In this week’s edition:

• IRS to increase taxation enforcement on cannabis industry
• Delaware plans to expand its medical cannabis program
• Mississippi Governor speaks out against cannabis referendum
• Dentons Partner Eric Foster to lead the Canadian Chamber’s review of national cannabis law
• And more…

Federal

The IRS is Building Cannabis Compliance Teams - The Internal Revenue Service (IRS) is undertaking new efforts to boost taxation enforcement, including building out specialized audit teams with specific expertise in the cannabis industry and launching enforcement partnerships with states where cannabis is legal.

DEA Removes Marijuana Plants from Illegal Grow in Rancho Penasquitos - The US Drug Enforcement Administration removed 2,000 illegally planted cannabis plants outside of Rancho Pensaquitos California. The agency also discovered a nearby processing plant containing 300 to 500 pounds of distribution-ready cannabis.

Addiction Medicine Doctors Group with Prohibitionist Roots Embraces Federal Marijuana Reforms - After consistently aligning itself with the prohibitionist movement, the Board of Directors of the American Society of Addiction Medicine (ASAM) voted to adopt 24 cannabis-related recommendations, a move considered an about-face for the organization. Notably, the group called for changing federal law to ensure that those who use cannabis are not subject to federal legal action if they live in a state where it is legal. 

States

CA - A California appeals court ruled that the City of Baldwin Park was within its rights to sign an exclusive cannabis transportation deal with California-licensed cannabis distribution company  Rukli Inc. The court ruled the agreement did not violate state cannabis competition laws. “While the legislature intended the act to restrain individuals and companies from acting in an anti-competitive manner, it expressed no similar intent to restrict cities,” Judge Manella wrote.

DE - With the close of the application process on October 28, Delaware is now set to review the candidates for medical cannabis licenses. At present, the state has only three licensed operators with a total of six locations across the state, including three in New Castle County, two in Sussex County and one in Kent County.

IL - A Cook County court declined to rule on a motion for an expedited ruling on a writ of mandamus seeking to force the state's Department of Agriculture to issue craft-cannabis-grower licenses that have been delayed by the pandemic. Instead, the state has 21 days to respond, and the case is being transferred to a new judge, so the motions won't be up for another hearing until Nov. 24.

MA - The state’s Cannabis Control Commission rejected a proposal to delay cannabis delivery for recreational users until 2023. Instead, the commission finalized a plan to formalize the home delivery program. Home delivery of cannabis has long been allowed under the state’s medical cannabis program but advocates of adult-use-delivery have pushed for a specific, delivery-only license to serve the broader cannabis market, arguing it will allow for more competition.

ME - A trade group representing Maine-based cannabis businesses has filed suit against the state for not enforcing a law reserving state cannabis business licenses for Mainers. In May, the state’s Department of Administrative and Financial Services, in response to litigation against the state by non-residents, stated it would no longer enforce the policy.

MO - Two years after voters approved legalizing medical cannabis in Missouri, the first dispensary in the Kansas City area opened. The Fresh Green dispensary in Lee’s Summit opened to long lines and sold out its inventory in just two days.

MS - Governor Phil Bryant tweeted his opposition to Initiative 65, which would legalize medical cannabis in Mississippi. The Governor stated, “Let’s listen to the science and vote no on legalizing marijuana.” While recent polls suggest a slight majority of Mississippians support medical cannabis, two opposing amendments may confuse voters and lead to a victory for anti-legalization forces. 

MT - The Montana Supreme Court rejected a lawsuit seeking to invalidate a cannabis legalization initiative slated to appear on the state’s November ballot. Notably, the court didn’t weigh in on the merits of the challenge; simply stating that petitioners Wrong for Montana failed to demonstrate “urgency or emergency factors” that would justify side-stepping the trial and appeals courts.

MT - Kurt Alme, US Attorney for the District of Montana, issued a press release titled “Recreational Marijuana - Consider the Risks,” urging Montanans to think about what he described as the “serious ramifications” of legalizing recreational cannabis.

OK - The Oklahoma Medical Marijuana Authority announced that fees and taxes levied on the state’s cannabis industry generated $42 million dollars for the state’s Department of Education. That sum is enough to fund the salaries of nearly 800 teachers.

OR - Two Oregon growers of wine grapes failed to convince a state judge that their crop would be harmed by odors from a neighboring cannabis operation, as they claimed. Yamhill County Circuit Court Judge Cynthia Easterday ruled that Smera Vineyard and Maysara Winery failed to meet their burden of proof to justify blocking the Wagner family from growing and processing their crop.

OR - The Oregon Liquor Control Commission issued “Guidance on Disclosing Interests in a Recreational Marijuana Business.” The document provides guidance on (i) disclosing ownership and financial interests, (ii) submitting background check information, and (iii) what changes of business structure require notice or preapproval.

PA -  The Pennsylvania House of Representatives approved an amendment to protect medical cannabis patients legally using cannabis against penalties for violating the state’s DUI laws. The proposal cleared the chamber in a 109-93 vote as an amendment to a broader piece of legislation concerning motor vehicle policies.

Hemp/CBD

US - On Tuesday, nine members of Congress sent a letter to the Drug Enforcement Administration (DEA) urging the agency to revise its proposed hemp regulations. The letter comes after the DEA released an interim final rule (IFR) for the crop in August, stating that the regulations were simply meant to comply with the 2018 Farm Bill, which legalized hemp and its derivatives. Stakeholders and advocates have expressed serious concerns about the regulations, arguing that they put processors at risk of violating federal law and would hamper the industry’s growth.

USDA - The US Department of Agriculture (USDA) released, then rescinded, a notice regarding the provision of federal loans to hemp processors. The agency issued the guidelines in April and and followed them up with a  notice this month informing applicants about the policy change in advance of the expiration of the 2014 hemp pilot program. However, after Congress approved a continuing resolution that extends the program until September 30, 2021, the USDA issued an “obsoleting notice” invalidating the prior document, because the loan policies are not currently applicable.

USDA - The US Department of Agriculture has approved hemp plans from Illinois, Indiana, Michigan, New Mexico, Oklahoma and South Dakota, as well as three Indian tribes.

International

ITA - Italy has added to a table of medicines subject to its narcotics law ingestible formulas with flower-derived CBD. The change sparked anger and confusion among cannabis activists and stakeholders who worry that it could negatively impact the nation’s industrial hemp industry.

FRA - On Novemberr 19, the EU’s top court will deliver its final ruling in the Kanavape case and the legality of France’s ban on hemp-derived CBD. The decision, which has the potential to open up a new CBD market in France and trigger a wave of legislative reviews and reform in other EU member states, could have implications for the European Commission’s final stance on whether flower-derived CBD should be regulated as a narcotic rather than a food ingredient.

LBN - On the advice of McKinsey and Company, the Lebanese parliament has legalized the farming of cannabis for medicinal and industrial use, with the specific objective of exporting the crop to foreign markets.

Dentons is scaling up across Latin America and the Caribbean, most recently with the opening of an office in Medellin, Colombia. The new office is part of Dentons Cardenas & Cardenas, a full service law firm with a more-than-100-year history in the country as well as 11 top-ranked practices and 23 lawyer recognitions in the 2021 edition of Chambers & Partners Latin America. To read more about our Life Sciences and Health Care practices in region, please click here.

Business

Caliva - One year after becoming chief brand strategist of California-based cannabis company Caliva, rapper Jay-Z announced his first cannabis line. Called Monogram, the brand debuted with a new website and Instagram account. It is not yet known whether Monogram products will be available only in California or in other states as well.

Medical/Health

International Journal of Drug Policy - A study titled “Reductions in Alcohol Use Following Medical Cannabis Imitation,” found that new medical cannabis patients who reported using alcohol on at least 10 occasions over a 12-month period prior to to enrolling in the program, self-reported “reductions and cessation of alcohol use” and “improved health outcomes.”

Dentons speaks

Dentons Partner Eric Foster will lead Canadian Chamber of Commerce's industry-led review of the nation’s Cannabis Act. The goal of the industry review is to provide recommendations on how the federal government can improve Canada’s legislative and regulatory frameworks for cannabis.

Dentons is co-sponsoring a series of events organized by New Frontier Data regarding the upcoming election and the potential impact on cannabis policy in the US. Dentons partner Eric Berlin participated in this week’s panel, titled “What is at Stake November 3rd? An Analysis on Cannabis Legalization.” The webinar will reconvene next week after the election.

Dentons Senior Managing Associate Joanne Caceres co-presented with Bloom Advisors on Illinois’ infused-product market. She discussed key regulatory considerations for operators as well as opportunities for non-licensees to participate in the category. To view a recording of the session, click here.

Joanne also participated on a panel titled “Disputes and Litigation with the Regulators” at the 2020 Cannabis Law Institute Event, where she discussed state application legal battles, amicus strategy and privacy concerns.

Dentons partner Eric Berlin spoke to Business Insider about the future of interstate commerce and the cannabis industry. To read his remarks, click here.

Please click here for more information on Dentons’ US Cannabis group.

Authored by Dentons Council David Quam and Associate Managing Director Crawford Schneider.