Welcome to our weekly roundup of CBD and hemp-related legal and regulatory news:
A bill by Wash. state senators Mark Schoesler (R) and Karen Keiser (D) would block intoxicating, synthetically derived cannabis products, including gummy candies and vape oil, from being sold at outlets outside the Initiative 502 system. They have roughly one week left to do so before the legislative session ends. In 2020, Wash.’s Liquor and Cannabis Board barred synthetically derived THC from products in the Initiative 502 system, but not those outside of it. Chairman David Postman said he wants the Legislature to make clear the board also has the authority to block gas stations, convenience stores and smoke shops, which are outside the regulated system, from selling the synthetically derived cannabinoids. Claims Journal.
According to Steven Brown, CEO of the Nothing But Hemp retail chain and founder of the Minn. Cannabis Association, all but one of his six stores in Minn. are expected to close. Among the challenges facing the industry is the Loveless vs. State of Minnesota decision. The appeals court found state laws separating illegal marijuana from legal hemp stopped at the plant and didn’t apply to extracts. At issue is the definition of hemp as containing less than 0.3% THC. The court decided the law applies only to plants/leafy material and not commonly sold extracts such as CBD oils, edibles and vaporizer cartridges. The result questions the legality of hemp-based CBD extracts. The decision was appealed to the Minn. Supreme Court by both Loveless and the Minn. AG, but could take months and wouldn’t guarantee a favorable outcome for the industry. Westword.
The Ky. Department of Agriculture (KDA) declared Delta-8 a Schedule I controlled substance at both the state and federal levels. The state farming agency at the time warned that distributing Delta-8 products could lead to revocation of hemp licenses and criminal prosecution. However, as the state legislature was to vote on a bill that would enshrine the ban, including all forms of what it refers to as “intoxicating products” derived from industrial hemp, such as cigarettes or cigars, chews, whole hemp buds, hemp teas and ground hemp flowers and leaves, the state court granted stakeholders a TRO. The proposed SB 170 is drawing pushback by Delta-8 and other hemp proponents. They argue that tens of millions of dollars have been invested to develop infrastructure for the hemp sector, and suggest the KDA is trying to “move the goal post and try to declare Delta-8 illegal,” without having consulted those in the industry. Hemp Today.
CanaFarma Hemp Products faces a second securities suit in N.Y. federal court from an investor who says the company and two of its executives misappropriated at least $4 million for personal use and other inappropriate reasons. The complaint states that from Mar. 2019 to Oct. 2020, the executives raised $15 million from more than 60 investors. Investors were informed their funds would be used for business operations, but allegedly, the executives were skimming funds by using fake financial projections and counterfeit contracts and invoices to make business costs appear legitimate. The plaintiff claims investors paid up to 50 cents per share during the relevant period, and that those shares are now worth a fraction of that amount. The plaintiff seeks compensatory damages, litigation costs, attorney fees and a jury trial. Law 360 (sub. req.)
Kirsten Figueroa, the commissioner of Maine’s Department of Administrative and Financial Services, argued the constitutional doctrine that limits states’ power over interstate commerce couldn’t be used to strike down a law requiring dispensaries be owned by Maine residents. “Striking down Maine’s medical marijuana residency requirement would do nothing to legalize [appellees’] illicit activity barred by Congress under the Controlled Substances Act,” she stressed. Figueroa was joined by United Cannabis Patients and Caregivers of Maine, an in-state trade group that intervened in the case, in asking the First Circuit appellate court to reverse a lower judge’s ruling barring enforcement of the law on the grounds it likely violated the U.S. Constitution and the dormant commerce clause since it favored in-state residents over others. Law 360 (sub. req.)
The International Cannabis Bar Association and Americans For Safe Access urged the Federal Circuit to reverse a TTAB decision finding a CBD-infused tea couldn’t register its trademark. In Sept. 2021, the TTAB rejected Joy Tea’s intent-to-use (ITU) application for a CBD tea on the grounds that it was unlawful since the FDA hasn’t regulated CBD consumable products. The INCBA and ASA argued the USPTO was treating cannabis-related ITU applications differently than it did applications for other not yet legal products that are expected to become lawful, such as a pharmaceutical undergoing the regulatory approval process. Joy Tea welcomed the intervention and said the appeal provides an opportunity for the courts to reconsider elements of federal cannabis policy. Law 360 (sub. req.)
Despite the meritless constitutional arguments Standing Akimbo attempted to invoke in this case, the Tenth Circuit should affirm the ruling of a lower court in finding the IRS issued its summonses to the Colorado Marijuana Enforcement Division in good faith, the government stated. The Colo.-based cannabis dispensary is attempting to quash summonses issued by the IRS, in the agency’s pursuit of a civil audit into Standing Akimbo’s tax return for 2016, along with the tax liabilities of its owners for the same year. Law 360 (sub. req.)
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