IDFPR Provides Key Guidance Regarding Management Service Agreements for Conditional License Holders in Illinois

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

Massachusetts Cannabis Industry Reform

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.

Social Equity

  • 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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The Interplay Between Control Issues and Loan Covenants in Cannabis

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

Jason Sidman CannaBusiness Spotlight

Jason Sidman CannaBusiness Spotlight

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 Jason Sidman, CEO of Sanctuary Medicinals, a vertically-integrated, multi-state cannabis company with operations in Florida, New Hampshire and Massachusetts as well as a medical dispensary license in New Jersey.

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

There are many challenges in this industry, as well as many opportunities. From where I sit, one of the most significant challenges is operating across multiple states with different and distinct regulations. What works as a best practice in Massachusetts may not be compliant with regulators in Florida, and this applies to everything from product testing and approvals to opening new locations, wholesale, marketing, and beyond.

How does your business solve issues related to this challenge?

Sanctuary is rapidly expanding into new markets, bringing our high-quality, award-winning products to patients and consumers across multiple states, and we have assembled a strong team to help us navigate state and local regulatory requirements. Every municipality is different, and it’s critical we have the best talent in place to remain … Keep reading

Key Takeaways from Benzinga 2022

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

Coming Up: Cannabis Business & Law Events with Clear-Headed Guidance

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

Spotlight Series: Cathy Corby Iannuzzelli, Co-Founder and President of KindTap

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

Life as a Cannabis Attorney

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

Scott Moskol, Burns & Levinson Cannabis Advisory Group

Scott Moskol, Burns & Levinson Cannabis Advisory Group

This March, NECANN returned to Boston after a pandemic-related hiatus with a three-day in-person show. I was fortunate enough to be asked to moderate a panel with Tina Sbrega of Lighthouse Biz Solutions and Cathy Corby Iannuzzelli of Kindtap on “Aligning Cannabis and CPG Consumer Experiences with Streamlined Payment Methods.” It was a sunny 70-degree day in Boston and spring was in the air. It was a refreshing feeling of renewal – NECANN was revitalized, as were all the attendees ready to enjoy an in-person event. Here are my favorite experiences and key takeaways from the conference:

  • This was the first all-live, in-person panel I’ve spoken on since February 2020. During the pandemic, I’ve embraced virtual opportunities, but it felt fantastic to return to speaking in front of a live and engaged audience.
  • I was glad to see longtime friends, colleagues, familiar industry friends, and of course our clients. Everyone had the networking bug, and the conference was buzzing with energy as attendees eagerly exchanged ideas.
  • The exhibition hall was packed – both with exhibitors and attendees. It was great to see so many local businesses that had survived and thrived the past two years, despite the toll of
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Scott Moskol, Burns & Levinson Cannabis Advisory Group

Scott Moskol, Burns & Levinson Cannabis Advisory Group

Readers, welcome back to the CannaBusiness Advisory blog! It has been a busy last few months as we took a short hiatus from publishing weekly posts. We first launched CannaBusiness Advisory in July 2017, and late last year we hit pause to re-focus our content and manage some large initiatives in our firm’s cannabis business and law advisory practice. Burns & Levinson’s 2021 Annual State of the Cannabis Industry Conference was our biggest and most successful event since we kicked off the conference series five years ago. This was our first in-person cannabis event in Boston since the beginning of the pandemic, and our team was proud to have nearly 200 in-person attendees (vaccinations were required), 60 virtual attendees, 23 expert speakers, and countless connections made. We are hard at work planning our 2022 conference, and in the meantime you can revisit last years’ panels on our YouTube channel.

The spring season is a time of renewal and revitalization. Just as NECANN held its first live Boston event this past weekend, reinvigorating the local cannabis community with the possibilities of the future, we are excited to see where future blog posts take us and our readers with respect to … Keep reading