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

From the “if at first you don’t succeed” files, New Jersey Governor Phil Murphy stated recently that he would support a bill to legalize marijuana, rather than awaiting a ballot initiative in 2020.  States that may see ballot initiatives include: Arizona, and Idaho.

Meanwhile, a commission appointed by New Mexico‘s governor to look into legalizing recreational cannabis will hold two meetings this month.  And in Alabama, a commission is studying a medical marijuana proposal.

Turning our attention to the Presidential candidates, our gaze falls upon Sen. Bernie Sanders (I-VT), who says he would legalize marijuana by executive order if elected.

Two jurisdictions are allowing those from other states to obtain medical marijuana: New Mexico (it’s a big week for New Mexico news, obviously) and the District of Columbia.

The American Bar Association weighed in this week on the question of cannabis.  The group believes the federal government should allow the states to operate without fear of interference.

And finally, a pot grower sentenced to five years in prison, where he’s planning to work on a new career – developing a new online legal research platform.  Look out Lexis and Westlaw!

See you next week!

 

CBD is “thriving” in the current regulatory environment, but is it doing so illegally?

As former U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb opined last  week, “the CBD craze is getting out of hand. The FDA needs to act.”  Since the passage of the Farm Bill in December of 2018, there has been a marked uptick in interest in the cannabidiol (CBD) space from businesses and users alike.  Congress explicitly preserved the FDA’s authority to regulate CBD-containing products to ensure that they are safe and that their claims are valid.  Current federal law expressly allows for the distribution of hemp-derived CBD products that contain 0.3% tetrahydrocannabidiol (THC) or less to be sold, with certain caveats.  The FDA has provided clarity that hulled hemp seed, hemp protein powder, and hemp seed oil can be legally used in foods.  Other CBD products, however, are still subject to various state law regulations as well as the U.S. Food, Drug, and Cosmetic Act (FD&C Act), which requires FDA pre-market approval for drug products.  Currently, the FDA treats CBD products aimed at human or animal consumption as drugs and therefore they cannot be distributed without prior approval or a rulemaking exception (more on this below).  The following is a brief update on recent developments within the federal regulatory regime of CBD products.  Continue Reading CBD is Everywhere – But Where Does the FDA Stand?

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

We’ll start our news coverage in Louisiana, where medical marijuana has cleared the final hurdle and is shipping out to dispensaries.  It’s been a bumpy ride to the sales counter, so any optimism about the success of the program is cautious.

Meanwhile, in Utah, there are two different issues with the state’s medical marijuana program.  Several companies denied licenses to grow for the program filed appeals, saying the process was flawed.  Those appeals were recently dismissed.  And the state Supreme Court ruled that the governor and legislature had the right to change the voter-approved medical cannabis law.

Colorado physicians can now prescribe medical marijuana in lieu of opioids.  The state joins New York and Illinois in allowing this practice.

In Florida, state Rep. Shevrin Jones recently introduced a decriminalization bill.  The legislature will take it up in the session starting January 2020, but the bill is viewed as a long shot.  In other Florida legalization news, a petition to put marijuana on the 2020 ballot has garnered enough signatures to prompt Supreme Court review.

Not every state is moving forward with marijuana, however. Nebraska’s Attorney General said last week that a medical marijuana bill currently under consideration in the Nebraska Legislature is unconstitutional.  And New Hampshire governor Sununu vetoed a bill that would have allowed medical marijuana patients to grow cannabis at home.

Turning our attention to international news, the government of St. Kitts and Nevis has introduced a bill to decriminalize marijuana, and Luxembourg is planning to legalize cannabis within the next two years.

And finally, makers of snack foods might want to consider putting their support behind legalization efforts.  A recent study has confirmed what everyone already knew: sales of snack foods increased in areas where marijuana is legal.

See you next week!

On July 29, 2019, New York Governor Andrew Cuomo (D) signed state legislation that further decriminalizes the possession of cannabis. The bill, sponsored by Senator Jamaal Bailey (D-Bronx), was passed by the New York State Assembly just over a month before it was signed, receiving 39 to 20 votes in the State Senate and 94 to 44 votes in the State Assembly.

Cannabis was first decriminalized in New York in 1977, when the punishment for possession of about an ounce or less of cannabis was reduced from a misdemeanor and jail time to the payment of fines. Possession of cannabis in “public view” could still result in charges and arrest. In 2014, Governor Cuomo signed the Compassionate Care Act, sponsored by Senator Diane Savino (D), which legalized the prescription and use of non-smoking forms of medical marijuana for patients with serious illnesses. Under the most recent bill, the threshold for legal cannabis possession more than doubled to just over 2 ounces, and the punishments are applied in the same manner regardless of whether or not it is in public view. Additional provisions of the bill level cannabis convictions.

While some advocates of cannabis legalization see the passage of the decriminalization bill as a victory, others believe it missed the mark. The Marijuana Regulation and Taxation Act, sponsored by Senator Liz Krueger (D-Manhattan) and Assembly Majority Leader Crystal Peoples-Stokes (D-Buffalo) would have provided for the regulation and taxation of recreational use of cannabis in New York. Although supporters of the bill were able to garner enough support from the State Assembly, they couldn’t clear the hurdle in the State Senate.

Many legislators who were on the fence about legalizing cannabis expressed concerns with the potential ramifications of legalization, including road safety, use by minors, and drug treatment funding. Others disagreed about how the state should invest tax revenues earned through legalization – while some believed the proceeds should be used to reinvest in the communities that have been impacted by the state’s drug laws, others thought the funds should be invested in the state’s infrastructure. Inside sources claimed that the bill had enough votes to pass just days before the legislative session ended, but demands and requests for further amendment led to the ultimate death of the bill. Ultimately, legislators seemed to reach a “happy medium” in passing the cannabis decriminalizing bill instead.

There have been different theories about the reasons behind why the legalization bill was unable to succeed during this year’s session. Governor Cuomo thought that cannabis should have simply been added into the state budget rather than addressed separately, believing that the approach would be an easier pill for legislators to swallow. Others thought it was a mistake to wait so late in the session to attempt the legislation amendment.

Despite the potential missteps during the process, Senator Krueger and Assembly Majority Leader Peoples-Stokes confirmed that they plan to continue their efforts next year to pass a bill legalizing recreational use of cannabis in the state. According to Assembly Speaker Carl Heastie (D-Bronx), the negotiations will be tense in 2020 since it will be an election year. For now, it appears that the legislator proponents of legalization have accepted the most recent loss of their battle to legalize cannabis, but apparently the war is not over…

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

Let’s start with the eagerly awaited hemp rules.  There will have to be a bit more awaiting, it seems.  Administration officials, who had said regulations might be available in August, are now predicting their appearance this fall.

In other federal news, the DEA has, yet again, not approved new suppliers of marijuana for research.  A lawsuit is pending, so perhaps next year, things will be different.

Or perhaps Senator Dick Durbin’s (D-IL) legislation will pass.  It would remove restrictions on federal research into cannabis and expand studies on the potential benefits and harms from cannabis use.

Meanwhile, the state of Arizona is experimenting with a new procedure to get around the lack of banking services for marijuana companies.  The state’s attorney general has approved a pilot program allowing digital payments to medical cannabis dispensaries.

In other state news, Alaska has approved social-use regulations; companies are challenging Utah‘s medical marijuana grower licenses, and lawmakers in the state are seeking to change the distribution system; and several Oklahoma dispensaries are suing Facebook for allegedly disabling their business pages.

Across the pond, a group of UK lawmakers, inspired by a trip to Canada, are hoping to legalize cannabis within 10 years.  And the new prime minister, Boris Johnson, has appointed a cannabis advocate as a policy adviser.

And finally, the alcohol industry has decided to join in the marijuana edible business.  So be on the lookout for weed beer.

See you next week!

Last week, several members of Seyfarth’s cannabis practice attended CannaVest West and the Cannabis Business Summit & Expo.  Industry expert panels discussed market trends, private equity, venture capital, family offices, and banking, as well as commercial real estate, which I had the opportunity to moderate.

Of interest to TBT readers, a few key takeaways from the event include:

Investment Opportunities – many industry experts accept as a given the fact that institutional capital will remain on the sidelines until marijuana is legal at the federal level.  Institutional investors perceive too much legal risk and are prepared to wait.  Many professional investors in the industry expect a market correction at some point in the near future and point to the recent declines in the value of a number of public Canadian cannabis companies.  This leaves an opening for private equity funds, venture capital funds, private investors and family offices, many of which can take more entrepreneurial risk and are not as constrained in the current regulatory environment.  Given how rapidly the industry is changing, most panelists thought it best for first time investors, even sophisticated investors, to leave it to the experts and invest through various types of funds or other vehicles such as REITs.  There was a real “don’t try this at home” attitude among the panelists.

Legal and Regulatory – uncertainty and confusion is anticipated to continue until the federal government passes legislation and the states figure out appropriate regulatory frameworks.  On the federal level, there are several bills working their way through the US House of Representatives to address legalization, banking, medical research and criminal justice–most notably the SAFE Act which would provide a safe harbor for cannabis banking.   However, one speaker predicted that the SAFE Act would not pass in the next twelve months and suggested that nothing would pass the Senate before the 2020 elections.  At the state level, regulators are still trying to understand various aspects of the industry and either fix what they got wrong or learn from the mistakes of the states that legalized cannabis a few years ago.

Banking – here, too, experts caution that there won’t be advancements until the feds legalize.  One cannabis banking expert made a very interesting observation about the SAFE Act, which many see as a panacea to much of the industry’s current lack of access to banking.  She said that even if the SAFE Act passes, the banking situation will not improve because banks are focused on the Bank Secrecy Act, which is not adequately addressed by the SAFE Act.  In discussing how a marijuana related business could get access to the banking system, she warned against unnecessarily complicated business structures (for example, three holding companies between the operating entity and the owner).  Bankers see such structures as an opportunity for mischief and may be reluctant to accept the companies as customers.

Real Estate – cap rates are compressing.  The days of finding an abandoned warehouse that an owner is willing to practically give away for pennies are over.  Prices are being driven higher by cannabis users of real estate, professional investors and speculators, and the lack of banks and other institutional lenders are allowing entrepreneurial lenders to dominate the market, translating to higher costs of lending too.

Hemp and CBD – have caused even more confusion for bankers and regulators, not to mention the marketplace.  One can’t assume that because hemp is now legal at the federal level, it will be easier to bank.  The Food and Drug Administration is beginning to flex its regulatory muscles and state laws continue to be a patchwork of confusion as states prohibiting growing, processing or selling hemp or hemp products try to catch up with federal law.  Finally, as long as states seize interstate shipments of hemp (Idaho, you know who you are), growers and processors may be reluctant to bring their product across state borders.

In short, the conference emphasized the fact that the cannabis industry is still young and has yet to establish banking, legal, regulatory and market norms.  Readers with any questions can contact me at sjutkowitz@seyfarth.com.

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

Let’s start with Congress, which had a very busy week.  On Tuesday, the Senate Banking Committee had a hearing on cannabanking.  Full video, as well as member statements and witness testimony are available at the committee website.

Rep. Jerry Nadler (D-NJ) and Sen. Kamala Harris (D-CA) have introduced a bill calling for the decriminalizing of marijuana.  It would also expunge past criminal convictions.

Sen. Robert Menendez (D-NJ) has introduced a bill allowing cannabis businesses (operating in states where it is legal) to obtain insurance services.  What the SAFE Act would do for banking, the CLAIM act would do for insurance.

In other federal news, hemp is a big topic of discussion, specifically the eagerly anticipated rules on hemp and CBD from the Food and Drug Administration.  FDA representatives headed to Congress to discuss this topic yesterday.  Full video of the hearing and witness testimony is available at the committee’s website.

Speaking of hemp, the states have been active this week as well.  The Ohio legislature passed a bill allowing in-state hemp cultivation.  It also allows forthe production of dietary supplements, cosmetics and pet products.  Again, those federal rules can’t come soon enough.

And a hemp boom is on in Virginia.  Over 800 farmers have applied to grow hemp.

In other state news, retail sales of medical marijuana are imminent in Louisiana.  In Utah, growers have been chosen for their medicinal cannabis program.  Police in Miami-Dade County will need more than the smell of marijuana to detain people, now that hemp is legal in the state of Florida.  And in Texas, the difficulty of distinguishing between hemp and cannabis has led some cities to drop possession charges.

See you next week!

 

A New Jersey appellate court recently concluded in Wild v. Carriage Funeral Holdings, Inc. (reported in our blog here) that even though New Jersey’s Compassionate Use Medical Marijuana Act (the Act) did not “require … an employer to accommodate the medical use of marijuana in any workplace,” it also did not “immunize an employer’s obligation already imposed elsewhere” — such as in discrimination statutes. On July 2, 2019, a few months after that decision, New Jersey Governor Phil Murphy signed a bill that amends the Act’s employment provisions to not only clear up previously unanswered questions but also to create additional compliance obligations for employers. The amended law takes effect immediately. Continue Reading New Jersey Governor Clears the Medical Cannabis Haze

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

Now that the public comment period for the Food and Drug Administration’s new CBD rules has closed, the agency is planning to release regulations by late summer or early fall of this year.  Any clarity for this industry would be welcome news indeed.

California may beat the FDA to the punch on CBD laws, as a bill allowing the use of CBD in food, drugs and cosmetics is making its way through the legislature.  It enjoys bipartisan support and is expected to pass.

Two weeks ago, we reported on a Senate bill to encourage research on CBD and marijuana research.  Not to be outdone, the House has introduced a similar piece of legislation.

In other federal news, the Senate Banking committee is scheduled to hold hearings on cannabis banking next week.  Watch this space for more details!

You’ll recall that lack of banking services is causing problems for West Virginia’s medical marijuana industry.  The state is now going to try again to find service providers.

Meanwhile, in Utah, there’s been a delay in announcing the winners of the state’s medical marijuana licenses.  Instead of this week, applicants will have to wait until the end of the month.

We’ve got two news items from New Hampshire this week.  Both involve the state’s governor, Chris Sununu.  First, he rejected a medical marijuana expansion bill, and second, he signed a bill allowing those with prior convictions for possession of small amounts of cannabis to have those convictions annulled.

Finally, in what has been described as “a typical Vermont story,” someone has planted 34 cannabis plants in the Vermont statehouse garden.  The plants will be removed, but law enforcement has decided not to pursue a criminal case.

See you next week!

In Dallas, a yoga studio offers CBD-infused kombucha.

In Philadelphia, a decorated chef serves an elegant CBD-infused four-course meal to a nattily dressed group of fifty.

In Kentucky, the Peaches & CBD Cream burger competes in Lexington Burger Week.

A vendor at an arts festival in Colorado offers CBD Hot Dogs from his hot dog cart.

In Minnesota, a brewer offers a pint of craft beer that contains 13mg of CBD. Continue Reading CBD: Uncertainty for Restaurants and Retailers