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Former Massachusetts Cannabis Regulator and State Sen. Jennifer Flanagan Joins National Cannabis Law Firm Vicente Sederberg LLP as Director of Regulatory Policy

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If the headline looks familiar, well, that’s because it is.

Cannabis lounges, where patrons can smoke a joint, rip a bong, vaporize a dab or do just about anything else you can think of with the plant, appeared to be a certainty as part of a Las Vegas ordinance back in 2017—and then again in 2019. They’ve been talked about for over four years in the entertainment capital of America.

But this time around, after years of setbacks and political meddling from the rival gaming industry, a bill at the Nevada State Legislature is on track to settle the score once and for all.

Assembly Bill 341 would pave the way for an unlimited number of lounges to open across the state, in counties where local governments allow cannabis businesses to operate. That includes in Sin City, where over 40 million tourists visited each year before the COVID-19 pandemic.

“This would really open the floodgates for something marijuana users have wanted for a long time,” said Assemblyman Steve Yeager, a Democrat from Las Vegas who sponsored the bill. “And there’s a social equity part to it where we’re not restricting this just to licensed dispensary owners.”

Yeager, in his third term at the state’s biennial legislature, has felt the frustration himself. Long considered the heir apparent to former State Sen. Tick Segerblom, who was known as Nevada’s “Godfather of Marijuana,” Yeager watched as the fledgling industry offered all of its spoils to a tiny group of anointed business owners, most of whom were lawyers, doctors, casino operators, lobbyists and former public officials.

Less than 100 groups control almost all of the industry, as the state capped dispensary licenses from the adult-use program’s inception in 2017.  Many of the companies are also vertically integrated, meaning dispensary owners also hold the lion’s share of production and cultivation permits. Disproportionately left out have been women and racial minorities, the latter group of which was most harmed by cannabis prohibition.

The new bill runs so contrary to the state’s years of meticulously restricting licenses and hand-picking operators that many dispensary owners are wondering if opening a lounge is even worth the investment.

“You have to figure out if you can make any money with them,” said David Goldwater, owner of Inyo, a dispensary located just over a mile from the Las Vegas Strip. “There’s going to be a ton of new competition.”

Goldwater, whose shop was one of the first dispensaries to open back in 2015, said he has no plans to open a lounge right away.

But those who plan to roll the dice on a new lounge say they plan to carve out a niche for themselves to survive. It’s not much different than other businesses in Sin City, which rely on gimmicks, glitz and glamor to earn visitors’ dollars.

Lissa Lawatch, general manager at Oasis Cannabis, is preparing a beach-themed lounge in hopes of luring tourists from the Strip a block away. Similar to the world-famous “beach clubs” found at a slew of neighboring resorts, the 4,000-square-foot cannabis lounge—set for an adjacent room next to the Oasis retail floor—plans to offer guests “a paradise in the desert.” That means live music, beach balls and seashell décor, among other tropical amenities.

“We’re going for a place that’s super chill so people can connect with their own vacation,” Lawatch said.

Anyone who buys cannabis at Oasis will be able to use the lounge, though Lawatch and company haven’t yet determined a time limit for their guests. Most prospective lounge owners plan to offer either a paid membership plan, where people can visit as often as they’d like, or a one-time entry with product purchases at the dispensary.

To make money, Oasis’ lounge will likely have a cover charge and rental fees for customers to use bongs and other paraphernalia, Lawatch said. Oasis also plans to cap the amount of time customers can hang out, so they’re not intoxicated when they hit the road.

“There’d have to be a limit, I mean, they even put limits on sushi bars,” she said. “You have to find a way to make sure people aren’t driving home roasted.”

Oasis is one of the few Vegas cannabis businesses located near the Strip. It opened in 2015 and was grandfathered through a 2017 regulation that banned cannabis companies from opening within 1,000 feet of a casino. Most other dispensaries are miles away from the famed Las Vegas Boulevard and consider at least 85% of their clientele to be locals.

Off-Strip dispensary reps believe lounges will be their golden ticket to finally reeling in more out-of-towners. Locals can legally smoke inside a private residence as long as they own it or have permission from their landlords. But tourists still have nowhere to go.

Instead of trying to discreetly consume in their rental cars, hotel rooms or on the street, visitors will opt for the peace and comfort of a legal consumption venue, the reps have said. The lounges will also benefit people in apartment complexes or housing where owners don’t allow cannabis.

“At its core this is a bill to decriminalize marijuana use in the state,” said Chris Anderson, a government relations rep for the Apothecary Shoppe dispensary in central Vegas. “The current bans can be seen as a form of discrimination against folks that have less means.”

The Apothecary Shoppe’s lobby resembles that of a quaint hotel, complete with tall wood-grain desks and formally dressed attendants to serve its guests. Fancy menu booklets, like those found at gourmet Italian restaurants, rest on the desks underneath bright reading lamps.

Instead of checking people into a resort, though, the uniformed budtenders offer their recommendations for marijuana products. The dispensary plans to offer a similar visitor experience for its planned on-site consumption lounge if A.B. 341 gets the nod from state officials.

In the increasingly unlikely event that the bill doesn’t pass, the Silver State already has one small lounge open. The Las Vegas Paiute Tribe, playing by its own set of rules that allow it to bypass state law, has operated a small “tasting room” inside its mega-dispensary on tribal land for a couple years. There, customers can try 0.3-gram blunts of flower, take a bong rip or inhale a single dab.

It’s just a sample of what’s to come, though, if state officials can be taken at their word.

Denver Overhauls Its Cannabis Rules: Week in Review

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Destigmatizing and legalizing cannabis are certainly positives for the industry, but it’s not just an increase in retail sales fueling the sector’s boom. Venture capital investors and businesses formerly agnostic (or even opposed to cannabis) now are pouring money into the industry, fueling much of the growth. With that, many long-term cannabis (and hemp) entrepreneurs are looking to parlay their experience and expertise in the field into profitable businesses.

The entrance of big money into the industry certainly provides a solid jumping-off point for businesses that partner with investors to increase profitability and valuation. However, it could also come back to haunt the seasoned cannabis entrepreneur who enters into a partnership without fully understanding the terms of the agreement.

This is why it is imperative for industry veterans to know how they can protect their stake in a business at the beginning of a new venture and avoid potentially expensive and time-consuming legal battles down the road, should things turn sour.

The strategies presented here can be effective in protecting your stake in a developing business, but remember that big money investors often have a “take-it-or-leave-it” mentality. However, that doesn’t mean a venture capital investor holds all of the power and leverage in the negotiation just because he or she is putting up money. Without your unique skill, product, process or experience—whatever forms the base of the business and sets it apart from competitors—the investment opportunity wouldn’t exist in the first place. If you are critical to the success of the business, you have leverage to steer the deal or walk away if the terms aren’t beneficial to you.

Document Early

When you’re in the early stages of building a business, it’s easy to get caught up in the euphoria of the new possibilities and future success of your new venture. While developing a vision in collaboration with new teammates and investors, there is not as much desire to pause the momentum and ask difficult but important questions like:

  • How will we make management decisions?
  • How much of this venture do I own, and how much do my partners own?
  • How would we deal with potential disputes between partners?
  • How would my interests be protected if:
  • The venture just muddles along or is a bust?
  • Everything goes as planned and the business is a moderate success?
  • You hit a home run and your founder’s shares are worth millions?

 That’s why it’s essential to put the terms of the business relationship on paper early, so expectations are clear and there are no misunderstandings or surprises in the future. You should start documenting once you’ve found your core business partners, even if you don’t have all of your investors on board yet.

Have a lawyer on your side—especially when dealing with investors

Finding a business-savvy lawyer to represent your interests can be critical early in the process, especially when dealing with outside investors or venture capitalists. A competent attorney can ensure the correct information is documented from the outset, draft operating agreements (more on that below) and can make sure your voice is heard in negotiations and business proceedings.

An operating agreement defines member’s rights

An operating agreement, sometimes called a shareholder or partnership agreement, is an essential document that defines members’ rights and lays out a framework of operations for events that could render parties in the business unable to continue working together. Think of it as a prenup for a business, intended to protect all parties if things go wrong or a member wants to leave the business. It can prepare the business for events such as:

Someone wants to amicably leave the business—what happens to their shares?

  • The business is booming and new investors want to buy in;
  • Majority partners want to sell the business;
  • Partners disagree on key management decisions or how to run the business.

 If you’re a cannabis industry veteran, you more than likely have expertise on the product itself—whether growing it, selling it, studying it, or manufacturing secondary products like concentrates and edibles. But if you’re seated at the table with investors looking to pump their money into the venture, you want to make sure you are maximizing your return on your years of work—not to mention legal risk—associated with working in the cannabis industry during the bumpy road toward more widespread legalization.

How to protect your stake as a minority shareholder

If you’re dealing with angel investors, chances are that you will be a minority shareholder, meaning you will own less than 50% of the shares or interest in the company. While you may not own the bulk of the company as a minority shareholder, don’t be quick to sign an agreement that diminishes your rights. Remember to take advantage of the leverage you hold as a cornerstone of the business by including provisions in the operating agreement that protect your rights and stake in the company.

For that reason, you should identify in the operating agreement the types of business decisions that will require consent by a supermajority of shareholders. Supermajority votes are recommended for decisions that affect the trajectory of the business, such as selling the company, liquidating assets, appointing management, spending a certain amount of money or taking on a certain amount of debt. If, for example, you are one of several minority shareholders who share ownership with an angel investor who owns 65% of the company, delineating decisions that require a supermajority vote ensures the angel investor can’t commandeer the business or make decisions that inequitably benefit him or her over the minority shareholders. 

Tag-along rights, also known as co-sale rights, are another provision to consider including in the agreement. If a majority shareholder decides to sell his or her shares, tag-along rights give minority shareholders the right to join the transaction and sell their shares along with the majority shareholder at the same price. Tag-along rights ensure the shares of minority partners are as liquid as those of their majority partners. Angel investors and venture capitalists, who tend to be well-connected businesspeople, may have an easier time selling hundreds of thousands or millions of dollars’ worth of shares than a boots-on-the-ground minority shareholder.

Conversely, drag-along rights give power to majority shareholders to force minority shareholders to sell their stock if the majority shareholders enter into a sale. Drag-along rights prevent minority shareholders from blocking the sale of a company, but also entitle them to the same terms of sale and conditions as the majority shareholder. Drag-along rights tend to favor majority shareholders and can eliminate 100% of minority shareholders in the event of a sale.

Buyout provisions can also protect minority investors by setting a valuation equation or identifying a neutral valuation expert to establish a fair way for buyout terms to be decided. For example, if a majority shareholder wants to buy out your 15% ownership in a company, but you believe those shares will be worth more in the future, a pre-negotiated valuation equation can determine how much your shares might be worth down the line. If you’re being forced to sell while the company is growing, a valuation equation could allow you to capitalize on the growth of the company and improve the price per share you’ll receive.

Vesting

In some cases, the operating agreement will dictate that minority shareholders receive their shares in the company on a vesting schedule, meaning the shareholder does not fully realize the full rights and benefits of the shares until certain conditions are met, such as remaining with the business for a certain period of time. We often see vesting provisions where certain business partners are providing “sweat equity” (i.e., their time, services or expertise) as opposed to monetary investments. Vesting schedules can be set up to allot a set percentage of shares over months, quarters or years, depending on the agreement. Minority shareholders will benefit from vesting schedules that vest more shares up front or on a more frequent basis.

“Cliff vesting,” where a larger percentage of shares vest all at once after a longer period of time (typically a year), requires the shareholder to stay at the company for a set time period before he or she will fully realize his or her shareholder rights. A typical “cliff vesting” clause provides that 25% of the allotted shares vest after the first year, with the remaining shares vesting over the next three years in equal monthly tranches. This arrangement tends to benefit majority shareholders because it gives them the potential opportunity to push out minority members before a significant portion of their shares have vested.

To protect against this scenario, minority shareholders should consider including a provision setting forth that if the minority member is pushed out of the operation of the business, his or her shares will continue to vest on schedule so long as he or she was terminated without cause or separated for good reason. Conversely, if the member is terminated for cause or leaves without good reason, he or she loses his or her unvested shares.

“Cause” is typically a defined term in the agreement and will often include “bad” behavior such as: the conviction of a felony, a breach of fiduciary duty, misconduct causing harm to the company or willful failure to perform substantial duties. The company should tailor this list to conduct that best suits its needs. 

Similarly, a “good reason” clause provides pre-negotiated situations that are considered acceptable withdrawals from the company that would also trigger vesting or accelerate the vesting schedule. “Good reasons” should be negotiated in the operating agreement and could include:

  • Being asked to relocate more than 50 miles from your home;
  • Substantial reduction in compensation;
  • Substantial reduction in responsibilities or authority.

Remember that the efficacy of the protective measures laid out here depend on the negotiated terms in the operating agreement. You may not be able to convince all parties to agree to all of these provisions, but retaining a lawyer will ensure that you understand your rights before a dispute arises and will increase the likelihood that provisions that are protective of minority members make it into the final agreement.

Red White & Bloom Closes Acquisition of Florida Operations From Acreage Holdings

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Adult-use cannabis legalization remains uncertain in South Dakota, where the state’s Supreme Court heard arguments April 28 on the constitutionality of a voter-approved amendment from the November 2020 election.

The court’s hearing stems from a lawsuit challenging the constitutionality of Amendment A, which passed with a 54.2% majority. The ballot measure read: “An amendment to the South Dakota Constitution to legalize, regulate and tax marijuana; and to require the legislature to pass laws regarding hemp as well as laws ensuring access to marijuana for medical use.”

The plaintiffs in that case argued that the measure violates the state’s one-subject rule and does not simply amend the state constitution but, rather, revises the constitution. Therefore, the revision would require a constitutional convention to be called for by a three-fourths vote of members from both chambers of the state legislature.

The defendants, who represent South Dakotans for Better Marijuana Laws, the group behind Amendment A, argued the measure contains one subject—cannabis—to which all provisions are essentially related. In addition, they argued the state constitution’s definitions of “amendment” and “revision” are permissive, not obligatory.

Keloland | keloland.com

Attorney Brendan Johnson argues in front of the South Dakota Supreme Court on Wednesday. 

During the hearing in front of the five South Dakota Supreme Court justices on April 28, Brendan Johnson, an attorney in support of Amendment A, argued the state’s one-subject rule as it has been applied by the high court has historically serviced as a shield, not as a sword, he said.

“It is designed to shield the people from legislation, from crafty legislators, who before the legislation passes, they’ll insert … something that the people weren’t expecting,” Johnson said. “They would have no reason to expect that this could happen. That has been the purpose of this single-subject. Same when it comes to amendments.

“Is there something in the amendment that is so outlandish, so outside the bounds, that the people of South Dakota couldn’t possibly have known what it was that they were really voting for? That didn’t apply here in South Dakota. We had a vigorous debate—probably the most intensely scrutinized piece of legislation in my lifetime, in a generation, that the people ever voted on.”

Article XXIII of the South Dakota Constitution states: “No proposed amendment may embrace more than one subject. If more than one amendment is submitted at the same election, each amendment shall be so prepared and distinguished that it can be voted upon separately.”

The plaintiffs argued that Amendment A has five subjects, as it appeared on the ballot: legalizing cannabis, regulating cannabis, taxing cannabis, requiring the South Dakota Legislature to pass laws regarding hemp and ensuring access to medical cannabis.

Keloland | keloland.com

Attorney Lisa Prostrollo argues in front of the South Dakota Supreme Court on Wednesday. 

In her opening remarks in front of the Supreme Court justices, Lisa Prostrollo, an attorney who argued in opposition of Amendment A, said the constitutionality of the voter-approved ballot measure is not a matter of legalizing cannabis.

“And it’s not about the multitude of other subjects that are packaged within Amendment A,” she said. “It’s about the rule of law, and it’s about enforcing the limitations that the people placed on their ballot initiative under the constitution. Those limitations are essential to preserving the integrity of our state’s founding documents. The circuit court recognized this when it struck down Amendment A, and we’re asking this court to do that same.”

RELATED: South Dakota Judge Strikes Down Adult-Use Amendment

On Amendment A, the South Dakota Supreme Court is considering a core filing that is 550 pages.

Justice Janine M. Kern said she counted 15 subjects and 55 subsections in the new article that Amendment A purports adding to the South Dakota Constitution. She asked about what she called the “far-reaching implications” of the article in regard to the state’s department of revenue’s “exclusive power” to enforce certain lawful functions, such as appropriating tax revenue gained through the implementation of an adult-use cannabis program.

“I’d like you to address that concept,” she said to Johnson.

“Of course, the number of provisions has always been less important than what the provisions themselves do,” Johnson said. “When it comes to the exclusive power of the department of revenue, you’re going to hear a lot about that. So, the language here is extremely important.”

Regarding the authority that would be granted to the state’s department of revenue, the article that would be added to the constitution states, “The department shall have the exclusive power … to license and regulate the cultivation, manufacture, testing, transport, delivery, and sale of marijuana in the state and to administer and enforce this article.”

Johnson said that language involves a simple delegation of power.

“That is not revolutionary, in all due respect to opposing counsel,” he said. “What we see every year in this legislature is that they will delegate powers to a different agency. When we talk about the exclusive power of the department of revenue, it means that they’re not sharing it with the department of health, which they might do in the situation of medicinal marijuana.”

In a rebuttal, Prostrollo said that delegation of power as written in the article is not simple but is unique as it applies to South Dakota. Granting the department of revenue exclusive authority to enforce certain lawful functions would affect South Dakota Highway Patrol Col. Rick Miller and the rest of the highway patrol, she said.

The entire case being argued in front of the Supreme Court on April 28 stemmed from Miller and Pennington County Sheriff Kevin Thom, who filed a lawsuit Nov. 24 that challenged Amendment A, arguing it violates the state’s one-subject rule.

Under South Dakota’s current system of government, the highway patrol has been granted or delegated authority to enforce all laws on state highways—an authority that the state legislature delegated—but if Amendment A is enacted, suddenly that authority shifts to the department of revenue, Prostrollo said.

Justice Mark E. Salter questioned that perspective as it relates to the constitutionality of Amendment A.

“Isn’t that the nature of an amendment, that the people through their vote could do something different—tell the legislature we want a different rule?” he said. “The highway patrol’s cognizance over whatever it has cognizance over at this point surely isn’t constitutionally based.”

It is constitutionally based, Prostrollo said.

“It is?” Salter asked.

Amendment A should in fact be considered a revision, Prostrollo said.

“Under our current constitution, we have three branches of government that are afforded specific delegated powers,” she said. “Amendment A changes that. It elevates the department of revenue to effectively a fourth branch of government with exclusive power. That’s a fundamental change to the basic structure of our constitution and our system of government. That makes Amendment A unlike any other amendment that this state has ever seen, and it’s the reason this court should strike it down today.”

Another key component surrounding Amendment A discussed during the hearing included the opposition’s silence to challenging the ballot initiative before the election.

Johnson acknowledged that Amendment A is a lengthy amendment that was crafted through studying legislation from other states, including constitutional amendments, and streamlined some of those previously established legalization efforts, he said.

Keloland | keloland.com

South Dakota Supreme Court Justice Patricia J. DeVaney questions Brendan Johnson during a hearing on Amendment A, the state’s voter-approved adult-use cannabis legalization initiative, on Wednesday.

Justice Patricia J. DeVaney asked if other states on which Amendment A was modeled also submitted their measures all as one amendment. Johnson said he’d have to double-check before providing a definitive answer.

“Colorado also has a single-subject rule, which is similar to South Dakota’s,” Johnson said. “So, that’s [part of] what we patterned it after.”

The first state to pass an adult-use cannabis legalization measure, Colorado voters approved Amendment 64 by approximately a 55% majority in the November 2012 election.

Amendment 64’s specific language on the 2012 ballot was as follows: “Shall there be an amendment to the Colorado Constitution concerning marijuana, and, in connection therewith, providing for the regulation of marijuana; permitting a person 21 years of age or older to consume or possess limited amounts of marijuana; providing for the licensing of cultivation facilities, product manufacturing facilities, testing facilities, and retail stores; permitting local governments to regulate or prohibit such facilities; requiring the general assembly to enact an excise tax to be levied upon wholesale sales of marijuana; requiring that the first $40 million in revenue raised annually by such tax be credited to the public school capital construction assistance fund; and requiring the general assembly to enact legislation governing the cultivation, processing, and sale of industrial hemp?”

Johnson said the critical issue for South Dakota’s voter-approved Amendment A is: Was it done constitutionally and lawfully?

The answer is “yes,” Johnson said.

“Did we have the requisite number of signatures? Absolutely did,” he said. “Did we get them in time? Absolutely did. Did we violate the single-subject rule? We did not.”

The South Dakota Constitution does not restrict the scope or magnitude of the single subject of a legislative act, Johnson said.

“Fifty-five sections is a lot,” he said. “But is it part of a singular scheme, where we are taking cannabis, which has been illegal, and legalizing it? I would say that it is.”

If opponents of Amendment A had a constitutionality issue with how it appeared on the ballot, Chief Justice R. Jensen questioned why those opponents did not file litigation to challenge the voter initiative before the election.

“You’ve got this issue with, ‘We don’t think that this is properly in front of the voters, and we want to challenge it. The secretary of state shouldn’t put this on the ballot,’” Jensen said. “Is there a reason that couldn’t have been brought before the election, before the people voted on this, and the court could have decided the one-subject issue before the people voted?”

The initiative petition was received by South Dakota Secretary of State Steve Barnett on Aug. 15, 2019—more than a year before the election.

There was no straightforward procedure for bringing an action before the election, Prostrollo said.

“Thankfully, the legislature has now addressed that, so it won’t be a problem moving forward,” she said. “But there was a question at the time. And in fact, this court has stated that when a case is deciding whether a change in the constitution has been legally affected, that question is actually better addressed after the election.”

If attorneys representing opponents of any ballot amendment were to bring challenges to court before an election, and then voters struck down and defeated such an initiative at the polls, that would be a waste of judicial resources, Prostrollo said.

While it’s clear that voters can change the constitution when they want to, and when they follow the rules, the substantive legality of Amendment A is not an issue, Salter said from behind the bench. Rather, what’s at issue are the technical requirements posed by the constitution for presenting an amendment in the first place, and whether the correct procedure was utilized, he said.

Going back to the one-subject rule, Johnson said it’s OK for voters to have multiple reasons for supporting a ballot initiative—such as voting in favor of legalizing adult-use cannabis and ensuring access to medicinal cannabis—on the same ticket. What’s not OK is if the ballot initiative buried something that somehow voters would have been tricked or fooled into supporting, he said. That did not happen with Amendment A, he said.

“When we talk about the damage that could be done,” Johnson said, “if that for the first time in our state’s history we have a court that literally throws out 417,000 votes that were cast on a piece of legislation passed by the people, the harm that that could do, especially in a time that [many] people feel like elections are rigged anyhow, the standard should be exceptionally high.”

Groundbreaking Paper Claims Outdated Laws and Regulations Are Hindering the UK’s CBD and Medicinal Cannabis Industries

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Adult-use cannabis legalization remains uncertain in South Dakota, where the state’s Supreme Court heard arguments April 28 on the constitutionality of a voter-approved amendment from the November 2020 election.

The court’s hearing stems from a lawsuit challenging the constitutionality of Amendment A, which passed with a 54.2% majority. The ballot measure read: “An amendment to the South Dakota Constitution to legalize, regulate and tax marijuana; and to require the legislature to pass laws regarding hemp as well as laws ensuring access to marijuana for medical use.”

The plaintiffs in that case argued that the measure violates the state’s one-subject rule and does not simply amend the state constitution but, rather, revises the constitution. Therefore, the revision would require a constitutional convention to be called for by a three-fourths vote of members from both chambers of the state legislature.

The defendants, who represent South Dakotans for Better Marijuana Laws, the group behind Amendment A, argued the measure contains one subject—cannabis—to which all provisions are essentially related. In addition, they argued the state constitution’s definitions of “amendment” and “revision” are permissive, not obligatory.

Keloland | keloland.com

Attorney Brendan Johnson argues in front of the South Dakota Supreme Court on Wednesday. 

During the hearing in front of the five South Dakota Supreme Court justices on April 28, Brendan Johnson, an attorney in support of Amendment A, argued the state’s one-subject rule as it has been applied by the high court has historically serviced as a shield, not as a sword, he said.

“It is designed to shield the people from legislation, from crafty legislators, who before the legislation passes, they’ll insert … something that the people weren’t expecting,” Johnson said. “They would have no reason to expect that this could happen. That has been the purpose of this single-subject. Same when it comes to amendments.

“Is there something in the amendment that is so outlandish, so outside the bounds, that the people of South Dakota couldn’t possibly have known what it was that they were really voting for? That didn’t apply here in South Dakota. We had a vigorous debate—probably the most intensely scrutinized piece of legislation in my lifetime, in a generation, that the people ever voted on.”

Article XXIII of the South Dakota Constitution states: “No proposed amendment may embrace more than one subject. If more than one amendment is submitted at the same election, each amendment shall be so prepared and distinguished that it can be voted upon separately.”

The plaintiffs argued that Amendment A has five subjects, as it appeared on the ballot: legalizing cannabis, regulating cannabis, taxing cannabis, requiring the South Dakota Legislature to pass laws regarding hemp and ensuring access to medical cannabis.

Keloland | keloland.com

Attorney Lisa Prostrollo argues in front of the South Dakota Supreme Court on Wednesday. 

In her opening remarks in front of the Supreme Court justices, Lisa Prostrollo, an attorney who argued in opposition of Amendment A, said the constitutionality of the voter-approved ballot measure is not a matter of legalizing cannabis.

“And it’s not about the multitude of other subjects that are packaged within Amendment A,” she said. “It’s about the rule of law, and it’s about enforcing the limitations that the people placed on their ballot initiative under the constitution. Those limitations are essential to preserving the integrity of our state’s founding documents. The circuit court recognized this when it struck down Amendment A, and we’re asking this court to do that same.”

RELATED: South Dakota Judge Strikes Down Adult-Use Amendment

On Amendment A, the South Dakota Supreme Court is considering a core filing that is 550 pages.

Justice Janine M. Kern said she counted 15 subjects and 55 subsections in the new article that Amendment A purports adding to the South Dakota Constitution. She asked about what she called the “far-reaching implications” of the article in regard to the state’s department of revenue’s “exclusive power” to enforce certain lawful functions, such as appropriating tax revenue gained through the implementation of an adult-use cannabis program.

“I’d like you to address that concept,” she said to Johnson.

“Of course, the number of provisions has always been less important than what the provisions themselves do,” Johnson said. “When it comes to the exclusive power of the department of revenue, you’re going to hear a lot about that. So, the language here is extremely important.”

Regarding the authority that would be granted to the state’s department of revenue, the article that would be added to the constitution states, “The department shall have the exclusive power … to license and regulate the cultivation, manufacture, testing, transport, delivery, and sale of marijuana in the state and to administer and enforce this article.”

Johnson said that language involves a simple delegation of power.

“That is not revolutionary, in all due respect to opposing counsel,” he said. “What we see every year in this legislature is that they will delegate powers to a different agency. When we talk about the exclusive power of the department of revenue, it means that they’re not sharing it with the department of health, which they might do in the situation of medicinal marijuana.”

In a rebuttal, Prostrollo said that delegation of power as written in the article is not simple but is unique as it applies to South Dakota. Granting the department of revenue exclusive authority to enforce certain lawful functions would affect South Dakota Highway Patrol Col. Rick Miller and the rest of the highway patrol, she said.

The entire case being argued in front of the Supreme Court on April 28 stemmed from Miller and Pennington County Sheriff Kevin Thom, who filed a lawsuit Nov. 24 that challenged Amendment A, arguing it violates the state’s one-subject rule.

Under South Dakota’s current system of government, the highway patrol has been granted or delegated authority to enforce all laws on state highways—an authority that the state legislature delegated—but if Amendment A is enacted, suddenly that authority shifts to the department of revenue, Prostrollo said.

Justice Mark E. Salter questioned that perspective as it relates to the constitutionality of Amendment A.

“Isn’t that the nature of an amendment, that the people through their vote could do something different—tell the legislature we want a different rule?” he said. “The highway patrol’s cognizance over whatever it has cognizance over at this point surely isn’t constitutionally based.”

It is constitutionally based, Prostrollo said.

“It is?” Salter asked.

Amendment A should in fact be considered a revision, Prostrollo said.

“Under our current constitution, we have three branches of government that are afforded specific delegated powers,” she said. “Amendment A changes that. It elevates the department of revenue to effectively a fourth branch of government with exclusive power. That’s a fundamental change to the basic structure of our constitution and our system of government. That makes Amendment A unlike any other amendment that this state has ever seen, and it’s the reason this court should strike it down today.”

Another key component surrounding Amendment A discussed during the hearing included the opposition’s silence to challenging the ballot initiative before the election.

Johnson acknowledged that Amendment A is a lengthy amendment that was crafted through studying legislation from other states, including constitutional amendments, and streamlined some of those previously established legalization efforts, he said.

Keloland | keloland.com

South Dakota Supreme Court Justice Patricia J. DeVaney questions Brendan Johnson during a hearing on Amendment A, the state’s voter-approved adult-use cannabis legalization initiative, on Wednesday.

Justice Patricia J. DeVaney asked if other states on which Amendment A was modeled also submitted their measures all as one amendment. Johnson said he’d have to double-check before providing a definitive answer.

“Colorado also has a single-subject rule, which is similar to South Dakota’s,” Johnson said. “So, that’s [part of] what we patterned it after.”

The first state to pass an adult-use cannabis legalization measure, Colorado voters approved Amendment 64 by approximately a 55% majority in the November 2012 election.

Amendment 64’s specific language on the 2012 ballot was as follows: “Shall there be an amendment to the Colorado Constitution concerning marijuana, and, in connection therewith, providing for the regulation of marijuana; permitting a person 21 years of age or older to consume or possess limited amounts of marijuana; providing for the licensing of cultivation facilities, product manufacturing facilities, testing facilities, and retail stores; permitting local governments to regulate or prohibit such facilities; requiring the general assembly to enact an excise tax to be levied upon wholesale sales of marijuana; requiring that the first $40 million in revenue raised annually by such tax be credited to the public school capital construction assistance fund; and requiring the general assembly to enact legislation governing the cultivation, processing, and sale of industrial hemp?”

Johnson said the critical issue for South Dakota’s voter-approved Amendment A is: Was it done constitutionally and lawfully?

The answer is “yes,” Johnson said.

“Did we have the requisite number of signatures? Absolutely did,” he said. “Did we get them in time? Absolutely did. Did we violate the single-subject rule? We did not.”

The South Dakota Constitution does not restrict the scope or magnitude of the single subject of a legislative act, Johnson said.

“Fifty-five sections is a lot,” he said. “But is it part of a singular scheme, where we are taking cannabis, which has been illegal, and legalizing it? I would say that it is.”

If opponents of Amendment A had a constitutionality issue with how it appeared on the ballot, Chief Justice R. Jensen questioned why those opponents did not file litigation to challenge the voter initiative before the election.

“You’ve got this issue with, ‘We don’t think that this is properly in front of the voters, and we want to challenge it. The secretary of state shouldn’t put this on the ballot,’” Jensen said. “Is there a reason that couldn’t have been brought before the election, before the people voted on this, and the court could have decided the one-subject issue before the people voted?”

The initiative petition was received by South Dakota Secretary of State Steve Barnett on Aug. 15, 2019—more than a year before the election.

There was no straightforward procedure for bringing an action before the election, Prostrollo said.

“Thankfully, the legislature has now addressed that, so it won’t be a problem moving forward,” she said. “But there was a question at the time. And in fact, this court has stated that when a case is deciding whether a change in the constitution has been legally affected, that question is actually better addressed after the election.”

If attorneys representing opponents of any ballot amendment were to bring challenges to court before an election, and then voters struck down and defeated such an initiative at the polls, that would be a waste of judicial resources, Prostrollo said.

While it’s clear that voters can change the constitution when they want to, and when they follow the rules, the substantive legality of Amendment A is not an issue, Salter said from behind the bench. Rather, what’s at issue are the technical requirements posed by the constitution for presenting an amendment in the first place, and whether the correct procedure was utilized, he said.

Going back to the one-subject rule, Johnson said it’s OK for voters to have multiple reasons for supporting a ballot initiative—such as voting in favor of legalizing adult-use cannabis and ensuring access to medicinal cannabis—on the same ticket. What’s not OK is if the ballot initiative buried something that somehow voters would have been tricked or fooled into supporting, he said. That did not happen with Amendment A, he said.

“When we talk about the damage that could be done,” Johnson said, “if that for the first time in our state’s history we have a court that literally throws out 417,000 votes that were cast on a piece of legislation passed by the people, the harm that that could do, especially in a time that [many] people feel like elections are rigged anyhow, the standard should be exceptionally high.”

Ensuring health and well-being through medical cannabis insurance

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What the law ensures is not a guarantee of what companies insure. That is, just because medicinal cannabis is legal in 33 states, just because the majority of states allow residents to buy and use medicinal cannabis, just because the majority of studies draw the same conclusion that medicinal cannabis can improve health and well-being does not mean that every insurer in these states will reimburse patients who use medicinal cannabis. However, there is a cover. Policies are available, premiums affordable, providers accessible or: what is legal is insurable, although this fact deserves more attention.

Whether the party in need is a person or a private company, whether the person needs medical cannabis to work, or whether a company needs insurance for workers using medical cannabis, individual or group insurance is real.

More importantly, medical cannabis is no longer an excuse for insurers to charge higher premiums. Whatever stigma this or that person ascribes to this subject, whatever the stigma persists, despite numerous tests and extensive testimony from patients, the stigma is false.

The link between medical cannabis and health is too strong to be dismissed and too significant to be denied. The connection between medical cannabis and wellness is also too believable to reject and too compelling to reject. However, this connection is a disclosure requirement of an insurance professional.

This duty is a duty to inform: to act, not to react, so that people who need help – people who deserve help – can not only live better, but can also live well; Live with the knowledge that medical cannabis is not a vice; Live with insurance to buy good medical cannabis, the virtues of which are multiple and verifiable; Live more active and productive lives thanks to doctors, scientists, activists, lawyers, and insurance agents.

This duty is a matter of communication.

By investing the time to explain why insurance complements health in general, and the value of medicinal cannabis in particular, insurance professionals expand the possibilities. Parent with Parkinson’s, father with PTSD, mother with MS, coworker with cancer – if one or all of them can benefit from medical cannabis, no one should have to go bankrupt to get better. Everyone should know that insurance removes the cruelty of this wrong choice.

Then where do we go from here?

What can we do to promote health and wellbeing with the understanding that the cannabis industry is at the forefront of science and technology?

What we can do, what we have to do is: lead.

By leading the public to a solution, by showing the public that a solution is neither elusive nor expensive, by explaining to the public why a solution is essential, the public wins.

This victory is attainable provided knowledge and action are one. In other words, awareness is a recipe for planning – and acting. That we realize how medical cannabis can help people, that we realize that people need help, that we realize that we can help, that realizing these things requires us to do something. Not anything, but something.

Meritorious because it is right and right because it is moral, we must defend medical cannabis insurability. This defense promotes health and wellbeing, and increases support through education and ongoing public outreach.

This defense is a solemn cause.

That defense is our call to glory.

Simple pharmacist

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How to Protect Your Rights and Ownership Stake in Cannabis Business Partnerships

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Adult-use cannabis legalization remains uncertain in South Dakota, where the state’s Supreme Court heard arguments April 28 on the constitutionality of a voter-approved amendment from the November 2020 election.

The court’s hearing stems from a lawsuit challenging the constitutionality of Amendment A, which passed with a 54.2% majority. The ballot measure read: “An amendment to the South Dakota Constitution to legalize, regulate and tax marijuana; and to require the legislature to pass laws regarding hemp as well as laws ensuring access to marijuana for medical use.”

The plaintiffs in that case argued that the measure violates the state’s one-subject rule and does not simply amend the state constitution but, rather, revises the constitution. Therefore, the revision would require a constitutional convention to be called for by a three-fourths vote of members from both chambers of the state legislature.

The defendants, who represent South Dakotans for Better Marijuana Laws, the group behind Amendment A, argued the measure contains one subject—cannabis—to which all provisions are essentially related. In addition, they argued the state constitution’s definitions of “amendment” and “revision” are permissive, not obligatory.

Keloland | keloland.com

Attorney Brendan Johnson argues in front of the South Dakota Supreme Court on Wednesday. 

During the hearing in front of the five South Dakota Supreme Court justices on April 28, Brendan Johnson, an attorney in support of Amendment A, argued the state’s one-subject rule as it has been applied by the high court has historically serviced as a shield, not as a sword, he said.

“It is designed to shield the people from legislation, from crafty legislators, who before the legislation passes, they’ll insert … something that the people weren’t expecting,” Johnson said. “They would have no reason to expect that this could happen. That has been the purpose of this single-subject. Same when it comes to amendments.

“Is there something in the amendment that is so outlandish, so outside the bounds, that the people of South Dakota couldn’t possibly have known what it was that they were really voting for? That didn’t apply here in South Dakota. We had a vigorous debate—probably the most intensely scrutinized piece of legislation in my lifetime, in a generation, that the people ever voted on.”

Article XXIII of the South Dakota Constitution states: “No proposed amendment may embrace more than one subject. If more than one amendment is submitted at the same election, each amendment shall be so prepared and distinguished that it can be voted upon separately.”

The plaintiffs argued that Amendment A has five subjects, as it appeared on the ballot: legalizing cannabis, regulating cannabis, taxing cannabis, requiring the South Dakota Legislature to pass laws regarding hemp and ensuring access to medical cannabis.

Keloland | keloland.com

Attorney Lisa Prostrollo argues in front of the South Dakota Supreme Court on Wednesday. 

In her opening remarks in front of the Supreme Court justices, Lisa Prostrollo, an attorney who argued in opposition of Amendment A, said the constitutionality of the voter-approved ballot measure is not a matter of legalizing cannabis.

“And it’s not about the multitude of other subjects that are packaged within Amendment A,” she said. “It’s about the rule of law, and it’s about enforcing the limitations that the people placed on their ballot initiative under the constitution. Those limitations are essential to preserving the integrity of our state’s founding documents. The circuit court recognized this when it struck down Amendment A, and we’re asking this court to do that same.”

RELATED: South Dakota Judge Strikes Down Adult-Use Amendment

On Amendment A, the South Dakota Supreme Court is considering a core filing that is 550 pages.

Justice Janine M. Kern said she counted 15 subjects and 55 subsections in the new article that Amendment A purports adding to the South Dakota Constitution. She asked about what she called the “far-reaching implications” of the article in regard to the state’s department of revenue’s “exclusive power” to enforce certain lawful functions, such as appropriating tax revenue gained through the implementation of an adult-use cannabis program.

“I’d like you to address that concept,” she said to Johnson.

“Of course, the number of provisions has always been less important than what the provisions themselves do,” Johnson said. “When it comes to the exclusive power of the department of revenue, you’re going to hear a lot about that. So, the language here is extremely important.”

Regarding the authority that would be granted to the state’s department of revenue, the article that would be added to the constitution states, “The department shall have the exclusive power … to license and regulate the cultivation, manufacture, testing, transport, delivery, and sale of marijuana in the state and to administer and enforce this article.”

Johnson said that language involves a simple delegation of power.

“That is not revolutionary, in all due respect to opposing counsel,” he said. “What we see every year in this legislature is that they will delegate powers to a different agency. When we talk about the exclusive power of the department of revenue, it means that they’re not sharing it with the department of health, which they might do in the situation of medicinal marijuana.”

In a rebuttal, Prostrollo said that delegation of power as written in the article is not simple but is unique as it applies to South Dakota. Granting the department of revenue exclusive authority to enforce certain lawful functions would affect South Dakota Highway Patrol Col. Rick Miller and the rest of the highway patrol, she said.

The entire case being argued in front of the Supreme Court on April 28 stemmed from Miller and Pennington County Sheriff Kevin Thom, who filed a lawsuit Nov. 24 that challenged Amendment A, arguing it violates the state’s one-subject rule.

Under South Dakota’s current system of government, the highway patrol has been granted or delegated authority to enforce all laws on state highways—an authority that the state legislature delegated—but if Amendment A is enacted, suddenly that authority shifts to the department of revenue, Prostrollo said.

Justice Mark E. Salter questioned that perspective as it relates to the constitutionality of Amendment A.

“Isn’t that the nature of an amendment, that the people through their vote could do something different—tell the legislature we want a different rule?” he said. “The highway patrol’s cognizance over whatever it has cognizance over at this point surely isn’t constitutionally based.”

It is constitutionally based, Prostrollo said.

“It is?” Salter asked.

Amendment A should in fact be considered a revision, Prostrollo said.

“Under our current constitution, we have three branches of government that are afforded specific delegated powers,” she said. “Amendment A changes that. It elevates the department of revenue to effectively a fourth branch of government with exclusive power. That’s a fundamental change to the basic structure of our constitution and our system of government. That makes Amendment A unlike any other amendment that this state has ever seen, and it’s the reason this court should strike it down today.”

Another key component surrounding Amendment A discussed during the hearing included the opposition’s silence to challenging the ballot initiative before the election.

Johnson acknowledged that Amendment A is a lengthy amendment that was crafted through studying legislation from other states, including constitutional amendments, and streamlined some of those previously established legalization efforts, he said.

Keloland | keloland.com

South Dakota Supreme Court Justice Patricia J. DeVaney questions Brendan Johnson during a hearing on Amendment A, the state’s voter-approved adult-use cannabis legalization initiative, on Wednesday.

Justice Patricia J. DeVaney asked if other states on which Amendment A was modeled also submitted their measures all as one amendment. Johnson said he’d have to double-check before providing a definitive answer.

“Colorado also has a single-subject rule, which is similar to South Dakota’s,” Johnson said. “So, that’s [part of] what we patterned it after.”

The first state to pass an adult-use cannabis legalization measure, Colorado voters approved Amendment 64 by approximately a 55% majority in the November 2012 election.

Amendment 64’s specific language on the 2012 ballot was as follows: “Shall there be an amendment to the Colorado Constitution concerning marijuana, and, in connection therewith, providing for the regulation of marijuana; permitting a person 21 years of age or older to consume or possess limited amounts of marijuana; providing for the licensing of cultivation facilities, product manufacturing facilities, testing facilities, and retail stores; permitting local governments to regulate or prohibit such facilities; requiring the general assembly to enact an excise tax to be levied upon wholesale sales of marijuana; requiring that the first $40 million in revenue raised annually by such tax be credited to the public school capital construction assistance fund; and requiring the general assembly to enact legislation governing the cultivation, processing, and sale of industrial hemp?”

Johnson said the critical issue for South Dakota’s voter-approved Amendment A is: Was it done constitutionally and lawfully?

The answer is “yes,” Johnson said.

“Did we have the requisite number of signatures? Absolutely did,” he said. “Did we get them in time? Absolutely did. Did we violate the single-subject rule? We did not.”

The South Dakota Constitution does not restrict the scope or magnitude of the single subject of a legislative act, Johnson said.

“Fifty-five sections is a lot,” he said. “But is it part of a singular scheme, where we are taking cannabis, which has been illegal, and legalizing it? I would say that it is.”

If opponents of Amendment A had a constitutionality issue with how it appeared on the ballot, Chief Justice R. Jensen questioned why those opponents did not file litigation to challenge the voter initiative before the election.

“You’ve got this issue with, ‘We don’t think that this is properly in front of the voters, and we want to challenge it. The secretary of state shouldn’t put this on the ballot,’” Jensen said. “Is there a reason that couldn’t have been brought before the election, before the people voted on this, and the court could have decided the one-subject issue before the people voted?”

The initiative petition was received by South Dakota Secretary of State Steve Barnett on Aug. 15, 2019—more than a year before the election.

There was no straightforward procedure for bringing an action before the election, Prostrollo said.

“Thankfully, the legislature has now addressed that, so it won’t be a problem moving forward,” she said. “But there was a question at the time. And in fact, this court has stated that when a case is deciding whether a change in the constitution has been legally affected, that question is actually better addressed after the election.”

If attorneys representing opponents of any ballot amendment were to bring challenges to court before an election, and then voters struck down and defeated such an initiative at the polls, that would be a waste of judicial resources, Prostrollo said.

While it’s clear that voters can change the constitution when they want to, and when they follow the rules, the substantive legality of Amendment A is not an issue, Salter said from behind the bench. Rather, what’s at issue are the technical requirements posed by the constitution for presenting an amendment in the first place, and whether the correct procedure was utilized, he said.

Going back to the one-subject rule, Johnson said it’s OK for voters to have multiple reasons for supporting a ballot initiative—such as voting in favor of legalizing adult-use cannabis and ensuring access to medicinal cannabis—on the same ticket. What’s not OK is if the ballot initiative buried something that somehow voters would have been tricked or fooled into supporting, he said. That did not happen with Amendment A, he said.

“When we talk about the damage that could be done,” Johnson said, “if that for the first time in our state’s history we have a court that literally throws out 417,000 votes that were cast on a piece of legislation passed by the people, the harm that that could do, especially in a time that [many] people feel like elections are rigged anyhow, the standard should be exceptionally high.”

Vessel Brand Launches Recycling Program in Partnership With GAIACA Waste Revitalization

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A unionization effort filed for 17 employees at the Curaleaf medical dispensary in Hanover, Mass., went all the way to Washington, D.C., before a final decision on the results of a mail-in election was made earlier this month. The majority of ballots had been challenged, some of which remained sealed in the final vote count.

The United Food and Commercial Workers (UFCW) Local 328, which represents more than 11,000 workers in a range of industries throughout Rhode Island and southeastern Massachusetts, filed for the Curaleaf Hanover union election April 20, 2020—during the onset of the COVID-19 pandemic. Ballots went out to the Hanover team in May, and the original vote count was June 26. That vote came back 5-2 in favor of joining the Local 328, excluding 10 challenged ballots, which were determinative, meaning there were more challenged votes than the difference between yeses and noes.

“There was some fighting back and forth—because it was during COVID—about people that they were bringing in from other areas and having them work there,” UFCW Local 328 President Tim Melia said. “But they weren’t part of the Hanover group. The company was arguing that they should be part of the unit and should be able to vote on the contract. And we were arguing back the other way. So, there were some charges about who was eligible and who wasn’t when the vote came.” 

The challenged ballots took nearly 10 months to sort out. A federal investigation and hearing by the National Labor Relations Board (NLRB) examined the circumstances of the challenged ballots, which stemmed from which workers were employed at the Hanover location before government shutdowns and which workers were not. The Boston regional office of the NLRB determined that six of the 10 challenged ballots should not be counted. Curaleaf appealed that decision to the NLRB in Washington, D.C., where the labor board declined to hear the case, essentially upholding the ruling of the regional director in Boston.

The final vote was 8-3 in favor of the Curaleaf Hanover workers unionizing, which became official on April 9, 2021, roughly a year after the workers’ campaign was organized.

Local 328 organizers first connected with dispensary workers at Curaleaf Hanover in March 2020, a month before filing the unionization vote and before pandemic-related government shutdowns were enacted. At the time in Massachusetts, the shutdowns affected adult-use dispensaries while medical dispensaries like Curaleaf Hanover were deemed essential. 

“What ended up happening was that the company had sent over some workers from different locations because this is a purely medicinal facility [in Hanover] and the [adult-use] locations for Curaleaf had closed,” Local 328 Director of Organizing Sam Marvin said. “So, they had temporarily sent some workers from kind of far away to work at the medicinal location that was still open. And, so, essentially that made up some of the challenged votes.”

Curaleaf did not confirm the pre-shutdown whereabouts of its workers who represented the six challenged ballots that remained sealed, but the NLRB regional director in Boston determined those six should not be counted as part of the Hanover group. Had the six Hanover ballots that remained sealed all been no votes, then, theoretically, the union organization effort would have failed, 9-8.

A spokesperson from Curaleaf said the vote at the company’s Hanover dispensary was a “secret ballot election” but recognized that the final count was in fact in favor of union representation by the Local 328 for purposes of collective bargaining.

“While we’re disappointed with this outcome, because we believe team members are best served dealing directly with our management team, we respect the collective voice of our Hanover team members at the time and will seek to have a collaborative working relationship with the UFCW,” the spokesperson said. “We will continue to prioritize creating a positive, supportive and inclusive work environment for all team members and provide our patients and customers with the excellent service they expect and deserve from Curaleaf.”

Going Beyond Wages and Benefits

When Cannabis Business Times reached out to Curaleaf following the final vote and asked in what ways the company prioritizes taking care of its employees and meeting their needs, the spokesperson said, “We welcome everyone to join our employee resource groups focused on fostering inclusion.” The company identified specific groups that have been developed to meet this priority:

  • Black, Indigenous and People of Color (Curaleaf in Color)
  • WCC (Women’s Cannabis Collective) 
  • PRIDE/QUSH (Queer-Centered Unity and Service Huddle)
  • Working Parents (FamiLeaf)
  • Community and Volunteerism (Curaleaf Cares) 

Curaleaf also hosts panel discussions and support events for all team members: 

  • Heritage Lunch-in (food dishes that represent our heritage—celebrating diversity) 
  • “Black in Cannabis” panel discussion (education and awareness of the war on drugs and historical community impact of Black people in cannabis) 
  • “AAPI in Cannabis” panel discussion (education and awareness of Asian American Pacific Islander communities in cannabis)
  • Holding Space and communicating from the C-suite (for times of grief and support—scheduled often and as needed when team members request and/or crisis happen. E.g., George Floyd murder and trial, mass shootings, Asian hate crimes, etc.)
  • “Help a Family” (sponsoring Curaleaf team members who are in additional financial need during the holiday season)
  • Virtual yoga and meditation classes 

“Our team members are the heart and soul of our company,” the spokesperson said. “Their dedication and commitment to serving our patients and customers is exemplified by their incredible efforts during this challenging time as our country deals with the COVID-19 pandemic.”

UFCW’s Push to Unionize Cannabis Workers

First organized by meat cutters and butchers in 1937, the Local 328 now represents workers in myriad industries, including retail food, institutional food, health care, banking, transportation, manufacturing, barbers, cosmetologists and now cannabis. But the push to unionize the cannabis space is just starting to unfold, both in the Local 328’s region and across the nation. Of the 11,000-plus workers represented by the Local 328, fewer than 100 are from the cannabis space. The union is working to increase that representation.

Earlier this month, dispensary workers at Greenleaf Compassionate Care Center in Portsmouth, R.I., unionized by a 21-1 vote to join the Local 328. The organized effort includes budtenders, keyholders, online team members and delivery associates.

Local 328 now represents workers from four cannabis businesses, including the Ocean State Cultivation Center (OSCC) in Warwick, R.I., where workers officially became the state’s first unionized cannabis organization with a negotiated contract in October 2020. OSCC provides cannabis products to compassion centers operating in Portsmouth, Providence and Warwick that serve more than 18,000 cannabis patients in Rhode Island’s medical program.

Perfect Union, a vertically integrated operator and parent company of OSCC, with dispensaries in California, New Mexico and Rhode Island, began paying all employees an additional $2.50 per hour on March 16, 2020—at the onset of COVID-19 and while negotiations were still taking place with UFCW. The bonus pay extended to more than 200 employees, including those working in cultivation, distribution, manufacturing and retail.

“Taking care of our employees is one of our highest priorities,” Perfect Union CEO David Spradlin said in a Local 328 release. “We are pleased to be partnering with the UFCW Local 328 and helping to set a standard for workers in Rhode Island’s cannabis industry. Our partnership ensures our employees will be treated fairly and equitably, allowing us to better serve the community around us.”

The two parties agreed to a labor peace agreement in late 2019, which committed them to open, transparent dialogue throughout the negotiation process, Marvin said. A labor peace agreement is an arrangement between a union and an employer under which one or both sides agree to waive certain rights under federal law with regard to union organization and related activity. Such an agreement is more likely to lead to unionization of a workplace, according to the U.S. Chamber of Commerce.

The finalized contract guarantees a living wage, comprehensive benefits, opportunities for career advancement and safe working conditions for OSCC employees, according to a Local 328 press release.

“The UFCW has been so important in turning these jobs into careers,” said Matthew Baryshyan, who works in cultivation at OSCC. “As this industry grows, so does our need to make sure our best interests are taken into consideration. We now have better wages, a pension plan, full benefits, vacation time, and the list goes on. The UFCW is making sure there is a future in cannabis, and it’s a bright one.”

Does Company Size Matter?

In addition, Local 328 representatives are currently negotiating a contract for the cannabis workers at a Cresco Labs cultivation and processing facility in Fall River, Mass. A multistate operator headquartered in Chicago, Cresco also operates one of its Sunnyside dispensaries in Fall River, after the company closed on its acquisition of Hope Heal Health Inc. in February 2020.

Earlier this year, more than 180 UFCW Local 881 members who work at Cresco Labs in Joliet, Ill., ratified a union contract that raised wages and improved benefits.

While Cresco Labs and Curaleaf are two of the biggest cannabis companies in the world, Marvin said workers throughout the industry essentially want the same thing—stability.

“Sometimes the smaller, medium-size companies will sell to a larger company,” he said. “So that’s why that’s one of the big issues for even the smaller, medium [companies] is to have some sense of protection and security in case that were to happen. They can still protect their unions, still protect their benefits and sit at the table with a new employer.”

As the biggest companies continue to grow in a sector with increasing revenues, workers of those companies want to ensure they are rewarded “in the industry where they’re creating these profits through their work,” Marvin said. This can take the shape of pay increases, ownership stakes or more inclusive workspaces.

Unionization efforts at Curaleaf Hanover and the Cresco Labs facility in Fall River come as the Massachusetts cannabis industry generated roughly $696 million in sales in 2020—a 56.4% increase from 2019, according to adult-use sales and production data from the state’s Cannabis Control Commission.

Since the adult-use system launched more than two years ago, Massachusetts cannabis sales have exceeded more than $1.5 billion overall. Cannabis sales in 2021 have already logged roughly $370 million through April, according to the state’s seed-to-sale tracking system.

Worker-Management Relations

Big or small, the Local 328 is pushing to extend its representation in the cannabis space. Sometimes organization efforts are met with cordial negotiations, and other times they are not, Marvin said.

As other state legislatures continue to debate and pass adult-use cannabis measures, lawmakers are including provisions in their bills that aim to deter anti-union practices on the part of cannabis business owners. For example, Virginia Gov. Ralph Northam signed legislation last week that gives the state’s incoming Cannabis Control Authority the power to strip licenses from any cannabis business that doesn’t remain neutral while its workers attempt to unionize.

Unionization can be good for both employers and employees, Marvin said. A key benefit made possible through unionization is that employers who may have a tough time entering into industry pension funds could gain access through labor unions that represent their workers, Marvin said.

“For example, we have UFCW industry pension funds that we can now negotiate these employers into because they’re union,” he said. “And we also have access to our industry health and welfare funds as well. So, maybe for some employers that cost can be greater if they’re doing it alone.”

While workers can gain health care and a secure retirement through unionization—which is not to say they can’t gain those benefits without a union—improving their relations with management can translate to the customer experience and reduce turnover, Marvin said.

“We don’t want to see an industry that has a high turnover where patients and customers are going in and seeing a new face every day,” he said. “We want to see that these are good jobs, that workers can take care of their families and their patients and customers at the same time. And I think ultimately that’s very beneficial for the consumer—that they can cultivate that relationship with employees and expect to see them the week after, and the week after that.”

Continuing the Push

Although Local 328 representatives have a trio of moving parts in the cannabis space—including their current negotiation with Cresco Labs and upcoming negotiation efforts with Curaleaf and Greenleaf—Marvin and Melia said the budding sector is ripe for additional unionization. Union negotiations are often centered on wages, hours, benefits and working conditions, while others choose to organize in order to gain dignity and respect on the job, Melia said.

Specifically for workers in medical dispensaries, who were deemed essential in many states as they worked on the front lines during the pandemic, having personal protective equipment (PPE), social-distancing protocols and proper cleaning measures in place were important safety standards, Marvin said. In general, working during a pandemic was a tipping point for many workers in a variety of sectors to organize, he said.

Going hand-in-hand with job security, workers want to make sure they are no longer at-will employees, Marvin said. In U.S. labor law, at-will employment is an employer’s ability to dismiss an employee for any reason, and without warning, as long as the reason is not illegal.

“I think that the organizing that workers are doing now is essentially framing how these jobs are going to be not only today and tomorrow, but for years down the road,” he said. “So, again, we want to make sure these are good jobs and we’re going to continue to communicate and partner with cannabis workers.”

How to Build a Brand that Lasts After Federal Decriminalization

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Despite President Biden’s reticence in tackling cannabis reform, Senate Democrats led by Chuck Schumer of New York have insisted that they intend to move forward with descheduling and decriminalizing cannabis with or without the President. This begs the question, what could brands across the legal cannabis industry look like as the federal regulatory environment evolves? As part of this, will interstate restrictions come down and allow for efficient regional and even national brands or will the structure continue to require a state-by-state strategy and rollout?

Currently, state borders set boundaries that dictate supply, distribution and sale, setting strict regulations on cannabis industry operations. As of today, many companies throughout the U.S. cannabis industry are structured as multi-state operators (MSOs), in which the companies own products or dispensary brands that are available in multiple legal state markets but operate in virtual silos from one another. This poses an interesting challenge that may need to evolve with federal legislative changes that could determine redrawing of these supply chains both on a regional and national level.

Brands like Korova, a popular edibles and flower brand based in California, with operations in Oregon and licensees in Oklahoma and Arizona, must keep its operations entirely separate, even if it operates under the same name in different states. Moreover, cannabis flower and extract sourced from California cannot legally be shipped to Oregon or other states. Thus, the MSO often creates vertical operations in each state in which it operates. It creates an entirely distinct process from cultivation to extraction to retail facilities. This difference in operation, even slight, can affect brand quality and consistency across markets if not managed carefully. 

When federal cannabis legislation changes, these types of decisions will most likely be left to the states. I view it as similar to how the alcohol industry operates. In this case, states want to work to protect tax revenue and jobs. Whatever new federal legislation materializes, it is likely that states will retain considerable control over their borders and will have little to no immediate change in terms of vertical operations or the supply chain. The industry is still very nascent, and today’s companies have already developed competitive moats.

On the other hand, if federal barriers are abruptly lifted, we head into a massive free for all. In this scenario, massive consolidation and disruption will occur across the industry, and companies with larger footprints, either in large, important states or across states, will likely be merged together or acquired outright, by either larger MSOs or consumer packaged goods companies that enter the cannabis industry. Along the way, smaller, private companies would go out of business. This would have a massive impact on the industry, with considerable local or state-level disruption to tax revenues and employment. No politician wants to be responsible for something like this, especially during this time of economic turmoil.

If the federal government goes all in on legalization and offers interstate commerce and travel across state lines, companies will no longer have to operate within their own states, nor will MSOs need to create separate vertical operations in different states with hopes that brands maintain consistency. If this occurs, it will ease major strains that presently exist for corporations throughout the industry. Large operators will certainly have an advantage if movement is freed for brands. However, challenges will most likely persist for smaller operators looking to make a splash in the market and the likelihood of this happening for the reasons stated above is low.

Interstate cannabis commerce will be the game changer. While it remains unlikely, in my view, that there will be interstate commerce allowed in any legislation we see out of this Congress, it will happen eventually, just as interstate alcohol laws have also evolved overtime. Having ownership of good assets and brands in important markets and building a strong revenue base is key to both short and long-term success as the industry continues it consolidation, a measure which will only be accelerated with more federal legislation. For Terra Tech, which is acquiring Korova and other brands, it is a fundamental part of our strategy.

So how does a company identify the strongest brands and best operations to work with in our incredibly fragmented industry with no national brands? While there are companies trying to move in that direction, none of them have national brand stature at this point, providing an opening. The brands most likely to succeed are the ones that are more likely to resonate with consumers across various markets. These brands tend to have higher quality and potency at a good perceived value, and which have history in the community of delivering consistent products.

When it comes to choosing markets to get involved in, some choose to do it regionally and others seek out available markets regardless of geography or marketing segments. Unlike many leaders of multi-state operations, I don’t prefer to buy smaller operations in a bunch of states. In my experience, organizing our operations by region increases our efficiency and profitability.  I’m very firmly in support of creating one larger brand than smaller regional brands. It’s easier to develop with marketing and advertising.

Defining Hemp: Classifications, Policies & Markets, Part 1

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What is “hemp”?

The word “hemp” has many meanings. Historically the term has been used as the common name for the Cannabis sativa L. plant. Just like other plants, the cannabis plant has two names, a common name, hemp, and a scientific name, Cannabis sativa L. After the ratification of the UN Single Conventions on Narcotic Drugs and Psychotropic Substances, in 1961 and 1972 respectively, the term started to be used to distinguish between resin producing varieties of the cannabis plant and non-resin producing varieties of the cannabis plant. Nowadays the term is generally used to refer to cannabis plants with a delta-9-tetrahydrocannabinol (d9-THC), a controlled substance, content equal to or less than the maximum allowable limit defined by each marketplace.

Tetrahydrocannabinol (THC), just one of hundreds of cannabinoids found in cannabis.

In the United States and Canada, the limit is defined as 0.3% on a dry weight bases, and until November 2020, in the European Union, the limit was defined as 0.2%. After years of effort the “hemp” industry in Europe was successfully able to get the limit raised to 0.3% to be in line with the United States and Canada – creating the largest global trade region for hemp products. But there exist several marketplaces around the world where, either through the consequences of geographic location or more progressive regulations, the d9-THC content in the plant can be substantially higher than 0.3% and still considered “hemp” by the local authority.

To address these variances, ASTM International’s Technical Committee D37 on Cannabis has been working on a harmonized definition of hemp, or industrial hemp, depending on the authority having jurisdiction, through the efforts of its Subcommittee D37.07 on Industrial Hemp. The following is a proposed working definition:

hemp, n—a Cannabis sativa L. plant, or any part of that plant, in which the concentration of total delta-9 THC in the fruiting tops is equal to or less than the regulated maximum level as established by an authority having jurisdiction.

Discussion: The term “Industrial Hemp” is synonymous with “Hemp”.

Note: Total delta-9 THC is calculated as Δ⁹-tetrahydrocannabinol (delta-9 THC) + (0.877 x Δ⁹-tetrahydrocannabinolic acid).

This definition goes a long way to harmonize the various definitions of hemp from around the world, but it also defines “hemp” as a thing rather than as a classification for a type of cannabis plant or cannabis product. This is a concept rooted in the regulatory consequences of the UN Single Conventions, and one I strongly disagree with.

The definition also leaves the total d9-THC limit open-ended rather than establishing a specified limit. An issue I will address further in this series.

Can “hemp products” only come from “hemp plants”?

If you are an invested stakeholder in the traditional “hemp” marketplace, you would say, yes.

But are there such things as “hemp plants” or are there only cannabis plants that can be classified as “hemp”? (The definition for hemp clearly states that it is a cannabis plant…)

A field of hemp plants, (Cannabis sativa L.)

There is no distinction between the cannabinoids, seeds, and fibers derived from a cannabis plant that can be classified as “hemp” and those derived from a cannabis plant that cannot. The only difference is the word: “cannabis,” and the slew of negative connotations that come along with it. (Negative connotations that continue to be propagated subconsciously, or consciously, whenever someone says the “hemp plant” has 50,000+ uses, and counting, and will save the world because it’s so green and awesome, but not the “cannabis plant”, no that’s evil and bad, stay away! #NewReeferMadness)

The declaration that “hemp products” only come from “hemp plants” has some major implications. “Hemp seeds” can only come from “hemp plants”. “Hemp seed oils” can only come from “hemp seeds”. “Hemp fibers” can only come from “hemp plants”. Etc.

What does that really mean? What are the real-world impacts of this line of thinking?

Flat out it means that if you are growing a cannabis plant with a d9-THC content above the limit for that plant or its parts to be classified as “hemp”, then the entire crop is subjected to the same rules as d9-THC itself and considered a controlled substance. This means that literal tons of usable material with no resin content whatsoever are destroyed annually rather than being utilized in a commercial application simply because a part or parts of the plant they came from did not meet the d9-THC limit.

Some of the many products on the market today derived from hemp

It is well known that d9-THC content is concentrated in the glandular trichomes (resin glands) which are themselves concentrated to the fruiting tops of the plant. Once the leaves, seeds, stalks, stems, roots, etc. have been separated from the fruiting tops and/or the resin glands, then as long as these materials meet the authority having jurisdiction’s specifications for “hemp” there should be no reason why these materials could not be marketed and sold as “hemp”.

There are several reasons why a classification approach to “hemp plants” and “hemp products” makes more long-term sense than a bifurcation of the “cannabis” and “hemp” marketplaces, namely from a sustainability aspect, but also to aid in eliminating the frankly unwarranted stigma associated with the cannabis plant. #NewReeferMadness

That said, say you are a producer making shives from the stalks of cannabis plants that can be classified as “hemp” and then all of a sudden, the market opens up and tons of material from cannabis plants that cannot be classified as “hemp,” that was being sent to the landfill, become available for making shives. Would you be happy about this development? Or would you fight tooth and nail to prevent it from happening?

In this segment, we looked at the history of the term “hemp” and some of the consequences from drawing a line in the sand between “cannabis” and “hemp”. I dive deeper into this topic and provide some commonsense definitions for several traditional hemp products in Part 2 of Defining Hemp: Classifications, Policies & Markets.