In this week’s edition:

• Secretary Becerra: Shifts in Public Opinion Will Inform Cannabis Rescheduling
• DOJ Expected to Issue “Cole Memo 2.0” This Year
• Kentucky Becomes 39th State to Legalize Cannabis for Medical Purposes
• Hemp-derived THC Products Face Growing Political Backlash in Numerous States
• Famed Cannabis Researcher Raphael Mechoulam Dead at 92

Federal

Top Federal Health Official: Shifts in Public Opinion Will Inform Cannabis Rescheduling  – Regarding the potential rescheduling of cannabis, US Department of Health and Human Services’ Secretary Xavier Becerra informed reporters last month that the agency will consider “whether or not we can show that there has been a change since the early 1990s in what cannabis means to America.” As yet, the agency has provided no timeline for completing its review and, in any case, the final decision on cannabis scheduling remains with the US Drug Enforcement Administration.

Alcohol Industry Lobbies for Federal Legalization of Cannabis – Wine & Spirits Wholesalers of America (WSWA) issued a letter to Congress calling for cannabis to be regulated at the federal level like alcohol. The trade group is advocating for comprehensive, rather than incremental, federal legalization that would allow states to make their own decisions regarding the legalization of cannabis within their borders.

Cole Memo 2.0 Likely Forthcoming – In testimony before the US Senate, Attorney General Merrick Garland indicated that the cannabis policy memorandum being developed by the DOJ will be “very close” to the 2013 Cole Memorandum—which former Attorney General Jeff Sessions rescinded in January 2018. There are hopes that the new policy will be updated to reflect the current status of the state-legal cannabis industry. Some lawmakers are reportedly concerned that any new policy could backfire and make it more challenging to pass major reform legislation, particularly regarding cannabis banking.

States

GA – A bill that would have expanded Georgia’s medical cannabis program failed to pass in the Georgia Senate. While many legislators reportedly believe that current state law is severely flawed, they could not come to an agreement regarding proposed changes before the session ended on March 29. The legislation would have abolished the current medical cannabis commission, increased transparency and given the Georgia Agriculture Commissioner the authority to license up to 20 companies to cultivate and sell medical cannabis.

HI – A bill legalizing adult-use cannabis in Hawaii ran out of time in the state House of Representatives after passing overwhelmingly in the state Senate and receiving support from the state’s Democratic governor. The bill (SB 669) was not scheduled for a House hearing in time before a key legislative deadline, although there may be a chance for the initiative to advance in 2024.

IL – Illinois has announced the formation of a cannabis working group focusing on issues that have purportedly held back the industry, while also reviewing measures to increase social equity in the medical and adult-use cannabis programs. Among other things, the group will consider ways to address the disproportionate impact the war on drugs has had on communities of color, particularly around cannabis-related arrests, and work with stakeholders to enact reforms regarding licensing and taxation, among other areas.

KY – Gov. Andy Beshear (D) recently signed legislation to legalize and regulate medical cannabis, making Kentucky the 39th state to permit its use. The new law directs the Cabinet for Health and Family Services to adopt rules by July 1, 2024, with first sales expected by 2025. The regulatory framework includes seven classes of medical cannabis business licenses and qualifying criteria for ownership of such businesses. Municipalities will have the authority to regulate or ban these businesses, although the law also establishes a citizen petition process for overturning a municipal ban.

MD - Maryland is on track towards legalizing the sale of cannabis for adult use under a bill (SB 516) that has already passed the House and is now being considered by the Senate. Under the measure, existing medical cannabis dispensaries would be converted into dual licensees when legalization takes effect July 1. A new Maryland Cannabis Administration will oversee state licensing and regulations.

MN – A state house committee has passed a bill to legalize adult-use cannabis in Minnesota. The bill has a lower tax rate than a recent legalization proposal made by Gov. Tim Walz (D)—which had a 15 percent tax rate for cannabis products. The bill also requires licensure for low-potency hemp edible manufacturers.

NH – A bill legalizing adult-use cannabis is now on its way for a vote before the full chamber of the House. A proposed “Liquor and Cannabis Commission” would regulate cannabis businesses under the bill, with no statewide cap on the number of licensed cannabis businesses. Existing medical cannabis dispensaries will be able to apply for dual licenses if the bill becomes law.

NY – The Second Circuit has issued a decision allowing cannabis licensing in Brooklyn to proceed after narrowing the scope of a district court order that had barred state cannabis regulators from issuing retail licenses in five regions across the state. Meanwhile, Gov. Kathy Hochul (D) has proposed a new enforcement plan to combat illegal cannabis businesses in the state, and Long Island towns and counties have overwhelmingly voted to opt out of having legal cannabis retail businesses within their jurisdictions.

WA – A bill that would protect job applicants, but not current employees, from discrimination based on cannabis use has passed both houses of the state legislature. In order to become law, the bill will need to be signed by Gov. Jay Inslee (D).

Hemp/CBD

Bipartisan Push in Senate Seeks to Ease Regulatory Burdens for Hemp Farmers – Last month, Senators Mike Braun (R-IN) and Jon Tester (D-MT) introduced the Industrial Hemp Act of 2023 (S. 980) in an effort to break down barriers for farmers interested in participating in the hemp industry. Among other things, the bill would reportedly reduce the regulatory burdens (by, for example, removing background checks and certain costly sampling and testing protocols) for hemp farmers that grow the crop strictly for use as a grain or fiber. The Act is now before the Senate Committee on Agriculture, Nutrition, and Forestry.

Randomized Study of CBD Products Available in Pennsylvania Reveals Large Inconsistencies in Product Potency Claims – Results from a Pennsylvania testing lab on 16 CBD products found that half of the products did not contain the amount of CBD claimed on the label. Products were chosen randomly from grocery store and supplement store food chains, with varying price points and CBD milligram potency. Notably, the tinctures and capsule-based products exceeded the claimed potencies on their labels, whereas the majority of gummy products fell short. 

South Dakota Governor Vetoes Bill Increasing THC Limits for In-Process Hemp - Gov. Kristi Noem (R) recently vetoed a bill that would have increased to 5 percent the amount of delta-9 tetrahydrocannabinol (THC) permitted in hemp—while it is being processed into a final product. Currently, up to 1 percent of THC is allowed for in-process hemp. A long-running issue for processors, levels of THC are known to increase temporarily during the production and extraction process. The state legislature’s attempt to override the veto failed last week.

Hemp-derived THC Products Face Growing Political Backlash in Numerous States – With the continued strong growth of the hemp-derived THC market, certain states have proposed increased regulation (or even prohibition) of such products. In Virginia, for example, the legislature recently presented a bill for the Governor’s signature that would have effectively banned hemp-derived THC products. At the last minute, and in apparent response to lobbying efforts by market proponents, Gov. Glenn Youngkin (R) proposed certain changes to the bill. In another example, Kentucky Gov. Andy Beshear (D) recently signed a bill into law establishing a strict regulatory framework for delta-8 products.

International

Proposed Bill Legalizing Cannabis Advances in Columbia – The historic bill is now reportedly more than halfway through the country’s legislative process. In support of the legislation, its sponsor, Rep. Juan Carlos Losada of the Liberal Party, reportedly noted that “the regulation of cannabis for adult use in Colombia is the gateway for a new drug policy that abandons the failed paradigm of prohibition and opens the field to a policy guided by public health guidelines.” In the legislature’s most recent action, the First Committee of the Chamber approved the bill by a large margin (26 to 6).

Netherlands Plans Launch of Cannabis Pilot Program By Year End – While the country is widely known as a haven for cannabis users, cannabis cultivation, for example, remains illegal in the country. Under the government’s pilot program, three already-designated cannabis growers will supply legal cannabis to coffee shops in the cities of Tilburg and Breda for a period of up to six months. The pilot program is expected to pave a path toward full legal sale of cannabis.

German Officials Plan to Proceed with Scaled-Back Version of Cannabis Legalization – Amid pushback from the European Union (EU)—including, specifically, its concerns that sweeping legalization would run afoul of European law—the German government is reportedly having second thoughts. Germany’s health minister, Karl Lauterbach, has publicly stated that he will be returning to the EU with a proposal that would legalize cannabis as broadly as possible without violating European law. Of more interest to Germans, perhaps, is that the new proposal apparently includes a plan allowing for the home grow of cannabis for personal use—a change that notably may not need EU permission.

Taliban Announces Ban on Cultivation of Hemp and Cannabis – A new decree issued by Taliban leader Hibatullah Akhundzada prohibits the cultivation of hemp and cannabis in Afghanistan. Hemp or cannabis grown in the country will be destroyed and violators will be “punish[ed] . . . as per Sharia laws.”

Business

Fourth Quarter Losses – According to the Coalition for Cannabis Policy, Education, and Regulation (CPEAR), the 13 largest cannabis companies in the US reported a cumulative loss of $1.2 billion in the fourth quarter of 2022, which is more than double the reported $500 million loss during the third quarter of 2022.

Medical/Health

Survey Shows Improvement in Chronic Pain with Cannabinoid Use – A new web-based survey found that individuals taking cannabinoids to treat chronic pain experienced significant improvements in all pain types, including overlapping pain conditions. Participants also reported improvements in comorbid symptoms, a lower interference from side effects, and more frequent and better communication with clinicians regarding cannabinoid use. The most common reasons for not trying cannabinoids for pain were a lack of clinician approval (40 percent) and the legal status of cannabis (25 percent).

Individuals with Inflammatory Bowel Diseases Report Improvement in Symptoms with Cannabis Use – A survey of patients suffering from inflammatory bowel diseases (IBDs) found that while 37 percent of patients used cannabis to relieve their IBD, only 48 percent of these individuals had discussed using cannabis with their physician. Among those who reported using cannabis, almost 86 percent saw an improvement in their symptoms. These findings, the authors note, “reinforce[ ] the importance that physicians understand the role of cannabis in the treatment of IBD in order to appropriately counsel patients.”

Famed Cannabis Researcher, Raphael Mechoulam, Dead at 92 – Raphael Mechoulam, an Israeli cannabis researcher known as the “father of cannabis research,” has died in Jerusalem at the age of 92. Among his many contributions to the scientific understanding of cannabis, Mechoulam was the first to isolate THC, the primary psychoactive compound of the cannabis plant.

Dentons Speaks

Illinois Women in Cannabis Annual Spring Conference - On March 25th Chicago partners Amy Rubenstein and Joanne Caceres spoke at Illinois Women in Cannabis’ Annual Spring Conference at Chicago-Kent College of Law. Amy and Joanne were on a panel “Ready, Set, Legal? Developments in Federal Cannabis Reform” and Amy also spoke on “Get Candid With The Women Driving The Deals”. The one-day in-person conference featured industry leaders and experts presenting on the evolving opportunities in the regulated cannabis industry in 2023 and beyond.

Federal Investigatory Risks – In a recent Law360 Expert Analysis, Dentons partner Amy Rubenstein and associate Alicia Corona explore federal investigatory risks for companies operating in the cannabis industry.

Benzinga Event – On April 11 Dentons will co-sponsor the event “Elevate Miami” during the Benzinga Cannabis Capital Conference. The event is an opportunity to network and connect with investors and C-suite executives, as well as Miami business leaders. Registration is available here.

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

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