In this week’s edition:

• FDA Clears DeFloria’s Cannabis-based Autism Treatment for Phase 2 Trial
• House Bill Mirrors Senate Bill Maintaining 280E Restrictions on Cannabis
• Cannabis Business Sale Dispute Dismissed Over Illegal Contract
• Ohio GOP Advances Senate Bill Overhauling Voter-approved Cannabis Law
• California Bill Seeks to Weed Out Illegal, Online Hemp and Cannabis Sellers
• Study Shows Licensed Cannabis Businesses Consistently Verify Customers’ Age to Prevent Youth Sales

Dentons Speaks

FDA Clears DeFloria’s Cannabis-based Autism Treatment for Phase 2 Trial – Partner Kelly Fair serves as external counsel and strategic advisor to DeFloria and Ajna Biosciences in achieving a drug development milestone. DeFloria, Inc. has received FDA clearance for its Investigational New Drug (IND) application for AJA001, an oral cannabinoid drug for treating autism spectrum disorder (ASD). DeFloria plans to initiate a Phase 2 clinical trial by mid-2025, enrolling 60 adolescent and young adult patients to investigate the drug’s efficacy and dosing regimen. ASD affects approximately 1 in 36 children in the U.S., representing a growing market with limited treatment options. AJA001 is developed by DeFloria, Ajna BioSciences, and Charlotte’s Web, leveraging extensive research and proprietary hemp genetics. In addition to the US trial, DeFloria plans to conduct a Phase 2 pediatric study in Australia in 2025.

Federal

President Donald Trump Voices Support for Capital Punishment of Drug Traffickers – During a White House event with governors from across the U.S. on Friday, the president responded to concerns about fentanyl trafficking by proposing the death penalty for people involved in selling illegal drugs. While he said he’s unsure whether the U.S. as a whole is ready to move forward with the policy, Trump encouraged governors to push for it at the state level. He also projected that his administration will cut drug use in the U.S. by 50 percent during his new term by launching an aggressive $100 to $200 million multi-channel advertising campaign to warn Americans about the harms of substance misuse. Despite his harsh stance on drug dealers, Trump has previously supported cannabis reform and pardoned individuals convicted of drug offenses.

House Bill Mirrors Senate Bill Maintaining 280E Restrictions on Cannabis – Rep. Jodey Arrington (R-TX) has introduced a bill to block cannabis businesses from taking federal tax deductions under Internal Revenue Service (IRS) code 280E, even if cannabis is federally rescheduled. The bill would amend the IRS code to say that, in addition to all Schedule I and Schedule II drugs, businesses that work with cannabis specifically would be barred from taking tax deductions that are available to other industries. The bill mirrors a Senate measure called the “No Deductions for Marijuana Businesses Act.”  It’s unclear if the proposal as a standalone will pass in either GOP-controlled chamber is unclear, but Arrington, as the chair of the House Budget Committee, could push for the bill’s inclusion in must-pass budget legislation.

Air Force Issues Memo Prohibiting Cannabis and Hemp-derived Cannabinoids – A new memo from the Department of the Air Force warns personnel at Hanscom Air Force Base in Massachusetts that possession of cannabis and hemp-derived cannabinoids, including CBD and delta-8 THC, is prohibited on military bases. Despite Massachusetts law permitting cannabis use, federal law and Department of Defense policy prohibit it on military installations. The memo clarifies that while hemp-derived products are federally legal, they are still banned on the base. This includes consumable products like CBD oils and delta-8 THC. Violating these rules can result in fines, imprisonment, and other penalties.

Petition Filed to U.S. Supreme Court to Settle Differing Interpretations of Policy Preventing Federal Interference in State Medical Cannabis Laws – A Maine man, Lucas Sirois, is asking the U.S. Supreme Court to review a case involving federal medical cannabis protections under the Rohrabacher‑Farr amendment. Sirois argues that the DOJ’s prosecution of him violates the amendment, which prevents federal funds from being used to interfere with state-legal cannabis activities. There is a split between the First Circuit and Ninth Circuit courts on the interpretation of the amendment, with the Ninth Circuit requiring strict compliance with state medical cannabis laws to invoke the rider’s protections and the First Circuit disagreeing, arguing that strict compliance is unrealistic and could chill state-legal activities.

Cannabis Business Sale Dispute Dismissed Over Illegal Contract – A federal magistrate judge in Ohio dismissed a breach of contract suit over a $5 million cannabis business sale, citing the contract’s illegality under federal law. The judge ruled that the agreement for the sale of cannabis plants and a cultivation license violates the Controlled Substances Act. While acknowledging that some courts have enforced contracts between cannabis businesses, in this case, the judge found the sale of contraband to be so intertwined with the contract that the federal court cannot step in. The judge also ruled that the court could not order specific performance or damages because it would involve valuing an illegal business.

State

FL – Florida lawmakers are attempting to impose significant restrictions on intoxicating hemp products through new legislation filed by Sen. Tracie Davis (SB 1030) and Rep. Hilary Cassel (HB 601). The proposed measures include: limiting delta-9 THC levels in hemp products, banning delta-8 THC products, prohibiting the sale of hemp extract products for smoking, banning the sale of hemp products in gas stations, restricting hemp stores from being within 500 feet of schools or daycare facilities and prohibiting advertising of hemp products visible from public places. The legislation would subject hemp locations to random, unannounced inspections by law enforcement and impose penalties for violations. Governor Ron DeSantis (R) vetoed an earlier bill that reached his desk.

KY – A Kentucky judge has ruled that Louisville firefighters can temporarily use medical cannabis while off duty without risk of disciplinary action. This decision follows a legal challenge from the firefighters’ union after the department initially barred use, despite medical cannabis becoming legal in the state on January 1. The temporary order will remain in place until an injunction hearing in March, where a permanent ruling will be considered. The decision does not allow on-duty consumption or impairment at work. Meanwhile, the city’s internal grievance process regarding the issue is expected to take months.

ID – A proposed constitutional amendment in Idaho could prevent residents from legalizing cannabis or any other drug through a ballot initiative. Introduced by Rep. Bruce Skaug (R-Nampa), the measure would require a two-thirds majority in both legislative chambers to legalize any drug, effectively blocking citizen-led efforts. Skaug argues that maintaining strict drug laws is necessary to deter crime and addiction, positioning Idaho as a “sane” contrast to states like Oregon. Opponents, including House Democratic Caucus Chair Todd Achilles (D-Boise), argue that the amendment sets an unreasonably high legislative barrier and could hinder access to medical treatments, particularly for veterans with PTSD. Previous efforts to put medical cannabis legalization on the ballot have failed, with the Kind Idaho Medical Marijuana Consortium raising little funding in recent years. If approved by the legislature, the amendment would go before voters in 2026. A similar measure failed in 2021 after clearing the Senate but stalling in the House.

MA – Bountiful Farms, a medical cannabis dispensary in Natick, faced license renewal issues due to a host community agreement (HCA) violating a 2022 Massachusetts law. The law caps community impact fees at 3% of gross sales and requires them to be tied to business impact, but Natick’s agreement included extra fees and restrictions, leading the Cannabis Control Commission (CCC) to reject the renewal. This reflects broader tensions as many municipalities exceed legal fee limits, with the CCC rejecting about 75% of HCAs last year. Without enforcement, cannabis businesses struggle to challenge noncompliant towns, sometimes resorting to lawsuits. Critics argue the HCA system, meant for local impact compensation, now burdens operators. While the CCC offers extensions and guidance, some say municipalities still wield excessive power, warranting reform.

MI – Michigan regulators have updated a best practices document for cannabis businesses, aimed at providing guidance on complying with the state’s regulatory framework. The document outlines best practices for areas such as security, inventory management, product labeling, and employee conduct. It also details specific procedures for cannabis operations, including handling product testing, transfers, and destruction, as well as managing standard operating procedures (SOPs). Additionally, it includes critical information on Metrc tagging.

NH – The New Hampshire House has passed a proposal to legalize cannabis for adults 21 and older, sponsored by Rep. Kevin Verville (R). The bill (HB 75) allows personal possession and consumption but excludes commercial cultivation and public use. While supported by many lawmakers, including Rep. Jodi Newell (D), the bill faces opposition from Governor Kelly Ayotte (R), who is likely to veto it. Polling indicates strong public support for legalization, with 65% of state residents in favor. However, previous legalization efforts have faltered, and the reconciliation of different legislative versions remains a challenge. In addition to passing a Republican-led bill to legalize cannabis for adults, New Hampshire’s House of Representatives passed several cannabis-related bills, including HB 196, which would annul past criminal records for simple cannabis possession, and HB 53, allowing medical cannabis patients to grow cannabis at home.

NJ – New Jersey Governor Phil Murphy proposes increasing the special tax on cannabis from $2.50 to $15 an ounce to fund social service and violence intervention programs. The tax, known as the social equity excise fee, was recently increased from $1.24 to $2.50 an ounce and has generated over $6 million, which remains unspent. Murphy’s plan includes applying the tax to intoxicating hemp products like delta‑8 and delta-10. The proposed changes are expected to bring in $70 million in revenue. Senate President Nicholas Scutari opposes the tax hike, arguing it would make legal cannabis less competitive with the black market.

OH – The Ohio Senate has passed a bill to amend the state’s voter-approved cannabis law, reducing the number of plants adults can grow and adding new criminal penalties. The bill, introduced by Sen. Steve Huffman, passed the Senate with a 23-9 vote and now heads to the House. The bill proposes halving the home cultivation limit from 12 to 6 plants, adding criminal penalties, and removing certain social equity provisions. The bill has faced opposition from some lawmakers who argue it goes against the will of the voters, while supporters claim it aims to protect children and reduce the illicit market. The bill also includes changes to THC content limits, licensing restrictions, and the removal of non-discrimination protections for cannabis consumers.

PA – While momentum is gaining for Pennsylvania to legalize adult use cannabis, disagreements remain among lawmakers around the model of state-run vs. private stores and other issues. A new poll shows that seven out of ten voters in Pennsylvania support legalizing cannabis, including majorities of Republicans, Democrats, and independents. According to the survey, most voters also want to see the legislature enact the policy change this year.

TN – Lawmakers in Tennessee are continuing to take different approaches to cannabis, with some fighting to restrict the sale of cannabis, including hemp-derived products, and others pushing for legalization. Rep. William Lamberth (R-Portland) introduced a bill that would allow the Alcoholic Beverage Commission to regulate cannabis distributors while Rep. Ed Butler (R-Rickman) introduced a bill that would explicitly ban the sales of THCa and THCp. Meanwhile, Rep. Aftyn Behn (D-Nashville) and Sen. Heidi Campbell (D-Nashville) are advocating for a bill that would broadly legalize cannabis for adults 21 and older, allocating 75 percent of the tax revenue to the state’s highway fund, 20 percent to the counties that sell it, and the remaining 5 percent to operating the program.

WI – Wisconsin Governor Tony Evers’ (D) latest budget request called to “legalize, regulate, and tax the sale of marijuana for recreational use, much like Wisconsin already does with alcohol.”  While there is still skepticism as to whether the state will legalize adult use cannabis in 2025, top Republican and Democratic lawmakers agree that a bill to legalize medical cannabis could pass this session.

WV – Lawmakers in West Virginia are considering a proposed amendment to the state’s medical cannabis regulations that would open access to a broader range of patients by expanding the definition of qualifying medical conditions. Currently, the state only authorizes treatment for 15 specific conditions, but House Bill 2765 would allow any medical condition to qualify if a licensed physician determines that cannabis would benefit the patient’s treatment plan.

Hemp

AL – A bill (SB 132) that was initially drafted to ban psychoactive hemp products now includes provisions to regulate, license and tax such products. As Sen. Tim Melson (R-Florence) explained to the Senate Healthcare Committee last week, the “initial bill outlawed or banned the hemp-derived substances, but this bill actually makes them legal, regulates them. It is licensing and puts a six percent tax on it in addition to the state sales tax.”

CA – Sen. Scott Wiener (D-San Francisco) introduced a bill last month (SB 378) to crack down on online hemp (and unlicensed cannabis) sales in the state. Among other things, the proposed legislation would impose strict liability on online marketplaces (that facilitate intoxicating hemp product transactions) for any damages caused to the consumer. California law already considers hemp products sales illegal.

IL – The Village of Oak Park, a Chicago suburb, is considering restricting hemp intoxicating products, particularly delta-8 THC products, because such products are, among other things, commonly sold without age restrictions. The village recently posted a public safety alert, titled “Unregulated THC,” noting that such “products may be marketed in ways that put the public’s health at risk and should especially be kept out of reach of children and pets.”

NM – Following state cannabis industry calls to crack down on intoxicating hemp products, the New Mexico legislature is now contemplating legislation (HB 346) that would prohibit synthetic cannabinoids (such as “K2” and “spice”) and “semi-synthetic” cannabinoids (e.g., delta-8 THC, which is generally converted from CBD) and would otherwise place finished hemp products under the jurisdiction of the New Mexico Environment Department. The Department currently regulates the manufacturing process but not the sale of hemp products. Last month, the Department released a fact sheet summarizing the agency’s support for the bill.

VA – After more than a year of litigating, the hemp companies challenging the state’s stringent hemp intoxicating laws have entered into a stipulation with the state, agreeing to dismiss their lawsuit without prejudice. The stipulation follows a Fourth Circuit decision last January that affirmed the district court’s judgement that Virginia’s law was not preempted by the 2018 Farm Bill.

International

Costa Rica – The Ministry of Health in Costa Rica has approved new regulations to facilitate the sale of medical cannabis products, ensuring they are safe and available only with a medical prescription. This move aims to improve patient access to medical cannabis, boost the pharmaceutical and research industries, and stimulate economic development by creating jobs and attracting investment.

Ecuador – Ecuador is rapidly positioning itself as a significant player in the non-psychoactive cannabis and industrial hemp industry. Since the regulation of this sector in 2019, the market has experienced steady growth, driven by favorable weather conditions, clear regulations, and increasing international demand. The country projects USD 17 million in revenue from non-psychoactive cannabis by 2025, with current exports of biomass and derived products to the United States, Iceland, and France. This burgeoning industry has generated 30,000 direct jobs and 144,000 indirect jobs, significantly boosting the local economy.

Germany – Conservative leader Friedrich Merz’s election victory in Germany could potentially slow or reverse recent cannabis reforms, as his party has historically opposed legalization. Despite concerns about increased drug-related crime, forming a coalition government with the Social Democratic Party is seen as urgent, making it unlikely that cannabis reclassification will be reversed in the near term.

New Zealand – New Zealand’s industrial hemp sector is poised for significant growth following the announcement of a long-awaited regulatory review. Minister for Regulation David Seymour revealed plans to reassess “outdated and burdensome regulations” that have hindered the industry, which currently requires Ministry of Health licensing due to hemp’s classification as a class-C controlled drug under the Misuse of Drugs Act. This review is the culmination of years of advocacy by hemp farmers, processors, and companies seeking to unlock the full potential of the fiber crop.

Nepal – Tens of thousands of Hindu devotees gathered at the Pashupati temple in Kathmandu, Nepal, to celebrate the Shivaratri festival, one of the country’s most significant religious events. During this festival, devotees engage in prayer, dance, and the traditionally permitted act of smoking cannabis, which is otherwise illegal and punishable by prison sentences in Nepal.

Switzerland – Swiss lawmakers approved a plan to legalize and regulate adult-use cannabis in the country. The vote was held by a chamber of the Swiss parliament, the Social Security and Health Committee of the National Council. The plan will impose a tax on cannabis products, but retail sales would be subject to state monopoly barring for-profit sales. For-profit commercial cultivation would be permitted by licensed growers and manufacturers.

Business

Cannabis MSO Jushi Benefiting From Little-used IRS Tax-credit Program – Jushi Holdings is a cannabis multistate operator which the IRS owes approximately $6 million in Employee Retention Credit (ERC) claims. ERC claims, which were enacted in March 2020, allow eligible businesses and tax-exempt organizations to receive a refundable tax credit if their employees were affected during the COVID-19 pandemic. Instead of waiting on the IRS to send the refunds to Jushi Holdings, the company instead sold its ERC claims to a third party for around $5.1 million. The company’s reasoning included the IRS delays in delivering ERC refunds to different industries.

Boston Beer’s Jim Koch Calls Hemp THC Beverages the “Fourth Category” – Boston Beer signaled an openness to marketing delta 9 products in the U.S. during its recent earnings call, but is not convinced the timing is right. Boston Beer already has a cannabis-based drink product in Canada, Teapot.

The Heritage Foundation Weighed in on the “Drug Crisis” – The Heritage Foundation published a post on its website calling on the Trump administration to “overhaul drug policies and strengthen America’s commitment to reducing and delegitimizing drug use.”  The article mentions the use of psychoactive drugs in the United States and political views on the same, while asking President Trump to “pivot and reform America’s recurring drug crises.”

Medicine

Study Shows Licensed Cannabis Businesses Consistently Verify Customers’ Age to Prevent Youth Sales – A secret shopper study in New York City found that state-licensed cannabis retailers are more consistent in verifying customers’ age compared to unlicensed stores. All of the licensed retailers that were observed checked purchasers’ ID both before store entry and prior to purchase, the study found. Unregulated stores, by contrast, checked IDs before entry only 10 percent of the time, and verified ages before purchase less than half (48 percent) of the time. Licensed stores also avoided using cartoon signage and selling products like infused energy drinks, soda, and candy, which were common in unlicensed stores. The results of the study are published in Pediatrics, a journal of the American Academy of Pediatrics.

Study Finds Cannabis Use in Older Patients Associated With Improved Quality of Life, Lower Demand for Prescription Drugs – Data published in the scientific journal, Cannabis, recently found that the use of medical cannabis products by qualified patients ages 50 and older is associated with a reduced need for prescription medications and significant health-related quality of life improvements. The study was conducted on participants with an average age of 67 who suffered from chronic pain-related conditions. The researchers collected their data at baseline and again at three months and six months. The results found that most participants experienced significant improvements in pain, sleep, and quality of life and a reduction in prescription medication.

A Study by the American Journal of Preventive Medicine found that alcohol and cigarette use decreases are corroborated with operational dispensaries opening up: “considering operational dispensary as recreational cannabis law (RCL) implementation, RCLs were associated with a decrease of 0.95 percentage point in current drinking and a decrease of 0.48 percentage point in current cigarette use”. The study was conducted on 4.8 million adults from the 2012-2022 Behavioral Risk Factor Surveillance System.

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

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