Update: Governor Michelle Lujan Grisham signed the bill into law on April 12, 2021, making New Mexico the fifth state to legalize cannabis via the legislature.
On March 31, 2021, legislators in New Mexico reached an agreement on SB2/HB2, a bill that legalizes adult use cannabis. The bill now heads to Governor Michelle Lujan Grisham’s desk, where she is expected to sign it.
Following the conclusion of the regular legislative session, the New Mexico House and Senate reconvened for a special session to finalize the cannabis legalization deal at the governor’s request.
The Cannabis Regulation Act (SB2/HB2) decriminalizes possession for adults over 21 and sets up a regulatory framework for licensing, commercial production and sales by April 1, 2022 (a year from now).
According to AP News, the New Mexico bill gives the governor’s office a lot of power in licensing the industry and “monitoring supplies.” That includes the power to appoint a superintendent of the Regulation and Licensing Department, which is in charge of regulatory oversight in the new market.
The Cannabis Regulation Act sets up an excise tax on adult use sales of 12% that rises to 18% over time, in addition to the “current gross receipts on sales that range from 5% to 9%.” The bill also removes taxes on medical sales.
To say 2020 was a historic year is an understatement.
Arizona landed in a solid eighth place among the top ten most successful cannabis states thanks to its expansive medical cannabis program. To close out the year, voters approved Proposition 207, also known as the Smart and Safe Arizona Act (SSAA), making Arizona one of 15 states, plus Washington D.C., to legalize the adult use of cannabis, which is expected to rocket the state’s overall cannabis sales to new heights.
It’s essential to this conversation that we clarify the two sides of this rapidly growing industry. Medical cannabis is a form of treatment, the adult use and consumption of cannabis is a choice. During the pandemic, in many medical cannabis states, the medical cannabis industry was deemed an essential service and allowed to continue providing valuable medicine to patients and caregivers. As medical cannabis programs continue to provide safer therapeutic options which are complementary to or serve as an alternative to many traditional treatments and narcotics, especially opioids, patients can be confident the need for medical programs will continue. Arizona’s adult use cannabis program imposes greater limitations on quantity and potency, while also requiring higher standards for packaging. We saw a trend during the pandemic as again, many states prioritized and allowed their medical programs to continue, while limiting adult use facilities, in the same manner as other non-essential businesses.
It’s also worth noting that we have seen many inevitable changes in patient behaviors during the pandemic, including an increased need for medical cannabis. There was a patient demand for convenience, safety and no-contact services, increased online ordering, scheduling and curbside pick-up or delivery. Many of these services were already on the rise in popularity throughout the various legal states. While Arizona’s recreational program prohibits delivery until at least 2023, retail adult use consumers will expect some of these services to extend to the new market. As life after the COVID-19 pandemic continues on and the need for some of these safer more convenient options also continues, we hope to see them more permanently implemented from a legal and regulatory perspective. For now, here are the highlights we’ll see come into play in the first few months of 2021 as Arizona adopts its new adult use cannabis program.
Smart and Safe Arizona Act (Prop 207):
Legalizes the sale, possession (one ounce) and consumption of adult use cannabis for adults at least 21 years old.
Adds a 16 percent excise tax on adult use cannabis sales, in addition to the state’s 5.6 percent, totaling a 21.6 percent tax.
Allocates an estimated $300 million in Arizona revenue to be divided between community college districts, municipal police, sheriff and fire departments, fire districts, highway funds, public health programs, infrastructure, and a new Justice Reinvestment Fund.
Allocates more than $30 million annually for addiction prevention, substance treatment, teen suicide prevention, mental health programs, and justice reinvestment projects.
Provides opportunities for expungement of certain lesser cannabis-related crimes such as possession, consumption, cultivation or transportation.
But of course, state law is just one part of the equation. Adult use cannabis facilities must be licensed separately from state to local levels, including counties to cities to local municipalities, all of which may also adopt rules and requirements through zoning and land use ordinances. Swift and certain timelines established by the Smart & Safe Act dictate the speedy launch of this new program, first utilizing the existing medical cannabis infrastructure.
Many Arizona consumers are under the impression that they’ll be able to walk into a dispensary on January 1, 2021 and buy cannabis. But that is not the case. They’ll have to wait until the Arizona Department of Health Services (AZDHS) completes the early applicant licensing process, which begins in January 2021. Currently, local and multistate operators are waiting for AZDHS to complete the rules and regulations for the adult use cannabis program. Here are two of the most significant steps to be navigated in the upcoming weeks:
Smart and Safe Arizona Act (Prop 207) – Step 1: The Rulemaking Process
AZDHS has been tasked with developing the rulemaking process for the Smart & Safe Act. The first draft of the adult use cannabis program rules has already been released, primarily consisting of the application requirements for the early applicant process. AZDHS collected its first round of public comments for consideration on Thursday, December 17, 2020. The exact details and parameters of the adult use cannabis program will not be finalized or known for certain until AZDHS completes the rulemaking process. We anticipate the next draft of adult use cannabis rules to be released sometime in early January.
Smart and Safe Arizona Act (Prop 207) – Step 2: The Application Process
AZDHS will begin accepting early applicants under the Smart & Safe Act on January 19, 2021, closing the process on March 9, 2021. Current medical cannabis license holders who apply for and acquire an adult use license in the early applicant process will be authorized to a dual-licensed dispensary (both medical and adult use license), as well as one offsite manufacturing facility (which may later be amended to include both medical and adult use manufacturing license), and offsite cultivation.
Early adult use license applicants are reserved for those that currently hold in good standing at least one Medical Marijuana Registration Certificate (“Medical Marijuana License”) and applicants applying to counties with no current operating dispensaries. Any county with a single operating dispensary (a medical cannabis dispensary) will be allocated an adult use license (dual license) as long as the medical license holder is in good standing for the application. All adult use licenses allocated to those counties without a current operating dispensary must keep that dispensary within that county.
AZDHS will have 60 days to process each application. Adult use licenses for counties without a current operating dispensary will be allocated through a random selection process, if more than two applications are received for that county. Additionally, upon the conclusion of the early applicant process, any adult use license that has not yet been awarded through that process, will be available to the general public and allocated through a random selection process.
This brings us to later phases of implementation of the Smart & Safe Act: within approximately six months of the adoption of the initial recreational program rules, AZDHS must develop and adopt the rules and regulations for the Social Equity Ownership Program (SEOP). The primary goal of the SEOP is to allocate 26 adult use licenses to “communities disproportionately impacted by the enforcement of previous cannabis laws.” In other words, communities disproportionately and negatively impacted by cannabis criminalization. Smart & Safe is light on the exact manner and process at this point, so Arizona voters and cannabis companies will look to AZDHS for the development and implementation of this important part of the adult use program. Stay tuned.
As a strange year heads to a final, painful finish, there have been some major (and some less so) changes afoot in the global world of cannabis regulation. These developments have also undoubtedly been influenced by recent events, such as the recent elections in the United States, state votes for adult use reform in the U.S. and the overall global temperature towards reform. And while all are broadly positive, they have not actually accomplished very much altogether.
Here is a brief overview of the same.
The UN Vote On Cannabis Despite a wide celebration in the cannabis press, along with proclamations of an unprecedented victory by large Canadian companies who are more interested in keeping their stock prices high than anything else, the December 2 vote on cannabis was actually fairly indecisive.
Following the WHO recommendations to reschedule cannabis, the UN voted in favor of the symbolic move. Despite removing cannabinoids from Schedule IV globally, a regulatory label designed for highly addictive, prescription drugs (like Valium), the actual results on the ground for the average company and patient will be inconclusive.
The first issue is that the UN did not remove cannabinoids themselves, or the plant, from Schedule I designation. This essentially means that countries and regions will be on the front lines to create more local, sovereign policies. This is not likely to change for at least the next several years (more likely decade) as the globe comes to terms with not just a reality post-COVID-19, but one which is very much pro-cannabis.
In the meantime, however, the ruling will make it easier for research to be conducted, for patient access (for the long term), and more difficult for insurers to turn down in jurisdictions where the supposed “danger” of cannabis has been used as an excuse to deny coverage. See Germany as a perfect example of the same.
It is also a boon for the CBD business, no matter where it is. Between this decision and the recent victory in Europe about whether CBD is a narcotic or not (see below), this is another nail in the coffin for those who want to use semantic excuses to restrain the obvious global desire for cannabinoids, with or without THC.
That said, the vote is significant in that it is a test of the current trends and views towards big issues within the overall discussion, beginning with decriminalization and a reform of current criminal and social justice issues inherent in the same. The Biden Administration, while plagued with a multitude of issues, beginning with the pandemic and its immediate aftershocks, will not be able to push both off the radar. Given the intersection of minority rights’ issues, the growing legality of the drug and acceptance thereof, as well as the growing non-partisan position on cannabis use of both the medical and adult use kind, and the economy, expect issues like banking to also have a hope of reform in the next several years.
Cannabis may be taking a back seat to COVID, in other words, but as the legalization of the industry is bound up, inextricably, in economic issues now front and center for every economy, it will be in the headlines a great deal. This makes it an unavoidable issue for the majority of the next four years and on a federal level.
Prognosis in other words? It’s a good next federal step that is safe, but far from enough.
The European Commission (EC) Has Finally Seen The Light On CBD
This combined with the UN rescheduling, will actually be the huge boost the CBD industry has been waiting for here, with one big and still major overhanging caveat – namely whether the plant is a “novel” one or not. It is unlikely as the situation continues to cook, that Cannabis Sativa L, when it hits a court of law, will ever be actually found as such. It has inhabited the region and been used by its residents for thousands of years.
However, beyond this, important regulatory guidance will need to fall somewhere on the matter of processing and extraction. It is in fact in the processing and extraction part of the debate that this discussion about Novel Food actually means something, beyond the political jockeying and hay made so far.
Beyond this of course, the marketing of CBD now allowed by this decision, will absolutely move the topic of cannabinoids front and center in the overall public sphere. That linked with sovereign experiments on adult use markets of the THC kind (see Holland, Luxembourg and Denmark as well as Portugal and Spain right after that), is far from a null sum game.
Legal Challenges Of Note
Against this changing regulatory schemata, court cases and legal decisions remain very important as they also add flavor to how regulations are interpreted and followed. The most important court case in Europe right now is the one now waiting to be decided in the Court of Human Rights at Strasbourg regarding the human rights implications of accessing the plant.
Beyond that, in Germany, recent case law at a regional social benefits court (LSG) has begun to establish that the cannabis discussion is ultimately between doctors and their patients. While this still does not solve the problem of doctor reluctance to prescribe the drug, barriers are indeed coming down thanks to legal challenges.
Bottom line, the industry has been handed a nice whiff of confidence, but there is a still high and thorny bramble remaining to get through – and it will not happen overnight, or indeed even over the next several years.
While the 2020 Presidential election didn’t exactly end up in a clear landslide victory for the Democrats, there is one group that did well: the cannabis industry.
The results clearly show that the expansion of cannabis is a recognizable part of today’s society across the United States. States like New Jersey, for example, partly thanks to New York and Pennsylvania—which already allow the use of medical cannabis—traffic will start to force the state of New York’s hand and that’s a big chunk of the population of the Northeast.
If the question of legalization was on the ballot, it was an issue that overwhelmingly succeeded in delivering a clear mandate. Adult use of cannabis passed handily in Arizona, Montana, South Dakota and as mentioned above, New Jersey, and was approved for medical use in Mississippi and South Dakota.
With only 15 states remaining in the union that still outlaw the use of cannabis in any form, the new reality for the industry is here. All of these outcomes show promise as the industry’s recognition is growing.
Election outcomes and the position of the average American on cannabis
Americans are definitely understanding, appreciating and using cannabis more and more. It is becoming a part of everyday life and this election’s results could be the tipping point that normalizes the adult use of cannabis. It is becoming more widely understood as an effective and acceptable means to help manage stress and anxiety, aid in sleep and general overall wellbeing.
This image of cannabis is aided by the many different forms of consumption that exist now: edibles, transdermal, nano tech, etc. No longer does a consumer have to smoke—which isn’t accepted in many circles—to get the beneficial effects of cannabis.
Knowledge expansion is going to move these products across state lines and eventually, the federal government will have to take notice.
Do Democrats and Republicans view cannabis through the same lens?
Cannabis is and will always be state specific. Republicans in general tend to be a little bit more cautious and there are a lot of pundits who believe that as long as the Republicans control the senate, there isn’t much of a chance for federal legalization.
There is some hope, however, that the industry will get support from the Biden administration. While President-Elect Biden has been on record as being against legalization of cannabis at a federal level, even he will eventually see that the train has left the station and momentum continues to build. In fact, Biden’s tone has changed considerably while he running for president, adding cannabis decriminalization to the Biden-Harris campaign platform.
Ultimately, how cannabis is viewed from each side of the aisle matters less than how it is viewed at the state level.
Cannabis reform under Biden
Biden had an opportunity to legalize cannabis federally in the U.S. during the Obama administration and it didn’t happen. It’s clear that the mandates of the Biden-Harris administration are going to be overwhelmed by current issues, at least in the beginning: COVID-19, the economy and climate change, to name but three.
What will be interesting is if the Biden-Harris administration goes to greater lengths to decriminalize cannabis. For example, cannabis is still a Schedule 1 drug on the books, which puts it in the same class as heroin. Biden couldn’t unilaterally remove cannabis from all scheduling, but his government could reschedule it to reduce the implications of its use.
This could, however, create more problems than it solves:
“It’s generally understood, then, that rescheduling weed would blow up the marijuana industry’s existing model, of state-licensed businesses that are not pharmacies selling cannabis products, that are not Food and Drug Administration-reviewed and approved, to customers who are not medical patients.
Biden rescheduling cannabis “would only continue the state-federal conflict, and force both state regulators and businesses to completely reconfigure themselves, putting many people out of business and costing states significant time and money,” as Morgan Fox, chief spokesperson for the National Cannabis Industry Association, said in an email on Monday.” (Source)
In reality however, there is little chance that Biden will spend any political capital that he has, particularly if the Senate remains in Republican control, dealing with the legalization of adult use cannabis.
What needs to happen for legalization to become a reality
Outside of the law, if Trump suddenly decided to legalize adult use cannabis before leaving the White House, the states would still need to agree on issues such as possession, transportation, shipment and taxation.
It’s clear that further normalization of cannabis use is required—which will likely take a good couple of years—in order for it to become as understood and as simple as wine, liquor or cigarettes.
Beyond that, it’s Congress that dictated that cannabis be illegal at the federal level and it will have to be Congress that makes the decision to change that. Even the Supreme Court has been reluctant to get involved in the question, believing this to be an issue that should be dealt within the House.
What does all of this mean for investment in the cannabis industry?
Cannabis should be part of most long-term investors’ portfolios. Like a group of stocks in a healthy market with the right balance sheets, cannabis is an expanding industry and growth is there.
Whether or not this is specifically the right time to invest, it’s always important to evaluate each stock or each company individually, from the point of view of the merits of the investment and investment objectives, as well as risk tolerance perspectives.
There isn’t any unique or special place to buy into the cannabis industry, unless it is connected to some new real estate or other opportunity that is COVID-19 related. This moment in time isn’t really any different from any other when it comes to the opportunity to own some cannabis stocks. It’s always a good time.
The short term returns of this market shouldn’t be speculated upon. There are just way more factors than the fundamentals of a company that will affect the short-term play. The country is in a transition of power, in addition to much international change taking place that can also contribute to returns in the short term, making speculation unhelpful.
The cannabis market in 2021
The cannabis industry is likely to continue to expand and grow with the select companies acquiring more and more and getting back to their cash flow. Some companies will slowly be going out of business and/or will be acquired by others going into a certain consolidation period of time. Whatever the outcomes in specific tourism dominated markets, the industry as a whole can really go in one direction.
Five states had cannabis reform on the ballot yesterday for the 2020 election: Arizona, Mississippi, Montana, New Jersey and South Dakota. All five ballot initiatives won by a clear margin, with some races ending in landslides. Stay tuned for coverage on congressional and presidential elections and the impact on the future of the cannabis industry.
For now, here are which states legalized cannabis last night, as well as some details on the five (well, technically eight) state ballot initiatives:
Arizona – Prop. 207 (Adult Use)
Results: 59.8% Yes, 40.2% No
Legalizes cannabis for adults over 21
Puts a 16% tax on retail sales of cannabis and cannabis products
Develops a process for expunging records of cannabis-related drug offenses
Arizona already has an established medical cannabis program
Mississippi – Initiative Measure 65 & Alternative Measure 65A (Medical)
Results: 67.9% Yes for either, 32.1% No against both
Both initiatives theoretically legalize medical cannabis in the state.
There is a legislature-proposed alternative on the ballot, which makes things a bit confusing and gives voters the option of voting for both, neither or one of the two.
Initiative 65 would give the state’s department of health a mandate and authority to establish regulations for a medical cannabis program by August 2021. This initiative lists 22 qualifying conditions.
Initiative 65A gives the legislature the power to come up with their own program as they see fit and does not include any sort of deadline.
Legalizes, taxes and regulates cannabis for adults over 21
Requires the state’s department of revenue to license and regulate cannabis businesses
Puts a 20% tax on retail sales of cannabis and cannabis products
Develops a process for expunging records of cannabis-related drug offenses
Montana already has an established medical cannabis program
This just allows the language of the initiative to call an adult over 21, instead of 18 as it is stated in the Montana constitution.
New Jersey – Question 1 (Adult Use)
Results: 66.9% Yes, 33.1% No
Legalizes, taxes and regulates cannabis for adults over 21
New Jersey already has an established medical cannabis program – this ballot measure gives authority to the regulatory body currently overseeing the medical program, the five-member Cannabis Regulatory Commission.
Only applies the 6.625% state sales tax and prohibits additional sales taxes.
It was 1996. I was four years old. California Proposition 215 passed and for the first time, legal medical cannabis became available. I don’t remember it honestly, but that moment triggered a reckoning of outdated and ineffective efforts to control cannabis, which continues on November 3rd.
The moment in 1996 created for me and my generation of millennials a new, decriminalized lens for which to view cannabis and its potential. In my lifetime, from first experimenting with cannabis after high school and then earning my PhD in plant biochemistry, advancing cannabis research, to starting an agtech company dedicated to the genetic improvement of cannabis, we continue this march toward legalization. But another march hasn’t started yet.
The cannabis we consume today is still largely the same (albeit more potent today) as the cannabis that was legalized in 1996. There’s been little advancement in our scientific understanding of the plant. This can and should change. I believe the future and legitimacy of the cannabis crop in the medical field and in farmers’ fields is on the ballot this November.
In 33 states, medical cannabis is currently legal and in eleven of those, including my home states of Nevada and Washington, legalized adult-use recreational cannabis is generating millions in tax revenue every month. But compared to every other commercial crop, cannabis is still decades behind.
We are seeing a glacial cadence with cannabis research. As voters in five more states consider this November whether to legalize cannabis, that same tipping point we reached in 1996 comes closer to being triggered for cannabis research.
Here’s what cannabis scientists, like me, face as we work to apply real scientific methods to the long-neglected crop: I published one of the most cited papers on cannabis research last year, titled, Gene Networks Underlying Cannabinoid and Terpenoid Accumulation in Cannabis. But, as per university policy, we were unable to touch the plant during any of our research. We could not study the physical cannabis plant, extracts or any other substantive physical properties from the plant on campus or as a representative of the university. Instead we studied cannabis DNA processed through a third-party. Funding for the research came from private donors who were required to be unassociated with the cannabis industry.
While we were conducting our heavily restricted, bootstrapped cannabis research, the university lab in the next building over was experimenting with less restrictions on mice using other drugs: cocaine, opioids and amphetamines. (Quick note, marijuana is listed as more dangerous than cocaine, which is a Schedule II drug.)
I get it. Due to the federal prohibition on cannabis as a heavily regulated Schedule I drug, universities cannot fund research without the risk of losing all of their federal funding. While the USDA does not support research and SBIR grants are all but impossible, one government agency does allow research, from cannabis grown only in Mississippi. It’s the Drug Enforcement Agency (DEA) and any research conducted using its crop is as ineffective as you’re imagining. Relevant research is likely impossible using the crop which dates back to a 1970’s strain with a potency that’s about 30 percent of today’s commercial cannabis offerings.
To change this anti-research climate, do what those in California did with Prop 215 in 1996. Vote.
Vote for legalization of cannabis if you’re in those five states where legalization is on the ballot; that’s Arizona, New Jersey, Montana, South Dakota and Mississippi. The more states that align with cannabis legalization, the stronger the case becomes for the federal government to reschedule the drug from a Schedule I controlled substance. Currently cannabis is listed as a Schedule I alongside heroin. The DEA claims cannabis has no currently accepted medical use and a high potential for abuse. Both are not true, just listen to the scientists.
Those outside of the five states putting cannabis on the ballot can still play a role in creating a Congress that is more receptive to cannabis reform. This Congress is the oldest, one of the most conservative and least effective in our country’s history. Younger, more progressive representation will increase our odds of advancing cannabis research.
Cannabis holds far too much possibility for us to allow it to be an unstudied “ditch weed.” THC and CBD are just two of nearly 500 compounds found in cannabis which, when scientifically scrutinized will harvest – I believe – vast medicinal and commercial benefits and the tax windfalls that accompany both. But first you have to vote.
If cannabis and your representatives are not on the ballot, do something millennials have built somewhat of a reputation for failing to do; pick up a phone and call your current representative. Tell them cannabis deserves scientific attention and investment. There’s too much potential in the cannabis plant to wait any longer.
On Tuesday, September 22, the Vermont Senate voted (23-6) to pass a bill that would legalize, tax and regulate adult use cannabis sales. The bill, S. 54, was approved by 92-56 in the Vermont House of Representatives earlier in the month.
Governor Phil Scott did not sign the bill, but let it become law anyway without his signature late Wednesday night on October 7. He did however sign separate legislation that will expunge previous cannabis-related convictions.
Despite the limitations and privations caused by the COVID-19 pandemic, Germany’s market is “up” in terms of sales and overall insurance approvals. For all the victories however, there are still many kinks along the way. That is of course, not just on the medical front (where flower is yet again in short supply this summer), but also in the CBD space.
There is also clearly a drumbeat for more reform afoot in a country which has bested the COVID-19 pandemic like few others in the world. And like France as well as other countries in Europe, the conversation across the region has turned to including cannabis in recovery efforts, and in multiple ways. That includes not only relying on a new crop and industry for economic revitalization, but also of course, on the topic of further reform.
A Brief Overview Of The “Modern” German Cannabis Market Germany kicked off the entire cannabis discussion in a big way in Europe in the first quarter of 2017. The government got sued by patients and changed the law mandating that public insurers had to reimburse the drug. They also kicked off a cultivation tender bid which promptly became mired in several rounds of lawsuits and squabbles. The first German grown cannabis will hit pharmacies this fall, but it is not clear when, and the unofficial rumour is that the pandemic will delay distribution. The German distribution tender has been delayed three times so far this year.
In the meantime, the German market has developed into the world’s most lucrative target for global exporters, particularly (but not limited) to GMP and other certifiable high-grade cannabis (and in all its forms).
Other Issues, Problems and Wrinkles
Nothing about cannabis legalization is ever going to be easy, and Germany has been no exception.
The first problem on the ground is that the supply chain here has had several major hits, from the beginning. This is even though the supply has come from ostensibly otherwise reliable sources. Companies in Canada and in Holland have all had different kinds of problems with delivery (for different reasons) throughout this period.
Right now, there is a major reorganization afoot in Holland which may also be affecting the recent decision on the Dutch side to reorganize how the government picks (private) German narcotics distributors. Aurora also had product pulled last fall because of labelling and processing issues. But these, no matter how momentous momentarily, are also just waves in a cannabis ocean that is still choppy. Domestic sales continue to expand and foreign producers can still find a foothold in a still fairly open market.
As a result, even with a new dronabinol competitor, Israel, Australia and South Africa as well as multiple European countries now in advanced export schemes, the supply problem is still a thorny one, but not quite as thorny as it used to be.
However, On The CBD Front…
Things have gotten even more complicated since the repeated decisions on Novel Food at the EU level. Namely, last year’s decision that the only CBD extract that is not “Novel” is extracted from seeds, has thrown the entire industry into a major fluff. Especially when such decisions begin to filter down via a federal and regional approach. This has begun to happen. Indeed, the city of Cologne, in Germany’s most populous state just banned all CBD that is not labelled per an EU (although admittedly) non-binding resolution on the issue.
This in turn is leading to a renewed push for the obvious: recreational cannabis.
Where Is the Recreational Discussion Auf Deutschland? The recreational movement, generally, has been handed several black eyes for the last three years. Namely, that greater reform was not preserved in the first cannabis legalization that passed, albeit unanimously, in the German Parliament in 2017. However, as many recognized, the first, most important hurdle had just been broached. And indeed, that cautious strategy has created a steadily increasing, high quality (at least for the most part) medical market that is unmatched anywhere in the world except perhaps Israel.
Now, however, there are other issues in the room. The CBD discussion is mired in endless hypocrisy and meddling at both the state country level and the EU. There are many Germans who are keen to try cannabis beyond any idea of cannabis as therapy. Remember that Germany has largely managed to contain the outbreak, despite the emergence of several recent but isolated hotspots of late. In Frankfurt, for example, with the exception of more people on kurzarbeit (which is not visible), most street traffic proceeds apace these days with masks on, but with that exception or two, feels pretty much back to “normal.” And of course, economic development in the form of exports is one of Germany’s favorite pastimes.
Beyond that, the needle has absolutely moved across Europe. Several countries, including Greece and Portugal as well as the UK’s Channel Islands, have already jumped on the cannabis economic development bandwagon, and this is only going to encourage the Germans as well as other similar conversations across the region. It has even showed up in France.
And of course, it is not like the implications of Luxembourg and Switzerland as well as recent efforts in Holland to better regulate the recreational industry there, have not been blatantly obvious to those in Europe’s largest medical market.
Look for new shoots and leaves, in other words of the next stage of cannabis reform to take hold auf Deutschland. And soon. It is inevitable.
On March 5, 2020, the U.S. Food and Drug Administration (FDA) issued a press release to the public about their work on devising a regulatory framework for cannabidiol (CBD) products. The FDA also submitted a report to Congress on their rulemaking progress.
The main theme of the report is the same story we’ve been hearing from the FDA for a while now: They are still working on figuring out how to regulate CBD products and wants to do more research before they tackle the rulemaking.
The most intriguing new development from this report is the FDA’s newfound interest in regulating CBD products like dietary supplements:
“FDA is actively considering potential pathways for certain CBD products to be marketed as dietary supplements. Under current law, CBD products cannot lawfully be marketed as dietary supplements, but FDA has the authority to create an exemption through notice-and-comment rulemaking that would allow products containing CBD to be sold legally as dietary supplements.”
If you’ve been living under a rock for the past couple years, here’s a recap: In June of 2018, the FDA approved GW Pharma’s drug, Epidiolex, for the treatment of rare forms of epilepsy. This allowed a drug containing CBD to go to market, but only through the agency’s drug approval process. When the 2018 Farm Bill (Agricultural Improvement Act of 2018) was signed into law in December later that year, the federal government removed cannabis (hemp) with less than 0.3% THC from the Controlled Substances Act, essentially legalizing it on a federal level. Congress tasked the FDA with figuring out how to regulate the market. Without any FDA guidance in the early days, the subsequent market growth created mass confusion for the industry and consumers alike, with no one really knowing if selling CBD products is legal or not. In May of 2019, the agency held a comment period and public hearing on CBD, which included a lot of discussion around the benefits, the risks and further research on CBD. Throughout 2019, the FDA sent a large number of warning letters to companies marketing CBD products with unsubstantiated health claims. Towards the end of 2019, Congress passed a bill mandating that the FDA update them on their progress to regulate the market within 60 days. That deadline came and went, and then the FDA issued the public update and submitted the report mentioned above to Congress last week.
The FDA says they intend to take a number of steps towards providing some market clarity, while still protecting the public from unknown risks. Firstly, they want to educate the public more about potential risks associated with CBD. “We remain focused on educating the public about the number of questions that remain regarding CBD’s safety,” reads the update. “There may be risks that need to be considered before using CBD products outside of the monitored setting of a prescription from your health care provider.” Those concerns mentioned above include potential liver injury, drug interactions, reproductive toxicity and more benign side effects like drowsiness.
The agency also wants to try and close knowledge gaps in the areas of safety and potential benefits. In this section of the update, the agency asks industry stakeholders for help. “We’re seeking reliable and high-quality data.” The agency is requesting data on sedative effects, impacts of long-term use, pharmacokinetics, safety of various drug delivery mechanisms, safety for animals, different processes for full or broad spectrum or isolate derivation, among other areas of interest. They plan to re-open the public docket from the public hearing back in May 2019, extending the comment period indefinitely as a tool for stakeholders to share information with the FDA.
As far as enforcement actions go, the agency wants to take a risk-based approach to it. While there is still no official enforcement policy, the FDA is working on it. Their biggest concern is with companies marketing CBD products using drug and health claims, which could “deter consumers from seeking proven, safe medical therapies for serious illnesses – potentially endangering their health or life.” The agency is also worried about potential contamination risk and consumer exposure to things like residual solvents and heavy metals. Their last concern in this area involves truth in labeling, like making false label claims, not listing every ingredient or incorrectly stating the amount of cannabinoids in the product.
“Our ongoing efforts related to CBD, including the steps we’re announcing today, are in line with our mission to protect the public, foster innovation and promote consumer confidence. We recognize the significant public interest in CBD and we must work together with stakeholders and industry to develop high-quality data to close the substantial knowledge gaps about the science, safety and quality of many of these products. We are committed to working efficiently to further clarify our regulatory approach to these products – as always, using science as our guide and upholding our rigorous public health standards.”
Overall, the public update and the report don’t disclose anything groundbreaking. They do, however, provide some much-needed guidance for the CBD market on how stakeholders can help the FDA’s efforts. The fact that they are investigating dietary supplements as a path toward a regulatory framework is the by far the biggest take away from all this.
While Luxembourg is a tiny country in the middle of Europe, it is beginning to play an outsized role in pushing all aspects of the cannabis discussion forward in the EU.
The country has steadily moved forward on integrating cannabis into the medical system. In 2018, medical cannabis was tested in a pilot project and is now available, on prescription, from a limited number of hospital pharmacies since February of this year. The program, at least from the Department of Health’s perspective, has been “very successful” so far in the words of Health Minister Etienne Schneier.
So, as a result, the next phase of the transition is going into effect. The budget for doctor training and medical cannabis purchases will be increased from €350,000 to €1.37 million next year. The drug will also be available from all pharmacies. Overall, the government has allocated a budget of €228 million for its cannabis “pilot” next year – an increase of €22m in 2019.
Canopy Growth Moves Into A Prime Position
Canopy Growth also announced last month that it has now become the exclusive supplier of medical cannabis to the country in a deal that extends through the end of 2021 (in other words presumably until recreational reform becomes legal). This is an interesting twist of events, given that Aurora announced it was the first company to import the drug into the country last year.
This is certainly a new chapter in the ongoing competition between the two Canadian companies who have, since 2017, essentially split Europe’s “first entries” between them (with the exception of Tilray in Portugal).
Why Is Luxembourg’s Cannabis Experiment So Interesting?
The increasingly strategic position of this tiny country on the cannabis discussion cannot be discounted.
In the summer of 2018, it was the government’s decision to change the law on medical cannabis use that preserved the ability of Germans to continue to buy cannabis stocks. Confused? The Deutsche Börse, in Frankfurt, the third largest stock exchange in the world, claimed that it could not “clear” stock purchases last summer because their clearing company, based in Luxembourg, could not close the transactions in a country where even medical cannabis was still off the table. When Luxembourg changed their law, in other words, the Deutsche Börse had to reverse course.
Since then, this tiny country has continued to challenge the cannabis discussion in the EU – also announcing that a full-boat recreational program will be enacted within the next two years (almost certainly by 2021). This aggressive timetable will also move the discussion in almost every EU regulation still on the table, and probably position the country as the only one in Europe where a fully integrated medical and recreational policy is in place. Even Holland does not cover medical cannabis these days. Dutch insurers stopped covering the drug in early 2017 – just as the German government changed its own laws.
Luxembourg, in other words, has now effectively pulled at least on par with Denmark and Germany in the cannabis discussion, with recreational now the agenda. And appears to be willing to preserve its medical program after recreational comes.
Who says size matters?
The “Colorado” Of Europe?
One of the reasons Colorado was such a strategic state in the cannabis discussion in the U.S. was undoubtedly its “purple” status – i.e. a state which politically swung both ways on a range of policy issues.
Luxembourg in fact, as the seat of the European Courts of Justice, may end up playing the same role in Europe – but on a national level.
In fact, the battle here increasingly resembles not Canada, but the U.S., as individual countries begin to tackle the cannabis question in their own way – both within and beyond the EU rubrics on the drug.
Will the United States legalize federally before the EU changes its tune? That is unknowable.
However, for the moment, the market leader in the EU to watch is undoubtedly Luxembourg, no matter its geographical size and population count.
As usual, cannabis reform enters through a crack, and widens from there. Luxembourg appears to be, if not the only crack, then certainly one of them that is turning into a decently sized crevice in the unyielding wall of blanket prohibition.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
We use tracking pixels that set your arrival time at our website, this is used as part of our anti-spam and security measures. Disabling this tracking pixel would disable some of our security measures, and is therefore considered necessary for the safe operation of the website. This tracking pixel is cleared from your system when you delete files in your history.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.