Seth A. Goldberg – Page 4 – Cannabis Industry

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.

June 30, 2020 by Duane Morris

Chambers Associate Interviews Seth Goldberg for Cannabis Insight

Seth Goldberg, partner and team lead of Duane Morris’ Cannabis Industry Group, is interviewed by Chambers Associate about the current and future state of the cannabis industry.

From the publication:

A lot can change in a decade. From illicit plumes of smoke cloaking skate parks and college dorm rooms, to a multibillion-dollar legitimate industry, cannabis has come a long way. In 2019, New Frontier Data – an organisation dedicated to providing information on the legal cannabis market – estimated the industry to be valued at $13.6 billion, with over 300,000 jobs involved.

As is common to growing industries like this (we’re here all day!), lawyers are getting very busy within this new revolution. To this end, we spoke with Duane Morris partner Seth Goldberg to unpack some of the realities of working in such an embryonic space. Goldberg leads Duane Morris’ dedicated Cannabis Industry Group and has been at the forefront of the legal cannabis sector.

To read the full article, please visit the Chambers Associate website.

June 17, 2020 by Seth A. Goldberg

Is this a Trend? A Third Court Stays Class Action Given FDA’s Primary Jurisdiction Over CBD

Yesterday, the U.S. District Court for the Eastern District of California stayed the matter styled Glass v. Global Widget d/b/a Hemp Bombs, a consumer class action alleging that Hemp Bombs, which manufactures CBD-infused edibles, tinctures and capsules, falsely advertised the amount of CBD in its gummies, and thereby sold products that were misbranded and adulterated under the Food, Drug & Cosmetics Act (FDCA), on the basis that the regulation of CBD is withing the primary jurisdiction of the FDA, which is in the process of developing regulations and guidance over CBD. We have previously written about two other consumer class actions arising out of similar clams of misbranded CBD products that have also been stayed recently under the “primary jurisdiction” doctrine.

Three decisions staying CBD class actions in two months may signal a trend, especially considering that the Courts in these cases refer to the other’s decisions. Such a trend may keep the plaintiffs’ bar at bay, as it would cast doubt on the viability of consumer class actions asserting CBD violations, or at least it could make the cases less appealing to the plaintiffs’ bar because a stay makes the timing of a settlement or resolution even more uncertain.

April 27, 2020April 27, 2020 by Seth A. Goldberg

Commercial Litigation in the Cannabis Space: Resolving Disputes Like Every Other Industry Does

As a commercial litigator who has handled a broad range of claims in highly regulated industries over the past 20 years — particularly in complex matters such as class actions involving claims brought by consumers and shareholders — and given my experience spearheading the development of Duane Morris’ cannabis industry group, which has included providing regulatory and business advice to a number of businesses and individuals with cannabis-related interests, I have been expecting the maturing cannabis industry to eventually mirror other industries when it comes to using commercial litigation to resolve disputes between businesses and to address claims of injury allegedly experienced by aggreived consumers and shareholders. It appears the time has come. Now, as opposed to even just a few months ago, not a day goes by when the daily legal news outlets that report on litigation matters filed in federal and state courts around the country do not include matters pertaining to adult use marijuana, medical marijuana, and/or hemp.

Today alone, legal news outlets are reporting about a shareholder deriviative action being filed against the manufacturer of cannabinoid-containing transdermal patches, a maker of mobile hemp dryers suing a distributor for alledgedly stealing trade secrets, a publicly-traded company that owns cannabis brands being sued for breach of contract by an MSO arising out of a failed merger agreement. Claims like these are among the many product liability, stock-drop and securities fraud, tradmark infringement, FLSA, and employment litigation matters to be filed in 2020 relating to cannabis; not to mention the federal and state regulatory cannabis-related enforcement actions also commenced. Just as in other industries, COVID-19 is likely to spur litigation in the space because of strains on resources and performance caused by business disruptions and the slower economy. To be sure, the plaintiffs’ bar has cannabis on its radar.

Thus, now more than ever, it is critically important for cannabis businesses to implement the necessary compliance measures, including making sure appropriate insurance coverage, e.g. premises, products, and D&O, has been obtained, that could protect their businesses from the cost and disruption of commercial litigation. Likewise, cannabis-specific nuances, such as the enforceability of contracts and jurisdictional questions, require careful evaluation by experienced counsel advising plaintiffs and defendants who are considering filing, or who have been brought into, a commercial litigation.

April 24, 2020 by Seth A. Goldberg

FDA’s CBD Enforcement Continues

On April 20, the FDA issued warning letters to two CBD companies – BIOTA Biosciences and Homero Corp., dba Natures CBD Oil Distribution – directing them to remove statements from their labeling and advertising on websites and social media claiming that CBD can cure opioid addiction among other illnesses. I am attaching the FDA’s warning letter, as it provides very useful information to the market as to the FDA’s current views of CBD products. As set forth in the warning letter, the FDA continues to view CBD as (1) an unsafe food additive; (2) not satisfying the definition of a “dietary supplement,” and (3) as unapproved new drugs if marketed as “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease and/or intended to affect the structure or any function of the body.” In the case of Homero, the CBD products were advertised with the following claims, among others:

“Natures Pure CBD Oil has been effective in the treatment and eradication of opiate use.”
“CBD Oil Inhibits the reward-facilitating effect of morphine”
“Vaping CBD Oil to Treat Asthma . . . Your best best [sic] to combat Asthma is by vaping CBD Oil.”
“Natures Pure CBD is a strong anti-oxidant that can alleviate lower epileptic seizures, psychotic disorders, and has neuroprotective qualities.”

April 24, 2020September 16, 2020 by Duane Morris

“Cannabis 303” Webinar Replay Available

A video replay of the webinar “Cannabis 303: Civil Litigation in the Cannabis Industry: An Unavoidable Consequence of a Maturing U.S. Cannabis Market” is available to view.

April 7, 2020September 16, 2020 by Duane Morris

Webinar: Civil Litigation and COVID-19 Implications for the Cannabis Industry

On Tuesday, April 21, 2020, Seth A. Goldberg, partner and team lead of the Duane Morris Cannabis Industry Group, and Justin M. L. Stern, Duane Morris associate, will present at the webinar, “Cannabis 303: Civil Litigation and COVID-19 Implications for the Cannabis Industry: An Unavoidable Consequence of a Maturing U.S. Cannabis Market.”

Please join the attorneys to review the recent landscape of cannabis-related commercial litigation, discuss the potential impact of COVID-19 on marijuana- and hemp-related civil litigation, and learn best practices for businesses with respect to preparing for, and possibly preventing, potentially resource-draining and almost always disruptive civil litigation matters.

REGISTER

March 26, 2020 by Duane Morris

Essential Yet Illegal: COVID-19 Shows Fed Cannabis Policy is Unsustainable

Although the cannabis reform movement has made incredible strides over the past 25 years, our industry and the medicinal potential of the plant are still not recognized at the federal level. The COVID-19 pandemic is drastically altering our lives but difficult times are able to expose many truths, including the understanding that legalization and safe access to cannabis is critical, especially during a crisis.

Thankfully, many states already have come to the realization that cannabis, especially medicinal use, is not a luxury but a necessity. Although states are restricting access to public places and prohibiting gatherings, many governors have designated cannabis dispensaries as an “essential service.” […]

“Opponents of federal legalization are likely to argue the categorization was merely a natural extension of the law in states that have already legalized medical marijuana to treat certain conditions, and that the uniqueness of the COVID-19 situation limits the ‘essential’ designation to that very urgent and unprecedented fact pattern,” Seth Goldberg, attorney and partner at Duane Morris LLP told mg.

To read the full text of this article, please visit the mg website.

January 23, 2020January 23, 2020 by Duane Morris

Time for a Cannabis Update

Duane Morris partners Neville Bilimoria and Seth Goldberg were quoted in an article in Chicago Lawyer magazine discussing legal issues related to the recent spate of vaping-related illnesses and deaths. Read our partners’ thought leadership on the Duane Morris website or the full article on the Chicago Lawyer website (subscription required).