legal marijuana – Cannabis Industry

June 16, 2023 by Deanna J. Lucci

NYS Office of Cannabis Management June 2023 Updates

This week, the New York State Cannabis Advisory Board (CAB) and the Cannabis Control Board (CCB) held meetings to discuss the current state of the cannabis industry and proposed regulations and legislation. The CCB is the approval and oversight body of the Office of Cannabis Management and is responsible for approving the regulatory framework for New York’s cannabis industry. This includes licensing cannabis businesses and approving the regulations and rules that will govern the cannabis industry in the state.

Cannabis Advisory Board Meeting

On June 13, 2023, the CAB met at CUNY School of Law in Queens to discuss the revised proposed regulations after receiving 3,500 public comments. These regulations range from focusing on achieving environmental and sustainability targets in the industry to rules for third-party platforms. Current proposals involve allowing the current Registered Organizations (i.e. vertically integrated medical cannabis operators) to co-locate three adult use dispensaries among their eight medical dispensaries. The CCB will vote on the final regulations at its first meeting in September. The CAB and CCB’s hope is to have a live functioning cannabis industry “with all the bells and whistles.”

The Conditional Adult-Use Retail Dispensary (CAURD) License is the first retail dispensary license available to businesses in New York State. These licenses are awarded to justice-involved New Yorkers and their family members. A “justice-involved” individual is someone who has been convicted of certain marijuana-related offenses in New York.

The State hopes to create a foundation to support an equitable industry. The CAB discussed the benefits of being a part of the CAURD Academy, which offers live education, seminars, office-hour meetings, calls with operators from other states, one-on-one mentorship, vendor demos, and access to accountants. Twenty-five licensees have taken part in the Academy thus far.

The CAB also discussed the NY Social & Economic Equity Plan and its recent report analyzing the national landscape of the cannabis market. Between 1980 and 2021, cannabis-related misdemeanor and felony convictions resulted in lost lifetime earnings of approximately $31 billion, and Black and Hispanic people accounted for 83% of those losses.

Acknowledging that it is inherently difficult for small operators to compete against large corporations, regardless of funding, the CAB agreed that New York State must protect its two-tiered market, enforce antitrust laws, protect against predatory practices, and approve regulations that are pro-competition and pro-employee. The CAB noted that cannabis cultivators and farmers want a clear path to licensure, additional Registered Organizations, and a community-driven incubator program.

Cannabis Control Board Meeting

On June 15, 2023, the CCB met in Buffalo to discuss recent Board updates and hear from the public. Chair Tremaine Wright opened the meeting by assuring New York residents that the state is continuing to open more dispensaries, expand access, and further develop New York’s cannabis supply chain.

The CCB approved Resolution No. 2023-23: Consideration of Conditional Adult-Use Retail Dispensaries. This adds 36 CAURD licenses in the Bronx, Brooklyn, Manhattan, Queens, Central NY, Mid-Hudson, and‒for the first time‒the Finger Lakes. Seven dispensaries were approved in the Finger Lakes region. This approval brings the number of CAURD to 251. Wright said these locations will help farmers get more of their product to market.

The Board then presented updates to the market. There are currently 13 open retailers statewide with more than 40 in development. Twenty-one percent of New Yorkers now live in a city with legal cannabis access. Some dispensaries are delivery-only, which is a new form for the state. Consumers are asked to look for a QR code on the window of the dispensary confirming that it is approved by the state. Retail sales are growing; cannabis sales year-to-date are $22.6 million. Some of the dips in sales were attributed to pop-up shops that have transition to brick-and-mortar spaces, which often require a brief shutdown to build out a new space. Product innovations are occurring regularly. Flower sales make up 51% of the revenue, with the rest split between beverages, complex caramels, premium vapes, and more. This widening of product options draws more consumers to the legal market.

The Executive Director reported next that under a newly enacted law, the Office of Cannabis Management (OCM) and the taxing authorities began raids on unlicensed businesses since June 7, 2023. This law allows OCM to take action against businesses selling cannabis without licenses, bolsters OCM authority by conducting regulatory inspections, utilizes court orders to padlock doors if necessary, and allows OCM to seize illicit cannabis.

Each location inspected is issued a notice of violation for selling cannabis without a license. The maximum penalty is $10,000 per day, plus potential additional penalties and consequences if sales continue.

Finally, during the closing comments, board member Reuben McDaniel resigned, presumably as a result of the perceived conflict of interest of his being both a CCB board member and also as the president of DASNY.

December 4, 2020December 4, 2020 by Deanna J. Lucci

House Passes Bill To Legalize Marijuana at the Federal Level

Today, the House of Representatives passed the groundbreaking MORE Act – legalizing marijuana at the federal level. The bill passed by a vote of 228 to 164.

As we previously discussed in our November 10th and September 4th blog posts, the MORE Act (Marijuana Opportunity Reinvestment and Expungement Act of 2019 – H.R. 3884) legalizes marijuana and cannabis at the federal level, by removing them from the Controlled Substances Act and eliminates some cannabis criminal records.

While the bill represents a first step toward legalizing cannabis, states would need to adopt similar measures to fully decriminalize its use – currently, 15 states and the District of Columbia have legalized (or recently voted to legalize) cannabis for adult recreational use, and 35 states and the District of Columbia have legalized medical cannabis.

The bill also makes other changes, including:

Replaces statutory references to marijuana and marihuana with cannabis,
Requires the Bureau of Labor Statistics to regularly publish demographic data on cannabis business owners and employees,
Establishes a trust fund to support various programs and services for individuals and businesses in communities impacted by the war on drugs,
Imposes a 5% tax on cannabis products and requires revenues to be deposited into the trust fund,
Makes Small Business Administration loans and services available to entities that are cannabis-related legitimate businesses or service providers,
Prohibits the denial of federal public benefits to a person on the basis of certain cannabis-related conduct or convictions,
Prohibits the denial of benefits and protections under immigration laws on the basis of a cannabis-related event (e.g., conduct or a conviction), and
Establishes a process to expunge convictions and conduct sentencing review hearings related to federal cannabis offenses.

While Sen. Kamala D. Harris (D-CA), the Vice President-Elect, introduced a counterpart bill (S.2227) in the U.S. Senate, its passage in the chamber is unlikely this Congress as Senate Majority Leader Mitch McConnell (R-KY) has declined to endorse the bill.

While this legislation is unlikely to pass the Senate this Congress, proponents of cannabis legalization have hailed the House vote as historic, and an important first step toward generating the momentum and support needed to favorably position the measure for future congressional consideration. And whether the measure would be approved by the next Congress likely depends on the outcome of the two Georgia Senate runoff elections scheduled for January 5, 2021. If both Democratic Senate candidates, Jon Ossoff and Rev. Raphael Warnock, win the runoffs, then the Democrats will control both the House and Senate, with Vice President-Elect Kamala Harris casting the tie-breaking vote.

However, it is unclear if President-Elect Joe Biden would sign the bill since he has proposed rescheduling cannabis as a schedule II drug so researchers can study its positive and negative impacts as opposed to removing it entirely from the list of scheduled substances. While Biden has expressed support for decriminalization of marijuana, expungement of prior cannabis use convictions, and legalizing cannabis use for medical purposes – he has said he wants to leave decisions regarding adult recreational use to the individual states. Nonetheless, marijuana legalization advocates believe this symbolic vote on the legislation could send a strong signal to the Biden administration that this is a Democratic priority.

Even though federal legalization may not be on the immediate horizon, the passage of the MORE Act in the House, and the legalization of adult-use and/or medical marijuana in five more states on November 3, 2020, could influence a Biden-appointed attorney general’s views on enforcement of marijuana related activities. While AG Sessions attempted to reverse the liberal Obama administration marijuana policies set forth in the Cole Memorandum, and AG Barr has reluctantly acknowledged that the Cole priorities have been relied on and should thus be followed, an AG appointed by Biden, given the current pro-legalization wave, Biden’s favoring of state’s rights on this issue, and Kamala Harris’s favoring of decriminalization, might endorse an approach consistent with, if not even more liberal than, the Cole priorities. Thus, while the appointment of AG Sessions sent shockwaves through the cannabis industry, market participants and those who have been standing on the sidelines eager to get on the field seem to have a lot to look forward to.

November 4, 2020November 4, 2020 by Seth A. Goldberg

State-Legal Marijuana a Clear Winner in 2020 Voting

Voters in the five states where the legalization of marijuana was on the ballot voted in favor.

In the populous states of New Jersey and Arizona, voters legalized marijuana for recreational use by adults over the age of 21. Given New Jersey’s proximity to New York and Pennsylvania, where medical marijuana programs have been popular, legalization in New Jersey could have a domino effect in the northeast, especially considering the tax revenue that will be gained by New Jersey from New York and Pennsylvania residents who travel there every day for work, the Jersey shore and casinos, and other reasons.

Voters in South Dakota and Montana also voted to legalize marijuana for recreational purposes, South Dakota voters also approved medical marijuana, and voters in Mississippi voted to legalize marijuana for medical purposes to treat 22 qualifying health conditions.

Seth Goldberg is a Team Lead of the Cannabis Industry Practice at Duane Morris.

September 4, 2020 by Deanna J. Lucci

House to Vote on Marijuana Legalization Bill This Month

For the first time ever, the U.S. House of Representatives will vote this month on legislation that if enacted would legalize marijuana and cannabis at the federal level, by removing them from the Controlled Substances Act and eliminate some cannabis criminal records.

The MORE Act (Marijuana Opportunity Reinvestment and Expungement Act of 2019 – H.R. 3884) would decriminalize marijuana at the federal level by removing it from the list of scheduled substances under the federal Controlled Substances Act, and would further eliminate criminal penalties for an individual who manufactures, distributes, or possesses marijuana. While the bill represents a first step toward legalizing cannabis, states would need to adopt similar measures to fully decriminalize its use – currently, 11 states and the District of Columbia have legalized cannabis for adult recreational use, and 33 states and the District of Columbia have legalized medical cannabis.

The bill also makes other changes, including:

Replaces statutory references to marijuana and marihuana with cannabis,
Requires the Bureau of Labor Statistics to regularly publish demographic data on cannabis business owners and employees,
Establishes a trust fund to support various programs and services for individuals and businesses in communities impacted by the war on drugs,
Imposes a 5% tax on cannabis products and requires revenues to be deposited into the trust fund,
Makes Small Business Administration loans and services available to entities that are cannabis-related legitimate businesses or service providers,
Prohibits the denial of federal public benefits to a person on the basis of certain cannabis-related conduct or convictions,
Prohibits the denial of benefits and protections under immigration laws on the basis of a cannabis-related event (e.g., conduct or a conviction), and
Establishes a process to expunge convictions and conduct sentencing review hearings related to federal cannabis offenses.

The bill, which is expected to be brought to the floor for a vote and pass sometime this month, was originally introduced last year by Rep. Jerrold Nadler, D-N.Y. and approved by the House Judiciary Committee in November. While a counterpart bill (S.2227) has been introduced in the U.S. Senate by Sen. Kamala D. Harris (D-CA) – the Democratic Vice Presidential nominee – its passage in the chamber is unlikely as Senate Majority Leader Mitch McConnell (R-KY) has declined to endorse the bill, making its chances of successfully moving through committee and to the Senate floor for a vote virtually impossible. Without action in the Senate, the bill will die this Congress. However, proponents of cannabis legalization – as well as civil rights and civil liberties organizations, and criminal justice reform advocates – are still hailing the House vote as historic, and an important first step toward generating the momentum and support needed to favorably position the measure for future congressional consideration.

Prospects for the successful consideration and approval of the measure by the next Congress will likely hinge on the outcome of the November election.

Vice President Joe Biden, the Democratic presidential nominee, has proposed rescheduling cannabis as a schedule II drug so researchers can study its positive and negative impacts. Biden has expressed support for decriminalization of marijuana, expungement of prior cannabis use convictions, and legalizing cannabis use for medical purposes – but wants to leave decisions regarding adult recreational use to the individual states. If elected, Biden and Harris would likely seek to decriminalize cannabis but stop short of advocating for federal adult use legalization, allowing the individual states to decide.

March 18, 2019 by Brad A. Molotsky

NJ Adult Use Bill – Two Steps Closer to a March 25th Vote – Brad A. Molotsky, Esq.

According to late night reporting from NJ Biz – Dan Munoz, who has been all over this topic, committees in both the NJ Assembly & Senate approved a measure that would legalize adult-use recreational marijuana, setting the proposals for a showdown full-floor vote in 7 days from now on March 25.

Senate Bill 2703 passed by a 6-4 vote with one abstention in the Senate Judiciary Committee Monday evening while its counterpart, Assembly Bill 4497, passed by a 6-1 vote with two abstentions at the Assembly Appropriations Committee.

Both measures would allow for anyone over 21 years of age to possess up to an ounce of marijuana.

The product would be taxed at $42 an ounce and the industry would be regulated by a five-person Cannabis Regulatory Commission, which will function similarly to how the Casino Control Commission operated following the legalization of gambling in the 1970s.

The approval of both measures followed hours of closed-door meetings as lawmakers hammered out last-minute changes to the legislation, including a dramatically increased expungement process for people with marijuana-related convictions.

Stay tuned for a detailed analysis as the final bill is published. – Brad

February 2, 2018February 22, 2018 by Seth A. Goldberg

Contingency Fees and Commercial Litigation Hit the Cannabis Space

As the values of transactions in the cannabis industry grow, commercial litigation is certain to follow. One reason for this is that lawyers may be more inclined to represent clients on a contingency fee basis. Where the value of a cannabis transaction is small, the expense of litigation may not be worthwhile for an individual or business feeling cheated, and any settlement or judgment would likely not cover the costs of an attorneys’ contingency fee. However, where the value of a cannabis transaction is sufficiently high, say the upper six-figures or more, a lawyer may be more inclined to take the case for a contingency fee because the lawyer’s percentage of any recovery is likely to be greater than the costs the lawyer will incur in litigating the matter. A contingency fee arrangement may also be utilized to the advantage of a party that believes threatened or actual litigation might shift the leverage in negotiations and result in more attractive commercial terms.

A recently filed action captioned Silver v. High Street Capital et al., 2:18-cv-00020 (E.D. PA. 1/3/18), appears to result from the type of high value transaction that might warrant a contingency fee in a commercial litigation. The plaintiff, industry consultant Harris Silver alleges that, in connection with their bid to obtain a license to grow and process cannabis pursuant to Pennsylvania’s Medical Marijuana Program, defendant High Street Capital and other defendants associated with High Street promised Silver a lucrative compensation package, including (a) $180,000 to prepare the license application; (b) a $150,000 cash bonus upon the granting of a license and a 4% non-dilutable equity stake in any licensee; and (c) a salaried position with the licensee. Silver claims that notwithstanding his work on the High Street application, for which a permit was granted, the High Street defendants never paid Silver the valuable consideration that was contingent on the permit being granted. Thus, based on a host of factual allegations detailing various communications he had with the High Street defendants, and other allegations detailing his efforts on their behalf, Harris asserted claims against the High Street defendants for breach of contract, common law fraud, promissory estoppel, unjust enrichment, securities fraud and civil conspiracy. Continue reading “Contingency Fees and Commercial Litigation Hit the Cannabis Space”

January 12, 2018February 22, 2018 by Seth A. Goldberg

Adult-Use Marijuana Bill Introduced in New Jersey

With the election of Phil Murphy as New Jersey Governor in 2017, the possibility of New Jersey becoming one of the next states to pass recreational marijuana legislation became very real, as this was among the issues key to Murphy’s campaign.

On Tuesday, January 9, 2018, less than one week after AG Sessions issued guidance to all US Attorneys rescinding Obama-era policies deprioritizing the federal prosecution of state-lawful cannabis-related activities, that possibility became more of a likelihood, as New Jersey Sen. Nicholas Scutari introduced Senate Bill 830, which would allow for the cultivation, sale and use of marijuana for recreational purposes in New Jersey by those 21 and older.

The legislation proposes adults would be permitted to possess up to 1 ounce of marijuana, 16 ounces of marijuana-infused products in solids, 72 ounces in liquid form, 7 grams of concentrate and up to six immature plants, and establishes a sales tax on marijuana that would rise incrementally from 7 percent to 25 percent over five years.

December 22, 2017 by Seth A. Goldberg

2018 Should Be The Year Cannabis Ends The Opioid Crisis…. Fingers Crossed!

Articles appearing this week in the LA Times and the Philadelphia Inquirer, among other recent articles, highlight the horrors of the opioid crisis and the need for research into cannabis as a possible solution. While the federal government warns about the spiraling toll of the opioid epidemic, it refuses to grant the applications of world-renowned scientists at major universities and research centers seeking to explore the ways in which the well-documented therapeutic properties of cannabis can alleviate the pain and suffering – physical, emotional and financial – being caused by opioid abuse. There is no shortage of deep pockets willing to fund the research, and US-based scientists are ready, willing and able to get to work, yet the federal government refuses to depart from its antiquated “reefer madness” established in the early 20th Century. 2018 should be the year the federal government stops blocking cannabis research so that scientists can determine if and how cannabis can stem the opioid crisis. Fingers crossed!

October 6, 2017 by Seth A. Goldberg

Insuring Cannabis Businesses

As I note in the linked article, insurers only stand to gain, and in big ways, from underwriting cannabis businesses. Growers, processors, dispensaries and ancillary businesses need a full range of coverage, and are ready to obtain it! Just as in any industry, insurance is a critical component to success in the cannabis space and will hasten the growth of markets already expanding at warp-speed. There are ways for insurers to cover the medical and recreational marijuana markets notwithstanding the regulatory uncertainty. It may require some creativity, but given the financial upsides, it should be well-worth the time and effort it takes to find the optimal pathway.

September 22, 2017 by Duane Morris

Know the Law: The Legal Side of a Cannabis Business

Join Duane Morris’ Patricia Heer at the October 12 NYC Women Grow event, “Know the Law: The Legal Side of a Cannabis Business,” in Duane Morris’ New York office, starting at 6:30 p.m.

The panel discussion will address the legal issues that current, future or ancillary businesses need to consider when working in the cannabis space.

Speakers

Patricia H. Heer Special Counsel, Duane Morris, LLP

Deanna Clark-Esposito, Managing Attorney, Clark-Esposito Law Firm, P.C.

Lauren Rudick, Partner, Hiller, PC

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