Employee Ownership Blog
Corey Rosen

Corey Rosen

New Maryland Law Lets Cannabis Businesses Have ESOPs

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.

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Corey Rosen

Bipartisan Group Introduces Promotion and Expansion of Private Employee Ownership Act of 2025

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.

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Corey Rosen

Could a New Supreme Court Decision Make It Easier to Sue ESOPs?

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.

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Corey Rosen

New Jersey Moves Forward on Employee Ownership Program

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Corey Rosen

New Report Details Employee Ownership in Europe

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.

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Corey Rosen

Matthew Licina

WA Bill Would Eliminate State’s Employee Ownership Program

Facing a budget deficit, Washington Governor Bob Ferguson is looking to potentially eliminate the state’s employee ownership program, which just got underway in 2024 and is similar to one in Colorado. Representative Adison Richards, a Democrat, has introduced HB 2047, a bill that would eliminate the program and its funding.

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Corey Rosen

EBSA Nominee Previously Urged ERISA Litigation Reform

In Why Does the Department of Labor Allow ERISA Regulation Through Litigation By Plaintiff Lawyers?, a September 2024 post on his private blog FID Guru, Daniel Aronowitz, the nominee to head the Department of Labor’s Employee Benefits Security Administration (EBSA), urged Congress to reform ERISA litigation rules. He wrote, “Congress must act with ERISA litigation reform. In the 1990s, the trial bar was filing frivolous securities fraud cases against public companies, using investors with as little as one share of stock. Congress acted with the Private Securities Litigation Reform Act of 1995 (PSLRA), creating a higher pleading standard to combat securities fraud abuse. It has not been a perfect solution, but at least Congress tried to reduce frivolous litigation.”

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Corey Rosen

California Bill Would Create Contracting Set-Aside for ESOP Companies

California Republican Senator Suzette Valladares has introduced SB-713, a bill that would:

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Corey Rosen

Massachusetts Bill Would Exclude Capital Gains from Sale to ESOP from Taxation

Massachusetts Senate bill S. 1950, An Act to Promote Employee Ownership, would exempt capital gains from the sale of a Massachusetts business with 500 or fewer employees from capital gains taxation. The bill was introduced by Democrat Julian Cyr and referred to committee. Long-term capital gains in the state are taxed at 5%.

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