Like many others, we were caught up in filing a slew of Minnesota adult use cannabis applications for our clients by March 14 (which, if you were paying attention, that deadline was extended to March 15 by midnight because of a crash with the Office of Cannabis Management (OCM) website). Every time a licensing window opens in a state with a new adult use cannabis program, there are lessons to be learned for clients, attorneys, and regulators, alike.
Cannabis companies of all sizes have likely come across the issue of having to pursue badly behaved accounts receivable. What was once a time of prosperity has now turned into a business climate of pessimism and regret where the extension of terms and promises to pay have been more than abused by retailers and distributors, alike. What should cannabis companies do when their initial reach outs for payment on the sale of cannabis goods or on the backs of their distribution and sales agreements go unanswered? This post is dedicated to those steps necessary for cannabis companies to try to make good on their bad deals and collection efforts.
2024 was a primarily lean and flat year for the U.S. cannabis industry. The state-legal cannabis industry has been volatile from its inception, and 2024 represented a year of winnowing with many cannabis businesses failing. 2025 has some light on the horizon, though, with the prospect of the Drug Enforcement Administration’s (“DEA”) rescheduling of cannabis from Schedule I to Schedule III. Until that occurs though, you can expect that cannabis in 2025 will be just as rocky as in 2024. Rocky doesn’t mean unsuccessful though. There are still opportunities across the board for investors and business operators, from state-by-state expansion to purchasing cannabis assets for pennies on the dollar in some cases.
Based on a recent article in the Green Market Report (and corresponding public filings), “$1.83 billion of . . . debt is set to come due by 2026” for a number of publicly traded multi-state cannabis operators (“MSO”s). While this public cannabis company debt is not a pretty sight, it might be the tip of
The Minnesota Office of Cannabis Management (“OCM”) has begun issuing final denials to the overwhelming majority of previously qualified social equity applicants (“SEA”s) ahead of its first statewide cannabis lottery on December 2 for 280 available “preapproval” cannabis licenses.
America’s Dairyland does not currently have any form of either medical or adult-use cannabis. The state has tried and failed at least a couple of times on convening medical cannabis legislation (see here on the latest attempt earlier this year). At the same time, Wisconsin is surrounded by three states that have both medical and adult-use cannabis programs (Minnesota, Illinois, and Michigan), with Canada to the north, which legalized cannabis in 2018.
On July 18, 2024, the Englewood and Denver area offices of the Occupational Safety and Health Administration (OSHA) published a Local Emphasis Program (LEP) targeted at identifying and reducing workplace hazards associated with cannabis processing, growing, cultivation, and product manufacturing.
In April, I wrote about the Docklight case in Washington State. That case involved a qui tam action pursuant to the False Claims Act in which Docklight, a cannabis ancillary company, settled with the Department of Justice for having wrongfully received and been forgiven a Payment Protection Program (PPP) loan. While there was little reporting on or analysis of the case by the cannabis industry, it was clear that the federal government was looking at cannabis and cannabis ancillary businesses and, essentially, PPP fraud.
Now, there is growing concern among cannabis PPP loan recipients of potential audits related to the Small Business Administration (SBA) Office of Inspector General’s estimate that up to one-third of PPP loans were fraudulently secured (and forgiven). Notably, as part of the PPP, the SBA issued specific guidance in 2019 that both cannabis and cannabis-related companies were not eligible for PPP loans (though it’s likely that hundreds if not thousands of these companies applied for and received these funds anyway). And while “plant touching” businesses likely have no leg to stand on if they’re audited by the SBA, cannabis ancillary businesses potentially have a shot at surviving these audits.
As the 2024 Minnesota Legislative Session came to a chaotic close on May 20, numerous changes to Minnesota Statutes Chapter 342 were sent to the Governor’s desk to build on the already existing cannabis regulatory structure. On May 24, Governor Tim Walz signed the amendments to Chapter 342, which address social equity provisions, preapproval process for social equity applicants, the larger application and licensing process, and consumer safety.
While the cannabis industry is closely following the recently published notice of proposed rulemaking from the Department of Justice (“DOJ”) and the Drug Enforcement Administration (“DEA”), which will move cannabis from a Schedule 1 controlled substance to a Schedule 3 controlled substance under the Controlled Substance Act (“CSA”), a very important federal cannabis litigation matter is making its way through federal court. That case is Canna Provisions, Inc., Gyasi Sellers, Wisacre Farm, Inc., and Verano Holdings Corp.v. Merrick Garland, case no. 23-cv-30113. Filed in October of last year, the Canna Provisions case is more important than ever in the context of rescheduling (in my opinion) and this post serves as an update on what’s happening in court.