In this week’s edition:

• Vice President Biden reaffirms opposition to federal cannabis legalization
• States take on cannabis legalization efforts in 2020
• Federal legislation introduced to allow CBD to be marketed as a dietary supplement
• Dentons’ Ausra Deluard discusses trends in antitrust enforcement
• And more…

Federal

Congressional hearing exposes marijuana research limitations imposed by federal law - The House Energy and Commerce Subcommittee on Health held a hearing on six cannabis bills, including two that would federally legalize cannabis. In addition to revelations surrounding new research regulations in process, the hearing, titled “Cannabis Policy For the New Decade,” included a brief statement from Rep. Joe Kennedy III (D-MA) on his personal evolution on this issue, including his opinion that “Prohibition has clearly failed and America isn’t waiting for its government anymore.” Watch the full hearing, linked in the article above.

Joe Biden again says no to marijuana legalization without more studies - Former Vice President Joe Biden (D) reiterated his opposition to federal legalization, without more studies. Instead, Biden’s cannabis reform plan involves rescheduling the plant to make it easier for researchers to access, decriminalizing simple possession and expunging prior cannabis records. Read the full interview here.

Congress should make cannabis research less cumbersome, APA says in written testimony - The American Psychological Association issued a statement asking Congress to remove roadblocks to cannabis studies, including calling for the Drug Enforcement Administration to be relieved of its role in reviewing requests to conduct such research. Instead, institutional review boards and the FDA are more appropriate bodies to manage this task, said APA Chief Scientific Officer Russell D. Shilling, PhD, in prepared remarks.

States

FL - Make it Legal Florida will not put a constitutional amendment on the 2020 ballot, the group announced Monday. Instead, it is shifting its focus to a 2022 ballot initiative. Meanwhile, a ballot initiative by Sensible Florida has also stalled. According to the Florida Division of Elections, the group so far has only 92,805 verified petition signatures. The signature requirement for 2020 measures is 766,200.

IL - Illinois regulators are investigating some dispensaries for violations of the state law requirement that no more than 40 percent of product inventory come from one cultivator. The law is aimed at preventing cultivators from entering into exclusive agreements with specific dispensaries and making sure all stores have a diversity of products from different sources.

KY - David W. Osborne (R), Kentucky’s House speaker, said at a hearing on the issue that if medical cannabis is legalized in Kentucky it should not be taxed.

NH - New Hampshire lawmakers are looking to legalize low-level cannabis possession and home cultivation without adding a commercial market, an approach similar to Vermont’s. A bipartisan bill is scheduled to get a hearing on January 23.

NJ - The New Jersey Appellate Division ruled that employers may lawfully reimburse workers for medical cannabis, finding that the payments would not violate the federal Controlled Substances Act (CSA). The court notably rejected the employer’s argument that the payments were akin to aiding and abetting a crime and relied on the fact that the employer had failed to show that the federal government aims to enforce the CSA in any state in which medical cannabis has been legalized. Importantly, the court found that compliance with the order does not establish the specific intent element of an aiding and abetting offense under federal law.

NJ - A New Jersey court said regulators cannot review new medical cannabis business licenses while applicants who were rejected on technicalities challenge the process.

NM - Gov. Michelle Lujan Grisham (D) formally asked lawmakers to legalize cannabis during the short 30-day legislative session beginning this month by including the issue in her written session call. Additionally, she asked lawmakers to pass a bill making clear that the state’s medical cannabis program applies only to residents, reversing a court ruling to the contrary. The following day, legislators filed an adult legalization bill. Introduced by Sen. Jerry Ortiz y Pino (D) and Rep. Javier Martinez (D), the legislation would allow adults in the state to possess and purchase cannabis from licensed retailers. It also includes a number of restorative justice and social equity provisions. Observers have expressed skepticism of the bill’s chances in 2020. We understand that a research bill may be considered as an alternative.

RI - Rhode Island Gov. Gina Raimondo (D) submitted a 2021 budget proposal to lawmakers that includes a plan to legalize cannabis and sell it through state-run stores. Already, however, the proposal seems unlikely to succeed as top lawmakers in the state are pushing back against the plan.

SD - A cannabis legalization measure officially qualified for the 2020 ballot in South Dakota. The development comes one month after the secretary of state said that a separate campaign to legalize medical cannabis in the state had also submitted the required valid signatures to qualify for the 2020 ballot—meaning that voters will see both medical and adult-use measures when they go to the polls in November. This means South Dakota could be the first state to legalize medical and adult-use at the same time.

VA - The ACLU of Virginia said instead of enacting cannabis decriminalization in the short term, it would "prefer the status quo while we’re waiting for full legalization." Its comments are in response to proposed bills that would replace a criminal fine with a civil penalty, which the organization finds problematic.

WA - Washington State regulators will adopt 18 cannabis enforcement changes recommended by consulting firm Hillard Heintze. Three themes emerged in the firm’s recommendations: (1) a need for greater consistency in how interpretations of agency decisions are communicated and applied; (2) a need for greater transparency and understanding by stakeholders about agency decisions and interpretations; and (3) a need for stronger outreach, communication, education and collaboration with the industry.

Hemp/CBD

Federal - A new bill filed by House Agriculture Committee Chairman Collin Peterson (D-MN) and bipartisan cosponsors would allow the marketing of CBD as a dietary supplement by amending the Federal Food, Drug and Cosmetic Act to include CBD in the definition of dietary supplements.

Federal - A federal judge ruled that CBD maker Green Roads shouldn’t face liability claims in a class action lawsuit until the Food and Drug Administration completes a review of policies for such products: “The FDA regulations currently provide little guidance with respect to whether CBD ingestibles, in all their variations are food supplements, nutrients or additives and what labelling standards are applicable to each iteration,” the judge stated. This decision is likely to be cited by defendants in the current California lawsuits against ingestible hemp product manufacturers and any that may arise in the future. Read the full decision here.

US Department of Agriculture - The USDA filed a Federal Register notice about a new data collection system it is creating to keep track of hemp production license applications. Interested persons are invited to submit written comments by February 28, 2020 here.

Cowen’s Equity Research - Cowen published its key takeaways from a CBD Policy Summit in Washington, DC, including that “strong consumer demand is advancing the ball,” according to the results of December 2019 survey of US consumers in which 10 percent of respondents reported having used CBD as a supplement.

International

EU - The European Commission is proposing a unified EU vote on six pending World Health Organization cannabis scheduling recommendations. If those countries vote as a block, they will represent almost a quarter of the total votes within the UN Commission on Narcotic Drugs. Among its recommended actions are: (1) to vote in favor of removing cannabis from Schedule IV of the 1961 convention (which would signal cannabis has therapeutic value while maintaining the status quo); and (2) postponing a vote on adding a footnote saying that “preparations containing predominantly cannabidiol and not more than 0.2% of delta-9 tetrahydrocannabinol are not under international control.”

Barbados - The island country’s agriculture minister said the government plans to begin issuing medical cannabis cultivation licenses next month. Barbados will adopt a tiered approach to cultivation and processor permits, ranging from Tier 1 for small-scale cultivation to Tier 3 for large-scale farms.

UK - Justice Secretary Robert Buckland said the government will not legalize cannabis anytime soon. “We have to be very clear controlled drugs, dangerous drugs are unlawful, they’re illegal, they’re criminal to possess or supply,” he said in an interview with LBC, a London-based national phone-in and talk radio station.

Business

Metrics - Arcview Market Research and BDS Analytics published a report finding that global legal cannabis sales rose 48 percent, to $15 billion, in 2019. Additionally, sales in 2020 are forecast to increase by 38 percent driven by growth in established markets and continued geographic expansion, including Illinois’ recreational market opening. “The disconnect between investor sentiment and the facts on the ground is as dramatic as anything I’ve seen since the dot.com stock crash of 2000, which happened just as the internet caught fire with consumers,” said Tom Adams, editor-in-chief of Arcview Market Research and managing director of BDS Analytics Industry Intelligence. “Five billion additional dollars were spent on legal cannabis in 2019 [than in 2018]. That’s bigger than the entire legal cannabis market was in 2015.”

Cresco - Cresco’s Illinois employees joined the United Food and Commercial Workers union. Zach Koutsky, legislative and political director for the local chapter, anticipates far more union involvement in the state’s cannabis industry as it grows.

Trends - XpertHR finds cannabis one of top HR concerns for 2020.

Medical/Health

Impaired driving - For those of you who may have been alarmed by headlines claiming that a study showed that cannabis use affects automobile drivers days after use (CNN: “Weed impairs driving skills long after the high is gone”), here is an article describing the nuances and limitations of the study. To see the original study, click here.

CBD research - A review concluded that "pre-clinical research using animal models of innate fear and anxiety-like behaviors have found anxiolytic, antistress, anticompulsive, and panicolytic-like effects of CBD" and that "preliminary evidence from human trials using both healthy volunteers and individuals with social anxiety disorder, suggests that CBD may have anxiolytic [i.e., anti-anxiety] effects."

Magic Mushrooms - A UK-based mental health care company announced it has been granted a US patent for a formulation that includes an active ingredient in psychedelic mushrooms, which the company is researching as a treatment for drug-resistant depression. Basically, “shrooms” have been patented, which will have a whole host of implications. Stay tuned.

Dentons Speaks

In “Ready for the next episode? Antitrust in the cannabis industry,” Cannabis Business Executive, Dentons attorney Ausra Deluard notes that Standard Oil’s history appears relevant today as federal antitrust agencies again investigate nascent industries striving for economic efficiency. In particular, she looks at current probes into big tech to provide some context for why the cannabis industry has been subject to antitrust merger investigations, and offers insights into what’s ahead in antitrust enforcement.

PLEASE NOTE: In light of the impeachment trial, Dentons has rescheduled our Globalization of Cannabis event in Washington, DC, from Jan. 30, 2020 to Mar. 11, 2020.

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

Authored by Senior Managing Associate Joanne Caceres.