In this week’s edition:

• DEA rescheduling of cannabis hearings begin; DEA requests subpoenas to compel FDA officials to testify
• Idaho, Indiana, Pennsylvania and Wisconsin look to legalize medical cannabis in 2025
• Many states propose legislation on hemp
• UN High Commissioner for Human Rights called on the international community to move away from punitive, criminal drug policies
• Denmark’s Cannabis Pilot may become permanent
• Teen Cannabis Use continues to drop in the U.S.

End of Year Message

Happy Holidays from the Dentons Cannabis Team! We look forward to a fruitful 2025 with you. In 2025, we anticipate action on many fronts:

• Rescheduling of cannabis;
• continued efforts on SAFER;
• fortification of state programs;
• additional debt;
• consolidation through M&A;
• creative structures for ownership and licensing; and
• significant activity with hemp.

Federal

The first DEA hearing on the Biden administration’s proposal to reschedule cannabis from Schedule I to Schedule III was largely procedural, focusing on legal and logistical issues rather than on the merits – The judge emphasized that the hearings are not to determine the benefits or drawbacks of cannabis but to address its potential medical use and addiction potential, with substantive hearings scheduled for 2025. Attorneys for the group Doctors for Drug Policy Reform (D4DPR) have notified the judge presiding over the DEA proceedings that it filed a petition with a federal court challenging DEA’s denial of its participation in the proceedings. A Veterans group has challenged its exclusion from the hearings. The DEA maintains that its role in the hearings is as a proponent of cannabis rescheduling. Meanwhile, the DEA is being sued by an attorney who says it failed to timely respond to a FOIA request.

DEA Requests Subpoenas to “Compel” FDA Officials to Testify in Rescheduling Hearing – The Drug Enforcement Administration said it “anticipates issuing subpoenas for testimony” from four Food and Drug Administration officials, despite the U.S. Department of Health and Human Services previously advising the agency that it would not voluntarily participate. “It is anticipated that these witnesses will be able to provide testimony and discuss the scientific and medical evaluations in the HHS Eight Factor analysis that is the basis for the Notice of Proposed Rulemaking, including the novel two factor test applied by HHS for determination of ‘currently accepted medical use,’” DEA said. The agency also indicated it will be introducing tens of thousands of public comments it received as part of the rulemaking process as evidence, despite warnings from the judge in a prehearing ruling that such comments “are not evidence” and this could be seen as a “dilatory tactic.” DEA was also admonished for a sloppy error in its original filing, which it promptly corrected (and the judge ultimately granted the subpoenas).

IRS Sends Message to Cannabis Businesses Regarding 280E – The Internal Revenue Service (IRS) issued a new notice mentioning that some companies in the cannabis industry have, without a “reasonable basis,” filled out a supplementary form in an attempt to take federal tax deductions that the IRS says they are prohibited from receiving under Section 280E.  If Dentons has provided you with a reasonable basis opinion, you have received an additional communication regarding this notice.

Chad Chronister, President-elect Donald Trump’s nominee for DEA chief has withdrawn his nomination – This follows the withdrawal of Trump’s first choice for attorney general, Matt Gaetz, amid a federal investigation, leaving the next nominee for the DEA position unclear.

President Joe Biden’s pardon of his son Hunter Biden – is garnering him criticism from cannabis reform advocates who urge the president to free remaining cannabis prisoners; meanwhile, former White House Domestic Policy Council Director Susan Rice had mistakenly claimed that the President had “already” pardoned prisoners serving time for nonviolent cannabis offenses.

Congressional Democrats are urging President Joe Biden to take further executive action on cannabis reforms; additional pardons – including broader clemency for those with cannabis-related convictions and reinstating the Cole Memo to deprioritize federal enforcement against state-compliant cannabis activities. In a letter led by prominent lawmakers, they emphasized the need to build on Biden’s past cannabis policies to address the harms of criminalization, particularly for communities most affected by the War on Drugs.  Last week, the White House announced that over 1,500 people will get their sentences reduced through commutations or receive presidential pardons for their offenses. A majority of pardon recipients were convicted for non-violent drug offenses. Advocates have argued that the pardons and commutations still fall short of Biden’s promise to release those currently incarcerated over cannabis.

Senate Majority Leader Chuck Schumer (D-NY) is committed to advancing the bipartisan cannabis banking bill, the Secure and Fair Enforcement Regulation (SAFER) Banking Act – Despite President-elect Donald Trump’s endorsement, the bill’s future remains uncertain with the incoming GOP majority in both chambers, though Schumer’s office confirms it remains a legislative priority.

A federal appeals court panel heard arguments from cannabis businesses challenging the constitutionality of federal cannabis prohibition – the case asserts that the U.S. government has effectively abandoned enforcement against state-regulated cannabis. The case, initially dismissed by a district judge, was appealed to the U.S. Court of Appeals for the First Circuit by plaintiffs including Verano Holdings Corp. and Massachusetts-based Canna Provisions, who argue that federal control over state-regulated cannabis is no longer justified.

State

DE –  Delaware’s lottery for the state’s fifteen (15) adult-use cannabis retail business licenses, also known as Open Retailer permits, will open on December 19 around 1:00 – 2:00 p.m. ET. The lottery is expected to feature Delaware’s largest field of applicants at five hundred nineteen (519). December 19 is also the day that previous adult-use license award winners are required to turn in their supplemental applications. The Open Retailer license winners will be subject to a financial background to ensure the granted license will cause no risk to the state.

ID – With the help of group Kind Idaho, Idaho officials issued an official title and summary of a possible 2026 ballot measure pushing to legalize personal use and cultivation of cannabis in the state. The proposed ballot measure would exempt people twenty-one (21) years of age and older from Idaho laws against the possession, production, or cultivation of cannabis. The exemption would apply to one ounce of cannabis flower or up to one thousand (1,000) milligrams of THC in the other products (oils, tinctures, gummies, and other edibles). Phil McGrane, Idaho’s Secretary of State, approved the petition for circulation, and the officials are authorized to gather signatures of support.  

IN –  According to a recent survey, nine (9) in ten (10) residents of Indiana support the legalization of medical cannabis in the state. Because of the survey results, Mike Braun (R), Indiana’s incoming governor, stated that it’s “probably time” that medical cannabis is legalized in the state. Another recent poll from Ball State University showed that sixty-two percent (62%) of Indiana residents support both the legalization of medical cannabis and adult-use cannabis.

MA –  The top choice for executive director of Massachusetts’ Cannabis Control Commission, or CCC, has turned down the offer. David Lakeman is a former CCC official and policy expert for the Cannabis Advisory Board who was the top cannabis regulator in Illinois. Lakeman announced, with no explanation, that he would not accept the job as the executive director.  The Massachusetts Cannabis Control Commission proposed new framework for social consumption of cannabis in the state. The proposed framework includes three different license types – a “supplemental” license, a “hospitality” license, and an “event organizer” license. Each license grants different uses. The language of the regulatory changes will be released on December 17. The commission plans to publish the social consumption regulations by mid-2025.

MS – The 5th Circuit Court of Appeals upheld Mississippi’s ban on medical cannabis advertising. Mississippi’s Department of Health does not allow medical cannabis dispensaries in the state to advertise or market in any media. The judge held that the ban on advertising was not a violation of the First Amendment and rejected the business owner plaintiff’s argument that cannabis is “effectively legal” at the federal level.

MO – The Missouri Independent conducted an investigation into microbusiness licenses granted by the state through a lottery for the social equity cannabis program. The investigation results showed that David Brodsky, a cannabis consultant, is associated with seven (7) out of ninety-six (96) of the microbusiness licenses. All of the businesses are under investigation or facing the possibility of revocation because the state is unsure if a qualified applicant will be running the business.

NE – A Nebraska state judge has denied a request to reopen secretary of state Robert B. Evnen’s challenge to medical cannabis ballot initiatives. The secretary of state wanted to amend the complaint to add new or slightly altered claims of fraud and malfeasance by people who collected signatures for the ballot measures that legalized the possession of cannabis for medical use and established the state-run regulatory program. The judge ruled that the request was futile and would dismiss the plaintiff’s complaint because he did not show that enough signatures lost their presumption of validity.

NY – New York’s Medical Cannabis Industry Association filed a lawsuit challenging the constitutionality of a $20 million fee required for medical cannabis operators to enter the retail marketplace in the state. The group claimed the fee is punitive and constitutes a “regulatory taking” of their business. The complaint requests that the court deem the fee unconstitutional and for it to be invalidated.

OH – Ohio regulators filed changes to the state’s cannabis laws and regulations. The regulators introduced new rules and filed amendments to other existing rules. One new rule outlines the general requirements for provisional licensure. The proposed rules states, “A provisional license does not permit the holder to cultivate, process, test, or sell cannabis, but is simply issued as a placeholder while provisional licensees work to meet the requirements to obtain a Certificate of Operation.” Others include a record keeping rule for cannabis entities, rules regarding transfers of cannabis from one licensed entity to another, and a rule requiring cultivators and processors to comply with good manufacturing practices (GMPs). Many other rules were filed relating to the state’s cannabis regulations.

OK – Oklahoma regulators with the Oklahoma Medical Marijuana Authority plan to open a testing laboratory to test medical cannabis products in the state and double check results from commercial testers in the state. The group plans to open the lab in February 2025. The Oklahoma Medical Marijuana Authority has invited public comment on proposed rules following new legislation on mandatory prepackaged cannabis, business license renewals and license transfers. The rules include new definitions for change of ownership requests and other terms, specific location prohibitions regarding multiple licenses of the same type, amendments to the business license transfer rules, and others. The public may submit comments online at the Oklahoma Medical Marijuana Authority website or make in-person comments at a hearing on December 17 in Oklahoma City.

PA – Lawmakers in Pennsylvania are planning to introduce legislation during the upcoming legislative session to legalize adult-use cannabis in the state. A bill from State Reps. Dan Frankel (D-Allegheny) and Rick Krajewski (D-Philadelphia) reportedly will include a model for cannabis to be sold in state-owned stores similar to how liquor is sold, while making room for private businesses in other parts of the industry, such as cultivation and social consumption lounges.

SC – Sen. Tom Davis (R) pre-filed a bill to legalize medical cannabis for the 2025 session, saying that cannabis is “a lot less intrusive” than opioids and can serve as an alternative for treating pain for patients in South Carolina. As introduced, the legislation would allow patients to access medical cannabis from “therapeutic cannabis pharmacies,” which would be licensed by the state Board of Pharmacy.

Hemp

U.S. Department of Agriculture to Make Changes to Hemp Crop Insurance Program – The revision to crop-rotation rules, announced recently by USDA’s Risk Management Agency, will effectively “allow hemp to be insurable if planted following soybeans,” the agency said. The change, which will go into effect next year, applies in 14 states: Colorado, Illinois, Indiana, Maine, Michigan, Minnesota, Montana, Nevada, New York, North Dakota, Oregon, Pennsylvania, South Dakota and Wisconsin. The agency is also adding smoke damage to a list of reasons the program will not cover losses. Fire will remain a covered cause of loss.

CT –  A lawsuit filed in federal court by the Infinity Smoke Shop in Stratford alleges a Connecticut law that took effect Oct. 1 violates federal law in limiting the amount of THC that can be present in hemp products.

IL – Gov. J.B. Pritzker (D) has been advocating for a hemp regulation measure that stalled at the Illinois State House. House Bill 4293 would regulate intoxicating hemp products similar to how legal cannabis is regulated, and would impose taxation and testing requirements. “This industry is selling hemp-derived products, such as Delta-8, and they’re using deceptive advertising tactics to market them directly to minors,” said Pritzker. Pritzker reportedly noted that over 9,000 cases of Delta-8 poisonings have been reported around the country since 2021.  The Illinois Department of Agriculture and a state legislative committee announced a 45-day delay in finalizing new hemp rules, which were initially set for approval on November 12, amid industry concerns. The proposed rules reportedly created concerns over inspections, high fees, and the implementation of social equity programs.

MO - Missouri lawmakers are considering new regulations for intoxicating hemp products, such as delta-8 THC drinks, which are currently sold widely without specific rules. The hemp industry has consistently opposed outright bans, advocating instead for age restrictions and testing requirements. The state is taking steps to regulate these products, with proposed administrative rules and budget requests for enforcement, despite ongoing debates about the appropriate regulatory framework.

OH –  Three bills introduced in the Ohio state legislature would put controls on the market for unregulated hemp intoxicants in the state. The latest draft law, introduced by Republican State Sen. Steve Huffman last month, would essentially ban the sale of products containing the hemp compounds. Senate Bill 326 would set a specific definition for an “intoxicating hemp product” and criminalize violations of the measure.

TN – Two groups are suing Tennessee state regulators in an attempt to stop hemp rules limiting the sale of THCa products. Under the new rules, set to go into effect on December 26, the combined amount of delta-9 and THCa, which becomes psychoactive when heated, must be under 0.3%.

TX – Texas Lt. Governor Dan Patrick (R) announced that state lawmakers will prioritize enacting a ban next year on all THC products, including hemp-derived delta-9 and delta-8 THC products. Patrick, who presides over the Senate and largely controls the flow of legislation in the chamber, said the THC ban would be designated as Senate Bill 3, a low bill number that reportedly signals it is among his top priorities for the upcoming legislative session.

International

United Nations High Commissioner Comments on War on Drugs –The United Nations High Commissioner for Human Rights called on the international community to move away from punitive, criminal drug policies, saying that the global war on drugs “has failed, completely and utterly.” Commissioner Volker Türk urged a shift to a more evidence-based, human rights-centered approach to drug policies that prioritize people over punishment.

Global Commission on Drug Policy Publishes New Report – The report, “Beyond Punishment: From Criminal Justice Responses to Drug Policy Reform,” urges countries to implement strategies focusing on “health, human rights, and social equity.” More than two dozen former presidents, prime ministers, and diplomats from around the world provided input for the publication.

Report Shows Nearly $13 billion in U.S. Taxpayer Dollars Spent on Global Counternarcotics Activities Since 2015 – The report, jointly published by the Drug Policy Alliance and Harm Reduction International, consists of what the authors describe as a “follow-the-money data analysis” examining anti-drug spending allocations across various government departments as well as case studies from Colombia, Mexico and the Philippines.

Brazil – Brazil’s Superior Court of Justice unanimously approved the planting, cultivation, industrialization and sale of hemp for medical and pharmaceutical purposes, under stringent regulations.

Canada – The Canadian government released a new study showing that the illegal market for cannabis has shrunk considerably since cannabis was legalized nationwide. In addition to showing a general trend of consumers moving away from the illicit market, findings indicate that rates of driving after consuming cannabis have fallen since 2019, while daily or almost daily use rates have remained largely stable among adults and youth.

Denmark – The country’s six-year medical cannabis pilot program, running since 2018, could soon transition into a fully legalized market, following a surprise announcement from the government. The program, which has expanded both in scope and patient access, may be made permanent based on positive patient outcomes and recommendations from a recent evaluation report, published at the same time as the government announcement.

France – According to the European Drug Control Agency, France has the highest adult cannabis consumption in the continent, despite cannabis remaining broadly illegal--although the country includes an experimental medical cannabis program. The country spends approximately 570 million Euros annually enforcing cannabis restrictions, but high consumption persists, with an illegal trade fueling gang violence and various social issues.

United Kingdom – The UK’s Food Standards Agency (FSA) recently announced that the first CBD products may be officially approved by Spring 2025, marking a major step for the sector. Following positive safety assessments for three applications, the FSA and Food Standards Scotland will hold an eight-week public consultation early next year before making final recommendations. The public consultation offers industry stakeholders a potential chance to address reported concerns about the current regulatory framework and the industry’s recent contraction.

Business

US Cannabis Sales to Hit $32bn in 2024 – The cannabis industry is projected to exceed 32 billion dollars in retail sales and nearly 12 billion dollars in wholesale sales in 2024, with the market expected to grow to 55 billion dollars by 2030. Over the past decade, cannabis has expanded nationwide, supporting 500,000 jobs and 25,000 businesses across 41 states, with flower remaining the top-selling product (at 40 percent of retail sales).

Everest Targets Cannabis Industry – The Everest Ransomware group has recently targeted the cannabis industry, with two cannabis operators appearing as victims on its dark-web blog. The second victim was apparently a client of the first.  The growing trend suggests Everest may continue to expand its focus on the cannabis sector, following its increased targeting of healthcare organizations.

Colorado Cannabis Industry’s New Trend: Low-Dose Products – The Colorado cannabis industry is responding to growing customer demand for low-dose cannabis products, offering a range of gummies, drinks, and tinctures designed for those seeking holistic relief, especially for anxiety. The trend is reportedly part of a broader shift, with companies catering to customers who want the benefits of cannabis without a strong high. The trend also comes as the industry faces challenges such as over-regulation and declining sales, with the move expected to help companies attract new demographics, including inexperienced users and those with anxiety or sleep issues.

Organigram Purchases Motif Labs – OrganiGram Holdings Inc. announced it will acquire Motif Labs Ltd. for up to 100 million Canadian Dollars, making it the largest cannabis company in Canada by market share.

NFL Changes Cannabis Testing Policy – The National Football League (NFL) has raised the league’s THC threshold for triggering a positive cannabis test from 150 ng/ml to 350 ng/ml and reduced related fines for violations, including missed tests. The move follows its 2020 decision to end suspensions for positive cannabis tests, reflecting growing support for cannabis use among players.

Cansortium Secures Large Loan – Cansortium, a vertically integrated cannabis company, has reportedly secured a senior credit agreement for up to 96.5 million US Dollars and used it to pay off a 23 million US Dollar loan from Green Thumb Industries. The new agreement with Chicago Atlantic refinances an existing loan with a favorable 12% cash interest rate while its nondilutive structure reportedly preserves shareholder value.

Medicine

NIH Promotes Funding Research on Cannabis – National Institutes of Health (NIH) is providing pre-recorded webinars regarding two funding opportunities, PAR-25-240 and PAR-25-241, which support policy research examining tobacco, alcohol, and cannabis policies in the U.S. with a focus on health equity. The apparent goal is to fund projects that explore how these policies affect use or exposure among populations experiencing disparities, with the results reportedly aimed at advancing more equitable policies.

Yale Invests Six Figures Into Cannabis Research – The Yale Center for the Science of Cannabis and Cannabinoids (YC-SCAN²) is awarding over 600,000 US Dollars in grants to 14 Yale School of Medicine researchers to study the effects of cannabis and cannabinoids on neurodevelopment and mental health. Established in 2023, YC-SCAN² aims to be a hub for medicinal cannabis research, with its findings intended to educate the scientific community, healthcare professionals, and the public.

Teen Marijuana Use Continues To Drop As More States Legalize, Federally Funded Study Shows, Contradicting Opponents’ Claims – A federally funded study by the National Institute on Drug Abuse (NIDA) and the University of Michigan reveals that teen cannabis use continues to decline despite the legalization of cannabis in more states.  The Monitoring the Future Survey shows stable or decreasing cannabis use among 8th, 10th, and 12th graders, with a significant drop in perceptions of marijuana accessibility among youth.  The findings contradict claims that legalization would lead to increased teen consumption and suggest that regulated adult-use markets with safeguards like ID checks can deter youth access.  Additionally, the study found an increase in the perception of marijuana use as carrying a "great risk" among teens, further supporting the trend of reduced usage

NIDA Seeking Drug Users – The National Institute on Drug Abuse (NIDA) intends to form a working group composed of individuals with “lived or living experience of substance use” to advise on enhancing engagement with substance users in government-funded research. NIDA is seeking members who have personal experience with substance use or are family members/caregivers, aiming to ensure the perspectives of people with drug experience are integrated into future research efforts.

Study Shows “Interesting Spillover Effect” From Adding Medical Cannabis to State Drug Monitoring Programs – A recent study, in the journal Health Economics, found that adding medical cannabis to state prescription drug monitoring programs led to interesting results.  Prominently, along with revealing a potential bias among healthcare providers against cannabis patients, the study showed that providers were less likely to prescribe other controlled substances, such as narcotics, to medical cannabis patients as the substances could interact poorly with cannabis, thus improving patient safety.

Psychedelics

VA To Fund MDMA Research – Bipartisan lawmakers are celebrating the U.S. Department of Veterans Affairs’ 1.5 million US Dollar funding for a study on MDMA-assisted therapy for veterans with PTSD and alcohol use disorder. This marks the first federal study on psychedelics since the 1960s, with researchers from Brown University and Yale University leading the clinical trial at Providence and West Haven VA Medical Centers, with enrollment set to begin next year.

Psilocybin Clinical Trial Reports Significant Reduction in Depression – A recent study, published in JAMA Network Open, revealed that psilocybin-assisted therapy significantly reduced depression symptoms in frontline clinicians during the COVID-19 pandemic. The trial involved 30 clinicians, with one group receiving psilocybin and the other niacin, and established that psilocybin therapy could be an effective treatment for mental health conditions such as depression, burnout, and PTSD.

Dentons Speaks

• Dentons Cannabis partner Kelly Fair spoke on the panel “Cannabis at a Crossroads: The DEA Hearings, Rescheduling and the Path Forward with the Trump Administration” at MJBizCon in Las Vegas. David Culver, senior vice president of government relations for the US Cannabis Council, moderated the discussion, which also included Bryan Lanza, a Cannabis Council consultant and former communications director for the Trump transition team.

• Dentons cannabis Partner Joanne Cáceres presented at the International Cannabis Bar Association CLE at MJBiz on “Navigating the Grey Space: Practical Consideration for Clients Operating in the Cannabis and Hemp Cannabinoid Market.”

Please click here for more information on the Dentons US Cannabis group.

Authored by associates Malina Dumas, Lauren Estevez, Blair Johnson, and Jacob Raver.