What's Happened in August?
As the nation continues to battle its way through the COVID-19 pandemic, states continue to see cannabis legalization initiatives qualify for November ballots. A new study analyzes the illicit market in California, and state law enforcement continues to highlight issues with THC candy being sold to children. Also, the latest data suggests that, on the whole, the impact of the pandemic has been mostly positive for the industry.
At the federal level, advocates are pushing Congress to pass the MORE Act to address the social and economic issues brought about by the pandemic. The DEA released its proposed rules for hemp and CBD, the FDA announced that it needs help in testing CBD products, and the USDA explained why hemp farmers have been excluded from relief under the Coronavirus Food Assistance Program. Finally, a new study suggests that the amount of cannabis that an individual consumes does not directly correlate to their level of impairment.
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After 4-year Delay, Recreational Sales are Set to Begin in Maine
4 years after voters in Maine approved an initiative to legalize the recreational adult use of cannabis, the state’s Office of Marijuana Policy has announced that recreational sales are set to begin on October 9th. The first licenses will be available to dispensaries beginning September 8th, giving those dispensaries about a month to cultivate and test product. The delay is due in part to a veto by the previous governor, but also due to the COVID-19 pandemic. Click here for more info.
Case Dismissed Against Hemp Farmers in Wyoming
In November of 2019, agents in the Wyoming Division of Criminal Investigation raided the farm of Debra Palm-Egle and Joshua Egle in Laramie County, Wyoming, and found more than 700 pounds of plants which they assumed was cannabis. While the Egle’s stressed that they were cultivating hemp and not cannabis, investigators identified several plants which tested over the 0.3% THC limit, which delineates hemp from cannabis. On August 6th, the Laramie County Circuit Court Judge dismissed all charges against the Egles, stating that prosecutors lacked probable cause to show that the Egles intended to manufacture cannabis, and not hemp. The judge cited the Egle’s history as hemp farmers and advocates for hemp regulation in Wyoming, as well as the results of tests conducted by the Egles which showed that their plants tested below the 0.3% THC threshold, as evidence that they intended to produce hemp. Click here for more info.
Legalization Initiatives Qualify for November Ballots in Montana & Arizona
In Montana, after collecting more than 130,000 signatures, cannabis reform group New Approach Montana has announced that they have received enough voter support to qualify two initiatives for the November ballot which would legalize the recreational adult use and possession of cannabis. The first initiative, Initiative 190, would legalize the possession and sale of cannabis, and implement a 20% tax on recreational products. The second initiative, Constitutional Initiative 118, grants the legislature the authority to bar individuals less than 21 years old from purchasing cannabis. Click here for more info.
And in Arizona, on August 11th, the Secretary of State announced that activists had also submitted enough signatures to place a cannabis legalization initiative on the November ballot. This comes just a week after a suit by opponents, arguing that the initiative misleads voters, was rejected by a lower court. The initiative would allow adults to possess up to an ounce, and cultivate up to 6 plants, at a time. Recreational sales would be taxed at 16%. The initiative also features some social equity provisions such as an opt-in expungement program, and a social equity ownership program. Opponents of the initiative have vowed to appeal their suit to the state supreme court. Click here for more info.
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Leadership Conference on Civil and Human Rights Urges Congress to Put Forward the MORE Act
On August 13th, the Leadership Conference on Civil and Human Rights (LCCHR), a coalition of hundreds of national advocacy and criminal justice reform groups, wrote a letter to the House of Representatives in which they urged the passage of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884. The coalition writes that, amid the COVID-19 pandemic and national protests over unjust policing practices, the passage of MORE is critically important to the nation's social and economic well-being.
The MORE Act, introduced to the House and Senate in July of 2019, would remove cannabis entirely from the Controlled Substances Act and remove all criminal penalties for the manufacture, distribution or possession of cannabis. The bill would also impose a 5% federal cannabis tax, and prohibit the federal government from denying any federal benefits based on certain cannabis convictions. From a social justice perspective, the bill would establish a federal expungement program for individuals with convictions, and tax revenue would be directed to a trust fund to be used to develop programs and services focused on business owners in communities most impacted by current cannabis regulation. Click the button below to read the letter from the LCCHR to the House.
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FDA Seeks Contractor to Help Study CBD Labeling
On July 8th, the Food and Drug Administration (FDA) finalized its report to Congress on the current state of the CBD marketplace, where it concluded that there are marked inconsistencies in the amount of CBD contained within certain products when compared to the amount listed on the product’s label. In order to better understand these inconsistencies and in order to develop effective CBD policy, on August 13th the FDA announced that it is looking to hire a contractor to assist in collecting samples of CBD products from across the country and assessing quantities of CBD in relation to the listed amounts, as well as testing for other heavy metals, chemicals and pesticides. To be awarded the contract, applicants must submit their application to the FDA by August 31st. Click here to read the notice from the FDA.
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USDA Explains Denial of CFAP Relief to Hemp Farmers
Back in March, as the U.S. was seeing rapid rises in COVID-19 cases and implementing state-wide stay-at-home orders, the passage of the CARES Act and the Families First Coronavirus Response Act provided that $19 billion in funds be directed to the United States Department of Agriculture (USDA) to provide assistance to farmers across the nation. On April 17th, USDA announced the creation of the Coronavirus Food Assistance Program (CFAP), to which farmers could apply for economic relief. After a four-month period of public comment, the USDA on August 14th released its Notification of Funding Availability for the CFAP, which detailed additional commodities which would be eligible for relief. Within that notice, the USDA explained why hemp farmers have been left out of the assistance program.
USDA explained that, for a commodity to qualify for assistance, data must establish that farm sale prices of that commodity had decreased by at least 5% between January and April of this year. The USDA concluded that farm sale prices for hemp had only decreased by about 1% during that period, and therefore hemp did not meet the threshold for assistance. Industry supporters argue that it is much more difficult to measure price declines against traditional benchmarks in a developing industry, and that hemp farmers should not be denied relief. Click here for more info, and click the button below to read the notice by USDA.
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DEA Releases Proposed Rules for Hemp and CBD
On August 21st, in an effort to bring the agency into compliance with the 2018 Farm Bill, the Drug Enforcement Administration (DEA) released its proposed rules for the regulation of hemp and CBD. In the proposed rule, the DEA stated that they are adjusting the definition of THC and THC extracts under the Controlled Substances Act to exclude hemp and CBD, or cannabis plants which contain less than 0.3% THC. The rule also states that DEA will de-schedule any schedule 5 cannabis-derived compounds which become FDA approved, as it did with Epidiolex, and that controls on the importation and exportation of hemp and CBD have been removed. While the DEA views these regulations as merely enacting statutory amendments to the CSA which had already been in effect, the agency will still maintain an open public comment period until October 20th. Click the button below to read the DEA’s proposed rule in the Federal Register.
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Study Suggests Differences in Local Cannabis Laws Fuel the Illicit Market in California
A study recently released by Applied Development Economics Inc. suggests that inconsistencies between state and local cannabis policies in California fuel the enormous illicit market within the state. The authors found that total legal cannabis sales in California were about $2.1 billion in 2019, but that the total size of the licit and illicit markets was somewhere around $7.9 billion. The authors also found that, if California were able to expand the legal market to the same extent as Colorado, the potential legal market could reach $9.8 billion.
This discrepancy, the authors propose, is due to individual jurisdictions implementing different cannabis regulations that stifle the growth of the legitimate market. The areas of Sacramento County, for example, have a total licit and illicit cannabis market of around $117 million. Because the county does not allow cannabis activity in any form, however, the vast majority of those sales are driven to the illicit market. The authors conclude that the legal market potential for California remains significant, and that jurisdictions that capitalize on the legalization of cannabis will see significant revenue increases from sales taxes. Click here for more info, and click the button below to read the report.
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Law Enforcement Highlights Investigation into THC Candy in Alabama
On August 11th, law enforcement officers in Geneva County, Alabama, held a press conference to warn community members about an investigation into illicit sales of candy which were found to contain THC. While some packaging was found to list THC as an ingredient on the product’s label, other products were found which contained no reference to THC. Three adults and one juvenile have already been arrested in connection with the investigation. Local District Attorney Kirke Adams is asking parents to be cautious about where they purchase candy for their children. Click here for more info.
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New Study Suggests that the Amount of Cannabis Consumed Does Not Correlate with Impairment
A new study released by the University of Colorado at Boulder adds to the debate around how law enforcement determines whether someone is impaired by cannabis use while driving. The researchers asked several cannabis users to consume different amounts of cannabis, and measured impairment in those individuals based on tests involving neurological and motor functions like speech, memory, gait, and balance. Those researchers concluded that the level of impairment in individuals who consumed a larger quantity of cannabis was not significantly different than the impairment displayed by those who consumed less cannabis. The conclusion, the researchers suggest, is that the effects of consuming cannabis reach a peak after a certain amount consumed. Accordingly, a determination of impairment based on an amount of cannabis consumed, which in turn is based primarily on a blood-THC concentration test, may not give an accurate indication of an individual’s level of impairment. Click here for more info.
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Analyses Indicate Net Positive Result of COVID-19 on the Cannabis Industry
New data continues to be released detailing the impact of COVID-19 on the cannabis industry. Last month, New Frontier Data released findings which suggest that the pandemic has accelerated the growth of legal cannabis markets in several states, and also accelerated the decline of the illicit market. The highest performing markets, including Oregon, Colorado and Michigan, showed dramatic increases in sales between March and May.
In May, Oregon saw a record $100 million in total sales, while Colorado neared $200 million for the first time. Between March and May, Michigan saw its medical sales rise by about 50%. Other states also showed drastic growth in their medical markets between April and May, with the number of registered medical patients in Florida and Oklahoma increasing by around 20,000 and 50,000 patients, respectively. This data seems to correspond to reports from other industry tracking organizations, such as BDS Analytics, which suggest that the effects of the pandemic on the industry have been net positive. BDSA also points out, however, that certain regions experienced dramatic declines during this time, including Nevada and Massachusetts. Click here for more info.
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This newsletter was written and prepared by Austin Bernstein and Cole White
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