Tag Archives: legal marijuana

Contingency Fees and Commercial Litigation Hit the Cannabis Space

Seth Goldberg
Seth A. Goldberg

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

Adult-Use Marijuana Bill Introduced in New Jersey

Seth Goldberg
Seth A. Goldberg

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.

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

Seth Goldberg
Seth A. Goldberg

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!

 

 

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.

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.

Patricia Heer Presenting at 4th Annual Cannabis World Congress and Business Expo in Boston

Duane Morris’ Patricia Heer will be presenting at the 4th Annual Cannabis World Congress and Business Exposition in Boston on October 4-6, 2017.

Patricia’s presentation, “Cannabis and Social Media with Some Practical and Legal Implications,” will take place on Friday, October 6 at 11:00 a.m.

The Annual Cannabis World Congress and Business Expos are the leading forums for doing business in one of the fastest growing industries in the United States. If you’re employed in the cannabis industry, a current business owner, interested in starting a cannabis business, provide private equity and investment resources, or provide professional or business services, these events provide numerous informative presentations and networking opportunities.

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

Should We or Shouldn’t We? – That Is the Question

Over the past few years the number of states that have legalized marijuana in some form has grown substantially to the point where, as of this writing, 29 states and the District of Columbia have legalized marijuana for either medical or recreational use. This recent acceptance of marijuana by a significant number of states has created a brand new industry, which is estimated to generate approximately $7.0 billion in 2017 and $24.5 billion by 2025. This industry is clamoring for acceptance into a financial system that allows participants to bring the cash generated into the secure environment afforded by our banking system. This will not only provide security to the marijuana related businesses (“MRBs”), but will also permit better accounting, monitoring, and taxing of funds generated by those businesses.

To read the full text of this article, please visit the Duane Morris LLP website.

David Feldman

Massachusetts Approves Cannabis Adult Use Legislation

Eight months after Massachusetts voters approved legal adult use of cannabis,on July 28, 2017, reluctant Republican Gov. Charlie Barker signed legislation to start a year long phase-in of permitting adults to buy and use cannabis. The expectation is that the first stores will be open by next July.

The legislation imposes a 20% tax on adult use cannabis, of which 3% will go to local municipalities. Also, in a unique feature, local governments will have the option to prohibit cannabis stores in their area, unless voters approved the measure in their municipality, in which case voter approval would be required to ban stores. Estimates are that as much as $300 million in taxes might be collected in the state just in the first two years after implementation.

A Cannabis Control Commission has to be appointed by August 1 and the commission will issue regulations by March. As the most populous Eastern state to approve adult use, will Boston and other Massachusetts destinations such as Martha’s Vineyard and Cape Cod see a surge in “cannabis tourism” as Colorado has? Only time will tell.

David Feldman

The World is Slowly Legalizing Cannabis

A fascinating article in Wikipedia scours the globe to see which countries have taken action to legalize or decriminalize the use of cannabis. While we focus heavily on the dramatic trend here in the US, with 29 states and the District of Columbia having legalized at least medical marijuana, it is happening elsewhere too. The most dramatic thus far have been Uruguay, which has fully legalized marijuana, and Canada, which is implementing nationwide legal adult use cannabis next year. South Africa’s prohibitions on private cultivation and use of marijuana were declared invalid this year, so it is now legal there. Possession for personal use of up to 22 grams of marijuana has been legal in Colombia since 1994.

While the majority of countries still prohibit and criminalize the production or sale of cannabis, dozens of nations have decriminalized it, so you just pay a fine if you are caught. Over a dozen countries have legal medical marijuana, and more are considering legal adult use. Here is a list (from the Wikipedia article) of which countries are which.

Legal medical marijuana: Australia, Canada, Colombia, Croatia, Czech Republic, Germany, Israel, Macedonia, Mexico, Phillipines, Poland, Turkey, Uruguay

Legal adult use marijuana: Canada (coming), Colombia, India (only in several provinces), South Africa, Spain (with limitations), Uruguay

Marijuana use decriminalized: Belgium, Bolivia, Cambodia, Chile, Costa Rica, Ecuador, Georgia, Greece, Israel (coming), Jamaica (personal use cultivation legal), Luxembourg, Malta, Mexico, Moldova, Netherlands, Paraguay, Peru, Portugal, Russia, Slovenia, Spain, Switzerland, Ukraine, US Virgin Islands