Dentons: Cannabis Group Weekly Alert – Week of July 20, 2020

In this week’s edition:

  • Worldwide legal cannabis industry revenue predicted to reach $20.4 billion in 2020, representing a year-over-year increase of 38%
  • Ninth Circuit rules that Joyce Amendment prevents federal government from sentencing two men who pled guilty prior to passage of the original appropriations rider
  • New Jersey Governor says cannabis legalization will boost state’s economy
  • Colorado proposes to allow social equity applicants to act as franchisees of existing cannabis businesses
  • And more…


Ninth Circuit Holds Joyce Amendment Prevents Sentencing Defendants Who Pled Guilty Prior to Original Appropriations Rider – The US Court of Appeals for the Ninth Circuit enjoined the federal government from prosecuting two individuals who pled guilty to cultivating medical cannabis a year before Congress passed an appropriations rider barring the Department of Justice from spending money to interfere with state cannabis laws.  A 2016 Ninth Circuit case held that individuals may seek to enjoin the DOJ only if they strictly comply with state cannabis law.  The majority found that the district court properly applied this precedent and did not clearly err in finding that both individuals strictly complied with California’s medical cannabis laws.

Report Highlights Drug Test Results From Federal Transportation Workers – The Federal Motor Carrier Safety Administration reported that marijuana accounted for almost half of the more than 25,000 positive drug tests of transportation workers in June.


CO  Colorado regulators announced a proposal to allow cannabis social equity applicants to functionally act as franchisees of existing cannabis businesses.  This program would help individuals harmed by the war on drugs to participate in the cannabis market.  Some advocates, however, are skeptical that upstart entrepreneurs could be taken advantage of by larger operators.  A hearing to finalize this rulemaking is tentatively set for July 30.  In other news, Colorado’s marijuana tax revenue and fees totaled $33.6 million in the month of June.

IL –  Illinois Gov. J.B. Pritzker (D) announced that cannabis sales in the first six months since implementation generated $52 million in tax revenue for the state based on more than $239 million in sales. A quarter of the tax receipts will go toward a community reinvestment program supporting individuals impacted by the war on drugs.  In other news, the High Times Cannabis Cup, which rates brands of marijuana on a variety of criteria, will be held in the state for the first time.  Due to the global pandemic, judging will be done virtually, with results to be announced on September 23.

MO – Missouri Gov. Mike Parson (R) signed legislation (i) limiting the forms, packaging and logos of medical cannabis edibles and (ii) requiring employees and owners of medical cannabis facilities to submit fingerprints to the state for background checks.

NJ – New Jersey Gov. Phil Murphy (D) said legalizing cannabis would be “an incredibly smart thing to do,” in part to help the state’s economy recover from the coronavirus pandemic. “It’s a job creator. It’s a tax revenue raiser….It checks a lot of boxes,” he said, adding that legalizing cannabis would also contribute to criminal justice reform.

NM – Medical cannabis producer Ultra Health filed a petition in state court challenging many of the rules recently adopted by the New Mexico Department of Health regarding plant and product testing, product labels and facility safety standards.  The petition contends these rules are arbitrary and capricious and should be invalidated.

Washington, DC – The DC Council approved a resolution to extend protections for local government employees against workplace discrimination for use of medical cannabis.


USDA – The US Department of Agriculture approved hemp regulatory plans for Minnesota, Tennessee and Puerto Rico.  In the past year, the agency has approved hemp proposals for a total of 53 states, territories or tribes.

FTC – The Federal Trade Commission reached a settlement with the marketer of the supplement Thrive, prohibiting the company from making claims that its CBD products were effective cancer treatments.  The settlement also requires the marketer to send notices to customers and retailers that its products will not prevent and cure cancer.  This is the FTC’s first settlement with a marketer claiming its products treat COVID-19.

HI – The Hawai`i legislature approved a bill banning smokable hemp and CBD-infused edibles. The bill was sent to Gov. David Ige (D) on July 17.


Global Use – In the eighth edition of the “State of Legal Cannabis Markets” series, Arcview Market Research and BDSA predict that worldwide legal cannabis industry revenue will grow another 38%, to $20.4 billion, in 2020.  The report also forecasts sales reaching $46.8 billion in 2025.  In Canada alone, medical and adult-use spending on cannabis nearly tripled in 2019, from $582 million to $1.6 billion, and revenue 2020 is expect to hit $2.8 billion.

Argentina – Argentina’s Minister of Health presented a draft proposal that would allow individuals to cultivate their own cannabis for medicinal use.  The country has allowed the use of medical cannabis since 2017.

Israel – Though Israel had no large imports prior to this year, in just the first six months of 2020 it overtook Germany as the largest importer of medical cannabis flower.

Netherlands – The Dutch government released an FAQ to clarify the application process to grow legal recreational cannabis.  The FAQ states that only applicants capable of large-scale cultivation (at least 14,330 pounds per year) will be considered.

New Zealand – Two drug policy experts are recommending changes to a draft cannabis bill legalizing adult-use cannabis prior to a referendum on the legislation in September.  The bill as currently drafted addresses the use, purchase and cultivation rules for adults over the age of 20.  The experts call for adopting a formal minimum price for cannabis and a lower potential cap for cannabis products. Additionally, they suggest the bill could be strengthened by clarifying the social benefit operators and role of local government.


ManifestSeven – ManifestSeven, an integrated omnichannel platform for legal cannabis, received conditional approval to trade on the Canadian Securities Exchange.

Grassroots – A shareholder is suing Grassroots Cannabis for records, claiming that executives agreed to lower the price of the company’s sale to Curaleaf in exchange for large bonuses and other perks.  Curaleaf announced its plans to acquire Grassroots for $875 million in June 2019.  However, due to the fall in cannabis stock prices, the current sale price stands at $700 million.

Metrc LLC – Metrc LLC, a cannabis track-and-trace company, filed an appeal in Missouri state court after a trial court found that the company did not have the right to charge cannabis retailers for its tagging services.  Metrc’s appeal argues that its contract with the state’s Division of Purchasing permits it to levy fees against private companies and that the trial court’s decision contradicts a state regulation.


Cannabis and Heart Health – A new study disputes long-held concerns that cannabis use can negatively impact heart health.  Researchers evaluated the effect of ECG abnormalities in cannabis users and concluded that “[i]n a middle‐aged US population, lifetime cumulative and occasional current marijuana use were not associated with increases in electrocardiogram abnormalities.”

Use of Cannabis for Treatment of Drug Dependence – Based on a review of 14 studies conducted with animals, researchers concluded that “CBD is a promising adjunct therapy for the treatment of cocaine dependence.”


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