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The state of Minnesota said Monday that it is suing a trio of businesses for alleged violations of the state’s edible cannabinoid laws, saying that they are selling products that contain up to 50 times the permitted amount of THC.
The lawsuit filed by the Minnesota Board of Pharmacy targets three companies, one of which, Northland Vapor—a company with retail locations in Minnesota, North Dakota, and South Dakota—allegedly “sold edible cannabinoid products that contain THC far in excess of five milligrams per serving and far in excess of 50 milligrams per package.”
Under Minnesota state law, the Board of Pharmacy explained, “an edible cannabinoid product…must not contain more than five milligrams of any hemp-derived tetrahydrocannabinol (THC) in a single serving or more than a total of 50 milligrams per package.”
Investigators for the agency “found packages containing 2,500 milligrams of THC, 50 times the amount permitted under Minnesota law,” the Board said.
Perhaps the most notable contraband swept up in the investigation were thousands of packages of the Delta-8 THC products known as “Death by Gummy Bears.”
As the Minnesota Board of Pharmacy explained, the “U.S. Food and Drug Administration (FDA) received complaints about serious adverse events associated with Northland Vapor’s ‘Death by Gummy Bears’ delta-8 THC products, including a death.”
Minnesota Public Radio reports that the board’s lawsuit “says the owner of the companies, Brett Erpelding, acknowledged to investigators that they sold products that were not in compliance with Minnesota law but maintained the products were not sold in Minnesota.”
“The pharmacy board, in conjunction with the U.S. Food and Drug Administration, has been investigating Erpelding’s companies after the FDA was notified in October that a healthy 23-year-old in West Virginia died shortly after consuming 10 Death by Gummy Bears brand items. The cause of death in the case was listed as undetermined,” Minnesota Public Radio reported.
Last month, on November 8, the Board of Pharmacy and the FDA “initiated an inspection at Northland Vapor’s manufacturing warehouse in Moorhead, Minnesota,” the Board said in its release, noting that investigators discovered “edible cannabinoid products that matched those for sale on the companies’ websites and at their retail location that were in violation of state law, including the following: Approximately 28,896 packages of Death by Gummy Bears, labeled as 25 individual gummy bears at 100 milligrams of THC per serving, totaling 2,500 milligrams per package; Approximately 112,710 packages of Death by Gummy Bears, labeled as 10 individual gummy bears at 100 milligrams of THC per serving, totaling 1,000 milligrams per package; Approximately 2,400 packages of Wonky Weeds Gummies, labeled as 10 individual gummies at 30 milligrams of THC per serving, totaling 300 milligrams per package; and Approximately 2,310 bottles of Wonky Weeds THC Syrup, containing 700 milligrams of THC per bottle.”
The state’s new edible law took effect last summer, catching some lawmakers and residents off guard, who weren’t aware that Minnesota had effectively legalized recreational cannabis. The law has come under criticism for its lack of regulations and safeguards.
The state’s Democratic governor, Tim Walz, has long expressed his support for legalization and now that he has secured re-election––and now that the Democrats have regained control of the state legislature––there is hope that an even more robust cannabis law may soon be arriving in the Land of 10,000 Lakes.
The post Minnesota Files Lawsuit Against Several Companies for Illicit Edible Sales appeared first on High Times.
California law required the state Department of Cannabis Control to begin accepting large license applications on January 1, 2023. Earlier this year, DCC published proposed large licensing regulations (which I described here). As usually happens, on December 5, 2022, DCC dropped its second set of modifications to the proposed regulations. When DCC’s rules take effect, they will make it very difficult for people to get large licenses.
To summarize my earlier post, the state will allow cultivators to apply for larger licenses than were previously available. Up until now, larger farms had to aggregate small licenses, which they can now convert into large ones. One of the key issues here though – which state law mandated years ago – was that large license holders couldn’t own testing labs, microbusinesses, and distributors. More on that below.
The big change though concerns prohibitions on license ownership. When I wrote my original post, the original proposed regulations said that “holders” of large licenses were ineligible to hold the other license types referred to above. This was an incredibly vague term. Did it mean that a business that holds a large license couldn’t hold the other types? Did it extend to owners of a business that had a license? It wasn’t clear at all.
On August 30, 2022, DCC did its first set of modifications to the proposed regulations. It expanded the definitions here by saying that any person that holds an ownership or financial interest in a large license cannot hold a prohibited license type. While this definition is also a bit vague, it is now incredibly expansive due to the inclusion of financial interest holders.
For reference, DCC defines financial interest holders as:
(1) A person with an aggregate ownership interest of less than 20 percent.
(2) A person providing a loan to the commercial cannabis business.
(3) A person entitled to receive 10 percent or more of the profits of the commercial cannabis business . . . .
The final category is too long to copy but can include things like employees with profit-share plans, lenders, brokers, etc. These changes are not exactly consistent with state law, which says only “A Type 5, Type 5A, or Type 5B licensee shall not be eligible to apply for or hold a Type 8, Type 11, or Type 12 license.” The expansion to beyond the licensee will be a huge issue for large and small businesses alike.
Since the DCC’s rules will forbid financial interest holding in both large licenses and distribution licenses, they will likely make life difficult for large cannabis companies rolling up small licenses into cultivation licenses. This is because large companies tend to have distribution licenses within their chain. Even if they don’t, they tend to have larger lists of stockholders or members, and if even one of those members holds a small financial interest in a distribution licensee, that will prevent a large license for cultivation.
These changes won’t just affect large cannabis businesses and MSOs. Smaller cannabis companies that need loans, want to enter into IP license agreements, want to engage with independent contractor brokers or salespeople, etc., will need to be very careful before applying for large licenses.
As a result of these rules, cannabis companies that don’t have financial interest barriers when they apply for large licensing will need to vet new stockholders/members as well as third-party contract relationships to determine whether they hold financial interests in prohibited license types. This can be an incredibly difficult process, which is likely to impose a greater burden on smaller businesses without robust compliance programs.
DCC noted in its email announcing these new modifications that:
The DCC is currently accepting comments on the further modifications to the proposed text of regulations. Any interested person, or the interested person’s authorized representative, may submit written comments relevant to the proposed regulatory action to the DCC. Please limit your comments to the modifications to the text.
All comments must be received by 5:00 p.m. on December 21, 2022.
In all likelihood, this will be DCC’s final round of modifications and it won’t change them again. Unfortunately, the broadening of state law here will make life more challenging for large and small cultivators alike. Stay tuned for more updates on California cannabis licensing.
The post California Large Licensing Gets Really Small appeared first on Harris Bricken Sliwoski LLP.
Seasonal slogans like “holiday spirit” and “the season of giving” are an annual reminder to give back to those in need. Here are just a few great examples of how cannabis businesses continue to give back.
Ayr Wellness, which has dispensaries operating in Arizona, Florida, Massachusetts, Nevada, New Jersey, and Pennsylvania, announced on Dec. 5 that it would be starting its “12 Days of Giving” campaign. While every purchase at its dispensaries will collect $1.12 per transaction to two of its partner organizations, Freedom Grow and Minorities or Medical Marijuana Project Clean Slate Initiative. Overall, Ayr Wellness aims to reach a goal of collecting more than $100,000, which will go toward supporting cannabis prisoners and their families, as well as various advocacy efforts and expungement programs. “Ayr’s ‘12 Days of Giving’ initiative aims to reinforce our commitment to being a Force for Good by activating twelve days of charitable giving across our retail footprint,” said Ayr president David Goubert. “This marks Ayr’s second year of the program, which is poised to directly benefit the families of those who have been incarcerated for cannabis offenses.”
Florida-based AFC Foundation, which offers financing in the cannabis industry, recently made a donation to Georgia-based Corners Outreach organization. In the past, AFC Foundation has also contributed donations to groups like Pennsylvania Court Appointed Special Advocate Association, Yo Soy Ella, and The Weldon Project. According to AFC Foundation president and co-founder Robyn Tannenbaum, it’s essential for the company to give back. “The evolution of the cannabis industry is heavily reliant on the health of the communities in which the businesses operate. As a result, it is imperative that we work to improve these communities and invest in their future endeavors,” said Tannenbaum. “We are proud to continue our efforts to enact social change. More importantly, we are excited to support an organization like Corners Outreach that works to improve education and career opportunities for families.”
In November, Michigan-based Puff Cannabis gave out more than 1,700 turkeys prior to Thanksgiving. Now, the brand announced its “Jackets for Joints” event. Running between Dec. 5-18, the campaign is asking for coats and jackets that fit kids between the ages of three to 12. In exchange, Puff is giving out one jar of pre-rolls. Puff president Justin Elias expressed the need for kids in Michigan. “I recognize that due to the times we live in, many children throughout the state of Michigan need warm jackets and coats and our ‘Jackets for Joints’ program will come to the aid of many of those little ones,” Elias said. “I hope we can collect and give away thousands of warm jackets and coats this winter in order to keep our children warm.”
40 Tons, which is an organization dedicated to assisting people affected by cannabis convictions, as well as their families. This past weekend, the organization held a Canna Christmas event that invited attendees to donate to a Christmas wish list created by people who have a loved one currently incarcerated for cannabis. Although the event has already passed, 40 Tons is a worthwhile organization to donate to this holiday as it continues to help others.
A medical dispensary in West Virginia called Cannabist recently donated $6,473.65 to its local American Legion Post 159 last week. Cannabist has four locations in the state, and took a portion of funds from weekly sales that will go on to fund scholarship opportunities for local high schools, provide funds for state capitol trips, and more.
We’re seeing tons of cannabis businesses giving back, but non-cannabis businesses are also pitching in to help patients with access to medical cannabis, too. According to Lanakshire Live, a Scottish news outlet, local businesses are stepping up to help Cole Thompson, a young boy who suffers from cortical dysplasia and uses Bedrolite cannabis oil to treat his condition. Like many other children throughout Europe, access to medical cannabis medicine is an expensive strain on their families.
A campaign called “Cole’s Christmas Wish” is currently underway, asking for donations to help fund his family’s access to the medicine. “An amazing 15 businesses have signed up already, but for it to work we really need to get the full 36 businesses signed up, hopefully by Christmas, which would give Cole the money for his medicine for the year,” said Cole’s mom, Lisa Quarrell. “We are still looking for 21 businesses who are willing to get on board by donating a one-off payment of £500 to keep Cole seizure-free and safe.”
The post Cannabis Industry Gives Back This Holiday Season appeared first on High Times.
As we blogged about last week, the SAFE Banking Act is trying to claw its way back from the dead during this lame duck session of Congress. Interestingly, on December 2, Punchbowl News reported that the Department of Justice (DOJ) issued a memo outlining its “issues” with the SAFE Banking Act. Here’s the memo (“Memo”).
Whenever we get a cannabis-related memo from DOJ, I get pretty excited. Mainly because we get a tiny peak into the minds of enforcement and what their priorities are at the time. This five-page memo is of particular import because it deals with cannabis financial crimes and enforcement. Unless you’ve been living under a rock, you know that two of the biggest problems for the cannabis industry overall are access to financial institutions and I.R.C. Section 280E.
The SAFE Banking Act neither legalizes cannabis nor reschedules it on the Controlled Substances Act. Given that fact, the memo starts out by saying that
Because marijuana would remain illegal under federal law, Congress should ensure efforts to provide access to financial services for state-legal businesses does [sic] not unintentionally erect obstacles to prosecution of other illicit activity or activities involving money laundering of proceeds of other illegal drugs or sales of marijuana that do not comply with state requirements
The DOJ’s first beef then is that the bill would technically immunize from prosecution cannabis businesses or providers that fall into certain legal classifications under the Act, rather than examining the types of legal or illegal activities in which those entities are engaged. The example provided in the Memo is that the DOJ could not go after a “cannabis-related legitimate business” that’s engaged in state licensed commercial cannabis activities but also fraud. Luckily, the DOJ instructs Congress in the Memo on how to fix the offending language by suggesting that immunity be limited to:
“the state-legal activities in which entities engage (again, ensuring those activities are in conformity with state law), rather than basing it on their classification as a particular business type, i.e., a ‘cannabis-related legitimate business’ or a marijuana-related ‘service provider.'”
The DOJ also thinks that the SAFE Banking Act is too broadly drafted to immunize cannabis companies from existing money laundering statutes, basically for the same reasons above. The DOJ also bemoans the fact that such a broad protection would put an additional burden on prosecutors to show the difference between legal and illegal activities in the cannabis trade. The DOJ provides the example that “a marijuana-related business could be laundering proceeds from fentanyl sales on the side, or from marijuana sales conducted outside of the state regulatory framework”, and that the SAFE Banking Act, as written, wouldn’t allow law enforcement or prosecutors to do their jobs effectively.
The DOJ also takes issue with the fact that the SAFE Banking Act doesn’t do much to solve the issue of total compliance for financial institutions with the Bank Secrecy Act, existing anti-money laundering laws, and countering-the-financing regulations to collect—or verify—information demonstrating that a particular business is operating in accordance with applicable state law. This is definitely an issue with these piecemeal cannabis bills: there will always be collateral effects regarding compliance with other, existing federal laws. The DOJ also opined that there will be forfeiture issues related to depository institutions’ interests in collateral, because the SAFE Banking Act doesn’t also amend current forfeiture laws.
Helpfully, the DOJ then trots out a list of technical assistance comments, pointing out to lawmakers where legal and interpretive inconsistencies will exist if the SAFE Banking Act is passed “as-is”. These mainly touch on things like definitions in the bill, the use of the term “cannabis” versus “marijuana” as compared to existing federal laws, and enforcement ambiguities.
Towards the end of the Memo, the DOJ states that
Section 3 and 14 (“Definitions”) read together result in interpretive uncertainties. The
definition of “cannabis-related legitimate business” is ambiguous. For example, this Section says nothing about how states will determine compliance with state law or what happens when state laws conflict – e.g., some states have different restrictions on movement of marijuana within or out of the state, or different registration and compliance regimes. Nor does it explain how to deal with fraudulent declarations of alleged compliance with state laws (many states do not have the bureaucratic capability to ensure full compliance yet, and DEA has law enforcement intelligence demonstrating that criminal organizations are exploiting the marijuana industry in states where the industry is legalized).
This is a somewhat troubling observation by the DOJ, but probably an accurate one.
Without a doubt, Congress will listen to the DOJ on technical changes to the bill. The fact that the DOJ isn’t entirely fighting the legislation is a good development. On the whole, the suggested changes are mostly helpful (from a legal/technical standpoint to avoid conflict) and they strike a compromise in that the DOJ still needs to be able to do its job if the SAFE Banking Act passes. To date, politics have played a big role in the SAFE Banking Act going nowhere, but now that we have DOJ weigh-in on the bill, we may actually be crossing into a phase of serious consideration. So, stay tuned.
The post Update: DOJ and SAFE Banking Act appeared first on Harris Bricken Sliwoski LLP.
Sorry, zaza, Leafly shoppers made classic strains top of the charts.
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The passion and zeal hits a fever pitch.
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