Last month, the UK House of Commons debated the current state of regulatory and legal hurdles negatively affecting the development of psilocybin-based (the psychedelic compound most commonly found in ‘magic mushrooms’) therapies for mental and physical health disorders in the UK. The debate resulted from an e-petition, which garnered 11,824 votes in February this year. The debate saw a consensus among Members of Parliament across party lines, collectively supporting the proposal for rescheduling psilocybin from the currently held Schedule 1 classification for spurring research benefitting patients and the UK healthcare & life sciences sector. While this debate marks progress, the…

Increased legalization of marijuana at the state level has led to the rapid growth of marijuana production and distribution companies. These companies have to deal not only with the normal federal tax consequences of running a business but also with the unique federal tax consequences of running a business that is technically illegal under federal law. As a result, these companies require sophisticated tax guidance. However, it would likely be a crime under the Money Laundering Control Act of 1986 (the “Act”) for a tax practitioner to receive payment for providing a company that produces and sells marijuana in the…

As the cannabis industry is growing across much of Western Europe and North America, businesses would be wise to familiarise themselves with the UAE framework to avoid any unintended consequences as seen in the recent case of Billy Hood (see here). The UAE maintains a strict zero tolerance policy on the use of cannabis as further explained below. UAE Framework: Federal Decree-Law No. 30/2021 On Combating Narcotics and Psychotropic Substances (the “Law”). The Law prohibits the procurement, import, export, manufacture, extraction, separation, production, possession, acquisition and abuse of narcotic drugs and psychotropic substances. Cannabis is specifically mentioned and its definition includes cannabis-derived products (including…

There have been multiple headlines concerning the recent imprisonment of a British football coach (Billy Hood) in the UAE who was found to be in possession of CBD vape oil that contained elements of THC, the psychoactive component of cannabis. Whilst legal in the UK and other western countries it is strictly prohibited in the UAE. In connection with this case, the General Directorate for Drug Control (”GDDC”) stated that Mr. Hood was found to have ”quantities of cannabis oil intended for trafficking in return for financial gain.” The GDDC report that Mr. Hood was found to have various…

We are extremely pleased to announce the launch of our Global Medical Cannabis Dashboard, a new interactive tool covering cannabis regulatory regimes in 112 countries (and counting) across the world. We reached out to our global network of healthcare regulatory specialist lawyers across 39 Baker McKenzie offices and 70+ of our correspondent firms and asked them to share their knowledge on this subject. Our resulting dashboard is unique in its scope and stretch and we invite you to explore it yourself. Our dashboard covers the overall feasibility of marketing medical cannabis, permissibility of medical cannabis in its raw form and…

This article referenced in this post was originally published in Volume 99, Issue 11, of CCH’s Taxes—The Tax Magazine (November 2021). In the November 2021 edition of International Tax Watch in TAXES – The Tax Magazine, Tom Firestone, Scott Frewing, Ethan Kroll, Erika Van Horne, Stewart Lipeles, and Julia Skubis Weber explore the U.S. international tax implications of section 280E, concluding that section 280E should not disallow deductions for expenses U.S. persons incur in connection with: maintaining cannabis IP in, and licensing that IP from, the United States;engaging in cannabis R&D in the United States; andassisting with and overseeing from…

Towards the end of July 2021, Thailand’s Ministry of Public Health (MOPH) issued a notification under the Food Act regarding food products which contain cannabis or hemp parts as a publication in the country’s Government Gazette. The notification, among other things, sets forth the classification of food products containing cannabis or hemp parts (“Food Products”) and the related requirements with respect to food quality, standards and labeling requirements.The key elements of this notification are as follows: The Food Products shall be classified as specially controlled foods under the Food Act.The Food Products shall adhere to the standards regarding THC content,…

Over the past few months, Thailand and its Ministry of Public Health (MOPH) have taken strides to deregulate certain cannabis and hemp plants. These actions have the potential to change the future of the cannabis and hemp industry in Thailand, in ways that are set out in further detail below. I. Thailand’s Ministry of Public Health Notification Exempts Certain Parts and Extracts of Cannabis and Hemp Plants from Regulated Narcotics On 14 December 2020, the MOPH published a notification regarding the determination of category V narcotics B.E. 2563 (2020) (“the New Notification”) in the country’s Royal Gazette. The New Notification, which…

The U.S. Department of Agriculture (“USDA”) released on January 15, 2021, a final rule package designed to serve as the framework for a U.S. hemp industry that gained federal legal status a little more than two years ago. The 301-page package delivers some changes from an October 2019 interim final rule that provided initial guidelines to implement the 2018 Agriculture Improvement Act (known colloquially as the “2018 Farm Bill”). The 2018 law removed hemp from the Controlled Substances Act and set a legal definition for hemp as 0.3 delta-9-tetrahydrocannabinol (“THC”) on a dry weight basis. The final rule package, which…

This article was originally published by Law360 on December 16, 2020. On Nov. 3, Oregon passed Measure 110, a novel law[1] that reclassifies personal or noncommercial possession of controlled substances such as heroin, cocaine and methamphetamines, from a Class A misdemeanor to a Class E violation, punishable only by a $100 fine.[2] It also establishes a drug addiction treatment and recovery program funded in part by the state’s marijuana tax revenue and state prison savings.[3] In 1973, Oregon was the first state to decriminalize possession of small amounts of marijuana. Could Measure 110 be the first step to legalization of…

This article was originally published by Law360 on December 2, 2020. “You have a row of dominoes set up, you knock over the first one, and what will happen to the last one is the certainty that it will go over very quickly.” —Dwight D. Eisenhower What did this election do for the marijuana industry? A lot. Four states — three traditionally red — voted to legalize recreational marijuana while a fifth, one of the reddest, voted to legalize medicinal marijuana. These reforms will likely create a domino effect, leading other states to reform their laws and will likely also…

On October 12, 2020, the Thai Cabinet approved in principle the draft “Kratom Act.” By way of background, kratom is an herbal extract that comes from a tropical tree that has stimulant qualities if used in high doses. It was previously controlled under the Thai Narcotics Act because of its addictive effects. However, following recent developments in the liberalization of cannabis and hemp in Thailand, the Thai government has also been considering liberalization of the rules regarding kratom. On March 10, 2020, the Cabinet approved in principle a draft amendment to the Narcotics Act, which was proposed by the Office…

The Bank Secrecy Act (“BSA”) implementing regulations at 31 CFR Chapter X require covered financial institutions to file reports of suspicious transactions with the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) in circumstances where the bank knows, suspects, or has reason to suspect that the transaction “involves funds from illegal activities.”  The requirement to file such suspicious activity reports or “SARs” arises under federal law.  Marijuana-related business activity that has been legalized under certain state laws—e.g., recreational cannabis dispensaries in Colorado—remains illegal under the federal Controlled Substances Act.  The conflict between state and federal law is, in the…

As the market for hemp derived CBD has exploded, there is increasing interest in international trade in these products and the materials used to make them, including in the United States. For example, a US-based manufacturer of hemp-derived CBD edibles might import the active ingredient for manufacturing and then export the finished product overseas. US-based companies could also be interested in importing or exporting raw materials such as industrial hemp, hemp seeds, or other hemp-derived products. Below we summarize some of the key US trade compliance considerations for companies seeking to import or export these products. Because every export from…

After the previous amendment to the Thai Narcotics Act came into force in February 2019, allowing the use of cannabis for medical purposes, the regulatory authority noted that there was room for improvement regarding the licensing process and the limited access for patients to medical cannabis. In order to facilitate patient access to medical cannabis, the Thai Food and Drug Administration held a public hearing on a draft amendment to the Narcotics Act. The public hearing ended in June 2020. The key elements of the draft amendment are: Licensed patients who have been approved by a medical practitioner or a…

On July 21, 2020, the U.S. Food and Drug Administration issued its draft guidance on clinical research for the development of drugs that contain cannabis or cannabis-derived compounds of botanical origin (as opposed to synthetic). The draft guidance isentitled “Cannabis and Cannabis-Derived Compounds: Quality Considerations for Clinical Research, Draft Guidance for Industry.”  The guidance provides some clarity on the use of cannabis in clinical research in light of the changes made by The Agriculture Improvement Act of 2018, Public Law 115-334 (the 2018 Farm Bill) which federally legalized hemp and cannabis derivatives that contain no more than 0.3 percent THC on a…

The Department of Justice recently took the extraordinary step of releasing a previously confidential memo from its Office of Legal Counsel concluding that DEA’s long-standing policy on marijuana research violates federal law and U.S. treaty obligations. Why did DOJ do this? What does the memo mean for the future of marijuana research? In this podcast, Matt Zorn and Shane Pennington, the lawyers who litigated this case, explain how they got DOJ to release the memo and what it all means. Global Cannabis Compliance Podcast · Podcast Episode 5

In August, the FBI announced that it would be focusing on public corruption in state marijuana licensing. In September, the Mayor of Fall River, Massachusetts was indicted for extorting more than $250,000 in bribes from cannabis businesses in return for assistance with licenses.  In October, alleged Rudolph Giuliani associates Lev Parnas and Igor Fruman were indicted for, among other things, a scheme to make illegal campaign finance donations in connection with a planned recreational marijuana business in Nevada.  Last week, the US Department of Justice announced charges against two officials of the city of Calexico, California (a small city about…

Adam Schleifer is a candidate for Congress in New York’s 17th congressional district. He previously worked as an Assistant U.S. Attorney in Los Angeles where he prosecuted violent drug cartels. In this podcast, he talks about why he believes that federal legalization of marijuana would be an effective means of combating drug cartels. Please join us for a fascinating discussion. Global Cannabis Compliance Podcast · Episode 4 – Legalization as a strategy to combat drug cartels?

This podcast features Steve Kemmerling, founder and CEO of CRB Monitor, a database that aggregates and maintains corporate information on 37,000 direct marijuana-related businesses, 68,000 marijuana business licenses and 68,000 beneficial owners, which is used by financial institutions for KYC and compliance purposes. In the podcast, Steve talks about what the data show about how the industry has evolved, where it may be going, and the banking challenges it faces. Steve also talks about the system he developed to help financial institutions rank the risks associated with different kinds of cannabis businesses and how the COVID crisis has impacted the industry.

The Great Depression and the need for tax revenue to fund the New Deal ended prohibition in 1933.[1] The economic fallout from the COVID crisis, according to some experts, could result in a “New New Deal,” and Senator Ed Markey (D-MA) recently said that 2021 would, like 1933, have an “FDR moment.”[2] Just as the first “FDR moment” included the (re) legalization of alcohol, there are indications that the next may include the legalization of marijuana. The COVID crisis has again highlighted fundamental tensions in marijuana law and policy in the United States. Several states have declared marijuana businesses “essential”…

The majority of states in America have legalized marijuana either for medical or recreational use—yet it remains illegal on the federal level. This poses regulatory challenges for financial institutions operating at the federal level and for some only operating in one state (because some are still subject to federal mandates, e.g., the Federal Deposit Insurance Act). Despite this disparate guidance, the multi-billion dollar U.S. cannabis market continues to expand. Dow Jones partnered with Baker McKenzie and FIBA, a nonprofit trade association of financial institutions from Europe, the United States, Latin America and the Caribbean to examine the provision of financial…

How to eliminate the marijuana black market? As the COVID-19 crisis continues to ravish state budgets, this question has become even more important, particularly in states like California, which have legalized marijuana but have not seen the expected tax revenues due to the persistence of the “tax exempt” black market. Increased enforcement would help, of course. But the best way to eliminate the illegal market is to support market entry by legitimate businesses. Several states have declared marijuana businesses “essential” and exempt from COVID lockdown requirements. Congressional appropriations riders prevent DOJ from prosecuting medical marijuana businesses that comply with state…

The U.S. Department of Agriculture (“USDA”) announced on February 27, 2020, that it would give hemp farmers a 20-month reprieve from a regulation requiring growers of hemp to have crop THC levels tested at laboratories registered with the Drug Enforcement Administration (“DEA”). The requirement had raised concerns in the industry that DEA-registered labs would be overwhelmed with crop samples at harvest time, leading to delays that could cost farmers sales. Delay in Requirement for DEA Lab Registration The 2018 Agriculture Improvement Act (known colloquially as the “2018 Farm Bill” or simply the “Farm Bill”) removed hemp, defined as cannabis containing…

By way of background, “hemp,” as regulated under the Narcotics Act, is currently defined as having tetrahydrocannabinol (THC) in leaves and flowers not exceeding 1% per dry weight. Certified hemp seeds are seeds of hemp that has THC in leaves and flowers not exceeding 1% per dry weight. On 28 January 2020 the Cabinet approved the principles of the draft Ministerial Regulation re: Licensing and Approval for the Production, Distribution or Possession of Narcotics Category V Hemp (the “Ministerial Regulation”) as proposed by the Ministry of Public Health, which is intended to apply to hemp (as defined above), revoking the…

As popular as cannabis has become as a recreational and medicinal agent, that popularity and the nascent nature of the cannabis industry have created a difficult scenario whereby manufacturers and sellers of these products are being sued with increasing frequency. Without a doubt, the legal and regulatory landscape for cannabis is complex. Several dozen states have legalized marijuana for medicinal and/or recreational purposes, but marijuana remains a Schedule I drug at the federal level. The Agricultural Improvement Act of 2018 (more commonly known as the 2018 Farm Bill) removed hemp (defined as cannabis products containing less than 0.3% THC on…

Although it may appear that the progress of cannabis liberalization may not seem to move as fast as most investors expect, from the experience of seeing the changes or drafting of the new laws which give significant impact to the industry or the public, we can say that the progress we have seen so far as from the time when this government came on board on 10 July 2019 has been quite impressive. Cannabis and hemp of certain qualities and specifications are now allowed under the laws for use for medical purposes, even though their cultivation and manufacture are still…

January 4, 2020 marked the two year anniversary of the “Sessions Memorandum” in which (then) Attorney General Jeff Sessions rescinded the Cole Memorandum and other Obama era DOJ guidance which essentially stated that DOJ would not prosecute state-compliant marijuana-related activity.  Many saw the statement as a declaration of a new “War on Drugs.” However, a review of DOJ cases brought over the last two years reveals that the Trump Justice Department has largely adhered to the Obama Administration’s enforcement priorities. The Cole Memorandum The Cole Memorandum stated that federal cannabis enforcement resources would be concentrated on cases involving: Revenue from…

Robert Mikos is one of the nation’s leading experts on federalism and drug law. His most recent scholarship analyzes the struggle among federal, state, and local governments for control of marijuana law and policy, which includes a first-of-its-kind casebook, Marijuana Law, Policy, and Authority. In this podcast, he discusses the intersection of federal and state cannabis law, the prospects for federal reform, the SAFE Banking Act and other hot topics in the field. Global Cannabis Compliance Podcast · Episode 2 – On Federalism and Drug Law

The prospective relaxation of cannabis regulations in jurisdictions around the world offers opportunities for investment for UK businesses. However, investors should be wary of potential exposure under UK anti-money laundering (“AML”) legislation and consider taking appropriate safeguarding actions prior to any transaction. Pot luck: cannabis law in different jurisdictions In the UK, it is a criminal offence to produce or supply cannabis under the Misuse of Drugs Act 1971, punishable by up to 14 years in prison and/or an unlimited fine. There is a limited exception relating to supply for certain medicinal purposes which may be supplied under licence. However,…

The risk of corruption in state cannabis licensing has once again been highlighted by recent reports that a federal grand jury has subpoenaed at least seven Massachusetts cities, including Boston, for information about contracts between cannabis firms and municipalities. The subpoenas apparently relate to “host community agreements,”  a contract between individual cannabis operators and their host community that is required by state law in Massachusetts.  Host community agreements, and similar arrangements in other states that have legalized cannabis, are well intentioned.  But like any arrangement that involves payment for permission to operate, they can be abused for corrupt ends.       …

The term cannabis has been in the spotlight recently not only in Thailand but also around the world as there have been many recent developments regarding medical and recreational cannabis that are worth noting and have spurred investments in many parts of the world, notably North America and some parts of Europe. For Thailand, with the recent legalization of medical cannabis, the topic is still a new one as regulations are still shaping up. However, it cannot be denied that investment opportunities come with such development, either in the short or long run, and this is where we must try…

As discussed in our previous post, Mexican lawmakers had until the end of October to issue regulations on cannabis. Nonetheless, and even though a preliminary draft bill for cannabis legalization was recently introduced in the Congress, the Mexican Senate now believes that additional time will be needed to reach an agreement on how cannabis should be regulated. On October 28, 2019, three days prior to the deadline, the Mexican Senate requested an extension from the Mexican Supreme Court of Justice. The extension was granted through an Accord dated October 31, 2019. Pursuant to the Accord, published on the Supreme Court’s…

On Tuesday, October 29, the US Department of Agriculture (USDA) established the US Domestic Hemp Production Program through the issuance of an interim final rule (the “Rule”). The USDA published the Rule on Thursday, October 31, in the Federal Register. The Rule took effect upon publication, but the USDA will take comment for 60 days. Pursuant to the Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), the Rule outlines provisions for states and Indian tribes to submit their plans for the domestic regulation of hemp. Such plans will need to be approved by the USDA. The Rule also establishes…

Cannabis was high on Australia’s regulatory agenda in September, with two significant developments. In our last post we discussed the tabling of Professor John McMillan AO’s Final Report in Parliament on 5 September 2019, which recommended extensive amendments to the regime for cultivation, production and manufacture of medicinal cannabis in Australia. In this post we discuss the move to legalise the personal possession and use of small amounts of cannabis in the Australian Capital Territory (ACT). On 25 September 2019, the ACT Legislative Assembly voted to legalise the personal possession and cultivation of cannabis under the Drugs of Dependence (Personal…

Although prosecution of state-legal sales by licensed and compliant cannabis businesses may not be a current priority for federal law enforcement, prosecution of corruption in the industry clearly is. Consider the following, all of which have occurred within the last three months: The indictment of alleged Rudolph Giuliani associates Lev Parnas and Igor Fruman for, among other things, a scheme to make illegal campaign finance donations in connection with a planned recreational marijuana business in Nevada (according to various reports, they were also interested in licenses in New York, California and Florida); An announcement by the FBI that, “As an…

Our prior post discussed the rapidly evolving cannabis regulatory environment in Mexico.  As the Supreme Court-ordered deadline for lawmakers to end cannabis prohibition approaches, Senators raced against the clock and unveiled last week a preliminary draft bill of a law that would regulate nearly the entire cannabis industry. The preliminary draft bill, titled the “Law for Cannabis Regulation”, comprises 74 articles and 11 transitory provisions that integrate various legislative proposals, including the prior leading bill from Mrs. Olga Sánchez Cordero (former Senator and Judge, and current Minister of Interior). Among other things, the Law for Cannabis Regulation: Allows (i) recreational,…

Executive summary Professor John McMillan AO’s Final Report of the review of Australia’s medicinal cannabis framework under the Narcotic Drugs Act 1967 (Cth) (ND Act) was tabled in Parliament on 5 September 2019, ahead of the 29 October 2019 target date. A link to the Final Report is here. The review was conducted on the extensive amendments made to the ND Act in 2016, which established a regime for the cultivation, production and manufacture of medicinal cannabis in Australia. The Final Report contains 26 recommendations to improve the efficiency and effectiveness of the regulatory regime including: a new single licensing…

Less than one year since medical cannabis was legalised in the UK and just two months since the first medical cannabis clinic opened in London (as reported in our last blog post), a cannabis-based drug has been approved for use in the UK. Its approval may herald the acceptance of cannabis-based drugs into mainstream medicine across the country. What is Epidyolex? Epidyolex is a cannabis-based medicine for children suffering from Epilepsy. Cannabis-based drugs contain cannabidiol (CBD) which is one of the components of marijuana. According to the World Health Organization, “there is no evidence of recreational use of CBD or…

In recent posts, we discussed lessons learned from recent compliance cases in the cannabis industry, and provided a checklist of key due diligence issues. In both articles, we highlighted the importance of independent verification of state cannabis licenses. Unfortunately, it is not always easy to get official information from state cannabis regulators. Information about cannabis licenses is not always public. This is the case in Arizona, where state law prohibits the release of the names of medical cannabis licensees. In other jurisdictions, license information is usually available, but the presentation of the information ranges from user-friendly databases (California and Colorado)…

Welcome to the Global Cannabis Compliance Podcast Series. Because we have received so many requests from readers for more information about the topics we have been covering, we have decided to start a podcast series featuring in-depth discussions with experts. Like the blog, the podcast series will cover all aspects of cannabis compliance including existing laws and proposed legislation in various countries and U.S. states, significant court cases and judicial decisions, enforcement trends, and best practices in compliance. If you have any suggestions for podcast topics, please let us know. Episode 1 – On the Cannabis Industry in Africa Countries…

Cannabis legalization is proceeding in Mexico after several years of no action. In 2017, Mexico published an amendment to its General Health Law that allowed THC use for medical purposes and ordered the government to implement secondary regulations to support the new law. At first, nothing happened. However, in August 2019, the Supreme Court of Justice in Mexico granted an amparo (constitutional) injunction to an underage child suffering from West syndrome, a condition that required CBD and THC dosing as part of his medical treatment. The Court determined that the child´s right to health services was violated because the Ministry…

The cannabis industry operates at a disadvantage vis a vis other industries because Section 280E of the Internal Revenue Code prohibits business expense deductions for businesses that “traffic” in federally controlled substances, including cannabis. As a result, cannabis companies pay taxes on gross rather than net profits. In the latest defeat for cannabis companies in the Tax Court, Boulder Alternative Care, LLC (“Boulder”), a Colorado dispensary, lost its bid to obtain ordinary business expense deductions for its legal operations (Docket No. 16495-16). Boulder argued that it was entitled to those deductions because Colorado, not federal, law controls. Boulder’s position was…

On September 25, 2019, the House of Representatives passed the “Secure And Fair Enforcement Banking Act of 2019” or the “SAFE Banking Act of 2019” (H.R. 1595) by a vote of 321 to 103. If adopted, the SAFE Banking Act would, among other things, create a safe harbor for depository institutions that provide banking services to state compliant marijuana-related businesses and also remove proceeds from state compliant cannabis transactions from the definition of criminal proceeds under U.S. anti-money laundering laws. This would dramatically change the industry, opening a whole range of legitimate services to state compliant businesses, and would also…

It seems as though no matter where you go these days, you’re bound to encounter a product containing cannabidiol, commonly referred to as CBD. As you have likely heard by now, the 2018 Farm Bill (formally, the Agriculture Improvement Act of 2018), which was signed into law on December 20, 2018, legalized the regulated production of hemp. This triggered a corresponding amendment of the Controlled Substances Act (CSA), removing “hemp” from the definition of marijuana and specifically excluding “tetrahydrocannabinols (THC) in hemp” from the listing of Schedule 1, or most dangerous, drugs. Hemp is now defined as cannabis plants and…

Many countries across the globe are in the process of decriminalising the medical and recreational use of Cannabis, and Africa is no exception to this growing trend. Governments across the continent are hoping that the decriminalisation of the plant will aid them in their quest to diversify their economies and generate transactions in hard currency. The Cannabis industry is one with a multi-billion-dollar footprint, and businesses are already benefiting from growing, distributing and exporting medicinal Cannabis. According to The Consumer Staples Report by Barclays, the global Cannabis market could be worth up to USD 272 billion in the coming years. …

The Federal Trade Commission (“FTC”) announced on September 10, 2019 that it sent warning letters to three unidentified companies for making claims regarding their products that contain cannabidiol (“CBD”), a compound derived from cannabis. The products, which range from “gummies,” and creams to oils, tinctures and capsules were advertised with claims that the products could treat serious diseases and conditions. In prior posts, we have mentioned Food and Drug Administration (“FDA”) regulation of drug claims. When claims are made regarding the diagnosis, cure, mitigation, treatment, or prevention of disease or that a product affects the structure or function of the…

In a previous post, we discussed lessons drawn from recent compliance challenges in the cannabis industry that highlight some of the consequences that arise without thorough due diligence on cannabis-related business partners (CRB). In this post, we provide a checklist of six key issues to consider when conducting due diligence on partners in the industry. While not intended to be comprehensive, this list is a sound foundation and will help identify areas requiring deeper due diligence. Issue 1: Location of the business In some countries, cannabis is legal for medicinal use. In others, it is legal for medicinal and recreational…

The uncertainty of the legal regime governing cannabis makes thorough due diligence on prospective business partners essential for those who want to ensure that they are complying with state law and minimizing their risks of federal investigation. In this two-part series, we first discuss some key compliance lessons from recent events and then offer a checklist for use when conducting due diligence on potential partners. Lesson I: Even “legal” companies sometimes violate state law “It’s o.k. – they’ve got a license.” But it may not be o.k. Several recent cases have shown that mere possession of a license is not…

Executive summary In October 2016, a regulatory framework was established for the cultivation and production of cannabis plants in Australia under the Narcotic Drugs Act 1967 (Cth) (ND Act), with the objective to enable the sustainable and safe supply of medicinal cannabis products. The regime is currently under review by the Commonwealth Office of Drug Control (ODC), with a final report expected to be released on 29 October 2019. In advance of this final report, set out below is the current framework for medicinal cannabis in Australia, which broadly falls under the following three categories: cultivation, production and manufacture; access…

Backers of a cannabis banking bill are accusing one another of undermining its prospects for success by pushing for amendments that would expand its scope in different directions.  The SAFE Banking Act (H.R. 1595) would allow financial firms to work with state-licensed cannabis businesses without running afoul of federal anti-money laundering laws.  The bill introduced by Rep. Ed Perlmutter (D-CO) has attracted 206 co-sponsors from both sides of the aisle and advanced out of committee in March.  Senators Jeff Merkley (D-OR) and Cory Gardner (R-CO) introduced a companion version in the Senate (S. 1200) that has 30 other co-sponsors.  However,…

The Netherlands’ “coffee” shops are retail stores where the Dutch government tolerates cannabis sales for personal consumption. In our prior post, we explained the basic legal framework around cannabis in the Netherlands. Here, we will discuss how the country has implemented its coffee shop system. Through the Tolerance Policy we previously described, the government allows coffee shops to sell cannabis under strict conditions and will not prosecute them if those conditions are met. In order to open a coffee shop in the Netherlands, the owner needs both an operating licence and a Declaration of Tolerance (and a license to…

The Netherlands is famous throughout the world for its trailblazing attitude toward cannabis consumption. However, despite its reputation in popular culture as an open cannabis haven, the Netherlands still criminalizes aspects of the cannabis trade and has a strict regulatory structure for its famous “coffee” shops. As other countries, states, and municipalities legalize aspects of cannabis sale and consumption, they may look to the Dutch experience for an example of an existing system that tries to balance some of the many completing legal, regulatory, political and cultural interests. In this post, we will describe the legal framework that underpins the…

The United Nations Office on Drugs and Crime (“UNODC”) recently released its 2019 World Drug Report which, among other things, claims that despite legalization in many states of the U.S., illicit markets in the U.S. have continued to thrive, while seizures have decreased and potency and use have increased. As the legalization debate heats up in the U.S., opponents will undoubtedly cite the UNODC findings, while proponents will have to address this data. Therefore, the report warrants close study by all who are interested in the future of marijuana law in the United States. Among other things, the report found…

A draft law recently adopted by the Russian State Duma (lower house of the parliament), though not yet approved by the Federation Council (upper house of the parliament) or signed by the President would amend existing law to allow the cultivation of certain plants that contain narcotic and psychedelic substances. Significantly, the bill would not decriminalize recreational use, nor would it permit the development of private dispensaries. It also contains certain restrictions and limitations: First, cultivation would be permitted only for certain specified purposes: medical and veterinary use and /or industrial needs not related to the production of narcotic and…

Beginning in 2020, Nevada and New York City will restrict an employer’s ability to screen job applicants for marijuana use. As marijuana legalization spreads across the country, other jurisdictions will likely follow suit. Employers, especially those that recruit in Nevada and NYC, should review their drug testing and hiring practices now to stay compliant. What it means for you Marijuana use by employees is for the first time protected in some jurisdictions, increasing the risk of discrimination claims by applicants and employees. Employers that hire in Nevada and NYC should consider whether their current recruitment and hiring practices may unlawfully…

On June 20, 2019, the House approved by a vote of 267 to 165 an “Appropriations Minibus” amendment sponsored by Rep. Earl Blumenauer (D-Oregon) that would prohibit the Department of Justice (“DOJ”) from using appropriated funds to prevent any state, U.S. territories, or Washington, D.C. “from implementing their own laws that authorize the use, distribution, possession or cultivation of marijuana.”  This amendment builds on a prior appropriations rider, originally enacted in 2014 and renewed every year thereafter, which prohibits the DOJ from using federally appropriated funds from prosecuting state compliant medical businesses.  The current measure goes beyond the prior amendment…

On March 28, 2019, South Carolina enacted the Hemp Farming Act (Act), which governs the cultivation, handling, and processing of hemp in South Carolina. The Act repealed (with limited grandfathering provisions, as described below) the existing statutes that created the hemp pilot program in South Carolina (Prior Law) under the Agricultural Act of 2014 (2014 Farm Bill). The Act makes it unlawful to cultivate, handle, or process hemp in South Carolina without a license issued by the South Carolina Department of Agriculture (SCDA) under a state plan (State Plan) pursuant to which the SCDA regulates hemp production in South Carolina,…

New private clinics offering medical cannabis in the UK The Medical Cannabis Clinic has revealed that it will be opening its flagship clinic in London, in Harley Street, this summer. The opening of London’s first such clinic follows the opening of Britain’s first medical cannabis clinic in Greater Manchester earlier in the year. As reported in the Guardian, Analytical Cannabis emphasises the importance of this for those suffering from conditions such as chronic pain, epilepsy and neurological and psychiatric disorders who have long been seeking access to what they hope is a transformative medicine. Access is clearly in demand from…

Given that many of the Democratic Party candidates have expressed support for marijuana legalization, a Democratic victory in 2020 seems likely to increase the chances for significant reform at the federal level. But what about a Republican victory? Although the Republicans have held the White House since 2016, the answer to this question is a mystery, due largely to the inconsistent and constantly shifting views of the President and his administration and the ambiguous positions of key Republican leaders in the Senate. In 2015, while campaigning, Trump characterized Colorado’s law legalizing recreational marijuana as “bad.” Once elected, he appointed as…

Cannabis and its derivatives have become a major industry in the U.S. and the U.S. Food and Drug Administration (“FDA”) is coming under increasing pressure to regulate this growing market. As a first step, FDA is on the hunt for data on the safety and efficacy of cannabis and cannabis-derived products. On May 31, 2019 the FDA held a public hearing to “obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.” The problem is that regulatory barriers make it difficult to access raw materials and to perform…

Primary season is in full swing, with Democratic candidates crisscrossing Iowa and shaking every hand they can find across New Hampshire. New to this election is the prominence that cannabis legalization and related criminal reform have taken in the major candidates’ platforms. As the country has swung to the left on cannabis legalization, most Democratic politicians have pushed liberalization even further. The candidates have taken varying stances on how exactly to handle cannabis legalization at the federal level, but their positions largely fall into three categories: marijuana use legalization, criminal justice reform, and business regulations to promote cannabis business. Most…

In Canada’s increasing liberalization of its cannabis related laws, the manufacture and sale of THC-containing edibles (food, beverages, extracts and topicals) will become legal on October 17, 2019, although these products will not find their way (legally) onto the market until the middle of December. That’s because producers must apply to Health Canada for a license 60 days prior to commencing the sale of these products, and the government is not going to begin accepting these applications until October 17, 2019. Last week, the government released the regulations that will govern the manufacture, advertising and sale of the noted edible…

The trend towards the decriminalization of marijuana in the United States occurred in the context of increasing public acceptance of the drug’s use. According to the Pew Research Center, in 1990, 16 percent of Americans said marijuana should be legal. By 2018, support for legalization grew to 62 percent. The significant shift in public opinion was caused in large part by the promotion of marijuana’s medical uses, a watershed moment for which came in 1996, when California became the first state to legalize medical cannabis. That event not only ended the public perception that marijuana and illegality were inherently linked,…

Around the world, countries are discussing cannabis legalization for medical, research, and/or recreational use. Brazil is no different. On June 14th, 2019, ANVISA (the Brazilian Health Regulatory Agency) published two public consultations related to cannabis, representing another step in the legalization process. The first consultation focuses on the technical and administrative requirements for cultivating cannabis for medicinal and scientific purposes. According to the draft, the cultivation of the plant must, along with other access control guarantees, be done indoors and behind security doors accessible through biometrics. The draft also provides that the cultivation can only be done by legal entities…

The 2018 Farm Bill removed industrial hemp and all derivatives (including hemp derived CBD) from Schedule I of the Controlled Substances Act (CSA). It also provided that intentional violations of the Farm Bill, including unlicensed production of industrial hemp, must be reported to the U.S. Department of Justice (DOJ). But what can DOJ do with such reports if hemp trafficking is no longer a crime? Relevant Provisions The Farm Bill (officially entitled the Agricultural Improvement Act of 2018): Removal of Hemp from CSA defined hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds…

Thailand’s legalization of cannabis for medical purposes continues to move forward. On 28 May 2019, the Thai Cabinet approved the draft Ministerial Regulation regarding Approval for the Manufacture, Import, Export, Sale, or Possession of Cannabis proposed by the Ministry of Public Health. Some of the key elements of the draft are: Definitions of the terms “Cannabis”; “Licensee”; and “Government agencies”.Categorization of seven types of objectives related to the manufacture, import, or export of cannabis: administration of cannabis for medical use domestically;education, analysis, and research for medical, scientific, or pharmacological purposes;prevention of offenses and for international co-operation;export manufacturing and export of…

Patents play an important role in American business by encouraging innovation and investment. The Cannabis industry, which has obtained thousands of patents, is no exception. At least one owner of Cannabis patents has filed a patent infringement action to enforce those patents against a competitor (United Cannabis Corp. v. Pure Hemp Collective, Inc., Case No. 18-cv-01922(WJM-NYW) D. Colo., filed July 30, 2018). Unfortunately, under a long line of authorities going back to The Highwayman’s Case in 1725, the illegality of the use, possession, and distribution of these products probably creates an insurmountable barrier to the enforcement of most Cannabis product…

There is an increasing global trend towards legalizing the use of cannabis, albeit to differing extents. Canada and Uruguay have fully legalized cannabis, while New Zealand has legalized cannabis for medical use only—although a referendum will be held in 2020 on recreational marijuana use. This trend is emerging even amongst Asian countries, which generally impose tough laws on drug use. Thailand is the first country in Southeast Asia to legalize the use of cannabis for medical purposes, with Malaysia and the Philippines considering similar legislative changes. Nonetheless, the fact remains that many Asian countries remain steadfast in their stance against…

On May 24, the US Attorney for the District of Colorado announced the arrest of 42 individuals as a result of a joint state-federal investigation targeting “black market” marijuana. According to an official press release, the investigation began in the summer of 2016 and involved searches at more than 250 locations, resulting in the seizure of more than 80,000 marijuana plants and 4,500 finished marijuana products. The grow areas were located primarily in sealed basements of newer homes in fairly upscale neighborhoods. The growers often used large air filters and vented air late at night to remove the smell of…

On May 20, the Ukrainian parliament agreed to consider a bill which would legalize medical cannabis. If the bill is passed, Ukraine would become only the second post-Soviet country to significantly reform its cannabis laws. (In 2017-18, the Constitutional Court of Georgia eliminated both criminal and administrative liability for private marijuana use, but left in place prohibitions on selling and public use). The bill was the result of a campaign by Ukrainian NGOs and is supported by the Acting Minister of Health, Ulyana Suprun, a Ukrainian-American native of Detroit who received an MD from Michigan State. Upon introduction of the…

Two recent rulings by the Supreme Court of Justice of Mexico (“SCJN”) represent a significant milestone in legal cannabis consumption in Mexico. On October 31, 2018, the First Courtroom of the SCJN, under Minister Norma Lucía Piña Hernández, approved the Amparos en Revisión No. 547/2018 and 548/2018, which declared that the prohibition on recreational cannabis was unconstitutional. These two rulings are binding precedent, which all courts in Mexico must follow when ruling in similar cases. The rulings are ad personam, meaning that individuals seeking a judicial declaration related to cannabis must initiate an action in a competent court to obtain…

The U.S. Food & Drug Administration (FDA) is under increasing pressure to provide regulatory guidance for using hemp-derived cannabidiol (CBD) in food. Currently, there is no clear route forward, and the FDA rulemaking process will take years. While the recent FDA leadership change will likely complicate the process, FDA is taking the first steps to enact the necessary rules. On December 20, 2018 the Agriculture Improvement Act of 2018, commonly known as the Farm Bill, was signed into law. Among other things, the Farm Bill made changes relating to the production and marketing of hemp and derivatives of cannabis with…

The legalization of medical marijuana in several jurisdictions throughout the US presents employers with the difficult task of reconciling their anti-drug policies with those state statutes authorizing marijuana use for medical purposes. Adding an additional layer of complexity to this already uncertain landscape, is the growing number of states that have also legalized marijuana for recreational use. As state marijuana laws continue to grow and develop, employers must stay attune to how they approach employees’ off-duty marijuana use for both medical and recreational purposes. Medical Marijuana and the Duty to Accommodate Perhaps the most common issue employers now face is…

Across the world, countries are revisiting their laws on the use of cannabis. For some countries, such as Canada and Uruguay, the legalization of the use of cannabis extends to non-medical purposes, including recreational use. For a number of other countries, such legalization has been limited to medical use only. The move to legalize cannabis for non-medical purposes is a direction being debated in light of the 1961 Single Convention on Narcotic Drugs, as amended by the 1972 Protocol, which places obligations upon State Parties to limit the production, manufacture, export, import, distribution, trade, use and possession of drugs exclusively…

All the world is abuzz with the seemingly sweeping changes to cannabis policies in countries such as Canada, Mexico, Israel, Uraguay, Lesotho, Germany, and the United States. The cannabis industry in the U.S. alone is projected to be a multi-billion dollar industry and it is arguably just a toddler at this point. Recognizing the need to connect with other attorneys who advise cannabis businesses, a small group of lawyers formed the National Cannabis Bar Association (“NCBA”) in 2015. After rapid growth within the U.S. and upon the historic legalization of cannabis in Canada in 2018, the National Cannabis Bar Association…

There has been explosive growth in the cannabis industry, and there is a dizzying array of choices for those looking to invest in this emerging industry. Who will be hot and deliver strong returns? Who will fizzle and fail in the wake of growing competition? Who is investing in innovation and differentiation? In our view, one way to measure the prospects of a cannabis company’s future success is to look at its level of innovation and its commitment to securing intellectual property rights (IP) for those innovations. While cannabis companies may face issues with respect to the enforceability of their…

As the movement towards legalization gains steam, international drug control treaties are a big elephant in the room. To date, legalization advocates and politicians alike have focused on laws at the local and national level. Little attention, however, has been paid to the multilateral treaties that arguably conflict with those laws. Most efforts to push a federal solution to the disparate local/national treatment of cannabis ignore the United States’ treaty obligations. This conflict must be addressed to ensure a smooth path forward. The international treaties are firmly anti-cannabis legalization. The 1961 United Nations Single Convention on Narcotic Drugs, which the…

Despite state laws decriminalizing varying types of its use, cannabis remains a Schedule 1 controlled substance under the Controlled Substances Act of 1970. As a result, the sale, use, and distribution of cannabis remains a federal crime. Individuals and businesses that support cannabis companies could face federal criminal liability based on conspiracy and aiding and abetting laws. Companies that transact with money derived from cannabis sales could be subject to federal anti-money laundering prosecution, as they are using proceeds derived from criminal activity. Because of the continued decriminalization efforts at the state level, the federal government has backed away from…

Marijuana businesses in the US and US investors in foreign marijuana businesses face a potpourri of federal tax issues. For example, the federal income tax treatment of a domestic marijuana business presents challenges for those entering the field. In 1982, Congress passed Internal Revenue Code (IRC) section 280E in response to a Tax Court case concerning a drug dealer who claimed ordinary and necessary business expenses related to his drug sales. Section 280E disallows deductions and credits for amounts paid or incurred in the trade or business of trafficking in controlled substances prohibited by federal or the law of any…

One argument in favor of legalizing recreational cannabis was that it would allow the government to collect taxes on previously black-market activity. Concurrent with Canada’s de-criminalization of recreational cannabis production, sale, and use in October 2018, the federal government imposed taxes on cannabis sales. Specifically, the government levied excise duties on all purchased cannabis products in Canada pursuant to the Excise Act, 2001, subject to certain exemptions (“Cannabis Duties”). This post provides a brief overview of this regime. Calculation and payment of Cannabis Duties takes place at the producer level. The government requires licenced cannabis producers to package cannabis products…

They say that politics makes for strange bedfellows, and nowhere is that more true than in the unlikely coalition of lawmakers working to reform the nation’s cannabis laws. In recent years, public support for legalizing cannabis has increased and legislators have begun introducing more bills than ever. While legalization legislation languished during the last Congress as Republican leaders remained steadfast in their opposition to any changes, advocates are optimistic that Democratic control of the House could finally bring significant reform. That, coupled with mounting pressure to clean up the disparity between state and federal laws, could propel incremental changes through…

Throughout Europe, cannabis remains broadly illegal and, in most European countries, selling the plant is a criminal offense. However, many countries have adopted their own laws to permit cannabis purchases, sales, and use for medicinal purposes. The current state of European law is similar to the United States – each country (state) has taken its own path to legalize aspects of cannabis, resulting in a complex regional set of laws and rules that apply to the cannabis business. Fortunately for companies doing business in Europe, unlike in the United States, there is no overarching federal criminalization of cannabis that creates…

By any measure, cannabis has become a major industry, and global financial markets anticipate big profits in the future. The first Canadian regulated, licensed, publicly traded cannabis producer went public on May 24, 2018, and, less than a year later, is already a USD $15 billion company. Another Canadian producer has tripled in market capitalization since its July 2018 IPO and is now valued at nearly USD $7 billion. Governments are also recognizing the potential to generate needed revenue from taxing cannabis transactions. For example, in the United States, Colorado and Washington, which were the first two U.S. states to…