Cannabis Group Weekly Alert - Week of May 13, 2020

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In this week’s edition:

  • Cannabis CEOs discuss pricing license values, branding and the economy at our May 7 Globalization of Cannabis webinar
  • SAFE Banking Act included in House’s COVID-19 relief bill
  • Maine to drop residency requirement for cannabis businesses
  • Florida now accepting hemp license applications
  • New Zealand publishes final draft of Cannabis Legislation and Control Bill
  • And more…

Federal

Marijuana Banking Access Included in House Leadership’s Coronavirus Relief Bill - The House of Representatives has included in its latest COVID-19 legislation language from the Secure and Fair Enforcement (SAFE) Banking Act that would allow state-legal cannabis businesses to access more banking services and products. Additionally, the bill includes language that could help people with prior convictions to become eligible for the SBA’s Paycheck Protection Program (PPP). However cannabis businesses, most of which have been deemed “essential businesses” during the pandemic, did not get any legislative fix to their ineligibility under the SBA’s policies.

One Doctor vs. the DEA: Inside the Battle to Study Marijuana in America - Scientists have successfully forced the Drug Enforcement Administration to release an internal document that was allegedly used to justify delaying the approval of additional cannabis manufacturers for research purposes. The 2018 memo raised questions about the existing arrangement with the University of Mississippi, and whether it was in compliance with international treaties (determining ultimately, that it was not). Read the memo here.

States

CA - A study conducted in California found that “the loss of cannabis that must be destroyed if a batch fails testing accounts for a larger share of total testing costs than does the cost of the lab tests,” estimating that, in 2019, assuming an average batch size (8 pounds) and failure rate (4 percent), testing cost $136 per pound of dried cannabis flower, or about 10 percent of the reported average wholesale price of legal cannabis in the state. The paper also presents results under a variety of different assumptions about batch size and failure rates.

IL - Illinois Gov. J.B. Pritzker (D) delayed the May 1 deadline for regulators to issue new adult-use dispensary licenses as a result of the state of emergency. You can read the executive order here.

KS - Kansas Gov. Laura Kelly (D) said that legalizing medical cannabis remains on the table for 2020 when lawmakers reconvene following the coronavirus pandemic. We remain skeptical such legislation will be able to pass this year.

ME - The Maine Office of Marijuana Policy dropped the four-year residency requirement included in the state’s legalization law, and the Maine Attorney General’s Office said it would no longer defend a lawsuit brought by a pair of companies, including the state’s largest medical dispensary operator, regarding the issue, conceding that the requirement was unlikely to survive a constitutional challenge.

MN - Minnesota’s House majority leader and 33 cosponsors filed a comprehensive 222-page cannabis legalization bill. The bill would allow Minnesota adults (21 and older) to possess and transport up to 1.5 ounces of cannabis (and up to 8 grams of cannabis concentrates) in public places, and keep up to 10 pounds at their private residence. Adults could also grow up to eight cannabis plants at home, up to four of which could be mature, flowering plants. Read the full bill here.

MO - Missouri continues to have issues arising from its controversial cannabis program licensing process. Last week, the House voted in favor of an amendment that would lift the cap on medical cannabis licenses, which the Senate could vote on this week. Additionally, a state court judge is considering a request for a temporary restraining order on selling, transferring or changing medical cannabis business licenses. Such measures come at a time of mounting questions concerning the validity of the scoring process.

NV - Nevada Gov. Steve Sisolak’s (D) extended coronavirus stay-at-home order now allows retail cannabis businesses to do curbside pickup. Additionally, phase one of the state’s coronavirus reopening plan will allow cannabis businesses to conduct in-store sales after submitting a plan and receiving approval from regulators. See the reopening plan here.

NY - New York City’s ban on pre-employment cannabis testing is now in effect. However, there are exceptions for certain safety-sensitive positions. Regulators are working on finalizing a proposal to exempt from the ban workers who use heavy machinery, spend a significant amount of time at a construction site, work with power or gas utility lines, or operate a motor vehicle.

OH - The Ohio Bureau of Criminal Investigation has implemented a new testing method to differentiate between cannabis and hemp. The quantitative analysis of a sample determines the tetrahydrocannabinol content.

PA - A Pennsylvania court ruled that a healthcare worker who was fired after failing a drug test as a result of using CBD oil to ease cancer symptoms is entitled to unemployment compensation. Read the full opinion here.

Hemp/CBD

US Department of Agriculture - The USDA released a short podcast about risk management offerings and crop insurance products for hemp growers. For more information on these offerings, see here.

Federal Trade Commission - The FTC sued Whole Leaf Organics for marketing CBD products as a cancer treatment. The lawsuit seems to escalate the federal government’s efforts against unsubstantiated CBD claims. Read the FTC’s complaint here.

Food and Drug Administration - The FDA continues to issue warning letters to entities making health claims relating to CBD, including two letters in late April to companies touting CBD as an alternative to opioids or as a treatment for opioid addiction.

E-commerce - eBay tweeted that it doesn’t allow the sale of CBD products and encouraged visitors to its site to report listings of such products for deletion.

FL - Florida has begun accepting hemp license applications. For more information about the process, check out the Florida Department of Agriculture and Consumer Services website here.

NY - New York issued a registration form for hemp cultivators understand their reporting requirements and deadlines.

PA - Pennsylvania has clarified which hemp or CBD products are taxable. Edibles, including supplements, are not taxable; vaping products and topicals are. For a full list, click here.

International

United Kingdom - The UK published emergency rules which, if activated, would allow patients receiving ongoing treatments to access cannabis-based medicines from pharmacies without a prescription during the coronavirus pandemic.

New Zealand - The New Zealand government published the final draft of the Cannabis Legislation and Control Bill, which will be put to voters in this year’s referendum. New Zealand is, unfortunately, following Canada’s lead in that only fresh and dried cannabis, including plants and seeds, would be immediately approved for production and sale under the new regime. As well, the legal age to partake would be 20 years old and consumers would be permitted to purchase up to 14 grams of dried cannabis (or its equivalent) per day.

Business/Technology

Hightimes Holding Corp. - The company announced plans to acquire 13 California dispensaries from Harvest Health & Recreation Inc. The mostly stock-based transaction, upon closing, will not only allow Hightimes Holding Corp. to enter the retail sector, but to become, overnight, one of California’s largest branded cannabis retailers.

Canopy Growth Corporation - Constellation Brands, Inc., subsidiary Greenstar Canada Investment Limited Partnership exercised warrants to purchase CA$245 million worth of shares in Canopy Growth Corp., bringing the alcohol company’s ownership stake to 38.6 percent.

Cresco Labs - Cresco Labs canceled its plan to acquire Tryke Companies LLC for $282.5 million, saying regulatory delays, a decline in capital markets and the coronavirus pandemic all led to the companies’ mutual decision to call off the deal.

Testing Technology - The Journal of Separation Science published a study regarding technology that claims to test simultaneously for terpenes and cannabidiol in hemp by fast gas chromatography with flame ionization detection.

Pollen Storage - Researchers from theUniversity ofLethbridge in Alberta, CA, have preprinted an article about the development and optimization of a germination assay and long-term storage for cannabis sativa pollen using cryopreservation.

Medical

Cannabis and IQ - Many studies have called into question prior findings about cannabis use and its detrimental effects on one’s IQ. Investigators are eagerly awaiting data from a recently launched Adolescent Brain and Cognitive Development (ABCD) study, which is following 11,000 US 10-year-olds in a national epidemiological sample with serial IQ testing and brain imaging to (i) capture the trajectories of normal brain and IQ development prior to any substance use; and (ii) document any longitudinal consequences of such use. Scientists will begin to see meaningful results in the next few years, as these subjects reach their mid-teens.

Irritable Bowel Syndrome (IBS) - An analysis of the Agency for Healthcare Research and Quality’s 2016 Nationwide Readmissions Database suggests that cannabis use may help ease symptoms of irritable bowel syndrome (IBS) that are strong enough to send patients to the hospital. In their cohort study of hospitalized IBS sufferers, researchers found that all-cause 30-day readmission rates were 12.7 percent in non-cannabis users and 8.1 percent in cannabis users.

Parkinson’s Disease - GB Sciences has been granted a patent from the US Patent and Trademark Office covering the use of its proprietary cannabinoid-containing complex mixtures for treating Parkinson’s Disease, the company announced. The patent, number 10,653,640 and titled “Cannabinoid-Containing Complex Mixtures for the Treatment of Neurodegenerative Diseases,” will be issued on May 19 to the company’s Canadian arm, GBS Global Biopharma.

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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