Cannabis Group Weekly Alert - May 2019 #4



States continue to push forward hemp legislation and measures to facilitate access to cannabis, while also working with federal authorities to curb black market operations.  An expanded medical cannabis program may be approved by NJ lawmakers this week, creating a “back door” path to recreational cannabis legalization. Hemp bills make significant progress in TX and LA, as the Lone Star State’s legislature approves a hemp bill and the hemp bill in Louisiana clears a key hurdle by passing out of the Senate Agriculture Committee.  FDA is still seeking public comment regarding a regulatory path forward for CBD products while the CA State Assembly passes a bill allowing for sale of CBD products.


Working together, federal authorities and Colorado officials raided hundreds of black market operations, seizing more than 80,000 plants and 4,500 pounds of harvested cannabis. A Colorado district attorney stressed that the investigation was a joint state-federal operation and not the US Department of Justice imposing its will on the state. In California, Governor Gavin Newsom had recently deployed the state’s National Guard to crackdown on illicit pot growers and has asked for more federal funding to add another 150 National Guard service members to the effort.

Support for federal cannabis banking legislation continues as the National Association of State Treasurers adopted a resolution endorsing “common sense federal laws and regulations to provide essential banking services to state legalized cannabis businesses, promote public safety and financial transparency, and facilitate local, state and federal tax and fee collection.” This endorsement follows letters of support issued earlier this month by state attorneys general and state treasurers.

Utah Governor Gary Herbert has criticized federal lawmakers for the “lack of action and attention” to cannabis policy reform.  The current Schedule I drug classification of cannabis interferes with research efforts into medicinal uses and prevents regular pharmacies from dispensing it.

The Transportation Security Administration (TSA) has changed its cannabis policy to allow “[p]roducts/medications that contain hemp-derived CBD or are approved by the FDA.”  Previously, no cannabis or cannabis -infused products were allowed. While TSA notes its screening procedures are focused on security, if such products are discovered during screening, the officers would refer the matter to a law enforcement officer.

The FDA’s principal deputy commissioner and acting CIO, Dr. Amy Abernethy, shared updates on the FDA’s review of CBD on Twitter. Abernethy tweeted that currently available data about CBD’s safety appear insufficient and hopes that the public hearing on May 31 would provide better information to fill some of the knowledge gaps. The public can submit comments, scientific data and information through July 2 to aid the FDA’s consideration of the regulatory path forward for CBD products.  Former FDA Commissioner Scott Gottlieb echoed Dr. Abernethy’s comments, stating that “there’s no science to demonstrate that putting it in the food supply has any medicinal value, let alone [to] support that it’s safe.”  Consistent with past FDA actions such as the approval of Epidiolex, he did acknowledge that CBD likely presents a pharmaceutical opportunity, especially for neurological and neuromuscular disorders.


The California Senate approved legislation, S.B. 51, to create state-chartered cannabis banks or credit unions that can provide depository services to licensed cannabis businesses. The legislation must now pass the Assembly and then be approved by Governor Newsom to become law. 

Colorado’s Supreme Court ruled that a sniff of a car by police dogs cannot establish probable cause for a search because the sniff itself constitutes a search that intrudes on a person’s reasonable expectation of privacy in lawful activity. The majority’s ruling held that such an intrusion “must be justified by some degree of particularized suspicion of criminal activity.” 

Michigan’s recreational cannabis market is predicted to rival those of Colorado and Nevada by 2023 according to a report by Chicago-based consultant Brightfield Group.  Brightfield also forecasted that Midwest and Eastern states, such as Michigan, Illinois, Massachusetts, New Jersey and New York, will account for one third of the US market by 2023. California is expected to account for 40 percent of the US market in 2023.

Missouri rejected a challenge by Bio TrackTHC to its award of an estimated $5 million contract to rival Metrc to register patients, license facilities and track cannabis from seed to sale. Bio TrackTHC argued that Metrc’s bid included hidden costs that would be charged to growers and dispensaries. The state rejected the protest and stated that the Metrc contract does not allow Metrc to charge additional fees.

The New Jersey Assembly passed a medical cannabis expansion bill that has been referred to as a “back door” path to recreational cannabis legalization. The Senate is expected to vote on the bill this week.  The legislation not only makes it easier for patients to obtain medical cannabis, but it would also increase the number of permits from 12 to 23, regulate the cultivation and sale of medical cannabis, and establish a Cannabis Regulatory Commission.  An expungement bill is also up for vote this week that would make more crimes eligible for expungement, expedite the process for cannabis-related offenses, and create a “clean slate” program that would expunge all offenses at once for anyone with a clean record for 10 years after their last offense. The bill would also treat possession of two ounces to one pound as a disorderly persons offense, with a maximum sentence of six months of imprisonment and a $1,000 fine.

Texas lawmakers passed HB 3703 to expand the qualifying medical conditions for cannabis use. If the governor approves the bill, all forms of epilepsy, seizure disorders, autism, terminal cancer, Parkinson’s and other conditions would be added as qualifying medical conditions. The bill retains a 0.5 percent cap on THC content.

Various states are moving on reform measures to confront the issue of where cannabis may legally be consumed.  The dilemma is particularly acute for travelers, as many states only allow consumption in private residences. California allows consumption lounges, but only a handful of local jurisdictions have approved such venues. Las Vegas approved Nevada’s first cannabis consumption lounges earlier this month.  In Colorado, the Legislature approved a bill to allow “marijuana hospitality spaces.”  Massachusetts is establishing a pilot program for consumption establishments.


California Assembly passed AB-228 to allow the sale of CBD products. Under the proposed law, a food, beverage or cosmetic would not be considered adulterated by the inclusion of industrial hemp derivatives, extracts or cannabinoids.  The legislation must now pass Senate and then be approved by Governor Newsom to become law.  Meanwhile, the California Department of Alcoholic Beverage Control issued an advisory Q&A that extends the existing prohibition on alcohol and cannabis beverages to also prevent alcoholic beverage licensees from selling or using CBD or CBD products derived from hemp.

Kansas enacted S.B. 28 into law, allowing an affirmative defense for possession of CBD medical cannabis oils. The law, also known as “Claire and Lola’s Law,” after girls born with microcephaly, allows patients, who are under active physician treatment and diagnosed with a debilitating medical condition, to possess a cannabidiol treatment with a THC concentration of no more than 5 percent relative to the CBD level.

Louisiana’s hemp bill, H.B. 491, cleared a key hurdle by passing out of the Senate Agriculture Committee, but not before a long list of amendments containing regulations and conditions for the industry and sale of CBD products was tacked on. If the bill passes, hemp could potentially be grown in Louisiana starting next year.

Texas lawmakers unanimously approved a hemp bill, H.B. 1325, that would establish a regulated system for commercial hemp farming, manufacturing and retail sale. Under the proposed legislation, hemp production and products would undergo strict testing and regular inspections.  Hemp products would be subject to comprehensive labeling requirements to ensure customer safety. Gov. Greg Abbott must sign the bill for it to become law.


Facebook continues to disallow mentions or displays of cannabis that attempt to sell, trade or barter cannabis, even in states where such sales are legal. The decision was made after months of internal deliberations. Current Facebook policy does allow for content pushing products derived from CBD. 

Square quietly launched an invite-only pilot program to work with CBD businesses. Senate Majority Leader Mitch McConnell and Senator Ron Wyden (D-OR) have urged federal agencies to issue new guidance clarifying that financial institutions should feel secure in engaging with the hemp industry as it has been legalized through the Farm Bill.

More former members of Congress are entering the cannabis industry. Former Senate Majority Leader Tom Daschle (D-SD) and former Rep. Joe Crowley (D-NY) joined the advisory board of cannabis company Northern Swan. Daschle explained that he has “heard enough and seen enough to know that cannabis offers some very real potential to improve the health and well-being of many Americans.”

The National Football League and NFL Players Association have agreed to study the use of cannabis in pain management. Several players have been outspoken on the league’s current position on cannabis, which continues to treat cannabis as a banned substances and punishes players who use cannabis to manage pain.

The UFC and Aurora Cannabis have also partnered in a multi-year, multi-million dollar, global partnership to advance clinical research on the relationship between hemp-derived CBD and athlete wellness and recovery. The research will be conducted at the UFC Performance Institute in Las Vegas, which has served over 400 athletes in the past two years. Studies will focus on pain management, inflammation, injury/exercise recovery and mental well-being.


German regulators at the German Federal Institute for Drugs and Medical Devices (BfArM) confirmed the results of its medical cannabis cultivation license awarding process. Five lots were awarded to Aurora Produktions GmbH, five lots awarded to Aphria Deutschland GmbH, and three lots for Demecan GmbH. The three companies now have 18 months to deliver the first harvest. Cultivation will occur indoors with “bunker style” security measures. Each lot represents 200 kilogram production per year and all production will be bought by the BfArM to be resold to medical cannabis manufacturers, wholesalers and pharmacies.

Israel’s largest medical cannabis producer, Breath of Life International Ltd., has filed a preliminary prospectus to list its shares on the Toronto Stock Exchange.

South Africa has removed legal barriers to commercializing CBD products by excluding certain CBD preparations from the Medicines and Related Substances Act. Under the amendment, those CBD preparations with a maximum daily dose of 20 milligrams or less will no longer require a prescription.

The global cannabis market is expected to reach US$89.1 billion by 2024 according to data compiled by Mordor Intelligence. Data reflects that consumers are shifting from traditional products to new emerging products as flower sales decline and cannabis oil sales increase.


A scientific review that is pending publication in the journal Frontiers in Pharmacology points to promising data on the effectiveness of CBD on alcohol use disorders. The authors reviewed 26 previous studies that explored the effects of CBD on animal subjects dosed with ethanol. The studies converge to find that CBD reduces the overall level of alcohol drinking by reducing ethanol intake, motivation for ethanol, relapse, and by decreasing anxiety and impulsivity. The authors call for human clinical trials, of which none have been published to date. 

The results of another study “significantly extend the published data” by showing that non-psychoactive cannabinoids are potential lead drug candidates for Alzheimer’s disease and other neurodegenerative diseases.

A group of researchers from the University of Colorado found that cannabis consumers may be more likely to survive heart attacks. A data analysis of the records of more than one million cardiac in-patients revealed that cannabis consumers were at a decreased in-hospital mortality risk post heart attack.

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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