On Friday May 31, 2019, the Food and Drug Administration (FDA) held a public hearing on the topic of cannabis or cannabis-derived compounds. The FDA held the hearing to gather information regarding the safety risks and health benefits associated with cannabis products. More than 110 speakers, including academic researchers, trade associations and cannabis product manufacturers, presented to the FDA panel during the all-day hearing. Below we outline the notable points from the hearing, including statements by FDA officials and interesting speaker comments. (more…)
On September 16–17, CLE International will host the 24rd Annual Wine, Beer & Spirits Law Conference in Charlotte, North Carolina. Those attending will include the alcohol beverage industry’s leading practitioners, including in-house counsel for producers, distributors and retailers, as well as industry lawyers and state administrators. Conference topics include:
Updates on TTB developments and trends
An overview of recent developments in alcohol trade practice and trademark law
The significance of regulatory compliance, and the state of data security and ownership
Updates on the cannabis industry, including the latest legalization efforts and how it could affect the alcohol beverage industry
McDermott partner Marc Sorini serves as co-chair for the event and will also present. Other McDermott presenters will be Michael Kimberly and Anthony DeMaio.
On May 28, 2019, the United States Department of Agriculture (USDA) issued a legal opinion to address questions raised by several hemp-related provisions of the Agricultural Act of 2018, better known as the 2018 Farm Bill. The USDA opinion clarifies four areas of the 2018 Farm Bill:
the removal of hemp as a controlled substance and schedule I drug became effective upon enactment of the 2018 Farm Bill;
following the publication of implementing regulations, states and Indian tribes cannot prohibit interstate transportation and shipment of hemp and hemp-based products, and the USDA confirmed that this preemption also covers hemp produced under the 2014 Farm Bill;
pending certain exceptions, individuals with certain controlled substance felony convictions will be barred from producing hemp; and
following the enactment of the 2018 Farm Bill, states and Indian tribes still retain the ability to regulate hemp production, including the ability to grow or cultivate hemp in that state or territory.
The Centers for Disease Control (CDC) and Substance Abuse and Mental Health Services Administration (SAMHSA) announced meetings to be held this summer related to public health and marijuana. The CDC’s Board of Scientific Counselors will convene for a two-day meeting, July 16–17, 2019, to discuss a wide variety of topics, including the role of the CDC’s National Center for Injury Prevention and Control in “addressing public health concerns related to marijuana.” This portion of the meeting will be held on July 17, will be open to the public and will allot 15 minutes for public comments at the end of the session from 3:40–3:55 pm on July 17, 2019. (more…)
Federal statutes create risk for banks that want to operate in the cannabis space. Banks face the threat of civil actions, asset forfeiture, reputational risk, and even criminal penalties if they do business with customers in the cannabis industry. Further, because most banks will not touch cannabis money, the growers, processors, and retailers in the industry must often operate on a cash-only basis. The Internal Revenue Service has even had to build “cash rooms” to accommodate taxes paid by legal cannabis companies.
Next week, Congress will hold a long-awaited hearing on the future of banking in the cannabis industry.
On Wednesday the 13th, the House Financial Services Committee Consumer Protection and Financial Institutions Subcommittee will convene a hearing entitled, “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses.”
Among the discussion points will be the Secure and Fair Enforcement (SAFE) Banking Act, which was introduced and championed in the last Congress by Rep. Ed Perlmutter (D-CO), a member of the committee. The Perlmutter bill provides safe harbor to banks working with businesses in the cannabis industry operating legally within their jurisdiction. Groups including the Credit Union National Association and the Independent Community Bankers of America support such legislative efforts. Last year, a bipartisan group of 19 state attorneys general sent a letter to Congress urging passage of the SAFE Banking Act. The bill had 95 cosponsors (including 13 Republicans) in the last Congress. Its companion legislation in the Senate, introduced by Jeff Merkley (D-OR), had 20 bipartisan cosponsors.
Banks, particularly the largest financial institutions, remain hesitant to provide services to the cannabis industry for fear of violating federal money laundering laws. That leaves many businesses in the industry to deal in cash. For a $10 billion (and growing) industry, “cash only” is not a sustainable policy. Business interests, regulators and (increasingly) Congress agree that something must be done in order to bring the cannabis industry into the banking system. Next week’s hearing is the first significant step of the 116th Congress to address this issue. In the coming weeks, banking legislation will be re-introduced, negotiated, marked-up in the Financial Services Committee, and possibly brought to the floor of the House.
Hearing details:
House Committee on Financial Services – Maxine Waters (D-CA), Chair
Subcommittee on Consumer Protection and Financial Institutions – Gregory Meeks (D-NY), Chair
Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses
As more states legalize the recreational use of marijuana, beer servers will undoubtedly face situations in which a patron is too impaired to drive due to the consumption of both cannabis and alcohol. State laws do not provide a crosswalk of breath alcohol concentration (BrAC) limits and nanograms per milliliter (ng/ml) of delta-9-tetrahydrocannabinol (THC) in a driver’s body fluids. But a few states have established limits on the nanograms per milliliter (ng/ml) of THC that may be present in a driver’s blood or urine. States will continue to create and modify statutory and regulatory schemes focused on marijuana impairment. In doing so, state legislatures will likely revisit the policy discussions on limits for alcohol consumption.
On Friday, April 13th, Senator Cory Gardner (R-CO) announced that President Trump assured him that the Department of Justice’s decision to rescind the Obama-era guidance on marijuana enforcement would not affect Colorado’s legal marijuana industry. President Trump also promised Senator Gardner that he would support a federal legislative fix that takes into account state decisions to legalize marijuana. In turn, the senator lifted holds on all Department of Justice nominees, ending an intra-GOP standoff over the Department’s cannabis policy.
In January, Attorney General Jeff Sessions rescinded guidance that outlined eight marijuana enforcement priorities, heightening the possibility of a federal crackdown in states that legalized recreational and medical cannabis. Pro-legalization advocates feared that Sessions’ announcement granted federal prosecutors broader discretion to pursue criminal charges against marijuana businesses operating legally under state law in states like Colorado, Washington, California and elsewhere. Sen. Gardner immediately responded that he would block all DOJ nominations over the new policy. (more…)
In the past three years, TTB has approved an increasing number of certificate of label approvals (“COLA”) for hemp-flavored vodka, from Mill Six’s hemp, white tea and ginger flavored vodka to Olde Imperial Mystic’s hemp infused vodka. Distillers have designed labels with green smoke-like images and psychedelic sixties-style lettering to hint at their cultural connection to marijuana. As more states have legalized recreational cannabis, distillers have been thinking more ambitiously about combining their distilling business with one or more aspects of the emerging marijuana business.
It’s hard to deny that marijuana has a cultural connection with craft beer, or at least with substantial segments of the craft brewing community. Many craft brewers have signaled to their fans that they know a thing or two about the rituals and lingo of marijuana consumption. But with the legalization of recreational cannabis by several states since 2012, many brewers have been thinking more ambitiously about combining their brewing business with one or more aspects of the emerging marijuana business.
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