adult use cannabis – Cannabis Industry

December 12, 2024December 12, 2024 by Haley Ferise

Pennsylvania Legislature Weighs Possibility of Adding Recreational Cannabis to the Purview of the Liquor Control Board

Pennsylvania state representatives Dan Frankel (D-Allegheny) and Rick Krajewski (D-Philadelphia) plan to propose a bill in the House of Representatives that would legalize recreational cannabis. Under their proposal, cannabis would be controlled by the state’s Liquor Control Board, the name of which would be changed to the Liquor and Cannabis Control Board. Cannabis would be sold at existing state liquor stores; meanwhile, private businesses would be permitted in the industry in cultivation and consumption sites, similar to bars.

However, there has been debate about the merits of this state-run system for liquor sales, and Republican members of the state legislature have made efforts to privatize liquor sales in the past.

Proponents of the state-run system argue that this system provides stable jobs, including consistent benefits and reliable pensions, for over 5,000 Pennsylvanians, while also returning millions of dollars in profits to the state. Furthermore, this system gives the state more control to prevent underage liquor sales.

Opponents of this system argue that Pennsylvanians should have more freedom over decisions regarding liquor sales. They also hypothesize that privatizing liquor sales would allow more stores to arise and more sales to occur, which would increase tax revenue for the state. For example, less than three years after Washington State privatized liquor sales, the number of liquor stores increased by approximately 327%, and the industry’s revenue collections increased by approximately 18%.

Despite this debate, Pennsylvania’s state-run system for liquor sales has remained in place. However, a state-run system for cannabis dispensaries may run into a separate issue: the potential conflict with federal law. Cannabis remains a controlled substance under Schedule I of the Controlled Substances Act, and Section 280E of the Internal Revenue Code disallows all tax deductions or credits for amounts paid or incurred in carrying on trade or business that consists of “illegally trafficking” a Schedule I controlled substance. As recently as June 2024, the IRS has issued reminders that this section applies to businesses selling marijuana, even if they operate in states which have legalized the sale of cannabis. It remains to be seen whether state-run dispensaries would be subject to this same provision.

Representatives Frankel and Krajewski’s bill would also provide for the possibility of expungement for people charged with cannabis-related crimes, invest revenue into communities impacted by prohibition policies, implement public health protections, and assist minority business owners in entering the industry.

The legislators have not officially proposed the bill but did release a memorandum to all House members seeking co-sponsors on December 2, 2024.

June 19, 2024 by Seth A. Goldberg

Diamond Shruumz Shows Why Intoxicating Products Should be Regulated

Recently, FDA announced issued an alert warning consumers that a brand of ingestible chocolate bars, cones, and gummies called Diamon Shruumz has been linked to a variety of severe heath symptoms, including seizures, central nervous system depression (loss of consciousness, confusion, sleepiness), agitation, abnormal heart rates, hyper/hypotension, nausea, and vomiting. As the name suggests, Diamond Shruumz products are marketed as a product that allows consumers to microdose – take in small doses – psilocybin and other psychoactive chemicals in mushrooms. These products are not subject to strict federal and state regulations, and can be purchased in gas stations and c-stores, or online by anyone who passes a simple age-gate. They are marketed with names that could easily be confused by consumers as products that do not contain intoxicating chemicals, such as “Hawaiian punch,” “cookies & cream,” “birthday cake,” and “cookie butter,” and their packaging is colorful and attractive. It seems obvious that intoxicating products like these need to be regulated in the interest of public safety. Regulation does not mean prohibition. It means safeguards that enable consumers to use products without unnecessary health risk, and they can protect manufacturers and supply chain participants from liability risk.

November 8, 2023November 13, 2023 by Danielle M. Dwyer

Labor Peace Agreement Mandate Challenged in Federal Court

States legalizing cannabis are increasingly requiring that cannabis licensees enter agreements allowing unions access to their employees for organization activities. Some states go even further, not only requiring a labor peace agreement (LPA), but that employees agree on the terms of a collective bargaining agreement (CBA) soon after licensure. As we previously reported, such requirements are especially prevalent along the East Coast, with varying labor requirements imposed by New York, New Jersey, Virginia, Delaware, and Connecticut, as well as California. Continue reading “Labor Peace Agreement Mandate Challenged in Federal Court”

October 24, 2023 by Kathryn R. Brown

Ohio Is Poised To Become The Next State to Legalize Cannabis For Adult Use

On November 7, 2023, Ohio voters will decide the fate of Ballot Issue 2, a citizen-initiated proposed law that would commercialize, regulate, legalize and tax cannabis for adult use. Recent polling data suggests broad support for Issue 2. A majority vote in favor of Issue 2 would make Ohio the 24^th state—and the sixth in the Midwest—to make recreational cannabis legal under state law.

If Issue 2 passes, a new chapter 3780 in the Ohio Revised Code called Adult Use Cannabis Control would take effect December 7, 2023. However, the cannabis industry expects sales in Ohio of adult use cannabis to commence in the summer of 2024. Continue reading “Ohio Is Poised To Become The Next State to Legalize Cannabis For Adult Use”

September 22, 2023September 25, 2023 by Gregory Slotnick

New York’s Conditional Recreational Cannabis Licensing Process Goes up in Smoke as State Regulators Ask Court to Stay Injunction Order

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”

April 17, 2023 by Michael D. Schwamm

New York City Introduces Several Local Laws Aimed at Helping to Control the Unlicensed Cannabis Industry in NYC

Two pieces of legislation were recently introduced in the New York City Council aimed at controlling the unlicensed cannabis market in New York City.

The first bill bill would prohibit knowingly leasing commercial premises to a tenant who uses the premises for distribution or sale of cannabis or cannabis products without a license. The first time that an unlicensed cannabis seller is found to be operating in leased commercial premises, the Sheriff, Police Department, or any other relevant agency would issue a warning to the owner of the premises. If an unlicensed cannabis seller is later found to be operating in the same commercial premises, the owner would be liable for civil penalties. https://legistar.council.nyc.gov/LegislationDetail.aspx?From=Alert&ID=6165428&GUID=33A0F77B-950A-4A9E-8033-F0316A346404&Options=ID%7CText%7C&Search=cannabis

The second bill would require the Department of Health and Mental Hygiene to collaborate with the Department of Consumer and Worker Protection and any other relevant agency to create and implement a public awareness campaign on the dangers of purchasing cannabis or cannabis products from unlicensed cannabis retailers. The campaign would target minors and young adults and focus on the risks of consuming cannabis products adulterated with synthetic cannabinoids and other harmful substances and the risk of purchasing such products from unlicensed cannabis retailers .https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6165413&GUID=59A6FC8D-E54A-43D2-B621-906AA1B706A2&Options=&Search=

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.

January 16, 2023January 16, 2023 by Brad A. Molotsky

Adult Use Cannabis – the United States Virgin Islands passes adult use cannabis legislation!

In case you might have missed it with your year end festivities, the U.S. Virgin Islands became the latest U.S. region to legalize adult-use cannabis. Once regulations are finalized, the rules will allow residents and visitors to purchase medical and/or recreational cannabis products from licensed dispensaries. The bill was signed by Governor Bryant and is now effective.

The legislation also includes provisions proposed by Senators Sarauw and Bolques and automatically expunges cannabis possession charges in the territory.

Medical cannabis was previously approved in 2019 but the legislature continues to work on the applicable rules and regulations for the program.

It is estimated by Commissioner Richard Evangelista that it will likely be another 18-24 months before the government can finalize the applicable regulations for medical and adult use.

Sarauw said that even now, with adult-use reforms now heading to the governor’s desk, “we have done absolutely nothing to move cannabis forward.”

At the moment, current rules decriminalize the possession of up to an ounce of cannabis in the U.S. Virgin Islands.

Key Take Away – the USVI has now officially approved adult use cannabis which will likely spark (sorry, could not resist) multiple businesses and business lines to look to establish operations in the Territory. Grow, manufacture, dispensing and businesses supporting these operations are sure to continue their thought processes as to how to engage and become licensed pending final rules to be issued by the Department of Licenses and Consumer Affairs.

Duane Morris has an active Cannabis Team to help organizations and individuals plan, respond to, and execute on your cannabis and hemp initiatives. We would be happy to discuss your proposed project and how these new rules might apply to you. For more information or if you have any questions about this post, please contact Brad A. Molotsky, or Tracy Gallegos, Seth Goldberg, or Paul Josephson who co-head the Cannabis Group or the attorney in the firm with whom you in regular contact .

January 11, 2023January 11, 2023 by Duane Morris

Is Your Business OSHA-Ready? Health and Safety Implications for Cannabis Industry Workplaces

If you employ workers in the cannabis industry, consider including workplace health and safety among your top priorities as you set goals for the new year.

With the rapid growth of the cannabis industry comes increased scrutiny from government regulators, including those charged with enforcing workplace health and safety laws. For example, in December 2022, cannabis producer and retailer Trulieve announced that it reached a settlement with the Occupational Safety and Health Administration (“OSHA”) of a citation issued in June 2022 for alleged violations of the Occupational Safety and Health Act. The citation followed OSHA’s investigation of the death of a Trulieve production worker from asthma-related complications allegedly related to her occupational inhalation of cannabis dust. As part of the resolution of the citation, Trulieve agreed to study the hazards of exposure to ground cannabis dust for purposes of determining whether cannabis dust should be classified as a “hazardous chemical” for OSHA purposes. Expected to be complete in May 2023, the study is likely to have nationwide implications for employers in the cannabis industry. Continue reading “Is Your Business OSHA-Ready? Health and Safety Implications for Cannabis Industry Workplaces”