In this week’s edition:

• Biden Touts Cannabis Scheduling Review and Pardons in New Proclamation for “Second Chance Month”
• Three in Five Americans Want Congress to Pass Cannabis Banking Reform, American Bankers Associations Poll Finds Amid Renewed Push
• Florida Voters Will Decide on Cannabis Legalization in November as Supreme Court Rejects Attorney General’s Move to Block Ballot Measure
• A New York Judge Scales Back an Order Invalidating State’s Cannabis Regulations
• Virginia Governor Vetoes Bill to Legalize Cannabis Sales
• Germany Becomes Largest EU Country to Legalize Recreational Cannabis

Federal

Biden Touts Cannabis Scheduling Review and Pardons in New Proclamation for “Second Chance Month” – The Biden administration is touting its role in directing federal agencies to complete cannabis scheduling review, as well as issuing presidential pardons for cannabis-related offenses, as part of President Biden’s proclamation declaring April to be “Second Chance Month.” Having previously stuck to promoting clemency actions when discussing cannabis reform, the president’s frank discussion of cannabis scheduling review is notable, especially with the November election approaching. The administration has been vocal in its efforts to reschedule cannabis, as Vice President Kamala Harris has urged the Drug Enforcement Agency (DEA) to finish its review, and Secretary of Health and Human Services Xavier Becerra has defended his agency’s rescheduling recommendation while telling cannabis advocates to “knock on [the] door” of the DEA for answers about the timing of their decision.

DEA Officials Discuss Cannabis Scheduling Timeline, Seeking to “Correct Misperception” That Decisions Are Made in a Shroud of Secrecy – Drug Enforcement Administration (DEA) officials have publicly discussed the cannabis rescheduling process for the first time. DEA senior prevention program manager Rich Lucey spoke recently on a DEA-affiliated podcast, stating “I just think it is important . . . to help people understand the process.” He further commented that "HHS has done their part, and now DEA is doing its part," which "can take anywhere from like three to six months sometimes." As the HHS recommendation was issued August 29, 2023, we are currently in month seven of the DEA review.

Federal OSHA Officials Host Event on Cannabis Industry Worker Protections as More States Legalize – Two representatives from the Occupational Safety and Health Administration (OSHA) are set to present a webinar on April 16 about the federal agency’s latest guidance and enforcement priorities for “protecting workers within the cannabis industry.” The presentation will further highlight recent OSHA inspections within the industry.

New Poll Finds Nine Out Of 10 Americans Support Legalizing Cannabis – The survey, conducted by the Pew Research Center, found that 88 percent of respondents said that cannabis should be legal for medical or recreational use by adults. A strong majority (57 percent) said cannabis should be legal for either purpose, while approximately a third (32 percent) supported medical use only. Only 11 percent of respondents said cannabis should not be legal for any purpose. As to the impact, most respondents seem to understand the economic benefits from legalizing cannabis, as just over half (52 percent) said legalized recreational cannabis is good for the local economy.

Three in Five Americans Want Congress to Pass Cannabis Banking Reform, American Bankers Associations Poll Finds Amid Renewed Push – A new poll from the American Bankers Association shows that 63 percent of Americans back cannabis businesses having  banking access. Compared to last year’s data (55 percent in support), this is a significant uptick in support for legislation such as the Secure and Fair Enforcement Regulation (SAFER) Banking Act that would protect financial institutions that service state-licensed cannabis businesses from being penalized by federal regulators. This survey is released amid growing pressure on Congress to advance the SAFER Banking Act, which cleared the Senate Banking Committee last September. Senate Majority Leader Chuck Schumer (D-NY) says the bill remains a “very high priority” for the Senate.

State

CO – A Colorado bill (SB24-158) is raising alarm among free speech advocates, who are concerned the bill would make it illegal to talk positively about cannabis online. The bill, which concerns internet age verification and content policies, would require social media platforms to immediately remove any user who “promotes, sells or advertises an illicit substance.” The definition of “illicit substance” includes not just illegal drugs, but also any controlled substance, which would thus affect state-legal cannabis and certain hemp products containing more than 1.25 milligrams of THC.

DE – As regulators issue a series of draft regulations to set up Delaware’s adult-use cannabis market, a bill (HB 285) that would markedly expand the state’s medical cannabis program is now before Gov. John Carney (D) for signature. The bill removes certain limits on patient eligibility and includes a provision permitting patients over 65 to self-certify for medical cannabis access without the need for a doctor’s input. Meanwhile, a separate bill, which would provide state-level protection to banks that service the cannabis industry, has passed the House and is now with the Senate.

FL – Florida's Supreme Court has decided in favor of allowing an adult-use cannabis legalization initiative proceed to the November ballot, despite opposition from Attorney General Ashley Moody (R). The decision follows months of debate over the initiative. Moody requested the court invalidate the ballot measure, arguing, among other things, that it was misleading regarding federal cannabis laws. The same court struck down a similar ballot measure in 2022.

KS – The Kansas State Senate has tabled legislation (SB 555) that would have created a medical cannabis pilot program that included, among other things, the distribution of cannabis to patients through as many as 950 of the state’s pharmacies. The same bill will be up for debate again at the next legislative session in January 2025. The legislation would not have permitted cannabis vaping or edibles.

KY – Lawmakers’ proposed budget bill includes a provision that seeks to limit funding for the Office of Medical Cannabis, the new regulatory body responsible for regulating Kentucky’s forthcoming medical cannabis program. The bill would make funding contingent on a finding by the Board of Physicians and Advisors that “there is a propensity of peer-reviewed, published research with sufficient evidence as to the efficacy of medical cannabis” for certain conditions. The state’s constitution permits the governor to line-item veto budget appropriations bills, which means that the governor could delete the applicable provision without vetoing the entire legislative package. Gov. Andy Beshear (D) is a well-known proponent of the state’s medical cannabis program.

MO – Cannabis regulators within the Missouri Department of Health and Senior Services revoked the licenses of nine social-equity cannabis businesses after determining the companies were not actually eligible for the designation under state law. The revocations come less than six months after an investigation by the Missouri Independent found that the cannabis social equity program was being exploited.

NY – After nullifying a substantive portion of New York’s adult-use cannabis regulations as arbitrary and capricious, in response to a petition (filed by Leafly Holdings, Inc, among others), New York state judge Kevin Bryant issued an amended order voiding only those specific rules relating to the marketing of cannabis products on third-party sites, which was the focus of Leafly’s original petition. The original order was quickly attacked when it was released on April 3, with a state senator stating that the court was effectively “throwing out all agency regulations.” Within 24 hours, the judge issued a revised order.

SD – South Dakotans for Better Cannabis Laws, an advocacy group, announced that they have collected half of the signatures required to place adult-use legalization on the state’s November ballot. If successful, this would be the third time adult-use legalization has appeared on the ballot in South Dakota. The first attempt passed, but was overturned by the state Supreme Court, and voters rejected the second attempt.

VA – More than three years after Virginia legalized the possession of small amounts of cannabis, Gov. Glenn Youngkin (R) vetoed a bill to legalize sales of adult-use cannabis, claiming that it would “endanger Virginians’ health and safety.” Delegate Paul Krizek (D), the lead sponsor of the bill, said the governor’s veto “squandered a vital opportunity to safeguard Virginians and will only exacerbate the proliferation of illicit products, posing greater risks to our schools and public safety.”

Hemp

MO – Proposed legislation in Missouri seeking to regulate intoxicating hemp-derived products, such as delta-8 THC, has drawn both intense support and scrutiny. At a recent cannabis industry summit, supporters of the bill advocated for regulating hemp-derived products under the rules that apply to cannabis companies. Opponents of the bill, however, have pushed back on forcing the hemp industry to comply with these same rules, particularly given that “[t]he feds are not stopping the sale of this product.”

NE – The Nebraska legislature debated a tax bill that would set a 100 percent tax rate on CBD and consumable hemp products. Despite criticism of this rate, no alternatives were proposed during the floor debate, though some legislators did advocate for cannabis legalization as an alternative way to raise revenue.

International

Germany Becomes Largest EU Country to Legalize Recreational Cannabis – Germany has implemented new legislation allowing adults over 18 to possess up to 25 grams of dried cannabis and cultivate three cannabis plants at home, making it one of the most cannabis-friendly countries in Europe, alongside Malta and Luxembourg. The law also permits the establishment of "cannabis clubs" starting July 1, where each club can have up to 500 members and distribute 50 grams of cannabis per person per month.

Malawi Legalizes Cultivation of Cannabis for Industrial and Medicinal Use – Malawian legislators have legalized the cultivation of a potent local strain of cannabis for industrial and medicinal purposes, granting licenses for growing and transportation. However, smoking cannabis remains illegal. The bill's passage faced opposition, with some members calling for more time to review the legislation. Advocates argue that legalizing the plant will boost the country's economy.

Business

The Verdict Is in: Cannabis Legalization Has Been a Success Story for States (Op-Ed) – Paul Armentano, deputy director of advocacy group NORML, asserts that more than a decade of cannabis legalization in states like Colorado and Washington has proven successful. Legalization has shifted the market from underground to regulated, generated tax revenue, decreased arrests and improved product safety. Contrary to fears, teen usage hasn't increased, and there's no evidence of heightened psychosis rates. With public support for legalization at its peak, Armentano advocates that now is the time to end cannabis prohibition.

UFCW Supports SAFER Banking – The United Food and Commercial Workers International Union (UFCW) continues to back the SAFER Banking Act, aiming to grant federal banking access to numerous cannabis industry workers for financial stability. UFCW International president Marc Perrone emphasized the necessity of this legislation, stating, "The cannabis industry is completely legitimate and lawful in many states and should not be excluded from basic financial protections. The SAFER Banking Act addresses these issues, providing a pathway for legitimate cannabis businesses, and their employees, to have access to traditional banking services."

Science

Study Finds Limonene Terpene Reduces THC-Induced Anxiety – A recent study found that limonene can reduce THC-induced anxiety when cannabis is taken with a dose of limonene. The National Institute on Drug Abuse funded the study, which was published in the journal Drug and Alcohol Dependence by researchers from Johns Hopkins University School of Medicine and the University of Colorado Anschutz Medical Campus. According to the research, when limonene is taken alone it does not reduce anxiety. However, when a dose of THC is increased along with the simultaneous administration of THC and limonene, the limonene selectively reduces the anxiety-inducing effects of THC, potentially making THC more effective for therapeutic purposes.

Researchers Explore Impact of Cannabis Use During Pregnancy – A study funded by the Maternal and Fetal Medicine Research Group of Vall d'Hebron Research Institute looked at the impact of antenatal cannabis use on fetal growth, preterm birth and other perinatal outcomes. Researchers found that “when isolating the impact of cannabis use by excluding women who use other recreational drugs and those who discontinue cannabis during pregnancy, no significant association between antenatal cannabis use and [small for gestational age at] birth was found.”

Researchers Present Findings on Metals Present in Cannabis Vapes – During an American Chemical Society meeting in March, researchers presented their findings that both legal and illegal vape pen liquids contained metal nanoparticles, including copper, zinc, lead, nickel, chromium and more. The study was funded by Health Canada and conducted by the National Research Council of Canada. Andrew Waye, who is in charge of the research program at the Health Canada Office of Cannabis Science and Surveillance, stated in a press release that “[c]annabis vapes are newly regulated products in Canada, so we don’t yet have much scientific data about them,” and “[t]his is an opportunity for us to look at some of the questions concerning the risks and unknowns of cannabis vapes.”

Psychedelics

Portland VA Opens Lab to Treat Veterans With Psychedelics – In March, the Department of Veterans Affairs’ Portland Health Care System opened the Social Neuroscience & Psychotherapy Lab, known as the SNaP Lab, focused on psychedelic therapy and clinical trials. According to its mission statement, the SNaP Lab “aims to maximize the benefits of therapeutic alliance and psychotherapy through the adjunct use of social psychopharmacology, such as oxytocin, MDMA, and psilocybin.”

Utah Authorizes Psychedelics Pilot Program – Gov. Spencer Cox (R) allowed a bill to become law without his signature that authorizes a pilot program for hospitals to administer psilocybin and MDMA as an alternative treatment option. While the governor had his own concerns with the legislation, he acknowledged that the bill had “overwhelming support,” with both chambers of the state legislature unanimously approving the measure. Under the pilot program, psychedelics will be administered either by a privately owned, nonprofit health care system with at least 15 licensed hospitals or within medical programs operated by institutions of higher education in the state.

Ibogaine, the Psychedelic, Unlikely to Receive Approval as Opioid Treatment, Says Top Addiction Researcher – National Institute on Drug Abuse director Nora Volkow said it is unlikely ibogaine will be approved as a treatment for opioid addiction. The remarks serve as a cautionary note amid widespread enthusiasm about ibogaine’s potential for addiction treatment. Volkow, however, states its potential cardiac side effects could stand in the way.

Dentons Speaks

Dentons partner Amy Rubenstein and associate Joanna Borman published an article, “Ready, Set, Recall: What Cannabis Businesses Should Consider When Recalling Products,” in Marijuana Moment.

Dentons’ Cannabis team has partnered with MBO Ventures and several certified public accounting (CPA) firms to offer virtual panel discussions that dive into why the employee stock ownership plan (ESOP) is a game-changer for cannabis businesses. Dentons partners Hannah King and Mark Loyd, together with Darren Gleeman of MBO Ventures and John Pellitterri, CPA of Grassi, recently hosted a webinar that covered the ESOP option, its significant tax advantages, the nuances of navigating an ESOP transaction and the process of securing approvals from state regulators. The recording is available here.

Dentons will cohost future webinars with MBO Ventures and CPA firms including Aramanino, AAF CPAs and Bridge West. Watch for invitations to those in upcoming alerts.

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

Authored by associates Malina Dumas, Lauren Estevez,Seena Forouzan, Jacob Raver and Margo Wilkinson Smith.