Dentons US LLP

07/15/2024 | News release | Distributed by Public on 07/15/2024 14:17

Cannabis Client Alert – Week of July 15, 2024

July 15, 2024

In this week's edition:


Federal

Biden Campaign Promotes Pardons and Rescheduling - New ads and webpages for the Biden Campaign aim to highlight the differences between the cannabis policies of Biden and Trump. These promotional materials emphasize Biden's mass cannabis pardons and scheduling review that prompted the Justice Department to recommend the rescheduling of cannabis from Schedule I to Schedule III under the Controlled Substances Act, while calling out Trump's opposition to cannabis reform and rescission of the Obama-era policy of non-intervention in state cannabis programs. However, despite new taglines such as "marijuana is not as dangerous as we once believed," Biden's performance still falls short of his promised reforms, including federally decriminalized cannabis. Trump's record on cannabis is mixed, and industry observants fear he will adopt an anti-drug platform.

Lawmakers Vote to Block Cannabis Rescheduling - The Republican-led House Appropriations Committee approved an amendment to a bill that blocks the Department of Justice from spending federal funds on the rescheduling plan, which is amid the rulemaking process. The committee also added a new provision that permits federal law enforcement agencies to enforce a federal law that increases penalties for distributing marijuana within 1,000 feet of an elementary or vocational school, college, public housing or playground.

New Priorities and Resource Center for Medical Cannabis and Cannabinoid Research - Following a conference with federal health agencies to discuss the state of cannabis science and policy, the National Center for Complementary and Integrative Health and other National Institute of Health (NIH) groups have published a paper citing new priorities in the research on medical cannabis and cannabinoids. These priorities include: (1) effects on pain, sleep and social anxiety issues, (2) the therapeutic use of terpenes, (3) computer-aided identification of bioactive minor cannabinoids in hemp, (4) chemical synthesis of rare cannabinoids and (5) how exactly the chemical constituents of cannabis interact with the body and brain. NIH is also supporting the launch of a Resource Center for Cannabis and Cannabinoid Research to support investigators in their research on cannabis.

Rescheduling Will Not Affect Drug Testing Policies for Truckers - During a recent House Committee on Transportation and Infrastructure hearing, U.S. Transportation Secretary Pete Buttigieg stated that the Justice Department's rescheduling recommendation will not affect drug testing requirements for commercial truckers. Cannabis will still be among the substances tested for. Buttigieg's statement was made in response to the expressed concern that the rescheduling and deregulation of cannabis will result in greater numbers of impaired drivers. While the trucking industry and its representatives have raised such concerns, commercial truck drivers overwhelmingly favor rescheduling and the loosening of cannabis laws and testing policies.

Supreme Court Remands Case on Gun Rights for Cannabis Users - The U.S. Supreme Court remanded a case concerning gun rights for cannabis consumers to a lower Court, emboldening the Justice Department and their stance that cannabis use warrants a ban on firearm ownership. This is consistent with other Supreme Court's approach to other gun cases following the United States v. Rahimi, in which the Supreme Court affirmed the government's right to restrict the gun rights of perpetrators of domestic violence. The DOJ's prohibition on gun rights for cannabis consumers as "dangerous individuals" or individuals who present a "heightened risk of harm" has been challenged, especially given its lack of historical analogue. Opponents have also emphasized that enforcement of the prohibition would result in the widespread criminalization of cannabis consumers otherwise acting in compliance with applicable law.

State

AR - Arkansas activists have submitted a ballot measure that would expand the state's medical cannabis program and possibly lead to the legalization of recreational use. Among other provisions, this measure would permit healthcare professionals to permit patients to grow their own cannabis, add nurse practitioners, physician's assistants, pharmacists and osteopathic doctors to the list of healthcare professionals who can make such recommendations, extend the renewal period for medical cannabis cards to three years, and permit dispensaries to start selling pre-rolled joints. The measure also includes a trigger that would automatically legalize recreational cannabis in Arkansas upon legalization at the federal level.

DE - Ahead of the launch of its recreational cannabis market, Delaware's new law expanding its medical cannabis program has gone into effect. The new law removes several limitations - doctors will now be able to recommend medical cannabis use for any condition they see fit and patients over 65 may self-certify. State lawmakers also sent bills to the governor that would allow medical cannabis businesses to start selling cannabis to adults and enact state-level protections for banks that provide services to licensed cannabis businesses, further preparing Delaware for the emergence of its recreational cannabis market.

FL - A recent survey shows that more than 64% of Florida voters support the cannabis legalization measure being included on the state's November ballot. The organization behind the survey is unknown and other polls are mixed, but many indicate that the measure will be successful. Florida Governor Ron DeSantis continues to oppose the measure.

MI - A bipartisan bill in Michigan seeks to modernize cannabis laws by merging the regulations for adult-use and medical cannabis, which would repeal the 2016 Medical Marihuana Facilities Licensing Act. The bill aims to alleviate burdens on businesses and the state's Cannabis Regulatory Agency, with State Rep. Graham Filler highlighting the benefits of streamlined and simplified laws for all stakeholders.

NE - Nebraska activists have submitted over 114,000 signatures for each of two medical cannabis legalization initiatives, aiming for inclusion on the state's ballot this November. These initiatives focus on legal protections for medical cannabis patients and the establishment of a regulatory commission, with the campaign overcoming previous setbacks and emphasizing widespread support from Nebraskans.

NV - An internal audit by the Cannabis Compliance Board (CCB) in Las Vegas found that 6 out of 10 applicants for social equity cannabis consumption lounge licenses were ineligible due to miscalculated residency requirements. To ensure fairness, the CCB will now consider 8 other applicants who meet the criteria and return application fees to the 20 applicants not proceeding in the process.

NY - A $300 million lawsuit alleges that former agents of New York's Dormitory Authority (DASNY) attempted to secure kickbacks from a security camera installation deal for cannabis dispensaries. The suit, filed by America Safe Cities (ASC) and its CEO, claims Reuben McDaniel III and other DASNY agents promised a $100 million no-bid contract to install surveillance systems at more than 300 cannabis dispensaries, as well as SUNY and CUNY campuses. The lawsuit asserts that during the award period, DASNY agents expected to "receive ownership, current compensation, and future compensation from ASC," as well as profits from the projects. According to the plaintiff, when it became clear this would not materialize, the company was told "abruptly and without notice" that it would not be selected for the project.

OH - Ohio regulators have notified 62 medical cannabis licensees that they qualify to participate in the upcoming adult-use cannabis market, pending the acquisition of a "certificate of operation" after meeting specific requirements. Although the exact launch date for recreational cannabis sales is not set, those who meet the dual-use licensure requirements and update their systems are expected to begin operations soon, with some sales potentially starting as early as this week.

Hemp

CT - Starting earlier this month, THC-infused beverages can only be sold at licensed cannabis retail establishments and package stores with an endorsement, and their sale is restricted to individuals 21 and older. The new law, which includes enhanced packaging, labeling, and testing standards, mandates that after October 1, 2024, THC-infused beverages sold in these venues must contain no more than 3 mg of THC per 12-ounce container, with previous retailers no longer permitted to sell these products.

GA - A new law will restrict hemp products to those over age 21 and close the THCA "loophole" in the state. According to the Capitol Beat News Service, Senate Bill 494, signed into law last week, will also provide for the issuance of manufacturer licenses and consumable hemp retail establishment licenses.

NJ - A new bill awaiting Governor Phil Murphy's signature would require intoxicating hemp products to be regulated by the Cannabis Regulatory Commission and disallow sales of these in convenience stores.

LA- Last month, Louisiana enacted a new law (HB952) that bans "any floral hemp for retail sale," including THCA flower, and imposes strict regulations on hemp-derived cannabinoids. Among other things, the law also limits the total amount of THC in consumable hemp products to 5 milligrams per serving and 40 milligrams per package, though the state health department can approve products exceeding these limits if certain conditions are met. Department-approved hemp THC beverages are permitted but must be sold in containers of at least 12 ounces. The new law also prohibits businesses licensed to sell alcoholic beverages or motor fuels from participating in the hemp industry.

SD - New legislation (HB 1125) banning the production and sale of certain hemp intoxicating products took effect in early July after a local judge declined to enjoin the law's implementation. Hemp Quarters 605, a local retailer, filed a lawsuit claiming, among other things, that the law conflicted with the 2018 federal Farm Bill and had requested a preliminary injunction to prevent the law from taking effect, arguing that it would cause irreparable harm by potentially closing the retailer's business. Judge Eric Schulte, however, ruled that their arguments were insufficient for an injunction and noted that the 2018 Farm Bill allows states to enact more stringent hemp regulations. Signed by Governor Kristi Noem (R) this past March, the new law prohibits chemically modified hemp intoxicating products.

TN- In accordance with state law, the state Department of Agriculture has released comprehensive regulations regarding the production, retail sale and distribution of hemp-derived cannabinoid (HDC) products. The new rules set forth the various requirements for HDC product licensing, testing and labeling, among others. Notably, the regulations would also effectively ban THCA products by January 1, 2025.

WY- A lawsuit filed earlier this month in the U.S. District Court for Wyoming is challenging a recently enacted state law (SF 32) that bans the addition of any "synthetic substance" into hemp or hemp products, on the grounds that it violates the 2018 Farm Bill. The Plaintiffs, comprising ten hemp businesses and one individual seller, claim the law unconstitutionally interferes with federal regulations and violates the U.S. Constitution's Commerce Clause, threatening their businesses "with extinction" by recriminalizing previously legal products. Plaintiffs are seeking a judicial injunction to prevent the law from taking effect and a declaratory judgment that the state law is invalid.

International

Ireland - The Oireachtas Drugs Committee recently held a hearing where panelists argued that the criminalization of personal drug possession, despite its good intentions, had failed to deter drug use and had instead led to increased violence and corruption. The committee is reviewing the Citizens' Assembly on Drugs report, which recommends decriminalizing all drugs for personal use and diverting individuals to health services.

Japan- In late 2023, Japan amended the Cannabis Control Act that eased rules regarding CBD and raised hopes for the future development and growth of the country's CBD industry. However, public comments on proposed regulations to enforce the new amendments reveal significant concerns, particularly regarding stringent THC limits for CBD products and raw materials. The proposed limits are so low that over 90% of currently marketed products would fail to comply, potentially risking widespread business closures. Prior to these strict regulations, the CBD market was projected to grow to 83 billion yen ($530.8 million) by 2025.

Business

Cannabis Companies Challenging Federal Cannabis Prohibition Appeal Dismissal to First Circuit- A group of cannabis businesses challenging the federal prohibition on cannabis filed an appeal to the First Circuit after federal District of Massachusetts Judge Mark Mastroianni dismissed their case. Underlying the dismissal was the district judge's ruling that U.S. Supreme Court precedent, specifically its 2005 decision (Gonzales v. Raich) regarding federal cannabis policy was dispositive and could not be disregarded. Among other things, the companies had argued that the circumstances undergirding the near 20-year-old precedent had changed to such an extent that the Supreme Court decision was no longer applicable.

D.C. Circuit Strikes Down Labor Board's Mail Election Ruling - A federal appeals court found that the National Labor Relations Board did not adequately justify what was required to certify a union's one-vote victory in a mail ballot election at a Chicago cannabis store. The Board applied a line of decisions allowing for setting aside an election only when a party establishes reasonable doubt about the election's validity and fairness. The Board rejected the employer's argument that the Board should have applied an alternate line of decisions that would permit setting aside an election based on "possible outcome-determinative [voter] disenfranchisement." According to the court, the Board "failed to provide a coherent explanation for why the first test applies instead of the second" and therefore the court could not sustain the Board's decision.

Study Concludes Outdoor Cannabis Cultivation Can Be 50 Times Less Carbon-Emitting Than Indoor Production - Researchers from McGill University and the University of Michigan in Anne Arbor found that cultivating plants outside can drastically reduce environmental impacts compared to indoor production, including lessening greenhouse gas emissions, soil acidification, and water pollution. The authors noted that the finding can help facilitate "informed decision-making to mitigate environmental impacts while supporting sustainable cannabis production practices."

Commission Publishes Overview of Cannabis Trafficking Prosecution Trends - The United States Sentencing Commission publication shows the percentage of drug trafficking cases involving cannabis, which was three percent, down 66.5% since the 2019 fiscal year. The overview breaks down individual and offense characteristics, punishments, and sentences relative to the guideline range. Two of the top five districts with reported cannabis drug trafficking offenses were in Texas, and more than 90% of individuals sentenced were men, with the majority being Hispanic and Black men. 64.7% had little or no prior criminal history.

RAW Rolling Papers Donates $50,000 to NORML- The National Organization for the Reform of Marijuana Laws (NORML) received a $50,000 donation from RAW Rolling Papers, a leading producer of rolling papers founded by Josh Kesselman. The donation will support NORML's efforts to expunge criminal cannabis convictions, end prohibition's collateral consequences, and ensure equal cannabis access.

Medicine

Study Finds No Significant Changes In Driving Performance Following Use Of THC-Infused Edibles - Researchers reported: "Compared to [baseline], cannabis edibles produced a decrease in mean speed 2 hours after consumption. … No changes in standard deviation of lateral position (SDLP; 'weaving'), maximum speed, standard deviation of speed or reaction time were found at any time point." Some participants expressed a lesser willingness to drive following cannabis ingestion. Researchers theorized that the absence of any significant performance changes may "reflect [subjects'] tolerance to the effects of cannabis," which earlier studies also found.

Researchers Find CBD May Address Key Symptom of Autism - The results of a pre-printed study suggest that CBD may be a promising intervention for addressing one of autism's core symptoms: social relating. Researchers conducted a randomized double-blind, placebo-controlled, crossover trial to understand whether oral CBD oil can improve behaviors in this population, with a primary focus on social relating outcomes, along with anxiety and parental stress.

Study Finds Use Of Alcohol Or Opioids Causes Greater Secondhand Harms Than Consumption of Cannabis - Looking at responses from 7,799 people to the 2020 U.S. National Alcohol Survey, researchers found that more than a third (34.2 %) said they had experienced secondhand harms related to alcohol use over the course of their lives. In contrast, just over five percent said they had experienced secondhand harms related to cannabis.

Psychedelics

Massachusetts Campaign Turns In Final Signatures To Put Psychedelics Legalization On The November Ballot - A Massachusetts campaign officially turned in a final batch of signatures to put a psychedelics legalization initiative on the state's November ballot after lawmakers declined to enact the reform legislatively. Activists say they are confident they secured enough petitions to qualify. If successful, the effective date of the law would be December 15, 2024, with a commission and advisory board to be created by March 1, 2025.

Dentons Speaks

Dentons Partner Eric Berlin spoke on the Dales Report regarding marijuana rescheduling. A recording of the talk can be found here.

Dentons Partner Kristin McCall spoke with John Charlton from WHAS-TV about what interested businesses need to know ahead of submitting a cannabis license application in Kentucky. The application period opened on July 1, 2024, and closes August 31, 2024.

Please click here for more information on the Dentons US Cannabis group.
Authored by associates Malina Dumas, Lauren Estevez, Jacob Raver, and Sarah Pennington Richards.