[co-author: Hanna Barker Mullin]

Cannabis: In Focus

• State Cannabis Regulators Urge Congress to Act on Hemp
• Massachusetts Judge Rules That Cannabis Business Must Bargain With Union, Applying Controversial Test
• California Cannabis Bankruptcy Case Again Survives Motion to Dismiss

State Cannabis Regulators Urge Congress to Act on Hemp

The Cannabis Regulators Association (CANNRA) issued an open letter on September 15, 2023, calling on Congress to enact regulations that address safety concerns for hemp-derived substances like Delta-8 THC.

Among other things, CANNRA urged Congress to delineate between hemp used as an agricultural commodity and hemp-derived cannabinoid products. In addition, CANNRA asked Congress to authorize and fund regulatory efforts to regulate cannabinoids and cannabinoid hemp products. CANNRA also encouraged Congress to include explicit language indicating that state regulators could go beyond federal policies to further protect consumers and public health. CANNRA wrote, “There should not be a federal preemption of state and territorial regulatory policies related to hemp and cannabinoid products.”

Massachusetts Judge Rules That Cannabis Business Must Bargain With Union, Applying Controversial Test

On September 21, a Massachusetts administrative law judge ruled that a cannabis dispensary must bargain with a union, despite the dispensary workers voting against joining. The union filed charges with the National Labor Relations Board (NLRB) citing alleged misconduct on behalf of the dispensary that purportedly undermined the election process. The decision is notable, as it is the first to apply a controversial test regarding employer conduct and union elections developed by the NLRB earlier this year and which is now on appeal.

California Cannabis Bankruptcy Case Again Survives Motion to Dismiss

On September 20, a California court held that a bankruptcy case involving a cannabis company could proceed. In an earlier ruling, U.S. Bankruptcy Judge Neil W. Bason noted that “the mere presence of marijuana near a bankruptcy case does not automatically prohibit a debtor from bankruptcy relief.”

In this latest ruling, Judge Bason reiterated that the mere fact that cannabis is illegal under federal law should not mean that payments to legitimate creditors are foreclosed, especially when the application of criminal law would allow for the same relief. Judge Bason noted “it would be odd to read the Bankruptcy Code as implicitly barring any payments to legitimate creditors when that is what federal criminal law itself provides.”

In his opinion, Judge Bason continued that “there is no doubt that a debtor’s connections with cannabis can, in some circumstances, result in dismissal of their bankruptcy case,” but here, the company “is attempting to divest itself of its investment in a Canadian cannabis business that is legally traded on a Canadian stock exchange; nothing that [the company] proposes to do postpetition will foster a single additional sale of cannabis products, nor will it add a single dollar to any cannabis-related enterprise; and [the company’s] proposed Plan provides for an orderly liquidation for the benefit of creditors, much as a receiver under [federal money laundering statutes] would do.”

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