Cannabis Project Newsletter - May 1, 2020
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What Happened in April?
By Austin Bernstein
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This April brought both political and economic showers for the cannabis industry.
Starting at the federal level, the Small Business Administration does not consider state licensed medical or retail marijuana businesses eligible for COVID relief. Advocacy groups and democrats in the House are bringing a full-court press to reverse of this policy.
The political activity begs the question of how the industry is fairing during this economic climate. April is typically an important month for the cannabis industry. Licensed businesses stock up on supply, anticipating increased demand from the 420 celebration. Whether that trend continued this April is unclear.
On one hand, stay-at-home orders in states with medical and retail programs (all but one in the latter) deemed licensed businesses "essential". Sales figures included peaks and valleys. Initial sales surges followed stay-at-home orders, only to taper off throughout April. Some reports indicate 420 sales in 2020 were more productive than 2019. See
here
. On the other, in recent weeks there have been a series of mass lay-offs and facility downsizing by industry leaders across the U.S. Without bankruptcy protection or 280E tax deductions, business leaders face difficult choices. Read more
here
.
The pandemic's impact is being felt at the state level, too. Petition gatherers seeking to place recreational measures on the ballot are unlikely to gather the requisite signatures due to social distancing requirements.
On the social equity front, California announced large social equity grants to local jurisdictions to provide access to capital for applicants in economic empowerment zones. And ACLU's recent report sounds the clarion call for addressing inequities caused by the War on Drugs.
The debate continues on how to best regulate CBD products. New coalitions formed this past month, including organizations representing some of the world's leading consumer brands, urging greater federal clarity.
The Alliance Cannabis Project brought many of these topics to the forefront during our Virtual Summit on Cannabis Law & Policy on April 21. We were pleased that so many of you could attend.
Stay safe, stay health, stay happy, and stay tuned.
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CANNABIS LAW & POLICY
VIRTUAL SUMMIT
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AG Alliance Cannabis Project brings together Attorneys General and diverse stakeholders to discuss a range of issues
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The Alliance Cannabis Project hosted an all day virtual summit on cannabis law and policy on April 21st. We were delighted that
Attorneys General Tish James (NY-D)
and
Wayne Stenehjem (ND-R)
provided opening remarks to launch the Summit. Their bipartisan leadership reminded us that the national debate on cannabis reform affects millions of Americans; patients and consumers, parents and families, law enforcement officers, federal, state and local government leaders, and the business community. Over
375 guests
joined the audience to learn from over
25 subject matter experts
across all levels of government, law enforcement, advocacy organizations, and the private sector.
An overarching takeaway from the Summit is that the issues triggered by cannabis reform are numerous, complicated, and will not be solved overnight. And just like past efforts to protect consumers and ensure the rule of law in other arenas, the Attorneys General are poised to lead here. To that end, the Cannabis Project serves as forum for engagement by both the public and private sectors.
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Despite national reform efforts, ACLU finds racial disparities in the enforcement of marijuana laws
Achieving social equity within the cannabis industry has become a cornerstone in the national debate. In past Cannabis Project programming, Attorneys General have spoken out on the need to do better here. A recent ACLU report -- "
A Tale of Two Countries: Racially targeted arrests in the era of marijuana reform
" -- concludes that black people are 3.64 times more likely to be arrested for marijuana possession. The report continues where an influential 2013 report left off and makes 5 alarming key findings. Click
Here
for the coverage in Forbes.
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California Announces $30 Million Grant Program To Promote Marijuana Industry Social Equity
Providing access to capital for minority owned cannabis businesses is a challenge the Bureau of Cannabis Control and Governor's Office of Economic Development are attempting to tackle. Through the Cannabis Equity Grant Program, a minimum of $23 million in low- or no-interest loans will be awarded to applicants "identified by local jurisdictions as being from communities most harmed by cannabis prohibition." Cities and counties across the state have been identified as recipients of the grant funding. The BCC's press release with more detail can be found
here
.
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Efforts to gather signatures in support of cannabis ballot measures are stymied by social distancing restrictions
Measures to legalize recreational sales are already on the ballot in South Dakota, Mississippi, and New Jersey. But COVID-19 has created hurdles for petition gatherers in at least five states: Arizona, Arkansas, Missouri, North Dakota, and Oklahoma.
Smart and Safe AZ
has gathered over 300,000 signatures, well above the 238,000 needed before July 2, and the campaign reports it will continue to gather.
Arkansans For Cannabis Reform
is reported to have gathered approximately 16,000 signatures, but needs at least 90,000 by July 3. The effort in Missouri is even less likely to achieve the requisite signatures by the May 3 deadline. As of the end of March, New Approach Missouri collected 60,000 signatures but needs to submit at least 170,000 to be placed on the ballot.
Legalize North Dakota
abandoned its initiative, which needed 13,000 signatures. And in Oklahoma, the statewide ban on signature collection has likely killed the legalization initiative, state question 807. The state's medical program has enrolled over 270,000 patients, the largest per captia program in the nation.
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Illinois recreational cannabis sales up during March
The Illinois Department of Financial and Professional Regulation reported for the month of March, statewide cannabis sales were $35.9 million, up more than $1 million from February sales. Local news
reported
that over 100 cars were lined up outside Rise Dispensary in Mundelein, Illinois, a suburb north of O'Hare Airport. Since January, when recreational sales went live, the state estimates the regulated marketplace has generated nearly $100 million in sales revenue. Putting that in perspective, in the first three months of sales, Colorado generated $48.1 million, and Michigan generated $31.6 million. These figures add to the conflicting data on the strength and viability of the national recreational market.
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New law in Florida seeks to block recreational marijuana ballot measure
Earlier this month, Governor Ron DeSantis
signed
a bill that requires the State Supreme Court to consider whether a proposal to amend the state constitution is in violation of the U.S. Constitution. Proponents of the legislation argue the ballot measure to legalize recreational cannabis would be preempted by the Controlled Substances Act, and therefore in violation of the Supremacy Clause of the U.S. Constitution. Before the change, Florida law required the state supreme court only to evaluate the clarity of any ballot measure.
As previously reported, Attorney General Ashley Moody's office challenged the ballot measure as unclear. The Office's latest filing does not address the question of whether the measure violates the U.S. Constitution. Attorneys General must uphold both federal
and
state law. The state supreme court will hear oral argument on the case on May 6.
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Policy Center for Public Health and Safety (PH&S) leads coalition urging Congress to provide COVID-19 relief to cannabis industry
As we previously reported, federal aid has been withheld from marijuana-related businesses. A group of trade associations and financial institutions issued a letter to Congressional leaders urging consideration of alternative relief in the form of either federal block grants or amending federal eligibility to align with the designation by numerous states determining marijuana-related businesses as essential. PH&S has advocated for financial transparency, public safety, and consumer protection within the regulated marijuana industry. Click
here
for complete coverage.
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The move comes as Democrats in the House introduced legislation to provide relief, entitled the Emergency Cannabis Small Business Health and Safety Act. As of this reporting, 34 members of the House have supported the Act.
More on the legislative details
here
.
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Meta-study conducted at the University of Arizona concludes medical cannabis may reduce opiod use among patients with chronic pain
A central focus in the legalization debate is the medicinal value of cannabis use. A recent study conducted by graduate students at the University of Arizona's College of Public Health concluded that "patients reported a 64-75 percent reduction in opioid dosage when used in combination with medical cannabis."
The researchers, however, identified several flaws in the methodology used, including inconsistent sample dosage sizes across studies. The report highlights the fact that more research is needed to ground policy makers in strong science. Click
here
for more reporting.
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Local law enforcement seize thousands of plants from illegal grow in Oklahoma
Earlier this month, local law enforcement
seized
over 2,500 illegal plants, worth and estimated $1.3 million from a residence in Harrah, Oklahoma. The state's medical marijuana program has generated millions in tax revenue. The seizure comes as state leaders are grappling with ballot measures that would create a recreational cannabis market. Read more
here
.
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New York Attorney General Tish James orders CBD company to stop marketing products as effective COVID-19 treatment
Scams and deceptive trade practices are all too common during times of crisis. Earlier this month, New York Attorney General James ordered Finest Herbalist, a CBD company, to cease and desist marketing their product as a means of curing or treating COVID-19. As the Order indicates, the World Health Organization has noted "there is no specific medicine to prevent or treat this disease." Read more about the NY AGOs work
here
.
Incidents of false advertising in response to COVID have been reported around the U.S. During the virtual summit, it was discussed that the majority of Attorneys General possess broad authority under Unfair and Deceptive Trade Practices laws and general common law to protect consumers.
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The Collaborative for CBD Science & Safety (CCSS) launches effort to increase science-based research on CBD products
Earlier this month, a diverse set of stakeholders formed a coalition to advocate for stronger regulatory controls on the proliferation of the CBD market. The CCSS' goals are to foster dialogue among stakeholders and advance quality of CBD products. The initiative's goals are detailed in the attached 1-pager below. Coalition members includes Greenwich Biosciences, Council for Responsible Nutrition, and Consumer Brands Association.
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United Cannabis Corp.'s Chapter 11 filing provides another test case for industry
Marijuana's legal classification as a Schedule I drug has closed the doors to the U.S. bankruptcy courts for regulated businesses. This is another example of how conflicting state and federal laws lead to business challenges during a period of consolidation.
The latest Chapter 11 filing by UCann, based in Golden, CO, presents a twist on past litigation. UCann reports that its focus is on manufacturing and selling
hemp-derived CBD
products. The 2018 Farm Bill removed hemp, as tested at or below 0.3% THC from raw flower, from the CSA. Given the widespread confusion over the legal and technical relationship between CBD and THC, it remains to be seen whether the bankruptcy courts will provide protection to a company that touches a cannabis plant in any form.
For interested readers, the case is identified on the docket as:
In re: United Cannabis Corporation
, case number 20-12692, in the U.S. Bankruptcy Court for the District of Colorado.
Click
here
for more reporting.
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The Cannabis Litigation Blog continues to cover the latest developments in cannabis law.
Check out Professor Mikos' latest post on recent court cases that examine the interplay between state employment disability reimbursement claims and federal drug law. Similar facts, different outcomes. Another example of the challenge with a patchwork system of laws and policy preferences.
We are extremely grateful for Professor Mikos' generous contribution of his time and energy to educate the attorneys general. His textbook,
Marijuana Law, Policy, and Authority,
should be on everyone
Interested in becoming a contributing author?
Contact Austin Bernstein at abernstein@agalliance.org
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| THE AG ALLIANCE CANNABIS PROJECT |
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