In this week’s edition:

• Key Senate Committee To Hold Hearing on SAFE Act
• Georgia Issues First Dispensary Licenses Permitting Sale of Low-THC Oil
• Washington State Bill Allowing Interstate Cannabis Commerce Now Before Governor
• National Association of Pharmacists Announces Support for Drug Decriminalization
• Federal Study Shows Teen Cannabis Use in Decline Following State Legalization
• Cannabis Shows Promise in Treating Type 2 Diabetes

Federal

Key Senate Committee To Hold Hearing on SAFE Act – After informing reporters last week that the Senate Banking Committee would soon discuss the bipartisan Secure and Fair Enforcement (SAFE) Banking Act, Committee Chair Sen. Sherrod Brown (D-OH) scheduled this week a hearing titled “Examining Cannabis Banking Challenges of Small Businesses and Workers.” Though additional witnesses may be invited, the SAFE Act’s primary sponsors—Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT)—are set to testify. The hearing is scheduled to begin at 9:45 AM ET on May 11, 2023. 

House Speaker Pledges Committee Vote on Cannabis Legalization Bill – According to Rep. Nancy Mace (R-SC), US House Speaker Kevin McCarthy (R-CA) has agreed to hold a committee debate and related vote on a bill to federally legalize cannabis as a condition for her support of the Speaker’s unrelated proposal to raise the debt ceiling and cut various federal programs. Last congressional session, Rep. Mace introduced the States Reform Act (SRA), a bill that would end federal cannabis prohibition while taking certain steps to ensure that existing state-legal businesses could continue to operate unencumbered by changing federal rules. The SRA has yet to be refiled.

Veterans Cannabis Research Bill Falls in Senate Procedural Vote – A bill to promote research into the therapeutic potential of cannabis for veterans failed to advance in the Senate last month. The Veterans Affairs Medicinal Cannabis Research Act (S 326) fell victim to the Senate’s 60-vote requirement (commonly known as a filibuster), obtaining only 57 votes. The bill is one of a number targeting the potential medical use of cannabis for veterans.

Reintroduced Congressional Bill Would Provide Federal Tax Relief for Cannabis Businesses – Rep. Earl Blumenauer (D-OR) recently reintroduced the Small Business Tax Equity Act (HR 2643) that would amend Internal Revenue Code section 280E to allow state-legal cannabis businesses to take federal tax deductions available to companies in other industries. The bill is presently before the House Committee on Ways and Means.

CLAIM Act Reintroduced in Congress – A bipartisan mix of Representatives and Senators, including Reps. Nydia Velasquez (D-NY) and Warren Davidson (R-OH) and Sens. Rob Menendez (D-NJ) and Rand Paul (R-KY), have reintroduced the Clarifying Law Around Insurance of Marijuana (CLAIM) Act. The bill would provide safe harbor to insurers who provide coverage to state-sanctioned cannabis companies.

Bureau of Alcohol, Tobacco, Firearms and Explosives Adjusts Cannabis Policy Regarding Agency Applicants – Certain applicants, including sworn law enforcement officers, that have grown, manufactured or sold cannabis in compliance with state laws no longer face automatic disqualification for a position with the federal agency. According to an agency spokesperson, the policy was updated last month as part of the agency’s annual policies review.

Leading Nonprofit for Work Safety Publishes Consumer Safety Report on Cannabis – Given the reported challenges for employers nationwide regarding cannabis, the Council released a consumer safety report and an interactive web tool, and is currently promoting a number of webinars open to the public. The Council’s activities are reportedly in response to its 2021 survey that revealed, among other things, that less than half of businesses have a written policy addressing cannabis use.

State

CA – In a brief filed with the Court of Appeals for the Ninth Circuit, the city of Sacramento urged the Court to affirm a lower judge’s decision to stay (and abstain from) a federal challenge to the city’s residency requirement for its social equity cannabis licensure program. The lower court held, among other things, that—under what is known as federal abstention doctrine—state court is the proper venue for the lawsuit to proceed. 

CA – The Department of Cannabis Control recently awarded $20 million in research grants to 16 academic institutions for studies on a variety of issues, including novel cannabinoids (like delta-8 THC), medical cannabis usage, and potency and unfair competition.  This is the second round of cannabis academic grants.  The agency issued $30 million back in 2020.

CO – Gov. Jared Polis (D) announced in April that the state will support social equity cannabis businesses through a state-run loan program. Funded by cannabis tax revenues, social equity applicants in the state will be eligible for $50,000 to $150,000 in loans.  

FL – The Florida House Health and Human Services Committee unanimously approved a bill that would allow physicians to renew medical cannabis certifications for qualified patients via telehealth. Physicians would still be required to conduct the initial qualifying physical examination in person. According to its sponsor, Rep. Spencer Roach (R), the bill “would treat the use of medical marijuana just like other medicines in the state of Florida.”

GA – After years of delays, the Georgia Access to Medical Cannabis Commission has finally issued its first dispensary licenses for the sale of low-THC oil to patients on Georgia’s medical cannabis registry. The two companies that received licenses, Trulieve Georgia and Botanical Sciences LLC, now have 120 days to begin selling products at their combined five locations.

IL – By mid-May, Illinois regulators plan to hold a lottery to select the next 55 social equity dispensary licenses from a pool of almost 2,700 applications. The winners will have 45 days to prove that they qualify under the agency’s social equity criteria. 

MD – Maryland Gov. Wes Moore (D) signed into law a bill to regulate adult-use sales, just two months before the state’s voter-approved legalization law takes effect in July. Under the law, existing medical dispensaries will be converted into dual licensees if they pay the required fee. The new Maryland Cannabis Administration will approve additional cannabis business licenses by July 1, 2024.

MA – Massachusetts Department of Revenue released a proposed rule that would exempt companies that facilitate cannabis product sales on behalf of retailers from certain marketplace facilitator requirements. Under the current rule, facilitators are subject to the state’s sales and use tax requirements that apply to out-of-state remote sellers.

MN – An adult-use legalization bill is proceeding in both chambers of the Minnesota legislature. Just one day after the Minnesota House approved the bill, the Senate Finance Committee passed a companion version. Lawmakers are hopeful the bill will be enacted this year before the legislative session ends on May 22.  

MO – Missouri will begin accepting applications for cannabis microbusiness licenses in late July, two months ahead of the constitutionally required deadline of September. Microbusiness licenses are designed to allow marginalized or underrepresented individuals to participate in the adult-use market. A total of 48 licenses will be issued via random lottery in October.

NY – New York Governor Kathy Hochul (D) signed legislation to reign in the state’s illicit marijuana market that includes penalties for unlicensed cannabis retailers of up to $20,000 per day. The new legislation provides additional enforcement power to the New York Office of Cannabis Management (OCM) and the state Department of Taxation and Finance (DTF) to enforce against stores engaged in the illegal sale of cannabis. 

PA – Rep. David Delloso (D) introduced a bill (HB 1080) that would allow adults to possess, consume, cultivate and purchase cannabis through state stores run by the Liquor Control Board. The legislation would permit farmers and small agriculture businesses to cultivate cannabis and contemplates the possibility of allowing cannabis imports from other states or countries where cannabis is legal.

SC – South Carolina’s House Republican Caucus appears divided over legalizing medical cannabis. Though several medical legalization bills have been introduced in the General Assembly, Rep. Melissa Oremus (R) told reporters that “it’s a very divided issue” and that she is not sure that any of the bills will pass the Republican-dominated chamber before the legislative session ends. 

TX – The Texas House of Representatives preliminarily approved a bill to decriminalize the possession of up to one ounce of cannabis or its concentrates, leaving one more vote in the House before final passage. The House has passed similar cannabis decriminalization bills during the last two legislative sessions before failing to pass in the Senate. Just days after the House action, San Antonio voters rejected a local decriminalization ballot measure.

WA – Washington legislators passed a bill that would allow the governor to enter into agreements with other states for the import and export of cannabis upon either a change in federal policy that “allow[s] for the interstate transfer of cannabis” or a federal Department of Justice opinion “allowing or tolerating” cannabis interstate commerce. If signed into law by Gov. Jay Inslee (D), Washington would become the third western state to adopt such a law, following passage of similar bills in Oregon and California.

Hemp/CBD

Hemp Advocates Meet Congressmen and Staff Regarding 2023 Farm Bill – On April 26, the US Hemp Roundtable, a national advocacy organization, and its allies participated in an all-day lobbying effort to push Congress to adopt several policy recommendations for the 2023 farm bill, including, most notably, a request for the Food and Drug Administration to take regulatory action on CBD products. Hemp industry groups also released a policy blueprint for the 2023 farm bill that, among other things, requests funding for hemp research at Historically Black Colleges and Universities, Tribal Colleges and Hispanic Serving Institutions.

Biotechnology Company Announces Strategic Cannabis Industry Agreement With Multi-State Operator  – 22nd Century Group (Nasdaq: XXII), a biotechnology company focused on utilizing advanced plant technologies to improve health and wellness, announced its second exclusive licensing, manufacturing and distribution agreement in the hemp/cannabis industry with Old Pal LLC, a company that originally launched in California and now operates in eight states. The agreement covers Old Pal branded non-Delta-9 THC as well as hemp-derived cannabinoid consumer products and accessories. 22nd Century Group signed a similar agreement with Cookies earlier this year.

International

Czech Republic – Food safety officials in the Czech Republic announced that the country will ban the marketing of products containing CBD and other cannabinoids from hemp due to a lack of research on potential health impacts. According to officials, the Czech Ministry of Agriculture is following a strict interpretation of European Union regulations that makes these products illegal because CBD is a new or “novel” food that has not yet passed required safety checks.

Business

Akerna Sells Cannabis Software Businesses for $5 Million. – Akerna Corp. is selling its cannabis software platforms for $5 million in cash to a business called MJ Freeway Acquisition Co., after having backed out of a previous deal for the assets. Denver-headquartered Akerna did not specify who owns the acquiring company.

Bright Green Granted DEA Production License. – The US Drug Enforcement Administration has officially registered publicly traded Bright Green Corp. as a federally licensed cannabis cultivator and product manufacturer. Including Bright Green, eight entities are now registered with the DEA as federally licensed cannabis "bulk manufacturers.”

National Association of Pharmacists Announces Support for Drug Decriminalization – The American Pharmacists Association, which represents over 62,000 pharmacy professionals nationwide, issued a new policy stating that the group “supports decriminalization of the personal possession or personal use of illicit drug substances or paraphernalia” but remains opposed to the “legalization of the possession, sale, distribution or use of illicit drug substances for non-medical uses.”

Research Confirms Plant-killing Black Root Rot in Cannabis Facility – The fungus that causes the plant disease “black root rot” has spread to cannabis plants beyond hemp, warns new research that identified the pathogen in a licensed commercial cultivation facility in British Columbia, Canada.

Report Shows Decline in Commercial Property Purchases by Cannabis Industry – Members of the National Association of Realtors are reportedly noticing a decline in commercial property purchases by cannabis industry-related businesses, along with a corresponding increase in leasing activity. The report identifies increased demand for warehouses, land and storefronts for cannabis businesses, and a decrease in lease addendums restricting cultivating and/or smoking cannabis on properties.

Twitter Loosens Restrictions On Cannabis-Related Advertisements – Twitter announced a new cannabis advertising policy that allows “certified advertisers” to show packaged cannabis products in advertisements promoted on the social media site. Advertisers must be pre-authorized by Twitter and may only target jurisdictions in which they are properly licensed. In addition, among other restrictions, advertisers may not promote or offer the sale of cannabis, with the exception of ads for topical (non-ingestible) hemp-derived CBD products containing less than 0.3 percent THC.

Medical/Health

Federal Study Shows Teen Cannabis Use in Decline Following State Legalization – The Youth Risk Behavior Survey published by the Centers for Disease Control and Prevention found that high school student use of cannabis had trended upwards from 2009 to 2013 (which was before legal adult use cannabis stores started opening) and has generally been on the decline since. While teen use of other monitored substances, including alcohol and prescription drugs, also decreased over the past ten years, there had already been a steady decline in the use of substances other than cannabis during that period. 

Study Shows Link Between Cannabis Use Disorder and Increased Risk of Schizophrenia – A study published in Psychological Medicine found that young men between the ages of 16 and 25 are particularly susceptible to the effects of cannabis on schizophrenia, although there was evidence of an association between cannabis use disorder (CUD) and schizophrenia among both males and females. Researchers highlighted the importance of early detection and treatment of CUD and policy decisions regarding cannabis use and access, particularly for 16-25 year-olds.

Studies Show Potential Hazards Related to Oral Administration of CBD - In a recent study published by the Food and Chemical Toxicology Journal, researchers raised safety concerns associated with oral exposure to CBD, particularly in terms of long term consumption by the general population. Some of the observed effects of CBD exposure include immune suppression, genotoxicity and mutagenicity.

Cannabis Shows Promise for Treating Type 2 Diabetes – A study published in the Iranian Journal of Pharmaceutical Research found that a drug containing CBD and THC administered through a sublingual spray twice per day over eight weeks lowered cholesterol and controlled blood sugar in type 2 diabetics. Researchers concluded that the specific 10:1 ratio of CBD to delta-9 THC was a critical factor in obtaining positive results.

Oral Fluid Tests Show Promise in Roadside Screening – A systematic review of roadside screening tests found that oral fluid tests showed the most promise in screening for blood THC levels over legal limits when compared to urine tests or observational tests. Oral fluid tests were higher in specificity and lower in sensitivity.

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

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