Last week, the U.S. Food & Drug Administration published its current thinking on the research and approval process for cannabis-related drugs. The publication, which among other things recognizes the “increasing interest in the potential utility of cannabis for a variety of medical conditions,” contains critical information for businesses and consumers in the cannabis market—including those wishing to develop new cannabis-related drugs.
2020 Business Law and Cannabis Law Symposium
Duane Morris partner Stuart Bartow will be speaking at the Bar Association of San Francisco’s 2020 Business Law & Cannabis Law Symposium, on the “Privacy Law in 2020, California CCPA, Federal, and European” panel, on February 5, 2020.
To register for the event, visit the BASF website.
Time for a Cannabis Update
Duane Morris partners Neville Bilimoria and Seth Goldberg were quoted in an article in Chicago Lawyer magazine discussing legal issues related to the recent spate of vaping-related illnesses and deaths. Read our partners’ thought leadership on the Duane Morris website or the full article on the Chicago Lawyer website (subscription required).
California’s Governor Proposes Changes to Cannabis Regulation and Taxation
Gavin Newsom, Governor of California, released his proposal for the State’s budget today, outlining a number of items of importance for the California cannabis industry.
The most noteworthy proposal is regulatory consolidation. In an effort to improve and simplify regulatory oversight of commercial cannabis activity, the Governor’s office is proposing to consolidate the three licensing entities that are currently within the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health, into a single “Department of Cannabis Control” by July 2021.
Such a change would be welcomed by many operators in the State, especially vertically integrated operators who must now contend with multiple state agencies that have different regulatory requirements and interpretations. This may also boost M&A activity in the state, given that it could lead to more consistent regulations regarding ownership changes and a more efficient regulatory approval process. A single regulatory agency would also streamline fee collections and enforcement. More details on this proposal are expected in the Spring of 2020 and we will be watching closely for those updates.
Additionally, the budget looks to “fix” what many consider to be a broken cannabis taxation regime. The Governor states that the goal of the proposal is to reduce the tax collection burden on the cannabis industry and simplify the tax collection process. The proposed changes move the responsibility for the cultivation excise tax from the final distributor to the first, and for the retail excise tax from the distributor to the retailer.
While no changes to the tax rates are specified, the proposed budget does state that the Governor will consider other changes to the existing cannabis tax structure, including the number of taxes and tax rates. The California tax burden is viewed as one of the major inhibitors of the growth and success of the cannabis market in the state.
We will continue to monitor these developments as they unfold, so please check back for further updates and analysis.
The USDA Hemp Interim Final Rule: Status, Remaining Issues, and Next Steps
Duane Morris partner Frederick Ball will be moderating the Food and Drug Law Institute’s webinar, “The USDA Hemp Interim Final Rule: Status, Remaining Issues, and Next Steps,” on January 21, 2020.
To register for the event, visit the Food and Drug Law Institute website.
Kelly Bonner Reviews How to Legally Implement CBD Products and Services into the Spa Industry
Duane Morris associate Kelly Bonner shares legal insight on CBD products and services in the January issue of DaySpa magazine.
From the publication:
- Consider the source. CBD can be derived from both hemp and marijuana, which have different definitions in U.S. law and are subject to different statutory and regulatory requirements. Hemp-derived CBD products are not illegal to sell and possess under federal law, as long as they contain no more than 0.3 percent tetrahydrocannabinol (THC). Marijuana has more than 0.3 percent THC, and is a Schedule I controlled substance under the federal Controlled Substances Act.
- Get proof. Given the current lack of federal testing requirements for CBD products, it can be difficult to ensure that those purchased from third-party vendors contain no more than the permitted level of THC. So it’s extremely important that spas get anything containing CBD from a trustworthy supplier who can verify ingredients, confirm THC levels with third-party labs and/or provide certifi cates of analysis.
- Act locally. While the 2018 Farm Bill lifted the federal ban on the commercial cultivation of hemp and derivatives that contain no more than 0.3 percent THC, the ability to manufacture, market and sell CBD products is still heavily regulated at the state level, and changing rapidly.
- Make no promises. The U.S. Food and Drug Administration (FDA) has issued warning letters to a number of CBD companies that have touted their products as having certain health benefi ts in their promotional materials and on packaging or websites. Spas should ensure that any products or services offered don’t come with false or misleading claims.
- Handle with care. Although research into the risks of CBD use is ongoing, the FDA has noted potential adverse health effects linked to the use of cannabis products containing THC by pregnant or lactating women. Even though CBD topicals typically contain very low levels of THC, spas should be up front with clients about potential risks.
To read the full text, read the January issue of DaySpa magazine.
Seth Goldberg Predicts What 2020 Will Bring to the World of Weed
Seth Goldberg, Duane Morris partner and Cannabis Industry Group team lead, is quoted in The Philadelphia Inquirer article, “Reading the tea leaves: What 10 cannabis bigwigs predict 2020 will bring to the world of weed.”
Mr. Goldberg says:
We’ll see adult-use in Illinois. While vaping bans are likely to be removed, additional restrictions around THC vaping could be imposed by states.
The hemp space seems situated to expand as the regulations become more clear, and the federal banking regulators have recently announced that hemp can be banked like any other legal product.
A lot is contingent on the federal government. If the STATES Rights Act or SAFE Banking Act were to pass, the latter of which seems to have the best chance in 2020, there will be a boost. Conversely, tightening of enforcement by the federal government could have the opposite effect. FDA regulations around vaping and CBD as a drug, dietary supplement, food/beverage may also be issued in 2020, which would shape the market for those products.
Bottom line, businesses and individuals in 2020 must remain mindful of the differences between the federal and state regulatory framework and the state-by-state regulatory patchwork, and be nimble in responding to changes.
To read the full article, visit The Philadelphia Inquirer website.
Duane Morris Honored in Cannabis 50 Impact Report
Duane Morris is recognized in the inaugural Cannabis 50 Impact Report, presented by MGO | ELLO.
The report honors a wide range of people, organizations and entities making an impact across the cannabis, hemp and CBD culture. Duane Morris is featured in the Knowledge and Health category as a business “pushing the boundaries of our understanding and sharing the complexities of cannabis, hemp, and CBD with the world” and for “providing legal education and guidance to cannabis.”
From the report:
Duane Morris was the first Am Law 100 firm to engage cannabis on a national platform. Their legal teams support clients across the cannabis supply chain, assisting with regulations, financial transactions, and general litigation. The practice is led by Partners and Cannabis Team Leaders, Jennifer Briggs Fisher and Seth Goldberg. They extend support to the entire cannabis community with their regular series of informational webinars exploring regulatory, business and financial complexities.
For more information, visit the Cannabis 50 website.
Cannabis Patent Review: Extraction and Purification
In this first article of his Cannabis Patent Review series, Duane Morris partner Vince Capuano reports on the patenting of technology related to cannabis extraction and cannabinoid purifications.
He writes:
One of the more active areas in the patenting of cannabis technology in 2019 is the related fields of cannabis extraction and cannabinoid purification. Cannabis operators now must educate themselves and navigate an emerging landscape of U.S. cannabis extraction and purification patents for freedom to operate, while also looking for opportunities to patent their own innovations. So far in 2019, the U.S. Patent and Trademark Office (USPTO) has granted over 30 patents with claims directed to cannabis extraction technologies and many others related to distillation of cannabinoid components and techniques for obtaining active compounds from marijuana and hemp. Dozens more are pending.
Duane Morris Partner Tracy Gallegos Named a Top Woman of Influence by MyVegas Magazine
Duane Morris partner Tracy Gallegos is featured in MyVegas magazine as one of the Top 100 Women of Influence. The list recognizes women who have made a “huge positive impact … and continue to change the shape of Las Vegas on a daily basis[.]”
Ms. Gallegos has a multifaceted practice that touches upon corporate, real estate, cannabis, sports and entertainment law for clients ranging from startup companies to established businesses. Her clients include cannabis companies involved in retail, manufacturing and cultivation, as well as companies providing ancillary services to the cannabis industry in both California and Nevada.
Read Ms. Gallegos’ profile in the publication. For more information, visit the MyVegas magazine website.