Cannabis Client Alert - Week of June 14, 2021

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In this week’s edition:

  • Illinois sets new records for sales of recreational cannabis in May
  • Nevada Legislature passes bill legalizing cannabis consumption lounges
  • Coalition of cannabis producers pushing federal and state regulators to block sales of Delta-8 THC
  • Amazon, the second-largest private employer in the US, announces it will stop testing job candidates for cannabis
  • Legislation to expand federal research supply options to be tested in Congress
  • And more…

Federal

Sen. Dan Sullivan Comments on Federal Cannabis Reforms - Alaska Sen. Dan Sullivan (R) says federal cannabis reform will involve giving more protections through the SAFE Banking Act and STATES Act, but not through removing all federal penalties.

Ninth Circuit Skeptical of Researcher's Shot at DEA Pot Rule -  The Ninth Circuit panel assessing the US Drug Enforcement Administration’s denial of a petition to federally reschedule cannabis heard oral arguments.  Discussion centered on the standing of the challenger, Dr. Suzanne Sisley, to appeal the case given Sisley was not part of the original descheduling petition.

Bill to Let Researchers Study Marijuana from Dispensaries Approved in Congressional Committee - A US House Transportation and Infrastructure Committee approved a bill that would allow researchers to study cannabis products from state-legal dispensaries, as opposed to the current very limited federally authorized source.  If passed, the bill would clear the way for scientists to conduct impaired-driving research using the actual cannabis products that consumers are purchasing from dispensaries in addition to permitting the interstate distribution of cannabis to scientists in jurisdictions that have yet to legalize cannabis.  The legislation also includes a mandate for cannabis-legal states to evaluate methods of education to discourage cannabis-impaired driving.

States

CA - The California Department of Tax and Fee Administration published a report for the first quarter of 2021 showing the state’s cannabis excise tax generated $131.9 million in revenue and that the cultivation tax generated $30.7 million.  Sales tax from cannabis businesses totaled $82.4 million in revenue for the same period.  Since its inception in January 2018, total revenue from the program to date measures at $2.38 billion, including $1.2 billion in cannabis excise tax, $298.4 million in cultivation tax and $882.7 million in sales tax.

CT - After running out of time in its previous session, the Connecticut General Assembly is set to hold a special session to consider the legalization of recreational cannabis.  The bill initially narrowly passed the state Senate and has since faced resistance by House Republicans.

CT - A state Senate vote to legalize cannabis for recreational use in Connecticut could come as early as June 11.  In the latest draft of the legalization bill, all licensed firms must expand or build facility paying union-scale wages and sign an agreement with a labor organization.  The bill is not expected to specify how many retail locations the state will license, as the locations will be determined at a later date and partially by market forces. 

DE - A vote on a cannabis legalization bill that was scheduled in the Delaware House of Representatives has been cancelled.  Rep. Edward Osienski (D), who filed the measure, explained that the House is considering a series of proposed changes that will require more time before lawmakers reach a consensus.

ID - Idaho activists have filed a measure to legalize cannabis possession on private property for adults.  The activists have until May 1, 2022, to collect approximately 65,000 signatures from registered voters for the measure to appear on the 2022 ballot.

IL - The Illinois Department of Financial and Professional Regulation reported record sales of recreational cannabis in May.  The state saw over $100 million in sales for the month, surpassing the prior record-setting month in April by $2 million.  Over 2.5 million cannabis items were sold, which was another record.  If the trend continues, Illinois could see more than $1 billion in adult-use cannabis sales in 2021.

LA - The Louisiana Senate approved a decriminalization proposal, sponsored by Rep. Cedric Glover (D), that would eliminate the threat of jail time and limit punishment for possession of up to 14 grams of cannabis to a $100 fine. The House previously approved the measure by a vote of 67-25 in May.

NV - On June 2, Nevada Governor Steve Sisolak (D) signed legislation removing per se limits on the amount of cannabis metabolite that can be in a driver’s blood to trigger a DUI.  The limits remain when a person is facing a felony.  Supporters say the per se limits are an inaccurate method to detect impairment.  In addition, the Nevada Legislature passed a bill legalizing cannabis consumption lounges, and Governor Sisolak is expected to sign it.  The bill creates two new licensing categories: retail cannabis consumption lounges and independent cannabis consumption lounges.  The state’s Cannabis Compliance Board would be responsible for drafting regulations and collecting application fees.

OK - A federal judge dismissed an Olympia, WA-based cannabis business' constitutional challenge to Oklahoma's requirement that medical cannabis license holders be an Oklahoma resident.  The business, Dank's Wonder Emporium, argued that the restriction violated the dormant federal commerce clause by discriminating against nonresidents.  US District Judge Stephen Friot pointed to the federal illegality of cannabis as the basis for his decision.

PA - A Pennsylvania appellate court ruled that a warehouse worker fired for failing a drug test could still receive unemployment benefits, given that the worker disclosed his medical cannabis prescription to his employer consistent with the company’s drug policy.  The ruling affirmed a decision by the state's Unemployment Compensation Board of Review earlier this year.

SD - The chief lawyer for the South Dakota Department of Revenue advised the State Legislature that the 4.5 percent sales tax and any local sales taxes will apply on medical cannabis when it becomes legal on July 1.

TN - Tennessee Governor Bill Lee (R) signed legislation to expand the state’s CBD program and create a commission to study broader medical cannabis legalization.  The new law allows patients with qualifying medical conditions to possess CBD oil containing up to 0.9 percent THC.

WI - Republican members of the Wisconsin Senate’s budget committee blocked a medical cannabis motion.  Democratic members of the committee introduced a motion to legalize cannabis for medical uses, but Senator Howard Marklein (R) ruled the motion was out of order, as the budget committee last month removed a medical cannabis provision from Democratic Governor Tony Evers’ 2021‒2023 budget.

HEMP/CBD

Pot Producers Pushing to Clamp Down on Delta-8 THC - A group of cannabis producers are pushing federal and state regulators to block sales of Delta-8 THC, a novel cannabis compound that can be easily produced.  The push comes as chemists and health advocates have expressed concerns over potentially dangerous contaminants and unpredictable potency levels.

Texans Breathe Sigh of Relief after Law to Outlaw 'Legal THC' Delta 8 Dies at Capitol - A bill pushing to outlaw Delta 8 statewide died in the Texas Legislature.

International

Spain - The Spanish Parliament approved a proposal of the Health and Consumer Affairs Commission to establish a subcommittee with the task of analyzing and considering the regulation of cannabis for medicinal use.  Among other things, the subcommittee’s objectives will include looking at the medical cannabis experiences of governments in other countries and related scientific evidence.

Business

Verano Holdings Corp. Acquires The Healing Center for $110 million - Chicago-based Verano Holdings Corp., a multi-state cannabis company, closed on several deals, including the acquisitions of western Pennsylvania-based The Healing Center for $110.3 million; TerraVida Holistic Centers LLC; GVB Holding Group LLC; and NSE Pennsylvania LLC.  As part of its purchase of The Healing Center, Verano will obtain the center’s three medical cannabis dispensaries in Cranberry Township, Monroeville and Washington, PA.

Ayr Wellness Inc. Secures Acquisition of New Jersey's Garden State Dispensary - Ayr Wellness announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act to move forward on its proposed acquisition of GSD NJ LLC (dba Garden State Dispensary) in New Jersey. The company announced that the transaction is now expected to close in July 2021, subject to certain closing conditions, including final regulatory approval from the state’s Cannabis Regulatory Commission

Pot Users Welcome: Amazon Won’t Test Job Seekers for Cannabis - Amazon, the second-largest private employer in the US, announced that it will stop testing job candidates for cannabis.  In a blog post, Amazon stated it will still test employees for other drugs and conduct “impairment checks.”  In addition, Amazon specified that some roles may still require cannabis testing per US Department of Transportation regulations.  The company also voiced support for federal legalization of cannabis.

NFL and Cannabis: League, Union Offer $1M for Pain Management Research - The NFL and NFL Players Association are jointly offering up to $1 million in grants to researchers to help develop alternatives to opioid-based pain management.  Among the areas the parties have expressed an interest in are the safety and effectiveness of cannabis as a treatment option. 

Medical

Cancer Initiation, Progression and Resistance: Are Phytocannabinoids from Cannabis Sativa L. Promising Compounds? - In a review of studies about the impact of phytocannabinoids from Cannabis Sativa L. on cancer initiation and progression, the authors noted an emerging role of these compounds in the development, progression and metastasis of tumors.  The authors also reported evidence indicating activity of phytocannabinoids may be more effective in combination therapies, encouraging the use of novel combinations and treatment schedules.  The authors concluded further studies will facilitate a better understanding of the application of such compounds in oncology.

Prolonged Medical Cannabis Treatment Is Associated with Quality of Life Improvement and Reduction of Analgesic Medication Consumption in Chronic Pain Patients - A study investigated the impacts of medical cannabis on chronic non-cancer pain.  While the study did not reveal any change in the intensity of pain reported by patients, it did show improvements in the quality of life of patients.

The Anti-Inflammatory Effects of Cannabidiol and Cannabigerol Alone and in Combination - A study showed evidence of significant anti-inflammatory benefits from cannabidiol (CBD) and cannabigerol (CBG) and may be particularly useful treatments to address lung inflammation.

Testing People For Marijuana Impairment Based on THC Levels Is ‘Not Reliable,’ Federally Funded Study Finds - A federally funded study backed by the National Institute of Justice concluded that the amount of THC in a person’s system after consuming cannabis is not an accurate predictor of impairment.

Dentons Speaks

Dentons sponsored New Frontier Data’s Cannabis in the US 2021 Mid-Year Market Update, which provides an update on expanding legalization efforts nationwide and the trajectory of the industry in 2021 and beyond.  Dentons’ cannabis practice co-chair Eric Berlin will be participating in a webinar hosted by New Frontier Data to discuss the report on Wednesday, June 30 at 2PM CT.

On June 2, Dentons announced an independent consultancy firm with an existing group chaired by former US Secretary of State Madeleine K. Albright.  Albright Stonebridge Group will be a founding member of the new consultancy and is changing its name to Dentons Global Advisors ASG.  Initial services include commercial diplomacy and capital markets and transaction advice.  The new firm also plans to offer services to help clients take advantage of opportunities and address government challenges.

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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