October, 2023 | Fraser Blog

Five Stories That Matter in Michigan This Week – October 27, 2023

EEOC Publishes Proposed Harassment Guidance

The U.S. Equal Employment Opportunity Commission (EEOC) recently published its long-anticipated proposed guidance on “Enforcement Guidance of Harassment in the Workplace.” Among other things, the guidance reflects the U.S. Supreme Court’s 2020 Bostock decision, which extends the meaning of “sex” in Title VII to sexual orientation and gender identity; provides that sex-based discrimination includes harassment based on pregnancy, childbirth, and other related medical conditions, such as conception or abortion; and addresses how electronic communication (including social media) can create a hostile work environment.

Why it Matters: The proposed guidance seeks to clarify and address uncertainties and open questions for employers. The opportunity for public comment is available until November 1, 2023.

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Provisional Patent Application Overview

Why it Matters: A provisional patent application is a type of patent application that serves as a placeholder for a non-provisional patent application, providing the applicant with a priority date for their invention and a one-year window to follow up and file a non-provisional application. Learn more from your Fraser Trebilcock attorney.

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Governor Whitmer Signs Bills Permitting State and Tribal Cannabis Businesses to Engage in Commerce with Each Other

The landscape of the cannabis industry in Michigan continues to evolve as new legislative efforts in Michigan aim to bridge the operational divide between state-licensed cannabis enterprises and tribal cannabis businesses. Two pivotal bills, Senate Bill 179 and Senate Bill 180, were signed by Governor Whitmer on October 19, 2023, creating a collaborative business environment for these formerly siloed entities.

Why it Matters: Prior to the legislation being enacted, state-licensed and tribal cannabis operations in Michigan functioned independently, restrained from mutual commerce and collaboration, including prohibitions on cannabis products being sold between these businesses. The new legislation allows these two distinct parts of the cannabis industry to interact.

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UAW and Ford Announce Tentative Deal

It was announced earlier this week that the United Auto Workers (UAW) and Ford Motor Company reached a tentative deal.

Why it Matters: The tentative deal would give workers an immediate 11% raise, a 25% increase in wages over the next four years, a reinstatement of cost-of-living adjustments, and additional benefits.

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Client Update: Corporate Transparency Act Report of Beneficial Ownership Information

Pursuant to the Corporate Transparency Act of 2021, beginning on January 1, 2024, most newly formed entities will be required to report to the Financial Crimes Enforcement Network information (FinCEN) about the identity of the entity’s beneficial owners and senior officers. And by the end of 2024, nearly all companies will have to report.

Why it Matters: There are roughly 1 million entities in good standing in the State of Michigan and at some time in 2024, most will need to make a beneficial ownership report to FinCEN. While there are numerous exemptions available, their application is limited to large enterprises and businesses that operate in industries that are already highly regulated. Therefore, it is important to remember that the reporting requirement will extend hundreds of thousands of entities. Learn more.

Related Practice Groups and Professionals

Labor, Employment & Civil Rights | David Houston
Intellectual Property | Andrew Martin
Cannabis Law | Sean Gallagher
Business & Tax | Robert Burgee

Client Update: Corporate Transparency Act Report of Beneficial Ownership Information

Pursuant to the Corporate Transparency Act of 2021 (31 USC 5336) (the “Act”), beginning on January 1, 2024, most newly formed entities (including but not limited to corporations, limited liability companies, and certain partnerships) will be required to report to the Financial Crimes Enforcement Network (“FinCEN”) information about the identity of the entity’s beneficial owners and senior officers. By January 1, 2025, most existing entities will have to make such a report.

Who needs to file?

Most entities, especially those newly formed, will need to make a report to FinCEN at some time in 2024. While most people will readily identify this as a requirement for businesses (and dismiss it as such), it is important to remember that the reporting requirement will extend to ALL entities that don’t qualify for an exemption. This means that every small business, like family corporations and single-member LLCs, that are organized through a filing with a US state will have to comply. The requirements will also extend to other entities, including so-called “single asset” LLC’s that are or were established for a non-business purpose, for things like real estate (such as a family cottage), private planes, and holding companies.

As mentioned above, while there are numerous exemptions available, they are mainly related to businesses that operate in industries that are already highly regulated. One, more widely applicable exception is one dealing with “large operating companies,” which will exempt those companies that meet ALL of the following criteria:

More than 20 employees (annualized FTE’s);
More than $5M in gross receipts (as reported on the prior year’s return); AND
Maintain a physical presence (either owned or leased) in the United States.

Additionally, considering the vast numbers of administratively dissolved corporations and limited liability companies that are not in good standing, another broadly applicable exemption may apply for certain “inactive” entities that meet ALL of the following criteria:

was in existence on or before January 1, 2020.
is not engaged in active business.
does not have any ownership by foreign person, directly or indirectly.
has not experienced a change in its ownership in the preceding twelve-month period.
has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding 12-month period; AND
does not otherwise hold any kind or type of assets, whether in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other similar entity.

Finally, sole proprietorships and general partnerships that are not incorporated or organized by a filing with a US state (and consequently lack the liability protections and other benefits of operating under such filings) will also be exempt from reporting. Thus, while many entities will slip through the net by virtue of being too small or too large, the vast majority of entities in the middle will not.

What must be reported?

If an entity is not eligible for one of the exemptions identified above, it is a “reporting company” under the Act and is obliged to make a report. Reporting companies will need to identify their “beneficial owners” [1] and those individuals who have “substantial control” [2] over the entity. With regard to each such person, a reporting company is required to report ALL of the following information:

their full legal name,
their date of birth,
their current residence or business address.
the unique identifying number from an acceptable identification document (such as a nonexpired driver’s license, state issued ID, or passport); and
an image of the identification document that includes the unique identifying number.

Additionally, while the Act does not require annual reporting, reporting companies will be obligated to update their reports within 30 days of any change in the reported information. That means a reporting company will have to update their FinCEN report each time an owner/officer is added or removed and for things as simple as when such people change addresses.

Do I really need to comply?

YES! Willful failure to file an initial or updated report with FinCEN is subject to a $500/day fine (up to $10,000) and imprisonment for up to two years.

What to do now?

If you a contemplating forming a new entity, it may be advantageous to file your organizing documents (such as Articles of Incorporation for Corporations or Articles of Organization for LLCs) by the end of 2023. This will provide you with added time to gather the information that FinCEN requires and allow some time for FinCEN to “work out the kinks.”

If you will form a new entity after January 1, 2024, you should make gathering the personal information of your principals part of your organizing process. Note that under FinCEN’s current rulemaking, new entities will be required report their beneficial owners within 30 days of the filing of their organizing documents.

If your entity is already operating, now is a good time to start gathering all of the information about your beneficial owners and officers with substantial control.

Contact your Fraser attorney for more information.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients with a focus on corporate structures and compliance, licensing, contracts, regulatory compliance, mergers and acquisitions, and a host of other matters related to the operation of small and medium-sized businesses and non-profits. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

[1] “Beneficial owner” means, an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise—

(i) exercises substantial control over the entity; or

(ii) owns or controls not less than 25 percent of the ownership interests of the entity.

[2] “Substantial Control” refers to the entity’s officers, directors, and those with the power and authority to make or direct the major decisions for the entity. Note that a person may have substantial control without actually “owning” the company, nonetheless that person’s information must be reported to FinCEN.

Five Stories That Matter in Michigan This Week – October 20, 2023

Cannabis Regulatory Agency Seeks to Update Michigan’s Marihuana Rules

The Michigan Cannabis Regulatory Agency (“CRA”) recently filed a Request for Rulemaking to begin the process of updating Michigan’s Marihuana Rules. The CRA is asking for feedback—comments or suggestions can be sent to CRA-AdminRules@michigan.gov.

Why it Matters: The proposed updates, a summary of which can be found here, would impact licensing, social equity, financial compliance, and a host of other issues.

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Provisional Patent Application Overview

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CRA Publishes September 2023 Data: Average Price Increases

Per data released by the Cannabis Regulatory Agency, the average retail price for adult-use sales of an ounce of cannabis in September was $100.14, an increase from $94.16 in August. This is still a decrease from September 2022, where the average price was $109.88.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices. Contact our cannabis law attorneys if you have any questions.

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Fraser Trebilcock Shareholder Ryan Kauffman Participates in Arguments in Michigan Supreme Court

On Thursday, October 5, Fraser Trebilcock Shareholder Ryan Kauffman participated in arguments in the Michigan Supreme Court on cases brought against higher education universities related to the COVID-19 issue.

Why it Matters: You can view the entirety of the argument by going to the Michigan Supreme Court’s YouTube page, or by clicking here (Mr. Kauffman’s argument starts at 43:40). Read more.

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Business Education Series – Maximizing Productivity: Strategies for More Effective Workdays

Productivity is a habit and it’s something you can become better at every day by choosing the methods and tricks that work for you.

Why it Matters: In the October Business Education Series program, Emmie Musser, Future of Work Strategist with TechSmith, is going to discuss some tried-and-true strategies for more productive and effective workdays. Learn more.

Related Practice Groups and Professionals

Intellectual Property | Andrew Martin
Cannabis Law | Sean Gallagher
Higher Education | Ryan Kauffman

Provisional Patent Application Overview

While deciding whether to file a patent application, it is important to consider both your short- and long-term goals in view of your finances and the current state of your idea. Depending on these factors you may be deciding between filing a provisional or non-provisional application. A provisional patent application is a type of patent application that serves as a placeholder for a non-provisional patent application, providing the applicant with a priority date for their invention and a one-year window to follow up and file a non-provisional application.

Whereas, a non-provisional patent application is the formal patent application submitted to the United States Patent and Trademark Office, which offers the opportunity for patent rights. While a provisional patent application does not guarantee patent protection, it can be a valuable tool for inventors and businesses to “get their foot in the door” and begin the patent process.

Here are some reasons why provisional patent applications are important:

Establishing priority – A provisional patent application establishes a priority date for your invention, which can be important in establishing your ownership of the invention in case of a legal dispute. This priority date also gives you a one-year window to file a non-provisional patent application and claim priority over any subsequent applications.
Delaying expenses – Filing a provisional patent application can be less expensive than filing a full patent application. It also allows you to delay some of the costs associated with a full patent application, such as paying for a formal patent search or hiring a patent attorney.
Protecting intellectual property – A provisional patent application allows you to disclose your invention to potential investors, partners, and customers without risking the loss of your patent rights. This is because provisional patent applications are not published, which means that the details of your invention remain confidential until you file a non-provisional patent application.
Providing time to refine your invention – A provisional patent application gives you a year to refine and develop your invention before filing a full patent application. This extra time can be useful for making improvements to your invention, testing it in the market, or exploring potential partnerships.
Enhancing marketability – A provisional patent application can enhance the marketability of your invention by demonstrating that you have taken steps to protect your intellectual property. This can make your invention more attractive to investors and potential partners. Additionally, once a provisional or non-provisional application is filed, you may advertise that your invention is “patent pending.”

It’s important to note that a provisional patent application is not a substitute for a full patent application. A provisional application does not result in a granted patent and must be followed by a non-provisional application within one year to maintain priority. However, a provisional patent application can provide valuable benefits and should be considered as part of an overall intellectual property strategy.

If you or your business is interested in intellectual property services, such as drafting patent applications, contact Andrew G. Martin or your Fraser Trebilcock attorney.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Andrew G. Martin is an experienced registered patent attorney with history working in the automotive, electrical, and agricultural industries. He regularly advises startups and small businesses on the patent and trademark prosecution process, assisting clients from start to finish. You can reach him at 517.377.0834 or at amartin@fraserlawfirm.com.

Fraser Trebilcock Shareholder Ryan Kauffman Participates in Arguments in Michigan Supreme Court

You can view the entirety of the argument by going to the Michigan Supreme Court’s YouTube page, or by clicking here (Mr. Kauffman’s argument starts at 43:40).

Mr. Kauffman was also quoted in The Detroit News, which you can view here.

Ryan K. Kauffman is a Shareholder at Fraser Trebilcock with more than a decade of experience handling complex litigation matters. You can contact him at rkauffman@fraserlawfirm.com or 517.377.0881.

Five Stories That Matter in Michigan This Week – October 13, 2023

Cannabis Regulatory Agency Seeks to Update Michigan’s Marihuana Rules

Why it Matters: The proposed updates, a summary of which can be found here, would impact licensing, social equity, financial compliance, and a host of other issues.

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Client Alert: October 14 Deadline: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage

Medicare Part D notices (of either creditable or non-creditable coverage) are due for distribution prior to October 15th.

Why it Matters: With respect to group health plans including prescription coverage offered by an employer to any Medicare Part D eligible employees (whether or not retired) or to Medicare Part D Medicare-eligible spouses or dependents, the employer must provide those individuals with a Notice of Creditable or Non-Creditable Coverage to advise them whether the drug plan’s total gross value is at least as valuable as the standard Part D coverage (i.e., creditable). Read more from your Fraser Trebilcock attorney.

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Michigan Cannabis Sales Exceed $274 Million in September

Cannabis sales surpassed $274 million in September, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $269,813,092.72, while medical sales came in at $4,915,502.78, totaling $274,728,595.50.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market oversaturation that the industry is contending with.

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U.S. Supreme Court Clarifies Legal Standard for Threatening Speech in Counterman V. Colorado

The U.S. Supreme Court’s recent ruling in Counterman v. Colorado addressed the longstanding ambiguity surrounding the standards for criminal prosecution based on perceived threats of violence.

Why it Matters: The Court held that such a prosecution requires proof that the defendant subjectively understood the threatening nature of the statement such that making the statement was at least reckless. This case not only delves deep into First Amendment protections but also has broad implications for online communications and interactions. Read more from your Fraser Trebilcock attorney.

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Business Education Series – Maximizing Productivity: Strategies for More Effective Workdays

Productivity is a habit and it’s something you can become better at every day by choosing the methods and tricks that work for you.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Employee Benefits | Bob Burgee
Employee Benefits | Sharon Goldzweig
Criminal Law | Paula Spicer

Client Alert: October 14 Deadline: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage

Medicare Part D notices (of either creditable or non-creditable coverage) are due for distribution prior to October 15th.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires entities who offer prescription drug coverage to notify Medicare Part D eligible individuals whether their prescription coverage is creditable coverage. With respect to group health plans including prescription coverage offered by an employer to any Medicare Part D eligible employees (whether or not retired) or to Medicare Part D Medicare-eligible spouses or dependents, the employer must provide those individuals with a Notice of Creditable or Non-Creditable Coverage to advise them whether the drug plan’s total gross value is at least as valuable as the standard Part D coverage (i.e., creditable). Medicare Part D notices must be provided to Medicare-eligible individuals prior to October 15th of each year (i.e., by October 14th).

The initial notices were due by November 15, 2005, and have been modified numerous times. The newest model notices and guidance were issued for use after April 1, 2011. Therefore, any notices you send from this point forward must conform to the new guidelines. Use of the former model notices will not suffice.

Downloads to the updated guidance and various notices can be found on the CMS website HERE and HERE.

As a reminder, there are five instances in which such notice must be provided:

Prior to an individual’s initial enrollment period for Part D;
Prior to the effective date of enrollment in your company’s prescription drug coverage;
Upon any change in your plan’s creditable status;
Prior to the annual election period for Part D (which begins each October 15); and
Upon the individual’s request.

Providing the notice above is important as a late enrollment penalty will be assessed to those persons who go 63 days or longer without creditable coverage (for example, if they enroll in an employer’s prescription plan which is not as valuable as the Part D coverage instead of enrolling directly in the Medicare Part D coverage).

If your plan does not offer creditable prescription drug coverage and if the Part D eligible person enrolls in your plan instead of the Part D plan for at least 63 days, a permanent late enrollment penalty of 1% of the premium is added to the Medicare premium for each month the person does not enroll in Part D.

Please contact us if you need assistance with your Notice of Creditable (or Non-Creditable) Coverage.

Reminder: Submit Medicare Part D Notice to CMS

As discussed above, employers offering group health plans with prescription drug coverage are required to disclose to all Part D-eligible individuals who are enrolled in or were seeking to enroll in the group health plan coverage whether such coverage was “actuarially equivalent,” i.e., creditable. (Coverage is creditable if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage under Part D.) This notice is required to be provided to all Part D eligible persons, including active employees over age 65.

The regulations also require group health plan sponsors with Part D eligible individuals to submit a similar notice to the Centers for Medicare and Medicaid Services (“CMS”). Specifically, employers must electronically file these notices each year through the form supplied on the CMS website.

The filing deadline is 60 days following the first day of the plan year.

At a minimum, the Disclosure to CMS Form must be provided to CMS annually and upon the occurrence of certain other events including:

Within 60 days after the beginning date of the plan year for which disclosure is provided;
Within 30 days after termination of the prescription drug plan; and
Within 30 days after any change in creditable status of the prescription drug plan.

The Disclosure to CMS Form must be completed online at the CMS Creditable Coverage Disclosure to CMS Form web page HERE.

The online process is composed of the following three step process:

Enter the Disclosure Information;
Verify and Submit Disclosure Information; and
Receive Submission Confirmation.

The Disclosure to CMS Form requires employers to provide detailed information to CMS including but not limited to, the name of the entity offering coverage, whether the entity has any subsidiaries, the number of benefit options offered, the creditable coverage status of the options offered, the period covered by the Disclosure to CMS Form, the number of Part D eligible individuals, the date of the notice of creditable coverage, and any change in creditable coverage status.

For more information about this disclosure requirement (instructions for submitting the notice), please see the CMS website for updated guidance HERE.

As with the Part D Notices to Part D Medicare-eligible individuals, while nothing in the regulations prevents a third-party from submitting the notices (such as a TPA or insurer), the ultimate responsibility falls on the plan sponsor.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Sharon Goldzweig is Of Counsel at Fraser Trebilcock, specializing in matters pertaining to employee health and welfare benefits. In a field where the laws are constantly changing, Sharon is constantly looking out for anything that might involve her clients including changes to ERISA and other federal laws. She can be reached at sgoldzweig@fraserlawfirm.com, or at 718.808.5140.

Five Stories That Matter in Michigan This Week – October 6, 2023

House Bills Would Allow Students Access to Medical Marijuana on School Grounds

“Jayden’s Law,” Michigan House Bills 5063 and 5064, would apply only to non-smokable medical marijuana. It would allow both public and private schools to administer medical cannabis on school grounds, subject to certain requirements, including a written treatment plan provided by the child’s caregiver, supervised administration by a designated staff member, and annual proof of the students’ medical marijuana cards.

Why it Matters: Michigan has allowed minors to access medical marijuana as registered patients for more than a decade. Such use, however, is prohibited while at school or school events. Backers of the legislation argue that students who use medical marijuana but must check out and back into school to do so, miss classroom instructions or extracurricular activities.

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U.S. Supreme Court Clarifies Legal Standard for Threatening Speech in Counterman V. Colorado

The U.S. Supreme Court’s recent ruling in Counterman v. Colorado addressed the longstanding ambiguity surrounding the standards for criminal prosecution based on perceived threats of violence.

Why it Matters: The Court held that such a prosecution requires proof that the defendant subjectively understood the threatening nature of the statement such that making the statement was at least reckless. This case not only delves deep into First Amendment protections but also has broad implications for online communications and interactions. Read more from your Fraser Trebilcock attorney.

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Fraser Trebilcock Attorney Thaddeus Morgan Selected to Serve on State Bar of Michigan’s U.S. Courts Committee

Fraser Trebilcock attorney Thaddues Morgan was selected to serve on the State Bar of Michigan’s U.S. Courts Committee for the 2023-24 Bar Year. Attorney volunteers are vital for the State Bar to continue providing exceptional service to the legal profession, the public, and the state.

Why it Matters: The State Bar of Michigan’s U.S. Courts Committee provides advice and recommendations concerning the State Bar’s interaction with federal courts in Michigan and on practice of law in those courts. Learn more.

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Employee Benefits Attorney

Fraser Trebilcock is seeking applications for a position in our Firm from well-qualified attorneys with strong experience in employee benefits, including employer sponsored retirement plans, employee health plans and general ERISA compliance.

Why it Matters: The successful candidate should have a solid and portable client base. Fraser will consider candidates who may lack a portable client base provided they have a solid background in these practice areas and demonstrate an aptitude for client service and growth. Learn more and to apply.

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Business Education Series – Maximizing Productivity: Strategies for More Effective Workdays

Productivity is a habit and it’s something you can become better at every day by choosing the methods and tricks that work for you.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Criminal Law | Paula Spicer
Litigation | Thaddeus Morgan

U.S. Supreme Court Clarifies Legal Standard for Threatening Speech in Counterman v. Colorado

The U.S. Supreme Court’s recent ruling in Counterman v. Colorado addressed the longstanding ambiguity surrounding the standards for criminal prosecution based on perceived threats of violence. The Court held that such a prosecution requires proof that the defendant subjectively understood the threatening nature of the statement such that making the statement was at least reckless. This case not only delves deep into First Amendment protections but also has broad implications for online communications and interactions.

In this case, Billy Counterman, the criminal defendant, sent numerous unwelcome messages via Facebook to a local musician, raising questions about the delicate balance between free speech and threatening conduct. After multiple block attempts by the musician, Counterman continued his messages from different accounts, leading the musician to believe she was under surveillance and in potential danger.

Colorado prosecutors charged Counterman solely based on his Facebook interactions, asserting that his messages transcended the bounds of protected speech under the First Amendment. Counterman contended that his messages were not “true threats,” arguing that he lacked a subjective understanding of their threatening nature. The lower courts, relying on an objective reasonableness standard, rejected this assertion, deeming the messages as unlawful threats.

The Supreme Court, however, overturned the lower courts’ decisions, opining that while “true threats of violence” are not shielded by the First Amendment, establishing whether a statement is a true threat necessitates a subjective test. The Court emphasized that an objective standard could potentially stifle legitimate speech. A subjective analysis is therefore crucial to reconcile the tension between safeguarding speech and enabling lawful prosecution for illicit expressions.

The ruling specified the requisite intent prosecutors must establish, decreeing that they must demonstrate that defendants made threatening statements recklessly, by ignoring a substantial risk of their statements being perceived as genuine threats.

Justice Kagan, writing for the majority, acknowledged that the balance the Court struck is an imperfect one. As she explained, “[a]s with any balance, something is lost on both sides: The rule we adopt today is neither the most speech-protective nor the most sensitive to the dangers of true threats. But in declining one of those two alternative paths,” she continued, “something more important is gained: Not ‘having it all’ — because that is impossible — but having much of what is important on both sides of the scale.”

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Paula Spicer is an attorney with Fraser Trebilcock with expertise in family law, juvenile justice law, mental health law, neurological disorders, and specialized “state of mind” defenses in criminal law. You can reach her at (517) 377-0823 or at pspicer@fraserlawfirm.com.