Cannabis Industry

July 30, 2025July 30, 2025 by Michael D. Schwamm

NY OCM Issues Key Correction on 500 Foot Distance School Zone Requirement

The New York Office of Cannabis Management (OCM) has issued a significant correction to its previous guidance on how to measure the required 500-foot distance between retail cannabis dispensaries and schools. This change has immediate and potentially wide-ranging implications for both pending applicants and currently licensed dispensaries across New York State.

Prior Guidance
OCM had long advised applicants that the 500-foot proximity restriction should be measured in a straight line from the center of the nearest school entrance to the center of the dispensary’s main entrance—only considering entrances regularly used by patrons. In addition, this rule applied only when the dispensary and school were located on the same street or road.

Updated Measurement Standard
OCM recently stated that this method was incorrect and inconsistent with Cannabis Law § 72(6) which states that “No cannabis retail licensee shall locate a storefront within five hundred feet of a school grounds as such term is defined in the New York Education Law or within two hundred feet of a house of worship.” Section § 409(2) of the Education Law defines “school grounds” as “any building, structure and surrounding outdoor grounds, including entrances or exits contained within a public or private pre-school, nursery school, elementary or secondary school’s legally defined property boundaries as registered in a county clerk’s office.”

Reading the two sections together, OCM has adopted a revised standard that requires the licensee to measure a straight line from the dispensary entrance to the nearest point on the school property line —regardless of whether they are on the same road. This new and broader interpretation significantly expands the areas considered off-limits.

Current Impact
According to the OCM, the revised guidance will affect the following applicants/licensees (subject to change upon further analysis) :
• 44 pending applicants whose proposed locations may now be noncompliant.
• 108 licensed dispensaries.

Over 80% of the affected parties are in New York City, while the remainder are spread across the rest of the State.

OCM Support for Applicants and Licensees

The applicants that don’t comply with the distance requirements must find new, compliant locations to proceed with their applicants.

To assist affected applicants, OCM and Empire State Development have created a $15 million Applicant Relief Program to help cover:

Costs of finding a new location.
Capital improvements made to the original (now non-compliant) location

Applicants may receive provisional licenses while they secure new locations.

Support for Licensees

For those affected licensed dispensaries, many of which already operating, the Governor’s Office and OCM are pursuing legislation to allow these businesses to remain at their current locations.

However, as there is the risk this legislation may not pass and OCM cannot renew licenses at locations that do not comply with the new interpretation of Cannabis Law § 72 (6), licensees will need a new compliant location before the Cannabis Control Board can finalize license renewal.

July 22, 2025July 22, 2025 by Tim Stafford

After Texas Governor Vetoed the Total Ban, Low-THC Consumables May Stay on Shelves

Discussions on SB 5 (Formerly SB 3) Began Today in Texas’ 89th Legislature 1st Special Session

Minutes before the June 22, 2025 deadline, Texas Governor Greg Abbott surprised many by vetoing Senate Bill 3—the proposed ban on all consumable hemp products containing THC.

The veto is a major victory for Texas’s booming hemp industry, estimated to be worth $5.5 billion. “Senate Bill 3 is well-intentioned,” Governor Abbott said, but the bill went too far, presenting “valid constitutional challenges.” He emphasized the need for legislation that can withstand legal scrutiny in his veto proclamation: “Allowing Senate Bill 3 to become law—knowing that it faces a lengthy battle that will render it dead on arrival in court—would hinder rather than help us solve the public safety issues this bill seeks to contain.” Governor Abbott acknowledged the many Texan businessowners that invest millions to responsibly grow, produce, and market safe products for adults. Noting that Texas needs to add regulations to ensure safety, Governor Abbott added SB 3 to the top of the Special Session’s agenda.

In response to the veto, Lieutenant Governor Dan Patrick, a supporter of SB 3, has not backed down from his stance against hemp products, accusing Governor Abbott of wanting to “legalize recreational marijuana” and signaling that he will push for a ban again during the Special Session. Senator Charles Perry, who authored SB 3 & SB 5, acknowledged that Governor Abbott “raised some legitimate concerns.” However, Senator Perry expressed optimism, saying he has “all the confidence in the world” that the Special Session will “alleviate and address [Abbott’s] concerns.”

Industry leaders, however, welcomed the veto. Heather Fazio, director of the Texas Cannabis Policy Center, called Abbott’s decision “a win for freedom and free markets” specifically because the hemp-derived products industry in Texas supports over 8,500 retailers and generates $3.5-8 billion annually. Jonathan Miller, general counsel for U.S. Hemp Roundtable, called the veto “a seminal moment for hemp farmers and businesses across the country.”

Texas’ Legislative Special Session started yesterdat and can last up to 30 days. During the Session, the legislators may only work on the governor’s agenda items. Fortunately for hemp businessowners and consumers, the legislators who fought against a total ban have a second bite of the apple.

Duane Morris LLP will continue to monitor and provide updates on the status of SB 5.

May 23, 2025May 23, 2025 by Tim Stafford

Texas House Changed SB 3 Dramatically… before a Late-Night Amendment Slashed it to Match Senate’s Version for Approval

The complete ban on consumable hemp will soon head to Governor Abbott’s desk and go into effect September 1, 2025.

Two months and three public hearings lead to an SB 3 that still allowed the sale of consumables with 2018 Farm Bill-levels of THC, excluding vapes. The House Committee on State Affairs, chaired by the author of its version of SB 3 Rep. Ken King (R-88) aimed to regulate low-THC hemp, rather than ban it.

“I read about the 1920s. I don’t think Prohibition worked in [the] 1920[s]. It’s not gonna work in [the] 2020[s].”

Rep. King offered his counter option after considering the failure of Prohibition in the United States. As advocates and businessowners in the hemp industry started to believe that the House would pass the “regulation instead of elimination” version of SB 3, however, Rep. Oliverson (R-130) introduced an amendment that set SB 3 back to its original, senate-approved form. The amendment bans consumable hemp with any trace of THC.

“As a physician, I cannot in good conscience support a system where Texans self-medicate with unregulated, inconsistent and highly potent intoxicants.”

Rep. Oliverson was met with over an hour of discussion, during which many members stated plainly that Texans will still have options for hemp and cannabis if a total ban is approved—but those options will be found underground and from the illicit market.

According to Rep. James Talarico (D-50), “This ban is a gift to the cartels.”

Rep. Talarico was a final speaker in opposition before the third and final vote to approve SB 3. After discussing how helpful SB 3 will be to cartels, he stressed the importance of legal hemp to adults looking to relax, seniors looking to manage chronic pain, and veterans looking to manage symptoms of PTSD. Despite Rep. Talarico’s message, House Representatives approved Rep. Oliverson’s amendment before approving the final version of SB 3 with a 95-44 vote. Though SB 3 will travel through the Senate again because of the addition of a “stair-step” approach to enforcement and punishment, its original author, Senator Perry (R-28) announced his support for the minor changes while Lieutenant Governor Dan Patrick thanked the House for approving the bill and “protect[ing] Texas children and adults.”

We will continue to monitor and provide updates on the status of SB 3, particularly as businesses and industry leaders begin responding to the new law.

May 13, 2025May 9, 2025 by Duane Morris

Webinar Replay: Rescheduling vs. Decriminalization – The Movement for Cannabis Legalization and Its Impact on Today’s Market

A replay of Rescheduling vs. Decriminalization – The Movement for Cannabis Legalization and Its Impact on Today’s Market is now available for viewing.

April 22, 2025 by Duane Morris

Legal Yet Unbankable: Inside The $100 Billion Underserved Market

Duane Morris partner Joseph Silvia is quoted in the Forbes article, “Legal Yet Unbankable: Inside The $100 Billion Underserved Market.”

Across the U.S., thousands of legal businesses wear the “high-risk” label and are quietly excluded from basic financial services—not because of any wrongdoing, but simply the industries they operate in: cannabis, firearms, crypto, adult content. And few face steeper barriers than cannabis businesses. Even with state-level legalization and proper licensing, most are relegated to bare-bones banking. The full financial stack—lending, investing, credit cards—remains out of reach due to federal prohibition and institutional risk aversion. […]

But the obstacles go far beyond payment friction. Because cannabis remains a Schedule 1 substance, the IRS bars businesses from deducting ordinary expenses like rent, payroll, or marketing—leaving many taxed on gross receipts instead of profit, with effective rates soaring past 70%. “The core obstacle to providing traditional banking services to cannabis businesses is the unresolved conflict between state and federal law,” said Silvia. “Over the past decade, many of these businesses have become legitimate enterprises serving diverse customers. Yet institutions that choose to serve this industry must do so amid regulatory uncertainty, heightened scrutiny, and elevated risk expectations.” […]

Read the full article on the Forbes website.

April 9, 2025 by Duane Morris

Duane Morris at Benzinga Cannabis Capital Conference

Duane Morris is pleased to be a sponsor of the 2025 Benzinga Cannabis Capital Conference in Chicago from June 8-10, 2025.

Use code DUANEMORRIS20 for a 20 percent discount on registration. Hope to see you there!

April 9, 2025April 9, 2025 by Duane Morris

Webinar: Rescheduling vs. Decriminalization – The Movement for Cannabis Legalization and Its Impact on Today’s Market

Duane Morris will hold its next Cannabis Webinar, Rescheduling vs. Decriminalization – The Movement for Cannabis Legalization and Its Impact on Today’s Market, on Thursday, May 8, 2025, from 12:30 p.m. to 1:30 p.m. Eastern.

REGISTER FOR THE WEBINAR

The panel discussion features journalist filmmaker Michele Mitchell, who will examine the history of the cannabis movement, its impact on the current state of the cannabis market, and whether rescheduling or decriminalization would have the most beneficial impact for cannabis as this nascent industry continues to grow.

April 8, 2025April 8, 2025 by Haley Ferise

Analysis Indicates Pennsylvania State-Run Cannabis Sales Likely Preempted by Controlled Substances Act

As the Pennsylvania legislature considers paths to an adult use cannabis program, the Pennsylvania Cannabis Coalition considered analyses regarding whether the state-run distribution and sales model could be preempted by federal law. In those analyses, the case law distinguishes legalization programs in which the state is not mandated to take action that creates a “positive conflict” with the Controlled Substances Act from those that courts have found to be preempted by the CSA. For example, in People v. Crouse, 388 P.3d 39 (Colo. 2017), the Colorado Supreme Court found that a state constitutional amendment requiring police officers to return seized cannabis to patients prescribed it who were acquitted of state charges was preempted by the CSA. Under the constitutional amendment, officers would be required to “distribute” cannabis, directly violating the CSA and creating a “positive conflict” between federal and state law.

This positive conflict caused by mandated state action is distinct from programs that merely permit regulation of the cannabis industry. For example, in City of Palm Springs v. Luna Crest Inc., 200 Cal.Rptr.3d 128 (Cal. App. 4th 2016), the California Court of Appeals allowed the City to regulate cannabis dispensaries because permitting regulation did not require any state actors to take a positive action prohibited by the CSA.

In contrast, the proposed policy adding recreational cannabis to the Pennsylvania Liquor Control Board’s purview would require a state agency and its employees to “distribute, or dispense, or possess with intent to … distribute or dispense” cannabis, directly and positively violating the CSA (21 U.S.C. § 841). Under the state-run retail model, the Commonwealth and its employees could be exposed to criminal liability and loss of federal grants. Additionally, the Liquor Control Board’s State Stores Fund could be tainted under federal regulations due to comingling of other funds with proceeds from the sale of cannabis. The fund includes Liquor Control Board employees’ retirement and disability accounts.

According to at least one poll, voters prefer a privatized sales program for adult use cannabis over the state-run retail model employed for alcohol sales in the Commonwealth. Initially, 51% of voters surveyed in a Change Research poll favored the privatized retail model, while 25% favored a state-run model. Upon being provided more information, support for a privatized retail model increased to 57% while support for the state-run model remained at 25% of voters surveyed. Voters of varied political backgrounds, including independents, Democrats, and Republicans, favored the privatized retail model, according to a memo published with the poll.

Finally, a memorandum penned by Representatives Rick Krajewski (D., Philadelphia) and Dan Frankel (D., Allegheny) proposing a state-run adult use retail model in Pennsylvania in December 2024 has yet to be submitted for introduction to the legislature.

Those in the industry would be impacted by the implementation of a state-run retail model for adult use cannabis; while the December proposal leaves space for private participation in the industry, businesses in Pennsylvania may be more limited in opportunities for advancement than those in other states were such a model adopted. Further, the legal risk to the Commonwealth under such a model could have negative implications for the industry at large.

We will continue to monitor Pennsylvania lawmakers’ stances and proposals on an adult use cannabis program leading up to the deadline for the legislature to agree on a budget at the end of June.

March 31, 2025March 31, 2025 by Haley Ferise

Pennsylvania House of Representatives Votes to Increase Regulation of Medical Cannabis Prescribers

In a 194-8 vote on March 17, the Pennsylvania House of Representatives has approved a bill that would greatly empower the State Department of Health to regulate medical cannabis prescribers. The State Senate Law and Justice Committee will consider the bill next.

Should the bill pass the Senate, the department would have authority to place specific prescribers on probation, limit the number of medical cannabis certifications prescribers are allowed to issue, require prescribers to be supervised by another physician, and enact reporting requirements. Further, the department could create any other condition it “determines is necessary to protect the health and safety of patients in the program.”

Representative Tim Twardzik (R., Schuylkill) proposed including the additional Department of Health authority in regulation of medical cannabis as an amendment to a cannabis lab testing bill. The House Health Committee unanimously approved the proposal.

State senators on both sides of the aisle have expressed interest in the bill. State Senate Majority Leader Joe Pittman (R., Indiana) said “it is clear Pennsylvania’s medical marijuana program was not implemented well and could benefit from potential changes to make the program more airtight, efficient, and productive.” Similarly, State Senate Minority Leader Jay Costa (D., Allegheny) explained that he supports oversight in the Commonwealth’s medical cannabis program, saying such measures “protect our medical cannabis patients from bad actors, dishonest laboratory practices, and dangerous contaminants.”

Still, lawmakers remain focused on bringing recreational cannabis to Pennsylvania. Senator Costa made that clear, stating “our ultimate goal is the creation of an adult-use recreational cannabis program.” State Senator Dan Laughlin (R., Erie) likewise supports adult-use legalization, commenting “legislation involving cannabis deserves thorough review and I remain committed to using my position as Chairman to achieve this goal.” And Governor Josh Shapiro has urged the legislature to include recreational cannabis in its budget, due by the end of June.

Stakeholders in the cannabis industry in Pennsylvania should pay particular attention to these simultaneous legislative goals, as regulation of the medical cannabis program and the introduction of a recreational cannabis program would both have profound effects on the industry’s landscape in the Commonwealth. We will continue to provide updates on the legislature’s movement with respect to both medical and recreational cannabis.

March 19, 2025April 7, 2025 by Tim Stafford

SB 3 Rolls into the Texas House of Representatives

After an hour and a half of debate on the Senate floor, Senate Bill (SB) 3 is engrossed. The bill received 24 ayes and 7 nos.

Senators who support the bill told stories of children and young adults losing all function after ingesting products containing intoxicating hemp. They emphasized how important it is for law enforcement officers to be able to immediately tell whether a product is illegal during a traffic stop, rather than make an assumption.

Opponents of the bill requested regulation instead of a total ban and raised the issue of veterans and other individuals who rely on these products rather than relying on alcohol and opioids for relief. Senator Charles Perry assured them that physician-prescribed hemp products will be more accessible under the Texas Compassionate-Use Program after a corresponding bill—SB 1505—is introduced and passes this Legislative Session.