Cannabis Update: February 2021

February 2021 Cannabis Update

February 2021

This month’s newsletter features updates on the progress of cannabis banking, employment matters for cannabis businesses, and more.

Cannabis Banking

The light is getting brighter towards banking solutions for cannabis businesses. In response to implement the provisions set forth in Assembly Bill 1525, the three state agencies, the Bureau of Cannabis Control, California Department of Food and Agriculture, and California Department of Public Health proposed a set of emergency regulations. The proposed regulations are intended to provide cannabis businesses greater access to financial institutions. Access to banking for business purposes has been a significant challenge for the cannabis industry not only for businesses and financial institutions, but prospective investors have been hesitant due the potential for large amounts of cash in possession at the premises. Most banking institutions have steered away from cannabis as it is still illegal at the federal level, and some businesses have had their accounts closed. Limited access to banking institutions presents safety concerns for businesses in holding cash at the premises without a bank account to deposit money. Assembly 1525 and the state agencies’ proposed regulations will work to help mitigate these concerns.

Employment Matters

Cannabis employment numbers experienced a spike in 2020, doubling the amount of jobs held the previous year by legal cannabis workers across the U.S. It is a significant accomplishment for the industry in providing gainful employment and the economy, particularly during the ongoing Covid-19 pandemic. As the industry progresses, it is crucial for employers to be informed of employment law.

Valley Harvest LLC and Nug Farms are being sued in federal court by former employees claiming unlawful termination. Various concerns were raised by the plaintiffs during their time of employment including violations of inappropriate health protocols to protect workers amid the coronavirus pandemic, wage laws, and discrimination under the Americans with Disabilities Act. If the parties fail to reach an agreement of settlement the case will continue to be heard by the courts. Margolin & Lawrence has reported previously on the seriousness of employment law issues that many employers will face in the legal cannabis market. Having a legal team well versed in cannabis and employment laws is crucial to the protection of your business.

Confused about Labor Unions and cannabis employers’ responsibility with labor laws? Check out our feature in Dark Matters Magazine, “Union Confusion – Many Trust Unions, While Others Try to Bust Them.”

Billboard Advertising

Cannabis businesses need to stay mindful when considering billboard placement to advertise their business. A formal judgment was entered on January 11th in the case of Farmer v. Bureau of Cannabis Control (Bureau) & Lori Ajax in the San Luis Obispo County Superior Court, determining it is illegal to place billboards or similar advertisements anywhere on an interstate or state highway that crosses the California border. Businesses which meet this criteria are required to remove their billboards or similar advertisements immediately to avoid disciplinary action.

DCR Updates on the Status of Los Angeles Licensing

During the February 4th Cannabis Control Commission meeting, the commission and DCR provided updates on the current status of ongoing cannabis licenses and future application processing. Moving forward with implementing the provisions under the Social Equity Program and issuing Temporary Approval to social equity applicants is top priority. The Department is actively prioritizing social equity applications to expedite through the licensing process and implement standards to be more transparent with the timeline. The DCR further stresses for applicants to submit all required forms in completion to prevent delays in application processing.

The DCR is currently accepting applications for non-storefront retail cannabis activities including distribution, manufacturing, testing, and retail delivery only. The first step is for applicants to submit their initial application for Pre-Application Review. Processing is estimated to take up to 120 days to complete. Once Pre-Application Review is complete, applicants will move forward with submitting additional documents for Temporary Approval and scheduling a virtual pre-licensing inspection. Estimated timeline to issue Temporary Approval is 180 days for processing.

All active Phase 2 licenses must show proof of an active state license or application by September 30th to prevent abandonment of their local processing.

The second round of social equity pre-vetting is expected to open for a 60-day window in spring 2021. Prospective applicants for a Phase 3 Round 2 license will need to be verified under the new eligibility criteria. Social equity applicants must have a previous cannabis arrest or conviction in the State of California and either qualify as low income or a residency status under the revised conditions definitions. The Phase 3 Round 2 licensing lottery will not require applicants to have a secured location to apply.

East Coast Update:

New Jersey

Senate Bill 21 titled “New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” passed and is set to regulate and enforce activities associated with the personal use, by persons 21 years of age or older, of legal cannabis or cannabis resin by January 1, 2021 (distinguishing the legalized products from unlawful marijuana or hashish). Lawmakers were set on agreeing upon a cohesive bill in less than 40 days. Their original plan of pushing for a 10 day turn around for the bill has proven to be distant and impossible.

New York

Governor Cuomo has kept voters and marijuana supporters on their toes. For three consecutive annual State of the State Address, Cuomo has announced his plans to legalize and regulate recreational weed. Lawmakers are optimistic this year with the push from neighboring state New Jersey and the major $15 billion deficit resulting from the COVID-19 crisis. Cuomo called for the “formation of an Office of Cannabis Management to oversee both the new program and the state’s already existing medical marijuana one.” Read more here.

West Coast Update:

Costa Mesa

No Cap on Retail Storefront Cannabis Businesses!

The November 3rd election not only resulted in a new President elect, but it opened a lot of doors for cannabis in California. Counties throughout the state have drafted ordinances to regulate and tax the commercial sale of cannabis products. Costa Mesa, city within Orange County, has not only legalized retail storefront dispensaries, but they currently do not have a cap on the number of dispensaries within city lines. In the race to determine the fate of Measure Q, a ballot initiative calling for the legalization of retail cannabis sales and delivery, 33,291 Costa Mesa residents voted for passage, comprising 65.17% of the vote, compared to 17,793 opposed.

“Measure Q would allow the City to permit legal cannabis sales and delivery in Costa Mesa with strict regulations. The regulations on cannabis retail uses must include restricting dispensaries and delivery uses to commercially-zoned properties, and to the Green Zone for delivery uses only. Retail cannabis uses would be prohibited from being located within 1,000 feet of schools, playgrounds, child care centers or homeless shelters. Storefronts would be required to utilize exterior building lighting, video monitoring, and security guards to ensure the safety of Costa Mesa residents.”

Covid-19 Vaccines for Essential Workers

Vaccines have started to be administered for essential workers and most at-risk groups to get vaccinated from the novel Coronavirus. Last year, cannabis businesses were deemed essential, allowing businesses to stay open during the mandatory closure of non-essential businesses and services during the stay-at-home order. Now, the California Department of Public Health, the governing body for cannabis manufacturing licenses in California are placing medical cannabis employees in line for the Covid-19 vaccine in either Phase 1A or Phase 1B. You may check if you are eligible for the vaccine here.

Dark Matters Magazine

Margolin & Lawrence partner Allison Margolin, founded a new cutting edge online forum, Dark Matters Magazine to share ideas and hot topics across the spectrum including psychedelics, politics, and Wall Street. Check out the latest top stories:

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https://darkmattersmag.com/business/the-flames-burn-eternal-for-the-hero-of-free-speech/

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Author: Jenna Rompel (Dark Matters)

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