Cannabis Client Alert - Week of January 11, 2021

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In this week’s edition:

  • Democratic control of Senate may accelerate cannabis legislation
  • Connecticut Governor Lamont plans to work with lawmakers to legalize cannabis in 2021
  • Cannabis sales in Illinois exceed $1 billion in first year of full legalization
  • Michigan Marijuana Regulatory Agency issues guidance on approval process for producing cannabis-infused beverages
  • Ahead of $110 million IPO, Florida federal judge dismisses consolidated proposed shareholder class action against Greenlane Holdings
  • Dentons partner Eric Berlin to be panelist on “Cannabis Industry Outlook 2021” webcast, to be live-streamed on January 21
  • And more…

Federal

Democratic control of Congress may ease path to cannabis legalization - With two Democratic victories in the Senate runoff elections in Georgia last week, the balance of power in the chamber shifts from Republican control to a slim Democratic edge. While many see this as an opportunity to advance various pieces of cannabis legislation, passage of a full legalization bill remains less certain in the short-term. Still, the shift of power in the Senate is significant, and with Sen. Chuck Schumer (D-NY) at the helm, there should be some movement on legislation to address banking reform, cannabis medical research and criminal justice reform.

States

CT - During the 2021 state of the state address, Connecticut Governor Ned Lamont (D) indicated that he will work with lawmakers to legalize cannabis this year, urging the state not to “surrender these opportunities to out-of-state markets or, even worse, underground markets.” The Governor also said that cannabis legalization could potentially reduce the spread of COVID-19 by reducing out-of-state travel for cannabis purchases.

IL - One year into the launch of regulated adult-use cannabis sales in Illinois, the state’s 2020 legal cannabis sales exceeded $1 billion. Last month alone, adult-use cannabis purchases totaled just under $87 million, up from approximately $75.6 million the previous month. The Illinois Department of Financial and Professional Regulation has so far reported annual adult-use and medical cannabis sales of just over $1 billion, a figure that will only increase when December medical cannabis figures are released.

MI - The Michigan Marijuana Regulatory Agency published a technical bulletin outlining the requirements for submission and approval to produce cannabis-infused beverages. The bulletin advises on the safe creation and production of such beverages, as well as the approval process and expectations for ongoing research and product development, noting that the results of such studies should be submitted when the product is ready for launch, and quarterly thereafter for a year.

MS - Madison Mayor Mary Hawkins Butler (R) is litigating to block the medical cannabis program that Mississippi voters approved in November. Mayor Butler opposes the program because it limits cities’ ability to regulate the location of commercial cannabis operations. The Health Department and Mississippi Municipal League support Mayor Butler’s suit. The Mayor also claims that the state, to qualify the initiative on the ballot, improperly used the five congressional districts that existed before a 2000 redistricting carved the state into four congressional districts.

NJ - In his state of the state address on Tuesday, New Jersey Governor Phil Murphy (D) expressed confidence that cannabis legislation would move forward. Last week, Governor Murphy voiced lingering concerns about the legislation’s provisions regarding underage possession. Governor Murphy had declined to sign bills passed by the Legislature last month to legalize and decriminalize cannabis that failed to include penalties for individuals under the age of 21 who are caught with cannabis. Despite State Senator Nicholas Scutari’s initial efforts to sponsor a new “cleanup bill” to address the Governor’s proposal, the majority of state lawmakers fiercely oppose the Governor’s request, arguing that it “could lead to more arrests of Black youth,” and would “disproportionally and unfairly hurt communities of color.”

OR - According to data published by the Oregon Liquor Control Commission, which oversees the state’s cannabis sales, total cannabis receipts in Oregon surged to over $1 billion in 2020 from $795 million in 2019. Notably, recreational cannabis sales soared about 20 percent in March, the month that Governor Kate Brown (D) instituted a stay-at-home order and other restrictions in Oregon due to the COVID-19 pandemic, and sales continued to increase through the remainder of the year.

SD - South Dakota Governor Kristi Noem (R), who had opposed measures to legalize cannabis in the state, issued an executive order last Friday to commence litigation challenging the voter-approved constitutional amendment to legalize recreational cannabis that passed in November. The challenge alleges that the initiative process used to place the amendment on the ballot was not proper and violated the procedures set forth in the state constitution.

SD - In its January newsletter, the State Bar of South Dakota published Ethics Opinion 2020-07, a one-page document instructing that lawyers cannot ethically provide legal services to cannabis clients despite the state's recent cannabis legalization. Specifically, the state bar concluded that lawyers “may not ethically provide legal services to assist a client in establishing, licensing, or otherwise operating a marijuana business,” and they may only advise clients on the potential legal consequences of operating a cannabis business.

UT - Utah state legislators plan to present legislation during the 2021 general session that would allow any doctor to recommend the use of medical cannabis to a maximum of 15 patients without registering as a qualified medical provider—as they could under a previous law that expired in 2019. However, some medical experts have raised concerns that omitting the required qualifications and four-hour online training can lead to more issues as physicians recommend (or don't recommend) cannabis to patients without a full understanding of cannabis and its effects on the human body.

International

Nigeria - In the Cannabis Control Bill 2020, Nigeria’s House of Representatives is proposing new legislation titled, “A Bill for an Act to Regulate the Cultivation, Possession, Availability and Trade of Cannabis for Medical and Research Use, and Related Purposes.” If enacted, hospitals and doctors would be allowed to prescribe doses of cannabis for treatment of patients and pharmacies and stores would be able to sell cannabis.

Business/technology

Greenlane Holdings - After concluding that e-cigarette distributor Greenlane Holdings Inc. sufficiently disclosed regulatory "red flags" in its registration document, a Florida federal judge dismissed a consolidated proposed shareholder class action that accused the Boca Raton-based company of hiding regulatory issues that could impact its business ahead of its $110 million initial public offering. The investors alleged that the company failed to warn them of an impending vape ban in San Francisco, which, once approved, could cause the stock to plummet. The judge, however, determined that the company was not required to disclose the specific legislation introduced in San Francisco in light of other “extensive” disclosures, noting also that the information was “right there in the public domain.”

Medical

CBD antidepressant effect - In a study aimed at exploring the potential antidepressant activity of CBD and the mechanism of CBD after chronic administration (or for seven days), researchers concluded that chronic administration of CBD at 100 mg/kg “induced antidepressant-like effects,” as it increased serotonin and noradrenaline levels in the hippocampus. The results shine a new light on further discovery and potential extent of the antidepressant effect of CBD.

Cannabis and withdrawal symptoms - In a new research study conducted by the University of Michigan Medical School and the VA Ann Arbor Healthcare System, detailed surveys of 527 Michigan residents over two years revealed that more than half of the people using cannabis for pain relief experienced several withdrawal symptoms over time. In addition to a general craving to use cannabis, other reported withdrawal symptoms included anxiety, sleep difficulties, decreased appetite, restlessness, depressed mood, aggression, irritability, nausea, sweating, headache, stomach pain, strange dreams, increased anger and shakiness.

Dentons speaks

In Case You Missed It: 

In an article on streaming news service Cheddar, Dentons partners Eric Berlin and Katie Ashton offered business insights and their outlook on the cannabis industry in 2021. Katie advised that "cannabis companies think beverages are going to be a huge seller in the US," and Eric predicted that, because of last year’s health and economic challenges, “M&A will, on the whole, be more strategic, especially when it comes to targeting distressed assets.” Read full article here.

Eric Berlin will speak on an expert webcast titled “Cannabis Industry Outlook 2021” which will air live on January 21 at 1 p.m. (PST)/4 p.m. (EST). Register here.

For an in-depth look at the new Administration, Congress and federal and state policy in 2021, Dentons’ Public Policy practice has released its annual Policy Scan—a reader-friendly breakdown of the players and policies that will shape the coming year.  Dentons 2021 Policy Scan.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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