On March 7, 2023, a federal court in Pennsylvania issued a ruling denying a cannabis company’s motion to dismiss claims based on the federal Fair Labor Standards Act (the “FLSA”). The opinion in DeMarco et al. v. FarmaceuticalRC, LLC et al., W.D. Pa. Case No. 2022cv-1164, covers familiar ground in the realm of FLSA misclassification cases, and explains why the plaintiffs—who work as drivers ferrying defendants’ cannabis products along their supply chain—sufficiently pled their claims. Specifically, the court applied the six-factor test for determining whether a given worker is an employee or an independent contractor and found that plaintiffs had sufficiently alleged the existence of an employer-employee relationship.…

Continue Reading Cannabis Employee Misclassification Case Moves Forward in Federal Court

Update II: We have been informed that METRC’s report to the state that 85% of licensees were in arrears was erroneous; METRC now reports that 11% of Michigan licensees are affected.

Update I: The CRA has had METRC agree to a 30-day pause before suspending any accounts. We will continue to monitor and report on updates as they unfold.

Related News: Michigan’s marijuana industry nearly shut down over new tracking system service provider fees

On February 27, 2023, Dykema’s Cannabis Industry Group was contacted by the Michigan Cannabis Regulatory Agency (“CRA”) about possible immediate suspensions of METRC user accounts. According to CRA, approximately 85% of all Michigan licensees may be impacted by these upcoming suspensions, so immediate action is critical.…

Continue Reading IMMEDIATE ATTENTION: Michigan Cannabis Licensees Face Imminent Loss of METRC

Dykema is thrilled to announce the launch of A Higher Law: a cannabis podcast from our award-winning cannabis practice group. A Higher Law will serve as an essential resource for cannabis operators looking to navigate latest legal developments in this complex industry. 

Hosted by a rotating lineup of cannabis attorneys, we’ll sit down with industry insiders from across the industry to discuss a variety of topics: from understanding cannabis tax codes, to complying with OSHA as a cannabis operator, to the latest news that’s impacting the future of the industry.…

Continue Reading Dykema Launches First-Ever Cannabis Podcast

The Food and Drug Administration (FDA) issued warning letters to five companies late last month on Monday, November 21, 2022, claiming that they are illegally selling products containing cannabidiol (CBD). The companies targeted are 11-11-11 Brands, CBD American Shaman LLC, Infusionz LLC, Naturally Infused LLC, and Newhere Inc. dba CBDFX. In its Constituent Update, the FDA states broadly that the companies are selling CBD products “that people may confuse for traditional foods or beverages which may result in unintentional consumption or overconsumption of CBD.”[1]…

Continue Reading FDA Warns Five Companies of Aggressive New Approach to CBD Enforcement

The adult-use marijuana market in Michigan has seen a plunge in the price of marijuana. According to the Cannabis Regulatory Agency, the average price of one ounce of marijuana in December 2020 was $350.88. In contrast, the average price fell to $109.22 in September 2022. This rapid price compression puts tremendous pressure on many marijuana businesses as they face greater competition with ever-slimming margins. For some, these market forces may present a financial or existential crisis.

Often, financially-distressed companies seek the protection afforded by federal bankruptcy courts to restructure their finances. There are several benefits to an overwhelmed debtor going through the bankruptcy process. As just one example, once a debtor files for bankruptcy, an automatic stay on actions prevents creditors from collecting against a debtor until the bankruptcy case is resolved or the Court allows the stay to be lifted. In addition, bankruptcy provides an orderly process that provides the debtor with the means of resolving creditor claims simultaneously.
Continue Reading Legal Options for Investors and Owners of a Financially Struggling Marijuana Business