In this week's edition:

  • US Senate approves funding bill that continues to protect state medical cannabis laws from DOJ interference through fiscal year 2020. While the bill does not expand the protections to all state cannabis laws, it includes new language regarding the need to issue CBD guidelines and to support hemp businesses.
  • A study finds that legalizing medical cannabis and providing access to dispensaries improves health among certain demographics by, for example, fostering "large reductions in alcohol consumption" and reducing "mental health issues and health related limitations." However another study casts some doubt on cannabis's efficacy for mental health.
  • The Centers for Disease Control and Prevention reports that there are now believed to be 1,604 cases of lung injuries associated with vaping products, 86 percent of which appear to be tied to THC-containing products.
  • And more...

Federal

By an 84 to 9 vote, the Senate approved a funding bill that continues to shield state medical cannabis laws from Department of Justice interference through fiscal year 2020.  But the bill does not include a broader, House-passed rider covering all state cannabis laws.  The legislation also contains new language directing the Food and Drug Administration to issue enforcement discretion guidelines for CBD and encouraging the Farm Credit Administration to provide services to hemp businesses and supporting "competitive USDA grants for hemp product." 

Washington State cannabis businesses reported that shipments of glass jars and other packaging products were seized as drug paraphernalia by US Customs and Border Protection (USCBP) agents at the port of entry in Tacoma, WA.  The seized materials included spice jars and glass vials that bore no markings indicating they were bound for a cannabis producer and processor, representatives of the companies said. The USCBP denied any new action to stop shipments bound for cannabis companies in the state.

States

Los Angeles City Council President Herb Wesson called for a redo of last month's cannabis retail licensing process, citing, among other reasons, that the city admitted that two applications gained early entrance to the application process.  Some winning applicants have threatened to sue the city if the initial results are redone.  Several stakeholders, including the California Minority Alliance, applauded Wesson's move as they also believe the September licensing process was flawed. Next steps, however, remain unclear. 

Denver officials reported an 80 percent failure rate for random yeast and mold tests on cannabis products from 25 dispensaries.  The majority of the dispensaries that failed the testing had obtained the flagged cannabis products from wholesale providers.  The city is reviewing each case, using the state's seed-to-sale tracking system, and other resources, to track how and when the failed cannabis products became contaminated after passing the required microbial testing before the products arrived at the dispensaries.  

The Chicago Zoning Board of Appeals released rules for this month's cannabis special use permit lottery.  Applicants for special use permits will be allowed to select their cannabis district of choice by lottery on November 15.  The rules make it clear that Chicago's 11 existing medical cannabis dispensaries will likely be the only places to purchase recreational cannabis come January 1, 2020. 

A Chicago entrepreneur is offering up to $250,000 in loans to 100 social equity applicants hoping to win special use permits to operate recreational cannabis dispensaries in the state of Illinois.  Seke Ballard, founder and CEO of Good Tree Capital, told the Chicago Sun-Times that he plans to offer selected companies and individuals no- or low-interest loans to cover the $2,500 application fee, stating, "[w]e are not going to wait on the state [and] we're not going to wait on the city, we are going to make sure that at least 100 social equity applicants have the support and knowledge they need to submit complete, compelling applications."

In anticipation of adult-use cannabis sales beginning in 2020, Illinois approved two more cannabis cultivation facilities for recreational cannabis, bringing the total to nine grow facilities.  The licenses were awarded to Anna, IL-based Wellness Group Pharms LLC and the GTI Rock Island (IL) LLC, the flagship operation of Chicago-based national cannabis consumer packaged goods company and retailer Green Thumb Industries Inc.

On November 1, 2019, the Iowa Medical Cannabidiol Board, after considering petitions to add post-traumatic stress disorder, opioid use disorder, Alzheimer's disease, and intellectual disability with aggression and/or self-injury as qualifying conditions for medical cannabis, and to replace the 3 percent THC potency cap with purchasing limits, (1) added post-traumatic stress disorder and intellectual disability with aggression as medical cannabis-qualifying conditions but rejected opioid dependency and Alzheimer's disease; and (2) approved replacing a THC potency cap with purchase limits.

The Kansas Legislature's Special Committee on Federal and State Affairs approved two tentative steps toward considering a medical cannabis bill.  Specifically, the committee recommended that (1) Kansas lawmakers consider allowing residents from other states to use the product in Kansas if they are properly licensed to do so in their home states; and (2) Kansas study Ohio's approach to medical cannabis use (i.e., 90-day limited supply, edibles and oils permitted but smoking prohibited). The committee also recommended that Kansas ban the vaping of cannabis.

The nationwide outbreak of vaping-related injuries is complicating cannabis legalization in Minnesota. Opponents are seizing on the vaping epidemic to urge caution on the cannabis front.  Paul Gazelka (R), majority leader of the state Senate, stated, "I hope this slows down the rush by [Gov. Tim Walz] and House Democrats on recreational [cannabis].  If they see the correlation, that might at least slow down the process." Proponents of legalization say the outbreak of illness is all the more reason to push for a legal and rigorously regulated cannabis market.

The Missouri Department of Health and Senior Services issued a new draft emergency rule concerning medical cannabis facility licensing and certification procedures. The draft rule creates procedures for confirming acceptance of a license and/or certification and for issuing new licenses/certifications when they become available.  The state is seeking public input until November 6. 

The Pennsylvania Supreme Court ordered the Lebanon County Court of Common Pleas to stop enforcing a controversial Lebanon County policy that prohibits the use of medical cannabis by people on probation or other court supervision until the Supreme Court of Pennsylvania has made its decision in a lawsuit challenging the constitutionality of the policy.  In October, the ACLU of Pennsylvania filed a class action against Lebanon County on behalf of three people who are on probation, are registered medical cannabis patients and use medical cannabis to treat their significant disabilities.  Briefs in the underlying lawsuit are due by December 9.

Rhode Island House of Representatives Deputy Speaker Charlene Lima (D) said regulators should not issue additional medical cannabis business licenses until law enforcement or an independent body can conduct an investigation to determine whether politically connected individuals and companies had an unfair advantage in the application process.  Rep. Lima is also considering filing legislation to deal with this issue when the General Assembly reconvenes.

The Washington State Liquor and Cannabis Board adopted an interim policy allowing licensed cannabis retailers, for a limited time, to return now-banned flavored cannabis-vaping products to licensed cannabis processors for credit against future purchases of cannabis production.  The interim policy applies retroactively to October 10 and will be in place through December 31,, 2019. A credit balance may be maintained for up to six months, until June 30, 2020. 

The Maine Office of Marijuana Policy recently adopted a universal symbol that must appear on all cannabis products sold for adult use in the state.  While Maine is the eighth state to adopt a universal symbol for cannabis products, it is the first to adopt another state's symbol—in this case, Massachusetts—rather than create its own.  In an article for Compound Interests, an individual who works for a multistate operator of cultivation facilities and dispensaries argued that a single, uniform symbol adopted for use in all states would benefit packaging companies and consumers alike.

Hemp/CBD

On October 31, 2019, the US Department of Agriculture (USDA) published its proposed hemp regulations.  With the interim rule's publication, the USDA will begin to implement the federal hemp program, including reviewing state plans and issuing licenses under the USDA hemp plan.  The interim rule includes long-awaited decisions on total-THC potency testing, approving state regulatory plans and the reach of a ban on industry participation by people with felony drug convictions.  There is a 60-day public comment period during which interested persons are encouraged to weigh in on the interim rule.  The comment period will close on December 30, 2019.

Colorado will likely have to alter some of its hemp regulations to align more closely with the USDA regulations, which may mean stricter rules for the state's cultivators.  Specifically, the testing and sampling requirements in the USDA regulations are stricter than Colorado's rules, which provide greater opportunity for cultivators to mitigate "hot hemp" or plants that test above the federal government's maximum allowable level of THC in industrial hemp.  Colorado regulators will send the state's hemp proposal to the USDA within the next few months in hopes of achieving full USDA compliance by the 2020 farming season.

The Tennessee Bureau of Investigation (TBI) said it has a new testing method to distinguish cannabis from hemp.  A combination of chemicals added to a sample of each plant turns a different color depending upon if the plant has more CBD or THC.  The new testing method is only implemented in TBI labs and does not assist law enforcement officers in the field. 

Wisconsin regulators began accepting applications for hemp licenses on November 1, 2019.  People who received licenses in 2018 or 2019 will not need a new license, but will need to register if they plan to grow or process in 2020. Anyone who does not already have a license will need to apply for a license and register if they intend to grow or process in 2020.

International

The International Narcotics Control Board warned Australia's government that a local cannabis legalization law violates international drug treaties.  Specifically, the board asserts that the local laws passed last month are in legal breach of the 1961 Single Convention on Narcotic Drugs, the 1971 Convention on Psychotropic Substances and the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.

The Quebec government adopted legislation raising to 21 the legal age to purchase cannabis, effective January 1, 2020, making Quebec the province with the highest legal age for cannabis use in the country. The legal cannabis use age is currently 19 in most provinces (with the exception of Alberta, where the minimum age to use cannabis is 18).  While some praised the move, others assert that raising the legal age will lead to an increase of young consumers purchasing cannabis on the black market.

The National Assembly of France approved an amendment for a two-year experimental medical cannabis project as part of the 2020 Social Security budget. President Emmanuel Macron said he is not in favor of broader cannabis legalization.  However, the French Undersecretary for Health expressed satisfaction with the initiative, noting that "the experimentation will involve 3,000 patients in France and must evaluate the positive impact of cannabis derivatives on certain pathologies."

Germany's conservative ruling party appears to be considering legalizing cannabis.  The new German drug commissioner, Daniela Ludwig, signaled a more liberal new drug policy, stating that the focus of the drug policy should be on practicality.  "At the end of the day, what is the best way to protect the health of people, especially young people, and which path makes the most sense for the situation in this country?"

Jamaica's minister of state of industry, commerce, agriculture and fisheries said the government has a first draft of medical cannabis import and export regulations.  The regulations, if enacted, would give the island nation's Cannabis Licensing Authority jurisdiction to handle requests for the importation/exportation of inflorescence/flower and extract/resin.  The minister stated that the administration recognizes that a fully developed cannabis sector can bring significant economic benefits for the Jamaican people and is pleased with the level of investor interest to date, both local and overseas.

The Mexican Supreme Court granted the nation's Congress a six-month extension to pass a cannabis law.  This extension provides the Senate additional time to hash out a legalization bill that was submitted last week by several committees.  If the bill is approved by the Senate, it would then head to the Chamber of Deputies, and then to the President Obrador's desk for signature.

Uruguay's Institute for the Regulation and Control of Cannabis (IRCCA) selected three new companies to cultivate cannabis for commercial purposes.  To keep up with consumer demand, the companies will join two existing cultivators who were selected four years ago during the government's first tender for cultivating adult-use cannabis.

Business

Curaleaf amended the terms of its pending acquisition of Cura Partners because of changing market conditions.  The transaction is expected to close by January 1.

Cresco Labs announced that the DOJ's review period for its planned acquisition of Tryke Companies has expired.  The transaction is expected to close during the first half of 2020. 

The directors of DionyMed Brands Inc. resigned and the company has been placed under receivership.  The company defaulted on a credit agreement, resulting in a payment demand of nearly $25 million and petition for the appointment of a receiver over all of DionyMed's assets.  On October 31, 2019, the company received notice that it no longer qualifies for the OTCQB, the middle-tier of OTC markets.

MedMen Enterprises Inc. reported quarterly revenue of $42 million, up 104 percent from a year ago, though it also had an annual loss of $172 million, up from a loss of $50.7 million in the previous year.  MedMen co-founder and CEO Adam Bierman stated, "[O]ur success was due, largely in part, to our loyal customer base. Throughout the year, we served over one million customers from all 50 states and more than 100 countries. In California, the largest cannabis market in the world, MedMen surpassed a record $110 million in annualized run-rate retail revenue."

HEXO Corp reported $15.4 million in quarterly revenue and a net loss of $56.7 million.  "We are at the end of the first year of adult use legalization in Canada, which was an incredible year full of successes and challenges across the industry.  We've gone from $4.9M to $59.3M in gross revenue in just one year. This type of revenue growth is a testament to the Company's resilience and capacity to pivot in the face of uncertainty," said Sebastien St-Louis, CEO and co-founder of the Gatineau, Quebec-based company.

To rein in spending, cannabis site Leafly is freezing hiring and canceling not-critical travel. Leafly's CEO indicated the moves are necessary to the successful integration of Leafly's 150 new employees who came on board in the past seven months. The news follows announcements of layoffs from other major cannabis companies, such as PAX Labs, Weedmaps, Eaze and HEXO.

Cannabis technology startup Flowhub closed a $23 million funding round led by Kraft Heinz's venture capital arm, Evolv Ventures.  Evolv was established last year to invest in emerging tech companies that are "transforming the food industry."  This is its first foray in the cannabis tech sector.

An anonymous survey of PGA Tour players found that 57 percent want cannabis to be removed from the banned substances list and 20 percent said they have smoked cannabis or ingested edibles within the past year.  One player remarked that nicotine should be added to the banned substances list.

In the wake of Square's recently launched CBD early-access program, which allows businesses in the US to sell CBD products on Square, the company tweeted, "[W]e have received an unexpectedly large number of applicants for our CBD program! As a result, it's taking a bit longer than anticipated to get back to everyone." 

Western University in Ontario, CA, is teaming up with cannabis beer brewer Providence Brands of Canada to develop new "innovative yeasts" for the formulation of new cannabis beverages.  Thanks to a $45,000 research grant provided by the Ontario Center of Excellence's Voucher for Innovation and Productivity Program and the Natural Sciences and Engineering Research Council of Canada's Engage program, researchers hope to develop "revolutionary" yeast that employs time-saving technology for use in cannabis and hemp beers.

Medical/Health

The Centers for Disease Control and Prevention reported that there are now believed to be 1,604 cases of lung injuries associated with vaping products, 86 percent of which appear to be tied to THC-containing products. To date, no single compound or ingredient has emerged as the cause of the injuries and there might be more than one cause.  However, because most patients report using THC-containing products before the onset of symptoms, the CDC recommends that persons not use THC-containing products.

A new review concluded that the risks of using medicinal cannabinoids to treat mental health problems may outweigh the benefits.  A meta-analysis published in The Lancet Psychiatry, a peer-reviewed medical journal, examining data from 83 studies and more than 3,500 participants between 1980 and 2018, found "scarce evidence" to suggest that cannabinoids improved a variety of mental health disorders, including depression, anxiety, attention-deficit hyperactivity disorder, Tourette syndrome, post-traumatic stress disorder and psychosis.  The review further found there is "very low quality evidence that pharmaceutical THC (with or without CBD) leads to a small improvement in symptoms of anxiety among individuals with other medical conditions."  The review noted that there remains insufficient evidence to provide guidance on the use of cannabinoids for treating mental disorders within a regulatory framework, and that further, higher-quality studies directly examining the effect of cannabinoids on treating mental disorders are needed. 

Mahmoud ElSohly, the director of the US's only federally approved cannabis cultivation facility at the University of Mississippi, disclosed that his lab and an unnamed company are working to develop THC eye drops to treat glaucoma. The targeted treatment of glaucoma using this novel delivery method is noteworthy.  However, the announcement also underscores the untapped potential for the development of other valuable treatment options derived from cannabis, development that's being inhibited under prohibition.  One barrier that has been identified by researchers and lawmakers alike is the substandard quality of cannabis produced at ElSohly's farm, which at least one study found to be genetically closer to hemp.  This raises questions about the validity of studies that rely on the federal government's cannabis.

A review published in Neurotoxicity Research suggested that "CBD and other cannabinoids have therapeutic effects in [Parkinson's disease 'PD'] and [L-DOPA-induced dyskinesia] LID."  Currently there are no pharmacological treatments for these disorders that do not cause severe side effects.  The manipulation of the endocannabinoid system, through phytocannabinoids and cannabidiol, could be a promising therapy to control PD and LID symptoms.

A University of Pennsylvania study found that legalizing medical cannabis and providing access to dispensaries improves health among certain demographics, such as by fostering "large reductions in alcohol consumption" and reducing "mental health issues and health related limitations."  The study speculates that one reason why medical cannabis laws have improved health is because people may be substituting cannabis for prescription opioids.

The USDA awarded Purdue University scientists $955,458 to study organic hemp production.  According to Kevin Gibson, the professor of botany and plant pathology who is leading the Purdue team, understanding organic methods is especially important because there are no legal pesticides that growers can use on hemp.  Gibson is also interested in how hemp may improve the viability of cover crops, which are difficult to grow in some areas because of late commodity crop harvests.

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