May is off to a great start with a federal decision to reschedule cannabis! We've picked these 12 strains to help each sign make the most of the month's cosmic energy, and celebrate a historic win.
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DCC launched the Real CA Cannabis initiative to help consumers find licensed dispensaries & regulated products.
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California’s cannabis market is broken. Taxes are too high, local control has proved disastrous, the illegal market is growing and regulations are too burdensome. There are not enough retain licenses and too many cultivation licensees. Over the past few years, the situation has become so dire that many licensees have exited the industry, including some of the largest and most well-capitalized players in the state.
In this webinar, Griffen Thorne (Partner, Los Angeles) and Hirsh Jain of Ananda Strategy will discuss whether the California market is too far gone or whether it can be saved.
Specifically, Hirsh and Griffen will look at:
Join us for this free webinar on June 26th at 12 PM Pacific.
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Hey abby is celebrating its second anniversary with a special discount. Leafly readers can save up to 40% on their very own 420 Edition of the Hey, abby grow box by clicking the link below.
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But did they?
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For years, people have tried to decipher the incredibly poorly worded (I can’t stress this enough) language in the 2018 Farm Bill and what it means for intoxicating hemp products like THCA products or delta-8. In the last week or so, there’s been a lot of bad news for the intoxicating hemp products industry. Let’s take a look.
Last June, I published a post entitled “So Long for THCA Products” where I analyzed the murky legality of THCA products. I, as well as another colleague here at the firm, tend to think on balance that these products are not permitted under current federal law. We do acknowledge that there are arguments in both directions.
In my June 2023 post, I concluded that even if there are good arguments for THCA’s legality, practically speaking law enforcement was likely to consider THCA in calculating total THC, given the fact that THCA converts to THC upon application of heat.
Indeed, this is essentially the position that DEA took in June 2023 (you can find DEA’s letter on attorney Rod Kight’s blog here), when Terrence Boos, the Chief of DEA’s Drug & Chemical Evaluation Section said “for the purposes of enforcing the [2018 Farm Bill’s] hemp definition, the [THC] level must account for any [THCA] in a substance.”
As of a few days ago, DEA reiterated this position in response to an inquiry by attorney Shane Pennington, even going so far as to note “cannabis-derived THCA does not meet the definition of hemp under the [Controlled Substances Act] because upon conversion for identification purposes as required by Congress, it is equivalent to [THC].”
Now, you may be thinking that’s the end of the road for THCA products. But, it bears mentioning that DEA’s interpretations are just that. A court could disagree and find THCA products to be lawful– although federal courts tend to give federal agencies a very broad degree of leeway. And here, I tend to think that federal courts would side with DEA.
I should also throw in that regardless of what federal law says, state laws are often much more restrictive and may completely bar THCA and other intoxicating hemp products. The point is that state law could be a pain even if federal law were to loosen up. And as we’ll discuss below, it doesn’t look like that will happen.
It may be time to throw out everything you knew or thought you knew about intoxicating hemp products–including what I just wrote above (!)–because a new Farm Bill is coming, and it isn’t looking good for intoxicating hemp products.
Last week, a congressional committee approved an amendment to the new Farm Bill that would effectively ban intoxicating hemp products. I should point out that this is just a committee amendment. It is NOT the final Farm Bill, and it could be modified or scrapped altogether before the final Farm Bill is passed. That said, it’s a pretty good indication of what at least some of the key congressional legislators are thinking.
If passed, the amendment would exclude from the definition of “hemp” created by the 2018 Farm Bill:
This last point is extremely vague. because the term “quantifiable amounts” is not defined and will be left to the USDA to define. It’s possible, though I think unlikely, that a low enough threshold could be set to end up barring even non-intoxicating CBD products. While I think that’s unlikely, I think there will be a LOT of pushback to this prong in particular as negotiations continue.
DEA is closing the gap on intoxicating hemp products and Congress could go several steps further. While there is still a lot left to be resolved prior to the 2024 Farm Bill being finalized, the future doesn’t look great for intoxicating hemp products. Either way, stay tuned to the Canna Law Blog for additional updates.
For more on this topic, check out the following:
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Including Tangerine Sunrise, Lemon Tree, and Wagyu.
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California‘s cannabis industry suffers from a seemingly unending list of problems: high taxes, prohibitionist cities, a related lack of retail licenses and oversupply of non-retail licenses, a monster illegal market with no end in sight, burdensome and often senseless regulations, and so on. Unfortunately, rescheduling won’t solve most of these problems–at least not directly. Today I want to look at what rescheduling could mean for California’s cannabis industry.
If you’re not already up to speed on rescheduling, check out my colleague Vince Sliwoski’s explainer of the DEA’s notice of proposed rulemaking to move marijuana from schedule I (where it sits next to heroin) to schedule III, or any of the following posts of ours:
With that out of the way, let’s look how rescheduling could affect (or not affect) California’s cannabis industry.
First and foremost, rescheduling does not mean that state-legal cannabis markets will be federally compliant. In other words, all California cannabis businesses will still violate federal law. The biggest change would be that IRC § 280E – which prohibits cannabis businesses from making standard federal tax deductions – will go away. But the statewide cannabis industry won’t be federally “legal.”
What that means is that rescheduling will have no impact on things like the prohibition on interstate commerce, which has kept California walled off from other states (at least California’s legal market). So for now, California’s still on its own.
Rescheduling also won’t impact state law where it counts. Things like local control, burdensome regulations, fighting the illegal market, and so on, will stay the same. Importantly, local and state tax law won’t change: California and many local cities tax cannabis businesses as if they are piggybanks. While 280E relief will undoubtedly help, it makes it much less likely that the state will revisit its own excise tax or think about how it could cap local gross receipts taxes.
So with all that out of the way, is there any good news? I think the answer is a clear yes. Here’s why:
We’ve got a long way to go before rescheduling happens. And while nobody can really say for sure how things will shake out, it seems like there are some definite positive outcomes for California’s cannabis industry. So stay tuned for more updates.
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Please join us in taking the day off to honor all who have served, so we can do things like have a Canna Law Blog and say whatever we want.
We will be back tomorrow with our regular programs.
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The Drug Enforcement Administration (DEA) published its Notice of Proposed Rulemaking (“NOPR”) last week to much fanfare. The NOPR would reschedule marijuana, “marijuana extract” and “naturally derived delta-9 tetrahydrocannabinols” from schedule I to schedule III of the Controlled Substances Act (CSA). But that’s not all.
In my very quick analysis after the rule dropped, I flagged DEA’s statement that it may develop “marijuana-specific controls” in conjunction with rescheduling. I’m surprised this DEA statement hasn’t spurred much discussion, despite its Easter egg placement at NOPR page 86. “Marijuana-specific control” rules could turn out to be a pretty big deal.
For context, the U.S. is a party to certain international treaties that require it to control cannabis and other drugs. Because of that obligation, the Department of Justice’s Office of Legal Counsel (OLC), has advised DEA that additional controls may be needed for marijuana on schedule III. That’s the simplest way to explain it: if you want more detail on the whys and wherefores of the legal regime and OLC’s rationale, go to pages 83-87 of the NOPR.
In my post last week, I highlighted that marijuana-specific controls would be considered by DEA “concurrent with this rulemaking.” In other words, DEA is saying, “we are looking at adopting new and special rules for marijuana, beyond just moving it to schedule III. But we don’t know what those new and special rules would be yet. Stay tuned.” This approach is artfully vague and noncommittal, and awkward, and begs examination.
I am not an administrative law expert. However, my understanding is that DEA would be required to notice any proposed, marijuana-specific control rules in the Federal Register and open them up for comment. In other words, the process would mirror what we just saw with last week’s NOPR.
If this happens, it will be interesting to see what the “specific controls” rules provide. To that end, I’m not aware of any such rules for other schedule III drugs. Instead, there are only general controls applicable to all schedule III drugs: e.g., certain storage requirements, allowances for paper or telephone prescriptions, refill caps, etc. None of that seems applicable to e.g. marijuana flower, which isn’t approved by FDA for anything.
On the other hand, what could these rules possibly say that would matter, especially with respect to state marijuana programs? Would anyone, outside of scientists studying marijuana, pay any attention to a DEA’s “specific controls” for schedule III marijuana? Probably not. Would DEA set about enforcing these rules against state-licensed marijuana businesses, medical marijuana card-holders, etc.? I can’t imagine it would. So, what’s the point?
Smarter people than me have puzzled over whether the international drug treaties are “flexible” enough to accommodate a schedule III landing for marijuana. Folks have also wondered whether these treaties can be read to accommodate what states have wrought under their Tenth Amendment powers, legalizing weed.
If the correct answer is “schedule III is viable under the treaties”, the OLC recommendation that DEA create “specific controls” for marijuana strikes me as: a) very smart and b) totally impractical. I don’t mean to speak ill of the wizards at OLC, but I’ve noted on our sister blog that lawyers should avoid “purely technical legal advice which is also inadequate”, per ABA Model Rule 2.1[2]. This advice has that look and feel, for me.
Is there a better approach than what OLC recommends? I think so. The U.S. could simply ignore its treaty obligations as to marijuana. That may sound extreme, but here are my arguments:
First, the U.S. arguably has ignored the Single Convention for many years with respect to marijuana. Strong arguments can be made that the U.S. has violated the treaties by failing to enforce the CSA in the face of state-level adult use legalization. More recently, OLC itself declared the U.S. in derogation of treaty requirements in the specific context of cannabis manufacturing and research. Did the sky fall when this OLC memo dropped, describing lawless policies? No. Hardly anyone noticed; fewer people cared.
Similarly, did anyone care last year when the International Narcotics Control Board expressed concern over the “international trend to legalize non-medical use of cannabis.” Nope. Again, no one cares. As I’ve explained elsewhere, “public international law is decentralized, unenforceable, unpoliced and frequently broken.” In the drug treaty context, enforcement is an academic consideration at best.
The second reason the U.S. could simply ignore its drug treaty obligations, rather than writing dumb, unenforceable rules, is that other countries have done this. Yes, there is a map. And instead of looking bad, or receiving mild sanctions, these countries have come off looking like the principled leaders they are. Way to go, Canada! And Germany. And South Africa. And everyone else.
Third, the U.S. does not faithfully and consistently comply with international treaties– when it even bothers to ratify them. A quick and discerning Google search will turn up many articles with long lists of treaties the U.S. has signed and failed to ratify, or that is has ratified and subsequently violated. Why single out cannabis for pious adherence?
I’ll be interested to see if DEA actually proposes rules on “specific controls” for marijuana in Schedule III. My guess is it will happen, in keeping with the grand tradition of impractical U.S. drug policy. I think we’re just seeing an unorthodox, two-step approach here due to political pressures to hurry marijuana along to schedule III. The order to review marijuana’s status came straight from the top, after all.
If DEA decides to propose “specific control” rules, it should happen fairly soon. Such a scenario seems more likely, and more manageable, than marijuana landing on schedule III “as is”, with specific controls to follow at some future date.
Watch this space.
____________
For related reading, check out the following posts:
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If you’re in Los Angeles, you know that a long weekend calls for setting the vibes just right. And who better to guide us than our favorite weed influencer, Biz? With his finger on the pulse of the cannabis scene, Biz shares his top picks to elevate your long weekend experience. Featured products Biz’s strain […]
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As the 2024 elections draw near, the economic impact of cannabis legalization is set to become a prominent topic in political discourse. With billions in total sales and millions in tax revenue, the economic benefits of legal cannabis are clear. However, beyond the monetary gains, there is a crucial aspect that must not be overlooked: job creation.
The 2024 Cannabis Jobs Report by Vangst reveals that over 440,000 jobs have been generated in states with legal cannabis, marking a 5.4% increase in the past year alone. This growth not only signifies economic stability, but also highlights the industry’s resilience in recovering from past job losses. As new markets like Missouri contribute to this job surge, the report underscores the varying dynamics of job creation across different states: newer markets are expanding while older ones face challenges. Despite these disparities, the forecast remains optimistic, with continued growth in sales and job opportunities anticipated in the coming years.
When discussing the economic benefits of fully legalizing cannabis, the subjects of total retail sales and related tax revenue are always immediately discussed, and rightfully so. Forbes estimates that the regulated U.S. cannabis industry will be worth $46 billion in 2028, and will surpass alcohol sales in some counties. Even in more remote and less populous states, cannabis has brought in millions in retail sales and tax revenue. In Maine for instance, cannabis sales reached $217 million in 2023. Missouri, despite a population of roughly six million, was the sixth largest market of all the states with legal cannabis in 2023. In all, Missouri topped $1 billion during its first year of recreational sales.
As we approach the 2024 elections, cannabis will undoubtedly be an issue on the forefront of discussions. The rapidly increasing, multi-billion dollar figure of total cannabis sales and many millions more in tax revenue will be mentioned prominently. However, when discussing the numerous economic benefits of recreationally legalizing cannabis, politicians who run so heavily on platforms of American job creation, such as the reality TV star turned President, must also acknowledge the thousands of jobs that are created annually from states with legal cannabis.
One partial reason identified by the Vangst Report for the dramatic increase in 2023 cannabis jobs, is that cannabis industry overall experienced a loss of about 10,500 jobs from 2022 to 2023. Not only were industry businesses actively creating new roles for prospective employees by the thousands in 2023, they were recuperating from a deficit of job loss. Luckily for this flourishing industry, the legalization and opening of the recreational cannabis market in Missouri easily filled those 10,500 previously lost jobs for their billion-dollar industry.
One noteworthy data set in the Vangst Report was precisely which states’ markets were creating more jobs, and the ages of various state markets in relation to job creation performance. Of the top nine states for cannabis job growth, three saw increases of over 100 percent; and none of those states had legal cannabis before 2018. One of those states, Utah, experienced a growth of about 16 percent, but is still a strictly regulated medical-only market. Even more surprisingly, Utah is the only state that could even be considered “West Coast” among the top nine.
Interestingly and worryingly, the eight states to experience the most staggering job loss all legalized cannabis at least a decade ago. On top of the mountain of issues that the California industry is already facing, the Golden State experienced the highest number of job losses in the past year. Neighbor state Nevada, despite attracting over 40 million tourists a year, experienced a seven percent job numbers drop. Colorado and Washington, the very first two states to legalize recreational cannabis in 2012, experienced the highest percentage of job loss by far, at 16 and 15 percent respectively.
“The national 5.4% growth in jobs wasn’t spread evenly. Now more than ever, America’s cannabis industry is a state by-state, region-by-region job market.” the Vangst Job Report summarized. “Young markets in recently legalized states continue to expand and create employment opportunities, while labor demand in mature markets contracts along with revenue and profit margins.”
Even with the notable stagnation or job loss in the thousands for certain states, the report indicates hints of future job growth. Vangst estimates that anywhere from 7,500 to 45,000 jobs could be created in Ohio, for example, which recently legalized adult use cannabis. Out east, With Maryland awarding 75 more retail cannabis licenses, the number of jobs created in that state would almost certainly increase. Overall, the Vangst Report hypothesizes another wildly successful year for cannabis sales.
“In 2023 our legal revenue forecast of $29.2 billion came in at $28.8 billion (98.3% accuracy). This year we’re looking for 9.1% growth, with sales increasing to $31.4 billion. By 2030, we predict this will grow to $67.2 billion as more states legalize and more consumers participate. That growth will create more jobs, more wages, more taxes, and more ancillary support. Despite the challenges, this seems like a good problem to have as an industry.”
As the cannabis industry continues to evolve and expand, its economic contributions are becoming increasingly significant– particularly in terms of job creation and tax revenue. Job growth underscores the industry’s resilience and potential to create economic opportunities, even as older markets face challenges.
As the 2024 elections approach, it is imperative for policymakers to recognize and address the multifaceted economic benefits of cannabis legalization, ensuring that discussions extend beyond sales and taxes to include the vital aspect of job creation. With projections indicating continued growth in sales and employment, the cannabis industry stands as a dynamic and promising sector, one poised to make significant contributions to the American economy in the years to come.
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Crush the campout. Win the road trip. Leafly's experts help out.
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Today is another historic day in the history of cannabis control and regulation. In a much anticipated announcement, the Drug Enforcement Administration (DEA) issued a notice of proposed rulemaking to reschedule marijuana, from Controlled Substances Act (CSA) schedule I to schedule III (the “Proposed Rule”).
We have covered the implications of a schedule III placement in various posts on this blog, beginning with the Health and Human Services (HHS) recommendation that DEA undertake this rescheduling last August. See:
For now, here are a couple of high-level observations on today’s Proposed Rule.
First, DEA is not proposing an interim final rule. We expected as much, but it would have been nice! Under an interim final rule, an agency finds that it has good cause to issue a final rule without first publishing a proposed rule (as DEA did here). An interim final rule would have gone effect immediately upon publication, and marijuana would have been moved to schedule III today. Instead we’ll have to wait.
Second, the Proposed Rule gives a standard 60-day comment period, from the date the Proposed Rule is published in the Federal Register. That’s a pretty standard window; although, as I’ve explained before, this can always be extended.
Third, the Proposed Rule is clear that “any drugs containing a substance within the CSA’s definition of ‘marijuana’ would also remain subject to the applicable prohibitions in the Federal Food, Drug, and Cosmetic Act (“FDCA”).” No, this does not mean FDA enforcement is going to begin; and no, this does not mean Big Pharma is coming to squash state licensed operators. Stop saying that.
Fourth, the Proposed Rule gives very specific protocols for submitting electronic and other types of comments. These protocols are not hard to follow! But if you fail to do so, your comment will not make it into the record, and it will not be considered by DEA.
Fifth, I really like this paragraph:
HHS recommended in August 2023 that marijuana be rescheduled to schedule III. See Letter for Anne Milgram, Administrator, DEA, from Rachel L. Levine, M.D., Assistant Secretary for Health, HHS (Aug. 29, 2023) (“August 2023 Letter”). The Attorney General then sought the legal advice of the Office of Legal Counsel (“OLC”) at DOJ on questions relevant to this rulemaking proceeding. Among other conclusions, OLC concluded that “HHS’s scientific and medical determinations must be binding until issuance of a notice of proposed rulemaking [(‘NPRM’)].” Questions Related to the Potential Rescheduling of Marijuana, 45 Op. O.L.C. __, at *25 (Apr. 11, 2024) (“OLC Op.”).1 After the issuance of a notice of rulemaking proceedings, HHS’s scientific and medical determinations are accorded “significant deference” through the rest of the rulemaking process.2 OLC Op. at *26.
I’ve always argued that HHS’s scientific and medical determinations are binding under the plain language of the CSA itself. But it’s awfully nice to hear confirmation that OLC agreed– especially because there was some consternation among the cognoscenti about what OLC was doing here. It seems that OLC has essentially confirmed to DEA: “you are stuck with schedule III.”
Sixth, it’s interesting to see the Proposed Rule delve into problematic international law constraints. The Proposed Rule gives a rather cursory analysis here, but OLC seems to have justified marijuana’s placement on schedule III in the context of public international law obligations, including the 1961 U.N. Singled Convention on Narcotic Drugs (to which the United States is a party). DEA states, however, at Proposed Rule page 86 that:
“[c]oncurrent with this rulemaking, DEA will consider the marijuana-specific controls that would be necessary to meet U.S. obligations under the Single Convention and the Convention on Psychotropic Substances in the event that marijuana is rescheduled to schedule III, and, to the extent they are needed if marijuana is rescheduled, will seek to finalize any such regulations as soon as possible.”
This could get pretty interesting! Expect a lot of fretting here by industry and the general public.
Seventh, it was also interesting to see DEA and HHS justify why it arrived at a schedule III conclusion, after concluding in 2016 that marijuana should stay in schedule I. I have wondered aloud about the intellectual gymnastics that might be required for this. Take a read at the rationale on the Proposed Rule at pages 11 – 13 and see if you’re convinced.
_____
OK, that’s it for now. The Proposed Rule is 92 pages and I had less than 30 minutes to read it and write this today. We will follow up as soon as next week with further thoughts on this very significant development.
The post BREAKING NEWS: DEA Issues Notice of Proposed Rulemaking to Move Marijuana to Schedule III appeared first on Harris Sliwoski LLP.
THC test subjects with limonene aboard reported a smoother flight.
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Germany’s new laws legalize possession by adults of up to 25 grams (around 1 ounce) of cannabis for recreational use. It also allows for adults to grow up to three plants. Use is prohibited within 100 meters of the entrance to a playground or school. This part of the legislation is already in force in Germany and come July 1, German adult residents can join nonprofit “cannabis clubs” with a maximum 500 members. Individuals 21 and older will be allowed to buy up to 25 grams per day, with a maximum of 50 grams per month; whereas those between the ages of 18 and 21 will be limited to 30 grams per month. Membership in multiple clubs will not be allowed.
Germany’s cannabis clubs will be prohibited from locating within 100 meters of a school or playground, and each city or town can have no more than one club for every 6,000 residents. Each cannabis club will need a permit to operate, and this permit will be valid for up to seven years, with the possibility of an extension.
Germany is only the third EU country to legalize cannabis for recreational use — after Malta and Luxembourg. Since Germany has so many more people than Malta and Luxembourg, put together, how legal cannabis fares in Germany will likely have a significant impact on whether recreational cannabis legalization happens elsewhere in Europe — perhaps even further afield as well.
Contrary to what many believe, Uruguay, Canada, Thailand, and the United States (but not every state) are the only countries that have both legalized recreational cannabis and moved forward with licensing its actual sale. South Africa, Mexico, Malta, Luxembourg, and Australia (but not every state) have legalized recreational cannabis, but have yet to provide anyone with the necessary licenses needed to actually sell it. Portugal has legalized growing cannabis and it exports large quantities of it.
A study completed by the University of Dusseldorf in November of 2021 estimated that approximately $4.7 billion Euros in total would be generated from the taxes on cannabis products sold to German citizens, from the tourists coming to Germany for cannabis, and from the money German courts and law enforcement will save by not prosecuting recreational cannabis cases.
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For context on the run-up to German cannabis legalization, check out the following:
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Minnesota cannabis producers have raised concerns over the availability of products when the legal market finally opens. In response, the Minnesota legislature has acted quickly to allow an avenue for early cultivation providing key guidance for the forthcoming Minnesota legal cannabis market. Noting these concerns, industry participants have asked the Minnesota Office of Cannabis Management (OCM) and their local legislators to consider opening cultivation and production of cannabis products early, in order to supply retailers with legal products to sell once licenses are awarded and retailers open for business.
The OCM issued a statement recently indicating it will not ask for changes to the current laws that would allow some cannabis cultivators to start growing plants early as a way to have products available and ready for retail when stores open sometime in early spring of 2025. The OCM notes that they remain receptive to proposals that could pave the way for early production, but are not seeking immediate action at this time. This recent decision highlights the issues and complexities of introducing a new legal cannabis market into an already existing marketplace. The main issue surrounds how legal retailers could open for business if they do not have any legal cannabis products to sell.
One option would be to rely on existing medical cannabis rules for early cultivation. However, concerns that issuing producer licenses contemporaneously with retail licenses would cause unnecessary delays, are met with concerns over unnecessary delays from the OCM. The OCM notes that reliance on the existing medical cannabis rules presents inherent flaws, particularly in accommodating outdoor farms and ensuring equitable opportunities for social equity applicants. Allowing for early cultivation under the existing medical cannabis requirements only exacerbates challenges faced by social equity applicants and would place legal producers outside of the existing medical regulatory framework at a disadvantage.
Senator Lindsey Port spearheaded amendments, which culminated in floor debate lasting over six hours. In response to the challenges facing producer and retail licenses, as well as accommodating outdoor farms, ensuring equal access for social equity applicants, or allowing early cultivation under the existing medical cannabis regulatory framework, legislators are took up the issue and provided additional proposals. The amendments were aimed at facilitating early cultivation, an essential step towards nurturing a robust and inclusive cannabis market. These amendments seek to grant permission for early production to social equity producers, addressing the imperative of equitable participation in the anticipated Minnesota legal cannabis industry. By integrating the existing medical cannabis regulations with newly proposed social equity pre-approved licenses, Senator Port’s amendments offer a pragmatic framework for expediting cultivation timelines while safeguarding the interests of diverse stakeholders.
The significance of early cultivation cannot be overstated in the context of Minnesota’s nascent legal cannabis market. Not only will Minnesota’s legal cannabis market be forced to compete with the existing illegal market, the same as every other state, but the new legal market will also be competing with the existing THC beverage and lower-potency hemp edible markets. Early cultivation holds the key to undermining the influence of illicit markets and channeling demand towards legal and regulated avenues, but only if the legal cannabis market can get a strong launch. Moreover, early cultivation will serve as a lifeline for small businesses and social equity applicants, affording them a crucial head start and robust launch in an industry characterized by fierce competition and evolving regulatory dynamics.
Understanding the nuances of licensing is integral to navigating Minnesota’s cannabis marketplace. Although licenses will not be issued until early 2025 at the earliest, and the full regulatory framework has not been finalized, producers and cultivators will have access to three distinct production license categories – bulk cultivators, mezzo licenses, and micro licenses. Each category carries with it separate requirements and allowances regarding canopy space, facility size, quality control requirements, staffing protocols, and more. Notably, lower-potency hemp cultivation and sale remain exempt from canopy caps, presenting another wrinkle or opportunity within the overall regulatory framework.
Although the outline has been set regarding cultivation, mezzo and micro licenses, uncertainty remains regarding the license lottery system. This uncertainty was also exacerbated by the issues surrounding whether, and how, Minnesota would allow early cultivation. Some cultivators raised concerns over what might happen if they are able to begin early cultivation but then lose out on the later license lottery. Others worried that if they do not begin cultivating early, they could forfeit additional points that could have secured them a license. Disruptions to the point-based allocation mechanism also raise pertinent questions regarding fairness and transparency through the licensing process. Addressing apprehensions surrounding straw applicants and ownership transparency is paramount to fostering trust and accountability within the OCM and its regulatory framework. It’s promising to see Minnesota legislators and regulatory agencies working in conjunction to address these issues early in hopes of fostering a robust market.
Establishing a flourishing cannabis market will require a form of early cultivation and production to ensure retailers are stocked with products to sell at launch and both the Legislature and the OCM are aware of that fact and working towards addressing these issues. The OCM’s leadership and decision-making on these issues have the potential to reshape and drive the trajectory of Minnesota’s legal cannabis market as we approach the much-anticipated retail launch in early spring of 2025. As Minnesota moves towards that launch, the discourse surrounding early cultivation serves as a litmus test for regulatory agility and stakeholder collaboration. By navigating the complexities of licensing, and regulatory concerns, and addressing the imperative early cultivation period, Minnesota is poised to address many tough questions and policy dilemmas before a single seed is sown or a single flower is sold under the new legal cannabis market.
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Pretty, fragrant, and relaxing—Pink Runtz is our Leafly HighLight strain for May.
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Data from the California Department of Justice reveals that nearly half a million individuals were arrested on cannabis charges in the state between 2006 and 2015. Even after Governor Schwarzenegger authorized a statewide decriminalization program in 2010, thousands continued to face serious misdemeanor charges related to cannabis. Despite California’s pioneering legalization of cannabis through Proposition 215 in 1996, just two years after the 1994 Crime Bill, the state legislature’s approach to cannabis legal reform was not as progressive as one might expect. The impact of the War on Drugs during this period was profound, with marijuana possession arrest rates increasing by 124% in 2010, even as rates for other serious crimes decreased significantly.
Proposition 64, passed a few years later, lacked any discussion addressing the damage caused by past policies. However, with social equity becoming a prominent topic in the cannabis industry, California officials have started investing significantly in social equity policies. Initiatives like the California Cannabis Equity Act of 2018 and the Budget Act of 2019 reflected this shift, aiming to support the economic development of communities and individuals adversely affected by previous harsh cannabis policies in what is now a multi-billion dollar industry.
In November 2023, California officials finally announced the application process for aspiring social equity business owners via the Cannabis Equity Grants Program for Local Jurisdictions which itself is an extension of Governor’s Office of Business and Economic Development. As the substantial costs of running a fully legal cannabis business in California can often get obscenely expensive, these large grants are meant to fund and lessen the financial burden of these exorbitant costs.
The overall purpose of this multi-million dollar initiative is “to advance economic justice for populations and communities impacted by cannabis prohibition and the War on Drugs by providing support to local jurisdictions as they promote equity in California and eliminate barriers to enter the newly regulated cannabis industry for equity program applicants and licensees,” according to the website. In February of 2023, the Governor’s Office of Business and Economic Development distributed approximately $15 million in social equity-focused funding to 16 different cities and counties throughout the Golden State.
At the end of last month, California officials finally awarded those patiently awaited funds. Funded by a $12 million portion of the billions in tax revenue raised by California cannabis sales, the grants will go to a total of 10 different cities and counties. While most awarded counties reside in Northern California, the city of Coachella also received $350,000 in funding. In particular, Oakland received $3 million and the city and county of San Francisco received over $2 million. “California’s cannabis industry is not just about business; it’s about righting past wrongs. Through initiatives like the Cannabis Equity Grants Program, the state is investing in communities once harmed by harsh drug policies, creating opportunities and economic justice for those affected,” said California Cannabis Attorney Karen Albence.
The possibilities with this funding are nearly endless. Funds will go towards local programs offering technical support, regulatory compliance and assistance. One notable grantee includes San Jose’s Cannabis Equity Business Academy. Social equity advocates have even more progress to celebrate, as the Governor’s Office of Business and Economic Development and Governor Gavin Newsom’s new budget proposal would invest $15 million further in similar programs by October of 2024.
Although it has taken a while for these programs to be created and even longer to be implemented, we are hopeful for this new era. This $12 million in local, social equity grants is a drop in the bucket, considering the damage that was done. But a drop is better than an empty bucket. With substantial investments and ongoing support, California is starting to pave the way for a more equitable and inclusive cannabis industry– one where all individuals, regardless of background, have the chance to participate and succeed. As the state continues to allocate resources and expand such programs, the future holds promise for further progress in achieving social equity within the California cannabis landscape.
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Stash upgrades for every mom too busy upgrade her own.
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The fluctuating levels of reported THC (tetrahydrocannabinol) in cannabis products have sparked discussions and concerns within the industry. Contrary to popular belief, the decline in tested THC levels does not necessarily indicate a decrease in potency. We examine the reasons behind this phenomenon, exploring how changes in testing protocols, sample selection, and laboratory practices contribute to these findings. As an industry, we cannot lose sight of the importance of standardized testing practices to ensure transparency and reliability in the market.
Just a few years ago, Justin Bieber boasted that he gets his weed from California. But recent testing indicates that the level of THC in California cannabis has fallen dramatically over the last year. Is it time for Bieber to find a new source? Probably not—but the industry shouldn’t shrug this news off either. Let’s look at what’s happening with THC testing across the country and consider what it means for consumers, cannabis businesses, regulators, and the industry as a whole.
California isn’t the only state that’s seen a drop in THC test levels. One recent article analyzed the THC percentage for 23 cannabis flower samples sold in Colorado, finding that the vast majority, 18 of 23, tested lower than the claimed range. Three samples contained less than half as much THC as their sellers claimed. Does that mean that weed is getting weaker? Not at all. Falling test results are far more likely due to changes in testing than to changes in the true levels of THC in cannabis plants.
Some of this has to do with sample selection. Every individual plant has a distinct genetic profile. Even in a controlled environment, each plant is influenced by the precise amount of light, nutrients, and water it receives (“epigenetic factors”). Some plants within a given crop will always be superior in quality, just as some flowers on any given plant will be average, while others will be exceptional. Cannabis producers should be taking a random sample from each batch for testing, but it’s often easy to—intentionally or otherwise—select more test samples from the best exemplars than from the run of the mill.
But it’s not all sampling error; labs may produce different test results from the same sample due to the protocols they use, or the stringency of their methods. Do some producers “lab shop” to find a lab that will report higher potency results? Almost certainly. Do some labs inflate their results to try to win more business? Again, almost certainly.
As states have gotten stricter about policing both sample selection and lab accuracy, tested THC results have fallen. But that doesn’t mean the product is any less potent.
Cannabis isn’t as straightforward as something like alcohol. There’s no single value that determines how “strong” a product is or what effects it’ll have on a consumer. The potency of any particular cannabis product isn’t driven just by its level of THC but also by its overall cannabinoid and terpene profiles, the form of consumption, and the individual traits of the person using it.
Why does THC testing even matter, then?
At a consumer level—especially for those who use marijuana medically—differences in THC levels may influence the amount they consume, and the therapeutic or recreational benefits they receive. Consumers may also use THC test results as a benchmark for quality or value and therefore the price that they’re willing to pay for a product.
At the state level, discrepancies in lab results have led to heightened scrutiny. California has been fining cannabis businesses and suspending operator licenses for overreporting THC content, while Massachusetts is sending out “secret shoppers” to check on producers and dispensaries.
More importantly, though, inflated THC test levels damage everyone’s trust in the cannabis industry. THC isn’t the only thing marijuana is tested for, or even the most important; consumers, businesses, and regulators should all be able to trust the processes and results of tests for pesticides, toxins, and contaminants like mold. But why should anyone believe those numbers are reliable if THC levels are consistently overreported?
That leaves us caught in a double bind: consistency is all but impossible to achieve within the current fragmented legal structure, but without consistency, the industry isn’t taken seriously.
Every ethical player in the cannabis industry—from growers to retailers to consumers—would benefit from uniform standards in testing methods, controls, regulations, and oversight (not to mention legalized banking!). As it stands, cannabis businesses must try to reconcile a morass of conflicting, often confusing guidance, paying exorbitant taxes — at least for now –without receiving many of the benefits that other businesses receive. We have been working with cannabis industry businesses to navigate these issues for well over a decade. Give us a call if you think we could help.
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May is off to a great start with a federal decision to reschedule cannabis! We've picked these 12 strains to help each sign make the most of the month's cosmic energy, and celebrate a historic win.
The post Star signs and cannabis strains: May 2024 horoscopes appeared first on Leafly.
Yesterday, some big news dropped that the cannabis industry has anticipated since last summer. I take issue with some of the headlines, so here’s mine: “DEA Reportedly Agrees to Initiate Proposed Rulemaking to Reschedule Marijuana…”. Clearly, I’m a lawyer and not a reporter, but the “Reportedly” and “Initiate Proposed Rulemaking” are key considerations here at the Canna Law Blog.
In October of 2022, President Biden requested that the Department of Health and Human Services (HHS) review marijuana’s placement on Schedule I of the Controlled Substances Act (CSA). HHS followed that directive, recommending that marijuana be moved to Schedule III on August 30, 2023. My real-time analysis of what a Schedule III placement would mean can be found here. I’m not going to re-type much of that analysis today; but I stand by all of it, and I encourage you to click that link when you’re done.
I mentioned above that DEA “reportedly” has agreed to follow the HHS proposal. The very next step will be for DEA to confirm that reporting. We are likely to see a statement or press release, and a notice of proposed rulemaking should follow. Here’s an example of what that looks like, from a recent DEA rulemaking on prescribing controlled substances via telemedicine. I trot out that particular example because DEA received “a record 38,000 comments” on those proposed rules. In my estimation, the marijuana industry does more complaining than lobbying, but I’ll put the over/under on marijuana comments at 3x telemedicine.
I don’t pretend to be an expert on the Administrative Procedure Act (APA). I can safely say, though, that much of this depends on exactly what rule or rules DEA proposes, and when. Right now, it’s reported that DEA has a draft rule out to the Office of Management and Budget for review. That process can take up to 90 days.
Once the rule is published, please know that DEA may extend timelines as ostensibly needed. For example, in the telemedicine rubric above, DEA and a related agency extended a temporary set of rules for a six-month stretch while DEA waited to instate its proposed final rule (the one that drew so much interest). Finally, even if DEA attempts to move briskly, I’ve mentioned the possibility of litigation and challenges to rulemaking. Someone is likely to sue.
Yes I am. In fact I doubt cannabis will be on Schedule III by November. And by extension there is always a possibility, however remote, of DEA backtracking on this reported decision. A reversal along those lines would be legally problematic, for what it’s worth. The CSA is clear that while the DEA maintains final authority to reschedule marijuana, HHS’ recommendations “shall be binding … as to [] scientific and medical matters.” I do believe marijuana to Schedule III will happen.
It has got to be tax relief. Taxes all the way. I explained in my August 30 post why springing the vise of IRC § 280E won’t fully cure the tax headaches faced by cannabis businesses, and why cannabis businesses still won’t be taxed like other businesses on a Schedule III status. But, wow!, a lot of these companies are going to see better margins overnight. Many will also find relief from thinking so hard about dicey, new-fangled tax avoidance propositions.
There are quite a few. A New York Times article from yesterday mentions, in passing, the possibility of “softening of other laws and regulations that account for the use or possession of cannabis, including sentencing guidelines, banking and access to public housing.” I agree with all of that. However, a move to Schedule III appears less helpful for other, businessy areas, e.g. bankruptcy, trademark.
I got this question from a client yesterday (Hey Tom!). The answer is, “not a lot.” This is because interstate commerce will still be verboten under Schedule III. Yes, the likelihood of federal enforcement against state-licensed marijuana businesses will decrease (from FDA, DEA, wherever); but enforcement probabilities are vanishingly low already– at least with respect to basic business activity. Again, I think the benefits of Schedule III will be more on the tax treatment side, which should lead to ancillary benefits, like lower costs of capital.
My guess is it would, as a purely administrative matter. By that I mean that HHS and DEA wouldn’t revisit the plant’s status anytime in the next decade or two. That said, Congress could always intercede. Congress has the power to remove marijuana from the CSA entirely, at any time and for whatever reason. Someday, when marijuana is finally descheduled entirely — and treated at least as respectfully as cigarettes, alcohol, sugar etc. — we will have Congress to thank, not the D.C. cops or scientists.
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Stay tuned to the Canna Law Blog — and stay off social media — for developments here as they ensue. For previous posts on this topic, check out the following:
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