Green California Vector IllustrationIn an Alert published Thursday, Fox partner Tracy Gallegos and associate Lynnel Reyes examined new emergency regulations recently proposed by the California Department of Public Health to allow Type 6, 7, or N cannabis licensed manufacturers to register their facility as a “shared-use” facility. The regulations also provide for a new license, the Type S license, which would allow licensees to create infusions, package and label cannabis products and conduct extractions with butter or food grade oils (provided that the extract or concentrate produced may only be used in infused products manufactured by that licensee.) The regulations are expected to be approved by tomorrow, April 13, 2018.

Tracy and Lynnel outline the details of the proposed regulations and the new Type S license, including its benefits, associated concerns and the application process.

To read their full discussion, please visit the Fox Rothschild website.

Venture capital is playing a growing role in the country’s emerging legal cannabis industry. Attorneys Emily J. Yukich and Matthew R. Kittay of Fox Rothschild’s Emerging Companies & Venture Capital Practice will conduct a panel discussion with industry insiders during the American Bar Association Business Law Section’s annual meeting in Chicago.

Cannabis leafThe Angel Venture Capital Subcommittee, which Yukich and Kittay co-chair, will present an in-depth 360-degree examination of venture capital investing in cannabis companies, featuring:

Panelists:

  • Jeremy Unruh, general counsel and director of external communications at PharmaCann, a medical cannabis provider based in Oak Park, Illinois.
  • Charlie Bachtell, founder and CEO of Cresco Labs, LLC, a Chicago-based medical cannabis cultivating and manufacturing company.
  • William Bogot, co-chair of the Cannabis Practice Group at Fox Rothschild LLP.

Date: Thursday, Sept. 14

Time: 10 a.m. to 11 a.m.

Venue: Chicago Ballroom VIII, Ballroom Level, Sheraton Grand, Chicago, Illinois.

Josh Horn, Co-Chair of Fox Rothschild’s Cannabis Law Practice Group, was recently interviewed by Big Law Business, a Bloomberg Law publication. Josh discussed his inspiration for entering the cannabis law field, Fox’s cannabis practice, and the future of cannabis law in Pennsylvania and on the national stage.

Check out the article: Why Fox Rothschild Is Still Banking on its Cannabis Practice

On our Physician Law blog, Fox associate Ed Cyran discussed physician investment in medical marijuana businesses in Pennsylvania, in light of the January announcement that the PA Department of Health would accept permit applications for growers/processors and dispensers of medical marijuana in the commonwealth. The applications, which are being accepted until March 20, require that the applicant raise substantial funding. Ed notes the legal and regulatory restrictions on such investment.

Medical cannabis
Copyright: alexmillos / 123RF Stock Photo

Tax and accounting issues you should not ignore when setting up your marijuana business:

  • The Trouble with Cash Based Businesses
    • Internal Controls – any cash based business is closely scrutinized by the IRS and other taxing authorities; having strict internal control procedures, in writing, which are strictly enforced, will go a long way in establishing credibility with taxing authorities
    • Form 8300 requirements – educate yourself or hire an accountant who can work with you to comply with this filing requirement
  • Find Good Help
    • It is very important to hire reputable CPAs and legal counsel to assist you in operating your business
    • CPAs often do not have guidance from their licensing boards re: representation of marijuana businesses and many are reluctant to advise marijuana businesses
    • Even though many state bars have given comfort to attorneys, many large law firms are still reluctant to assist marijuana businesses
    • However, sophisticated advisors are starting to work with the industry, both in house and as external advisors
  • Comply, comply, comply
    • Abide by Internal Revenue Code section 280E – this requires knowledgeable and diligent accounting advice
    • Be timely and fully pay your taxes – tax liens can create issues with licensing authorities and the IRS has very unfavorable positions regarding collections issues for the industry
    • Taxpayers have the burden of proving the proper tax liability – consider all your options before refusing to cooperate in IRS examinations