Cannabis Client Alert - Week of May 3, 2021

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In this week’s edition:

  • Contrasting earlier statements, a key Senate leader expresses uncertainty about tying SAFE Banking Act to a more comprehensive cannabis bill
  • FDA announces ban on menthol cigarettes
  • South Dakota Supreme Court hears oral arguments about constitutionality of cannabis ballot measure
  • Texas House of Representatives passes bill expanding state’s medical cannabis program
  • Washington State Liquor and Cannabis Board issues policy statement on Delta-8 and Delta-9 THC
  • And more…

Federal

Senate Banking Committee Chairman Suggests Uncertainty About Tying Marijuana Banking Bill to More Comprehensive Marijuana Bill - Senate leadership is considering how best to proceed following House passage of the Secure and Fair Enforcement (SAFE) Banking Act on April 19. Sherrod Brown (D-OH), chairman of the Senate Banking Committee, despite previously suggesting that cannabis banking and sentencing reform be addressed in the same bill, recently told reporters that while there is “interest certainly from both parties” in sentencing reform and decriminalization, it’s “not clear” whether the Senate will attach banking provisions to a more comprehensive cannabis bill. For the moment, Sen. Brown noted that the Senate Banking Committee is looking at the SAFE Act seriously, but is “not ready to move on it.” 

Bipartisan Group of House Members Calls for Prohibition on Federal Interference with State, Tribal Legal Cannabis Activities - A group of 44 members of the House sent a letter to congressional leaders requesting that the 2022 appropriations bills include language that would prohibit the federal government from prosecuting individuals who comply with state or tribal recreational cannabis laws. While the House passed similar language in 2019 and 2020, the provisions were ultimately excluded from the Senate appropriations bills. The letter also requests continuance of the Rohrabacher-Farr amendment, which bars the federal government from prosecuting individuals who comply with their state’s medicinal cannabis laws.

FDA Announces Ban on Menthol Cigarettes - The Food and Drug Administration last week announced that it was working towards issuing standards to ban menthol cigarettes and all characterizing flavors (including menthol) in cigars. In 2009, the agency, in response to new power granted to it by the Family Smoking Prevention and Tobacco Control Act, banned all flavored cigarettes from the market except for menthol. Since then, there has been a contentious debate about menthol, which both sides of the debate see as a social justice issue. Once the FDA finalizes these standards, the ban will likely be challenged by the tobacco industry and therefore may not take effect for many years.

State

AL - More than half of Alabama’s 42 district attorneys signed on to a letter opposing the medical cannabis bill that is being considered by state lawmakers. Noting that “too many in the general public have been convinced that [cannabis] is harmless,” the letter urges lawmakers to avoid “further[ing] the lie by voting for any form of legalization.” The bill has already been approved by the Senate and is expected to be voted on in the House in the coming weeks.

IL - For several months running, the Illinois Department of Revenue has collected more revenue from cannabis taxes than from liquor taxes. In February and March, cannabis taxes totaled around $56 million, compared to just $39 million in liquor taxes. Based on sales in 2020, Illinois ranked fifth in cannabis tax collections among states where adult-use cannabis is legal.

LA - The Louisiana House Judiciary Committee approved a bill to impose fees and establish a cannabis business licensing system, which will go into effect only if a separate bill to legalize cannabis is enacted. The legalization bill is headed to the House floor after receiving approval from the House Administration of Criminal Justice Committee. Meanwhile, the House Agriculture, Forestry, Aquaculture and Rural Development Committee has advanced legislation that seeks to align the state’s hemp program with recent federal rules.

MT - Following voter approval of a ballot measure legalizing recreational cannabis, Montana lawmakers are moving forward with HB 701, a single bill to implement and tax recreational cannabis in the state. Under the bill, recreational cannabis will be taxed at 20 percent. A new amendment, passed by a committee last week, directs cannabis revenue to be split among the Department of Revenue, a substantive abuse prevention program, and conservation efforts. The bill is headed to the House following approval in the Senate.

PA - A new poll shows that 58 percent of Pennsylvania residents support complete legalization of cannabis, the highest level of support since tracking began. Another 14 percent neither favor nor oppose legalization, while 26 percent are opposed. The support for legalization in the state mirrors national polling, which shows a majority of Americans in favor of legalization. 

SD - South Dakota’s Supreme Court heard arguments on the constitutionality of Amendment A, a ballot measure passed by voters in November 2020 to legalize recreational cannabis state-wide. Republican Governor Kristi Noem directed the state Attorney General’s Office to file suit against the amendment as unconstitutional based in part on the claim that the initiative violated the single-subject rule. The law was set to go into effect on July 1, 2021, before it was found unconstitutional by a lower court.

TX - Texas’s House of Representatives approved a bill that would raise the THC cap to 5 percent from 0.5 percent and expand the state’s medical cannabis program by (i) including individuals with chronic pain, cancer and PTSD, and (ii) authorizing the state’s Department of State Health Services to add additional qualifying conditions through administrative rulemaking rather than legislative action.

WA - To support business viability and allow licensees to remain competitive, the Washington State Liquor and Cannabis Board approved a new rule to expand the plant canopy square footage allowed for some cannabis producers. Washington’s cannabis producers are divided into three tiers, each of which can cultivate up to a maximum square footage. The new rule doubles—to 4,000 square feet from 2,000 square feet—the plant canopy square footage allowed for Tier 1 cannabis producers.

Hemp/CBD

USDA Developing Hemp-Based Cosmetics - The US Department of Agriculture is partnering with an Illinois-based chemical manufacturing company to test an innovative approach to hemp processing to create skin-care ingredients that “perform specific functions, like protecting skin from UV light, retaining moisture, or stabilizing other active ingredients used in skin-care formulations.” In addition to “expanding the market for hemp seed oil,” the USDA also hopes to look for ways to better process hemp for use in other products, including food ingredients.

Future of Delta-8 THC Legality - The number of products containing Delta-8 THC has “exploded” over the last year, particularly in states where recreational cannabis remains illegal. Delta-8 THC, which is chemically similar to Delta-9 THC (the main psychoactive ingredient in marijuana), is legal under the 2018 Farm Bill as written and was not initially addressed by many state laws. Questions about its legality, however, have caused confusion within the hemp industry and among consumers. Recently, several states, including Alabama, North Dakota, Oklahoma and Oregon, have begun to address and regulate the compound. Moreover, industry experts suggest that federal guidance may emerge regulating deltas as intoxicants.

Alabama Senate Removes Amendment that Would Have Banned Delta-8 and Delta-10 THC - In April, Alabama’s Senate Judiciary Committee passed an amendment to a controlled substances bill that would have categorized Delta-8 and Delta-10 THC as controlled substances in the state. However, the amendment was removed from the bill this week at the request of the amendment’s author following a number of complaints from the state’s hemp industry.

Washington State Liquor and Cannabis Board Issues Policy Statement on THC Compounds - Washington State’s cannabis regulatory body issued a policy statement clarifying that Delta-8 THC derived from licensed cannabis is permissible. However, Delta-8 THC, “as well as derivatives, extracts, cannabinoids, isomers, and CBD isolate from hemp or other sources that are genetically or chemically altered into compounds may not be produced or processed in . . . licensed facilities, and may not be sold in licensed marijuana retail stores.”

New Study Looks at Use of CBD in E-Cigarettes - Previous studies have shown that CBD is partly transformed into THC when smoked as a cigarette. A new study looked to further this research by investigating the effect of temperature on the composition of CBD. The results show that “CBD in e-cigarettes can be considered as a precursor of THC, [and] thus it bears all the dangers related to this psychoactive compound.”

International

Mexico - Mexico’s Senate missed an April 30 deadline set by the Supreme Court to pass a cannabis legalization bill. The bill, which would regulate the cultivation, production, consumption, distribution, industrialization and sale of cannabis for personal consumption, has already passed Mexico’s lower house, the Chamber of Deputies. The delay in the Senate is the result, in part, of changes made by the Chamber of Deputies as well as questions relating to specific provisions of the bill raised by the hemp industry.  

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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