Category: Mergers and Acquisitions

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

Post author By Blank Rome LLP
Post date November 18, 2025

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.

Tags Massachusetts

Banking and Restructuring Controlled Substance Act Interviews Legislation Meet Blank Rome Mergers and Acquisitions Regulatory Compliance

Closing the Hemp Loophole: What Monday’s Farm Bill Update Means for Delta-8 and Hemp-Derived THC

Post author By Blank Rome LLP
Post date November 11, 2025

Marc A. Polito —

At Blank Rome’s 9th Annual State of the Cannabis Industry Conference, Frank A. Segall, partner and co-chair of the firm’s Cannabis practice, asked a panel—including Joseph Andreae, CEO of CULTA, Jared Maloof, CEO of Standard Wellness, Ed Schmults, CEO of Firelands Scientific, and Jim Scott, CEO of Statehouse Holdings—what is the number one issue confronting the cannabis industry today? All four chief executives unanimously echoed the same sentiment: the number one issue confronting state-regulated cannabis operators today is the unregulated hemp market, which has become a growing thorn in their sides as the hemp market picked up steam over the past few years. Well, with new action by lawmakers yesterday, it appears this issue is on the brink of being resolved!

Over the past six years, the hemp industry has transformed from a niche agricultural sector into a national marketplace for diverse cannabinoid products. That transformation was catalyzed by the 2018 Farm Bill, which legalized hemp by defining it as cannabis with no more than 0.3 percent delta-9 tetrahydrocannabinol (“THC”) on a dry-weight basis. What resulted from this was an unintended market: intoxicating hemp-derived cannabinoids such as delta-8 THC, delta-10 THC, and other analogs produced from cannabidiol (“CBD”) isolates through chemical conversion. The “hemp loophole,” as it came to be known, allowed psychoactive products to proliferate in convenience stores, restaurants, and online and circumvented the strict controls applied to state-licensed cannabis.

Tags delta-10, delta-8, delta-9, Farm Bill, hemp, hemp loophole

Banking and Restructuring Controlled Substance Act Employment Issues Legislation Meet Blank Rome Mergers and Acquisitions Regulatory Compliance

Turning Over a New Leaf: How Cannabis Receiverships Can Cultivate a Stronger Future

Post author By Blank Rome LLP
Post date September 10, 2025

Lauren Medeiros Forster —

It is no secret that the cannabis industry has been on a wild ride lately, especially in mature markets. Many operators are feeling the pressure, and they are not alone. Let us break down the current landscape, why it is tough out there, and how receiverships and distressed sales might actually be a positive move for struggling cannabis companies.

Many developed cannabis markets are facing serious challenges. Inflation and a shaky economy are making it harder for businesses to stay afloat (regardless of industry type), on top of market saturation that has caused cannabis prices to drop, and tight profit margins for businesses in the more established marijuana states. This is compounded with the harsh effects of tax burdens due to 280E—where cannabis companies are unable to deduct otherwise established business expenses from gross income as a result of the federal illegality of cannabis in the United States—and lack of liquidity from inability to access traditional debt financing and institutional equity markets. As a result, many cannabis companies are finding it difficult to pay their debts and keep the lights on. And because cannabis is still federally illegal in the United States, struggling cannabis operators are limited when it comes to utilizing federal bankruptcy mechanisms for relief.

But hope is not lost. Even in tough times, cannabis businesses along with their management, creditors, and investors, have found options to help their companies restructure and move forward. One of those is a state-level receivership.

Tags distressed sale, receivership

ESOPs (Employee Stock Ownership Plans) Mergers and Acquisitions

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

Post author By Blank Rome LLP
Post date May 27, 2025

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.

ESOPs (Employee Stock Ownership Plans) Mergers and Acquisitions

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

Post author By Blank Rome LLP
Post date May 14, 2025

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.

Tags FAQ, frequently asked questions

ESOPs (Employee Stock Ownership Plans) Mergers and Acquisitions

Cannabis ESOPs Provide Solutions for Operators

Post author By Blank Rome LLP
Post date May 1, 2025

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.

Tags 280E, income tax, tax benefits

Banking and Restructuring Mergers and Acquisitions Regulatory Compliance

November 2024 Transaction Highlights: A Month of Newsworthy Successes

Post author By Blank Rome LLP
Post date December 4, 2024

Marc A. Polito —

Our Cannabis Industry Group would like to thank our clients—major cannabis market leaders—for yet another successful month, trusting us to close several notable and newsworthy deals across various practice areas and industries in November 2024. Our team of dedicated attorneys provided strategic counsel on complex transactions, including banking and finance, mergers and acquisitions, workouts and receiverships, and public securities, showcasing our commitment to delivering exceptional results for our clients. These achievements underscore the strong partnerships we have with our clients, as well as our firm’s extensive experience and collaborative approach to navigating intricate legal and business landscapes while servicing major market leaders in the cannabis industry.

Tags financing, transactions

Controlled Substance Act Employment Issues Legislation Meet Blank Rome Mergers and Acquisitions Regulatory Compliance

Welcome to Cannabis Industry Insights

Post author By Blank Rome LLP
Post date June 20, 2024
Sticky post

Frank A. Segall, Scott H. Moskol, and Max M. Borg —

Whether you are a plant-touching operator or an ancillary business, lender, or investor, Blank Rome’s Cannabis Industry Insights blog is your go-to resource for the cannabis industry.

Authored by our trailblazing Cannabis practice attorneys, the Cannabis Industry Insights blog explores the rapidly evolving legal, regulatory, and business landscape, helping those in the sector stay ahead of the curve and seize industry opportunities. Our cannabis team was one of the first in the United States to utilize its extensive corporate and finance experience to support the cannabis industry, and has received numerous accolades, including Law360’s prestigious 2023 Cannabis Practice Group of the Year.

Through our blog, we will continue to explore issues that directly impact the cannabis industry. With the announcement of the rescheduling of cannabis from Schedule 1 to Schedule 3 under the Controlled Substance Act, we are optimistic about new and expanding opportunities for industry players. In addition to interviews with industry leaders, the blog will cover such topics as the impact of rescheduling on 280E taxation; legal and regulatory compliance concerns; the landscape for mergers and acquisitions; legislative efforts; banking, insurance, and other business issues; capital markets; workouts and restructurings impacting the industry; the growing importance of e-commerce, fintech, and regtech; debt and equity financings; labor and employment issues in light of unionization efforts; data privacy and security; and employee stock ownership plans (“ESOPs”); among other areas that are relevant to the underpinnings of the industry.

Our goal is to help cannabis businesses survive and thrive in this highly regulated environment, as well as to assist new participants in entering this exciting industry. Subscribe below to receive our timely content:

Tags welcome