Cannabis Group Weekly Alert – February 2020 #4

Dentons

In this week’s edition:

  • Presidential candidates begin to differentiate themselves on cannabis legalization
  • California proposes new rules to allow for protected designations of geographic origins of cannabis products
  • The US Department of Transportation becomes the latest agency to issue guidance warning to its employees that a positive drug test for CBD could lead to their termination
  • Members of the SPD in Germany have adopted a cannabis policy platform that endorses decriminalization and calls for pilot program to study legal recreational use
  • A new medical study found that patients experiencing attention-deficit hyperactivity disorder that were treated with medical cannabis reported a higher occurrence of stopping use of all ADHD medications

Federal

  • Customs and Border Protection – Newly unveiled documents reveal that US federal law enforcement agencies have been instructed to revoke the Nexus passes of Canadian citizens who partake in legal cannabis use. Guidance issued by US Customs and Border Protection has informed border agents that Canadians who admit to cannabis use are technically admissible to the US, but are not eligible for US-administered Trusted Traveler Programs.
  • NCIA – The National Cannabis Industry Association held a summit with federal, state and local law enforcement agencies; state regulators; cannabis businesses; and other industry stakeholders to address challenges associated with the continuing illicit cannabis market. A recurring theme of the summit was confusion among law enforcement agencies as to their role in a world where cannabis is legal in certain state jurisdictions but illegal at the federal level.
  • 2020 presidential candidates – In response to a question on possible changes to federal cannabis laws, Marc Lotter, director of strategic communications for PresidentTrump’s reelection campaign, stated that cannabis must be kept illegal. But what about his potential 2020 Democratic rivals?
    • Senator Bernie Sanders has said he’ll remove the federal ban on marijuana during his first 100 days as president.
    • Senator Elizabeth Warren has staked out one of the most pro-cannabis stances in the Democratic primary field by vowing to support its legalization and to reduce federal funding to states that refuse to legalize cannabis.
    • Michael Bloomberg, a longtime opponent of legalization, recently said states should be able to set their own laws without federal interference . He also released a criminal justice policy platform calling for decriminalizing cannabis possession and mass expungement of prior cannabis convictions.
    • Vice President Joe Biden, whose opposition to full legalization is well known, has softened his stance on the campaign trail (somewhat) He now says he’s for decriminalization, expungement of some records, making medical marijuana legal and supporting more research.
    • Mayor Pete Buttigieg told the Boston Globe, “The safe, regulated, and legal sale of marijuana is an idea whose time has come for the United States, as evidenced by voters demanding legalization in states across the country.”
    • Senator Amy Klobuchar on February 22 issued the following statement: “I support the legalization of marijuana and believe that states should have the right to determine the best approach to marijuana within their borders.”

State

  • AL – Legislation legalizing medical cannabis in Alabama has been favorably reported by the state Senate’s Judiciary Committee and will go to the full chamber for a vote, and then on to the House. If passed by the state legislature, the bill would establish an Alabama Medical Cannabis Commission to oversee an in-state medical cannabis program.
  • CA – The California Department of Food and Agriculture (CDFA) has published proposed regulations for appellations of origin standards, a protected designation that identifies the geographical origin of a product, for cannabis. Officials from the CDFA claim that the regulation will promote regional cannabis products and improve consumer confidence by preventing misrepresentation of product origin.  Stakeholders will have 45 days to submit comments on the proposed regulation
  • IA – Two state legislative committees favorably reported measures to expand the state’s medical cannabis program. The bills approved by the Senate Judiciary Committee and the House Public Safety Committee differ slightly, but both increase the allowable THC levels in cannabis products sold under the state’s medical cannabis program.  Governor Kim Reynolds (R) has indicated that a compromise on the two bills will likely be reached before the 2020 legislative session is adjourned.
  • GA – Georgia’s House Agriculture Committee has advanced legislation criminalizing the transport of hemp plants without paperwork verifying that the crop was grown under a farming or processing license.  Under the bill, individuals who violate the statute may face up to a year in jail or a $1,000 fine for possession of less than an ounce—the same penalty as misdemeanor cannabis possession charge.
  • KY – The Kentucky House of Representatives on February 20 voted 65-30 in favor of a bill legalizing medical cannabis. The bill has since been reported to the state Senate. If enacted into law, the bill would establish a state cannabis regulatory body to develop rules for the program and determine which medical conditions qualify individuals for cannabis based treatments.
  • LA – The Louisiana Agriculture Commission has issued the first industrial hemp licenses to farmers in time for the 2020 planting season. The first license was awarded to the Powell Group, an investment firm that owns several agriculture businesses.
  • ME – Maine’s Office of Marijuana Policy issued guidance on February 21 establishing advertising guidelines for cannabis products. Under the new policies, cannabis businesses are warned to refrain from running advertisements that can be appealing to individuals under the age of 21 and must ensure that advertisements do not appear in prohibited areas.
  • MI – Michigan Lieutenant Governor Gilchrist signed legislation (HB 4126 and HB 4127) on February 19 to strengthen disclosure requirements of health information for cannabis products. The bills will require the state Marijuana Regulatory Agency (MRA) to set regulations directing cannabis establishments to include warning labels for pregnant women on products and make pamphlets detailing health/safety information on cannabis use by minors available at the time of purchase.
  • MO – The Missouri House Special Committee on Government Oversight is investigating conflict of interest allegations that have plagued the state’s medical cannabis program in the lead-up to its launch this summer. State lawmakers used the hearing to scrutinize the program’s licensing decisions and have indicated that additional hearings may be necessary.
  • NH – The New Hampshire House of Representatives on February 20 passed by a 236-112 vote a bill legalizing the personal use and home cultivation of cannabis. Unlike states that have legalized commercial production and sales of cannabis products, the legislation would allow adults 21 and older to grow a limited number of cannabis plants at home and gift up to three-quarters of an ounce to other adults. The legislation has been reported to the state Senate where cannabis advocates believe it has a good chance of passing.
  • NM – Governor Michelle Lujan Grisham (D) on February 20 signed a new law limiting participation in the state’s medical cannabis program to in-state residents and reciprocal patients enrolled in out-of-state programs. In other words, under the new law, New Mexico citizens residing out-of-state will not be eligible to participate in the state’s medicinal cannabis program.
  • VT – A new survey conducted by the Marijuana Policy Project (MPP) shows that 76 percent of Vermont residents are in favor of allowing adults to purchase cannabis “from regulated, taxpaying small businesses.”
  • VA – The Virginia legislature is drawing closer to passing legislation to decriminalize cannabis. Committees in both the House and Senate have approved amended versions of cannabis decriminalization bills.  If passed, the bills as amended would make possession of up to one ounce a civil penalty punishable by a $25 fine without the threat of jail time.

Hemp/CBD

  • US Department of Agriculture – The USDA published a report exploring the economic viability of the American hemp industry as the country transitions to an era of legal hemp.  Among other things, the report analyzed the legal, logistical and economic challenges that might arise as US farmers return to a crop that hasn’t been commercially farmed in decades.
  • USDA – The USDA on February 20 approved hemp regulatory plans for the states of Washington and Wyoming; and the Otoe-Missouria Tribe, Prairie Band Potawatomi Nation and Santee Sioux Nation. To date, the USDA has approved hemp regulatory plans for 8 states and 10 Native American tribes.
  • US Department of Transportation – The DOT has become the latest federal agency to issue a formal guidance memo to its employees addressing questions surrounding use of CBD products. While the memo does not expressively forbid employees from using CBD products, it cautions employees that failure of a drug test for CBD will result in termination.

International

  • Canada – A new report from Statistics Canada analyzing the recreational use of cannabis by Canadian citizens post-legalization contains promising information for cannabis advocates. The report concluded that, by 2019, more than 5.1 million people nationally, or 16.8 percent of Canadians aged 15 or older, reported using cannabis in the three months prior to the survey, compared with 14.9% (4.5 million) reporting use in pre-legalization 2018. The report found that an estimated 29.4 percent of users obtained all of their cannabis from legal sources, nearly three times higher than before legalization. Additionally, the report found that cannabis consumption among 15- to 17-year-olds fell to 10.4 percent in 2019 from 19.8 percent in 2018.
  • Germany – Earlier this month, members of the Social Democratic Party (SPD) adopted a new position on cannabis, endorsing a policy platform in favor of decriminalizing possession and allowing pilot programs involving the legal distribution of adult-use cannabis—the first time a German political party forming a governing coalition has formally endorsed cannabis reform. With this shift in policy, a majority of elected representatives in the German Parliament now belong to a party that supports some version of recreational cannabis reform.
  • Scotland – The country’s first medicinal cannabis clinic is set to open, a private clinic in Aberdeen having received approval to prescribe medical cannabis to patients. The Sapphire Medical Clinic will offer cannabis flowers, oil and gel to patients who are referred by GPs.

Business

  • Kiva Brands Inc. – In a trademark infringement suit, US District Judge Charles R. Breyer of the Northern District of California, after granting plaintiff natural foods supplier Kiva Health Brands Inc.’s (KHB’s) motion to dismiss cannabis edible producer Kiva Brands Inc.’s (KBI’s) counterclaims seeking to cancel KHBls federal trademark registration and alleging trademark infringement, reasoning that because KBI’s products are illegal under federal law, it could neither establish lawful commercial use of its “Kiva” mark nor cancel KHB’s registration, the court on February 14 granted KHB partial summary judgment on KBI’s prior use affirmative defense on the same grounds.
  • Phyto Partners – Phyto Partners, a venture capital firm that provides debt and equity capital to privately held cannabis companies, announced the launch of its third cannabis-focused private equity fund.  Phyto Partners III, LP, has a target of $50 million. Why now?  “The cannabis industry has just gone through a reset of expectations and valuations, opening up an incredible investment opportunity,” said Managing Partner Larry Schnurmacher.
  • Vertosa – New research from cannabis and hemp infusion technology company Vertosa (fka Nanogen) has revealed that liners in aluminum cans can cause molecular reactions that reduce the potency of cannabis-infused beverages. While manufacturers have added liners to prevent cannabis-infused drinks from acquiring a metallic taste, the storage and distribution process for the products can cause beverages to lose their advertised potency.

Medical/Health

  • Rambam Maimonides Medical Journal – A new study published in the Rambam Maimonides Medical Journal revealed a possible new medical use for cannabis in treating individuals with attention-deficit hyperactivity disorder (ADHD). Researchers observed that patients treated with medical cannabis reported a higher occurrence of stopping use of all ADHD medications.  While the results were not deemed to be causal, researchers expressed optimism that additional studies might shed light on the potential beneficial effects of medical cannabis on ADHD symptom severity.
  • Translational Psychiatry – A recent study published in Translational Psychiatry analyzed the effect of cannabis on endocrine pathways related to appetite and metabolism. The study found that cannabis use modulated blood concentrations of some appetitive and metabolic hormones, chiefly insulin, in individuals participating in the study.