This Week:
- Senate poised to consider cannabis banking bill after House passes historic cannabis banking legislation last week
- Governors of New York and Connecticut plan to meet with regional counterparts to discuss coordinated efforts to legalize cannabis
- Maryland state court bars Maryland Medical Cannabis Commission from issuing additional licenses over concerns application process is flawed
- Centers for Disease Control and Prevention announces confirmed cases of vaping-related injuries has risen to 805 and the death toll to 13
Federal
The House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act by a vote of 321 to 103, marking the first time a chamber of Congress has approved standalone cannabis reform legislation. The SAFE Banking Act now advances to the Senate, where, if passed, it will give cannabis businesses access to banking services by protecting banks that service the industry from federal penalties. While a step in the right direction, several organizations and members of Congress believe the SAFE Banking Act does not go far enough. For instance, Financial Services Chairwoman Maxine Waters (D-CA) stated "[the SAFE Banking Act] is but one important piece of what should be a comprehensive series of cannabis reform bills." It remains to be seen whether the Republican-controlled Senate will approve the banking bill.
All eyes are on the Senate, as it is poised to take up the cannabis banking bill. In the face of the inescapable reality that 33 states have legalized cannabis in some form, Senate Republicans are expected to act. Senator Marco Rubio (R-FL) recognizes this reality, stating, "I think you can be against marijuana and still understand that if it's going to be a legalized product, we need to be able to control it through our banking system."
Senate Banking Chairman Senator Mike Crapo (R-ID) said he is considering a handful of new additions to the SAFE Banking Act, including anti-money laundering measures to ensure that illicit cash will not make its way into the financial system if the law is enacted. In an interview with POLITICO's Zachary Warmbrodt, the Idaho Republican said last week's historic 321 to 103 vote for the SAFE Banking Act in the House was an indication the proposal has bipartisan backing. Crapo wants to hold a vote on his own version by the end of the year. "This is an issue in which I have seen strong support not only across the country from various banking institutions, even the small community banks in states that don't have the issue, but also among colleagues on both sides of the aisle," he said. "I think there will be good support for it."
Twenty-one state attorneys general sent a letter on September 23rd urging congressional leaders to pass the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, which would exempt state-legal cannabis activity from the federal Controlled Substances Act (CSA). Led by Washington, DC, Attorney General Karl Racine and top law enforcement officials in New York and Nevada, the letter emphasizes that the STATES Act would enable cannabis businesses to access financial services, increase transparency and mitigate risks associated with operating on a largely cash-only basis. In urging the adoption of the STATES Act, the AGs assert that the CSA's outdated restrictions "imperil states' rights, and in the process, impose serious regulatory and public safety consequences."
On September 26, the Senate Appropriations Committee passed a bill containing a rider that would continue to protect state medical cannabis laws from federal interference. No senator filed an amendment to broaden the protection to cover state adult-use cannabis laws. Per Marijuana Moment, a primary reason that no amendments were added is because the congressional appropriators made a "gentleman's agreement" earlier this year not to add new policy-related riders to spending legislation out of concern that adding controversial provisions could jeopardize passage of the overall bills.
Senate Majority Leader Mitch McConnell (R-KY) inserted a provision into a spending bill report attached to the legislation to fund the Department of Justice for fiscal year 2020 that directs the Drug Enforcement Administration to develop "on-the-spot field testing technologies" to distinguish between hemp and non-hemp cannabis. A separate provision in the report "directs DEA to ensure the subsequent drug codes and scheduling guidance for [cannabis] and [cannabis] extracts shall be updated to reflect the removal of hemp as a controlled substance." This is but one of several recent efforts by Senator McConnell to ensure "hemp can be treated the same as any other legal commodity."
A recent US Forest Service report identified insecticide and pesticide use from illegal cannabis growing sites as a threat to species of conservation concern. In the nearly 200-page report, entitled Persistence Analysis for Species of Conservation Concern Inyo National Forest, the Forest Service found that rodenticide, pesticide and insecticide use from illegal cannabis grow sites poses a threat to numerous mammals throughout the Sierra Nevada. The report noted that cannabis growing activity "is extensive, illegal, and not authorized, funded or carried out by the Forest Service." The Forest Service set forth a proposed action which includes an intent to work with local, state and federal agencies to remove and remediate poisons and pesticides from cannabis cultivation sites.
States
Arizona regulators are taking steps to implement a new state law requiring the testing of medical cannabis. In May 2019, state legislators unanimously passed a law requiring mandatory lab testing for medical cannabis products. Under the new law, the Arizona Department of Health Services (ADHS) was required to adopt rules to certify and regulate such labs. The ADHS formed the Medical Marijuana Testing Advisory Council to discuss the challenges facing Arizona as it attempts to regulate medical cannabis. One of the biggest concerns is a disruption to supply chain where patients may not have access to the medicine that they normally have access to because labs are unable to get accredited by November 1, 2020, or the ADHS is unable to timely adopt regulations.
California Gov. Gavin Newsom (D) announced grants totaling $28.5 million funded with cannabis tax revenue generated by the Adult Use of Marijuana Act that will be used to repair the harms of the war on drugs through job placement, mental health treatment, substance use disorder treatment, and legal services to address barriers to reentry, among other programs. The Governor's Office of Business and Economic Development will award grants to local health departments and qualified community-based nonprofit organizations to support communities disproportionately affected by past federal and state drug policies.
Illinois Gov J.B. Pritzker (D) appointed state Senator Toi Hutchinson (D) to oversee implementation of Illinois' recreational cannabis program. Senator Hutchinson, who led the effort to pass the recreational cannabis law, will resign her 40th District Senate seat before stepping into her new role, which will include publishing a study by March 2021 that analyzes discrimination in the cannabis industry and its effect on the state.
Maryland regulators were expected to announce the winners of additional medical cannabis business licenses on September 26, but due to a state court's grant of a temporary restraining order barring the issuance of any additional cannabis licenses, regulators instead announced that the state needed more time to review the applications. The Maryland Medical Cannabis Commission Chairman did not specifically mention the court order in his announcement, but he did acknowledge concerns raised by the Legislative Black Caucus that minority-owned firms did not have a fair shot in this round of licenses. Later in the week, the Maryland Medical Cannabis Commission posted Grower and Processor applications rankings on its website, identifying the ranking of each applicant only by application receipt number.
Massachusetts Gov. Charlie Baker (R) declared a public health emergency and ordered a four-month ban on the sale of all vaping products, including those for cannabis. The ban is effective immediately through January 25, 2020. The ban is reportedly the most sweeping prohibition targeting e cigarettes in the United States as it bans all vaping products, flavored and unflavored, and applies to both online and retail sales. The Baker administration emphasized that the ban is intended to allow the medical community and federal regulators time to investigate the recent nationwide spike in vaping-related illnesses.
Massachusetts regulators gave final approval for cannabis delivery services, along with strict security rules, such as requiring personnel to film every customer transaction with a body camera. Delivery services will be subject to significant regulations designed, in part, to mitigate safety concerns. For the initial two years, the delivery permits will only be awarded to participants in the Massachusetts Cannabis Commission's social equity and economic empowerment programs, meant to benefit those communities affected by the war on drugs.
New Jersey lawmakers are expected to vote on a cannabis legalization proposal during the upcoming lame-duck period (November through early January). At this point, it is uncertain whether lawmakers will vote on a proposed law to make cannabis legal or to place a referendum on the November 2020 ballot asking New Jersey voters to decide. Which option will be pursued depends on whether legislative leaders can muster enough votes for such cannabis legislation to pass.
The New Jersey Cannabis Industry Association (NJCIA) hired outside counsel to conduct an investigation into allegations of potential "ethical concerns," including insider dealings, inappropriate disclosures and sexual indiscretions by organization personnel. NJCIA recently partnered with NJ Cannabis Insider, a subscription-based publication, to promote public events. However, shortly after learning about the investigation, NJ Cannabis Insider decided to end its event partnership with the NJCIA because it continues to "be concerned by these allegations."
New York Gov. Andrew Cuomo (D) and Connecticut Gov. Ned Lamont (D) announced they will meet with other governors in the region next month to coordinate cannabis legalization plans. The pair cited that federal inaction on the issue has forced states to take the lead, but it is important to avoid a patchwork approach among states in the region. Cuomo stated, "If we are on our own, let's hook our boats together and let's see if we can find our way through this storm." The Governors also plan to address other issues, including age restrictions, THC content restrictions, tax rates, packaging requirements, impaired driving, and expungement for prior cannabis convictions. The goal is to have a proposal ready by January 2020.
Oregon Gov. Kate Brown (D) directed the Oregon Health Authority (OHA) to consider vaping actions, including a possible ban, following the death of a second person in the state who suffered severe lung injuries after purchasing cannabis products from a licensed cannabis business. OHA issued a public health warning, urging people to stop vaping immediately.
Pennsylvania Gov. Tom Wolf (D) announced that he now supports cannabis legalization following a recent listening tour during which Lieutenant Gov. John Fetterman (D) visited all 67 counties and learned that state residents overwhelming support cannabis reform. This marks an evolution for the Governor, who took a prior position that Pennsylvania was not ready to legalize. Gov. Wolf called on lawmakers to: (1) pass a bill to decriminalize low-level cannabis offenses; (2) pass legislation providing for the expungements of prior cannabis convictions; and (3) "seriously debate" legalizing cannabis for adult use.
Utah Gov. Gary Herbert (R) signed a special-session bill changing how the state will distribute medical cannabis. The Utah legislature abandoned a state-run dispensary network that required local health department workers to provide medical cannabis to qualifying patients. Instead, lawmakers compromised to allow 14 privately-owned dispensaries to distribute medical cannabis in the state.
In response to Wisconsin lawmakers introducing the first bipartisan medical cannabis bill since 2001, Wisconsin Gov. Tony Evers (D) tweeted, "[T]his is really about helping those who are struggling with chronic pain or debilitating illness by providing an alternative treatment option. It's long past time to listen to the will of the people who overwhelmingly support medical marijuana legalization." The bill has a tough chance of passing in the immediate future, but with a Republican sponsor, the bill may signify a changing tide on an issue that has yet to gain traction in Wisconsin. The bill would create a regulated process for medical cannabis that would require a recommendation from a physician with whom a patient has an established relationship. It would also require the Department of Health Services to create a registry for people allowed to use cannabis, and the Department of Agriculture, Trade and Consumer Protection to create a licensing system for growers, producers and sellers to ensure safety and quality.
Hemp/CBD
The United Kingdom's National Farming Union (NFU), a group representing approximately 50,000 farmers in England and Wales, stated that hemp-derived construction components could help reduce greenhouse-gas emissions and should be promoted by the government. In a new report that sets out a plan to make the UK's agricultural sector carbon-neutral by 2040, the NFU encourages British farmers to plant hemp for the production of building materials.
International
The United Nations Commission on Narcotic Drugs , a policymaking body of the UN, held a meeting on proposed changes to the scheduling of cannabis and its compounds and derivatives under international treaties. During the meeting, member states were given the opportunity to address questions to the World Health Organization, the International Narcotics Control Board and the United Nations Office on Drugs and Crime .
Lawmakers in the Australian Capital Territory (ACT) approved a bill to legalize cannabis possession and cultivation for personal use. The bill provides, among other things, that each household could grow a maximum of four plants. The law must first be signed off on by the ACT Health Minister and would not come into effect until January 31, 2020. It remains unclear how the bill will interact with Commonwealth laws, which provide that law enforcement determine whether to charge individuals with a Commonwealth offense.
Australia's federal government is considering challenging a new local cannabis legalization law. Specifically, federal Attorney-General Christian Porter warned residents of Canberra that he does not expect federal police to "turn a blind eye" to cannabis possession when the drug becomes legal in 2020. The ACT's chief minister has shrugged off concerns that federal prosecutors will target Canberrans when the new cannabis legislation comes into effect in January. "Does anyone seriously think the Commonwealth DPP (director of public prosecutions) is going to spend all of their time, or a considerable amount of their time, prosecuting individuals in the ACT for the possession of less than 50 grams of cannabis?," he stated during a recent radio interview.
A Colombian cannabis legalization bill cleared its first hurdle in the House of Representatives. Although there is still a long road ahead (i.e., seven debates in both chambers before it can become a law), the bill passed its first debate without any amendments. The bill seeks to modify Article 49 of the Colombian Constitution, which prohibits the possession and consumption of narcotic or psychotropic substances.
Roy Thompson, Director of Government Affairs at Dentons Munoz, reports that the Costa Rican Ministry of Health has issued the first registry for a CBD oil imported from the United States. This event gives the green light to all CBD producers around the world interested in establishing commercial activities in the Central American region. The registry was issued in July 2019, and the product is already being sold in pharmacies in Costa Rica.
Uruguay made its first commercial cannabis export shipment since legalizing the drug in 2013, sending 10 kilograms to Australia. The Uruguay government cited export earnings as one of its goals when it became the first country to create a national, regulated cannabis industry.
Business
Vaping product sales are down significantly in the US amid reports of severe lung injuries. Specifically, the amount of the legal cannabis industry's revenue attributable to vape products has dropped by 15 percent nationwide, with some states reporting decreases of more than 60 percent. Analysts are waiting to determine whether vape product sales will erode further after the Centers for Disease Control and Prevention recent announcement that the number of suspected vaping-related illnesses surged 52 percent in a week's time.
Israeli organic chemist Raphael Mechoulam, the Hebrew University of Jerusalem Professor of Medicinal chemistry who discovered THC and CBD, has made another leap in the field of cannabis research. NBC News has reported that Mechoulam and a team of scientists announced earlier this week that they have figured out a process to create stable, cannabis acids. Cannabis acids are compounds that are produced in the plant when it is alive and may be more potent than their better-known derivatives, such as CBD and THC. This discovery could pave the way for pharmaceutical companies to potentially develop new drugs based on the cannabis acids for such health issues as psoriasis, arthritis, anxiety and inflammatory bowel disease.
GW Pharmaceuticals plc (GW) announced that it received European Commission approval to market its CBD drug Epidyolex for the treatment of seizures in patients with two rare, severe forms of childhood-onset epilepsy. Per GW, when added to other anti-epileptic treatments, Epidyolex significantly reduced the frequency of seizures in patients with Lennox-Gastaut syndrome and Dravet syndrome.
GenCanna Global, Inc. (GenCanna) engaged Goldman Sachs & Co. LLC as a financial advisor to assist the company in evaluating a potential initial public offering. GenCanna is a vertically-integrated agriculture-technology company specializing in the production of hemp rich in CBD. "We are excited to partner with Goldman Sachs as we explore a variety of ways to continue our category-leading growth," said Matty Mangone-Miranda, CEO of GenCanna.
Eaze, a cannabis marketplace, and partners Ultranative and Bail Capital, announced the launch of Momentum, a business accelerator to "cultivate the growth and success of underrepresented cannabis business founders." The inaugural Momentum class will include 10 participants who will receive a $50,000 grant, participate in a 10-week education program led by industry experts, and have access to Eaze's ecosystem of business, marketing and retailer resources.
Charlotte's Web Holdings, Inc., a market leader in whole-plant CBD hemp extract products, announced that its CBD gummies are being sold in 738 Vitamin Shoppe locations in 45 states. Charlotte's Web gummies launched in June 2019, and are made with whole-plant extract to support specific health-related functions including everyday stress, sleep, and recovery from exercise or active lifestyles.
Martha Stewart said that CBD products she is developing with Canopy Growth Corp. will be available next year. Stewart also said that she hoped cannabis would be legalized eventually in the United States and a cannabis cookbook might be a possibility for her in the future.
Medical/Health
The Centers for Disease Control and Prevention announced that the number of confirmed cases of severe lung injuries believed to be associated with vaping nicotine or cannabis has now surpassed 800 and the death toll has risen to 13. At this point, illnesses have been reported in almost every state. Health officials are currently advising people not to use any vaping products—tobacco or cannabis—until the cause of these injuries is better understood.
The Canadian Agency for Drugs and Technologies in Health (CADTH) recently published a report, "Medical Cannabis for the Treatment of Dementia: A Review of Clinical Effectiveness and Guidelines," summarizing the findings from research into the clinical effectiveness of medical cannabis for the treatment of dementia. The report states that limited evidence from one systematic review and one uncontrolled before-and-after study "suggested that medical cannabis may be effective for treating agitation, disinhibition, irritability, aberrant motor behaviour, and nocturnal behaviour disorders as well as aberrant vocalization and resting care, which are neuropsychiatric symptoms associated with dementia" and that there "was also limited evidence of improvement in rigidity and cognitive scores." The report also stated that no "relevant evidence-based clinical guidelines regarding the use of medical cannabis for treating dementia were identified."
The Arthritis Foundation issued CBD use guidance for adults with arthritis. On its website, the Arthritis Foundation states that "while currently there is limited scientific evidence about CBD's ability to help ease arthritis symptoms, and no universal quality standard or regulations exist, we have listened to our constituents and consulted with leading experts to develop these general recommendations for adults who are interested in trying CBD." The Arthritis Foundation then provides "Key Takeaways" and "FAQs" regarding CBD use in adults.
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