Dentons 3 April 2025 Weekly Cannabis Client Alert

April 3, 2025

In this week’s edition:

Dentons Speaks

Dentons Partners Eric Berlin and Joanne Caceres spoke with the Founders of Perfectly Dosed in the webinar “Navigating the Next Steps in the Hemp THC Beverage Market”. The conversation explores essential operational and legal strategies in the fast-evolving hemp THC industry.

Partner Hannah King presented “Escape 280E: How Cannabis Companies Can Pay Zero Income Tax with an ESOP” on March 22 at NECANN’s 2025 New England Cannabis Convention in Boston with MBO Ventures’ Managing Partner Darren Gleeman.

Federal

Uncertainty Continues Regarding Rescheduling of Cannabis Under the Trump Administration – President Donald Trump’s initial actions in office, including his appointments to lead federal drug and health agencies, have cast doubt on the likelihood of cannabis rescheduling in the short term. Former Rep. Matt Gaetz, and Trump’s first pick for Attorney General, insists rescheduling is ‘on the horizon’ in a recent op-ed in The Tampa Bay Times, which praised President Donald Trump’s leadership in supporting rescheduling. While some remain hopeful that the Trump administration will act before the end of the year, many executives and lobbyists are increasingly doubtful that significant federal policy reforms will occur anytime soon.

Feds Say Cannabis Can Be Seized From State-Legal Businesses In Pending New Mexico Case – Federal agencies responsible for border security are defending against a lawsuit from New Mexico cannabis businesses whose state-legal products and assets have been seized, arguing that cannabis, as a Schedule I drug under federal law, can be summarily confiscated. The U.S. Department of Homeland Security (DHS) and Customs and Border Protection (CBP) suggested in a new federal court filing that the situation might change if cannabis were rescheduled to Schedule III.

FDA Sends Warning To Injectable CBD Product Company – The Food and Drug Administration (FDA) has issued a warning letter to Pico IV Inc., a California company, for allegedly marketing an injectable CBD product and making unauthorized health benefit claims. The FDA highlighted multiple violations of the Federal Food, Drug, and Cosmetic Act (FD&C Act) and other federal laws related to the sale of the intravenous CBD product. The agency has given Pico IV 15 working days to take corrective action and inform the FDA of the steps taken to address these violations.

DEA Promotes Anti-420 Day Campaign – The DEA is promoting an “Anti-420 Day” campaign encouraging young people to create original videos warning their peers about the harms of THC use. The campaign, run by anti-cannabis nonprofit Johnny’s Ambassadors, seeks to focus on the negative impacts of THC on youth through personal stories and educational content.

State

CA – The California Supreme Court has de-published a previous ruling that declared cannabis illegal in the state due to federal law, as reported by the Santa Barbara Independent. This decision stems from a lawsuit filed by a Lompoc property owner against the County of Santa Barbara, challenging the use of an easement road on her property for transporting cannabis. Although the property owner and the county are still bound by the prior ruling, the de-publishing means it can no longer serve as a legal precedent for other cases, effectively nullifying its broader legal impact.

DE – The launch of Delaware’s adult-use cannabis market, initially planned for this year, may face delays due to a conflict with the FBI over the approval of a fingerprint background check application. State regulators had intended to license the first recreational cannabis businesses in April, following the legislature’s approval of legalization bills two years ago. However, the Office of the Marijuana Commissioner (OMC) has not yet received the necessary approval from the FBI to implement a fingerprinting system for criminal background checks, which is a requirement under state law.

HI – Hawaii lawmakers advanced a bill allowing healthcare providers to recommend medical cannabis for any condition they deem appropriate, rather than a specific list of conditions. The bill includes changes such as allowing sales between licensed dispensaries and permitting dispensary waiting rooms to sell hemp products and accessories. Governor Josh Green supports expanding access to medical cannabis and full recreational legalization.

ID – Indiana lawmakers are advancing Senate Bill 478 to regulate craft hemp flower products with a focus on Delta-8 THC. The bill covers licensing, testing, packaging, age limits, and advertising. The legislation maintains the ban on the sale of craft hemp flower and prohibits the possession of craft hemp flower unless it is being used by a licensee to manufacture a craft hemp flower product. Craft hemp flower products would have to contain less than 0.3 percent of Delta-8, Delta-9 or hexahydrocannabinol THC by weight or volume. Gummies, other edibles and tinctures would be capped to 100 milligrams of THC per serving and 3,000 mg per package; drinks would be limited to 25 milligrams per unit and 600 mg per package; and e-liquid would have to contain less than 3 grams of THC per device. There are concerns about distinguishing legal hemp from banned cannabis in testing. The bill has passed committee and is now awaiting a hearing in the House Ways and Means Committee.

KY – Following the passage of a medical cannabis law in January 2025, cannabis is projected to become available to most consumers by the end of the year, and sales could start as soon as this summer. Around 7,000 Kentuckians have applied for medical cannabis cards, with most being approved.

MA – Massachusetts Bill H. 2179 aims to prohibit most pre-employment cannabis testing, marking a significant change from current practices. The bill states that employers can only test for cannabis after extending a conditional job offer, but cannot make passing the test a condition of employment. While H. 2179 is still under consideration, it reflects a broader national shift away from cannabis testing in employment decisions.

MD – Maryland Governor Wes Moore and legislative leaders agreed to increase the adult-use cannabis tax from 9% to 12%, aiming to generate an additional $39 million in revenue. Maryland’s adult-use cannabis sales provided roughly $72.9 million in state revenue in 2024. On average, cannabis businesses would be on the hook for an additional $270,000 in taxes each year, meaning consumer prices could increase at dispensaries.

MO – A proposal to regulate hemp-THC products like seltzers and edibles was rejected by a House committee. The bill faced opposition from within the hemp industry, with disagreements over the regulation of THC-A flower. Meanwhile, the Missouri Cannabis Trade Association’s two bills, which have both gained approval by House and Senate committees, could ban intoxicating hemp products from being sold outside of cannabis dispensaries – with the exception of hemp beverages, such as THC seltzers currently sold in bars and liquor stores.

MT – The Montana Senate gave initial approval to a bill to redirect cannabis tax revenue away from environmental conservation efforts and toward law enforcement and drug treatment programs. Senate Bill 307 aims to reallocate over $60 million in recreational cannabis tax revenue from conservation programs to police and addiction treatment. The bill has support from drug prevention specialists and law enforcement, but faces opposition from conservation groups and the Montana Fish Wildlife and Parks department. The bill passed the Senate 30-20 and will have a hearing before the Senate Finance and Claims Committee.

NY – Last month, New York launched a $5 million grant program to assist adult-use cannabis social equity retail licensees, offering $10,000 to $30,000 to Conditional Adult-Use Retail Dispensary (CAURD) license holders. This initiative aims to support “justice-involved” individuals and nonprofits facing various challenges in the state’s adult-use cannabis market, including capital shortages. Meanwhile, after four years since recreational cannabis legalization, the licensing of social consumption sites still languishes as the OCM has yet to implement the necessary regulations, with the agency explaining that it was “prioritizing first the licenses that are critical to establishing a stable and sustainable supply chain, including cultivation, processing, and retail.”

OH – Ohio Gov. Mike DeWine (R) is advocating for reallocating cannabis tax revenue to fund police training, local jails, and behavioral health services, despite such reforms not being part of the 2023 voter‑approved cannabis legalization law. Among other things, he emphasized concerns regarding products’ higher THC potency.

VA – Gov. Glenn Youngkin (R) vetoed a bill that would have legalized retail cannabis sales (a repeat of his veto last year against setting forth a legal framework for cannabis sales), citing continuing concerns about public health, safety, and increased crime. Despite cannabis use and possession by adults already being legal in the state, Youngkin argued the proposed bill would not eliminate illegal sales or ensure product safety, and will still create additional adverse societal effects and financial costs that would far exceed tax revenue.

Hemp

AL – Following a heated public hearing, a state Senate committee rejected SB 237, a bill aimed at regulating hemp beverages and products. The bill, sponsored by Sen. Tim Melson (R-Florence), would have imposed a 10% excise tax, banned smokable hemp, and regulated consumable hemp products similarly to alcohol and tobacco, with the goal of preventing underage access and addressing safety concerns linked to their use.

AZ – Arizona Attorney General Kris Mayes (D) issued letters to law enforcement agencies and retailers clarifying that the sale of THC-infused products without a valid cannabis establishment license is illegal. While acknowledging that some businesses believe sales are permitted under the 2018 Federal Farm Bill, Mayes emphasized that only licensed dispensaries can legally sell THC products, including delta-8 and delta-9 THC, under the Smart and Safe Arizona Act. The attorney general has asked law enforcement agencies to wait until April 24, 2025 before taking action.

CA – Last week, California quietly extended its emergency ban (for a further ninety days) on intoxicating hemp products first imposed last September. Meanwhile, a study of hemp THC products in California’s until now booming market, found that, among other things, more than half of the products contained THC above the 0.3% concentration limit, with vapes containing, on average, 268 percent more THC than the legal limit.

NE – The Nebraska Attorney General’s office sent cease-and-desist letters to 104 vape shops, dispensaries and gas stations, ordering them to stop selling cannabis products within 30 days. The office claimed the businesses were breaking state law.

TX – The Texas Senate approved Senate Bill 3, which would prohibit the retail sale of any cannabinoid in the state, except CBD and CBG. The bill still needs to pass the House, which has proposed its own House Bill 28 that would regulate the market rather than completely ban it. A report by Whitney Economics revealed that the Texas hemp market contributes $10 billion to the state’s economy. Should the bill be passed by the House, Delta-8, Delta-9, and all other forms of intoxicating THC, including beverages, would be banned entirely, a move which could cost the industry $8 billion and impact tens of thousands of jobs.

International

Australia – Australia’s Parliamentary Budget Office issued a report that showed the legalization of cannabis could generate $700 million in annual revenue. The total in annual revenue is calculated from a mix of sales tax, corporate taxes, and a 15-percent special tax on cannabis.

Canada – The Canadian government published proposed changes to cannabis regulations regarding packaging, licensing limits, research and production standards for cannabis businesses across the country. The changes focus on five key areas: licensing, personnel and physical security, production to support product innovation, packaging and labelling, and record-keeping and reporting requirements. The proposals would allow micro-cultivation, micro-processing, and nursery license holders to produce up to four times their previous allowable production limits.

France – Three documents outlining the proposed French medical cannabis framework were submitted to the European Commission for approval, a necessary formality for adoption. Under the proposals, cannabis will remain a treatment of last resort for patients with specific condition eligibility, such as neuropathic pain, MS, relief from effects of chemotherapy, and persistent palliative care symptoms. In addition to finished products with specified cannabinoid ratios, cannabis flower would be available but strictly to a “single-use” dose and with specific vaporization devices.

Netherlands – The Dutch government intends to transition to its regulated adult-use cannabis market experiment on April 7, despite significant concerns that the timing is premature due to supply issues. Ten municipalities will participate in the experiment, however, only seven of ten cultivators are currently operational. Participating coffeeshops will be required to source cannabis only from government-approved growers in an attempt to curb the former “tolerance policy” in which illegal supply was permitted to be legally sold to consumers.

UK – A new survey finds that 84% of UK doctors would be open to prescribing medical cannabis for chronic pain if it were part of its public healthcare system toolkit through the National Healthcare Service (NHS). Chronic pain is one of the most common indications for which cannabis is prescribed privately in the UK and 78% believe that opioids for pain relief are too frequently prescribed. However there is some concern that the NHS could not handle the potential increase in patients even though it could lead to substantial savings. The survey of 250 practicing doctors was commissioned by a private medical cannabis clinic. King Charles, who has been battling cancer, has reportedly tried medical cannabis as a treatment and relief from related symptoms. The monarch has been known to champion homeopathic and alternative remedies, and according to a palace source, “sees there is no danger in trying the cannabis route.”

United States – The 2025 Global Cannabis Regulatory Summit took place in Washington, DC, on March 25-27, bringing together industry stakeholders, regulators and advocates from 16 international markets. The first-of-its-kind, invite-only international symposium was hosted by Artemis Growth Partners, a global private investment group, in conjunction with Tenacious Labs. Former United States Secretary of Health and Human Services Kathleen Sebelius and Super Bowl Champion and cannabis advocate Marvin Washington provided keynote discussions.

Business

Tariffs on China Affecting the US Cannabis Industry – Many cannabis companies rely on Chinese manufacturing for cannabis equipment, accessories and machinery, but President Trump’s imposed tariffs are increasing prices. As a result of tariffs as high as 45%, companies are looking to Malaysia, Indonesia, other Southeast Asian countries, and even considering trade through Canada, to stay competitive. The shift in production presents short term supply issues, logistical challenges and other costs, with vaporizer companies being particularly burdened.

Leak Reveals Donation by Philip Morris in Campaign to Oppose Adult-use Cannabis in Florida – A leak revealed that tobacco company Phillip Morris International donated $500,000 to Governor Ron DeSantis’ (R) campaign to oppose Florida’s Amendment 3, a bill that would have legalized adult-use cannabis in the state. The accepted donation was made in the closing weeks of the campaign and makes Phillip Morris one of the top contributors. Amendment 3 failed to pass in 2024, receiving less than the required 60% of the vote to become law, despite a multi-million dollar effort to support legalization.

Edible Arrangements Launches Hemp Product Delivery – The company behind Edible Arrangements is entering the cannabis market by launching a new delivery service for hemp products. Edible Brands is best known for fruit arrangements, but has recently announced that it will start selling hemp gummies, drinks and supplements via delivery in Texas. After Texas, the brand will expand to Florida and Georgia, with certain products available to be shipped nationwide in accordance with state laws. This announcement follows two months after DoorDash announced that it was expanding its offerings to include hemp-derived THC and CBD products, including gummies and beverages.

Medicine

Study Shows Medical Cannabis Represents Cost-Effective Adjunct Therapy for PTSD – A new study concluded that medical cannabis products, particularly non-flower formulations, represent a cost-effective adjunctive therapy for moderate post-traumatic stress disorder (PTSD). The study, published in the journal Clinical Drug Investigation, says that products such as edibles, oral solutions and tablets “consistently demonstrated cost-effectiveness” under a standard model of insurers’ willingness to pay. These findings show that it could be advantageous for the patient as well as the health insurer to provide health insurance coverage for medical cannabis. If the United States makes cannabis federally legal, the country could save an estimated $29 billion in health insurance costs annually.

New Study Shows 4 in 10 Military Veterans with Chronic Pain Use Medical Cannabis – A study published in Global Advances in Integrative Medicine and Health found that 4 in 10 military veterans with chronic pain report using medical cannabis to manage symptoms such as mobility issues, sleep issues, anxiety, and stress, the new study shows. While 98% of the study participants want healthcare providers to discuss the use of natural products with their patients as an alternative to opioid prescriptions, only half of the 52 participants reported that their healthcare providers actually discusses natural alternatives with them.

Research Suggests Cannabis Can Help with Pain Management in Athletes – Cannabis “demonstrated positive findings” for managing pain in NCAA athletes, new research says. Specifically, cannabis has shown positive results to help athletes with improving oxygenation of tissues, reducing muscle spasms, and enhancing pain management. Additionally, anti-inflammatory properties in cannabis were found to assist in recovery and post-exercise treatment. This study stems from the notable change by the NCAA to remove cannabis from its list of substances banned for Division 1 athletes. The NFL and UFC have also amended their cannabis testing policies with an emphasis on health and well-being instead of punishment.

Psychedelics

DOD Distributes $10 Million in Funding for MDMA Research for Military Members – The Department of Defense has allocated nearly $10 million in funding for research into the therapeutic potential of MDMA for active-duty military members. The money will be divided in $4.9 million increments to one trial exploring MDMA in the treatment of PTSD and another exploring MDMA in the treatment of traumatic brain injuries. The FDA released its first draft guidance on studying psychedelics last year..

Federal Judge Orders Utah Police To Return Psychedelic Mushrooms Seized From Religious Group – A federal judge in Utah has ordered county law enforcement return psilocybin mushrooms that police seized from a Provo City-based religious group that uses the psychedelic fungi as a sacrament. The founder of religious group brought the suit on constitutional grounds and under the state Religious Freedom Restoration Act which was passed to protect religious practices from government interference. The court ruled that “a law that categorically prohibits the possession and use of the psilocybin sacrament – thereby preventing Singularism’s adherents from pursuing their spiritual voyages and hindering them from producing their sacred scripture – substantially burdens the free exercise of Singularism and its adherents.”

Please click here for more information on the Dentons US Cannabis group.

Authored by associates Lauren Estevez, Jacob Raver, Blair Johnson, Kristina Grimaldi, and legal interns Victoria Mooncotch and Jessica Steinberg