Cannabis Client Alert – Week of February 19, 2024

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Cannabis Client Alert – Week of February 19, 2024

Cannabis Client Alert – Week of February 19, 2024

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February 19, 2024

In this week’s edition:

Hawai`i Discusses Cannabis Legalization
U.S. Virgin Islands Approves Cannabis Legalization Plan
Massachusetts Legislative Committee Approves Bill to Legalize Psilocybin Therapy
German Lawmakers to Vote on Adult-Use Cannabis Legalization

Federal

CRS Issues Report on Cannabis Industry’s Unique Financial Issues – In a report on Federal Reserve policy, experts from the Congressional Research Service reviewed the unique financial issues that are affecting the cannabis industry and discussed a potential solution in the Secure and Fair Enforcement Regulation (SAFER) Banking Act. Without passage and access to traditional financial services, experts recognized that industry participants “face higher borrowing costs” and are “heavily reliant on cash transactions, making them a target for theft.”

US Navy Adopts More Lenient Cannabis Policy – According to the new policy, new recruits that test positive for THC when they arrive for boot camp at Recruit Training Command (in Great Lakes, Illinois) will not be automatically discharged. The changes come as part of a suite of initiatives the Navy is using to address the Navy’s current recruitment crisis.

State

HI – Cannabis legalization faces public opposition from law enforcement officials and pollical leaders over fears of increased crime and a growing illicit market. Standing with other officials (including county police chiefs and prosecutors) to rally against legalization, the Honolulu Mayor, Rick Blangiardi, stated that recreational cannabis was simply a “non-starter” for his state.

IA – Iowa state senators are advancing a bill to double the number of medical cannabis dispensaries in the state. There are currently only five licensed medical dispensaries servicing a reported 18,000 Iowans.

ID – Idaho is moving to crack down on illegal cannabis advertising with new legislation that would criminalize the activity. Lawmakers are responding to the proliferation of cannabis advertisements throughout the state despite its prohibition at the state level. Surrounding states (including Washington, Montana, Nevada, and Oregon) have legalized recreational cannabis.

KS – Kansas Gov. Laura Kelly (D) tweeted that the state “need[s] to decriminalize medical marijuana” to help Kansans with chronic pain and other disorders. According to Gov. Kelly, “[p]roviding this relief is long overdue and would also boost [the state’s] economy.” Advocacy groups in the state have been pushing the legislature to act on medical cannabis for years, but a bill has yet to pass both the state House and Senate.

NC – A recent poll found that 78% of North Carolina voters supported legalizing medical cannabis, with only 18 percent opposing it. Although the North Carolina Senate passed a bill to legalize medical cannabis in 2023, the bill failed to get through the House.

PA – In a recent budget address, Pennsylvania Gov. Josh Shapiro (D) called for the legislature to legalize adult use cannabis and provide relief for individuals convicted of cannabis use. Gov. Shapiro estimates that legalizing adult use would generate an additional $250 million in tax revenue for the state each year. Despite the Governor’s call for legalization, the Senate President Kim Ward (R) has said the state Senate is a long way from approving adult use.

RI – Rhode Island regulators released new guidance on permissible curbside pickup of cannabis preorders. Under the guidance, the state’s Office of Cannabis Regulation (OCR) will accept proposed plans from licensed compassion centers for curbside pickup by qualified registered patients, caregivers, authorized purchasers and adult-use consumers aged 21 and older. Pickup will only be permitted in “limited, designated and approved areas of the compassion center’s parking lot premises.”

SC – The South Carolina Senate gave initial approval to a bill that would legalize medical cannabis, setting up a final vote on the legislation before it could move to the state’s House of Representatives. The bill’s sponsor, Sen. Tom Davis (R), has said that his goal was to “come up with the most conservative medical cannabis bill in the country that empowered doctors to help patients—but at the same time tied itself to science, to addressing conditions for which there’s empirically based data saying that cannabis can be of medical benefit.” In line with this goal, the bill would prohibit smokable cannabis, which experts believe may limit the economic potential of the cannabis industry in the state.

VA – Virginia’s House of Delegates and Senate approved competing measures to legalize adult use cannabis, just ahead of the state’s crossover deadline, which requires each chamber to finish working on legislation that originated in that chamber. Both bills would allow retail adult-use cannabis sales to begin on January 1, 2025, but differ in their taxation proposals. Lawmakers from each chamber will now consider the other chamber’s bill.

Hemp

A hemp industry trade group has reported that an organization of feed control officials has tentatively approved the use of hemp seed meal as animal feed for egg-laying hens, following a recommendation from the FDA's Center for Veterinary Medicine. The decision, if officially adopted, would allow hemp seed meal in the diets of laying hens at an inclusion of no more than 20%, with specific limits on CBD and THC content, potentially benefiting both agriculture and soil quality.

FL – The regulation of potential adult-use cannabis in Florida faces a temporary pause as House Bill 1269 was postponed in the Health and Human Services Committee. Ongoing adjustments to the bill, relevant to hemp, include a proposed amendment for a 1g THC limit per vape cartridge (which would apply to all forms of THC isomers, including those derived from hemp), to address concerns about product safety and health. The bill contemplates a two-track market, encouraging individuals to retain medical cannabis cards, and would take effect 30 days after the 2024 election if a constitutional amendment authorizing adult personal use passes with at least 60% of the vote. The Supreme Court is currently reviewing the ballot language for the amendment.

GA – A federal class action lawsuit in Georgia is pursuing $150 million in damages against popular cannabis brands STIIIZY and Cookies, among others, alleging racketeering for selling cannabis misrepresented as legal hemp products. The class action suit claims consumer deception and underscores legal complexities in the cannabis industry post-federal hemp legalization in 2018. Also in Georgia, the agriculture commissioner has called on lawmakers to restrict consumable hemp products.

IA – Iowa's House committee is considering a bill, labeled S.F. 2005, that seeks to establish new state restrictions on the sale of hemp-infused pills, food, and beverages. The legislation, proposed by the Iowa Department of Public Safety, aims to combat the emergence of high-potency, high-THC hemp products in the market by imposing significant penalties for selling such items, while also prohibiting individuals under 21 from purchasing consumable hemp products. The bill has sparked debate among hemp growers and business owners, with concerns raised about its potential impact on both legitimate low-THC products and the perceived favoritism toward state-licensed medical cannabis businesses.

MT – The Montana Cannabis Control Division published a new guidance on synthetic cannabinoid and hemp product THC limits interpreting the state’s 2023 hemp law (HB 948). HB 948 limits the concentration of THC in hemp products to not exceed 0.5 mg per serving and 2.0 mg per package.

International

Germany – Germany’s government coalition reached a final deal on cannabis legalization. The bill—which will be voted on this month, with the aim of legalization taking place in April—will clear the path for legalized recreational cannabis use, making Germany the third European Union member state to legalize recreational cannabis. While small changes to the proposed bill are anticipated to address concerns raised by opposition parties, the coalition plans to introduce complementary measures to establish pilot programs for commercial sales. Germany’s cannabis ban is expected to be lifted by April 1, allowing adults to grow cannabis at home and possess small quantities, while cannabis clubs will be permitted starting July 1.

Israel – Local experts report Israel’s new rules might spur growth in the medical cannabis industry. The new rules, implemented in January, permit broader access for patients and ease the path for physicians by allowing specialist doctors more discretion to administer medical cannabis, expanding the types of patients eligible for medical cannabis, and canceling restrictions that previously allowed medical cannabis only as a last resort. The changes are part of a major regulatory overhaul of Israel’s medical cannabis industry, with further changes anticipated in March.

Malta – Malta’s first adult-use cannabis club is now open for business. Coming two years after the European Union member state liberalized its cannabis rules, Malta’s first adult-use cannabis club is fully operational. While Malta does not allow adult-use cannabis stores, consumers are permitted to join nonprofit cannabis associations, where they can purchase a maximum of 7 grams of cannabis per day, and 50 grams per month. The Times of Malta reported that more than 150 member joined in the first two days.

Thailand – Thailand’s cabinet is expected to consider legislation to clarify that recreational cannabis is banned next week. After becoming the first Asian country to decriminalize cannabis in mid-2022, Thailand’s new government is signaling a sharp about-face, with Agence France Presse quoting Health Minister Cholnan Srikaew’s statement that using cannabis for fun is wrong. This reversal comes following the August 2023 election of Thailand’s new prime minister, Srettha Thavisin, who pledged during his campaign that he would restrict the use of recreational cannabis, citing addiction concerns.

Ukraine – Ukrainian President Volodymyr Zelensky has signed a bill legalizing medical cannabis, emphasizing its potential to alleviate physical and mental wounds suffered by soldiers during the country's conflict with Russia. The legislation, approved by lawmakers in December, is set to take effect within six months and will permit medical cannabis use for severe illnesses and post-traumatic stress disorder resulting from the ongoing conflict.

U.S. Virgin Islands – The U.S. Virgin Islands Cannabis Board voted last week to approve long-awaited rules and regulations for the territory’s adult-use cannabis industry. Under the new law, adults aged 21 and older will be allowed to purchase and possess up to 2 ounces of cannabis, a half-ounce of cannabis concentrate, and 1 ounce of edibles. Medical cannabis patients will still be allowed larger quantities. Dispensary sales will be subject to a minimum 18% tax, with three-fourths of the revenue allocated to the general fund, including percentages earmarked for behavioral health programs, addressing homelessness, and supporting youth programs.

Business

A Q&A with Wine & Spirit Wholesalers of America’s President and CEO Francis Creighton – The WSWA president and CEO spoke about the decision to allow hemp-derived beverage brands to exhibit at the organization's conference. Ms. Creighton explained the conference is an opportunity for its members to learn about new, innovative products, which includes hemp-derived beverages. Noting hemp-derived beverages “sit in a regulatory no-man’s land,” WSWA’s president further stated cannabis and hemp products should be regulated in the same manner as alcohol products.

NJ Cop Union Agrees Gun Law Doesn’t Disturb State Pot Law – The New Jersey State Policemen’s Benevolent Association is asking a federal court to dismiss Jersey City’s lawsuit that seeks to overturn a state policy protecting police from being punished for off-duty cannabis use. The lawsuit argues that the Gun Control Act of 1968 preempts state law’s legalization of recreational cannabis, and claims that federal regulations prevent police departments from providing guns and ammunition to anyone who uses cannabis. In a recent legal filing, the Association countered that the city faces no real threat of federal indictment if it follows New Jersey law, and reasoned that local law enforcement officers are in fact exempt from the Gun Control Act and relevant federal law.

Lawsuit Claims Cookies Broke Exclusive Cannabis Licensing Deal in New York – A retail partner of cannabis company Cookies sued the California-based brand, alleging the multistate operator broke an “exclusive” agreement for a branded adult use cannabis store in New York state. The lawsuit revolves around a newly licensed cannabis store called Culture House that opened in the former location of a Cookies-branded clothing and CBD outlet, which maintains aspects of the brand’s aesthetic. The lawsuit alleges that by allowing a New York-based cannabis business to open a Cookies-branded cannabis store at the location – as they attempted to do last year, according to the lawsuit – Cookies violated an “exclusive right to open the first Cookies-branded retail cannabis stores” in New York.

Medical

Gallup Poll Shows 17% of Americans Smoke Cannabis – According to a recent Gallup poll, seventeen percent of Americans aged eighteen and older reported smoking cannabis in 2023. While this is only an increase of one percent since 2022, notably only seven percent of American adults identified as cannabis smokers ten years prior when the question was first added to the annual survey measuring Americans’ consumption habits. In its analysis, Gallup said, “Age is a significant driver of the likelihood of smoking cannabis. About a quarter of young adults, those aged 18 to 34, say they smoke cannabis (26%), but reported use falls to 18% among adults aged 35 to 54 and is even lower, 11%, among adults aged 55 and older.”

Study Shows Cannabis Use Does Not Increase Odds of Vehicle Collisions – The study, published in the April 2024 issue of the journal Accident Analysis and Prevention, found that cannabis use alone is not associated with higher odds of car accidents. Alcohol, on the other hand—whether used by itself or combined with cannabis—showed a clear correlation with odds of a collision.

Psychedelics

Appeal to the Ninth Circuit Claims DEA Wrong to Block Psylocibin Therapy – The brief, filed by Dr. Sunil Aggarwal and the clinic he co-founded, Advanced Integrative Medical Science Institute, argues that the Drug Enforcement Administration’s denial of Dr. Aggarwal’s petition was arbitrary and capricious. The first request in the petition was that DEA permit Dr. Aggarwal access to psilocybin for therapeutic use under state and federal “Right to Try” laws without requiring him to obtain a special registration or waiver from DEA. The alternative proposal was that, in the event that DEA believed registration was required, the agency exercise its authority to grant a waiver or exemption from those requirements. According to the brief, federal drug enforcers denied Dr. Aggarwal’s requests and proposals without providing a compelling reason for the refusal, which is required under the Administrative Procedure Act.

Massachusetts Legislative Committee Approves Bill to Legalize Psilocybin Therapy – The measure, introduced by Rep. Nicholas A. Boldyga (R) and approved by the Joint Committee on Public Health, would create a framework to license facilitators to supervise medical, therapeutic and spiritual applications of psilocybin. The bill would require the Massachusetts Department of Public Health to establish a licensing process for both facilitators of psilocybin therapy as well as “independent training schools” that would be responsible for instructing the facilitators. A separate psychedelics legalization initiative remains pending before lawmakers ahead of a potential vote on the November ballot. Meanwhile, a legislative committee in Indiana approved a bill, and a New Mexico legislative committee approved a resolution, to support research on the therapeutic potential of psilocybin.