Report Finds Adult-Use Cannabis Legalization Not Associated With Adverse Social Effects

A new report published this month has found no link between cannabis legalization and certain public health issues.

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Ohio Officials Seek Public Comments on Medical Cannabis Conditions

Ohio officials are considering the addition of a few more more qualifying conditions for their medical cannabis program.

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Parlez-vous Cannabis Médical? The French Begin National Medical Cannabis Trial

The French, at long last, have decided to move forward on validating cannabis as medicine – and they are doing it differently than anyone else in Europe so far.

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Idaho Cannabis Campaign Gets Green Light to Collect Signatures

Despite a move to constitutionally ban the plant, Idaho medical cannabis advocates may start collecting signatures for a pro-pot ballot measure.

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Cannabis in Australia: You Better Run (to It)

On February 1, the over-the-counter sale of CBD products became legal in Australia, following a schedule adjustment in December by the country’s Therapeutic Goods Administration (TGA). Products must still be approved by the TGA and be included in the Australian Register of Therapeutic Goods (ARTG). The daily dose must not exceed 150 mg.

At the time of the TGA announcement there were no CBD products that met the criteria for over the counter sales, though an increase in the number of applications for inclusion in the ARTG was expected in the wake of the TGA’s announcement. At the moment, only one cannabis product (nabiximols) is approved by the TGA. However, unapproved products can still be obtained with a doctor’s prescription, and this is true of products containing THC as well.

Regulation of medical cannabis varies according to the state or territory. In Tasmania, for instance, a doctor may only prescribe cannabis when conventional treatment has failed, a limitation that is not present in other Australian jurisdictions.

As for recreational cannabis, the legal framework across the country is generally prohibitionist. The most liberal regime is found in the Australian Capital Territory (ACT), where it is lawful to possess up to 50 grams of dried cannabis or up to 150 grams of fresh cannabis. In addition, growing up to two cannabis plants at home is permitted, with a maximum of four plants per household. However, even these relatively modest permissions are contrary to Australian federal law (Americans: does this sound familiar?).

The ACT is smaller and less populated than any of Australia’s six states, so we should not expect it to be a legal trendsetter. Instead it will probably take a move by one of the larger states to kick off a legalization wave such as the one we are witnessing in the United States.

It does not appear that New South Wales (NSW) will provide the spark, at least not until its next elections in 2023. NSW Premier Gladys Berejiklian has said she is “comfortable with the laws where they are” and suggested that states like Colorado were “regretting” legalization (which we should note appears at odds with the Colorado Governor Jared Polis’ views on the subject).

Things appear somewhat more promising in Victoria, where Premier Dan Andrews is bullish about the state’s medical cannabis industry. (As an aside, we just love the images of Andrews visiting a Victorian grow.) Back in 2014, Andrews expressed opposition to the legalization of recreational cannabis, but as far as we can tell he has not made similar comments in recent years. And as we often point out in these pages, a few years are an eternity when it comes to cannabis policy. Victoria will hold elections next year: Will a fourth Andrews term bring with it a major turning point for cannabis in Vic and Australia? (Aussies: We would love to hear your thoughts on this.)

With an Australian lawyer on our international cannabis team, we will certainly be keeping an eye out for legal developments Down Under. The prospect of recreational cannabis legalization, even just in some Australian states, in an exciting one—but cannabis businesses in the United States and elsewhere should not wait until that happens to seek out opportunities.

As it is, the continent represents a CBD and medical cannabis market of more than 25 million people. It is true that access to the entire market requires dealing with eight regulatory frameworks in addition to the federal one, but keep in mind that NSW and Victoria have between them about 15 million residents. Add Queensland and that figure rises to 20 million, more than any American state except California, Texas, and Florida.

Yes, we are trying to tempt you.

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Mexico Medical Cannabis: Fully Legal, But Is It Open?

In our last post, as well as in our Mexico cannabis webinar last month (replay here), we examined the implications, business opportunities and requirements to take advantage of the Medical Regulations that recently entered into force in Mexico.

Yes, medical cannabis is now fully legal in Mexico. However, that does not mean that you are able to do all that is allowed under the Medical Regulations. “Does that mean that there are areas in medical cannabis that are closed to my company?” No, it does NOT. It just means that some areas will be open sooner than others.

For starters, it is important that applicants–particularly foreign investors–keep in mind the difference between publication, entry into force and full implementation of any statute. The Medical Regulations are no exception. Under Mexican Law, every statute contains a final section, of a purely operational character, called Transition Provisions (“Artículos Transitorios”), which provides for:

1. when the statute is going to enter into force
2. whether conflicting related laws or regulations are to be harmonized or repealed, and
3. items of a transitional nature, such as phased implementation of specific provisions.

In the case of the Medical Regulations, Transition Provisions provide for the phased implementation of specific sections– notwithstanding the Medical Regulations as a whole entered into force on January 13, the day after their publication. This was so intended given that there are now several Government agencies in charge of interpreting and applying the Medical Regulations which not only must coordinate with each other, but also update, optimize or streamline their processes to fulfil their new tasks, including servicing and processing cannabis applications.

These agencies must elaborate on the administrative procedures now available for all activities provided for in the Medical Regulations, train their personnel, adapt their structures and develop internal guidelines to issue application formats, fees, etc. The agencies with the heaviest mandate form part of the ministry of agriculture, so much so that they have a specific provision just for them:

FOURTH. The Ministry of Agriculture and Rural Development, including its regulatory agencies, will have 90 working days following entry into force to harmonize its internal guidelines as required thereof, in order to ensure due implementation of these Regulations [translation ours].

What are the implications of what we have said so far? To start, per the provision cited above, you can already apply for any permit/license provided for in the Medical Regulations, so long as they are not related to growing activities, which will open for applications in late May or early June, 2021.

In addition, the fact that Government agencies have to adjust–and some have even a grace period to do so–could mean that provisions governing applications for permits/licenses might not be implemented as written from day one. There are three potential reasons for this.

1. The Transition Provisions expressly mandate that in implementing the Medical Regulations, all agencies shall operate within their approved budget for the current fiscal year and shall not increase it for subsequent fiscal years. In effect, agencies must handle more work with the same staff and without additional financial resources. Because Mexican federal entities are suffering of one of their largest budget cuts in history, we expect that agencies will struggle to make ends meet in order to service cannabis applications.
2. There is no fee schedule provided yet for several application procedures set forth in the Medical Regulations. For this to happen, we would have to wait until relevant agencies (notably the Tax Administration Agency and the Ministry of Economy) send proposals to Congress to amend the Federal Fees Law (Ley Federal de Derechos).
3. Third, against a COVID/low budget backdrop, agencies may fail to issue traceability requirements, application forms, specific implementation requisites or anything in between to apply for each permit/license, the 90-working-day deadline notwithstanding.

Thus, even though medical use is already fully legal, one may not be able to conduct all regulated activities from the outset, even if already provided for and legally effective. Applications for permits/licenses could not be submitted nor processed effectively, which would result in delays in issuance and would necessarily push back deadlines in any market forecast and business plan… unless companies are ready to work around delays.

How do you do that? What to do when there are no procedure guidelines or specific requirements in an activity that should be open under the Medical Regulations and therefore in practice you cannot apply for a particular license or permit? Well, that depends on the situation.

Agencies might receive your application, but never process it and therefore never respond. If no guidelines or specific application requirements are issued, you submit your application with the basic requirements set forth in the Medical Regulations, and the relevant agency will have 90 days to respond. If it fails to do so, you file an amparo action claiming that agency failed to issue a resolution, despite being legally obliged to do so. This would be possible because:

1. Legally speaking, you are entitled to exercise your right to conduct an activity from the moment the Medical Regulations entered into force, for the basic means to exercise the right (the application) are contained therein; and
2. Because rights and means are provided for in the Medical Regulations, the fact that the Government is not ready to process applications is irrelevant to exercise such rights. It is worth noting that probabilities of prevailing have increased now that medical cannabis is fully legal.

It could also happen that agencies respond, but do so in a manner that renders any given authorization useless. For example, the Medical Regulations provide that import via mail or parcel services is prohibited; instead, all medical cannabis imports shall pass exclusively through expressly authorized ports of entry. Whenever you receive an import permit, a list of authorized ports of entry will be attached to it.

Now, that list should be jointly drafted by COFEPRIS and the Tax Administration Agency, but there is no list at the moment and no sign that there will be one soon. If you want to import (as U.S. companies have begun to do), and receive an import permit without knowing which ports of entry you may use for your product, you can be proactive and ask for authorization to import through a specific port of entry. If they deny your request, you file an amparo action arguing that they do not give you the means to comply with the Regulations. To that, COFEPRIS and the Tax Administration Agency will have to prove that they did publish a list and made it known to you, which they will be unable to do if they fail to timely draft one. As a result, you could potentially prevail and be able to import through the port of entry of your choice.

Bottom Line: The fact that the Medical Regulations are now in force might not mean an individual or a company can do everything provided for from day one. However, per the examples above, there are ways to work around this and take advantage of the lack of implementing guidelines to apply for medical use permits/licenses effectively.

As of right now, you can apply for any permit license other than those related to growing activities. Businesses and individuals have the rights and the means to exercise those rights under the Medical Regulations. If the authorities are slow in building a structure to service applications, it is in your interest (and indirectly, everyone else’s in the industry) to prompt the Mexican government to fulfill its obligations.

Said another way, if they are taking their time anyway, better to beat the rush. Start applying now!

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ICYMI: California’s Cannabis Consolidation Trailer Bill

Love it or hate it, California continues with its democratic experiment around regulated cannabis production, distribution, and sales pursuant to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”). Although the licensing program here in California has had many regulatory bumps, the existing regulations are rife with ambiguities, and enforcement has been all over the place (or absent, or almost exclusively dictated by local governments), we’re going to see more technical fixes to the law on the horizon.

Earlier this month, the Governor’s cannabis consolidation bill finally posted. What am I talking about?  Back in January of 2020, Governor Newsom announced that he intended to have the Bureau of Cannabis Control, CalCannabis, and the Manufactured Cannabis Safety Branch consolidated into a single cannabis agency to enforce cannabis regulations and oversee licensees in California. That effort was stalled by the advent and continuing impact of COVID-19. Finally though, as part of the 2021-2022 budget, Governor Newsom revealed his plans for this mass consolidation on February 2.

Back in January, the Governor’s Office released a budget summary which generally covers what the trailer bill will do regarding California cannabis. Here are the highlights as we see them:

Combined Agencies. If this bill passes, the three cannabis agencies now in play will be combined into a single Department of Cannabis Control (“DCC”) (within the California Bureau of Business, Consumer Services, and Housing Agency) that will commence on July 1, 2021.

Regulation Transfers. All of the regulations now in play under MAUCRSA will automatically be adopted by the DCC upon its creation unless and until repealed, replaced, amended, etc. This was a pretty big question for licensees: if consolidated, are we going to see an over haul of all agency regulations? For now, the answer appears to be “not really.”

Expanded Background Checks. Criminal background checks are being expanded under the bill to include criminal records:

. . . from a local or state agency certified records of all arrests and convictions, certified records regarding probation, and any and all other related documentation needed to complete an applicant or licensee investigation. A local or state agency may provide those records to a licensing authority upon request.

Verticality Interruption. If the bill passes, “[a] person with a financial interest in a state testing laboratory license . . . is prohibited from holding a financial interest in any other type of cannabis license.” This was not necessarily the case previously, at least not under the MAUCRSA regulations– even if it makes perfect sense to not allow someone to test their own cannabis.

Ag Product Designation. Cannabis would now be considered an agricultural product under the law, following what some of the other states have done, and affording licensed cannabis certain statuses and protections that it currently lacks.

Environmental Controls. Environmental impact will now take center stage for cultivators. The bill provides that:

In issuing cannabis cultivation licenses, the [DCC] shall consider issues, including, but not limited to, water use and environmental impacts. If the State Water Resources Control Board or the Department of Fish and Wildlife finds, based on substantial evidence, that cannabis cultivation is causing significant adverse impacts on the environment in a watershed or other geographic area, the [DCC] shall not issue new licenses or increase the total number of plant identifiers within that watershed or area.

Plant ID program. The state would have to set up a “unique identification program,” which seems to be different from the track and trace requirements and exclusively applies to cultivators regarding ID’ing the source of all cannabis/cannabis plants.

Chain of Custody Requirements. When testing labs coordinate for quality assurance testing, the drivers moving the product must now be direct employees of the lab, and labs can now receive samples directly from a manufacturer or a cultivator for “quality control purposes,” and such samples cannot be certified for retail sale. Meaning, cultivators and manufacturers would be able to go right to labs to have samples tested first before submitting entire batches to distributors for the state-required quality assurance testing.

Provenance Strictures. It’s now clear that if a cannabis product was cultivated, processed, manufactured, packed or held at any location that doesn’t have a state license, it is considered misbranded and violates the law (and under that circumstance would be destroyed), and any misbranded (or adulterated) products may be recalled by either the affected licensee or the DCC under certain conditions posing a threat to public health and safety. Adulterated or misbranded product (not otherwise derived from or stored at an unlicensed location/source) will be embargoed and the affected licensees can appeal to the DCC to continue making the product if certain limitations/controls are imposed by the DCC.

Social Equity Administration. The Governor’s Office of Business and Economic Development will spearhead state efforts dedicated to social equity licensing (and funding) and businesses in California by working with and being the point of contact for all local equity programs that receive assistance funds under MAUCRSA. The Bureau of Cannabis Control’s Equity-Local Liaison Unit would also be expanded to provide services to all social equity applicants of every license type.

Housekeeping. The bill finally cleans up any legal references anywhere regarding the Medical Cannabis Regulation and Safety Act and the Medical Marijuana Regulation and Safety Act to mean the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA).

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If you recall, MAUCRSA was born out of Governor Brown’s trailer budget bill back in 2017, so it’s not unusual for the budget bill to make sweeping changes to existing laws. While Govenor Newsom’s bill isn’t a massive reform effort, it definitely creates some technical fixes and clarifications needed by the industry. In addition, it certainly cannot hurt to have just one cook in the kitchen — like pretty much every other state with cannabis licensing — when it comes to consistent rulemaking and more centralized enforcement.

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