General – Page 9 – Cannabis Industry

April 17, 2023May 30, 2023 by Robert Davydov

Chicago Cubs Partner with CBD Beverage Company Under New MLB Sponsorship Rules

On April 7, 2023, the Chicago Cubs announced a partnership with MYND DRINKS, a Chicago-based cannabis beverage company. This historic partnership recognizes the Cubs as the first Major League Baseball (MLB) team to collaborate on a business venture with a cannabis company.

Background

Back in December 2019, MLB modified its list of abusive drugs by removing cannabis to implement a more treatment-based approach. The league’s updated drug policy allows players to use natural cannabinoids for medical purposes, such as to help relieve pain, improve quality of sleep, and manage stress or anxiety.

A couple years later, on June 22, 2022, MLB announced a landmark decision to approve CBD sponsorships. However, the sponsorships must satisfy two requirements:

CBD companies must receive the NSF Certified for Sport® designation, a certification designed to:
1. favor products infused with CBD, a non-psychoactive compound found within the hemp plant, and
2. disfavor products infused with psychoactive levels of THC, which pose a risk of drug-induced sensations to consumers, and
MLB teams must receive approval from the Commissioner’s office.

MYND DRINKS produces 100% plant-based, CBD-infused, sparkling beverages. The three beverage flavors—Lemon Ginger, Elderberry Passionfruit, and Orange Mango—each satisfied MLB’s safety measures to obtain NSF certification. The CBD company promotes wellness and recovery, and aspires to change the world “one MYND at a time.”

Partnership & Opportunities

The partnership between the Cubs and MYND DRINKS includes, among other things, on-field signage at Wrigley Field stadium, certain in-game features, and international marketing rights in the United Kingdom.

Furthermore, MLB’s Chief Revenue Officer stated that the league is open to featuring jersey patch sponsorships for the 2023 season. Since opening day, on March 31, 2023, a handful of MLB teams debuted sponsorships with a company logo adorned on the sleeve of players’ jerseys. Cannabis companies are permitted to participate in such deals as well. However, a company interested in this arrangement must “have a brand that represents sports.” CBD brands supporting wellness and recovery, like MYND DRINKS, will likely receive a green light from the league’s administration.

Cannabis Market Trends

Market competition is intensifying due to the increasing therapeutic properties of cannabis and continuing legalization of markets. As a result, there has been a rise in demand for cannabis-infused beverages, edibles, and other related products. The global cannabis market was valued at about $13 billion in 2022 and is projected to grow at a compound annual growth rate of 22% to reach over $66 billion by the end of the decade. Cannabis companies are thus eager to establish a position in this rapidly expanding market.

Therefore, this CBD partnership will be revolutionary for MLB and other professional sports leagues across the globe.

Read the full text of the article on Law360.

April 10, 2023 by Duane Morris

International Arbitration and Cross-Border Disputes in the Cannabis Industry

As continued legalization of cannabis across jurisdictions in the U.S. and foreign countries causes the industry to become increasingly lucrative, determining proper avenues for dispute resolution controlling underlying agreements and investments has become a critical consideration for business-owners and foreign investors alike. Foreign investment in businesses involving cannabis is subject to a complex web of oversight that could include any combination of local and foreign laws, agreements, regulations, and practices. Many foreign investors in the cannabis industry have turned to international arbitration as a method for navigating these complexities and resolving disputes that may arise from such investments and business relationships. This post explores high-level considerations for foreign investors in the cannabis industry when assessing the viability of arbitration as a means for dispute resolution.

To read the full post by Duane Morris attorney Ramsey Schultz, please visit the Duane Morris International Arbitration Blog.

March 29, 2023 by Emily Meehan

Senate Bill aims to dismantle Minnesota’s recreational cannabis market

On Friday, a Minnesota senator introduced a bill that would drastically alter the state’s adult-use cannabis industry only a year after it launched adult-use cannabis sales.

Senate Bill 546, introduced by Sen. Keith Regier, R-Kalispell, focuses on “eliminating adult-use dispensaries” and intends to “reduce the demand for marijuana sales.”

The bill would prohibit non-medical marijuana sales, increase the state tax on medical marijuana from 4% to 20%, lower the THC cap on flower from 35% to 10%, lower the THC levels in individual edibles from 10 milligrams to 5 milligrams, and cap the THC percentage in concentrates at 10%.

According to the Montana Free Press, these significant limits on medical marijuana potency and allowable amounts for possession would not only reduce the consumer base for existing cannabis businesses, but would also drastically reduce revenue for state coffers. Since adult-use sales began in January 2022, Montana has generated $54 million in tax revenue from the industry, derived almost entirely from recreational consumers that pay a 20% tax to the state. In 2022, retailers sold $202,947,328 worth of recreational cannabis, which is roughly double the amount of medical marijuana sales.

“If SB 546 passes, it would render the entire cannabis program worthless, not only for the operators but also for consumers and patients in the state,” Zach Block, owner of Kalispell dispensary Montana Canna, told the Montana Free Press.

Minnesota’s Business, Labor and Economic Affairs Senate Committee plans to hold a hearing on Senate Bill 546 on Wednesday, March 29, 2023.

March 29, 2023May 30, 2023 by Robert Davydov

Cannabis Companies Infringe Popular Ferrara Candy Trademarks

The Ferrara Candy Company (Ferrara) is an American candy manufacturer owned by the Ferrero Group. Ferrara — well known for candy brands such as Laffy Taffy, SweeTarts, and Nerds — has achieved enormous commercial success throughout the United States.

On May 31, 2022, Ferrara filed a lawsuit in federal court in Colorado against a cannabis edibles maker on the grounds of trademark infringement. Trademark infringement occurs when a party violates the exclusive rights of a trademark owner, without authorization or license.

On March 20, 2023, the federal judge found that the cannabis company illegally copies the logos, names, and packaging of Nerds, Trolli, and Runts candy for its THC-infused products. Ferrara never authorized the use of its logos and trademarks for cannabis products. The products appear to have a significant amount of THC, with some containing as much as 600 milligrams, which is more than 60 adult servings. The THC-infused products thus pose a public health hazard – especially to children — who are easily susceptible to believing that the cannabis products are ordinary candy. As a result, the court determined that injunctive relief is appropriate and ordered the cannabis company to:

1. 1. stop producing and selling cannabis products that infringe the Ferrara candy brands;
  2. destroy any remaining products infringing Ferrara’s brands; and
  3. pay Ferrara all profits derived from the acts of trademark infringement.

Ferrara takes a serious approach to such cannabis products in order to protect consumers. In addition to this judgment and injunction in Colorado, Ferrara has also successfully enjoined cannabis companies from selling THC-infused knockoff versions of its signature candy products in California, Florida, and Illinois. Shortly after these proceedings commenced, the attorneys general of New York and Connecticut issued warnings about designing the packaging of cannabis products to look like well-known candy or snacks, both citing a nationwide rise in accidental overdoses among children.

While the desire to appeal to consumers is understandable, it is unlawful to profit off another’s registered trademark. Manufacturing and marketing cannabis products that copy well-known consumer brands and packaging opens the door to litigation that in turn poses huge legal, financial, and reputational risks. Trademark infringement is a serious legal matter that, as illustrated above, will likely result in unfavorable consequences to violators. Cannabis companies should act with caution when adopting and commercializing brands, to avoid creating the potential for consumer confusion between their THC-infused products and the products of already established mainstream brands. This is particularly true when the established mainstream brands are used for candy or other products appealing to children.

Read the full text of the article on Law360.

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 8, 2023May 30, 2023 by Robert Davydov

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, 2023March 29, 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