In this week’s edition:

• Court rules medical cannabis measure cannot appear on Nebraska ballot in November
• USDA seeks additional comments on hemp production rule
• Illinois cannabis dispensary license applicants sue state over application process
• House committee approves bill to reduce barriers to cannabis research
• Several interesting medical studies are published
• And more…

Federal

House Committee Approves Legislation Reducing Restrictions to Cannabis Research - The House of Representatives Energy and Commerce Committee approved the Medical Marijuana Research Act, which seeks to address some of the existing barriers to cannabis research. To “improve and increase the opportunity for very urgently needed medical marijuana research,” the bill would establish a simplified registration process for researchers and expand the sources of cannabis that scientists may access, increasing the supply of cannabis for research purposes.

FDA Hosts Webinar on Protecting Proprietary Information - The Food & Drug Administration (FDA) is hosting a webinar to instruct cannabis-based drug developers and cultivators on using drug master files to prevent the disclosure of proprietary information in submissions to the FDA. The webinar will also cover the FDA’s role in the regulation of cannabis and the agency’s draft guidance on researching cannabis for drug development purposes.

IRS Provides New Cannabis Industry FAQs - The Internal Revenue Services (IRS) issued frequently asked questions addressing tax issues in the cannabis industry. The FAQs clarify that cannabis businesses have the same tax obligations as other businesses, despite selling products considered illegal under federal law. Additionally, the IRS provides guidance to cannabis businesses on payment plans, penalties and additions to taxes, cash payments over $10,000 and allowable deductions.

States

State Ballot Initiatives - Voters in Arizona, Mississippi, Montana, New Jersey and South Dakota will vote in November on legalizing the purchase of cannabis for medical or recreational use. Measures in both Arizona and New Jersey are expected to pass, which would result in approximately one in three Americans having access to legal recreational cannabis. If the ballot measures pass in all five states, more than two-thirds of federal lawmakers will represent states with legal medical or recreational cannabis use. Despite efforts by advocates or lawmakers, cannabis legalization will not be on the ballot this year in Arkansas, Idaho, Missouri, Nebraska, North Dakota and Oklahoma.

GA - State Senator Matt Brass (R) updated constituents about the 2019 “THC Medical Marijuana Production” law, which allows Georgia physicians to prescribe 5 percent THC oil for several medical diagnoses. According to Sen. Brass, applications for licensed growers may be available by late Fall 2020. Eventual license holders will then have 12 months to produce and distribute medical cannabis with close monitoring of the distribution.

IL - A group of social equity applicants that did not receive cannabis dispensary licenses is suing the Illinois Department of Financial and Professional Regulation (IDFPR), claiming the state gave dispensary licenses to politically connected businesses and did not offer any way to challenge the application grading process. The suit claims that many of the winners hired a “tied-in lobbyist” that may have had “additional insight into the ‘secret formula’ maximum scoring process.” The lawsuit also notes that an employee of KPMG, the accounting and consulting firm that graded applications, is a partner in one of the 21 groups that secured a spot in the upcoming dispensary lottery. According to a KPMG spokesman, this employee was “not part of the engagement team that scored the applications.”

IA - Officials in Iowa plan to seek a formal exemption under the Controlled Substances Act with the Drug Enforcement Administration (DEA) to prevent the loss of federal funding for education and long-term care facilities. An exemption could also provide cannabis companies in the state greater access to financial institutions and resolve tax burdens.

ME - The Office of Marijuana Policy issued its first round of cannabis business licenses to three cultivators, two cannabis shops and one testing facility. Retail sales of cannabis to adult users are permitted to begin on October 9.

MS - A recent poll of Mississippi voters shows strong bipartisan support for legalizing medical cannabis use in the state. While voters preferred the measure initiated by the Mississippians for Compassionate Care campaign over the one drafted by the Legislature, a majority of voters said they would vote for either on the ballot.

NE - The Nebraska Supreme Court ruled that a medical cannabis legalization initiative cannot appear on the ballot in November. According to the opinion, the measure violates the single-subject rule restricting ballot initiatives to one subject because it contains “at least eight subjects” that are “not naturally and necessarily connected to the . . . primary purpose” of the measure.

OR - The Oregon Liquor Control Commission released guidance for cannabis licensees impacted by natural disasters.

Hemp/CBD

Federal Bill to Allow CBD and Hemp to Be Sold as Dietary Supplements - Representatives Kurt Schrader (D-OR) and Morgan Griffith (R-VA) introduced the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2020 to allow CBD and other hemp-derived compounds to be marketed and sold as dietary supplements. The House of Representatives has not held any hearings or votes on a similar measure introduced in January.

US Department of Agriculture - Though it received over 4,600 comments during the first public comment period, the USDA is seeking new comments on the U.S. Domestic Hemp Production Program Interim Final Rule, particularly from those with experience growing the crop under the interim regulation. The announcement encourages stakeholders to provide input on 12 topics, including the 15-day harvest window, hemp breeding and research, and DEA laboratory registration. Comments are due by October 8.

International

Australia - Regulators in Australia reached an interim decision to amend the country’s Poison Standard and reduce CBD from a Schedule 4 product to a Schedule 3 product in oral, oral mucosal and sublingual formulas for therapeutic use. This change, which takes effect on June 1, 2021, will allow CBD products to be sold without a prescription if they adhere to specified criteria.

St. Vincent and the Grenadines - Following issuance of the first cannabis dispensing license, the Cabinet of St. Vincent and the Grenadines approved the start of operations for the first cannabis pharmacy in the country, allowing Green Lava (SVG) Inc. to begin procuring and dispensing medical cannabis products.

Business

Drug Testing Policies - Business Insider conducted a poll of the largest banks with major offices in New York City about their drug testing policies. None of the respondents screened applicants for THC, consistent with an order that took effect in the city in May prohibiting most employers from screening applicants for cannabis use. Additionally, some respondents reported eliminating drug-testing requirements entirely.

Lavvan Inc. and Amyris Inc. - Cannabinoid developer Lavvan recently sued biotech company Amyris for $881 million for trade secret misappropriation and patent infringement. Under the companies’ research and development agreement, Amyris agreed to create and give exclusive rights to a technology package to Lavvan, which would “control the implementation of technology via manufacturing and commercialization of the cannabinoids.” Lavvan claims that Amyris is now using “intellectual property licensed exclusively to Lavvan to compete against, rather than collaborate with” Lavvan. Lavvan Inc. v. Amyris Inc., case number 1:20-cv-07386 (SDNY, Sept. 10, 2020)

Medical/Health

Cannabis May Offer Potential Therapeutic Benefit for Individuals with Autism Spectrum Disorder - Researchers have reviewed available preclinical and clinical data regarding the use of cannabis and CBD to treat the symptoms of and comorbidities associated with autism spectrum disorder (ASD). The data suggest that cannabis or CBD use is well tolerated by individuals with ASD and may have potential for therapeutic benefit.

Study Finds Cannabis Influences Brain Functions During Fear Processing For Individuals at Clinical High Risk for Psychosis - Individuals at clinical high risk for psychosis often suffer from anxiety and an inability to control or regulate their emotional responses, which are associated with altered responses to emotional stimuli in two regions of the brain. A new randomized, double-blind study found that a single oral dose of CBD influences brain functions in these regions during fear processing. These results are consistent with a previous study finding that CBD influenced activation during verbal memory tasks.

Thai Study Shows Potential Benefits of Cannabis Use - Research conducted by Thailand’s Government Pharmaceuticals Organization has found that cannabis use improved symptoms in 62 percent of children with epilepsy and 5 of 7 patients with multiple sclerosis. Additionally, the studies showed improvements in pain, appetite and sleep palliative in terminal cancer patients who received THC for 3 months.

THC May Reduce Anxiety and Aversive Memory Expression in PTSD Patients - Though some patients with posttraumatic stress disorder (PTSD) have used cannabis recreationally, little is known about the effects of cannabis and THC on traumatic memory outcomes associated with PTSD. A recent review of published studies and randomized controlled trials found that THC can suppress anxiety and traumatic memory expression without producing significant adverse effects if used in low doses or when associated with CBD.

Dentons speaks

Dentons partner Eric Berlin was quoted in an article published in Bezinga discussing the potential impact of the federal Marijuana Opportunity Reinvestment and Expungement Act on businesses and the economy.

“Cardinal considerations for incorporating TCPA safeguards into cannabis marketing,” by Eric Berlin, Nathan L. Garroway, Bety Javidzad, Mark A. Silver, and Taylor M. Koshak, September 14, 2020.

Along with the co-chair of Dentons’ White Collar and Government Investigations practice, Dentons partners Katie Ashton and Eric Berlin participated in a webinar titled “Cannabis Corruption Investigations: Are the Feds Watching You?” on September 17, 2020.