Corey Rosen
A bipartisan bill in the Minnesota Senate (Senate File 3520) would amend several provisions of Minnesota’s cannabis statute to allow ESOP companies to own cannabis businesses. Technical issues with the current licensing law make ESOP trusts ineligible to be owners. Similar legislation was recently enacted in Maryland.
Corey Rosen
Senator Bill Cassidy, M.D. (R-LA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, just introduced two bills to encourage ESOPs.
Corey Rosen
A new NCEO paper, Expanding Employee Ownership: Models in the US, UK, Canada, France, and Slovenia (PDF; also see the embedded version below), explores the five leading models for trust-based employee ownership. Research and experience show that holding employee ownership in a trust, rather than individually owning shares, tends to be the most sustainable form of employee ownership. Companies generally need tax or other incentives to create and fund the plans for employee ownership to grow. Also, employee ownership is more likely to be widely adopted in forms that are funded in whole or in part by the company, rather than just by employees. These five models are the only legislatively supported models that combine all these features.
Corey Rosen
Bill relaunches last Congress’s Employee Equity Investment Act under Commerce Department
Senators Chris Van Hollen (D-MD) (press release) and Jerry Moran (R-KS) and U.S. Representatives Blake Moore (R-UT) and Lori Trahan (D-MA) have introduced the American Ownership and Resilience Act (Senate and House bill PDFs), a relaunch of the Employee Equity Investment Act of 2023 (EEIA) introduced in the last Congress. The legislation is cosponsored in the Senate by Senators Tammy Baldwin (D-WI), Todd Young (R-IN), Jeanne Shaheen (D-NH), Eric Schmitt (R-MO), and Peter Welch (D-VT). In the House, it is cosponsored by Representatives Dusty Johnson (R-SD) (press release) and Bill Foster (D-IL). It has not yet been assigned a bill number.
Corey Rosen
Maryland Governor Wes Moore signed legislation allowing cannabis businesses in the state to be owned by ESOPs. Under prior law, licenses to sell cannabis could not be transferred for five years, and then only under certain circumstances. The new law, SB-215, is a set of cannabis reform provisions that includes one allowing an exception to this rule when a cannabis licensee sells to an ESOP (see page 11 of this PDF). There are a handful of cannabis businesses with ESOPs in other parts of the US. For businesses that are large enough and profitable enough to have an ESOP, it can help avoid some of the particularly onerous tax obligations that cannabis companies can face.
Corey Rosen
House Ways and Means Committee chair Mike Kelly (R-PA) and committee member Jimmy Panetta (D-CA) have introduced the Promotion and Expansion of Private Employee Ownership Act of 2025. The proposal does not yet have a bill number. The bill was introduced with six cosponsors equally split between both parties. The bill is identical to S. 2515 in the last Congress.
Corey Rosen
ESOP legal experts suspect that the recent unanimous Supreme Court decision in Cunningham v. Cornell University, No. 23-1007 (U.S. Apr. 17, 2025) will make it easier for plaintiffs to file lawsuits against ESOP fiduciaries. The issue in Cornell related to ERISA’s prohibited transaction provisions and the many statutory exemptions. Under ERISA, fiduciaries are prohibited from causing plans to engage in transactions with parties in interest, subject to exemptions, including the adequate consideration exemption that authorizes ESOP stock transactions in employer stock. The question in Cornell was whether plaintiffs could adequately plead a violation of ERISA’s prohibited transaction provisions by simply stating that a transaction with a party in interest occurred, or whether plaintiffs must also plead that an exemption does not apply. Federal circuit courts have been split on this question, with some holding that plaintiffs had to plead facts to plausibly state that an exemption did not apply and others holding that plaintiffs do not have to address the exemptions. In Allen v. GreatBanc (7th Cir. 2016), the Seventh Circuit held that the plaintiffs stated a plausible breach of ERISA’s prohibited transaction provisions merely by alleging that the ESOP’s stock value dropped after the sale, that the ESOP transaction was financed by the seller, and that the loan’s interest rate was high. The Seventh Circuit did not require the plaintiffs to plead the absence of any prohibited transaction exemptions.
Corey Rosen
Corey Rosen
The Annual Economic Survey of Employee Share Ownership in European Countries, 2024 (PDF) from the European Federation of Employee Share Ownership shows that while the number of employee share plans has increased, the percentage of employees participating in these plans has decreased somewhat. The report is primarily focused on large publicly traded companies in Europe. Most of the plans that are broad-based are some form of stock purchase plan. The report says that 6.7 million employees participate in employee ownership plans in Europe, or about one in five employees in all large public companies. Nonmanagement employees own an average of 1.7% of the shares in these companies.
