In this week’s edition:

• House Speakership Chaos Muddles Passage of SAFER Banking
• Federal Census Report Tracks Near $6 Billion in Cannabis Tax Revenue
• In Novel Approach, Georgia Moves to Permit Sale of Cannabis Products in Pharmacies
• Minnesota Receives More Than 1,000 Applications from Businesses to Enter State’s Low-dose Hemp-derived Product Market
• American Nurses Association Recognizes Cannabis Nursing as Specialty Practice
• X (Formerly Twitter) Set to Relax Advertising Rules for Cannabis Companies
• Cannabis “Entourage Effect” Produces Longer Lasting High Than Pure THC

Federal

Advocates, Congressional Legislators Push Biden For More Cannabis Action on One-Year Anniversary of Cannabis Pardons – Last year, President Joe Biden (D) issued a pardon for all those convicted of cannabis possession and directed the Drug Enforcement Administration (DEA) to conduct a scheduling review of cannabis, which is currently controlled under schedule I. But more must be done, according to reform proponents, including the Cannabis Regulators of Color Coalition, the National Association of Black Cannabis Lawyers, the Drug Policy Alliance and the Parabola Center. “President Biden must send clearer signals that he understands and supports full legalization,” said Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus.

Void in House Speakership Muddles Passage of SAFER Banking – In late September, the cannabis banking reform bill, rebranded as the SAFER (Secure and Fair Enforcement Regulation) Banking Act, appeared to be finally gaining momentum, with its historic approval from the Senate’s Banking Committee—despite Sen. Raphael Warnock’s (D-GA) “no” vote due to the lack of restorative justice provisions.  But all eyes have now moved to the House, where recent complications wholly unrelated to cannabis appear to be jeopardizing the bill’s passage. Nearly all congressional business remains frozen in the wake of Rep. Kevin McCarthy’s (R-CA) ousting as House speaker, and Rep. Jim Jordan (R-OH), well-known as a cannabis legalization detractor, is currently the frontrunner for the speakership.

Federal Report Tracks Near $6 Billion in Cannabis Tax Revenue – Over an 18-month period (from July 2021 to the end of 2022), states collected more than $5.7 billion in taxes from licensed cannabis sales, according to a new report from the US Census Bureau. The bureau announced in August that it would begin capturing such data in an effort to “keep up with the nation’s ever-changing business landscape.”

State

AK – New regulations signed by Lt. Gov. Nancy Dahlstrom (R) will, among other things, loosen restrictions on cannabis advertising and permit state-legal cannabis businesses to distribute free cannabis samples at retail shops. The changes are part of a broader relaxation of state rules, including changes in tax policy, standards on edibles and rules on drive-up windows. 

AZ – The Arizona Center for Investigative Reporting (ACIR) is reporting a number of instances where private investors and larger cannabis businesses have successfully wrested control over licenses meant for social equity recipients. According to ACIR, these changes in ownership “offer the most recent glimpse into how powerful entities dominated Arizona’s social equity program in a way that some argue was by design, ultimately enriching those who helped craft the voter-approved initiative” that legalized cannabis back in 2020.

CA – Gov. Gavin Newsom (D) has recently signed off on a number of cannabis-related bills while vetoing others. The governor approved, among other things, bills regarding cannabis equity, testing and licensing as well as a prominent bill that blocks employers from asking about cannabis use during the hiring process. At the same time, the governor vetoed the legalization of cannabis cafés and a separate bill that would have updated labeling and packaging rules.  

GA – In a novel move to broaden medical patient access to cannabis, the state will now permit the sale of certain cannabis products at pharmacies across the state. The state-legal medical cannabis market launched only this past April, with two licensees (Trulieve and Botanical Sciences) operating six dispensaries each. One hundred and twenty pharmacies have already applied to take part with the state’s Board of Pharmacy—though the state reportedly has only 14,000 certified medical cannabis patients. 

IL – Illinois regulators recently filed revised cannabis rules that create a process for craft growers to apply to the state’s Department of Agriculture to increase canopy space. Craft growers will be permitted to request an increase of 3,000, 6,000 or 9,000 square feet of canopy space, with a maximum total canopy space of 14,000 square feet.

MN – Officials in Cook County have expressed interest in operating a municipal cannabis dispensary, in part “because it would create a new revenue stream for county government.” Notably, the county currently operates a municipal liquor store and anticipates any county-operated dispensary would be structured similarly.

NJ – New Jersey has issued $12 million in grants to 48 businesses under the state’s Cannabis Equity Grant Program, which is intended to support new businesses in the cannabis industry for their startup and operational costs during the first three years of operation. Forty percent of the funding was designated to social equity applications, and five percent to businesses located in impact zones. The grant—known as the Joint Ventures Grant—can be used for various expenses, including rent/mortgages, payroll, compliance with regulations, legal expenses, employee training, utilities and supplies.

NY – Gov. Kathleen Hochul (D) announced a new license application period for permanent cannabis business licenses. The application will be available until December 4, 2023. Existing cannabis licensees have been operating under conditional rules that were paused by state courts to resolve challenges to the licensing eligibility. The applications are open to all currently licensed businesses in good standing with the state and compliant with all regulations and financial requirements. 

OH – Three major business groups—the Ohio Chamber of Commerce, the Ohio Business Roundtable and the Ohio Manufacturers’ Association—have publicly opposed the state’s adult-use ballot initiative in the upcoming November election. The groups raised concern that legalizing adult-use would affect workplace safety, lead more people to call off work and increase insurance premiums. Proponents of the initiative, however, note that businesses will still be able to prohibit workers from using cannabis.

PA – The Pennsylvania House of Representatives approved a tax reform bill that would decouple state tax rules from the federal IRS Code 280E, allowing state-licensed medical cannabis operators to take state deductions for ordinary business expenses. The bill passed by a narrow margin along party lines, and now heads to the Republican-controlled Senate. A House committee passed similar language in an amendment to a tax bill last year, but the legislation ultimately did not proceed.

Hemp

USDA – The US Department of Agriculture announced that a hemp plant genetically engineered to produce lower levels of THC and cannabichromene (CBC) “may be safely grown and bred in the United States.” The engineered variant was submitted for review by Growing Together Research, which is attempting to engineer plants free of THC and CBC and increase resistance to certain herbicides.

AK – Under newly promulgated regulations, hemp intoxicating products will now be regulated by the state’s cannabis regulator, the Alcohol and Marijuana Control Office. The new regulations were championed by the state-legal cannabis industry, including the Alaska Marijuana Industry Association. Vape shops, for example, will no longer be able to sell such products. Court challenges are widely expected.

FL – On October 9, Florida Commissioner of Agriculture Wilton Simpson announced the seizure of 1,272 packages of THC-O, along with 653 packages of Tianeptine, commonly known as “gas station heroin.” The results came from inspections of more than 50 businesses in 27 counties over a multi-day period and followed the larger sweep in July and August that targeted the sale of hemp extract products that were deemed attractive to minors. The earlier sweep included inspections of more than 700 businesses in all 67 Florida counties and uncovered more than 83,000 packages of hemp extract products, including high-potency THC products marketed to children.

IL – State Rep. La Shawn Ford (D) recently introduced the Consumable Hemp Licensing bill (HB 4161), describing it as a “comprehensive plan to strictly regulate, license and tax delta-8 and other similar intoxicating delta hemp products.” The bill is set for potential consideration during the state’s upcoming fall veto session in late October/early November.

MN – Minnesota received more than 1,000 applications for business licenses to enter the state’s low-dose hemp-derived products market prior to the October 1 deadline. The deadline applied to all businesses, including liquor stores, that sell hemp-derived cannabinoid products containing THC, CBD or both. The newly registered businesses will face new regulations and taxation under Minnesota’s adult-use cannabis legalization law that went into effect in May.

TX – The Texas Court of Appeals for the Third District at Austin upheld an injunction to stop the state’s Department of State Health Services from classifying delta-8 and other THC isomers as schedule I controlled substances (an action the department took in 2021). The ruling allows businesses to continue selling delta-8 products in the state.

International

Europe Adopts New Cannabis Flower Monograph  – The European Pharmacopoeia Commission adopted a new European monograph, which describes uses of cannabis flower and quality requirements. The text is intended to be read in conjunction with the general monograph Herbal drugs (1433), which includes additional requirements that are applicable unless otherwise stated in the Cannabis flower monograph. At the request of stakeholders, the commission made the monograph immediately available on the EDQM website for informational purposes. The monograph will be published in Ph. Eur. Supplement 11.5 in January 2024, and will go into effect on July 1, 2024. A webinar will be held to discuss the text on December 14, 2023.

Report From International Coalition Finds War On Drugs Negatively Impacts Environment – A new report from the International Coalition on Drug Policy Reform and Environmental Justice claims that criminalized drug prohibition has harmed the environment and undermined actions to protect it. The report focuses on how prohibition has pushed production and trafficking into key environmental frontiers like tropical forests, how profits from drug trafficking have funded wider environmental destruction and how the market dynamics associated with drug prohibition precipitate violence and corruption, providing a direct barrier to environmental action.

Business

American Nurses Association Recognizes Cannabis Nursing as Specialty Practice – The professional association, which represents the interests of more than five million nurses nationwide, announced that it now formally recognizes cannabis nursing as a specialty practice, highlighting the “essential role and special contribution of cannabis nurses to the health care system and promotes enhanced integration of cannabis therapies for health care consumers across diverse health care settings.”

Benefits Provider Touts “First Group Health Medical Cannabis Program” for Employees in Some States – Bennabis Health has partnered with CannaCoverage to offer an employee benefits program that includes medical cannabis coverage. This program, described as the "first group health medical cannabis program," doesn't provide traditional insurance but offers discounts on medical cannabis products, reducing out-of-pocket costs for employees who use cannabis for therapeutic purposes. The announcement reflects a growing trend toward normalizing medical cannabis coverage in workplace benefits, supported by the recent recommendation from the Health and Human Services Department to reschedule cannabis under the federal Controlled Substances Act, potentially paving the way for broader acceptance of cannabis as medicine. Currently available in New Jersey, Washington, DC, and New Mexico, the program aims to expand to other states that offer medical cannabis.

X, Formerly Known as Twitter, Is Planning to Announce Further Changes to its Cannabis Advertising Policy – X, formerly Twitter, is set to relax its advertising rules for cannabis companies for the second time this year. The announcement was made at the Benzinga Cannabis Capital Conference, and X's sales and partnership executive, Alexa Alianiello, suggested that these changes were in response to feedback from the cannabis industry. The move signifies X's ongoing efforts to attract the cannabis sector, having already lifted its ban on cannabis ads in February and allowing more flexibility for cannabis marketers in May, making it a valuable advertising channel for the industry despite federal restrictions.

Verano Holdings Corp. Receives Conditional Approval to List Shares on the Cboe Canada Exchange – Verano Holdings Corp., a Chicago-based, multistate cannabis operator, is in the process of moving its Canada-listed shares from the Canadian Securities Exchange to the Cboe Canada exchange. This shift is expected to better position the company to leverage potential legislative developments in the United States, particularly in anticipation of cannabis rescheduling by the DEA. The move will not necessitate any corporate restructuring, and Verano shares will continue trading under the same symbol, VRNO, on Cboe Canada.

Cannabis E-commerce Platform Leafly Regains Nasdaq Compliance – Leafly Holdings has announced that it has regained compliance with Nasdaq's minimum bid-price requirement. In September, the cannabis e-commerce platform consolidated its shares on a 20-to-1 basis to meet Nasdaq's rules, which mandate a minimum bid price of $1 for listed equities. Leafly successfully met this requirement for 10 consecutive business days as of September 25, allowing the company to remain listed on the Nasdaq Capital Market under the ticker symbol LFLY. Share consolidations like this have become common among Nasdaq-listed cannabis and ancillary companies to maintain compliance in the face of low equity valuations.

US Cannabis Company Curaleaf Moves to List Shares on Canada’s TSX – Curaleaf Holdings, a multi-state cannabis operator based in New York, is proceeding with its plan to list on the Toronto Stock Exchange (TSX), which represents an upgrade from its current listing on the Canadian Securities Exchange (CSE). Curaleaf filed an application to list its subordinate voting shares on the TSX following a marketed offering of these shares on October 3. The move, which is subject to approval by the TSX, is expected to provide Curaleaf with greater access to global institutional investors, custody solutions backed by US financial institutions, reduced stock volatility with dedicated market makers and eligibility for inclusion in various indexes. Curaleaf's shares currently trade as CURA on the CSE and as CURLF on US over-the-counter markets.

Medical

Cannabis “Entourage Effect” With Multiple Cannabinoids Produces a Stronger and Longer Lasting High Than Pure THC, Study Finds – A recent study supports the "entourage effect" theory in cannabis consumption, revealing that products containing a diverse array of natural cannabinoids offer a stronger and longer-lasting psychoactive experience compared to products with pure THC. The study used electroencephalogram (EEG) technology and AI to measure the effects of two types of cannabis products: a full-spectrum live rosin with 85 percent THC and other natural cannabinoids, and high-purity THC oil with 82 to 85 percent potency. Results showed that the full-spectrum product had a faster onset and higher potency, demonstrating the potential therapeutic benefits of the entourage effect and highlighting the importance of considering more than just THC percentage when selecting cannabis products.

Dentons Speaks

Law360 Recognizes Eric Berlin as an MVP in Cannabis Law for 2023 – Eric Berlin of Dentons US LLP has earned recognition as a 2023 Cannabis MVP by Law360 for his contributions in the cannabis industry. Berlin has been instrumental in pushing for safe, legal and affordable access to cannabis for individuals with medical needs. Berlin helped lead the way in getting Canadian cannabis company Canopy Growth Corp. listed on the Nasdaq. He specifically focused on getting the public exchange to accept the business's plan to restructure under a new US-based holding company Canopy USA LLC, which Canopy Growth would maintain a controlling interest in. "They had never seen this structure before," he said. "So working day in and day out with the legal team to get them comfortable with the deal was my critical role."

Jefferies 2023 Cannabis Summit – Eric Berlin, co-chair of Dentons’ US and global Cannabis teams, and 2023 Law360 MVP of the Year in Cannabis law, will be speaking at the conference’s regulatory panel on October 25. The summit will consist of a variety of panels focused on key topics in the emerging space, as well as the potential to meet with the leading US and global companies one-on-one. 

Sustainability Means Responsible Business Growth Presented by Bank of America – On October 25, Dentons Cannabis partner Kelly Fair will be moderating an interactive panel discussion in San Francisco on the topic of sustainability and responsible business growth. Panelists include Bank of America senior vice president Carmen Sanchez, Bank of America sustainable strategy executive Erin L. Smith and E.L.F. Beauty vice president of sustainability Ellen Leung.

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.