In the days of the Armada, a fleet of warships, the scuttlebutt was the rumor or gossip that would spread throughout the ship. Today, Armada Law Corp presents The Scuttlebutt, a daily summery of news articles that people within the cannabis, hemp and plant medicine industries are chatting about along with links to the full articles.

In today’s news:

#cannabisindustry – “Michael Kahn, the CEO and founder of MCR Labs, wrote in a letter to the Cannabis Control Commission on Sunday that a team of eight CCC agents came to the company’s Framingham flagship location on March 21 without an apparent purpose and accosted workers.

“The behavior of the CCC and its agents shocked our employees, who felt unfairly targeted,” Kahn wrote the commissioners. “The inspection appeared to be more of a fault-finding exercise than a comprehensive review.”

Specifically, Kahn wrote that CCC agents refused to sign a visitor log, forced employees to open sample cases meant for inspection without wearing gloves, physically touched workers while ordering them to complete tasks and loudly berated them.”

#cannabispolitics – “The measures would legalize recreational marijuana for adults 21 and older and set up a regulated industry in the nation’s second-smallest state:

  • House Bill 1 ends criminal penalties for adults 21 and older possessing an ounce or less of marijuana.
  • HB 2, which requires a three-fifths supermajority in order to become law, sets up a regulatory framework similar to those seen in other states.”

#cannabisindustry – “While the scope of the definition of a debt is broad, it does have its limits.  For instances, debts incurred by a business are not subject to the FDCPA nor are business debts guaranteed by an individual.  But what about a consumer debt which arises from the purchase of cannabis bought legally under state law?  Is a debt collector constrained by the FDCPA?  Put differently, may a debtor of cannabis sue under the FDCPA if the collector engages in false and misleading practices or fails to send a required written validation notice?

Courts have not decided whether a consumer would have an FDCPA claim where the debt arises from cannabis purchases.  In other contexts, however, courts have found that federal law could not provide a remedy where cannabis was at issue.”

#cannabispolitics – “On March 22, 2023, the Wine & Spirits Wholesalers of America (WSWA) announced their support of federal legalization and regulation of adult-use cannabis in a three-page letter addressed to members of Congress, including Speaker Kevin McCarthy, Leader Hakeem Jeffries, Leader Charles Schumer, and Leader Mitch McConnell (1). The WSWA is the industry trade group representing the distribution tier of the wine and spirits wholesalers in the United States (2).

Signed by WSWA President and CEO Francis Creighton, the letter explained how the regulation of alcohol could serve as a framework for cannabis regulation and how the current state-by-state approach to cannabis reform is unsustainable. Additionally, it called for the creation of a federal regulatory structure that licenses producers, testing facilities, and distributors in order to ensure product integrity, establish appropriate tax and trade practicerequirements, and protect public safety (1).”

#cannabislaw – “Recently, the United States Bankruptcy Court for the Central District of California broke from the routine and highlighted a path through which a distressed cannabis business may be able to pursue bankruptcy under federal law. The court in In re: The Hacienda Company, LLC allowed a former cannabis company to continue its Chapter 11 bankruptcy where the debtor company had, prior to filing its bankruptcy petition, stopped operating as a cannabis business itself and had transferred its intellectual property to a Canadian cannabis business in exchange for stock in that foreign company. The court paid homage to the CSA and to why violations of non-bankruptcy laws such as the CSA might establish cause to dismiss a cannabis debtor’s bankruptcy proceedings, but drew a distinction between pre-bankruptcy petition violations of law and post-bankruptcy petition violations, which it viewed as more problematic. Using that dichotomy as a guide, the court applied what it called a “middle road” approach — in which a bankruptcy court uses its discretion based on facts and circumstances — to determine whether the debtor’s connections to cannabis profits or past or future investments in cannabis warrant dismissal of its petition. The court noted that although indirect connections with illegal activity might violate non-bankruptcy law, the degree of the connection to that activity is important in deciding whether to dismiss the case. The court allowed the debtor’s Chapter 11 to proceed because the company had removed its wholesale cannabis product manufacturing and packaging business by the time it filed and was not looking to reorganize as a cannabis going concern. The Hacienda opinion marks a significant shift away from the U.S. trustee’s traditional “zero-tolerance” approach to cannabis and cannabis-related debtors and toward a more fact-based, case-by-case assessment and determination. After Hacienda, there is at least a glimmer of hope for failing cannabis businesses and creditors of accessing remedies under federal bankruptcy laws, but only time will tell if its reasoning will catch hold in other jurisdictions.”

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