Cannabis Group Weekly Alert - January 2020 #2

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In this week’s edition:

  • Law360 names Dentons Cannabis Practice of the Year
  • House subcommittee examines federal cannabis policies
  • California’s governor moves to consolidate state cannabis regulations
  • Federal hemp license awards delayed
  • Mexico prioritizing legalization in 2020

Federal

  • House Energy and Commerce Committee Subcommittee on Health Holds Hearing on Cannabis Policies for the New Decade - In what is likely one of the few congressional hearings to be held on cannabis policy this year, a House subcommittee heard testimony from the National Institutes of Health, the Food and Drug Administration (FDA) and the Drug Enforcement Administration (DEA) on the federal policies underlying the cannabis market. A key question for lawmakers was why, when additional research is needed, only one facility was authorized to produce cannabis for research purposes. Matthew Strait of the DEA noted that new regulations governing applications for federal licenses were pending before the Office of Management and Budget, and may be announced soon.
  • Federal Agencies Work to Streamline Cannabis Research Regulations - Officials with the National Institute on Drug Abuse, the DEA and the FDA are exploring solutions to remove federal barriers to researching the use of cannabis compounds for pain management and addiction treatment according to federal officials.
  • Prospects for Federal Cannabis Legislation in 2020 Grow Dim - Despite several high-profile developments on cannabis issues in 2019, Congress appears unlikely to take any serious action in 2020. As the 2020 presidential elections continue to heat up, the prospects for bipartisan legislative deal making grow bleaker. While it is possible that Democrats in the House of Representatives will consider legislation to legalize cannabis, Senate Republican leadership appears unwilling to consider such a proposal.

States

  • CA - California Governor Gavin Newsom’s (D) 2020 budget proposal would streamline regulations for the cannabis industry by consolidating the state’s regulatory framework under the newly established Department of Cannabis Control. Additionally, the Governor would move responsibility for the cultivation excise tax from the final distributor to the first, and for the retail excise tax from the distributor to the retailer.
  • CA - State health officials have added cannabis smoke to the list of chemicals that are known to cause reproductive toxicity after the conclusion of a rulemaking proceeding.
  • CA - In an effort to service customers in jurisdictions that do not permit direct recreational cannabis sales, a kiosk-and-delivery model has been launched in Anaheim, CA, allowing customers to order from a kiosk and then receive a delivery. While California regulations do not expressly allow or prohibit this model, its legal status is undecided.
  • CO - Despite being the first county to license retail cannabis in 2013, Pueblo County Commissioners are set to consider a proposal to expand the buffer distance between an outdoor cannabis grower and the nearest residential home to 1,000 feet from the current standard of 250 feet.
  • HI - The State of Hawaii has moved to relax legal punishments for possession of cannabis with police directed to issue citations for individuals caught possessing less than three grams of cannabis.
  • FL - The state Supreme Court is scheduled to consider a case on the constitutional status of state laws regulating Florida’s medical cannabis industry. A decision is expected sometime in 2020.
  • FL - A campaign by Make it Legal Florida to place a ballot initiative to legalize recreational use of cannabis has collected enough signatures to qualify for the November 2020 ballot, but the state Attorney General’s Office is challenging the measure in the state’s supreme court.
  • FL - The City of Orlando has approved a resolution to expand the number of licensed cannabis dispensaries in 2020.
  • IA - Governor Kim Reynolds (R) and several state lawmakers have expressed their support for proposals to expand Iowa’s medical cannabis program, and the issue is expected to be a top priority in the state legislature’s 2020 session.
  • IL - Chicago’s O’Hare and Midway airports announced the installation of ”amnesty” boxes into which travelers can safely dispose of any recreational cannabis products prior to boarding planes.
  • IL - Illinois started the new year with high levels of excitement for the legalization of recreational cannabis use, early reports are projecting nearly $10.8 million worth of sales in the first five days. Demand has been so high that dispensaries are already running short of product and do not have enough workers to service customers. In an effort to increase production, the state Department of Agriculture has opened the application process for cannabis infuser, transporter, and craft grower licenses.
  • IL - Despite the excitement surrounding the legalization of recreational cannabis use in Illinois on January 1, the state’s high taxes on the product have caused public policy experts to predict that the black market for cannabis products will continue to thrive.
  • KS - Kansas Governor Laura Kelly (D) has indicated that she would likely sign a bill to legalize recreational use of cannabis if the state legislature were to pass a legalization bill in the 2020 legislative session.
  • KY - Newly elected Governor Andy Beshear (D) has called for bipartisan cooperation in the 2020 legislative session and has indicated that he will work with state legislators to pass legislation authorizing a medical cannabis program.
  • MA - Officials in the state Cannabis Control Commission have announced that the state drew in over $420 million from cannabis sales in 2019.
  • MA - State health officials have certified that a fourth individual’s death has been linked to an illness caused by vaping in Massachusetts.
  • MS - The Mississippi Secretary of State has officially certified a 2020 ballot measure to legalize medicinal cannabis.
  • NJ - State law enforcement officials concluded a year-long investigation by arresting 24 men and women involved in one of the largest cannabis and THC distribution networks operating throughout Monmouth, Ocean and Bergen counties.
  • NJ - Recent public opinion surveys conducted in New Jersey show that a majority of citizens support legalizing recreational cannabis use, good news for proponents of a likely 2020 ballot referendum.
  • NY - New York Governor Andrew Cuomo (D) will try again in 2020 to legalize recreational use of cannabis despite the failure of the state legislature to pass legislation in 2019. Governor Cuomo’s proposal would limit recreational cannabis sales to individuals over age 21 and promote social equity in the cannabis industry through various programs.
  • OH - A petition to list "Bengals/Browns Fans" as an official medical cannabis condition was submitted last month to the State Medical Board of Ohio, though it is expected to be rejected as the board requires information from experts who specialize in studying the condition, relevant medical or scientific evidence, and letters of support from doctors.
  • OK - State officials have announced that Oklahoma’s medical cannabis program has surpassed 240,000 enrolled patients.
  • UT - State regulators concluded their review of medical cannabis pharmacy licenses and have announced recipients.
  • TX - While Texas remains one of the few states that has refused to embrace medical or recreational cannabis use, there are signs that resistance by politicians is softening.
  • VT - Vermont’s Attorney General and democratic lawmakers held a press conference earlier this month urging the state’s House of Representatives to advance legislation authorizing the sale and regulation of cannabis. While the state passed legislation legalizing recreational use of cannabis in 2018, there is currently no regulatory framework in place for the production or sale of cannabis.

Hemp/CBD

  • Department of Agriculture - A spokesperson with the US Department of Agriculture announced that federal hemp licenses will be delayed pending negotiations with the White House Office of Management and Budget to finalize technical details.
  • PA – The administration of Governor Tom Wolf (D) has announced that the state’s Department of Agriculture’s 2020 hemp program will begin accepting applications from both commercial growers and processors.
  • SC - State regulators issued a notice that hemp and CBD ingredients will not be permitted in commercial livestock feed.
  • SD - Governor Kristi Noem (R) announced that she will support hemp legislation provided that lawmakers include guardrails within the bill. The Governor historically has opposed any relaxation of laws or regulations around hemp or cannabis.

International

  • Canada - While the United States leads in cannabis innovation, federal regulatory roadblocks in the US have allowed Canada to emerge as a dominant international exporter of cannabis.
  • Finland - Regulators in the Finnish Food Authority have issued directions to stores to halt sales of CBD-infused food products as they do not have proper authorization to be sold as foodstuff products.
  • Mexico - Members of the Mexican national legislature have indicated that legislation legalizing recreational use of cannabis will be a top priority in 2020
  • South Africa - The South African Finance Minister has indicated that a proposal to legalize cannabis will be submitted to the governing cabinet before the month’s end.
  • Thailand - The Public Health Ministry of Thailand has opened the country’s first two full-time clinics dispensing cannabis oil for medical treatment, a step forward in the government’s policy of promoting the licensed use of cannabis products to relieve the symptoms of a range of health ailments.

Business

  • Curaleaf Holdings - Earlier this month, Curaleaf Holdings finalized its purchase of Acres Cannabis assets for a price of $70 million. With the new addition, Curaleaf now holds two cultivation facilities, two processing sites and two dispensaries, all in Las Vegas, and a retail location in Ely, NV.
  • Lightshade - Lightshade, a Colorado cannabis dispensary, has been hit with a potential class action in federal court citing allegations that its website is inaccessible to blind potential customers. This case is the latest in a trend of such suits accusing cannabis and CBD sellers of violating the Americans with Disabilities Act.
  • Trulieve - Trulieve, Florida’s largest medical cannabis company, is the defendant in a securities class-action complaint filed by investors citing allegations that the company overstated corporate profits and misled them about the company’s plant-growing practices.
  • Cresco Labs - Cresco has announced that it closed the acquisition of CannaRoyalty Corp., significantly increasing its footprint in the California market and making it one of the largest wholesale distributors in state.
  • Goldenseed - Goldenseed, a California lifestyle cannabis and hemp brand, became the first US private cannabis cultivator and processor to be qualified by the Securities and Exchange Commission to sell its stock to the general public.

Medical/Health

  • Medical Research - A new study published this month found that combinations of very low doses of CBD + THC or CBDA + THCA robustly reduce nausea symptoms in rats.
  • Medical Research - A study conducted by the American College of Gastroenterology has concluded that clinical trials with cannabis in patients suffering from inflammatory bowel disease (IBD) have shown improvement in quality of life.

Dentons Speaks

  • Dentons Global Cannabis practice has been recognized as one of Law360’s Practice Groups of the Year.
  • On Thursday, January 16, Eric Berlin participated in a live video webcast “Cannabis 2.0 — Industry Outlook” produced by Expert Webcast.

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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