Research recently published in Environmental Health Perspectives describes the public health risks associated with the lack of national standards for cannabis lab testing. Researchers from Arizona State University’s School of Mathematical and Natural Sciences partnered with labs that conduct cannabis testing to data mine compliance testing records, review publicly available medical cannabis use reports, and examine regulations in all 37 U.S. jurisdictions that have legalized medical and/or recreational cannabis.

Continue Reading Study Shows Lack of Uniformity Among States’ Cannabis Testing Laws Could Lead to Public Health Risks

As the cannabis industry and its associated sectors have gained increasing social and legal acceptance, these businesses have started to face an issue that has been plaguing traditional consumer packaged goods companies in the state of California for decades — Proposition 65 claims. This article warns companies in the cannabis industry to plan for an increasing number of Prop 65 claims from plaintiffs and encourages businesses to keep their compliance programs and policies up to date.

Read the full article on Law360.com.

On Wednesday, a U.S. Court of Appeals for the First Circuit panel applied the U.S. Constitution’s Dormant Commerce Clause (DCC) to the medical cannabis industry in a 2-1 decision, striking down local laws requiring state residency as unconstitutional and protectionist. While cannabis remains federally illegal, Maine legalized medical cannabis in 2018 and imposed limitations on who could own state-legal cannabis businesses in the state.

Background

Plaintiff Northeast Patients Group (NPG), a medical cannabis company that operates dispensaries in Maine, wanted to sell their business to a Delaware corporation, in violation of a Maine law that allows only residents of the state of Maine to operate dispensaries within its boundaries. Specifically, Maine cannabis law required that all individuals holding a management or ownership interest in a medical cannabis dispensary must be a state resident. In December 2020, NPG and the Delaware company filed suit, challenging the state’s residency requirement as unconstitutional under the DCC because it favors Maine residents over residents of other states.

Shortly thereafter, a nonprofit representing medical cannabis businesses owned by Maine residents intervened as a defendant. This intervenor argued that while the DCC is intended to protect interstate commerce, there is no interstate market for cannabis since it is illegal to transport cannabis between states. The intervenor concluded that the DCC was therefore inapplicable because there was no interstate commerce to burden.

Ruling on cross motions for summary judgment, the district court held that the DCC applied even in the absence of interstate commerce in medical cannabis and struck down Maine’s residency requirement as unconstitutional. This decision was appealed, and the long-awaited decision was just released.

The Decision

The First Circuit affirmed the lower court’s decision. The appellate panel held 2-1 that the DCC was applicable to state cannabis regulations despite ongoing federal cannabis prohibition. Specifically, the panel noted its holding “reflects the reality” that there is a market for medical cannabis that would, absent the residency requirement, “attract entrants far and wide.” The panel relied on the Rohrabacher-Farr amendment, a spending bill rider that forbids the U.S. Department of Justice (DOJ) from using its funds to interfere in state-legal cannabis markets, as evidence that Congress has “acknowledged the existence of a market” in medical cannabis. The decision upheld the permanent injunction against the state residency requirement as unconstitutional under the DCC.

The lone dissenter argued that the DCC was inapplicable because its protections were meant to promote competition within legal markets and should not be applied to those that are illegal under federal law.

Implications

The First Circuit’s decision highlights the salience of the DCC in assessing state and local cannabis systems, especially as Congress debates proposals to promote interstate commerce in cannabis. Elsewhere in Maine, for example, NPG won a case against the city of Portland under the DCC, invalidating an ordinance granting preference for long-time city residents. Residency-based preferences in Detroit and Missouri were similarly struck down on DCC grounds last year.

The First Circuit is the first federal appeals court to wrestle with cannabis and the DCC, and it is unlikely to be the last. As we have written elsewhere (see here and here), continued ambiguity between state and federal authorities regarding cannabis-related DCC concerns is likely to prompt further litigation for regulated businesses and applicants, frustrating the industry, regulators, and the public.

In late July, the U.S. House of Representatives passed H.R. 8454, the Medical Marijuana and Cannabidiol Research Expansion Act (Research Expansion Act). A similar version of the bill, S. 253, passed the Senate earlier this year. The bill is expected to head to President Biden after the bills are reconciled.

Among other things, the bill would ease limitations on medical research on cannabis and cannabidiol (CBD). Specifically, the bill would:

  • Direct the U.S. Drug Enforcement Administration (DEA) to register practitioners to conduct cannabis and CBD research and manufacturers to supply cannabis for research purposes. The bill expressly allows the DEA to register manufacturers and distributors of cannabis or CBD for the purpose of commercial production of a drug approved by the U.S. Food and Drug Administration (FDA).
  • Require the DEA to assess whether there is an adequate and uninterrupted supply of cannabis for research purposes.
  • Permit registered entities to manufacture, distribute, dispense, or possess marijuana or CBD for the purposes of medical research.
  • Clarify that physicians do not violate the Controlled Substances Act (CSA) when they discuss the potential harms and benefits of cannabis and CBD with patients.
  • Direct the U.S. Department of Health & Human Services (DHHS) to coordinate with the National Institutes of Health (NIH) and other agencies to report on the “therapeutic potential” of cannabis for conditions such as epilepsy, the impact of cannabis on adolescent brain development, and cannabis’ effects on the ability to operate a motor vehicle.

Congress continues to debate various measures to legalize and deschedule cannabis, most notably the recently introduced Cannabis Administration and Opportunity Act. The Research Expansion Act presents an important step in the process of federal regulation of the nation’s cannabis industry. This will be the first cannabis-related bill to reach the Oval Office. While the president has not expressed support for full legalization, he has signaled his support for medical cannabis research.

A class-action lawsuit was filed on July 12 in the U.S. District Court for the Eastern District of Arkansas alleging that cannabis testing companies inflated the amount of THC found in cannabis flower. Plaintiffs are a putative class of medical cannabis patients in Arkansas and bring suit under the Racketeer Influenced and Corrupt Organizations (RICO) Act. Plaintiffs allege that products with higher levels of THC cost more for patients, providing an incentive for test results to show a higher level than is actually present in the products. Plaintiffs further assert that they had the products tested by another lab, and the original THC results were overstated by an average of 25%.   

This Arkansas suit is the latest in a string of RICO suits in state-legal cannabis markets. While the number of such suits has grown in recent years, their success has been minimal to date.

Cannabis: In Focus

  • Minnesota Legalizes Edibles Containing THC
  • Senators Ask Biden Administration to Pursue Cannabis Descheduling and Clemency
  • Cannabis Legalization Up to Midterm Election Voters in Several States
Continue Reading Cannabis Legal Report – Week of July 18, 2022

On July 8, California’s Department of Cannabis Control (“DCC”) issued draft regulations looking to standardize cannabis testing across the state. According to a statement, the DCC issued the proposed regulations in reaction to concerns about cannabis potency inflation and “laboratory shopping,” by cannabis businesses looking to secure THC levels that may be higher than what is actually contained in the cannabis flower or product. These new regulations would standardize the ways in which licensed cannabis labs in California can conduct their cannabinoid testing.

Continue Reading California Proposes New Cannabis Lab Testing Regulations