Welcome to our weekly roundup of CBD and hemp-related legal and regulatory news:
The FDA and FTC issued a record seven warning letters in one day to companies making CBD, the largest federal action against the industry in over a year. The letters targeted companies making COVID-related claims, and mark the first warnings issued since multiple scientific studies showed CBD, cannabinoid acids and even synthetic cannabis compounds may prevent or treat COVID-19 infections. The companies were given 48 hours to scrub their websites and social media posts of product listings that “misleadingly represent them as safe and/or effective for the treatment or prevention of COVID-19.” Companies that don’t comply could face product seizures or even criminal charges.
Hemp Industry Daily
U.S. District Judge Frank D. Whitney said the six causes of action We CBD brought against the U.S. Customs and Border Protection under both tort and constitutional theories fail. Furthermore, the judge agreed with CBP that his court lacks jurisdiction over We CBD’s tort claims because they are jurisdictionally barred under the Federal Tort Claims Act’s detention of goods exception. Law 360 (sub. req.)
As the Michigan Marijuana Regulatory Agency proposes allowing hemp farmers to convert their harvests into synthetic marijuana products, cannabis retailers, growers and processors in the state’s regulated adult-use and medical marijuana sectors are pushing back against the draft rules. They claim the rules would saturate the market and further depress crop prices, especially if out-of-state growers sell their hemp in the Mich. market. They also argue such a proliferation of synthetic marijuana alongside typical cannabis products found in retail stores would confuse consumers. Meanwhile, the MMRA Director Andrew Brisbo says the regulations are necessary to provide oversight over what’s currently a gray or even illegal market for synthetic marijuana. MiBiz
With heightened scrutiny of their industry, legitimate hemp farmers, like Mason Walker, CEO and co-owner of East Fork Cultivars, are concerned about the future of hemp in Ore. Furthermore, the increased supply of the plant over the last couple of years has had a negative effect on the price farmers can demand for hemp on the agricultural commodities market. While hemp can be used for several commercial applications, it’s primarily being grown in Ore. to produce CBD extract. Regulatory uncertainty surrounding CBD has only made matters worse, adds Paul Murdoch, CEO of Horn Creek Hemp. OPB
According to Abdel Berrada, a hemp researcher with Mesa Verde Ag Solutions, hemp growing in Colo. crashed from 85,000 acres in 2019 to 10,000 in 2020. The hemp boom in the state turned to bust for many reasons, he notes, including inexperienced farmers hoping for a quick profit, a steep learning curve, a high supply that drove down the price and insufficient processing infrastructure. Other challenges include having no access to large industrial processing facilities in the state and the DEA authorizing a minimal number of testing labs, adds Berrada. The Durango Herald
The latest suit requests a delay for a scheduled Apr. 8 lottery to determine the winners of 26 social equity marijuana retail permits. The plaintiffs allege the Ariz. health department has not fully vetted the roughly 1,500 applicants for the social equity lottery to confirm they’re eligible under state law. If the lottery isn’t delayed for fuller vetting, the suit claims, the state might be forced to revoke some of the 26 licenses it plans to award after the Apr. 8 drawing. The three plaintiffs all work with a company called Brachium Prime. The two other lawsuits that were filed with a focus on the social equity licenses include one by the Greater Phoenix Urban League and Acre 41 (dismissed in Feb.) and another by Black Seed (pending). MJ Biz Daily
U.S. District Judge Steven D. Grimberg threw out a lawsuit accusing the Georgia Access to Medical Cannabis Commission of botching the application process for the state’s low-THC cannabis oil program, saying Georgia Atlas and its Ill. affiliate have no standing because marijuana remains a Schedule I substance under federal law. The plaintiffs filed the lawsuit in Aug., alleging the regulator gave improper consideration to residency criteria and altered its definition of “minority” applicants to exclude women, resulting in a fundamentally flawed and discriminatory process. However, Judge Grimberg found that even if the process “was plagued with unfairness and rife with error,” it wouldn’t erase the fact that cannabis remains federally illegal. As a result, Georgia Atlas and Illinois Atlas can have no federally protected property interest in obtaining a license to cultivate or distribute cannabis, he said. Law 360 (sub.req.)
The IRS is not permitted “to use civil authority to enforce criminal law,” according to the brief Standing Akimbo filed with the Tenth Circuit, which urged the appeals court to reverse a lower court decision permitting the summonses. “This court has only allowed the IRS drug crime investigations for ‘civil tax purposes’ only [and] has not legitimized such investigations for purposes of enforcing the Controlled Substances Act,” the cannabis company said. A Colo. federal court found Standing Akimbo’s arguments for blocking the IRS’ enforcement of the summonses were unconvincing because the appeals court had allowed the agency to proceed with identical summonses for Standing Akimbo’s tax information that involved a different tax period. The dispensary unsuccessfully sought review of that decision before the U.S. Supreme Court. The IRS issued the summonses to enforce Internal Revenue Code Section 280E’s bar on tax deductions for marijuana businesses and others that violate the CSA. Law 360 (sub.req.)
