Cannabis Project Newsletter - January 31, 2020
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What Happened in January?
Summary by Cole White
In January, the states were primarily focused on the vaping health crisis that has evolved over the past several months. While the CDC has recently reported a more direct link with illicit THC vape cartridges, many states have taken the opportunity to institute new reforms around THC vaping, as well as tobacco and nicotine vaping.
On the federal level, cannabis and banking lobbyists are encouraging Senate Banking Committee Chairman Mike Crapo to advance the Secure and Fair Enforcement Banking Act (SAFE Banking Act) after he expressed several concerns about the bill, including his overall opposition to marijuana legalization. Advocates point out that the bill does not support legalization generally, it only attempts to grant marijuana businesses access to banking to improve industry operations and public safety. Opponents are applauding Crapo for slowing down the process to direct focus onto issues like lack of research and children's health and safety. See the federal update section below for a more detailed discussion.
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California
– The Governor has proposed changes to the budget which would simplify and improve the taxation and regulation structure for the industry. The largest suggested change is consolidating licensing authority under one state agency. The new Department of Cannabis Control should be up and running by mid 2021. Click
here
for more.
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Hawaii
– As of Jan 11th, Hawaii has decriminalized the individual possession of a small amount of marijuana. Individuals may be subject to a fine for possession, but can no longer be arrested. Click
here
for more.
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Illinois
– As of Jan 1 recreational sales have begun, and within 6 days many retailers had already began reporting issues with inventory shortage. Click
here
for more.
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New Mexico
– With only 3 weeks left in the 2020 legislative session, legislators are prioritizing a bill which would legalize the recreational sale of marijuana to adults. The bill passed through the Senate Public Affairs Committee on a 4-3 vote. Click
here
for more.
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New York
– Legislators are pushing a bill which would regulate and tax the recreational sale of marijuana, but senators disagree on how funding should be allocated. The bill specifies that half of the fu
nds received from marijuana taxation would be reinvested into minority communities who have historically been disproportionally affected by drug laws. Click
here
for more.
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Massachusetts
- The temporary quarantine order of THC vape products has been lifted. Licensees can receive permission to sell their products if they can show that the product was manufactured after the date of the quarantine order, and the product has been tested without revealing any negative results. Click
here
for more.
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Vermont –
The Governor and other state lawmakers
are pushing a bill to legalize the sale and taxation of marijuana to capitalize on the state's recent legalization of possession. Click
here
for more info, and click
here
to see AG Donovan make the announcement.
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Washington
- A new rule has been suggested by the Washington State Liquor and Cannabis Board which would allow out of state investment in the cannabis industry, with a 1% investment tax to be deposited in a social equity fund. Click
here
for more.
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Washington D.C.
- The legislature is considering a bill which would expand delivery options for medical cannabis. Click
here
for more.
Overall, 2020 is shaping up to be a big year for the states and cannabis. Many states are continuing the nation-wide trend towards legalization. The AGA Cannabis Project will continue to monitor and report on state developments on a monthly basis throughout the year.
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The SAFE Banking Act - Comparing Viewpoints
Summary by Cole White
The Secure And Fair Enforcement (SAFE) Banking Act was reintroduced in Congress in April of last year. The bill is primarily focused on alleviating the inability of the cannabis industry to gain access to the banking industry. Specifically, the bill focuses on prohibiting regulators from interfering with or terminating a financial institution’s federal deposit and share insurance for providing services to a cannabis company. The goal is to align incentives so that banks will not face punishment for bankrolling a state-legal cannabis organization. Last June, the National Association of Attorneys General (NAAG) sent a
letter
to congress urging passage of the bill. After some debate, it passed through the Democratic-controlled House in September. For more info on the SAFE Banking Act, see the "SAFE BANKING ACT DETAILS" link below.
But several lobbying groups and senators are expressing their concerns. Senate Banking Committee Chairman Mike Crapo (R-ID) said in December that he is specifically concerned about “the high-level potency of marijuana, marketing tactics to children, lack of research on marijuana’s effects, and the need to prevent bad actors and cartels from using the banks to disguise ill-gotten cash to launder money into the financial system.” Click
here
to read his full comments.
Some non-profit groups such as Smart Colorado, a Colorado based non-profit focused on protecting children from marijuana, are applauding Crapo for his reticence. “As a nonprofit organization dedicated to protecting children from the harms of marijuana commercialization, we want to thank Senator Crapo for his courage in standing up for the health and welfare of youths, whose interests too often have been ignored in this important debate.” To address the concerns of high potency, Senator Crapo is considering an amendment which would significantly limit the potency of marijuana products that could be sold in stores, and those stores would have to meet those potency requirements in order to qualify for banking services. Click
here
to read Smart Colorado's perspective.
Other financial services and law enforcement officials, however, are also speaking out. While concerns over child safety and access are of course legitimate, the marijuana industry’s continued lack of access to banking services creates a series of security, public safety and regulatory problems. Marijuana businesses are forced to operate on a completely cash basis without access to small business loans or credit lines, pay taxes and bills in cash, and secure cash during storage and transportation. “Senator Crapo’s concerns, while substantive and understandable given the complexity of the issue, also signals a broader Senate bottleneck. This is unfortunate. The SAFE Banking Act is meant to conservatively address issues related to cannabis banking in a bipartisan manner. The issues raised by Sen. Crapo will continue to exist until marijuana related business can access the financial system.” Click
here
to read the American Bar Association's perspective.
While the debate on SAFE continues, the House Energy & Commerce Subcommittee on Health held a hearing on January 15th titled “Cannabis Policies for the New Decade.” They discussed, among other things, several different bills which would expand access to marijuana for researchers, which had strong bipartisan support. The hearing included testimony from the FDA, NIDA, and DEA among others. For a summary of the hearing, click
here
.
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Illicit THC Vape Products Primary Driver of Health Crisis
Summary by Cole White
In his CNN Health article,
The Vaping Black Market is Hiding in Plain Sight
, Dr. Sanjay Gupta explains that the CDC has identified illegal THC vape products as the primary driver of the vaping crisis currently sweeping the nation. The solution seems obvious – buy legal vape products from licensed retailers. But Dr. Gupta explains that distinguishing a fake from a legitimate product is more difficult than one might think. Illegal products can have packaging and product branding very similar or identical to legitimate products.
The easiest way to spot an illicit vaping product is to identify whether the store selling the product is itself legitimate. Just like the products, illicit THC stores can appear identical to their legal counterparts, but legal THC business are typically identified and listed by their state regulatory agencies. Potency can also be an identifying factor for illegal products; legal products typically range between 70-90% THC potency, while illegal cartridges are typically between 40-50%. This is because illegal cartridges are “watered down” with other chemicals such as vitamin E acetate, a substance which the CDC has identified as one of the leading causes of the current vaping crisis.
CDC Findings
The CDC recently released data which found that 80% of the patients with the mysterious vaping related lung illness were linked to illicit THC vape products. However, the report also found that around 16% of the patients who reported on their products sources reported having purchased only from commercial sources, rather than purchasing through friends or the black market. While illicit THC products appear to be the main culprit in the lung illness, the study concludes that "there has yet to be a clear and present distinction between the legal regulated market and the illicit market." As Dr. Gupta points out, this may be due to the difficulty in identifying a legitimate from an illegitimate commercial source. While the CDC has walked back its broad advisement against vaping, they recommend continuing to avoid THC vape products, especially those known to contain vitamin E acetate.
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The Search for a Reliable Impairment Detection & Measurement System
Summary by Cole White
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While an alcohol breathalyzer has proven to be an effective and reliable tool for determining alcohol impairment, cannabis has not been subject to the same level of extensive research as alcohol over the years and developing a similarly effective tool has proven difficult.
Many different companies are attempting to tackle this problem, and they are going about it in different ways. Last year, a company called Hound Labs sponsored a research study which concluded that “THC could be detected in breath for up to 3 hours after smoking and that there’s a correlation between THC concentrations and blood concentrations for that initial period.” Hound Labs used this data to create a dual alcohol and THC breathalyzer which can detect THC consumption within the previous 3 hour period. However, this technology only determines if an individual has used cannabis recently, not whether or not they are impaired. Click
here
to read more.
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Problems with Determining Impairment
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The biggest problem with determining impairment in an individual is the lack of detailed research on the effects of marijuana in the blood, as compared to alcohol.
In July of 2017, the National Highway Traffic Safety Administration (NHTSA) sent a
study
to congress making several conclusions about the effects of marijuana on an individuals ability to drive. This study was based primarily on control/test group experimentation, and was not primarily focused on scientific studies of the effects of THC in an individual's blood and the resulting impairment.
The state approach to this issue, so far, has been to focus resources on training police officers as drug recognition experts, rather than invest in early models of unproven technology. However, many of the companies working on the problem say that they are close to a solution, including Hound Labs.
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CWAG / AGA SPRING DINNER APRIL 21 - CANNABIS PROJECT FORUM
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The Cannabis Project supports Attorneys General in the development and enforcement of state cannabis laws, studies trends in law & policy, and convenes forums for discussion on how cannabis laws might protect public health and safety while respecting the role of states as laboratories of democracy.
To this end, at the Attorney General Alliance and CWAG Spring Dinner, on April 21, the Cannabis Project will host a forum for Attorneys General Staff and interested parties to dialogue on legal and policy issues inherent in this space. Topics may include consumer protection, public health and safety, the illicit market and law enforcement, and financial transparency. Attendance is by invitation only. Registration and sponsorship information will be made available on February 2, 2020. For questions or inquiries on how to partner with the Cannabis Project or attend the AGA Spring Dinner, please contact Austin P. Bernstein, Director and Assistant Attorney General.
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