Tuesday, April 7, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Tuesday, April 7, 2020 | Curated by host Shea Gunther

// Businesses That ‘Indirectly’ Work With Marijuana Industry Ineligible For Federal Coronavirus Loans (Marijuana Moment)

// Canada’s COVID-19 olive branch for cannabis sector comes with caveat (Marijuana Business Daily)

// FDA Declares Cannabis Drug Epidiolex No Longer A Controlled Substance (Green Market Report)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// Colorado eases hiring process for cannabis firms eyeing casino workers (Marijuana Business Daily)

// Delaware Officials Allow Medical Marijuana Delivery Amid Coronavirus Outbreak (Marijuana Moment)

// Phoenix marijuana dispensary hawks COVID-19 ‘immunization stabilizer,’ state orders it to stop (AZ Central)

// Illinois governor commutes sentence of jailed cancer patient (St. Louis Today (AP))

// 73% of Cannabis Consumers Get Lit to Relieve Anxiety During Coronavirus Pandemic (Merry Jane)

// iAnthus Capital Defaults On Debt, Investigates Claims Against CEO (Deep Dive)

// Two Marijuana Magazines Owned By High Times Suspend Publication Due To Coronavirus (Marijuana Moment)


Check out our other projects:Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement. • Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: thefuturistics/Flickr

FREE Webinar on April 29th – Beyond CBD: New Cannabinoids

In the few years, and especially since the U.S. government passed the 2018 Farm Bill, CBD products have exploded onto the global marketplace. Now that any kind of consumer product imaginable has been marketed with CBD additives—including things like sportswear, pillows, toothpaste, and even hand sanitizer—manufacturers are exploring less prominent cannabinoids to isolate and market in consumer products.

In this FREE Harris Bricken webinar at 12pm PST on Wednesday, April 29th, our cannabis and hemp attorneys, Daniel Shortt (Seattle, WA), Griffen Thorne (Los Angeles, CA), Nathalie Bougenies (Portland, OR) and Vince Sliwoski (Portland, OR) will discuss the latest trends in the developing cannabinoid market, including CBG, CBN, and others. We will also examine the approach to regulating hemp, marijuana, and their cannabinoids within state, federal and international frameworks. Domestically, we will look closely at the FDA, to highlight where we think states will go with regulating “new cannabinoids”. And finally, we will discuss intellectual property and a host of other commercial contract issues that are critical for cannabinoid product marketers, manufacturers, and sellers.

CBD is so 2019. Don’t forget to tune into our free webinar to learn about the hottest new trends in cannabinoids and cannabinoid products!

Register HERE today for our upcoming FREE webinar at 12pm PST on Wednesday, April 29th.

The post FREE Webinar on April 29th – Beyond CBD: New Cannabinoids appeared first on Harris Bricken.

Monday, April 6, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Monday, April 6, 2020 | Curated by host Shea Gunther

// Ontario cannabis stores to close after removal from ‘essential’ list (Marijuana Business Daily)

// Map: Where Canadian cannabis businesses can stay open during COVID-19 pandemic (Marijuana Business Daily)

// North Dakota Activists Say Marijuana Legalization Initiative Unlikely In 2020 Due To Coronavirus (Marijuana Moment)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// Cannabis Consumer Behavior Alters With Covid-19 Quarantine: Edibles & Drinks Surge (Green Market Report)

// CCC weighing options to help shut down pot businesses (Worcester Telegram)

// Hemp Businesses Eligible for Coronavirus Stimulus Package (Leafly)

// Hawaii’s Medical Marijuana Dispensaries Remain Open During Virus Crisis (Civil Beat)

// Colorado Marijuana Takeovers Still Planned Amid Economic Dip (Denver Westword)

// Green Growth Brands Puts Its CBD Business Into Receivership (New Cannabis Ventures)

// How to conduct clean cannabis sales in the age of COVID-19 (Leafly)


Check out our other projects:Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement. • Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Conor Lawless/Flickr

Delaware Cannabis Business Incorporation: Authorized and Issued Shares

Even though COVID-19 continues to wreak havoc on the world and the U.S. economy, we continue to work on interesting and complex business deals with our cannabis clients with many clients either looking to acquire or be acquired as the industry matures and inevitable consolidation occurs. And because many deals continue to have a Delaware component, this post addresses relevant issues when forming a Delaware entity, specifically a Delaware C corporation.

In a prior blog post my colleague Vincent Sliwoski said the following regarding Delaware entities:

  • People will say things like “half of all public companies are registered there,” or “my other company is a Delaware company,” or “Delaware has no state income tax.” Most of the time, none of these are great reasons to register a cannabis company in that state. This is because nearly all cannabis companies are small, privately held businesses that receive no tax benefits and no meaningful liability protection by registering in Delaware, or anywhere out-of-state.
  • Large, publicly traded companies, on the other hand, may prefer Delaware registration for various reasons, including: 1) Delaware law protects directors and officers from derivative liability (to shareholders and non-managing members); 2) Delaware has a unique “Court of Chancery” solely dedicated to corporate law disputes and significant business cases; 3) Delaware has no state corporate income tax; and 4) Delaware’s LLC Act and General Corporation Law are both perceived as cutting-edge, on topics from fiduciary requirements to series LLCs.
  • A founder may have access to venture capital that insists on seeing a Delaware C-corp, or perhaps she is motivated to keep her name off formation documents at all costs, given the status of federal law. (Delaware allows this; certain states do not.)

When working with clients who have decided upon forming a Delaware corporation, they often raise these same issues. I usually only run into these issues when my client has a very good reason to form a Delaware corporation.

I generally do not suggest reasons why Delaware is good because I want to know whether my client is sophisticated enough to raise these issues themselves. If they only want to form a Delaware corporation because they like the idea of having a Delaware corporation, then I generally give them my reasoning as to why Delaware may not be ideal for their situation.

Here are some common questions I receive when my clients want to form a Delaware C corp on the foundational issues that arise when filing the certificate of incorporation:

How many shares should we authorize?

10MM authorized shares is a common standard, though the only relevant standard is determining what is best for your company based on your current and future goals and the requirements of your future investors and key employees. If you are a startup company that does not have investors and therefore has no need to require a large number of shares, then you can start with a minimal amount of authorized shares and increase the number in the future when you have a reason to do so.

 How many shares should we issue?

If you intend to add a large number of investors, you will generally want to have more shares. This is true if you intend to have a pool of stock that you will grant to key employees. Then the number of shares is more of a psychological question: will your employees and investors feel better about receiving 100k shares or 10 shares, even though economically we are dealing in absolute percentages and the number of shares is irrelevant? And if you grant options to your employees or investors, then you need to think about the per-share exercise price for those shareholders, which would lead you to want more shares so their per-share exercise price is lower.

What should we use for par value?

Par value is largely arbitrary, so you can choose $0.01 or $0.0001 or some other value. However, Delaware uses a particular formula to determine assumed par value, which matters when you pay your annual Delaware franchise tax. The formula for assumed par value is: gross assets / issued shares, and then the assumed par value times your authorized shares equals the total assumed par value capital. Click here to use the downloadable Delaware franchise tax calculator so you can input varying scenarios based upon your future goals.

For instance, if you do not intend to take on additional investors initially or issue stock to employees, you could issue 1,000 shares and pay $175 under the authorized shares method for your franchise tax. Keep in mind that you can always adjust the number of authorized and issued shares if something changes down the road, such as taking on additional investors or increasing the company’s gross assets (though there is a DE filing fee to do so).

What are the Delaware franchise tax implications?

Your initial goal in deciding how many shares to authorize and issue is to minimize your Delaware franchise tax payment. Delaware uses two different formulas to calculate its franchise tax for corporations: (a) the authorized shares method and (b) the assumed par value capital method. You want to choose the method that results in the lowest tax payment based upon your company goals.

Under the authorized shares method, you are taxed based only upon the total number of authorized shares, and 1-10,000 authorized shares will result in a $175-250 annual tax payment. If you authorize a large number of shares, like 10MM, you would pay an annual tax of over $85k under this method.

In contrast, under the assumed par value capital method, it is to your benefit to both authorize and issue a large number of shares relative to your capitalization. Under this method, a company with $1MM in gross assets, 10MM authorized shares and 5MM issued shares (assumed par value of $0.20) would owe a franchise tax payment of $800.

$400 is the lowest annual tax payment under this method, and you would arrive at that number by authorizing and issuing 5MM shares with $1MM in gross company assets. In order to have the $400 payment under this method, you need to issue nearly all of your authorized shares, which is probably not what most growth-oriented companies intend to do.

How would you advise use based on starting capitalization table of around $1,000,000?

You probably want to either authorize 1,000 shares so you pay $175 annually under the authorized shares method or 10MM authorized and 5-7MM issued so you pay $800, which will let you keep a pool of authorized but unissued shares for employees and future investors.

Delaware’s franchise tax is one of the early significant factors you need to grapple with when you are deciding whether to form a Delaware corporation and how my shares to authorize and issue. As with most foundational business decisions, you will need to think through many different scenarios in your company’s future and plan with the various probabilities in mind. Of course, you will not be able to plan for every contingency, as COVID-19 has taught and continues to teach us all.

The post Delaware Cannabis Business Incorporation: Authorized and Issued Shares appeared first on Harris Bricken.

Hemp CBD Across State Lines: South Dakota

The Agriculture Improvement Act of 2018 (2018 Farm Bill) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (CSA) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (USDA) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (Hemp CBD). Today we turn to South Dakota.

South Dakota currently did not allow hemp cultivation until just days ago. Until relatively recently, the state’s governor, Kristi Noem indicated that she was extremely anti-hemp, but changed course late last year. The state was considering a law (HB 1008) that would allow for hemp cultivation for certain licensed businesses. That law was signed on March 27, 2020.

Per South Dakota’s new law, the state will submit a hemp production plan to the USDA for approval. This hasn’t happened yet. The state will require licenses, testing, and compliance with USDA rules. Notably, the law requires permits to transport hemp throughout the state, so presumably this applies to even people passing through. Unfortunately, the law also states that people transporting hemp are deemed to have consented to searches without warrants to determine whether hemp is actually marijuana. This seems rather suspect.

When it comes to Hemp CBD, South Dakota has been unfriendly. In early 2019, the state passed Senate Bill 22, which placed Epidiolex on South Dakota’s controlled substances law on Schedule IV. Also in 2019, the South Dakota Attorney General (AG) issued a statement clarifying that industrial hemp and all forms of CBD oil are illegal in the state, unless if prescribed in the treatment of epilepsy, which should continue to be considered.

That said, the new cultivation law allows for licensed processors to make “industrial hemp products” which are defined as “a finished manufactured product, or consumer product containing cannabidiol that is packaged for individual sale, with a delta-9 tetrahydrocannabinol concentration of not more than three-tenths of one percent, derived from or made by processing industrial hemp”. There’s not much more in the law on regulations relative to the sale of Hemp CBD products, except that the law prohibits the sale of hemp for smoking or inhaling. So a bit remains to be seen on how South Dakota will regulate Hemp CBD products.

For additional updates on changes to South Dakota hemp laws and Hemp CBD laws, please stay tuned to the Canna Law Blog.  For previous coverage in this series, check out the links below:

The post Hemp CBD Across State Lines: South Dakota appeared first on Harris Bricken.

Coronavirus and Cannabis Q&A Webinar Recording

On March 26th, attorney Vince Sliwoski hosted an interactive webinar to address the affects of COVID-19 on the cannabis industry. In this webinar, Vince read and responded to a wide variety of stakeholder questions.

In case you couldn’t join, or if you would like to revisit some of the information, you can stream the webinar below:

The post Coronavirus and Cannabis Q&A Webinar Recording appeared first on Harris Bricken.

Friday, April 3, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Friday, April 3, 2020 | Curated by host Shea Gunther

// Eleven Senators Push To Let Marijuana Businesses Access Federal Loan Programs (Marijuana Moment)

// Weed Prices in France Nearly Double as Supplies Dry Up Due to COVID-19 (Merry Jane)

// Illinois Stores Sold Nearly $36 Million Worth Of Recreational Marijuana In March Despite Coronavirus (Marijuana Moment)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// Canada classifies medical cannabis ‘essential’ amid COVID-19 pandemic (Marijuana Business Daily)

// Canada’s COVID-19 wage subsidies could keep cannabis workers on payroll (Marijuana Business Daily)

// Idaho Activists Suspend Campaign To Legalize Medical Marijuana Due To Coronavirus (Marijuana Moment)

// Cops Are Still Busting Weed Grows in the Middle of the Coronavirus Pandemic (Merry Jane)

// The 2020 Hash Bash will be livestreamed due to the coronavirus (Detroit Metro Times)

// Coronavirus Pandemic Cancels Annual ‘420 Hippie Hill’ Cannabis Celebration In San Francisco (KPIX 5 CBS SF BayArea)

// When will your state’s COVID-19 cases peak? Check this chart (Leafly)


Check out our other projects:Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement. • Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Geoff Livingston/Flickr

The FDA Crackdown on Coronavirus Medical Claims: CBD Companies, Take Note!

Unfortunately, in times of crisis and hardship there will always be companies attempting to take advantage of people, playing off of fear and desperation. Earlier this month, the FDA sent out a round of warning letters to companies that were selling fraudulent COVID-19 products. We’ve written extensively about what CBD companies should not do if they want to avoid FDA scrutiny, as well as the scrutiny that CBD companies have already received. And although none of the letters sent out in this round of FDA enforcement specifically referenced CBD products, at least one of the companies targeted does sell CBD products, and we have heard anecdotal reports of CBD companies making dubious statements related to the coronavirus that may or may not rise to the level of medical claims.

In light of the foregoing, we thought it would be helpful to lay out the nature of the claims being made related to COVID-19 that the FDA will not tolerate, and to review the basics of labeling and advertising related to medical claims as they pertain not just to CBD companies, but to any company in the health and wellness space. Here’s what the FDA had to say in its March 9, 2020 news release:

The FDA considers the sale and promotion of fraudulent COVID-19 products to be a threat to the public health. We have an aggressive surveillance program that routinely monitors online sources for health fraud products, especially during a significant public health issue such as this one,” said FDA Commissioner Stephen M. Hahn, M.D. “We understand consumers are concerned about the spread of COVID-19 and urge them to talk to their health care providers, as well as follow advice from other federal agencies about how to prevent the spread of this illness. We will continue to aggressively pursue those that place the public health at risk and hold bad actors accountable.”

“There already is a high level of anxiety over the potential spread of coronavirus,” said FTC Chairman Joe Simons. “What we don’t need in this situation are companies preying on consumers by promoting products with fraudulent prevention and treatment claims. These warning letters are just the first step. We’re prepared to take enforcement actions against companies that continue to market this type of scam.”

One of these letters was issued to Herbal Amy Inc., a company out of Idaho that also sells CBD products online. Herbal Amy was selling “Coronavirus Protocol” products including “Coronavirus Boneset Tea, Coronavirus Cell Protection, Coronavirus Core Tincture, Coronavirus Immune System, and Elderberry Tincture.” This is some of the language included with the products that the FDA deemed unlawful:

Corona virus treatment. Stephen Buhner has analyzed how corona viruses infect tissues, what tissues they infect, and the herbs that are useful to interrupt that process, as well as the herbs useful to shut down the cytokine cascade they create. Here is his protocol.… [T]his is a rather extensive protocol because the particular corona virus that is now spreading world wide is exceptionally potent in its impacts. All the herbs are specific in one way or another for this virus. A number of the herbs are strongly antiviral for corona viruses .…. The formulations are preventative as well as specific for acute infections ….”

Stephen Buhner has used this with other corona virus infections, including SARS, it works well.”

These types of statements are extremely misleading, and illustrate the purpose for which the FDA was created. Our blog archives contain a multitude of resources for companies in the CBD space regarding what you can and cannot say in marketing your products. Generally speaking, products that are not approved by the FDA for the “diagnosis, cure, mitigation, treatment, or prevention of any disease” cannot be marketed as drugs, meaning that these products cannot be marketed with health claims or structure/function claims. If you make health claims regulated by the FDA related to CBD or other cannabis products, you are risking federal enforcement action.

If you are unsure as to whether or not your labels, websites, social media, or other marketing materials contain statements that could be construed as health claims (and it’s important to remember that even vague or general statements could constitute health claims), you should consult with your attorney. We advise many clients on these very issues. And in closing, a reminder from the FDA:

There are currently no vaccines or drugs approved to treat or prevent COVID-19. Although there are investigational COVID-19 vaccines and treatments under development, these investigational products are in the early stages of product development and have not yet been fully tested for safety or effectiveness.”

The post The FDA Crackdown on Coronavirus Medical Claims: CBD Companies, Take Note! appeared first on Harris Bricken.

Thursday, April 2, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Thursday, April 2, 2020 | Curated by host Shea Gunther

// AOC Says Marijuana Dispensaries Should Stay Open During Coronavirus If Liquor Stores Can (Marijuana Moment)

// The Feds Are Offering Grants to Study How Coronavirus Impacts Cannabis Consumers (Merry Jane)

// OWNERS: Have a Heart Compassionate Care dispensaries were not economically feasible to operate (Quad-City Times)


These headlines are brought to by MJToday Media.


// Cannabis users, shops suffer high anxiety after Massachusetts shuts down recreational sales (NBC News)

// Why are liquor stores and marijuana dispensaries considered essential businesses? (Newsweek)

// Maine retailers deemed essential prepare to follow new state mandates (Portland Press Herald)

// COVID-19 Kills a Non-Violent Drug Offender Serving 27 Years Behind Bars (Merry Jane)

// USDA Approves Hemp Plans For South Carolina And West Virginia (Marijuana Moment)

// Medical cannabis businesses eye potential new markets in southern US (Marijuana Business Daily)

// Washington Governor Signs Bill To Diversify State’s Marijuana Industry (Marijuana Moment)


Check out our other projects:Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement. • Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Nrkbeta/Flickr

Ketamine Litigation: Oregon Hospital and Pharmacy Face $8.2 Million Medical Negligence Lawsuit

A few weeks ago, Hilary Bricken wrote about the proliferation of ketamine clinics in the United States and the logistics and legalities of operating a ketamine infusion clinic. As Hilary explained, the only FDA approved use of ketamine is for the induction and maintenance of anesthesia, though it also used for off-label infusions in the management of psychiatric disorders and chronic pain management.

Ketamine is listed as Schedule III controlled substance under the federal Controlled Substances Act. Its use is also restricted by various state laws and regulations. But because there is no FDA regulation on the control and oversight of clinics, patient safety protocols may vary and the liabilities (e.g. medical malpractice) for off-label use of ketamine are fairly far-reaching. Perhaps as a result, there have been multiple reports of safety and abuse problems related to the drug.

An example of the kinds of liabilities faced by ketamine clinics, prescribing physicians, hospital systems, pharmacies and others came to light this week in an $8.2 million medical negligence lawsuit filed in Oregon state court. The defendants are a prescriber of a ketamine nasal spray for use in pain management and the pharmacy that produced the spray. Branchflower v. Oregon Health Science University, et al., No. 20CV13573 (Multnomah County) (Email me if you’d like a copy of the complaint).

In March 2018, an OHSU doctor provided the plaintiff with a prescription for nasal ketamine – 150mg/ml with instructions to dispense 5-10 sprays in alternating nostrils every 3 hours. Because nasal ketamine was not on the market as a formulated product, plaintiff was instructed to take the prescription to a compounding pharmacy. (A “compounding pharmacy” is pharmacy equipped to make medicine for a specific patient, for medicines not commercially available.) The pharmacy prepared and filled the prescription and the plaintiff used the nasal ketamine without incident for 22 days (though it was prescribed as an 11-day supply).

Plaintiff then sought a refill of the ketamine and was issued the same dose as before. A few days later, “Plaintiff experienced a severe episode of dissociative behavior” and attacked his wife of 20 years, with whom he had four children. Plaintiff’s son called the police, who found plaintiff naked in the house. Plaintiff struggled with policy and was arrested and charged with attempted rape and multiple counts of assault against the police officers. The complaint alleges plaintiff has little to no memory of this incident, after which he was jailed for 45 days and his wife and children were forced to leave their leased house and sell possessions to pay legal fees.

The plaintiff was evaluated by a doctor, who summarized his findings in a report in which he described the amount of ketamine prescribed to the plaintiff as a “gross overdose.” After this report, the criminal charges against plaintiff were dropped.

The complaint alleges that OHSU and the compounding pharmacy were negligent in a number of ways, including:

  • In prescribing nasal ketamine when it was not approved for nasal use;
  • For prescribing an excessive and dangerous dose;
  • In failing to warn plaintiff of the potential side effects of hallucinations and dissociative behaviors; and
  • In failing to administer test doses of nasal ketamine in a monitored medical setting.

The complaint also alleges OHSU failed to obtain plaintiff’s informed consent to the prescription for nasal ketamine by failing to warn him it was an off-label use not approved by the FDA and failing to inform of the risks of ketamine and alternative treatments. These are various serious claims and the stakes are high.

Whether a jury finds merit to plaintiff’s claims remains to be seen. Nonetheless this case reflects the fact that this emerging area of medicine faces significant risks and that doctors, ketamine clinics and pharmacies ought to take special care in their protocol for administering or prescribing treatments.

The post Ketamine Litigation: Oregon Hospital and Pharmacy Face $8.2 Million Medical Negligence Lawsuit appeared first on Harris Bricken.