United States: Cannabis Group Weekly Alert - Week Of April 22, 2019

The big news this week is Canopy Growth Corp.'s announcement that it plans to acquire Acreage Holdings, Inc., a leading US multistate cannabis operator, in a deal that could be valued at $3.4 billion. The deal provides a clear entry strategy into the US for Canada-based Canopy Growth. Certainly, Canopy Growth has made a big bet on the future of cannabis legalization in the US. In another significant milestone, Greenlane Holdings, Inc., launched its IPO on the NASDAQ stock exchange, the first purely cannabis-focused business to do so.

Momentum continues to build for the Secure and Fair Enforcement (SAFE) Banking Act, with five new co-sponsors in the House and a ringing endorsement from the largest US banking trade organization.

Georgia state legislators passed a new medical cannabis bill to permit for limited cultivation, buying and selling of cannabis with less than 5 percent THC. Previously one of the most restrictive programs in the country, this move was lauded by patients and passed with little drama. Texas is also considering several bills aimed at expanding medical access, further decriminalizing cannabis and legalizing hemp.

California is facing many challenges to its cannabis program, including temporary licenses expiring before regulators can replace them and lawsuits from anti-cannabis groups powered by the strict requirements of the California Environmental Quality Act. Vermont legislation permitting cannabis sales may face insurmountable hurdles, with Republican Governor Phil Scott stating he will only support the bill if it includes roadside saliva testing.

Michigan formally launched its 2019 hemp pilot program. The Oklahoma legislature sent Governor Kevin Stitt a hemp bill permitting cultivation consistent with the 2018 Farm Bill. It is expected that the Governor, a Republican, will sign the bill. CBD continues to gain mainstream acceptance with national retailers, with The Vitamin Shoppe the latest major chain to enter the space.

US corporations are embracing "420" as cannabis legalization becomes more and more acceptable. Major companies who had 420-specific advertising include Lyft and Carl's Jr.

Read more about these stories and cannabis related news below.


The House version of the Secure and Fair Enforcement (SAFE) Banking Act got five new co-sponsors, for a total of 165. This far surpasses the level of sponsorship for other cannabis bills in Congress.

Further adding to the momentum, the American Bankers Association, the largest US banking trade organization has backed the SAFE Banking Act, saying in a letter to the US Senate that it would help reduce crime, boost tax revenue and improve transparency.

US Citizenship and Immigration Services (USCIS) released policy guidance regarding "Controlled Substance-Related Activity and Good Moral Character Determinations." It states that "violation[s] of federal controlled substance law, including for marijuana, remains a conditional bar to establishing good moral character." While not phrased in the absolute, this guidance is likely to be of concern to non-citizens considering using cannabis or working in a cannabis related industry.

The US Attorney for the Western District of Washington, who has been one of the most vocal opponents of cannabis and cannabis legalization, said that "even if I wanted to [crack down on cannabis businesses], I just couldn't," adding that if safe consumption sites for illegal drugs open up, "action will be swift, sure and decisive."

A district court in Colorado denied a request for summary judgment where defendant argued that liquid cannabinoid formulations are not eligible for a patent.  The case addresses cannabis extraction methods the well accepted rule that "[l]aws of nature, natural phenomena, and abstract ideas are not patentable."  The "911 Patent" made claims about "a [liquid] extract comprising a mixture of at least 95% total cannabinoids, and at least one terpene/flavonoid" and "[specific] formulations containing the extracts according to the invention."  The court ruled that "the 911 Patent is not 'directed to' an unpatentable law of nature, a natural phenomenon, or an abstract idea. It is instead 'directed to' a non-naturally occurring delivery method of naturally occurring chemicals in (as far as the record reveals) non-naturally occurring proportions and concentrations."


In California, more than 6,000 temporary cultivation licenses are expected to expire by the end of April before they can be replaced with annual permits. Licensing delays could cost cannabis growers thousands of dollars in lost revenue, and possible shutdowns.

Adding to Cali growers' woes, industry observers are warning about the impact the California Environmental Quality Act (CEQA) may have on the legal cannabis market, calling it the "silent killer." CEQA says that any project which has the potential to change the physical environment is subject to discretionary review by a government body and may have to submit assessments of potential environmental impacts requiring mitigation. The law is often used as a weapon to delay or stop disfavored projects, and has already sparked a number of lawsuits from anti-cannabis groups.

Florida Gov. Ron DeSantis (R) signed off on a settlement deal approving eight new medical cannabis operators. The settlement ends a lawsuit filed by Nature's Way Nursery of Miami, Inc., challenging how the state originally determined who was awarded licenses. The 8 companies will bring to 22 the total number of operators doing business inside Florida.

Georgia Gov. Brian Kemp (R) signed a bill allowing in-state cultivation and sales of low-THC medical cannabis products. Although Georgia has allowed patients to possess cannabis oil since 2015, there was no mechanism to sell, buy or transport the oil.

Maryland regulators told medical cannabis businesses that they will lose their temporary licenses if they don't begin operations by September 30. It is reported that 26 companies are in danger of losing their license approvals if they cannot comply with the deadline. Joy Strand, executive director of the Maryland Medical Cannabis Commission, said the commission does not plan to re-award any licenses that are surrendered by companies that lose their preliminary approvals.

In Texas, three major cannabis reform bills—to decriminalize marijuana, legalize hemp and expand medical cannabis—have cleared committees and are on their way to the House floor. Regarding these and other bills under consideration, Heather Fazio, director of Texans for Responsible Marijuana Policy, told Marijuana Moment, "[l]egislators are taking this issue more seriously now than ever before, and they're responding to their constituents who want to see these laws changed."

The future of legal cannabis sales in Vermont is uncertain after Gov. Phil Scott (R) said that a cannabis sales legalization bill would need to allow roadside saliva testing to win his support. Proponents of saliva testing say it is necessary to keep drug-impaired drivers off the road. Opponents say it is overly invasive as well as inaccurate

Hemp and CBD

Michigan Gov. Gretchen Whitmer (D) and regulators announced the launch of a hemp pilot program for the 2019 planting season. Interested parties can now download the applications for growers and processor-handlers online. Notably, the application cost for growers is only $100 compared to a whopping $1,350 for processor-handlers.

Oklahoma lawmakers sent Gov. Kevin Stitt (R) a hemp bill. The bill would allow the state Department of Agriculture to develop and manage a hemp production program under the 2018 federal farm bill. The Governor is expected to sign the bill

The Associated Press examined mainstream retailers embracing CBD. Aside from CVS, Walgreens and Rite-Aid, the article also notes that Martha Stewart, Nine West and Simon Property Group ("the nation's largest mall owner") have entered or plan to enter the space. Companies still waiting in the wings include Walmart and Amazon.

The Vitamin Shoppe began selling oral CBD soft gels this week and will start selling CBD drops by the end of the month. Some see this as a bolder step than other mainstream companies, who have steered clear of ingestible products.

Also relating to food, Carl's Jr. announced that it is "testing" a burger that features a sauce infused with CBD. The "Rocky Mountain High: CheeseBurger Delight" burger was on the menu at one location (in Denver, CO) for just one day (4/20). Although the company has said this is more than a stunt, industry observers are skeptical.

Elavon, a US bank subsidiary, notified its hemp and CBD clients that it re-categorized hemp and cannabidiol-based merchants as a prohibited business type and that accounts for such merchants would be closed within 45 days. Such a move is perplexing considering the passage of the hemp-friendly federal farm bill and the general movement of the industry


Canada-based Canopy Growth Corp. announced its plan to acquire a leading US multistate cannabis operator, Acreage Holdings, Inc., "at such time as cannabis production and sale becomes federally legal in the United States." The company states that the proposed deal "complements Canopy Growth's US CBD strategy with an accelerated pathway into US cannabis markets" and that the "deal structure [is] expected to provide improved access to capital for Acreage, paving way for accelerated expansion." Pending approval from shareholders and the Supreme Court of British Columbia, Acreage will receive an immediate payment of $300 million. In addition, if exercised, holders of Acreage's subordinate voting shares will receive 0.5818 per Canopy common share—valuing the deal at $3.4 billion.

Greenlane Holdings, Inc., the leading distributor of premium ancillary products to head shops, smoke shops and dispensaries in North America, launched an initial public offering on the Nasdaq stock exchange on Friday, April 19. We expect NASDAQ will continue to move forward in listing other cannabis ancillary companies this year.

US corporations are embracing the "420" holiday as cannabis legalization becomes more and more acceptable. Major companies who had 420-specific advertising include Lyft, Carl's Jr and long-time participant Ben & Jerry's.

Bank of America has begun covering cannabis stocks. Industry observers touted this as noteworthy because very few Wall Street firms have publicly weighed in on the sector.

Some California and national businesses are reportedly dropping zero-tolerance cannabis policies. Policies varied from stopping screening all together, only screening "safety-sensitive positions", or screening generally and ignoring failures cause by cannabis

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions