In December, President Trump signed a 5000+ omnibus bill into law titled the Consolidated Appropriations Act of 2021 (CAA). The bill was highly publicized for extending certain COVID-relief measures to small businesses, such as revitalizing the Paycheck Protection Program. Another facet of the CAA was a provision which bans the United States Postal Service (USPS) from shipping Electronic Nicotine Delivery Systems (ENDS).
Cannabis vaporizers are captured in the CAA’s broad and vague definition of ENDS, which are defined as “any electronic device that through an aerosolized solution, delivers nicotine, flavor, or any other substance to users inhaling from the device.” The definition includes a component, liquid, part or accessory of the vaporizer device, without regard to whether the component, liquid, part or accessory is sold separately.
The CAA provided that the USPS must develop regulations within 120 days on how it will implement its ban on shipping and handling ENDS.
The USPS released its proposed rule on February 19, 2021 titled “Treatment of E-Cigarettes in the Mail.”
Currently, shipping cigarettes and smokeless tobacco through the USPS is prohibited unless, as set forth in the exceptions, they are mailed between authorized tobacco businesses or are small shipments between individuals … Keep reading
On February 3, 2021, the Massachusetts Supreme Judicial Court (SJC) heard a case that raised questions to a grievance cannabis operators in the Commonwealth have been grueling over for years. In the case of Mederi Inc. v. City of Salem, Mederi Inc. was denied a host community agreement (HCA) by the city of Salem after applications for the city’s five adult-use recreational marijuana retailer licenses were slotted. As a part of the Superior Court’s (Feeley, J.) ruling, the court found that the Massachusetts legislature did not intend for the Cannabis Control Commission (CCC) to have the authority to review the contents of HCAs under G. L. c.94G (the Statute).
Marijuana applicants are not only required to enter into HCAs with a host community as directed by the Statute but also are required by the CCC’s regulations in order to be accepted for licensure. During oral arguments, the justices of the SJC raised several questions against the regulatory scheme conducted by municipalities across Massachusetts, charging operators fees disguised such as “charitable donations” and “traffic enhancement fee[s]” that force such businesses to make annual obligations well over the maximum 3% community impact fee allowed by the Statute.
The panel highlighted … Keep reading
Delta-9-tetrahydrocannabinol (popularly referred to as THC) is widely considered the rock star of cannabinoids. However, Delta-9-THC isn’t the only cannabinoid with psychoactive effects that is emerging on the scene. In fact, it was forced to share the spotlight with its lesser-known cousin, Delta-8-THC, in a recent Rolling Stone article. Does this mean we should expect to see a new cannabinoid rising star on the horizon?
As Rolling Stone highlighted in its article, there is good reason to buy into the hype surrounding Delta-8.
In some ways, Delta-8 sounds too good to be true. But it isn’t. For people who want to feel the psychoactive effects of Delta-9 yet find it gives them paranoia or anxiety, Delta-8 is a quasi-legal option available online. And unlike Delta-9, Delta-8 is significantly cheaper, making it a viable option for some people looking for a short uplifting feeling without being intoxicated. But judging by how much attention Delta-8 has been getting by law enforcement, the trend might be short-lived. Despite the burgeoning success of Delta-8 over the past year, any day can be the cannabinoid’s last.
In fact, the two analog cannabinoids share a lot in common. They are nearly identical from … Keep reading
Despite the ongoing COVID-19 pandemic, 2020 was a record-setting year for the cannabis industry, and indications suggest 2021 will continue the trend. Years of steady growth in the cannabis industry shined in 2020 with record levels of sales growth, significant legalization reforms, and re-emerging optimism in the cannabis capital markets.
Sales of medical and recreational cannabis set all-time records in both mature cannabis markets, such as Colorado (sales figures for medical and recreational cannabis exceeded $2 billion, up from $1.7 billion in 2019 and $1.5 billion in 2018) and Oregon (annual sales surpassed $1 billion for the first time in 2020), and emerging markets, such as Illinois (sales surpassed $1 billion for the first time). One factor that contributed to these all-time highs resulted from dozens of states – and the District of Columbia and Puerto Rico – declaring their cannabis industries “essential,” allowing cannabis operators to remain open and operational throughout the pandemic. Notably, one exception was the Commonwealth Massachusetts, where the governor closed adult-use cannabis businesses for two months but declared medical cannabis companies as “essential.” Despite the governor’s actions, Massachusetts sales still set records – hitting $700 million in sales, up approximately 56% from … Keep reading
In our first installment of this two-part “mini-series” on finders, we outlined the Securities and Exchange Commission’s proposed conditional exemption (“Proposed Exemption”) to permit unregistered brokers – or “finders” – to engage in limited activities on behalf of private issuers without being subject to federal broker-dealer registration requirements.
We expect the Commission’s Proposed Exemption would help facilitate private companies’ capital raising efforts by permitting unregistered exempt finders to connect issuers with accredited investors in private markets in exchange for transaction-based compensation. Private investment funds, prospective finders, issuers, and investors should all take notice of this proposed “finders” exemption. Cannabis businesses, in particular, may find that the Proposed Exemption would open doors to previously untapped networks of potential investors through exempted intermediary “finders” that are not explicitly available under current regulations.
However, there are also certain traps for the unwary.
This installment highlights key considerations and concerns that issuers, private funds, potential investors, and prospective finders should be aware of – particularly any cannabis constituents seeking to navigate the proposed safe harbors in light of the federal illegality their industry operates under.
The Proposed Exemption Would Expand Available Capital Sources: Exempt Finders Would be Free to Connect Private Companies with … Keep reading
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.
Click here to watch the full webinar.… Keep reading
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
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.
Click here to watch the full webinar.… Keep reading
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