Cannabis Legal Report – April 2023 #2

[co-author: Hanna Barker Mullin]

Cannabis: In Focus

Tenth Circuit Upholds Licensing Agency’s Discretion When Awarding Cannabis-Related Licenses
Delaware Becomes Latest State To Legalize Recreational Cannabis
Cannabis Legislative Updates

Tenth Circuit Upholds Licensing Agency’s Discretion When Awarding Cannabis-Related Licenses

The U.S. Court of Appeals for the Tenth Circuit upheld the dismissal of a suit on April 18, 2023, challenging the Utah Department of Agriculture and Food’s (UDAF) denial of a marijuana cultivation license. While 33 applications met the state’s minimum threshold requirements for further consideration, only 10 licenses were available in the state. A cannabis company brought suit alleging that the state unduly favored applicants who emphasized community involvement in Utah in their applications and that individual agency staff members improperly coached other companies in the preparation of their applications. The panel held that the agency had discretion to choose among qualified applicants, especially when “community involvement” was one of several statutorily defined criteria for awarding medical cannabis licenses.

Delaware Becomes Latest State To Legalize Adult-Use Cannabis

Delaware Governor John Carney announced on April 21, 2023, his office will take no action on two bills to legalize cannabis. This will allow the laws to come into effect by default, making Delaware the latest state to legalize a recreational cannabis market.

Cannabis Legislative Updates

Multiple cannabis reform bills—some with bipartisan support—have been filed in the 118th Congress:

Rep. Earl Blumenauer (D-OR) introduced the bipartisan Small Business Tax Equity Act (H.R. 1118), which would allow state-legal cannabis businesses to claim tax deductions and credits via an exception to Internal Revenue Code Section 280E. Reps. Nancy Mace (R-S.C.), Barbara Lee (D-Calif.), and Dave Joyce (R-Ohio) are cosponsors. Read more.
Rep. David Joyce (R-Ohio) and House Minority Leader Hakeem Jeffries (D-NY) reintroduced the Preparing Regulators Effectively for a Post-Prohibition Adult Use Regulated Environment (PREPARE) Act (H.R. 2598), which would direct the attorney general to create a Commission on the Federal Regulation of Cannabis, which would advise on how to develop cannabis regulations modeled after federal and state regulatory frameworks for alcohol.
Reps. Barbara Lee (D-Calif.) and David Joyce (R-Ohio) introduced the Veterans Medical Marijuana Safe Harbor Act (H.R. 2588), and Sen. Brian Shatz (D-Hawaii) filed a companion bill (S. 1183). The bipartisan legislation would temporarily allow veterans to legally possess and use cannabis under federal law as recommended by doctors in accordance with state law as well as give doctors with the U.S. Department of Veterans Affairs (VA) the ability to prescribe cannabis to patients.
Reps. David Joyce (R-Ohio) and Alexandria Ocasio-Cortez (D-NY) reintroduced the Harnessing Opportunities by Pursuing Expungement (HOPE) Act (H.R. 6129). The bill would provide federal grants to states that want to expunge the records of those convicted of nonviolent, cannabis-related crimes.