December 2020

Exclusion of the SAFE Banking Act in Coronavirus Relief Doesn't Mean It Won't Pass in 2021

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

New Jersey Adult-Use Legalization Puts Pressure on Neighboring States

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

Raising Capital Using an Intermediary Finder: The Potential Impact of the SEC’s Proposed Conditional Finder Exemptions

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.

Overview

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

High Risk: Protecting Directors and Officers in Cannabis Banking

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.

Click here to watch the full webinar.… Keep reading

A Marijuana Milestone: House Votes to Approve the MORE Act

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