In this week’s edition:

• Industry groups continue to urge Senate Banking Committee Chairman Crapo to move the SAFE Banking Act through committee
• California’s hemp regulator passes an emergency rule to ensure compliance with the 2018 Farm Bill
• Illinois takes steps to prioritize medical cannabis patients
• Kentucky urges Congress to redefine hemp as any cannabis plant with 1 percent or less THC, up from the current maximum of 0.3 percent.
• Texas A&M researchers announce the development of a laser that can efficiently sort hemp from cannabis.
• And more…

Federal

Trump’s budget again omits protection for state medical cannabis programs while allocating funds for the FDA to regulate cannabis and cannabis derivatives. Congress is expected to ignore the request to strike the Joyce Amendment—as it has for the past several years. 

Credit Union National Association (CUNA) has commented on SAFE Banking Act proposals, urging Senate Banking Committee Chairman Mike Crapo to advance the legislation through the committee’s consideration process in order to allow the proposed changes to be considered as amendments that all of the committee members can vote upon. A separate, bipartisan industry letter, signed by hundreds of representatives of major businesses and organizations, including Acreage Holdings, 4Front Ventures, VS Strategies, Marijuana Policy Project and the National Cannabis Industry Association, urged the Senator to move the House version of the SAFE Banking Act through committee.  The 12 legislators who opposed the SAFE Banking Act in the House signed a letter to Chairman Crapo reiterating their opposition  to the legislation.

States

Colorado. A pair of cannabis opponents submitted a four-sentence ballot proposal to repeal Colorado’s constitutional provision legalizing recreational cannabis use.  The proposal was deemed materially deficient and petitioners were given one month to cure the deficiencies and submit a revised proposal, after which, to qualify for the 2020 ballot, they will have to collect 124,362 signatures from registered voters.

Florida. A local orchid grower’s effort to contest a regulator’s award of licenses to eight competitors failed after the state court of appeals decided the grower lacked standing.

Florida House Speaker José Oliva is publicly advocating for legislation that would cap THC levels in cannabis products.  However, no such bill has yet to be filed in either the House or Senate.

Georgia’s medical cannabis patient population has grown 70 percent over the past year, to a total of 14,511 patients.  The most common condition for medical cannabis patients in the state is “intractable pain.”

Iowa. A subcommittee of the Iowa General Assembly, the state legislature, has advanced a bill lifting a 3 percent THC cap on state-approved medical cannabis products.  The latest version of the bill is more restrictive than a prior version that Governor Kim Reynolds vetoed last spring.  While the prior version allowed patients to purchase up to 25 grams of THC per 90 days, the modified legislation would cap patients at 4.5 grams per 90 days.

The Illinois Department of Financial and Professional Regulation (IDFPR) issued an advisory spelling out how medical cannabis patients should be prioritized, including expanding any purchase limits for recreational customers 2.5 times for medical patients.

The Department also expanded access for medical cannabis patients by allowing medical dispensaries to remain open until 10 p.m., two hours longer than the 8 p.m. curfew the Department had previously imposed.  With the change medical patients are now allowed to purchase cannabis during the same hours as recreational customers can.

Kentucky legislators have advanced HB 136, which would legalize medical cannabis for a limited list of qualifying conditions.  The bill imposes strict regulations, including a continued ban on smoking cannabis flower (although flower may be sold for other uses). 

The New Mexico Senate approved SB 271, a bill that would allow the state Department of Health to enter into agreements with Native American tribes looking to sell medical cannabis in their own territory.  The bill’s sponsor, Sen. Benny Shendo (D-Jemez Pueblo) told his colleagues that the US Attorney’s Office had told members of the Picuris Pueblo that a government-to-government agreement would prevent the federal government from raiding tribal lands looking for cannabis. The Picuris Pueblo had previously tried to establish its own medical cannabis program before being shut down by the federal government.

The New Mexico Legislature’s Senate Judiciary Committee rejected SB 115, a proposal to legalize adult-use recreational cannabis.  While the bill is now dead, Governor Michelle Lujan Grisham continues to campaign for statewide legalization, citing overwhelming public support for marijuana legalization.

The New Mexico legislature also advanced two bills, HB 214 and HB 334, that would clarify the state’s hemp laws and expand cannabis research, respectively.  HB 214 requires any out-of-state consumable hemp products to pass the same requirements as products manufactured in New Mexico.  HB 334 allows researchers in New Mexico to grow their own cannabis or to purchase cannabis from state-licensed facilities rather than the from the federal Drug Enforcement Agency.

Nevada’s Tax Commission recently reached settlements with two cannabis companies accused of regulatory violations.  One was with a laboratory whose THC-level testing came under scrutiny when independent re-testing showed a 9‒10 percent lower concentration than the laboratory had reported.  The complaint against the lab also alleged a number of other violations, including failure to maintain records and failed samples for at least 30 days. Facing possible penalties totaling $107,500, the lab settled for $70,000 and a 30-day suspension of its license.  The other settlement was with a company that allegedly failed to (i) keep accurate records as required by the state’s seed-to-store tracking program and (ii) notify the state of employee terminations. The company paid a settlement of $17,500. 

New York Assembly Majority Leader Crystal Peoples-Stokes, who introduced a legalization bill, said she thinks it’s “very likely” to progress this year despite opponents who question whether enough has changed since last year’s unsuccessful attempt. Governor Andrew Cuomo’s budget proposal also includes a plan for legalization. The state budget is due April 1.

The Ohio State Medical Board (OSMB) has submitted to the state legislature three new conditions—autism spectrum disorder, anxiety and cachexia—for inclusion in the state’s medical cannabis program.  The OSMB rejected conditions such as depression, insomnia, opioid use disorder and “being a Bengals or Browns fan.”

The Oklahoma Secretary of State approved a petition for a state question on legalizing recreational cannabis to begin collecting signatures.  State Question 808 proposes a constitutional amendment which would “decriminalize cannabis, hemp, and all its related products for all persons.”  The ballot question faces opposition from advocates for State Question 807, a better-funded initiative to “legalize, regulate and tax marijuana for persons aged 21+ under state law . . .”  The Secretary of State has not yet signed off on State Question 807.

Hemp/CBD

Defendant CBD manufacturer Elixinol LLC has urged a California federal court to dismiss a putative consumer class action accusing it of selling dietary supplements and pet treats in violation of federal law.  While the US FDA has issued public guidance regarding dietary supplements containing CBD, Elixinol argued that the guidance is non-binding and does not constitute agency rulemaking.

California’s Department of Food and Agriculture has passed an emergency rule, effective immediately, to ensure compliance with the federal 2018 Farm Bill.  The rule requires growers to register with county officials their hemp production locations and approved cultivars.  Persons with felony convictions relating to a controlled substance are ineligible to participate in the hemp program for ten years from the date of conviction.

The Kentucky legislature has submitted a concurrent resolution to urge Congress to reassess the federal definition of hemp to increase maximum THC content to 1 percent from 0.3 percent.

International

Mexico - Senator Julio Menchaca, president of Mexico’s Senate Justice Commission, has declared that the Mexican legislature will, by the end of February in advance of an April deadline set by the Supreme Court, consider a draft opinion regulating recreational cannabis.  Joaquin Contreras, a partner in our Mexico City office, reports that the Senate has commenced open hearings to discuss the latest draft of the bill.  After the hearings, the Senate is expected to vote and send the bill to the House by early March.  The bill has changed significantly since its circulation in December 2019.

United Kingdom - The UK’s Food Standards Agency (FSA) cautioned consumers not to ingest more than 70mg of CBD daily and announced that CBD manufacturers must submit applications for “novel food authorization” by March 31, 2021, or have their products removed from store shelves in England, Wales and Northern Ireland.  The FSA’s chief executive, Emily Miles, said that the announcement is intended to promote a better understanding of the health and safety concerns associated with CBD products, particularly among vulnerable groups.

Nepal - Nepal’s ruling Communist Party has filed a proposal to legalize the production and use of cannabis.  The proposal comes at a time when many of the Western countries that had pressured the Nepalese government to criminalize cannabis in 1976 are themselves in legalization mode.

Business

Acreage Holdings, Inc., has entered into financing transactions with an institutional lender for a US$100 million credit facility that is not dilutive to its planned equity deal with Canopy Growth Corp.  A US$50 million loan serves as cash collateral.

The US Department of Labor’s Occupational Safety and Health Administration (OSHA) has ramped up its oversight of the cannabis industry by conducting inspections of cannabis-related businesses and issuing warnings.  One such business, Trulieve, Inc., faces an inspection to determine if it is in compliance with regulations promulgated for businesses primarily engaged in growing food crops under a glass cover.

Curaleaf Holdings, Inc., expanded into wholesale arrangements in New Jersey to supply other dispensaries (alternative treatment centers) from its 100,000-square-foot indoor cultivation center.

Dispensaries drive more foot traffic to local businesses and reduce crime, owners of neighboring businesses told the Miami Herald.

NFL - A new proposed collective bargaining agreement between the National Football League and its Players Association could lead the NFL to significantly relax its restrictions on cannabis use for professional football players.  Under the current system, players are subject to random testing for cannabis any time between April and August.  The proposed CBA would reduce that time frame to a two-week window, and dramatically reduce the penalties incurred if a player tests positive for the substance.

Medical/Research

Researchers at the Texas A&M University claim to have developed a Raman spectrometer, a handheld laser device capable of detecting, with 100 percent accuracy, whether plant material is hemp or cannabis.  The laser can identify structural differences between hemp and cannabis plants based on changes in vibrational bands. Hemp was found to have more cellulose.

Dentons

Podcast - Joanne Caceres was recently featured on the Bloomberg Law Analysis podcast, where she discussed the current federal regulation of hemp and how it could inform future regulation of the cannabis industry.

Eric Foster and Stuart Ruffolo of Dentons’ Canada have published an overview of “Dentons’ Pick of Canadian Regulatory Trends to Watch in 2020.” To download the full report, click here. And please click here for more information on Dentons US Cannabis group.

Authored by Associate David Hall and Counsel Ausra Deluard