Cannabis Client Alert - Week of March 8, 2021

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In this week’s edition:

  • US Senate reports 91% of Americans support cannabis legalization, criticizes DEA barriers on research
  • Las Vegas City Council lifts prohibition on cannabis dispensary drive-thrus
  • New Hampshire Supreme Court rules workers compensation insurance should reimburse patients for medical cannabis
  • Legalization gains traction in New Mexico, Pennsylvania, Tennessee and Washington, DC
  • French government survey reveals that 80% of respondents support legalization
  • And more…

Federal

US Senate reports on popularity of cannabis legalization and the DEA’s barriers on research -  A report published by the US Senate Caucus on International Narcotics Control indicates broad voter support for cannabis legalization and criticizes current policies inhibiting cannabis research, including the Drug Enforcement Administration’s role in impeding studies. The report highlights the thriving US cannabis industry, noting that despite “increasing popularity—91 percent of Americans believe cannabis should be legalized for either medical or recreational purposes—cannabis remains illegal at the federal level.” The report further emphasizes the need for more research on the effects of cannabis use, citing concerns raised about impaired driving, THC potency, and cannabis use in vulnerable populations, such as children, the elderly and pregnant or breastfeeding women.

Cannabis seizures at US southern border decline after state legalization laws - According to the recently published 2020edition of the DEA’s National Drug Threat Assessment, seizures of cannabis along the US’ southern border have decreased by more than 80 percent since 2013, Mexican cannabis having been mostly replaced by domestic product. Justin Strekal, political director at NORML, a nonprofit organization that advocates for the reform of marijuana laws, commented that “…[W]hen given the option, consumers choose their cannabis to be grown in America. States’ decisions to legally regulate cannabis has, as expected, led to a precipitous drop in demand for imported cannabis and has significantly disrupted the illicit cannabis trade in Mexico.”

States

AK - Alaska lawmakers are considering loosening a state restriction on edible cannabis products that would double the amount of THC (cannabis’ psychoactive compound) allowed in a single serving. Proponents of the change believe it would offer manufacturers greater flexibility, lowering costs for manufacturers and consumers, while opponents worry the change may create negative public health effects, such as an increase in accidental overconsumption and cannabis-related emergency calls.

DC - Washington, DC, Mayor Muriel Bowser and DC Council Chair Phil Mendelson have each introduced bills that would “lay out a green path” for growing, selling and distributing cannabis legally. Councilman Mendelson’s bill would impose a 13 percent tax on retail sales, while Mayor Bowser’s proposal calls for a 17 percent tax.

NV - In a 6-0 vote, the Las Vegas City Council approved a bill to lift the city’s prohibition on cannabis dispensary drive-thrus. The bill allows dispensaries “to propose and operate a drive-through facility as a conditional use,” subject to conditional-use procedures, limitations and requirements, and also addresses security issues during the licensing process. A representative from Thrive Cannabis Marketplace, a local dispensary that operates a North Las Vegas drive-thru, told reporters that the drive-thru allows it to “process more customers and patients throughout the day” under the COVID-19 capacity restrictions and “adds security for their employees, who might otherwise have to frequent the parking lot to deliver curbside pickup orders.”

NH - In an opinion reversing the state’s Compensation Appeals Board, the New Hampshire Supreme Court ruled that state workers' compensation insurers must reimburse eligible patients for their prescribed medicinal cannabis treatments. Importantly, the Supreme Court reasoned that the Controlled Substances Act (CSA) “does not make it illegal for an insurer to reimburse an employee for his or her purchase of medical marijuana,” so an order “to reimburse does not interfere with the federal government's ability to enforce the CSA.”

NM - Five legalization bills were introduced in this year’s legislative session, including three bills in the New Mexico Senate alone. With the legislative session ending on March 20, the “clock is ticking for legalization” in the state.

PA - Efforts to legalize adult-use recreational cannabis have gained bipartisan support in Pennsylvania, as Senators Dan Laughlin (R) and Sharif Street (D) co-sponsored legislation to allow cannabis use for adults 21 years and older. Their bill would “release prisoners and expunge records” of those with non-violent cannabis offenses, as well as allow medical cannabis patients to grow up to five plants inside their home.

TN - The Tennessee Senate Government Operations Committee approved a bill to legalize medical cannabis and advanced it to the Judiciary Committee for consideration. The bill would allow patients with certain qualifying conditions to “possess and purchase cannabis from licensed dispensaries,” but cannabis products could not be used for smoking or vaping, nor be infused into food items.

TX - A recent poll shows significant growth in support for cannabis legalization in Texas over the past decade. A survey conducted by the University of Texas and The Texas Tribune found that 60 percent of state voters favor cannabis legalization “for any use,” compared to 42 percent in 2010.

WV - Governor Jim Justice (R) announced that he would sign a bill to legalize adult-use cannabis in West Virginia after hearing from members of the medical community that regulated cannabis sales could reduce “drug-type problems,” such as opioid overdose. “[T]he wave is coming across all of our states,” he said, “and as that wave comes, if House Republicans and Democrats and Senate Republicans and Democrats would get behind…legalization of recreational marijuana…[I] would too.”

Hemp/CBD

CBD and CBG - Although CBD (cannabidiol) continues to be the most favored cannabinoid in the industry for most growers and consumers, there has been a noticeable shift toward “novel” cannabinoids. For example, the lesser-known cannabinoid CBG (cannabigerol) gained greater traction in 2020, with reports now showing that 43 percent of hemp grown for cannabinoid extraction was for CBG, while CBD dropped by about 16 percent.

International

Thailand - Thailand, the first country in Southeast Asia to legalize medical cannabis, has further eased its medical cannabis restrictions. In a statement by the nation’s Deputy Premier and Health Minister, Thai families may form communities to grow up to six pots per household to supplement their family income by making food and cosmetic products as a fresh revenue source or by supplying the crop to public hospitals and state facilities.

Morocco - Morocco’s Government Council has temporarily postponed a bill that would allow the legal production of cannabis for medicinal and therapeutic use to be produced in the country’s traditional cannabis-growing region. By allowing exclusive cultivation of the “cash crop” in Morocco’s northern regions, many cannabis farmers could be lifted out of poverty and illegality if the bill is approved.

France - “A fact-finding mission” conducted at the behest of the French Parliament surveyed over 250,000 online respondents regarding recreational cannabis. The results showed that 80.8 percent of the respondents favored an “authorization for consumption and production of cannabis in a framework governed by law” while 13.8 percent favored decriminalization only.

Business/Technology

Verano - After raising nearly US$80 million for acquisitions and going public through a reverse takeover, multistate cannabis operator Verano Holdings announced its acquisition of nine operating retail outlets or licenses, expanding its footprint to include Arizona, Illinois and Pennsylvania.

Alimentation Couche-Tard Inc. - With most stocks, including cannabis equities, sustaining considerable losses in the last five trading days, the owner of Circle K, Alimentation Couche-Tard Inc. (Alimentation), seized the opportunity to increase its stake in the Canadian cannabis company Fire & Flower Holdings Corp., in a transaction that converted almost $52 million of its debt to equity. Alimentation has now increased its Fire & Flower shares to 19.9 percent.

Psychedelic Therapy Patents - As researchers show promising results from academic trials of psychedelic therapy for mental health disorders, there are growing concerns of potential price gouging or monopolies by for-profit companies asserting patents. Specifically, researchers fear that the focus on scientific literature and prior patents during a patent-approval process may not account for the fact that psychedelics have been illegal and operating underground, so the amount of psychedelic knowledge remains limited.

Medical

Cannabis, vaping and respiratory symptoms among adolescents - In a new research study conducted by the University of Michigan that explored the relationship between respiratory symptoms among US adolescents who reported using cigarettes, e-cigarettes and/or cannabis in the past 30 days, as well as lifetime users of cannabis with electronic nicotine delivery systems (ENDS), adolescents who had used cannabis in ENDS appeared about twice as likely to report wheezing or whistling in the chest than those who used e-cigarettes or smoked.

Cannabis use and hypertension - In a research study using self-reported longitudinal data obtained from the National Epidemiologic Survey on Alcohol and Related Conditions Wave 1 (2001/2002) and Wave 2 (2004/2005), researchers performed data analyses to quantify the relationship between hypertension and lifetime cannabis use, 12-month cannabis use and 12-month cannabis use frequency. The study revealed that cannabis use was not associated with incidences of hypertension.

Dentons speaks

In case you missed it

Scott Greiper, President of Viridian Capital Advisors (a leading financial and strategic advisory firm in the cannabis industry), joins Dentons Cannabis co-heads Katie Ashton and Eric Berlin on Wednesday, March 24, 2021 for a lively discussion on the impact the Biden administration and new Congress will have on capital markets for the US cannabis industry.

Join Howard Dean, Eric Berlin, and John Ashford, CEO of The Hawthorn Group, for an informative discussion on the cannabis industry 2020 election victories in the upcoming webinar “Opportunities for Cannabis: Capitalizing on 2020 Election Wins & Other Market Advances” on Tuesday, March 30, 2021.

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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