United States: Cannabis Group Weekly Alert - Week Of July 30, 2019

In this week's edition

  • The US Senate held a long-awaited hearing on cannabis and banking reform;
  • Arizona's AG approved a digital payment club for cannabis businesses;
  • Florida regulators are challenging the court ruling deeming the state's medical cannabis rules unconstitutional;
  • Ohio regulators are investigating two dispensaries for potential ownership issues; and
  • CannTrust's board terminated the CEO and its chairman resigned amidst revelations that the company was growing cannabis in unlicensed rooms.
  • And more...


On July 23, 2019, the United States Senate Committee on Banking, Housing, and Urban Affairs held a public hearing on the cannabis industry titled "Challenges for Cannabis and Banking: Outside Perspectives." After the hearing, Committee Chairman Senator Mike Crapo (R-ID) told reporters there was a "strong case to be made [that] we need to deal with the banking side of this issue" but concerns as well. While it is exciting news that such a hearing occurred, it is not expected that Crapo will change his resistance to the bill.

At the same time, Sen. Bob Menendez (D-NJ) introduced bipartisan legislation designed to protect insurers that offer coverage to cannabis businesses that are now legal at the state level. The bill would provide legal protection to insurers that sell coverage to state-sanctioned and regulated cannabis businesses as well as associated businesses, including lawyers and landlords, according to a description of the legislation from the Senator's office.

The Food and Drug Agency (FDA) again rejected a citizen petition to add cannabis and THC to a list of restricted over-the-counter drugs. Such a classification, the petition argued, would communicate that FDA does not consider cannabis or THC as GRAS ("generally recognized as safe and effective,"), clarify that such products are illegal to market, and alert the public to their health risks. It is an attempt to get the FDA to take a firmer stand against active medical cannabis dispensaries. The agency rejected the petition after finding that granting it was not "in the public interest or in the interest of justice." Although a catchy headline, the decision is not some huge victory for cannabis; the FDA simply found that laws prohibiting the marketing of unapproved over-the-counter drugs are "unambiguous" and that further classifying cannabis and THC as negative monographs would not clarify their legal status.

Officers with US Customs and Border Patrol (CBP) at Peace Bridge on the US-Canadian border are reporting an increase in the volume of cannabis seized at that crossing. In the past week, they seized 27 lbs. of cannabis in one two-day period.

A poll of 1,346 adults suggests that Americans support cannabis legalization more than they do free college tuition, a $15 minimum wage, abolishing the death penalty, forced Medicare for all, and eliminating the electoral college.


Arizona's attorney general approved a plan for third-party Alta to provide a digital payment service for medical cannabis businesses to use digital tokens instead of cash to pay suppliers. Patients would still be expected to pay cash. The plan was approved through a "sandbox" state program, which allows the state Attorney General to authorize exemptions from various financial laws.

A high-ranking Republican Arizona state representative said lawmakers may have to pass a cannabis legalization bill to ward off a more far-reaching voter initiative backed by the industry. Something similar happened in Ohio, where the state legislature passed a medical cannabis law to head off an industry-backed voter initiative.

The California legislature still has several cannabis bills pending, any of which, if passed, would be impactful for the industry. AB 228, which would create a pathway for the sale of hemp-infused food and beverages, is considered likely to pass. Other bills that are being considered include laws setting up a state banking system, changing labeling requirements on vape cartridges, and restricting advertising of unlicensed cannabis businesses.

Additionally, California regulators have stated that the vast majority of the data from the state's cannabis track-and-trace system will be kept out of the public domain. However, the agency may release an aggregated year-end report.

Florida regulators asked for an en banc hearing to reconsider a ruling deeming the state's medical cannabis rules unconstitutional. Gov. Ron DeSantis (R) said he supports regulators' decision to appeal.

During a debate between Mississippi's three Republican gubernatorial hopefuls, the candidates agreed on opposing a medical cannabis ballot initiative. However, two of the three candidates said they would implement a medical cannabis program if such a ballot initiative were to pass.

New Jersey Gov. Phil Murphy announced that the state's medical cannabis program has triple the number of patients and nearly double the number of participating physicians since he took office.

A proposed North Dakota cannabis legalization ballot measure was approved for signature-gathering. The measure allows adults over 21 to possess up to 12 plants for personal use and directs the state to create a system for the regulation and taxation of cannabis. Proponents have said they're aiming to put the question to voters in the June 2020 election, which means they would need to collect 26,904 signatures by Feb. 10, 2020.

Ohio regulators are investigating two dispensary licensees after a wide-ranging state investigation into dispensary ownership. One dispensary is charged with lying about its ownership status to qualify as a social equity applicant; the other is accused of selling its license before it is allowed to. The inquiry is intended to ensure that dispensaries live up to the pledges in their applications, a pharmacy board spokesman said.

Hemp / CBD

Officials from the USDA and FDA reported to the Senate Agriculture Committee about efforts to implement the legalization of hemp. The FDA representative echoed many of the FDA's themes, including concerns about entities making therapeutic claims, false or misleading labeling, patient safety and disincentives for research, while remaining committed to some update in the fall. The USDA representative stated that hemp rules were undergoing interagency review and were still expected in the Fall of 2019.

A broad coalition of state agriculture officials, farmers and drug policy reform groups and industry are asking the US Department of Agriculture to narrowly interpret language imposing a lifetime ban on drug felons participating in the hemp industry to apply only to license holders and not to workers in the business. The group argues that their position is consistent with legislative intent that such bar only apply to "producers" of hemp.

Curaleaf Holdings, Inc. issued a press release regarding its response to the FDA warning letter that it received last week.

Tennis pro John Isner, the world's 14th-ranked player, signed an endorsement deal with CBD-infused beverage maker Defy. This deal, the first of its kind for the sport, signals further acceptance by professional sports of CBD products.


Thailand's new government listed medical cannabis as one of its priorities in a policy document. Medical cannabis has been legal in Thailand beginning last year, but this document evidences an appetite to develop the country's medical cannabis market. "The study and technological development of cannabis, hemp, and other medicinal herbs should be sped up for the medical industry to create economic opportunity and income for the people," the policy document said.

Confusion and frustration reign in Uganda, where over 50 cannabis hopefuls wait to be licensed. Health minister Jane Ruth Aceng has been accused of dragging her feet due to her own conflicting beliefs. While regulators are claiming that no licenses have been issued to anyone, at least one company was approved in 2016 to grow and export cannabis. Reports are conflicting as to whether its license has been suspended while new regulations are completed or whether it continue to be allowed to grow and export cannabis.


Fire & Flower, a leading licensed retailer in Canada, announced a strategic investment of more than $380 million by Couche-Tard, a global convenience store retailer with over 16,000 stores in 25 countries.

CannTrust's board terminated the CEO, and its chairman resigned, amidst revelations that the company grew cannabis in unlicensed rooms. The move comes shortly after The Globe published a report alleging that the two were made aware in November that cannabis was being cultivated in unlicensed rooms—seven months before Health Canada uncovered the regulatory breach.

Tobacco company Imperial Brands PLC is investing approximately $123 million in Auxly Cannabis Group Inc. by way of a convertible bonds and will grant Auxly global licenses to Imperial Brands' vaping technology and access to its vapor innovation business.

UFC and Aurora Cannabis announced that they are partnering with each other on a study of CBD as a treatment for pain, inflammation, wound-healing and recovery.

California luxury cannabis brand Canndescent announced that it will invest $25.8 million to expand operations to Nevada, Michigan and Massachusetts.

Cresco Labs unveiled Sunnyside*, a new dispensary brand that aims to serve the daily cannabis user as well as the novice. "Many of today's dispensaries service the needs of traditional cannabis consumers," said Cresco Labs' CEO and co-founder Charlie Bachtell. "As the cultural landscape progresses, we're building a modern, yet familiar store environment built on wellness, education and customer service to rapidly bring in new users and welcome them to cannabis." The first Sunnyside location will open in Philadelphia in November with future locations planned for Florida, Illinois, Ohio, Arizona, Massachusetts and Michigan.

Startups and cannabis businesses are continuing to make bets on producing cannabinoids from yeast. THC, CBD, CBG and even "unnatural cannabinoids" can already be produced, though industry participants disagree whether such processes can be scaled and commercialized as effectively as plant cultivation.

Blum cannabis dispensaries reportedly accept credit card sales by categorizing purchases as "food truck sales." This activity could draw the attention of federal regulators as violations of federal anti-money laundering laws. So far, there have been no reported ill-consequences to Blum around this revelation.

The Arcview Investor Forum, held over four days last week in Chicago, offered attendees a chance to hear from industry leaders and peruse booths set up by entrepreneurs pitching their brands. Founders of the event commented on the increasing legitimization of the cannabis industry and the shift from cannabis pioneers to new cannabis professionals, many of whom will proudly tell you they do not use cannabis themselves.

Spuds Ventures LLC is using the Spuds MacKenzie brand to market CBD pet products following a lawsuit settlement with Belgium-based Anheuser-Busch InBev.

The New York Times examined the intersection of cannabis legalization and employment & labor laws. Although more employers are reportedly eliminating the testing of employees for cannabis, several individuals reported issues when interviewing for positions.

Medical / Health

University of Guelph researchers believe that they have isolated the genes in cannabis that make Cannflavins A and B, two flavonoids in cannabis that past research suggests have powerful anti-inflammatory and pain relieving properties. The research notes that these compounds could be 30 times more effective, gram-for-gram, than acetylsalicylic acid (aka aspirin), but that the compounds are currently extremely difficult and expensive to isolate and scale by other means.

A study published by OncoTarget "demonstrates the anti-cancer activity of various whole cannabis extracts on a set of human cancer cell lines." Researchers tested 12 cannabis extracts on 12 types of cancer cells, finding that differing cannabinoid content has unique effects on each cell type. Importantly, pure THC performed less well than certain whole plant extracts, suggesting there is some interplay of compounds that is important. The findings further indicate that the effect of a cannabis extract on a specific cancer cell line relies on the extract's composition as well as on certain characteristics of the targeted cells.

A scientific review suggests that CBD may reduce problems related to crack-cocaine and/or methamphetamine addiction, such as withdrawal symptoms, craving, impulsivity and paranoia. According to the paper, there are currently no approved pharmacotherapies for addiction to cocaine and other psychostimulant drugs.

A new Gallup poll found that young Americans are significantly more likely to smoke cannabis than cigarettes and that across age groups cannabis consumption is nearing parity with cigarette smoking.

A study published in the Journal of Diabetes found that reported cannabis use, even at low frequency of less than four uses per month, is associated with lower fasting insulin in obese adults.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions