In this week’s edition:

• US attorney general reaffirms that state-legal cannabis use is not a federal enforcement priority
• State legislatures in Alabama, Kansas and Louisiana make progress on medical cannabis legislation
• Tilray and Aphria complete merger deal, creating largest cannabis company in the world by revenue
• And more…

Federal

Attorney General Confirms Cannabis Use Is Not a Justice Department Enforcement Priority - Attorney General Merrick Garland confirmed in a recent House subcommittee meeting that enforcement against cannabis use in states where it has been legalized is “not a good use of our resources” or a priority for the Department of Justice. In contrast, “transnational operations of large amounts coming from Mexico or transnational operators who are coming into the United States to do the growing . . . are certainly within” the department’s “jurisdiction” and “scope of concern.”

Drug Enforcement Agency Releases Annual Data on Cannabis Eradication Efforts - The DEA’s Domestic Cannabis Eradication/Suppression Program (DCE/SP), which seeks to “halt the spread of cannabis cultivation in the United States,” was responsible in 2020 for the eradication of 3,711,040 cultivated outdoor cannabis plants and 830,922 indoor plants, for a total of 4,541,962 cannabis plants. DCE/SP also accounted for almost 5,000 arrests and the seizure of more than $41 million of cultivator assets. The majority of eradicated plants originated in California (more than 80 percent), followed by Kentucky (nine percent).

State

AL - Alabama moves closer to legalizing medical cannabis use. Following passage of a medical cannabis bill in the state legislature, Gov. Kay Ivey (R) “hopes” to sign the bill after “thoroughly reviewing it.” If signed, the bill would legalize medical cannabis use for about 10 different medical conditions, including cancer, HIV/AIDS, autism and epilepsy.

CO - Gov. Jared Polis (D) signed legislation last week to expand access to medical cannabis in schools, ensuring that cannabis will be treated “the same way as other prescribed medicines.” The new law removes discretion previously granted to school principals to set policies, instead requiring school boards to create policies regarding storage and administration of cannabis-based medicine for qualifying students. Officials have also announced that Gov. Polis plans to sign another cannabis bill that would increase the legal possession limits for adults.

FL - Several bills that would have legalized and taxed recreational cannabis in Florida failed to make it out of legislative committees before the last day of the legislative session. The next legislative session will not occur until 2022. 

IL - Cannabis sales in Illinois broke another monthly sales record in April, surpassing sales in March (another record-breaking month) by about $5 million. In total, there were close to 2.5 million cannabis items purchased in April, totaling just under $115 million.

IA - Pursuant to an Iowa law requiring the state to seek protections for its medical cannabis program, Iowa officials have requested that four federal agencies, including the DEA, guarantee that they will not punish individuals participating in the state’s program. The request follows a lawsuit filed by activists alleging that the state failed to ensure the law was carried out.

KS - After a series of hearings, panel consideration and the addition of several amendments, the House passed a bill to establish a medical cannabis program in Kansas. The legislation gives the state authority to license medical cannabis growers, testing labs, processors distributors and retailers, but permits counties to opt out of allowing cannabis businesses in their jurisdiction. The bill now heads to the Senate and, if passed there, is expected to be signed by Gov. Laura Kelly (D).

LA - The Louisiana legislature continues to move forward on a number of cannabis bills. Last week, the House approved a bill that would expand the state’s medical cannabis program to permit patients to purchase whole-flower cannabis. The House also passed legislation establishing a cannabis business licensing system and will now move on to consider a companion bill that would legalize recreational cannabis use.

MN - The Minnesota House will vote for the first time ever on legislation that would legalize recreational cannabis use for adults and expunge most minor cannabis convictions. The vote comes after significant community engagement efforts by the bill’s author to bolster support and develop the legislation. Though the bill is expected to pass in the Democratic House, advocates believe it is unlikely to pass in the Republican-controlled Senate.

NM - A recent New Mexico court ruling expands access to the state’s medical cannabis program. The ruling stemmed from lawsuit challenging a rule promulgated by the state’s Department of Health that essentially disqualified from the state’s program more than 5,000 individuals who were duly enrolled as reciprocal cannabis participants. The court’s order invalidates that rule and, consistent with the enabling legislation, requires the Department of Health to allow individuals to register in New Mexico’s program if they have proof of authorization to participate in another state’s or territory’s medical cannabis program.

NC - The tribal council of the Eastern Band of Cherokee Indians approved an ordinance that allows adults to possess up to one ounce of medicinal cannabis on tribal land. Notably, the ordinance does not permit selling and growing cannabis on tribal land, and cannabis use still remains illegal elsewhere in North Carolina.

WV - Individuals with a qualifying serious medical condition may now apply for a medical cannabis card in West Virginia on the new state portal. Physician certification of eligibility is required before a patient can receive the identification card.

Sovereign Lands - Indigenous cannabis dispensary owners across different territories are coming together to establish “an economically-viable industry by and for Indigenous Peoples” that will be known as the “Red Market.” The market will include “stores that are running on sovereign lands in their own nations so they can create laws and regulations, bylaws, and understandings of how to legally trade this product through various different routes and networks.”

Hemp/CBD

State Action on “Hemp-Derived” Delta-8 THC - Dentons has seen several state acts on “hemp-derived” Delta-8 THC in recent weeks. Please contact us for details.

International

Europe - The European Commission added hemp-derived cannabigerol (CBG) as a safe ingredient in the European Union’s cosmetic ingredient database, permitting manufacturers to use CBG in their cosmetics and skin care products.

Business

Canadian Cannabis Companies Tilray and Aphria Close Merger Deal - Following shareholder approval, Canadian cannabis companies Tilray, Inc., and Aphria, Inc., announced the closure of a significant merger deal. The merger creates a company that will account for more than 17 percent of the Canadian retail cannabis sales, with an estimated CA$874 million in pro forma revenue.

Credit Suisse Stops Services for Some Cannabis Transactions - According to customers of Credit Suisse Group AG, the Swiss lending company will no longer execute transactions in or hold customers' shares of cannabis companies that operate in the United States. Previously, Credit Suisse was one of a handful of banks that would buy and sell cannabis stocks and hold those shares as a custodian for US clients. As a result of this policy change, a “number of large investors in the space [have] lost their ability to custodian the stocks,” leading to a “significant selloff.”

Ascend Wellness - Multi-state cannabis operator Ascend Wellness Holdings Inc. has gone public, surging about 22 percent on its first day on the Canadian stock market to a value of $1.6 billion. Ascend joins several other US cannabis companies that have gone public in the last several months due to rising expectations that Congress will pass federal banking legislation.

Acreage and Medterra Agree to Joint Venture - Acreage Holdings, Inc., a vertically integrated cannabis company, will partner with one of the largest CBD companies in the cannabis industry, Medterra CBD, LLC, to produce and market a collection of CBD products. The new products are expected to be available in the second half of 2021 on Medterra’s e-commerce platform. 

Scotts Miracle-Gro - The Scotts Miracle-Gro Company’s cannabis-focused subsidiary, Hawthorne Gardening Company, saw sales increase 66 percent in the last quarter. The company is now forecasting that Hawthorne sales will increase by 30 percent or 40 percent for the full year.