Cannabis Client Alert - Week of May 17, 2021

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In this week’s edition:

  • Republican lawmakers introduce House bill to federally legalize cannabis
  • For the first time since 1968, DEA approves new cannabis cultivators for federal research
  • Mississippi Supreme Court strikes down voter-approved medical cannabis initiative and upholds life sentence for person convicted of possession
  • Dentons’ Globalization of Cannabis series continues on May 25
  • And more…

Federal

Republican Lawmakers File Bill to Federally Legalize Cannabis - Reps. David Joyce (R-OH) and Don Young (R-AK) introduced a bill to federally deschedule cannabis, protect banks that serve state-legal cannabis businesses, and provide additional assurance that military veterans may use cannabis in accord with state law.  The Common Sense Reform for Veterans, Small Businesses, and Medical Professionals Act would provide for regulations similar to federal rules for alcohol, which would be developed by the Food and Drug Administration and the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau.  The bill does not contain any social justice provisions. The bill will not move in the short term, and no Republican senator has introduced a Senate version of the same bill or issued comments supporting the House measure.

Moderate Senator Susan Collins Signs on to SAFE Banking - Sen. Susan Collins (R-ME) signed on to the Secure and Fair Enforcement (SAFE) Banking Act, despite her 2015 comment that she would not support an amendment that would allow banks to “essentially finance dealers of recreational marijuana.”  At that time, she supported only state medical cannabis.  Since then, Maine voters have legalized adult-use cannabis.  The SAFE Banking Act currently has 37 Senate cosponsors and the House passed its version of the bill with bipartisan participation last month.  The SAFE Banking bill will likely sit on the back burner in the Senate, where the forthcoming Booker-Wyden-Schumer bill will be the priority.

DEA Licenses Cannabis Cultivators for Research, Ending Trump-Era Freeze - For over 50 years, the only authorized grower of cannabis for federal research has been a farm at the University of Mississippi, authorized in 1968.  On May 14, 2021, the Drug Enforcement Agency (DEA) announced it has extended a Memorandum of Agreement (MOA) to certain manufacturers who appear to be in compliance with DEA regulations issued in December 2020.  Those who accept and finalize their MOA will be licensed to cultivate up to a quota amount and supply “more than 575 DEA-licensed researchers,” according to the DEA announcement

American Protestant Pastors View Cannabis Use as Morally Wrong - A survey of about 1,000 US Protestant pastors found that 76 percent oppose cannabis legalization (i.e., legalization “for any purpose”). Seventy-eight percent of all protestant pastors said that “It is morally wrong to get high smoking marijuana,” although among the subset of “mainline” (i.e., non-evangelical) pastors, the number was significantly lower (only 47 percent). Similarly, support for legalization varies across denomination types, with very few supporters among evangelical pastors (10 percent) and 43 percent mainline pastors in favor of it.

State

MN - The Minnesota House of Representatives last week approved a bill to legalize cannabis in the state.  However, the GOP majority in the state Senate has vowed not to pass the bill, although there is more interest than in the past.

MS - The Mississippi Supreme Court struck down a medical cannabis legalization initiative approved by more than half of the state’s voters in November.  Opponents of the initiative argued that a flaw in the voter initiative process makes the measure invalid.  Specifically, the law requires that a certain percentage of signatures must come from each of the state’s five congressional districts; however, the 2000 Census reduced Mississippi to four districts, making contribution from five impossible.  The dissenting judges in the 6-3 decision noted that the court’s decision “judicially kills Mississippi’s citizen initiative process” not only for medical cannabis, but for other planned initiatives, like early voting.

MS - The Mississippi Court of Appeals has upheld a life sentence of a person convicted of possession of 1.5 ounces of cannabis.  The 38-year-old had prior convictions, including two home burglaries in 2004 and unlawful possession of a firearm in 2015.  Under Mississippi law, a person can be sentenced to life without parole after serving at least one year in prison on two separate felonies, one of which must be a violent offense.  Burglary in Mississippi is considered a “violent offense” whether or not there is proof of violence.

NE - A medical cannabis bill has died in the Nebraska legislature, but it could open the door to a ballot measure that would be considerably less restrictive than the prior bill.

NJ - Pepsi must reimburse medical cannabis costs for a former employee’s work-related back injury, a New Jersey appeals court ruled.  The decision in Brian W. Calmon v. Pepsi Bottling Group (N.J. Super. Ct. App. Div.) cited the recent New Jersey Supreme Court decision in Vincent Hager v. M&K Construction as controlling precedent.  Pepsi argued, unsuccessfully, that covering such costs could be aiding and abetting the use of an illegal drug, and that medical cannabis is not “reasonable and necessary” treatment under the state Workers’ Compensation Act, among other things.  Separately, New Jersey is set to open an adult-use cannabis market by the end of this year.

VA - Virginia Governor Ralph Northam (D) signed into law certain employment protections for medicinal use of cannabis oil.  “Cannabis oil” is defined to include no more than 10 mg of delta-9 THC per dose, among other things.  Within limits, the law protect employees from discipline or discharge relating to medical use under a valid certification, but there are several exceptions.  Employers may still discipline or discharge employees who are impaired at work or even possess the oil during working hours.  Other limitations apply. For example, employers are not required to do anything that would cause the loss of a federal contract.

Hemp/CBD

House Bill to Legalize CBD as a Dietary Supplement Adds Two Cosponsors - The Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021 would alter the Food and Drug Administration’s current position that CBD products may not be sold as dietary supplements.  Reps. Nancy Mace (R-SC) and Antonio Delgado (D-NY) added their sponsorships on May 11, bringing the total to 25 cosponsors, including 9 Republicans.

Colorado Bans Delta-8 THC from Hemp - The Colorado Department of Public Health and Environment issued a statement on Friday, directed to hemp license-holders and other stakeholders, that “chemically modifying or converting any naturally occurring cannabinoids from industrial hemp is non-compliant with the statutory definition of ‘industrial hemp product,’” according to the view of the Marijuana Enforcement Division (MED) and the Division of Environmental Health and Sustainability.  This bars conversion of industrial hemp into “delta-9, delta-8, delta-10-THC, or other tetrahyrdrocannabinol isomers or functional analogs.”  The statement noted that it is unknown whether harmful byproducts may result from such conversion and, therefore, they are not allowed in food, supplement or cosmetics.

Pennsylvania Releases Hemp Sampling Protocol - The Pennsylvania Department of Agriculture released a hemp sampling protocol.  Samples will be cut from the top 5-8 inches of female plants’ main stem, including cuttings from no less than five plants.  The formulas for the number of samples from small, medium and large canopies are set out in the guidance, along with other instructions for field agents.

International

China - China announced a ban on the production and sale of synthetic cannabinoids, sometimes called “spice” or “Natasha,” which will be effective at the beginning of July.  The move is similar to China’s 2019 class-wide ban on all fentanyl-related drugs, which are synthetic opioids.  Many in the US say that China is a source of synthetic drugs shipped to the states, and that synthetics may cause serious and unpredictable side effects compared to cannabis. 

Zimbabwe - Zimbabwe will now permit cannabis investors to hold 100 percent ownership of their investments, abolishing a rule that required co-ownership with the government.  Export earnings from cannabis exceeded those of tobacco, making it arguably the country’s largest cash crop.  Other investment-friendly aspects of the new agreement include protection of property rights and allowing investors to keep more of their US dollar proceeds than exporters are currently permitted to retain.

Business

Economic Impact - The total US economic impact of the cannabis industry in 2021 is estimated at $92 billion, according to an industry report, MJBizFactbook.  This figure takes into account not only cannabis sales, but also taxes, as well as spending of cannabis industry employees.  While California has the highest total-dollar impact figure, Nevada is expected to have the highest per-person impact, $1,917 per person.

Green Thumb Industries - Green Thumb Industries (GTI) reported a 90 percent year-over-year increase in first-quarter revenue for 2021, at $194.4 million.  This was the second-highest revenue reported this quarter, after Curaleaf.  GTI’s net income was $10.4 million for the quarter, and was reported by equity research firm Cowen as the cannabis industry’s top pick.  The company attributes the increased revenue to higher demand, and recently announced its acquisition of a medical cannabis operator in Virginia, which is set to legalize adult use by 2024.

Joy Tea - A CBD beverage company is seeking the right to trademark products that aren’t currently legal, but that may be in the near future.  Joy Tea is appealing the US Patent and Trademark Office’s determination that its application for registration of hemp-derived CBD beverages while the Food and Drug Administration says it is working on rules to allow for some CBD products.  The appeal documents are available here.

Medical/Health

THC Research Standards - Five milligrams of THC has been proposed by as the standard unit of THC for research purposes.  A notice in the National Institutes of Health Guide directs researchers funded by several major organizations (including the National Institute on Drug Abuse (NIDA), the National Cancer Center Institute, the National Heart, Lung, and Blood Institute; and the National Institute of Mental Health) to measure and report their findings using 5mg of delta-9 THC as the standard unit.  This unit is not related to recommendations for use, but would help make numerous studies more comparable.

Cannabis as Opioid Substitute - A systematic literature review of 14 articles concluded that “the majority of the literature…demonstrated the use of cannabis adults with chronic pain resulted in better pain control and/or fewer opioids required to control pain in this population.”  Only two of the articles contradicted these findings, and these evaluated only illicit, not authorized medical use.  The study was a graduate student work published by Minnesota State University.

Fibromyalgia - A study of 117 individuals with fibromyalgia in Canada were surveyed on whether they had ever used cannabis, whether they continued to use it, and whether they reported relief of their symptoms.  Among those who had ever used cannabis, 61 percent reported continued use, and the study found that “symptom relief was substantial.”  The study is in a forthcoming edition of Clinical and Experimental Rheumatology, a peer-reviewed journal.

Pain Management - A study by New Frontier Data indicates that 45 percent of all cannabis consumers report pain management as one of their top reasons for cannabis use, and 59 percent of medical consumers citing the same.  For consumers indicating that they were prescribed opioids for pain management, 48 percent reported having replaced some of their prescribed medication with cannabis.

Dentons Speaks

Dentons will host the next installment of its Globalization of Cannabis series on Tuesday, May 25, 10:30 - 11:30 am CST.  Speakers include Dentons partners Eric Berlin (Chicago), Eric Foster (Toronto), Peter Homberg (Berlin), Catalina Pinilla (Bogotá), and others. RSVP here.

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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