General

The Constitutionality of the State Residency Requirements


More frequently over recent years, federal courts have wrestled with the constitutionality of a state’s requirement under its cannabis regulations that ownership of a cannabis company be majority owned (or some other prescribed percentage ownership) by a resident of such state, better known as a state’s “residency requirement.” The obvious repercussion of this regulatory requirement is the investor pool that cannabis companies can draw from is limited, especially as compared to cannabis businesses operating in states without a residency requirement. Not to mention the disappointment of entrepreneurs who want to invest in a new cannabis market, but don’t want to establish residency there.

Residency requirements have been challenged in federal district courts on the grounds that the regulation violates the Dormant Commerce Clause, a rather opaque bit of constitutional jurisprudence. The federal courts of Maine and Missouri have struck down residency requirements in those states, while just last week, a federal court in Washington upheld the residency requirement as constitutional and valid. Below is a summary of each court’s reasoning behind the decisions. No doubt, as new markets open up and states that have legalized adult use in November 2022 roll out their regulations, there will be additional states … Keep reading

Moving Markets: Declining Economic Conditions in Western States to Curaleaf Exit


Recent economic conditions in mature and established cannabis markets have led major players to bow out due to oversaturation in search of more opportunistic emerging markets. Curaleaf Holdings, a multistate operator, recently pivoted its business strategy by shutting down all California, Colorado, and Oregon operations. With all three of these states experiencing declining wholesale cannabis prices due to cultivation oversupply, Curaleaf has decided to exit these states and reduce its payroll by about 10% overall. Curaleaf is not the only big cannabis company to experience job cutbacks in recent months. Oregon-based Dutchie, California-based WM Technology, and Colorado-based Akerna Corp. have all scaled back their workforce as a cost-saving measure.

The California market has been troubled by several contributing factors, making it a particularly challenging market for a wholesale cultivator. After a period of wholesale cannabis price decline due to market oversupply and competition, prices have leveled off and even increased slightly. However, despite this uptick in price, some farmers still choose not to grow or renew their cultivation licenses as production costs exceed the wholesale price for outdoor bulk cannabis. Additionally, the thriving and unrestrained illicit cannabis market in California creates even more competition, with the illegal market not … Keep reading

Spotlight Series: Joe Campanelli, President and CEO of Needham Bank


 

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 Joseph Campanelli, President, and CEO of Needham Bank. Joe’s 30 years in the financial services industry – including leading Hartford National into interstate banking, building Sovereign Banks – New England and its entry into commercial baking multi-state acquisitions, and leading the turnaround of Flagstar Bank, raising over $1 billion in capital, position him as a key market leader in cannabis banking.

From your corner of the cannabis industry, what’s the single greatest challenge right now?

For us, the greatest challenge is the enormous loan volume coming from the cannabis industry and rigorous compliance standards. Since marijuana is still illegal at the federal level, many financial institutions are unwilling to serve cannabis business clients, creating a high volume of loan requests for banks that serve this industry.

Although numerous requests are constantly coming in, it is critical to take the time to find a solution for each customer’s unique credit needs. And after determining the appropriate structure, challenges include trying to process the loan request promptly while balancing credit risk, customer … Keep reading


Last month, tens of thousands of folks working in the cannabis industry congregated in sunny Las Vegas for MJBizCon 2022. Me and my canna-crew, comprised of the unparalleled attorneys in Burns & Levinson’s Cannabis Business and Law Advisory Group, were thrilled to share the city with other cannabis professionals and entrepreneurs. While the B&L team has been attending MJBizCon since its inception, it was my first time there. What can I say? It was a great privilege to chat with passionate professionals, learn from industry pioneers, and be in a place where cannabis is lauded for its economic and wellness value and continuing potential in our national economy. In the wake of meeting and talking with over fifty individuals from all aspects of the cannabis industry and from all corners of the country, here were my biggest takeaways. 

Working with the Same Plant but Different Laws

While the cannabis plants from state to state may share substantially the same genetics, the businesses that cultivate, manufacture, distribute, and sell those plants operate in entirely different regulatory ecosystems from state to state. As a student of the regulations, I’m well aware of the differences in cannabis-related laws from state to state. … Keep reading

Spotlight Series: Tony Repanich, President and CEO of Shield Compliance


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 Tony Repanich of Shield Compliance, a compliance platform for banks and credit unions. As President and Chief Executive Officer, Tony leads operations and is the company’s principal product architect. Having served as a senior executive at a Washington State-based community bank for 25 years, Tony has in-depth knowledge of the banking industry and the regulatory and compliance requirements for high-risk industries. Today he brings that knowledge to financial institutions serving and considering serving the legal cannabis industry.

Shield Compliance was a bronze sponsor at Burns & Levinson Sixth Annual State of the Cannabis Industry Conference. Our nationally recognized conference convened experts and industry leaders to share unique strategic legal and financial perspectives on forecasted trends, regulations, M&A, investments, and more.

From your corner of the cannabis industry, what’s the single greatest challenge right now?

One of the most challenging issues facing the cannabis industry is access to banking and financial services. Not only is this a challenge to the cannabis-related business (CRB)      owners and other participants in this industry, but it … Keep reading

Spotlight Series: Drew Richards, Director, New England Cannabis Industry Leader at Marcum LLP


The CannaBusiness Advisory Spotlight Series features expert perspectives from Burns & Levinson clients and contacts who are blazing new trails in the cannabis market.

Today, we spotlight Marcum LLP and Drew Richards, Director, New England Cannabis Leader. Marcum LLP is an accounting and advisory services firm that offers accounting, financial and consulting services to cannabis industry operators. Based in New Haven, Drew Richards has 12 years of experience conducting, reviewing, and analyzing financial information. Marcum LLP was a Gold sponsor at Burns & Levinson’s Sixth Annual State of the Cannabis Industry Conference, held on October 17th at the Westin Boston Waltham. Our nationally recognized conference convened national experts and industry leaders to share unique strategic legal and financial perspectives on forecasted trends, regulations, M&A, investments, and more.

From your corner of the cannabis industry, what’s the single greatest challenge right now?

Although there are a lot of accounting-related challenges (280E, inventory valuation), including the various and different state regulations, I would say the biggest challenge right now centers around education and future operations. Business owners may not have accounting backgrounds, so they run their businesses without much consideration for generally accepted accounting principles (GAAP) or international financial … Keep reading


On October 17th Burns and Levinson hosted its Sixth Annual Cannabis Industry Conference. Our very own Scott Moskol sat down with the following experts to discuss the current state of the national cannabis market and diagnose the events of the last couple of years that led the market to where it currently resides.

David Bunzel / Managing Director – Investment baking, M&A, Public & Private Markets / Young America Capital

Kyle Patrick Judge / Vice President – Management Liability, Cannabis & Transaction Risk / HUB International

Tiffany Liff / Managing Director / Entourage Effect Capital

Richard Ormond / Senior Advisor / PGP Capital Advisors

Jacques Santucci / President / Opus Consulting

There is no denying that the national cannabis market is undergoing a thorough “shake-up,” resulting in depressed prices, a reduction in annual gross profit, and an increase in defaults under debt instruments leading to the institution of receivership and other foreclosure proceedings. But how did we get here, and what should cannabis operators keep in mind when strategizing ways to safeguard the health of their company?

Straight from the mouths of our experts to your computer screen, here’s a non-exhaustive list of the realities that make running a … Keep reading


 

On October 17th Burns and Levinson hosted its Sixth Annual Cannabis Industry Conference, where our very own Frank Segall sat down with Steven Hoffman to reflect on Steven’s time as the Chairman of the Cannabis Control Commission, his impact, and what his hopes are for the future of the industry.

Steven recalled his first few months as the Chairman as somewhat of a whirlwind. From being appointed on a Friday night and thrust into a press conference on Monday morning, he has been going nonstop ever since. Steven initially had the help of 5 commissioners, no office, no staff, no money, and very aggressive legal mandates to decipher. His plate was overflowing from day one. For the next 6 months, the commissioners held between 30-50 public meetings in order to discuss and draft regulations that would be broadly followed throughout Massachusetts.

Steven’s proudest moment as commissioner was the implementation of the Cannabis Social Equity Trust Fund. This fund was put into place to encourage the participation of regulated marijuana for entrepreneurs who have been harmed by marijuana prohibition and enforcement. This fund is set to provide additional opportunities to those who may not be able to do … Keep reading

Spotlight Series: Kyle Patrick Judge, Vice President, Manage Liability, Cannabis & Transaction Risk at HUB International


The CannaBusiness Advisory Spotlight Series features expert perspectives from Burns & Levinson clients and contacts who are blazing new trails in the cannabis market.

Today we spotlight Kyle Patrick Judge, Vice President, Management Liability, Cannabis & Transaction Risk at HUB International. HUB is a global insurance broker and financial services firm headquartered in Chicago with over 530 offices throughout North America. Their work focuses on risk management, insurance, employee benefits, retirement, and wealth management products and services. HUB’s dedicated cannabis practice assists cannabis-related businesses with securing business insurance, risk services, and claims management, and building employee benefits programs.

At Burns and Levinson’s Sixth Annual State of the Cannabis Industry Conference, Kyle will speak with nationwide industry experts on the panel “Weathering the Storm: Restructurings, Workouts, and Distressed M&A.” The panel will discuss best practices for navigating financial and operational distress from multiple perspectives – investors, secured debt holders, and companies during dropping stock prices and reduced multiples.

From your corner of the cannabis industry, what’s the single greatest challenge right now?

The biggest challenge in the management liability space is a lack of carriers playing in the cannabis space. This is the crux of a lot of … Keep reading


President Biden Acknowledges a “Failed Approach” to Marijuana Policy, Outlines Significant Plans to Pardon Thousands, and Evaluate How Marijuana Is Scheduled Under Federal Law.

 

On Thursday, October 6, 2022, President Joe Biden issued a press release and video statement announcing his actions to end what he called a “failed approach” to the United States’ federal marijuana policies and calling for significant marijuana reform at the federal level.

First, President Biden announced his administration will be pardoning any U.S. citizens and lawful permanent residents charged or convicted under federal law (and Washington D.C. law) of simple marijuana possession on or before October 6, 2022. Their full political, civil and other rights will be restored. The President called on all governors to follow suit and pardon state offenders of simple marijuana possession.

President Biden also directed the Secretary of Health and Human Services and the Attorney General to initiate the administrative process to “review how marijuana is scheduled under federal law.”

At a minimum, the President’s announcement shows a real – and long-awaited – change in the Federal Government’s approach to cannabis, which has been criminalized as a Schedule I substance since the Controlled Substances Act was signed into law … Keep reading