On April 1, 2019, Fox Rothschild attorneys Josh Horn and Joseph McNelis will present Implications of Medical Marijuana in the Workplace, a live webinar, in conjunction with Lorman Education Services.

Joshua Horn, Partner, Fox Rothschild LLP

Joseph A. McNelis III, Associate, Fox Rothschild LLP

The presentation will discuss the challenges employers across the country face given the dichotomy between state and federal laws governing cannabis. Josh and Joe will will provide an overview of federal and state marijuana laws, discuss specific aspects of the employment relationship affected by the legalization of marijuana, and offer practical guidance for employers on how to navigate this new and developing area of the law.

For more information and to register for this webinar, click here.

Also–don’t forget to check out our “White Paper” on the same topic, which provides a great overview and important takeaways for employers.

Florida Governor Ron De Santis signed SB182 into law yesterday.  SB182 redefines medical use of marijuana to include possession, use or administration of marijuana in the form of smoking.

The new law also triggered the dismissal of an appellate court action regarding the constitutionality of Florida’s medical marijuana law which previously banned the smoking of medical marijuana.

Notwithstanding the new law legalizing smokable medical marijuana it will take time for dispensaries to start selling it, since the Florida Department of Health will have to institute regulations and procedures for the new product.  If the past is predictive of the present, it could take a year for new regulations to be issued by the Florida Department of Health.  The new law also legalized the purchase and possession of smoking paraphernalia.

Medical marijuana patients will still need a prescription from a doctor and a Florida medical marijuana patient i.d. card to purchase smokable medical marijuana.  Additionally, nothing in the new law permits or authorizes smoking medical marijuana in public, in an enclosed work area, or on public transportation.  Further, the owners of private property can ban smokable medical marijuana on their property.

Children will also be able to use smokable medical marijuana if they suffer from a terminal illness and they have received two opinions from two doctors that they should utilize smokable medical marijuana.

 

Dori K. Stibolt is a West Palm Beach, Florida based partner with Fox Rothschild LLP.  She focuses her practice on litigation and labor and employment issues and has taken a special interest in the cannabis business.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

On March 22, 2019, the Pennsylvania Bar Institute will hold its second annual Medical Marijuana & Hemp Law Symposium, a full-day interactive event that will touch on all aspects of the emerging cannabis industry in Pennsylvania.

Light bulb symbol composed of cannabis, illustrating concept of cannabis-related patents

Speakers will include attorneys, government officials, doctors, and other experts in the industry, and the Symposium will feature Fox Rothschild attorneys Josh Horn and Joseph McNelis. The Symposium will be held live in Philadelphia, simulcast to 18 locations around Pennsylvania, and offered in a webcast.

Josh will co-lead the opening “Year in Review” presentation, discussing developments in Pennsylvania’s cannabis industry in 2018 and an outlook for the future, as well as a session on “Transactions in the Medical Marijuana Industry.” Joe will co-lead a panel on Employment Law issues, where he will discuss recent case law developments around the country, and what the PA Medical Marijuana Act means for the workplace.

For more information, or to register for the event, click here. We hope to see you there!

 

Although cannabis is illegal under federal law, at least 30 states and the District of Columbia have legalized cannabis for medical use and ten states, as well as D.C., have legalized it for recreational use—a dichotomy that presents a unique and complex challenge for employers. Fox Rothschild’s Cannabis Law and Employment Law attorneys have been on the forefront of these issues in multiple states, particularly in Pennsylvania.

Check out our latest thoughts and practical tips for employers in Pennsylvania (and elsewhere) in the recent issue of the Pennsylvania Bar Association’s Labor and Employment Section Newsletter:

Pennsylvania Medical Marijuana – Challenges and Opportunities in the Workplace, by Joseph McNelis and Joshua Horn. A link to the article can be found here, courtesy of the Pennsylvania Bar Association and Pennsylvania Bar Association’s Labor and Employment Section.

You can also read a more in-depth analysis of questions at the intersection of legal cannabis and Employment Law in our White Paper on the subject, “Employment Compliance in the Age of Legalized Marijuana.”

Joseph McNelis works in Fox Rothschild’s Blue Bell, PA office and focuses his practice on labor and employment matters. Joe also tracks legal developments in the cannabis industry in Pennsylvania and nationwide. Joe can be contacted at 610-397-2332 or jmcnelis@foxrothschild.com.

With momentum growing for legal adult-use cannabis in Illinois following the election of J.B. Pritzker to the governorship, the Illinois General Assembly is already proposing legislation that would loosen regulations governing the cannabis industry.

On February 15, 2019, Sen. Heather A. Steans introduced SB 2023, which would amend the Illinois Banking Act and the Illinois Credit Union Act to prevent the Secretary of Financial and Professional Regulation from taking various punitive actions against banks for providing financial services to legitimate cannabis-related businesses.  The proposed bill would also prevent the Secretary from recommending or incentivizing a bank to decline, downgrade or cancel financial services for an individual or entity solely because such individual or entity is engaged in a legitimate cannabis-related business, or becomes engaged in such a business, or the financial institution discovers that such individual or entity is engaged in such a business.  Senator Steans, together with Representative Kelly Cassidy, is also leading the charge on the legislation to legalize cannabis for recreational adult use in Illinois.

Proponents in the Illinois cannabis industry hope that the proposed bill will provide greater comfort for banks to provide financial services to cannabis-related businesses, since most banks in Illinois and other states have been hesitant to do so in the face of the federal prohibition on cannabis and certain actions taken by the current leadership at the Department of Justice that indicated greater hostility towards the cannabis industry.

On January 4, 2018, the Department of Justice withdrew the August 2013 Cole Memorandum, which had discouraged the federal prosecution of individuals and entities operating cannabis-related businesses in accordance with state laws, and the February 2014 Cole Memorandum, which applied the principals of the initial Cole Memorandum to financial institutions providing services to entities operating cannabis-related businesses in accordance with state law.  As a result of these actions by the Department of Justice, Springfield Bank, a downstate bank which had been operating as the main source of financial services for the Illinois medical cannabis industry, stopped providing services to the industry in the spring of 2018.  Although some smaller financial institutions continue to work with cannabis-related businesses, the industry is still severely underserved.  Since the federal issues that chilled banking activity have not yet been resolved conclusively, the proposed Illinois bill is unlikely to solve the issue on its own, but it would be a good first step in giving greater comfort to banks that wish to get involved in the industry.

Fox Rothschild will continue to track the status of SB 2023, as well as the expected recreational adult-use bill once it is introduced in the General Assembly.  For the full text of SB 2023, please see the website of the Illinois General Assembly.

Field of Hemp

Late last year, Congress passed the Agriculture Improvement Act of 2018 (the “Farm Bill”). While the passage of a Farm Bill is a common occurrence for Congress, the 2018 version is significant because it removes hemp from the list of controlled substances, leading many (including us!) to project a boom in the U.S. Hemp Industry.

More recent developments have given some in the industry pause, including a December 20, 2018 Statement from the Commissioner of the Food and Drug Administration making clear that the FDA had regulatory authority over products containing CBD, even if those products were derived from hemp. The Statement seemed to indicate that the FDA would focus on food products containing CBD and products marketed as having certain medical or therapeutic properties. Furthermore, operators in the industry must also be aware of, and compliant with, state laws and regulations governing the production of industrial hemp. We recently blogged on this topic as well.

The Hemp Industry may get more clarity this month, as the U.S. Department of Agriculture announced a “listening session” during which the Agricultural Marketing Service will discuss “a new program to regulate hemp production” and receive comments from attendees to assist the Department in devising such a program. The Listening Session will occur on March 13, 2019 from 12:00 p.m. – 3:00 p.m. EST, and requires pre-registration to attend.

While this is merely the first step in what could be a long rulemaking process, it is a good sign to see the federal government moving quickly in response to questions and uncertainty in this newly invigorated industry. For more information, see the official statement and information on the session from the USA Website.

Here is the full Summary from the USDA’s Statement: In preparing to implement the Agriculture Improvement Act of 2018 (commonly referred to as the 2018 Farm Bill), the Agricultural Marketing Service (AMS) will host a listening session for initial public input about a new program to regulate hemp production. The listening session will provide interested parties with an opportunity to assist the Agency’s future rulemaking efforts by sharing their views on how the United States Department of Agriculture (USDA) can partner with agriculture agencies representing states, territories, and Indian tribes to implement a nationwide program for overseeing the production of industrial hemp.

Joseph McNelis works in Fox Rothschild’s Blue Bell, PA office and focuses his practice on labor and employment matters. Joe also tracks legal developments in the cannabis industry in Pennsylvania and nationwide. Joe can be contacted at 610-397-2332 or jmcnelis@foxrothschild.com.

Jennifer Benda, a Partner in Fox’s Denver, CO office, is an experienced tax attorney who handles tax controversy and income tax planning and compliance matters. She has significant experience assisting companies in the cannabis industry with tax planning, transactional matters, IRS examinations, and other tax compliance matters. Over at Fox Rothschild’s Tax Controversy and Financial Crimes Report Blog, Jennifer provides analysis on a recent decision from the Tenth Circuit Court of Appeals concerning the type of evidence cannabis businesses need to substantiate their “costs of goods sold” under the tax code, and the limits court will apply to these calculations.

In Feinberg v. Comm’r, T.C. Memo 2017-211, the U.S. Tax Court previously ruled that the taxpayer failed to substantiate its cost of goods sold when instead of submitting documentary evidence, the taxpayer provided an expert report, asking the court to make a determination of cost of goods sold based on industry averages. The Tenth Circuit Court of Appeals affirmed this decision in a February 26, 2019 ruling.

As Jennifer explains, this opinion also has important implications for cannabis businesses who may seek to assert the Fifth Amendment privilege against self-incrimination in response to discovery requests in audits or tax court matters. For more analysis and takeaways from the Tenth Circuit’s decision, check out Jennifer’s post.

Recently Congress passed the Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), which legalized activities pertaining to industrial hemp on the federal level. So now we can begin cultivating, processing, and selling industrial hemp, right? The short answer: No.

The 2018 Farm Bill legalized the cultivation and processing of industrial hemp, provided that the hemp used meets the following definition:

“[T]he plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

Essentially, the United States Department of Agriculture (“USDA”) categorized industrial hemp as an agricultural commodity and removed it as Scheduled I controlled substance. (Note: Any product derived from “hemp” that falls outside of the above definition as set forth by the USDA, is considered a Schedule I drug and therefore still illegal under Federal Law.)

Field of Hemp

Great news, right? No so fast.  What most people do not understand is that following this legalization, it becomes the responsibility of each State to regulate such industrial hemp activities. The states must now codify its own legislation, and the respective state department of food and agriculture must create regulations to support commercial activities concerning industrial hemp.

For example, California has codified general statutes pertaining to industrial hemp. See FAC Sec. 81000 et al. Specifically, Sec. 81003 provides that for one to engage in the commercial cultivation of industrial hemp, it must be registered with the County Agricultural Commissioner in which the commercial hemp cultivation will take place. This means that the individual counties in the state of California must implement rules and regulations regarding the industrial hemp activities.

However, it is up to the California Department of Food and Agricultural (the “CDFA”) to first draft and approve general regulations concerning industrial hemp, such as registration fees and sampling procedures. Thus, most County Agricultural Commissioners in California have not opened county registration, as they are awaiting the CDFA to adopt final regulations before they create their own, at least at the local level. While the CDFA is currently in the active rule making process, industrial hemp regulations have yet to be drafted and approved.

As another example, the state of Florida recently hired a new Cannabis Director who has stated that her initiatives include creating regulations pertaining to industrial hemp activities. However, because those regulations are not currently in place, commercial activities relating to industrial hemp remains illegal under Florida law.

Thus, despite industrial hemp being legal on the federal level, most states still have not adopted regulations addressing industrial hemp activities, and therefore, engaging in these activities are still prohibited at the state level. The regulatory drafting and approval process at the state and county levels will require time.

Some states are using either their cannabis regulatory division or their Department of Food and Agriculture to regulate the industrial hemp state programs. If you want to know more about industrial hemp in your state, make sure you check both regulatory agencies…especially before engaging in such activities.

 

 

Chambers USA researches and compiles a list each year of the country’s top lawyers and law firms. This year, Fox Rothschild’s Cannabis Practice Group and 3 of its attorneys made the list!

The firm was included in the 2019 Chambers USA guide for Cannabis Law, as were three of its attorneys: Jennifer Benda, Joshua Horn, and Matthew Kittay.

  • Jennifer Benda, a Partner in Fox’s Denver, CO office, is an experienced tax attorney who handles tax controversy and income tax planning and compliance matters. She has significant experience assisting companies in the cannabis industry with tax planning, transactional matters, IRS examinations, and other tax compliance matters.
  • Joshua Horn is the Co-Chair of Fox’s Cannabis Practice Group and is a sought-after authority on complex cannabis law issues. He advises companies in the cannabis industry on all aspects of their business, including licensing, banking, mergers and acquisitions, corporate finance and structure, securities, lending. intellectual property, advertising, and litigation.
  • Matthew Kittay is a Partner in Fox’s New York, NY office who focuses his practice on corporate law, particularly venture capital, private equity and private M&A. Matt regularly advises on venture capital financings, restructurings, lending transactions and operations for companies and funds in the cannabis industry and cannabis industry service providers.

Last week, North Carolina regulators followed the lead of public health officials in several other states and began cracking down on CBD-infused products. Cannabidiol, better known as CBD, is one of over 100 cannabinoids, such as THC, found in the cannabis plant. Unlike THC, it doesn’t have consciousness-altering effects and can’t give you a “high.” Many believe CBD consumption has a variety of health benefits, from relieving pain and anxiety to treating epilepsy, which has recently made CBD a popular food and drink additive. While the 2018 Farm Bill made the sale and production of hemp-derived CBD oil legal, the FDA has stated that it is unlawful to add CBD to food or dietary supplements, regardless of whether it is hemp-derived. In the past week, New York, Ohio, and Maine have banned the sale of CBD edibles. Now the North Carolina Department of Agriculture (NCDA) has started sending out warning letters to businesses selling food, drinks or animal food containing CBD and notifying them that doing so violates state and federal law. It is the NCDA’s position that CBD oil can’t be added to human or animal food for sale and CBD products can’t make health claims, such as curing or preventing a disease. For now, the NCDA will take an “educate before regulate” approach, informing businesses that sell these products about the NCDA’s stance on them before taking a more assertive approach in the future, if necessary, that could potentially result in seizures and embargos, or fines and penalties.