Cannabis Group Weekly Alert – Week of July 27, 2020

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In this week’s edition:

  • Democratic Party’s draft 2020 platform stops short of full adult-use legalization
  • Sources report federal cannabis legalization may be voted on in September
  • FDA issues draft guidance on clinical research involving cannabis and NIST launches standards program for labs
  • DOJ doubles down on demand for unredacted cannabis license applications for a mysterious criminal investigation
  • California proposes LED requirement for indoor growers
  • White House Office of Management and Budget is reviewing CBD product enforcement guidance submitted by FDA
  • And more…

Federal

Democratic Party’s Draft 2020 Platform Excludes Cannabis Legalization – The draft platform released by the Democratic National Committee’s platform drafting panel stops short of adult-use legalization, but includes decriminalization of possession, automatic expungement of prior cannabis convictions, federal rescheduling by the executive branch, and legalizing medical cannabis, as well as allowing states to set their own laws, all of which is in line with the recent recommendations of a task force organized by presumptive Democratic presidential nominee Joe Biden and Senator Bernie Sanders (I-VT).

Congress Planning Vote on Cannabis Legalization in September – Sources indicate that the House of Representatives is planning a floor vote on some version of the Marijuana Opportunity, Reinvestment, and Expungement Act (MORE) in early September, although the procedural mechanics are still in question. Such a vote might put pressure on the Senate to take action in support of a more modest federal legalization bill, the Strengthening the Tenth Amendment Through Entrusting States Act (STATES).

FDA Guidance Encourages Cannabis Research – The FDA has issued draft guidance, titled “ Cannabis and Cannabis-Derived Compounds: Quality Considerations for Clinical Research,” covering sources of cannabis for clinical research, quality considerations to be addressed in investigational new drug applications, and recommendations regarding the calculation of THC levels. The draft is open for comment until September 21, 2020.

CBD and THC Testing Program Launched by NIST – The National Institute of Standards and Technology (NIST) has launched a Cannabis Quality Assurance program (CannaQAP), which aims to help labs produce consistent measurements of THC, CBD and other cannabinoid compounds. NIST will first send hemp oil samples with known measurements to participating labs, which will respond, on an anonymous basis, with their measurements as well as methodologies. Then, NIST will publish the known values so that labs can self-assess their accuracy. NIST will also analyze which methods consistently produce better results and eventually develop reference materials similar to those for other substances. This first exercise will be open through August 31, 2020.

Justice Department Demands Unredacted Cannabis Documents from California Officials – The Department of Justice (DOJ) and the Drug Enforcement Agency (DEA) are seeking “unredacted cannabis license(s), unredacted cannabis license application(s), and unredacted shipping manifest(s)” from six entities, through a subpoena related to a criminal investigation. California’s Bureau of Cannabis Control (BCC) initially declined to comply with the subpoena, asserting that state privacy law prevents the release of information, specifically because the request did not show the required “relevancy” to the investigation, and because the release of information could impact the security of the businesses involved. In response, the DOJ has filed a petition in federal court requesting an order to compel the BCC to release the information, citing the supremacy of federal law, among other arguments.

It is not clear whether the investigation means that the federal government is heading toward criminal prosecution of cannabis businesses that are legal under state law. As further reported here, the DEA may instead be investigating the possibility that California growers are shipping their legally grown cannabis outside of the state, which is clearly illegal. The case is United States of America v. The Bureau of Cannabis Control, case number 3:20-cv-01375, in the US District Court for the Southern District of California.

White House Official Notes Youth Use Has Fallen Since Legalization – An official from the White House’s National Marijuana Initiative (under the High Intensity Drug Trafficking Area program) acknowledged that. although Colorado teen consumption of cannabis spiked in 2014, teen use has decreased overall since legalization in Colorado and other states. No one has a clear explanation of why use is decreasing, the official added. The data comes from the US Substance Abuse and Mental Health Services Organization (SAMHSA), and the comments were made in a presentation to lawmakers in North Dakota, where cannabis was legalized for medical purposes in 2016 but remains illegal for recreational purposes. The lawmakers plan to issue a report on legalization this fall.

Justice Department and Federal Trade Commission Crack Down on ‘Transaction Laundering’ of Cannabis Sales – Several recent federal investigations have led to criminal and civil cases against websites and others that facilitate purchases of cannabis and other illegal transactions under the guise of selling other products, such as flowers or dog treats. “Middlemen” that connect sellers to financial institutions or help approve the transactions are the focus of many investigations, some involving major payment industry players, such as Visa, Mastercard and PayPal.

States

AZ – Arizona’s Secretary of State and various county officials are in the process of verifying signatures on ballot petitions in support of cannabis legalization. County officials will have until August 7 to determine whether at least 57 percent of those sampled are valid, which would qualify the initiative for the ballot. Separately, a July poll of 600 people indicates that about 62 percent of the state’s voters support adult-use legalization.

CA  A proposal before the California Energy Commission would require all indoor cultivators to use only LED lights by 2023. Cannabis businesses say the requirement could cost them hundreds of millions of dollars, and could affect yields as operators learn to adapt their methods. The proposal is part of a report issued by the state’s Codes and Standards Enhancement (CASE) program. Public comments on the report can be submitted by email to info@title24stakeholders.com until July 31.

MA  Massachusetts regulators are considering removing a requirement that medical cannabis operators be vertically integrated. Such a move would allow separate growers and/or processors to serve dispensaries. The state’s Cannabis Control Commission raised the possibility at a recent meeting and plans to seek public comment on the matter.

NY – The New York State Senate has passed a bill preventing tenants from being evicted solely on the basis of legally using medical cannabis. Separately, New York City recently enacted a ban against pre-employment cannabis testing, except for employees in certain job categories.

MI – The Michigan Marijuana Regulatory Agency recently issued a revised advisory bulletin addressing homogeneity requirements for processors. The bulletin updates two regulations affecting edibles and cannabis-infused products.

OR – Oregon regulators have proposed rules banning certain non- cannabis additives from inhalable cannabis products and revising certain regulations around labeling.

RI – The Rhode Island Department of Health licensed the state’s first cannabis sampling and testing lab, Green Peaks Analytical, which may serve licensed cultivators and compassion centers. The state’s Office of Cannabis Regulation will work with Green Peaks and other stakeholders over a six-week period to establish a time frame by which all medical cannabis products will be required to have their potency labeled and verified by a licensed lab.

Hemp / CBD

Food and Drug Administration – The White House Office of Management and Budget is reviewing CBD product enforcement guidance submitted by the FDA. Beyond its title (“Cannabidiol Enforcement Policy; Draft Guidance for Industry”), not much is known about the policy. FDA has described it as a “risk-based enforcement policy” addressing the factors it will use to prioritize enforcement decisions.

International

Canada – Regulators in Ontario, Canada, ended, effective at 11:59 p.m. on July 23, the cannabis delivery and curbside pickup services they temporarily permitted due to the COVID-19 pandemic. However, there is some ambiguity around the end date, as some argued that a regulation allowed the services to continue until July 29, even though Ontario’s Declaration of Emergency expired on July 24.

Business

Curaleaf Holdings, Inc. – Curaleaf has completed the process of acquiring Grassroots/GR Companies, Inc. According to Curaleaf, it is now the largest private vertically-integrated multi-state operator in the US. Meanwhile, an investor suit against Grassroots arising from the deal continues. The suit alleges executive wrongdoing and an improper valuation of the firm by an outside financial adviser.

Puffco and KandyPens – Vape manufacturer Puffco recently sued competitor KandyPens over alleged misuse of Instagram. Puffco is claiming that KandyPens is behind two Instragram accounts that falsely claim Puffco is facing lawsuits over flawed products. Although a proposed class action regarding vaporizer defects was filed against Puffco, the suit was dismissed. The current case is Puff Corporation v. KandyPens Inc., case number 1:20-cv-00976, in the US District Court for the District of Delaware.

Medical / Health

Migraines – A study to be published in the Journal of Integrative Medicine suggests that cannabis flower may be an effective medication for treatment of migraine- and other headache-related pain, although the effectiveness differs according to the characteristics of the particular plant, the combustion method, and the age and gender of the patient. In general, 94 percent of users experienced symptom relief, with males and users under 35 experiencing greater relief than their counterparts. Females and younger users had greatest success with indica strains.

Inflammatory Bowel Disease – A meta-analysis to be published in the Journal of Clinical Gastroenterology found that, “[c]annabi(noid)s do not induce clinical remission or affect inflammation in [inflammatory bowel diseases] patients,” but that “cannabi(noid)s significantly improve patient-reported symptoms” and quality of life.

Alzheimer’s – Cannabis may slow the progression of Alzheimer’s disease by modulating amyloid-beta modifications, according to a meta-analysis to be published in the journal CNS & Neurological Disorders – Drug Targets.

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