In this week's edition:
- State regulation of vaping products continues to evolve, as judges in Montana and Oregon stayed bans on the sale of flavored electronic cigarettes (although Oregon's ban on cannabis vaping products remains in place); a Massachusetts judge allowed a state ban on cannabis vaping products to survive; and the state of Washington imposed additional regulations on marijuana licensees, requiring that they post warning signs and disclose all compounds used to produce, or added to, cannabis concentrates.
- FDA and FTC posted a joint warning letter to Rooted Apothecary regarding the sale of unapproved CBD products with unsubstantiated health claims.
- Four Northeastern governors met and formulated a 32-point declaration of "core principles" to support a coordinated, regional approach to the regulation of vaping and cannabis in New York, New Jersey, Connecticut and Pennsylvania.
- Cannabis legalization legislation was introduced in Pennsylvania and a working group in New Mexico has released its recommendation for legislation to be considered in 2020.
- Mexico released its draft cannabis legalization bill that is expected to be voted on this week.
- BNY Mellon's Pershing unit, which is responsible for the clearance of a third of all trades in the US, issued a notice saying that, effective November 30, it will no longer accept incoming positions of "non-permitted" cannabis securities.
Chairman Mike Crapo (R-ID), head of the Senate Banking Committee, outlined how he would like to change the Secure and Fair Enforcement (SAFE) Banking Act that passed the House last month. While the details of his suggestions are unclear, he did outline his key concerns—health and safety, interstate commerce, and money laundering with regard to legacy cash.
Rep. David Joyce (R-OH), co-chair of the Cannabis Caucus in the House of Representatives, provided his views on cannabis legislation, expungement of federal criminal records and states' rights. He said he favors the STATES Act over the SAFE Act and the MORE Act because he likes "to focus on strategies that are actually moving the ball forward," noting that President Trump has indicated his willingness to sign the STATES Act. He voiced concerns about expunging federal criminal records of persons who knowingly engaged in the illicit drug trade, but also noted that during his 25 years as a local prosecutor, the county focused on "coke, meth, heroin—the things that destroy families" and scaled back on the prosecution of cannabis possession cases, "because a lot of times those cases were being used as fodder for stats, for people who were trying to get grants."
The Centers for Disease Control and Prevention (CDC) issued clinical guidance for health care providers evaluating patients with lung injury linked to vaping products. The guidance advises close follow-up, as some patients who have presented with mild symptoms have experienced a rapid worsening of symptoms within 48 hours. Neither the FDA nor the CDC has identified the cause of e-cigarette injuries and whether there is a relationship between any specific products or substances and the reported illnesses. However both agencies have warned the public to stop using THC-containing vaping products, noting that of the 573 patients who self-reported the substances used in e-cigarettes or vaping products, 76 percent said they used THC-containing products, exclusively or with nicotine-containing products.
Major League Baseball and its players union have discussed the possibility of easing up on testing for cannabis and whether to allow players to use cannabis following surgeries or for general pain relief. Back in March, the MLB warned players that CBD could elicit a positive drug test for cannabis despite "THC free" labeling.
The Professional Golfers Association suspended Matt Every for 12 weeks for violating the PGA's conduct policy on drugs of abuse. The two-time winner tested positive for cannabis, which he uses for medical purposes pursuant to Florida's legalized medical cannabis program. "Cannabis has proven to be, by far, the safest and most effective treatment," Every claims. Robert Garrigus had received a three month suspension in March 2019, the first professional golfer to be suspended for the use of cannabis.
California's 2019 legislative session closed on October 15, the last day for the Governor to sign or veto passed bills. Governor Newsom signed a number of cannabis-related bills, including AB 37, which allows business expense deductions on state taxes, and SB 34, which allows businesses to provide free medical cannabis to low-income patients and exempts those products from state taxes. He vetoed SB 305, which would have allowed terminally ill patients to use medical cannabis at health care facilities. His veto message suggested that health care entities could risk losing Medicare and Medicaid funds if they allowed the use of cannabis at their facilities.
A Colorado expungement program intended to provide a fresh start to individuals with previous pot convictions has resulted in only a miniscule number of applicants getting their low-level marijuana convictions sealed. One reason is the state's laws ban "automatic" expungements, and sealing of records is both time-consuming and for many, cost-prohibitive. Less than one percent of persons with eligible past cannabis convictions in Colorado have had their records sealed.
Colorado regulators are finalizing a ban on certain additives in cannabis vape products, including polyethylene glycol, Vitamin E Acetate and Medium Chain Triglycerides.
In Illinois, Chicago's City Council approved zoning rules that enable the city's 11 existing medical cannabis dispensaries to pivot to recreational cannabis sales on January 1. The dispensaries would have the exclusive right to open a second location until late spring, at which time other entities would have a chance to bid for a recreational license.
The Illinois Department of Financial and Professional Regulation has approved 11 "same site" adult-use cannabis licenses for existing medical cannabis dispensaries throughout the state.
In Louisiana, after 20 potential jurors being questioned by defense attorneys and prosecutors voiced opposition to cannabis criminalization, prosecutors agreed to reduce the initial felony charges to a misdemeanor in exchange for a guilty plea from the defendant.
Massachusetts' four-month ban on the sale of all vaping products survives after a state judge denied a motion for a preliminary injunction.
The Maryland Department of Health warned consumers not to use vaping products containing THC. Meanwhile, the Maryland Medical Cannabis Commission is evaluating vaping products to determine whether any additional measures may be necessary, such as expanded compliance testing.
Two-thirds of Marylanders polled support legalizing recreational cannabis to fund new educational programs.
A Montana judge signed a temporary restraining order to prohibit the enforcement of emergency rules that would have banned the sale of flavored electronic cigarettes for 120 days. The TRO was issued in response to a lawsuit filed by three vape shops and an industry group that claimed that the ban was an overly restrictive reaction to illnesses caused by illegal black-market products. The plaintiffs claimed that the ban could force more than 20 shops in the state to close.
Nevada officials have increased regulatory enforcement efforts after allegations of corruption. Nevada Governor Sisolak formed a special task force that has begun to take several steps to tighten regulation, including indefinitely freezing the sale and transfer of cannabis business licenses and conducting spot inspections of testing laboratories to ensure compliance and prevent testing manipulation.
Governors from New York, New Jersey, Connecticut and Pennsylvania, along with legislative leaders from New York, Rhode Island and Massachusetts, met and formulated a 32-point declaration of "core principles" to support a "coordinated" regional approach to regulating vaping and cannabis. The bullets include "deploying strategies such as a limitation on the number of licenses" to protect against manipulation of markets; "implementing a similar overall effective tax rate"; and "limiting flavors for inhalable products to the taste of tobacco or cannabis or a taste derived from compounds derived directly and solely from the cannabis or hemp plant." It is unclear whether these "core principles" will further delay the progress of thoughtfully formulated legislative proposals, thereby increasing the likelihood of ballot initiatives.
New Mexico released a cannabis legalization proposal to be considered during its 30-day legislative session that begins in January 2020. The proposal recommends deterring illicit markets by prohibiting jurisdictions from opting out of legal pot sales (but permitting locally-imposed zoning restrictions); and imposing a 20 percent ceiling on the total tax rate.
Ohio published updated patient and caregiver statistics, reporting 63,819 registered patients and 40,571 unique patients who purchased medical cannabis. Sales totaled $33.4 million for 4,015 pounds of plant material and 125,794 units of manufactured product. Five testing licenses have been issued, as well as 41 processor licenses, 56 dispensary licenses, 19 Level 1 cultivating licenses and 13 Level 2 cultivating licenses.
Oklahoma regulators released an updated list of licensed dispensaries that serve the more than 200,000 certified patients. In other news, the former general counsel of the Oklahoma Health Department pled guilty to misdemeanor charges for sending herself fake emails threatening retribution if the Department imposed restrictive rules on cannabis use.
Oregon's ban on flavored nicotine vaping products was lifted, but its ban on flavored cannabis vaping products remains in place. The Oregon Liquor Control Commission has randomly inspected about 100 cannabis retailers to ensure vaping products are not available for sale. No violations have been identified, but the inspections have drawn regulatory attention to "a couple of questionable labels."
Pennsylvania's General Assembly is evaluating a comprehensive cannabis legalization bill that was introduced by Sens. Daylin Leach (D) and Sharif Street (D). The proposed legislation would allow deliveries and social use lounges, cap at three the number of dispensaries operated by a single owner, and allow existing medical cannabis dispensaries to sell recreational products as long as the supply chains are kept separate. There is no cap on the total number of dispensary licenses in the bill.
Rhode Island's Governor Gina Raimondo filed a complaint to strike down provisions in a recent state appropriations bill that allows legislators to control cannabis and hemp policy in the state. The Governor alleges that the provisions are an unconstitutional violation of the separation of powers structure and limit the executive's ability to regulate the medical cannabis and hemp program because state regulators have to get approval from the state legislature before adding or altering any cannabis or hemp rules.
Utah's cannabis legislation remains in dispute as the lawsuit against the state's Prop. 2 replacement bill survives a motion to dismiss and is transferred back to state court.
The Washington State Liquor and Cannabis Board adopted emergency rules regarding vaping products. The rules require all cannabis licensees to (1) post warning signs and (2) disclose all compounds used to produce or added to cannabis concentrates for inhalation.
The U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) posted a joint warning letter to Rooted Apothecary LLC in Florida for "illegally selling unapproved products containing cannabidiol (CBD) online with unsubstantiated claims." The FDA was particularly concerned about the claims made through an online store and social media websites that targeted "vulnerable populations like infants and children" through statements like "an attractive and safe option for children" and "children can use high amounts of CBD safely without any risk." The products claimed to treat teething pain and ear aches in infants, autism, attention-deficit/hyperactivity disorder, Parkinson's and Alzheimer's diseases, and other conditions. The letter also warns that CBD products cannot be marketed as dietary supplements. Under the FTC Act, it is unlawful to make or exaggerate claims, whether directly or indirectly, through the use of a product name, website name, metatags, or other means, without rigorous scientific evidence to substantiate the claims. Violations of the FTC Act may result in an administrative cease and desist order that could also require a company to pay back money to consumers.
The dietary supplement industry is urging Congress to pass legislation that would grant a limited waiver exempting CBD products from the Food, Drug, and Cosmetic Act to allow companies to sell hemp-derived CBD as a dietary supplement if the products meet health and safety standards, including accurate product labeling, good manufacturing practices and prohibitions against making drug claims. The FDA has stated that it could take three to five years to establish a legal regulatory pathway for use of CBD in dietary supplements and food.
The FDA issued a warning advising pregnant and breastfeeding women to avoid using CBD because "there is a potential for CBD products to be contaminated with substances that may pose a risk to the fetus or breastfed baby, including THC." Commentators have noted that valproic acid may be culprit for liver toxicity results found during Epidiolex trials.
Alabama has started accepting applications for its hemp program. Applications will be accepted through November 14.
Former New England Patriots tight end Rob Gronkowski (Gronk), a partner in Abacus Health Products, the maker of CBDMEDIC products, has announced a continuing relationship with Patriots owner Robert Kraft through a partnership with Robert Kraft's companies, Gillette Stadium and Patriot Place, to promote CBD products.
Canada celebrated its one-year anniversary of federal legalization. "Cannabis 2.0" now begins with an expanded menu of cannabis products expected to become available by December or early 2020. Health Canada is reviewing product submissions for edibles, infused drinks, and lotions.
France's Agency for the Safety of Medicines and Health Products (ANSM) created a committee to develop rules over the next six months for its two-year medical cannabis experiment, including parameters regarding which products will be available, training for doctors and pharmacists, and a patient registry.
Malaysia is considering banning the sale of electronic cigarettes, citing the growing reports of deaths and illnesses in the US. India banned electronic cigarettes last month. Experts in toxicology argue that the vaping illnesses are a "U.S. specific phenomenon" and there is no evidence of similar illnesses outside of the US.
Mexico's draft cannabis legalization was publicly released and is expected to be voted on this week. The legislation prohibits vertical integration, limiting a single person or company (including partners, subsidiaries and shareholders) to one type of license, although a single licensee could have more than one license of a single type, including up to three retail licenses. Licenses would not be transferable and foreign ownership would be limited to a maximum 20 percent of capital. Cannabis edibles and drinks for recreational use would be prohibited.
Scotland's ruling party, the Scottish National Party, unanimously approved a resolution to decriminalize possession and consumption of controlled drugs.
South Africa has granted its first commercial cannabis cultivation license to the Polkadraai Strawberry farm, also known as Felbridge. The license allows for the cultivation of up to 20 tons of cannabis but does not allow manufacturing.
American-Israeli backpacker Naama Issachar has been sentenced to seven and a half years in prison in Russia for attempting to smuggle nine and a half grams of cannabis through a Moscow airport on her way from India to Israel. In September, an American college student who pled guilty to possessing 19 grams of cannabis in a Russian airport was only required to pay a $235 fine. A sentence reduction for Issachar's fate may be tied to Russian efforts to secure Israel's release of Russian IT specialist Aleksey Burkov, who is wanted by the US for hacking and credit card fraud. Burkov was arrested in Israel and his extradition to the US was approved by Israel's Supreme Court in August.
BNY Mellon's Pershing unit, responsible for the clearance of a third of all trades in the US, issued a notice saying it will no longer accept incoming positions of "non-permitted" cannabis securities, effective November 30. The letter did not define "non-permitted" cannabis securities, but analysts said the move targets U.S. multistate operators trading on the Canadian Securities Exchange. This moves comes in contrast to BNY Mellon's announcement in April that it would act as a custodian bank to safeguard the assets of the AdvisorShares Pure Cannabis ETF that trades on the NYSE.
Canopy Growth secures the first UK license to store and distribute cannabis medicinal products. The license allows Canopy's pharmaceutical business, Spectrum Therapeutics, to import cannabis medicinal products to the UK directly from Spectrum's global networks. Spectrum also became the exclusive supplier of medical cannabis to Luxembourg until December 31, 2021. Spectrum will import cannabis from its licensed facilities in Denmark.
Eaze plans to debut a pioneering cannabis concierge service at the Fairmont Miramar Hotel & Bungalows Santa Monica, in partnership with Recreational Embassy. The service, dubbed Eaze Hospitality, will offer hotel guests in-room menus with low-dose and non-inhalation hemp and cannabis products.
Toronto Stock Exchange's S&P/TSX composite index advanced led by cannabis stocks as "Cannabis 2.0" takes effect, legalizing cannabis derivatives including edibles and beverages. Aurora Cannabis revealed plans to release vapes, concentrates and edibles (gummies, chocolates, baked goods and mints) in December, when legal sales of such products will be permitted to begin in Canada following a legislated 60-day review period.
Marijuana Policy Project, a leading US cannabis policy reform group, has elected Mark de Souza, CEO of multistate operator Revolution Global, to its board of directors. MPP also adds seed-to-sale tracking company Akerna to its Policy Council, which also includes Acreage Holdings, Cresco Labs, Eaze, 4Front Holdings, Greenlane Ventures, Hawthorne Gardening Supply, PAX Labs and Vicente Sederberg.
U.S. Tax Court Judge Mark Holmes determined that Harborside owes $11 million in taxes, and no penalties (rather than the $36 million sought by the Internal Revenue Service), after it lost its argument regarding the applicability of 280E business deductions. Harborside plans to appeal the decision, particularly with regard to calculating the costs of goods sold.
Flowhub secured $23 million for its retail management software that helps automate compliance, improve point-of-sale capabilities and provides a mobile inventory management system. The investors include e.ventures, Evolv and Poseidon.
Aphria Inc. announced its second consecutive quarter of profitable growth, with net revenues of $126.1 million in the first quarter, an 849 percent increase from the prior year quarter, and adjusted EBITDA from cannabis operations of $1.3 million in the first quarter.
CannTrust will destroy $65 million of inventory and $12 million of biological assets as part of its remediation plan in an effort to reinstate its licenses.
Bonsai Cultivation voluntarily recalled flower and pre-rolls because of elevated yeast and/or mold counts that were discovered during a regulatory investigation.
FedEx tweeted that it "prohibits shipment of plants, leaves & flowers, hemp oil, hemp seed oil and CBD." FedEx Express Terms and Conditions (last updated October 1, 2019) continues to list hemp and CBD derived from hemp as prohibited products.
The National Association of Cannabis Businesses adopted standards on security to help limit cash and product diversion, particularly by internal actors who are responsible for the vast majority of such diversion.
According to Canadian researchers, 45 percent of studied patients successfully stopped taking benzodiazepines (e.g., Valium and Xanax) after starting medical cannabis therapy.
Atypical cannabinoids, like O-1602 and abnormal cannabidiol (2µM) significantly reduced tumor growth in chemotherapy resistant breast cancer cell lines.
A review of literature on pharmacology and use of cannabinoids in treating various skin conditions demonstrates that cannabinoids have anti-inflammatory, antipruritic, anti-aging and anti-malignancy properties.
A survey of multiple sclerosis patients in British Columbia revealed that one of four patients regularly use cannabis products.
Recent studies on the use of cannabis to replace opioids for pain relief indicate that patients prefer to consume cannabis over opioids. A multivariate logistic regression that analyzed responses from 120,764 participants reflected that medical cannabis legalization is associated with a lower likelihood of opioid pain reliever use, but not misuse. A significant proportion of respondents indicated that cannabis was equal to opioids for pain relief. Another study assessed survey responses from the 486 (of the 9,003) respondents who reported using cannabis and opioids in the past year. Of the 486 respondents, 41 percent decreased or stopped using opioids because of cannabis use, 46 percent reported no change in opioid use and 8 percent increased their opioid intake.
UC San Diego's Center for Medicinal Cannabis Research awarded a total of $3 million in research grants to five research teams to study the efficacy and safety of medical cannabis to treat schizophrenia, rheumatoid arthritis, insomnia, alcohol dependence, and anxiety linked to anorexia.
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