Tag Archives: Seth A. Goldberg

The DEA Affirms CBD Derived from “Marijuana” Is Federally Unlawful

Seth Goldberg
Seth A. Goldberg

The Controlled Substances Act defines “marijuana” as:  all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.

The DEA has recently affirmed its position that CBD sourced from the parts of the plant that are included in the definition of marijuana are unlawful.   This is true even if the CBD does not contain any THC.  CBD derived from the excluded parts of the marijuana plant does not violate federal law.   Were it to investigate/prosecute a business  or individual for possessing CBD, the DEA would place the onus on the target to prove the CBD was sourced from the lawful parts of the plant.

Just like THC-containing products that are lawful under a state’s marijuana laws, CBD that may be lawful under a state’s marijuana laws, is still federally unlawful if sourced from the parts of the plant included in the definition of marijuana.

Duane Morris Partners Named Cannabis Law Trailblazers

Congratulations to Duane Morris partners Seth A. GoldbergChristiane Schuman Campbell and David N. Feldman, who were recently named Cannabis Law Trailblazers by National Law Journal.

The inaugural list honors individuals “who are involved in all areas of cannabis law from helping regulate the marketing to providing licensing to new companies.” Duane Morris is one of only three Am Law 100 firms represented on the list.

To read the full press release, please visit the Duane Morris website.

Constellation Brands’ $4B Cannabis Investment

Seth Goldberg
Seth A. Goldberg

On August 15, 2018, Constellation Brands, which owns popular beer, wine and spirits products, such as Corona, Robert Mondavi and High West, announced it is investing $4 billion in Canopy Growth, which is one of the leading investors in the global legal cannabis market.  The announcement boosted Cannabis market stocks in the US and Canada, and is likely to catch the eye of big alcohol, big tobacco, big pharma and larger consumer products companies that have been interested in entering the growing legal marijuana markets.  More and more companies once-hesitant about doing so are finding that good counsel can help them navigate the regulatory hurdles that might otherwise stand in the way of profiting from this exciting market.

Momentum Builds With Schumer’s Bill To Legalize Marijuana

Seth Goldberg
Seth A. Goldberg

Just weeks after Senators Elizabeth Warren (D-Mass) and Cory Gardner (R-Colo) introduced bi-partisan legislation to make marijuana lawful under a state’s marijuana laws also lawful under the Controlled Substances Act (CSA), Senate Minority Leader Chuck Schumer (D-NY) introduced legislation removing marijuana from the CSA altogether on Wednesday, June 27.  Schumer’s bill also comes just one day after Oklahoman’s passed legislation legalizing medical marijuana in their traditionally red state, and one day before the U.S. Senate passed legislation legalizing hemp for all purposes, including extracts from hemp, such as cannabidiol.

By removing from the purview of the CSA, state-legal cannabis and proceeds derived therefrom, the Warren/Gardner legislation, if passed, would likely have the effect of nationwide legalization, but state operators and consumers would still need to be concerned about marijuana’s Schedule 1 status under the CSA, whereas the Schumer bill, if passed, would eliminate those concerns by removing marijuana from the CSA.

Cannabis Banking Concerns a Focus of Proposed States’ Rights Bill

Seth Goldberg
Seth A. Goldberg

On Wednesday, an article I wrote describing the public safety concerns that result from the lack of banking in the cannabis industry due to the federal prohibition of marijuana was published in the National Law Journal.

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.

California Attempts to Address Public Safety with Cannabis Banking Legislation

Seth Goldberg
Seth A. Goldberg

I have previously written about the public safety concerns resulting from the lack of banking in the cannabis industry.  As I noted in that article, the elimination of the Cole Priorities in January 2018 has left federally-regulated banks wondering how they can follow FinCen’s guidance for banking cannabis issued in February 2014, which was explicitly dependent on the Cole Priorities.

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.”

FDA to Consider Approval of Botanical (not synthetic) CBD Drug

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.

Pennsylvania Medical Marijuana Program to Begin Phase II Permitting

Seth Goldberg
Seth A. Goldberg

On April 5, 2018, Phase 2 of the PA Department of Health’s permitting for commercial medical marijuana cultivation and dispensary operations will begin.

13 Grower/Processor permits will be available, two in each of the six DOH regions, and the 13th going to the highest scorer.  23 Dispensary permits will be available, nine in Region 1, three in Regions 2 and 3, two in Regions 4 and 6, and four in Region 5.  Applications will be available online at www.medicalmarijuana.pa.gov  on April 5, and the submission deadline will be May 17.

In June 2017, 12 Grower/Processor and 27 Dispensary permits were granted.    According to April Hutcheson of DOH:

  • 25,573 patients have registered to participate in the PA program;
  • 9,020 patient certifications have issued;
  • 7,000 of those patients have purchased their ID cards;
  • 6,683 patients have bought medical marijuana in a PA dispensary;
  • 866 physicians have been registered to participate in the program; and
  • 473 of the registered physicians have been approved.

Given the very real possibility that PA will approve the use of dry flower products, i.e., smoking and edibles, this summer, the PA market is positioned for strong performance over the next few years.

Sessions Draws Lines for US Attorneys in Terms of Marijuana Prosecution

Seth Goldberg
Seth A. Goldberg

In speaking at the Georgetown Law Center on March 10, 2018, AG Sessions said the following:  “We’re not going to be able, even if we desire, to take over state enforcement of routine cases that might occur.  Federal agents are highly paid, highly trained.  They work on cases involving cartels, international organizations, major distribution networks, large amounts of cash. They deal with criminal organizations, RICO type cases, and we’re not out there prosecuting those types of cases everyday.”

Although, in making the above comments, Sessions was clear that marijuana was still illegal in the U.S., he appears to have drawn a box around those types of marijuana-related criminal activities on which federal prosecutors are focused.  The above comments are not inconsistent with the Sessions memo of January 4, 2018, and may help clarify what prosecutorial discretion looks like under that memo.  Based on the above comments, it would seem that activities conducted pursuant to state marijuana programs are not the types of activities on which federal prosecutors are focused.

Cannabis Trading on Major U.S. Stock Exchange

Seth Goldberg
Seth A. Goldberg

Another breakthrough for the cannabis space occurred on Tuesday, February 27, 2018, when Toronto-based Cronos Group Inc. began trading on the Nasdaq Stock Market. (MJN:CN). This marks the first listing of a company focused purely on cannabis on a major U.S. stock exchange.  The listing of Cronos comes within two months of the memorandum issued by Attorney General Sessions that rescinded the federal government’s previous guidance regarding enforcement of state-lawful cannabis activities under the Cole Memorandum.  That earlier guidance is credited with providing the cannabis space with a window of opportunity for the warp-speed growth the space has seen in recent years.  The Sessions memo was intended to slow the growth of the cannabis space, especially with respect to the capital markets.  The Nasdaq listing of Cronos suggests that 2018 could be another strong year for cannabis-related investments; 2017 was believed to have resulted in approximately $2 billion in cannabis-related investments in the U.S.