The Green Mountain state has taken a significant step toward legalizing recreational cannabis. On September 17, 2020, the Vermont House of Representatives adopted the Conference Committee report for S.B. 54, an act relating to the regulation of cannabis. The Conference Committee has had custody of the bill since early this year and was tasked with reconciling the significant differences between the bill and a similarly-intentioned, but substantively different,… More
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Illinois’ widely-watched application process for handing out 75 adult-use cannabis dispensary licenses has now wound up in federal court, following the September 4, 2020 filing of a lawsuit by several unsuccessful applicants. The state on September 3, 2020 announced its intention to complete the licensing process – which had already been delayed several months – through a lottery including 21 of the roughly 700 dispensary applicants.
Many of the plaintiff applicants are owned by veterans,… More
The Office of Cannabis Business Regulation within the Rhode Island Department of Business Regulation is currently accepting applications for six new Compassion Center licenses. One license will be awarded for each of the six zones delineated in the license application materials, and applicants must apply for a license in a specific zone. The application period commenced on July 17, 2020 and will remain open until 3 p.m. on December 15,… More
On August 28, 2020, the Cannabis Control Commission held a meeting to discuss the public comments on proposed amendments to the Commission’s adult-use and medical marijuana regulations. By way of background, the Commission posted draft regulatory amendments in late July, hosted a public hearing on the amendments on August 3rd and accepted written public comments on the amendments until August 15th. Since the 15th, the Commissioners and staff have reviewed all of the public comments and considered whether any warranted reconsideration of,… More
Spurred by Commissioner Kay Doyle, the Cannabis Control Commission has solicited public comments on whether it should dismantle the vertical integration model for Marijuana Treatment Centers in the Commonwealth. In a formal public notice dated August 11, 2020, the Commission explains that it will be considering whether to allow vertically-integrated MTCs to, subject to existing licensing caps, apply for certain adult-use endorsements, including cultivation, marijuana product manufacturing, or retail endorsements,… More
The Massachusetts Cannabis Control Commission has published an ambitious regulatory update of both adult use regulations at 935 CMR 500.000, medical marijuana establishment regulations at 935 CMR 501.000, and co-located adult-use and medical-use marijuana regulations at 935 CMR 500.000. The CCC is holding a virtual public hearing on August 3, 2020 at 10:00 AM, and accepting written comments on the regulations up through August 14, 2020 at 5:00 PM.… More
As part of sweeping recommendations touching upon subjects ranging from climate change to criminal justice reform to healthcare, the Biden-Sanders Unity Task Force Recommendations recently previewed a framework for federal cannabis regulation under a Biden administration. Although the framework is thin on details, it reaffirms the widely-held belief among Democrats that the federal government should decriminalize cannabis and take affirmative steps to erase the scars of past criminal convictions arising from cannabis use.… More
On June 24, John Elias, a former Acting Chief of Staff to the United States Assistant Attorney General for the Antitrust Division, testified in front of the U.S. House of Representative’s Judiciary Committee that last year the Antitrust Division had investigated ten cannabis mergers and the California/automakers emissions agreements based on political pressure from Attorney General Bill Barr and not based on any concerns about harm to competition.… More
In September 2019, Metrc, a prominent cannabis seed-to-sale tracking company, filed suit against the Missouri Office of Administration (OA) requesting the ability to charge additional fees beyond those specified in its contract with the state.
In April 2019, Metrc was awarded a five-million-dollar contract to oversee three of Missouri’s medical marijuana programs. Metrc was one of 20 bids for the contract. The Missouri Division of Purchasing advised bidders to provide “firm,… More
In November 2019, the Massachusetts Cannabis Control Commission (CCC) released new regulations dictating that Marijuana Cultivators engaged in indoor cultivation must include a report of their energy and water usage over the 12-month period preceding the date of their license renewal applications. This requirement is outlined in 935 CMR 500.103(4)(c). All applications for renewal filed on or after July 1, 2020 must include this required documentation.
The Cannabis PowerScore is specified by the Massachusetts CCC as an approved form and manner for reporting energy and water performance.… More
The Boston Cannabis Board on June 24, 2020 held a virtual public meeting addressing the current state of adult use marijuana licensing in the City of Boston. Established by a City Council ordinance in November 2019, the Board was intended to bring additional clarity and transparency to cannabis licensing in Boston. Chairwoman Kathleen Joyce stated that the Board sought to ensure a “clear, predictable, and transparent process” for businesses seeking a license,… More
During a Cannabis Control Commission (“Commission”) regulatory policy discussion on June 19th, Chairman Steven Hoffman confirmed the Commission’s plans to publish draft revised regulations within the next few weeks and to vote on final regulations by the end of August. The revisions will address numerous issues that the Commission has identified since it updated its regulations last fall, including proposing new requirements for vape products and establishing a permitting process for cannabis research projects.… More
Massachusetts Governor Charlie Baker announced today that Massachusetts adult-use cannabis retail stores will be allowed to re-open for curbside pickup beginning on Memorial Day. The announcement was a part of the Governor’s comprehensive plan for re-opening businesses across the Commonwealth, which includes mandatory workplace safety standards, sector-specific protocols, and a phased approach to reopening businesses.
Phase 1 of the Governor’s reopening plan allows retail businesses of all types to conduct curbside pickup beginning on Memorial Day. … More
When Maine enacted the Marijuana Legalization Act in 2018 the legislature included one of the most stringent residency requirements in the nation. In order to obtain a license, an applicant had to be majority owned by individuals who were Maine residents for the past four years. Earlier this week Maine’s Attorney General conceded that the residency requirement was likely unconstitutional and Maine’s Office of Marijuana Policy announced that it would no longer enforce the requirement.… More
The Massachusetts Appeals Court has vacated a preliminary injunction issued in January by a Superior Court judge to prevent the City of Cambridge from enforcing an ordinance that delays medical cannabis facilities (“MTCs”) from converting to adult-use facilities. The Appeals Court’s order in Revolution Clinics II, Inc. v. City of Cambridge was issued by a single justice on April 24, 2020, and reverses the Superior Court on narrow grounds.… More
Treasury Report Recommends Increased Audits of Cannabis Companies and Highlights Potential Section 280E Relief
On March 30th, the Treasury Inspector General for Tax Administration (“TIGTA”) released a report which concluded, based on its estimates, that the IRS could have collected significant additional tax revenue from cannabis companies if IRS audits of such companies were increased. In particular, TIGTA reported on potential income tax deficiencies arising from the denial of business deductions and credits under Internal Revenue Code Section 280E.
As a general matter,… More
On April 20, United Cannabis Corporation filed a Chapter 11 bankruptcy petition for reorganization in Colorado. The Bankruptcy Court for the District of Colorado has previously dismissed bankruptcy cases for marijuana businesses due to the substances’ federally illegal status. In In re Rent-Rite Super Kegs W. Ltd., 484 B.R. 799 (Bankr. D. Colo. 2012), the court found that there was “cause” under 11 U.S.C. § 1112(b) to dismiss the debtor’s Chapter 11 case because the debtor was violating the Controlled Substances Act by renting space in its warehouse to parties who were growing marijuana. … More
A Massachusetts Land Court judge has ruled that a Mansfield RMD license-holder can use its property for adult-use sales even though the property is not locally zoned for adult-use sales. The Land Court’s decision provides strong authority for RMDs provisionally licensed before July 1, 2017 who would like to expand to adult-use operations.
The case is Rosenfeld v. Town of Mansfield. Rosenfeld and her licensed RMD,… More
Last week, Governor Baker issued a COVID-19 Essential Services Order establishing which businesses in the Commonwealth may remain open as “essential” while most of our commerce, unfortunately but necessarily, shuts down in order to slow the deadly Coranavirus pandemic. Medical Marijuana Dispensaries and Liquor Stores made the cut. Adult use cannabis did not.
The Cannabis Control Commission announced on March 20, 2020, that healthcare providers registered with the CCC to prescribe medical marijuana will have the option to issue prescriptions to new patients following a telehealth consultation. This new guidance is a departure from the CCC’s regulations, which require patients to be physically present for a clinical visit in order to receive a prescription. See 935 CMR 501.0101(7). … More
The global outbreak of COVID-19 is disrupting lives and businesses across the world, and the cannabis industry and its customers are no exception. Our new reality is not only of great financial concern, but also presents serious public health challenges. Cannabis patients, of course, need to maintain access to essential medicine.
While many states have rightly concluded that medical marijuana dispensaries are an “essential service” that may remain open during shutdowns in the same manner as pharmacies,… More
Rhode Island Governor Gina Raimondo’s fiscal year 2021 budget includes over $20 million in revenue that the Governor expects to be generated by legalizing cannabis for recreational use. While the Governor’s support for legalization is welcomed news for the industry, there is a twist: dispensaries would be owned by the state and run by private operators, much like how states such as New Hampshire structure the sale of liquor.
The proposal calls for retail revenues to be split between the state (61%),… More
On Tuesday, I blogged about H 4367, a bill that would amend the statutory language that defines permissible scope of community impact fees in Host Community Agreements (“HCAs”) and would grant to Cannabis Control Commission authority to regulate HCA. Soon after I posted the blog, the House passed the bill with two substantive amendments.
The first amendment, offered by Representative Kane, clarifies that while the 3% community impact fee is the only fee a locality can collect in an HCA,… More
A bill that would amend the statutory language that defines permissible scope of community impact fees in Host Community Agreements (“HCAs”) is making its way through the Massachusetts State House. The bill, H 4367, would also give the Cannabis Control Commission (“CCC”) express regulatory authority over HCAs.
The issue the bill addresses is one that has created considerable uncertainty and controversy. Under Massachusetts law,… More
On November 4, Maine’s Office of Marijuana Policy (“OMP”) finalized its Adult-Use Marijuana Program regulations and announced that it would begin accepting applications for adult-use licenses on December 5. The regulations establish six types of cultivation licenses ranging from 500 to 20,000 square feet of canopy; a product-manufacturing license, and a marijuana store (i.e., retail) license.
The OMP has not capped the number of licenses it will issue for cultivators,… More
The U.S. Department of Agriculture (“USDA”) released draft regulations for hemp production on Tuesday, giving farmers, states, and other industry stakeholders some much needed clarity on how the hemp provisions of the 2018 federal farm bill will be interpreted and enforced.
Once the interim rule is finalized, the USDA will begin to accept and review states’ and tribes’ hemp regulation plans. The plans must at a minimum provide for tracking of land where hemp is grown;… More
The ink is barely dry on the New Jersey ATC and Missouri medical marijuana facility applications that so many of us assembled this August. Yet now, a new round of states have issued applications for competitive cannabis licenses. Below we discuss the qualifications, requirements, deadlines and other relevant information for the Illinois (adult use), Michigan (adult use) and Texas (medical; <.5% THC) applications.
The Illinois Department of Financial and Professional Regulation (“IDFPR”) has posted its application form for conditional adult-use licenses for new dispensing organizations.… More
California is the largest cannabis market in the United States and it is soon to be the first state in the country with a comprehensive data privacy regime designed to protect consumers’ personal information. The California Consumer Privacy Act (“CCPA”) goes into effect on January 1, 2020, and will apply to companies with revenues in excess of $25 million that do business in California (as well as certain other categories of companies).… More
Massachusetts Secretary of State Bill Galvin and his Securities Division are increasingly turning their attention toward securities offerings in the cannabis industry, as demonstrated by the June 19, 2019 filing of the second enforcement action against a cannabis business in the last two months. The filing was accompanied by a statement from Galvin warning of future sweeps in the industry.
The latest enforcement action, brought against Positronic Farms,… More
Cresco Labs announced this week that United States antitrust regulators are seeking additional information about its anticipated acquisition of Origin House. Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Cresco Labs was required to notify the U.S. Department of Justice Antitrust Division (the “Division”) of the transaction and to observe a waiting period while regulators reviewed the transaction. On June 10, the Division requested additional information regarding the proposed transaction.… More
The New Jersey Department of Health’s Medical Marijuana Program announced on Monday that it was seeking applications to license up to 108 additional Alternative Treatment Centers (ATCs). More specifically, the Department intends to license up to 24 cultivators, 30 manufacturers, and 54 dispensaries. The cultivator licenses will be divided into three different size categories: 5,000 square feet, 20,000 square feet, and 30,000 square feet. The purpose of sub-dividing the cultivation licenses by size is to create opportunities for small and medium-sized businesses to participate in the medical marijuana program.… More
Last month, the House Financial Services Committee advanced a federal marijuana banking bill to the full House on a bi-partisan 45 to 15 vote. The “Secure and Fair Enforcement Banking Act” or “SAFE Banking Act” would prevent federal banking regulators from taking adverse actions against financial institutions solely due to an institution’s provision of financial services to state-legal cannabis businesses. The bill would also provide protections for financial institutions that do business with cannabis-industry service providers by declaring that proceeds from such providers do not constitute “proceeds from an unlawful activity.” And,… More
Cannabis Companies Need to Think About Compliance for Every Step of their Business: Consider Enterprise Risk Management, Says Acreage’s Compliance Chief
There is no business quite like cannabis, and very few that need constant attention to regulatory compliance in every aspect of operations. Friend of the blog and Director of Legal Compliance at Acreage Holdings, Gary Kaminsky, penned an excellent column recently for Law360 suggesting cannabis companies should implement regulatory Enterprise Risk Management (“ERM”) principles. The column can be found here: A Holistic Approach To Compliance For Cannabis Cos. –… More
On November 29, a U.S. Tax Court judge confirmed that § 280E of the Internal Revenue Code prevents state-legal cannabis businesses from deducting ordinary and necessary business expenses from their federal taxes. The ruling is a blow to businesses in the cannabis industry, who incur significantly higher federal tax burdens than they otherwise would if, like other businesses, they were allowed to deduct their business expenses.
Section 280E declares that “[n]o deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business .… More
With July 1st now fully in the rear-view mirror, we thought it would be a good time to update you on the latest developments at the Cannabis Control Commission. Earlier this month, the Commission approved two final retail licences for businesses in Northampton and Leicester. These represent the very first final adult-use retail licenses awarded in the Commonwealth. With this, Massachusetts residents should expect adult-use retail shops to open to the public within a matter of weeks. … More
With the first retail sales of adult use marijuana slated to take place in just over five months, the Massachusetts Cannabis Control Commission (the “Commission”) is working overtime to regulate an industry that some project will exceed $1 billion in revenue by 2020. As the July 1st target date for the opening of retail cannabis shops approaches, one area that will undoubtedly become the focus of much attention is the ability of retailers to market their wares. … More
Despite a less-than-friendly administration, a number of federal cannabis bills have recently been introduced to Congress. Here is a list of bills marijuana business owners should be keeping an eye on:
The Marijuana Justice Act
S.1689, sponsored by Senator Cory Booker (D-New Jersey), introduced August 1, 2017.
The long awaited amendments to the medical marijuana regulations are finally final. The draft amendments to 105 CMR 725.000, Implementation of an Act for the Humanitarian Medical Use of Marijuana, were made available for comment more than a year ago. The amendments accomplish much, such as allowing certified nurse practitioners to certify qualifying patients, certifying institutional caregivers without individual employee certification, streamlining and bifurcating the application/registration process for RMDs,… More
The Department of Public Health this week released guidance that paves the way for RMDs, which prior to the new legislation adopted this summer had to be organized as not-for-profit corporations under Chapter 180, to convert to for-profit corporate entities. The green light from DPH is a blessing for RMDs who, by virtue of the nonprofit requirement, were forced to adopt complex corporate structures. The Guidance can be found here.… More
One Day after being ruled “out of order” by House leadership, Marijuana Business Daily is reporting that the Rohrabacher-Blumenauer Amendment has been extended in the House Budget and temporary hurricane aid package through December 2017.
Since 2015, the Amendment has been consistently attached to federal spending measures passing Congress and signed by the President. The Amendment prohibits the Department of Justice from expending any funds to enforce any law that interferes with a state’s implementation of its own medical marijuana laws.… More
State House News is reporting that Treasurer Deb Goldberg has named former Bain and Company partner Steven Hoffman as Chair of the about-to-be-formed Cannabis Control Commission. When all is said and done, the CCC will regulate all things cannabis in the Commonwealth, including the regulated adult use market and the existing medical marijuana program. Like Gov. Baker’s pick, former Sen. Jennifer Flanagan, Mr. Hoffman voted against Question 4 in November.… More
Governor Charlie Baker signed the legislative overhaul of last November’s referendum legalizing the licensed sale and cultivation of adult use cannabis. We summarized many key details of the bill here.
We have 8 short months until applications are due, although what those applications will require, how far along in the painstaking local zoning process applicants must be, how clear of an advantage licensed medical operators and applicants will have,… More
No sooner said than done, the long-awaited conference committee bill amending Chapter 334 of the Acts of 2016 (the adult use cannabis referendum) has been released. Our complete summary of the new legislation and a comparison to the referendum’s original language can be viewed here:
Some big picture highlights:
(1) The referendum’s one year head start for many medical marijuana licensees has been eliminated. … More
We are more than two weeks now since the passage of the House and Senate’s competing legislation overhauling the framework regulation and taxation of adult use cannabis adopted by Massachusetts voters in November. In general, the Senate hewed closer to the language and intent of the referendum, while the House repealed the voter-passed law in its entirety in favor of a total rewrite. Then three legislators from each chamber were swiftly appointed to a conference committee to reconcile the two competing bills into final legislation. … More
The Joint Committee on Marijuana Policy today voted to advance, over objection and disapproval, a bill that repeals the 2012 Medical Marijuana law and 2016 Adult Use laws in Massachusetts — both passed by referendum — in their entirety. Our summary of the major points can be viewed by clicking this link House Bill Summary.
In its place, a House Bill sent out of committee imposes many changes including a 28% tax rate (up from 12%) on adult use licensees;… More
Last month, we noted that a significant number of Massachusetts towns and cities were already enacting bans or temporary moratoria against recreational marijuana sales, even though it will be months before the first adult-use operators are even eligible to apply for licenses. Now the legislature may be doing something about that trend. Senate President Stanley Rosenburg (D.) said that lawmakers were considering whether there is a way to incentivize more communities to say ‘yes’… More
Nevada’s adult use referendum passed the same day as Massachusetts voters ushered in the Commonwealth’s adult use law. From there, the states took two very different paths.
Well, wanting to keep its boot on the neck of the black and gray markets and begin collecting revenue,… More
Months before the first adult-use cannabis operators are eligible to apply for licenses, a significant number of cities and towns are passing (1) temporary moratoria on local zoning approvals of any such facilities; or (2) permanent outright bans. According to the Massachusetts Municipal Association, 39 municipalities have thus far enacted temporary moratoria, while at least 10 have passed outright prohibitions. “Dozens” more municipalities are expected to vote on such measures soon.… More
Out of nowhere, Sen. Patricia Jehlen, chair of the Joint Committee on Marijuana Policy, tells the Boston Globe that she wants to eliminate the one-year head start that the adult use referendum gives to experienced medical marijuana operators to apply for licenses. She tells the Globe:
But there are areas where Jehlen is keen to see the law changed. One is leveling the playing field, so medical marijuana companies don’t have what Jehlen called “an artificial leg up” in the retail market.… More
The Boston Globe reports that the Legislature is very likely to strip the State Treasurer of Authority to appoint and oversee the Cannabis Control Commission in favor of an “independent” Commission funded by licensing fees and appointed by various state elected officials. The model appears to be the controversial Massachusetts Gaming Commission.
This week, State Treasurer Deborah Goldberg wrote to U.S. Attorney General Jeff Sessions seeking clarity on the federal government’s “intentions” before the state “commit[s] significant public resources to implementing Massachusetts’ recreational marijuana laws.” She’s not alone on seeking clarity as Attorney General Sessions’ public and reported statements have been anything but consistent and specific (see here and here and here, but also here).… More