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Cannabis Client Alert – July 2022 #2

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In this week’s edition:

  • Senators Introduce Cannabis Administration and Opportunity Act
  • New York Approves Regulations for Adult-Use Cannabis Licenses
  • House Subcommittee To Hold Hearings on Hemp
  • Officials From Four EU Countries Meet To Discuss Cannabis Legalization

Federal

Cannabis Administration and Opportunity Act (CAOA) – On July 21, Sens. Corey Booker (D-NJ), Ron Wyden (D-OR) and Chuck Schumer (D-NY) introduced CAOA, their long-awaited cannabis legalization bill. Originally slated for filing last April, the bill is considered dead on arrival, at least for the current legislative session, although parts may be included in a minibus bill anticipated in the next several weeks.

US House Passes SAFE Banking Act as Amendment to 2023 Defense Bill – This is now the seventh time the US House has approved the Act in some form. The SAFE Banking Act, which would prohibit federal regulators from taking punitive measures against financial institutions that provide services to state-legal cannabis businesses, has cleared the US House twice as a standalone bill, but both times it stalled in the Senate. This attempt is very likely to meet the same fate.

US House Approves Appropriations Bill Legalizing Cannabis Advertising on TV and Radio – The appropriations bill includes language prohibiting the Federal Communications Commission (FCC) from penalizing broadcasters for airing cannabis advertisements in states with legal cannabis markets, at least for fiscal year 2023. Appropriations bills are valid only for the intended fiscal year and thus require annual re-approvals by Congress. Meanwhile, in the Senate, Sen. Ben Luján (D-NM) introduced a similar but standalone bill, the Secure and Fair Enforcement Advertising Act, that would permanently allow stations to accept cannabis advertising.

Proposed Bipartisan Senate Bill Clarifies “Right to Try” Law – US Sens. Corey Booker (D-NJ) and Rand Paul (R-KY) introduced legislation clarifying that the Right to Try Act allows terminally ill patients to have access to Schedule I drugs (including, for example, MDMA and psilocybin) for which a Phase 1 clinical trial has been completed. Despite MDMA and psilocybin showing great medical promise, many patients have still found it impossible to access such drugs.

CDC Establishes New Office With Cannabis-Related Responsibilities – As part of a reorganization of the US Department of Health and Human Services, approved on July 1, the Centers for Disease Control and Prevention has established the Office of the Associate Director for Science. Among other responsibilities, the Office will coordinate “agency-wide and cross-agency cannabis-related surveillance, research activities, and communications activities, and provide[] technical assistance for cannabis-related programmatic activities.”

Federal DC Appellate Court Affirms FDA’s Denial of Flavored Vape Applicants – The DC Circuit Court of Appeals rejected an appeal by four makers of flavored e-cigarettes who challenged the FDA’s denial of their premarket tobacco product applications. The applicants had originally submitted premarket tobacco product applications with the FDA in September 2020, seeking approval to make and sell nicotine e-cigarette products with various flavors. This follows a similar decision by the Fifth Circuit in early July affirming the FDA’s denial of applications from two flavored e-cigarette makers.

States

CO – Colorado witnessed drastic declines in medical cannabis sales over the last year, due in part to state legislation, HB 21-1317, which went into effect on January 1, 2022. The bill limited the amount of cannabis concentrate that dispensaries could sell patients.

CO – Colorado’s secretary of state approved a state initiative for the upcoming November ballot that would legalize psychedelics. Colorado voters will have the chance to decide whether to legalize psychedelics and create licensed psilocybin “healing centers” where people can use the substance for therapeutic purposes.

CT – The Connecticut Department of Consumer Protection publicized the identity of 16 companies approved for licensure as social equity cultivators. The social equity applicants must now pass background checks and other requirements before being licensed. Adult-use cannabis retail sales are anticipated by the close of 2022.

DC – Washington, DC, Mayor Muriel Bowser (D) has signed local legislation banning most workplaces from firing or otherwise punishing employees for cannabis use. The legislation builds on previous measures lawmakers approved to protect local government employees from workplace discrimination on the basis of cannabis use.

IL – On July 22, Illinois issued 185 conditional recreational cannabis retail licenses. With only 110 adult-use retail licensees in operation, the move is set to more than double the state’s cannabis retail market. The 185 licensees are currently permitted to begin building out their locations in anticipation of future approval for cannabis retail sales.

MN – Minnesota’s Medical Cannabis Program will now permit state-registered patients to buy cannabis gummies from licensed dispensaries starting August 1. Perhaps unrelated, this follows recently enacted legislation that legalized hemp-derived THC edibles and infused drinks.

NY –New York’s Cannabis Control Board has approved regulations for conditional adult-use retail dispensary licenses. Generally, eligibility is limited to those that had a cannabis-related conviction before March 31, 2021, and have held at least 10 percent ownership in a qualifying, profitable business for two years in the state.

PA – Pennsylvania Gov. Tom Wolf (D) has signed into law a banking and insurance reform bill that contains language expressly permitting state banks and insurers to service cannabis-related businesses operating in the state’s medical cannabis market. Under the bill, banks and insurers may still refuse to service such businesses, if they so decide.

SD – More than a year and a half after voters approved medical cannabis, South Dakota’s first state-licensed medical cannabis dispensary will open this week. Prior to this, medical cannabis was only available on tribal land in the state.

TX – In a recent editorial, Texas Agriculture Commissioner Sid Miller voiced support for legalizing medical cannabis in the next year. To accomplish this, Commissioner Miller plans to “urge” the state Legislature and Governor to make medical use “a top priority in the upcoming legislative session.”

Hemp/CBD

Congress To Hold Hearings on Hemp – Members of the House Agriculture Subcommittee on Biotechnology, Horticulture, and Research will hold a hearing on hemp next week. Though details have yet to be released, the hearing is expected to cover expanding regulations for hemp as part of the next Farm Bill package.

Study Finds Evidence of Mislabeling for CBD Products – A new study released by Johns Hopkins Medicine found “significant evidence of inaccurate and misleading labeling of CBD content” in more than a hundred topical CBD products. Additionally, the study found that some products contained amounts of THC, despite claims stating otherwise.

Several Minnesota Cities Temporarily Ban THC Edibles – Following passage of a state law allowing the sale and consumption of edible products containing THC, at least three cities in Minnesota have issued moratoriums temporarily banning the manufacturing and sale of THC edibles to give city officials time to research the issue and draft ordinances regulating the sales of such products.

Sales of Delta-8 THC Products in Tennessee Continue – Despite efforts by Tennessee State Senator Richard Briggs (R) to ban the sale of Delta-8 THC in the last legislative session, Tennessee hemp producers continue to grow hemp-derived CBD and Delta-8 THC products. In the next legislative session, Sen. Briggs plans to shift his efforts from banning sales to stronger regulations of products containing hemp-derived ingredients.

International

European Union – As numerous countries in Europe pursue cannabis reform, officials from Germany, Luxembourg, Malta and the Netherlands met to discuss plans and challenges with legalizing recreational cannabis use. While no decisions were made at this meeting, the four countries have a “common understanding” that the “status quo is not a tenable option.” Future multilateral discussions are expected and may include countries outside the EU.

Belgium –Brussels Mayor Philippe Close announced his support for cannabis legalization. According to the Mayor, legalizing cannabis could help address criminal activity, including an upsurge in armed incidents between drug traffickers.

United Kingdom – The UK’s Home Office, which is responsible for the country’s drug policies, proposed “a new regime for how the criminal justice system deals with drug possession offences for so-called recreational users.” The proposal, detailed in a white paper titled “Swift, Certain, Touch. New Consequences for Drug Possession,” sets forth a tiered penalty system for drug possession, with penalties ranging from fines to the rescission of passports and drivers licenses.

Thailand –Thailand’s Ministry of Public Health has yet to issue official guidelines for food products containing THC after the country became the first in Southeast Asia to legalize such products. According to a study from a Thai university, 30 percent of drinks with THC currently being sold contain THC levels above the legal limit.

Indonesia – Indonesia’s Constitutional Court rejected a review of the country’s narcotics law that could have allowed for legalizing medical cannabis use. While the judges found insufficient research to justify such a ruling, they urged the government to conduct research on the therapeutic use of cannabis and other narcotics.

Business

Cannabis Flower Remains Best-Selling Product – A new market report from New Frontier Data revealed that sales of cannabis flower products accounted for 44 percent of total cannabis sales last year. Cannabis vapes followed at 27 percent, while edible products accounted for 11 percent of sales.

Clemson University Partners with Medical Cannabis Company for Tissue Culture Research – Clemson University is partnering with Maryland-based medical cannabis company Curio Wellness on a two-year study of cannabis tissue culture. Using industrial hemp, the study “aim[s] to protect plants from viral pathogens while improving production efficiency.”

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