On May 10, Treasury Secretary Janet Yellen presented the Financial Stability Oversight Council (FSOC) Annual Report before the Senate Banking Committee about the need for sensible stablecoin legislation (we have previously discussed the President’s Working Group (PWG) report on stablecoins here and here).  Secretary Yellen cites the findings in the PWG report as reason to conclude that “the current statutory and regulatory frameworks don’t provide consistent and comprehensive standards for the risks of stablecoins as a new type of payment products, and urges Congress to enact legislation to ensure that stablecoins and such arrangements have a federal prudential framework.”
Continue Reading Stablecoin Regulation Update

On May 16, the CFPB released a report examining metrics on mortgage servicers’ responses to the COVID-19 pandemic.  According to the report, homeowners are still facing significant risks and challenges in working with mortgage servicers, particularly borrowers struggling with mortgage payments after their COVID-19 hardship forbearances and other protections under the CARES Act have expired.
Continue Reading CFPB Report on Mortgage Servicers Examines Industry Responses After Pandemic Protections End

On May 17, the FDIC and the CFPB took parallel actions to combat the misuse of  the name or logo of the FDIC and deceptive representations about deposit insurance.  The FDIC approved a final rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo.  The CFPB followed suit by releasing Consumer Financial Protection Circular 2022-02 providing that company’s likely violate the CFPA’s prohibition on deception acts or practices if they misuse the name or logo of the FDIC or engage in false advertising or make misrepresentations to consumers about deposit insurance, regardless of whether such conduct (including the misrepresentation of insured status) is engaged in knowingly.
Continue Reading FDIC and CFPB Take Action to Protect Against Misrepresentations about FDIC Insured Status and Misuse of Name and Logo

Recreational cannabis is now legal in 19 states and Washington D.C., driving the growth of legal cannabis sales estimated at $33 billion this year—up 32% from 2021—and expected to reach $52 billion by 2026.[1] This movement signals that financial investment in cannabis is not abating but accelerating notwithstanding the impact of the lingering COVID-19 pandemic. This growth in the cannabis industry, of course, also means that operators and their investment partners face commercial risk, including insolvency.

Continue Reading The Cannabis Conundrum: Can Cannabis Companies File Chapter 15?

On May 13, 2022, a law requiring publicly held corporations headquartered in California to have women on the board of directors was enjoined from being enforced and declared unconstitutional after a bench trial in Los Angeles Superior Court.  In Crest v. Padilla, a judge ruled that the law violated the Equal Protection Clause of the California Constitution because it created a suspect gender classification without a compelling state interest, and the law was not necessary or narrowly tailored to achieve the State’s goals of remedying gender discrimination or benefiting the economy. 

Continue Reading Court Enjoins Law Requiring California Businesses Have Women on Their Board of Directors

The US Food and Drug Administration (FDA) Office of Pharmaceutical Quality (OPQ) of the Center for Drug Evaluation and Research (CDER) recently published a White Paper laying out a framework to evaluate the Quality Management Maturity (QMM) of pharmaceutical manufacturing sites. The White Paper supports CDER’s long-held vision for pharmaceutical quality in the 21st century, described as a “maximally efficient, agile, flexible manufacturing sector” that is able to reliably produce high-quality drug products without extensive regulatory oversight.[1] The Agency is hosting a two-day workshop on May 24 and 25 for stakeholders to provide feedback on the proposed QMM, which may be a welcome shift towards a more holistic, metric-based review of manufacturers with mature quality systems.

Continue Reading FDA White Paper Signals Shift to Performance-Based Reviews of Mature Quality Systems

On January 5, 2022, we discussed the Notice of Benefit and Payment Parameters for 2023 proposed rule released by the Centers for Medicare & Medicaid Services (CMS). On April 28, 2022, CMS issued the NBPP 2023 Final Rule. CMS published a Fact Sheet and other resources on April 28, 2022. The rule will take effect on January 1, 2023, but the optional early bird application deadline is May 18, 2022 and the final deadline for issuers to submit changes to their QHP Application is August 17, 2022.
Continue Reading 2023 Payment Rule’s Nondiscrimination Provisions and Anticipation of New Section 1557 Rules

Residents of California often complain about high taxes, but no one pays higher taxes than the cannabis industry.  In addition to the Federal 280E penalties, the cannabis industry in California is subject to a 15% state-wide excise tax, sales and use taxes that can reach up to 10.75%, and local business licenses taxes which are as high as 15% in some jurisdictions.  On top of these excise taxes, which combined can approach 40%, there is a state cultivation tax currently imposed on cannabis flowers at a rate of $161.28/dry-weight pound (and some local jurisdictions impose additional cultivation taxes).
Continue Reading California Cannabis Farmers May Finally Get Some Relief

In March, U.S. Department of Treasury issued its annual General Explanations of the Administration’s Revenue Proposals, commonly known as the “Green Book.”  Among other revenue proposals, the Treasury addressed the treatment of on-demand pay arrangements or earned wage access (EWA) programs, which have risen in popularity in recent years (previously discussed in our Labor and Employment Blog).  EWA programs generally allow employees to access accrued wages before the end of their regular pay cycle.
Continue Reading Treasury Department Proposes Non-Loan Status for Earned Wage Access

In recent years, a wide array of trade actions pursued by the United States, foreign and domestic policies of the United States and China, reputational risks, and supply chain breakdowns are driving a trend of more and more manufacturing moving from Asia to Mexico. The Biden Administration has made no secret of its desire to encourage U.S. manufacturers and their component suppliers to move production from China to Mexico.[i]

Continue Reading The Trend of Production Moving from China to Mexico – Regulatory and Practical Considerations: Zai Jian Zhongguo, Bienvenidos a México

On May 9, the CFPB released an advisory opinion affirming that ECOA and its implementing rule, Regulation B, protect not only those persons actively seeking credit, but also those who have sought and received credit.  The CFPB stated in the opinion that “[d]espite this well-established interpretation, the Bureau is aware that some creditors fail to acknowledge that ECOA and Regulation B plainly apply to circumstances that take place after an extension of credit has been granted, including a revocation of credit or an unfavorable change in the terms of a credit arrangement.”  In addition, the Bureau states that it is “aware that some creditors fail to provide applicants with required notifications that include a statement of the specific reasons for the adverse action taken or disclose an applicant’s right to such a statement.”
Continue Reading CFPB Affirms that ECOA Protects Consumers After Receiving Credit

In March, U.S. Department of Treasury issued its annual General Explanations of the Administration’s Revenue Proposals, commonly known as the “Green Book.”  Among other revenue proposals, the Treasury addressed the treatment of on-demand pay arrangements or earned wage access (EWA) programs, which have risen in popularity in recent years (previously discussed in our Labor and Employment Blog).  EWA programs generally allow employees to access accrued wages before the end of their regular pay cycle.
Continue Reading Treasury Department Proposes Non-Loan Status for Earned Wage Access

More than 13 million people were enrolled in Medi-Cal in California in September 2021, making it the largest Medicaid program in the nation. In December 2021, the Centers for Medicare & Medicaid Services (CMS) approved the California Department of Health Care Services’ (DHCS’) request for a five-year extension of its Medicaid section 1115 demonstration and a five-year extension of its Medicaid managed care section 1915(b) waiver. These Medicaid waivers are part of the “California Advancing and Innovating Medi-Cal” (CalAIM) initiative which was launched in January 2022 to provide aid to California’s most vulnerable residents and to provide more equitable programs and access statewide.
Continue Reading Medicaid and Health Equity: CalAIM’s Bold Experiment

On April 29, 2022, the Centers for Medicare and Medicaid Services (“CMS”), issued the final rule on Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs (the “Final Rule”).  CMS promotes the Final Rule as advancing “CMS’ strategic vision of expanding access to affordable health care and improving health equity in Medicare Advantage (MA) and Part D through lower out-of-pocket prescription drug costs and improved consumer protections.”  With a few exceptions, the Final Rule is a wholesale codification of the proposed rule. Except as noted below, the requirements of the Final Rule are effective January 1, 2024.
Continue Reading CMS Issues Contract Year 2023 Final Rule for Medicare Advantage Organizations and Prescription Drug Sponsors

California federal Judge William Alsup dismissed various claims against Mint Mobile LLC based on a data breach that exposed personal information of Mint customers. Plaintiff Daniel Fraser alleged that Mint, a mobile virtual network operator using the T-Mobile network infrastructure, was hit with a data breach in June 2021. According to Fraser, the breach resulted in disclosure of his and others’ personal information, including names, addresses, email addresses, phone numbers, account numbers, and passwords.

Continue Reading Mint Gets Data Breach Claims Dismissed

On April 29, the CFPB filed a proposed order in federal court seeking final judgment against three California-based defendants for engaging in unlawful fee-charging practices and deceptive telemarketing. According to the complaint, the defendants, a student loan debt relief business and a general debt-settlement company, along with their owner and CEO charged illegal upfront fees and deceived customers into paying for debt relief services in violation of the Consumer Financial Protection Act (CFPA) and Telemarking Sales Rule (TSR).  The CFPB alleges that defendants wrongfully charged more than 9,000 consumers with federal student-loan debt a total of approximately $10.5 million in illegal upfront fees, and used deceptive sales tactics to lure consumers into signing up for certain debt-relief services.  If approved by the court, defendants would be banned from performing debt relief and settlement activities.  The CEO would also be require to pay a civil monetary penalty of $30,000.
Continue Reading No Relief in Sight: CFPB and FTC Continue to Take Action Against Debt Settlement Companies