Tag Archives: Neeraj Kumar

Meet the Duane Morris Lawyers Who Are Working on Some of the Biggest Deals in the Booming Marijuana Industry

With the rapid spread of marijuana legalization in the US, lawyers are discovering that the tangled web of regulations guiding the rapidly growing industry is a boon for business. …

There are several key reasons lawyers are attracted to the marijuana industry. For one, as cannabis companies grow, merge, and start getting the attention of Fortune 500 corporations as acquisition targets, they need more sophisticated advice on financing, tax planning, corporate structure, and M&A. …

That’s an opportunity to a select group of lawyers who have cut a trailblazing path into the industry. Once reluctant, some of the biggest law firms, like Duane Morris, Baker Botts and Dentons, are building out specialized cannabis practice groups as the industry continues to grow in profitability and complexity. …

Business Insider has pulled together a list of the top lawyers who’ve worked on the largest deals in the past year in the growing marijuana industry.


Seth GoldbergDavid FeldmanJen FisherNeeraj Kumar: Duane Morris

Firm: Duane Morris

Location: Philadelphia, New York, and San Francisco

Duane Morris has staked out big territory: It’s one of the few AmLaw 100 firms marketing its cannabis practice group, said Neeraj Kumar, an associate at the firm who works on cannabis issues.

“This is a very good opportunity for our firm,” said Seth Goldberg, the chair of the firm’s practice in Philadelphia. Cannabis is one of the “few emerging markets that has multibillion-dollar potential.”

Goldberg, a seasoned trial lawyer with decades of experience, said he spearheaded the firm’s involvement in the industry in 2014 after Colorado became the first state to allow recreational pot shops.

And for Kumar, the opportunity to become an expert in a field where there’s “a new development every week” was something he couldn’t turn down.

Duane Morris represented iAnthus, a US cannabis company, in its $640 million merger with MPX Bioceutical, also the first public-to-public transaction in the US cannabis industry. Further, the firm has advised investors on real-estate acquisitions.

For more information, visit the Business Insider website.

Cannabis Banking Guidance Unclear After Sessions Action

On January 4, US Attorney General Jeff Sessions rescinded all prior advisory memos on prosecutorial priorities relating to cannabis, including the 2014 Cole Memo which many relied on in entering the space. One consequence of rescinding the Cole Memo is its effect on US Treasury Department guidelines for banks and financial institutions that seek to take cannabis customers. Those 2014 guidelines, issued by the Treasury’s Financial Crimes Enforcement Network (FinCEN), outline processes and filings to be undertaken when a cannabis customer is signed up. The main focus of the process is on due diligence the bank must do on the proposed customer, including ongoing monitoring while the company is a customer. The guidelines also require filing of a “suspicious activity report” (SAR) with FinCEN for each such potential customer.

The banking guidelines focus heavily on the now-rescinded Cole Memo, which suggested the low prioritization of enforcement against people complying with state cannabis laws. The Memo contained a list of exceptions, and if one of the exceptions was present, then enforcement could be pursued. The exceptions included things like providing cannabis to minors, the involvement of organized crime or firearms, and the like. The FinCEN guidelines require a bank to conduct an analysis of whether the potential customer is complying with the Cole Memo priorities. Indeed the type of SAR that the bank must file varies depending on whether or not the potential customer appears to be in compliance with the Cole Memo.

story in Politico quoted a FinCEN spokesman who was asked if they are looking to bring their policies into line with the Justice Department. He said, “FinCEN works closely with law enforcement and the financial sector to combat illicit finance and provide relevant information that allows law enforcement to pursue their priorities. We will continue to work with DOJ and other stakeholders on this issue.” It does appear that confusion and uncertainty on this issue will continue until FinCEN provides further clarification or interpretive guidance. In the meantime, this might mean that some financial institutions will stop servicing cannabis customers and others that were considering it may suspend their efforts.

This post was the combined effort of David Feldman and Neeraj Kumar.

High Cannabis Taxes Could Help Grow California’s Black Market

As California gears up to issue the first set of adult-use cannabis licenses on January 1, 2018, state and local taxes on adult-use cannabis may reach as high as 45% in some parts of the state. According to a recent report by Fitch Ratings, cannabis consumers are expected to pay a sales tax ranging from 22.25% to 24.25%, which includes an excise tax of 15%, and additional state and local sales taxes ranging from 7.25% to 9.25%. Local cannabis businesses will have to pay taxes ranging from 1% to 20% of gross receipts, or $1 to $50 per square foot of cannabis plants, and farmers will be taxed $9.25 per ounce for flower, and $2.75 per ounce for leaves.

These rates are considerably more than in other states that have already legalized adult-use cannabis.  Colorado and Nevada, for example, each have a tax rate of 36%. Oregon comes in at 20% and Alaska has a rate of up to 20%. Massachusetts, which legalized adult-use cannabis, and should begin retail cannabis sales in July 2018, is expected to have a tax rate of 24%. Maine has not established a tax rate yet. Washington is the only other state with higher taxes, at an effective tax rate of approximately 50%.

The legitimate cannabis industry in California has a projected value of $7 billion with the potential to collect $1 billion per year in tax revenue. However, industry leaders in California believe that a higher effective tax rates on consumers, retailers and growers could potentially divert sales to the already well-established cannabis black market. For example, the black market price for an eighth of an ounce of cannabis is approximately $20, as opposed to approximately $50 at a licensed dispensary. High taxes, coupled with a cheaper source of product, could ultimately hamper California’s efforts to legitimize the cannabis industry.  However, since legal cannabis is subject to stringent quality assurance testing which will be overseen by the California Bureau of Cannabis Control, consumers may be willing to pay a premium to ensure that they are getting a better, safer product than they would on the black market.