On December 23, 2018, the Department of Public Health will transfer oversight of the Massachusetts Medical Marijuana Program to the Cannabis Control Commission, the agencies recently announced, giving the CCC oversight of both recreational and medical marijuana programs. (The Adult-Use Act mandated that the transition occur by the end of the year.)

The DPH has run the Medical Use of Marijuana Program since its inception in 2014. To date, there are 47 registered marijuana dispensaries that have been approved for sales across Massachusetts; those RMDs serve more than 57,000 patients and over 7,000 personal caregivers. DPH and CCC officials have assured the public that patients in the medical program will not see any substantial changes as a result of the transfer.

In a statement issued last week, Public Health Commissioner Monica Bharel stated:

We want to assure medical marijuana patients in the Commonwealth that we have worked closely with the CCC and our constituents over the past several months to support a smooth transition of the program and to ensure that patient access is not impacted by this change.

Echoing Commissioner Bharel’s assurance, CCC Chairman Steven J. Hoffman publicly noted “the considerable collaboration between DPH and the CCC.” … Keep reading

Utah Medical Marijuana Compromise Passes and Is Signed into Law

On Monday, the day after Utah’s medical cannabis initiative became law, state legislators supplanted it with a more tightly controlled plan for providing marijuana-based treatment. That plan is called the Utah Medical Cannabis Act, and it is designed as a replacement for voter-approved Proposition 2. The compromise bill is more restrictive than the law established by Proposition 2, which was supported by the Marijuana Policy Project and Utah advocates.

In early October, supporters and opponents of Proposition 2 reached an agreement whereby both sides de-escalated their campaign operations and agreed on a medical-marijuana-law compromise that would be enacted regardless of the outcome of the ballot initiative vote. The legislation has acted as a bridge between Prop 2 opponents, such as the Church of Jesus Christ of Latter-day Saints and the Utah Patients Coalition, the group that spearheaded the initiative effort.

The compromise bill makes a number of changes to Proposition 2, including no home cultivation for patients, a smaller number of dispensaries, and a requirement that dispensaries employ pharmacists who recommend dosages. The replacement legislation crafted by lawmakers and both sides in the Prop 2 debate overhauls the medical cannabis distribution system proposed by the ballot initiative, and … Keep reading

CCBJ: High Times Ahead for Cannabis-Related Business

The following interview appears in the November–December 2018 issue of the Corporate Counsel Business Journal.
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Corporate Counsel Business Journal: Burns & Levinson has had a cannabis law practice since 2013 and has already handled hundreds of millions of dollars in corporate transactions in this emerging industry. How has your cannabis practice evolved and changed since you first started?

Frank A. Segall: Our goal in entering the cannabis space was to bring our sophisticated corporate expertise to this industry. While we certainly started and remain committed to representing operators looking for licensure, we are heavily focused on working with entities raising capital through the public and private markets, forming venture capital funds and acquiring and selling operations on a nationwide basis. We have also been retained to assist groups in cannabis-related workouts and restructures. In addition, we are highly focused on addressing the banking issues confronting this industry, and we are structuring solutions by working with banks and credit unions that are willing to enter this space.

Understanding the depth of the industry, we endeavored from day one to predict the legal needs of the many cannabis-related businesses that are essential to this industry. We are fortunate to … Keep reading

Healthy Pharms Litigation Dismissed on Eve of Massachusetts Cannabis Sales

The closely watched Massachusetts cannabusiness case, Crimson Galeria Limited Partnership, et al. v. Healthy Pharms, Inc., et al., has been dismissed. On November 9, 2018, Judge Allison D. Burroughs of the U.S. District Court for the District of Massachusetts issued an order closing the action upon stipulation by the parties to dismiss the action with prejudice. Plaintiffs, whose property is located within 200 feet of Health Pharms’ registered marijuana dispensary, alleged that the operation of the RMD diminished the market value of their properties and restricted future development opportunities. They contended that the RMD made the surrounding area less desirable for prospective buyers or renters, who would “reasonably worry” about “increased crime” and “pungent odors.”

The Healthy Pharms case was followed closed by those in the cannabis industry due to several important issues raised in the complaint. The Plaintiffs asserted claims against the “Government Defendants” for declaratory and injunctive relief, arguing that federal law (i.e., the Controlled Substances Act) preempts Massachusetts’ legalization of medical marijuana dispensaries. They also asserted claims against Healthy Pharms and the other Dispensary Defendants, alleging civil violations of the Racketeer Influenced and Corrupt Organizations Act, for acting and conspiring to distribute marijuana in violation … Keep reading

Riding the Legalization Wave: The After-Effects of the Midterm Elections

It’s no surprise that marijuana reform resulting from the recent midterm elections made headlines last week, as three states voted in favor of legalization. As discussed in last week’s blog post, voters in Missouri and Utah green-lit measures to legalize state medical marijuana programs, while voters in Michigan moved to adopt a measure legalizing adult-use (medical marijuana has been legal in Michigan since 2008). With these major ballot initiatives being passed, almost two-thirds of states have now legalized cannabis in some capacity, and 20% of states allow recreational consumption. However, this is only the tip of the iceberg when it comes to the growing wave of momentum in favor of federal cannabis reform.

In addition to the legalization efforts in Missouri, Utah and Michigan, Democrats regained control of the House of Representatives last week, including the House Rules Committee, which over the last few years has acted as a gatekeeper blocking votes on cannabis amendment and reform. Republican Pete Sessions (TX), the chairman of the House Rules Committee, lost to Democratic opponent Colin Allred, who has previously been critical of Sessions. As recently as September, Congress blocked an amendment that would have permitted doctors affiliated with the Department … Keep reading

In the News: 3 States Adopt New Cannabis Laws; AG Sessions Resigns

Following Tuesday’s midterm elections, three states—Michigan, Missouri, and Utah—adopted new cannabis laws: Michigan voters approved a measure that legalizes marijuana for recreational use, Missouri approved the creation of a comprehensive medical marijuana program, and Utah passed a measure legalizing medical marijuana for patients with certain qualifying illnesses.

Michigan

Proposal 1 makes Michigan the first Midwestern state to pass adult-use marijuana legalization. It establishes several classes of licenses and gives the Department of Licensing and Regulatory Affairs (LARA) up to one year to promulgate regulations. For at least 24 months, LARA will only accept adult-use applications from existing medical marijuana businesses. Marijuana Business Daily has projected Michigan’s recreational cannabis market will generate between $1.4 billion and $1.7 billion in annual sales within several years of launching, making it one of the largest in the nation.

Missouri

Missouri voters approved Amendment 2 (Medical Marijuana and Veteran Healthcare Services Initiative), making the Show-Me State one of the 33 in the Union that have embraced medical marijuana. The measure creates regulations and licensing procedures for medical marijuana and medical marijuana facilities—dispensaries, cultivators, and testing and marijuana-infused-product manufacturing facilities. Moreover, Amendment 2 tasks the Missouri Department of Health and Senior Services to regulate the … Keep reading

In My Opinion: Alpenglow Botanicals v. United States

If you read my most recent post on Section 280E of the Internal Revenue Code, you might have picked up on my disappointment with the Alpenglow opinion. Whether the conclusion is right or wrong, in my estimation, it could have been much more thoroughly reasoned.

In Alpenglow, the 10th Circuit Court of Appeals was asked, among other less interesting questions, whether the IRS has authority to apply Section 280E if the taxpayer has not been convicted of drug trafficking. The court summarily concluded that the IRS’s authority was not limited to instances involving a conviction. The opinion’s main themes are as follows:

  • The IRS has authority to determine whether and when to deny deductions under Section 280E.
  • Section 280E has no requirement that there be a criminal investigation or conviction in order for it to apply, and if that was Congress’ intent, they could have easily placed that language in the statute.
  • Other courts have upheld tax deficiencies against state-sanctioned cannabis businesses based on application of Section 280E without questioning the IRS’s authority.

If you consider the legislative intent, this historical application, and what is currently taking place in the cannabis industry, it feels like this was … Keep reading

Midterm Elections and Cannabis Reform

The 2018 midterm elections could hold significant consequences when it comes to the immediate future of the cannabis policy throughout the U.S. Not only will a number of states be deciding their local policy, some experts suggest that if the U.S. House flips in favor of the Democrats, federal cannabis reform could shortly follow.

At the state level, California, Michigan, Missouri, Ohio, Utah, and Wisconsin will vote on a variety of different cannabis-related proposals. Michigan will decide on Proposal 1, which has the support of 62 percent of registered voters, permits people over the age of 21 to possess and grow personal-use quantities of cannabis and related concentrates, and also offers licensing activities related to commercial marijuana production and retail marijuana sales. North Dakota will vote on Measure 3, which would legalize the possession and use of marijuana by adults and automatically expunge most prior cannabis convictions. Missouri will decide on ballot questions specific to providing medical cannabis access. Utah will vote on Proposition 2, which regulates the licensed production and distribution of medical cannabis products to qualified patients. In Wisconsin, 16 counties and two cities face referendum questions concerning cannabis decriminalization; however, all are “advisory … Keep reading

On October 17, 2018, Canada became the first of the G7 countries (Canada, France, Germany, Italy, Japan, the UK, and the U.S.) to fully legalize the consumption and sale of recreational cannabis nationwide – and only the second country worldwide, following Uruguay in December 2013. While recreational marijuana consumption remains largely prohibited throughout the world, there seems to be no stopping the upward-trending legalization movement sweeping the globe. Case in point: 13 countries – Australia, Canada, Chile, Colombia, Germany, Greece, Israel, Italy, Netherlands, Peru, Poland, Sri Lanka, and the UK (effective November 1, 2018) – now permit cannabis use for medicinal purposes.

Over recent years, especially, marijuana has realized a monumental –and, perhaps, unprecedented – shift in public perception and, in turn, investment activity. Regarding the former, take, for example, the UK: its government is reversing policies on cannabis and is now set to legalize its medical use, with a current investigation into relaxing laws that govern when cannabis-based medicines can be prescribed by doctors. With respect to the latter, the industry is experiencing a flurry of global investment from pharmaceutical, alcohol, tobacco, and food and beverage companies, which are partnering with or providing significant capital to cannabusinesses, to … Keep reading

A Conversation with Massachusetts Cannabis Control Commissioner, Steven Hoffman – Part II

Below is the conclusion of the conversation that Burns partner and Cannabis Business Advisory Group co-chair Frank A. Segall had recently with Steven Hoffman, Chairman of the Massachusetts Cannabis Control Commission, regarding the state of the industry in the Commonwealth.
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FRANK SEGALL: Let’s talk about [the 3% sales tax incentive]. Host-community agreements have received some attention – for those in the audience, the regulations are pretty clear: Towns can charge up to 3% of gross revenue, with respect to costs that are associated – we’ll say directly, but it’s not clear – with operating an establishment. What we’re seeing is, it’s pretty much 3% flat, with no analysis as to the costs. And there are additional requests that towns have been making – we’d like that new fire truck, we’d like that new park – that have created some consternation and raised questions about whether the rules are being followed and the playing field is level. What are your thoughts on that?

COMMISSIONER HOFFMAN: This is a complicated issue – there’s been a lot of comment and feedback on this. We’ve looked at 15+ host-community agreements that we’ve signed thus far, and there are three things that we … Keep reading