Cannabis Industry

April 4, 2019October 17, 2019 by Duane Morris

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.

March 27, 2019 by Seth A. Goldberg

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

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.

March 27, 2019 by Brad A. Molotsky

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

March 25, 2019 by Duane Morris

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.

March 23, 2019March 25, 2019 by Seth A. Goldberg

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

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.

March 22, 2019 by Brad A. Molotsky

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

March 18, 2019 by Brad A. Molotsky

NJ Adult Use Bill – Two Steps Closer to a March 25th Vote – Brad A. Molotsky, Esq.

According to late night reporting from NJ Biz – Dan Munoz, who has been all over this topic, committees in both the NJ Assembly & Senate approved a measure that would legalize adult-use recreational marijuana, setting the proposals for a showdown full-floor vote in 7 days from now on March 25.

Senate Bill 2703 passed by a 6-4 vote with one abstention in the Senate Judiciary Committee Monday evening while its counterpart, Assembly Bill 4497, passed by a 6-1 vote with two abstentions at the Assembly Appropriations Committee.

Both measures would allow for anyone over 21 years of age to possess up to an ounce of marijuana.

The product would be taxed at $42 an ounce and the industry would be regulated by a five-person Cannabis Regulatory Commission, which will function similarly to how the Casino Control Commission operated following the legalization of gambling in the 1970s.

The approval of both measures followed hours of closed-door meetings as lawmakers hammered out last-minute changes to the legislation, including a dramatically increased expungement process for people with marijuana-related convictions.

Stay tuned for a detailed analysis as the final bill is published. – Brad

March 13, 2019 by Brad A. Molotsky

NJ Adult Use Cannabis Bill Fast Tracked for March 25th Vote

Gov. Phil Murphy and legislative leaders reached agreement on key provisions to legalize marijuana for adult recreational use, including how to tax and regulate it, and expunging past low-level marijuana offenses for certain users as a step toward social reform per reporting from Dan Munoz.

Per a press release issued by key Assembly Senate and the Governor’s office, we should expect to see the introduction of a cannabis bill within days.
Under the terms of the agreement:

• Adult-use marijuana would be subject to an excise tax of $42 per ounce, which will be imposed when marijuana is cultivated.

• Municipalities that are home to a cultivator or manufacturer would receive the revenue from a 2 percent tax on the product within their jurisdiction.

• Municipalities that are home to a wholesaler would receive the revenue from a 1 percent tax on the product within their jurisdiction.

• Municipalities that are home to a retailer would receive the revenue from a 3 percent tax on the product within their jurisdiction.

To start to address social equity concerns, the revised legislation will likely provide an expedited expungement process for individuals convicted of low-level marijuana offenses, and a separate expungement process that would automatically prevent certain marijuana offenses from being taken into account in particular areas such as education, housing and occupational licensing.

Additionally, there are a number of provisions that aim to ensure broad-based participation for women owned and minority owned businesses, low and middle-income individuals, and disadvantaged communities.

Under the proposed legislation, adult-use marijuana would be governed by a Cannabis Regulatory Commission, composed of 5 members—three appointed directly by the Governor to serve terms of at least 4 years, and 2 appointed by the Governor upon the recommendations of the speaker and Senate president.

The commission would be tasked with promulgating all regulations to govern the industry and overseeing applications for licensing of adult-use marijuana dispensaries.

-Brad A. Molotsky, Esq.

March 8, 2019 by Brad A. Molotsky

Is March the 4:20 for Adult Use Marijuana in NJ?

Is March the 4:20 for NJ recreational, adult use marijuana? Brad A. Molotsky

According to Senate President Stephen Sweeney, with budget hearings and discussions beginning to ramp up in Trenton, March 2019 is likely the last best time to act on a New Jersey marijuana-legalization bill.
In order for the Bill to move forward, Senator Sweeney confirmed his view that a vote needs to be held this month (i.e., March) in order to hold an election on a measure legalizing, regulating and taxing marijuana for adult-use.

Why March – According to the Senator, April would be a difficult month because of budget hearings and religious holidays. Then May is the actual budget discussion and focus on passage of the budget.

That in and of itself is problematic, according to Dan Munoz at NJBiz, given that lawmakers might view negotiations on the budget and marijuana-legalization through a tit-for-tat, transactional lens.

As for whether we could see a vote this summer or during a lame duck session of the Legislature, Senator Sweeney said he “doesn’t want to wait that long.” And whether lawmakers might put the questions before voters as a ballot referendum has essentially been a non-starter according to Munoz.

A tentative agreement between the Governor and the legislative leaders calls for a $42 an ounce tax on marijuana and for a 5-member Cannabis Regulatory Commission to oversee the new industry. Per the momentary agreement, Governor Murphy would be able to select 3 of the 5 Commission members.

Per Munoz, Governor Murphy was initially pushing for legalization within his first 100 days of office. The proposed 2020 budget, unveiled Tuesday by Governor Murphy, includes $60 million of tax revenue under the assumption that marijuana is made legal by January 2020.

The 2020 budget also anticipates spending $21 Million to create the necessary regulatory apparatus for legalized cannabis and thereafter has a placeholder for a $12 Million a year spend for cannabis operations and enforcement.

Could be an interesting March in Trenton – stay tuned!

March 7, 2019 by David E. Landau

No Hemp Transport Through Idaho

A recent decision by a Federal Magistrate Judge for the United States District Court for the District of Idaho upheld the seizure of an industrial hemp shipment in January after the enactment of the 2018 Farm Bill.

On January 24, 2019, Big Sky, a Colorado-based company, shipped industrial hemp from Oregon thorough Idaho on its way to Colorado. The hemp was seized in Idaho and the driver arrested for illegal transportation of marijuana. The crime carries a 5 year mandatory sentence. Big Sky sued for a temporary restraining order to release the hemp under the 2018 Farm Bill. The Court found that because no plan from the State of Oregon had been approved by the Department of Agriculture, the seized hemp was not produced in accordance the 2018 Farm Bill. The Court held that at this point time, without USDA approval of a state hemp plan, the Interstate Commerce Clause provisions of the Farm Bill do not apply. A Temporary Restraining Order was denied on 2/2 and the Preliminary Injunction was denied on 2/20. Big Sky Scientific LLC v. Idaho State Police et al., No. 1:19-cv-00040-REB (D. Idaho, February 2, 2019). The case is on expedited appeal to the Ninth Circuit. Opening brief is due 3/20.

This decision is contrary to the intent, if not the letter, of the Farm Bill. It creates confusion about the what is permissible now, prior to USDA regs and approval of state plans.