Jessica McElfresh, Cannabis Attorney in CA- Interview Series

We also need to remember that even in states with legal cannabis, people of color are still far more likely to be searched, stopped, or otherwise harmed on suspicion of violating cannabis laws.  Legalization has reduced arrests and searches tied to cannabis overall – but that reduction has not been evenly shared, and people of color remain far more likely to be stopped, searched, or arrested for cannabis offenses.  We need to keep talking about that and working to change it.

– Jessica McElfresh

I could offer you “7 key reasons why you need an attorney for your cannabis startup.” But if you have been in the business for some time, you have probably found yourself in a situation where you needed to call upon a legal eagle.

The highly regulated marijuana industry is governed by laws that keep mutating. A good attorney should be conversant with the nuances of this industry including licensing, zoning, employment, land use, and everything that has to do with regulatory compliance. There are not many lawyers who are willing to associate themselves with the uncertainties of this fledgling industry. It takes a rare breed, and Jessica McElfresh fits that tab perfectly, its been twelve years and counting in cannabis law.

Attorney Jessica McElfresh is a successful defense attorney who has been at the forefront of marijuana legalization in California. She uses that passion and skill to represent people at all stages of the state’s legitimate marijuana market. We spoke to her to gain an understanding of what it takes to be a successful attorney in the cannabis industry.

Welcome Jessica.

As an intro, how did your career path lead you to the cannabis industry?

It was early in my career change.  I graduated from law school during the Great Recession, and the plan I had originally had for myself – working as a prosecutor – was not open then.  Based on my time as an intern, I had already realized that I likely belonged in a different place.  I was working in criminal defense when another lawyer suggested looking into cannabis law since I had shown some interest.  After further interest and research, I jumped in with both feet, and I’ve never looked back.

 Tell us more about your role as a California- based cannabis attorney.

I began working in cannabis law back when it was medical cannabis law, we had little direct regulation at the state level, and most local governments throughout the state would even consider talking about licensing medical cannabis collectives.  What laws we did have for medical cannabis were based on an affirmative defense to criminal prosecution for a variety of felonies and misdemeanors.  Since I began working in medical cannabis law in 2010, I’ve worked for local regulation, represented collective operators and qualified patients in criminal court, obtained some of the first licenses for medical cannabis retailers in the City of San Diego and other cities, co-authored three successful local ballot initiatives to license cannabis businesses, and more.  Today, I focus on state and local licensing for cannabis businesses throughout the supply chain and the state and regulatory compliance and license defense.  The main part of my job has not changed: I still wake up focused on helping clients follow state and local law – and now regulatory guidelines – and translate those laws into a clear path for compliance.

You have invested over a decade to offering cannabis legal expertise. What has been the most rewarding aspect of your career in the industry?

I’ve had the good fortune of seeing many of my clients achieve what they set out to do: survive and then thrive in a risky, highly competitive, and rapidly changing industry.

Even in states where cannabis is legal, things are not where they should be. For example, being found in possession of a single blunt could cost you your job. What can be done to make things easier for regular marijuana users?

For people living in states with legal cannabis, laws that protect them – at least for state-based employers and with appropriate exceptions for safety-sensitive positions – from being fired for consuming cannabis legally during their off-hours.  Unfortunately, some people in states with legal cannabis are still receiving unfair and unwarranted attention from child protective services.

We also need to remember that even in states with legal cannabis, people of color are still far more likely to be searched, stopped, or otherwise harmed on suspicion of violating cannabis laws.  Legalization has reduced arrests and searches tied to cannabis overall – but that reduction has not been evenly shared, and people of color remain far more likely to be stopped, searched, or arrested for cannabis offenses.  We need to keep talking about that and working to change it.

The legal marijuana industry is beset with several constraints. What do you think of the hefty licensing fees, fines, and taxation in the industry?

Legalization is an experiment in real-time, with real people and consequences when mistakes occur.  In California, cannabis taxes are almost always too high.  High taxes are making it impossible for some licensed businesses to survive because taxes and operating costs make turning a profit impossible in a competitive market in which many consumers – who want to buy legal cannabis – cannot afford to do so and turn to the unregulated black market, which can easily undercut the legal one.  This won’t change, even if we could rapidly increase the number of licensed retailers statewide in California until the state, and many local governments, reduce cannabis taxes.

Some local jurisdictions have reduced tax rates already.  For example, the City of San Diego just approved reducing the local tax rate for cannabis cultivators, manufacturers, and distributors from 8% to 2%.  Costa Mesa and Long Beach had already made similar changes.  At the state level, reducing taxes is taking longer for both political and legal reasons.  In California, the passage of Proposition 64 in 2016 means that the Legislature could amend the cannabis tax laws only with a two-thirds majority.  I’m guardedly optimistic that California will enact some tax relief this year for cannabis businesses.  If they fail to, many in the legal industry – especially small to mid-size operators – will be forced to close.

For someone looking to venture into the cannabis space, what are some of the bottlenecks that they are likely to come across when applying for a license?

First, surviving local licensing.  The majority of jurisdictions in California still do not allow local cannabis businesses, especially retail.  This relative lack of licenses means that applicants face fierce competition for licenses and properties, all of which make costs balloon.  Second, having enough funds.  Those who succeed and get a license will face a longer cash burn before becoming profitable than many want to believe.  Third, scaling a steep learning curve.  Licensed cannabis businesses must hire and pay more sooner than many other growing businesses.  Cannabis licensees must comply with complex and evolving regulations, particularly at the state level.  They face much higher tax bills than those in other industries.  And, all licensees are competing with each other in this pressure-cooker environment.

What’s the inspiration behind your cannabis advocacy efforts?

Some days, I get to believe that my work with licensed businesses is overall reducing cannabis stigma and making some contribution to societal change on cannabis.  But, most days, I’m proud and inspired to help my clients and their employees succeed and enjoy greater legal, and hopefully long-term financial, security.  I’m also inspired by how much still needs to be fixed.  From too-high taxes to not-enough licenses statewide, the cannabis industry has a lot to improve to ensure its future success.  As for social reform and beginning to address the harms of the War on Drugs, including making more licenses available to equity applicants, we have barely scratched the surface.

It was an honor to pick the mind of this seasoned cannabis attorney. Thanks Jessica for according us the opportunity. Those who want to find out more about Jessica’s legal services can check out her website.