How to make cash with cannabis? How to do well with weed? Let us presume our world is all Canadian, where marijuana has been legalized. Then the chief questions are what products (recreational? Medical? pharmaceutical?) might be produced, sold domestically, imported, or exported and what can we discern about the value of market opportunities, apparent or latent, thus far. If we add to our world the US -- where 10 states (or so – the numbers are dynamic) have legalized recreational usage of pot and 33 states (same qualification) have legalized medical use of pot, and many states and the national government continue to impose criminal penalties on the use and trafficking of pot – the picture muddies. How handle payments receipts for a pot business if banks will not accept deposits or provide checking services? How finance production if banks will not lend? How can lenders who, ignoring other risks, want to lend, properly price the credit when federal bankruptcy courts may be closed to borrower entities? And what legislative changes are likely on the federal and state levels? Sure BlackRock is investing in cannabis businesses, but should accredited investors? Is bitcoin a more predictable play? To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/making-cash-with-cannabis-2020/

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5. Disclaimer
The material in this webinar is for informational purposes only. It should not be considered
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6. Meet the Faculty
MODERATOR:
Chris Cahill - L&G Law Group LLP
PANELISTS:
Jonathan Loiterman - Green Star Growing, Inc.
Logan Leichtman - Lotus Law Group
Joshua Bauchner - Ansell Grimm & Aaron, P.C.
Jesse Bontecou - Oregon Retailers of Cannabis Association
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7. About This Webinar – Making Cash With Cannabis
How to make cash with cannabis? Let us presume our world is all Canadian, where marijuana has
been legalized. Then the chief questions are what products (recreational? Medical?
pharmaceutical?) might be produced, sold domestically, imported, or exported and what can we
discern about the value of market opportunities, apparent or latent, thus far. If we add to our world
the US -- where 15 states (or so – the numbers are dynamic) have legalized recreational usage of
pot and 35 states (same qualification) have legalized medical use of pot, and many states and the
national government continue to impose criminal penalties on the use and trafficking of pot – the
picture muddies. How handle payments receipts for a pot business if banks will not accept deposits
or provide checking services? How finance production if banks will not lend? How can lenders who,
ignoring other risks, want to lend, properly price the credit when federal bankruptcy courts may be
closed to borrower entities? And what legislative changes are likely on the federal and state levels?
Sure BlackRock is investing in cannabis businesses, but should accredited investors? Is bitcoin a
more predictable play?
7

8. About This Series – Hot Topics 2020
You know that weed has gone mainstream when bright-faced MBAs and JDs euphemize ganja with its
scientific name of “cannabis.” Mary Jane will likely become legal throughout the US before consumers
fully adopt blockchain-based cryptocurrencies as a means of obscuring their purchases of bud. By then,
digital assets that go way beyond cryptocurrencies, such as “coins” and “tokens” (which also reside on
blockchain), and which represent unregistered or even registered securities in, say, Thai stick, may
diversify a standard G-man’s investment portfolio. Is this the dawning of the Age of Aquarius? Maybe.
This webinar series introduces blockchain, cannabis, and digital assets as new realities and
opportunities.
Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and
executives without much background in these areas, yet is of primary value to attorneys, accountants, and other
seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to
entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that
participants will enhance their knowledge of this area whether they attend one, some, or all episodes.
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9. Episodes in this Series
#1: Blockchain Basics
Premiere date: 10/8/20
#2: Making Cash With Cannabis
Premiere date: 11/5/20
#3: Digital Assets
Premiere date: 12/3/20
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10. Episode #2
Making Cash With Cannabis
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11. State Legalization of Marijuana
• Legal for medicinal purposes in 35 states and Washington D.C., plus 4 of the 5 U.S.
territories
• 15 of those states (AL, AZ, CA, CO, IL, ME, MS, MI, MT, NJ, NV, OR, SD, VT, & WA) and
Washington D.C., the Northern Marianas, and Guam permit marijuana for recreational
purposes
• See “Legality of Cannabis by U.S. Jurisdiction,” Wikipedia at
https://en.wikipedia.org/wiki/Legality_of_cannabis_by_U.S._jurisdiction
(visited Nov. 4, 2020)
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12. Federal Legalization of Hemp
In 2018, Congress passed and the President signed the Agricultural
Imrpovement Act of 2018, which removed "hemp" -- defined as cannabis
products with less than 3% THC on a dry weight basis -- from the definition
of marijuana under the Controlled Substances Act
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13. Federal Criminal Law
• Under the Controlled Substances At, 21 U.S.C. §§ 801-971, it is, with respect to
marijuana, a crime to:
 Grow it
 Process it
 Sell it
 Knowingly rent, manage, or use property for the purpose of manufacturing, distributing
or using it
 Sell or offer to sell drug paraphernalia [including any equipment, product, or material of
any kind which is primarily intended or designed for use in manufacturing it]
 Derive profits or proceeds from violating the CSA
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14. The Supremacy Clause
• Constitution of the United States, Article 6, Clause 2:
 This Constitution, and the Laws of the United States which shall be made in Pursuance
thereof; and all Treaties made, or which shall be made, under the Authority of the United
States, shall be the supreme Law of the Land; and the Judges in every State shall be
bound thereby, any Thing in the Constitution or Laws of any State to the Contrary
notwithstanding.
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15. Federal Non-Enforcement of CSA by Statue
• The Rohrabacher–Farr amendment became law in 2014 and prohibiting the Justice
Department from spending funds to interfere with the implementation of state medical
cannabis laws. It does not change the legal status of cannabis and must be renewed each
fiscal year in order to remain in effect. Currently effective through Dec. 11, 2020.
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16. Federal Non-Enforcement of CSA by Policy
• The Cole Memorandum was issued by the United States Attorney General in 2013 to US
Attorneys stated that the Justice Department would not enforce federal marijuana prohibition
in states that "legalized marijuana in some form and ... implemented strong and effective
regulatory and enforcement systems to control the cultivation, distribution, sale, and
possession of marijuana," with certain exceptions.
• The Cole Memorandum was rescinded by Attorney General Jeff Sessions in 2018
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17. Cannabis: An Episode of Federalism
• U.S. federalism divides power between the national government and the States, with the
U.S. government being supreme in many areas
• Marijuana legalization has been led by state laws
• Some say that federalism is bad because it frustrates the application of uniform national
law
• Some say that federalism is good because it frustrates the application of uniform national
law
• Ron Swanson of Parks and Recreation and thoughtful libertarian constitutionalists may
well argue that State legalization of marijuana in the face of a federal ban represents the
finest traditions of federalism
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18. Cannabis Law Changes Brewing in the U.S. Congress
• The STATES Act (“Strengthening the Tenth Amendment Through Entrusting States”)
would prevent the application of the Controlled Substances Act to persons complying with
state law re manufacture, production, possession, distribution, dispensation, administration, or
delivery of cannabis; and would exempt funds from legal cannabis businesses from the
definition of “specified proceeds of illegal activity” under money laundering laws
• The MORE Act (“Marijuana Opportunity, Reinvestment & Expungement”) is to be voted
on by the HOR perhaps in late 2020, would remove marijuana from the list of controlled
substances
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19. Cannabis as a Business: What to do with Empty
Shopping Malls?
• Fulfillment centers (i.e., distribution centers)
• Paintball ranges
• Indoor golf
• Wiffle Ball stadia
• Grow cannabis !!!!
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20. Cannabis, Inc.: Hitting the Big Time
• Curaleaf Holdings Inc., which runs dispensaries in most states with legal weed, had a
$2.3 billion market cap in 2019, now $5.36 billion
• US multi-state operator Green Thumb Industries had a $2.7 billion market cap in 2019,
(now $3.49 billion) and has vertically-integrated operations across many states, including
retail dispensaries and cultivation and processing facilities for medical and recreational
markets
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21. Cannabis, Inc.: Hitting the Big Time (Big Name
Executive Talent)
• Parallel (fka Sunterra Wellness) sells medical and wellness products containing
marijuana:
Its finance head is Fareed Khan, former Kellogg Co. CFO
 Its CEO is William Wrigley, Jr., formerly chairman and CEO of the famous gum and
confectionary
 Ed Brown, former CEO of Patron Spirits Co. is another senior executive
See www.liveParallel.com
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22. Cannabis, Inc.: Burgeoning
*Retail sales of Marijuana in the US: $0.4bn in 2014, $1.5bn in 2016, $4.4bn in
2018, $6.35bn in 2019
*Federal and state tax revenue from legal cannabis in the US: $0.75 in 2017,
$2.27bn in 2020 (est.)
Dwight K. Blake, Marijuana Statistics 2020, Usage, Trends and Data, viewed at https://americanmarijuana.org/marijuana-statistics/
(visited Nov. 4, 2020)
22

23. Cannabis Business Travails: Banks and Taxes (A
Conundrum)
• All businesses must pay applicable state and local taxes, including federal income taxes
• Very few state or federally charted banks of credit unions will take deposits from
marijuana-related businesses
• State and local taxes can be paid in person, in cash; but the IRS does not accept cash
payments – must be check or wire transfer
• NEVERTHELESS, in 2018 the IRS collected $2.8 billion in taxes from regulated cannabis
businesses
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24. Cannabis Business Travails: Secured Lending
• Even assuming that lenders are not worried about losing their charters because they are
handing lucre from crime (and they are):
 Difficult for lender to understand nature and risks of underlying collateral and security
interests; including what assets can be used to secure the loan, and the value of such
assets in post-default liquidation
 Lender could take a lien (mortgage, deed of trust) on real property
 But liens on goods, accounts, inventory, permits and licenses, and intellectual
property?
 Permits and licenses to grow, manufacture, or sell marijuana and related products
may be non-transferable (so how foreclose upon and then sell?), or if transferable, may
require cooperation for debtor to transfer them
24

25. Cannabis Business Travails: Secured Lending
• What is the value of the marijuana inventory in foreclosing lender’s hands, if possessing
and selling it requires a license the lender does not or cannot hold?
• And even if lender could get it sold, it would have to be sold within the state – no national
market, no crossing state lines (federal law in that regard may well be enforced) or
international borders (will be enforced).
• And even with regard to possessing and selling marijuana in the state, a lender cannot
expect that collateral to be protected by crop insurance: nearly impossible to obtain
25

26. Cannabis Business Travails: Secured Lending
• Accounts: how lender get control by control agreement when receipts are not kept in
banks?
• IP: trademarks and patents are protected at the national level by federal law, and
marijuana is illegal under federal law, the USPTO has rejected overwhelming majority of
marijuana-related trademark and patent applications it has received.
• Perennial risk of seizure of the collateral, should federal policy shift
See Frank A. Segall, Scott Moskol, and Joshua Robinson, “Is the Time Ripe for Lending to Marijuana-Related
Businesses?”, Journal of Corporate Renewal (May, 2019) pp. 20-14.
26

27. Cannabis Business Travails: Trade Credit
• Trade credit largely unavailable for cannabinoid and hemp transactions, let alone
marijuana transactions
• Supply chain is on a cash basis – consider that for a moment: how can that work?
27

28. Cannabis Business Travails: Business Finance
(Bankruptcy)
• Lenders need collection risk predictability in default situations, including bankruptcy
• In Garvin v. Cook Invs. (In re Cook Invs., et al) 922 F.3d 1031 (9th Cir. 2019), the Court
affirmed a bankruptcy court’s order confirming a commercial landlord’s chapter 11 plan that
received at least indirect support from a tenant in the marijuana business
• Section 1129(a)(3) of the Bankruptcy Code forbids confirmation of a plan that is proposed
“by any means forbidden by law”
• The plan provided that secured creditors would be paid by funds from non-marijuana-
related tenants, though the debtor would receive rent payments from a marijuana-related
tenant
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29. Cannabis Business Travails: Business Finance
(Bankruptcy), Cont'd
In In re Way to Grow, Inc., 610 B.R. 338 (D. Col. 2019), the debtors -- sellers of
hydroponic agricultural equipment -- appealed the bankruptcy court’s dismissal of
their bankruptcy petition because the overwhelming majority of the products sold
were to cannabis cultivators
The appeal: but the Agriculture Improvement Act of 2018 legalized hemp and most
of the products were sold to hemp producers!
That is, can a company with some income from cannabis be allowed to file for
chapter 11 bankruptcy protection if it can fund its reorganization without cannabis-
derived income?
29

30. Cannabis Business Travails: Business Finance
(Bankruptcy)
• In Garvin, the United States Trustee (USTR, a watchdog in bankruptcy cases) had
objected to the plan
• It is USTR policy to so object, based on two principles:
 The bankruptcy system may not be used as an instrument in the ongoing
commission of a crime and reorganization plans that permit or require continued
illegal activity may not be confirmed
 Bankruptcy trustees and other estate fiduciaries should not be required to administer
assets if doing so would cause them to violate federal law
• Clifford J. White III and John Sheahan, “Why Marijuana Assets May Not be Administered
in Bankruptcy,” American Bankruptcy Institute Journal (Dec. 2017), p. 34-35.
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31. About the Faculty
31

32. About The Faculty
Chris Cahill - ccahill@lgcounsel.com
Christopher Cahill is Head of the Bankruptcy and Restructuring Practice Group at Lowis & Gellen LLP, in
Chicago. He advises businesses on relationships with vendors, customers, and lenders, to maximize
market share, return, and liquidity. He also litigates on behalf of secured creditors, trade creditors, and in
chapter 11 cases and advised more generally on corporate restructuring, including workouts, loan
forbearance, assignments for the benefit of creditors, UCC Article 9 foreclosure sales, and avoidance
litigation.
Mr. Cahill also publishes and speaks frequently on commercial insolvency and commercial transaction
issues. He is an Executive Editor of Commercial Bankruptcy Litigation, 2d Edition (Jonathan P. Friedland,
Elizabeth Vandesteeg & Christopher M. Cahill eds., 2020), a comprehensive treatise that is updated
annually and published by Thomson Reuters. In addition, Mr. Cahill is the host of Financial Poise Radio,
a weekly interview and commentary podcast for investors and other market participants, with 100
episodes and counting.
32

33. About The Faculty
Jonathan Loiterman - jonathan.loiterman@gmail.com
Jonathan Loiterman is the Chairman & CEO of Green Star Growing, Inc., a licensed cannabis
grower, processor, and wholesaler in Oregon. Mr. Loiterman is licensed as an attorney in
Illinois and Oregon and has served as a past Chairman of the Illinois State Bar Association’s
Health Section Council as well as a member of the Oregon Liquor Control Commission’s
Cannabis Advisory Board.
33

34. About The Faculty
Logan Leichtman - logan@lotuslawgroup.com
Logan Leichtman focuses his practice on real estate, land use and regulatory compliance for
the cannabis industry. During law school, Logan interned for state representative Ken Helm.
The two published a paper in the Willamette Law Review about the implementation of
recreational cannabis legislation in Oregon. Logan served as editor-in-chief of Willamette Law
Online and also as an editor of Willamette Law Review. Logan previously practiced at Emerge
Law Group in Portland. Prior to law school, Logan worked as a video editor and post-
production coordinator with credits including content that has aired on HBO, CNN, BBC and
MTV. He originally cut his teeth in entertainment as a concert producer, having put on
hundreds of shows in venues throughout the state of Virginia.
34

35. About The Faculty
Joshua Bauchner - jb@ansellgrimm.com
Joshua S. Bauchner is a partner with the Firm and Co-Chair of the Litigation Department,
head of the Cannabis Law Practice Group, and a member of the Community Association Law
and Bankruptcy practice groups. His areas of concentration include complex commercial,
class action, bankruptcy-related, and securities litigation, including: enforcing commercial
lease agreements, guaranties, purchase and sale contracts, and commission agreements;
litigating partnership disputes; defending against class-actions arising from alleged violations
of consumer protection and related statutes; litigating claims arising from bad faith denial of
insurance coverage; and defending against commercial foreclosure actions.
To read more, go to: https://www.financialpoise.com/webinar-faculty/joshua-bauchner/
35

36. About The Faculty
Jesse Bontecou - jesse@oregoncannabisretailers.com
Jesse Bontecou has been heavily involved in managing electoral and issue campaigns in
Oregon for the past 13 years. He has worked with over 100 campaigns and has been
responsible for creating and running some of the most successful voter contact and volunteer
programs in the country. His long list of personal relationships with elected officials and
staffers is a great asset to ORCA. A proud Reed College alumni, he specializes in messaging,
compliance, operational planning.
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37. Questions or Comments?
If you have any questions about this webinar that you did not get to ask during the live
premiere, or if you are watching this webinar On Demand, please do not hesitate to email us
at info@financialpoise.com with any questions or comments you may have. Please include
the name of the webinar in your email and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes
only. It has been prepared primarily for attorneys and accountants for use in the pursuit of
their continuing legal education and continuing professional education.
37

38. About Financial Poise
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