Cannabis Group Weekly Alert - Week of June 25, 2020



In this week’s edition:

  • NCUA issues guidance on provision of financial services to hemp businesses
  • Louisiana governor expands cannabis industry protections statewide
  • Nevada governor pardons over 15,000 convicted for low-level cannabis possession
  • Pennsylvania high court strikes down county restrictions on use of medical cannabis
  • And more . . .


Ninth Circuit Court Tosses Cannabis Tax Bill Challenge - The Ninth Circuit Court of Appeals ruled against two California cannabis companies, Organic Cannabis Foundation LLC and Northern California Small Business Assistants Inc., determining that they cannot challenge their tax bills after missing a deadline to petition for review. The filing could have been deemed timely under the “mailbox” rule had the companies used an approved delivery service designated by the IRS.

FDIC Chairwoman Jelena Mcwilliams on the Future of Arizona's Banking Industry - Federal Deposit Insurance Corp. Chairwoman Jelena McWilliams met with Arizona bankers in a virtual meeting as part of her 50-state tour to discuss challenges facing banking and the economy. On the topic of cannabis banking, McWilliams advised, “[W]here it's legal at your state level, and you do appropriate due diligence based on state requirements... file a suspicious activity report and follow guidance to make sure you're in compliance with how the federal body is telling you to do this. This is one area where you cannot have too many [suspicious activity] report filings. Follow that, and I think you'll be OK. I can't give you blanket immunity. I just can't.”


AL - Alaska’s Marijuana Control Board published a notice of proposed regulatory changes dealing with directors of a corporation and state residency. Written comments may be submitted to the Alcohol & Marijuana Control Office, or via e-mail, until July 31, 2020.

CO - The Colorado Department of Transportation launched a new cannabis-impaired driving prevention website. The site includes frequently asked questions, laws and roadside impairment testing methods for enforcement and detection, updated statistics, downloadable social media graphics, and educational videos, among other things.

LA - Louisiana Gov. John Bel Edwards (D) signed into law legislation expanding cannabis industry protections statewide. Beginning August 1, a new law will allow physicians to use their discretion in prescribing medical cannabis to patients for any debilitating condition. Also taking effect August 1 is legislation protecting banks and credit unions with cannabis business clients against state regulatory penalties, and a law providing liability protections for physicians who recommend medical cannabis and authorized medical facilities with cannabis patients.

ME - Maine’s largest medical cannabis dispensary chain, Wellness Connection of Maine, is suing the city over an ordinance favoring state residents for adult-use cannabis licenses, asserting the ordinance is “unconstitutional” and “discriminatory” to out-of-state companies. Under the ordinance, which took effect June 17, in-state license applicants receive additional points under a competitive “points matrix” during application scoring.

MO - Missouri regulators announced that two state-licensed medical cannabis cultivation facilities successfully completed commencement inspections with the Missouri Department of Health and Senior Services. The facilities are the first of 60 total facilities in the state that will be licensed to grow medical cannabis for infused-product manufacturing facilities and directly for retail dispensaries.

MO - Kansas City Mayor Quinton Lucas (D) introduced an ordinance proposing to end all penalties for cannabis possession under local laws. The new ordinance would repeal existing laws stipulating that possession of 35 grams or fewer of cannabis carries a $25 fine and more than 35 grams is punishable by a $500 fine.

NV - Under a Governor’s resolution approved by the state’s Board of Pardons Commissioners, more than 15,000 people convicted for low-level cannabis possession in Nevada were automatically pardoned. The resolution provides unconditional clemency to individuals convicted for possession of up to one ounce of cannabis between January 1986 and January 2017.

NJ - The New Jersey Assembly passed a cannabis decriminalization bill which, if signed into law, would make possession of up to two ounces a civil penalty punishable by a USD $25 fine and no jail time. Under the proposed legislation, possession of more than two ounces but less than one pound would be punishable by up to six months in prison or up to a USD $1,000 fine for a first offense. The bill would also create a “legal presumption” that possession of up to two ounces “is the authorized possession of medical cannabis or a medical cannabis product” under state law, and provide for “virtual expungements” for convictions applicable to penalties reduced under the bill.

PA - In a unanimous decision, the Pennsylvania Supreme Court struck down a Lebanon County court policy prohibiting people on probation from using medical cannabis, even where the individual had obtained a state-issued medical cannabis card. The challenge was brought by the ACLU, which stated in a press release, “This is a major victory for people who rely on medical marijuana to treat their medical conditions. We are grateful that the justices understood the legislature’s clear intent that people who lawfully use this treatment should not be punished for it.”


US - The US Department of Agriculture (USDA) announced its approval of hemp production plans under the agency’s Domestic Hemp Production Program for the Little Traverse Bay Bands of Odawa Indians, the Pawnee Nation of Oklahoma and the Ysleta Del Sur Pueblo. This brings the total number of approved plans to 50.

US - The federal National Credit Union Administration (NCUA) issued a memo overviewing issues related to providing financial services to hemp businesses. The NCUA has said this new guidance memo’s “purpose is to provide additional information for credit unions that are serving, or considering serving, legal hemp-related businesses, as they, too, have been affected by the COVID-19 pandemic.”

FL - The Florida Department of Agriculture and Consumer Services (FDACS) has identified ‘toxic waste’ levels of lead in hemp products on Florida shelves. The agency’s director of cannabis stated that FDACS believes the source of the contamination is “containers or droppers, or a combination of that are being used,” and that the agency’s director of food safety is conducting research efforts to confirm the cause.

IO - Iowa Gov. Kim Reynolds (R) signed into law HF2581, an act relating to the regulation of hemp, including by providing for testing methods and the regulation of hemp products, providing penalties, making penalties applicable, and including effective date provisions.

LA - Louisiana Gov. John Bel Edwards (D) signed into law ACT 344—HB 843 To provide for the regulation of industrial hemp, industrial hemp products, and industrial hemp-derived cannabidiol (CBD) products.


Canada - New monthly retail sales data from Statistics Canada reflects that retail cannabis sales in the country only suffered a minor decline despite the COVID-19 pandemic, dropping 0.6% from a record high in March to 180.1 million Canadian dollars (USD $132.7 million) in April. However, monthly sales varied considerably across all 10 of Canada’s provinces. For example, in Ontario, the country’s largest market, cannabis sales fell by 9.6% on a monthly basis, whereas in Alberta, the nation’s fourth largest province, monthly sales grew by 4.7%.

Canada - Several major cannabis companies in Canada are facing a proposed multi-million dollar class-action lawsuit over allegations they failed to properly label their products and that the potency of their products is “drastically different” than advertised. Defendants include Tilray, Cronos, Aurora Cannabis and other cannabis industry businesses and their subsidiaries.

Switzerland - The National Council, the lower house of Switzerland’s Federal Assembly, passed legislation that would establish a pilot research program permitting the temporary production and distribution of adult recreational cannabis. The bill will next be considered by the Council of States, where it is expected to be approved.


Yelp - Yelp has ceased offering key advertising features to cannabis-related businesses, including the ability to feature “Business Highlights” and create photo “Portfolios”.

MedMen Enterprises Inc. - MedMen Enterprises Inc. announced that co-founders Adam Bierman and Andrew Modlin have stepped down as members of the company’s board of directors. MedMen also announced that a settlement has been reached to resolve litigation between MMMG-MC Inc. (BVI), Brent Cox, Omar Mangalji, and various other parties, including MedMen.

Acreage Holdings, Inc. - Acreage Holdings Inc. announced that it is entering into a short-term definitive funding agreement with an institutional investor for a total of USD $15 million in gross proceeds. Acreage indicated it expects to use the proceeds for working capital and general corporate purposes.

HEXO Corp. - HEXO Corp. announced it is establishing an at-the-market equity program that will allow the company, at its discretion, to issue up to C$34.5 million (or its US dollar equivalent) of common shares from treasury to the public.


Migraine Frequency Decrease Following Prolonged Medical Cannabis Treatment: A Cross-Sectional Study - The Multidisciplinary Digital Publishing Institute (MDPI) published a study in which it found that medical cannabis resulted in the long-term reduction of migraine frequency in more than 60% of treated patients and was associated with less disability and lower antimigraine medication intake.

Hemp Oil Can Help Treat Chronic Neuropathic Pain: Study - The University of New Mexico published a study in Life, a journal of the Multidisciplinary Digital Publishing Institute, finding evidence that hemp oil, notwithstanding relatively low levels of THC, can be used to successfully treat and improve chronic neuropathic pain.

Israeli Researcher Dedi Meiri On Cannabis, Alzheimer’s And Dementia - David Meiri, an Israeli researcher was featured in a webinar where he spoke about the cannabis research in his lab at the Technion-Israel Institute of Technology, including ongoing research on the role of cannabis in treating Alzheimer’s: “It’s a clinical trial on around 80 patients who suffer from severe Alzheimer’s disease, with violent behavior, anxiety, anger and sleep disorders. We will treat them with cannabis to see if it can improve their behavior, make them calmer, more relaxed and help them sleep better.”

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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