In this week’s edition:

• Cannabis Banking Bill Excluded From Year-End Spending Measure
• Legal Recreational Cannabis Sales Off to Successful Start in Connecticut
• Texas Accepting Applications for New Medical Cannabis Dispensaries
• Colombia Requires Insurance Providers Cover the Prescription Costs of Medical Cannabis
• Several New Studies Show Medical Efficacy of Cannabis and Cannabinoids

Federal

Cannabis Banking Bill Excluded From Year-End Spending Measure – While there were hopes that banking reform legislation would pass during the lame-duck session, the Secure and Fair Enforcement (SAFE) Banking Act was ultimately left out of a $1.7 trillion government funding bill. The effort was the second failed attempt at passing SAFE in December, following its failure to be included in the National Defense Authorization Act (NDAA).

Legislation Introduced to Reduce Tax Burden on Cannabis Businesses – At the end of 2022, Representative Nancy Mace (R-SC) introduced congressional house bill H.R. 9702, which would amend Section 280E of the Internal Revenue Code to include an exemption for cannabis businesses operating in compliance with applicable state laws. If it had been enacted, exempted cannabis businesses could have deducted ordinary business expenses for their operations. The bill will now need to be reintroduced during the current 118th Congress to move forward.

Gun Rights Measure for Medical Cannabis Patients Marks First Cannabis Reform Bill of 2023 –Representative Alex Mooney (R-WV) introduced the first cannabis related bill in the new Congress. The bill would allow medical cannabis patients to legally purchase and possess firearms. Federal law currently states that firearms cannot be sold to a person if he or she is “an unlawful user” of any controlled substance.

White House Report Highlights Police Concerns Regarding Cannabis Legalization – The White House delivered its annual drug enforcement report to Congress, which highlights concerns from regional police partners regarding the legalization of cannabis at the state level. Some of the topics raised in the report, High Intensity Drug Trafficking Areas Program, include environmental issues related to illicit cultivation operations, reports of explosions and fires in extraction facilities, the demand for higher-potency THC products and implications for drug trafficking.

States to Watch 2023 (Adult-Use)

FL – The political committee Safe & Smart Florida is leading an initiative that would allow individuals 21 years of age or older to possess, purchase and use adult-use cannabis. Nearly 150,000 valid signatures have already been collected. The measure needs 891,589 signatures statewide to get on the ballot.

HI – With a pro-legalization governor and lieutenant governor now in office, lawmakers in Hawaii are prepared to introduce cannabis reform legislation in 2023. A state cannabis task force issued a report at the end of 2022 that included recommendations for the legislature in rolling out a dual-use (medical and recreational) system. Hawaii legalized medical use of cannabis in 2000 and established a dispensary licensing system in 2015 to increase patient access.

MN – Minnesota lawmakers approved a medical and adult-use cannabis legalization bill in early January—building on a reform measure that passed the full house in 2021. Key changes to the prior version included adding a new license category for businesses that sell “lower potency edible products.” These businesses would be subject to reduced regulatory requirements (allowing, for example, on-site consumption if the business also has a liquor license). Other amendments include the addition of tribal representatives to a new Cannabis Advisory Council and the revision of language regarding local zoning requirements.

OH – Ohio’s Secretary of State resubmitted legislation that would legalize, tax and regulate adult-use cannabis, after a legal dispute held up a ballot initiative in 2022. If the state legislature fails to adopt the measure, legalization supporters intend to try their hand again with a ballot initiative this November.

States to Watch 2023 (Medical-Use)

KY – After signing two executive orders (here and here) relating to medical cannabis last November, Kentucky Gov. Andy Beshear (D) used his State of the Commonwealth address in January to call on the state legislature to legalize medical cannabis. “Far too many Kentuckians are suffering from life-threatening and chronic conditions like our veterans with PTSD or Kentuckians with cancer.” The executive orders, which are now in effect, permit certain patients to possess up to eight ounces of medical cannabis obtained legally from dispensaries in other states and directs the Cabinet for Health and Family Services to regulate the sale of delta-8 THC products.

SC – South Carolina is witnessing a bipartisan push to legalize cannabis for medical use as legislators pre-filed two competing proposals last month ahead of the legislative’s session start in January. The bills include similar frameworks that would authorize the use of medical cannabis by patients with a doctor’s recommendation. It remains unclear whether Gov. Henry McMaster (R) would veto any legalization bill.

WI – State Senate Majority Leader Devin LeMahieu (R) indicated to reporters that Senate Republicans are “close” to supporting the legalization of medical cannabis. Senator Mary Felzkowski (R) has already expressed her plan to reintroduce legislation that would create a state-run medical cannabis program limiting cannabis products to certain forms, including liquid, oil, pill, topical cream or tincture. Meanwhile, a spokesperson for Gov. Tony Evers (D) stated that the Governor is “looking forward to working together with legislators on both sides of the aisle this session to find common ground on this important issue.”

Other State News

AL – The Alabama Medical Cannabis Commission (AMCC) ultimately received 94 applications for medical cannabis business licenses before its December 30, 2022, submission deadline. The AMCC is now reviewing and ranking the applications. More applications were received than licenses available. There were, for example, 38 integrated facility applications submitted for 5 available licenses. Integrated facilities will be authorized to cultivate, process, transport and dispense medical cannabis. The AMCC is scheduled to release applications in April for public review and comment before it awards licenses in June.

AZ – Last month, the Arizona Supreme Court issued a decision ordering the removal of a parent’s name from the state’s child abuse registry—which employers access for background checks—stemming from the parent’s use of state-legal cannabis during pregnancy. The court declined to hear any further challenges from the Department of Child Safety to a unanimous appellate court decision holding that the pregnant parent’s medical cannabis use (which resulted in a newborn testing positive for cannabis) did not constitute child abuse or neglect.

CT – Connecticut launched adult use sales at seven existing medical cannabis establishments across the state in early January, resulting in more than $250,000 in sales during the first seven hours. Officials expect more than 40 dispensaries, along with dozens of other cannabis-related businesses, to open in the state by the end of this year.

IN – Indiana lawmakers introduced a bipartisan bill that would legalize medical and adult-use cannabis, but only once marijuana is no longer a Schedule 1 controlled substance under federal law. The bill would also impose a cannabis excise tax to generate revenue and establish an “Indiana Cannabis Commission” as the state’s regulatory body.

MS – Laura Goodson, an attorney for the Mississippi Medical Cannabis Program (MCCP), has been appointed the agency’s acting director.  Meanwhile, officials remain reportedly hopeful that the state’s first medical dispensaries will open early this year. At the end of 2022, more than 900 state citizens were already certified as medical cannabis patients.

MO - Missouri’s Division of Cannabis Regulation published its third round of draft rules for the state’s adult-use cannabis program in early January, with the comment period closing after only three days on January 12, 2023. A final version of the regulations is expected to be promulgated in February, with licensing of “comprehensive” (medical and adult-use) cannabis facilities to follow. The majority of existing medical cannabis facility licensees have already applied for conversion to a “comprehensive” facility. Adult-use products are expected to also be available in February.

NJ – New Jersey cannabis regulators recently shared their 2023 priorities with reporters. Among other things, the Cannabis Regulatory Commission (CRC) hopes to update the state’s medical cannabis regulations, increase social equity, expand the types of products available in the adult-use market and work with municipal officials to change the perception of the industry.

NY – On January 6, 2023, the Dormitory Authority of the State of New York (DASNY) published its report on the state’s $200 million Social Equity Cannabis Investment Fund along with a related FAQ. Last June, Gov. Kathy Hochul (D) directed DASNY to select a fund manager responsible for raising $150 million from private investors (with an additional $50 million coming from the state) to pay for leasing and renovating up to 150 Conditional Adult-Use Retail Dispensaries (CAURD). The dispensaries at these locations are to be owned and operated by individuals that have been impacted by America’s War on Drugs—defined by state regulations as “justice involved” individuals. The report provides basic details of the program and explains the process DASNY went through with the selected fund manager—Social Equity Impact Ventures—to identify locations for these licenses. The FAQ document provides more details on the agency’s activities over the past 10 months and what is included in the fund’s offerings.

TX – Texas regulators are now accepting applications for new medical cannabis dispensaries. The application window will close on April 28, 2023. Those who previously applied for a cannabis retail license may reapply with an updated application form. Application fees also waived for reapplying applicants. Per state law, the Texas Department of Public Safety, Regulatory Services Division, has stated that it will “issue only the number of licenses necessary to ensure reasonable statewide access to, and the availability of, low-THC cannabis for patients registered in the compassionate-use registry.”

VA - The Virginia General Assembly will reportedly consider a number of cannabis-related bills during this legislative session. While some lawmakers are focused on passing consumer protection laws relating to hemp and delta-8 THC products, others are pushing to implement retail cannabis sales following the legalization of adult-use cannabis in 2021. A key point of contention among Democrats involves how to roll out the program in a socially responsible, equitable way.

VI – Earlier this month, US Virgin Islands Gov. Albert Bryan Jr. (D) signed a bill legalizing cannabis for adult-use. The enacted legislation includes, among other key provisions, a streamlined regulatory framework for medical and adult-use cannabis, enforcement authority for the Office of Cannabis Regulation, entrepreneurship and job opportunities for Virgin Islands residents, and the establishment of taxes and licensing fees to provide a revenue stream for government initiatives. The governor also signed a complementary expungement bill that was amended to provide automatic relief from the courts for people with prior convictions involving up to two ounces of cannabis.

Hemp/CBD

Minnesota Board of Pharmacy Claims Lack of Resources to Regulate Hemp Product Industry –In response to complaints from the public and investigations from the federal Food and Drug Administration to identify and investigate bad actors in the state, Minnesota’s Board of Pharmacy (BOP) has noted that it lacks the people (only five inspectors on staff), the budget and the enforcement tools to oversee the hemp-derived product market. Indeed, the state does not have either a licensing framework or ability to tax businesses that produce or sell hemp-derived products. The BOP’s executive director told reporters it is her hope that lawmakers will not only pass more comprehensive legislation to regulate these products but will also grant regulatory authority to a different state agency that has the tools to regulate the industry.

Utah Regulators Advocate for Curbs on Delta-8 THC in Medical Cannabis Market – Reacting to safety concerns raised by patient advocates, producers and researchers, the Utah Department of Agriculture and Food (UDAF) is pushing for the adoption of new regulations and changes in state law “that would allow [the agency] to restrict the presence of synthetic cannabinoids in products in Utah, even if they have not been demonstrated to be toxic,” according to Brandon Forsyth, the director of the agency’s Cannabis and Hemp Division. Utah’s current laws do not prohibit the presence of “THC analogs” in products sold in state-licensed pharmacies.

Google Changes Rules for CBD Advertising – As part of a pilot program, Google will allow the promotion of FDA-approved pharmaceuticals containing CBD on its platform. The company will initially restrict advertisements to individuals 18 years of age or older in California, Colorado and Puerto Rico.

International

Colombia – As the result of a government mandate, every insurance provider in Colombia must now cover the prescription costs of medical cannabis for patients. The mandate went into effect on January 1, 2023. Colombia also entered into a contract with the largest government-owned insurance company in its capital, Bogota, to provide healthcare services (including the provision of medical cannabis) to over one million patients.

France – The French Council of State, which serves as the country’s supreme court for administrative justice, overturned a ban on the sale of CBD flower within France. In December 2021, the government banned the import, export and use of hemp-derived CBD flowers and leaves for industrial and commercial purposes, while at the same time legalizing CBD products containing less than 0.3% THC. The Council determined that this blanket prohibition was excessive and disproportionate.

Italy – The army, Italy’s sole legal medical cannabis supplier, reportedly intends to produce at least 1,500 pounds of cannabis this year at its existing cultivation facility near Florence. This level of production would cover nearly half of the supply required annually for patients in the country, and is more than double what the facility produced in 2022. Italy currently imports cannabis from other countries, such as Canada, Denmark, Germany and the Netherlands, to cover the annual needs of its residents.

Business

GW Pharmaceuticals Files Patent Infringement Lawsuit Against Generic Drugmakers – UK drugmaker GW Pharmaceuticals, the company behind the CBD-based drug Epidiolex, filed a lawsuit earlier this month in New Jersey’s federal district court alleging patent infringement against a dozen generic drug companies, including Teva, Apotex and Alkem. The 322-page complaint alleges, among other things, that defendants violated its patents when seeking abbreviated new drug applications (ANDA) from the FDA. Epidiolex was the first pharmaceutical derived from cannabis to be approved by the FDA in 2018. GW Pharmaceuticals is a subsidiary of Jazz Pharmaceuticals, headquartered in Ireland.

Medical/Health

Medical Cannabis Legalization Correlated With Reduction in Pain-Related Opioid Use – A cross-sectional study of more than 50,000 patients with newly diagnosed cancers found a possible association between the implementation of medical cannabis regimes between 2012 and 2017 and a 5.5 to 19.2 percent reduction in the rate of opioid dispensing. The study, published in JAMA Oncology, posited that cannabis “could be serving as a substitute for opioid therapies among some adult patients receiving cancer treatment.”

Study Hints at Potential Use of CBD For Treating Chronic Conditions in Post-Menopausal Women – As detailed in the journal Biomedicines, a study of ovariectomized mice showed CBD having a “potent ant-inflammatory effect” in the colon tissues of those mice with low estrogen levels. The loss of estrogen in humans and rodents has been associated with cardiometabolic disease and bone loss due to reduced gut barrier integrity in the colon leading to chronic low-grade inflammation. While the study indicates, if only indirectly, that CBD may offer a therapeutic option for post-menopausal women, the journal article called for more research.

CBD Protects Against Cardiac and Renal Injury in Mice Study – In a recent study designed to examine the effect of CBD on cytokine storm-induced cardiac and renal injury using the lipopolysaccharide-induced sepsis mouse model, results showed markedly improved cardiac function and systemic reduction of renal inflammation. The findings suggest that CBD could be “repurposed to reduce morbidity in patients with cytokine storm,” also known as cytokine release syndrome.

Patients Suffering from PTSD Exhibit Quality of Life Improvements After Using Cannabis-Based Medicinal Products – A UK study, published in Expert Review of Neurotherapeutics, analyzed the results of more than 150 patients from the UK Medical Cannabis Registry for health-related quality of life changes and adverse events. Over a period of six months, significant improvements were reportedly observed in PTSD symptoms, sleep and anxiety while the study’s analysis of adverse events suggested that the products were generally safe for use.

Randomized Double-Blind Placebo-Controlled Crossover Study Reveals Medicinal Cannabis Improves Sleep in Adults With Insomnia – Medicinal cannabis oil improved both time and quality of sleep with an increase of 21 minutes per night and a recorded 80 percent improvement in sleep quality. A total of 29 participants with self-reported clinical insomnia completed the trial. Participants were randomly allocated either placebo or an oil containing a mixture of THC and CBD over a two-week period followed by a one-week wash-out period. The medicinal cannabis oil was also well-tolerated by participants. The trial’s study results were first published in late December by the Journal of Sleep Research.

Retrospective Analysis of National Poison Data System Shows Increase in Cannabis Edible Ingestion by Children – From 2017 to 2021, pediatric exposures to edible cannabis increased by 1375 percent (207 to 3,054 reported cases). Of all cases, 22.7 percent were admitted to the hospital with a significant increase in both ICU and non-ICU admissions. Of cases with a known outcome, 70 percent were reported to have central nervous system depression.

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

Authored by associate Jacob Raver and Malina Dumas.