Cannabis Law Blog

News & Insights for Cannabis Law and Business

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Even two weeks after Election Day, jurisdictions nationwide are riding high after a number of positive wins related to the possible systemic legalization of cannabis use nationwide.  As of November 3, 2020, the pendulum now undeniably swings in favor of cannabis, with medical cannabis legal in 33 states and recreational adult-use permitted in 12 states and Washington D.C.
Continue Reading Green Wave: The Latest Election Cycle Brings Hope for Standardized Cannabis Legalization

Unions have long sought to avoid the NLRB’s election process, relying instead upon so-called “neutrality” agreements to obtain initial recognition by employers and legally enforceable rights to represent and bargain on behalf of previously unrepresented employees.  Although truly neutral pre-recognition “neutrality agreements,” i.e. those calling for an employer to be neutral on the subject of unionization and little more, are lawful, many such agreements go beyond mere neutrality and venture into actual employer support of organizing.  This may render such agreements unlawful under the National Labor Relations Act (NLRA or Act) because they interfere with employees’ rights under the Act. 
Continue Reading Neutrality and Labor Peace Agreements – When Its Unlawful for an Employer to Be “Too Neutral” as to Union Organizing Under the NLRA

Alternative dispute resolution (“ADR”) – such as mediation and arbitration  – has long been an attractive alternative to litigating disputes in court, especially for parties hoping to arrive at a swift resolution.  Now, given the unprecedented backlog in California courts caused by the COVID-19 pandemic, as well as uncertainty related to re-initiation of jury trials, ADR may become an increasingly favorable option – particularly for those in the cannabis industry.  According to the 2019 Annual Report and Financial Statements published by American Arbitration Association (“AAA”), cannabis-related cases have seen more growth (225%) than any other category of AAA’s 9,737 business-to-business
Continue Reading Using ADR for Cannabis Disputes

In Granny Purps v. County of Santa Cruz, the Sixth District Court of Appeal green-lit a medical cannabis cultivator’s ability to pursue damages – to the tune of potentially $3.5M – from the County of Santa Cruz when it determined the County cannot rely on zoning ordinance to seize the cultivator’s plants grown in violation of local regulation. Specifically, the Sixth District found that, while the County is not compelled to return seized property if the property is illegal, the local ordinance at issue “ultimately regulates land use within the County; it does not (nor could it) render illegal a
Continue Reading County Zoning Ordinance Cannot be Used to Justify Cannabis Plant Seizure

The viability of California’s cannabis delivery businesses continues to hang in the balance as trial in the landmark litigation between the Bureau of Cannabis Control (BCC) and over two dozen local municipalities was postponed at the eleventh hour. In her tentative ruling, issued the afternoon before the much-anticipated bench trial in County of Santa Cruz v. BCC (County of Fresno Super Court, Case No. 19CECG01224), Judge Rosemary McGuire questioned the ripeness of certain municipalities claims challenging implementation of California Code of Regulations, Title 16, section 5416(d) (Regulation 5416(d)), which allows delivery of cannabis to any jurisdiction within the state.
Continue Reading Long-Awaited Trial in Cannabis Delivery Litigation is Again Postponed Until November

*This post originally appeared as an article in the August 2020 edition of Happi Magazine.

Beauty companies, including those using CBD or hemp-derived components, face an uptick in alleged false-labeling class actions. Whether the actions are justified or vexatious, one thing is certain: they are expensive to defend. By keeping the following labeling-related litigation trends in mind when considering and reviewing product labels and marketing, beauty companies can, hopefully, avoid becoming a litigation target.
Continue Reading No Reason to Blush

On June 29, 2020, Colorado adopted a statewide social equity program (SEP) for permitting cannabis operators.[1]  More specifically, House Bill 20-1424 (HB 20-1424) “defines social equity licensees, and modifies and expands the marijuana accelerator program to make it available for social equity licensees and retail marijuana stores.”[2]  The new law enables a social equity licensee to participate in the state’s accelerator program, which, as managed by the Colorado Office of Economic Development and International Trade, supports cannabis business development.[3]  Colorado’s accelerator licensing program, originally slated to go into effect July 1, 2020,[4] pairs
Continue Reading Colorado’s Accelerator Program Paves Way for a Social Equity Program

On June 29, 2020, the Financial Crimes Enforcement Network (FinCEN) published updated guidance intended to “enhance the availability of financial services” for the hemp industry (the Guidance).  Even though the Agriculture Improvement Act of 2018 legalized hemp[1] at the federal level, some banks have hesitated to provide financing to the hemp industry because they are uncertain of their obligations under the Bank Secrecy Act or Anti-Money Laundering regulations (BSA/AML).  The Guidance was published to clarify those obligations, and follows closely on the new National Credit Union Administration guidance for federally-chartered credit unions issued on June 20, 2020. 
Continue Reading Clearing the Air: FinCEN Guidance May Help Banks Find Their Way in the Field of Hemp Financing

It would be an understatement to say that the COVID-19 pandemic impacted transactional activity for buyers and sellers across a range of industries, the hemp and cannabis merger and acquisition (“M&A”) space being no exception.  In particular, the current period of COVID-19 volatility in the hemp and cannabis space is marked by numerous consequential outcomes, namely: (1) a sharp decline in the number of deals; (2) decline in capital raises; and (3) overall decline in market valuations.
Continue Reading Up in Smoke: COVID-19’s Impacts on Hemp & Cannabis M&A

As the novel coronavirus (COVID or COVID-19) continues to ravage the United States, the cannabis industry is feeling the pandemic’s negative impacts despite an initial spike in sales after cannabis operations were deemed essential under various state “stay-at-home” orders.[1]  This article details the most recent state-level responses activated in California and Illinois.
Continue Reading COVID-19’s Continued Impacts on Cannabis Operators

The cannabis industry faced heightened antitrust scrutiny from the Department of Justice (DOJ) in 2019.  There were public reports regarding several “Second Requests” seeking information about potential cannabis transactions.  Second Requests are a part of expensive and time-consuming antitrust investigations typically issued in the approximately 2 percent of transactions that present significant anticompetitive concerns.  To have several Second Requests within a short period of time in the same industry, particularly in an emerging industry such as cannabis, appeared unusual to many observers.  Recent events have shed light on some possible reasons for DOJ’s heightened focus.
Continue Reading High Risk of Second Requests in the Cannabis Industry

As with many states, Texas and the cannabis plant have a long, complex history – from the first citywide cannabis ban adopted in El Paso in 1915, to the enactment of state laws in 1931 that made possession of any amount of cannabis illegal statewide, to imposing in 1955 sentences of up to life imprisonment for cannabis possession by repeat offenders.
Continue Reading Easing the Pain: Relief for Texans in the Form of Low-THC Cannabis

This article originally appeared in Cannabis Business Executive​ on June 10, 2020.

Claimed “illegality” of cannabusinesses continues to be a critical issue for them in their ability to enforce their rights in the courts. The ability to seek judicial relief may be especially important to some cannabusinesses that are struggling as a result of the COVID-19 pandemic (e.g., to seek bankruptcy relief, or to obtain compensation from customers or suppliers that breach contracts). In our December 2019 articles[i], we observed that a cannabusiness may find it difficult to pursue its Intellectual Property (IP) rights in certain jurisdictions where
Continue Reading The Status of a Cannabusiness’ Ability to Seek Relief in the Courts — the ‘Illegality’ Issue

Many Illinois cannabis contracts, including intellectual property licensing agreements, development agreements and supply agreements, contain force majeure clauses.  Depending upon the language of these clauses, the COVID-19 pandemic may be an event that triggers these clauses and provides a defense to nonperformance of the contract.

Companies that are experiencing difficulties complying with or enforcing compliance with their contracts should carefully examine their contracts to determine if a force majeure clause may excuse performance.

On March 20, 2020, Illinois Governor J.B. Pritzker issued a stay at home order for all Illinois residents.  (Executive Order 2020-10.)  On April 30, 2020,
Continue Reading IMPACT OF COVID-19 ON ILLINOIS CANNABIS CONTRACTS — Do Force Majeure Clauses Provide A Defense To Non-Performance

On April 6, 2020, the U.S. Drug Enforcement Agency (“DEA”) made history by descheduling  Epidiolex, GW Pharmaceuticals’ anti-epileptic oral solution containing cannabiodiol (“CBD”), thereby removing it from the purview of the Controlled Substances Act (“CSA”) even though it is derived from cannabis and not hemp.  The DEA’s recent descheduling continues the federal government’s trend of keeping the whole cannabis plant illegal as a Schedule I, while  permitting pharmaceutical derivations of cannabis. The DEA’s action on Monday is effective immediately.

The FDA’s approval, which was the first approved medication to contain a purified form of CBD derived from cannabis, originally placed
Continue Reading DEA Deschedules Cannabinol-Containing Epidiolex