The Pennsylvania Department of Health recently released proposed permanent regulations to replace the temporary regulations that have been in place since April of 2017.  The proposed permanent regulations would not substantially alter the medicinal cannabis market in Pennsylvania but there are several notable proposed changes in the new regulations.  For example, the proposed regulations add certain conditions under the definition of a “severe medical condition” and prohibit practitioners from charging their patients excessive fees.

The proposed regulations are not in full effect yet but it is always wise to stay ahead of potential regulatory changes.  For more details on the proposed permanent regulations check out the article linked below written by Fox attorneys Edward J. Cyran and Madison S. Clemens.

PA Department of Health Proposes Permanent Medical Marijuana Regulations

The 2020 U.S. Elections provided a change in presidential administrations to one that is reportedly pro-cannabis legalization, along with sweeping approval by voters in those states where legalization of cannabis was on the 2020 ballot.  As such, it is predicted that federal legalization is closer than it has ever been.  With legalization moving closer it is important to understand what federal legalization means for the industry and what traditional legal and financial options will become available to cannabis businesses once legalization does occur.

Fox Rothschild’s Partner Keith Owens addresses the uncertainty of cannabis bankruptcies and how they may change with legalization in the article linked below.  Check it out!

The Uncertain Future of Cannabis Bankruptcies and the 2020 Elections

In November 2020, New Jersey residents voted to approve a constitutional amendment to legalize the possession and use of cannabis for persons age 21 and older and legalize the cultivation, processing, and sale of retail cannabis.  By passing this amendment, New Jersey was poised to take the lead in the adult-use cannabis market amongst its neighboring states.  However, as we have seen in the past, the legislative roll out has been slow and has hit a few major roadblocks.

Fox Rothschild’s Partner, and cannabis practice co-chair, Joshua Horn goes into detail about the delayed roll out and the risks associated with further delays in the article linked below.  Check it out!

https://www.law360.com/cannabis/articles/1356622/nj-s-pot-stalemate-puts-legalization-on-the-edge-of-collapse?nl_pk=05d58edb-1c44-458f-88fc-2b4e75ff7f55&utm_source=newsletter&utm_medium=email&utm_campaign=cannabis

The cannabis industry took a step back on its merger and acquisition activity in 2020 due to some pandemic-related instability but the industry picked up where it left off by the end of the year, and we expect that trend to significantly increase in 2021.  In the article linked below, Melissa Sander and I discuss why an influx of cash in 2021 will lead to greater competition among larger companies looking to expand, and outline steps smaller businesses should take now to ensure they are attractive targets for acquisition.  It is important to be ready for this type of trend because sitting on the sidelines can cost you in the end.

Cannabis Sector Poised for Increased M&A Activity in 2021.

On November 9th, join Fox’s Jonathan Lagarenne, Bob Nagle, Mark Yacura, and Joshua Horn in Rutgers’ CDR Workshop on CBD.  Jonathan Lagarenne, Bob Nagle, and Mark Yacura will present on a panel that will provide corporate banking, employment, and investment considerations when entering the CBD market.  Joshua Horn will then provide an update on the latest CBD regulations for importation, transportation, and intrastate sales, and discuss the ever-evolving matrix of state compliance regulations.  Click here to register.

This year, New Jersey voters will be presented with a referendum on whether to legalize cannabis for adult use.  Join Fox for an interactive discussion featuring insider perspectives on the potential impact of both possible outcomes.  Click the link here to register for free.

Topics will include: 1) Overview of New Jersey’s regulatory environment; 2) The current state of the medical-use market; 3) Business opportunities and challenges in the potential new adult-use market, and 4) New Jersey’s importance to the cannabis industry.

Moderator:

  • Elizabeth Litten, Partner, Fox Rothschild LLP

Speakers:

  • Assemblyman Gary Schaer, Deputy Speaker, New Jersey Legislature
  • Peter Kelly, Partner, Fox Rothschild LLP
  • Jason Morris, Senior VP, Operations, TerrAscend NJ
  • Dina Rollman, Senior VP, Government & Regulatory Affairs, Green Thumb Industries
  • Jeremy Unruh, Senior VP, Public & Regulatory Affairs, PharmaCann

See you there!

 

On August 25th, Pennsylvania’s Governor Tom Wolf called for the legalization of recreational cannabis to assist with the state’s efforts in supporting small businesses that have been negatively impacted by COVID-19.

Pennsylvania’s small businesses and hospitality sectors have been hit hard by COVID-19 and the State has incurred steep costs in an effort to help those struggling businesses.  Gov. Wolf’s proposal to legalize recreational cannabis would generate additional tax revenue for the state and assist with the COVID-19 support.  In addition to generating additional funds to support small businesses, half of the tax revenue generated by recreational cannabis sales would be directed to historically disadvantaged businesses.

For additional information on Gov. Wolf’s proposal, check out this article by the Philidelphia Business Journal: Wolf calls for recreational marijuana to be legalized to help with Covid relief funding.

Most states have seen an increase in their costs due to COVID-19.  Whether it is an increase in unemployment or additional assistance offered to businesses, states across the board have seen an increase in expenditures.  Cannabis legalization can play a pivotal role in helping states meet their new burdens and challenges.  Gov. Wolf may be one of many government officials that will begin pushing their states to legalize cannabis sales as they take notice of the tax revenues generated by the states that have legalized cannabis before the pandemic.  Currently, Pennsylvania only allows medicinal cannabis sales.  If it agrees with Gov. Wolf’s proposal, it will join 11 other states that have legalized recreational cannabis in the U.S.

In Illinois, many new craft grower, infuser and transporter licenses were supposed to be issued by the Department of Agriculture on July 1, 2020. But, because of COVID-19, the issuance of those licenses has been delayed until possibly September 2020. The exact date remains uncertain.

Many potential applicants intended to qualify as a Social Equity Applicant by hiring a certain number of qualifying employees. One way to qualify as a Social Equity Applicant in Illinois is to hire a minimum of 10 full-time employees at the time of application, with at least 51% of those employees either (i) currently residing in a Disproportionately Impacted Area or (ii) having been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the Cannabis Regulation and Tax Act (the Adult Use Act) or a member of an impacted family.

Keeping these people employed during the pandemic is difficult or impossible for some applicants because the individuals must be full-time employees at the time the applications were submitted, which were due on or before April 30, 2020.

Due to the severe economic conditions resulting from the COVID-19 pandemic, these applicants can now submit an Attestation form to the DOA and will no longer be required (for now) to maintain all employees that help satisfy the social equity criterion throughout the duration of the application scoring period. Specifically, the DOA “has determined that due to the unprecedented economic conditions resulting from the COVID-19 pandemic, Applicants seeking to qualify as Social Equity Applicants under this criterion will not be required to maintain all employees that help satisfy this criterion throughout the duration of the application scoring period, so long as the Applicant executes the attached attestation.”

If the applicant is eventually awarded a license, the applicant will be required to, within 60 days of receiving the license, employ the required number of individuals with the required status to meet the statutory qualifications of a Social Equity Applicant.

If you plan to request relief of the requirement to maintain employment for qualifying individuals, the Attestation form must be submitted to AGR.ADULTUSE@Illinois.gov.

In the Weeds - The Fox Rothschild Cannabis Law Blog

In February 2020, the California Department of Food and Agriculture (“CDFA”) released its proposed regulations for a first of its kind appellation program for cannabis cultivators.  The appellation program was established through the same law that regulates California’s cannabis industry, the Medicinal and Adult-Use Cannabis Regulations and Safety Act (“MAUCRSA”); however, the CDFA had to establish its regulations to implement that program.

After releasing the proposed regulations in February 2020 there was a public comment period, which ended in May 2020.  Since then, there have been no statements from the CDFA on changes to the proposed regulations; however, it is highly likely that the general concepts of the regulations will remain after any revisions are made based on public comments.

Below are the key general concepts of the CDFA’s proposed appellation regulations:

  • Cannabis products can only be marketed as being produced or grown from a specific county or appellation of origin if 100% of the cannabis was produced from that county or appellation.
  • Licensed cannabis companies must file a notice with the CDFA prior to using an appellation of origin.
  • Licensees can submit a petition with the CDFA to establish appellations throughout the state. Those petitions must provide the following;
    • A general description and location of the proposed geographical area;
    • Evidence of use of the appellation name;
    • A description and documentation of the boundary of the proposed appellation of origin;
    • A description and evidence of distinctive geographical features affecting cannabis cultivation in the boundary;
    • Identification and definition of all standard, practice, and cultivar requirements of the proposed appellation of origin;
    • A description and evidence of the legacy, history, and economic importance of cannabis cultivation in the area; and
    • A list of cultivator license types issued by the department (such as Indoor, Mixed-light Tier 1, Mixed-light Tier 2, or Outdoor) which are prohibited from using the appellation of origin.
  • Once the petition is filed, the CDFA will issue a notice of the petition and there will be a 30-day public comment period. The CDFA will issue its determination on the petition after the public comment period.

The use and protections of cannabis appellations can help old school cultivators in California’s historic cannabis areas, such as Mendocino, Humboldt, and Trinity counties, and increase demand for products grown in those areas and in particular appellations.  By establishing appellations and setting standards to use such appellations, stakeholders can secure much needed marketing recognition because consumers will be able to rely on consistent products from each appellation.  Similar to wine, a protected cannabis appellation can provide consumers with product consistency and stakeholders with increased product value.