Cannabis Client Alert - Week of November 16, 2020

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In this week’s edition:

  • US Senate’s likely next Banking Committee Chair “sympathetic” to need for cannabis banking legislation
  • New Jersey legislators struggle to decide tax, revenue provisions to implement voter-approved legalization
  • West Virginia issues 10 medical-processing permits
  • Argentina permits home-growing and expands legalization measures
  • Verano and AltMed form one of largest privately owned cannabis businesses in US
  • And more…

Federal

Support for Legalization 68 Percent Nationally - According to a recent Gallup poll, 68 percent of US residents support legalizing cannabis, including a majority of every age and income group. While a strong majority of those who identify as liberals or Democrats support legalization, only 49 percent of conservatives and 48 percent of Republicans do. And although overall support for legalization is on the rise, Republican support has slightly decreased when compared to poll results in 2017, 2018 and 2019.

Senate Actions Criticize USDA Restrictions; Introduce Spending Bills - The Senate Appropriations Committee released several bills and reports impacting cannabis, including a report criticizing the strictness of the US Department of Agriculture’s (USDA’s) proposed rule that would require hemp farmers to destroy their crop if it exceeded the 0.3 percent THC limit by more than a 0.5 percent margin. The committee called the proposed rule “arbitrary” in light of public feedback. While several spending bill provisions support state hemp programs and research, one provision would block the District of Columbia from using its local tax dollars to regulate a legal cannabis market.

MORE Act Vote Slated for December, But Not Likely to Pass - Although the US House of Representatives plans to vote on the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act in December, many commentators have indicated that it is not likely to pass the Senate, which is expected to remain in Republican control after Georgia’s runoff elections in January.

Sen. Toomey, Potential Banking Committee Chair, Supports Banking Legislation - US Sen. Pat Toomey (R-PA) indicated that he is “sympathetic” to the need for “ordinary banking services” for the legal cannabis industry, according to a tweet by a Politico reporter. If Republicans maintain control of the chamber, Sen. Toomey will serve as the chair of the Banking Committee.

States

Nineteen States Form New Cannabis Regulators Association - Officials from 19 states announced formation of the Cannabis Regulators Association. CANNRA aims to share best practices, create model policies and promote public health and regulatory certainty. The group’s inaugural president is Norman Birenbaum, who is currently New York’s director of cannabis programs. Birenbaum said CANNRA is not an advocacy group, but rather will work to support informed decision-making.

CT - Legalization is “inevitable at some point, especially when your neighboring states are doing it,” according to Connecticut’s incoming House Speaker Matt Ritter (D). Ritter was likely referring to New Jersey’s recently successful legalization referendum, among other developments in the region, but stopped short of providing a timeline for any Connecticut legislation.

IL - Although the legal battle continues, a second chance for applicants seeking a dispensary license in Illinois will move forward after a recent court victory. The state plans to re-grade losing applicants who respond within 10 days to a notice of deficiency, a plan that was opposed by certain dispensary applicants eligible to enter a lottery for awarding licenses. A temporary injunction would have immediately blocked the plan, which may increase the number of applicants in the lottery.

IL - The Illinois Department of Revenue proposed a rule to clarify that cannabis concentrates should not be taxed as cannabis-infused products, but should instead be taxed based on the amount of THC they contain. This would mean that, instead of being taxed at a flat 20 percent, taxation would be 10 or 25 percent, depending on whether the THC level is below or above 35 percent. In addition, a proposed definition of “smoking” would broadly include inhaled products, and guidance would further clarify the application to concentrates and infused products.

NJ - After New Jersey voters approved a referendum to legalize cannabis, the State Legislature’s efforts at implementing legislation for retail sales have temporarily stalled due to competing stakeholder concerns. The proposed tax rate (6.25 percent) and user fees are being hotly debated, as are concerns about whether the revenue allocation will advance social justice. Floor votes that were expected this week are now delayed, although separate decriminalization bills are moving forward.

PA - The Pennsylvania Medical Marijuana Advisory Board voted 7 to 4 against adding insomnia to the state’s list of qualifying conditions, citing concerns that many cases of insomnia are not medically severe. The board is also considering adding traumatic brain injury, but chose to postpone that decision until a later meeting.

TX - A bill to legalize medical and recreational cannabis was introduced by Texas State Senator-elect and current House Rep. Ronald Gutierrez (D) (SB 140). A total of nine new bills supporting legalization or decriminalization were introduced in the state this week.

WV - Ten medical cannabis processor permits were awarded by West Virginia’s Office of Medical Cannabis (OMC), which is part of the Department of Health and Human Resources’ Bureau for Public Health. The OMC will now move forward with the scoring of dispensary applications. The office plans to begin issuing patient cards as early as Spring 2021.

International

Argentina - Growing cannabis at home for medical use was authorized by a presidential decree in Argentina last week, along with other measures expanding the country’s 2017 legalization law. Pharmacies are now authorized to sell cannabis-derived products, and many insurance systems are required to cover such prescribed medications. Also, new regulations require growers (who may supply family or certain others) to register with the government, and allow cannabis to be prescribed for any condition for which there is scientific evidence of efficacy.

Israel - A committee for the regulation of cannabis in Israel published its conclusions last week in a legal memo that will form the basis of a bill that is expected to become law in approximately nine months. If enacted, the law would permit adult purchasing by both locals and tourists, and establish funding for community development. Home growing will not be permitted at first, but potentially will be allowed at a later stage.

Britain - A recent bill to address post-Brexit access to life sciences industry developments may help the medical cannabis market in the UK. Having legalized medical cannabis in 2018, the country’s restrictive prescribing rules and lack of research funding have stifled growth and patient access. Following in Denmark’s footsteps, the medicines and medical devices bill could be an opportunity for major change by allowing for a public-private collaboration model with substantial foreign investment, according to a report by European cannabis consultancy group Hanway Associates.

Business

Verano - Chicago-based Verano Holdings LLC, a multistate cannabis operator, announced it will acquire Florida-based AltMed, accelerating its expansion into that state, as well as into Arizona, and creating one of the largest privately held cannabis businesses in the US.

Hydrofarm - Hydrofarm Holdings Group, a specialty indoor gardening supplier with a cannabis focus, filed an S-1 with the SEC to raise $100 million in an initial public offering. The California-based company had $309 million in sales for the fiscal year recently ended, and plans to list on the Nasdaq under the symbol HYFM.

Medical/Health

Emotion, Cognition, and Attention - A randomized, controlled trial published in Frontiers in Psychiatry studied the effects and the interaction of CBD and THC in 60 healthy volunteers. Administration of CBD alone did not influence the emotional state, cognitive performance, or attention. Furthermore, a single dose of CBD prior to THC administration did not change or mitigate the effects of THC (which reduced cognitive processing speed and attention). The researchers urge further study of the complex interaction between CBD and THC.

Rheumatism - A meta-analysis of published medical literature in the journal Rheumatology found that nearly 20 percent of patients suffering from rheumatologic diseases actively consume cannabis, with an improvement in pain. Cannabis users in the studies were more likely to be smokers or unemployed than non-users, and were more likely to have fibromyalgia, as compared to rheumatoid arthritis or lupus.

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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