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2019 Employment Law Year in Review

This past year was one that saw a number of landscape-changing developments in the broad realm of employment law. From paid family leave to cannabis to overtime-threshold changes, there were a number of changes to existing laws, new measures to keep track of, and new challenges for employers.

By Maureen James, Esq.

2019 … it’s been real.

Much like politics this year, employment law has experienced quite the roller-coaster ride. So what has this year taught us? Where will we go next? Has anyone really gotten over the Game of Thrones finale? Will 2020 include more Baby Yoda? You know … the important stuff.

This year saw many changes, most of which will really be felt during 2020 and beyond. Even so, those changes have opened dialogue to new and progressive topics that are changing the landscape of employment law. Here is a summary of the new developments, both here in the Commonwealth and nationally.

Paid Family Medical Leave

We cannot write a ‘year in review’ without starting with the Massachusetts Paid Family Medical Leave law (PFML). A lot of attention was given to PFML last year, and rightfully so. This is an institutional change, and all involved have been nervous about its rollout.

As readers are likely aware, PFML is a state-offered benefit that, come 2021, will entitle most Massachusetts workers to take up to 26 weeks of paid leave for medical or family reasons. PFML is funded through a Massachusetts wage tax that is shared by employees and businesses with 25 or more employees.

Last summer, the Department of Paid Leave issued final regulations and rolled out an updated timeline for employers, which included the deadline for notification to employees of Sept. 30, 2019, the commencement of payroll withholdings on Oct. 1, 2019, and information on the application process for private-plan exemptions.

It is clear this will be a hot topic throughout 2020 as employers will start making their quarterly PFML tax contributions and begin preparing for the first round of claims beginning in January 2021.

Marijuana

Medicinal and recreational marijuana went from nowhere to everywhere this year. Commissions, taxes, licensing … there are lots of complicated issues. For employers, many have been trying to balance state and federal law, as well as existing policies and changing culture. Unfortunately, we are not yet at a place were clear policies and practices exist. Over the next year, this will likely be a hot topic as its effects continue to grow — pun intended.

National Labor Relations Board

Last summer, the National Labor Relations Board made some drastic policy shifts in three swift steps. In May, it was announced that it intended to set standards for union activity on employer property. It followed up in June 2019 with a ruling in UPMC Presbyterian Shadyside, where it overturned decades of precedent and determined that employers can ban union organizers from public areas of their private property.

In August 2019, it held in Bexar County Performing Arts Center Foundation that property owners can bar labor protests by off-duty contractor workers unless they work “regularly and exclusively” on the property and there is no “reasonable non-trespassory alternative” for communicating their message. With these large shifts, it will be interesting to see what other areas NLRB reviews and possibly enacts changes to next year.

“This year saw many changes, most of which will really be felt during 2020 and beyond. Even so, those changes have opened dialogue to new and progressive topics that are changing the landscape of employment law.”

Continuing this trend of pro-employer decisions, a few weeks ago the board released a decision overruling a prior case that held that employees have a presumptive right to use an employer’s e-mail system for non-work-related communications, which includes e-mail traffic related to forming a union. The recent decision reconfirmed that an employer has a right to restrict employee use of its e-mail system as long as it is done on a non-discriminatory basis.

Union Fees

In a recent case — Janus v. State, County, and Municipal Employees Council 31, 138 S. Ct. 2448 — the U.S. Supreme Court held that non-union workers cannot be forced to pay fees to public-sector unions. Throughout 2019, this has been a debated topic in Massachusetts. The Legislature passed a law providing Massachusetts’ public employee unions access to contact information for employees, as well as certain allowances to charge fees to non-members.

Gov. Charlie Baker vetoed the law, but in September, he was overridden. As we move into 2020, the effect this law has on union dues and relationships between members and non-members, if any, remains to be seen.

Department of Labor Overtime Threshold Changes

One of the many regulations taking effect at the inception of 2020 includes a boost to the salary threshold for the eligibility of workers to receive overtime under the Fair Labor Standards Act (FLSA). This change will extend overtime protections to currently exempt workers making less than $684 per week (or less than $35,568 per year) and highly compensated employees making less than $2,066 per week (or less than $107,432 per year). This means, before year’s end, employers who employ exempt workers will need to review their compensation (including any non-discretionary bonuses and commissions) to ensure they earn enough to qualify for exempt status as of Jan. 1, 2020.

Non-compete Law

Massachusetts’ new Noncompetition Agreement Act has changed how employers draft, use, and enforce non-compete agreements. The law makes certain types of non-competes flatly unenforceable, and restricts how long and for what reason an agreement can be used in other situations. It also requires consideration (i.e., some sort of payment) to the employee if an employer wants to enforce a non-compete provision. The law has only been in effect a year, so we have not seen the full ramifications of the statute yet.

U.S. Citizen and Immigration Services’ H-1B Visas

March 2020 will bring the official beginning of the spring season, but also the first round of electronic registration for H-1B visas under the fiscal year 2021 cap. H-1B sponsorship is offered by employers in ‘specialty occupations’ that require at least a bachelor’s degree (or the equivalent in education and experience). In this new electronic process, employers seeking H-1B workers subject to the 2021 FY cap will complete an electronic registration that requires only basic information about the company and each requested worker.

The H-1B random selection process will use those registrations, and then the selected registrations from that pool will be eligible to file more detailed petitions for the H-1B visa cap.

2020 … Bring It On

There are only a few things that are certain: death, taxes, and another terrible reality show. However, 2020 most certainly will be a year where many new laws stretch their legs and see their first moments of sun. There will undoubtedly be new issues to confront, but no matter what year it is, you can never be too prepared.

Maureen James is an attorney with Skoler, Abbott & Presser, P.C., one of the largest law firms in New England exclusively practicing labor and employment law; (413) 737-4753; [email protected]

Law

And to Keep It That Way, Businesses Can Make Use of the NDA

By Kenneth Albano, Esq.

Managing Partner Kenneth Albano

Kenneth Albano

In the legal world, we use the term ‘attorney-client privilege,’ while in the medical field, you may have heard the expression ‘doctor-patient confidentiality.’ Both terms are used in circumstances where a lawyer or doctor must maintain confidentiality to best protect a client or a patient.

In a business setting, the term ‘confidential’ can be used on many fronts, most notably in the context of a formal confidentiality/non-disclosure agreement, more commonly known as an NDA.

The use of an NDA can be seen in many different business scenarios, with the primary purpose being to protect confidential information from being revealed to the public or an unwanted third party, or from being used without the consent or knowledge of the first party.

Within the NDA document itself, the two parties are known as the ‘disclosing party’ and the ‘receiving party.’ The disclosing party is the person requesting that the receiving party sign the NDA, in order to protect the confidential information at stake.

For example, if an owner of a company were looking to retire and possibly sell the business to a competitor, he would not want to offer up proprietary information without protection. In a case like this, the retiring business owner might ask his purchaser or competitor to sign an NDA, which would protect the business owner while the two parties negotiated the terms for the sale of the business.

“You have worked long and hard to develop and grow your business, and without the protection of an NDA, loss of information could have very real financial repercussions.”

The content of an NDA can typically be broken down into five main components:

• Define the parties. This means laying out in clear terms who is the disclosing party and who is the receiving party. Typically the parties are individuals. Within the NDA document, the receiving party will be bound by numerous covenants or conditions associated with the protection of the confidential information being used or revealed.

• Describe the nature of the transaction the NDA is governing. For example, an NDA might be used to protect confidential information associated with the hiring of a new employee or executive, keeping business information private when working with independent contractors, preventing an idea or invention from being stolen or infringed upon, or protecting proprietary or secret company information that might be disclosed during a potential sale of a business.

• Include all the details. Within the NDA, it is important to specifically define, in great detail, exactly what constitutes the confidential information to be protected. In our prior example of the sale of a business, the NDA might prevent the receiving party from revealing any information about the business — whether it were oral or written information concerning the company, technical information, proprietary sales and financial data, software products, marketing strategies, customer lists, personnel records, or any information supplied by the business to the receiving party by the company or its representatives.

In another example, if the NDA were being used for the purpose of hiring a new employee or executive, the definition of the confidential information might include various proprietary information belonging to the company, about which the new employee would become aware during his or her employment. This type of protective covenant regarding confidential information can also be found in a written employment agreement or non-compete agreement as well.

• What information is allowed to be disclosed by the receiving party without violating the NDA? Under normal circumstances, confidential information does not include (a) information generally available or known to the public; (b) information that was already known by or available to the receiving party; (c) information subsequently disclosed to the receiving party by a third person, under no obligation of confidentiality to the disclosing party; or (d) information required to be disclosed as part of a judicial process, government investigation, or legal proceeding.

This type of information would normally be presented as a defense by the receiving party, if litigation alleging a violation or threatened violation of the NDA was commenced by the disclosing party.

• Define the consequences of a violation. If the receiving party breaches or violates the terms and covenants of the NDA, in most cases, the disclosing party can pursue a legal remedy via the court system. Remedies may include but not be limited to preventing further disclosure or use of the confidential information, award of damages, or other equitable relief as may be provided under the law.

Other important elements of an NDA include the length of time the agreement is to be in effect (the ‘term’), and also the governing law which would interpret the terms of the NDA should a conflict arise, and which is generally the state law for the state or commonwealth in which the disclosing party is doing business.

If your company is involved in a transaction where proprietary information could be disclosed to an independent third party, consider the use of an NDA. You have worked long and hard to develop and grow your business, and without the protection of an NDA, loss of information could have very real financial repercussions.

Kenneth Albano is managing partner for Bacon Wilson, P.C., and a member of the firm’s corporate, commercial, and municipal law departments. He represents commercial banks in all aspects of lending and workout practices and represents closely held business entities in all aspects of operations. He serves as town counsel to several Massachusetts municipalities, including Monson, Southwick, and Holland; (413) 781-0560; [email protected]

Law

Understanding the Americans with Disabilities Act

By Sarah M. Ryzewski, Esq.

Sarah M. Ryzewski

A request for time off comes across your desk from an employee. The employee is requesting additional time off to accommodate a disability she has. The additional time requested is needed to be able to attend all of her appointments, necessary for her to complete her treatment.

How an employer goes about identifying an accommodation request, and either approving or denying the request, is important in staying compliant with the Americans with Disabilities Act (ADA) and other federal and state laws. Satisfying the obligations required by employers under such laws is necessary to prevent unlawful actions and prevent disability discrimination.

Under the ADA, it is unlawful for certain employers to discriminate against individuals with disabilities; the law further requires employers to provide reasonable accommodations to individuals with a qualified disability. A disability is an impairment that substantially limits one or more life activities. A qualified disabled individual is a person who is capable of performing the essential functions of the particular job or would be capable of performing the essential functions with a reasonable accommodation.

The ADA applies only to employers who have 15 or more employers, labor unions, and state and federal government.

Employers need to be able to recognize when a request for an accommodation for a qualified disability is being made. Employees seeking accommodations under the ADA are making the request to be able to perform the essential functions of the job which they have. When making a request for an accommodation, employees are not required to use specific words such as ‘accommodation’ or ‘disability,’ but, rather, only need to explain why a change or adjustment is needed because of a medical condition.

“Under the ADA, it is unlawful for certain employers to discriminate against individuals with disabilities; the law further requires employers to provide reasonable accommodations to individuals with a qualified disability.”

This medical condition can be either mental or physical. Since key words or phrases are not required under the ADA to make accommodation requests, employers need to educate themselves on how to spot a variety of different ccommodation requests, how requests are being made, and the words being used. Take, for instance, the employee cited above, requesting time off for her appointments. She would be successful in submitting her request for an accommodation by explaining to her employer she needs additional days off during the next few months to be able to complete her chemotherapy. She would not be required to say she needs an accommodation for her disability.

Once the accommodation request has been made, employers will need to determine whether or not the accommodation is reasonable and will need to enter into an interactive discussion. A reasonable accommodation is a change to a job that will allow an individual with a qualified disability to perform essential functions of a job. The accommodation must be related to the job the employee making the request has — otherwise, it is not reasonable. Moreover, employers are not required to approve a request for an accommodation if the request made would cause the employer an undue hardship.

Undue hardships occur when it would require an employer to undertake an unreasonable expense or it would cause significant difficulty to allow the request. Reasonable accommodations usually include modified work schedules, making workplaces easily accessible, leave, and modifying work equipment, among others.

An unreasonable accommodation request would include personal items such as paying for special eyewear or hearing aids. Whether or not an employer ultimately approves or denies an accommodation request, the employer should seek out alternative accommodations to present and negotiate to the employee making the request. Employers are strongly encouraged to fulfill their duty to be compliant by researching the accommodation request and providing alternative accommodations before flat-out denying the request. Determinative on whether an accommodation decision can be reached or not, employers can provide temporary accommodations until a final accommodation has been determined.

To complicate the obligations under the ADA, additional federal and state laws may be intertwined, forcing employers to stay informed. These laws can obligate employers to adhere to additional requirements or may prevent employers from being able to approve certain accommodations.

Frequent laws which come into play with the ADA include the Family Medical Leave Act (FMLA) and state-specific medical leave acts. Medical leave acts allow employees to take a specified amount of time off for medical or family-related reasons. Employers should inform employees whether or not the leave for a disability is within an existing leave policy with the employer, or whether it will be treated as an accommodation request, and should provide information as to whether the leave will be paid or not and the amount of time an employee is allowed to take.

Employers can request documentation for a leave request before approving it as an accommodation request. Employers should provide information on how the ADA’s reasonable-accommodation requirement could be affected by other federal and state laws. Based upon the example from above, the employer would need to explain how the employee’s request for leave as an accommodation would either be within the employer’s existing leave policy or treated as an accommodation request for her disability.

Furthermore, the employer would need to provide additional information to the employee on whether or not the leave, if approved, would be paid or unpaid, and the amount of time she could take.

Although the ADA has many complex components, it is crucial to be well-educated on obligations owed by employers. Employers who fail to adhere to the requirements risk possible claims of non-compliance and potential claims of disability discrimination.

Providing information to employees on the ADA is crucial. Employers should provide employees with the procedures on how to request accommodations, provide contact information for individuals who handle accommodation requests, and document every accommodation request. Having information relating to the ADA within an employee handbook, signage, and training and orientation material is essential. Finally, employers should have a procedure in place for how to successfully oblige the law.

For more information on the ADA and employer obligations, seek clarification from an attorney.

Sarah M. Ryzewski, Esq. is an associate attorney at Royal, P.C.; (413) 586-2288; [email protected]

Law

Breaking Up Is Hard to Do

By Amelia J. Holstrom

On Nov. 3, 2019, news broke that the McDonald’s board of directors voted to terminate CEO Steve Easterbrook for having a consensual relationship with an employee.

Early reports indicate that, after a three-week internal investigation, McDonald’s board found the relationship to be inappropriate and in violation of its policies, including its standards of business conduct, which prohibits employees with “a direct or indirect reporting relationship” from “dating or having a sexual relationship.” McDonald’s makes clear in its policy that “it is not appropriate to show favoritism or make business decisions based on emotions or friendships rather than on the best interests of the company.”

Amelia J. Holstrom, Esq.

Amelia J. Holstrom, Esq.

McDonald’s is not the first large corporation to find itself in this type of predicament. Companies like Boeing, in 2005, and Best Buy, in 2012, have parted ways with chief executives based on alleged relationships with employees. The decision to remove an employee at any level involves consideration, but to remove an employee at the top of the ladder should be no different.

You may be asking, can companies do that? Can they fire someone for a consensual relationship? Yes, they can — and so can you.

Love Hurts

It isn’t any secret that people spend most of their waking hours at work. Not surprisingly, office romances sometimes bloom. What better place to meet your soulmate, right?

From the employer’s point of view, dating in the workplace can spell trouble. Office romances create many problems. Because employers cannot prevent their employees from developing emotions, it is important to address workplace romances well in advance of any potential problems.

Workplace dating is a recipe for disaster in more ways than one. In addition to decreasing morale and productivity, when true love goes sour, employees often cannot work with each other anymore, or worse, workplace romances can ultimately lead to sexual harassment and/or discrimination and retaliation claims.

“The decision to remove an employee at any level involves consideration, but to remove an employee at the top of the ladder should be no different.”

Assume, for example, that a superior and subordinate have been dating for some time. Their romance fizzles, and things end. What if the subordinate now claims to have felt pressured into the relationship? A supervisor’s relationship with a subordinate is most damaging to the company because of the legal consequences.

In Massachusetts, when a supervisor engages in harassment of a subordinate, even if there is no direct reporting relationship, a business is automatically liable for that harassment.

I Would Do Anything for Love, but I Won’t Let Supervisors Date Subordinates

How should you combat workplace romances? Employers can adopt policies on personal relationships in the workplace that specifically prohibit supervisors and managers from engaging in any romantic relationships with employees at the company, including direct and indirect subordinates.

If you choose to adopt such a policy, it should state that such relationships raise ethical and fairness issues and problems with favoritism and morale, and that they will not be tolerated. Employers should also spell out what will happen if such a relationship is discovered.

Some employers confront the couple, indicate that, if they wish to continue the relationship, one must resign, and let the employees decide who will resign. Other employers confront the employees and terminate the employment of one or both of them effective immediately. It depends on the stance your business wants to take.

Love Rules

What if you don’t want to prohibit such relationships at your workplace? Another approach used by some employers is to have employees in a relationship enter into a ‘love contract.’

Such a document essentially memorializes, in writing, the consensual nature of the employees’ relationship. Be careful here, though. Love contracts are not prospective, as they will not limit the company’s liability for future sexual harassment and/or discrimination and retaliation claims. They may only be helpful to demonstrate that there was a consensual relationship between the employees before and at the time the employees signed the contract.

You Oughta Know

All employers can learn a valuable lesson from the situation involving McDonald’s. Each employer should consider how it wants to handle workplace romances before one becomes an issue for its business. Having a plan or policy in place could save you a lot of heartaches … I mean, headaches.

(The author wishes to thank Neil Sedaka, Nazareth, Meat Loaf, Don Henley, and Alanis Morissette for their wise lyrics about love.)

Amelia J. Holstrom is a partner with Skoler, Abbott & Presser, P.C., one of the largest law firms in New England exclusively practicing labor and employment law. Holstrom specializes in employment litigation, including defending employers against claims of discrimination, retaliation, harassment, and wrongful termination, as well as wage-and-hour lawsuits. She also frequently provides counsel to management on taking proactive steps to reduce the risk of legal liability; (413) 737-4753; [email protected]

Law

Cannabis, Marijuana, and Hemp

By Chris St. Martin and Sarah Morgan

Late last month, the U.S. Department of Agriculture published regulations on domestic hemp production. However, there remains significant confusion surrounding the legality of cannabis, marijuana, and hemp.

Chris St. Martin

Sarah Morgan

This confusion comes from state and federal governments’ shifting approaches to regulating these industries. It is even more difficult to understand the legal framework surrounding retail sales, which include hemp and CBD products, as well as marijuana products sold by state-licensed dispensaries. In this article, we hope to provide some clarity regarding what the laws say about cannabis and how they are being enforced.

What Is Cannabis?

Cannabis is a plant genus, or family, composed of three species: Cannabis sativa, Cannabis indica, and Cannabis ruderalis. The species have physical variations between them that allow them to grow in different environments, flower at different periods during the growth cycle, and contain different chemical properties (see discussion on cannabinoids below) that produce different sensations when ingested.

Strains (think, ‘flavors’) produced from the Cannabis sativa species tend to incite feelings of euphoria, boost energy and creativity, and lead to a more head-focused high. Cannabis indica, alternatively, primarily affects the body, and is often helpful in reducing muscle aches and pains and inducing sleep. For these reasons, strains cultivated from indica plants tend to be more useful for medicinal purposes.

“THC, or tetrahydrocannabinol, is the cannabinoid responsible primarily for producing the psychoactive effect, or the ‘high,’ commonly associated with ingesting cannabis.”

Cannabis ruderalis is somewhat between sativa and indica, and has lower yields, but can often be cross-bred with other species to create medicinal strains. The stems of this species can also be used to make clothing and textiles.

The flowering buds of the cannabis plant produce a resin that contains cannabinoids, which are unique chemical compounds found only in cannabis and interact with different receptors in the user’s central nervous system to produce the effects described above.

The ratio of the cannabinoids in a particular strain depends on the genetics of the plant from which it is derived — in other words, how the plant has been bred by selectively combining sativa and indica plants to emphasize particular cannabinoids over others and create a unique strain with individualized characteristics.

More than 100 cannabinoids have been identified, most notably THC and CBD.

THC, or tetrahydrocannabinol, is the cannabinoid responsible primarily for producing the psychoactive effect, or the ‘high,’ commonly associated with ingesting cannabis. Although THC is most notable for its psychoactive properties, it has also been purported to have medical benefits on the user and can be used to treat a variety of conditions, including seizures, inflammation, pain, nausea, depression, and anxiety.

CBD, or cannabidiol, has anti-anxiety effects on the user and is utilized primarily for its purported medicinal benefits. It does not produce psychoactive effects (in fact, it may lessen the psychoactive effects of THC), and, for this reason, although CBD and THC have similar medicinal benefits, some people may choose to ingest only CBD to avoid feeling the ‘high’ brought about by THC.

CBD can be extracted from the resin of the cannabis plant and can be processed into essential oils, tinctures, and other non-smokable forms. CBD can even be added to body-care products and applied topically.

Marijuana or Hemp?

The term ‘marijuana’ is generally used to identify cannabis that is cultivated for its intoxicating effect on a user. Marijuana was made effectively illegal under federal law with the passage of the Marijuana Tax Act of 1937.

The Legislature later classified, and criminalized, marijuana as a Schedule 1 narcotic under the Controlled Substance Act of 1970, during the nascent ‘war on drugs’ declared by President Nixon. Classification as Schedule 1 — alongside heroin, LSD, and ecstasy — means that marijuana is deemed to have no currently accepted medical use and a high potential of abuse.

Public sentiment has recently begun to reject this classification of marijuana and the total federal prohibition. Although, at this writing, marijuana remains illegal at the federal level, 11 states, including Massachusetts, and the District of Columbia, have passed laws legalizing marijuana for recreational use, and 23 others have legalized the use of medical marijuana. Since 2016 in Massachusetts, individuals age 21 or older may possess up to an ounce or more on their person and up to 10 ounces in their homes without violating Massachusetts law.

The Cannabis Control Commission (CCC), the agency tasked with regulating the state’s marijuana industry, provides further information regarding the Massachusetts law on its website.

Cannabis that is selectively bred for non-intoxicating properties is considered ‘hemp.’ Industrial hemp is one of the oldest cultivated crops in the world and is useful in formulating textiles, rope, paper, plastics, insulation, oil, and body-care products. Because of this selective breeding, hemp plants contain only trace amounts of THC, but their CBD levels are unchanged.

“State and federal legal developments have created a confusing CBD marketplace. Stores everywhere are selling CBD products intended for human consumption and making health claims about such products. However, both types of sales are illegal, according to state and federal agencies.”

Hemp is cultivated to enhance its distinctively versatile qualities, such as longer, more fibrous stalks and shorter leaves, rather than for the leaves and flower buds for which marijuana plants are cultivated. Because of this, hemp cannot be consumed as an intoxicant. Nevertheless, the Controlled Substances Act did not distinguish between marijuana and hemp (since both are technically cannabis) in classifying marijuana as a Schedule I substance; therefore, hemp was swept up in the heyday of the war on drugs and made illegal.

Changing Legal Framework

Under the Farm Bill of 2018, the U.S. Congress, for the first time, legalized the production and sale of hemp at the federal level, eliminating its status as a Schedule I narcotic. The Farm Bill and regulations define hemp as cannabis containing not more than 0.3% THC. Cannabis plants containing any quantity of THC above that amount are classified as marijuana, and remain illegal under federal law. In late October, the USDA published interim regulations on hemp production, which means they are subject to change after a public comment period but were effective immediately.

These regulations also set forth licensing requirements, procedures for testing THC levels and disposal of non-compliant plants, and rules governing other aspects of the industry.

The FDA has taken a more cautious approach, citing concerns about whether CBD is safe to consume in food and supplements. In an April 2019 statement, the agency sought to clarify its position on hemp products. The statement indicated that enforcement resources are directed toward illegal sales of CBD products that claim to prevent, diagnose, treat, or cure serious diseases, such as cancer.

However, it also stated that it is unlawful to introduce CBD-containing food into interstate commerce or to market CBD products as dietary supplements.

This means that effectively all CBD food products, including those derived from legally grown hemp, are unlawful, according to the FDA. The only hemp products that can be legally added to foods are hulled hemp seed, hemp-seed protein powder, and hemp-seed oil, because the seed of the hemp plant contains neither CBD nor THC.

The FDA has undertaken to develop CBD regulations, but despite repeated urging from the USDA and members of Congress, the former FDA commissioner indicated that that the rule-making process around CBD food products would be more complex than conventional products and could take years.

Massachusetts legalized hemp production as a component of the same 2016 law that legalized recreational cannabis. However, after the change of law at the federal level, both the state Department of Agricultural Resources and Department of Public Health issued policy statements on the same day imposing strict rules on hemp products. These two statements echo the FDA’s prohibitions on adding CBD to food products and making health claims about CBD.

What Can We Buy and Sell?

These state and federal legal developments have created a confusing CBD marketplace. Stores everywhere are selling CBD products intended for human consumption and making health claims about such products. However, both types of sales are illegal, according to state and federal agencies. Consumers, retailers, growers, and other stakeholders are looking for information about what is legal, what is not, and why there is so much ambiguity.

CBD derived from marijuana remains illegal under federal law. However, the U.S. attorney in Massachusetts has indicated he will not direct his office’s resources to federally prosecute cannabis companies that are permitted under state law, a move that has allowed the cannabis industry in Massachusetts to flourish. Under this state’s regulatory regime, marijuana products containing CBD, as well as THC, can be bought and sold at cannabis dispensaries that are licensed by the CCC.

Retailers in Massachusetts sell cannabis flower, edibles, concentrates, and other forms of marijuana containing both THC and CBD. CCC regulations do not classify edible marijuana products as food, allowing dispensaries to sell CBD-infused edibles without contravening the state Department of Public Health’s policy.

In contrast, despite the federal and state legality of producing hemp, some of the most popular hemp-derived CBD products — food and supplements — cannot be sold under either state or federal law. Nevertheless, the CBD industry may avoid total extinction, since CBD can be added to topical lotions and other cosmetics without defying the laws.

Non-food CBD products, however, represent a small percentage of the potential uses of CBD, and the loss of a valuable opportunity for introducing additional, more profitable products containing CBD into the marketplace adds further demand for the FDA to promulgate its promised CBD rules. Furthermore, hemp can be legally sold for rope, clothing, building material, and other non-ingestible uses, but hemp farmers have stated that Massachusetts currently lacks the manufacturing infrastructure necessary to process the plant for these purposes.

Chris St. Martin and Sarah Morgan are both litigation associates at Bulkley Richardson; (413) 781-2820.

Law

A New Type of Relief

By Rebecca Mercieri Rivaux, Esq.

Rebecca Mercieri Rivaux

Small-business owners will soon have a more affordable option to reorganize their companies. In February 2020, the Small Business Reorganization Act (SBRA) will go into effect, providing a new type of relief to small-business debtors.

The SBRA creates a new subchapter within Chapter 11 of the U.S. Bankruptcy Code. While Chapter 11 bankruptcy generally provides for business reorganization (usually involving a corporation or partnership), it can be an unappealing option for many small-business debtors, due to complex procedural requirements and high legal and administrative costs. The SBRA will expedite reorganization for small-business debtors by streamlining the burdensome requirements of Chapter 11 bankruptcy.

The SBRA is, in fact, very comparable to a Chapter 13 bankruptcy, the kind used by individuals. Just as with Chapter 13 filings for individuals, an SBRA debtor can expect to have a trustee appointed by the bankruptcy court. The court-appointed trustee will aid the small business in developing a reorganization plan, but is not likely to be involved in any operational aspects of the business. This essentially allows the debtor to remain in possession and control of their own business during the bankruptcy process. The trustee is responsible for disbursing payments to creditors under the reorganization plan.

In order to take advantage of the new SBRA, a debtor must first qualify as a small business. To qualify, the debtor must be a person or entity engaged in a commercial or business activity. If such a business has secured and unsecured debt totaling less than $2,725,625, the business may propose a reorganization plan under the SBRA — so long as they use net income to repay creditors.

This is in keeping with the general practices of Chapter 11, where a debtor usually proposes a plan of reorganization to keep its business in existence and pay creditors over time.

SBRA debtors must produce a copy of the business’ most recent balance sheet, a statement of operations, a cash-flow statement, and a federal income — or file a sworn statement that such documents do not exist.

The SBRA allows the small-business debtor to repay its creditors within a payment plan of three to five years, as the bankruptcy court determines. The SBRA also allows small-business debtors a greater opportunity to retain their ownership interests in their business, even when claims have not been repaid in full (in contrast with a typical Chapter 11 bankruptcy, where a shareholder cannot retain equity in the business unless creditors are paid in full).

To qualify, the debtor must be a person or entity engaged in a commercial or business activity. If such a business has secured and unsecured debt totaling less than $2,725,625, the business may propose a reorganization plan under the SBRA — so long as they use net income to repay creditors.

Another significant benefit to the SBRA is a specialized restructuring strategy offered to individual debtors. An individual who qualifies as a small-business debtor can modify the mortgage on his or her principal residence, provided that the mortgage loan was not used to acquire the real property, but was used primarily in connection with the debtor’s business — such as an individual who is borrowing against the equity in their home for the purpose of supporting their business. This individual small-business debtor would then be able to reduce the loan to the value of the secured claim, propose a lower interest rate, or extend the maturity date of the loan. Once the small-business debtor has completed all payments to creditors, a discharge is granted.  

Under the SBRA, the only excluded activity for the small business debtor is operating “single-asset real estate,” a term that describes a debtor who receives substantially all of its gross income from the operation of a single real property.

Despite this restriction, for many small business debtors, the SBRA will offer relief and a realistic means to reorganize and restructure their businesses under the Bankruptcy Code.

Rebecca Mercieri Rivaux is an associate with Bacon Wilson, P.C., and a member of the firm’s bankruptcy and business/corporate practice groups; [email protected]

Law

The #MeToo Movement Has Vast Implications in This Sector

The #MeToo movement has brought about change and challenge — from a liability standpoint — in workplaces of all kinds. And this includes the broad spectrum of education. Indeed, recent cases indicate that courts may soon hold schools, colleges, and universities strictly liable for any sexual misconduct by their staff toward their students.

By Justice John Greaney, Jeffrey Poindexter, and Elizabeth Zuckerman

By now, we’ve all seen the #MeToo movement change how Massachusetts and the nation are talking about sexual harassment and other misconduct in the workplace, in schools, in social settings, on sports teams, in public places, and in our private lives.

Justice John Greaney

Jeffrey Poindexter

Elizabeth Zuckerman

The movement has ended careers, felled prominent figures, and made many newly aware of the great number of people — men and women — who face sexual harassment at some point in their lives. It has also reminded students, teachers, professors, administrators, and parents that schools and institutions of higher education are far from immune to this type of misconduct, and that students are sometimes victims of the very staff, faculty, and coaches expected to educate, guide, coach, and protect them.

Against this backdrop, administrators of Massachusetts schools, colleges, and universities have a special reason to take note of the rising tide of complaints about sexual harassment and other gender-based discrimination. The sea change in how sexual harassment is viewed, along with the development of Massachusetts law surrounding sexual harassment in schools, colleges, and universities, suggest that Massachusetts courts may soon hold these institutions strictly liable for any sexual misconduct by their staff toward their students.

That means, whether or not the school, college, or university knew about the conduct, whether or not the institution was negligent in any way, it could be on the hook for substantial damages if a staff member commits sexual harassment. In other words, even without doing anything wrong, or knowing anything wrong was happening, an educational institution could be liable for the entirety of the harm that befalls a student.

As a result, schools, colleges, and universities need to act now to implement policies which provide the best defense if a claim of sexual harassment is made.

In Massachusetts, Chapter 151C of the General Laws, the Massachusetts Fair Educational Practices Act (MFEPA), provides students who have been subjected to sexual harassment by a teacher, coach, guidance counselor, or other school personnel with a cause of action against the educational institution. MFEPA declares that “it shall be an unfair educational practice for an educational institution … to sexually harass students in any program or course of study in any educational institution.” In conjunction with General Laws c. 214, § 1C, the right for students to be free of harassment can be enforced through the Massachusetts Commission Against Discrimination (MCAD) or through the Superior Court.

“Administrators of Massachusetts schools, colleges, and universities have a special reason to take note of the rising tide of complaints about sexual harassment and other gender-based discrimination.”

The statutes also define sexual harassment broadly, including “any sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when: (i) submission to or rejection of such advances, requests, or conduct is made either explicitly or implicitly a term or condition of the provision of the benefits, privileges, or placement services or as a basis for the evaluation of academic achievement; or (ii) such advances, requests, or conduct have the purpose or effect of unreasonably interfering with an individual’s education by creating an intimidating, hostile, humiliating, or sexually offensive educational environment.”

Chapter 151C has been interpreted several times in the courts in Massachusetts, including when:

• A male athletic director of a Massachusetts community college was reported to have provided alcohol to female students in exchange for sexual favors. Several years later, more complaints about his behavior led the college to implement a policy to prevent sexual harassment.

Reports of further inappropriate conduct led to an investigation and agreement that he would no longer coach female athletic teams. However, he continued to work at the school and, eventually, resumed coaching a women’s basketball team. Students who had been coached by the athletic director brought claims against both him and the school.

• During the investigation into a rape of a student by a teacher at a Massachusetts high school, it was disclosed that a male guidance counselor had been involved in sexual misconduct with students. The superintendent of the school district acknowledged that he was aware of continuing reports about the guidance counselor’s inappropriate relationships with students after a female student alleged that the counselor had brought her to his home on two occasions and attempted to coerce her into having sex.

• Parents reported the inappropriate conduct of a male middle-school science teacher to the vice principal and a guidance counselor. The teacher had made inappropriate comments and touched female students, and had been told by school officials to stop on three occasions. The teacher was fired after an internal investigation, but not before he allegedly molested an 11-year-old student.

Despite occasions to consider the applications of Chapter 151C, Massachusetts courts have not yet decided whether schools, colleges, and universities will be held strictly vicariously liable for sexual harassment. In the cases referenced above, it appears the schools or colleges knew about the misconduct and, at least passively, allowed it to continue.

That means that the schools or colleges could be considered negligent, because they knew, or should have known, an employee’s behavior was problematic, but they failed to act, or failed to take adequate measures to remedy the situation. However, if Massachusetts courts rule for strict liability under Chapter 151C, it will mean that it is no defense that the institution did not know what its employee was doing, or even that it took reasonable measures to screen that employee before hiring.

Instead, the mere occurrence of sexual harassment by an employee will be enough to make the institution liable to the victim.

There are indications this may be the direction in which the courts go, because a closely related statute, Chapter 151B, which governs sexual harassment in the workplace, does impose strict liability. It seems entirely possible that the courts will conclude that liability under Chapter 151C should be no different, given that the two statutes relate to the same subject matter and share a common purpose.

Furthermore, because the operative statute is clearly intended to protect vulnerable students from abuses of power by those entrusted with their well-being, it seems likely that the courts may conclude that a strict standard of liability is consistent with the underlying purposes of the statute.

“The rising awareness of the problem of sexual harassment and assault appears to make it more likely that courts will conclude that the only way to stem the tide of abuse is to put the burden on those in the best position to protect vulnerable students — the schools they attend.”

This argument seems strengthened by the popular mood regarding sexual harassment. The rising awareness of the problem of sexual harassment and assault appears to make it more likely that courts will conclude that the only way to stem the tide of abuse is to put the burden on those in the best position to protect vulnerable students — the schools they attend.

Two recent decisions suggest this result may be coming. In a 2016 federal court case, Doe v. Brashaw, Judge Douglas Woodlock gave the first indication that the courts may come down on the side of strict liability under Chapter 151C. He noted there was no clear guidance in the text of the law on whether negligence was required to hold the school, college, or university liable.

Weighing the arguments on each side, he concluded it made sense, at least at the early stage in the case at which he was reviewing the matter, to apply a strict vicarious liability standard.

More recently, in 2017, another federal judge again noted that the standard was unsettled and deferred considering the argument, made by the Massachusetts Institute of Technology as defendant, that it was entitled to a more favorable standard than strict liability.

Given the significant risk that Massachusetts schools, colleges, and universities will be considered liable for their employees’ misconduct, regardless of what they knew, or didn’t know, about it, how can these institutions respond? The answer is that schools, colleges, and universities need to ensure their sexual-harassment, disciplinary, and hiring policies are up to date.

This will allow these institutions to avoid hiring or retaining employees who show any indication that they will engage in sexually harassing behavior, and also allow the institutions to respond rapidly and effectively if any employee does. In addition, schools, colleges, and universities need to appropriately train and supervise all employees.

For many institutions, this will mean implementing new requirements for training and new policies for ensuring sexual harassment cannot go on in a school, college, or university without rapid detection. In addition to in-house training, the institutions should consider learning sessions taught by outside consultants, particularly law firms, with experience in handling sexual misconduct in the educational environment.

Outside investigations by impartial law firms will, when appropriate, removed the inference of bias on the part of the educational institution when considering possible misconduct by a teacher, administrator, or staff member. In sum, educational institutions need to be prepared to act quickly and decisively when faced with a complaint of sexual harassment in order to remediate any misconduct.

Justice John Greaney is a former justice of the Supreme Judicial Court and senior counsel at Bulkley Richardson. Jeffrey Poindexter is a partner and co-chair of the Litigation Department at Bulkley Richardson. Elizabeth Zuckerman is an associate in the Litigation Department at Bulkley Richardson.

Law

What to Expect When…

By John Gannon, Esq.

My wife and I recently welcomed our first child into the world. We are over the moon in love with our daughter and excited to see where this amazing journey will take us.

John S. Gannon

John S. Gannon

As an employment attorney, this process got me thinking about the topic of parental leave. That’s the legal term for providing job-protected time off from work to employees so they can bond with a newborn or newly adopted child.

Massachusetts state law requires almost all businesses to provide some job-protected leave for the birth or adoption of their child, and the federal Family and Medical Leave Act (FMLA) obligates employers with 50 or more employees to provide additional time off and protections to new parents. Although at first glance these laws may seem easy to administer, there are plenty of traps for those who do not have a deep understanding of how parental leave needs to be administered. Here are a few things employers should be aware of when an employee requests and takes parental leave.

What Does Your Policy Say?

Hopefully, you have a policy that addresses parental leave. If not, it’s time to get one on the books. Even if you have a policy, it’s never a bad idea to be make sure the language is up to date and consistent with state and federal laws governing time off to bond with a child. For example, the Massachusetts Parental Leave Act (MPLA) requires employers with six or more employees to provide eight weeks of unpaid leave to full-time employees for the purpose of giving birth or for the placement of a child for adoption.

If you have more than six employees, you need to have a policy and practice that addresses parental leave. Notably, up until a few years ago, this law was commonly referred to as the Massachusetts Maternity Leave Law, because the language of the statute provided leave protections for female employees only. The law was amended a few years ago to expand parental-leave protections to employees in Massachusetts of all genders.

If your policy refers to maternity leave instead of parental leave, it’s time to update your handbook as several employment laws have probably been added or changed since your last review.

Intersection of the FMLA

Employers covered by the FMLA have additional obligations that go beyond the requirements of state-mandated parental leave. For starters, under the FMLA, eligible employees are entitled to take up to 12 work weeks of FMLA leave in a 12-month period for a number of different reasons, including the birth of a child and to bond with a newborn or newly adopted child.

Both mothers and fathers have the right to take FMLA leave to bond with a child. Importantly, when an employee takes time under the FMLA to bond with a child, the eight weeks of state-mandated MPLA runs concurrently. This means that an employee with 12 weeks of available FMLA is entitled to 12 total weeks of parental leave, as the MPLA is used at the same time as the FMLA is used. However, questions arise when employees use FMLA for a reason unrelated to the birth or adoption of their child.

For instance, suppose an employee used 12 weeks of FMLA earlier this year to care for a sick parent. This month, the employee approaches you requesting leave to care for a child who is expected next month. That employee would no longer be entitled to 12 weeks of FMLA to care for the newborn, but would still be entitled to the eight weeks of MPLA under state law.

Leave Employees on Leave Alone

They call it leave from work for a reason. Employers need to resist the urge to contact employees on leave with work-related questions, especially if the leave is unpaid.

A call or two about something basic, such as the location of a file or document on the system, is probably fine. However, requesting attendance at meetings or on phone conferences will cross the line, as will the assignment of projects or other tasks. Not only are you taking parents away from a special and important time in their lives, but you are also potentially creating a situation where you are unlawfully interfering with an employee’s right to take time off under the FMLA or MPLA.

Plus, if the employee is taking unpaid parental leave, which is typically the case, you will need to be sure that the employee is compensated for any work performed during parental leave, including answering calls or responding to e-mails. This can be tough to account for, so the best practice is to let employees on parental leave enjoy their time off without work-related distractions.

Final Thoughts

I learned firsthand that parental leave was a special time for me and my newborn. Employers need to openly encourage employees to take all available parental leave, and should consider offering benefits that go beyond those required by state and federal law.

The U.S. Department of Labor reported in a policy brief on parental leave that longer leaves promote better child bonding, improve outcomes for children, and even increase gender equity at home and at the workplace.

A generous parental-leave policy is also a fantastic recruiting and retention tool, as it sends a message that the business values its workforce and is committed to bettering employee work-life balance.

John Gannon is a partner with Skoler, Abbott & Presser, P.C., one of the largest law firms in New England exclusively practicing labor and employment law. He specializes in employment litigation and personnel policies and practices, wage-and-hour compliance, and non-compete and trade-secrets litigation; (413) 737-4753; [email protected]

Law

Mediation: Art of Compromise

By Julie A. Dialessi-Lafley, Esq.

Mediation. Most, if not all of us, have heard the word, but what does it really mean to engage in mediation?

Many people familiar with mediation may think of it in the context of divorce or family-law matters, and, indeed, the process often provides families in conflict with meaningful solutions. But families aren’t the only ones who can benefit from the skills of a trained mediator. In fact, almost any issue or dispute that might be addressed in court could also potentially be solved by mediation.

Mediation is a process in which two or more parties discuss their disputes with the assistance of an unrelated third party — a trained mediator. The mediator assists the disagreeing parties with communication and with the terms of any settlement of the disputed issues. Resolution by agreement is the goal.

Mediation can be used for all kinds of disputes. Many couples facing divorce choose to engage in mediation rather than a court process. Issues of neighbor-to-neighbor disputes are ideal for mediation, and many schools use mediation internally to resolve student-to-student conflicts. Mediation can also address disputes involving business transactions, accidents or injuries, construction, workers’ compensation, employment issues, or labor and community relations. Almost any matter that does not involve complex procedural or evidentiary issues could be addressed through mediation.

Another appealing aspect of mediation is the relatively low cost. Mediation is normally more cost-effective than litigation in court, and certainly it is far less formal than a court process.

Mediation can take place at nearly any stage of a dispute. Conflicting parties may be able to avoid litigation altogether by mediating disputes prior to filing a court action. However, even once litigation is filed, mediation is usually still an option. If the parties agree to engage in mediation while a case is pending, they can do so in a good-faith effort to find a solution outside the courtroom. The parties can also opt out of the mediation process at any time.

Here in Massachusetts, the courts generally cannot order parties to engage in mediation. However, if an existing agreement, contract, or other independent rule requires mediation prior to litigation, the court may be precluded from hearing a matter until the parties attempt to resolve their dispute in mediation.

In fact, the courts tend to favor the mediation process and encourage parties in civil disputes to work toward their own agreements. If litigation is pending, but the parties come to an agreement through mediation and present it to the court, that agreement is likely to become the official order or judgment of the court. If only this writer had a quarter for every time a judge said to litigants, “you are better off trying to come to an agreement you can live with than to let the court decide.”

Unlike a judge or arbitrator, mediators do not decide the outcome of the dispute. They assist the parties to air their differences, identify the strengths and weaknesses of their respective sides, and find a resolution that everyone can live with.

For some people, a common misconception is that by going to mediation they will be giving up rights or forced into an outcome with which they don’t agree. For other people, a desire for the proverbial ‘day in court’ may be enough to keep them from engaging in mediation. In fact, the mediation process allows for a considerable amount of flexibility, and the mediator will design the process around the needs of the participants.

But what is the actual process like? For a typical day-long mediation, the experience normally follows six stages, each with a specific purpose.

Mediator’s Opening Statement

With everyone in the same room, the mediator makes introductions; explains the goals, expectations, and rules of the mediation; and encourages respectful dialogue with the goal of resolution.

Parties’ Opening Statements

Each party has an opportunity to give their perspective of the dispute without interruption. This can include the facts, impact, and general ideas about resolution.

Joint Discussion

Parties may remain together to begin dialogue on the issues, respond to opening statements, and engage in more in-depth work with the mediator. Normally this is determined by the conduct and emotions of the people in the room, and the mediator’s perception of their ability to work together respectfully in the same room.

Private Caucuses

Parties are placed each in separate rooms, and each is given time to meet privately with the mediator. This may continue for the majority of the in-depth work. The mediator, through this private discussion, determines the appropriate way to proceed.

Joint Negotiation

After private caucuses, parties may come back together to communicate directly. However, this does not usually happen until a settlement is reached, or the time scheduled for the mediation ends.

Closure

If the parties reach an agreement, the mediator will likely put the main provisions in writing and ask each side to sign it. If the parties are unable to agree at the time, the mediator will help determine if they want to work toward a solution within mediation.

Conclusion

Mediators are normally patient, persistent, and have plenty of common sense. Effective mediators are good listeners and negotiators, and they’re understanding of human nature. A mediator has to be articulate in order to accurately restate and relate to the positions of the conflicting parties. They may be attorneys, laypeople with training or certifications, volunteers in court-sponsored programs, privately retained, or even retired judges. Attorneys who are also mediators cannot represent one side or another, nor can they give legal advice while in the role of mediator.

One of the most important roles of the mediator is to help the parties understand that accepting less than what they may feel they ‘deserve’ is essential to a fair settlement. As the old saying goes, ‘if everyone walks away feeling slightly unhappy with the agreement, it is probably a fair agreement.’

Despite everyone walking away slightly unhappy, mediation is typically successful and satisfactory. Statistically, parties are more likely to abide by an agreement they reach on their own than an order from a court. The nature and structure of the mediation process results in its high success rate.

Attorney Julie Dialessi-Lafley is a certified mediator and a shareholder with Bacon Wilson, P.C. She has extensive experience with all aspects of family law, including pre- and post-nuptial agreements, separation, divorce, child custody and parenting time, and grandparents’ rights. In addition to family law, she represents clients in matters related to accidents and injuries, civil litigation, and probate and estate planning; (413) 781-0560; [email protected]

Law

What’s Next for the Cannabis Industry?

The cannabis industry is off to a fast and quite intriguing start in the Bay State, and two new categories of license have particular potential to move this sector in new directions: one for home delivery of cannabis products, and another for social-consumption establishments, or cannabis cafés.

By Isaac C. Fleisher, Esq.

We are nearly three years into the Commonwealth’s experiment with recreational cannabis, and the industry is finally moving beyond an amusing novelty.

The Cannabis Control Commission (CCC) reports that retail sales in 2019 alone have already exceeded $190 million, and this is just the tip of the iceberg. To date, the CCC has issued only 72 final licenses for marijuana establishments, but there are currently another 400 license applications that are pending or have received provisional approval.

Isaac C. Fleisher

This all means that, over the next few years, the Massachusetts cannabis industry is set to grow at an unprecedented rate. What we don’t know is how this growth will change and shape the industry.

Much of the excitement and rhetoric around legalization has focused on the potential to create new business and employment opportunities for communities that have been disproportionately harmed by prohibition and for local entrepreneurs. Lawmakers attempted to pursue these goals (with mixed success) through the design of the original regulations, with provisions for local control by cities and towns, special categories for equity applicants, and caps on the number of licenses that a single business could control.

The CCC has recently been grappling with these issues once again as it revises its regulations.

On July 2, after months of policy discussions and hearings, the CCC released new draft regulations for both medical and recreational marijuana, which will be open for public comment until Aug. 16. While most casual observers will not find the draft regulations to be scintillating reading material, there are a number of interesting new provisions that can tell us a lot about what the future of Massachusetts’ cannabis industry could look like.

Two new categories of license have particular potential to move the cannabis industry in new directions; one for home delivery of cannabis products, and another for social-consumption establishments (i.e., cannabis cafés).

Social Consumption

A social-consumption license would authorize businesses to sell cannabis products to customers for on-site consumption. Just think of your neighborhood bar, but it serves cannabis instead of alcohol. Under the proposed regulations, cannabis could be consumed at a social-consumption establishment in almost any form, except for combustible (i.e. smoking it the old-fashioned way), but even that possibility is left open by a provision for an outdoor smoking waiver.

Cannabis edibles would have to be prepackaged and shelf-stable, but there is no prohibition on serving prepared food on site, so long as the food isn’t directly infused with marijuana. That means we could soon be seeing cannabis restaurants that offer gourmet food alongside gourmet pot.

“There is no prohibition on serving prepared food on site, so long as the food isn’t directly infused with marijuana. That means we could soon be seeing cannabis restaurants that offer gourmet food alongside gourmet pot.”

The CCC is taking an incremental approach to this new class of license by including provisions for a social-consumption pilot program that would be limited to only 12 municipalities. Towns that participated in a working group on social consumption — including North Adams, Amherst, Springfield, Provincetown, and Somerville — would be among those able to opt into the pilot program. Licenses would initially be available only to applicants that were already licensed as a ‘microbusiness’ or a ‘craft marijuana cooperative,’ or applicants certified by the CCC as an ‘economic empowerment’ applicant or ‘social equity’ applicant. The pilot program is an interesting attempt to address the demand for new cannabis markets, while still preserving access for small, local, and minority-owned businesses.

Home Delivery

A licensed ‘delivery-only retailer’ could deliver marijuana products directly to a customer’s residence. Advocates for home delivery have long touted its potential to level the playing field between large, well-funded businesses and the small, local entrepreneurs the CCC seeks to attract.

In theory, a delivery-only licensee wouldn’t need much more than a vehicle in order to begin operating. However, the draft regulations include a number of provisions that could create substantial barriers to entry for small-time operators. Home-delivery orders would still need to go through a traditional brick-and-mortar retailer, who would presumably not be particularly interested in providing their product to competitors at wholesale prices.

Additionally, the draft regulations prohibit deliveries to any residence in a town that has banned brick-and-mortar retailers.

Numerous security provisions included in the draft regulations create further costly (and controversial) requirements for delivery-only retailers. Each delivery vehicle would need multiple surveillance cameras, and delivery agents would need to wear body cameras to record the entire delivery, including the customer. This has predictably resulted in a number of concerns about privacy and regulatory overreach.

At a recent CCC meeting, Commissioner Shaleen Title pointed out that, “to the extent that home delivery to [medical-marijuana] patients has been ongoing, there may already be security in place that goes above and beyond our regulations, and to my knowledge there haven’t been incidents … That seems to be an argument that you should not be putting in additional burdens and regulations.”

While body cameras got the most attention at the CCC’s meetings, one provision in the proposed home delivery regulations with the potential to be far more consequential is the option to use a “third-party technology platform provider” to facilitate the ordering process. In simpler terms, we could soon be saying “there’s an app for that.”

While there is still a thorny tangle of federal and state laws preventing a true e-commerce for cannabis, it’s not hard to imagine startups racing to be the first ‘Uber for weed.’ This would certainly make the consumer experience even more convenient, but it would mean yet another blow to the delivery only retailer’s profit margin, and does not seem consistent with the goal of lowering the barrier to entry for small businesses.

Of course, excitement about new markets comes with the important caveat that the rules still need to be finalized and, in some cases, there would need to be a corresponding change in state law. Nevertheless, it is encouraging to see that regulators are willing to consider new ideas for Massachusetts’ cannabis industry. The lines around the block at the first retailers have everybody seeing dollar signs, but with no statutory limits on the number of licenses that the CCC can issue, it is only a matter of time before supply exceeds demand.

In states that are further along in this process there is already evidence of a boom-bust cycle, as oversupply causes wholesale prices to plummet and smaller operators are forced out of the market. In Massachusetts, where the cannabis industry is still relatively nascent, there is still opportunity for regulators, consumers, activists, and entrepreneurs to play important roles in shaping the future of the industry.

Attorney Isaac C. Fleisher is an associate with Bacon Wilson, P.C., where his practice is focused on business and corporate law, with particular emphasis on the rapidly expanding cannabis industry. An accomplished transactional attorney, he has broad experience in all aspects of business representation, for legal matters ranging from mergers and acquisitions to business formation and financing; (413) 781-0560; [email protected].