Roxanne Minott

Transfer Disclosure Statement Includes Construction Defect Litigation

On July 1, 2014, the Real Estate Transfer Disclosure Statement (TDS) was modified in that it now mandates disclosures of the seller’s awareness of specific construction defect claims under Senate Bill (SB) 800. The law goes into effect January 1, 2014, and becomes operative July 1, 2014. The law is codified in Cal. Civil Code §§895, et. seq.

The TDS is a required disclosure for sales transactions concerning one-to-four residential units, with some units being exempt from this requirement. The TDS provides a description of the condition of a property, and when the property is being sold, the statement must be given to a potential buyer as soon as it is feasible to do so, and prior to transfer of title.

What Does the New Law State?

According to the new law, the modified TDS will ask whether the seller has knowledge of certain claims posing a threat to the real property. Such claims include:

  • Claims for damages by the seller due to construction defects.
  • Claims for breach of warranty.
  • Claims for breach of an enhanced protection agreement (these include claims for damages in which it is alleged that there is a defect or deficiency in the property or in the property’s common areas).

The new law also provides standards of construction defect liability for newly-built housing, and a pre-trial process for resolving disputes involving construction defect and building standards violations.

What Is Required of the Seller or Homeowner?

In accordance with SB 800, the seller or homeowner is required to adhere to a certain procedure before filing a construction defect lawsuit. The seller must provide the builder with an absolute right to repair before filing a claim with the desired effect of lessening the likelihood of litigation.

The homeowner must provide the builder with a written claim outlining the violation(s) that the builder allegedly committed. Then, the builder is required to confirm receipt of such claim, and has the right to perform an inspection of the alleged defect(s). The homeowner may then continue with the filing of a lawsuit only if the builder does not make repairs or the homeowner is unhappy with the repairs.

If the property is being sold, the seller is required to reveal to the buyer any information that could have a material effect on the value of the property. Such disclosure must be made at the time of transfer.

What Is the Implication of the New Law?

Under the new law, the seller must inform a potential buyer of any construction defect(s) on the property.  And if the seller reaches a settlement with the builder, and receives a cash award as a result of such settlement, the seller is required to disclose knowledge of the defect(s), and whether repairs were made to correct the defect(s).

For information about Roxanne Minott’s real estate practice, visit Alain Pinel Realtors.

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Matthew Izzi

Changes to California’s ADA Laws Will Result in Fewer Frivolous Lawsuits

The last few years have seen some serious changes in the law that will change how many lawsuits will be filed under the Americans with Disabilities Act (ADA). While that initially may sound unnerving, these changes are designed to deter frivolous suits and, more importantly, make the system more efficient for those with valid claims.

What Are the Changes?

Senate Bill 1186 puts forth a new process that lawyers must follow before initiating a lawsuit against a business or landlord for not being ADA compliant. Here are a few highlights:

  1. Initial demand letters for ADA compliance may no longer make requests for money.
  1. Demand letters must now include the lawyer’s state bar number, and be sent to both the California state bar and the Commission on Disability Access, who will track the complaints.
  1. For damages, plaintiffs used to be able to “stack” claims, meaning each time a person with a disability visited a non-compliant area, it would constitute a new offense. The new law offers “mitigation of damages” as a defense. Courts are now allowed to look at the reasonableness of the plaintiff’s visit and see if the plaintiff had no choice but to return to the non-compliant site.
  1. The new law also provides encouragement to building owners to take preventative measures. Under the new law, a business owner or landlord who obtains an inspection and then corrects any violations is entitled to claim special protection against a claim or complaint alleging a disability access violation. More importantly for the business owner or landlord, the statutory damages are reduced from $4,000 to $1,000 per violation.

Do These Changes Hurt the Individuals with Disabilities Filing the Suit?

This new law does not limit all damages incurred by the disabled person—including damages for injuries caused by the failure to provide access. The limitation also does not apply to intentional violations; if a business owner gets an inspection and willfully does nothing, they will be just as liable as before.

These changes were made in response to a “very small number of plaintiff’s attorneys” abusing the law by “issuing a demand for money to a California business owner that demands the owner pay a quick settlement of the attorney’s alleged claim.”

The legislature noted that this “pay me now or pay me more” approach was being “used to scare businesses into paying quick settlements that only financially enrich the attorney and claimant,” without taking any measures to assist “the disability community as a whole.”

At the core of this new law is an effort to stop excessive litigation and stop those who were abusing the laws and system as they were. That effort should make meritorious claims more likely to be heard more quickly, as frivolous or exaggerated claims will be more difficult to pursue.

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Roxanne Minott

Protection for Employees Claiming Unpaid Wages

Protection of an employee or applicant for employment who engages in protected conduct has been expanded, as of January 1, 2014. Under current law, an employer is forbidden to discharge an employee, or discriminate against an employee or applicant for employment because that employee participates in protected conduct.

Under the new law, an employer is prohibited from engaging in retaliation or harmful behavior against an employee or applicant for employment because that employee participated in protected conduct. According to the new law, protected conduct includes an employee’s written or verbal grievance that his or her employer owes him or her unpaid wages.

For instance, a former employee may decide to file a complaint with the Division of Labor Standards Enforcement, in which case, the employee is still entitled to be reinstated and to be reimbursed for lost wages and employment benefits.

What Are the Penalties for Violation of the New Law?

An employer who purposely refrains from hiring or promoting an employee, or rehiring a former employee, who is eligible to be rehired or promoted, based on the outcome of a grievance procedure or hearing, can be charged with a misdemeanor. Violation of this law by an employer will result in liability for a civil penalty of $10,000 for each employee for each violation. This penalty will be enforced in addition to any other available remedies.

Irrelevance of Employee’s Immigration Status

In enforcing labor and employment laws, an employee’s immigration status is irrelevant to an employer’s liability for retaliating against an employee. Some employers have been known to use their employees’ immigration status to prevent the employees from exercising their employment rights.

An example of such behavior was exhibited by an employer in San Jose, CA, who, according to the Labor Commissioner, owed an immigrant worker $50,000 in unpaid wages. Because the employer was dissatisfied with the ruling, the employer engaged in harassment against the worker in his home, and made threats to report him to immigration.

The new law will likely deter employers from retaliating against their employees who file claims for unpaid wages, and will prevent employers from using their employees’ immigration status against them.

Further information concerning author Roxanne Minott can be found at Alain Pinel Realtors.

 

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Matthew Izzi

How Will California’s Decision on the Death Penalty Affect Capital Punishment Nationwide?

In a recent decision, the 9th Circuit Court of Appeals overturned California’s death penalty. For the rest of the nation, a decision deeming California’s specific death penalty unconstitutional may not initially seem like big news. However, seeing as California had the largest death row population in the country, the impact from a decision like this may be huge.

It’s worth mentioning from the outset that this is not the first time California’s death penalty has had potentially crippling legal troubles. Back in 1972, a case called People v. Anderson held that the state’s capital punishment system violated the state’s ban on cruel and unusual punishment. In addition, the death penalty itself is no stranger to strong legal opposition. In the same year as the Anderson decision, the Supreme Court of the United States issued Furman v. Georgia, which called for a degree of consistency in how the death penalty is applied. The immediate effect of the decision was a moratorium on executions nationwide.

Ultimately, despite short victories, the death penalty won the war. In California, a voter initiative known as Proposition 17 reintroduced the death penalty back to the state. With 37 states adjusting their death penalty laws to comport with Furman, the Supreme Court spoke again on the death penalty in 1976 in Gregg v. Georgia. There, a series of criteria and procedural requirements had to be met before a death sentence could constitutionally be issued, but nonetheless, the death penalty was officially revived.

Since the 70s, the dialogue on capital punishment has been focused around an Eighth Amendment claim of a cruel and unusual implementation and basis. This has heightened an awareness of and objection to how capital punishment impacts certain classes of people. In some instances, it has been successful. More frequently, opposition falls on deaf ears.

What’s different about this decision, Jones v. Chappell, is it hinges on the administrative aspect of capital punishment, rather than solely the moral or equitable grounds most objections are based on. In fact, the court specifically pointed to a “systemic delay caused by the dysfunctional state review process [which] has resulted in the arbitrary selection of a small handful of individuals for execution,” as a specific reason for why the state’s death penalty unconstitutional. Indeed, in California, the average time from conviction until execution is 20 years. Moreover, there hasn’t been a single execution in the state since 2006.

While this decision may still be appealed, what it does is really incredibly significant. This decision lays the framework for an entirely new realm of constitutional objections to capital punishment systems. Rather than simply belaboring and struggling over the nuances of existing Eighth Amendment claims, it accepts those points and rules that as applied, the system still isn’t working.

Essentially, a new claim has been created; advocates may now argue, with persuasive authority – in many states, binding authority – that a specific state’s death penalty statutes are so dysfunctional, so ill equipped to handle the gravity of the task it has been created to do that it itself is unconstitutional as a cruel and unusual punishment. Think about it – being sentenced to die, but only actually having a remote possibility of a potential death at the hands of the state creates an entirely knew form of punishment that sounds as though it were created by Kafka.

Of course, the specific facts around California’s death penalty are important. California’s delays are undoubtedly unique. Nonetheless, Arizona just experienced a similar debacle when having to appeal a 9th Circuit decision and petition the Supreme Court to order that they were under no obligation to reveal the source of a drug in their execution cocktail. The company that has manufactured existing, “acceptable” execution drugs stopped doing so when they discovered what their drug was used for, and states have scrambled to use similar substances, many of which are remarkably more problematic.

Texas has reportedly had to beg Oklahoma to lend them some drugs just to keep executions moving. Moreover, when you have Judge Kozinski, the Chief Judge of one of the most powerful and persuasive circuits in our nation, calling for a return of the guillotine and firing squads to subvert the administrative mess lethal injection has posed, it’s pretty clear the entire system is crumbling.

Signs seem to indicate a breaking point in capital punishment, and for those opposed to it, this decision creates, at least for now, a pretty universal and powerful argument that how capital punishment has been conducted isn’t working. Just as importantly, it marks a clear indication that a system that delivers empty promises and bureaucracy to victims of heinous crimes is not only unfair to them, it’s unfair to us all.

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Brandon Rose

Adam Carolla’s Crowd Funding Campaign Disrupts Patent Troll’s Hopes of Easy Money

Companies who viciously litigate patents, known as patent trolls, often extract easy money by bullying startups and small businesses. In most instances, this tactic would have worked for Personal Audio. However, they evidently didn’t know what they were getting into when they brought a patent suit against best-selling author and comedian Adam Carolla…

After a year of patent litigation concerning Mr. Carolla’s popular podcast, Personal Audio offered to dismiss its lawsuit, citing business reasons. However, Mr. Carolla rejected the walk-away offer, which was conditioned on terms not publicly disclosed, vowing to continue the fight to either invalidate the patent or obtain a favorable judgment, limiting Personal Audio’s ability to assert its patent against podcasters in the future.

The litigation centers on a patent held by Personal Audio, purportedly covering “episodic content,” which was filed in 2009 to update a 1996 patent relating to the production of audiocassettes of magazine and news content distributed through the mail. Personal Audio claims that its patent applies to podcasting. Mr. Carolla has sought review to invalidate the patent.

Rather than give in to Personal Audio’s demands, Mr. Carolla used his podcast to unite fans and other podcasters against Personal Audio. Mr. Carolla sought contributions to his company’s Save Our Podcasts Legal Defense Fund through the crowd funding website FundAnything. The crowd funding campaign currently has over 12,000 supporters and has raised nearly half a million dollars.

Patent lawsuits are expensive to defend. Many startups and small businesses do not have the time or resources to engage in a lengthy court battle, regardless of the merits of the case. This has spawned a lucrative cottage industry where companies, referred to as “patent assertion entities” (a.k.a. “patent trolls”), acquire patents with the primary intent of suing or extracting licensing fees from alleged infringers. Patent trolls seek out vulnerable targets and threaten legal action or sue in the hopes of obtaining a quick settlement. Personal Audio, which produces no product or services, fits the definition of a patent troll.

Through crowd funding, Mr. Carolla has been able to fight back against the tactics used by patent trolls. Many startups and small businesses are already familiar with crowd funding. While they may not have a built-in community of fans and podcasters ready to rally to their defense, like Mr. Carolla, crowd funding may give them the ability to defend against patent suits, where they would otherwise be forced to settle early. The crowd funding platform may also weaken the patent troll’s leverage and cause them to think twice before filing suit.

Of course, before companies start crowd funding their legal fees, they should consider whether taking money from third parties would impact their ability to make decisions in their case. For example, Mr. Carolla, by earning the support of other podcasters, may feel obligated to fight not only for his company’s interests, but on behalf of other podcasts as well. Companies should also consult with their attorneys about structuring the fund so that it does not violate rules of professional conduct regarding attorney trust accounts or the payment of attorney fees by third parties.

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Matthew Izzi

New California Legislative Bills That Affect the Legal Community

This past month has seen many amendments and changes to California’s laws. While changes in the legislature are nothing new, many of the recent changes mark rather interesting and significant departures from existing laws.

Some of the More Significant Changes:

  • Personal income taxes: Among the more notable changes is a shift in the California tax code to conform to the federal tax code. This change provides for the same extension permitted under federal law, in addition to the discharge of debt for related penalties and interest. Moreover, these changes are retroactive and apply immediately.
  • Worker’s Compensation: Prior to the change in this law, California required the Administrative Director of the Division of Workers’ Compensation to establish a priority conference calendar for cases where an attorney represents the employee and the disputed issues are employment or injury. The change in the law adds additional requirements, providing for priority status in cases where the employee is or was employed by an illegally uninsured employer.
  • Concussions: The bill prohibits high school and middle school football teams of school districts, charter schools, or private schools that elect to offer an athletic program from conducting more than 2 full-contact practices per week during the preseason and regular season, as defined. The bill also prohibits the full-contact portion of a practice from exceeding 90 minutes a day, and completely prohibits full-contact practice during the off-season.
  • Family law proceedings: Prior to a change in the law, before the commencement of a proceeding for a modification or termination of an order for child, family, or spousal support, the law establishes a procedure for limited post-judgment discovery in specified family law proceedings, generally ordering the production of a completed current income and expenses declaration. This bill requires discovery to automatically reopen as to the issues raised in the post-judgment pleadings currently before the court when a request for order or other motion is filed and served, even after entry of judgment.
  • Underage drinking: This change allows a qualified student to taste an alcoholic beverage without fear of criminal prosecution under criminal law. Put simply – this change in the law allows minor students to sample alcohol, as long as they spit it out after tasting it.
  • Water Liability: The California Safe Drinking Water Act, provides for the operation of public water systems, and imposes legal duties and responsibilities on the State Department of Public Health. Prior to a change in the law, this department was required to conduct research, studies, and demonstration projects relating to the provision of safe drinking water. The change in the law exempts the following departments from liability stemming from claims prior to and during the interim operation period in Riverside County:
    • Elsinore Valley Municipal Water District
    • Eastern Municipal Water District
    • Western Municipal Water District
    • Metropolitan Water District of Southern California

Other important changes include a method of providing for video appearances by criminal defendants and a reduction in maximum misdemeanor sentence time from 365 days to 364.

Lawyers working in tax law, family law, criminal law, worker’s compensation, and governmental liability should plan to adjust any upcoming motions or hearings in accordance with these new provisions, many of which have already taken effect.

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Roxanne Minott

Extrinsic Evidence Can No Longer Alter the Terms of Trust Instruments

Prior to January 1st, 2014, the law forbade extrinsic evidence from changing the terms of a written contract. The parol evidence rule states that a court will not contemplate any evidence beyond the four corners of a written contract to change the terms of that contract. The rule previously applied only to contracts, deeds, and wills; it now applies to trust instruments.

The parol evidence rule stipulates that the terms stated in a writing that is intended by the parties to be the final version of their agreement, may not be opposed by evidence of any previous agreement or contemporaneous oral agreement. The rule also states that the terms mentioned in the writing may be explained or complemented by evidence of consistent additional terms unless the writing is also intended to be a complete and only statement of the terms of the agreement.

In addition, the rule mandates that the court decide whether the writing is intended by the parties to be a final version of their agreement regarding the terms that are included and whether the writing is intended to be the only statement of the agreement’s terms. However, there may be certain situations in which evidence is included, such as evidence of a mistake or flaw in the writing, or where the legality of the agreement is debatable. Under the law, an agreement includes deeds, wills, and contracts between parties; it now includes trust instruments.

What Are the Implications of the New Law?

The addition of trust instruments to the list of agreements affected by the parol evidence rule will help clarify the law with respect to probate and trust litigation. It will also lessen the cost of litigation and expenses in that it will dissuade parties from contesting the application of the parol evidence rule to trust instruments.

Contact author Roxanne Minott by visiting Alain Pinel Realtors.

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Matthew Izzi

Confusion over Obamacare Means More Work for Tax Lawyers

The Affordable Care Act (ACA), or Obamacare, has seen trouble since the beginning. When the Act was set in motion, the Obama administration refused to acknowledge the bill as a tax, even though many of its provisions were taxes. Only later was the Act essentially stamped as a valid exercise of the taxing power by the Supreme Court. Next, states were given the option to opt out of Medicaid provisions. Most recently, corporations may make religious objections and potentially opt out from contraceptive, and now potentially other mandates, as well.

Now, the ACA has been put under some serious tension. The D.C. Circuit of Appeals ruled that, as the ACA is written, only state-run insurance markets can offer tax insurance subsidies, leaving lower income individuals in the 36 states that rely on federally established market places high and dry. Only a few hours later, the Fourth Circuit court ruled the IRS rule allowing people to draw on the subsidies in both kinds of exchanges was a reasonable interpretation of the ambiguous language of the ACA.

This tension will likely not be resolved before next tax season. The ACA has already been a potential boon for tax lawyers, and this new split and conflict will likely lead to even more work for these practitioners.

How Has the ACA Been Beneficial to Tax Lawyers?

The ACA triggered health care providers, insurance companies, and even businesses concerned over tax penalties and implications to hire lawyers and firms specializing in tax. Moreover, some provisions have been postponed with respect to certain employers, and as well those that raise equity concerns, such as the “Cadillac Tax,” which is levied against providers whose plans exceed a certain threshold amount. This list of provisional nuances abounds, and each new ambiguity is an instance where the advice and counsel of a tax lawyer has been, and would be, extremely beneficial.

Over the last few years, the lawyers that may have benefitted the most from the over 2,400 new pages of federal legislation have been those in-house or associated with big firms. However, the recent changes may see small and solo practitioners experienced an influx of business as well.

How Will This New Tension Create Work for More Tax Lawyers?

This new tension creates an interesting dilemma; pay the ACA premiums without subsidies, that were initially promised and actually provided for by the law but are now potentially null with respect to 36 states, or face the tax penalty, which slowly increases over the years at a sliding scale. While tax preparation software and companies are a dime a dozen these days, none of them could reasonably be expected to contest a fee for opting out of coverage, and certainly could not be expected to write a demand letter, let alone get litigious over the matter.

Small and solo practitioners who are experienced with tax law may soon see an opportunity to represent middle America while this tension gets worked out, and potentially find further opportunities in the event it does not.

After all, even with the subsidies provision of the ACA being shot down (or even upheld), the bill isn’t going anywhere. This means businesses and individuals alike will need to start factoring requirements into their tax planning, and potentially brace for more changes to the law. Who better to handle those issues for individuals and small businesses than the lawyer who helped manage their initial dispute with the IRS when subsidy issues were being settled?

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Kristen Johnson

Injured on Someone Else’s Property? How Much You Recover May Depend on Your “Category”

When you get injured on someone else’s property, you may be wondering whether or not you should be stuck with your own medical bills.  Before you can decide if you are even entitled to damages, you must figure out if the owner or person in control of the property where you were injured owed a duty of protection to you with regard to the safety of the land.  These obligations depend entirely on the type of person that is on the property.  The different categories of people are invitees, licensees, known trespassers, and unknown trespassers, and a different level of protection against harm is owed to each one by the person that owns, rents, or leases the property.

The lowest level of protection is owed to unknown trespassers, which is no protection at all. Unknown trespassers are people that come onto someone else’s property and that person has no reason to know that they are there.  One example of an unknown trespasser would be a random person walking around a house in a low-crime neighborhood to “case it” with the intention of breaking in later.  The property owner does not owe a single effort of protection to this kind of trespasser.

Unlike unknown trespassers, known trespassers are owed a level of protection, though property owners only need to protect them against man-made conditions that they actually know about.  Known trespassers are people that come onto a person’s property without anyone’s permission, but whose presence is reasonably foreseeable.  This type of trespasser includes anyone that goes onto land where there are signs posted that state “No Trespassers Allowed” because these people are known to come onto the property from time to time.  Property owners and others that are in control of the property owe these known trespassers a duty to protect them only from relatively hidden man-made dangers, such as sprinkler heads that are not visible to the naked eye.

The next level of protection for visitors to another’s property is given to licensees.  Property owners give people that are licensees permission to be on their property, but the people that are visiting are not on the property to provide a benefit to the owner.  Instead licensees are people such as friends that come over to watch the Super Bowl on TV.  For these people, property owners owe a duty to protect them from any dangers that the owner knows about, regardless of whether they are man-made or are just occurring naturally, so long as they are not obvious dangers.  This means that property owners are responsible for warning licensees about the patch of quicksand that just happens to exist in their yard, but not about the giant hole in the middle of their living room floor.

Finally, the most protection is owed to invitees, who are sometimes referred to as business invitees.  An invitee goes onto another’s property in order to give a business benefit to the owner, like shopping at a store, or to enjoy the property if the property is opened to the public, such as a museum.  Property owners need to make sure that their property is reasonably safe from danger for invitees.  If the harm cannot be eliminated, then there needs to be adequate warning provided, such as those “Slippery when wet” signs that you see on the floor.

Keep in mind that if you were a licensee or an invitee originally, but then you went beyond the part of the property that you were invited to, then you may only qualify as a known or unknown trespasser.

With all of these different categories in mind, you can now decide what kind of duty the landowner owed to you when you were injured on their land. Once you have the duty figured out, then you can determine if they are liable for damages that you suffered.

By: Kristen Johnson, LegalMatch Staff Writer

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Jason Cheung

Qualifying For California’s Medical Marijuana Defense

Marijuana is a harmless substance. Marijuana, in fact, demonstrates anti-cancer properties, making marijuana healthier than other legal drugs, like tobacco.  Although the state of California continues to prosecute innocent people who use, possess, grow, or transport marijuana, the citizens of California recognize that marijuana does have many medical benefits.

In recognition of marijuana’s ability to relieve pain, California voters passed Proposition 215. Proposition 215, also known as the Compassionate Use Act (CUA), is an affirmative defense to the charges of possession and cultivation of marijuana. The California Legislature later amended the CUA to include the transportation of marijuana.

As an affirmative defense, the CUA does not actually prevent patients from being arrested. The CUA prevents a patient from being prosecuted for possessing, growing or transporting marijuana. In order to present the CUA defense though, the patient must have a doctor’s recommendation. This recommendation does not have to prescribe a specific amount of marijuana, but it should state that the patient requires medical marijuana and it should also be signed by the physician.

The only other requirement for a medical marijuana defense under California law is that the defendant be a patient afflicted with a serious illness. Serious illness includes AIDs, cancer, and/or severe chronic pain, among other conditions. The defendant’s condition would be established through the doctor’s recommendation and/or testimony.

Alternatively, the defendant could also be the primary caregiver to a patient and still qualify for the CUA defense. In order to be a primary caregiver though, the defendant must consistently give care to a seriously ill patient, independent of any assistance with medical marijuana before the marijuana was prescribed.

The defendant cannot qualify as a primary caregiver if the defendant does not provide for the patient’s basic survival needs or if the defendant’s only purpose as a caregiver is to give marijuana to the patient.  Giving marijuana to the seriously ill patient must be only one aspect of the defendant’s care to the patient in order for the defendant to be considered a primary caregiver in compliance with the Compassionate Use Act.

Although the CUA is an absolute defense to certain charges, the CUA does have limitations. First, the CUA only applies to the personal possession, cultivation, or transportation of marijuana. If the defendant is charged with another marijuana crime, like a DUI or intent to sell marijuana, then the CUA cannot be used. Finally, the CUA is only a state law. If the federal government is prosecuting the case, then the CUA cannot be used.

Despite the limitations, the Compassionate Use Act represents significant hope for seriously ill Californians. The CUA may not stop patients from being arrested, but it can keep patients out of California’s overcrowded prisons.

By: Jason Cheung, LegalMatch Staff Writer

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