There are significant differences between professional employment organizations (PEOs), administrative services only (ASO) providers, and payroll providers. Why are these services critical for cannabis companies and their financial institutions? Which one do you need – and when? Katrina Skinner of Burns & Levinson joins Brian Wall of AdaptiveHR and Stacie McLauchlan of Paragon Payroll to discuss why cannabis companies should outsource HR and payroll, the implications of 280E, 401(k) options, how banking is affected, and of course – the cost of obtaining and providing these services.
The Massachusetts Cannabis Control Commission (CCC)’s new regulations for adult-use and medical-use are to be effective on January 8, 2021.
The new final regulations’ simplified language in the Advertising, Labeling, and Packaging sections clarified the permitted and prohibited practices under these categories and implemented a pre-approval process.
We encourage marijuana businesses to seek guidance from a trusted attorney regarding these final regulations and the potential impacts on your business or operations.
Pre-Approval Process for Packaging & Labeling
In addition to complying with the Advertising, Labeling, and Packaging regulatory requirements set forth 935 CMR 500.104 (4)-(6), the CCC must pre-approve a package or label. An application for pre-approval may be submitted at any time but should be submitted prior to sales or before implementing a substantive change to an already approved package or label. The pre-approval application fee is $50 per product.
The CCC may determine the form and manner for a pre-approval application, but, in addition to such application, applicants will also need to submit images of the proposed package or label to the CCC as an electronic file. Packaging applicants should submit front and back photographs of the packaging and labeling applicants should submit one photograph of each … Keep reading
Despite best efforts by the U.S. House of Representatives in 2020, provisions related to the SAFE Banking Act were not included in the $900 billion Coronavirus relief bill passed on Monday in the U.S. Congress. Supporters of the banking reform legislation included, among others, a group of bipartisan Attorneys General, state treasurers, and a majority of the members of the House. Unfortunately, those opposing any form of marijuana policy reform prevailed, and depending on the outcome of the Georgia Senate race in January, those same leaders may continue to impede reform efforts if the Republicans retain control of the U.S. Senate.
Nevertheless, the cannabis industry and financial institutions serving or considering serving the cannabis industry remain hopeful that the SAFE Banking Act may still pass in 2021 when the President-elect Joe Biden is in office and if Pennsylvania Republican Pat Toomey becomes the new chair of the Senate banking committee. In an interview with Politico, Senator Toomey said that he is “sympathetic to the idea that people who are involved in the cannabis industry—in an entirely legal fashion, in the state in which they operate– ought to be able to have ordinary banking services.” Toomey will become the chair … Keep reading
Earlier this month, the House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act. This bill would decriminalize cannabis on the federal level and provide retroactive expungement for certain marijuana offenses. The proliferation of pro-cannabis legislation is also present in state legislatures.
Last week, New Jersey approved a historic bill that will establish rules and regulations for legal adult-use cannabis. The Garden State, which was one of five states that approved cannabis ballot measures this November, is now the first state in its region to legalize both medicinal and adult-use cannabis. Experts, including Marijuana Business Daily, project New Jersey’s adult-use market to become the largest on the east coast, generating $850-$950 million in annual retail sales by 2024.
The New Jersey Assembly passed the bill by a vote of 49-24, while the NJ Senate approved the legislation by a margin of 23-17. As is the case in other jurisdictions, much of the division among legislators concerned the perceived strength of the bill’s social equity provisions. However, the bill in its current form features provisions that would give licensing priority to microbusinesses owned by residents as well as applicants from economically disadvantaged communities and those impacted by the war … Keep reading
In an industry already rife with significant regulatory complexities, cannabis issuers face challenges familiar to many small and emerging businesses raising capital. One of which is the regulatory minefield posed by hiring unregistered broker-dealers, also known as “finders,” to assist issuers with raising capital in private markets from accredited investors. This is particularly true for the capital raising ecosystem within the cannabis space, which, due to its federal illegality among other factors, lacks the type of established, robust capital raising networks available to other, more traditional industries.
This post is the first of two installments of a “mini-series” discussing the potential impact of the SEC’s proposed limited conditional “finder” exemptions on issuers’ capital raising efforts.
Earlier this fall, the SEC took a significant step forward by proposing an exemptive order offering limited conditional “finders” exemptions from broker-dealer registration to individuals assisting issuers with raising capital in private markets from accredited investors (the “Proposed Exemption”). The objective of the proposed new exemption is to advance one of the SEC’s stated missions to support the capital raising efforts of privately held businesses, and also to provide regulatory clarity to investors, issuers, and the intermediary finders who assist them.… Keep reading
Financial institutions involved in the cannabis space must safeguard themselves – and their leadership – against the risks associated with the continually-evolving industry. Patrick Ryder of HUB International joins Burns & Levinson Attorney Scott Moskol to discuss the benefits of the Directors and Officers Liability Insurance Policy. Learn about coverage features, common claimants specific to cannabis, and how the product can protect banks, credit unions, money transmitters, payment processors, broker-dealers, and more.
Last week, the cannabis industry celebrated as the House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act (the “MORE Act”), which decriminalizes cannabis on the federal level and provides retroactive expungement for certain marijuana offenses.
The passage of the MORE Act by the Democrat-led House illustrates a shifting perspective at the federal level upon the cannabis industry as a whole. If the MORE Act gets signed into law, the decriminalization of cannabis will open up several opportunities and benefits to those in the existing cannabis industry as well as encourage new participants. In theory, this sounds like a win. In reality, the House vote is merely the first step in a long process to affect any tangible change.
The MORE Act’s most well-known measure is to remove cannabis from Schedule 1 of the federally controlled substance list, which decriminalizes cannabis. While this would legalize cannabis on the federal level, the measure does not equate to a nationwide and uniform approach. It will be up to each state to legislate and regulate its own respective cannabis programs.
The bill also affords the cannabis community greater access to government resources such as Small Business Administration loans and demographic tracking … Keep reading
Despite the “green wave” America experienced on Election Day, and the increased success the legalized U.S. cannabis industry has experienced in 2020, the number of financial institutions providing banking services to cannabis-related business (“CRBs”) appears to be decreasing. In fact, this was the third quarter in a row that FinCEN’s quarterly report has shown that fewer banks and credit unions filed requisite suspicious activity reports (“SAR”s) indicating that they service cannabis clients.
While one of the reasons for the steady decline may be attributable to FinCEN’s June guidance that removed mandatory SAR filing for hemp-related businesses and therefore those financial institutions that only serve hemp customers are no longer reflected in the report, another factor may be that cannabis-related SARs are being filed late due to staffing constraints brought on by the COVID-19 pandemic. Regardless, the troubling downward trend supports the contention that not enough financial institutions are entering into the cannabis banking space to meaningfully change the landscape for cannabis business operators.
With new states legalizing medicinal cannabis and more states legalizing cannabis for adult-use, the need for cannabis banking that provides robust service offerings and competitive pricing is only going to grow. The expanding market will provide … Keep reading
If the 2020 elections taught us anything about the burgeoning cannabis industry, it is that more Americans believe cannabis should be legalized now than ever before. A recent Gallup poll, released on November 9th, found that 68% of Americans believe cannabis should be legalized, which is the highest percentage in more than 50 years of polling. This is extraordinary growth since the Gallup polls first began tracking the American consensus on marijuana legalization back in 1969. At the time, only 12% of respondents were in the legalization camp.
Instead of a Red wave or Blue wave, America experienced a Green wave this November, which transcended party lines. Six states passed varying degrees of cannabis legalization and many by a larger margin than the presidential election. Additionally, two other jurisdictions had psychedelics mushrooms on the ballot. So which states were the big winners this year?
- Arizona – Approved adult-use legalization
- Mississippi – Approved medical use
- Montana – Approved adult-use legalization
- New Jersey – Approved adult-use legalization
- Oregon- Approved legalization of psilocybin for therapeutic uses and Approved decriminalization of non-commercial possession of controlled substances
- South Dakota – Approved both medical use and adult-use legalization
- Montana – Approved adult-use
As in past years, the Fourth Annual State of the Cannabis Industry Conference brought some of the industry’s top leaders and regulators to discuss and reminisce on the industry’s growth, the current state of the industry, and the future of the industry. With topics ranging from restructuring and workouts to hemp and CBD, the Conference concluded with its final panel, discussing the current status of the industry’s capital markets and M&A transactions with a panel of the industry’s top investors and funds. The panel’s discussions centered on the current state of capital in the industry, the recent valuation reset of the industry, methodologies, and determinations of deploying capital, and new trends and key developments in the past 2-3 years.
As many in the industry are well aware, raising capital in the cannabis space has never been easy. This year alone, capital raising has declined by 67% since last year, with $2.6 billion raised in the first half of 2020 compared to the $5.5 billion raised in the first half of 2019. However, the panelists noted that, while capital raises are down, the opportunity and leverage for investors has never been stronger. … Keep reading