In the Weeds: Cannabis and the Workplace, Missouri Licensing, California Antitrust Case, Oregon THC Test Results

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Newsworthy Highlights

SHRM Analyzes Workplace Cannabis Use by ‘Safety-Sensitive’ Employees. On Oct. 5, 2021, the Society of Human Resource Management analyzed how state workplace cannabis laws are applied to workers in safety-sensitive positions. In the article, McGuireWoods labor and employment attorney John Thomas discussed the difficulty multistate employers face when trying to reconcile the patchwork of state cannabis laws with workplaces involving safety-sensitive positions. The interview also investigated a trend among a minority of states to protect off-duty, recreational marijuana use in addition to medicinal marijuana.

Judge Strikes Down Missouri Residency Requirement for State Medical Marijuana Licenses. After issuing a temporary injunction in June 2021, a federal judge granted a permanent injunction against a Missouri regulation requiring the majority ownership of companies licensed to dispense, manufacture and grow marijuana to be Missouri residents. The lawsuit, brought by a Pennsylvania-based investor, argued that the residency requirement violated the U.S. Constitution’s commerce clause and limited his economic opportunities in Missouri. In light of this ruling, out-of-state minority investors in Missouri medical marijuana companies can now obtain majority interest. A spokesperson from the Missouri Department of Health and Senior Services indicated it will comply with the decision and not appeal the verdict. The court has not yet filed a written order.

Employment Search Engine for Cannabis. Website search engine Phynally connects job seekers with employers that do not utilize cannabis pre-employment screenings. According to the website, Phynally “educates employers on human resource opportunities related to legalization of medical and recreational alternative medicine.”

Jury in Cannabis Antitrust Case Awards Millions to Cannabis Company Under California’s Cartwright Act. A California jury recently awarded damages in an antitrust case brought under California’s Cartwright Act. In Richmond Compassionate Care Collective v. Koziol, et al., Case No. MSC16-01426 (California Superior Court for the County of Contra Costa), Richmond Compassionate Care Collective (RCCC), which held a medical marijuana dispensary permit, alleged that the directors of the Richmond Patients Group (RPG), a company that also held a medical marijuana permit, conspired to prevent RCCC from opening a dispensary by blocking RCCC’s access to certain commercial properties where medical marijuana dispensaries were permitted to operate. The complaint alleges, among other things, that RPG went directly to landlords to persuade them not to lease or rent their properties to RCCC. According to the complaint, this scheme was an unlawful group boycott in violation of California’s Cartwright Act. The jury returned a verdict against RPG and awarded $5 million in damages, which will be automatically trebled to $15 million. One defendant, Alexis Parle, was found not liable.

Grassroots Federal/State Legislative Highlights

Oregon’s Liquor and Cannabis Commission and Department of Agriculture Announce Results of Operation Table Rock. On Sept. 30. 2021, Oregon’s Liquor and Cannabis Commission (OLCC) announced that it found high THC levels in some Oregon hemp grows. Operation Table Rock was an effort between OLCC and the Oregon Department of Agriculture to determine whether hemp growers were actually growing hemp or marijuana. According to the announcement, test results from 212 sites showed that 58 percent of the samples tested positive for THC (114 tested positive and 98 tested negative); the highest sample tested at 32.9 percent THC. OLCC also indicated that it intends to recommend that the legislature and governor continue the existing moratorium on production licenses for two more years, into 2024.

Washington State Liquor and Cannabis Board Seeks Industry Input on Draft Quality Control Testing Rules. The Washington State Liquor and Cannabis Board will hold a listening session on Oct. 20, 2021, to obtain public and licensee feedback on the new draft rules for quality control, testing and sampling. According to the session agenda, the meeting will take place virtually from 1 to 4 p.m. (PT).

Seattle Decriminalizes Psychedelics by Unanimous Vote. Seattle joins Denver, Colorado; Ann Arbor, Michigan; Washington, D.C.; and Oregon in the list of places that have decriminalized psychedelics for non-commercial use. On Oct. 4, 2021, Seattle City Council unanimously supported the decriminalization and adopted a resolution that puts engaging in psychedelic-related activities and substances on “Seattle’s lowest law enforcement priorities.” The council acknowledged the use of psychedelics for spiritual purposes as well as the beneficial use of psychedelic medicine for substance abuse and in other therapeutic settings. The resolution is not an ordinance, but the council stated it will work with Seattle Police Department on policies to protect individuals from arrest or prosecution.

Investments and Transactions Highlights

PharmaCann Inc. Announces Planned Merger With LivWell Enlightened Health. On Oct. 12, 2021, PharmaCann Inc., a vertically integrated cannabis company, announced a definitive merger agreement to acquire LivWell Enlightened Health, a multistate cannabis cultivation, medical and recreational retail dispensary based in Colorado. Upon completion of the planned merger, PharmaCann and LivWell will operate approximately 60 dispensaries and 11 cultivation and production facilities across eight states.

Cresco Labs Expands in Pennsylvania Through Acquisition of Vertically Integrated Operator Laurel Harvest. On Oct. 14, 2021, Cresco Labs, a vertically integrated multistate operator, announced the execution of a definitive agreement to acquire 100 percent of the outstanding equity interests in Laurel Harvest Labs LLC, a Pennsylvania cultivator and medical dispensary with one location in Montgomeryville and a second under construction in Scranton. As part of the deal, Cresco Labs will also acquire the real estate of Laurel Harvest’s cultivation facility and Scranton dispensary. The $80 million transaction will be completed on a cash-free, debt-free basis. Subject to, among other things, required CSE, regulatory and court approvals, the acquisition is expected to close in the fourth quarter of 2021.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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