In this week’s edition:

• DEA Administrative Law Judge Stays Cannabis Rescheduling Hearing
• Second Circuit Mulls Applicability of Dormant Commerce to Cannabis
• Michigan’s AU Retail Sales Hit More Than $3 Billion In 2024
• Ohio’s Recreational Market Sales Exceeds $255 Million Since August Opening
• Nebraska Medical Cannabis Now Legal
• New York Judge Finds Raids Targeting Hemp Stores Likely Unconstitutional
• Declining Cannabis Use Among Youth

Federal

DEA Stays Cannabis Rescheduling Hearing – U.S. Drug Enforcement Administration (DEA) Administrative Law Judge (ALJ) John Mulrooney has canceled the previously set January 21, 2025 hearings on the Biden administration’s cannabis rescheduling proposal, following a legal challenge from pro-reform hearing participants. The proceedings will be stayed for at least three months. ALJ Mulrooney was considering a motion to remove the DEA from the rescheduling hearing altogether, based on purportedly improper communications and witness selections by the DEA—communications and witness selections which rescheduling advocates believed showed that the agency opposes the scheduling action it is purportedly defending at the proceedings. While ALJ Mulrooney denied the motion, he ultimately granted a request to appeal the denial to the DEA Administrator, thereby necessitating a stay of the proceedings.

Trump’s New DEA Head Blamed Cannabis For School Shootings and Claimed Rescheduling Push Politically Motivated – Trump appointed an acting administrator for the DEA on Tuesday, Derek Maltz, who served in the DEA until he retired in 2014. He is not viewed as friendly to cannabis reform. In 2022, he drew a connection between cannabis consumption and school shooters on the social media platform X, and in 2024 accused the U.S. Department of Justice (DOJ) of politicizing the rescheduling process.

New Co-Chairs At Congressional Cannabis Caucus – Reps. Dina Titus (D-NV) and Ilhan Omar (D-MN) have been appointed to co-chair the Congressional Cannabis Caucus, taking over from retiring members Earl Blumenauer and Barbara Lee. Titus expressed her commitment to changing federal cannabis policies, particularly advocating for its rescheduling under the Controlled Substances Act, noting that the cannabis industry has proven to be responsible in states where it is legal. With co-chairs Reps. Dave Joyce (R-OH) and Brian Mast (R-FL) remaining in their roles, the new leadership is poised to continue advancing cannabis-related policies.

MJBiz Cannabis Predictions for 2025 – With relief from the tax burden of Section 280E closer than ever—and President Donald Trump the first President to have endorsed an adult-use marijuana legalization measure—MJBiz Daily released its predictions earlier this month for the cannabis industry in 2025.  Among other things, the report believes that cannabis will be reclassified as a schedule III drug by the DEA before year-end and that states will continue to increasingly regulate or ban hemp products.

Conservative Think Tank Polling - 73 Percent of Voters Support Cannabis Legalization - A recent poll from the Manhattan Institute shows that 73 percent of American voters, including a majority of Republicans, support cannabis legalization for either recreational or medical use, with most agreeing that its possession and sale should be legal in all circumstances. The poll, which surveyed 2,304 voters, found broad support for various reform proposals, although concerns about impaired driving, underage use, and public consumption were prevalent. A plurality of respondents favored legalizing cannabis for recreational use, while others preferred medical use only or allowing personal cultivation without commercial sales.

Congressional Research Service Reports On Circuit Split Regarding Federal Prosecution of State-Legal Medical Cannabis  – In each fiscal year since FY2015, Congress has included provisions in appropriations bills (Rohrabacher-Farr Amendment or Joyce Amendment) that prohibit the DOJ from using appropriated funds to interfere with state medical cannabis programs. Federal courts have generally interpreted the amendments to prevent criminal prosecution only when individuals strictly comply with state cannabis laws. Recently, however, a Circuit split has formed regarding the level of state law compliance required to invoke the protection. In 2016, the Ninth Circuit ruled that individuals must “strictly comply” with state medical cannabis laws to prevent federal prosecution. However, in 2024, following an earlier 2022 decision, the First Circuit seemingly endorsed a “substantial compliance” standard, which might allow for small technical violations that would not otherwise comport with the Ninth Circuit’s strict compliance requirement.

Second Circuit Mulls Dormant Commerce Applicability to Cannabis - A Second Circuit panel recently heard arguments regarding whether the dormant commerce clause applies to the federally illegal cannabis industry and, if so, whether New York regulators can still prioritize local applicants for cannabis licenses. Plaintiffs challenging New York’s cannabis licensure practices argue that the state’s policies discriminate against out-of-state participants in the cannabis market. Judges questioned how a national cannabis market could be protected when Congress has made it clear that cannabis should remain illegal federally. Plaintiffs allege that the state’s priority system for certain applicants continues to unfairly favor locals, echoing issues raised in a previous case concerning the Conditional Adult-Use Retail Dispensary (CAURD) program. The court also considered whether the case was ripe for appeal, given a state court’s recent injunction of the licensure program at issue.

SEC Charges Broker Dealer for Alleged AML Violations – The SEC recently charged LPL Financial LLC for multiple alleged failures in its anti-money laundering (AML) program, including inadequate customer identification and failure to close high-risk accounts.  To resolve the charges, LPL agreed to pay an $18 million civil penalty and implement improvements to its AML policies and procedures. “LPL failed to close or restrict thousands of high-risk accounts, such as cannabis-related and foreign accounts, that were prohibited under LPL’s AML policies.”

NIST To Publish New Standard on Allowable Moisture Loss in Cannabis Products – The National Institute of Standards and Technology (NIST) is expected to publish a new standard this month regulating allowable moisture loss in cannabis products, permitting up to three percent weight loss due to drying. The guideline is aimed at ensuring consumers and patients receive the advertised weight, and will be included in NIST’s federal handbook on packaged goods to guide both hemp and marijuana markets. The National Conference of Weights and Measures (NCWM) approved the new guideline last week.

NIDA Posts Blog Discussing NASEM Report on Cannabis  – Last week, the Director of the National Institute on Drug Abuse (NIDA), Dr. Nora Volkow, released a blog post discussing the rapid expansion of cannabis availability over the past two decades; public use of cannabis and how it is outpacing research on its public health impacts; and a recent report by the National Academies of Sciences, Engineering, and Medicine (NASEM), which emphasized the need for more research to inform policy decisions. The report focused on health outcomes, product safety, and the effects of high-THC, among other things and highlighted the importance of improving surveillance, testing, and data collection to guide public health efforts.

State

DC – Over 270 medical cannabis dispensaries could open in Washington, D.C. this year, with 276 currently moving thru the Alcoholic Beverage and Cannabis Administration’s approval process, though most are conditional due to the challenge of securing real estate. More than 80 applicants have reportedly secured locations, and over 35 of those have received licenses and must open within 120 days. Twelve dispensaries are operational in D.C., with an additional five expected to open soon.

FL – After the failure of a Florida cannabis legalization initiative in 2024, Smart & Safe Florida has filed a revised version for the upcoming ballot in 2026. The new measure, titled “Adult Personal Use of Marijuana,” includes, among other things, provisions prohibiting public smoking and vaping and requiring legislative approval for rules on public consumption. The changes aim to respond to various critiques, including those from Gov. Ron DeSantis (R), who prominently opposed the failed 2024 measure.

HI – Hawai’i Gov. Josh Green (D) recently signed an executive order to protect the state’s medical cannabis caregivers from excessive enforcement, especially as certain provisions of the medical cannabis program expired on December 31, 2024. The order directs the Department of Health to avoid using its limited resources to enforce minor violations related to caregivers’ activities under the medical cannabis law.

IA – While Iowa GOP lawmakers are likely against legalizing cannabis this session, a former state deputy treasurer and former director of the Iowa Department of Management expects the state will soon “need a new sin tax” to make up for lost revenue from tax cuts.

IL –  Illinois regulators approved four new medical conditions to qualify for medical cannabis, all centered on women’s health. At the recommendation of the Medical Cannabis Advisory Board, endometriosis, ovarian cysts, uterine fibroids, and female orgasmic disorder were added to the list.

IN –  Lawmakers in Indiana introduced bills to legalize recreational cannabis, allow medical cannabis, and fund research on the therapeutic benefits of psilocybin.

KY – Kentucky Gov. Andy Beshear (D) said the state could legalize adult use cannabis as a next step after the launch of the medical cannabis program in 2025 if officials can “prove” that the new medical program adequately protects public safety and is regulated effectively. Sen. David Yates (D) introduced SB36, which would create a ballot initiative permitting Kentucky voters to amend the state’s constitution by adding a section allowing adults 21 and over to possess, use, buy and sell up to one ounce of cannabis and to cultivate five plants for personal use. The same lawmaker introduced SB33, which would remove penalties for possession, cultivation, and sale of up to eight ounces of cannabis or up to five plants. The legislation would also provide for the expungement of convictions for cannabis offenses that did not exceed that threshold.

MA – The Massachusetts Cannabis Control Commission has hired Travis Ahern as its new executive director. The Commission has been without a permanent chair since September 2023. Ahern is “potentially slated” to begin work in March, according to a Commission spokesperson. He was previously the policy and finance director for the Massachusetts Water Resource Authority Advisory Board and has held roles in municipal government in Danvers, Weston and Holliston.

MI – Michigan’s licensed adult use cannabis retailers reportedly recorded $3.27 billion in sales in 2024, representing a 9.9 percent increase from $2.98 billion in 2023. In addition, the $264.7 million in adult use sales from December 2024 pushed the state’s cumulative market total to more than $10.2 billion since sales launched five years ago in December 2019.

MN – The Minnesota Office of Cannabis Management opened a 30-day public comment period and issued a notice to adopt expedited rules in Q1 2025. Comments may be submitted until Wednesday, February 12.

MO – The Missouri Division of Cannabis Regulation announced in December a series of proposed rules aimed at combating predatory financial agreements and other practices during the application process for microbusiness licenses. The division is incorporating public feedback before submitting the final rules to the Secretary of State’s office. A cannabis trade group has pushed back on the new proposed rules, urging state regulators to adopt regulations that would allow microbusiness licensees to sell licenses sooner.

NE – Nebraska’s medical cannabis legalization took effect last month, after a lawsuit challenging the initiatives was dismissed, allowing patients with a healthcare practitioner’s recommendation to possess up to five ounces of cannabis. The state will begin licensing dispensaries next year, despite ongoing concerns from state officials about the initiatives’ compliance with federal law.

NJ – Applications have officially opened for licensed cannabis consumption lounges in New Jersey, with social equity businesses able to apply starting March 28, 2025. Microbusinesses and diversely-owned dispensaries can apply beginning April 2, followed by all other retailers on July 2, with rules prohibiting the sale of food or alcohol but allowing adults to bring or have food delivered.

NY – A group of New York cannabis dispensary owners filed a lawsuit against state regulators last week, claiming that the Office of Cannabis Management (OCM) allowed dispensaries to open too close to one another, violating the state’s 1,000-foot spacing rule. The plaintiffs, including Actualize Dispensary, Astro Management, L.O.R.D.S, and R&R Remedies, argue that the OCM did not properly conduct the required review before granting waivers, which has put their businesses at risk and undermined the regulatory framework intended to support diverse licensees.

OH – Ohio’s recreational marijuana market has proven highly profitable, with sales reaching over $242 million by the end of 2024. As of January 4, 2025, the state reported total sales exceeding $255 million, with dispensaries anticipating further growth if new rules allowing the sale of additional products are approved.

PA – Pennsylvania State Rep. Dan Frankel (D) anticipates a vote on his bill to legalize cannabis “sometime early spring,” though it remains uncertain if the legislature will support the proposed state-run sales model. Frankel, along with co-sponsor Rep. Rick Krajewski (D), emphasized the need to address the harms of criminalization and generate state revenue, arguing that regulating cannabis is essential for public health and social justice as illegal markets continue to thrive.

RI – The Rhode Island Cannabis Control Commission convened for the first time in over two months early January, focusing primarily on the hiring of a chief public affairs officer. The Commission spent 15 minutes in executive session to vote on extending a job offer to a candidate, but Chairperson Kimberly Ahern did not disclose the candidate’s name, citing procedural steps that need to be completed before making an announcement.  The Commission also released draft cannabis regulations on January 8, 2025 which are now open for public comment.

SD - South Dakota State Rep. Travis Ismay (R) has introduced legislation to overturn the state’s voter-approved medical cannabis program, a move he previously supported as a citizen activist. Melisa Mentele, executive director of New Approach South Dakota, criticized the effort, highlighting the negative impact it would have on patients and the state’s cannabis industry, which was established by a voter initiative in 2020 and supported by nearly 300,000 voters.

VA – During his State of the Commonwealth address, Virginia Gov. Glenn Youngkin (R) reiterated his opposition to legalizing cannabis sales, arguing it would harm children, exacerbate mental health issues, and increase violent crime. Although adult use, possession, and limited cultivation of cannabis are legal in Virginia following a 2021 Democrat-led initiative, subsequent Republican control of the House and governor’s office has stalled the establishment of a regulatory framework for retail sales, leading to the rise of illicit stores.

WI – Gov. Tony Evers (D)  included a proposal in his 2025-27 budget to establish a process for citizens to propose and repeal laws via binding referenda, which would allow for a state referendum on cannabis. Evers’ efforts are likely to fail, as any proposed budget needs approval from the Republican-controlled legislature, which has generally been opposed to any broad legalization of cannabis. Wisconsin is one of eight states without a medical cannabis program and reportedly one of 24 states that doesn’t allow citizen-initiated ballot measures, leaving residents unable to directly enact state laws.

Hemp

FDA – Following a warning letter from the FDA last December, Anne’s Daye, the maker of CBD-coated tampons, has removed the products from the U.S. market. The FDA flagged the tampons as “adulterated” and “misbranded” due to the inclusion of CBD, noting that the company had not notified the agency about changes that could impact the safety of the product.

USDA – The U.S. Department of Agriculture (USDA) and the United States Trade Representative (USTR) have appointed two new hemp industry stakeholders, Brian Furnish and Michael Klumpp, to the Agricultural Technical Advisory Committee (ATAC) for Trade in Tobacco, Cotton, Peanuts, and Hemp. These appointments aim to promote the global trade of hemp and involve experts from various hemp-related industries. ATACs provide technical advice to the USDA and USTR to shape U.S. trade policy and open access to global markets for agricultural products.

IL – A legislative bill to crack down on hemp products failed earlier this month, leaving the industry’s future uncertain. Chicago Mayor Brandon Johnson (D) and Gov. J.B. Pritzker (D) were publicly at odds over the bill, with the governor criticizing Johnson’s lack of communication and involvement in the capital, despite the mayor claiming ongoing collaboration. The tension comes amid difficult budget negotiations, with Pritzker downplaying Johnson’s opposition to the failed hemp measure while emphasizing the challenges ahead for the state’s finances. Meanwhile, the Chicago City Council voted to ban hemp sales in two Southwest Side wards, though Alderman Marty Quinn claimed the vote might have been unnecessary, as a 2012 zoning ordinance already banned the sale of products with effects similar to THC. The Department of Business Affairs and Consumer Protection stated the ordinance did not explicitly prohibit the sale of delta-8 and other hemp derivatives. Mayor Brandon Johnson and the city’s Law Department have yet to clarify the legality of the products, with the Law Department needing more time to study the issue.

MI – Michigan’s Cannabis Regulatory Agency (CRA) has filed a complaint against Sky Labs LLC, accusing the company of handling hemp isolate without necessary licensure and failing to comply with regulatory requirements. The complaint details issues such as Sky Labs not producing certificates of analysis for products, improper surveillance footage, and a failure to maintain accurate records.

MN – The Office of Cannabis Management (which is responsible for the regulation of both the state-legal cannabis and hemp product markets) recently issued guidance to hemp product manufacturers for the production of “safe and legal hemp-derived cannabinoid products (HDCPs) like edibles.”

NY – A New York state court judge has found that hemp regulators at the Office of Cannabis Management and the New York City Sheriff’s Office likely overstepped their authority in conducting heavy-handed warrantless raids on hemp stores, thereby likely violating the stores’ constitutional rights. The court issued a temporary restraining order on further raids, limiting inspections to two unarmed inspectors unless a security concern is identified. As the judge wrote, “[t]he manner of the searches’ execution is damning. In all instances respondents were accompanied by heavily armed law enforcement officers who ordered customers out of the stores and prevented anyone from entering, permitting no commercial transactions to happen.”

TX – Earlier this month, Texas Agriculture Commissioner Sid Miller commented that regulating hemp could be an alternative route to a ban altogether. Proposed legislative bill (SB 3) would ban all forms of cannabis sold in Texas. A committee hearing is expected to take place for the bill in the near future.

VA – U.S. Court of Appeals for the Fourth Circuit has ruled that Virginia’s hemp product restrictions (under SB 903) are not preempted by the 2018 Farm Bill. The Court also found that the state law did not violate the Dormant Commerce Clause of the U.S. Constitution.

WY – A group of hemp companies in Wyoming are challenging a new state law (SEA 24) restricting hemp products. The companies argued to the U.S. Court of Appeals for the Tenth Circuit that the state failed to show how the products targeted by the challenged law could be harmful and that the statue is an unlawful infringement on private property rights and unconstitutionally vague.

International

Argentina – The Regulatory Agency for the Hemp and Medicinal Cannabis Industry (“ARICCAME”) recently promulgated stricter compliance measures through Resolution No. 2/2024. The regulation establishes provisions for dealing with violations of the nation’s regulatory framework for hemp and medical cannabis. One key provision of the regulation is that violations will result in administrative sanctions.

Czech Republic – The Czech Republic plans to regulate sales of cannabis with up to 1 percent THC (including extracts and tinctures) and the sale of kratom. The public policy changes will go into effect in July 2025.

Germany – A new poll from the German Hemp Association shows that 59 percent of German voters now support allowing adults to legally purchase cannabis from licensed stores. Germany’s relative recent cannabis law has been implemented over the last year, likely leading to an increase in favor of the policy change.

Ukraine – Ukrainian Deputy Prime Minister Olha Stefanyshyna announced that officials have given final approval for selling medical cannabis products under the country’s new legalization law. Approved products include oral cannabis drops, capsules, dental pastes, and gels.

Business

Cannabis Debt Crisis Looms as Billions in Loans Come Due in 2026 – By the end of 2026, up to $3 billion in debt will become due for U.S. cannabis operators—though most of the companies reportedly have the option to refinance their loans.

GAO Forming Cannabis Business Focus Groups – While passage of the SAFER Banking Act remains stalled, the U.S. Government Accountability Office (GAO) is seeking to better understand the banking challenges faced by cannabis businesses. GAO recently circulated a survey to gather preliminary information from cannabis businesses and financial institutions; the survey included questions about businesses’ experiences with banking, the impact of federal prohibition, and any specific challenges.  Following the survey, virtual focus groups have been scheduled this year to delve deeper into these issues. The study was requested by the Senate Subcommittee on Financial Institutions and Consumer Protection to examine the economic effects of the War on Drugs and the role of financial institutions in addressing these effects.

Facebook Continues to Censor Cannabis Searches – Facebook continues to block terms such as “marijuana” and “cannabis” despite Meta’s new content moderation policies removing restrictions on other highly debated topics like immigration and gender identity. Cannabis-related accounts, including those of medical marijuana patients, content creators, and state regulatory agencies, continue to face visibility issues and content removal on Meta’s platforms causing frustration amongst various stakeholders with the ongoing restrictions on cannabis content.

DoorDash Launches Cannabis Home Delivery – DoorDash announced the launch of home delivery for hemp-derived cannabis products containing CBD and THC.  Customers in states where delivery of hemp-derived cannabis products is available will now see a “CBD/THC” tab at the top of the DoorDash app, with safeguards to ensure legal age verification.  The announcement drew mixed responses from cannabis industry executives, with some praising the move for increasing access to quality products, while others expressed concerns about the regulatory differences between hemp-derived and state-regulated cannabis products.

Administrative Court Upholds Florida State Regulator’s Decision Rejecting Medical Cannabis Dispensaries Near Convenience Stores – An ALJ upheld Florida state regulators’ decision to reject Green Thumb Industries’ (GTI) request to open medical cannabis dispensaries adjacent to convenience stores, citing concerns over safety, security, and potential risks to minors. GTI had planned to open dispensaries next to Circle K locations in St. Petersburg, Ocala, and Orlando but was denied approval by the state’s Office of Medical Marijuana Use (OMMU), which argued that the proximity to convenience stores could lower the standards of cannabis dispensaries and increase crime risks. GTI claims the state’s actions were based on unadopted rules and that Florida law does not prohibit dispensaries from being near gas stations or convenience stores. The judge, however, sided with the OMMU, finding that each request had been evaluated on its specific circumstances, and that the safety concerns raised were relevant.

Medicine

Declining Cannabis Use Among Youth –  Studies continue to show that cannabis legalization has led to a decrease in use among teenagers in 19 of 21 U.S. states. National data mirrors state trends, with significant declines in use among 12th-grade students. The decline in youth use has been attributed to strict age-verification regulations reducing access for minors as well as tax-funded education programs that increase awareness about the effects of cannabis.

Study Finds Lower Opioid Misuse After Passage of Medical Marijuana Laws –  A study by Columbia University’s Mailman School of Public Health observed decreases in opioid misuse among individuals who used cannabis and lived in states with medical cannabis laws. While the same effects were not found in states with both medical and recreational cannabis laws, the findings do suggest that medical cannabis laws may help reduce opioid misuse among cannabis users. The combined effect of medical and recreational laws is less clear with further research needed to understand the long-term impacts of such laws.

Study Finds CBD May Reduce Cravings in People With Alcohol Use Disorder –  A new study published in Molecular Psychiatry found that an 800-milligram dose of CBD significantly reduces alcohol cravings in people with alcohol use disorder (AUD).  The study involved 28 participants who abstained from drinking for 24 hours before being given CBD or a placebo. They were then exposed to alcohol-related cues in a bar laboratory setting. CBD reduced alcohol cue-induced brain activity, suggesting it can modulate neurobiological mechanisms underlying alcohol craving. The findings support the potential of CBD as a treatment for AUD, aligning with previous research on CBD’s effects on opioid use disorder.

Psychedelics

Google Co-Founder’s Nonprofit Invests in Psychedelic Startup –  Sergey Brin’s nonprofit, Catalyst4, is funding startups in areas such as psychedelics and energy projects.  Catalyst4 currently holds a $1.5 million stake in psychedelics startup company Soneira, with reports of additional investments likely forthcoming. Soneira is reportedly building on recent Stanford University findings suggesting that ibogaine, a plant-based psychedelic drug, is effective in treating traumatic brain injuries.

Dentons Speaks

North Point Pharmaceutical Cannabis Symposium – On January 13, 2025, Dentons Cannabis Partner Kelly Fair discussed exciting developments in cannabinoid-based therapies and investor perspectives regarding the development and bringing-to-market of cannabinoid-based drugs at an industry and investor panel. Other panelists including Bill Cronin (5 Horizons Capital), Howard Goodwin (Intrinsic Capital Partners) and Arthur Wakeley (Former Managing Director of Celadon Pharmaceuticals).

Town of Kent Public Forum –  Dentons Partner and Cannabis Practice Head, Eric Berlin, spoke at a town public forum in Connecticut with other national cannabis experts on the best approaches to regulating hemp and cannabis on January 16, 2025.

Village Tea Podcast – Dentons Partner and Cannabis Practice Head, Eric Berlin, recently delved into cannabis law for the listeners of the Village Tea Podcast on January 17, 2025.

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

Authored by associates Malina Dumas, Lauren Estevez, Seena Forouzan, Kristina Grimaldi, Blair Johnsonand Jacob Raver.