Archive for the 'Government' Category

Can Marijuana Businesses Survive the Trump Administration?

One of the most notable trends of the most recent election was the explosion of laws legalizing recreational and medical marijuana across the nation. In fact, while only 8 states currently allow recreational use, the majority of states have legalized the use of marijuana in one form or another. This explosion has caused a chain reaction, a matching eruption of businesses prepared to sell marijuana products wherever it is legal.

One of the largest of these companies is Dixie Brands, an enormous Colorado-based business. Dixie Brands, founded in 2010, currently has branches operating in Arizona, Colorado, California in Nevada. They have in the news recently for their desire to spread nationwide with planned expansions to Maryland, Oregon, and Washington.

Marijuana Business

However, operating and expanding as an operation in the business of selling a product that is federally illegal is understandably extremely complicated. Not only does each state have its own notably different set of laws on how a business must operate but federal law bars marijuana companies from a number of things most businesses would consider necessary to operate. In fact, the majority of the growth of the industry is predicated off the hands off approach of the federal government under the Obama administration.

Marijuana Businesses Under President Obama

In August of 2013, the Obama administration issued a memo stating that it would not interfere with legal cannabis business so long as they operated in states with fully fleshed out regulatory regimes for such businesses such as Colorado. In December 2014, President Obama signed a bill into effect which limited how the Justice Department could stop states from putting their own rules into effect when it comes to marijuana.  In a recent interview, President Obama went so far as to say that he believes that marijuana should be treated as a health issue in same vein as cigarettes and alcohol. He went out of his way in the same interview to note that polls show that the majority of people who voted for President-elect Trump feel the same way.

What They Might Face Under President Trump

These comments come after Trump has picked Sen. Jeff Sessions as his top choice for U.S. Attorney General–a particularly controversial pick.  Senator Sessions was nominated for a position as a federal judge by President Reagan in 1986. However, a Republican led Senate Judiciary Committee refused to appoint him after a number of racist comments and opinions came to light. Senator Sessions referred to the NAACP as “un-American,” repeatedly called the African-American Assistant United States Attorney Thomas Figures “boy,” and–perhaps most relevant for the state of marijuana law across the country–said that he thought the KKK were good people “until I learned they smoked pot.” While President-elect Trump has previously supported a hands-off approach to marijuana, his pick of Senator Sessions for U.S. Attorney General certainly points in a different direction–much to the chagrin of companies like Dixie Brands.  Senator Sessions is, as you can probably tell from his statements about the KKK, extremely outspoken in his opposition towards marijuana as a whole. Senator Sessions has stated that “one of [President Obama’s] great failures …is his lax treatment and comments around marijuana.”  He has been quoted as saying “We need grownups in Washington to say, ‘Marijuana is not the kind of thing to be legalized, it ought not to be minimized, and that it’s a real danger.'” He has even gone so far as to say “good people don’t smoke marijuana.”

All of this points to a potential change in stance from the incoming administration; the kind of change in stance that could be catastrophic for a business like Dixie Brands and the entire industry they belong to. So what exactly are the legal obstacles currently facing businesses based around marijuana products and how can a firmer line on marijuana make things even worse for these businesses?

The Legal Roadblocks of Selling Legalized Marijuana

First and foremost, the obvious elephant in the room.  Marijuana is federally illegal. Federal law supersedes state law when the two conflict. Thus, so long as marijuana remains criminal at the federal level the entire business could come crashing down in a matter of months or weeks with just a few changes to enforcement and federal laws. Supreme Court cases have shown that even personal use or cultivation of marijuana within a single state has sufficient impact on the nation as a whole to allow for enforcement of federal laws despite contrary state law. The bill signed by President Obama protecting such state laws from interference could be easily overturned by a conservative Congress with the mind to do it. If the choice of Senator Sessions as U.S. Attorney General signals an administration in line with his way of thinking, action such as this may well be in our future.

So, to say that the marijuana business is on shaky ground is a bit of an understatement. However, businesses such as Dixie Brands are used to operating on shaky grounds. The nature of their business has always involved some level of legal headaches in areas such as intellectual property, forming binding contracts and advertising. However, there are some legal issues that are even more fundamentally problematic for companies selling marijuana products.

Legal Transportation of Marijuana

One of the biggest of these headaches is that federal law makes it illegal to transport marijuana across state lines–interstate commerce is generally the realm of the federal government and the federal government says marijuana is illegal. The federal government can even prosecute people transporting marijuana from one legal state to another. The penalties for a violation of these rules are hefty–up to five years in prison or fines of up to $250,000.

This is especially relevant now that the entire block of states along the west coast all have legalized marijuana. In a normal franchise, standardizing providers and shipping equivalent quality goods to all your branches is standard practice.  However, this is illegal for marijuana companies and requires these companies to find a different legal provider of marijuana in every state they operate in. While some states have made it clear that enforcing these laws at their borders is not high on their priority list for single persons, this doesn’t necessarily apply for a larger business shipping large quantities and doesn’t prevent federal operatives from intervening.

What About Banking for Marijuana Businesses?

Another common issue facing businesses selling marijuana products is banking.  The fact that marijuana is, once again, illegal at a federal level has made most banks very hesitant to accept any money from a marijuana-related business. The problem is that this money is essentially earned through committing a federal crime and banks are fearful they may lose their required FDIC and NCUA insurance as both of these are provided by the federal government. Even worse, by working with a business like Dixie Brands a bank could face a lawsuit brought by the federal government.

Back in February of 2014, a division of the U.S. Department of the Treasury known as the Financial Crimes Enforcement Network (FinCEN) has created guidelines under which a bank may safely work with a marijuana-related company. These rules made it so that banks could work with companies selling marijuana so long as they file frequent Suspicious Activity Reports proving that the people they work with aren’t committing fraud or laundering money. However, while the rules made it technically legal to work with a company marijuana products, they also make it so expensive and time consuming to do so that no bank actually chooses to take FinCEN up on the offer. What’s more, these guidelines are not actually binding law but merely recommendations. This means that a change in position from the federal government, such as the one that looks to be on the horizon, would leave any bank following the FinCEN guidelines hung out to dry in a potential legal crackdown.

This issue has led to two things.  First, the marijuana industry is primarily a cash industry with all the problems that brings with it.  The interstate nature of credit cards, electronic payments, electronic transfers, PayPal and similar services tender all these payment methods unavailable to marijuana-related businesses. There are stories of owners of marijuana-related businesses coming to pay their taxes with sacks and sacks of cash like a Scrooge McDuck cartoon.  Second,  states have been forced to try and design their own internal banking services to help regulate the businesses they seek to tax.  Some of these, such as the newest regulations out of California, will only be taking effect later this year.

Is This the End of Expanding Marijuana-Related Businesses?

There is, unquestionably, an enormous amount of tax revenue to be made and jobs that could be created through legalized and regulated marijuana in the U.S.  However, the stance of those the incoming administration has chosen to represent them is not a friendly one to legalization.  There are certainly arguments in favor of this side of the argument as well–difficulty of enforcement, difficulty in proving current intoxication, etc.  However, as it stands the public opinions of the incoming Trump administration are incongruent.  President-elect Trump himself has been publically supportive of the growing marijuana industry.  The man he has chosen to weigh in most influentially on the current laws of the federal government, however, has a diametrically opposed position.   The marijuana industry is, and has been, an incredibly profitable house of cards–we’ll have to wait and see if the Trump administration chooses to blow it over.

Overtime Law Changes: How to Protect Your Business and Rights

Early in 2016, at the direction of President Obama, the Department of Labor (DoL) issued long awaited reforms to how overtime would be handled across the country.  The new rule, inventively called the Overtime Final Rule, is only the seventh time the Department of Labor has adjusted its rules for the changing times since nearly 80 years ago in 1938.  It would also be the first such adjustment in twelve years.  However, while the rule was initially set to take effect at the beginning of last month, the it’s looking more and more like the Overtime Final Rule may be even more long awaited than expected.  A ruling out of a Texas district court, temporarily preventing the Overtime Final Rule from moving forward, was recently upheld on appeal. 

Overtime Law Changes Department of Labor

What Does the Rule Cover?

So first things first, what exactly would the Overtime Final Rule do and why would anybody try to stop it?  The Overtime Final Rule was designed to update the salary exemptions to overtime.  Basically, if you make more than a certain amount–and your job requires a fairly high level of independent judgment and discretion on your part–an employer doesn’t need to pay you for overtime hours worked.  Overtime generally includes any hours in excess of 40 in a week, 8 hours in a day, or being required to work more than 6 consecutive workdays.  The Overtime Final Rule would have nearly doubled the cutoff point in pay before you are exempt from overtime.  The new cutoff would have jumped from exempting anybody making more than $455 per week all the way up to only excluding employees making $913 per week.  This amount would rise every year for the next three years to allow employers more time to adjust to the changes.  The DoL expected this change to make around 4.2M employees eligible for overtime pay around the country.   The new rule also sought to clarify the fairly murky area of the exact kind of jobs that can be overtime exempt.  However, it was the fact that it would require employers to make such huge changes in how they pay their employees that led to it being challenged as vigorously as it has been.  While rule may leave many employees excited about the prospect of a potential raise or overtime pay, the same prospect filled many employers with dread at having to budget in those changes as the DoL predicted that 4.2M new non-exempt employees would cost employers over $295M.

The response to the rule when it was first announced in May of 2016 was swift–a barrel of lawsuits against the DoL, its divisions, and its agents.   21 states, the Plano Chamber of Commerce and over 50 different businesses all sued in Texas District Court to try and put a stop to the new changes by arguing that the changes overstepped the DoL’s authority.  This led to Judge Amos Mazzant out of Texas issuing an unexpected emergency motion, days before the Overtime Final Rule was set to take effect, which prevented rule from moving forward anywhere in the country.  The federal government has appealed the ruling but until that case sees light–it’s currently in briefing until at least January 31st of this year–the Overtime Final Rule is stalled.

Is This the End of the Overtime Final Rule?

To call the Texas District Court’s ruling a setback to the DoL would be a dramatic understatement.  The case is still ongoing, upcoming decisions in the case include a request to stop the rule permanently.  However, as it stands the rule is stalled not dead–although the changing political climate may see the DoL abandon the case entirely.

With President-Elect Trump set to take office in a few weeks, there will be a changing of the guard at the DoL and until that changing of the guard it’s very unlikely there will be much action on the case.  Once the changing of the guard does occur, President-Elect Trump has appointed Andrew Puzder as his Labor Secretary–an outspoken critic of the Overtime Final Rule.  With this in mind, it seems unlikely that the case will be a high priority for the new administration and it may even be dropped–ending any chance of the DoL’s overtime changes taking effect.  Even if the case moves forward and the rules end up taking effect, a conservative majority in Congress would allow Republicans to kill the rules using a joint resolution under the Congressional Review Act.   

However, while things aren’t looking particularly good for the DoL’s rules, the case is far from over.  The Texas AFI-CIO–a prominent labor union–is currently seeking to join the case as a defendant in order to take over the case should the DoL end up walking away from it.  What’s more, the Congressional Review Act is an option that is very rarely used.  There may be life in the Overtime Final Rule yet.  So how do you plan for a future where the legal environment is totally up in the air?

What Do You Do Now?

So how do you move forward as a business?  Many have been busily preparing to adjust for the changes, however that in and of itself presents a challenge to employers.  What’s more, failure to properly classify an employee when it comes to overtime exemption can lead to costly lawsuits and fees.

The two options to deal with the changes is to either provide raises or reclassify employees.  Raises hit the bottom line while reclassification hits employee morale through the perceived loss of prestige and can require removing autonomy from an employee–sometimes even necessitating barring that employee from activities such as accessing emails while off duty.

As it stands, the Overtime Final Rule is simply not in effect and thus employers do not need to currently comply with its rules.  However, the injunction did not block all amendments the rules proposed–keeping sections increasing the cap on overtime exemption for particularly highly paid employees from $100,000 per year to $134,000 per year.  Thus, it’s important as an employer to be certain that employees exempted on this basis are properly classified. 

As to the remainder of the rules, there are basically two camps–employers who have already made changes to address the Overtime Final Rule and those who have not.  If you’ve made no changes, it makes sense to stay the course for now while preparing a plan to quickly move yourself in line witht he rules should they end up taking effect.

If you have made changes, the situation is a bit more complicated.  Rescinding raises and employment changes can be a tricky business, beyond the fact that it’s a painful HR move, it can give rise to legal claims against your business depending on how salaries or pay were agreed to.

As an employee it is important to keep an eye on where this law goes and make sure you are being compensated properly according to the law.  If you have been reclassified or given a raise, look to your employment agreements and figure out whether your employee can take back what they’ve given you.  What’s more, remember that an employer can rarely take back wages already paid under a restructured compensation plan.  Generally they will be limited to reducing future pay.

Surprisingly, businesses have by and large moved forward as it the ruling from Texas never happened.  Studies show the majority of small businesses–84% of them–have simply moved forward with raises, reclassifications, and employment agreements as if the rules had taken effect.  This is good news for employees.  However, many small businesses can ill afford the costs of such changes if they don’t have to.  For employees and employers alike, keep an eye on this case in the coming months–it has to come out of legal limbo sometime.

Can the Police Shoot Your Dog For Barking?

A federal court recently issued a ruling that has got the media in a frenzy.  Can police officers now shoot an animal for moving or barking when entering a home?  While the court ruling did order a police shooting of 2 in-home pets as justified, it doesn’t give the police a sweeping authority to shoot your dog.

Let’s Break It Down

The facts of this case are important to the ruling because the decision is based on the totality of the circumstances.  A warrant was issued out of a Michigan court that gave the Battle Creek Police Department (BCPD) permission to search a local residence, the owner a known gang affiliate, for drugs.

According to court documents, as officers began to execute the search warrant, officers noticed dogs “…barking aggressively, ‘digging and pawing,’ and ‘jumping’ at the window.”  An officer testified that upon entering the home, a 97-pound pit bull lunged at him and it was then that the officer fired his gun at the dog, only injuring it.   The dog retreated to the basement.

Police Shoots Barking DogThe officer further testified that he could not safely clear the resident’s basement because the already injured pit bull was standing at the bottom of the steps.  It was then the officer fired two fatal shots into the already injured dog.

The same officer additionally testified that the second pit bull was standing across the room and barking at the officers, so he fired shots at the second dog.  The dog ran to the corner of the room and caught the eye of a second officer, who then fired shots at the second dog.  An officer then testified that because the dog had several wounds, he “…‘didn’t want to see it suffer’ so he put her out of her misery and fired the last shot”.

Killing a Pet Constitutes a Seizure under 4th Amendment

Many courts have widely agreed that deadly force against a household pet constitutes a seizure.  We know that seizures are unconstitutional under the 4th Amendment if they’re unreasonable.  It’s also been established that killing a pet is reasonable only if the pet poses an imminent danger and force is unavoidable.

Hindsight is 20/20

Ever heard the expression “hindsight is 20/20”?  It’s easy for a person to see things that seem obvious after-the-fact, but it’s the circumstances before-the-fact that matter most when answering these kinds of questions.  Courts focus on the perspective of the officer on the scene and not the perspective of the perfect vision that hindsight offers.  It all comes down to whether or not the pet poses an imminent threat from the perspective of the officer.

This is important because anyone reading those facts above after-the-fact could easily argue the officers acted unreasonably against the two dogs.  Shooting the first dog when the dog lunged at the officer is one thing, but shooting an injured animal that’s simply barking is another story.  But, again, the courts don’t get the pleasure of making those judgments based on hindsight and they must consider the perspective of the officers in the moment of the situation.

Court Says Fear of Imminent Threat from Dogs Was Reasonable

There’s no argument that executing a search warrant lends to stressed circumstances for police officers and those officers are often forced to make split-second judgements based on unknowns.  The court found that due to the already high nature of the threat against the officers executing the warrant in a home of known gang affiliates, the officers were understandably on high alert.

The shooting of the first dog, according to the court, was warranted because 1) it was aggressively barking, 2) it lunged at the officer, 3) even after the dog had already been shot by the officer, the dog continued to aggressively block the officers entrance into the basement, and 4) the officers could not safely clear the basement while the dog was preventing the officer to do so.  The court found the shooting of the second dog reasonable because both officers testified they could not safely clear the basement with the presence of the barking dog.

Conceptually, I agree with the standard used by the court—if an animal poses an imminent threat, then force is reasonable.  However, I’m not convinced, at least that the second dog, posed an imminent threat to the officers in this situation.  Although the court didn’t actually create a bright line rule giving police the power to shoot any moving or barking animal inside a house, actual application of this ruling could have potential repercussions for abuse.

Can Too Much Caffeine Lead to a DUI?

Has it come to this?  At least 68 million Americans drink coffee every single day.  If those staggering numbers are any indication of the number of people that are consuming caffeine on a daily basis, consider the fact that that number is for coffee consumption and doesn’t even include soda.  Does that mean all of us consuming caffeine need to worry about getting a DUI?

A California man, Joseph Schwab, was pulled over on suspicion of driving under the influence back in 2015.  Schwab was given a breathalyzer test, which he passed with flying colors.  Although the breathalyzer showed 0.00% blood alcohol level, Schwab had his blood taken for a toxicology test after being taken to county jail.  Results, again, came back 100% in favor of Schwab.

Charges weren’t initially filed against Schwab, but ten months later misdemeanor driving under the influence of a drug charges were filed.  A second set of test results sent from an outside testing facility showed caffeine was the sole substance in Schwab’s blood.

Chief Deputy District Attorney, Sharon Henry, for Solano County stated, “the charge of driving under the influence is not based upon the presence of caffeine in his system.”  Schwab’s attorney, Stacey Barrett, however, stated she was not provided with any evidence supporting a theory of any other substance within Schwab’s system.  Barrett subsequently filed a motion to dismiss the charges against Schwabb.

Can Caffeine Consumption Really Get You a DUI?

Maybe, but it’s probably not really very likely.  Under California law, a drug is any substance, illegal or legal, that isn’t alcohol that might “impair, to an appreciable degree” a driver’s capabilities behind the wheel to drive like a sober person.  Were you able to drive with caution?  Was your driving that of a sober person of ordinary prudence under similar circumstances?

Caffeine works by stimulating the central nervous system, the heart, muscles, and the centers that control blood pressure.  Theoretically, if enough caffeine is consumed, then it’s possible it could have effects that could impair a driver’s capabilities to drive safely.  Typically, though, side effects of consuming caffeine have much smaller effects such as stomach aches and insomnia.

How, Then, Can Schwab Be Charged?

According to the District Attorney’s office, the State decided to go ahead & charge Schwab because drug tests don’t catch every drug.  The State was convinced that because Schwab was driving so erratically, he must have been on something.  Remember, though, that since this was a criminal charge brought against Schwab, the State has to prove beyond a reasonable doubt that he was driving under the influence of drugs.

Even though caffeine is a substance that can affect the nervous system, brain, or muscles, all things that define a drug under the applicable law, a prosecutor would be hard-pressed to prove to a jury beyond a reasonable doubt that the consumption of caffeine, alone, inhibited Schwab’s abilities to drive enough to pose any danger.  Observations of an arresting officer can be relied upon heavily, but it’s not necessarily enough.

Under California law, driving erratically isn’t necessarily conclusive enough to prove driving under the influence—it’s only a factor a jury can take into consideration.  An arresting officer can testify to 1) the unsafe manner in which you drove, 2) your physical appearance, and 3) your performance on a field sobriety test.  According to the officer, Schwab cut her off and was driving erratically.  In Schwab’s case, this would have been the only evidence, at least that’s been made public, that the State had to go on since blood tests came back negative.

These are the likely reasons the District Attorney’s office conceded and just filed their own motion to dismiss the charges against Schwab, despite the fact they claimed forensic lab experts stated it was “highly likely the defendant was under the influence of a drug.”

 

Uber Puts the Brakes on Their Self-Driving Cars

A few months back, Uber announced it was going to test something potentially groundbreaking–they announced tests of self-driving rideshare services in San Francisco.  Unfortunately for Uber, the tests turned out to be more premature than groundbreaking.  The California DMV condemned the tests as illegal and demanded that Uber not roll out their self-driving cars.  In the face of the disapproval of the California DMV, Uber decided to totally ignore the DMV and move forward with the tests anyway–for a week.  After moving forward, the California DMV revoked the registrations on every single one of Uber’s self-driving cars and Uber was forced to abandon their tests.

What’s the Problem with Uber’s Self-Driving Cars?

The problem California had with Uber’s self-driving test cars was a simple one, Uber simply didn’t bother to get the permits necessary to use an autonomous car in California.  Uber objected to the requirement of permits in the first place, arguing that because their self-driving cars needed human supervision they were not actually autonomous under California’s definition as California currently defines an autonomous car as one that drives “without the active physical control or monitoring of a natural person.”  The vice-president of Uber’s advanced technologies division made an announcement stating that “this rule just doesn’t apply to us, you don’t need to wear a belt and suspenders and whatever else if you’re wearing a dress.”
Uber Puts Brakes on Self-Driving Cars

The California DMV, as you can tell from how they responded, didn’t agree.  They’ve already issued hundreds permits to test autonomous cars on the roads of California.  They consider this permitting necessary for public safety when it comes to such new technology, and they demanded that Uber follow their rules.  Perhaps this was a wise precaution, in the one week Uber’s cars were running one was caught on tape running a red light.

This isn’t the first time Uber has chosen to ignore state laws in testing automation or had trouble with the law.  In fact, their very business model has occasionally been challenged as illegal.  Earlier this year, Uber went forward with testing self-driving trucks in Nevada despite explicit warnings from the state’s DMV that doing so would violate Nevada law.  Luckily for Uber, while Nevada has similar permitting requirements to California, the laws were so new as to not yet have any penalties set up for failure to comply.

Despite these setbacks, Uber’s self-driving plans have been making strides around the nation.  In Pittsburgh they have been given essentially free reign with a similar program testing autonomous ridesharing.  They have announced they will be moving the San Francisco test cars to Arizona and moving forward there.

Part of Uber’s problem, and how they caught a break in Nevada, is that self-driving cars are so new that very little law has actually sprung up to regulate how and when they can be used.  However, this has been slowly changing as states recognize that autonomous cars are here to stay.

Self-Driving Car Laws Around the Nation

Self-driving cars are coming and it’s not a matter of if, it’s a matter of when.  Just recently, Ohio announced it was investing $15M in self driving trucks going forward.  In the same week, Michigan became the first state to pass comprehensive laws on using, testing, developing and selling self-driving cars.

However, luckily for companies like Uber, Michigan’s laws have not focused on restricting the use and testing of self-driving cars–quite the opposite.  Michigans bills, 995 through 998, provide clear rules for how an autonomous car may be used on public roads and freeways.  The laws are set up to make clear rules for testing.  Once testing is complete, the new laws even allow for properly tested automated vehicles to be sold to the public.  The laws also require the Michigan Department of Transportation to recommend standards that will ultimately regulate the connected networks of autonomous cars and how the data collected from such a network–collisions, traffic data, etc.–will be allowed to shared with others.

What is less fortunate for Uber is that the laws also serve to outright lock them out of any self-driving rideshare services.  The new laws only allow specific most eligible automakers from creating a network of self-driving taxis.  While the law is very new, it certainly seems like this would keep Uber from spreading their new programs into Michigan.

Uber seems to think so, they’ve heartily condemned this part of the law in the media–calling the rules anti-tech and protectionist.  They have a point to a degree, creating a state made monopoly on a service or product does not seem like the best idea.   However, for the most part, Michigan’s rules will serve to open doors and ease the way as self-driving vehicles make their way into the marketplace.

While Michigan’s laws are the most sweeping, and likely the most lenient, laws passed on the subject they are far from the only laws regulating self-driving cars.  California, Arizona, Nevada, Utah, North Dakota, Louisiana, Tennessee, Florida, Massachusetts, Washington D.C., and Virginia all have laws in place regulating the use of autonomous vehicles.  In September of 2016, even the federal government–through the National Highway and Transportation Safety Administration–released an updated set of suggestions providing guidance for states in making laws.

It hasn’t all been forward progress, 16 states had self-driving car legislation that either stalled out or failed to pass in 2016.  However, Michigan–perhaps because it is a state so embroiled in car manufacturing–has taken the next steps in a trend towards fully preparing for self-driving vehicles to hit the market in earnest.  It’s only a matter of time until autonomous cars become as common as hybrids have become.  Uber may be flouting laws right now, but what they’re doing is going to become so common as to need clear regulation nationwide.



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