The California Department of Public Health (CDPH) is the state agency designated under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) as responsible for regulating cannabis manufacturing.
The CDPH issued emergency regulations for manufacturers in November 2017, and has now proposed readopting those regulations for another 180 days. Based on feedback from the public and stakeholders in the industry, the CDPH has proposed some changes to these regulations.
The CDPH has removed the distinction of A and M Licenses and now only requires one application and applicants will only have to pay one licensing fee. Previously you had to submit two applications and pay two separate licensing fees if you wanted to operate in the medicinal and adult-use market.
The readopted regulations have now incorporated the previously released shared-use facility regulations, which allow a manufacturing premises to be used my multiple businesses that take turns utilizing the space and equipment. This allows for operations similar to a commercial kitchen or agreements in which larger manufacturers offer space and use of equipment to smaller manufacturers.
The CDPH has removed tinctures from the definition of a product containing more than 0.5% alcohol by volume. However, tinctures cannot be sold in a package larger than two fluid ounces and shall include a calibrated dropper or other measuring device
The change to only a single application for both medical and adult-use is a welcome change for manufacturing businesses. Overall, the CDPH did not make significant changes to its regulations.
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.
Yesterday, Senators Elizabeth Warren (D-Mass) and Cory Gardner introduced bipartisan legislation that, if passed, would make the regulation of marijuana a state issue. Comments by Senator Gardner show public safety issues resulting from the dearth of banking providing services to the industry are a focus of the newly-proposed legislation. The Hill reports Gardner stating when introducing the legislation:
“This city of Denver, the state of Colorado, can collect taxes … they can take it to the bank,” Gardner said. “But if you’re in the business, if you work for the business, you can’t get a bank loan or set up a bank account because of the concern over the conflict between the state and federal law. We need to fix this public hypocrisy.”
It was widely reported on April 13, 2018, that President Trump promised to Senator Gardner that he would support a states’ rights approach to marijuana, which promise appears to have resulted in this proposed legislation. A lot has to happen before this bill reaches Trump, but if it does, a veto may be unlikely. Such states’ rights legislation could then pave the way for more banks to service the industry.
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!
While the Cole Priorities were in place, that guidance provided a clear path for banking cannabis industry participants adhering to the Cole Priorities. FinCen’s guidance is still in place, and banking cannabis is still possible, but confusion about how to do so without the Cole Priorities as guideposts has caused greater reluctance on the part of banks.
Enter proposed legislation in California, SB-930, which passed in the California Senate yesterday. Not a complete solution to the banking problem by a long shot, but progress nonetheless. If it becomes law SB-930, would result in the establishment of a California-chartered bank that would permit California cannabis industry participants to deposit the proceeds of their state-lawful cannabis activities, and would provide to them limited banking services that would allow for payment of taxes and vendors by check.
As reported in the Sacramento Business Journal, the Bill’s sponsor, Sen. Bob Hertzberg (D-Van Nuys), characterized SB-930 as an attempt alleviate the public safety concerns resulting from the federal government’s current hands off approach to banking cannabis. As Herzog stated, “It’s not only impractical from an accounting perspective, but it also presents a tremendous public safety problem. This bill takes a limited approach to provide all parties with a safe and reliable way to move forward on this urgent issue.”
California’s three cannabis licensing authorities, the Bureau of Cannabis Control, California Department of Public Health and California Department of Food and Agriculture, have proposed readopting their emergency regulations currently in effect for another 180 days. Since the original regulations were released in November 2017, representatives from the three agencies have been soliciting feedback from stakeholders and the public. As a result of that process, some changes are being made to the emergency regulations. Continue reading California Cannabis Licensing Authorities To Readopt Emergency Regulations with Proposed Changes→
Duane Morris will host the Cannabis Law Summit, to be held on May 17-18, 2018 at the firm’s New York office. Duane Morris attorney Patricia Heer will be a member of the panel discussion “Introduction to Cannabis & Tri-state Medical Programs” on Thursday, May 17, at 10:00 a.m.
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.
Authored by Robert Prince, Ph.D, https://www.duanemorris.com/attorneys/robertwprince.html
On Thursday April 18, 2018, at 8:00AM-12:30PM EST, an FDA advisory panel will consider whether to recommend or not recommend approval of GW Pharmaceutical’s cannabis-based drug Epidiolex ® for use in treating two rare types of epilepsy in children- Dravet syndrome and Lennox-Gastaut syndrome. Epidiolex is an oral formulation of a purified form of cannabidiol (CBD) a component found in cannabis. CBD does not have any psychoactive effects as compared to another component of cannabis tetrahydocannabinol (THC). Epidiolex has less than 0.1 percent of THC.
If approved, Epidiolex would be the first botanical cannabis product approved in the U.S. for any indication. The FDA has approved Marinol® and Syndros® for uses in the U.S. for the treatment of anorexia associated with weight loss in AIDS patients. Both products contain dronabinol, a synthetic delta-9-tetrahydrocannabinol. Another FDA approved drug Cesamet® contains nabilone, which is a synthetic drug with a structure similar to THC that is used to treat nausea and vomiting.
The FDA released briefing documents on April 17, 2018, which did not seem to raise any major issues with Epidiolex, resulting in the share price of GW Pharmaceuticals to rise sharply- up 2.27%. The Center for Drug for Drug Evaluation and Research (CDER) indicates that it plans to provide a free of charge, live webcast of the April 19, 2018 meeting of the Peripheral and Central Nervous System Drugs Advisory Committee. Information regarding the webcast, including the web address for the webcast, will be made available at the following website: http://www.fda.gov/AdvisoryCommittees/Calendar/default.htm. At the time of writing this note, the FDA has not provided any login information for the webcast.