This week:

  • Former FDA Commissioner Scott Gottlieb suggests that Congress remove cannabis from the existing paradigm for drug scheduling
  • Maine expects to begin accepting cannabis business license applications by the end of 2019
  • South Dakota is preparing a bill to legalize hemp in 2020
  • Mexican lawmakers plan to vote to legalize cannabis by the end of the month
  • FinCEN continues to report increases in the number of banks and credit unions working with cannabis businesses
  • Dentons Partner Eric Berlin discusses private equity and cannabis
  • And more...

Federal

Former Food and Drug Administration Commissioner Scott Gottlieb wrote an op-ed discussing the impasse between conflicting federal and state laws with regard to cannabis, noting that "a feasible compromise would require Congress to take marijuana out of the existing paradigm for drug scheduling, especially if Congress wants to allow carefully regulated access for uses that fall outside FDA-approved drug indications" and that "regulation of the potency of THC compounds, the forms they take, how they're manufactured, and who can make purchases ought to be possible."

Rep. Matt Gaetz (R-FL) said, "I come from the pro-science wing of the Republican Party. I understand that the earth is warming, that medical marijuana can help people live better lives and no one chooses to be gay. I can't believe that any of those things are still issues of debate among any group of intelligent adults."

Four trade associations representing the dietary supplement and natural products industries sent a letter urging Congress to, among other things, "pass legislation to clarify that CBD derived from the hemp plant is a lawful dietary ingredient if the dietary supplement containing the CBD meets established product safety and quality criteria." Specifically, the associations recommend that dietary supplements containing CBD should have to "fully comply with applicable requirements for new dietary ingredients" under the Food, Drug, and Cosmetic Act (FDCA) and "all other provisions of the FDCA and FDA's implementing regulations applicable to dietary supplements, including those requiring accurate product labeling and good manufacturing practices as well as the prohibition against making any drug claims."

States

The Anchorage Municipal Assembly in Alaska voted to place before voters an April 2020 ballot measure seeking to allow on-site consumption at cannabis dispensaries.

In California, Gov. Gavin Newsom (D) signed a bill to let schools decide whether parents may administer medical cannabis to their children on school campuses; the Department of Business Oversight released guidance (tracking 2014 FinCEN guidance) to state-chartered financial institutions; and the Department of Consumer Affairs busted a company for illicitly manufacturing cannabis products, including gummies and vaporizers in Kushy Punch packaging with an estimated street value of $21 million. Kushy Punch, a state-licensed company, reportedly responded by saying that the allegations are "completely false" and that the "BCC went into an old storage warehouse and found two-year-old disposable vapes with dead batteries than [sic] have been off the market even before regulations came around and they assumed we are selling vapes to the black market."

Colorado retailers sold more than $173.2 million in cannabis products in August, a new monthly high.

A Florida judge ruled that a corrections officer's employment was terminated improperly because it was based on a positive drug test for delta-9 tetrahydrocannabinol, which may have resulted from the officer's use of legal CBD.

As Illinois prepares for cannabis legalization to take effect on January 1, 2020, reports suggest that demand could outpace supply.

In Louisiana, gubernatorial candidates Eddie Rispone, Ralph Abraham and incumbent Gov. John Bel Edwards agreed on opposing legalizing cannabis during a debate; and a judge presiding over a felony cannabis case halted juror selection after too many potential jurors in the pool said they support legalization.

Maine regulators expect to start accepting cannabis business license applications by the end of the year.

A Maryland judge extended a temporary restraining order that bars regulators from issuing additional medical cannabis grower and processor licenses until October 17. Remileaf sought the restraining order after its applications were removed from consideration for allegedly missing a deadline for paper submission by mere minutes (and after having already submitted the applications online within the deadline). The Legislative Black Caucus also asked the Maryland Medical Cannabis Commission to postpone granting licenses over concerns about whether minority-owned firms were fairly evaluated.

In Massachusetts, regulators approved licenses for companies offering to train employees of cannabis businesses.

Kansas City, Missouri Mayor Quinton Lucas (D) tweeted, "Why is municipal government in the marijuana ordinance enforcement business at all? #KCMO is considering 100 gram decriminalization as an ordinance matter, but the better move may be to remove marijuana as an offense from the municipal code altogether. It doesn't change state treatment of marijuana possession, distribution, etc., as an offense, and thus our 4 local prosecutors would still have ability to prosecute or decline. We won't create inconsistency with state law... instead we will just get out of the business."

New Jersey regulators reported that the state's medical cannabis program has enrolled 40,000 patients since Gov. Phil Murphy (D) took office.

New Mexico regulators mandated that medical cannabis vaping products containing THC be labeled with the following warning: "WARNING: Vaping cannabis-derived products containing THC has been associated with cases of severe lung injury, leading to difficulty breathing, hospitalization and even death."

A recent poll found that 56 percent of New York residents support legalizing cannabis. In addition, a majority of those polled ranked cannabis as the least serious public health problem in a list that included alcohol, obesity, tobacco and opioids.

In Pennsylvania, over two dozen employees of Pennsylvania Medical Solutions, a subsidiary of Vireo Health Inc., entered into a labor contract with their employer, making them the first cannabis workers in the state to unionize.

Rhode Island regulators enacted a ban on flavored e-cigarettes with an exemption for THC-based vaping products sold by medical cannabis dispensaries.

Suddenly and without explanation, Texas regulators suspended the application process for low-THC medical cannabis dispensary licenses. The month-long application window was supposed to run from October 1 through November 1.

Hemp and CBD

The National Academies of Science, Engineering and Medicine will host a forum this month on the "current and emerging scientific knowledge on and the potential health implications" of CBD.

South Dakota lawmakers are working on a bill to legalize industrial hemp in 2020.

Integrated CBD, an Arizona-based supplier of CBD products, received $50 million in debt and equity financing in a Series A round led by a New York hedge fund that manages about $7.4 billion in assets.

International

Brazilian regulators delayed a vote on medical cannabis proposals.

In Canada, Quebec's government is appealing a court ruling that invalidated the province's ban on possession and cultivation of cannabis for personal purposes; a poll found that working Canadian adults believe legal cannabis has had no impact on employment-related health and safety incidents (75%), productivity (74%), absenteeism (71%) or quality of work (70%); and Statistics Canada released data suggesting illegal online cannabis sales may be undercutting the legal market.

Sen. Ricardo Monreal, the Senate leader of Mexico's ruling party, said lawmakers plan to vote to legalize cannabis by the end of this month, but he's not supportive of a recently filed legalization bill that would create a state-run cannabis market.

Business

The number of banks (553) and credit unions (162) working with cannabis businesses rose again last quarter, according to the Financial Crimes Enforcement Network (FinCEN). Because FinCEN's reporting captures only financial institutions submitting Suspicious Activity Reports, more banks are likely, knowingly or unknowingly, banking cannabis businesses.

Dosist has released "dose dial," the first dose-controlled, child-resistant cannabis delivery device in the edible category.

Helix TCS, Inc. appealed a Tenth Circuit ruling that the Fair Labor Standards Act applies to all workers, including those working in a business that is illegal under the Controlled Substances Act.

Canopy Growth Corporation named David Klein, chief financial officer of Constellation Brands, Inc. as chair of its board.

New Frontier Data announced plans to acquire Civilized Worldwide Inc., a cannabis lifestyle media company.

HEXO Corp reported that fourth-quarter revenues are below initial expectations, with its CEO stating that this was "primarily due to lower than expected product sell through." National pricing pressures, regulatory uncertainty, limitations on the types and availability of cannabis derivative products and delayed store openings contributed to the company's decision to withdraw its outlook for fiscal year 2020.

Nielsen Holdings plc and Charlotte's Web Holdings, Inc. teamed up to launch a CBD retail market analysis program.

Citigroup's CEO said the company will not bank cannabis businesses until there are federal policies allowing it.

MedMen Enterprises, Inc. and PharmaCann, LLC mutually agreed to terminate their merger, whereby MedMen would have acquired PharmaCann in an all-stock transaction. As part of the agreement to terminate, PharmaCann will pay a termination fee to MedMen through a transfer of certain membership interests, including a cultivation and production facility in Illinois, a retail license in Illinois and a vertically integrated license in Virginia. MedMen also announced the appointment of a new chief financial officer.

Aleafia Health Inc. terminated a wholesale cannabis supply agreement with Aphria Inc.

Merida Merger Corp. I, a cannabis-focused blank check company, filed plans for a $100 million initial public offering.

Tilray Inc. and Anheuser-Busch InBev SA/NV expect to have CBD-infused beverages on the Canadian market as soon as December 2019.

Altria is sponsoring a cannabis panel featuring anti-tax activist Grover Norquist at the State Policy Network conference this month.

Surterra Wellness changed its name to Parallel.

The Boiler Inspection and Insurance Company of Canada discussed potential costs associated with equipment failures when underwriting cannabis businesses.

Sundial Growers Inc. was sued for allegedly failing to disclose that a customer returned half a ton of cannabis tainted with mold and parts of rubber gloves. In a clarifying statement, the company said "the amount of product returned was a fraction of the 554 kilograms erroneously quoted in the article. The return represented a minimal percentage of our total production to date, had no impact on our second-quarter financial results and is expected to have a negligible impact on our third quarter earnings." After issuing this statement, shares rebounded.

Medical and Health

The vaping crisis continues to negatively impact the regulated cannabis industry as the Centers for Disease Control and Prevention reported that there are now 1,299 known cases of severe lung injury, including 26 deaths, believed to be associated with vaping; Colorado Green Lab hypothesized that the outbreak of vaping-related lung injuries could be caused by a metal ingredient in vaping devices themselves—instead of a contaminant in nicotine or cannabis oils; acting Food and Drug Administration Commissioner Ned Sharpless urged consumers to "stop using vaping products that contain THC or that have had any substances added to them, including those purchased from retail establishments; a US district court judge denied a request for a temporary restraining order on Massachusetts's ban on vaping products; Oregon imposed a six-month ban on the sale of flavored vaping products; and Washington imposed a 120-day ban on the sale of flavored vaping products. Vaping advocates in the UK, which has not experienced similar rates of vaping illness that the US has, attribute the crisis in part to the US embracing prohibitionist rather than harm-reduction policies.

The National Institute on Drug Abuse awarded $3.5 million to researchers at the University of Georgia to study the impact of medical cannabis laws on people with chronic pain.

More research on the "entourage effect" was completed as a review published by Neuroscience & Biobehavioral Reviews found that "CBD did not consistently influence the effects of THC across all studies and outcomes" but suggested that "CBD may interact with some acute effects of THC"; and a study published by Cannabis and Cannabinoid Research found that "THC alone produced robust analgesia equivalent to the full cannabis extract, whereas terpenes alone did not produce analgesia," suggesting that "the analgesic activity of cannabis is largely mediated by THC, whereas terpenes alone do not cause alterations in cannabis-mediated analgesia."

A study published by the Centers for Disease Control and Prevention found that youth cannabis use in Washington State's largest county declined or remained stable after cannabis was legalized for adults, and noted that the results are "consistent with trends reported in Colorado and Oregon, states that legalized adult retail sales of marijuana in 2013 and 2014, respectively."

A study published in the American Journal of Psychiatry and Neuroscience looked at whether medical cannabis could assist 600 chronic pain patients in stopping or reducing their opioid use, finding that "[a]fter 6 months, 156 patients (26%) had ceased taking opioids", "[a]n additional 329 patients (55%) had reduced their opioid use by an average of 30%", "[o]ne hundred fourteen patients (19%) neither increased nor decreased their opioid use", and "one patient whose opioid dose was increased had poorly controlled pain and an aggravated pain condition."

A study published by Justice Quarterly on the effects of legalization in the States of Colorado and Washington found there were "no statistically significant long-term effects of recreational cannabis laws on the initiation of retail sales on violent or property crime rates in these states."

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