Duane Morris Partner Jennifer Briggs Fisher Named Cannabis Attorney of the Year

Jennifer Briggs Fisher, partner and a team lead of Duane Morris’ Cannabis Industry Group, has been named Cannabis Attorney of the Year by Bonaventure Equity. The award was presented at the Cannabis Dealmakers Summit on April 18 in San Diego.

Ms. Fisher regularly works with cannabis companies and ancillary businesses in California and throughout the nation, as well as in Canada, to provide compliance advice on a wide range of issues related to legal cannabis and hemp business activities. She is an experienced litigator, provides advice on regulatory and compliance issues and has represented corporations and individuals involved in a broad range of complex and high stakes civil, criminal, legislative and administrative proceedings.

David Feldman

NYC to Ban Pre-Employment Cannabis Testing

Last week, the New York City Council overwhelmingly approved a new local law to prohibit city employers from testing potential employees for marijuana use. This weekend Mayor Bill de Blasio indicated he will sign the bill. There are certain exceptions, permitting marijuana testing for police, construction workers, child care workers and some others. It also does not prohibit testing of current employees or firing someone for cannabis use. The bill, which would not take effect until one year after the Mayor signs it, applies to any employers in the city, even if their headquarters is elsewhere. The few Republicans who did not support the bill argued that employers should have the freedom to decide whom they wish to hire.

It appears no measure like this that has passed elsewhere, even in states that have legalized adult use of cannabis. Some states’ laws do prohibit discrimination against employees solely because they use medical marijuana. New York’s current proposed cannabis legalization bill, for example, would treat possessing a medical cannabis card as a disability, entitling the holder to certain benefits and protections. This bill, however, also prohibits testing of those using cannabis recreationally.

NYC has been readying itself for the expected passage of legal adult use cannabis in the State at some point this year. While previously opposed to legalization, the Mayor now supports it. Following an embarrassing New York Times story, the Mayor also recently banned the NYPD from arresting folks solely for using marijuana in public. Only traffic tickets can be issued now. Will the Big Apple lead the way in supporting the legal use of cannabis? This new law appears to be an important step in that direction.

David Feldman

Senior Trump Officials Support Congressional Action on Cannabis

In the last week both the US Attorney General and the Treasury Secretary have encouraged Congress to take action towards easing US cannabis prohibition. Yesterday, in testimony before Congress, AG William Barr seemed to support the currently pending Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, while still opposing legalization. He was concerned about the continuing conflict between federal and state laws in the area, saying: “The situation that I think is intolerable and which I’m opposed to is the current situation we’re in, and I would prefer one of two approaches rather than where we are. Personally, I would still favor one uniform federal rule against marijuana but, if there is not sufficient consensus to obtain that, then I think the way to go is to permit a more federal approach so states can make their own decisions within the framework of the federal law and so we’re not just ignoring the enforcement of federal law…I would much rather that approach—the approach taken by the STATES Act—than where we currently are.”

Separately, many have been disappointed by the lack of action by Secretary Steven Mnuchin’s Treasury Department. In February 2018 he said that addressing the challenge of cannabis businesses’ access to commercial banking was at the “top of the list” of his priorities. Since then the Department has taken no action on the issue. On Tuesday of this week, Mnuchin announced in Congressional testimony, essentially, that his hands are tied and he believes he cannot solve the cannabis banking problem administratively. He urged Congress to address the issue with new laws “on a bipartisan basis.” Mnuchin spoke of the need to build “cash rooms” at Treasury to hold taxes that cannabis companies pay in cash. The SAFE Banking Act of 2019, which would effectively eliminate most restrictions on banks taking cannabis companies as customers, has passed the House Financial Services Committee and is expected to pass the full House as well. It’s fate in the US Senate is less clear. The STATES Act also would address the banking issue.

Politically, it appears we are closer than ever to Congressional action in this area. Every Presidential candidate, including all the Democrats, Trump and his current Republican contender Bill Weld, favors some form of legalization or allowing states to decide on the matter. Between the growing public support for legalization, the taxes and jobs pouring into cannabis-legal states and the desire to right the wrongs of the War on Drugs, it is becoming both more politically acceptable and politically expedient to support easing of federal criminal restrictions. The current holdup? The US Senate, where Lindsey Graham and Mitch McConnell continue to appear to desire to stonewall further legalization efforts. Stay tuned.

 

FDA Announces Its Next Steps for Cannabis Products

With the enactment of the Agriculture Improvement Act of 2018 (also known as the 2018 Farm Bill), hemp-derived CBD appeared to be on the table for marketing all across the country. However, the U.S. Food and Drug Administration’s (FDA) press release issued that same day put a hold on the jubilation, stating that FDA considered any and all cannabis-containing or cannabis-derived products as drug products and not food or dietary supplements, regardless of whether the CBD was hemp-derived.

On April 2, 2019, departing FDA Commissioner Scott Gottlieb issued a statement about FDA’s next steps to advance a regulatory pathway for cannabis-containing and cannabis-derived products. At the same time FDA updated its cannabis-containing products and cannabis-derived products Q&A. It is clear that, at this point, FDA has not changed its position.

Read the full Alert on the Duane Morris LLP website.

CBD’s Big Week – Now Walgreens to Sell in Select States

Seth Goldberg
Seth A. Goldberg

Last week, I wrote about CVS Pharmacy’s decision to sell hemp-derived CBD products in eight states, Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee.  Today, one of its competitors, Walgreens announced a similar decision – Walgreens will be entering the hemp-derived CBD space Walgreens in Oregon, Colorado, New Mexico, Kentucky, Tennessee, Vermont, South Carolina, Illinois and Indiana, where it will sell CBD creams, patches and sprays in nearly 1,500 stores.

As with CVS, Walgreen’s decision to sell hemp-derived in CBD in select states, as opposed to rolling those products out nationally, is likely the result of the still developing federal regulatory framework for hemp, which includes forthcoming regulations and guidance from USDA and FDA, and differences in the laws pertaining to hemp and hemp-derived CBD products from state-to-state.

Notwithstanding the challenging regulatory environment, the mass marketing of hemp-derived CBD, now that hemp is no longer a federal controlled substance, provides a lucrative opportunity for the hemp-derived CBD supply chain – cultivators, processors, and retailers, including the major pharmacy chains.  However, the “select state” approach Walgreens and CVS have taken demonstrates that careful is analysis of the federal and state laws and regulations at play is necessary before entering the hemp-derived CBD market.

 

Cannabis Banking – Can Do in West Virginia – Brad A. Molotsky, Esq.

Gov. Jim Justice of West Virginia signed into law, HB 2358, a medical cannabis banking bill, allowing bidding for financial institutions to provide banking services related to the state’s medical marijuana program.

Per reporting from MJ Biz, House Bill 2538 also establishes the Medical Cannabis Program Fund for collecting fees related to the program and the Treasurer’s Medical Cannabis Fund allowing the state treasurer to collect $ for banking services.

Justice said Tuesday he fully supports opening access to medical marijuana. Delegate Mike Pushkin, D-Kanawha, who co-sponsored the bill, said he was happy to see Justice sign the bill.

“I think that if we allow different types of entities to act as a depository, then we are more likely to find somebody to step up and do that business,” he said.

Justice has yet to act on a separate bill, House Bill 2079, which addresses issues with the original medical marijuana bill, including the permitting process and regional distribution requirements.

Justice has until midnight Wednesday to act on bills from this year’s 60-day legislative session. -Brad A. Molotsky

Paul Josephson to Speak at Crain’s Presents The Business of Cannabis

Photo of attorney Paul Josephson
Paul Josephson

Duane Morris partner Paul Josephson will be a panelist at “Crain’s Presents The Business of Cannabis: Growing a Sustainable Industry in the Empire State,” to be held on Thursday, April 18, 2019 from 8:00 a.m. to 11:00 a.m. at The New York Athletic Club in New York City.

For more information about the event, please visit the Crain’s New York Business website.

The Light is Still Yellow, but Hemp-Derived CBD Hits The Mass Market

Seth Goldberg
Seth A. Goldberg

CVS Pharmacy’s announcement  that it will be selling hemp-derived CBD topicals, including creams, sprays, roll-ons, lotions and salves in Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee, should really come as no surprise, as the mass marketing of CBD has been an eventuality since hemp was removed from the Controlled Substances Act’s definition of marijuana with the signing of the 2018 Farm Bill in December 2018.  CBD’s therapeutic benefits, without the psychoactivity of THC, have made products containing CBD the darling of the cannabis industry.

However, as CVS’s decision to market hemp-derived CBD products in select states demonstrates, the 2018 Farm Bill was not a total green light.  USDA has yet to establish regulations fully implementing the federal hemp program, which would allow states to establish their own rules for cultivation, processing and sale of hemp, meaning state-by-state differences in the laws concerning cannabis, including hemp, must be assessed before marketing products like hemp-derived CBD.  Such federal regulations should be promulgated later in 2019, ahead of the 2020 growing season.

In addition to USDA, FDA has authority over CBD-containing products under the Food, Drug and Cosmetics Act, adding another layer of regulatory complexity that makes the 2018 Farm Bill’s removal of hemp from the CSA more of a yellow light for marketing hemp-derived CBD. Thus, manufacturers and distributors of CBD products must assess how CBD fits in with FDA and state rules concerning drugs and drug approvals, active pharmaceutical ingredients, health claims and labeling, and foods and beverages. FDA has said it is evaluating CBD closely, and should be providing guidance later in 2019.

Because the light is still yellow on the marketing of hemp-derived CBD, manufacturers and distributors should carefully evaluate the federal and state regulatory framework before marketing their CBD products.

Gotham Green makes $250M investment in Medmen – Brad A. Molotsky, Esquire

Per MJBiz, MedMen, a California-based multistate marijuana operator, will receive an investment of up to $250 million from private equity fund Gotham Green Partners (GGP).

The investment – a convertible credit facility – is believed to be the largest to date by a single investor in a publicly traded cannabis company with U.S. operations.

The money will go toward a number of corporate activities, including potential acquisitions, investment in technology and increased cultivation and production, MedMen said.

“More than having adequate growth capital to fund all of their current operational needs (and eliminating the lingering overhang of future tag on offerings), we believe the GGP investment comes with many lateral strategic benefits, as they are the preeminent investor across the cannabis supply chain,” Paul Penney, managing director at Northland Securities, wrote in an email to Marijuana Business Daily.

After the news, MedMen, which trades on the Canadian Securities Exchange as MMEN, saw its stock rise more than 6% over its price at close the previous day.

-Brad A. Molotsky, Esquire, Duane Morris

Why Social Justice Matters in the Cannabis Debate

David FeldmanThe centuries of enslaving people of color and the overwhelming racism against and systemic mistreatment of Mexicans and other Hispanics in this country were and in many respects to this day remain horrid and indefensible. This has been no more apparent than in the U.S. “War on Drugs.” We can recount at length the original criminalization of cannabis in the 1930s and again in 1970 as almost purely racist, political and economic. It was a way, among other things, to lock up Mexicans and blacks and stop their efforts to hurt opposition candidates or take jobs away from “real” Americans. Leaders from those times have all but, and in some cases directly, admitted as much.

To read the full text of this column by Duane Morris partner David Feldman, please visit the HoneySuckle website.