Tracy Gallegos, partner and team lead of the Duane Morris Cannabis Industry Group, discussed the cannabis industry’s mergers and acquisitions (M&A) landscape at the Benzinga Cannabis Capital Conference on September 27, 2023.
The discussion also touched upon the rescheduling of cannabis, with differing opinions on its likelihood. Ms. Gallegos said she skeptical due to formal rulemaking processes and international treaty considerations.
Yesterday, the Senate Committee on Banking, Housing, and Urban Affairs reported the Secure and Fair Enforcement Regulation (“SAFER”) Banking Act, formerly known as the SAFE Banking Act, out of committee by a vote tally of 14-9. Although the House of Representatives approved the SAFE Banking Act seven times over the past several years, it never made any traction in the Senate. That changed with yesterday’s vote, marking the first time that any version of the bill was sent to the Senate floor. The Chairman of the committee, U.S. Senator Sherrod Brown (D-OH), expressed his satisfaction with the result, stating that this “bipartisan bill is necessary” to “make it safer for legal cannabis businesses and service providers to operate in their communities and protect their workers.”[1] Continue reading “Milestone For SAFE[R] Banking”
Paul Josephson, partner and team lead of the Duane Morris Cannabis Industry Group, moderated a fireside chat with U.S. Virgin Islands Governor Albert Bryan Jr. at the Benzinga Cannabis Capital Conference on September 27, 2023.
“A governor who really gets economic development,” as Josephson said, Bryan said the region is on the cusp of an unprecedented economic surge. “We have a $4-billion economy right now. And we have $15 billion in sales over the next 10 or so years.”
Duane Morris partner Michael Schwamm has been named to Green Market Report’s 2023 list of Notable Leaders in Cannabis, which recognizes industry professionals who have demonstrated a willingness to effect meaningful change in a dynamic industry.
New York’s much-anticipated adult-use cannabis retail licensing process has recently been stuck in a haze since August 18, 2023, when a New York Supreme Court judge ruled that the state Office of Cannabis Management’s (“OCM”) discretionary licensing procedure violates New York’s Marihuana Regulation and Taxation Act (“MRTA”). As Duane Morris previously reported, the judge’s ruling, resulting in an injunction and stoppage of the OCM’s ability to grant additional license applications, is the latest in a number of delays and legal disputes that has New York’s cannabis authorization program far behind schedule. The case involves a group of military veterans who claim New York’s initial round of issuing conditional licenses only to people with prior marijuana convictions, and not also to a wider group of service-disabled veterans and other social equity applications, violated the MRTA. As a result of the injunction, the OCM has appealed the decision and seeks either a temporary stay of the injunction or an expedited appeals court briefing schedule. Continue reading “New York’s Conditional Recreational Cannabis Licensing Process Goes up in Smoke as State Regulators Ask Court to Stay Injunction Order”
On August 29, 2023, the U.S. Department of Health and Human Services responded to President Biden’s October 2022 call for a federal review of marijuana scheduling: The drug should be rescheduled as a Schedule III controlled substance. Below, we explore questions on the tax ramifications to the cannabis industry if marijuana is rescheduled as such.
Read this Duane Morris Alert for FAQs on cannabis rescheduling.
I have been touting the benefits of medical marijuana for nursing home/senior care residents for many years now. As a cannabis attorney, as well, I have been immersed in the research and studies, showing how marijuana can benefit nursing home residents, just like any other drug our residents may take for their well-being.
But the risks of utilizing marijuana in the nursing home, I’ve been stating, have been too great. Marijuana remains a Schedule I federally illegal controlled substance, and, as such, the Controlled Substances Act defines cannabis and its distinct cannabinoids as possessing “a high potential for abuse … no currently accepted medical use … [and] a lack of accepted safety for the use of the drug under medical supervision.”
Read the full column by Duane Morris partner Neville M. Bilimoria in McKnight’s Long-Term Care News.
Duane Morris, in partnership with FTI Consulting, will hold its next Cannabis Webinar, Distressed Cannabis M&A, on Thursday, October 5, 2023, from 1:30 p.m. to 2:30 p.m. Eastern.
Learn more and register on the Duane Morris website.
Earlier today, on August 30, 2023, the U.S. Department of Health and Human Services (HHS) officially recommended that cannabis be moved from Schedule I to Schedule III under the Controlled Substances Act (CSA) – a landmark recommendation from HHS which indicates that HHS no longer considers cannabis to be a drug with high abuse potential and no medical value.
After completing a scientific review into cannabis per a requested review from the Biden Administration, HHS advised the Drug Enforcement Administration (DEA) that it believes marijuana should be placed in Schedule III of the Controlled Substances Act.
Note, HHS’s recommendation is NOT binding on the DEA but given the report’s findings and growing public sentiment is likely that the DEA agrees with the recommendation and shifts its policy.
Historically, cannabis has been federally prohibited as a Schedule I controlled substance. As noted by many pundits, the rescheduling to Schedule III would have major implications for researchers who have long criticized the Schedule I classification that creates significant barriers to access for studies.
For researchers, this change would likely mean that they would no longer need to go through the onerous registration process with the DEA in order to access cannabis for studies as a Schedule III drug. The shift to Schedule III would also enable various federal tax deductions to become applicable to the cannabis industry and unlock value for them that is currently stuck in an onerous tax structure under the Internal Revenue Code. Schedule III drugs are not subject to the same onerous structure under federal rules.
The cannabis ball is now firmly in the DEA’s court as the DEA has the final authority to schedule a drug as Schedule III rather than Schedule I under the CSA (or transfer a controlled substance between schedules or remove such a drug from scheduling altogether).
Parting Hits – With Congress due to reconvene after Labor Day, and the Biden Administration looking for a win on moving this issue along, look for pressure to continue to mount for some type of Congressional action in the Banking arena under a SAFE legislation bill and for the DEA to move through their rule making process in a swift and firm manner.
Duane Morris has a full service cannabis group that helps clients and investors in a wide array of cannabis-related issues including, but not limited to, licensing, fundraising, intellectual property protection and real estate. If you have any questions, please do not hesitate to contact Brad Molotsky or the attorney with whom you regularly communicate at Duane Morris.
On August 18, 2023, a New York Supreme Court judge, ruled that the state’s discretionary licensing process violates the law.
A group of disabled military veterans filed a lawsuit against cannabis regulators claiming the initial round of New York licenses were improperly limited to people with prior marijuana convictions, rather than a wider group of service-disabled veterans and other social equity applicants prioritized by New York’s Marihuana Regulation and Taxation Act.
Supreme Court Judge Kevin Bryant upheld the lawsuit and stated, “There is no dispute” that state law says applications “shall be opened for all applicants at the same time.” As a result, Justice Bryant issued an injunction blocking the the state Office of Cannabis Management (OCM) from processing or issuing marijuana dispensary licenses until at least Aug. 25.
This is the latest setback in a series of delays since New York legalized marijuana two and a half years ago. There are only 23 legal dispensaries in the state, with more than 300 farmers and manufacturers in need of a place to sell their goods.
Further arguments on the ruling will be held Aug. 25. The OCM plans to appeal, a spokesperson said in a statement Monday.
