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Scammers have recently started calling trademark customers and falsely claiming to be an employee with the United States Patent and Trademark Office (USPTO). The scammers use a tactic called “spoofing,” where they trick phone networks into displaying a fraudulent name, number, and location. They’re trying to trick you into believing you’re talking to the USPTO, so they can steal money or personal information from you.

If you receive a call from someone you suspect is a scammer, do not give them any personal identifying or payment information. The USPTO will never ask for your personal or payment information over the phone.

If you ever have questions about the status of trademark applications or your trademark rights, reach out to Emerge Law Group intellectual property practice group chair, Sean Clancy.

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We are excited to share that two of our team members have been included in the Top 200 Global Psychedelic Lawyers and Policy & Regulatory Experts List by the Cannabis Law Report! Dave Kopilak and Sean Clancy are both shareholders at Emerge and have been driving forces in the psychedelics space.

Dave was the primary drafter of Oregon’s Psilocybin Services Act (“Measure 109”) which was approved by Oregon voters on November 3, 2020.  Dave was also an advisor to the Oregon Health Authority regarding IRC 280E and tax issues facing psilocybin businesses under Measure 109. As a seasoned corporate business attorney, he brings sharp insight and decades of legal experience to the numerous challenges that Oregon-licensed psilocybin businesses face.

Sean was also part of the small team of Emerge Law Group attorneys that researched and drafted Measure 109.  In September 2022, he served on an Oregon Health Authority Rules Advisory Committee, providing recommendations about the rules that will govern the Measure 109 program.  As a general business attorney who also specializes in intellectual property, Sean represents psychedelic clients on both routine and complex matters including high value brands and technology, plus all variety of contracts and strategic relationships.

As a full-service business law firm that has specialized in the cannabis space for many years, while also serving a variety of conventional industries, Emerge Law Group is familiar with the unique and complex issues that businesses and individuals face in an emerging and highly regulated industry. Emerge Law Group currently assists a variety of clients in connection with Oregon’s psilocybin law and the legal psychedelics space.

Learn more about our Psychedelics Practice Group here, and be sure to subscribe to our specially curated bi-weekly psychedelic news report, PsychedeLinks.

Join us in celebrating Dave & Sean!

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Emerge Law Group is pleased to announce that Jay Purcell and Duncan Delano have been promoted to shareholders at the firm, effective January 1, 2023.

Since Jay joined Emerge in March 2022, he has worked on transactions involving cannabis companies in Watsonville, Santa Cruz, Sacramento, Shingle Springs, Goleta, Cathedral City, Palm Springs and San Rafael; including a California drone company with European operations, a New York digital agency’s acquisition of a Brazilian target’s assets, an Oregon/Canada hemp company, a California social media startup, a Los Angeles digital agency focused on queer audiences and a Virginia/California solar energy startup. He works on financings, mergers/acquisitions and day-to-day corporate work.

Jay was a College Scholar at Cornell University’s College of Arts & Sciences, triple-majoring in Government, History, and Philosophy. He stayed at Cornell for a masters in Africana Studies, during which he was a Visiting Scholar at the University of KwaZulu-Natal in Durban. After graduating from Berkeley Law in 2011, his career began in Silicon Valley at Wilson Sonsini Goodrich & Rosati. At WSGR, he worked with small and growing tech companies as they negotiated investments, executive hiring/separation, equity incentives and exits. Jay also worked with the venture funds, angels, family offices, and banks who made and monitored investments in these companies. In 2016, Jay began focusing on cannabis businesses, first in Santa Rosa and San Francisco, and beginning in 2018, in Los Angeles and Southern California. He has worked with companies operating throughout California, including Humboldt, Sonoma, Napa, San Francisco, Alameda, Santa Cruz, Los Angeles, Riverside and San Bernadino counties. These companies include the entire range of licensees: nursery, cultivation, manufacturing, distribution, testing, storefront retail, and non-storefront retail. Jay has worked on both sides of social equity companies in San Francisco, Oakland, and Los Angeles.

Jay was elected to the Board of Directors of the Berkeley Law Alumni Association in 2014, serving as a Board Officer since 2018. For several years, he led or co-led its Outreach Committee, responsible for linking underrepresented admits to alumni mentors during the admissions process.

Duncan joined Emerge in August 2021, leading Emerge’s expansion to New Jersey and New York.  Over the past year and a half, Duncan has grown Emerge’s east coast business into a vibrant, full-service practice servicing cannabis applicants, investors, landlords, and others in the newly regulated cannabis markets.  Duncan helps cannabis businesses of all types apply for and obtain state and local licenses throughout New Jersey and New York.  This includes locating and financing their operations, and finding success in a highly regulated and rapidly changing industry.

Duncan’s practice also focuses on commercial real estate and general corporate law, representing entrepreneurs, lenders, borrowers, developers, funds and commercial landlords and tenants in a variety of business and commercial real estate transactions, including mortgage and mezzanine financing and syndications, joint ventures, commercial leasing, and acquisitions and dispositions of real property and debt.

Duncan has a long record of pro bono service, working with immigrants seeking asylum and reuniting mothers and children separated at the border, successfully petitioning the President to commute the sentence of a non-violent drug offender, and expunging the records of those convicted of marijuana crimes.  Duncan serves on the New York City Bar Association’s Drugs and the Law Committee and on the committee’s Psychedelic Subcommittee.  The Committee recently organized a free seminar series in conjunction with the City Bar Justice Center to educate aspiring New York cannabis entrepreneurs on a variety of pertinent legal startup topics.

Prior to joining Emerge, Duncan worked for seven years at two AM Law 100 firms in New York City, Schulte Roth & Zabel LLP and Haynes and Boone, LLP, in their commercial real estate groups after spending the first three years of his career in Portland, Oregon in a general corporate practice.  Duncan graduated magna cum laude from Lewis & Clark Law School in 2010 with a Certificate in Environmental and Natural Resources Law.

Join us in celebrating our newest shareholders! Congratulations Jay & Duncan!

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Authors:
Kaci Hohmann and Delia Rojas, Attorneys at Emerge Law Group

On September 30, 2022, the federal Financial Crimes Enforcement Network (“FinCEN”) published final regulations governing beneficial ownership reporting requirements under the Corporate Transparency Act (the “Final Rule”). The Final Rule substantially mirrors the draft rules covered in our earlier blog on the topic. The Final Rule becomes effective January 1, 2024. See our summary and tips below to prepare for the upcoming reporting requirements.

Who must report?

The Final Rule requires a “reporting company” to report certain information to FinCEN regarding its beneficial owners and company applicants. A “reporting company” is any domestic or foreign entity created or registered to do business in a U.S. state or Indian tribal jurisdiction (“Reporting Company”). This definition would seemingly capture nearly all US businesses, although there are 23 categories of exemptions set forth in the Final Rule, including (i) certain inactive entities, (ii) insurance companies, (iii) financial institutions, and (iv) large operating companies employing more than 20 full-time employees, having an operating presence in the U.S., and having gross receipts for sales in the U.S. exceeding $5,000,000.

Who is reported?

Each Reporting Company must report information concerning its “beneficial owners,” which includes any individual who, directly or indirectly, exercises “substantial control” over or owns or controls 25% or more of the “ownership interests” of the Reporting Company (“Beneficial Owners”).

An individual has “substantial control” over a Reporting Company if they serve as a senior officer, have authority over the appointment or removal of any senior officer or a majority of the directors (or similar body), or directs, determines, or substantially influences important Reporting Company decisions.  FinCEN indicated that it designed the “substantial control” element to capture the key individuals of the Reporting Company who direct its actions and to “focus the applicability [of the Final Rule] on the senior officer element of the definition of substantial control”.

In the Final Rule, the definition of “ownership interest’’ more broadly focuses on types of arrangements that directly or indirectly convey ownership interests, such as equity, convertible instruments, and put options. Additionally, the definition of “ownership interest” now includes a catch-all provision for “any other instrument, contract, arrangement, understanding, relationship, or other mechanism used to establish ownership.” Importantly, any option or similar interest of the Reporting Company is treated as exercised in determining “ownership interest.”

In response to extensive public comments on the topic of a “company applicant”, the Final Rule requires Reporting Companies created or registered on or after January 1, 2024, to report information related to a “company applicant.” A company applicant is the individual(s) primarily responsible for directly filing the document that creates or registers a Reporting Company, such as a law firm (“Company Applicant”).  Entities created or registered before January 1, 2024, are not required to report information with respect to any “company applicant.”

What information must reports include?

The initial report for the Reporting Company must include the legal name, any trade name or d/b/a name, principal place of business address in the U.S., state of formation or registration, and its IRS employee identification number. The Reporting Company must also provide the full name, date of birth, current address, the number and issuing jurisdiction of a passport, identification card, or driver’s license, and a photo of the identification document used for each Beneficial Owner and Company Applicant.

When must reports be filed?

Reporting Companies in existence prior to January 1, 2024 must file its initial report before January 1, 2025. Reporting Companies created or registered on or after January 1, 2024 must file its initial report within 30 calendar days of receiving actual notice that it was created or registered to do business with a secretary of state or similar office. If a Reporting Company’s exemption status changes, a report must be filed within 30 calendar days of the change in exemption status. Lastly, if there are any changes to the information filed in the initial report, an updated report must be submitted within 30 calendar days of the change.

What proactive compliance steps should businesses take?

The Final Rule imposes considerable new federal compliance requirements on businesses. Although some entities will be exempted, many will not. Every business should investigate whether it is a Reporting Company or qualifies for an exemption. A Reporting Company’s failure to comply with the reporting requirements could result in significant penalties and possible imprisonment.

Businesses with reporting obligations should create and implement internal policies and procedures to ensure that all reporting is timely and properly made. It’s not too early to begin collecting the information your business may need to report. Additionally, businesses and business attorneys should consider adding provisions to certain agreements requiring the applicable people to cooperation with required information collection and reporting, and update confidentiality clauses to carve out exceptions for reporting requirements.

If you have any questions or concerns about how the beneficial reporting requirements may impact your business, contact an attorney from our Business Group.

See the final rule here.

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By Russell Rotondi, Shareholder

One of the most important relationships a beer supplier or brewery will enter into is with that of its wholesale distributor.  As such, the malt beverage distribution agreement is one of the most important contracts for the brewery and wholesaler alike.  In Oregon, like many other states, this relationship is highly regulated.  But unsuspecting breweries, especially start-ups, are often unaware of the pitfalls of entering into a supplier-wholesaler relationship without understanding the statutory and administrative law that works behind the scenes to the supplier’s disadvantage.

It should be noted at the outset that Oregon law provides that as an exception to its tied-house rules (i.e., prohibition against suppliers, wholesalers or retailers in owning a financial interest in one another), Oregon malt beverage suppliers licensed as a brewery-public house (BP) are allowed to self-distribute up to 7,500 barrels of the beer it brews per year.[2]  For context, of the reporting U.S. breweries in 2021, greater than 92% of them produce fewer than 7,500 barrels of beer per year (one barrel equaling 31,000 gallons).[1]

That said, what if a supplier (of any size) wants to focus on plying its beer-making craft and intends to rely on a third-party wholesaler for its distribution needs?  Unfortunately for suppliers, most U.S. state legislatures have placed their thumb on the scale to create what this author considers to be an unfair advantage to wholesalers with respect to the supplier-wholesaler relationship.

This interventionism from state legislatures was originally justified as protectionism by the state in favor of smaller, local distributors dealing with larger, often multi-state, breweries (e.g., Anheuser-Busch) importing their beer into local jurisdictions and taking advantage of the “little guy.” However, in the beverage industry of 2022, distributors have become the large, often multi-state, operators, and the suppliers are often craft brewery start-ups that would traditionally benefit from such protectionism.  In other words, over the years, the balance of power has shifted one-hundred and eighty (180) degrees.

Alcohol franchise law is the body of state law that serves to govern the relationship between two contracting licensee parties.  In the case of the supplier-wholesaler relationship, it is this author’s opinion that franchise laws often distort the free market relationship to restrict the ability of a brewery to leave its distributor.  Even worse, suppliers are often unaware of the imbalance of power created by franchise law when entering into such relationships.

In Oregon, the relevant statutes are contained in Oregon Revised Statutes (ORS) §§ 474.005-474.115.  Some of the highlights of Oregon’s beer franchise law are as follows:

  • Wholesale distribution agreements must be in writing (ORS § 474.007);
  • Good cause is required for a supplier to terminate, cancel or fail to renew a distribution agreement and distributors have an opportunity to cure and take corrective action for 90 days (ORS § 474. 011);
  • In the event of a termination by supplier that is not for good cause, or in bad faith, the distributor is entitled to compensation from the supplier pursuant to “fair market value” (ORS § 474.011) and the supplier has the burden to prove it acted reasonably (ORS § 474.075);
  • There are limited grounds for supplier to terminate without providing an opportunity to cure (ORS § 474.015);
  • Successors in interest are bound by such agreements (ORS § 475.025) and a supplier may not unreasonably interfere with the transfer of a wholesaler (ORS § 475.045); and
  • The territory of the distribution agreement must be designated in writing and filed with Oregon’s relevant regulatory agency, the Oregon Liquor and Cannabis Commission (OLCC) (ORS § 475.115).

While on its face, the statutory provisions may seem innocuous, but given the generous cure period, the economic consequences of “fair market” compensation, and the totality of statutory protections for the distributor, state alcohol franchise law, and specifically Oregon’s beer franchise law, often serve to grant the distributor indefinite and typically exclusive rights to sell a supplier’s products, no matter the distributor’s performance (good or bad) in the relationship.  This leaves an opening for distributors to abuse the system to the detriment of suppliers.

Before an Oregon brewery enters into a relationship with a third-party wholesale distributor, it should familiarize itself with Oregon’s beer franchise laws and consult an experienced attorney to understand its rights, what material terms are dictated by statute even if contrary to the terms of a written agreement, and what material terms are open for negotiation and on what commercially reasonable terms.

[1] Oregon Revised Statutes (ORS) § 471.200

[2] https://www.ttb.gov/beer/statistics

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Like corporations, limited liability companies (“LLCs”) often incentivize employees with equity awards.  Lots of companies and employees are familiar with equity awards from corporations (e.g., stock options), but LLCs use profits interests awards and phantom equity.

Profits Interests

Profits interests are the most common form of LLC equity compensation.  Someone holding a profits interests will share in the increased value of the company after award is granted.  The award has no value on the grant date, but as the company’s value increases, so too does the value of the profits interest award.

Taxation

If properly structured, profits interest awards are not taxed on the grant date or on vesting and are generally subject to capital gains treatment upon sale. To ensure there’s no tax when the award vests, a profits interest holder is very likely to file an “83(b) election” immediately after receiving the award.

To maintain capital gains treatment, the recipient must, among other things, be treated as an owner of the company from the grant date forward and must hold the profits interests for at least two years before selling. The difference in tax rates can be significant.  Current capital gains rates currently have a 20% ceiling, while the highest ordinary income tax rate is currently 37%.

Conversion from Employee to Owner

Under IRS rules, the recipient of any profits interest award becomes an owner of the LLC and is no longer an employee.  In most cases, this has negative tax and other consequences that must be weighed against the benefits of receiving the award.  Some negative consequences for the recipient include:

  • The recipient’s salary becomes self-employment income, and the recipient will likely become subject to self-employment taxes at a rate of 15.3% instead of the 7.65% rate employees pay.
  • The company will no longer withhold employment taxes. Instead, the recipient must make estimated quarterly tax payments.
  • The recipient will be disqualified from participation in any employee-only benefit plans.
  • The recipient will not be eligible for unemployment benefits.

Phantom Equity

Phantom equity mimics owning equity in the LLC. These awards entitle the recipient to a “bonus” that approximates owning real equity at the time of specified liquidity events (e.g., merger or acquisition).  Phantom equity is not as commonly used by LLCs as profits interests are, but phantom equity avoid some risks inherent to profits interests.

Taxation

Phantom equity is not taxed on the grant date; however, the proceeds received by the recipient on a liquidity event will be taxed at ordinary income rates, instead of capital gains rates. As mentioned above the difference in these rates can be significant. To ensure that phantom equity plan works as intended, attorneys and accountants will ensure a plan complies Tax Code Section 409A.

Recipient Remains an Employee

Unlike profits interest awards, a phantom equity award does not affect the recipient’s status as an employee of the company.  Consequently, the employee does not have negative employment tax consequences and remains eligible for all company-sponsored employee-only benefit plans and unemployment benefits.

Because of their beneficial tax treatment, profits interests tend to be the preferred method for incentivizing LLC employees with equity.  However, for equity awards that are small by comparison to the recipient’s salary, the negative consequences of becoming an owner of the LLC may outweigh the benefits of the award.  In such cases, phantom equity awards can be an excellent alternative for incentivizing employees.

From the company’s perspective, profits interests are more complex and require more administrative work than phantom equity. Nonetheless, the tax savings for your LLC’s key staff may justify the overhead expense of profits interests. A LLC could implement both plans, with phantom equity for staff with shorter tenure and lower compensation and profits interests designed for long-term and higher-paid service providers.

For more information about choosing which type of equity incentive is appropriate for your LLC, please contact attorneys Russ Rotondi, Marco Materazzi, Dave Kopilak, Shannon Hartwell, Jake Cormier, Jay Purcell, or Genny Kiley from our Business Transactions practice group.

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By:  Delia Rojas and Kaci Hohmann

The Corporate Transparency Act (“CTA”), part of the federal Anti-Money Laundering Act of 2020, came into effect in January 2021. Its goal is to prevent money laundering and abuse related to the use of shell companies as a mechanism for concealing illicit business activities.  In December 2021, the Financial Crimes Enforcement Network (“FinCEN”) published proposed rules for public comment implementing the beneficial ownership information reporting requirements of the CTA (the “Draft Rules”).  The Draft Rules address who must report beneficial ownership information to FinCEN, when they must report, and what information the reports must include.  The public comment period for the Draft Rules closed on February 7, 2021. As of the date of this blog post, it isn’t yet clear whether FinCEN will further revise the Draft Rules and open a second public comment period before finalizing and publishing the final rules. Regardless, the scope of the CTA is broad and will impact small and large businesses alike.

Below we summarize some of the most important reporting requirements proposed under the Draft Rules. These requirements are subject to change, and as more information becomes available, Emerge Law Group will keep you updated.

Who must report?

Under the Draft Rules, a corporation, limited liability company (LLC), or similar entity formed or registered to do business in any state by filing documents with a U.S. state or Indian Tribe (“Reporting Company”) must report certain information to FinCEN about anyone who, directly or indirectly, exercises substantial control over, or owns or controls 25% or more (“Beneficial Owners”) of the Reporting Company. The definition of Reporting Company broadly captures many businesses with a number of important exceptions, including certain publicly traded companies; tax-exempt entities, such as 501(c) entities; and heavily regulated businesses that already provide ownership information to a federal government agency. The Draft Rules also specifically exclude financial institutions; insurance companies; and large operating companies that employ more than 20 full-time employees, have an operating presence in the U.S., and have gross receipts or sales in the U.S. exceeding $5 million dollars.

Examples of an individual who exercises “substantial control” over a Reporting Company are those who serve as senior officers; and those who direct, determine, or “substantially influence important matters of a Reporting Company.” FinCEN specifically stated that a person who makes day-to-day managerial decisions with respect to one part of a Reporting Company’s assets or employees should not, in isolation, cause that person to be deemed to exercise “substantial control” of a Reporting Company, unless that person satisfies another element of the “substantial control” criteria.

Examples of an individual who “owns or controls 25% or more” of a Reporting Company are those who hold an ownership interest through stock, LLC units, profit interests, and other convertible equity interests, such as warrants or options.

Additionally, information about individuals who file documents creating, or first registering, a Reporting Company under state law, or who direct or control the filing of such documents (“Company Applicants”), must be included in the report to FinCEN. This means attorneys, legal assistants, entity registration service providers, and any person involved in the preparation and filing of entity formation documents will also have to provide their information to Reporting Companies for reporting obligations.

When must reports be filed?

When a Reporting Company must file their initial report will depend on when the final rules become effective.

For Reporting Companies formed after the effective date, the report must be filed within 14 days of formation. For Reporting Companies formed before the effective date, the report must be filed within one year of the effective date of the final rules.

Furthermore, the Draft Rules require ongoing reporting to ensure that all beneficial ownership information is up to date, requiring updates to be made within 30 days of a change.

What information must reports include?

The Draft Rules provide that Reporting Company reports must include the Reporting Company’s legal entity name, assumed business name, street address, state of organization, and federal employer identification number. The reports for Beneficial Owners and Company Applicants must include the individual’s name, birthdate, residential address, and acceptable photo ID.

Confidentiality will be of concern for many of our firm’s clients. The CTA requires the establishment of security protocols to protect the confidentiality of the reported information. FinCEN is specifically prohibited from sharing the information with the general public and as a general matter, the information can only be disclosed, subject to stringent access protocols, to law enforcement, financial institutions, and other authorized users for the purpose of protecting national security and intelligence, enhancing financial system transparency, and assisting in other enforcement efforts to counter illegal activity. However, rules detailing which agencies will be authorized to view reported information and the security protections for that information have yet to be published for public comment.

What proactive steps should businesses take?

For starters, your business can begin collecting the beneficial ownership information that will eventually need to be reported to FinCEN. Businesses and business attorneys should also consider adding provisions to agreements with owners requiring the owner’s cooperation to collect the owner’s required reporting information and update confidentiality clauses in legal documents to carve out exceptions for these reporting requirements.

Violating the beneficial ownership reporting requirements could result in civil penalties up to $500 per day and criminal fines up to $10,000 or up to two years in jail. Compliance with these impending rules will be crucial and Emerge Law Group will continue to monitor developments.

If you have any questions or concerns about how the beneficial ownership reporting requirements will impact your business, contact an attorney from our Business Group.

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The recent case of In re Blue Water Wellness, LLC (Serial No. 87893655) presents a useful summary of the legal status of CBD trademarks (and the USPTO’s “lawful commerce” requirements in general).

The USPTO only allows trademark registration for federally lawful commercial activity.  This gets tricky when someone files a trademark application based upon future “intent” to sell products that have uncertain legal status at the time of filing, but the legal status changes while the application is reviewed by the USPTO.

In this case, the applicant applied for the mark CBD2GO for “dietary beverage supplements for human consumption in liquid and dry mix form for therapeutic purposes; all of the foregoing containing CBD.”

The application was filed on April 28, 2018, and initially refused for being unlawful under the Controlled Substances Act.  That refusal was withdrawn after the passage of the 2018 Farm Bill and, instead, the USPTO newly refused the application for being unlawful under the Food Drug & Cosmetics Act.

Footnote 2, in this case, explains the Trademark Trial and Appeal Board’s logic: following the 2018 Farm Bill and USPTO Examination Guide 1-19, the Controlled Substances Act is no longer a basis to refuse hemp-derived CBD but the Food Drug & Cosmetics Act is a separate basis for unlawfulness and refusal.  As a result, hemp products with ingestible CBD are still generally not an acceptable lawful basis for federal trademark registration.

The Trademark Trial and Appeal Board also clarifies at the end of this case that “1(b) bona fide intent to use” in commerce cannot exist on a trademark application filing date if the applied-for goods are not lawful on that date.  You cannot file “hoping it will become legal.”

That said, with Examination Guide 1-19 the USPTO created an unusual exception for goods that became lawful after the 2018 Farm Bill.  If someone applied for hemp plant biomass-based upon future intent to use when it was unlawful, before the Farm Bill was signed into law on December 18, 2018, 1-19 created an exception for those applicants to amend their earlier filing date to December 18, 2018.  As a result of this exception, applicants who filed earlier (when the goods were unlawful) were rewarded by being able to amend and claim lawful bona fide intent starting from the date the law effectively changed.

Although federal trademark protection for CBD remains challenging (and for cannabis, or any unlawful controlled substance) it may still be advisable to evaluate creative application strategies, file early, and seek extensions in case the USPTO creates similar exceptions for goods that may become lawful in the near future.

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On July 12, 2021 Governor Gavin Newsom signed the Cannabis Trailer Bill, Assembly Bill – 141, which, among other things, consolidates the three California state regulatory programs—the Bureau of Cannabis Control, Cal Cannabis, and Manufactured Cannabis Safety Branch—into one state department, the Department of Cannabis Control (“DCC”). Newsome appointed Nicole Elliott as its first Director.

Nicole Elliott, Department of Cannabis Control Director

The DCC will oversee the licensing and enforcement of all types of commercial cannabis operations along with the state’s track-and-trace system. As part of the consolidation, one of the first major priorities of the DCC is to combine the three sets of cannabis regulations into one. The goal is to provide consistency within the requirements for each license and improve the regulations with further comment from the public. The DCC created a new website that includes information for all applicants and licensees and currently links licensees to the appropriate licensing system. Eventually, the DCC will combine the licensing systems as well.

The bill also extends the timeline for the DCC to issue and renew provisional licenses. Subject to the new eligibility requirements, an operator can renew their provisional license up until January 1, 2025, with all provisional licenses expiring by January 1, 2026. Regardless of whether the business is looking to apply or renew, moving forward, cultivation operators will need to submit additional paperwork to demonstrate the progress on compliance with the environmental standards in order to obtain or keep a provisional license.

Furthermore, starting January 1, 2022, the bill implements a prohibition on issuing a provisional license to an applicant or licensee if doing so would cause the operator to hold multiple cultivation licenses that would exceed an acre of outdoor or 22,000 square feet of mixed light or indoor on contiguous premises. Starting January 1, 2023, the DCC will not be authorized to renew a provisional license on the same basis. On its face, the bill prohibits the licensure of larger growing operations without first reaching full environmental compliance, which can take years depending on the area and size of the project.

Senate Bill 160 is a bill that quickly moved through the legislative process last week and was approved by Newsome on July 16, 2021. SB-160 amends AB-141 in various ways. Most importantly, the bill authorizes the DCC to the issue new provisional licenses until September 30, 2022, for general applicants and June 30, 2023, for equity applicants. A cultivation operator looking to obtain a new provisional license must submit an application to the DCC no later than June 30, 2022, or, if an equity applicant, no later than March 31, 2023, which is not much time for cultivators given the onerous environmental review that they each face.

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Oregon Measure 109 Passes!!!

Emerge Law Group celebrates the passage of Oregon Measure 109, also known as the Oregon Psilocybin Services Act (“M109”).  M109, the first of its kind in the nation, will create a legal, regulated market for psilocybin-assisted therapy under Oregon law.

“Emerge Law Group is both thankful and proud to have contributed to the success of Measure 109,” said Dave Kopilak, Co-Chair of the firm’s Psychedelic Practice Group.  Kopilak, a veteran cannabis industry attorney, was the primary drafter of M109, with support from M109’s chief petitioners Tom and Sheri Eckert and Emerge Law Group attorneys Kaci Hohmann, Kaitlyn Dent, and Sean Clancy.  “This is great news for terminally ill Oregonians,” said Kathryn Tucker, Co-Chair of the firm’s Psychedelic Practice Group, who assisted the M109 campaign by bringing her years of experience in advocacy on behalf of terminally ill patients to educate the end of life care community, encouraging leaders in hospice and palliative care to understand and support M109.  “Opening access to psilocybin therapy will offer relief to dying patients suffering from anxiety and depression, providing an important new tool to the palliative care toolbox.”

The primary purposes of M109 are to:  (i) educate Oregonians about the safety and efficacy of psilocybin in treating a variety of mental health conditions, including addiction, depression, anxiety disorders, and  end-of-life psychological distress, (ii) reduce the prevalence of mental illness in Oregon; and (iii) improve the physical, mental, and social well-being of all Oregonians.  These purposes should be pursued with the utmost vigor, so that psilocybin services can become a safe, accessible, and affordable therapeutic option for individuals 21 years of age and older for whom psilocybin may be appropriate.

There is much work to do during M109’s two-year development period and that work will begin very soon.

Emerge Law Group will be closely following the actions of the Oregon Health Authority, the Oregon Psilocybin Advisory Board created by M109 (the “Advisory Board”), the Governor (who in early 2021 will appoint 15-16 members of the Advisory Board), the Oregon State Legislature, and yes, the United States Attorney for the District of Oregon.

Emerge Law Group is uniquely situated to assist clients who are interested in M109, and to advise advocates seeking to open legal access to psilocybin in other jurisdictions.  Please contact attorneys Dave Kopilak, Kathryn Tucker, Kaitlyn Dent, Kaci Hohmann, or Sean Clancy if you have any questions concerning M109 or any other laws (or ideas for any new laws) involving psilocybin, entheogenic plants, or psychedelics in general.

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FRANCHISE LAW

Franchisors

Franchise law is a heavily regulated area of law.  We help clients expand their businesses through franchising and other distribution methods. We have experience in many industries including, restaurants, health, and beauty, alcohol, and cannabis among others. Our representative services include the following:

Franchisees

We also help potential franchisees interested in buying a franchise. We are able to assist with evaluation of franchise opportunities with respect to:

Alternative Structures

However, not all businesses are suited to franchise. We are also experienced with helping clients structure alternative distribution methods to prevent classification as a franchise.

MERGERS AND ACQUISITIONS

Our M&A attorneys are highly experienced in counseling clients who are considering acquisitions or exit strategies.  We have many years of experience handling deals of various types and sizes, ranging from sales of small closely-held business, private companies, and publicly-traded corporations.  We have represented business owners, private equity firms and investment banks in a wide range of industries. 

We have a deep business bench, and Emerge attorneys have handled transactions of all shapes and sizes.  Whether your deal is valued at $100,000 or $100,000,000, our experienced attorneys will guide you through the deal process.

We understand the intensity, technical skill and judgment needed to get deals done, and we provide our clients with timely, practical and cost-effective legal advice.  We are highly capable in all aspects of M&A, including the following:

CANNABIS INDUSTRY

Emerge Law Group is highly experienced in the cannabis industry.  We have helped many clients obtain state licenses and local permits to operate cannabis businesses throughout California, Oregon, and Washington.

Emerge attorneys were instrumental in the drafting and passage of Oregon Measure 91, legalizing marijuana in the State of Oregon, and have represented cannabis businesses well before many law firms were willing to enter the cannabis industry. As a firm that has provided legal services in the cannabis space for many years, we are familiar with the unique and complex issues businesses and individuals face in an emerging and highly regulated industry.

We regularly help clients with:

Cannabis laws and rules are also regularly changing.  Members of our team are dedicated to attending legislative hearings, state agency and local city and county meetings to stay up-to-date on any new changes and how to adjust to any new changes.

See our Cannabis Industry page for more information.

PSYCHEDELICS

There is tremendous excitement about the potential for psychedelic drugs to benefit a wide variety of populations, including terminally ill patients suffering with anxiety and depression. Until recently, psychedelic substances have been accessible only in the illicit market and are illegal under federal and state to manufacture, distribute, or possess. These substances have, since 1970, been treated as having no legitimate medical use, and no commercial application. As such, no one invested in this area or required legal services, outside of the criminal context.

Today, researchers in a multitude of clinical studies are proving the medical safety and efficacy of these medicines, with the objective of changing the treatment of these substances under the Controlled Substances Act. Companies are now actively raising money to develop intellectual property and seize market opportunities associated with psychedelic drugs.

In addition, advocates at the state and local levels are not waiting for the rescheduling of these substances and are active in undertaking efforts to decriminalize these substances and/or make them affirmatively legal under state and/or municipal law. Decriminalization already has occurred in cities including Denver, Oakland, Santa Cruz, and Ann Arbor. Oregon is poised to be the first state to make psilocybin therapy affirmatively legal. Emerge Law Group is working with a wide array of clients pushing forward in this emerging area.

See our Psychedelics Practice Group page for more information.

TAXATION

CORPORATE AND PARTNERSHIP TAX

Businesses of all kinds benefit from a customized but systematic approach to structuring legal relationships. Emerge Law Group helps businesses and business owners with a variety of tax planning matters.

Representative client services include:

ESTATE PLANNING

Estate planning encompasses everything from a will and power of attorney to combined estate and business succession planning. In almost all cases, the purpose of the plan is to help the client protect those they care about most in the event they can no longer be there for them.

Emerge Law Group has experience with a wide range of tools used in estate planning, including wills, trusts, and family business entity planning.

TAX CONTROVERSIES

Emerge Law Group can assist with the resolution of difficult tax controversies. Our areas of emphasis and experience include:

REAL ESTATE TRANSACTIONS

Emerge Law Group assists clients with a wide range of real estate transactional matters.  We regularly help clients with:

LAND USE

Emerge Law Group also assists clients with all aspects of local government land use and development processes, ranging from preliminary property analyses and building permit issues to complex land use reviews and hearings. Our attorneys are experienced in obtaining land use entitlements and development permits for a wide range of uses.

We regularly help clients with:

Above all, we understand the value of working with cities and counties to enhance communities while developing the land to its potential. We strive to create solutions to land use issues that serve to better our clients and the communities in which they live and work.

LITIGATION AND ALTERNATIVE DISPUTE RESOLUTION

The attorneys in Emerge Law Group’s Litigation and Alternative Dispute Resolution practice group litigate commercial, intellectual property, and public interest matters in state and federal courts, as well as private mediation and arbitration proceedings.  Our lawyers have represented national and regional financial institutions, major media, entertainment and technology companies, and other Fortune 500 companies in a broad array of high-stakes disputes.  Our team of litigators has handled leading cases that have shaped the law in cutting-edge business, technology, free speech, and public interest impact lawsuits in trial and the courts of appeal.

We have particular expertise in handling civil litigation and regulatory enforcement matters in the cannabis and psychedelic industries.  While many firms claim expertise in the these industries, few have our depth of experience successfully litigating contract, trademark, partnership, shareholder, land use, and real estate disputes in court and arbitration.  Even fewer firms have our level of experience handling writ of mandate proceedings against the government regulators.

Our litigators practice in California, Oregon, and Washington, but have appeared in state and federal courts nationwide.  Our knowledge of our clients’ businesses, goals and concerns, and our experience litigating at the highest levels, give us unique insight into possible outcomes and pitfalls as we continuously confront issues of new impression.

No matter what the industry, we pride ourselves in achieving our clients’ objectives through efficient and creative solutions primarily designed to avoid disputes in the first place—which is always the best litigation strategy.  Many times, our clients obtain excellent outcomes before or at the earliest stages of litigation because our adversaries quickly recognize the challenges they will face in litigating against us.  When litigation is unavoidable, however, we work hard to provide our clients with both cost-efficient and “big firm” quality representation.

 

INTELLECTUAL PROPERTY

Your intellectual property (or “IP”) strategy can harness your most valuable information and intangible assets including your name, your brand, your designs, your content, your services, and your products — what makes your business stand apart in a competitive world.  We can help you evaluate and build your IP portfolio, then secure it, monetize it, and protect it.

IP encompasses multiple areas of law and different types of information or material.

Our Intellectual Property practice focuses on:

TRADEMARK

Trademarks include names, signs, logos, designs, phrases, slogans, expressions, and sometimes even colors, sounds, or smells that identify or distinguish one business compared to others.  Trademark protection is fundamental in securing your “brand.”

COPYRIGHT

Copyright covers original works of creative authorship fixed in a tangible medium of expression.  This includes literary, dramatic, musical, and artistic works, such as poetry, novels, designs, movies, songs, computer software, and architecture. Copyright does not protect facts, ideas, systems, or methods of operation, although it may protect the way these things are expressed.  Depending upon the type of work, “moral rights” (such as the right of attribution) may be implicated as well.

TRADE SECRET

Trade secret laws can vary somewhat between states, but generally trade secrets cover information, including drawings, cost data, customer lists, formulas, recipes, patterns, compilations, programs, devices, methods, techniques or processes that derive economic value from not being generally known and are the subject of efforts that are “reasonable under the circumstances” to maintain secrecy.

PRIVACY

Depending upon where you live or operate, there is a special patchwork of laws and regulations that protect and regulate personal information.  If you are handling or giving out personal or potentially sensitive information, you may be implicating privacy laws.

PUBLICITY

Publicity rights address the commercial use of an individual’s face, name, image, or likeness.  These rights vary state-to-state.  Marilyn Monroe, for example, lived in multiple states which created complex questions about her publicity rights.

Our Intellectual Property services include:

FINANCIAL INSTITUTIONS

In states where new cannabis banking opportunities exist, Emerge Law Group has the proven expertise in creating canna-banking programs to efficiently capitalize on those opportunities. Our Banking Practice Group specializes in working with banks and credit unions to develop regulatory compliant programs and operational best practices. We also train banking staff to become experts in canna-banking so they can effective understand and manage the risk affiliated with canna-banking.

We regularly help clients with:

EMPLOYMENT LAW

At Emerge Law Group, we recognize that employees are the heart and soul of any successful business.  Our Employment Law Practice Group works with employers to help them effectively manage their workforce, navigate the complex web of federal, state and local employment laws and, if necessary, defend against claims before administrative agencies and in court.

We regularly help clients with:

CORPORATE FINANCE AND SECURITIES

Our corporate finance and securities lawyers are experienced attorneys who have practiced at large law firms, worked as in-house counsel for public companies and investment banks, and owned and operated start-up companies. We work with clients to help achieve their financing goals while safely navigating the highly technical securities law landscape. 

In addition to representing issuers, we also routinely represent institutional and individual investors, including in connection with fund formation and investments.

Our expertise includes:

We have a deep understanding of the financing options available to businesses, including simple unsecured loans, asset-backed financing, convertible debt, common and preferred equity, crowdfunding and various other structures.  We work closely with our clients to understand their business and financing needs, ensure they are prepared to approach investors and choose the right partners, structure and negotiate terms, navigate the due diligence process and successfully close the deal.

COMPLIANCE AND LICENSING

ALCOHOL AND BEVERAGE INDUSTRY

Emerge attorneys have represented businesses in the alcohol and beverage industry, including wineries, breweries, distilleries, restaurants, bars, movie theaters, golf courses, and gas stations.  We can help you vet new locations, acquire existing locations, and apply for the appropriate liquor license.  We also provide training to comply with applicable rules and regulations, prepare operating procedures, submit renewals, and keep clients protected in the event of any potential violations or administrative hearings.

CANNABIS INDUSTRY

Emerge Law Group is highly experienced in the cannabis industry.  We have helped many clients obtain state licenses and local permits to operate cannabis businesses throughout California, Oregon, and Washington.  We regularly help clients with:

Cannabis laws and rules are also regularly changing.  Members of our team are dedicated to attending legislative hearings, state agency and local city and county meetings to stay up-to-date on any new changes and how to adjust to any new changes.

See our Cannabis Industry page for more information.

PSYCHEDELICS INDUSTRY

Emerge Law Group is a leader in the psychedelics industry.  There is tremendous excitement about the potential for psychedelic drugs to benefit a wide variety of populations, including veterans struggling with PTSD and terminally ill patients suffering with anxiety and depression.  Until recently, psychedelic substances have been accessible only in the underground; they are illegal under state and federal law to manufacture, distribute, or possess.  These substances have, since 1970, been treated as having no legitimate medical use, and no commercial application.  As such, businesses have not invested in this area or required legal services, outside of the criminal context.

Today, psychedelics are proceeding toward legalization on multiple paths.  Researchers in a multitude of clinical studies are proving the medical safety and efficacy of these medicines, with the objective of changing the treatment of these substances under the federal Controlled Substances Act, opening legal access to them.  Private and public companies are now actively raising money to develop intellectual property and capitalize on the market opportunities associated with psychedelic drugs.  Opportunities to be early actors in this new arena are tremendous.

See our Psychedelics Practice Group page for more information.

BUSINESS AND CORPORATE

Our business transactions team is made up of highly experienced transactional attorneys who have practiced at large law and accounting firms, worked as in-house counsel for public companies and investment banks, and owned and operated start-up companies. We understand complex legal matters and provide high quality legal services in a cost-effective manner.  Our clients value our experience, knowledge and judgment.

ENTITY FORMATION

Our team routinely advises clients regarding:

CORPORATE GOVERNANCE

Emerge attorneys also advise on-going concerns with: