Cannabis Industry

March 22, 2023 by Michael D. Schwamm

New York State Advertising Rules Effective Today

Effective March 22, 2023, New York’s cannabis advertising rules are now in place. These rules aim to protect public health, particularly minors, and ensure that cannabis advertising is truthful and not misleading.

- Cannabis advertisements cannot be displayed within 1,000 feet of a school or daycare center.
- Ads cannot target individuals under 21 years of age or depict minors, toys, characters, or cartoons.
- Advertising cannot claim cannabis is safe or healthy or that it has curative or therapeutic effects unless supported by substantial evidence.
- Ads cannot contain false, misleading, or deceptive information.
- The warning statement “This product may be intoxicating and may be habit-forming” must be included in all cannabis advertisements.
- Promotions, such as giveaways or coupons, are prohibited except in licensed dispensaries.
- Advertising cannot be displayed on any public transportation or property owned or leased by the state or local government.
- All ads must include the New York State Department of Health’s “Know the Facts” educational campaign website address.

March 22, 2023 by Danielle M. Dwyer

CANNABIS INDUSTRY THE LATEST FRONTIER FOR LABOR ORGANIZING EFFORTS

As legal adult-use cannabis continues to spread across the country, so does a movement to unionize cannabis workers. The need for dispensary and cultivation workers has rapidly increased, along with the demand for higher wages, improved benefits, diversity and inclusion efforts, and more.

To date, 21 states and the District of Columbia have legalized adult use marijuana. Bills to legalize adult use marijuana are pending in several other states. According to Forbes, cannabis sales in the United States are estimated to reach $57 billion by 2030. The industry shows no signs of slowing down. Labor unions have taken notice and have seemingly set their sights on the cannabis workforce.

The efforts of labor unions have been buoyed by labor peace agreement (LPA) laws. While LPA laws vary by state, they generally require cannabis companies to take a hands-off approach to union organizing efforts as a condition of doing business in the state. This means the company cannot interfere with organizing efforts. However, unions typically also agree via the LPAs not to interfere with the operations of the business. Alternatively, some LPA laws offer preferential status in licensing applications for companies that enter into LPAs.

California, New York, New Jersey, and Virginia all have varying degrees of requirements with respect to LPAs in their states. Pennsylvania and Illinois do not require LPAs, but the states offer certain advantages to companies who enter into LPAs. Several other states, such as Massachusetts, Connecticut, and Minnesota, are contemplating enacting their own LPA requirements.

The apparent enthusiasm of organizing efforts largely paid off for unions in 2022. According to Bloomberg Law’s NLRB Election Statistics report, unions prevailed in 76% of overall elections in 2022, one of the highest success rates on record. The United Food and Commercial Workers Union, which has dubbed itself “the Cannabis Workers’ Union” representing more than 10,000 cannabis members, won 70% of representation elections in 2022. They are not the only ones. The International Brotherhood of Teamsters, which has unionized some cultivation workforces, won 66% of representation elections in 2022.

While there has been some litigation surrounding LPAs and organizing efforts, to date, most cannabis companies do not appear to be challenging these requirements. This has the strategic benefit of allowing cannabis businesses to get licenses and begin operations, rather than engage in what could be a prolonged legal battle. However, as unions expand and tighten their grasp on cannabis workforces, industry groups may start to fight back.

March 17, 2023 by Kathleen M. Kline

Pennsylvania Lawmakers and Governor Shapiro Contemplate Adult-Use Legalization Proposals

Several recent developments underscore Pennsylvania’s growing interest in legalizing adult-use cannabis, although the prospects for legalization in the Commonwealth remain uncertain. Governor Josh Shapiro, who has publicly supported adult-use legalization for several years, included a proposed 20% tax on adult-use marijuana products in his 2023-2024 executive budget proposal, released on March 7. The budget proposal does not contain any provisions addressing legalization itself, but contemplates that legal adult-use cannabis sales will begin in 2025 and would result in approximately $16 million in tax revenue for the Commonwealth in the first year.

Separately, state lawmakers have issued three memos describing legislation to be introduced in both the House and Senate. Two co-sponsorship memos, submitted by Representative David Delloso (D) and Senator Marty Flynn (D), propose utilizing the “state store” system – under which wine and liquor are currently sold in state-owned stores – to facilitate sales of adult-use marijuana to consumers aged 21 and older. Use of the state store model for adult-use sales, these memos claim, would “ensure the safety and integrity of cannabis sales” in the Commonwealth and would prevent market domination by large, out-of-state corporations. These two memos also propose social justice components to a legalization bill – primarily, expungement of lower-level marijuana-related convictions and allowing for the cultivation and processing by individuals of up to six plants for personal use. A third memo, by Representatives Dan Frankel (D) and Donna Bullock (D), proposes allowing private sales of adult-use cannabis rather than utilizing the state store system. Central goals of this bill announced in the memo include social justice, consumer safety, and revenue, although the details of this anticipated bill are less clear than those set out in the co-sponsorship memos.

Currently, no formal legislative proposals for adult-use legalization have been introduced, and prior bills – including those utilizing the state store model to facilitate sales – have been unsuccessful. Proponents of legalization are hopeful that the recent shift from Republican to Democratic control of the House might tip the scales in their favor, though the Pennsylvania Senate is still under Republican control.

March 8, 2023 by Deanna J. Lucci

Application for Federal Pardons of Marijuana Possession Now Available

As we previously reported, on October 6, 2022, President Biden announced that he would pardon those convicted of simple marijuana possession offenses under the federal Controlled Substances Act. As part of his executive action, Biden directed the Attorney General to develop an administrative process to issue Certificates of Pardon to eligible individuals.

On March 3, 2023, the Department of Justice announced the launch of an online application form for individuals seeking proof that they were pardoned under Biden’s proclamation. The form requires the applicant to provide their full name, contact information, date and place of birth, and citizenship status, followed by information about their charge or conviction with supporting documentation.

In order to be eligible for the Certificate of Pardon, applicants must satisfy the following:

1. Applicant must have been charged with or convicted of simple marijuana possession by either a federal district court or D.C. Superior Court;
2. Applicant must have been a U.S. citizen or lawfully present in the U.S. at the time of the offense; and
3. Applicant must have been a U.S. citizen or lawful permanent resident on October 6, 2022, when Biden announced the pardon.

Note that the pardon neither indicates the innocence of the federal offender nor expunges their conviction. Nevertheless, it may remove civil restrictions such as the right to vote, hold office, or sit on a jury. The pardon may also alleviate limitations placed on obtaining certain licenses or employment.

However, Biden’s pardon merely affects several thousand federal offenders. As we previously reported, only about 6,500 people have been convicted for simple possession under federal law and a few thousand more have been convicted under the Code of the District of Columbia. The vast majority of cannabis convictions for simple possession occur at the state level. Those convicted of state marijuana offenses do not qualify for the pardon. Biden urged state governors to follow his lead and issue similar pardons.

Since Biden’s proclamation, several states have flirted with the idea of pardoning nonviolent marijuana crimes, some of which took more substantial steps forward. For example, on November 21, 2022, the governor of Oregon pardoned more than 47,000 people with convictions for simple marijuana possession and forgave more than $14 million in unpaid fines and fees.

As of the present, Connecticut, Missouri, Rhode Island, and Alaska have demonstrated similar relief efforts. Connecticut expunged the record of about 44,000 residents convicted of cannabis possession, while Missouri expunged the record of about 7,500 residents and ultimately expects 100,000 expungements in the coming months. The Chief Justice of the Rhode Island Supreme Court issued an executive order directing judges to establish and implement marijuana expungement procedures. Rhode Island expects 30,000 residents to be able to clear their record. Justices of the Alaska Supreme Court issued a similar order, permitting residents convicted of possessing less than one ounce of marijuana to seal the records related to such convictions. Alaska expects 800 residents to benefit from the order, which takes effect May 1, 2023.

To date, 24 states have enacted legislation to expunge marijuana-related criminal convictions. According to the National Organization for the Reform of Marijuana Laws, state and local officials have issued more than 100,000 pardons and more than 1.7 million marijuana-related expungements since 2018. More states are likely to follow in the same breadth soon.

Read the full text of the article on Law360.

February 17, 2023 by Duane Morris

Probe Shows OSHA Regulating Cannabis Cos. Like All Others

For years, legal commentary about cannabis and the workplace has focused on employees’ off-duty cannabis use, as well as employers’ rights to test and discipline employees for off-duty cannabis use.

But with the Occupational Safety and Health Administration’s investigation of Trulieve, one of the largest multistate cannabis companies, the spotlight now shines on the safety of the licensed cannabis workplace itself and whether on-duty contact with cannabis may pose health hazards…

Read the full article:

February 16, 2023 by Deanna J. Lucci

DEA Finds that Lab-Derived Cannabis Compounds Are a Schedule I Drug, Even if Made from Hemp

On February 13, 2023, the U.S. Drug Enforcement Administration (DEA) published a letter in which it opined that two acetate compounds chemically derived from cannabis, delta-8-THCO and delta-9-THCO, are Schedule I substances under the federal Controlled Substances Act (CSA), even if they are derived from hemp, which is federally legal. The DEA’s letter came in response to an inquiry from an attorney who represents the Hemp Industries Association.

Dr. Terrence L. Boos, Chief of the DEA’s Drug & Chemical Evaluation Section Diversion Control Division wrote, “Delta-9-THCO and delta-8-THCO do not occur naturally in the cannabis plant and can only be obtained synthetically, and therefore do not fall under the definition of hemp.” Dr. Boos wrote that the CSA classifies THC under Schedule I, and THC (tetrahydrocannabinols) means those “naturally contained in a plant of the genus Cannabis (cannabis plant), as well as synthetic equivalents of the substances contained in the cannabis plant and/or synthetic substances, derivatives, and their isomers with similar chemical structure and pharmacological activity to those substances contained in the plant.” (emphasis added).

It’s important to note that the compounds addressed in the DEA letter are different from delta-9-THC, the psychoactive chemical found naturally in cannabis that causes a high, and delta-8-THC, a compound that can be synthesized from CBD derived from hemp.

Given the DEA’s position, retailers selling products that contain Delta-9-THCO or delta-8-THCO must hold all requisite licenses to sell cannabis products in jurisdictions where cannabis has been legalized, either for medicinal or recreational purposes. For retailers who are selling delta-9-THCO or delta-8-THCO products in states where cannabis has not been legalized, such retailers would likely be in violation of the CSA, according to the DEA’s position.

February 9, 2023February 9, 2023 by Duane Morris

Paul Josephson Named to New Jersey ROI Influencers: Power List 2023

Duane Morris partner Paul Josephson was named to the New Jersey ROI Influencers: Power List for Government Affairs and Cannabis for 2023.

February 8, 2023 by Kathleen M. Kline

Adult-Use Legalization Bill Proceeds Through Committee in Minnesota House and Senate

Following last year’s passage of a law authorizing the sale of certain food and beverage products containing THC, two companion bills to legalize adult-use marijuana are moving thorough committee in both the Minnesota House and Senate. Proponents of the legalization proposal are optimistic that the legislation can be passed by the close of the state’s congressional session in May, and Minnesota governor Tim Walz has indicated he would sign the legislation, if passed.

Minnesota currently permits the use of medical marijuana to treat certain conditions, and, this past summer, legalized the sale of food and drink products containing up to 5 mg of hemp-derived THC. Under the current regime, liquor stores cannot sell THC beverages – and these beverages cannot contain alcohol – but otherwise their sale is not restricted; they are offered by distributors, in taprooms and convenience stores, and through online sales, among other means. In addition to THC beverages, retail stores have begun offering THC gummies and other food products.

The legalization bill currently under discussion would remove the restriction on sales of THC beverages by liquor stores and otherwise loosen the requirements for licenses to sell low-potency (5 mg or less THC per serving) products. Other significant aspects of the proposal are the authorization of marijuana delivery services as well as on-site consumption (but not smoking or vaping) of cannabis products at retail sellers. On-site consumption permits would also be made available for events, such as concerts and festivals. The proposed legislation would allow counties and municipalities to own and operate dispensaries, but – in contrast to some other states’ laws – would not allow municipalities to enact prohibitions on otherwise-authorized cannabis businesses. Minnesota is also following the trend of including a social equity component in its legalization proposal. The bill includes a program to automatically expunge prior marijuana records, and the contemplated licensing scheme would prioritize “social equity” applicants, including minorities and residents of low-income communities. Retail cannabis would be subject to an eight percent sales tax, which would fund substance misuse treatment programs and grants supporting farmers.

Polls have found that the majority of Minnesota residents support the legalization of adult-use cannabis, with one recent survey showing a 3% increase in support since last year, to 61%. This support, combined with the enthusiasm expressed by lawmakers, may soon lead to the passage of an adult-use legalization bill in Minnesota.

February 2, 2023 by Duane Morris

How Marijuana Pardons Affect Employee Background Checks

On Oct. 6, 2022, President Joe Biden issued a blanket pardon to all citizens and lawful permanent residents convicted of simple possession of marijuana under the federal Controlled Substances Act. The move reflects a shift in attitudes towards low-level drug offenses, and should serve as an impetus to employers to review their policies on criminal record checks.

Because marijuana possession offenses predominantly fall under the jurisdictions of the states, not the federal government, the immediate impact of these pardons is limited. Only about 6,500 people have been convicted for simple possession under federal law and a few thousand more have been convicted under the Code of the District of Columbia.

To read the full text of this article by Duane Morris attorneys Danielle M. Dwyer and Jesse Stavis, originally published in Law360, please visit the firm website.

January 26, 2023 by Duane Morris

Law360 Cannabis Group of the Year: Duane Morris

In a field rife with rapid regulatory changes and legal uncertainty, Duane Morris LLP’s experience advising multimillion-dollar acquisition and tax settlement deals has placed it in the forefront of major industry developments, earning it a spot on Law360’s 2022 Cannabis Groups of the Year.

To read the full text of this article, please visit the Law360 website (subscription required).