Earlier this month, surprising many in the industry, the Drug Enforcement Administration announced it is proposing to significantly increase the amount of cannabis it will permit to be grown for research purposes in 2019. The 2018 limit, about 1000 pounds, will be increased to over 5400 for 2019, an over five-fold increase. The proposal remains open for public comment for the next 30 days, then the DEA will make final decisions on the matter.
Until 2016, only the University of Mississippi was permitted to grow cannabis for federally approved research purposes. But very few licenses were approved, and in most cases researchers learned that the low quality of product from Ole Miss made research essentially worthless. The Obama Administration, in its last months, approved a dramatic increase in research and opened up the right for other institutions to apply to grow cannabis for that purpose. Dozens applied, but Attorney General Jeff Sessions, until now, had not let any licenses be approved. Some believe it is relentless pressure on Sessions from the Senate that has led him not to stand in the way of this new action. In a hearing almost a year ago he had even admitted that adding more grow facilities for research could be “healthy.”
Cannabis medical research has been exploding elsewhere, particularly in Israel. For example, a published, peer-reviewed study earlier this year from there showed that over 95% of thousands of tested cancer patients said their condition improved with the use of cannabis. There is also a state-funded “Center for Medical Cannabis Research” in California that has commenced several studies, including one on the efficacy of CBD on autism spectrum disorder. Another California group is studying whether smoked cannabis can help with post-traumatic stress disorder. Most of these studies, however, are not “double blind” clinical trials given the federal restrictions. Many in the industry hope that the expanded DEA licensing will open the door to more exploration of the potential medical benefits of cannabis.
In a rather symbolic moment in the march to the legalization of industrial hemp, the caretakers at George Washington’s Mount Vernon farm announced in May (although it has only recently received news attention) that they have planted a small crop of industrial hemp. They are doing so under Virginia law and say they are going to use the plant “as an interpretative tool to help better tell the story of Washington’s role as a farmer.”
As many know, hemp was a critical crop in Colonial times and some states, including Virginia, actually required farmers to grow it. Hemp was used particularly to make rope, thread, canvas and sailing cloth. Washington’s primary crop actually was hemp. Thomas Jefferson grew hemp as well.
The Mount Vernon farmers intend to use the hemp they grow to give fiber-making demonstrations at the site, which is owned by the Mount Vernon Ladies Association of the Union. They bought the site from Washington’s descendants in 1858 for $200,000 and now about a million visitors each year tour the facility. Many do not realize that Mount Vernon is not owned by the Federal government and is not a national park.
Hemp, while derived from the cannabis plant, contains no THC and has no psychoactive effects. In June, the Senate passed a farm bill that included language effectively legalizing industrial hemp. However, the House version of the bill is silent on hemp, and a conference to deal with the differences is being arranged. Senate Majority Leader Mitch McConnell (R-KY) is a strong supporter of legalizing hemp, which many believe will help sway some skeptical House Republicans to support those provisions.
The United Kingdom this week approved the legalization of medical cannabis. The decision was made by the Home Secretary, Sajid Javid, who said, “Recent cases involving sick children made it clear to me that our position on cannabis-related medicinal products was not satisfactory.” As a result, medical cannabis will become available to children and adults with a prescription. The specifics of how this will be implemented have not yet been determined.
Javid did add, however, that this was “in no way a first step to the legalization of cannabis for recreational use.” This follows a widely watched story involving a 12-year old boy with a rare form of epilepsy who had received a special emergency license to be treated with medical marijuana in Northern Ireland.
Over 30 countries have legalized medical cannabis at this point, including a number of European countries. Press reports on the UK decision included enthusiastic quotes, especially from parents of children facing difficult illnesses. With over 65 million people, the UK represents a big increase in those now able to access medical cannabis worldwide.
The US Senate, by an overwhelming 86-11 vote, last week approved the sweeping Farm Bill containing language which fully legalizes industrial hemp. As we know, hemp, which is derived from cannabis plants, is used to make products from rope to clothing and does not contain THC, the psychoactive part of the plant. In colonial days hemp was so crucial that farmers, like George Washington, were legally required to grow it.
Most believe the House will follow suit. Hemp has not been legal on a federal level since federal criminalization of cannabis in the 1930s. Many believe that occurred in part because of fears of hemp competing with powerful timber interests and DuPont’s then new patent on nylon. After the 1930s bill was declared unconstitutional in 1968, the Nixon Administration helped orchestrate passing the Controlled Substances Act. That law, still in force, declared all parts of the cannabis plant as Schedule I drugs, as dangerous as heroin and LSD. A top Nixon aide later admitted, “Did we know we were lying about the drugs? Of course we did.” Constitutional challenges thus far have been unsuccessful.
Legalization of hemp could yield a variety of products that previously could only be produced with imported hemp. These could include food, building materials, paper products and many others. Currently, it it believed that China is the largest producer of hemp, since it is legal to do so in a number of Chinese provinces. They started farming it during the Vietnam War to make more breathable uniforms for their soldiers in the intense heat. This Senate vote is indeed a significant step towards relaxation of federal cannabis regulation.
The New York Times reported yesterday that the New York State Health Department is ready to recommend legalizing adult use of cannabis in the Empire State. Commissioner Howard Zucker was quoted as saying they had reviewed the pluses and minuses and concluded, in a study requested by NY Governor Andrew Cuomo, that “the pros outweighed the cons.” The study, started in January, has not been released yet.
Governor Cuomo, as recently as last year, said that cannabis is a “gateway drug.” But he is now facing strong opposition on the issue from his primary opponent Cynthia Nixon. Even his Republican opponent wants to legalize cannabis and use the money to fix New York’s transportation system. He is also feeling pressure from New Jersey’s apparent plan to legalize adult use in the near future, not to mention Massachusetts’ full adult use rollout commencing very soon. This led to his commissioning the Zucker study.
Even with this study recommending legalization, the NY legislature would have to pass a law to make it happen. Republicans, who tend to be more anti-legalization, currently control the Senate while Democrats control the Assembly. So there is no certainty of getting a bill passed. But it appears the momentum is building towards adult use legislation in the nation’s fourth largest state.
On the White House lawn this morning, getting ready to leave for the G-7 summit in Canada, Pres. Trump made positive comments about the cannabis bill introduced yesterday by Sen. Cory Gardner (R-CO) and Elizabeth Warren (D-MA). The STATES Act would allow states the freedom to legalize cannabis within their borders with no federal enforcement action permitted. The text of the Senate bill, just released, removes state legal cannabis from enforcement under the Controlled Substances Act.
On the lawn, the President said of the bill, “I probably will end up supporting that, yes.” He said, “We’re looking at it,” but also noted that he “really” supports Sen. Gardner. Of course the bill has to be passed by Congress before being sent to the President. The question is whether the process can be completed before the “silly season” of midterm elections brings most legislative activity to a stop. Trump promised to support a bill like this in exchange for Sen. Gardner resuming approval of judicial nominations, which he had stopped after Attorney General Jeff Sessions rescinded an Obama-era memo de-emphasizing federal enforcement against actors in cannabis legal states.
The House version of the bill was introduced this morning but text is not yet available. The initial sponsors will be Rep. Jared Polis (D-CO), David Joyce (R-OH) and Earl Blumenauer (D-OR). The bill also appears to effectively repeal IRS Code Section 280E which prevents cannabis companies from deducting ordinary business expenses. It also removes activity by cannabis companies being assumed to be money laundering, which will hopefully help more banks to take cannabis companies as customers. Certainly a dramatic potential development.
Senators Cory Gardner (R-CO) and Elizabeth Warren (D-MA) today introduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. While we have not seen the text yet, Sen. Warren has published a summary. The bill would amend the Controlled Substances Act (CSA) saying it no longer applies to anyone acting in compliance with state (or tribal) laws relating to the manufacture, production, possession, distribution, dispensation, administration or delivery of cannabis. It also legalizes industrial hemp and removes it from the CSA. In addition to other provisions, the bill prohibits the distribution or sale of cannabis to anyone under 21 other than for medical purposes.
There are a number of pending bills promising various levels of cannabis legalization or decriminalization. This bill is important because it is the result of conversations between Sen. Gardner and the President. When Attorney General Jeff Sessions rescinded the 2014 Cole Memo which de-emphasized cannabis enforcement against legal state actors, Sen. Gardner angrily stopped approving new judicial nominations. That led to Trump’s commitment to Gardner to support “states rights” legislation if brought to him. Advocates hope this bill has a chance to move quickly as a result.
While not listed in the summary, according to MJBizDaily, the bill also would repeal tax code Section 280E which prohibits cannabis companies from deducting their ordinary business expenses, and also would allow federally insured banks greater ease in accepting cannabis customers. Stay tuned!
Senate Minority Leader Chuck Schumer has officially joined a rapidly growing number of US legislators calling for the federal decriminalization of cannabis. Last Friday, he tweeted: “THREAD: It’s official. Today, I am formally announcing my plan to decriminalize marijuana at the federal level. It’s time we allow states, once and for all, to have the power to decide what works best for them.” Then later in the day he tweeted, “The time has come to decriminalize marijuana. My thinking – as well as the general population’s views – on the issue has evolved, and so I believe there’s no better time than the present to get this done.”
To be clear, Schumer is not suggesting full legalization, merely decriminalization. This could mean that while cannabis would still be illegal under federal law, possession would bring only a fine or the like, rather than jail. In a video attached to his tweet, he talked about how people of color have been disproportionately affected by incarceration for possession of small amounts of cannabis.
This follows an apparent historic agreement a week ago between President Trump and Sen. Cory Gardner (R-CO) to move forward with legislation that would protect states’ rights with regard to cannabis. This could mean a permanent ban on federal enforcement of those complying with state cannabis laws. Many hope such a bill could address the challenges with banking in the industry, as well as IRS Code Section 280E, which prohibits the deductibility of business expenses of those in cannabis.
In addition, Senate Majority Leader Mitch McConnell has introduced a bill to legalize industrial hemp. Finally, there are three pending bills in Congress which would fully deschedule and legalize cannabis nationwide, much like Canada appears to be on the verge of doing. It does indeed appear that things are moving rather quickly in the direction of dramatically improved federally legal status of cannabis.
As more and more politicians of all stripes move towards support of federal legalization of cannabis, two senior Republicans have joined the advisory board of a major cannabis company. According to The Hill, the former Speaker of the House John Boehner and former Massachusetts Governor William Weld became advisers to a New York-based grower and distributor of cannabis.
The article reminds us that Boehner was formerly opposed to legalization, though Weld, a moderate, has been a long-time supporter. They issued a joint statement saying, “we both believe the time has come for serious consideration of a shift in federal marijuana policy.” They focused particularly on the view of a large majority of Americans that cannabis should be legalized on a federal level.
As we know, President Trump said during the campaign that he is “100%” in favor of medical cannabis and that adult use should be decided by the states. Of course he is famous for changing his mind and frankly does not appear focused on the issue. And Attorney General Jeff Sessions remains strongly opposed to legalization and rescinded a series of advisory memos designed to protect those complying with state cannabis laws. But we have not yet seen any increase in federal enforcement efforts, though a number of states recently have been cracking down on unlicensed operators.
While it seems unlikely for the time being that the Trump Administration would unilaterally deschedule cannabis and legalize it (which they could), there is growing belief among DC-watchers that Congress might yet consider some action. For example, Republican Senate Majority Leader Mitch McConnell said he intends to introduce legislation to legalize hemp. The legislators are paying attention to the massive taxes coming into legal states, reduction in opioid use and deaths in those states, and many new jobs being created.
Senate Majority Leader Mitch McConnell (R-KY) announced a plan on Monday to introduce federal legislation to remove industrial hemp as a Schedule I drug under the Controlled Substances Act (CSA). Citing hemp as important to Kentucky’s farming history, he voiced his most positive support to date for this action. McConnell remains opposed to other legalization of cannabis.
Hemp is used to make clothing, paper and other products, is not ingested and contains virtually no THC, which is the psychoactive part of the cannabis plant. In colonial days, hemp was grown throughout the US, and in fact was required to be grown in states like Virginia where it was needed to make rope for boats. George Washington and Thomas Jefferson both grew hemp on their farms. China is now reported to be the largest producer of hemp, having geared up in the 1970s to make more breathable uniforms for their soldiers in steamy Vietnam.
In the 1930s, timber and nylon scions like DuPont and William Randolph Hearst saw hemp as a potential competitor and reportedly worked with the federal government to make all cannabis byproducts illegal in the US. Nixon doubled down in 1970 with the CSA simply continuing the prior prohibition on everything coming from the plant.
While it’s not clear when a bill will actually be presented to Congress, the AP says McConnell said about hemp, “It’s now time to take the final step and make this a legal crop.” Many think the next move could be to legalize CBD (cannabidiol), which contains many of the medical benefits of cannabis with negligible amounts of THC.