In this week’s edition:

• Several key Biden nominees have historically favored legalization
• First cannabis reform act of the session filed in Congress
• Arizona’s adult-use dispensaries begin operations
• California credit union offers access to banking services for cannabis businesses
• Ireland finally funds its medical cannabis program
• And more…

Federal

Biden health nominees have history of supporting legal cannabis - President Biden nominated Rachel Levine to be assistant secretary of the US Department of Health and Human Services (HHS). Dr. Levine, currently Pennsylvania’s secretary of health, was instrumental in establishing and then expanding that state’s medical cannabis program, and her HHS nomination was praised by the American Trade Association of Cannabis and Hemp. Biden earlier nominated California Attorney General Xavier Becerra to serve as the head of HHS. In 2017, Becerra pledged to defend California’s legal cannabis market from any federal intervention, but has not otherwise been a vocal advocate for the industry.

More pro-cannabis Biden picks - Biden also nominated South Carolina Democratic Party Chair Jaime Harrison, a supporter of full cannabis legalization, to lead the Democratic National Committee. Rhode Island Governor Gina Raimondo (D), who also supports legalization, was nominated to head the Commerce Department. And, of course, Vice President Harris sponsored the MORE Act. Attorney General nominee Merrick Garland, for his part, has made few notable remarks about cannabis policy.

Biden taps LaBelle as acting drug czar  - Biden named Regina LaBelle acting head of the White House Office of National Drug Control Policy (ONDCP). LaBelle, who served as deputy chief of staff, senior policy adviser and chief of staff at ONDCP during the Obama administration, replaces ONDCP Director James Carroll. The announcement was praised by the head of Smart Approaches to Marijuana (SAM), which generally favors decriminalization instead of legalization.

Biden not likely to open bankruptcy to cannabis businesses - Experts say that, until federal law changes, plant-touching businesses likely cannot be given access to bankruptcy processes, even if Biden were inclined to support such a move. What’s more, the US Trustee Program does not typically change with administrations, and the current director has taken a hard line, resulting in a buildup of precedential case law that presents further obstacles.

First federal cannabis reform bill of the new Congress filed - Rep. Greg Steube (R-FL) filed a bill that would move cannabis from Schedule I to Schedule III of the Controlled Substances Act, which would not end prohibition but would have numerous salutary effects, such as improving opportunities for research, supporting federal employees who use cannabis and permitting cannabis companies to deduct business expenses from their taxes. Rescheduling is reportedly supported by President Biden.

States

AZ -The first recreational dispensary licenses were approved last Friday for 86 dispensaries in Arizona, most of which are existing medical licensees that are able to expand sales right away. Legalization was authorized by the state’s voters in the November election. Previously the only authorized way to purchase cannabis has been with a medical marijuana card.

CA - North Bay Credit Union (NBCU) has partnered with the California Cannabis Industry Association (CCIA), to offer CCIA members “exclusive access to banking” as members of NBCU, with access to services like checking accounts, online payments, wire transfers and ACH processing. Access to banking is a key challenge for cannabis businesses nationwide. According to a press release, California’s cannabis market generates $5.6 billion annually, which is more than 10 percent of the national cannabis market, and employs nearly 40,000 people. CCIA is a nonprofit that represents over 400 businesses.

IL - Illinois recently awarded $31 million in grants funded by cannabis taxes for violence prevention, reentry and development in areas hurt by the war on drugs. The state’s “Restore, Reinvest, and Renew (R3)” program, created by the legalization statute, is funded by 25 percent of the tax revenue from cannabis sales last year. Those funds, which have been released after some delay, went to a variety of businesses, nonprofits, and other organizations who applied for grants this past summer. The Emerald South Development Corp. received the largest grant, $2.5 million, for youth and economic development, and violence prevention in Chicago’s South Side.

MI - Michigan’s cannabis regulator has proposed a program to link multistate cannabis operators with social equity applicants in order to increase minority ownership in the industry. The proposal, found in a report from the state’s Marijuana Regulatory Agency (MRA), includes both an equity sharing component and a path for potential applicants to gain experience working in the industry, and access to capital upon “graduation.” According to MRA data, only 3.8 percent of people with equity in a recreational cannabis business are Black, and 1.5 percent are Hispanic or Latino. The report also proposes a new microbusiness license for up to 300 plants instead of the current 150, with other added flexibilities.

MS - The American Medical Association (AMA) and its state affiliate, the Mississippi State Medical Association (MSMA) are opposing the state’s approval of a medical cannabis ballot initiative. The groups recently filed an amicus brief supporting a legal challenge pending before the state Supreme Court, alleging that medical cannabis “poses significant risks to public health and puts a burden on Mississippi physicians.” Potential federal liability for signing off on medical cannabis certifications is a concern. The lawsuit also alleges procedural noncompliance with a ballot initiative rule requiring that “signatures of the qualified electors from any congressional district shall not exceed one-fifth of the total number of signatures required.” Supporters of the ballot results argue that, since the state now has only four districts, adherence to the rule is mathematically impossible and is no longer applicable.

MO - Electronic physician certification for medical cannabis patients is being rolled out in Missouri by the state’s Section for Missouri Marijuana Regulation. The state began reaching out to physicians to offer training on the new online system, including how to create a secure physician account. The state anticipates that certification will be fully electronic by June 2021.

NH - A bipartisan bill to legalize recreational cannabis in New Hampshire was filed this month, but faces opposition from a majority Republican state legislature and the threat of a veto by Governor Chris Sununu (R), who opposes legalization. Although medical cannabis has been permitted since 2013, cultivation for personal use is still a felony, something the recent bill would change, if passed.

NM - New Mexico Governor Michelle Lujan Grisham announced last week that her priorities for the new legislative session include "legalizing adult-use recreational cannabis through legislation that protects the state’s medical cannabis program." State Rep. Javier Martinez (D-Albuquerque) plans to introduce a bill with such goals, while Republicans, such as Minority Whip Rod Montoya, continue to oppose the measure.

NY - New York Governor Andrew Cuomo (D) released the full legislative details of his cannabis legalization plan though his budget proposal. No home cultivation, delivery services or on-site consumption at dispensaries would be authorized, although it leaves the door open for regulators to create additional license types that could authorize those activities in the future. The plan would allocate $100 million in tax revenue over four years to community grants, which many advocates find inadequate. Meanwhile, lawmakers are pushing a different framework. State Sen. Liz Krueger (D), whose district is primarily the Upper East Side of Manhattan, introduced a bill that would permit adult use, personal use cultivation of up to six plants, and taxes allocated to education and drug treatment as well as community grants. Commentators describe a growing recognition that adult-use legalization in the state seems inevitable.

TX - Two out of three Texans support cannabis legalization as a way to increase funding for K-12 education in the state, according to a recent poll. The survey of about 1,000 people found that half of Republicans and conservatives, along with three-quarters of Democrats and liberals, support legalization for school funding. Furthermore, there was greater support for a marijuana tax than for most other revenue-raising options, such as increasing taxes on sugary drinks, motor vehicles or corporations. That said, any legalization or decriminalization bill is expected to be defeated in the state Senate.

Hemp/CBD

New Jersey publishes list of hot hemp strains - The New Jersey Department of Agriculture published a list of hemp “Varieties of Concern” and “Prohibited Varieties” for 2021. In addition, the document lists “Prohibited Varieties for Pennsylvania” for 2021. The listed strains were found to result in a THC test result above 0.3 percent in one or more instances during 2020. Hemp farmers are encouraged to review the lists and must avoid growing the Prohibited Varieties in 2021.

International

Canada - After two years of legalized cannabis in Canada, in-depth reporting says that little has been done to redress harms to many whose lives have been derailed by past convictions. Also, unlicensed sales are abundant and certain Indigenous cannabis businesses operate in a legal limbo. A study from the University of Toronto shows that Canadian cannabis companies’ executives are overwhelmingly White, with only about 2 percent of their management Indigenous individuals and only 1 percent Black Canadians.

Ireland - Funding for its medical cannabis program is available for the first time in Ireland, which authorized medical cannabis way back in June 2019. The program will be included in the nation’s Health Service Executive (HSE) service plan for 2021. Four products have been deemed acceptable, and once suppliers make them available, medical consultants can prescribe them for a short list of conditions if other treatment have been unsuccessful.

Business

En route to Canadian Stock Exchange, Verano raises $100 million - Verano Holdings, a large Chicago-based cannabis operator, is slated to become a publicly traded company on the Canadian Stock Exchange next month. A vertically-integrated business active in 12 states, Verano raised $100 million in private financing in the process of going public. This makes Chicago home to three of the ten largest publicly traded cannabis companies.

Jay-Z launches $10 million fund for minority-owned cannabis businesses - Sean “Jay-Z” Carter announced the formation of his Social Equity Ventures fund, which will invest up to $1 million in each of its chosen cannabis startups, focusing on empowering groups marginalized by the war on drugs. The group will also fund job fairs and training workshops, with investments from other celebrities like Rihanna and DJ Khaled. Jay-Z previously formed a related cannabis venture, The Parent Company, in partnership with Roc Nation.

Medical/Health

New Antibiotics - CBD’s ability to kill bacteria appears to extend to “gram-negative bacteria,” and could help develop a new class of antibiotics. According to a study published in the journal Communications Biology, CBD analogs could potentially address treatment-resistant staph and strep infections, MRSA, meningitis, gonorrhea, and airway infections like pneumonia. According to the study, CBD also showed a low tendency to cause bacterial resistance.

Dentons speaks

Eric Berlin presented at Expert Webcast’s “Cannabis Industry Outlook 2021” webinar. The panel discussed the likelihood of federal legalization, state and international initiatives, commercial banking, recent transactions, and the increasing use of a “special purpose acquisition company” (SPAC) as a vehicle for obtaining public investment.

Read more about Dentons’ Cannabis group.