Laws involving marijuana and industrial hemp are ever evolving. With the passing of the Michigan Regulation and Taxation of Marihuana Act, the marijuana and industrial hemp industries are expected to have exponential growth. Kitch has experience in marijuana and hemp related matters such as:

Areas of Practice:

Kitch’s attorneys stay knowledgeable and current on all developments necessary to successfully navigate this complex and highly regulated area of cross-disciplined law.

Real Estate

The complexities of Michigan’s marijuana legislation present unique challenges for many stakeholders in the real estate industry. Our real estate attorneys provide owners, property managers and tenants with the advice necessary to navigate local, state and federal marijuana laws so their businesses thrive. Land Use and zoning restrictions have a direct impact on locating marijuana-related businesses, and those restrictions can have a significant effect on the viability of a real estate transaction or on the value of the property. Our real estate attorneys provide expertise in the following areas:

Drafting and/or consulting on property management, construction, and lease agreements, amendments, personal and corporate guaranties, rules and regulations, option contracts, assignment of rents, subleases and rights of first refusal
Representing clients in commercial and industrial landlord/tenant proceedings in both District Court and Circuit Court

Construction

The complicated nature of marijuana cultivation facilities, processing centers, and provisioning centers requires a keen understanding of the factors that go into a construction project. Our construction attorneys have extensive experience providing owners, contractors, and construction managers with the advice necessary to navigate their business and the law to most effectively serve the industry. Our Construction attorneys provide expertise in the following areas:

Risk Management
Drafting, reviewing, or consulting on construction agreements
Cost Efficiency
Regulatory Requirements
Representing clients in construction-based litigation in both State and Federal Court

Brand & Product Licensing

The growth of the legal marijuana and hemp market creates a blossoming need for cultivators, processors, marijuana micro-businesses, transporters, and provisioning centers to create brands synonymous with quality and good service. Successfully creating a marijuana brand requires legal expertise that will allow the product/brand to be legally licensed. Our product licensing attorneys provide expertise in the following areas:

Product Licensing
Brand Licensing
Franchising
Consulting on and/or drafting brand or product licensing agreements
Representing clients in brand or product licensing disputes

Compliance

Highly regulated industries present significant challenges for businesses, requiring an in-depth understanding of ever-changing legal requirements, continual oversight and scrutiny of the business’ operations, and ongoing education of executive leadership and staff. Businesses in the marijuana field must have a detailed understanding of state and federal requirements to establish a strong compliance program, and understand how compliance considerations impact nearly every decision the business makes. The Kitch firm’s has, since its inception, focused on highly-regulated areas, like health care, and is well-positioned to guide clients in the marijuana industry. This expertise results in an exceptional level of counsel for the clients that Kitch serves, including:

Assisting clients in structuring compliance programs
Drafting policies and protocols to codify the business’ expectations and commitment to compliance
Advising clients on compliance issues, reporting requirements, and risk management
Providing education to executive leadership and staff on legal requirements, as needed
Guiding clients in responding to violations of legal or regulatory requirements
Providing counsel during governmental investigations, licensing reviews, and audits
Reviewing contracts, documents, and proposed actions to identify potential compliance issues

Corporate Formation

Marijuana entities, like all businesses, begin with corporate formation. One of the most important decisions someone starting a business can make is what the legal form of that business should be and how it should be taxed. The selection of a corporation (business, professional or nonprofit), limited liability company (regular or professional), partnership (limited liability, limited or general), or sole proprietorship often depends upon individual circumstances and business expectations. While these entities face the same questions and decisions as other businesses, they also face additional restrictions and considerations related to the highly-regulated nature of the industry. Our experienced corporate counsel can help navigate these issues, such as addressing in organizational documents, the licensing impact of an owner attempting to transfer his/her ownership interest without approval from licensing authorities, distinguishing between passive and active owners in terms of governance responsibilities, and providing for flexibility to seek investment capital. Consistent with how we feel the law should be practiced, we work with our clients to help them make, with our guidance, the best decision for their circumstances and expectations.

Specifically, our corporate formation assistance includes:

Assisting startups/clients in navigating the complex process of formation and entrepreneurship
Advising clients on choice of entity, forum of incorporation and the implications of those choices, including tax considerations and administrative burden
Structuring transactions to conform with state licensure requirements and restrictions
Advising on tax issues
Tailoring business structure and organizational documents to business’ unique needs
Forming corporations, limited liability companies, partnerships, and limited partnerships
Drafting bylaws, operating agreements, shareholders’ agreements, member agreement and partnership agreements, and coordinating the same with principals’ estate plans
Performing due diligence for corporate transactions

Corporate Governance

Business enterprises in the growing medical marijuana industry must be carefully structured to maximize all corporate, employment and tax advantages, while maintaining all legal protections available. Decades of experience in corporate law, business planning, employment and labor law, and business taxation allows us to address common business problems and offer insight and solutions unique to this developing field. The complexities of the laws pose a particular challenge to businesses seeking to comply with often conflicting laws and regulations while meeting the day-to-day needs of the business and maintaining the flexibility to adapt to a fast-changing industry. From matters ranging from corporate compliance, contracting, merger and acquisitions, employment agreements, policies and procedures to available tax benefits and considerations, the Kitch firm is singularly capable of handling all areas related to marijuana related businesses. We offer expertise in:

Drafting and reviewing contracts, policies, business plans and other documents
Advising on employment and tax issues
Obtaining assumed names for the business (i.e., trade names or d/b/a)
Advising entrepreneurs on mergers, asset sales, subsidiary creations, spin-offs, split-offs and split-ups
Assisting in executing mergers and acquisitions, including drafting purchase and sale agreements, promissory notes, guarantees, security agreements, and financing statements
Performing due diligence for corporate transaction

Intellectual Property

The growth of the marijuana and hemp industries has led to the development of new business strategies, methodologies, and the cultivation of new strains of product. It is imperative that anyone involved in these industries be aware of their intellectual property (IP) rights and how to best avoid future problems when their IP rights are overlooked. Furthermore, because marijuana is still federally prohibited, the marijuana industry faces additional hurtles when protecting its IP. Kitch’s IP attorneys can assist in the following areas:

IP Portfolio Building and Development
IP Portfolio Management and Licensing
Brand Protection
Patents
Trademark
Copyrights
Representation in Litigation with IP Issues

Immigration

The legalization of marijuana in Michigan and Canada has led to the common misconception that marijuana can be freely carried across the Michigan- Canadian border. However, marijuana is still illegal at the federal level and U.S. Customs and Border Protection will enforce federal law at the border. U.S. citizens and foreign nationals visiting or living in the US will be charged with a criminal offense if caught with marijuana at the Canadian border. The consequences of being found with marijuana, or even being connected to the marijuana industry, will result in foreign nationals being deemed inadmissible to the US. It is imperative that U.S. and Canadian employers with employees crossing the border, as well as investors in the legal marijuana industry, consult with U.S. legal counsel regarding all the implications and considerations when crossing the border. Kitch’s Immigration attorneys can assist in the following areas:

Waivers for individuals who are found to be inadmissible to the U.S. and Canada;
Advising clients on compliance policies for foreign nationals;
Devising and implementing best practices and company policies for border crossings; and
Providing education and information to human resources staff on legal implications of marijuana for foreign national employees

Tax Services

In addition to the traditional tax issues associated with forming and operating any commercial activity, businesses working with the legal growth and sale of cannabis in Michigan face some significant federal and state tax obstacles. Notably, Internal Revenue Code Section 280E denies many otherwise allowable business deductions for taxpayers carrying on a trade or business that consists of trafficking any controlled substances that are prohibited under federal law. Although marijuana is legal under Michigan law, it is classified as a Schedule I substance for federal purposes. Consequently, Section 280E applies to deny many of the business expenses of taxpayers involved in the legal growth and sale of marijuana in Michigan when filing their federal income taxes. There are also many other tax implications associated with the marijuana business, including state and local tax considerations.

Kitch is exceptionally equipped and experienced in advising the Michigan marijuana sector on the federal and state tax consequences and offering tax planning structures and other ideas to minimize the negative impact of the tax laws specific to these businesses. We have a dedicated group of professionals who have in-depth experience advising clients on the complexities of the tax law, choice of organizational structure, tax accounting methods, working through the complex web of regulations and managing tax audits.

Licensing

Before a marijuana business can operate, it must go through the complex and highly-regulated state licensing process. Registering for a license can be complicated, work-intensive, and time-consuming. There is also extreme competition for licenses. Growers, processors, transporters, provisioning centers, and safety compliance facilities require licenses. Our licensing attorneys can assist clients in navigating the convoluted process and tailoring applications according to the client’s business plans and goals to ensure continued success of the business.

The Food & Drug Administration also plays an important role in marijuana licensing. So far, the FDA has not approved marijuana as a safe drug for any purpose but has approved purified cannabidiol for the treatment of seizures. The FDA also supports scientific research into uses of marijuana. With legalization and interest in marijuana research, the opportunities for licensing products through the FDA is increasing.

With the legalization of marijuana in both Michigan and Canada, there are also cross-border licensing issues, which Kitch attorneys are ready to assist with.

Kitch’s licensing attorneys can assist in the following areas:

Guiding clients through the Investigational New Drug process with the FDA for marijuana and marijuana-related products
Applying for a license
Renewing a license
Resolving issues with cross-border licensing

Municipal Law

With the rapid development of the marijuana industry has come corresponding activity in municipal zoning and land-use planning efforts. Many major municipalities have adopted, or are considering, local ordinances to address marijuana use, distribution, and regulation. Zoning boards, planning commissions, and city councils have addressed options ranging from a strict prohibition of marijuana-related businesses to the creation of dedicated districts to centralize related businesses. Current debates include the legality and scope of marijuana cooperatives, dispensaries, and other joint enterprises. Our attorneys have a long history of working with government agencies and entrepreneurs to reach creative solutions and foster a cooperative business relationship. Our extensive experience in municipal, administrative and regulatory law can ensure administrators, zoning and planning commissions, and independent businesses comply with all relevant state and federal laws and regulations. Our related practice areas include:

Government Administration
Government Affairs and Negotiation
Land Use
Real Estate
Zoning/Planning

Product Manufacturing

The legalization of marijuana has opened doors to many new marijuana-related products. The industry is no longer limited to the traditional bounds of consumption. Product manufacturers are finding new ways to infuse lotions, toothpaste, shampoo, and many other everyday products to expand their customer base. A segment of this expansion requires proper labeling and packaging to ensure the product provides adequate information and safety precautions to the public. Because our attorneys have expertise in product liability, they are equipped to assist with marijuana product manufacturing issues. Our experienced attorneys can assist with:

Defending against any product manufacturing lawsuits
Guiding clients in responding to violations of legal or regulatory requirements
Advising clients on compliance issues
Reviewing contracts and other documents to identify potential issues

Security & Privacy

With security breaches frequently in the headlines, consumers are constantly trying to protect their personal information. Continually evolving nuanced regulations on collecting, using, and storing information has created a complex climate that can be difficult to maneuver. With an established practice area in technology, Kitch attorneys are experienced to assist with any security and privacy issues. Kitch can assist with:

Guiding clients in responding to violations of legal or regulatory requirements
Advising clients on compliance issues
Assisting clients in creating security and document retention plans

Marijuana & Industrial Hemp

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