Cannabis Client Alert - Week of June 21, 2021

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In this week’s edition:
  • Pressure grows to pass SAFE Banking legislation
  • Connecticut becomes latest state to legalize cannabis for adult use
  • California provides funds to help struggling cannabis industry amid licensing delays
  • And more…

Federal

  • Senators Jeff Merkley (D-OR) and Steve Daines (R-MT) sent a letter to Senate Banking Committee Chairman Sherrod Brown (D-OH) urging him to mark up their Secure and Fair Enforcement (SAFE) Banking Act.The letter comes amid growing frustration with Brown, who has said he is not eager to move the legislation on its own. Similar frustration exists in the House of Representatives where Representatives like Ed Perlmutter (D-CO) are pushing for SAFE banking language in any moving vehicle.The House Financial Services Committee’s appropriations bill includes SAFE language.Unlike regular legislation, however, protections in appropriations bills must be renewed every year.
  • Civil rights groups are pushing for changes to the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act that will ensure the market is equitable, empowers impacted communities and limits the ability of large corporations to dominate the marketplace. Passed by the House last year, advocates are calling for the MORE Act to be voted on by the House before August break.

States

CA - The California State Legislature approved a $100 million program to extend temporary licenses and provide grants to local governments to help struggling legal cannabis companies. More than 80 percent of provisional-license holders have yet to transition to regular licenses, in part because of what some consider onerous environmental compliance provisions.

CA - The State Personnel Board issued a “precedential decision” stating that testing positive for past cannabis use should not be used as grounds for firing most public employees. The board found that urine tests do not accurately reflect whether an employee is intoxicated at work. The decision does not apply to police or certain other professions where employees are prohibited from using cannabis.

CT - This week Connecticut became the 19th state to legalize recreational cannabis. The law taxes retail cannabis sales based on tetrahydrocannabinol (THC) content, equal to 0.625 cents per milligram for plants, 2.75 cents per milligram of edible products and 0.9 cent per milligram for all other cannabis products. The new law is projected to raise $4.1 million for the state and municipalities in fiscal year 2022, growing to $73.4 million by FY 2026. Local governments may hold a referendum on whether to permit cannabis sales and may impose an additional 3 percent municipal sales tax on top of the state’s existing 6.35 percent sales tax. 

FL - The state’s Supreme Court blocked a proposed constitutional amendment to allow recreational cannabis use in Florida from appearing on the 2022 ballot, saying that the ballot language was misleading. The decision effectively ends the ballot initiative effort, which was also about to be hampered by recent legislation that limits to $3,000 per individual contributions to groups sponsoring ballot initiatives during the signature-gathering stage.

HI - Hawai`i Governor David Ige (D) recognized the state’s 21’s anniversary since decriminalizing medical cannabis by declaring June 14 as “Medical Cannabis Day.”

MS - Mississippi Gov. Tate Reeves (R) says he supports calling state lawmakers back to the Capitol for a special session to address a medical cannabis bill if a deal on the legislation can be reached in advance of the session. Last month the Mississippi Supreme Court threw out the state’s ballot initiative process and along with it a medical cannabis initiative that had been approved by more than 70 percent of the state’s voters. Governor Reeves opposes legalizing cannabis, even for medical purposes, but says he supports the will of those who voted for legalization.

NJ - The practice in New Jersey of “gifting” cannabis products to those who purchase other items will soon come to an end after the state Attorney General sent warning letters to companies using the practice to circumvent state law. Although New Jersey approved recreational use earlier this year, licensing regulations still need to be developed before licenses are granted.

RI - Rhode Island’s Senate Judiciary Committee voted to approve a measure that would legalize recreational cannabis, setting the stage for a possible Senate vote later this year. The move is significant because no bill legalizing cannabis has ever moved past committee consideration. The revised bill scales back the number of cannabis stores a community might host and reserves one-third of retail licenses for communities disproportionately hurt by previous cannabis enforcement. 

TX - Texas enacted modest reforms to its medical cannabis program, including adding cancer and post-traumatic stress disorder to the list of conditions that qualify patients to legally access cannabis. The new law also doubles the amount of THC concentration that is allowed, from 0.5 percent to one percent.

Hemp/CBD

International

Business

  • New Frontier released its “Cannabis in the U.S. 2021 Mid-Year Market Update.” Sponsored by Dentons, the report finds that, by 2025, 42 percent of total annual US cannabis demand is projected to be met by legal purchases in regulated marketplaces, up from 24 percent in 2020; and 5.4 million Americans, or 2.4 percent of US adults, will be registered patients in medical cannabis states. The report also finds that 141 million Americans reside in 18 adult-use states, representing a diverse and widely distributed consumer base for retailers to segment and target; and that, as of May 2021, capital raises in cannabis have more than tripled, reaching $6 billion, signaling increased confidence in projected aggressive cannabis market growth. 
  • WM Holding Company, LLC, a leading technology and software infrastructure provider to the cannabis industry, announced on June 16 that it completed its business combination with Silver Spike Acquisition Corp. In connection with the closing, SSPK changed its name to WM Technology, Inc.
  • Cronos Group Inc. and PharmaCann Inc. announced that they have entered into an agreement under which a wholly owned subsidiary of Cronos Group has purchased an option to acquire an approximately 10.5 percent ownership stake in PharmaCann, one of the largest vertically integrated cannabis companies in the US.

Medical/Health

  • A new longitudinal, multicenter study of the non-acute effects of cannabis on neurocognition in adolescents shows that decision-making is not impaired when (i) cannabis is used in moderation and (ii) onset of use occurs after the age of 15.
  • A JAMA Psychiatry report used MRI scans of adolescent brains at 14 and 18 to determine the effect of cannabis use in teens.The study found use by teens accelerated thinning of parts of the right and left prefrontal cortices, which may have an effect on the neuro-maturation process of the brain.
  • A study finds that medical cannabis improves insomnia symptoms and sleep quality in individuals with chronic insomnia symptoms.

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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