In this week’s edition:

• DEA Head, Anne Milgram, Reports No “Specific Timeline” on Cannabis Rescheduling
• Maine Decouples State From Federal Tax Code, Permitting Cannabis Businesses to Deduct Most Business Expenses
• Minnesota Celebrates First Store To Sell Cannabis for Recreational Use After Recent Legalization
• Republicans Attack FDA Inaction on CBD and Hemp-derived Intoxicating Products
• Cresco Labs and Columbia Care Terminate $2 Billion Planned Merger
• Mastercard Moves to Stop Cannabis Debit Card Purchases

Federal

No Timeline on Cannabis Rescheduling, DEA Chief Says – The Biden administration has yet to provide the US Drug Enforcement Administration (DEA) with any “specific timeline” to complete its cannabis rescheduling review.  DEA Administrator Anne Milgram testified before Congress last month and stated that a specific timeline for the rescheduling had not been provided.  The US Food and Drug Administration (FDA) is currently reviewing scientific data relating to cannabis as part of the rescheduling administrative process. 

Veteran Access to Medical Cannabis Approved in Spending Bill – Veterans would not be prohibited from accessing medical cannabis under an amendment that has been approved by the US House of Representatives to be included in a spending bill. The amendment to the 2024 Military Construction, Veterans Affairs, and Related Agencies appropriations bill (H.R. 4366) “prevents the VA from interfering with a veteran’s ability to participate in a legal state medical cannabis program, deny service to such a veteran, or limit health care providers’ ability to make appropriate recommendations of this treatment option for veterans.” Rep. Brian Mast (R-FL) introduced the amendment with Reps. Earl Blumenauer (D-OR), Barbara Lee (D-CA) and Dave Joyce (R-OH). The funding bills included multiple cannabis-related amendments providing protections for US Department of Veterans Affairs (VA) doctors who recommend cannabis as potential therapeutic treatments for PTSD.

New Bill Would Prevent Federal Agencies from Discriminating Against Cannabis Users in Hiring – Reps. Nancy Mace (R-SC) and Jamie Raskin (D-MD) introduced the Cannabis Users’ Restoration of Eligibility (CURE) Act. The bill would protect people from being denied federal employment or security clearances based solely on their prior use of cannabis. On the Senate side, the Intelligence Committee approved an amendment to an oversight bill that would prevent intelligence agencies from denying security clearances to applicants solely due to their past cannabis use.

State

AL – Alabama plans to issue its first medical cannabis licenses on August 10.  This comes after the Alabama Medical Cannabis Commission (AMCC) announced in June that it would not issue the 21 licenses initially awarded after discovering inconsistencies in its scoring process. 

IL – Illinois recently completed a new social equity lottery for cannabis retail licenses, which drew nearly 2,700 applicants. This is all part of the Illinois Department of Financial and Professional Regulation’s (IDFPR) process for issuing 55 new licenses for retail cannabis operators. According to the IDFPR, there are now 137 retail dispensaries open in Illinois.

ME – On July 26, 2023, Maine Gov. Janet Mills (D) signed into law LD 1063, An Act to Provide Equitable Tax Treatment to State-licensed Cannabis Businesses. The new legislation allows state legal adult use cannabis businesses to deduct ordinary business expenses. With the bill’s passage, Maine joins twenty other states in exempting, or “decoupling” from, Federal Tax Code Section 280E, which prohibits businesses trafficking in substances controlled under Schedule I or II of the U.S. Controlled Substances Act from deducting most ordinary business expenses.

MN – Minnesota adults 21 and over can now legally possess, grow, and purchase cannabis for personal use. Two Indian tribes in the state had recently stated their plans to begin cannabis sales almost immediately with the Red Lake Nation’s NativeCare already making its first cannabis sale on August 1. The state passed adult-use legalization in May, and widespread recreational cannabis sales are not expected to open until at least 2024.

MO – On July 27, 2023, Missouri Department of Health and Senior Services opened the state’s first lottery for cannabis microbusiness licenses. Applicants will vie for one of 48 available licenses. The lottery drawings will occur no later than October 2, 2023, with licenses awarded by October 4th and the application period ends this Thursday, August 10, 2023. The Department plans to issue 144 such licenses over 18 months through three lotteries. With recreational sales only starting early this year, the state is already reporting strong sales, at $4 million worth of cannabis on average per day.

NC – Citing widespread Republican opposition, North Carolina House Speaker (R) Tim Moore stated that legislation legalizing cannabis for medicinal purposes was unlikely to pass before the 2023 session adjourned at the end of August. Rep. Moore noted that while the bill could pass the chamber with Democratic support, there would be no such vote until the majority of the House Republican Caucus voted in support, per Caucus rules. Meanwhile, state senators have passed similar bipartisan measures twice since June 2022.

OH – Last week, Ohio’s Coalition to Regulate Marijuana Like Alcohol hurriedly turned in 6,545 new signatures in time to put a cannabis legalization measure on the upcoming 2024 ballot. State officials had informed the Coalition last month that the measure was 679 signatures short following a verification review of more than 220,000 signatures the Coalition had already submitted. County and state officials will now confirm whether enough of the signatures are valid before the measure can proceed.

Hemp/CBD

Unprecedented House Hearing Sees Republican Representatives Attack FDA Over Inaction on CBD and Hemp-derived Intoxicating Products – The House Oversight and Accountability Subcommittee on Health Care and Financial Services held a first-of-its-kind hearing last month concerning the FDA’s decision not to regulate CBD products. Republicans generally excoriated the agency, arguing the FDA had the necessary tools to regulate CBD products and hemp-derived intoxicating products but have chosen not to. Instead, the FDA is shirking its duty and asking Congress for additional funds and regulatory powers. House Committee Chair Rep. James Comer (R-KY) described the FDA’s decision as a simple ploy for more bureaucratic power. Democrats, in contrast, generally sided with the FDA, arguing that the agency was being more than reasonable in turning to Congress. As Rep. Katie Porter (D-CA) noted, the “same lawmakers who want to do oversight of the FDA for being cautious” are the same lawmakers that “would turn around and blast the agency” for exceeding its legal authority.     

FDA Issues Warning Letters to Delta-8 Product Companies “Selling Copycat Food Products” – The FDA joined with the US Federal Trade Commission (FTC) in sending warning letters to six separate companies for allegedly selling food products (containing delta-8 THC) that imitate “traditional foods like chips, cookies, candy, gummies or other snack food items.” The FDA reiterated its long-running concern that such products could be accidentally ingested by children. 

Bicameral Request for Information Announced for CBD Subject Matter Experts and Stakeholders – On July 27, 2023, a bipartisan group of Senators and Representatives, including Sens. Bernie Sanders (I-VT) and Bill Cassidy (R-LA) as well as Reps. Cathy McMorris Rodgers (R-WA) and Frank Pallone, Jr. (D-NJ), issued a Request for Information (RFI) regarding FDA regulation of CBD. The RFI is intended to assist Congress in assessing the “potential for a regulatory pathway for hemp-derived CBD products that prioritizes consumer safety and provides certainty to the U.S. market.” Written responses to the RFI’s 29 inquiries are due by August 18.

Federal Lawmakers Introduce Bipartisan Legislation to Update Hemp-Derived CBD Rules – The Hemp Access and Consumer Safety Act would give hemp-derived CBD products an opportunity to lawfully be used in dietary supplements, foods, and beverages under the federal Food, Drug and Cosmetic Act while requiring manufacturers to comply with all existing federal regulations, including labeling requirements. In a press release, Sens. Ron Wyden (D-OR), Rand Paul (R-KY), Jeff Merkley (D-OR) and Rep. Earl Blumenauer (D-OR) said the introduced bill “is essential to protecting consumer safety and treating hemp producers fairly.”

Kentucky Issues Emergency Regulations Regarding Hemp-Derived Intoxicating Products – Kentucky’s Department of Public Health issued emergency regulations, as required by recently enacted HB 544, that set forth rules and regulations for in-state manufacturers, processors and retailers as well as rules for product packaging and labeling.  In addition, the regulations state that only adults aged 21 years or older may purchase such products.

Maryland Hemp Businesses Sue Over Product Restrictions – Maryland hemp companies filed a lawsuit against state agencies and the governor for limiting business opportunities related to hemp-derived products. The Maryland Hemp Coalition claims that the state created a monopoly for licensed cannabis operators by capping THC concentration limits in products containing CBD and restricting licensing.

New York Sets THC Limits On Hemp-Derived Products – New York cannabis regulators approved emergency regulations limiting THC in edible products containing hemp-derived cannabinoids. The rules limit edibles to a 15-to-1 CBD to THC ratio, with no more than 10 milligrams of THC per package and 1 milligram per serving. Retailers will be prohibited from selling products with more than 0.5 milligrams of THC to anyone under the age of 21.

Virginia Cracks Down on Retailers Selling Hemp-Derived Intoxicating Products – In the wake of Virginia’s recent enactment of SB 903 which set forth a highly restrictive regulatory regime for hemp-derived intoxicating products, state regulators have assessed substantial fines on at least five business for allegedly violating the new law. Other hemp product shops have announced plans to shut down and move to states with friendlier less restrictive laws.

International

Albania Legalizes Medical Cannabis – The Albanian Parliament voted 69-23 in favor of a bill that allows the controlled cultivation, production, and export of medical cannabis, along with industrial hemp. The legislation will create a National Cannabis Control Agency, led by the health minister.

New Zealand Government Increases Support for Medical Cannabis Research and Economic Development – The Ministry of Health approved changes to its medical cannabis regulations to loosen export and import controls while allowing licenses for non-therapeutic research using medical cannabis or industrial hemp, among other technical changes. The government intends to have amended regulations in effect by the end of 2023, subject to public comment and final approval.

Ghana Approves Industrial Production of Cannabis – Ghana's parliament passed the Narcotics Control Commission Amendment Bill, which legalizes cannabis cultivation for industrial and health purposes. Under the new law, the Ministry of Interior has the authority to issue licenses for cannabis cultivation, allowing companies to grow plants with no more than 0.3% THC on a dry-weight basis. The legislation aims to harness the potential benefits of cannabis cultivation and explore its industrial potential while ensuring regulation of its cultivation and use.

Business

Global Legal Cannabis Market to Reach $103.8 Billion by 2030 – After reaching a value of $16.1 billion in 2022, a global market research firm estimates that the global legal cannabis market could be valued at $103.8 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 26.2% from 2023 to 2030. This significant growth in the global cannabis market is attributable to changing attitudes toward cannabis, a trend toward legalization, and increased demand for recreational and medical use.

Meta Updates Hemp and CBD Ad Rules – Meta Platforms, which operates Facebook, Instagram, and other social media platforms, updated its advertising policy to permit the “promotion of legally permissible, non-ingestible CBD in the U.S., with some restrictions.” Meta still prohibits advertisements that promote or offer the sale of products containing THC or cannabis products containing related psychoactive components and requires topical CBD products to be certified through a payment compliance company before being advertised.

Cresco Labs and Columbia Care Terminate $2 Billion Planned Merger – Two large multi-state operators (MSO), Cresco Labs and Columbia Care, have terminated a planned $2 billion merger that would have created the country’s largest cannabis MSO. A joint statement issued by the companies attributed the termination to the changing cannabis market and industry.

Mastercard Moves to Stop Cannabis Purchases – Mastercard instructed financial institutions, such as banks and payment processors, to stop allowing cannabis transactions on Mastercard debit cards. According to a company spokesperson, “[t]he federal government considers cannabis sales illegal, so these purchases are not allowed on our systems.” As a result of this demand, cannabis businesses will have to deal in more cash, which presents significant challenges and risks. 

Medical/Health

Medical Cannabis Linked to Lower Pain and Other Benefits – Researchers from the University of Florida found that participants in a three-month pilot study “perceived medical cannabis to be overall effective for chronic pain management.” Other reported benefits include reduced anxiety, improved physical and mental functioning, and a reduced dependency on opioids and other prescription medications.

No Reported Differences in Liver Transplant Patient Survival Between Cannabis Users and Non-users – A review of several observational studies has shown no significant differences in patient survival between pre-transplant cannabis users and non-users.  In addition, the review, published in Canadian Liver Journal, noted that the proportion of patients listed for liver transplants in Canada was less among cannabis users than non-users and that the time to listing was longer for cannabis users.

Dentons Speaks

PFAS Risks In Cannabis Products and Packaging – On July 26, 2023, Law360 published an article by Dentons Partner Amy Rubenstein and Senior Managing Associate Malina Dumas that highlights ways cannabis companies can mitigate risks posed by perfluoroalkyl and polyfluoroalkyl substances, or PFAS (also known as “forever chemicals”). The article discusses the cannabis legalization bill that recently went into effect in Minnesota, which specifically prohibits PFAS in cannabis packaging.

Dentons Attorney Attends Signing Ceremony for Equitable Tax Treatment Bill

Dentons Partner Hannah King (front right) attended a signing ceremony with Maine Governor Janet Mills for LD 1063, An Act to Provide Equitable Tax Treatment to State-licensed Cannabis Businesses (referenced above). For more information about the bill’s background and significance, please read the Dentons alert available here.

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

Authored by associates Malina Dumas, Lauren Estevez, Jacob Raver, and Margo Wilkinson Smith.