Page 29 - BusinessWest January 22, 2024

A Matter of Survival
Lawsuit Seeks to Limit Federal
Reach into State-legal
Cannabis Industry
BY JOSEPH BEDNAR
[email protected]
When asked what it takes to thrive in the cannabis business these days, Meg Sanders paused before noting that ‘thrive’ is the wrong word.
“I think thriving is part two. Right now, surviving is really the topic of the day. That’s what we need to be looking at,” said Sanders, CEO of Canna Pro- visions, which operates dispensaries in Holyoke and Lee.
And it’s not just because of the heightened competition that has arisen, both within Massachusetts and from across state lines, though that factor has caused some shops to close, with others likely to follow, as the market begins to settle, eventually determining how many dispensaries is too many.
No, that development has only exacerbated one of the key challenges
for cannabis entrepreneurs: the fact that the drug is federally illegal, which makes financing thorny, normal business activities difficult, and the tax envi- ronment severe, to say the least.
“What if we could get SBA loans? What if we could apply for federal grants? I mean, there’s so much money out there that a small business should be eligible for, but we can’t do any of that because we’re federally illegal.”
MEG SANDERS
“Our accounting bill is probably super elevated from a normal business. Our legal bill is probably way larger than a normal business because there are just so many T’s to cross and so many I’s to dot. And that’s just part of
it,” Sanders said before detailing issues with access to financial services
and lending. “What if we could get SBA loans? What if we could apply for federal grants? I mean, there’s so much money out there that a small busi- ness should be eligible for, but we can’t do any of that because we’re federally illegal.”
With that in mind, a coalition of U.S. cannabis operators and investors filed a lawsuit late last year against U.S. Attorney General Merrick Garland. The coalition asserts that the federal government has no basis for enforcing the Controlled Substances Act against intrastate, state-regulated cannabis operations. The plaintiffs include Canna Provisions; Gyasi Sellers, CEO and founder of Treevit; and Wiseacre Farm, all of which are independent opera- tors in Massachusetts that claim to have suffered significant harm and busi- ness challenges due to federal prohibition.
Verano Holdings is also named as a plaintiff, while foundational support- ers of the suit include Ascend Wellness Holdings, TerrAscend, and Green Thumb Industries, as well as Eminence Capital and Poseidon Investment Management.
The lawsuit seeks to confirm the rights of Massachusetts and other states to regulate cannabis within their borders, and to limit the federal govern- ment’s power to regulate commerce.
The Controlled Substance Act bars the production, distribution, and pos- session of marijuana, regardless of whether those activities cross state lines or, as in the case of the plaintiffs’ businesses, are intrastate. According to the lawsuit, “this unjustified and unconstitutional prohibition on intrastate can- nabis harms plaintiffs and hinders the efforts of states to provide patients and adults with access to strictly regulated and tested cannabis.”
“The purpose of the lawsuit is to basically challenge the constitutional-
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