Dentons US LLP

01/06/2021 | News release | Distributed by Public on 01/06/2021 16:26

Cannabis Client Alert - Week of January 4, 2020

January 6, 2021

In this week's edition:

  • Federal cannabis cultivation permits on the horizon
  • Cannabis Regulators Association (CANNRA) adds five new members and establishes policy committees
  • Mexico on the verge of legalization
  • And more…

Federal

DEA Might Start Issuing Cannabis Cultivation Permits in Early 2021 - After the Drug Enforcement Agency (DEA) on December 18 published its final rule to expand the number of federally approved cultivators, many expect permits to be issued in the first half of 2021. The number of approved cultivators could be anywhere from three to fifteen depending on the number and quality of applications. The permits will facilitate expanded medical cannabis research. Notably, in comments attached to the new rule the DEA stated it would look 'unfavorably' on companies from states where cannabis is legalized because of their status as violators of federal cannabis prohibitions.

Cannabis Legalization Could Advance Even Under McConnell, Top Senate Democrat Says - Senate Minority Leader Chuck Schumer (D-NY) said that he thinks the movement to federally legalize cannabis can make 'progress' even if Majority Leader Mitch McConnell (R-KY) maintains control. 'It'll move a lot faster' if he himself is installed as majority leader, Schumer said. 'But on the issue of marijuana, I believe-even [if], God forbid, I'm not majority leader- that the pressure on McConnell is going to increase and we could make some progress.'

Congressional Ban on Mailing E-Cigarettes May Cover Cannabis Vapes - Several cannabis-related provisions made their way into the omnibus spending and COVID-19 package passed in Congress prior to the new year. Notably, the bill includes a provision that restricts how electronic cigarettes may be sold online and shipped. Interestingly, the definition used in the bill for an 'electronic nicotine delivery system' arguably could include cannabis products. The bill definition is as follows: 'any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device.' Aaron Smith, CEO for the National Cannabis Industry Association, told Marijuana Moment the language could have a 'significant effect' on online purchasing and shipping of cannabis vaporizers.

States

Cannabis Regulators Association - The Cannabis Regulators Association (CNNRA) announced that regulators from 5 new states will be joining the organization: Arizona, Connecticut, Florida, Georgia and Montana. The new members will be involved in 15 newly established committees to collect information and suggest policy on a variety of cannabis-related issues.

CO - New cannabis rules promulgated during the 2020 General Assembly legislative session went into effect on January 1. The new rules expand the statewide social equity program (SEP), eliminate residency requirements for employees, enhance sustainability and create additional delivery permits.

GA - The timeline for awarding Class 1 and Class 2 production licenses has been delayed after a protest was filed by Trulieve, GA, Inc., on December 22. A decision by the Deputy Commissioner is expected on or before January 22.

IL - The Illinois Supreme Court will hear a case to determine the owner of a cannabis-growing license. That case centers on an applicant-scoring system that many, including former Governor Bruce Rauner, believe was flawed. The two contesting parties are Curative Health Cultivation, LLC, and Medponics Illinois, LLC. Medponics initially won a court ruling, which was later reversed by an intermediate appellate court. Now the state's highest court will weigh in.

IL - A Cook County judge dismissed an effort by the Illinois Craft Cannabis Association to force Governor J. B. Pritzker (D) to award grower licenses to its members. By law, Pritzker's administration is supposed to issue 40 licenses. The Governor attributed the delay to the Agriculture Department's pandemic-related responsibilities.

MD - A lawsuit in Maryland is challenging residency requirements imposed by the Maryland Medical Cannabis Commission. The judge denied the Attorney General's initial motion to dismiss and will move forward with a trial set for mid-May 2021.

MO - Cole County Circuit Judge Patricia Joyce ruled that state rules limiting how many companies can grow and sell medical cannabis in the state are appropriate and protect patient safety. Dispensaries are only beginning to open in the state more than two years after voters approved the establishment of a regulatory system.

NH - The New Hampshire Supreme Court ruled that Jeremy Mack, a member of a Native American Church that authorized the use of fungi under controlled circumstances, was wrongfully convicted for possesion of psilocybin mushrooms. The high court cited Mack's religious freedom as evidence to overturn the conviction.

NM - A state district court judge in Albuquerque ruled that the Bernalillo County Metropolitan Detention Center should not penalize medical cannabis patients under its custody or supervision for using the drug.

ND - State Medical Marijuana Director Jason Wahl said that about 4,400 patients are enrolled in the state's medical cannabis program-a much higher participation rate than Wahl had projected.

OK - The state's Medical Marijuana Authority issued 2,392 new cultivation licenses through November 2020, edging out California for the title of most newly issued permits in the country. The new licenses added $25 million to state coffers from all commercial cannabis licenses as of November 7, including $6 million from cultivation licenses alone.

RI - Both Governor Gina Raimondo (D) and the General Assembly want to move forward with cannabis legalization. However a major issue standing in the way is whether cannabis products would be sold by private retailers or state-run stores. Senate Majority Leader Michael McCaffrey favors the private retailer plan while the Governor prefers a state-run model.

WI - Law enforcement officials say they have seen no major effects from the increased number of dispensaries opening across the border in Illinois. Wisconsin's Republican-controlled Legislature is unlikely to move forward with legalization any time soon. There were a handful of attempts to legalize some form of cannabis use last year, but none of the efforts gained traction.

Hemp/CBD

US Drug Enforcement Agency - A federal judge dismissed a lawsuit filed by the Hemp Industries Association and a South Carolina CBD producer that attempted to force the DEA to answer questions about the hemp rule issued in August that criminalizes common byproducts of cannabinoid extraction. The judge said the DEA shouldn't have to explain its position before the lawsuit goes to trial.

US Food and Drug Administration - The FDA has warned five companies to stop selling certain CBD products that they say violate the Federal Food, Drug, and Cosmetic Act. All five warning letters address the illegal marketing of unapproved CBD products claiming to treat medical conditions; express concern with the directed administration of some of the products, including nasal, ophthalmic and inhalation; and address violations relating to the addition of CBD to food, and the impermissible marketing of CBD products as dietary supplements. Two of the letters also address CBD products illegally marketed for pets. Notably, none of the products addressed in the letters underwent the FDA's drug approval process, the agency said.

US - Senator Rand Paul (R-KY) introduced the Hemp Economic Mobilization Plan Act of 2020 to raise the THC limits on industrial hemp in the US to 1 percent from 0.3 percent. Currently, any hemp crops that test above 0.3 per cent must be destroyed.

International

BLZ - The government of Belize is moving forward with plans to formalize the country's cannabis industry. The government plans to hold stakeholder meetings in January 2021. Policies and legislation will likely follow the outreach process.

COL - Colombia's Superintendency of Industry and Commerce sent a letter to the Ministry of Health recommending a lift on the ban on exporting cannabis flower. As of October, total cannabis exports hovered around $5 million. They include oils, resins, semi-finished and finished medical cannabis products. Other countries are able to export significantly more because shipments of the flower are permitted.

EU - The European Monitoring Centre for Drugs and Drug Addiction published a report detailing the results of a study of the sale of low-TCH products in Europe. The report mentions several issues in the industry, including inadequate labeling, inconsistent product content and poor quality control, among others. The report may very well lead to changes in the regulatory structure in Europe.

MEX - As its Congress finalizes legislation to legalize cannabis across the entire supply chain, Mexico could well become the world's largest legal cannabis market in the near future. The Mexican Senate passed a bill in November legalizing recreational cannabis. The lower house is set to approve that bill by February.

Business

Tilray and Aphria- Cannabis companies Tilray and Aphria have merged to create the world's largest cannabis producer, measured by sales. The merger will result in a company holding a whopping 17 percent share of the Canadian cannabis market. In addition to the Canadian market, the newly formed company is reportedly looking to enter the US market.

Canopy Growth Corporation - Canopy Growth filed a lawsuit against GW Pharmaceuticals in relation to an alleged violation of Canopy's cannabis-extraction method. The suit was filed on the same day that the US Patent and Trademark Office issued a new patent to Canopy that gives it broad and exclusive rights to a process of extracting cannabinoids from plant material in the US.

AFC Gamma - AFC Gamma plans to go public on the Nasdaq, which would make it the second cannabis-focused REIT on a major exchange. AFC Gamma hopes to raise up to $115 million.

Tel Aviv Stock Exchange - The Israeli exchange launched a new index for medical cannabis companies. The new index includes nine companies 'primarily engaged in the fields of research, cultivation, sale or production and marketing of medical cannabis products,' the stock exchange announced. The index has a market cap of $529 million.

Columbia Care - Columbia Care, Inc., has signed an agreement to acquire Green Leaf Medical, LLC, a multistate cannabis operator based in the mid-Atlantic, for $240 million. If the deal passes the regulatory approval process, Columbia Care will be one of the largest operators in Pennsylvania, Maryland, Ohio and Virginia.

Medical/Health

Scientific Reports- In a paper titled 'Identification of a new cannabidiol n-hexyl homolog in a medicinal cannabis variety with an antinociceptive activity in mice: cannabidihexol' researchers have 'closed the loop' on the proper recognition of various phytocannabinoids that might serve future research on the impact of cannabis.

Clinical Gerontologist - A study by Dr. Lydia Manning and Lauren Bouchard titled 'Medical Cannabis Use: Exploring the Perceptions and Experiences of Older Adults with Chronic Conditions' suggests that older adults are open to medical cannabis as an alternative to pharmaceutical drugs, but have expressed frustrations with education, awareness and lack of support with dosing.

Please click here for more information on Dentons' US Cannabis group.

Authored by Dentons Council David Quamand Associate Managing Director Crawford Schneider.