The voters of Missouri have spoken. During the 2022 Midterm Election, voters passed Amendment 3—a ballot measure legalizing the possession, use, and sale of marijuana to adults 21 years of age or older in the Show-Me-State. Among other things, Amendment 3 includes important information that every Missouri employer should know before the December 8, 2022, effective date.Continue Reading Missouri Joins Growing List of States Legalizing the Adult Use of Recreational Marijuana: What This Means for Missouri Employers
The 2022 Midterm Election revealed a mixed bag of results regarding the legalization of adult use (recreational) marijuana: voters in Maryland and Missouri approved adult-use legalization measures whereas voters in Arkansas, North Dakota, and South Dakota rejected similar legalization efforts.Continue Reading <strong>2022 Midterm Election Results: A Mixed Bag for Marijuana</strong>
The United States’ retail cannabis industry continues exploding, and it doesn’t show any signs of slowing down. These numbers are guaranteed to change after this Tuesday’s election, but as of October 2022, 37 states have legalized some form of medical cannabis, and 19 have legalized the substance for recreational use. Now, only 3 states remain with no cannabis access laws on the books. Retail cannabis sales in the U.S. are projected to exceed $33 billion by the end of 2022. As the industry continues to boom, retail landlords have increased opportunities to diversify their retail spaces by leasing to cannabis tenants. However, with these new opportunities come unique challenges and important considerations landlords should address as they prepare to lease to tenants in this new sector of the market.Continue Reading So You Want to Rent To A Cannabis Tenant? Nine Considerations for Retail Landlords
In January of 2022, a worker in a Massachusetts cannabis cultivation facility died because of “the hazards of ground cannabis dust,” according to a report issued by the Occupational Health and Safety Administration (OSHA).Continue Reading OSHA Investigates Cannabis Cultivation Facilities for Respiratory Hazards
While AK Futures LLC v. Boyd St. Distro, LLC (9th Cir. May 19, 2022) may seem like a golden opportunity for companies in the intoxicating hemp market, it is unlikely to be much of a windfall beyond the near future. Those relying on this decision to provide legitimacy to their business should proceed with extreme caution based on previous responses to loopholes and governmental eagerness to regulate intoxicants such as delta-8. To believe that these products will be held to a lesser standard than state-regulated (and soon enough, federally-regulated) marijuana products would be short-sighted and naïve.
As mentioned in the first post of this series, it is unlikely that AK Futures LLC v. Boyd St. Distro, LLC (9th Cir. May 19, 2022) will be viewed as the conclusive victory that some in the delta-8 THC arena are hoping for. In this post, we will explore what might be accomplished by (or more accurately, what backlash might come from) this and other similar decisions.
The debate surrounding delta-8 THC and the proper regulation of intoxicating hemp products has accelerated greatly over the last several months, fueled by multiple court decisions, federal policy actions, and new state laws. Not least of which is last May’s decision in AK Futures LLC v. Boyd St. Distro, LLC, No. 21-56133, 2022 WL 1574222 (9th Cir. May 19, 2022). This case provides a great deal of clarity for many seeking to enforce trademark protections for hemp products. It is a major win for intoxicating hemp maximalists, and in hindsight, it feels like the start of many that came this summer. However, it would be unwise to see these developments as a final green light to produce and sell delta-8, delta-10, hemp-derived delta-9, and other intoxicating hemp products across the country.
A split First Circuit panel affirmed yesterday that the US Constitution’s dormant commerce clause applies to the federally illegal medical marijuana industry and that a Maine law mandating local ownership of cannabis businesses was struck down.
What does this mean?
Since Colorado became the first state to regulate medical cannabis, there has always been a desire from local advocates and state regulators to limit individuals permitted to own a marijuana license to those that are residents of such state. These atypical rules have caused numerous litigations contesting the validity of such rules, created a quagmire of work arounds by non-residents in an attempt to own businesses in such states (resulting in regulatory actions and litigation), and have hampered industry participants from participating in normal capital markets.
While most states have either gotten rid of or have stopped enforcing such rules (Missouri is an example), this ruling is still a solid legal win for the marijuana industry in affirming that such laws are unconstitutional.
On May 18, 2022, in a 153-2 vote, the Massachusetts House of Representatives voted to amend the state’s tax code to provide income tax relief for Massachusetts cannabis businesses. The Massachusetts House and Senate will go through a conference committee process before both chambers vote on a final bill, which would then be sent to the Governor’s desk for signature. If passed in its current form, Massachusetts would decouple its tax code from Section 280E of the Internal Revenue Code, which denies most deductions to cannabis businesses.
Internal Revenue Code Section 280E provides that no deduction or credit shall be allowed for any trade or business consisting of trafficking in controlled substances prohibited by Federal law or the law of any State in which such trade or business is conducted. Because cannabis remains listed as a Schedule I controlled substance under the federal Controlled Substances Act, cannabis businesses are generally not permitted to deduct business expenses on their federal income tax returns. Currently, business deductions and credits are not permitted at the state level either, because Massachusetts uses federal taxable income as the starting point for calculating Massachusetts tax liability. The result of Internal Revenue Code Section 280E is that cannabis businesses incur a significantly higher effective tax rate than businesses in most other sectors.
The pending bill would allow Massachusetts cannabis businesses to deduct business expenses for purposes of determining Massachusetts taxable income, potentially resulting in significant tax savings. If passed, Massachusetts would become one of a growing number of states to decouple from Internal Revenue Code Section 280E, including California, Colorado, Hawaii, Michigan, New York and Oregon.
Husch Blackwell’s tax and cannabis attorneys will continue to monitor the Massachusetts bill, as well as developments in other states. If you have questions about the effect of 280E or decoupling on your business, please reach out to Steve Levine, Bob Romashko and Kevin Erb.
Husch Blackwell’s Matt Kamps and Andrea Shoffstall were recently published by Marijuana Ventures in an article where they review U.S. cannabis-centric patents and patent applications trends during the pandemic, which were granted and published at record numbers in 2021. However, early returns in 2022 suggest the numbers may take a dip for the first time in years.
In addition, Kamps and Shoffstall examine cannabis-centric litigation at the federal level. Read more.