Cannabis Group Weekly Alert – Week Of January 7, 2020 – Food, Drugs, Healthcare, Life Sciences – United States – Mondaq News Alerts
In this week’s edition:
- Senate Banking Committee Chairman Mike Crapo opposes SAFE Act; suggests limiting banking protection to low-THC products, with further restrictions on vapes and edibles
- FY2020 federal spending legislation no longer includes protections for all state cannabis programs
- DEA seizes 44 websites that advertised black market vaping products and the FDA announces it will prioritize enforcement against unauthorized flavored e-cigarette products;
- Adult-use sales begin in Illinois, with nearly $3.2 million in sales on first day
- Sixteen states could see cannabis-related ballot initiatives this year
- Two new cannabinoids (THCP and CBDP) discovered; THCP appears to be much stronger than THC
- Dentons to host Globalization of Cannabis event in Washington, DC on Thursday, January 20, 2020.
Senate Banking Committee Chairman Mike Crapo (R-ID) communicated his opposition to the SAFE Banking Act, suggesting various material changes to the bill. The amendments include restrictions on the types of cannabis products that cannabis businesses may sell if they want to access financial services, including products with THC potency over 2 percent and edibles that could appeal to children. Senator Crapo reiterated his opposition to efforts to legalize cannabis on the federal level and in the State of Idaho.
The 2020 spending legislation no longer includes protections for all state and tribal cannabis programs although the rider protecting medical cannabis programs remains. The legislation contains a provision blocking the District of Columbia from using its local tax dollars to implement a legal cannabis sales program. President Trump issued another statement reiterating his ability to ignore medical cannabis protections passed by Congress. President Trump made the same statements in 2017 and 2018 when signing the appropriations bills with no change in enforcement activity.
National surveys find that approximately two-thirds of Americans favor cannabis legalization. A Fox News survey found that 63 percent of adults interviewed support legalizing adult-use of cannabis on a national level. Gallup and Pew had found slightly higher support of respondents in favor (66 and 67, respectively).
The U.S. Food and Drug Administration issued a policy prioritizing enforcement against unauthorized flavored e-cigarettes (other than tobacco or menthol). Health and Human Services Secretary Alex Azar noted that “the United States has never seen an epidemic of substance use arise as quickly as our current epidemic of youth use of e-cigarettes.” More than 5 million U.S. middle and high school students currently use e-cigarettes. According to HHS Secretary Azar, under current law passed by Congress, “no e-cigarettes are currently on the market legally.”
The U.S. Drug Enforcement Administration shut down 44 websites advertising the sale of illicit THC vaping cartridges and the Centers for Disease Control and Prevention (CDC) concluded that the vast majority of vaping illnesses were caused by vitamin E acetate. Vaping illnesses can get worse, even deadly, after hospital discharge and the CDC recommends that doctors follow up two days after discharge. There have been 54 deaths and more are under investigation.
Sixteen states could see some form of a cannabis related ballot initiative in 2020. In the past two weeks, the New Jersey state Senate and Assembly voted (by a supermajority) to add a referendum for adult use legalization on the ballot and South Dakota‘s petition for medical cannabis gained enough signatures for inclusion on the November ballot.
The Alabama Medical Cannabis Commission, a group set up by the state’s Legislature, has issued a report which recommends that medical cannabis be legalized in Alabama citing strong scientific evidence for the “significant relief for symptoms of certain specified medical conditions.”
California‘s Legislative Analyst’s Office recommends eliminating existing cannabis taxes in favor of a tax based on potency or product types. State Assemblyman Rob Bonta (D-Oakland) plans to reintroduce legislation to reduce cannabis taxes.
Adult use sales began in Illinois. Day one sales totaled nearly $3.2 million in more than 77,000 individual transactions, including one with Illinois Lieutenant Governor Juliana Stratton, who bought THC gummies. Over 40 dispensaries are currently licensed for adult use sales, with 37 ready for business on January 1, 2020.
Hundreds of applicants in Illinois lined up to submit applications by the January 2 deadline for the next round of 75 dispensary licenses that will be issued on May 1, 2020. While public consumption of cannabis is still prohibited, Chicago Mayor Lori Lightfoot and the Chicago Police Department issued a statement that Chicago residents would not be arrested or ticketed for cannabis consumption in their backyards or on their porches or balconies.
Illinois Governor J.B. Pritzker announced that he was pardoning more than 11,000 people convicted of low-level cannabis crimes. Convictions involving less than 30 grams of cannabis would be automatically expunged.
Illinois also released emergency rules for adult use cultivation that will govern applications for craft growers, infusers and transporters. Illinois Department of Agriculture has approved all 21 medical cannabis cultivation centers for adult-use growth. Currently, only existing medical cannabis cultivation centers could apply for adult-use growth. Social equity applicants will have opportunities to apply for cultivation licenses in an upcoming phase. Chicago Mayor Lightfoot would like to form a city-owned cannabis cultivation co-op to promote and support social equity entrepreneurs.
Maryland has appointed William Tilburg as the new executive director to lead the Maryland Medical Cannabis Commission.
Michigan has approved three licensees for delivery, including Lit Provisionary, Battle Creek Provisioning and Nature’s Releaf. Most local jurisdictions in Michigan do not allow dispensaries and Detroit has delayed adult use sales until at least January 31.
Missouri has issued 10 certifications for medical cannabis testing facilities and 60 medical cultivation licenses. A Missouri applicant who lost its bid for one of the cultivation licenses also lost its request for a temporary restraining order against the state. But, the applicant is concentrating on proceeding with litigation. While Cole County Circuit Judge Jon Beetem determined that the applicant could not show that it suffered irreparable injury, he noted in his opinion that the issues of whether the Missouri regulations impede access to medical cannabis or violated the “right to farm” merit further review.
New Jersey‘s governor Phil Murphy signed the state’s expungement bill into law.
The Oregon Liquor Control Commission amended regulations to prohibit the manufacture and sale of alcoholic beverages containing CBD, THC or any other cannabis derivative, including terpenes.
Rhode Island legislators oppose Governor Gina Raimondo’s efforts to legalize adult-use cannabis.
Utah has received more than 130 applications for 14 medical cannabis pharmacies. The Utah Department of Health expects to select the winning bids this month.
Washington State Liquor and Cannabis Board adopted final rules for packaging and labeling. Licensees have until July 1, 2020 to bring all product packaging and labeling into compliance and retailers have until January 1, 2021 to phase out all non-compliant products.
Wisconsin Senate Majority Leader Scott Fitzgerald continued to be a vocal opponent of medical cannabis legalization despite Republican support for multiple bills.
HEMP / CBD
The U.S. Department of Agriculture extended the deadline to submit public comments on its interim final rule for hemp production and processing to January 29. Senate Minority Leader Chuck Schumer (D-NY) noted that the tremendous potential and excitement about the hemp industry could “go away if these rules are done in too narrow and restrictive a way” and “people believe the [THC] level they set is way too low.” A number of regulators, lawmakers and industry participants have sought changes and more time. Congressional delegations from Virginia and Maine sent multiple letters voicing concerns about THC testing procedures and limits.
The USDA also approved a hemp program in Louisiana – making it the first state to get federal approval of a state industrial hemp plan. The state is beginning to accept industrial hemp applications for growers, processors, seed producers and contract carriers. The USDA also approved hemp programs in New Jersey, Ohio and for three Native American tribes.
The Environmental Protection Agency has approved 10 pesticides for hemp cultivation.
Iowa Attorney General Tom Miller issued a reminder that CBD products remain illegal in the state, with the limited exception of FDA-approved medications and products sold through Iowa’s medical CBD program.
Argentina Minister of National Security Sabina Frederic noted the need to move towards the legalization of cannabis, citing the high cost of prosecuting cannabis related offenses.
Canada will start to test the emissions of vape products. Vapes will go on sale in certain provinces this week as part of the federal rollout of second-wave cannabis products, often referred to as Cannabis 2.0. Quebec and Newfoundland have imposed a complete prohibition on the sale of cannabis vapes, Nova Scotia has banned vapes with flavoring additives, and British Columbia has placed a 20 percent tax on vaping products. Vaporizer and edible products from about 15 brands and 12 licensed cultivators are expected to be available in Ontario dispensaries this week. Supply is expected to sell out in the first week, but products will gradually be added to the initial selection.
Quebec has increased the legal age for adult-use cannabis to 21 from 18, making it the Province with the strictest age rules in Canada. The Province’s health ministry cited concerns about protecting developing minds of young adults from cannabis, while opponents of the move raised concerns about safe access, especially as nearly 50 percent of Quebecers had tried cannabis before the age of 17 before it was legalized.
Italy’s Supreme Court, the Court of Cassation, has ruled that small-scale domestic cultivation of cannabis for the exclusive use of the grower is legal.
A Russian court rejected an appeal of a seven-year prison sentence imposed on an Israeli-American woman who has already been detained for nine months after 9.5 grams of cannabis was found in her checked suitcase during a stopover between India to Israel.
Akerna announced its acquisition of Ample Organics, a popular seed-to-sale tracking platform in Canada, and the hiring of John Fowle as its new chief financial officer. Fowle previously served as CFO for a SaaS and business services company.
Curaleaf secured from a syndicate of lenders $275 million in debt financing bearing interest at an interest rate of 13 percent per annum with a maturity 48 months from closing. The proceeds will be used to refinance existing debt, satisfy transaction fees and expenses from previously announced acquisitions, fund capital expenditures and for general corporate purposes.
HoundLabs plans to begin sales of its cannabis breathalyzer this year. While the breath analyzer does not test for THC impairment level, it can detect whether a user has ingested THC of any kind in the past three hours.
Linx Card, which touts itself as a primary provider of debit merchant services to cannabis dispensaries, is being sued by several cannabis businesses that are owed millions of dollars. First Data, which had terminated its relationship with Linx Card, is holding $619,560 in funds claimed by various parties and has asked a court how to distribute the money. Linx Card claims that First Data is holding more money and is working with counsel to release money to the owed retailers.
MedMen announced plans to sell three vertically integrated licenses in Arizona and a cultivation and manufacturing license in Illinois for $54 million. It also expects to raise $20 million by offering class B shares at $0.43 each. MedMen shares have fallen 81 percent in 2019.
Tilray has expanded distribution of its medical cannabis into Switzerland, the fourteenth country to distribute Tilray cannabis.
Zenabis Ltd. is recalling one lot of Namaste CBD gelcaps in Canada that contained 2.2 mg THC per capsule and no CBD.
Medical / Health
Two previously unknown cannabinoids, THCP and CBDP, were revealed in a study published by Nature.com. Of particular interest is THCP, as its affinity for CB1 receptor is 30-times higher than the one for THC, making the newly discovered THCP cannabinoid much stronger than THC.
An Oregon State University study of cross-sectional data from a National College Health Assessment survey found that college students engage in less binge drinking when adult-use cannabis is available.
Compliance with age-restrictions is high, according to a study that sent underage buyers into cannabis dispensaries. The study found that refusal rates exceeded those for alcohol.
A study examined Twitter posts about cannabis and found that tweets generated by bots are twice as likely to mention health and medical uses for cannabis as non-bots.
Eric Berlin and Katie Ashton, co-chairs of Dentons U.S. cannabis group, were quoted in a Law360 article, “3 Ways Attys Are Preparing for Illinois Cannabis Sales,” on how law firms should prepare to serve clients in the Illinois adult-use cannabis market. Attorneys should be prepared to deal with a lot of moving parts, such as developments in local municipalities, they said.
They were also quoted in a Law360 article, “3 Cannabis Policy Trends to Watch in 2020.” Berlin discussed the need for changes in the USDA’s interim rules for hemp production. “The rules as drafted are problematic for those in the industry,” he said. Ashton said she believes support for the SAFE Banking Act is being driven by the banking lobby.
Peter Homberg, chair of Dentons Europe cannabis group, discusses medical cannabis in Europe.
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