Cannabis Client Alert - Week of August 30, 2021



In this week’s edition:

  • FDA confirms universities in Iowa will not lose federal funding for participating in state medical cannabis program
  • Applications for cannabis producers are open in New Mexico
  • FBI investigating corruption claims in Nevada’s cannabis licensing process
  • Texas court rules state ban on smokable hemp is unconstitutional
  • And more…


FDA Confirms Iowa Universities Don’t Risk Federal Funds for Patients’ Use of Medical Cannabis - In a letter to Iowa officials, the US Food and Drug Administration (FDA) confirmed that academic institutions in the state will not lose agency grants and contracts if they permit patients to use medical cannabis on their property in compliance with state law. Despite the increased interest in cannabis research, many colleges and universities have been hesitant to engage in research using medical cannabis for fear of losing federal funding. While the FDA’s recent assurance may quell some of these fears, officials from the Department of Education, the Drug Enforcement Administration and the Centers for Medicare & Medicaid Services have yet to respond to similar letters from the state of Iowa.

Federal and State Officials Explore Use of Medical Cannabis in Hospitals - In response to a request from a California state lawmaker pursuing legislation on the use of medical cannabis in California hospitals, officials from the US Department of Health and Human Services (HHS) and the California Governor’s Office are exploring whether hospitals and other healthcare facilities may allow terminally ill patients to use medical cannabis in states where such use is legal, without jeopardizing federal funding.

FDA Issues First Marketing Order Denials for Electronic Cigarette Products - The FDA issued marketing denial orders for approximately 55,000 non-tobacco flavored electronic cigarette products from JD Nova Group LLC, Great American Vapes and Vapor Salon. As a result of the denial orders, these products cannot be introduced into interstate commerce and any that have already been introduced must be removed from the market. According to the FDA, the denials were based in part on the fact that “flavored tobacco products are very appealing to young people.” These are the first marketing order denials issued for applications that have reached the substantive scientific review process, but only represent a small number of the 6.5 million premarket tobacco applications submitted in 2020.


AZ - According to a new state website that tracks the growth of the cannabis industry, Arizona brought in close to $21 million in medical and adult-use cannabis tax revenue in the month of July. Taxes from medical cannabis remained slightly higher than taxes collected for adult-use cannabis, despite steady growth in adult-use cannabis revenue since sales began in January.

CA - State officials estimated that California collected around $817 million in adult-use cannabis tax revenue during the 2020-2021 fiscal year, representing an increase of 55 percent over the previous year. This estimate is preliminary and does not take into account additional regular sales tax or local revenues to municipalities where the transactions occur.

CO - Voters in Colorado will vote on a new ballot initiative in November that would raise cannabis taxes to fund after-school programs, tutoring and summer learning activities for low-income students. If the initiative is approved, the state excise tax on adult-use cannabis would gradually increase from 15 percent to 20 percent by 2024.

IL - A proposed bill in the Illinois General Assembly would prohibit employers in the state from firing employees for testing positive for THC unless the level qualifies as impaired under the state’s driving under the influence law. According to the bill’s sponsor, the “intent is to categorize cannabis use on personal time the same way we treat any other substance so long as you’re not impaired in the workplace.” Although many companies have already adopted similar policies, the head of the state’s Chamber of Commerce cited concerns that the new law would undermine protections for employers and lead to more lawsuits.

MA - Theory Wellness, a recreational and medical cannabis dispensary in Great Barrington, MA, has been ordered to pay $300,000 in restitution and penalties for failing to properly pay employees who worked Sunday and holiday shifts, in violation of state law.

NC - The North Carolina Senate Health Care Committee approved a bill to legalize medical cannabis use. The bill, which has already been approved by the Senate Judiciary and Finance Committees, must still pass the Senate Rules and Operations Committee before it can head to the Senate floor.

NJ - Consistent with state law allowing municipalities to opt out of the recreational cannabis industry, nearly 71 percent of municipalities in New Jersey have passed ordinances prohibiting cultivation facilities, manufacturers, wholesale distributors, delivery companies and legal dispensaries. The president of the New Jersey CannaBusiness Association likened the situation to Colorado, in which the number of municipalities allowing recreational cannabis sales was initially low, but doubled within four years.

NM - Applications are now open for businesses to apply for a license to become legal cannabis producers in the state of New Mexico. The announcement came just one day after the state released final rules for cannabis producers and several days before the mandated September 1 deadline. Regulators will have 90 days to issue a determination after an application is submitted.

NV - The FBI is investigating Nevada’s cannabis licensing process to determine if any “bribes or campaign contributions were used to influence the distribution of cannabis licenses.” This investigation is reportedly in addition to a joint investigation being run by the state’s Department of Public Safety and federal authorities.


Court Rules Texas Ban on Smokable Hemp Products Unconstitutional - A Texas state district court ruled that the state’s ban on the production and sale of smokable hemp violated the Texas Constitution. The plaintiff’s case was based on a previous state Supreme Court ruling that a law could be deemed unconstitutional if “the statute’s effect as a whole is so unreasonably burdensome that it becomes oppressive in relation to the underlying governmental interest.” Although the lead attorneys on the case expect the state to appeal, advocates hope the case sets “a new standard in similar cases across the country.”


France - Aurora Germany GmbH, a subsidiary of Aurora Cannabis Inc., and Ethypharm SAS delivered the first shipment of cannabis to France’s medical cannabis pilot program, which is set to benefit 3,000 patients over a two-year period. The two companies were selected by the National Agency for the Safety of Medicines and Health Products to supply dried flower for the entire pilot program.

South Africa - The South African government has announced a plan to create a US$1.9 billion cannabis industry, designed to create 25,000 jobs and attract foreign investment. The plan, which encourages the cultivation of hemp and cannabis, is the result of a two-year process that explored lessons from countries like the US and Canada.

Canada - Licensed cannabis producers in the Canadian province of New Brunswick will now be able to sell their products on-site at their facilities. Cannabis NB, the province’s government-owned cannabis corporation, which is the only legal retailer in New Brunswick, hopes the new program will increase visibility for local producers, allow for product testing on a small-scale, and create tourism opportunities.


Literature Review Suggests Cannabis May Be Effective Treatment for Fibromyalgia - Fibromyalgia syndrome (FMS) is a pain disorder characterized by chronic pain and sleep disturbance in the absence of any well-defined underlying disease. Current treatment strategies for FMS are limited both in number and efficacy. A recent review of 22 articles, however, determined that cannabis may be “a safe and effective treatment for fibromyalgia pain.” Further investigation is needed into dosage, length of treatment, adverse effects and dependence.

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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