Cannabis Client Alert - Week of May 24, 2021

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In this week’s edition:

  • Alabama legalizes medical cannabis; Montana legalizes adult use
  • FTC imposes fines for CBD marketing
  • Nigeria plans to legalize cannabis farming
  • Sam Adams and Rite Aid show interest in cannabis and CBD products
  • And more…

States

AL - Alabama Governor Kay Ivey (R) signed the state’s medical cannabis legalization bill into law on Monday.  The relatively restrictive Alabama Compassionate Act includes low dosage limits and prohibitions on smokable flower, vaping, candies and baked goods.  Vertically integrated license holders may operate up to five dispensaries, and dispensary license holders are allowed up to three locations. Business license applications are to start by September 1, 2022.

CO - Colorado raised its legal possession limit from one to two ounces, and also announced that past convictions for possession under this limit will be sealed as long as qualifying individuals petition and have no subsequent criminal convictions.  Over 2,700 people have already been pardoned under the prior policy for smaller possession crimes.

MT - Montana legalized adult-use cannabis when Governor Greg Gianforte (R) signed HB701.  Sales may begin in January 2022, but will vary by county.  About half the state’s counties, where voters did not approve the ballot measure, will not have adult-use sales unless voters later approve it.  Taxes will be 5 percent for medical; 20 percent for adult use.  Although the use of tax funds described in the ballot measure is the subject of a legal dispute, the new legislation includes plans to fund a large drug treatment program through support of local organizations.

NJ - A panel of the New Jersey State Bar Association is discussing the state’s forthcoming adult-use market and its potential opportunities for minority businesses.  The state’s commission is required to prioritize license applications on the basis of “impact zones,” where law enforcement and past cannabis activity contributed to higher unemployment and/or poverty.  However, panelists such as state Sen. Ronald L. Rice (D) debated whether barriers to capital would ultimately keep black and brown business owners in the minority.

NV - Cannabis Advertising Guidance was published by Nevada’s Cannabis Compliance Board recently, implementing statutes and regulations on the issue.  All product packaging requires pre-approval, although logos, signage and ads do not.  Avoidance of marketing to those under 21 is a major theme of the rules.  Prohibitions include depiction of cannabis use, “resemblance to brands targeted at children, toys, candy, fruit, [or] cartoon characters,” and offers of free cannabis, among other things.  The guidance politely requests, “Please continue to keep advertising respectful and tasteful.” 

OH - Three medical conditions—arthritis, chronic migraines and complex regional pain syndrome—were added to the list of qualifying conditions for medical cannabis in Ohio.  The Ohio Board of Pharmacy also voted last month to make 73 more dispensary licenses available, although the process has not yet been announced.  Approximately 155,000 patients—about six times as many as expected—have registered so far in the state.

SC - The South Carolina General Assembly wrapped up last week without passing Sen. Tom Davis’s (R) South Carolina Compassionate Care Act.  Senate Majority Leader Shane Massey (R) stated that the proposal will be taken up in 2022 “for special order debate as the first order of business.”  The relatively conservative bill, if it passes, will initially approve 15 vertically integrated licenses and over 100 dispensaries.

TX - Medical cannabis House Bill 1535 passed out of the Texas Senate this week. The Senate revised the new THC limit from 5 percent to 1 percent, still up from the current state limit of 0.5 percent. The Senate version also removes chronic pain from the bill’s expanded list of qualifying conditions, but still adds PTSD and cancer. The bill was held up for over two weeks, while the end of session loomed near, in Lt. Gov. Dan Patrick’s office, a “legislative purgatory” between the state House and Senate.  The bill now goes back to the House for approval before moving to the Governor.

US Commonwealth of Northern Mariana Islands (CNMI) - The CNMI Cannabis Commission recently issued the US territory’s first “Retail” and “Producer Class II” licenses.  Saipan Select LLC was granted both licenses.  Sales are likely to begin in six to eight weeks.

Hemp/CBD

Senate Bill Would End FDA Limbo, Legalize CBD Food, Drink and Supplements - Sens. Ron Wyden (D-OR), Rand Paul  (R-KY) and Jeff Merkley (D-OR) filed a bill that would clear a path for food, drink and supplements containing “hemp, hemp-derived cannabidiol, or a substance containing any other ingredient derived from hemp.”  If passed, the Hemp Access and Consumer Safety Act would exempt such products from certain federal restrictions, but would allow federal packaging and labeling requirements.  FDA is reportedly developing regulations to permit and regulate some CBD products, but has not issued them, and current FDA guidance states that CBD foods and supplements are not permitted.

FTC Imposes Penalties for Deceptive CBD Marketing - A $30,000 fine was imposed by the FTC on Scottsdale, AZ-based CBD product company Kushly Industries LLC for alleged false or unsubstantiated claims that its CBD products could treat or cure disease.  The FTC complaint alleges both claims of actual cures—for everything from acne to Parkinson’s—as well as claims that scientific studies prove the products’ efficacy.  The fine, imposed by a “consent agreement” subject to public comment, represents the amount of consumer spending on the products.  The FTC announced a crackdown on such false claims in December 2020.

Kansas Expands Hemp Program Under New Law - Kansas Governor Laura Kelly (D) signed House Bill 2244, which (i) moves hemp processing jurisdiction to the State Fire Marshal’s office, (ii) raises the processor fee limit to $1,000, (iii) further describes the fingerprinting and background check requirements, and (iv) clarifies that permissible hemp products are subject to a limit of 0.3 percent THC in their final form. 

Florida Publishes Hemp Transportation Guidance - The Florida Department of Agriculture recently released a one-page guidance document for those transporting hemp into or within the state.  Transporters “must stop and submit for inspection…at an agricultural inspection station,” and present a list of information, including the Certificate of Analysis showing the total THC delta-9, and the origin and destination of the plants, among other things.  Live plants as well as plant materials are addressed, with restrictions on packaging and other requirements.

Michigan Moves to Regulate Delta-8 - A committee of the Michigan Legislature approved a package of bills that would require hemp-derived delta-8 THC to be regulated by the state’s Marijuana Regulatory Agency.  The bill now moves to the full House. Delta-8 THC does not count towards the federal 0.3 percent THC limit, but can potentially mimic a cannabis high.  Several states have either banned delta-8 THC or have made discouraging statements, and clarifications are under consideration in even more states. 

International

Uruguay - Cannabis products with 10 percent THC or more will be permitted in Uruguay pharmacies beginning in 2022, after a policy change by the Instituto de Regulación y Control de Cannabis (Ircca).  Currently, products for sale typically contain 2 percent THC, although higher concentrations are available for consumption through cannabis clubs.  Officials supporting the change cited the benefits of moving consumers from the illegal market to a regulated one.

Nigeria - The Nigerian House of Representatives plans to legalize cannabis farming, and will host a roundtable for potential investors and other stakeholders on June 7 and 8.  Spokesman Benjamin Okezie Kalu described the need to diversify the nation’s economy after oil prices plummeted during the coronavirus pandemic, citing the potential to leverage Nigeria’s industrial agriculture resources for a variety of products with a focus on medical cannabis.

Business

Samuel Adams - The Boston Beer Co., maker of Samuel Adams beer and Truly Hard seltzer, plans to create a Canadian subsidiary to develop non-alcoholic cannabis beverages, potentially ahead of US federal legalization. 

Rite Aid - Pharmacists at Rite Aid are now trained to advise customers on alternative medicine products in the store, such melatonin and aromatherapy, potentially including CBD products, which were recently introduced at some Rite Aid stores.  CEO Heyward Donigan is reportedly “closely watching” the growth in medical and adult-use cannabis legalization.

Dentons Speaks

On Tuesday, May 25, Dentons hosted another installment of its Globalization of Cannabis series.  Speakers included Dentons partners Eric Berlin (Chicago), Eric Foster (Toronto), Peter Homberg (Berlin), Catalina Pinilla (Bogotá), Jonathan Lynch (Seoul) and others.  A recording is available 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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