In this week’s edition:

• DEA Proposes Significant Increase in Cannabis and Psychedelics Production for Research
• Federal Reserve Bank Cites Positive Economic Impacts of Cannabis Legalization
• Uber Eats Jumps Into Cannabis Delivery In Toronto
• Bermuda’s Attempt at Cannabis Legalization Squashed by Britain
• Law360 Recognizes Dentons’ Eric Berlin as 2022’s Cannabis MVP

Federal

DEA Proposes Significant Increase in Cannabis and Psychedelics Production for Research – The Drug Enforcement Administration (DEA) proposed to more than double the amount of cannabis that can be legally manufactured for research in 2023 (up to 6.7 million grams from a quota of 3.2 million grams in 2022 and 2 million grams in 2021). According to the notice published in the Federal Register earlier this week, the agency is also looking to dramatically boost the aggregate production quotas of certain psychedelics, including LSD, psilocyn and mescaline. The DEA has consistently increased production goals in recent years as more state and local governments enact reforms. The agency noted “a significant increase in the use of schedule I hallucinogenic controlled substances for research and clinical trial purposes.”

Federal Reserve Bank Cites Positive Economic Impacts of Cannabis Legalization – The Kansas City branch of the Federal Reserve Bank published a report finding that the cannabis industry has had a significant economic impact in states in the region that legalized cannabis. According to the report, “[t]he emergence of the industry has led to higher employment and stronger demand for commercial real estate,” as well as increased tax revenues from cannabis sales. One state under the branch’s jurisdiction, Missouri, will vote on adult use cannabis legalization next month. Efforts in two other states in the region (Nebraska and Oklahoma) failed to get legalization on the ballot for 2022. While the bank does not advocate for federal reforms, its report highlights the importance of increased access to banking for these markets.

Cannabis Company Moves Forward with DEA Approvals Following Lawsuit – The Drug Enforcement Administration (DEA) issued a memorandum of agreement with the intent to issue a Schedule One cultivation registration to MMJ Biopharma Cultivation last week. The company plans to dismiss a lawsuit filed against the DEA, which alleged the agency failed to comply with the statutory timeline requirement for processing its applications. The company sought authorization to cultivate specific genetic strains of cannabis and manufacture a proprietary active pharmaceutical ingredient for use in FDA-approved clinical trials involving treatments for multiple sclerosis and Huntington’s disease.

States

AL – More than 600 sets of medical license application forms were requested from the Alabama Medical Marijuana Commission (AMCC) by the October 17 deadline. The applications will be sent out on October 24, and businesses will have until December 30 to complete them. There are 12 available licenses for cultivators, 4 for processors, 4 for dispensaries and 5 for integrated facilities. The most requested applications were for dispensaries, at 239; followed by 133 requests for integrated facility applications. According to the Commission’s website, more than 20 municipalities have already passed resolutions or ordinances approving sales. State license fees will range from $30,000 for a testing laboratory or secure transporter to $50,000 for an integrated facility.

CA – California is adopting an expanded approach to crack down on illicit operations by turning the state’s multi-agency seasonal eradication program into a year-round investigative effort. According to Attorney General Rob Bonta (D), the new program will attempt to prosecute underlying labor crimes, environmental crimes and the underground economy. The seasonal eradication program, which lasts about 90 days each summer, will continue in tandem with the cooperation of other federal, state and local agencies. This year’s eradication program resulted in the seizure of nearly one million plants valued at approximately $1 billion, as well as 100 tons of processed cannabis.

KY – Recent findings from a committee established to gauge public opinion on medical cannabis in Kentucky, the Team Kentucky Medical Cannabis Advisory Committee, found overwhelming support for legalization of cannabis for medical use. “Polling suggests 90% of Kentucky adults support legalizing medical cannabis,” Gov. Andy Beshear (R) said. This comes after the failure of state lawmakers to pass legislation to legalize medical cannabis during the state’s most recent legislative session.

MI – Michigan reported a new high in cannabis sales for the month of September. The state saw $195,349,995 worth of adult-use cannabis purchases and $16,629,957 in medical cannabis sales last month. That total is about $2 million greater than the previous record in July and $17 million more than the earlier April record.

MN – A unique cannabis market has been developing in Minnesota since July 1, when low-potency, hemp-derived edibles and beverages became legal. Legislators sought to address the proliferation of unregulated hemp-derived products over the past 2 years and protect consumers by legalizing products with less than 5 milligrams of THC. However, some state and local officials are concerned by the fact that the legislature did not establish regulatory oversight or licensing requirements for businesses manufacturing or selling such products. Many local governments have been deciding whether to write their own zoning and licensing regulations for businesses selling cannabis products, enact a moratorium to prohibit such businesses from operating in their communities for up to one year, or take a “wait and see” approach. The topics of agency oversight, local control, and taxation will likely be taken up in the next legislative session.

MO – Roman Catholic bishops in Missouri have taken a stance against the legalization of adult-use cannabis, urging “Catholics and all persons of good will to oppose Amendment 3.” The bishops say that they are concerned about potential negative impacts on public health and the workforce, which they say would likely outweigh any benefits. Instead of legalizing cannabis, the bishops are urging action to target underlying social and economic issues that can lead to substance abuse.

NV – Last week, the Nevada Cannabis Compliance Board began accepting applications for cannabis “consumption lounges.” Under the current regulatory regime, existing retailers are able to apply for a consumption lounge license. Independently licensed lounges will now also be able to enter into a contract with a retailer to purchase ready-to-consume cannabis products. “Nevada’s lounges will be a one-stop entertainment shop to create jobs, grow the industry and boost our economy,” noted Gov. Steve Sisolak (D).

OK – The Oklahoma Bureau of Narcotics (OBN) has been targeting criminal organizations involved in illegal cannabis grow sites across the state. Over September and October, nearly 80,000 illegally cultivated plants have been seized, along with 3,100 lbs. of cannabis and 16 firearms. OBN Director Donnie Anderson promises that more investigations are underway.

RI – This month, the Department of Business Regulation is expected to open the adult-use retail application process to existing medical cannabis operators. Meanwhile, certain delays in the establishment of the state’s cannabis commission are being blamed for holding up the licensing of new entrants to the state, effectively creating a limited marketplace that will benefit only those cannabis companies currently licensed under the state’s medical cannabis regime. Recreational sales are expected to begin on December 1.

SD – South Dakotans for Better Marijuana Laws (SDBML) announced a 10-day statewide tour to register and educate voters in light of recent polls showing 47 percent of voters oppose a citizen initiative on the November ballot to legalize adult use cannabis, with eight percent remaining undecided. If approved, the ballot initiative would authorize adults 21 years of age or older to purchase and possess up to 1 ounce of cannabis and grow up to 3 plants for personal use. The measure omitted any regulatory policies around taxation, licensing, or equity, leaving those decisions up to the state legislature this time around. While 54 percent of voters approved adult use legalization at the ballot in 2020, the South Dakota Supreme Court invalidated the measure on procedural grounds following a legal challenge led by Gov. Kristi Noem (R).

International

Bermuda – Britain’s crown-appointed governor of Bermuda, Rena Lalgie, recently quashed legislation that would have legalized recreational cannabis on the island and set up a related licensing authority to regulate the new industry. Although Bermuda is a British overseas territory, such involvement by the Governor is highly unusual and comes despite warnings by Premier E. David Burt that it would “destroy” the island’s relationship with Britain. 

Colombia – The legalization of cannabis is reportedly moving through the country’s Congress. Most recently, the Chamber of Representatives First Committee, in a 31-2 vote, approved legislation legalizing and regulating cannabis nationwide.

Business

Major League Baseball to Promote CBD Products from Charlotte’s Web  – Three years after MLB became the first US sports league to remove CBD from its list of banned drugs, the league has entered into a $30.5 million partnership with Colorado-based cannabis company Charlotte’s Web. In a statement, MLB Chief Revenue Officer Noah Garden said the deal makes CBD "a more widely adopted part of the health and wellness regimen of our players and fans." Under the partnership, MLB now owns roughly 6.1 million shares of Charlotte's Web, with the company owing a 10 percent royalty on any products sold with MLB branding after the total sales exceed $18 million.

Uber Eats Jumps Into Cannabis Delivery In Toronto – The Canadian press has reported that Uber Eats is partnering with online cannabis marketplace Leafly in a deal that will see the delivery service process cannabis orders for the following retailers: Hidden Leaf Cannabis, Minerva Cannabis and Shivaa’s Rose. “We are partnering with industry leaders like Leafly to help retailers offer safe, convenient options for people in Toronto to purchase legal cannabis for delivery to their homes, which will help combat the illegal market and help reduce impaired driving,” said Lola Kassim, general manager of Uber Eats Canada.

Dentons Speaks

Cannabis MVP – Law360 has recognized Eric Berlin, co-chair of Dentons’ US and global Cannabis teams, as MVP of the Year in Cannabis law for 2022. One of the nation’s leading cannabis law authorities, Berlin advocates full-time for clients in, or impacted by, the state-legal cannabis and hemp industries, including helping them navigate tensions with federal law. Berlin has shaped the cannabis industry through his foresight and creativity and by building a preeminent legal practice to help clients access private and public capital markets, ensure compliance, establish multi-state operations and grow companies globally.

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

Authored by associate Jacob Raver and Malina Dumas.