The cannabis market in America has expanded and continues to grow with each election cycle. State lawmakers and their respective voters continue to propose and pursue the passage of ballot referendums, constitutional amendments, and new legislation that seek to legalize the recreational use of cannabis and establish a framework for the adult-use commercial market and the regulatory oversight thereof. The November 8th midterm elections are no exception, as five states seek to legalize recreational cannabis.
The following states seek to join the nineteen (19) states that have previously legalized recreational cannabis.
- Action: Ballot Referendum. Lawmakers in Arkansas passed a constitutional amendment to permit the addition of this initiative to the ballot. The state Supreme Court upheld the constitutional amendment and ordered the initiative to legalize recreational cannabis to be added to the ballot for November 2022.
- Faces a legal challenge claiming the title of the ballot initiative is misleading. Many state officials are arguing that this legal challenge should be resolved before adding it to the ballot, which remove it from this year’s ballot.
- The legal challenges have delayed the secretary of state’s ability to certify the signatures received supporting the ballot referendum. The initiative
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Join us on Monday, October 17, for Burns & Levinson’s nationally recognized State of the Cannabis Industry Conference! Each year our team convenes national experts and industry leaders to share unique strategic legal and financial perspectives on forecasted trends, regulations, M&A, investments, and more. Make connections, develop partnerships, and gain insight from industry leaders.
We’re back for our sixth and best event yet with a full day of in-person programming at the Westin Waltham Boston — although there is a live stream option for those who’d like to access the panels remotely.
Early bird tickets are on sale for a limited time for a discounted price of $149. Click here to purchase.
This year’s panels include:
- A discussion on restructuring, workouts, and distressed mergers and acquisitions,
- A spotlight on women executives in the cannabis industry,
- A deep dive into capital markets, financing, debt, and the state of M&A,
- A fireside chat with Steven Hoffman, the former chairman of the Massachusetts Cannabis Control Commission,
- A CEO roundtable.
Be sure to subscribe for more updates on confirmed speakers and panels.
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“If you build it, they will come.” These were the words spoken from above to Kevin Costner’s character, Ray Kinsella, in Field of Dreams, as he walked through an Iowa cornfield and envisioned Shoeless Joe Jackson standing in what would become a beautiful ballfield. And this vision did come true. Like Ray, countless entrepreneurs have walked through farmlands, warehouses and retail shops alike – dreaming of building state-of-the-art cannabis facilities.
The cannabis industry is home to some of the hardest working, gritty, thoughtful, and passionate entrepreneurs in the world, and there are plenty of success stories out there. However, the industry at large is quickly experiencing a difficult truth: it’s not as simple as if you build it, they will come. The saying for the industry, at this point, should probably be something more along the lines of if you build it, and build it in a great location, and are well capitalized, and execute effectively, with a great team that provides customers with a consistent product, then they will come.
Yes, there is momentum from 2021’s state legislative victories that resulted in Connecticut, New Mexico, New Jersey, New York, and Virginia all legalizing adult use. But … Keep reading
On July 1, 2022, the Illinois Department of Financial and Professional Regulation (IDFPR)—the regulatory department charged with implementing and administrating multiple aspects, including licensing, of Illinois’ Adult Use Cannabis Program—published an Advisory Notice online providing information to conditional dispensary licensees (Conditional Licensees).
Buried amongst otherwise relatively straightforward guidance regarding rules related to business operations and timing expectations for the conditional license process was new crucial guidance regarding the use of Management Service Agreements (MSAs) by Conditional Licensees.
The IDFPR stated that MSAs require new Principal Officers to be added to the ownership structures of Conditional Licensees. Conditional Licensees are barred from changing their Principal Officers until they have received an active license—so the IDFPR’s declaration effectively prohibits the use of MSAs by Conditional Licensees.
The IDFPR’s stance is somewhat surprising given the definition of “Principal Officer”:
Principal Officer includes a cannabis business establishment applicant or licensed cannabis business establishment’s board member, owner with more than 1% interest of the total cannabis business establishment or more than 5% interest of the total cannabis business establishment of a publicly traded company, president, vice president, secretary, treasurer, partner, officer, member, manager member, or person with a profit sharing, financial interest, or revenue … Keep reading
Over the past few years, August has become a popular month for cannabis industry reform in Massachusetts.
Most recently, the Massachusetts legislature approved a bill, S. 3096, earlier this week that significantly changed many of the challenges faced by operators in the Commonwealth’s cannabis market for years. At a high level, the reforms focused on two main aspects – social equity and host community agreements (HCAs). The bill has been sent to the desk of Charlie Baker for approval.
Here’s the top three things you need to know about the updates to social equity and HCA as proposed in the new bill.
- Leveling the HCA Playing Field – The new bill establishes that the Massachusetts Cannabis Control Commission (CCC) will now have the power to develop a model HCA with minimum standards and best practices to be implemented during the negotiation process between social equity licensees and their host communities that they intend to operate. These standards will be specific to social equity businesses (SEBs), which presumably could give SEBs a leg up in negotiating power with municipalities with respect to HCAs that may not necessarily be available to other licensees.
- Cannabis Social Equity Trust Fund –
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Regardless of the jurisdiction in which it conducts its business, licensed cannabis businesses (“Cannabis Operators”) are constantly grappling with what I’ll refer to as “control issues” while negotiating the documentation of a corporate transaction. Cannabis regulations in most states prohibit people from exercising a certain level of control (i.e., decision-making authority over operations, finances, strategic planning and/or marketing of a Cannabis Operator) without first being approved by the applicable regulatory authority, undergoing background checks, fingerprinting and submitting other application requirements. Conversely, people who contract with Cannabis Operators but are not afforded a material level of control over the Cannabis Operator according to the contract can avoid such rigorous requirements. Control issues arise when some third party (e.g., investor, lender, consultant, management services provider, each a “Contracting Third Party”) contracts with a Cannabis Operator to provide a service to the Cannabis Operator or funding in the form of an equity investment or a loan. For various reasons, Contracting Third Parties do not want to be considered persons with control over a Cannabis Operator or be subject to background checks or other reporting requirements to the applicable regulatory authority. It is the collective duty of counsel to the Cannabis Operator and … Keep reading
After a few days in the Miami sun — well, actually, in the air-conditioned exhibition spaces of the Fontainebleau hotel — the Burns & Levinson team is happy to report that the 2022 Benzinga Cannabis Capital Conference was a great success.
Our Cannabis Business & Law Advisory Group was well represented by Frank A. Segall, Scott Moskol, Bryan Natale, and myself – Max Borg. We had the opportunity to connect with many of our fantastic clients throughout the industry and to meet many key industry participants we hope to work with soon.
Benzinga was a concentrated gathering of many – if not most – of the key players throughout the cannabis industry, from the largest investors in the space to founders and CEOs of the largest cannabis companies in the world, to activists, politicians, consultants, advisors, professionals and many others.
Before discussing my five biggest takeaways from the conference, I want to briefly reflect on the experience of the event itself. The passion and enthusiasm for this rapidly growing industry could be felt throughout the conference. It was a fantastic networking and educational experience, and people seemed to be having FUN! I wonder if it was a coincidence the … Keep reading
Happy 4/20! Today, our team is celebrating by gearing up for two exciting events hosted by Burns & Levinson featuring experts and cannabis marketplace pros from across the industry.
CannaBusiness Advisory Webinar
Permissible Payments in Cannabis
Safer alternatives to cashless ATMs, blockchain, and more
Thursday, April 28 | 4:00 p.m. ET
Register to join us on Thursday, April 28 at 4:00 p.m. ET.
Join industry trailblazers for a virtual discussion and industry advisory on the current state of permissible payment platforms in the cannabis industry and legal, ethical alternatives to cashless ATMs and blockchain.
Cashless ATMs are a popular method of payment for consumer cannabis purchases. However, the legality is questionable, and as cashless ATMs may be violating the policies of major credit card companies, the method may soon be shut down.
Frank A. Segall and Scott Moskol of Burns & Levinson, and Terry Neeley of West Coast AML Services, a top compliance advisor to cannabis lenders, will address how cashless ATMs and blockchain payment options may violate credit card company policies and expose dispensary operators, customers, and their banks to potential claims.
Tina Sbrega of Lighthouse Biz Solutions, and Cathy Corby Iannuzzelli of KindTap Technologies, will discuss their … Keep reading
The CannaBusiness Advisory Spotlight Series features expert perspectives from Burns & Levinson clients and contacts who are blazing new trails in the cannabis market.
This week we spotlight Cathy Corby Iannuzzelli, Co-Founder, President and Chief Payments Officer of KindTap.
From your corner of the cannabis industry, what’s the single greatest challenge right now?
Without a doubt, the greatest challenge is the conflict in regulations at the state and federal levels. I think of it as “regulatory schizophrenia.” At the state level, cannabis businesses are legal, tax paying companies contributing to the economic and social needs of their communities. At the federal level, they are illegal businesses denied access to mainstream financial services, limited in the legitimate business expenses they can deduct and paying more for just about everything as suppliers increase prices to cover their own risks of serving the cannabis industry. It’s a real credit to the creativity and tenacity of the leaders of the industry – and the value of the product – that the U.S. cannabis market has grown to $30 billion in spite of these challenges.
How does your business solve issues related to this challenge?
KindTap provides compliant digital payment products to consumers … Keep reading
Earlier this week, Burns & Levinson’s attorneys Lauren Medeiros Forster and Gustav Stickley V (Gus) spoke on a panel hosted by the Law Firm Alliance about their experiences practicing law in the red-hot cannabis industry. Today on the blog, they’re sharing their perspectives, experiences as cannabis attorneys, and industry predictions. For background: Lauren’s practice focuses on commercial contracts, mergers & acquisitions, finance, securities, lending, and private equity matters in a range of industries, including cannabis. Gus represents cannabis clients focusing particularly on general corporate matters and governance, mergers and acquisitions, finance, securities, and lending.
What is alluring about practicing business law in the cannabis space?
Gus: Working in the cannabis industry makes me feel like a pioneer. New markets are opening up every election cycle, new regulations are being crafted by state regulators, then amended and further amended to keep up with developments and trends in the market. Companies of all sorts pop up with different goals, and different products (some entirely new to the market!). There is always a new problem that arises that taxes the brain and helps us earn the trust of our clients.
Lauren: I like that I have the opportunity to work … Keep reading