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, Duane Morris partner and team lead of the Cannabis Industry Group, is quoted in the Philadelphia magazine article, “If Pennsylvania Is Going to Legalize Adult-Use Marijuana, This Is How It Should Be Done.”
Use the State’s Existing Supply Chain
“There is a supply chain that is already intact and could likely be expanded very quickly to allow for a recreational marijuana program to be implemented without too much challenge,” said Mr. Goldberg.
“You have growers and processors who can expand their production, labs who could expand their testing, dispensaries who could expand their sales, fairly quickly, to provide adult-use marijuana to Pennsylvanians. This is a very good framework to be utilized in a way that could get this done quickly and efficiently if people wanted to.” […]
Be Mindful of How Marijuana Is Taxed
Currently, marijuana growers and processors in Pennsylvania are taxed five percent on the gross receipts received from the sale of medical marijuana to a dispensary. But there is no sales tax on marijuana, so consumers who purchase it do not pay a tax. According to Mr. Goldberg, that could change with legalization, but it shouldn’t.
“Whether a marijuana sales tax is imposed on consumers or whether the five percent excise tax that’s imposed on growers and processors is increased, these are things that I certainly wouldn’t advocate for because I don’t know that it would be necessary to result in a boost in the tax revenue.” […]
Duane Morris partners Seth Goldberg and David Landau have been named to the American Trade Association for Cannabis and Hemp (ATACH) Task Force, which will focus on the harmonization of laws and regulations that contribute to the bifurcated treatment of hemp and marijuana, as well as the evolving regulatory landscape for cannabis industry participants. Mr. Goldberg, a team lead for the Duane Morris Cannabis Industry Group, joined ATACH president Michael Bronstein and Gary Kaminsky of Acreage Holdings in their meeting with the White House’s Office of Management and Budget in August.
Seth Goldberg, partner and team lead of Duane Morris’ Cannabis Industry Group, and Justin M. L. Stern, Duane Morris associate, authored the Cannabis Industry Journal article, “Consumer Class Actions Against CBD Companies Are Hitting a Snag.”
Excerpt from the article:
Over the past year, more and more consumer class actions have been filed against manufacturers and distributors of CBD-infused products. These actions typically assert claims based on how the product is marketed, such as whether it (i) contained the advertised amount of CBD, (ii) contained more THC than it should have or (iii) has the ability to provide the therapeutic benefits touted. The marketing of these products is subject to regulation by FDA, which has yet to issue pertinent regulations that have been expected since passage of the 2018 Farm Bill legalizing hemp and CBD products derived therefrom. Thus, in recent months, a number of federal courts have stopped these class actions in their tracks pending further guidance from FDA as to how CBD-infused products should be regulated. This growing body of precedent should be welcome news for the CBD supply chain, as it may provide a disincentive to the plaintiffs’ bar to expend their resources on similar actions until the regulatory framework is clear.
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.
Seth Goldberg, partner and team lead of Duane Morris’ Cannabis Industry Group, discusses with Law360 how the COVID-19 pandemic has affected the industry and shares how he and his family have been adapting.
Below are highlights from the article:
What challenges has the pandemic created in your specific area of work?
From a pure business standpoint, the pandemic has been bittersweet for the cannabis industry. Many of our clients have fared well because state-licensed medical marijuana businesses have been deemed “essential” in all states that have legalized medical marijuana. However, as in every industry, the pandemic has created workforce issues and has also impacted performance. […]
How are you and your family adapting at home?
It’s fun, especially if you like practicing law while teaching fourth-grade math, negotiating screen time for two 13-year-olds, and keeping a college-bound senior interested in completing high school remotely. A breakthrough was convincing the four kids that the internet on their laptops would be faster if they turned the wifi on their cellphones off!
What is the most creative or productive response to the crisis you’ve witnessed so far?
My daughters insisting that buying three “fancy mice” would be a good substitute for friends and classmates.
Duane Morris has developed a tremendously responsive and informative COVID-19 task force that is, on a daily basis, providing incredibly insightful information about all aspects of the legal issues and implications of the pandemic, including contractual, employment, insurance and health care issues. […]
Seth Goldberg, partner and team lead of the Cannabis Industry Group, is also ranked as a national leading attorney in Cannabis Law.
What the team is known for Utilizes cannabis expertise on a nationwide basis and across a broad spectrum of practice areas, with practitioners specializing in IP, corporate transactions and regulatory advice within the sector. Offers expanded capabilities in the wake of the 2018 Farm Bill for clients trading in hemp and hemp-derived CBD products. Also boasts litigators able to handle contentious issues for producers and distributors across the industry.
Strengths“Outstanding is the first word I’d choose to describe their service,” says one client, who notes that the team is “creative and always very informative in an industry changing on an almost daily basis.“
Another client says: “The group is very polished, professional and experienced.”
Work highlights Represented iAnthus Capital Holdings as US counsel in connection with its all-stock merger with MPX Bioceutical.
Notable practitioners Seth Goldberg boasts high-level experience advising cannabis businesses throughout their life-cycle. Clients say: “Seth is a great businessman – not only does he understand the law, but also the business realities of things, which makes him a great adviser from that perspective.”
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.
Since the 2018 Farm Bill passed in December 2018, removing hemp from the Controlled Substances Act and thus legalizing it under federal law, consumer goods containing the hemp-derivative cannabidiol (CBD) have become exceptionally popular. With that growing popularity among consumers has come increased scrutiny by federal regulators whose mission is consumer safety and protection, such as the Food and Drug Administration and Federal Trade Commission, and now by the plaintiffs’ bar, which files consumer class actions based on advertising. As the recent spate of warning letters and consumer class actions demonstrate, hemp-derived CBD product manufacturers and others in the supply chain for those products have to be mindful of the claims they make to consumers about their products.
Banking has been an impediment for the cannabis industry because the Bank Secrecy Act of 1970 (BSA) and related regulations―which seek to prevent money laundering and other financial crimes―place onerous requirements on banks when a transaction is suspected to involve illegal activity. 12 C.F.R. Section 21.11. Notwithstanding billions of state-legal cannabis dollars exchanging hands, the commercial banking industry, which is largely federally regulated, is virtually nonexistent in the cannabis space. In 2014, the Treasury’s Financial Crimes Enforcement Network (FinCEN) provided guidance intended to enhance the banking of cannabis-related monies by establishing a category of suspicious activity reporting for “marijuana related businesses.” But, according to FinCEN, as of June 30, 2019, just 553 commercial banks and 162 credit unions had filed an SAR for a “marijuana-related business.”