Although the federal government seems to have turned a blind eye to the legalization of the medical and even recreational use of cannabis in certain states, they have not relinquished their duty to maintain competitive markets in the U.S. Over the past year, the Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”) have used their powers under the Hart-Scott-Rodino (“HSR”) Antitrust Improvements Act of 1976 (the “HSR Act”) to investigate mergers and acquisitions in the cannabis market, even though the operations of such business are essentially illegal under federal law. Continue Reading Holding Up the Green: Hart-Scott-Rodino and its Impact on Cannabis M&A Transactions

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

As is so often the case, the states were the big newsmakers this week.  In Maine, the Office of Marijuana Policy will start accepting applications for retail sales on December 5.  As of today, it’s been three years exactly since voters approved legalization.

Business license applications are also a hot topic in Michigan.  The Marijuana Regulatory Agency started accepting them on November 1.  In Wisconsin meanwhile, legislators introduced a decriminalization and expungement bill.  It would also ban police searches of vehicles based on smell alone.

And lots is going on in South Dakota.  Two different ballot initiatives are under consideration, one that would legalize medical marijuana, and one that would legalize adult-use.  Lawmakers are also writing new legislation to legalize hemp, after the governor vetoed an earlier bill.

On the federal level, the protections for medical marijuana businesses in what used to be called the Rohrabacher-Blumenauer Amendment have been included in the text of both the House and Senate DOJ appropriations bill, for the first time ever.

What’s going on with hemp this week?  The U.S. Hemp Authority, the people who certify hemp, have released new standards for the industry.  Information on “Guidance Procedures 2.0” is available here.

And finally, how do sellers of high-end properties distinguish themselves in the real estate market?  By throwing a “cannabis open house.”

See you next week!

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

The big news this week comes from the USDA.  The agency officially proposed rules for the industry, which are available here.  For our take on these rules, see Tonya and Renee’s post from Tuesday.  Not everyone is in love with the rules.  As of this writing, over 4,000 people have signed a change.org petition to revise them.  Note: in order to comment officially on a proposed rule, please proceed to regulations.gov.

On the campaign trail, Senator Bernie Sanders (I-VT) released a plan to legalize recreational marijuana and expunge past convictions.  For earlier coverage of his views, see our post here.  The Presidential candidates have different views on cannabis, but they center around how to legalize or decriminalize, not if that should happen.

Academia continues to be a marijuana hotspot.  Students in states where medical cannabis is legal are suing their colleges for taking disciplinary action against them for using it.

So what’s happening on the state level?  Michigan is now (as of today) accepting applications for adult-use marijuana business licenses.  In Utah, meanwhile, businesses can now apply for licenses to run medical marijuana dispensaries, which the state calls pharmacies.  No, I don’t know why.

Shifting our gaze to our neighbor to the South, Mexico has had some problems in its journey to legalization.  It appeared that the Senate would vote on a legalization proposal this week, but the legislation has now been referred to another panel for review.

And finally, Molson Coors will soon be selling CBD-infused beverages in Canada.  They’ll be called Flow Glow and feature two flavors: Goji + Grapefruit and Raspberry + Lemon.

See you next week!

 

The National Safety Council released a policy statement endorsing employer zero-tolerance policies for cannabis use for employees who work in safety-sensitive positions, explaining that no level of cannabis is safe. Continue Reading National Safety Council Endorses Zero Tolerance Prohibition on Cannabis/Marijuana for Safety-Sensitive Employees

Through a reintroduced House bill, Congress is taking strides to push for cosmetic regulation reform and, separately, through the SAFE Act, it is seeking to establish a safe harbor for financial institutions to support the burgeoning cannabis industry. Plus, the USDA just issued an interim rule for hemp production. Continue Reading Cosmetics, Hemp, and CBD: Legislative and Regulatory Update

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Hemp was in the news quite a bit this week.  The 2019 edition of the Hemp and CBD Industry Factbook released figures that show retail sales of CBD topping $1 billion this year, and predicted that number could hit $10 billion by 2024.

But there are some hiccups on the way to that big number.  First, the federal government is seizing hemp imports at the border despite legalization.  Innovative Nutraceuticals LLC has brought suit in California federal court to stop this practice.

Meanwhile, the FDA and FTC are cracking down on one company’s medical claims.  Rooted Apothecary received this letter from the agencies telling it to stop selling unapproved products with unsubstantiated claims.

And South Dakota still has problems with hemp.  A Colorado man has been indicted by a grand jury for transporting the product through the state to Minnesota.  Granted, it’s much longer to go through Wyoming, Montana and North Dakota to get to Minnesota from Colorado, but it would still be shorter than serving a 15 year prison sentence.

It wasn’t all about hemp this week.  You will doubtless recall that last week we reported that two of Rudy Giuliani’s associates were trying to involve themselves in the Nevada marijuana industry.  Turns out, they were trying to get into cannabis in Florida as well.

In federal tax news, the U.S. Tax Court ruled this week that the tax code ban on business deductions by medical marijuana companies is constitutional.  The case is Northern California Small Business Assistants Inc. v. Commissioner of Internal Revenue, docket number 26889-16.

And of course, there’s news from the states.  Let’s start in the northeast, where the governors of four states (New York, New Jersey, Connecticut and Pennsylvania) met to discuss coordinating their states’ cannabis policies.  All four are supporters of adult-use legalization.  Maybe Colorado should convene something similar to get South Dakota on board with hemp?

Speaking of Connecticut, the state just added several conditions to the list of permissible uses of medical marijuana.  Tourette syndrome and intractable neuropathic pain are now eligible for treatment with medical cannabis.

Rhode Island was not at the governors’ meeting, perhaps because the governor and the legislature are involved in a lawsuit.  The governor says the legislature is trying to veto executive regulations; the legislators say they will remove the provision from the law.

The news wasn’t entirely from the East Coast.  New Mexico’s legalization task force has released its final report.  It would allow for expungement of low-level marijuana convictions, but would not permit home growing.

Cannabis research was also a big topic.  The University of California San Diego has just gotten state approval to research the medicinal value of marijuana (particularly CBD) as of January 1, 2020.  This will likely please former VA Secretary David Shulkin, who recently called for more research into medical marijuana.  And Senator John Cornyn (R-TX) voiced his support for further research at a Congressional hearing this week.  Which is cold comfort for the Scottsdale Research Institute (subscription required), which saw the D.C. Circuit Court refuse to involve itself in the company’s fight with the DEA over cannabis research licenses.

Finally, what on earth is going on in Oklahoma?  The General Counsel of the state’s Department of Health sent herself threatening messages, purporting to be from cannabis advocates.  What a long, strange trip it has been.

See you next week!

The legal cannabis business is spreading like weeds.  As several states and foreign countries have enacted laws decriminalizing or legalizing marijuana for medicinal or recreational use, a fresh rush of reefer madness has overtaken the business world.  Investments in the cannabis industry are now available as ETFs (Exchange Traded Funds), and marijuana startups are proliferating at every step along the supply chain. Continue Reading Weed and Worry — The Immigration Consequences of Engaging in the Cannabis Trade

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

You might think news about Rudy Giuliani and Ukraine wouldn’t appear on a blog devoted to cannabis, but you’d be wrong.  Two of the former mayor’s associates were indicted for moving foreign money into U.S. elections.  One of their targets was a Nevada gubernatorial candidate; they hoped he would provide them with a cannabis license.

In more traditional marijuana news, two Pennsylvania state senators introduced a bill to legalize cannabis in the state.  The legislation includes provisions concerning home grow, delivery, expungement and a low bar to entry.

In New Mexico, an expert panel appointed by the state’s governor recommended using proceeds from recreational marijuana to provide low-interest loans to small cannabis businesses and eliminating taxes on medical marijuana.  We’ll be keeping our eye on the Land of Enchantment in 2020.

California made a lot of news this week.  The governor signed bills on: social equity, vape packaging, labor peace agreements, “specialty cottage” growers, allowing medical patients to receive free cannabis, and allowing students to use medical marijuana at school.  He also approved an overhaul of the cannabis tax system, but vetoed legislation that would have allowed the use of marijuana in hospitals.

The news wasn’t just on the state level this week.  A former IRS trial attorney predicted a “tsunami” of 280E audits, as a change in agency policy means that associated companies could come under increased scrutiny.

Meanwhile, Senator Majority Leader Mitch McConnell met with cannabis industry representatives to discuss banking and other issues.  The passage of the SAFE Banking Act has increased banking interest (no pun intended) in serving the marijuana industry.

Finally, times have changed in higher education.  When I was in college (many years ago), marijuana was certainly on campus.  Now, however, it’s on the syllabus.

See you next week!

It is widely known that California’s Governor Gavin Newsom has signed into law (and also rejected) a flurry of bills in recent weeks.  But what has been done in the cannabis space?  So glad you asked, because, indeed, Newsom has signed several bills impacting the cannabis industry, reflecting a focus on encouraging minority participation, encouraging union membership, and clarifying select existing regulations.

How is this accomplished?

For starters, Senate Bill (SB) 595, which provides some relief from licensing fees for needs-based applicants, is meant to facilitate minority owned businesses.

Assembly Bill (AB) 1529, an urgency statute co-sponsored by the California Cannabis Industry Association, modifies the labeling requirements on vaporizer cartridges.  It facilitates compliance with the requirements by making some practical modifications to the labeling specifications.

AB 1291, which requires a labor peace agreement for all businesses with 20 or more employees, is designed to facilitate union protections for cannabis industry workers, as well as protections from strikes and other disruption for businesses.  The new law provides “teeth,” imposing strict timelines under threat of loss of marijuana business license.  “Unions were a big part of the legalization push in California and several other states, giving them leverage to push for peace agreement requirements,”  Seyfarth Shaw attorney Jinouth Vasquez Santos is quoted as saying in Law 360.  It will be interesting to see how, in light of AB 5’s near prohibition of independent contractors in California, businesses might try to avoid hiring “employees.”

AB 858 clarifies requirements for “specialty cottage” growers.

Finally, SB 34 allows retailers to provide free products to qualifying medical patients, a practice that was common until the 2018 regulations went into effect.

The Western District of New York, in Horn v. Medical Marijuana, Inc., et al., issued an initial procedural order last week in a case where the plaintiff’s purchase and use of the defendant products resulted in a failed drug test that resulted in his employer terminating his employment.  Horn v. Medical Marijuana, Inc., et al. No. 15-cv-701-FPG (W.D.N.Y.)

We have noted previously that the federal Drug Enforcement Agency (DEA) recently announced that drugs that include CBD (cannabidiol) with less than 0.1% of THC (tetrahydrocannabinols) are now considered Schedule V drugs provided they are approved by the federal Food and Drug Administration (FDA).  The move marked the first time the DEA removed any form of cannabis from Schedule I and was due to the FDA’s approval of Epidiolex, a non-synthetic cannabis-derived medicine used to treat severe epilepsy.  Setting aside this very limited exception, marijuana and CBD remain illegal under federal law.  And while CBD is projected to be a $22 billion industry by 2022, many employers remain hazy about this extremely popular product and the implications it has for their employees and businesses.

We had previously blogged on The Stoned Age: What the CBD Craze Means for Employers and Their Substance Abuse Policies, CBD is Everywhere – But Where Does the FDA Stand?, CBD: Uncertainty for Restaurants and Retailers, and FDA: .1% CBD OK.  As the legalization and normalization of these products becomes more prevalent, their encroachment into the workplace becomes more and more likely, and more of an ongoing issue for employers. Now, we are seeing CBD companies being sued for allegedly promoting “pure CBD” products that might actually contain THC and, thus, creating work-related issues for applicants and employees using these products.

In Horn v. Medical Marijuana, Inc., et al., the plaintiff was a professional over-the-road hazmat commercial truck driver who worked for the same company for 10 years and drove professionally for 29 years.  Plaintiff’s employment as a professional commercial driver required that he be and remain free of all illegal and impairing substances, including marijuana.  The plaintiff allegedly used a CBD product called Dixie X.   Subsequently, the plaintiff submitted to a random urinalysis screening as required by his employer, and as required by the U.S. Department of Transportation (DOT)’s drug and alcohol testing regulations set out in Part 40.  Plaintiff ultimately was terminated for testing positive for a “high level of THC.”

Before his termination, plaintiff asked an independent laboratory to test Dixie X CBD to determine if it did indeed contain THC.  That laboratory informed plaintiff that it could not run the tests on the Dixie X as the substance was illegal and contained THC levels well over the federal limit as per DEA regulations.

In his complaint, the plaintiff alleges that, among other claims, he had used products marked “THC free” and “non-THC,” and the defendants were “misleading the public at large through their misrepresentation of the true chemical compound make-up of products like DIXIE X.”  We will monitor this case as it progresses through the courts.

We continue to recommend that employers exercise caution when dealing with applicants and employees using medical marijuana or CBD.  As noted in our previous blogs, CBD is a recent and largely unregulated industry.  Thus, before taking any action against medical marijuana or CBD users, employers should review the laws of the states in which they operate and work with employment counsel to help navigate this complex and rapidly evolving area of the law.

Employers also may need to consider:

  • Revising their policies to define marijuana and address CBD use;
  • Training managers and supervisors on how to address situations where an employee defends a positive drug test by claiming use of CBD; and
  • Educating employees about CBD and zero tolerance policies.

Seyfarth Shaw will continue to monitor legal developments at the federal and state level.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Cannabis Law Practice or Workplace Policies and Handbooks Team.