Cannabis Group Weekly Alert – Weeks of May 25 and June 1, 2020 – JD Supra

In this week’s edition:

  • Harborside Health Center challenges 280E on constitutional grounds
  • Massachusetts adult use dispensaries allowed to reopen for curbside pickup
  • Louisiana House approves a cannabis banking bill to protect banks and regulators
  • Rhode Island allows hemp growers to sell product to cannabis entities
  • Favorable decisions in federal lawsuits against CBD retailers CV Sciences and Elixinor
  • UN Commission on Narcotic Drugs to vote on changing international cannabis laws
  • Shareholder lawsuit against Canadian cannabis company Sundial is dismissed
  • And more…


Harborside Health Center Challenges the Tax Code Harborside filed a lawsuit urging the Ninth Circuit Court of Appeals to overturn the 280E tax penalty on cannabis businesses. 280E blocks cannabis businesses from taking any business deductions for expenses. The case is Patients Mutual Assistance Col v. CIR.

The Drug Enforcement Agency  – The DEA is facing a lawsuit in the Ninth Circuit Court of Appeals challenging the agency’s denial of requests to change the status of cannabis as a Schedule I drug under the Controlled Substances Act. The Scottsdale Research Institute and several military veterans are challenging the DEA’s interpretation of federal law (which the DEA has argued dictates the Schedule I status), as well as the constitutionality of the policy, and are calling for research on medical cannabis. Sisley, et al. v. DEA.

Task Force Recommends Federal Waivers – A task force that is affiliated with the Council on Criminal Justice and which boasts former Deputy Attorney General Sally Yates, and a former governor (of Georgia), mayor (of Philadelphia) and police chief (of Washington, DC) is calling on the federal government to issue waivers that would let states legalize cannabis without interference.

Justice Department Blocks ‘Essential’ Marijuana Workers From Bankruptcy Protection – According to the DOJ, even if a cannabis businesses or workers are deemed “essential” by a state, they will not have access to bankruptcy relief if, for example, they fall behind on their mortgage or car payments. Some lawyers have attempted to separate out cannabis-related income in structuring a bankruptcy repayment plan, with mixed results.

Leafly 2020 Jobs Report – State-legal cannabis businesses now employ nearly 250,000 workers throughout the United States, up from 211,000 in 2019.


CA – California Gov. Gavin Newsom (D) signed an executive order extending by 60 days the time to renew medical cannabis patient and caregiver identification cards that would otherwise have expired between March 4, 2020 and May 19, 2020. The cards will now be valid through July 19, 2020.

CA – The California Bar’s Committee on Professional Responsibility and Conduct issued Formal Opinion No. 2020-202, stating that lawyers may advise cannabis clients. However, the lawyer must inform the client of the conflict between state and federal law, and may not advise or assist a client in violating federal law “in a way that avoids detection or prosecution of such violations.”

CO – A number of bills will be considered by the Colorado General Assembly. One would remove the requirement that all managers and employees of cannabis retail businesses must be Colorado residents. Another would align Colorado law with Federal law on hemp, including creating new reporting requirements and assigning appointing authority for the nine-member industrial hemp advisory committee to the Colorado Agricultural Commission. (The original committee members were appointed by a state senator and state representative.)

CO – Colorado Gov. Jared Polis (D) extended to June 28 a coronavirus executive order allowing online ordering and curbside pickup at cannabis dispensaries and letting doctors issue medical cannabis recommendations via telemedicine. Although online ordering is otherwise prohibited by state law, the state is currently looking into whether curbside ordering and pickup can continue after the emergency.

IL –  Cannabis tax revenue totaling $31.5 million will fund programs in Illinois communities that have been harmed by violence, excessive incarceration and economic disinvestment. Also in Illinois, a new bill would allow new legal cannabis employees to begin their jobs on a provisional basis while awaiting background checks, rather than being required to wait 45 days from hiring to allow time for the results of the background check come in. The bill passed the Senate and is heading to the House for a vote.

LA – The Louisiana House of Representatives approved a cannabis banking bill, and also passed a bill to allow physicians to prescribe medical cannabis for any debilitating condition. The banking bill provides banks protection from state regulators only. The medical cannabis bill, if signed, will greatly expand eligibility for participating in the state’s existing program.

MA – Adult-use cannabis businesses in Massachusetts were permitted to resume sales, via curbside pickup, beginning on May 25. They had been closed since the beginning of the pandemic by order of Gov. Charlie Baker (R).

MA – Massachusetts began accepting applications for cannabis delivery licenses on May 28, according to tweets by the state’s Cannabis Control Commission and this FAQ document.

ME – The City of Portland approved a recreational cannabis licensing ordinance that will limit the number of retail stores in the city to 20. The application process will be merit-based.  

MD – Maryland regulators revealed that 10,000 people have registered as medical cannabis patients since the beginning of the coronavirus outbreak, bringing the total patient count in the state to nearly 100,000.

MN – A Minnesota tribe approved medical cannabis with flower sales, which is noteworthy because Minnesota state law does not permit sale of flower. The medical conditions approved by the Red Lake Nation Ojibwe tribe will also be broader, including opioid-addiction recovery.

MT – A Montana law allowing medical cannabis patients to purchase from any dispensary went into effect on June 2. Patients are now “untethered” from a single provider, as a result of Senate Bill 265.

NJ – New Jersey issued two new permits to dispense medical cannabis, bringing the total number to eleven. The new businesses, Zen Leaf Elizabeth and Columbia Care, plan to open this month.

NM – New Mexico dispensaries sold US$40.1 million worth of medical cannabis products in the first quarter of the year—a 43 percent increase in sales compared to the first quarter of 2019. The state now has more than 85,000 medical patients enrolled in the program.

NM – New Mexico Gov. Michelle Lujan Grisham (D) recently remarked that legalized cannabis likely would have improved the state’s ability to withstand the economic damage caused by the current pandemic, stating, “If we want economic support and economic relief, then we have to use every economic idea. And I want to point out also that the vast majority of New Mexicans favor recreational cannabis.” The Governor is being considered by former Vice President Joe Biden to be his running mate in in the upcoming presidential race.

RI – Rhode Island licensed hemp growers may sell product to licensed cannabis compassion centers and cultivators, according to a new bulletin released by the state’s Department of Business Regulation and Office of Cannabis Regulation.

VA – Virginia Gov. Ralph Northam (D) signed a cannabis decriminalization bill into law, making the state the 27th in the nation to remove the threat of jail time for low-level cannabis possession, and moving Virginia in line with states that are expected to legalize cannabis further.


United States – The Food and Drug Administration announced that Biota Biosciences is voluntarily recalling injectable CBD products. The FDA sent a warning letter to the company last month about injectable products that it was erroneously advertising as both a pain reliever and an alternative method of detoxification from opioids. 

United States – A new coalition has formed under the umbrella of the Consumer Brands Association that brings together retail, including convenience store, leaders and representatives of law enforcement. The coalition has launched a campaign calling for uniform federal policies on CBD. 

AL – The Alabama Department of Agriculture and Industries released a list of licensed hemp processors and handlers.

KY – Kentucky released an economic report showing that, for 2020, it has licensed 960 hemp growers to grow up to 32,000 acres; 150 hemp processors and handlers, and 4.6 million square feet of greenhouse space. Processors and handlers reported $193.9 million in gross product sales in 2019, more than triple 2018’s gross product sales of $57.57 million.

TX – Texas adopted hemp seed certification standard regulations, effective June 4, 2020.

VT – Vermont’s hemp rules went into effect on May 21, 2020. The rules establish standards for recordkeeping, reporting, testing, labeling, disposal of non-compliant crops, and inspections and enforcement. The text of the rules can be found here.

Elixinol, LLC – A federal court in the Northern District of California dismissed a class action alleging that Elixinol, LLC’s CBD products were illegal. Elixinol argued that the 2018 Farm Bill provides the right to transport and ship hemp. McCarthy v Elixinol, LLC.

CV Sciences – A federal court in the Central District of California paused a CBD labeling class action. CV Sciences requested the stay order, arguing that “the FDA has not formally established its position” on whether CBD should be available without a prescription. The parties must check in with the court every 90 days. Colette v. CV Sciences.


United Nations – The UN Commission on Narcotic Drugs (CND) plans to vote in December, pandemic or no pandemic, on changing international cannabis laws. The vote is related to recommendations by World Health Organization Expert Committee on Drug Dependence (ECDD) to move cannabis flower and resin out of the strictly-controlled Schedule IV international classification (which also includes cocaine and prescription opioids), and to make low-THC products completely legal. In the meantime, CND is planning meetings to consider each of those recommendations.

Canada – In Statistics Canada’s latest monthly domestic retail sales update, the government’s official numbers cruncher revealed that cannabis sales rose by 19 percent on a month-over-month basis in March to CAD$181 million (US$130 million). That gain contrasted dramatically with an almost 8 percent decline in domestic retail sales for the same timeframe in 2019

Czech Republic – The Czech government approved an amendment potentially allowing licenses for medical cannabis growers, as well as exports. If the law is passed by Parliament and signed by the President, it will go into effect in July 2021.

Jamaica – To reduce the spread of coronavirus, the Jamaican government is allowing patients to place medical cannabis orders online for pickup at “herb houses.”


Aphria Inc. – Aphria announced that it is leaving the New York Stock Exchange after the June 5 close, and will appear on the Nasdaq Global Select Market, with the same symbol, “APHA,” starting on June 8.

Aurora Cannabis Inc. – Aurora announced plans to acquire CBD company Reliva, LLC, in a. a US$40 million stock deal, The deal, which is expected to close in June, aligns with the “business transformation plan” Aurora announced this past February.

Green Growth Brands Inc. – Green Growth has filed for insolvency protection. The company said the filing was necessitated by a severe liquidity crisis in the face of material matured and maturing debt, and the negative impact of the COVID-19 pandemic.

Harvest Cannabis – Harvest Cannabis, a small dispensary in Arkansas, successfully challenged (for now) a larger competitor’s use of the word “Harvest,” winning a preliminary injunction against Harvest Health, an affiliate of Natural State Wellness Dispensary. Natural State Wellness said it intends to appeal the ruling, relying in part on the argument that its trademark was developed in another state. This highlights the fact that cannabis businesses currently cannot access the federal trademark system.

Tilray, Inc. – Tilray subsidiary Tilray Portugal, Unipessoal Lda., received a Good Manufacturing Practice (GMP) certification in accordance with European Union standards for its medical cannabis extraction facility. This allows it to manufacture medical cannabis extracts and export GMP-produced finished medical cannabis products, both dried flower and oil, from Portugal throughout the European Union and other international markets.

Tryke Management – Tryke Management won a $1.8 million lawsuit against payment processor Linx in an Arizona federal court, and is now putting in a bid for attorneys’ fees. Tryke is just one of many cannabis companies suing Linx for failure to repay payments processed through its platform.

Sundial, – Canadian cannabis company Sundial has escaped a shareholder lawsuit filed last fall claiming that its offering documents were false and misleading. A New York state court judge dismissed the case last week. The judge ruled that the company’s offering documents used “aspirational” language and that risk disclosures were “robust” enough to preclude any claims that they were misleading.

Charlotte’s Web – Charlotte’s Web obtained a utility patent for a new hemp variety, its second US patent for hemp genetics.


Israel – Ancient cannabis residue was found in a 2,700-year-old temple, according to a study in Tel Aviv University’s archaeological journal, as reported by the BBC. The remains of burnt offerings found on limestone altars in Tel Arad led researchers to conclude that cannabis may have been burned in order to induce a high among early Jewish worshippers.

Sativa Strains and Coronavirus – Preliminary research in Canada suggests that certain high CBD-sativa dominant strains may affect the same receptors involved in the transmission of the novel coronavirus. The study has yet to be reviewed or conducted on human subjects.

Multiple Sclerosis – A review provided evidence in supporting the use of medical cannabis to reduce common symptoms reported in patients with multiple sclerosis including pain and spasticity.

Driving – A driving study found that “after smoking cannabis, overall mean speed was reduced” and “no effects of therapeutic cannabis were found on straightaway mean speed or straightaway lateral control for either condition (standard or cognitive load) or on brake latency.” However, the study did suggest that even with repeated daily use, cannabis consumption among therapeutic users may alter driving behavior.

Cancer Risk – Daily cannabis use may serve as a biological cofactor role in the development of HPV-positive head and neck squamous cell carcinoma, according to an experimental study published in the journal Clinical Cancer Research. The study found that “cannabinoids can promote progression of HPV-positive HNSCC through p38 MAPK pathway activation.”

Cannabis During Pregnancy – A systematic review of research to date indicates that prenatal cannabis exposure (i.e., exposure during pregnancy) does not lead to cognitive impairment in children. The review, published in the journal Frontiers in Psychology, found, as summarized by Forbes, that “[l]ess than 5 percent of comparable studies in this area showed any statistical difference between children’s scores on cognitive tests; importantly, these included both slight dips and improvements in scores, and all but 0.3 percent of study results still fell in the normal range.” Another study found that “rates of marijuana usage in pregnant women who underwent universal drug screening increased after legalization” and “there were no differences in neonatal outcomes between users and non-users.” 

Medical / Environmental Impact of Cannabis Treatment – A study evaluated whether treatment with medical cannabis resulted in reduction in pharmaceutical consumption in a nursing home for the elderly. The study, which took place in Israel, found that “39 dosages of prescription drugs were cancelled for the 19 elderly individuals included in this research, indicating that medical cannabis can be an effective treatment that also reduces the environmental drug load, thereby preventing water pollution.”

Reduced Opioid Prescribing – States with active medical cannabis laws saw certain opioid prescription rates drop nearly 20 percent compared to prohibition states, according to a study by Columbia University’s Irving Medical Center, which analyzed nationwide Medicare Part D prescription drug data prescribed by orthopedic surgeons.

Veterans Affairs Canada spent more on medical cannabis last year than on any other drug, according to an in-depth story published in the Chronicle Herald. The report explores veterans’ issues related to trauma, treatment, and cannabis. It states that veterans are “regularly” prescribed cannabis well above Health Canada’s recommended daily dose, and it examines reimbursement trends, studies of effectiveness, and large businesses involved in cannabis-related treatment in Canada.



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