Category: ESOPs (Employee Stock Ownership Plans)

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Controlled Substance Act Employment Issues ESOPs (Employee Stock Ownership Plans) Interviews Meet Blank Rome Mergers and Acquisitions

ESOPs for Cannabis Companies: A Strategic Solution to 280E Tax Hurdles

Scott Moskol recently spoke with Investing News Network about how employee stock ownership plans can offer tax advantages and foster sustainable expansion for U.S. cannabis companies. Read an excerpt below:

In light of Section 280E of the US Internal Revenue Code, which significantly inflates effective tax rates by prohibiting standard business deductions for companies trafficking in Schedule I substances, employee stock ownership plans (ESOPs) have gained traction as a strategic countermeasure in the cannabis space.

While the transition of medical marijuana to Schedule III has provided some tax relief, adult-use cannabis continues to be classified as a Schedule I substance, keeping the burden of 280E in place for many.

But as federal rescheduling efforts progress, will the complexity of an ESOPs remain necessary?

The Investing News Network recently interviewed Scott H. Moskol, partner and cannabis practice co-chair at Blank Rome, to explore how these structures benefit the sector and what could be next.

[…]

Moskol described ESOPs as “especially salient for the cannabis industry” because they effectively restore cashflow that 280E would otherwise strip out. He mentioned Massachusetts operators Canna Provisions and Theory Wellness as companies that have completed ESOP transactions and “continue to grow,” as well as at least one ESOP-owned business in Maine, where higher state income tax rates can make the ESOP tax advantage more meaningful.

Illicit, a company that was backed in an ESOP transaction by a lender client of Moskol’s firm, was also cited by Moskol as an example of how these structures can support growth. After completing its ESOP, Illicit is now looking to use the cashflow that’s been freed up “to make certain strategic acquisitions.”

Ultimately, tax savings from ESOPs can be used to shore up operations, acquire new assets, pay down debt or even purchase real estate that’s currently being leased. All of those moves can strengthen EBITDA, improve balance sheets and make a business more attractive as a future sale or initial public offering candidate, or if institutional investors begin to apply more traditional valuation frameworks to the sector.

To read the full article, please click here.

“ESOPs for Cannabis Companies: A Strategic Solution to 280E Tax Hurdles,” by Meagen Seatter, was published in Investing News Network on June 1, 2026.

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Banking and Restructuring Controlled Substance Act Employment Issues ESOPs (Employee Stock Ownership Plans) Legislation Mergers and Acquisitions Regulatory Compliance

High Stakes and Material Changes in the Bay State: Senate Bill No. 2722 vs. House Bill No. 4160

Lauren Medeiros Forster —

There were several material changes relating to strategy, compliance, and deal‑making advanced by Massachusetts Senate Bill No. 2722 (“S. 2722”) on November 13, 2025. Below is a short summary of what you need to know about the Senate’s rewrite and meaningful reshaping of several House‑backed ideas (under House Bill No. 4160 (“H. 4160”)) for changing the legal regime of cannabis in the Commonwealth.

1.      Employee Stock Ownership Plans

Employee stock ownership plans (“ESOPs”) are here to stay. Both bills tell the Massachusetts Cannabis Control Commission (“CCC”) to set up clear procedures to allow the sale of a business to employees via an ESOP and to exclude a trustee acting solely for an ESOP during or after a sale when counting toward cannabis license caps under the Massachusetts cannabis laws. That part did not change, which is a positive result for the Commonwealth. The proposed changes to the current law enable succession planning, retention, and worker‑ownership options for operators and investors without tripping license caps and also improve exit/liquidity paths for owners. This also means there would be no caps on the number of licenses an ESOP can own.

Continue reading “High Stakes and Material Changes in the Bay State: Senate Bill No. 2722 vs. House Bill No. 4160”
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ESOPs (Employee Stock Ownership Plans) Mergers and Acquisitions

On-Demand Webinar: Understanding Cannabis Employee Stock Ownership Plans (“ESOPs”)—Key Questions and Practical Insights

Frank A. Segall, Scott H. Moskol and Jason S. Luter—

In a rapidly evolving cannabis industry, business owners are facing mounting challenges, from limited access to capital and 280E tax burdens to succession planning and founder burnout. Could Employee Stock Ownership Plans (“ESOPs”) be the solution?

In this webinar, Blank Rome partners Frank A. Segall, Scott H. Moskol, and Jason S. Luter, along with Symphony Risk’s president TJ Frost and director Corey Tobin, explore how ESOPs work, why they’re particularly well suited for cannabis companies, and what’s involved in executing one successfully.

Whether you are frustrated with 280E, exploring exit strategies, looking to boost employee retention, or simply curious about alternative ownership models, this session offers practical insights and real-world guidance.

Watch the full webinar to learn how ESOPs can help you build a more resilient, tax-efficient, and employee-driven cannabis business:

WATCH ON DEMAND

If you would like more information, please reach out to Blank Rome’s Cannabis or ESOP team.

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ESOPs (Employee Stock Ownership Plans) Mergers and Acquisitions

FAQ: Employee Stock Ownership Plans (“ESOPs”) in the Cannabis Industry

Scott H. Moskol and Jason S. Luter —

Welcome to our latest blog post where we delve into the intricacies of Employee Stock Ownership Plans (“ESOPs”). Scott H. Moskol, a partner and co-chair of the Cannabis practice at Blank Rome, and Jason S. Luter, a partner, chair of the firm’s ESOP practice, and co-chair of the firm’s Dallas office answer frequently asked questions about the benefits and mechanisms of ESOPs, particularly within the context of the cannabis sector.

How long have ESOPs been around?
The first ESOP was established in 1956 by Louis Kelso for Peninsula Newspapers. The concept was formalized in federal law by the Employee Retirement Income Security Act of 1974 (“ERISA”).

Are ESOPs used for any other businesses or just cannabis?
Yes, according to the National Center for Employee Ownership, as of the beginning of 2025, 6,358 ESOP companies exist, collectively employing approximately 10.8 million employees, representing almost 8 percent of the private sector workforce in the United States. Over 50 percent of private ESOP companies are in one of three industry categories: Manufacturing (21 percent), Professional/Sci/Tech Services (19 percent), and Construction (15 percent).

For what size cannabis company does an ESOP make sense?
While around $20 million in minimum gross revenues and a minimum of 15 to 20 employees across a cannabis company’s operations is probably ideal, in certain instances an ESOP for a cannabis company with minimum gross revenues of $5–$10 million can be feasible.

Continue reading “FAQ: Employee Stock Ownership Plans (“ESOPs”) in the Cannabis Industry”
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ESOPs (Employee Stock Ownership Plans) Mergers and Acquisitions

Cannabis ESOPs Provide Solutions for Operators

Scott H. Moskol and Jason S. Luter —

As we enter Q2 of 2025, the cannabis industry has become increasingly pessimistic about the elimination of Section 280E of the Internal Revenue Code, whether via rescheduling or otherwise. Rescheduling appears unlikely in the foreseeable future, and certain members of the Senate have filed a bill that would make 280E continue to apply even if rescheduling were to occur

Cannabis ESOPs (employee stock ownership plans) can provide a structure to avoid 280E, as well as federal and state income tax, entirely.

Continue reading “Cannabis ESOPs Provide Solutions for Operators”
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