On March 9, 2019, James Creedon joined Richard Cheng of DLA Piper to discuss the many legal issues to consider when starting or growing a business in the cannabis industry. This presentation, hosted by the Texas Cannabis Business Alliance, was attended by a wide variety of entrepreneurs at the Communion Neighborhood Cooperative and was divided into three sections: The first section was an overview of the current legal status of cannabis laws and regulations on the federal and state level, and included discussion of legislation pending in the U.S. Congress and the Texas legislature. The second section used an example business to walk through the immediate challenges faced by cannabis industry companies in Texas, addressing topics such as the legal status of CBD, industrial hemp farming, and the Texas Compassionate Use program. The final section identified the importance of good business practices and the use of resources such as the TCBA to connect with other industry members and start informed on changes in the law. For more information about this presentation, please contact us by email at contact@creedonpllc.com or by phone at 972-850-6864.

1. JAMES CREEDON — CREEDON PLLC
RICHARD CHENG — DLA PIPER

2. RICHARD CHENG
RICHARD.CHENG@DLAPIPER.COM
BACKGROUND
AND EXPERIENCE
ROLE AND FOCUS
IN THE INDUSTRY
HOW WE CAN HELP YOU
PROTECT & BUILD
JAMES CREEDON
JHCREEDON@CREEDONPLLC.COM

3. “CANNABIS
IS THE NEXT
GOLD RUSH” “The largest group of [legal] cannabis buyers will be in North
America, going from $9.2 billion in 2017 to $47.3 billion a
decade later.” Thomas Pellechia, Forbes.com (March 1, 2018)

4. ANNUAL
GROWTH
PREDICTIONS
ARE OVER 20%
Image and data from Arcview Market
Research in Executive Summary: The
State of Legal Marijuana Markets (5th
edition)
REVISED PREDICTIONS INCREASE
Current estimates of 2016 to 2017
growth rate average from 25% to
33%, with revised estimates of
2017 spending at $9.7 billion
LEGALIZATION MATTERS
As more states move to approve
cannabis products, spending shifts
into this sector and increases
overall market revenue

5. GALLUP POLL:
U.S. SUPPORT
FOR LEGAL
MARIJUANA
Gallup Poll results as reported by
Arcview Market Research in Executive
Summary: The State of Legal Marijuana
Markets (5th edition)
SUPPORT DOUBLES SINCE 2000
Pew Research Center Polls from
2000 to 2018 show adult support
nearly doubling from 31% to 61%.
(Last cited Pew Research Center
Poll conducted Oct. 25-30, 2017)
MILLENNIAL SUPPORT HIGHER
For those born 1981-97, support
crested 70%. Gen X (1965-80)
support is at 66%, and Boomers
(1946-64) reached 56%. (Pew
Research Center Poll, Oct. 2017)

6. LEGALIZATION
ACROSS THE
UNITED STATES
Image and state status reporting
provided by the National Cannabis
Industry Association, with data
reported and compiled by
CannaRegs, Ltd., Arcview Market
Research, and BDS Analytics
ADULT USE BROAD MEDICAL
LIMITED MEDICAL PROHIBITED

7. WHAT DOES
CANNABIS
MEAN?
Understanding the basic
terminology at the beginning will
help to frame out our discussion

8. MARIJUANA / MARIHUANA
Generally differentiated from other forms of Cannabis
by its higher THC content (greater than 0.3%)
CANNABIDIOL (CBD)
Non-intoxicant found in Cannabis (generally not under
DEA/CSA enforcement as of May 22, 2018)
THC = TETRAHYDROCANNABINOL
Intoxicant in Cannabis regulated by the Controlled
Substances Act and Drug Enforcement Administration
HEMP
Generally differentiated from other forms of Cannabis by
its low THC content (0.3% or less by 2014/2018 Farm Bill)
CANNABIS
TERMS

9. PAY ATTENTION TO LEGAL CHANGES
Federal, state, and local law all vary,
with a number of changes on the
horizon.
LEGAL
UPDATE
1

10. FEDERAL
LEGAL REGIME
TODAY
These laws change day-
by-day, so always be
certain to get the most
recent updates
MARIJUANA IS ILLEGAL FEDERALLY
The Controlled Substances Act still applies, and AG
Sessions rescinded the 2013 Cole Memo in January
2018 to lift soft restrictions on enforcement
march
9
2019
THC IS ILLEGAL FEDERALLY
The 2014 Farm Bill set the industrial hemp permissible
level of THC at 0.3%, and content above that is
prohibited overall — the 2018 bill does not change this
CBD GENERALLY NOT PROHIBITED BY THE DEA/CSA
On May 22, 2018, DEA clarified that products outside
of CSA marijuana definition (i.e. seed oil and mature
stalk extract) are not prohibited
FDA EXERTS REGULATORY CONTROL OVER CBD
FDA considers CBD to be a drug under substantial
clinical investigation which was not marketed prior as a
dietary supplement or conventional food

11. TEXAS
LEGAL REGIME
TODAY
These laws change day-
by-day, so always be
certain to get the most
recent updates
MARIJUANA IS ILLEGAL IN TEXAS
Although there is an on-the-ground trend towards
decriminalization, marijuana arrests can and do still
result in significant penalties
march
9
2019
THC IS ILLEGAL IN TEXAS
THC continues to be illegal in Texas, regardless of the
method by which it is obtained — this includes
mislabeled products
CBD IS ILLEGAL IN TEXAS
The Texas Controlled Substances Act still prohibits
CBD unless specifically approved under the terms of
the Compassionate Use Act
HEMP IS ILLEGAL IN TEXAS
Texas continues to prohibit hemp, has not submitted a
USDA hemp plan, and does not permit hemp extracts

12. MEDICAL CANNABIS
16 bills with some focusing on
establishing greater oversight
REDUCING PENALTIES
13 bills filed focusing mostly
on personal use quantities
HEMP
6 bills with focus on
occupational licenses and
oversight
OTHER BILLS
10 bills ranging from zoning to
drug testing of state
employees
FDA IS TAKING STEPS TO UPDATE CBD POLICY
• New food/drink CBD regulatory changes
planned but FDA Commissioner Scott Gottlieb
resignation makes status unclear
USDA HOLDING HEMP LISTENING SESSION MARCH 13
• Must register by March 11 at
http://creedon.link/hemplisten
BRIEF REVIEW ON
TEXAS CHANGES
TWO LEGISLATIVE PUSHES
• Secure and Fair Enforcement (SAFE)
Banking Act
• Strengthening the Tenth Amendment Through
Entrusting States (STATES) Act
CONSTITUTIONAL
AMENDMENTS
6 joint resolutions primarily on
legalization or dedication of
tax proceeds
BRIEF REVIEW ON
FEDERAL CHANGES

13. CANNABIS BUSINESS OPERATIONS
MODEL
BUSINESS
2

14. BUSINESS:
KUSHIECAKES
KUSHIECAKES is a bakery selling a four-layer brownie cake in
Dallas, which contains CBD Oil purchased from Colorado. The
owners have also begun selling hemp oil extract on the shelves, and
once a week run a holistic health session in which one of the
owners provides CBD dosing guidance for patients.

15. USE YOUR ATTORNEY AND CPA
Legal issues can be general to the business or specific to
the cannabis industry
HAVE A GOOD OWNERSHIP AGREEMENT
Make clear how everything will work in advance
DEVELOP GOOD INTERNAL PRACTICES
Cannabis businesses face complex issues which require
careful operations
BUILD THE BRAND INTELLIGENTLY
Position yourself for the future legal status of this
industry — not just the present
FORM AN ENTITY
LLC’s are most common in Texas and provide the most
flexibility
OVERALL BUSINESS PRACTICE

16. TAX ISSUES ARE SIGNIFICANT
Be aware that the financial issues in this industry are
complex and constantly changing
RISKS TO FUTURE LEGAL OPERATIONS
Future licensing may require no history of violations
REMEMBER THAT NON-CANNABIS LAWS APPLY
Providing medical advice is a serious risk
COMPLY VOLUNTARILY WITH FUTURE REGULATIONS
Set the standard now to increase opportunities later
LEGAL VS. UNCLEAR BUSINESSES
You can service the industry or be at the core — each
carries different risks
MAJOR CANNABIS ISSUES

17. FINAL
ADVICE ON
CANNABIS BUSINESSES
• GROW INTELLIGENTLY
• USE YOUR RESOURCES
• CONNECT WITH OTHERS
• EVALUATE RISK AND MAKE SMART CHOICES

18. CANNABIS
RESOURCES
WHERE TO LOOK
National Cannabis Bar Association
https://www.canbar.org
Daily Update: Word on the Tree Newsletter
https://wordonthetree.com
Marijuana Moment
https://www.marijuanamoment.net
National Cannabis Industry Association
https://thecannabisindustry.org
DEA/CSA Updates
https://www.deadiversion.usdoj.gov/schedules/marijuana/index.html
FDA Updates
https://www.fda.gov/NewsEvents/PublicHealthFocus/ucm421168.htm

19. VISIT
CREEDON PLLC
WWW.CREEDONPLLC.COM
2595 Dallas Parkway, Suite 420
Frisco, Texas 75034
972.850.6864
jhcreedon@creedonpllc.com
VISIT
DLA PIPER
WWW.DLAPIPER.COM
1900 N. Pearl Street, Suite 2220
Dallas, Texas 75201
214.743.4582
richard.cheng@dlapiper.com