Cannabis Group Weekly Alert - June 2019

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Last week, Illinois passed a bill that, when signed by Governor Pritzker, will make the state the 11th to legalize cannabis for adult use, and the first to do so by legislation rather than voter referendum. While adult-use legalization appears to be dead for now in Connecticut, New Jersey and New York, bills in New Jersey and Texas to expand their medical cannabis programs both progressed. And across the pond, France announced a medical cannabis pilot program.

In hemp and CBD news, the USDA issued two memorandums regarding hemp legalization, and on May 31st, the FDA held its first public hearing on the effects of CBD. Public comment on the topic remains open until July 2nd.

See below to read more about these and other cannabis-related stories. In separate Alerts this week, we provide a more detailed look at the Illinois adult use legislation and our takeaway from the FDA hearing

Federal

The US Department of Agriculture issued two memos on hemp legalization implementation, clarifying some points of contention in the industry. The USDA stated its opinion that: (i) descheduling of the crop and its derivatives, such as CBD and THC, is self-executing without further action; and (ii) that states cannot block legal hemp shipments through their borders, including for hemp grown legally pursuant to the 2014 Farm Bill. The memos also clearly state that the trace amounts of THC found in hemp are no longer considered a controlled substance: “Congress has removed hemp from Schedule I and removed it entirely from the CSA. In other words, hemp is no longer a controlled substance. Also, by amending Schedule I to exclude THC in hemp, Congress has likewise removed THC in hemp from the CSA.”

The US Food and Drug Administration (FDA) held its much anticipated public hearing on products containing cannabis or cannabis-derived compounds on Friday, May 31st. FDA Commissioner Dr. Ned Sharpless gave opening remarks that mirrored prior public FDA statements. His prepared remarks are available here. Attorneys from Dentons’ Cannabis group attended the event and have provided a high-level summary here.

Twelve governors (seven Democrats and five Republicans) of states with laws permitting or decriminalizing marijuana for adult use or medical purposes delivered a letter urging Congress to pass the “Strengthening the Tenth Amendment Through Entrusting States (STATES) Act,” calling it a “logical step” that “honors state action by codifying protection at the federal level for those businesses and consumers operating in accordance with state law.”

The US Court of Appeals for the Second Circuit issued an opinion keeping open a challenge to cannabis’s Schedule I status and warning that it may take matters into its own hands if the Drug Enforcement Administration doesn’t “promptly” consider medical cannabis patients’ rescheduling requests. Noting the DEA’s history of “dilatory proceedings,” the Court suggested that may have to take more drastic action if the DEA declines to take action or delays its decision on rescheduling.

States

The Arizona Supreme Court ruled that medical cannabis extracts are legal. Although the Yavapai County Attorney argued that the Arizona Medical Marijuana Act only permits cannabis flower, the Court reasoned that a plain reading of the act compelled its finding that patients were allowed to consume cannabis in various forms.

Colorado’s Governor signed several cannabis bills including HB 1090, which permits investments by individuals and entities outside CO and public companies, HB 1230, which allows for cannabis tasting rooms, and HB 1234, which allows for home delivery.

Connecticut's House speaker Joe Aresimowicz (D) said that cannabis legalization is dead for the year. At this point, lawmakers are considering putting the issue of legalization in front of the state’s voters in the form of a Constitutional amendment.

The Illinois legislature passed HB 1438, a bill to allow for adult use in Illinois starting in 2020. Illinois will become the 11th state to legalize adult use and the first to do so through its legislature rather than a ballot referendum. The bill now goes to the desk of Gov. J.B. Pritzker (D), who tweeted his intention to sign it into law. Highlights of the 533-page bill, written by lawyers in Dentons’ Cannabis practice group, are available here.

Iowa Gov. Kim Reynolds (R) vetoed a bill to expand the state's limited CBD medical cannabis program. Reynolds took issue with a provision that would have increased the amount of THC allowable in medical products, from 3 percent THC per product to a 25mg THC limit per month. She stated: “I agree that there should be some change to the three percent THC limit . . . [b]ut I have not been unable to discern any evidence-based justification for the specific 25-gram limit proposed in this bill.”

The Louisiana Senate killed a bill that would have added inhalation to the list of permitted methods for patients to administer medical cannabis.

Maryland regulators received more than 160 applications for 14 available medical cannabis business licenses.

Missouri regulators issued final rules for its medical cannabis program. Under the rules, applications will begin to be accepted August 3, 2019; those received on that date will be approved or denied within 150 days (by Dec. 31, 2019). Licenses will be valid for 3 years.

The New Jersey Senate passed its version of a medical cannabis expansion bill. A new vote by the House to align with a last-minute amendment the Senate approved is expected on June 10. Separately, the NJ Department of Health is seeking new alternative treatment centers to expand access to medical cannabis. The department may add up to 108 new centers.

Texas lawmakers took final action on a medical cannabis expansion bill, sending it to the desk of Gov. Greg Abbott (R), who is expected to sign it. The bill eliminates the need for patients to get approval from two specialists in order to participate and adds several conditions, including terminal cancer, incurable neurodegenerative diseases (e.g., Alzheimer’s, Parkinson’s, Huntington’s, etc.), autism, ALS, all epilepsy disorders, multiple sclerosis and spasticity.

Utah regulators have begun accepting medical cannabis cultivation license applications. The window to submit proposals to the state opened on May 31 and closes on July 1.

Hemp and CBD

Nebraska lawmakers passed a hemp bill. LB657 requires the state Department of Agriculture to establish, operate and administer a program to license and regulate those who cultivate, process, handle or broker hemp. The bill expressly permits the possession, transport and sale of hemp products.

International

Pending approval by its Ministry of Health, France is set to launch a multi-year medical cannabis pilot program. The use of medical cannabis will be strictly controlled. Only a small number of patients will be eligible to receive it and only as “a last resort” after trying other available therapeutic pain treatments.

Business

After Google announced that it is banning from its Google Play Store Android-friendly apps that “facilitate the sale of marijuana,” a company spokesperson told Marijuana Moment that affected apps can remain on the platform simply by “mov[ing] the shopping cart flow outside of the app itself.”

Even as Square moves to allow CBD companies onto its credit card-processing platform, eBay says it will continue to ban people from selling products containing the cannabis-derived compound.

Charlotte's Web Holdings, Inc., announced that it will trade on the Toronto Stock Exchange. This occurred on the heels of its having reported year-over-year revenue growth of 66 percent, despite a year-over-year decrease in net income.

Breath of Life International Ltd. (BOL Pharma), Israel’s largest medical cannabis producer, has filed a preliminary prospectus for a proposed IPO on the Toronto Stock Exchange.

Acreage Holdings, Inc., reported a 487 percent increase in quarterly revenue from a year ago, but it also incurred net losses of more than $31 million.

Cresco Labs reported earnings that were lower than Wall Street expectations ($21.1 million vs. estimated $22.8 million). Year-over-year revenue increased 313 percent.

Rohrabacher announced on Twitter that he has become a shareholder and advisory board member of BudTrader, an online advertising platform for cannabis products, services, jobs, equipment and more.

Health

Researchers from the University of Colorado compared in-hospital outcomes of acute myocardial infarctions (AMI) patients with reported cannabis use to those with no reported cannabis use and found that cannabis use was not associated with increased risk of adverse short-term outcomes. Furthermore, cannabis use was associated with decreased in-hospital mortality post-AMI. Although the study had several limitations (including its reliance on self-reported cannabis use and a lack of information on frequency or dosing), researchers surmise cannabis may have cardiac protective effects.

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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