As an update to our September 4th blog post, the House of Representatives was scheduled to vote on the historic MORE Act on September 21. However, days before that vote House Democrats postponed the vote indefinitely. It was reported that moderate Democrats expressed concern about voting on the MORE Act before voting on a second Coronavirus relief package. House Judiciary Committee Chairman Jerry Nadler (D-N.Y.), the bill’s sponsor, suggested the vote could be delayed until after the November elections. However, House Majority Leader Steny Hoyer (D-Md.) said in an emailed statement that Democratic leaders were “committed” to scheduling a vote on the bill before the end of the year.
On Monday, November 9, Hoyer wrote in a letter to colleagues that the House would vote on the MORE Act in December. Hoyer’s letter did not specify which week the vote will take place, but the House is scheduled to be in session Dec. 1-4 and Dec. 7-10.
As discussed previously on this blog, if enacted The MORE Act (Marijuana Opportunity Reinvestment and Expungement Act of 2019 – H.R. 3884) would legalize marijuana and cannabis at the federal level, by removing them from the Controlled Substances Act and eliminate some cannabis criminal records. As Hoyer wrote in his letter this week, the MORE would “decriminalize cannabis and expunge convictions for non-violent cannabis offenses that have prevented many Americans from getting jobs, applying for credit and loans, and accessing opportunities that make it possible to get ahead in our economy.”
While it is unlikely that this legislation would pass in the Republican-controlled Senate – ensuring it will die this Congress – proponents of cannabis legalization have hailed the House vote as historic, and an important first step toward generating the momentum and support needed to favorably position the measure for future congressional consideration. And whether the measure would be approved by the next Congress likely depends on the outcome of the two Georgia Senate runoff elections set to take place on January 5, 2021. If both Democratic Senate candidates, Jon Ossoff and Rev. Raphael Warnock, win the runoffs, then the Democrats will control both the House and Senate.
However, it is unclear if President-Elect Joe Biden would sign the bill since he has proposed rescheduling cannabis as a schedule II drug so researchers can study its positive and negative impacts as opposed to removing it entirely from the list of scheduled substances. While Biden has expressed support for decriminalization of marijuana, expungement of prior cannabis use convictions, and legalizing cannabis use for medical purposes, he has said he wants to leave decisions regarding adult recreational use to the individual states. Nonetheless, marijuana legalization advocates believe even a symbolic vote on the legislation could send a strong signal to the Biden administration.
Voters in the five states where the legalization of marijuana was on the ballot voted in favor.
In the populous states of New Jersey and Arizona, voters legalized marijuana for recreational use by adults over the age of 21. Given New Jersey’s proximity to New York and Pennsylvania, where medical marijuana programs have been popular, legalization in New Jersey could have a domino effect in the northeast, especially considering the tax revenue that will be gained by New Jersey from New York and Pennsylvania residents who travel there every day for work, the Jersey shore and casinos, and other reasons.
Voters in South Dakota and Montana also voted to legalize marijuana for recreational purposes, South Dakota voters also approved medical marijuana, and voters in Mississippi voted to legalize marijuana for medical purposes to treat 22 qualifying health conditions.
Duane Morris represented Devine Holdings LLC in a litigation arising out of Harvest Health and Recreation Inc.’s potential acquisition of Arizona-issued cannabis operator licenses. The litigation was resolved on mutually agreeable changes to the terms of the acquisition arrangement.
Paul Josephson remembers his time at the University of Michigan, a decade after the city of Ann Arbor had decriminalized marijuana.
“It was an issue everybody was aware of,” Josephson said. “You could walk past a cop with a joint hanging out of your mouth. You’d get a $15 summons you would have to pay.”
Not true for the Black students he encountered for the first time at a large university. He said he learned that their experiences with police officers was very different than his.
“If you were Black or poor, it could especially derail your career,” he said.
Combine that with Josephson’s history in politics, beginning with him being elected president of UM’s student government and then choosing to go to law school in the nation’s capital, and you can explain why he got involved in efforts to legalize marijuana in New Jersey.
To read Mr. Josephson’s full profile, please visit nj.com.
In 2019, the Patent and Trial Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) issued a decision in the first inter partes review of a cannabis related patent (Insys Development Company, Inc. v. GW Pharma Limited and Otsuka Pharmaceutical Co., (IPR 2017-00503)) (“Insys”). That decision was of interest to stakeholders in the cannabis industry particularly for what was not stated in any of the proceedings. Because enforcement of patent rights is governed by federal law, the Schedule I status of cannabis has cast uncertainty over whether cannabis patent rights can actually be challenged or enforced. The Schedule I status of cannabis did not enter into the PTAB’s decision, which was based solely on the obviousness of the claims. The PTAB proceeding showed that just like any other patents, cannabis related patents can be challenged. (See the following link for more information: https://blogs.duanemorris.com/cannabis/2019/01/16/business-as-usual-at-the-patent-and-trial-appeal-board-the-first-cannabis-related-patent-and-trial-appeal-board-decision-at-the-united-states-patent-and-trademark-office/)
Now, in 2020 the PTAB has issued a decision denying a petition for post-grant review of a psychedelic therapeutics patent. (Kohn & Associates, PLLC v. Compass Pathways Limited, Pet. for Post-Grant Review, PGR2020-00030, filed February 21, 2020) (“Compass Pathways”). Post-grant review is a trial proceeding at the PTAB that permits a third party to challenge the validity of claims of a granted patent. The first step in the post-grant review process is the filing of a petition by the challenger requesting post-grant review. The challenger must convince the Board that it is “more likely than not” that at least one of the challenged claims is not patentable. If the Board is not persuaded by the challenger’s arguments, the petition is denied and no post-grant review will take place. This is what happened in Compass Pathways.
Similar to its decision in Insys, the PTAB’s decision on the psychedelic therapeutics patent in Compass Pathways had nothing to do with the Schedule I status of psychedelic therapeutics. This recent PTAB proceeding demonstrates that psychedelic therapeutics patents can be challenged and that the PTAB will consider that challenge in the same way that it considers challenges to patents on any other subject matter.
Seth Goldberg, Duane Morris partner and team lead of the Cannabis Industry Group, is quoted in the Philadelphia magazine article, “If Pennsylvania Is Going to Legalize Adult-Use Marijuana, This Is How It Should Be Done.”
Use the State’s Existing Supply Chain
“There is a supply chain that is already intact and could likely be expanded very quickly to allow for a recreational marijuana program to be implemented without too much challenge,” said Mr. Goldberg.
“You have growers and processors who can expand their production, labs who could expand their testing, dispensaries who could expand their sales, fairly quickly, to provide adult-use marijuana to Pennsylvanians. This is a very good framework to be utilized in a way that could get this done quickly and efficiently if people wanted to.” […]
Be Mindful of How Marijuana Is Taxed
Currently, marijuana growers and processors in Pennsylvania are taxed five percent on the gross receipts received from the sale of medical marijuana to a dispensary. But there is no sales tax on marijuana, so consumers who purchase it do not pay a tax. According to Mr. Goldberg, that could change with legalization, but it shouldn’t.
“Whether a marijuana sales tax is imposed on consumers or whether the five percent excise tax that’s imposed on growers and processors is increased, these are things that I certainly wouldn’t advocate for because I don’t know that it would be necessary to result in a boost in the tax revenue.” […]
For the first time ever, the U.S. House of Representatives will vote this month on legislation that if enacted would legalize marijuana and cannabis at the federal level, by removing them from the Controlled Substances Act and eliminate some cannabis criminal records.
The MORE Act (Marijuana Opportunity Reinvestment and Expungement Act of 2019 – H.R. 3884) would decriminalize marijuana at the federal level by removing it from the list of scheduled substances under the federal Controlled Substances Act, and would further eliminate criminal penalties for an individual who manufactures, distributes, or possesses marijuana. While the bill represents a first step toward legalizing cannabis, states would need to adopt similar measures to fully decriminalize its use – currently, 11 states and the District of Columbia have legalized cannabis for adult recreational use, and 33 states and the District of Columbia have legalized medical cannabis.
The bill also makes other changes, including:
Replaces statutory references to marijuana and marihuana with cannabis,
Requires the Bureau of Labor Statistics to regularly publish demographic data on cannabis business owners and employees,
Establishes a trust fund to support various programs and services for individuals and businesses in communities impacted by the war on drugs,
Imposes a 5% tax on cannabis products and requires revenues to be deposited into the trust fund,
Makes Small Business Administration loans and services available to entities that are cannabis-related legitimate businesses or service providers,
Prohibits the denial of federal public benefits to a person on the basis of certain cannabis-related conduct or convictions,
Prohibits the denial of benefits and protections under immigration laws on the basis of a cannabis-related event (e.g., conduct or a conviction), and
Establishes a process to expunge convictions and conduct sentencing review hearings related to federal cannabis offenses.
The bill, which is expected to be brought to the floor for a vote and pass sometime this month, was originally introduced last year by Rep. Jerrold Nadler, D-N.Y. and approved by the House Judiciary Committee in November. While a counterpart bill (S.2227) has been introduced in the U.S. Senate by Sen. Kamala D. Harris (D-CA) – the Democratic Vice Presidential nominee – its passage in the chamber is unlikely as Senate Majority Leader Mitch McConnell (R-KY) has declined to endorse the bill, making its chances of successfully moving through committee and to the Senate floor for a vote virtually impossible. Without action in the Senate, the bill will die this Congress. However, proponents of cannabis legalization – as well as civil rights and civil liberties organizations, and criminal justice reform advocates – are still hailing the House vote as historic, and an important first step toward generating the momentum and support needed to favorably position the measure for future congressional consideration.
Prospects for the successful consideration and approval of the measure by the next Congress will likely hinge on the outcome of the November election.
Vice President Joe Biden, the Democratic presidential nominee, has proposed rescheduling cannabis as a schedule II drug so researchers can study its positive and negative impacts. Biden has expressed support for decriminalization of marijuana, expungement of prior cannabis use convictions, and legalizing cannabis use for medical purposes – but wants to leave decisions regarding adult recreational use to the individual states. If elected, Biden and Harris would likely seek to decriminalize cannabis but stop short of advocating for federal adult use legalization, allowing the individual states to decide.
Duane Morris partners Seth Goldberg and David Landau have been named to the American Trade Association for Cannabis and Hemp (ATACH) Task Force, which will focus on the harmonization of laws and regulations that contribute to the bifurcated treatment of hemp and marijuana, as well as the evolving regulatory landscape for cannabis industry participants. Mr. Goldberg, a team lead for the Duane Morris Cannabis Industry Group, joined ATACH president Michael Bronstein and Gary Kaminsky of Acreage Holdings in their meeting with the White House’s Office of Management and Budget in August.