In this week’s edition:

• US Sen. Cory Gardner says SAFE Act close to moving forward
• Vermont passes bill to legalize cannabis sales
• USDA temporarily suspends hemp testing requirement due to lab shortage
• Lebanon legalizes cannabis production for medical and industrial uses
• And more…

Federal

Deal On Marijuana Banking Bill Is ‘Close,’ GOP Senator Says - Despite concerns raised by Senate Banking Chairman Mike Crapo (R-ID), lawmakers are “close” to finalizing the Secure and Fair Enforcement (SAFE) Banking Act, which would open financial services to businesses in legal cannabis states, said Colorado Sen. Cory Gardner, the bill’s lead Republican sponsor.

In major shift, UN drug chief questions whether control treaties involving cannabis are out of date - The annual report of the United Nations International Narcotics Control Board (INCB) criticized recreational cannabis legalization, stating (as in years past) that it contravenes international drug control treaties. But INCB President Cornelis P. de Joncheere, surprising many, commented that 2021 may be “an appropriate time” to reevaluate and consider “alternative instruments and approaches.”

States

AK - A judge blocked the state from issuing more medical cannabis dispensary licenses pending resolution of an unsuccessful applicant’s claim that the state didn’t follow the rules in issuing certain existing licenses. Medicanna sued the state after its application was passed over in favor of another applicant who scored lower. The state argued that it was Medicanna that didn’t follow the rules, resulting in its disqualification from consideration.

CA - California regulators approved a process for promulgating regulations for its cannabis track-and-trace program. Absent a non-substantive revision, the proposed rule is identical to the existing emergency Regulation 3702.

CT - Connecticut lawmaker and cannabis legalization supporter Rep. Josh Elliot (D) commented that “the votes still aren’t there” for adult use marijuana. Responding to those who think legalization is just around the corner, he said: “Why would we think the votes would be there this year? Whose mind has been changed? You still need the numbers, and some people want to be a ‘no’ indefinitely.”

IA - Iowa Governor Kim Reynolds (R) stated that she is comfortable with a state board’s recommendation on the amount of medical cannabis available to each patient. The Iowa Medical Cannabidiol Board recommended 4.5 grams of THC in a 90-day period. Currently, the state’s medical cannabis program uses a 3 percent THC limit; Reynolds vetoed a bill with a higher limit last year.

IL - Illinois generated more than $10 million in tax revenue during its first month of adult use cannabis sales. Once administrative fees are accounted for, the remaining 45 percent of the tax revenue will be reinvested in communities disproportionately impacted by the failed war on drugs and used to fund substance abuse and mental health programs.

KS - The Kansas Legislature rejected a bill to reduce penalties for third-time convictions for possession of marijuana, which under current Kansas law is a felony punishable by up to 14 months in prison (though offenders often receive probation). The bill would have made possessing cannabis a misdemeanor (the charge for first-offense possession) no matter how many priors.

ME - Maine issued guidance on cannabis product advertising, prohibiting ads that could be construed as appealing to those under 21. Advertisements cannot be near schools or at public sporting events or music venues unless the venue only admits adults. For social media, advertisers must use age verification technology, and in mass media, advertisers must have data about the consumer base to show the ads are aimed at adults.

NJ – The New Jersey General Assembly, the Legislature’s lower house, approved a bill protecting insurance companies that work with cannabis businesses and consumers. The state Senate will consider the bill next. The full text of the bill can be found here.

TX - The Texas Department of Public Safety published a memo indicating that state labs will no longer test for cannabis in criminal cases for possession, so if prosecutors want such a test, they will either have to pay for it with local funds or do without. This policy means that there will continue to be inconsistency across Texas in how simple possession cases are handled.

UT - Utah Governor Gary Herbert (R) signed Senate Bill 121, modifying Utah’s new medical cannabis law, a week ahead of the program’s launch. The modifications raise patient caps for doctors, remove certain packaging requirements and allow qualifying patients to seek expungement of criminal records for past marijuana convictions.

VA – The Virginia General Assembly, the state legislature, approved a resolution directing the Joint Legislative Audit and Review Commission to “study and make recommendations by July 1, 2022, for how Virginia should go about legalizing and regulating the growth, sale, and possession of cannabis and address the impacts of cannabis prohibition.” Meanwhile, a bill legalizing smokable hemp for people 21 and older passed both houses and is on the Governor’s desk.

VT - The Vermont House of Representatives formally passed a bill to legalize cannabis sales one day after it received lawmakers’ initial approval. Prior to final passage House members added a ban on advertising by cannabis businesses, but rejected expanded disclosure requirements for investors as well as a proposal to give police discretion to test the saliva of drivers suspected of being under the influence. Gov. Phil Scott (R) has said he would need to see strong impaired-driving provisions in order to sign it.

Hemp/CBD

USDA - The US Department of Agriculture and the Drug Enforcement Administration will not require hemp farmers to have their crops tested by DEA-licensed labs for the 2020 crop year, citing a shortage of licensed labs in comparison to the demand for testing. Nor will it require the disposal of crops containing excess THC. The flexibility is effective until October 31, 2021, or until a final rule is released. While problems with the rules remain, this is a welcome change for the industry. 

FDA - Food and Drug Administration Commissioner Stephen Hahn commented that that it would be “a fool’s game” to try to keep popular CBD products off the market, and that “[w]e’re not going to be able to say you can’t use these products.” That said, he added, “we want to get [people] information to help them make the right decisions.”

Federal – A US House bill that would require the FDA to allow CBD as a dietary supplement got three new cosponsors, bringing the total to eight. The new sponsors are Earl Blumenauer (D-OR), Denver Riggleman (R-VA) and Cynthia Axne (D-IA).

MO - The Federal Reserve Bank of St. Louis posted a reminder on its website that licensed hemp businesses can apply for bank accounts; that banks need not automatically file suspicious activity reports (SARs) on such businesses, unless there are transactions with cannabis (i.e., products with greater than 0.3 percent THC); and that “banks should be looking out for additional guidance” on federal hemp rules from financial regulators soon.

NM - New Mexico regulators announced that they are investing $600,000 in local economic development money into Natural ReLeaf’s hemp farm, which is expected to create 56 jobs over the next two to three years.

VA - Virginia lawmakers passed a bill to clarify that smokable hemp is legal for those 21 and over. The products are already widely available in the state, though they have posed a problem for law enforcement, who currently have no way of distinguishing legal hemp from illegal cannabis.

International

Lebanon – Lebanese lawmakers approved a bill to legalize cannabis cultivation for medical and industrial uses, albeit with strict regulation and oversight by private pharmaceutical companies.

Mexico - In Mexico, Senate committees are finalizing provisions of a bill broadly legalizing cannabis, while President Andres Manuel Lopez Obrador has said he is currently focused on cannabis for “medical purposes only.” As drafted, the bill under consideration would allow adults to possess up to 28 grams of cannabis for personal use and to cultivate up to four plants. Individuals could apply for a license to possess more than 28 grams but no more than 200 grams.

Paraguay - Paraguayan regulators have issued preapprovals for the country’s first medical cannabis production licenses. Five licenses will be granted, with final approvals coming in November for entities showing compliance with all requirements.

Business

Eaze - Eaze will use $35 million in funding to roll out a new “verticalization” model. Instead of working with third parties to source cannabis products, the company, which was founded to connect adult consumers with local licensed retailers through an online platform, will run its own retail and distributor operation, along with reselling licensed brands via retail partners.

Medical/Health

Antibiotic Resistance - A study to be published in ACS Infectious Diseases concluded that cannabis may help address antibiotic resistance. Specifically, “cannabinoids exhibit antibacterial activity against methicillin-resistant Staphylococcus aureus (MRSA), inhibit its ability to form biofilms, and eradicate preformed biofilms and stationary phase cells persistent to antibiotics.”

Dentons speaks

Dentons Chicago Partner Eric Berlin and Senior Managing Associate Joanne Caceres, joined by PharmaCann LLC Director of Public and Regulatory Affairs Jeremy Unruh, presented on “Cannabis and Hemp/CBD Legalization” at the University Club of Chicago on February 20.

Berlin and Caceres also presented a Pincus Professional Education seminar on “Cannabis and Hemp Law and Business in Illinois: The Nuts and Bolts” at the Chicago Bar Association on February 21.

Dentons Chicago Partner Katie Ashton spoke on a panel at the Illinois Women in Cannabis’ Equal Opportunity Conference at Chicago-Kent Law School on February 22. The program was sponsored by Dentons, and the panel addressed how lawyers can navigate clients through challenges unique to the cannabis industry.

NOTE: Due to travel restrictions, we have cancelled The Globalization of Cannabis: U.S. Legislative and Regulatory Developments event that was to be held in DC on Wednesday, March 11, 2020.