cannabis regulation – Cannabis Industry

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=

January 9, 2023 by Nicholas A. DiMarco

New York Approves Draft Rules regarding Local Time, Place, and Manner Restrictions

On November 21, 2022, the New York State Cannabis Control Board (the “Board”) approved draft regulations under the Marihuana Regulation and Taxation Act (“MRTA”) that address, among other subjects, the scope of “municipal rulemaking,” or the authority retained by cities, counties, towns, and villages to enact “time, place, and manner” restrictions on the operation of adult-use retail dispensaries and on-site consumption sites within their jurisdiction.

Short of opting out from the marijuana retail market altogether, the MRTA permits municipalities to exercise control over the market by passing “local laws and regulations governing the time, place and manner of the operation of licensed adult-use cannabis retail dispensaries and/or on-site consumption site,” so long as the law does not make the operation of such facilities “unreasonably impracticable” as determined by the Board. But while “time, place, and manner” restrictions have a long history in First Amendment jurisprudence, see City of Renton v. Playtime Theatres, 475 U.S. 41, 46 (1986), what do they mean in the context of regulating the marijuana retail market? Continue reading “New York Approves Draft Rules regarding Local Time, Place, and Manner Restrictions”

September 6, 2022 by Michael D. Schwamm

Could the NY conditional adult use retail dispensary program (CAURD) be in jeopardy?

A Maine law requiring all owners of medical marijuana businesses to be residents of the state was recently struck down by the US Court of Appeals for the First Circuit, which ruled that the statute is a violation of the “Dormant Commerce Clause” of the United States Constitution, which prohibits states from passing legislation that restricts interstate trade. In its opinion (Northeast Patients Group et al. v. United Cannabis Patients and Caregivers of Maine, the Appellate Court upheld a lower court ruling that the residency requirement is an unconstitutional restriction on interstate trade.
Under the Maine’s medical marijuana program, all directors or officers of a licensed medical cannabis dispensary are required to be residents of the state. Interestingly, Maine had already dropped its residency requirement for its adult-use market following an earlier legal challenge that was also based on the Dormant Commerce Clause but it sought to keep it in place for its medical cannabis program.
This could be a problem for NY’s new adult use cannabis program, as of the requirements is that the potential licensees must have been arrested (or are related to someone who was arrested) for a marijuana related crime in New York and must also have been a New York resident at the time of the arrest. This could like be deemed a residency requirement and thus lead to challenges not only to any individual licenses grants but the entire CAURD program.
Equally or possibly even more problematic is the fact that this ruling could also open the door to legal challenges to a variety of other State laws banning the exporting or importing of cannabis from other states, as the same rationale invalidating the residency requirements could come, as disallowing cannabis exports and imports between states could be construed as similarly placing unreasonable restrictions on interstate commerce.

June 16, 2021 by Duane Morris

Webinar Replay: Big Money Meets Big Government: Greenlighting Mergers as State and Federal Regulators Step Up Scrutiny

A video replay of the webinar “Big Money Meets Big Government: Greenlighting Mergers as State and Federal Regulators Step Up Scrutiny” is available to view.

May 19, 2021 by Duane Morris

Webinar: Big Money Meets Big Government: Greenlighting Mergers as State and Federal Regulators Step Up Scrutiny

Duane Morris is hosting the webinar, “Big Money Meets Big Government: Greenlighting Mergers as State and Federal Regulators Step Up Scrutiny,” on June 15, 2021, from 12:30 p.m. to 1:30 p.m. Eastern.

Join Duane Morris’ Brian Pandya, former Deputy Associate Attorney General, who will discuss the M&A landscape and other regulatory enforcement challenges and opportunities; American Trade Association for Cannabis and Hemp (ATACH) co-founder Michael Bronstein; and Paul Josephson, former chief counsel to the New Jersey governor and director of the NJ Division of Law and advisor to trade associations and several leading MSOs, for a discussion on how acting and new government personnel affect the policies, landscape and issues related to the big deals that are currently in process.

For more information and to register, visit the event website.

April 28, 2020April 28, 2020 by David E. Landau

Cannabis Industry Ramps Up Efforts to Obtain Covid-19 Financial Assistance

In an April 28th letter authored by the American Trade Association for Cannabis and Hemp (ATACH) and the Policy Center for Public Health and Safety, 24 state-level cannabis trade associations from across the country called on Congress to end the Small Business Administration’s exclusion of cannabis businesses from COVID-19 federal funding relief.

Although a number of states have deemed medical marijuana companies- and in some cases adult use marijuana companies- “essential” businesses, the SBA has excluded them from the Economic Injury Disaster Loans because marijuana is still a prohibited Schedule 1 Controlled Substance. Even worse for the industry, SBA has included ancillary cannabis companies in its prohibition. The cannabis industry is also ineligible for the Paycheck Protection Program and the Employee Retention Credit.

This issue was first flagged by industry groups in early April when they wrote to governors asking them to fill the gap. The industry’s allies in Congress then took up the cause. Almost three dozen members of the U.S. House of Representatives signed a letter to congressional leaders urging that cannabis companies be included in future federal relief packages aimed at stimulating the economy during the COVID-19 outbreak. A group of 10 U.S. senators followed on April 22nd with their own letter urging congressional leaders to include small, state-legal marijuana businesses and ancillary companies in any future coronavirus relief packages. On April 23^rd, Reps. Earl Blumenauer and Ed Perlmutter introduced the Emergency Small Business Health and Safety Act which would make cannabis businesses eligible for the SBA programs.

The ATACH letter urges Congress to amend the CARES Act to make cannabis businesses eligible for all available loans tax credits and other pandemic-related assistance. The letter also suggests Congress authorize fixed block grants to each state for non-specific pandemic relief. This would leave it up to the stated to tailor relief efforts and a individual state could make funds available to cannabis businesses.

January 10, 2020April 6, 2020 by Justin A. Santarosa

California’s Governor Proposes Changes to Cannabis Regulation and Taxation

Gavin Newsom, Governor of California, released his proposal for the State’s budget today, outlining a number of items of importance for the California cannabis industry.

The most noteworthy proposal is regulatory consolidation. In an effort to improve and simplify regulatory oversight of commercial cannabis activity, the Governor’s office is proposing to consolidate the three licensing entities that are currently within the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health, into a single “Department of Cannabis Control” by July 2021.

Such a change would be welcomed by many operators in the State, especially vertically integrated operators who must now contend with multiple state agencies that have different regulatory requirements and interpretations. This may also boost M&A activity in the state, given that it could lead to more consistent regulations regarding ownership changes and a more efficient regulatory approval process. A single regulatory agency would also streamline fee collections and enforcement. More details on this proposal are expected in the Spring of 2020 and we will be watching closely for those updates.

Additionally, the budget looks to “fix” what many consider to be a broken cannabis taxation regime. The Governor states that the goal of the proposal is to reduce the tax collection burden on the cannabis industry and simplify the tax collection process. The proposed changes move the responsibility for the cultivation excise tax from the final distributor to the first, and for the retail excise tax from the distributor to the retailer.

While no changes to the tax rates are specified, the proposed budget does state that the Governor will consider other changes to the existing cannabis tax structure, including the number of taxes and tax rates. The California tax burden is viewed as one of the major inhibitors of the growth and success of the cannabis market in the state.

We will continue to monitor these developments as they unfold, so please check back for further updates and analysis.

July 16, 2019 by Duane Morris

New Illinois Cannabis Law Sets Licensing, Regulation Trends

On June 25, Illinois Gov. J.B. Pritzker (D) signed into law the Cannabis Regulation and Tax Act, making Illinois the 11th state in the country to legalize cannabis and the first to have a legislature approve commercial sales without a voter referendum.

Legalizing marijuana in Illinois is expected to generate revenue to help restore poverty-and crime-ridden communities and fund substance abuse, mental health, and law enforcement services. Adult-use cannabis sales could net Illinois about $500 million in tax revenue annually, according to some experts. The act takes effect Jan. 1, 2020.

The Illinois law will end cannabis prohibition and replace it with a comprehensive and highly regulated system to tax and regulate cannabis for adults 21 and over.

To view the full text of this article written by Duane Morris attorney Neville Bilimoria, please visit the Duane Morris website.

May 29, 2019May 29, 2019 by Duane Morris

“How to Free CBD from the FDA’s Grasp: Call It GRAS,” The Cannabis Reporter Radio Show with Rick Ball

Duane Morris partner Rick Ball was a guest speaker on The Cannabis Reporter Radio Show, hosted by Snowden Bishop, on May 20, 2019. The episode is titled “How to Free CBD from the FDA’s Grasp: Tell Congress to Call It GRAS,” and can be found on The Cannabis Reporter website.

About the Episode

When Congress legalized agricultural hemp with the passage of the 2018 Farm Bill, it seemed like the hemp industry would finally be out of the woods from a regulatory standpoint. So, it defies logic that the FDA is creating obstacles for hemp CBD producers and that every-day people are still being arrested for possession of hemp biomass and extracts.

Just last week, a 67-year-old great grandmother was arrested at the happiest place on earth when a Disney World employee discovered a bottle of CBD in her purse after a routine inspection at the park entrance. You may recall the truck driver who was arrested in Idaho with a load of freshly harvested hemp on its way from Oregon to a processing plant in Colorado just weeks after the hemp measure was signed into law.

Incidents like that leave most of us scratching our heads, considering that hemp is now legal at the federal level and hemp-derived CBD is a harmless molecule that is naturally produced in our own bodies when we’re young.

Let’s face it, legal hemp seems to be an oxymoron. Minutes after the hemp measure was signed into law, the FDA blindsided the elated industry with its stern warning that only one CBD product has ever been approved for sale in the U.S. and that all other hemp CBD products would remain illegal to sell until they can be approved by the FDA. The only exceptions would apply to the manufacturing and sale of CBD limited to states that had included CBD provisions in their state marijuana policy measures.

To read more about this episode and listen to the interview with Duane Morris attorney Rick Ball, please visit The Cannabis Reporter Radio Show page here.

February 5, 2019 by Duane Morris

The 2018 Farm Bill Preserves FDA Right to Regulate Cannabis Products

Last year was a record year for cannabis. Canada passed the Cannabis Act, making adult-use cannabis legal there. The FDA approved a cannabidiol-based medicine, Epidiolex. And the President signed the Agriculture Improvement Act of 2018, aka the 2018 Farm Bill, into law on December 20, 2018.

While the 2018 Farm Bill granted the U.S. Department of Agriculture the ability to regulate hemp, it also preserved the right for the U.S. Food and Drug Administration (FDA) to regulate products containing cannabis or cannabis-derived compounds. The FDA regulates products such as human and animal drugs, biological products, cosmetics, food and animal feed, among other things. So any inclusion of cannabis or cannabis-derived compounds, like CBD, in any of those types of products would be regulated by the FDA. The FDA has stated that this is true regardless of the source of the cannabis substance, be it hemp or marijuana.

Read the full Duane Morris alert.