Leah Heise, cannabis executive discusses the Supreme Court’s latest decisions and their potential impact on the cannabis industry.
Leah Heise is an experienced executive, regulatory attorney, and business innovator. She served as an integral part of the pioneering first wave of growth of regulated cannabis, from its origins as a legacy and activist-driven enterprise to a billion-dollar legal industry. As the Founder & CEO of Gemini Twin Consulting, she guides cannabis and other business operations through complex issues including scaling, infrastructure, compliance, licensing, and IPOs – all while maintaining her personal mission of creating an inclusive environment for all.
An accomplished C-suite veteran, Leah’s previous positions include Ascend Wellness Holdings (CAO), Women Grow (CEO), 4Front Ventures (CXO), and Chesapeake Integrated Health Institute (President). She has successfully exited four companies – two through acquisition, one which created a more than a 10x return for investors, and two through IPO. At Ascend, where she served as the Chief Administrative Officer, Leah’s focus on building scalable infrastructure assisted the company in growing its human resources from 73 employees to more than 1,300 in less than 18 months, and from $19M in revenue in 2019 to a $1.6B market cap on IPO in May of 2021.
We were given a chance to interview Leah and get her views on what today’s SCOTUS decision means for cannabis. Read on to get insights on this wonderful interview.
Ganjly: Leah, as a former regulatory attorney and cannabis executive, how do you view the potential impact of the Chevron decision on the cannabis industry?
Leah Heise: There are pros and cons to this decision for the cannabis industry. From a Chevron deference standpoint, it was always a question of what side of the table you were on whether you loved it or hated it. If you were inside an agency promulgating regulations and enforcing those regulations, Chevron deference was a boon. If you were a respondent fighting an enforcement action or a complainant challenging a regulation, Chevron deference was a hindrance. Ultimately the retraction of Chevron is in line with the argument that the government frequently overreaches in its application of regulatory authority. What does this mean for cannabis? It could be a great thing, again, depending on what side you are on. We know we are overregulated and overtaxed. Perhaps there is now a pathway to alleviate some of this.
Ganjly: Can you explain how the Chevron decision might affect the rescheduling of cannabis and the broader implications for administrative law interpretations within the industry?
Leah Heise: My concern is that absent Chevron’s deference, Agencies will take longer to move regulations forward. This would apply to Rescheduling. We have been so hopeful as an industry that Rescheduling would happen before the election. I’m not sure that the DEA will be eager to move quickly even with a push from the Administration. If it does go through, which I hope, the litany of lawsuits that will arise will take years to wind their way through the courts. In terms of administrative law interpretations within the industry, the Looper decision (the overturning of Chevron) did leave intact some level of deference for administrative law interpretations. If a statute is explicit, deference still exists. There are also lower levels of deference that still exist under earlier cases, e.g., Skidmore, which grants deference to the courts to defer to an agency’s interpretation of informal documents (like guidance memos). We will be looking at years of lawsuits winding their way through the judicial system as all of these areas are explored on a case-by-case basis.
Ganjly: With the Chevron decision in mind, what risks do you foresee for the FDA’s recent interpretation that seeds are not covered by the CSA?
Leah Heise: That interpretation may be covered by a lower standard of deference like Skidmore. As long as the FDA has a thorough, consistent approach it would be a good argument for upholding it.
Ganjly: Regarding the SEC v Jarkesy decision, can you elaborate on why you believe this will flood the courts with lawsuits and what this means for cannabis businesses?
Leah Heise: In the SEC v. Jarkesy, SCOTUS invalidated the SEC’s ability to bring civil penalty cases before an Administrative Law Judge asserting that it was a violation of due process because the Agency was the investigator, prosecutor and judge. Future cases of this type, which are quicker via a civil penalty action, will now have to slog their way through the judicial process for a jury trial. Because the decision wasn’t limited to the SEC, any civil penalty action brought by an agency may have to go to the judicial branch. The judicial branch is overwhelmed already with cases. Adding civil penalty cases to the mix will be even more burdensome. The argument that having investigators, prosecutors and judges all inside of one body is unconstitutional is not new. This has been debated since the New Deal. There have been proposals to create a separate circuit specifically designed for civil penalty cases. This has not happened to date. For cannabis, a clogged court system will further slow down judicial relief. If this ruling trickles down to the states, and their processes follow the Federal government, we may see challenges to fines and penalties issued by Cannabis Agencies pushed to jury trial as well. Right now, we have to wait and see.
Ganjly: How might the SEC v Jarkesy decision set a precedent for border control actions, such as seizing legally produced cannabis products from states where it is legal?
Leah Heise: This analysis of this issue would require a look into the authority of enacting legislation for Border Control. If it is explicit, there may be no ability to attack it. That said, I have always believed that Civil Asset Forfeiture matters are ripe for reconsideration by the Supreme Court because they place the burden of proof on the party from whom cash or product was seized rather than on the seizing party. There is a very low standard of proof in these cases. Have you ever known someone who was going to use cash to buy a car, only to have that cash seized? Very, very rarely can you get that money back.
Ganjly: What potential benefits do you see from the SEC v Jarkesy decision for the cannabis industry, particularly in terms of enforcement actions?
Leah Heise: If there is a trickle-down effect to the states, we may see less enforcement actions from state regulators. Depending on where you sit, this may or may not be a good thing.
Ganjly: How do you think the requirement for claims to go through the court system rather than agency enforcement might change the landscape for cannabis businesses?
Leah Heise: There is a potential cost implication here. Attorneys will need to be retained at a much higher cost and for a longer period of time to successfully navigate these cases.
Ganjly: What steps should cannabis businesses and stakeholders take to prepare for the potential legal and regulatory changes stemming from these Supreme Court decisions?
Leah Heise: We live in a very highly regulated environment. Cannabis companies should be hiring smart professionals who can not only watch and read the trends of what is occurring on a local, state, federal and international level, but also utilize those professionals in strategically assessing where they may need to pivot and react. It is too early to say where the industry will be impacted, but someone should be watching and identifying potential opportunities and risks to these businesses. For smaller businesses that can’t afford huge legal bills, join your local cannabis group and be active.
Ganjly: In the long term, how do you see these decisions shaping the future of cannabis regulation and the industry’s ability to adapt and thrive?
Leah Heise: I believe we will see more methodical, reasoned regulation designed to survive judicial scrutiny which is a good thing. As to the industry’s ability to adapt and thrive…no industry is more scrappy than cannabis. We live for the pivot and are nimble enough to do it. We are a group of entrepreneurs who are willing to risk everything to see this plant to legalization. This may be a bump in the road, but never count cannabis out.
Thank you, Leah, for taking the time to do the interview. We appreciate it!
Leah also serves as a Constellation advisor to Kearney, a top-tier CPG and transformative management consulting firm interested in bringing their operational expertise to cannabis. Additionally, she is also a Strategic Advisor and part owner in Safe Arbor (a pre-market contactless delivery system) and ProCanna (a software platform providing compliant, operational efficiencies to the industry).
