Legal Archives - Page 2 of 13 - Green Market Report

Leland RadovanovicApril 4, 2022
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This article is part of an ongoing series from the Green Market Report covering some of the biggest challenges facing the California cannabis market in 2022.

Part 1 – Burdensome Legislation

The first quarter of 2022 has been busy with newly proposed cannabis bills in California, with more than two dozen bills submitted in the California State Assembly and Senate. Lawmakers introduced bills at a dizzying rate addressing a range of issues from insurance (AB-2568) and CEQA (SB-1148) to clearing criminal convictions (AB-1706) and re-felonizing homegrown cannabis (AB-1725).

In the haystack is a needle of a bill, SB-1097, introduced on February 16, 2022, by Senator Pan. SB-1097, which would impose new health warning labeling rules for cannabis packaging and advertising, could drastically change the cannabis brand landscape.

It is an important backdrop to understand that among the many roles Dr. Richard Pan has, he is a pediatrician and chairs the Senate Committee on Health. In the first section of the bill, Senator Pan presents studies of rising adolescent cannabis use, increasing use during pregnancy, and lowered perceptions of health harms with cannabis use, among other stats. It’s his “why.”

The bill would require that by January 1, 2025, in addition to the currently required labels, cannabis and infused products other than topicals include one of a set of warning labels that covers at least 1/3 of the front in 12-point type with a bright yellow background and a pictorial or graphic element. Products must have the rotating warning labels batched and equally divided between the mandated messages. 

While the bill would give operators and brands until 2025 to become compliant, operators with slim margins will still take a bottom-line hit.

Ryan Jennemann, co-founder and CEO of THC Design, a Los Angeles-based cultivator, says that the initial cost of changing out displays is in the tens of thousands of dollars, not including the packaging. “Let’s just say the packaging [cost] increases by 10-20 cents; there’s $5,000-$10,000 a month moving forward conservatively,” Jennemann stated.

Jennemann also makes the case that, in particular, brands with small packaging will need to increase their size to accommodate the proposed health warning labels that “it’s bad for the environment to be pumping out a bunch more plastic packaging.”

Geoff Doran, CEO and founder of Van Doran Brands, a cannabis flower brand headquartered in Los Angeles, points out that “no other industry in the US has warning labels like the ones being proposed.”

“The concerning part is that we are already running out of space on packaging in order to comply with the current regulations,” Goeff Continued.

SB-1097 would also mandate a full-page printed flyer or folded brochure that includes warnings for safer use of cannabis, including starting with small doses, warning of edibles’ delayed effects, and the health warnings required on product packaging mentioned above. All this must be in 12-point type, have no advertisements, use the heading “Health Warning from the State of California,” and be given to a consumer at sale or delivery.

Lastly, the bill would require physical and online advertisements for cannabis or a cannabis brand to include the health warnings that cover at least 15 percent of the ad in the upper right corner and have a bright yellow background. Radio, television, and video advertisements would require the same rotating warnings. 

Tracey Mason, the co-founder and CEO of House of Saka, a California company producing cannabis-infused beverages, thinks the bill is another nail in the coffin of an already struggling industry in California.

“It is punishing and ill-informed in nature, further serving to underscore the outdated and consistently refuted notion that cannabis use is somehow more dangerous or deadly than other intoxicants – like alcohol and prescription drugs – with zero data on which to base those claims,” stated Mason.

The rotating warning label language required on products, brochures, and advertisements is included in SB1097 with additional language for edibles and inhaled products. Only one warning would be required on the packaging at a time.


The ten rotating messages range from telling consumers to buy legal cannabis, not to use cannabis while breastfeeding, or that cannabis is not for kids or teens. 

WHO Guidelines

Eddie Kirby, the communications director for Senator Pan, pointed to the World Health Organization’s (WHO) guidelines for effective packaging and labeling of tobacco products, used in countries like Italy and Mexico, as established best practices that Senator Pan wants in California for cannabis products. 

The WHO guidelines include packaging recommendations such as using pictures or a graphic for the warning label, bright colors and larger font sizes for visibility, and how much space the health warnings should take up.

Kirby also explained that Senator Pan is trying to create new cultural safety norms about cannabis with the label system, similar to what we have in the U.S. for alcohol. 

“You don’t say chug; you say know your limits, and this new industry needs that,” Kirby explained.

Mason argues that the proposed language is ultimately not helpful to consumers, that “they will not have access to real information about how to best use and enjoy our products because the limited space we have to offer a level of education on our packaging will be lost to hyperbolic language not grounded in reality.”

The bill is set for a hearing on April 4, 2022, and the public can currently comment through the California legislative information website.


Debra BorchardtApril 1, 2022
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The Marijuana Opportunity, Reinvestment and Expungement (MORE) Act from House Judiciary Chairman Jerrold Nadler (D-NY) was passed by the House vote today.

Raj Grover, CEO, High Tide (NASDAQ: HITI) said, “We congratulate the US House on passing the MORE Act as the vote is in line with broader public opinion Meanwhile, we know that given the current makeup of Congress, getting a comprehensive legalization bill through the Senate remains far from assured. For us, the best news is that our business operates in the US with large, growing revenue numbers regardless of what happens in Congress, due to our successful M&A strategy and our network of CBD and consumption accessories e-commerce platforms.”

Nadler tweeted this morning

HAPPENING TODAY: The House is considering my bill, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. This bill will reverse decades of failed federal policies based on the criminalization of marijuana.

It also take steps to address the heavy toll these policies have taken across the country, particularly among communities of color. For far too long, we have treated marijuana as a criminal justice problem instead of as a matter of personal choice and public health.

The bill sets a new path forward and would begin to correct some of the injustices of the last 50 years. The bill decriminalizes marijuana at the federal level, removing it from the Controlled Substances Act. This change applies retroactively to prior and pending convictions.

While I am proud to be the sponsor of this legislation, there are many people who are responsible for getting us to this point today, and I want to thank them for their efforts, and I encourage my colleagues to support this critical legislation.

While many cannabis industry insiders are thrilled to hopefully see its passage, this will be the second time that a bill to end federal cannabis prohibition has been considered in a full chamber of Congress. Unfortunately, the same fate for the first MORE Act in 2020 is expected to be repeated. The legislation has to move to the Senate for approval and that is unlikely.

MORE Act Could Bring $8.1 Billion

Congressional Budget Office (CBO) has said that it expects the proposed federal taxes included in the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act to bring in $8.1 billion in revenue from 2022 to 2031.

“H.R. 3617 would federally decriminalize cannabis (marijuana), expunge the records of people convicted of federal cannabis offenses, and require resentencing of some federal prisoners,” the report says. “As a result, CBO estimates, thousands of current inmates would be released earlier than under current law. In the future, decriminalization also would reduce the number of people in federal prisons and the amount of time they serve.

H.R. 3617 would create a new Opportunity Trust Fund and would appropriate to the fund amounts equivalent to the net revenues received from the occupational tax and from excise taxes on cannabis products. CBO estimates that about $7.8 billion would be appropriated to the fund over the 2022-2031 period, of which the Department of Justice would spend about $3.4 billion to provide job training and legal aid, among other services, to people harmed by what was termed the war on drugs. CBO also estimates that the Small Business Administration would provide about $1.4 billion in grants to states and localities to make business loans to related small businesses and to develop cannabis-licensing rules.

Finally, H.R. 3617 would reduce the Bureau of Prisons’ costs by reducing both the number of people in federal facilities and the amount of time they serve. CBO estimates that the provision would result in net savings of about $800 million over the 2022-2031 period, assuming appropriation actions consistent with the anticipated changes in prison populations. Those savings are not reflected in the table because they are subject to future appropriation action.”

Rep. Steve Cohen (D-TN) said, “Marijuana is less dangerous than alcohol. People do not smoke marijuana & beat up their wives or get angry and beat up others or drive their cars in wildly dangerously conditions, and kill others. Congress has been out of step on this issue.”

“It is clear prohibition is over,” Rep. Perlmutter said. “Today we have an opportunity to chart a new path forward on federal cannabis policy that actually makes sense. The MORE Act is about justice, safety, equity and

Flora Growth CEO Luis Merchan said, “We applaud the US House of Representatives for passing the MORE Act, which would remove cannabis from the list of federally controlled substances and also contains robust social equity provisions as well. With the second historic passage of this bill, it’s time for the US Senate to seriously look at also passing meaningful federal reform. There are thousands of Americans in jail for nonviolent cannabis offenses, and the industry also doesn’t have access to the banking services or to all of the tax write-offs that it deserves. This bill would also allow for crucial research on the medical applications of cannabis to move forward, so doctors and patients can have access to the medical data they need to consider alternatives. We’re excited about any progress at the federal level, but also strongly urge the full Congress to pass comprehensive legalization as urgently as they can.”

Medical Marijuana, Inc. CEO Blake Schroeder added, “Though decriminalizing marijuana would put the U.S. in a much better position to provide safe and free access to cannabis products, it is not the same as legalizing it. We can’t stop fighting for Federal legalization. Even in the CBD space, we’ve been battling the government here (as well as in other countries) to acknowledge the potential wellness and economic benefits of making it legal and allowing every citizen to have free access to the plant. What we need more than ever is for the government to step in just as aggressively as it did during the infancy of the “War on Drugs” campaign but instead, educate people on the anecdotal and scientific evidence on how CBD and cannabis can improve their lives. Even though the House passed this bill to decriminalize cannabis, it is much less likely that it will make it through the Senate, a repeating pattern that we’ve seen a multitude of times over the past decade. Industry leaders need to band together to figure out how we are going to change the minds and hearts of these Senators if we want any legislation to pass.”


StaffMarch 29, 2022
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On Monday the Marijuana Opportunity, Reinvestment, and Expungement or MORE Act was supposed to go to a vote in the House, but that has now been extended to Wednesday.  It seems several politicians are trying to tweak the language with amendments. However, even if it gets passed by the House on Wednesday, it would still need to get approved in the Senate which has its own goals.

Senator Chuck Schumer recently said the plan is to file that bill—the Cannabis Administration & Opportunity Act (CAOA)—in April. Marijuana Moment also reported that “the Senate unanimously approved a bipartisan bill meant to promote research into marijuana, in part by streamlining the application process for researchers who want to study the plant and encouraging the Food and Drug Administration (FDA) to develop cannabis-derived medicines.”

Marijuana Moment described the amendments as such:

Driving Issues

Rep. Dan Bishop (R-NC) filed an amendment that would require the transportation secretary and attorney general to develop and publish “best practices for the recognition and testing of drivers impaired by marijuana” before any provision of the legalization bill could take effect. That means a study would have to take place on the notoriously difficult issue of measuring for impairment under the influence of cannabis before legalization could happen.

A proposed revision from Rep. Josh Gottheimer (D-NJ), who did vote in favor of the MORE Act last round, seeks to provide $10 million for the National Highway Traffic Safety Administration to conduct research on “technologies and methods that law enforcement may use to determine whether a driver is impaired by marijuana.”

Rep. Pete Pete Stauber (R-MN) filed an amendment to make it so immigrants could be deported for driving under the influence of marijuana.

Employer Issues

Rep. Conor Lamb (D-PA), one of just six Democrats to vote against the MORE Act last session, introduced three proposed changes.

  • The first would require the National Institute for Occupational Safety and Health to conduct a study on the “impact of the legalization of recreational cannabis by states on the workplace” and develop “best practices for use by employers that are transitioning their policies related to the use of recreational cannabis, prioritizing the development of best practices for employers engaged in federal infrastructure projects, transportation, public safety and national security.”
  • The second would mandate that the secretary of education conduct a study on “the impact of the legalization of recreational cannabis by states on schools and school-aged children” and develop “best practices for use by educators and administrators to protect school-aged children from any negative impacts of such legalization.”
  • The third would maintain enhanced federal penalties for distributing more than five grams of marijuana to a person under the age of 21 and for distributing more than five grams of marijuana within 1,000 feet of a school, college, playground or public housing authority, or within 100 feet of a youth center, public swimming pool or arcade.

Edibles Restrictions

Rep. Tiffany Thomas (R-WI) introduced two amendments. Her first would create a civil penalty for manufacturing or distributing cannabis products with any “constituent, ingredient or artificial or natural flavor additive (other than marijuana), including a fruit, vanilla, coconut, licorice, cocoa, chocolate, candy, confectionaries, menthol or coffee.” That would essentially cut out just about every edible in the market that currently exists.

Thomas’s second amendment would require that marijuana products be sold in packaging that is “designed or constructed to be significantly difficult for children under 5 years of age to open or obtain a toxic or harmful amount of the substance contained therein within a reasonable time and not difficult for normal adults to use properly.” It would also mandate that cannabis products be labeled with a warning that states: “The Surgeon General has determined pregnant women should not use marijuana, which affects the developing fetus, and is associated with adverse outcomes for newborns including lower birth weight, poor cognitive function, hyperactivity and other long-term consequences.” Most packaging already requires child-resistant elements and warning language so this amendment isn’t too unusual.

Here We Go Again

The MORE Act has been in this spot before. It was originally sponsored by House Judiciary Committee Chairman Jerrold Nadler (D-NY) and passed the House in 2020. However, it was stalled in the Senate that never brought the legislation to a vote. It advanced again this session in September. Then the House Leadership said it would schedule a vote this week. The leaders of the Judiciary Committee then released a nearly 500-page report on what the legislation would accomplish and outlining arguments for and against the reform.

The Congressional Budget Office and the staff of the Joint Committee on Taxation estimate in a new report that H.R. 3884, otherwise known as the MORE Act would increase revenues, on net, by about $13.7 billion over the 2021-2030 period by creating business income, compliance, and occupational taxes; those increases would be partially offset by allowing certain deductions for business expenses associated with trafficking controlled substances.

The MORE Act would also federally decriminalize cannabis (marijuana), expunge the records of people convicted of federal cannabis offenses, and require resentencing of some federal prisoners. As a result, CBO estimates, thousands of current inmates would be released earlier than under current law. In the future, decriminalization also would reduce the number of people in federal prisons and the amount of time federal inmates serve. In total, the report said that over the 2021-2030 period, CBO estimates that H.R. 3884 would reduce time served by 73,000 person-years, among existing and future inmates. CBO’s analysis accounts for time served by offenders convicted of cannabis-only crimes and by those convicted of another crime in addition to a cannabis offense.


Debra BorchardtMarch 16, 2022
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Law360 reported that federal prosecutors on Monday unsealed the indictment against a Russian tycoon accused of making illegal political contributions in support of a cannabis venture, claiming that he made the donations in the names of straw donors. According to the Justice Department, the group hoped that the donations  to certain candidates would help Muraviev and his business partners win the coveted cannabis and marijuana licenses.

The scheme dates back to the spring of 2018 when Lev Parnas and Andrey Kukushkin decided to get into the cannabis industry. The two along with Andrey Muraviev and Igor Fruman were working together to grease the political wheels. Muraviev, who is a foreign national Russian citizen, was charged in New York federal court “with conspiring to make contributions and donations as a foreign national and in the name of another person, as well as actually making those contributions and donations.” Muraviev is thought to be somewhere in Russia at this time.

Law360 reported that U.S. Magistrate Judge Robert W. Lehrburger ordered the unsealing of the superseding indictment Monday. The original court documents were filed under seal in September 2020.

The indictment says that Parnas faked an energy company as a front and that the campaign contributions actually came from Fruman. The company was called Global Energy Producers (GEP), but it had no income or revenue and yet it made a $325,000 contribution to one political committee and $15,000 to another.

Fruman, was sentenced to a year and a day in prison in January for soliciting $1 million from Muraviev to make the illicit political contributions.

In October, Parnas and Kukushkin were convictedParnas was also convicted on charges related to making a wrongful $325,000 contribution to the Trump-allied super PAC America First Action, which was the subject of a Federal Election Commission complaint.

According to Law360, U.S. Attorney Damian Williams said in a statement Monday that Muraviev “attempted to influence the 2018 elections by conspiring to push a million dollars of his foreign funds to candidates and campaigns. He attempted to corrupt our political system to advance his business interests.”

In addition to spending money on political contributions, the group also used the money to pay off credit cards and lease luxury vehicles.

 

 


Leland RadovanovicMarch 3, 2022
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A New Jersey cannabis license applicant is suing the state and claiming that some license winners were using certain women as props to get special female-owned business license. Curio Holdings LLC, a subsidiary of privately-owned Curio Wellness based out of Maryland,  filed a lawsuit in the Superior Court of NJ, Appellate Division (#A-000947-21), against New Jersey Cannabis Regulatory Commission (NJCRC) for a stay of Alternative Treatment Center license awards in the Central Region, alleging application fraud from several of the awardees of the coveted licenses. 

Curio Holdings is claiming that because of  fraudulent Women Business Enterprise certifications (WBE) Altus New Jersey, LLC (Altus) and Holistic NJ I LLC (Holistic) among others, should have their license awards withdrawn and a stay on awards put in place.

WBE certifications are acquired through the Department of Treasury, Division of Revenue and Enterprise Services. To qualify for the M/WBE certification,, a business or enterprise has to be either be fully owned and controlled by a minority or woman or has 51% ownership interest or stock held by minorities and/or women and the management and daily business operations are controlled by one or more of the minorities and/or women who own it. Applicants get 90 points out of a possible 900 points for being a minority or women-led company.

Curio Holdings writes that NJCRC previously responded to its question on whether it fully vetted individual company M/WBE credentials by stating that “[a]pplicants that provided an approved New Jersey Department of Treasury issued MBE/WBE/Veteran-Business/Disabled Veteran Business certification were awarded the maximum points for this category.” In other words, NJCRC trusts the department’s certifications. 

Tangled Web Of Connections

The lawsuit outlines the alleged fraudulent WBE certifications for Altus, Holistic, AP NJ Health, and CHM Consulting, but the Altus and Holistic allegations are a tangled web of relationships and potential corporate system gaming.

Altus’ principal ownership lists  Katherine Bio. The lawsuit alleges that she has little to no experience in the management or daily operations of a cannabis business and has not been seen or heard at any of the previous host community approval meetings, nor was her ownership and Altus’ WBE certification touted publicly. Ms. Bio did however hold the principal position of “medical advisory committee” for Standard Farms, a once troubled Pennsylvania-licensed cannabis cultivator. Tilt Holdings (OTC: TLLTF) acquired Standard Farms in 2019 in a deal valued at $40 million. The company said that Bio was no longer associated with Standard Farms.

Instead of Bio, Robert Pease and Peter Goldrath have publicly represented Altus. Pease was the previous president and chief financial officer at Franklin BioScence. Mr. Goldrath was co-founder of Standard Farms, alongside Katherine Bio and her husband Peter A. Bio, the founder of Standard Farms. Both Goldrath and Mr. Bio are partners at a private cannabis investment firm called FocusGrowth Asset Management LP (FocusGrowth). 

The lawsuit alleges that the most telling fact that Altus’ WBE certification may be using Bio as a propare public comments from Goldrath that Altus’ funding and management will be supplied through management services and funding agreements with FocusGrowth, where both he and Mr. Bio are partners. 

Standard Farms’ Female Trouble

Mr. Bio and Mr. Goldrath, in their past lives at Standard Farms, have allegedly and unsuccessfully attempted to use a woman to game the application system to win more points. 

A former director of administrative operations for Standard Farms, Lisa Pabon, filed a wrongful termination lawsuit in 2018 against the company. She alleged that Mr. Bio and Mr. Goldrath fired her for refusing to defraud New Jersey during the 2018 RFA process. They wanted her to agree to claim that she was the “Equal Opportunity and Director of Community Outreach” and “Chief Administrative Officer” at Altus on the application – positions she never held at a company she never worked for. 

“I wasn’t going to go to jail for lying,” she told the Inquirer in 2019.

In the same lawsuit, Lisa Pabon also alleged that Standard Farms “sold product with defective/leaky cartridges” that she believed were emptied and recycled instead of being destroyed as required by law.

Although returned, there was no record in the state’s seed-to-sale cannabis tracking system. She documented at least $15,000 worth of marijuana oil returned from patients and vendors. Instead of responding to her concerns, Standard Farms fired her and later told the court that she was terminated for being rude, incompetent, and difficult to work with. 

The case was dismissed pending private arbitration, so Green Market Report is unable to confirm the results of the arbitration. In addition to this lawsuit, Standard Farms had multiple allegations from whistleblowers lobbied against the company in 2019. 

According to the Inquirer, Renee Kelso, the former director of quality assurance at Standard Farms, quit her job after trying to prevent the company from using hydrogen peroxide mist spray to control mold and mildew – a practice explicitly banned in the states for cannabis. 

Another executive, Paul Karlovich, quit Standard Farms because he said the company “made him do things that he wasn’t comfortable with.” He alleged the company broke the law and brought in seeds and cutting illegally after the 30-day deadline and that the company had neither the tools to mitigate the airborne mildew dust in the greenhouses from the humid climate of the Poconos nor proper odor mitigation system. 

After the Inquirer published the whistleblower’s stories and complaints, TerraVida Holistic Centers, immediately removed Standard Farms products from its stores. 

Holistic NJ A Layer Deeper

Curio also suggests that there’s more woman propping for  WBE fraud at Holistic NJ, a shell for Holistic Industries and where Amy Singer is listed as its principal owner. However, NJCRC’s award letter was penned to Josh Genderson, the CEO and chairman of Holistic Industries, a multistate operator of cannabis companies in Maryland, Massachusetts, Michigan, Missouri, Pennsylvania, and California.

This alone begs the question of Holistic NJ ownership, management and the day-to-operational control necessary to qualify for the WBE certification. In other words, if Singer is leading the company shouldn’t the correspondence be directed toward her?

Here’s where the relationships get tangled because Amy Singer, the purported owner of Holistic NJ, is married to Justin Singer, a partner at Feuerstein Kulick LLP, a cannabis boutique law firm that is named as the outside general counsel for Holistic Industries. Justin Singer is also a partner at FocusGrowth, along with Mr. Bio and Mr. Goldrath and two additional partners at Feuerstein Kulick.

From the Curio documents, it appears that FocusGrowth and Feuerstein Kulick principals are involved in both applications. This would disqualify both Altus and Holistic NJ Applications for violating the 2019 RFA rule that “significantly involved persons” can only be associated with one application. 

The lawsuit goes on the allege WBE fraud from CHM Consulting and misgivings about AP NJ Health’s application score based on prior predatory practices.

While it could be perceived as just sour grapes on Curio’s part, there is big money at stake here. 

Cannabis licenses are as valuable as they have ever been, especially in states where the number of them are capped. Plus, this wouldn’t be the first time a company was accused of using stand-ins to get a license. Harvest Health & Recreation paid $500,000 to settle a charge that it misrepresented a minority ownership in Ohio in 2020. The company said the company was minority owned while all the correspondence was going to the now former CEO Steve White. New Jersey may need to do more vetting when it comes to its social equity applicants.

This lawsuit is ongoing with​​ merits brief due on 4/18/2022.


Gretchen GaileyMarch 2, 2022
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President Joe Biden began his first State of the Union Address laying out the numerous ways that he is working to support the people of war-torn Ukraine. He went on to describe his triumphs in turning around the economy post-pandemic and then rattled off several issues that he says need to be dealt with like crime, infrastructure, childcare, opioid abuse, veterans care, even going so far as to cure cancer, but the one element that was sorely lacking from the speech – cannabis.  

Don’t get me wrong, I did not ever expect Biden to announce the legalization of cannabis or even announce his willingness to finally maintain his campaign promises of decriminalizing pot or releasing those in federal prison for non-violent marijuana offenses.  However, I would like President Biden to open his eyes and recognize that cannabis is the one plant that could actually help with all the problems he described.

First, President Biden wants Congress to pass his infrastructure plan to provide us with better roads, bridges, and jobs, who wouldn’t want that?  Why don’t we build the next generation of infrastructure in this country with hemp?  The hemp industry is ready to take its place on our roads, in our textiles, and in job markets with its inclusion in the 2018 Farm Bill.  It’s time for the President to take this industry to the next level, clean up the muddy regulations and provide the industry with the super sites that are necessary to scale up and make it a reality.  Let this booming space provide the materials you seek and put American workers back to work.

Like so many other Americans, President Biden would like to see us finally conquer the crippling epidemic of opioid abuse, however, he continues to ignore the amazing potential of medical cannabis.  According to the Journal of American Medical Association, researchers have seen a 25% drop in opioid abuse where medical marijuana was legalized.  This was not a stat baked up in the back of some hotboxing van, read the report, President Biden, please!!!

Study after study has shown that medical cannabis helps with pain relief and for our warfighters, it has gone a long way to help with PTSD. President Biden needs to look at the research of Dr. Sue Sisley who has dedicated her life to advocating for veterans’ access to cannabis.  Her work is providing relief to our veterans who have not been able to find that care at the VA. But even her hands are tied when it comes to being held back by red tape at the DEA and less than ideal government-issued cannabis for her research.

He rounded out his speech talking about finding the cure for cancer. I can’t claim that cannabis cures cancer, but I know researchers who have done amazing work in the space like Mara Gordon. She has seen tumors in children disappear and others go into remission for years.  We all know friends who have used cannabis to help a loved one with a better quality of life when their time had come. Right now, these stories remain, just stories in the President’s mind.  I would implore the researchers that he turns to take on this inspiring mission of curing cancer to look to cannabis as a possibility.

For the past 7 years, I have had the privilege of being a part of this industry, nay, this community, and every day I learn some new ways that this amazing plant can impact our lives. It is way overdue for the President to step out of his Reefer Madness mindset and learn about what this plant can do or at least do what he promised in his campaign. God Bless America and God Bless Cannabis.


Debra BorchardtFebruary 23, 2022
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The latest twist to the ongoing battle between Ascend Wellness (OTC: AAWH) and MedMen Enterprises Inc. (OTC: MMNFF) is that MedMen is now going to take back some of its recent influence-peddling accusations. The conflict is over MedMen’s agreement to sell its New York assets to Ascend, which MedMen is now trying to terminate. Back in January, MedMen alleged that Ascend’s CEO Abner Kurtin used political influence with New York Governor Kathy Hochul and was shortly thereafter able to obtain an email saying the license transfer from MedMen to Ascend was approved.
MedMen made the following accusations:
1) AWH New York, LLC President, T. Andrew Brown, attended an in-person fundraiser for Governor Kathy Hochul in Manhattan on December 8, 2021
2) Ascend’s Chairman and Chief Executive Officer, Abner Kurtin, met with Governor Hochul’s secretary “and other senior state officials” in Albany on December 10, 2021.

Ascend’s legal representative Mylan Denerstein, of Gibson Dunn said, “After we provided documentary evidence proving MedMen’s assertions were demonstrably wrong, they indicated they will withdraw their false allegations. Like any house of cards, MedMen’s claims collapsed when exposed to the slightest scrutiny. Ascend will continue to correct the record and looks forward to entering New York’s cannabis market once its rights are vindicated in court.”

Bad Vibes

MedMen had agreed to sell a majority of its New York assets to Ascend Wellness, but the deal was dependent upon approval from New York State. That approval came on December 16, 2021, but MedMen claimed the communication on that day stated the approval was “conditional.” MedMen said that it needed final approval by December 31, 2021. Ascend claimed in its complaint, that it went back to the Office of Cannabis Management (OCM) and asked for clarification. The OCM stated that its approval was in fact final.

MedMen said in its countersuit that on December 28th, Richard Zahnleuter the General Counsel of the Office of Cannabis Management (which supports but does not direct the Cannabis Control Board) contacted MedMen to say he might need up to 60 days to finish its review. However, MedMen also said that Zahnleuter emailed the following evening saying that the December 16th email did give the “final” approval for the deal. Making things even more complicated, MedMen says it spoke with Zahnleuter on the phone who said he had been “pressured” to send the email saying the December 16th email gave final approval. Zahnleuter would not disclose to MedMen who had pressured him.

MedMen wants the court to declare the termination was valid and it also wants to keep the money Ascend gave for the deposit and the working capital advance. Ascend gave MedMen some much-needed cash, including an upfront $4 million cash infusion in December 2020 in connection with the execution of a letter of intent between the parties and a further $4.46 million to cover MedMen’s working capital needs and Utica facility site improvements and expansion during 2021. MedMen also wants a termination fee to be paid.


Debra BorchardtJanuary 25, 2022
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The U.S. Securities and Exchange Commission (SEC) scored a big W this week when a California federal judge ordered cannabis investment firm VerdeGroup to pay more than $1 million in civil penalties, disgorgement, and interest. Law360 reported the final judgment was issued on January 20, 2022, and the defendants have 14 days to pay the SEC. In addition to the payments, the judge has permanently banned VerdeGroup, Thomas Gaffney, and Lisa Gordon from the securities industry.

U.S. District Judge Stanley Blumenfeld Jr. has ordered VerdeGroup to pay a civil penalty of $500,000. VerdeGroup, Tommy’s Pizza, Gaffney and his wife Cynthia Gaffney are jointly and severally liable for disgorgement of more than $470,000, including prejudgment interest. Gaffney and Lisa Gordon were also ordered to pay civil penalties of $100,000 and $5,000, respectively.

Cannabis Scam

The SEC had alleged that from January 2018 through July 2019, VerdeGroup raised approximately $612,765 from about 27 investors from several states. Thomas Gaffney is described in the original complaint as a recidivist violator of the securities laws. Gaffney was sued by the SEC in 2013 for engaging in a fraudulent stock scheme involving illicit kickbacks and phony agreements to mask the kickback. He was sentenced to time served, followed by three years of supervised release with a special condition of eight months of home confinement,
among other things.

In this alleged scam, Gaffney is accused of fooling 27 investors and raising nearly $612,765 that was supposed to go towards cannabis investments. Instead, the funds were “transferred from that third party account to an account in the name of relief defendant Tommy’s Pizza Ventures, Inc. (“Tommy’s Pizza”), the signatories of which are Gaffney and relief defendant Cynthia Gaffney. Investor funds were then used for Gaffney’s personal expenses, and a pizza parlor business, among other things. VerdeGroup and Gaffney misappropriated approximately $467,110 of investor money. To further generate investor interest in the offering, defendants Gaffney and VerdeGroup also made material misrepresentations to investors and prospective
investors about VerdeGroup’s business partners and its efforts to undertake an initial public offering. Gaffney and VerdeGroup made the same or similar misrepresentations
to lull investors into not withdrawing funds and to encourage investors to invest more and/or rollover funds to a different entity.” Some of the personal expenses included cruises and Tiffany’s jewelry.

Lisa Gordon was hired by Gaffney to handle VerdeGroup investor relations and acted as an unregistered broker-dealer in connection with the offering and directly offered and sold securities by soliciting investors through phone calls and emails. Gordon did not have a securities license. The securities offering was not registered with the SEC as required by the Securities Act and at least some of the investors were not provided with the information that a registration statement is required to provide for the protection of investors. In addition, the complaint said that at least one of the investors was unaccredited.

The offering was conducted using a Private Placement Memorandum (“PPM”) that offered $25,000,000 in promissory notes at $5,000 per unit with a minimum purchase of $10,000.
The PPM stated that the notes provided a 12% annual rate of return that matured in 24 months and converted to equity at maturity. VerdeGroup also claimed in the PPM that it “invests in equity positions with legal marijuana companies” and that it “anticipates ‘Going Public’ in 2019.” Investors were fooled when the PPM stated that Thomas “Lynch” was the person involved with VerdeGroup not Thomas Gaffney.

Investors May Get Some Money Back

According to the court order, the SEC “Shall hold the funds (collectively, the Fund) and shall distribute the Fund in a manner consistent with the Supreme Court’s admonition in Liu that the disgorgement remedy must be for the benefit of investors. Liu v. SEC, 140 S. Ct. 1936, 1947–49 (2020). The Court shall retain jurisdiction over the administration of any distribution of the Fund. The SEC may disburse funds to the defrauded investors without seeking leave of Court. If the SEC wishes to send any portion of the Fund to the United States Treasury or otherwise dispose of the Fund in any manner besides compensating the defrauded investors, the SEC must first obtain approval from the Court unless it has already distributed the full
disgorgement amount to investors.”

 

 


Debra BorchardtJanuary 21, 2022
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3min24200

The New York State adult-use cannabis program has been pushed back to a later date and as a result, the state’s projections for early tax revenues have been adjusted as well. When adult-use sales or recreational marijuana was first legalized in the state, sales were originally planned to begin in April 2022. However, former Governor Andrew Cuomo stalled on making appointments to create the cannabis program and it wasn’t until the current Governor Kathy Hochul took over that the program got a jump start. Still, those delays have now affected the state budget. The program is slotted to receive $46 million as it ramps up.

Originally, Comptroller Thomas DiNapoli had estimated that in the fiscal year of 2021-2022 the state would bring in $20 million in marijuana tax revenue. that was then projected to grow to $115 million in the fiscal year of 2022-2023, $158 million in 2023-2024, and $245 million in 2024-2025.

The new state budget now calls for the state to collect $56 million in revenue in the fiscal year of 2023. The majority of that revenue will come in the form of licensing fees. After that, sales are expected to kick in, and in the fiscal year of 2024, New York projects $95 million in tax revenue. That will grow to $158 million in 2025, $245 million in 2026, $339 million in 2027, and $363 million in 2028.

According to the program’s current design, there will be a 9% state excise tax on cannabis. It will be divided with 40% going to education, 40% to community reinvestment and 20% to drug treatment. Another 4% tax will go to the counties, which will receive 25 %, while municipalities get 75% if they allow marijuana businesses. There’s also a separate potency-based tax on cannabis products.

The Governor has also set aside $200 million to assist social equity applicants. Last month, Sen. Jeremy Cooney (D) introduced that would include transgender and non-binary people in the cannabis social equity program. Cooney also proposed other cannabis legislation related to business tax benefits and licensing.

Opt-Outs

Many cities and towns in the state have opted out of the adult-use program. The Rockefeller Institute of Government has tracked the towns that have decided against the program for now. Currently, 765 out of 1,521 have decided against dispensaries and 869 have decided against consumption lounges. Many have stated that the lack of specific rules and regulations from the state has caused them to remain on the sidelines for now. They can opt-in at a later date.


Julie AitchesonJanuary 19, 2022
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4min21440

Only eighteen of the forty-seven states, four U.S. territories, and the District of Columbia that have legalized some form of marijuana have passed legislation to allow for recreational cannabis use, but that number is poised to grow in 2022. Lawmakers in Delaware, Maryland, Ohio, Pennsylvania, and South Dakota are already making moves to get recreational cannabis legislation passed in their respective states.

Delaware State Representative Ed Osienki’s proposed legislation may have fizzled due to numerous proposed amendments in 2021, but Osienski has been revising the bill to incorporate these amendments for 2022 and hopes to see it pass this year. In its original incarnation, House Bill 150 would allow anyone over the age of 21 to possess, use, purchase, or transport marijuana under one ounce but does not permit individuals to grow their own cannabis. The bill also proposes to tax cannabis in the same way as alcohol and contains several prohibitions, including those against the use of marijuana in public by drivers or passengers, smoking cannabis where any other form of smoking or vaping is not allowed, and selling it where alcohol is also being sold.

House Bill 1 was introduced by Baltimore City Delegate Luke Clippinger in the state of Maryland this month. HB 1 is a constitutional amendment that would allow General Election voters to decide whether or not to legalize recreational marijuana use for those 21 years and older at the polls. The new bill proposes that the General Assembly would decide upon the use, distribution, possession, regulation, and taxation of marijuana. A recent Goucher College poll in the state showed that 77% of Democrats support legalization, 50% of Republicans would like to see the measure passed and 60% of Independents are in favor of the bill.

Pennsylvania’s Senate Bill 473 is a bipartisan attempt at passing recreational use legislation where partisan efforts have repeatedly failed. In addition to legalizing marijuana use for those 21 and over, the bill includes social equity and decriminalization measures. But SB 473 isn’t lawmakers’ only bipartisan attempt. Senate Bill 107 decriminalizes cannabis by changing possession of a small quantity (30 grams or less) to a summary offense, which is a third-degree misdemeanor.

South Dakota had a bit of a false start with legalization when the state’s Supreme Court upheld a lower court’s ruling to nullify the voter referendum to legalize recreational marijuana that passed in 2020 (due to an amendment with provisions related to multiple subjects– marijuana, medical marijuana, and hemp). Not to be deterred, South Dakota lawmakers have seen to it that more than 25 of the 38 introduced pieces of legislation for 2022 so far deal with either medical or recreational marijuana use. Petitions for the ballot initiative to legalize the possession, use, and distribution of marijuana are currently circulating.

While the legal status of marijuana at the federal level remains uncertain and hotly debated in Congress, states are making inexorable strides towards recreational use. As states like California and Colorado see eye-popping recreational tax revenue, lawmakers from around the country are rallying to make sure that their constituents have access not only to the medicinal benefits that a thriving cannabis market has to offer, but the economic benefits as well.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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