“I am a farmer,” says Jon Piasecki, co-owner of Wiseacre Farm in West Stockbridge, Massachusetts. “I have cattle, sheep, pigs, donkeys, goats, chicken. I grow vegetables. I also grow cut flowers in the form of cannabis and I’m damn good at it.” Wiseacre Farm, a state-licensed outdoor cannabis farm, is in its first growing season. The recently expanded farm now cultivates 4,000 plants on just over two acres of the 100,000-square-foot farm. “This is a tough business,” says Piasecki. “But I believe that this plant will help our people, as it has for thousands of years, and our economy. So I’m devoted to it.”
Wiseacre is one of four cannabis businesses and investors that filed a joint lawsuit against Attorney General Merrick Garland in the US District Court of Massachusetts in October. The plaintiffs allege that outdated federal laws impede their ability to operate their businesses—which are legal in Massachusetts but illegal federally—resulting in unfair burdens that harm their businesses and threaten public safety.
In 2008, Massachusetts decriminalized the possession of small amounts of marijuana, and in 2012, it became one of the first states to legalize medical marijuana. The state further embraced cannabis reform in 2016 when voters approved the recreational use of marijuana for adults. The first recreational dispensaries opened in 2018, allowing adults aged 21 and older to purchase and use cannabis for non-medical purposes. In 2019, the same year that Wiseacre set up shop, award-winning and woman-led Massachusetts retailer, Canna Provisions, opened its first location in Lee, expanded to Holyoke, and created a craft cultivator in Sheffield a year later. “We want to see cannabis as an industry thrive, be treated fairly, and have access to more than just checking and savings accounts,” says Meg Sanders CEO of Canna Provisions.
Wiseacre Farm, Inc., Canna Provisions, Inc., courier service Gyasi Sellers, and multi-state operator Verano Holdings Corporation, are represented by the prominent law firm Boies Schiller Flexner.
Lawsuit
The complaint, filed as Canna Provisions, et. al. v. Garland claims that the federal government has no basis for enforcing the 1970 Controlled Substances Act against intrastate, state-regulated cannabis operations. “While Congress has authority to ban marijuana from interstate commerce, it has no general police power over marijuana grown, transported, and distributed in intrastate commerce,” the complaint states.
Enacted as part of the broader effort to address drug abuse and the illicit drug trade in 1970, the Controlled Substances Act allowed the federal government to establish marijuana as a Schedule I Controlled Substance—like heroin and ecstasy. Thus, cannabis businesses regulated by the state are still classified as federally illegal. Furthermore, the lawsuit alleges the ability of the federal government to regulate lawful businesses encroaches on states' rights. The businesses argue that the outdated law and structure of the industry as it stands now, impedes their ability to safely “manufacture, distribute, or dispense” marijuana, even in intrastate commerce,” the complaint says.
The crux of their argument hinges on a 2005 Supreme Court ruling (Gonzales v. Raich), which determined that Congress, with the goal of eradicating cannabis from interstate commerce, possessed a rational and lawful purpose in intervening in state-level cannabis regulation.
However, the complaint highlights that over the past 18 years since that decision, Congress and the Executive Branch have abandoned any intention to "eradicate" marijuana.
The businesses hope to convince the court that the Controlled Substances Act is unconstitutional at the state level where marijuana is regulated and legal and is unnecessarily burdening both large and small businesses operating legally in the state of Massachusetts.
There are many prospects that cannabis may be federally legal at some point soon, most recently President Biden’s marijuana reform executive order of 2022, when he pardoned thousands of people convicted of marijuana possession and claimed he would look into the de-scheduling of marijuana as a Schedule I drug. The plaintiffs in the suit however, including Sanders, feel jaded. “We’ve heard time and time again that something might happen, but so far no one has delivered,” says Sanders.
It’s important to note that in 2005, the last time the Supreme Court heard a case involving the Controlled Substances Act, there weren't any state-regulated cannabis businesses. Today 38 states have legalized cannabis in some form, either medicinally or for recreational use.
The Health of the Industry
At the end of August, the Massachusetts’s Cannabis Control Commission released a report showing that adult-use cannabis in Massachusetts had the reached $5 billion mark in gross sales—a feat that took just eight months after reaching the $4 billion-dollar mark. That’s the shortest amount of time it’s taken any Massachusetts business to gain $1 billion dollars in sales, according to the commission.
Not so fast says Sanders. “Everybody sees the revenue numbers, but it doesn’t talk to the health of the industry,” says Sanders, who’s been in the industry since 2009 and is one of the few female CEOs in cannabis. “I appreciate that people think we’re crushing it,” she exclaims. “We’re not. Because it’s really hard and really expensive.” According to Oregon-based Whitney Economics, only 24 percent of marijuana companies nationwide are profitable.
“But these numbers show that people want safe access to cannabis,” says Sanders. “They want to be able to go to a store and purchase weed legally. Ideally digitally as with everything else.” Sanders hopes that a successful lawsuit will allow cannabis businesses to accept credit cards, something currently unavailable to them because credit card companies like Visa and Mastercard will not work with cannabis businesss.
Most conventional vendors for payroll, security, insurance, and banking, Sanders says, are not available in the same way to cannabis businesses as they are to other small businesses, resulting in Sanders and Piasecki having to make alternative arrangements.
“What is the most basic thing that employees want?” asks Sanders. “They want their paycheck to be accurate. They want their W2 on time. They want all the things normal businesses take for granted.” But because large payroll services like ADP won’t touch cannabis, companies are forced to use smaller, start-up-type services. “It’s sort of a duct-tape approach,” says Sanders.
Luckily, both Sanders and Piasecki have been able to find banks, payroll companies, and other necessary services to operate, but this doesn’t come without a price. “Everything is just 10 times as expensive and takes three times as long as it would if we were treated like the legal businesses that we are,” says Wiseacre co-owner David Jadow. When businesses do decide to work with those in the cannabis industry, there’s something called a “green tax,” according to Piasecki. “Businesses are taking a risk when they work with cannabis. So some see it as an opportunity and take advantage of the fact that we otherwise wouldn’t be able to do business without their services. They upcharge our businesses at every turn.”
One of the biggest dangers for cannabis businesses and those who consume their product is having to operate in cash which the lawsuit claims is threatening public safety. “The fees paid to avoid literally the most dangerous part of the business, cash, are incredibly high,” says Piasecki. Currently, Wiseacre pays $2,000 a month to be able to access a business checking and savings account.
The plaintiffs claim they are also excluded from various federal initiatives, such as small business loans and normal and ordinary tax deductions available to other businesses are not available to cannabis businesses based on the steep tax consequences applied to cannabis businesses based on their illegal status at the federal level.
Punitive Tax Measures
Section 280E of the federal tax code—which prohibits tax deductions for businesses that traffic controlled substances—is one of the biggest barriers cannabis companies face to being successful, according to Sanders. “Unlike other businesses outside of cannabis, we can’t write off any business expenses, including salaries and benefits, and other normal expenses any business would accrue,” says Sanders. “We end up paying tax rates close to 74 percent of our bottom line.”
Another hurdle farms face is access to land. Cannabis farms like Wiseacre do not have the same access to land as all other farms and Piasecki claims that farmers, who are already struggling, have had to turn down business with him and others because he grows cannabis. “We can't access any land that’s insured by the government. We can’t touch anything with a conservation easement, and any farmer who draws crop insurance from the government cannot work with us. If we do, they are in violation of the Controlled Substances Act.” “I want to be able to farm my crop just like any other farmer in the state,” says Piasecki.
Unlike any farm in the United States, Cannabis farms in Massachusetts and other similarly regulated states must adhere to a strict seed-to-sale tracking program. “We are at all times subject to inspection by the Cannabis Control Commission. The level of control is high” says Piasecki. This heavily regulated process, according to Piasecki and Jadow underscores part of the complaint in the lawsuit. With this tightly controlled program already in place, the lawsuit claims, “Congress’s inaction in updating legislation is undermining Massachusetts and other state's abilities to regulate.”
“Now that there are elaborate and tightly controlled state programs for regulating marijuana it’s different than it was years ago when the Controlled Substances Act maybe did make sense to be applied uniformly,” says Jadow.
Community
Wiseacre and Canna Provisions are considered champions of their communities. They care about their employees and want to continue to contribute in a positive way. The plaintiffs in the lawsuit are committed to working with those who have been disproportionally affected by the war on drugs, but the complaint highlights that the current laws are making it harder for this work to happen.
This fall Canna Provisions was awarded Corporate Citizen of the Year by the Lee Chamber of Commerce—the first time the 100-year-old chamber voted for a cannabis company. The Chamber acknowledged Canna Provisions’ commitment to “giving back to the community without having to be asked.” Canna Provisions supports local events, offers job training, works on public safety issues with the town, and participates on various community boards.
During the harvest season, Wiseacre is the largest employer in the town of West Stockbridge. Piasecki offers his employees a highly competitive $25-an-hour wage, flexible hours, and lunch every day during the harvest season. “People need jobs, reliable jobs, and we have them,” says Piasecki.
“Similar to other businesses, people who are coming to Lee or Holyoke to buy products at Canna Provisions are also going to be spending money elsewhere in the community like restaurants and shops,” say Sanders. “Just like other businesses, cannabis businesses are contributing positively to the community and to society. Now we want to be treated like all other small businesses.”
Stigma and A Misunderstood Drug
Both Sanders and Piasecki entered this industry after realizing the potential healing abilities the plant might offer people. Piasecki, a former award-winning landscape architect and Cornell-trained plant scientist and botanist, first was introduced to the medicinal benefits of the plant when he was looking for relief from a stonemason career that had been tough on his body. Sanders, a former compliance officer for a small family firm in Colorado, witnessed those around her healing. “I learned about the plant through people who were suffering, and watching parents and children deal with unbelievable health challenges. Those with multiple sclerosis, veterans experiencing PTSD, chronic pain, anxiety, or simply replacing alcohol with cannabis all benefit.”
But the stigma is still there and the plant is still misunderstood. “The stigma that starts at the federal government ramifies all the way down into the state and community levels,” says Piasecki.
“I wish we as a society could be a little more forward-thinking,” says Sanders. “If we are successful I’m thrilled to be a part of it. If we fail, I’m thrilled to be a part of this lawsuit too. This is a journey. This isn’t a stop. I believe in safe access to plant-based wellness. I’ve seen with my own eyes what this plant can do for people. Cannabis conversations are won one conversation at a time. One person at a time.”
The US District Court of Massachusetts has 60 days to respond from when the lawsuit was filed.
