Cannabis Industry

August 23, 2022August 23, 2022 by Duane Morris

New York Cannabis Control Board Approves 19 Adult Use Conditional Cultivator and 15 Adult Use Conditional Processor Licenses; Retail Dispensary License Applications Open August 25

On August 15, 2022, the New York Cannabis Control Board (the Board) held a public meeting via real-time stream to consider a number of agenda items. Among the most notable of the topics taken up was the approval of conditional adult use cultivator licenses and conditional adult use processor licenses.

Chair Tremaine Wright opened the meeting by providing an update on the Seeding Opportunity Initiative (SOI) that was launched in Spring 2022. Through the SOI, the Board has granted 223 adult use conditional cultivator licenses, resulting in the first farms cultivating regulated adult use cannabis in New York State. Chair Wright also noted that the Board visited three of these farms in July and were encouraged by the progress and creativity demonstrated in such a short window of time. After some additional opening remarks, the Board moved on to “further steps to advance the Seeding Opportunity Initiative” to “continue to build out New York’s Adult Use Cannabis supply chain.” Continue reading “New York Cannabis Control Board Approves 19 Adult Use Conditional Cultivator and 15 Adult Use Conditional Processor Licenses; Retail Dispensary License Applications Open August 25”

July 21, 2022 by Deanna J. Lucci

Long-Awaited Marijuana Legalization Bill Introduced in the U.S. Senate

More than a year after introducing a first draft, U.S. Senators Chuck Schumer (D-N.Y.), Cory Booker (D-N.J.) and Ron Wyden (D-OR) finally introduced their proposed marijuana legislation, the Cannabis Administration and Opportunity Act (CAOA) on Thursday, July 21.

The CAOA is a comprehensive bill that would not only permit cannabis companies to access the banking system but would legalize and decriminalize recreational cannabis with an eye toward supporting communities that have been most impacted by the war on drugs. The CAOA also provides for cannabis industry workers’ rights, a federal responsibility to set an impaired driving standard, expungements of criminal records and penalties for possessing or distributing large quantities of marijuana without a federal permit. It would also create a new federal definition for hemp that would increase the permissible THC by dry weight to 0.7 percent from the current 0.3 percent, and the definition would include all THC isomers, not just delta-9 THC. Other features of the bill include grant programs for small business owners hoping to enter the industry who come from communities that were disproportionately affected by the war on drugs, increased funding for law enforcement for illegal cultivation, and cannabis marketing restrictions.

Under the proposal, the Drug Enforcement Administration would no longer have jurisdiction over cannabis and would be regulated by the U.S. Food and Drug Administration and the Alcohol and Tobacco Tax and Trade Bureau (TTB) within the Treasury Department. The bill proposes a 5% to 12.5% excise tax for small and mid-sized cannabis producers. It would charge an initial tax of 10% on larger cannabis businesses and gradually increase it to 25%.

The Senate Judiciary Subcommittee on Crime and Terrorism chaired by Booker scheduled a hearing for Tuesday, July 26 titled, “Decriminalizing Cannabis at the Federal Level: Necessary Steps to Address Past Harms.”

While the bill is unlikely to garner the required 60 votes to pass in the Senate, many see it as a first step toward opening the cannabis debate on Capitol Hill and passing incremental reform that could finally end the federal prohibition on cannabis.

As we have previously reported, the U.S. House of Representatives has passed legislation multiple times in the past few years that would decriminalize cannabis and allow cannabis businesses to access the federal banking system. However, none of those measures have yet made it to the Senate floor.

July 1, 2022 by Emily Meehan

U.S. Supreme Court Rejects Cases Seeking Workers’ Comp for Medical Marijuana

The U.S. Supreme Court declined to hear two cases challenging Minnesota’s denial of workers’ compensation for medical marijuana used to treat work-related injuries.

Two Minnesota employees, Susan Musta, who suffered a neck injury while working as a dental hygienist and Daniel Bierbach, who was injured at his job working for an all-terrain vehicle company, were certified as eligible to participate in Minnesota’s medical cannabis program and began using medical cannabis to treat their pain. They requested reimbursement for the cost of that treatment from their employers pursuant to Minn. Stat. § 176.135, subd. 1 (2020), a Minnesota state law that requires employers to furnish medical treatment as may reasonably be required to treat a work-related injury.

Their respective employers opposed the requests for reimbursement, arguing that paying for someone to possess cannabis is prohibited by federal law, specifically the federal Controlled Substances Act, 21 U.S.C. §§ 801–971 (“CSA”). Musta and Bierbach argued that, because employers are not required to possess, manufacture or distribute cannabis in contravention of federal law, merely providing workers’ compensation for marijuana is not preempted by the CSA.

Their cases made their way to the Minnesota Supreme Court and presented the following question: Does the CSA preempt an order under a state workers’ compensation law requiring an employer to reimburse an injured employee for the cost of medical marijuana? In both instances, the Minnesota Supreme Court said yes, deciding that employers were not obligated to pay for medical marijuana treatment. Musta and Bierbach appealed the decision to the U.S. Supreme Court.

The U.S. Supreme Court invited the U.S. Department of Justice (“DOJ”) to file a brief before making a decision. The DOJ agreed with the Minnesota Supreme Court that the CSA preempts state law and recommended that the court not take up the pair of cases. It wrote, “the Legislative and Executive Branches of the federal government are best situated to consider any potential tailored measures to address specific instances of interaction between federal and state marijuana laws.”

The U.S. Supreme Court denied Musta and Bierbach’s writs of certiorari, indicating that fewer than four justices believed the legal challenges warranted the court’s consideration. By rejecting their cases, the U.S. Supreme Court has chosen not to weigh in on the viability of a workers’ compensation claim for medical marijuana coverage, nor has it taken the opportunity to close the gap between state and federal marijuana policy.

June 27, 2022 by Duane Morris

Report of New York State’s Office of Cannabis Management (“OCM”) Board Meeting, June 23, 2022

By Jordan Nittinger

New York State’s Office of Cannabis Management (“OCM”) held a board meeting on June 23, 2022, with nearly 600 attendees in virtual attendance through online streaming. Continue reading “Report of New York State’s Office of Cannabis Management (“OCM”) Board Meeting, June 23, 2022”

June 13, 2022 by Duane Morris

Reflections of a Former Regulator: Three Thoughts on a Budding Industry

By Matthew J. McCarthy

Beginning in 2019, I served as the lead prosecutor in regulatory enforcement actions at the Maryland Medical Cannabis Commission, where I worked closely with the Commission’s investigators and compliance professionals to develop enforcement procedures to help guarantee a safe and reliable medical cannabis marketplace. During my time as a cannabis regulator, I had an invaluable opportunity to help shape the local regulatory landscape, foster productive relationships between government and industry, and observe emergent cannabis regulatory systems across the Northeastern and Midwestern U.S. I hope that the three notes below can provide some insight as to how licensees can orient themselves for a productive present and profitable future. These observations are mine alone.

Continue reading “Reflections of a Former Regulator: Three Thoughts on a Budding Industry”

June 9, 2022June 13, 2022 by Deanna J. Lucci

U.S. Mayors Call on Congress to Pass Cannabis Reform

This week, the U.S. Conference of Mayors – which represents the 1,400 U.S. cities with populations of 30,000 or more – passed a resolution urging Congress to pass the SAFE Banking Act of 2021, the MORE Act and the Cannabis Administration and Opportunity Act (CAOA), which has yet to be formally introduced.

The House of Representatives has passed both the bipartisan SAFE Banking Act and the MORE Act at least six times in recent years but the Senate has yet to take these bills to a vote. Per the resolution, the SAFE Banking Act would “provide financial security for cannabis dispensaries and related companies and enhance public safety” while the MORE Act and/or the CAOA would “legaliz[e] the medicinal use of cannabis and the adult use of recreational cannabis.” Continue reading “U.S. Mayors Call on Congress to Pass Cannabis Reform”

June 3, 2022November 8, 2023 by Duane Morris

New York Regulators Approve New Rules on Packaging, Labeling, Advertising and Testing As Part of Its Adult-Use Retail Market Launch

By Steven Perelman

The Cannabis Control Board (“CCB”) of New York State’s Office of Cannabis Management (“OCM”) held an important special board meeting in which it approved several resolutions implementing New York’s Marihuana Regulation & Taxation Act (“MRTA”). Signed into law on March 31, 2021, the MRTA legalizes adult-use cannabis (also known as marijuana, or recreational marijuana) in New York State. Continue reading “New York Regulators Approve New Rules on Packaging, Labeling, Advertising and Testing As Part of Its Adult-Use Retail Market Launch”

June 3, 2022 by Duane Morris

California Targets Cannabis Businesses over Unpaid Taxes

Duane Morris partner Tracy Gallegos was quoted in this article in MJBizDaily.

California’s business tax collector is ramping up enforcement against unlicensed and licensed cannabis companies, which owe the state nearly $200 million in unpaid taxes. […]

Tracy Gallegos, a corporate partner in the Las Vegas office of the Duane Morris law firm, said many of her clients entered the regulated industry with high aspirations, but naiveté and poor, early business decisions compounded problems. Continue reading “California Targets Cannabis Businesses over Unpaid Taxes”

May 31, 2022February 25, 2025 by Duane Morris

Cannabis Product Mislabeling Leads to Investigation and Recall in Oregon

The Oregon Liquor and Cannabis Commission (OLCC) is conducting an ongoing investigation into Curaleaf regarding an alleged mislabeling of a nonpsychoactive cannabidiol (CBD) product, which actually contained psychoactive delta-9 tetrahydracannabinol (THC). Curaleaf operates 101 retail cannabis dispensaries in 16 states. The OLCC investigation revealed that the alleged mislabeling resulted from an employee’s confusing the CBD bottles with the THC bottles in preparing the Curaleaf cannabis products at issue. The incident caused consumers ingesting those products to have experienced a “high” they did not anticipate, and ultimately led to the recall of approximately 500 bottles of tincture from the Oregon market. At least three of those consumers went to the emergency room due to the high, one consumer was hospitalized and one consumer’s estate brought a claim for wrongful death.

To read the full text of this Duane Morris Alert, please visit the firm website.

Seth Goldberg is a Team Lead of Duane Morris’s Cannabis Industry Group, a cannabis business advisor, and a trial attorney with experience in products liability and consumer fraud claims. Ethan Feldman is an associate in the firm’s Trial department, with experience in products liability and consumer fraud.

May 19, 2022 by Duane Morris