Welcome to another edition of Tailored Benefit’s Cannabis in the News. Tailored Benefits is a boutique Employee Benefits Company.  

Let me digress and state that we usually always focus our stories on our industry as it pertains to California.  However, this week there are some stories that read of bigger industry trends that need recognition for the larger implications.

Recently we reported on Constellation Brands, the maker of Corona beer, Svedka vodka and Casa Noble tequila, announced that it is investing an additional $4 billion in the Canadian Canopy Growth. Now we have Coco Cola contemplating an entry into the Cannabis/CBD beverage market.  Coke said it is “closely watching” the growth of CBD, a non-psychoactive component in marijuana, as an ingredient in what it called functional wellness beverages.

A glass of cola with ice cubes

“The space is evolving quickly,” Coke said. “No decisions have been made at this time.” Coke’s interest was first reported by Bloomberg, which said the company was in talks with Aurora Cannabis, a Canadian cannabis company. Aurora has also expressed interest in cannabis drinks. Neither would comment on a possible deal.  “There is so much happening in this area right now and we think it has incredible potential,” said Aurora spokesperson Heather MacGregor. “Stories like this are further validation of the massive global potential of the cannabis industry.”

Drug testing and the workplace: For the first time, a federal court sided with an employee who brought a claim against her employer for termination for off-work use of marijuana. This decision will surely change how employers deal with after hours cannabis use. Blanket drug tests may no longer be de riguer. For backdrop, employers are not allowed to discriminate against employees with disabilities. Both federal and state laws provide this protection. This means that an employer cannot take an adverse employment action against an employee because of the employee’s disability. Again, this is a “general” rule of thumb: In the cannabis context, things are always a bit different. Some states have passed legislation protecting medical marijuana users off work marijuana use. Employers in those states cannot terminate an employee or refuse to hire an applicant because of their off-work medical marijuana use. Historically, however, the big problem with these laws is that state and federal courts have readily determined the Controlled Substance Act (CSA) preempts state law, and that employers may terminate medical marijuana patients for off-work use.

The federal court first addressed the CSA preemption claim and held that the CSA did not prohibit employers from employing marijuana users. Meaning, if state law prohibited employers from discriminating against medical marijuana users, it would control. The Court next determined that the ADA did not preempt PUMA because the ADA explicitly allows employers to prohibit illegal drug use at the workplace but does not authorize employers to take adverse employment action based on drug use outside of the workplace. Finally, the Court determined the FDCA does not regulate employment and therefore was inapplicable in the current case. The Court did not rule on the substance of Noffsinger’s claim–meaning it has not determined if Noffsinger was discriminated under PUMA. That decision is still pending a jury trial.

The importance of the decision is that it’s the first case of its kind to determine that marijuana’s illegality under federal law does not bar an employment claim based on state law. State courts, such as the Oregon Supreme Court, have expressly held that the CSA preempts state medical marijuana laws—meaning employers in the State of Oregon, for example, may still terminate an employee for off-work marijuana use. The decision in the Noffsinger case is not binding in other jurisdictions, but it could indicate a significant shift in federal courts’ view on medical marijuana.

More on the complex nature of adding CBD into drinks: This past year, the country has witnessed widespread interest in the use of cannabis in its nutraceutical (when added to food or drinks) form. Cannabidiol (“CBD”), the non-psychoactive chemical compound found in the cannabis plant, has gained great popularity among alcohol beverage companies. The growing popularity of CBD-infused products combined with their mainstream nature has given alcohol beverage companies the false impression that blending CBD into their products is an easy process.

Glass of whiskey with ice decanter and barrel on wooden table

How does it work: The CSA exempts certain parts of the cannabis plant from the definition of marijuana, including hemp-derived CBD products. Accordingly, only CBD derived from industrial hemp (“Hemp” or “Hemp-CBD”) is allowed in the formulation of CBD-infused alcoholic beverages.  The U.S. Alcohol and Tobacco and Trade Bureau 2000 Hemp Policy dictates how manufacturers may use Hemp-CBD in their alcohol products. However, even though the TTB permits the use of Hemp derivatives in alcohol products, the federal agency strictly prohibits producers from implying or referencing the presence of hemp, marijuana, and other controlled substance; or any psychoactive effects.” In other words, producers should refrain from using the term “CBD” in their formula or statement of process as the TTB seems to interpret the term as unlawful under federal law.  Moral: obtaining approval for the manufacture and sale of hemp-CBD infused alcoholic beverages is a complex process, due primarily to the uncertain nature of hemp-CBD laws.

Finally, in a rare move, the U.S. Drug Enforcement Administration approved the importation of marijuana extracts from Canada for a clinical trial, a decision that paves the way for additional research into the potential medical benefits of cannabis. The DEA’s decision could also open new business opportunities for Canadian and perhaps U.S. medical cannabis growers.

San Diego’s Balboa Park at twilight in San Diego California USA

The University of California San Diego’s Center for Medicinal Cannabis Research announced Tuesday the DEA approved plans to import capsules containing CBD and THC from British Columbia, Canada-based Tilray to study the drugs’ effectiveness in treating essential tremors that afflict an estimated 10 million people.  Currently, the only federally approved marijuana cultivator in the United States is the University of Mississippi, but the marijuana grown there is considered of poor quality compared to what is grown commercially in states where MJ is legal. In 2016, the Obama administration launched an effort to expand the number of growers allowed to grow cannabis for research and soon after began taking applications. More than 20 cultivators applied. But since the Trump administration came into power, the program has been missing in action. The UC San Diego study is expected to begin in early 2019 with financial support from Tilray and the International Essential Tremor Foundation. It’s estimated the trial will take approximately one year to complete.

Tailored Benefits is an employee benefits company that has had cannabis clients for over eleven years. Jeffrey Rosen, Tailored Benefit’s founder, practiced law for ten (10) years in San Francisco, Silicon Valley & Taipei, Taiwan. He has run an employee benefits company for over twenty years. Tailored Benefits’ has evolved over the past several decades to play an integral part in the cannabis industry and specifically Employee Benefits. With the surge in demand for cannabis employees, Tailored Benefits’ specific cannabis employee benefit solutions is how you can set yourself apart, attract and retain valuable employees.

If you need more information on how to insure your cannabis business, Tailored Benefits is here to guide you and keep you informed on local and federal policies.

All the best,

Jeffrey Rosen, President

(415) 974-1114

jdr@tailoredbenefits.com

@TailoredBen_