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Oklahoma medical marijuana license holders could face custody issues

medical marijuana custody issues graphic

By Cassity B. Gies

On June 26, 2018, Oklahoma voters approved State Question 788, legalizing cultivation, use, and possession of medical marijuana. Almost three years after passing with 57% of voter support, our state struggles to manage the competing interests surrounding a legal concept colored with controversial opinions, long standing prejudices, and discriminatory undertones that linger in the air every bit as noticeable as the smell of marijuana smoke, itself.

Phillips Murrah family law attorney Cassity Giles

Cassity practices family law including divorce and separation, custody, and child support issues.

Far from a settled issue, the debate surrounding the medicinal value of the marijuana plant carries hundreds of years of societal and legal baggage, which complicates the implementation of Oklahoma’s newest industry.

Anticipating the gamut of opinions surrounding this controversial plant, anti-discrimination laws approved both by voters in the original ballot initiative and again by lawmakers in the Oklahoma Medical Marijuana Use and Patient Protection Act (more commonly known as the Unity Bill), aim to protect patients and license holders from foreseen prejudices. However, when bumping up against 120 years of court decisions regarding marijuana as a dangerous Schedule 1 drug, akin to the likes of heroin, frankly, the reality of our state’s anti-discrimination protections should make Oklahoma patient card holders, especially those with families and children, nervous.

The Oklahoma Public Health Code, 63 O.S. § 42(D), reads “No medical marijuana license holder may be denied custody of or visitation or parenting time with a minor, and there is no presumption of neglect or child endangerment for conduct allowed under this law unless the persons behavior creates an unreasonable danger to the safety of the minor.”

Our family law practice handles medicinal marijuana issues on a weekly basis now. The impact of holding a medical marijuana card varies according to every situation, and multiple factors affect the extent that a patient card can complicate a custody decision.

Judges vary in their attitudes towards medical marijuana. Some attribute its uses to the likes of any other legal prescription. Others take a stricter stance, opposing its use by any person providing care for children, regardless of prescription. Clients should be fully informed that marijuana consumption during these early years of implementing its legality can disadvantage a marijuana patient if he or she comes up against judicial disfavor.

I have heard attorneys openly warned from the bench that, regardless of how the law reads, any consumption of marijuana by a parent will be enough for that judge to presume the parent is under the influence while parenting a child, and therefore endangering the child. While this may seem to cut directly against 63 O.S. 42D, judges are ultimately charged with determining the best interests of children during custody decisions, and the deference awarded to their judicial determination provides wide latitude.

One straight-shooting guardian ad litem candidly told me that if their office learns a client has a marijuana card and that client resides in certain rural jurisdictions, the first piece of advice given to those parents is to surrender their prescription and forfeit their medical marijuana license because they will instantly be disfavored by the court.

The more moderate and more widely held attitude towards medicinal marijuana use and child custody decisions examines the facts of a case and looks for a nexus between a parties’ marijuana use and activity that threatens to harm the child. Is a parent exposing the child to marijuana? Is the child able to access it? Are the parents subjecting the child to secondhand exposure? Practicing in family law requires understanding that multiple global perceptions shape custody decisions and, as in all custody considerations, the specific facts at hand will affect the outcome of the case.

When a parent finds themselves googling “marijuana and child custody decisions,” litigation is already at an increased risk of conflict, and understanding that complication starts with understanding how to frame the divisive issues at hand and the rules of the Oklahoma Medical Marijuana Authority (OMMA). Attorneys in this field should know how to craft their case when marijuana issues are present, and, remarkably, this area of law often gets glanced over by attorneys declining to study this nuance.

It surprises me how few family law attorneys have studied the OMMA regulations and are admittingly unfamiliar with the impact that they have on child custody issues. A common example is Okla. Admin. Code § 310:681-5-17, amended last fall, authorizing non-licensed minors to enter a licensed cannabis premise when accompanied by a parent or legal guardian.

Besides a thorough knowledge of cannabis laws, many attorneys have yet to dive into the evidentiary nuances that arise in these cases. For example, drug testing has been accepted for years amongst courts as forensic evidence, but a good attorney knows the limits of these tests. When the purpose of a drug test is to provide forensic evidence in a court of law, shockingly, the FDA does not regulate or review the processes and procedures for drug testing facilities providing forensic results. This surprises people to hear and causes a good attorney to slow down and learn a little cannabis chemistry.

Having a relationship with experts who can support or discredit a disputed drug test can crucially benefit your client’s case. Most of our local courts require education in understanding the limitations of a drug test. Understanding laboratory inconsistencies, chain of custody arguments, and scholarly research illuminating faulty processes helps sort through blatantly false results which, disappointingly, circulate in courtrooms everywhere.

As soon as a prospective client shares that they hold a medicinal marijuana license, or that opposing party holds a license, the attorney should recognize this complication and advise their client of the additional work that could likely accompany their case. With the Oklahoma cannabis industry blazing ahead into what many people consider a twenty-first century land rush, the accompanying fallout affecting family law should not be taken lightly.


For more information on how the information in this article may impact you, please call 405.606.4744 or email Cassity B. Gies.

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Income tax challenges for medical marijuana businesses in Oklahoma

On June 26, Oklahoma voters approved State Question 788, which legalizes the use, growth, and sale of marijuana in the state for medicinal purposes.  In addition to providing rules for individual use of medical marijuana, the approval of SQ 788 also created a number of opportunities for new related businesses, such as retailers or dispensaries, commercial growers and processors. However, although licensed medical marijuana businesses are now legal under Oklahoma state law, conflicting federal law creates a number of challenges for business owners, particularly with respect to federal income tax law.

Attorney Jessica N. Cory

Jessica N. Cory advises clients regarding corporate and general business matters, including choice of entity, formation, tax-free reorganizations, acquisitions and dispositions and tax planning.

Generally, the Internal Revenue Code allows a taxpayer to take a deduction for all “ordinary and necessary” business expenses paid or incurred during the taxable year.  Congress has created an exception to this rule in certain instances, however.  One such exception is Internal Revenue Code Section 280E, which prohibits a taxpayer engaged in the business of “trafficking in controlled substances” from taking a deduction for ordinary business expenses.  For purposes of this provision, a controlled substance is any Schedule I or Schedule II drug under the federal Controlled Substances Act, which includes marijuana.  Although taxpayers have argued that Code Section 280E should not apply to businesses operating legally under state law, courts have repeatedly rejected this argument, concluding that any business buying or selling marijuana regularly is subject to the restrictions of Code Section 280E until Congress chooses to amend the Internal Revenue Code.

Although Code Section 280E’s bar on deductions represents a significant obstacle for medical marijuana business owners, several exceptions help reduce the burden on these taxpayers.  For example, although a medical marijuana business cannot deduct expenses in the same way as other taxpayers, it is entitled to offset its gross receipts with its cost of goods sold (“COGS”), although the Internal Revenue Service has issued guidance strictly limiting what types of costs a taxpayer engaging in a marijuana business can allocate to COGS.  Caselaw supports this narrower interpretation of COGS, including prohibiting resellers of marijuana from including any indirect costs – costs other than the price paid for inventory plus any transportation or other necessary acquisition costs – in COGS.

Another important exception to Code Section 280E is the separate business rule recognized by the Tax Court in an early medical marijuana case.  Under this rule, although Section 280E may preclude a taxpayer from taking any deductions relating to its medical marijuana sales, it can still deduct its expenses for any separate, non-trafficking trade or business.  Accordingly, it is extremely important for a marijuana business to keep careful records of any other businesses it may also operate, unrelated to growing, processing, or selling marijuana.

Members of Congress have repeatedly introduced legislation to exempt marijuana businesses lawfully operating under state law from the parameters of Section 280E.  Until this type of legislation is enacted, however, federal tax law will remain a potential minefield for any unwary medical marijuana businesses.  It is therefore important for businesses opening under SQ 788 to seek out an experienced accountant or tax lawyer to discuss the best way to structure their business to comply with federal tax law while minimizing their tax burden.


If you would like to know more about how this affects your business, contact Jessica N. Cory at 405.552.2472 or jncory@phillipsmurrah.com.

Medical Marijuana and Drug Testing in the Construction Industry

This article discusses procedures the Oklahoma construction industry employers need to develop with the legalization of medical marijuana, including how to handle drug testing.

With the passage of State Question 788 and the decision by the Governor not to call a special session, many of the ancillary questions regarding the impact of medical marijuana will remain unanswered until the next legislative session in 2019. But, in jobs where safety is key, such as construction, employers will need to develop procedures now to ensure that they are complying with safety rules and regulations as well as not stepping on an employee’s rights.

Q: How does the passage of State Question 788, medical marijuana, affect my safe work site and drug free policies?

A: The provisions of State Question 788 provide that an employer can take action against an employee who uses or possesses medical marijuana at the place of employment or during work hours. Thus, a contractor’s safe work site policy that prohibits the use of drugs or alcohol on the job is allowable under the law. However, unless an employer can show an imminent risk of losing a monetary or licensing benefit under federal law or regulation, an employer cannot refuse to hire, terminate, or otherwise discriminate against an employee simply because the employee has a medical marijuana card.

Q: If one of my employees with a medical marijuana card is “high” on the job can I still terminate him or her?

A: Maybe. Contractors will need to carefully differentiate between being impaired at work (ie, under the influence of marijuana and its attendant effects) and drug testing positive for medical marijuana although the employee may not be impaired. Unlike alcohol, scientific research has not been able to put a specific number on the THC levels (the compound in marijuana that makes one “high”) that impairs a person’s ability to drive or work safely—and THC may appear in a blood or urine screen well after it is consumed. So, unless the legislature choses a legal level of THC, the key will likely be whether, based on an objective observation, the employee was able to safely function.

Q: My company is working on federal projects, how can I mesh the state law requirements and federal law requirements?

A: Federal law still considers marijuana to be a Schedule I Narcotic under the Controlled Substances Act. Thus it is against federal law to consume or possess marijuana, medical or not. Additionally, most, if not all, federal projects are subject to the federal Drug Free Workplace Act which requires employers to have a drug free work place policy prohibiting the unlawful possession or use of drugs in the workplace and make an ongoing good faith effort to maintain a drug free workplace. These policies include requiring the employee to report to the employer and the employer to report to the contracting agency any workplace criminal drug conviction. However, the distinctions are fine and the interplay between federal law and the imminent risk of losing federal contracts or licensing has yet to be defined by Oklahoma or Federal courts and not by the federal or state government.

SQ 788 also opens path for new medical marijuana businesses

In this article, Director Jason M. Kreth discusses requirements and allowances for medical marijuana distributors and businesses since Oklahoma voters approved State Question 788.

Jason M. Kreth

Jason M. Kreth is a Director and a commercial litigator who represents financial institutions, handling matters such as foreclosures, bankruptcy and lender liability litigation. He also represents clients in a range of real property disputes.

Q: What type of new business opportunities exist now that SQ 788 has passed?

A: The approval of SQ 788 enacted a series of new statutes that take effect July 26. Aside from provisions related to the acquisition of a medical marijuana license for individual use, the statutes also provide a framework for the approval of new medical marijuana businesses. These businesses are: retailers or dispensaries of medical marijuana; commercial growers of medical marijuana; processors of medical marijuana into concentrated, edible or other forms; and medical marijuana researchers. In addition, the Oklahoma State Department of Health has published its draft proposed Medical Marijuana Control Program regulations which, if implemented in their current form, would provide for the licensure of laboratories to test and approve various medical marijuana products. However, both the statutes implemented by SQ 788 and the regulations proposed by Department of Health are still subject to change.

Q: What are the main requirements that must be met in order to obtain a license as a dispensary, commercial grower, processor or researcher?

A: In each case, an individual or entity wishing to obtain a license to operate as a dispensary, commercial grower, or processor, must submit an application to the Oklahoma State Department of Health along with a $2,500 fee. The application must establish that the applicant: is 25 or older; is an Oklahoma resident, in the case of entities, that all members, managers and board members are Oklahoma residents and that no more than 25 percent of its ownership is out-of-state; is registered to conduct business in Oklahoma; and isn’t incarcerated and doesn’t have either a nonviolent felony conviction in the last two years or any other felony conviction in the last five years. In addition, the Department of Health’s proposed regulations also would require submission of a criminal background screening as well as proof of a $50,000 bond made payable to the Oklahoma State Department of Health.

Q: Where can these new medical marijuana businesses operate?

A: Virtually any location as other businesses. The only direct exception is a dispensary can’t operate within 1,000 feet of a school. To ensure this freedom to operate these businesses, the statutes specifically prohibit a city or municipality from restricting zoning for the purpose of preventing the opening of medical marijuana establishments, and landlords are prevented from refusing to execute a lease with such businesses unless, by doing so, they would lose a licensing or monetary benefit under federal law. However, the proposed regulations of the Department of Health would create several practical limitations on where these businesses could be located. For instance, a dispensary may not be housed in the same location as a physician who can prescribe medical marijuana and the location where medical marijuana may be grown or processed is subject to more exacting security and privacy standards than those of a simple dispensary, which may limit the options for potential locations.

Q: When can these businesses obtain their licenses?

A: The statutes set an ambitious timetable of applications being made available within 30 days of the passage of SQ 788 and the establishment of a regulatory office for processing these applications within 60 days of passage. Furthermore, the statutes require that all applications must be processed within two weeks. However, these timetables are subject to alteration by the legislature and may be extended.

 

Published: 7/3/18; by Paula Burkes
Original article: https://newsok.com/article/5600093/sq-788-also-opens-path-for-new-medical-marijuana-businesses