A group of Illinois cannabis companies face an antitrust lawsuit alleging that they maintained illegal interlocking directorates. An interlocking directorate is where a person from one company serves as an officer or director at a competing company in violation of Section 8 of the Clayton Act. On April 18, 2022, a plaintiff named True Social Equity in Cannabis, an association of consumers, workers, and others in Illinois, filed a complaint in the Northern District of Illinois alleging that Akerna Corp., Green Thumb Industries Inc., ILDISP LLC, Verano Holdings Corp., and Surterra Holdings Inc. maintained illegal interlocking directorates (the “Illinois Complaint”).

In addition to the Illinois Complaint, the U.S. Department of Justice Antitrust Division (DOJ) announced in an April 2022 speech by Assistant Attorney General Jonathan Kanter that DOJ is “ramping up” efforts to enforce alleged violations of Section 8. Private litigation and government challenges to resolve alleged interlocks are rare, but DOJ and the Federal Trade Commission occasionally announce settlements based on investigations. In June 2021, DOJ announced that Endeavor Group executives were resigning from the Live Nation Board of Directors as part of a settlement of an alleged illegal interlocking directorate.

Section 8 of the Clayton Act prohibits a person from simultaneously “serv[ing] as a director or officer in any two corporations (other than banks, banking associations, and trust companies) that are [competitors].” 15 U.S.C. § 19. The prohibition only applies to corporations whose competitive sales are above a certain dollar threshold, and there are other exemptions that may apply.

Although the Illinois Complaint also contains vague and unsupported allegations of collusion, price-fixing (via information sharing), and monopolization of the legal Illinois marijuana market, no other antitrust violations besides the Section 8 claim are alleged. In addition, rather than requesting equitable relief to remedy the alleged interlock, the Illinois Complaint inexplicably seeks to prohibit the defendants from marketing, selling, licensing, distributing, and growing marijuana and a divestiture of all assets.

The Illinois Complaint and DOJ’s recent announcement should factor into a company’s selection of its board of directors and officers. Because the analysis of whether two companies compete and meet the requirements of Section 8 (or qualify for Section 8’s exemptions) is a complex and fact-specific inquiry, we recommend that you consult with antitrust counsel if you have any questions in this regard.

The 2019 Cannabis Regulation and Tax Act provided the authority for the Illinois Department of Agriculture (the “IDOA”) and the Illinois Department of Financing and Professional Regulation (the “IDFPR”) to issue additional adult-use craft grower, infuser, transporter, and dispensary licenses. Each Department developed an application process for each license type to be graded by a third-party contractor. KPMG was awarded the contract to score the license applications. The award of several categories of licenses has been inhibited by a number of lawsuits. We have provided a brief summary of the status of each license category and the corresponding litigation below.

Continue Reading Cannabis Licenses in Illinois: Could Hopeful Social Equity Applicants See Relief Soon?

Husch Blackwell has launched its Psychedelics and Emerging Therapies team, an interdisciplinary, cross-office group of lawyers capable of addressing the challenges faced by innovators that seek to research, develop and commercialize novel therapies based on psychedelic drugs. Many of these drugs are regulated by a patchwork of state and federal laws regulating Schedule I controlled substances. Continue Reading Husch Blackwell Launches Psychedelics and Emerging Therapies Practice Group

The Husch Blackwell Cannabis team has released episode two of their podcast, The Grass is Greener: Cannabis Law News. In this episode, cannabis attorneys Marshall Custer and Alyssa Samuel dive into ESG (Environmental, Social, Governance) and what it means for the cannabis industry, specifically the regulated marijuana industry. They explore what it means to take a holistic approach to ESG and how today’s cultural climate is setting the stage for increased demand for responsible companies by consumers. Cannabis companies have always been required to be good corporate citizens, but what does the future of ESG hold for the industry?

Tune in and find out.

On October 3, 1863, Abraham Lincoln issued the proclamation that would serve to formally reserve the last Thursday of each November for the American tradition of Thanksgiving with the following words:  Continue Reading Thanksgiving: an 1863 proclamation, is it still relevant today?

The cannabis industry has exploded in the past decade, from a taboo topic to a multi-billion dollar industry. As the legal cannabis industry continues to evolve, it is crucial to stay on top of industry trends and the ever-changing regulatory landscape. Tune into The Grass is Greener: Cannabis Law News, hosted by Husch Blackwell’s Cannabis Law team as they discuss the most pressing topics in the cannabis industry.

Episode 1 – The State of the Cannabis Industry: Where Do We Go from Here?

In the inaugural episode of The Grass is Greener: Cannabis Law News, Husch Blackwell Cannabis Group Co-Leaders Steve Levine and Marshall Custer discuss the state of the cannabis industry, including the current federal landscape and predictions for the future. The big money that we’ve been waiting for may be trickling in, but what will the exit moment look like for most operators?

Tune in and find out.

Husch Blackwell’s Cannabis Group is thrilled to announce their expanded presence in the Northeast. This expansion into Boston coincides with a strong year for the cannabis team. In June 2021, Chambers USA cited the team’s cross-disciplinary approach that utilizes its well-established base in regulatory compliance to advise on a range of transactions and business structuring matters. The team was also recognized by Legal 500, saying that the practice is well regarded for its experience with cannabis in multiple states as well as its impressive connectivity to regulators.

With the additions of Andrew Levine, Sean Ryan and Steve Tringale to the Cannabis group, the team can better serve their clients in the Northeast. The trio brings decades of regulatory experience, making them uniquely suited to serve New England’s expanding cannabis industry.

“I’m extremely excited to have Andrew, Sean and Steve join our Cannabis group. We’ve been a truly national marijuana practice for years,” said Husch Blackwell partner Marshall Custer, who co-leads the firm’s cannabis group. “But admittedly our bench in the Northeast has lagged a little behind the assets we have in the Midwest and West Coast. Both on personality and capability, Andrew, Sean and Steve are a great fit and I’m looking forward to working with them.”

Key Takeaways:

  • The recently released IPCC Report shows irreversible harm to the global ecosystem.
  • Fund managers focused on ESG criteria will have an increased focus on environmentally conscious companies and substantial sums of investment dollars will likely flow into companies that commit to more aggressive ESG plans.
  • Cannabis companies could benefit from looking at how industries like the wine industry have embraced sustainability.
  • In an industry where competition for capital is fierce, adopting ESG principles is an effective way for cannabis companies to not only foster good will, but to foster investment.

On Monday, August 9, 2021 the United Nations Intergovernmental Panel on Climate Change Sixth Assessment Report (the “IPCC report”) sent shock waves through the financial markets and the world in general. This report, the most comprehensive of its nature released since 2013, made it abundantly clear that much of the damage incurred by the global ecosystem will be irreversible and the harm is accelerating at an alarming rate. This has catalyzed investment funds and asset managers focusing on ESG investments to rethink their approach. According to Bloomberg Law, Chris Meyer of Praxis Mutual Funds, a well established socially responsible investment firm stated that the report “…changes the calculus. We will need to have a sharper focus. This report shows that investors are not moving quickly enough.”  Financial investment itself may not be able to curb the problem, however, what is certain is that fund managers focused on ESG criteria will have an increased focus on environmentally conscious companies and substantial sums of investment dollars will likely flow into companies that commit to more aggressive ESG plans. Continue Reading The UN Report on Climate Change: What does it have to do with Cannabis and Wine in the US?

Cannabis Co-Leader Steve Levine is slated to provide an update on compliance for marijuana and hemp packaging at the Cannabis Packaging Conference in Anaheim, CA on August 11, 2021.

This presentation will provide a detailed update surrounding the challenges with import compliance for packaging related to marijuana and hemp and how to ensure compliance with applicable state law requirements.

In collaboration with WestPack and the California Cannabis Industry Association, CannPack (formerly known as Cannabis Packaging Summit) delivers a robust conference and exhibition to showcase the latest innovative products within cannabis packaging solutions.

For more information, click here.

Husch Blackwell has named partner Marshall Custer as co-leader of the firm’s 80-plus lawyer Cannabis practice group. Custer will share leadership duties for the team with partner Steve Levine, who was appointed by the firm to lead its Food & Agribusiness strategic business unit. Levine was a prime mover in creating Husch Blackwell’s cannabis practice and has led the group for the past decade.

Custer has worked with industrial hemp and marijuana companies since the industry’s beginning. He works closely with individual entrepreneurs and executives on regulatory compliance, corporate structuring, debt and equity financing, governance, securities compliance, and mergers and acquisitions.

In 2021, Custer was ranked by Chambers USA as a leading attorney in Cannabis Law and was mentioned as a key lawyer of the Cannabis group by The Legal 500.

“Marshall is a strategic and pragmatic leader” said Levine. “His significant industry experience, business acumen, and legal prowess make him the right co-leader for our cannabis practice going forward.”