Cannabis Vaping Health Claims Should Be Taken Seriously by the Cannabis Product Supply Chain

Seth Goldberg
Seth A. Goldberg

Yesterday, I blogged about a Washington Post article that reported that vitamin E acetate in marijuana vaping products is being considered as possibly being linked to alleged vaping related lung injuries.  I cautioned cannabis manufacturers, processors and dispensaries, i.e., the cannabis supply chain, that articles like WP’s, which referred to vitamin E acetate in cannabis vapor as a “contaminant,” could be the impetus for product liability lawsuits.

Today, WP provided an update to yesterday’s article.  WP now states as many as 450 vaping illness cases have been reported across 33 states.  Up from yesterday’s report of 250 cases across 25 states.  WP’s new article refers to the vaping related health claims as possible a “new lung disease” based on a study by the New England Journal of Medicine that reports about a possible lung disorder being experienced by certain consumers of vape.    However,  WP appears to acknowledge  scientists have not yet identified a specific chemical in vape, or whether vaping of nicotine or marijuana, is resulting in an increased risk of the lung disorder reported by NEJM.  Indeed, scientific research and investigation is needed in this area.

Nevertheless, as I explained yesterday, having represented pharmaceutical companies in product liability matters involving alleged “contaminants,” product liability lawsuits are often, if not usually, filed without any scientific proof of injury causation.   Accordingly, the cannabis supply chain should be careful to ensure the safety of their products, and implement necessary compliance measures.

Likewise, cannabis consumers should be mindful that many of the reports of vaping related health issues concern “black market” vape products, not those manufactured by state-licensed cannabis companies who are required by law to maintain strict standards for their products.

 

Will Cannabis Vaping Lead to Products Liability Lawsuits?

Seth Goldberg
Seth A. Goldberg

Today, the Washington Post reported that federal and state regulators have identified the chemical vitamin E acetate as being contained in certain cannabis vaping products allegedly linked to lung injuries.  According to WP,  215 cases possibly arising out of cannabis vapes containing the chemical have been reported in 25 states, and two deaths have been linked to marijuana vaping.

WP refers to vitamin E acetate in cannabis vapor as a “contaminant,” which is a loaded term that could get the attention of the plaintiffs’ product liability bar.   Articles like this are often the impetus for lawsuits to be filed.  Consequently, products’ liability claims may soon become a reality for the cannabis vape supply chain.

However, as even the WP article makes clear, whether vitamin E acetate in marijuana vapor can cause an increased risk of injury of any kind to vaping consumers is being investigated, and has not been proven.   The article also identifies the fact that many users of marijuana vape also vape nicotine, which is likely one of many confounding factors.  Thus, product liability claims asserting injuries from marijuana vaping brought now are likely to be unsupported by science.

Nevertheless, those in the cannabis supply chain, e.g., manufacturers, processors, and sellers,  should be aware of the likelihood of such claims, as product liability claims are often asserted without any scientific evidence of causation.   Those in the supply chain should know that a range of compliance measures can be implemented to better protect against against such claims.

It Is Permissible for Federally Insured Credit Unions to Bank Hemp Businesses

Photo of attorney Michael Zullo
Michael S. Zullo

“Credit unions may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp related businesses within their fields of membership,” says the National Credit Union Administration (NCRU) in its recently released guidance 19-RA-02.

While this is a significant step for hemp businesses seeking banking outlets, it is far from the relief proposed by Secure and Fair Enforcement Act (“SAFE Banking Act”) and does not represent a blanket permission.  Still, the NCRU Guidance signals a recognition of the growing Cannabis industry and the practical need to provide financial services to businesses in the industry.  Here are some key takeaways.

First, the guidance only applies to Federally Insured Credit Unions, not national banks.

Second, the guidance explicitly relates to credit unions serving “hemp” businesses as defined in the Agricultural Improvement Act of 2018 (2018 Farm Bill), which removed hemp from Schedule I of the Controlled Substances Act.[1]  Marijuana remains a Schedule I drug, which restricts banking access of marijuana businesses.

Third, because the USDA has yet to promulgate regulations and guidelines to implement the hemp production provisions of the 2018 Farm Bill, credit unions must ensure members in hemp-related business are operating under the industrial hemp pilot provisions of the Agricultural Act of 2014 (2014 Farm Bill).

Fourth, credit unions that elect to bank hemp-related businesses must maintain robust Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance programs.  This includes:

  • Maintaining appropriate due diligence procedures for hemp-related accounts and complying with BSA and AML requirements to file Suspicious Activity Reports (SARs) for any activity that appears to involve potential money laundering or illegal or suspicious activity.
  • Remaining alert to any indication an account owner is involved in illicit activity or engaging in activity that is unusual for the business.
  • Staying on top of state and tribal laws, regulations, and agreements under which each member that is a hemp-related business operates.
  • Verifying that the member is part of the pilot program created in the 2014 Farm Bill.
  • Adapting ongoing due diligence and reporting approaches to any risks specific to participants in the pilot program.
  • Being familiar with any other federal and state laws and regulations that prohibit, restrict, or otherwise govern these businesses and their activity.

In sum, banking hemp-related businesses is permissible for credit unions.  But they must be diligent in crafting BSA/AML policies.  This is not a complete solution to the existing banking problems facing the Cannabis industry, but it does evidence a growing regulatory desire to provide access for the industry, which could sway policy makers down the road.

[1] The 2018 Farm Bill defines “hemp” as: “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

Duane Morris Partner Vince Capuano Quoted in AP News Article, “How much pot in that brownie?”

How much marijuana is really in that pot brownie? Chocolate can throw off potency tests so labels aren’t always accurate, and now scientists are trying to figure out why.

In states where marijuana is legal, pot comes in cookies, mints, gummies, protein bars — even pretzels. These commercial products are labeled with the amount of high-inducing THC. That helps medical marijuana patients get the desired dose and other consumers attune their buzz.

But something about chocolate, chemists say, seems to interfere with potency testing. A chocolate labeled as 10 milligrams of THC could have far more and send someone to the emergency room with hallucinations.

[…]

Scores of cannabis-related inventions have received U.S. patents, said [Duane Morris partner] Vincent Capuano, who holds a doctorate in organic chemistry. Inventors have patented ways of putting cannabis into milk, coffee pods, ice pops and chewing gum.

“There’s a lot of flash and hipness, snake oil and marketing. But there’s still a lot of real chemical advance happening,” Capuano said of the industry. “It’s right in center field for chemists.”

[…]

To read the full article, visit the AP News website.

Duane Morris Welcomes Corporate Partner Tracy A. Gallegos in Las Vegas and San Francisco

Tracy A. Gallegos has joined Duane Morris LLP as a partner in the firm’s Corporate Practice Group. She will be resident in the Las Vegas office and also practice in San Francisco. Gallegos further enhances the firm’s corporate, real estate and cannabis law capabilities. Prior to joining Duane Morris, Gallegos was a partner at Fox Rothschild LLP.

“Tracy brings a big-picture understanding of the issues affecting businesses in the real estate, sports, cannabis and entertainment industries,” said Matthew A. Taylor, CEO and Chairman of Duane Morris. “Her collaborative, client-focused approach is a perfect fit with our culture at Duane Morris.”

To read the full press release about Duane Morris partner Tracy A. Gallegos, please visit the Duane Morris website.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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