Authored By: Jerald S. Chesler, Esq.

Jerald S. “Jerry” Chesler, Esq. is a nationally respected medical marijuana (MMJ) business attorney from Arizona. Jerry is a Founding Member of the National Cannabis Industry Association (NCIA), a Founding Director of the Arizona Cannabis Bar Association and an editor for the National Cannabis Law Journal. He lectures nationally on taxation, banking and finance in the cannabis industry.

After closing his cannabis law practice, Jerry spent two years as General Counsel and VP of Cannabis Operations for a publicly traded company (American Green, Inc. OTC: ERBB) He left American Green to open Chesler Consulting in order to create private equity ventures in the cannabis space. Jerry continues to advise law firms, business operators and investors about the cannabis industry.

 

The Arizona Court of Appeals recently issued a ruling in the case State of Arizona vs. Jones. (No. 1 CA-CR 16-0703) This ruling states that the Arizona Medical Marijuana Act (“AMMA”) does not protect concentrated cannabis resin, specifically hashish. The case is heading for appeal at the Arizona Supreme Court, but it has sent shockwaves through the Arizona medical marijuana (“MMJ”) industry.

In March 2013, Jones was found in possession of a jar containing 0.050 ounces of hashish. At the time, Jones was a registered qualifying patient using marijuana for medicinal purposes. Jones was later indicted on one count each of possession of the narcotic drug cannabis and possession of drug paraphernalia — the jar containing the cannabis. He moved to dismiss the charges, arguing the indictment was deficient as a matter of law because his valid AMMA card provided an absolute defense.

The motion was denied following an evidentiary hearing. The majority’s theory is that extracts of cannabis resin are “cannabis”, a narcotic drug, rather than “marijuana” that is protected by the AMMA. This is based on a definition contained in the criminal code.

The Court noted: Hashish is widely recognized as “‘the resin extracted’ from the marijuana plant.” State v. Bollander, 110 Ariz. 84, 87 (1973). Cannabis is defined within the criminal code as “[t]he resin extracted from any part of a plant of the genus cannabis, and every compound, manufacture, salt, derivative, mixture or preparation of such plant, its seeds or its resin,” and “[e]very compound manufacture, salt, derivative, mixture or preparation of such resin or tetrahydrocannabinol.” A.R.S. § 13-3401(4).

The parties disagreed as to whether hashish is included within the AMMA’s immunities. Jones argued that hashish is a preparation of the marijuana plant and, because he possessed less than 2.5 ounces of hashish, he was immune from prosecution for its possession. The State argues possession and use of cannabis is not protected by AMMA because it is neither marijuana nor a preparation thereof, but “is merely [the] separati[on] [of] one part of the plant from another.”

The State argued that by not specifically including extracted resin within its description of immunized marijuana, AMMA adopts the “preexisting law distinguishing between cannabis and marijuana.” The majority of the Court agreed. It deferred to the statutory definition of cannabis as “technical words” to be construed according to such peculiar and appropriate meaning from the criminal statute.

The crux of the dissent is that the statutory definition of “marijuana” from the AMMA is controlling. That definition includes “all parts of a plant of the genus cannabis”. Regardless of the criminal definition that treats extracted resins as narcotic drugs, the dissent correctly points out that “resin is apart of the plant, just as sap is a part of a tree.” Therefore, it is protected by the AMMA, despite the language of the criminal code.

As the AMMA was the result of a voter initiative, rather than imposed by the legislature, I believe the intent of the voters should be determinative. As the technical definition of “cannabis” from the criminal statute is not consistent with its common or scientific usage, I do not believe the voters intended that definition to apply. I believe the decision is likely to be reversed.

Regardless of its wisdom, Jones currently is the law of the land in Arizona unless and until it is stayed or overturned. Mr. Jones is appealing the decision and a number of advocacy and industry groups already are working on funding, amicus briefs and strategies to support the appeal.

At this point, some of the dispensaries have taken a stand and issued policies indicating that they are keeping all products except hashish on the shelves. So far, no aggressive county attorney has decided to raid a dispensary over this issue. So it remains mostly business as usual in Arizona.

The greatest risk is to the MMJ patient/customer populations. Regardless of their status as MMJ patients, they may be prosecuted for “possession of narcotics” if they are arrested with any extracted products. This is a particularly egregious result if the extract was legally purchased at a dispensary.

Arizona MMJ has become a big business, a significant employer and source of tax revenue. Therefore, I am optimistic that the current Jones ruling will not hold up or be in effect for long. Legislative action is unlikely, but not out of the question. However, there may be more headlines before this matter is resolved.