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What Will Grow From Marijuana Law?

11/8/2012

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-- Paul E. Padilla

There was a lot of commotion this week, with the election season coming to an exciting end and focus turning to how new officials and policies will unfold. In Colorado, Amendment 64 passed, which permits recreational use of marijuana. While legalizing marijuana has been a hot topic for a long time, Amendment 64 certainly doesn’t end the debate.

I admit that I voted for Amendment 64, based on my belief and observations that the concept of “medical marijuana” is a misnomer. Having previously lived one block away from “Marijuana Mile” (South Broadway) in Denver, I have seen firsthand that there is minimal health care taking place in the thriving cannabis industry of Colorado. And, while I have no interest in using marijuana myself or expanding the general population’s access to it, I think marijuana is already widely available, so we might as well collect tax revenue to fund our deteriorating educational system (and maybe fix some potholes – pun intended).

My personal beliefs aside, Amendment 64 will raise many more issues than it resolves. Once the Amendment goes into effect, it will allow people 21 years old and up to possess an ounce of marijuana and grow six plants in their homes. This may decrease the number of criminal prosecutions for possession of marijuana, but it will likely open the flood gates to other legal issues.

The most significant problem that exists with recreational marijuana is federal law. A looming black cloud (no pun intended) will exist over Colorado as long as the federal government prohibits its use and possession. The obvious risk this creates is that an individual will have a false sense of security buying and carrying marijuana, because it is allowed under Colorado law. But that person may still be prosecuted in federal court, which is generally much more serious.

An additional issue created by the conflict with federal law is that marijuana dispensaries cannot open bank accounts, because the banking industry is regulated at the federal level. Because any banking activity connected with illegal activity (i.e. marijuana) is considered money laundering, dispensaries cannot accept credit cards or open bank accounts. Thus, you have a multi-million dollar industry that is stuffing its mattresses with cash. And lots of cash usually means lots of crime.

In addition to the federal issues, it is important to recognize the other legal consequences of recreational marijuana. In the west, DUI rates are incredibly high due to minimal public transportation and significant cultural factors. With expanded availability of marijuana, it is essentially guaranteed that the DUI rates will also increase.

Also, just as alcohol and alcoholism has been pervasive in family and employment law, marijuana’s impact will also grow (pun intended). Even though marijuana will now be legal and available, it doesn’t mean that the courts will allow or tolerate its use in family and employment settings.

So, while you may soon be able to buy marijuana freely in Colorado, it remains to be seen just how big of an impact recreational marijuana will really have on the state.
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Hard Times Close Another Local Business

1/5/2012

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_ Today, the Denver Post published an article about a local business, M&D’s Cafe, which is closing its doors after 34 years in operation because it is unable to make payments on its loans or pay its taxes. The story is important because the cafe was a major presence in its neighborhood, and it is an example of how the economic downturn continues to affect businesses - even those considered to be landmarks.

In November, I wrote an article about the City of Denver’s Office of Economic Development (OED), and the emphasis that Mayor Hancock is placing on small business development (Bureaucracy Better For Business?). The article discussed the small business lending programs that the City offers, where traditional financing through banks is unavailable. It just so turns out that M&D’s was a recipient of one of the loans through the OED, and that the City of Denver is foreclosing the loan.

While the Post maintained its journalistic neutrality and reported the case in an honest light, it is hard to read the article and not feel that the City is the bad guy in this case. But, it is important to remember the role that the OED plays in making small business loans. When you read about a foreclosure it is easy to lump the City’s lending program in with the other bad press about banks. However, what is important to remember is that the OED’s lending program gives small businesses the opportunity for financing and another chance, where traditional financing alternatives are not available.

So, while it is sad to see another business close its doors due to hard times, it is also important to keep in mind that the OED’s lending program made it possible for M&D’s to keep serving the community for a little longer that it would have otherwise.
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There's No "I" In Massachusetts

12/2/2011

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_This week, the Massachusetts Attorney General filed suit against Bank of America, JP Morgan, Wells Fargo, Citigroup, and GMAC for their conduct in dealing with the mortgage and real estate crisis. The Massachusetts Attorney General claims that the banks used deceptive and illegal practices in foreclosing thousands of mortgages from 2008 through 2010, including the practice of “robo-signing,” where mortgages were transferred in the secondary market without following formal policies and procedures.

Each of the banks has taken a slightly different position in the lawsuit, some wanting to settle the suit as soon as possible, while others have stated that they will defend themselves aggressively. So, there is a possibility that this lawsuit could develop into a costly and protracted battle in Massachusetts state court.

The major issue that this lawsuit creates is whether the filing of an individual state’s claim against the banks will slow down the ongoing settlement negotiations involving both federal and state prosecutors for a nation-wide deal. The Massachusetts Attorney General stated that the nation-wide settlement discussions were taking too long, but this lawsuit could prolong those discussions even more.

While it may seem like a step in the right direction to file a lawsuit and get the ball rolling against the banks, this lawsuit significantly undermined the collective process. Now, as Massachusetts moves forward with its state-specific claim, there is a distinct possibility that no national settlement will be reached until the Massachusetts suit is resolved, and there’s no telling when that could be.

In short, it seems that Massachusetts has decided to take its bat and ball and go home, and has left the rest of us standing in the field wondering what to do next.
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    First Draft is a collaborative effort between Beth and Paul Padilla, both equity partners in the firm, and is intended to give you a brief overview of current legal topics and let you know what effects those issues may have in your life.

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