CannaBeat - September 11, 2023

CannaBeat is a curated biweekly selection of top news stories impacting business, research, and culture in the cannabis industry, crafted by Emerge Law Group.

Emerge’s Hot Take

Unlocking Change: HHS Recommends Rescheduling Cannabis to Schedule III

On August 29, 2023, Department of Health and Human Services (“HHS”) recommended the rescheduling of cannabis from its current Schedule I classification to Schedule III. To date, cannabis has been (mis)classified as a Schedule I substance, categorized as having “no currently accepted medical use in the United States, a lack of accepted safety for use under medical supervision, and a high potential for abuse.” This classification hindered research, limited access and harmed hundreds of thousands, particularly communities of color through the war on drugs. HHS’ surprising recommendation demonstrates a shift in perception and recognition that the status quo is failing.

Under Schedule III, cannabis would be classified alongside other prescription drugs, such as ketamine and steroids. A reclassification would acknowledge that cannabis has potential for medical uses and has a lower risk of abuse than other drugs listed in Schedule I and II. This opens the door for further research in cannabis medicinal properties and paves the way for future evidence-based policy.

Most importantly, as a Schedule III substance, cannabis would no longer be subject to Internal Code Section 280E, the tax code provision that punishes the cannabis business.

Although rescheduling of cannabis would be a positive step forward, it would not completely alleviate the conflict between state and federal law. All cultivators, manufacturers, and distributors would continue to be regulated by state and local authorities.

Other Noteworthy News

Congressman Introduces Bill to Withhold Federal Funding from States with Legal Weed

“Rep. Chuck Edwards (NC), unveiled the “Stop Pot Act.” Rep Edwards explained, the bill withholds 10 percent of federal highway funds from governments that permit recreational cannabis. The legislation ‘does not apply to jurisdictions that authorize medical use of marijuana when prescribed by a licensed medical professional,’ the congressman’s office said in a press release. Edwards’ bill is being introduced amid a sea-change in marijuana policy across the United States. Twenty-three states have legalized recreational cannabis for adults. Recreational pot has also been made legal in the District of Columbia, and the U.S. territories of Guam and the Northern Mariana Islands. As local news station ABC11 reported, Edwards’ bill also ‘comes as the Eastern Band of Cherokee Indians is set for a referendum election next week that has a question about whether to legalize the sale and use of recreational marijuana on tribal lands.’…”

California Marijuana Regulators Double Grant Funding to Help Localities to Open Licensed Cannabis Shops

“California marijuana regulators are doubling the amount of money they’re offering to localities to open cannabis retailers in their jurisdictions as part of a grant program that aims to mitigate the illicit market. The Department of Cannabis Control (DCC) also announced expansion of the Local Jurisdiction Retail Access Grant (LJRAG) program, allowing cities that participated in the first phase to apply for funding again this round. DCC unveiled the first-of-its-kind program in February, and it recently awarded $4.1 million in grants to 18 jurisdictions.
For the second phase, regulators said that they are offering up to $150,000 per eligible retail licensee that a city authorizes and up to $300,000 per social equity license. ‘There are still many locations throughout the state where cannabis usage is notable, but existing consumers do not have convenient access to legal retail cannabis,’ said DCC Director Nicole Elliott . ‘We know that cannabis consumers often make purchasing choices based on convenience, so sufficient access to legal retail reinforces extremely important consumer safeguards.’ Local governments are eligible for the grant dollars if they currently have no retail licensing program but plan to develop and implement one. Jurisdictions that intend to support equity-centric licensing policies are being prioritized. Localities that have opted out of allowing marijuana retailers, with no plans to license them in the future, are ineligible for the grants. Jurisdictions that have licensing programs, and those where retailers have already been approved, also don’t qualify…”

Alabama Medical Cannabis Commission Facing Another Lawsuit

“One of the nation’s largest medical cannabis companies has filed a lawsuit against Alabama’s Medical Cannabis Commission. Verano grows and sells cannabis in 13 states and planned to bring business to Alabama before its business license was taken away after the commission found an error in application scores. The company is now suing, claiming the commission overstepped its power. The cannabis commission is already facing another lawsuit for possible violations of Alabama’s Open Meetings Act. James Leventis, executive vice president of Verano, said the commission awarded final licenses in June. He said Verano Alabama was invoiced $50,000 by the state for a licensing fee and paid that fee the same day. Leventis said the Medical Cannabis Commission found an error in the application scores a few days later, stopped the process and voided those licenses. ‘It’s a made-up concept. They were valid awards,’ said Leventis. The applications were re-graded. Verano got the highest score among the integrated facility applicants but wasn’t awarded a medical cannabis business license in August. ‘They still have our $50,000 today,’ said Leventis….”

Cannabis Workers Continue to Organize

“From Michigan to Chicago and over to Rhode Island, cannabis employees are establishing protections by working with union representatives. Around the country, union negotiations have gotten employees higher pay, set workplace safety requirements, established seniority, and more. “The Teamsters launched a national campaign to organize the cannabis industry a little over two years ago. Since then, we have successfully organized more than 1,000 members and won contracts that address the most important issues to workers in this craft, issues like job security, annual raises, guaranteed tips and discounts, enhanced occupational safety, respect in the workplace, and a voice on the job,” said Teamsters vice president Peter Finn. Rise Dispensary workers in Warwick, Rhode Island, voted 50 to six to join UFCW Local Union 328 in July, according to ABC6. The workers are seeking higher pay, better benefits, and workplace protections. Rise is owned by Green Thumb Industries, a corporate cannabis firm whose Chicago, a city where Teamsters 777 has advocated for months. Recently, MedMen staff in Las Vegas voted to join UFCW Local 711, according to a press release from the organization. ‘It is time for cannabis workers in Vegas to be recognized for the labor and value we provide,” Sandra Becerril shared. “We look forward to standing united with my coworkers and our union representatives to work with our employer to negotiate for the pay, protections, and benefits we have earned and deserve.’…”

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CannaBeat by Emerge Law Group

CannaBeat is a weekly brief on news, business, and culture in the cannabis industry curated by members of Emerge Law Group’s distinguished Cannabis Industry Group.