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The fallout after Sessions’ anti-states’-rights posture on marijuana

(BUSINESS NEWS) What are politicians saying and how will cannabusinesses fare as US Attorney General, Jeff Sessions takes a hardline stance against marijuana use and sales.

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“What is a legacy? It’s planting seeds in a garden you never get to see.” —Hamilton, “The World Was Wide Enough”

It’s not uncommon to see policies changed from one Presidential administration to another, as each tries to shape the nation, and, ultimately, their legacy, in the way that makes the most sense to them and their party. However, what is somewhat uncommon is to see a President tacitly approving a major shift in policy (and perhaps practice) that potentially negatively affects not only a growing business segment in multiple states, but also flies in the face of promises made on the campaign trail and angers members of his own party who see it as a rise in the overreach of federalism.

Late last week, Attorney General Jeff Sessions rescinded a memo regarding federal levels of action regarding marijuana issued by former Attorney General Eric Holder’s Justice Department. The memo, which dated back to the Obama presidency, provided states with autonomy regarding the legalization of marijuana, and kept federal prosecutors at bay, for all but the most serious of marijuana-related crimes, such as drug trafficking across state lines or selling to minors. For a brief history of how marijuana legislation state-by-state came to be, check out a great overview at Vox.

Sessions, however, views marijuana as a gateway drug, the state legalization of which has not only flouted federal law, but also created a potential for higher rates of impaired driving, greater appeal to youth, as well as a black market for marijuana in states which neighbor those where marijuana is legal. Advocacy groups, such as Smart Approaches to Marijuana, join Sessions in his concern and welcome a potential return for marijuana to fall under federal enforcement.

While Sessions has taken the step of rescinding the prior guidance on the issue for federal prosecutors, there has yet to be a directive as to just how active enforcement on marijuana will be. While some say that the new direction will give prosecutors the ability to go after high profile cases that states are loath or unable to prosecute, others within the Justice Department point to a department strapped for resources, and highlight opioid abuse and human trafficking as remaining front and center on the minds of the prosecutors.

On the campaign trail, then-candidate Trump promised that he would leave marijuana legislation in the hands of the states, a position that echoed with his Republican base.

Looking at the matter as a states’ rights issue, rather than a federal problem, providing states greater autonomy to appeal to their citizens/voters to solve their local problems removes federal overreach – a key campaign point of President Trump and platform point for the Republican Party.

Indeed, the sudden move by Sessions appears to have caught many key Republican politicians off guard, but ready to strike back. Senator Cory Gardner, a Republican from Colorado, promised to block appointments for key Justice Department positions until Sessions relents and restores the previous policy.

Don Young, a Republican Representative from Alaska, in speaking to the Associated Press, noted that the legalization of recreational marijuana sale had been approved by the voters from the individual states and they, as Congressmen, had a duty to act, saying, “Congress is the voice of the people and we have a duty to do what is right by the states.”

Coming on the first day that recreational marijuana was to be made legal for sale in California, Sessions’ shift had the effect of disrupting a growing business segment as well: Cannabusinesses and those industries that have grown to meet their needs, such as bankers and security forces.

What to do with the proceeds from cannabusiness has always been a slippery argument. Banking, which is regulated by both the states as well as the federal government, has had no assurances that federal enforcement of banks and credit unions which accept funds from the sale of marijuana would be exempt from prosecution.

Indeed, industry giants such as Wells Fargo, which had initially tried to get a large portion of the market share have pulled out completely, leaving smaller firms, such as Colorado’s Safe Harbor Private Banking, to bear the burden and potential for prosecution for crimes ranging from money laundering to racketeering. On the heels of Sessions’ announcement, cannabusiness stocks slipped sharply as well.

As the Trump presidency finds its legacy forward, balancing between states’ rights, law and order, and the best use of federal resources, it should consider the fruits that previous Prohibitions have borne.

Making alcohol illegal in the United States from 1920-1933 had the net effect of increasing the reach of organized crime and the spread of bathtub gin. The war on drugs in America, including on marijuana since 1937, has had similar results: a large amount of money spent to negligible gain.

The National Review points out that police departments nationwide made nearly 575,000 marijuana-related arrests in 2105 alone(nearly 70,000 more than for all categories of violent crime combined). In combating the effects of foreign drug cartels, they note the work of a Mexican think tank who estimated that legalization of marijuana nationwide in the United States would have the effect of crippling the Mexican drug cartels financially, reducing their intake by $1.6 billion (or 80 percent) annually.

For today, however, there is no talk of decriminalization, much less legalization nationwide, and the states whose voters approved the legal sale of marijuana in their borders are somewhat in limbo. Despite the uncertainty, there is a spirit of optimism that the status quo won’t change as much, and that the move was designed to reflect posturing on the part of the Sessions-led Justice Department.

Washington Governor Jay Inslee, whose state was one of the first to legalize marijuana in 2012, said that things would go on as usual, stating that “[w]e should, in my book, not push the panic button on either …individual lives or …businesses.”

Roger is a Staff Writer at The American Genius and holds two Master's degrees, one in Education Leadership and another in Leadership Studies. In his spare time away from researching leadership retention and communication styles, he loves to watch baseball, especially the Red Sox!

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1 Comment

1 Comment

  1. TheSophist

    January 9, 2018 at 10:34 pm

    Silly post. Neither the Attorney General nor his boss the President make laws. Hence, they can’t make marijuana legal or not legal. Congress does that. That various Republican congresscritters are now talking about legalizing pot is precisely the way it’s supposed to work.

    I prefer if the Executive Branch doesn’t get to pick and choose which laws it will and won’t enforce, and the legislature is forced to make and repeal laws that the people want and do not want. YMMV.

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So the Labor Department is cool with unpaid internships again

(BUSINESS NEWS) Regulations on unpaid internships continue to wax and wane, and businesses that opt to use unpaid labor should be aware of new regulations.

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Unpaid internships are a deacreasingly common institution in the United States, with help from former regulatory attempts to make them more difficult to create.

That regulatory oversight might become more relaxed after the Department of Labor (DOL) issued new rules under the Fair Labor Standards Act (FLSA) that governs the role of unpaid internships in the modern American workforce.

Last week, the United States’ labor governing body decided to revise its guidelines on unpaid internships using the concept of a “primary beneficiary test.”

The core principle behind the seven statements that comprise the primary beneficiary test revolves around the idea that the reason you are hiring unpaid interns is for work that provides the intern with the primary benefit (educational opportunities, hands on learning, and networking), not because the company isn’t paying someone else to perform the same activities.

So with these guidelines, there’d be no more call for jokes about interns fetching coffee or making copies. Sounds like a win for the intern, right?

Not exactly.

The guidelines stress, however, that there is no magic quota of yes or no answers that yields the unpaid intern in question has job duties that would require payment. That even includes answering “no” to the statement that reads: “the intern and the employer clearly understand that there is no expectation of compensation.”

Of course, if a company were in violation of these guidelines, especially the one regarding compensation, it would be easier for adjudication to be brought against the company into a court of law. These rules start as the groundwork for any legal action interns can bring against an organization.

The first set of six guidelines were developed in 2010. By 2011, a lawsuit brought by unpaid interns against Fox Searchlight while working Darren Aronofsky feature, Black Swan, claiming the interns were performing job duties in need of compensation (read: they weren’t already paying employees to do the same roles, rather using interns as free labor).

The ruling in 2013 was in favor of the interns, but a different federal court reversed that decision in 2015. It is interesting to note that the revised guidelines published by the DOL only a week ago were derived from the Court’s 2015 decision on this case.

The larger trend of lawsuits brought by unpaid interns may cause a company pause if they reverse decisions about payment of employees.

Despite the judicial onslaught, some organizations may still choose to pursue unpaid internships in light of the relaxation of the guidelines by the DOL.

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Starbucks’ Teavana chain finally settles lawsuit with Simon Property Group

(BUSINESS NEWS) A bitter battle over store closures concludes with private settlement – and Teavana stores are still closing.

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A months-long legal fight between Starbucks’ Teavana and Simon Property Group, the number one mall operator in the U.S., has come to an end with a private settlement that reportedly allows the tea chain to move forward with some of its store closures.

In July 2017, Starbucks unveiled plans to close all 379 retail locations of its floundering Teavana stores.

Shortly thereafter, Simon Property Group got a local judge to bar Starbucks from closing the 77 Teavana locations in its malls, a peculiar legal move for this situation. Starbucks would be breaking its lease agreement with Simon, and Simon wasn’t going to stand for it.

Simon Property Group cited the ongoing financial plights traditional malls have experienced for years as more and more retailers shut their doors as its primary reason for blocking Starbuck’s actions. The difference with Teavana is that Starbucks isn’t under great financial stress and can actually afford to keep the stores open, per court documents.

Starbucks disagreed, but in November, a judge sided with Simon and ordered Starbucks to keep its Teavana stores open and not break dozens of leases nationally. Starbucks fought back with a December appeal, but the case moved up to Indiana’s highest court, bypassing the intermediate Court of Appeals.

And now, before Starbucks’ appeal could be heard, the dueling companies have apparently reached an undisclosed settlement, according to New York Post reports. Exact settlement details have not been revealed, but the Post has found at least two Teavana locations that are closing in just a few days, indicating that settlement may play out in Starbucks’ favor.

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Zillow sued for concealing Zestimates on certain listings

(BUSINESS NEWS) Zillow being sued for Zestimates is nothing new, but they’re now being accused of concealing Zestimates on “Co-Conspirator Broker” listings, violating federal Antitrust laws.

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From our real estate section, The Real Daily:

The latest Zillow legal troubles again surround their Zestimates; this time they are being sued for their Zestimates violating federal Antitrust laws. The company has allegedly violated and continue to violate Section 1 of the Sherman Act, 15 U.S.C. § 1 and the New Jersey Antitrust Act, N.J.S.A. 56:9-3.

Plaintiff, EJ MGT LLC, based in New Jersey, filed suit again Zillow Group Inc. and Zillow Inc. today. In a 21-point legal brief outlining their specific violations, two things become immediately clear (assuming of course there is truth in these allegations): Zillow is giving preferential treatment to preferred brokerages (labeled ‘co-conspirator Broker[s] in the lawsuit) and Zestimates are wildly inaccurate (as many have adamantly stated since Zestimates’ conception).

The first few points of the brief explain exactly what Zillow is being accused of doing: “this antitrust action arises from Zillow’s conspiracy with certain real-estate brokerage companies to selectively conceal ‘Zestimates.’” Zillow’s estimate of a residential property’s “fair market value” which the lawsuit states they know “to be inaccurate,” have allowed “only select brokers to conceal the display of Zestimates on their listings to the exclusion of the general public.”

The lawsuit goes on to state that “these agreements between Zillow and certain co-conspirator brokers of residential real estate restrain trade (read: the agents/brokers being allowed to conceal unwanted Zestimates, henceforth referred to as ‘Co-conspirator Brokers’) and deprive Plaintiff and the public in general of the benefits of open and robust competition in two markets: the residential real estate market and the residential real estate brokerage market.”

In essence, Zillow and the Co-conspirators Brokers have made an illegal agreement regarding the display of Zestimates on Zillow’s site.

Zillow has long touted their Zestimates as a “user-friendly format to promote transparent real-estate markets and allow people to make informed decisions;” except Zestimates are often believed to be inaccurate and now they’re being concealed at the request of a select group of Co-conspirator Brokers – a far cry from making real estate more transparent.

If the lawsuit’s claims have any validity behind them, it seems as though Zillow may be in for a bumpy ride. Item 10 in the suit states, “Zillow has acknowledged that it conceals Zestimates as a result of agreements with only ‘certain brokers’ who receive ‘certain treatment’” and uses a message screenshotted from Zillow’s Help Center as proof these words were in fact used to explain why some listings had prominent Zestimates while others did not:

You may be wondering what brought about this lawsuit; it seems Plaintiff, EJ MGT LLC, owns and is marketing a property located in Cresskill, New Jersey, through an agent unaffiliated with Zillow (not a Co-Conspirator Broker). Therefore, their listing contains a prominently displayed Zestimate, while a similar listing in nearby Alpine, New Jersey, which is listed through a “Co-conspirator Broker,” conceals the Zestimate:

The above example is not the only one outlined in the case, however. Item 12 of the lawsuit states that further evidence can be seen by comparing a residence page for a property while it was listed with a Co-conspirator Broker versus the same residence page once the property was off the market. One clearly conceals the Zestimate, while the latter displays it clearly underneath the listing price.

For reference, the Co-conspirator Broker listing was screenshot on December 26, 2017 and the screenshot after it was taken off the market with the Zestimate was taken on January 2, 2018. Merely a week in between images, and yet the difference of how the ad is displayed is quite apparent:

In essence, Zillow has violated the very transparency they claimed to create.

Zillow is allegedly promoting misleading and inaccurate information while using their marketing power to charge brokers to hide this information which could negatively impact a sale, and which Zillow itself has acknowledged is sometimes inaccurate.

Also, general members of the public have no way to prevent Zillow from obtaining and posting information in this way, and it cannot be altered without hiring a Co-conspirator Broker, as Zillow has explicitly refused to offer the option to hide information to individual home owners, further deepening the dependency on Co-conspirator Brokers.

Because of their alleged refusal to treat everyone equally and “empower homebuyers with information,” they have potentially restrained trade in connection with the exchange of information regarding home valuation and offered anti-competitive benefits to only those brokers chosen to purchase that ‘special’ service package from Zillow that removes Zestimates from listings.

Therefore, brokers are not on even footing: when a seller attempts to price check; the brokers without it could be losing out to those who have the ‘special’ package and removal of Zestimates alongside listing prices.

So far, each individual Co-conspirator Broker has not been named; they have been named as a group: Sotheby’s International Realty, Inc., Coldwell Banker Real Estate LLC, Century 21 Real Estate LLC, The Corcoran Group ERA, and Weichert Realty, according to court documents. It is unlikely that any action would ever impact the brokerages, rather Zillow Group itself.

Zillow is being sued for five counts: two counts of conspiracy to restrain trade, one count of violating the New Jersey Consumer Fraud Act, one count of slander of title/product disparagement, and one count of interference with prospective economic advantage. A jury trial has been requested.

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