Governor Wolf Calls on PA Legislature to Pass a Recreational Cannabis Bill; $1B of CARES Relief

Earlier today, August 25, 2020, Gov. Tom Wolf called on the Pennsylvania legislature to legalize recreational marijuana and use the tax revenue to help small businesses that have been impacted by the COVID-19 pandemic.

According to the Philadelphia Business Journal, Gov. Wolf’s proposal on recreational marijuana was part of a package unveiled to spend the $1 billion remaining out of $3.6 billion CARES Act funding. The Governor called for a range of spending that would include$225 million in forgivable loans and grants to small businesses and another $100 million for restaurants and bars, hospitality and leisure businesses that have taken a big hit since March with business closures and occupancy restrictions. Tax revenue from the sale of recreational marijuana would add to the state’s small business funding and half would go to historically disadvantaged businesses.

To read the full text of this post by Duane Morris partner Brad Molotsky, please visit the Duane Morris Project Development/Infrastructure/P3 Blog.

Consumer Class Actions Against CBD Companies Are Hitting a Snag

Seth Goldberg, partner and team lead of Duane Morris’ Cannabis Industry Group, and Justin M. L. Stern, Duane Morris associate, authored the Cannabis Industry Journal article, “Consumer Class Actions Against CBD Companies Are Hitting a Snag.”

Excerpt from the article:

Over the past year, more and more consumer class actions have been filed against manufacturers and distributors of CBD-infused products. These actions typically assert claims based on how the product is marketed, such as whether it (i) contained the advertised amount of CBD, (ii) contained more THC than it should have or (iii) has the ability to provide the therapeutic benefits touted. The marketing of these products is subject to regulation by FDA, which has yet to issue pertinent regulations that have been expected since passage of the 2018 Farm Bill legalizing hemp and CBD products derived therefrom. Thus, in recent months, a number of federal courts have stopped these class actions in their tracks pending further guidance from FDA as to how CBD-infused products should be regulated. This growing body of precedent should be welcome news for the CBD supply chain, as it may provide a disincentive to the plaintiffs’ bar to expend their resources on similar actions until the regulatory framework is clear.

Please visit the Cannabis Industry Journal website to read the full article.

Webinar with NBA Hall of Famer Dominique Wilkins: Professional Sports & CBD: The Journey Ahead

Duane Morris, MGO and ELLO Capital will be hosting the webinar, “Professional Sports & CBD: The Journey Ahead,” on Tuesday, September 15, 2020, from 2:00 p.m to 3:00 p.m. Eastern.

REGISTER

About the Program

As awareness of the health benefits of CBD grows, professional athletes are voicing their support for the supplement as a safe substitute to help reduce inflammation and manage pain—and many are even investing in CBD or launching their own brands. Despite the World Anti-Doping Agency (WADA) removing CBD from their list of prohibited substances in 2018, many professional sports leagues continue to ban CBD, resulting in market and regulatory complexity for the sports world. This panel discussion will explore the legality of CBD use for professional athletes and provide an overview of the consumer and investor markets for CBD in the sports nutrition and recovery industries. The presentation will be followed by a lively discussion around the role of CBD in professional sports with NBA Hall of Famer Dominique Wilkins, who currently serves as vice president of basketball and special advisor to the CEO of the Atlanta Hawks.

Moderator

Presenters

  • Hershel Gerson, CEO and Managing Director, ELLO Capital
  • Seth A. Goldberg, Partner and Team Lead, Duane Morris Cannabis Industry Group
  • Chris Howard, Vice President, General Counsel & Chief Compliance Officer, E-Alternative Solutions
  • Dominique Wilkins, Nine-Time NBA All-Star; NBA Hall of Fame Inductee; and Vice President of Basketball and Special Advisor to the CEO, Atlanta Hawks

About the Duane Morris Cannabis Industry Group

Duane Morris attorneys in offices throughout the U.S. and internationally have extensive experience with the wide array of issues attendant to legal cannabis business activities, including licensing for cultivation, processing and dispensing; litigation; banking and finance; raising and deploying capital; mergers and acquisitions; protecting intellectual property; real estate development; public company representation and SEC filings; land use and zoning; healthcare and research; taxation; and cross-border transactions. In addition to advising participants in the medical and adult-use cannabis and hemp/CBD industries, as the industry has grown, Duane Morris attorneys experienced in cannabis-related issues frequently advise clients in other sectors whose businesses intersect with the expanding regulated cannabis sector.

About the MGO | ELLO Cannabis Practice

The MGO | ELLO cannabis practice provides a collaborative professional services offering that delivers world-class financial, tax and advisory services focused on empowering cannabis and hemp industry operators and investors to achieve their business goals. Its subsidiary ELLO Capital, a boutique investment bank, provides M&A, capital raising and strategic advisory services to companies and investors in cannabis, hemp and impacted industries. Together the cannabis platform delivers a suite of proven solutions to help operators, regulators and institutional investors navigate these complex industries.

Politically Motivated Investigations of Legitimate Cannabis Businesses: One More Reason for Cannabis Operators to Return to the Black Market?

In June 2020, John W. Elias, a prosecutor in the United States Department of Justice’s Antitrust Division, testified to the U.S. House Committee Judiciary that investigations of cannabis mergers were pursued based on Attorney General William Barr’s personal dislike for the cannabis industry rather than legitimate antitrust issues. Specifically, Elias testified, among other things, that since March 2019, the Antitrust Division has conducted ten investigations of mergers in the cannabis industry. Further, Elias testified that, “While these were nominally antitrust investigations, and used antitrust investigative authorities, they were not bona fide antitrust investigations.” Elias went on to state that, with respect to a proposed $682 million merger between two cannabis companies, MedMen and PharmaCann, career staff in the Antitrust Division initially examined the transaction to determine whether there should be no investigation, a brief investigation or a full investigation. Upon conclusion of its review, career staff determined that “the cannabis industry appeared to be fragmented with many market participants in the states that had legalized the product.” Accordingly, staff concluded that the proposed combination between MedMen and PharmaCann was “unlikely to raise any significant competitive concerns.”

To read the full text of this article by Duane Morris partner Tracy Gallegos, please visit the Cannabis Industry Journal website.

New FDA Draft Guidance on Cannabis-Related Clinical Research Omits Discussion of Nondrug CBD Products

On July 21, 2020, the U.S. Food & Drug Administration (FDA) issued draft guidance outlining the agency’s current thinking on the development of drugs containing cannabis or cannabis-derived compounds. The new guidance is disappointing to many in the cannabis industry because it does not provide insight into the FDA’s views on the marketing of nondrug, hemp-derived CBD products.

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

Okla. High Court Marijuana Ruling Provides Preemption Guide

Duane Morris attorneys Justin Stern  and Joseph Pangaro authored the July 1 Law360 article, “Okla. High Court Marijuana Ruling Provides Preemption Guide.”

Stern and Pangaro write:

Adult-use marijuana may be coming to Oklahoma sooner rather than later — barring any unforeseen events, legalization of marijuana for adult use will be on the state’s ballot this year.

On June 23, in the case of In re: State Question No. 807, Oklahoma Supreme Court rejected arguments that the proposed initiative was legally insufficient as preempted by federal laws making marijuana illegal. Interestingly, the court explained that state legalization of marijuana would not be “clearly or manifestly” unconstitutional as preempted by the federal Controlled Substances Act, or CSA, despite the apparent conflict.

To read the full article, visit the Duane Morris website.