Over 50 years ago President Nixon declared a “War on Drugs,” leaving housewives over the country proclaiming marijuana[1] to be the devil’s lettuce and urging sweet Billy to steer clear of the gateway drug. However, as time has progressed, marijuana’s use and presence in society has become less taboo. Some credit public acceptance of the three leafed plant commonly referred to as ganja or hemp to medical advances and promises of the drug’s potential to soothe pain, ease anxiety, and ease the effects cancer. Perhaps the drug’s popularity (or notoriety depending on one’s perspective) developed lyrically through Willie Nelson’s infamous “Roll Me Up and Smoke Me When I Die,” or Afroman’s four little words “Because I Got High.” Others find comfort in Mary Jane’s economic benefits, citing its exponential positive impact on tax revenue, generation of jobs, sources of potential investment, or enforcement funds returning to the Fed’s piggy bank. Whatever the source, there is no debate individual determinants of support for marijuana are extremely personal and range widely.
While smoking marijuana, either medically or recreationally, may be socially tolerated, the drug is nonetheless illegal pursuant to federal law. Under the Controlled Substances Act, marijuana, in any form, is prohibited for consumption, production, processing, and sale. However, most states have legalized the use of cannabinoids in some form. Here we discuss the cannabinoid legal landscape, including conflicting federal and state laws and regulations, two unanticipated— yet controlling— federal acts, hurdles affecting business operations, and pending legislative bills urging the federal government to “Just Say Yes.”
Alright, Alright, Alright[2]
What are Cannabinoids?
Cannabinoids are a group of substances found in the cannabis plant.[3] While there are around 540 chemical substances found in the cannabis plant, the two most common cannabinoids are cannabidiol (“CBD”) and tetrehydrocannabinoil (“THC”).[4] CBD is the main non-psychoactive cannabinoid in cannabis.[5] CBD may be derived from hemp or non-hemp plants, which is any part of the cannabis satvia plant with less than 0.3% of THC.[6] As long as CBD products contain less than 0.3% THC, they are legal under federal law.[7] CBD may be ingested in multiple ways—just ask Martha Stewart as she “preheat[ed] the oven” for the Silent Generation and Baby Boomer’s acceptance of cannabinoids with her line of CBD products.[8] CBD may be consumed through inhalation, via vapors or smoke, through aerosol spray into the cheek, by mouth as capsules or as a liquid solution.[9]
“Cannabis,” on the other hand, refers to all products derived from the cannabis sativa plant. ”[10] Different forms of cannabis contains different levels of THC—with higher levels of THC producing a stronger effect. Claimed by Willie Nelson to have “saved his life,” “marijuana” refers to all parts of the cannabis sativa plant that contain substantial amounts of THC— the main psychoactive cannabinoid that gives consumers a “high” feeling.[11] Marijuana may be smoked as a cigarette, referred to as a joint, in a pipe or bong, or through electronic vapes.[12] It may also be mixed with foods, brewed as teas, or infused with candies.[13]
Forty-seven states allow for the use of CBD and low THC products, while thirty-seven states and four territories allow the medical use of cannabis products.[14] Nineteen states and three territories have implemented laws allowing for non-medical, recreational adult cannabis use.[15] Currently, Idaho, Nebraska, and Kansas have no public cannabinoid access program available.[16]
Indisputably, both cannabis and CBD have incredible potential to generate revenue. Over 48 million people, or 18% of Americans, report kissing the sky with marijuana in 2019.[17] Colorado became one of the first states to legalize recreational marijuana in 2012. Since the state’s legalization of marijuana, sales totals for medical and retail marijuana exceed $13 billion and the state has collected over $2 billion in sales tax.[18] Nevada, a state that legalized recreational marijuana in 2017, reported $152,334,798 in total cannabis excise tax revenue, including the state wholesale and retail tax, for its 2022 fiscal year.[19] The state’s taxable sales reported by adult-use retail stores and medical dispensaries blaze higher at $965,091,123.[20] In the United States, CBD sales reached 4.6 billion in 2020, and the industry shows no signs of slowing down.[21] CBD sales are expected to reach $15 billion by 2024 and $20 billion in 2025.[22]
Without a doubt, the cannabis industry is poised to fly high. But the industry faces significant hurdles before full normalization—most notably federal legalization. Knowledge of four federal acts is critical to understanding the legal framework for cannabinoids. These include the Controlled Substances Act (“CSA”), the Agriculture Improvement Act of 2018 (the “Farm Bill”), the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”), and the Federal Trade Commission Act (the “FTCA”).
Up in Smoke[23]
The Controlled Substances Act
Enacted as an essential component of President Richard Nixon’s “War on Drugs,” the Controlled Substances Act (“CSA”) makes the possession, production, and distribution of marijuana illegal— without exception.[24] Under the Act, “Marihuana” is a Schedule I drug, alongside heroin, LSD, and methamphetamine.[25] Schedule I drugs are classified by their purported potential for abuse, lack of accepted medical use treatment in the United States, and lack of accepted safety for use under medical supervision.[26] Despite cannabis’ status as legal under many state laws, the CSA subjects cannabis consumers and businesses to civil and criminal penalties, including the risk of asset forfeiture under federal law.[27]
To clarify the apparent conflict in federal and state treatment of cannabis, the Department of Justice (“DOJ”) has issued several memoranda to federal prosecutors offering guidance concerning marijuana enforcement and prosecution.[28] In August 2013, the DOJ confirmed the federal government’s treatment of marijuana in the Cole II Memorandum (“Cole II”), noting “Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels.”[29] Despite this statement, Cole II presented eight defined goals of the DOJ, recognizing the need to define its marijuana enforcement priorities amidst state legalization.[30] Cole II also emphasized the DOJ’s reliance on states to “implement strong and effective regulatory and enforcement systems that will address the threat [legalized marijuana] could pose to public safety, public health, and other law enforcement interests.”[31]
In 2018, Attorney General Jeff Sessions rescinded prior guidance, including Cole II. However, in practice, the DOJ continues to follow Cole II, making it clear that while the federal government continues to criminalize the cultivation, distribution, sale, and possession of marijuana, the DOJ’s intent is to allow state “prosecutorial discretion” in regulation and enforcement of marijuana-related activity.[32]
Pursuant to the CSA, the Attorney General may add, transfer, or remove any drug from any schedule in the CSA through a rulemaking proceeding.[33] As such, marijuana could potentially be removed as a schedule I drug under the Act. Procedurally, in order for this to occur, the Administrator of the Drug Enforcement Administration (“DEA”), the Secretary of Health and Human Services (“HHS”) or any interested party may bring a petition.[34]
Can You Take Me Higher[35]
Supreme Court Hesitation?
From 1990 to present, the federal government’s prohibitive stance on cannabis has been tested several times through litigation. However, federal courts in the United States have yet to rule in opposition of the CSA.
The Supreme Court held in United States v. Oakland Cannabis Buyers Co-op, there are no medical necessity defenses to a violation of the CSA.[36] This ruling reinforced the notion that individuals who manufacture and distribute medical cannabis, albeit legally under state law, are still in violation of federal law. In 2005, the Supreme Court, provided guidance on the effect of purely local cultivation and use on interstate commerce in Gonzales v. Raich, finding Congress can enforce the prohibition even when the product does not enter into the interstate market.[37] The Ninth Circuit, in Conant v. Walters, held that any doctor prescribing medical cannabis to a patient would be aiding and abetting a violation of the CSA.[38] Consequently, a physician in cannabis-legal states may “recommend” cannabis to his or her patients, but may not “prescribe” cannabis.[39]
Several cannabis cases now before the Supreme Court and federal appeals courts could have a significant impact on the cannabis industry in 2022.[40] Notably, in Northeast Patients Group et al. v. Figueroa, the First Circuit explored the constitutionality of Maine’s law that bars or restricts nonresidents from holding cannabis licenses, or investing in cannabis business.[41] The First Circuit found the dormant commerce clause applies to the cannabis industry, meaning out-of-state companies can enter the cannabis market in Maine. The State of Maine may appeal the decision to the Supreme Court. However, as the First Circuit’s decision presently stands, Maine may not interfere with interstate commerce by imposing a residency requirement. This residency requirement is similar to the framework many other states employ—which could drive additional challenges to the legitimacy of the requirements, or even a potential circuit split in the future.
Feelin’ Alright?[42]
The Agriculture Improvement Act (Farm Bill)
The CSA proves the cannabinoid industry can’t always get what it wants, but the 2018 Agriculture Improvement Act (the “Farm Bill”) gave those in the CBD market a taste of what they needed.[43] The Farm Bill removed hemp as an illegal substance under the CSA.[44] It also carved out an exception for the cannabis plant and derivatives that contain less than 0.3 percent THC on a dry weight basis—making hemp-based CBD products with less than 0.3 percent THC legal under federal law.[45] The Farm Bill expressly preserved the FDA’s authority to control and regulate products containing cannabis or cannabis-derived compounds under the Food & Drug Cosmetics Act. In essence, this means hemp and low-level THC, although no longer illegal, are still subject to the same requirements as FDA-regulated products containing any other substance and FTCA guidance with respect to customer complaints regarding hemp and marijuana businesses.
While hemp’s effectiveness and medical credibility are wildly debated, there is no debate that demand of hemp products is increasing. In 2021, the United States Department of Agriculture estimated the total value of hemp production at $824 million.[46] Despite the economic surge from hemp’s legalization in 2018, the hemp and low-level THC industry is still faced with regulatory challenges. Many hemp advocates are hopeful the 2023 Farm Bill will address crucial issues that affect the industry.[47] At the top of industry leaders’ list is the inclusion of a provision to increase the allowable THC threshold in the hemp plant from 0.3% to 1%. Hemp cheerleaders also desire revised banking regulations to ease complications and light up greater sources of funding for hemp cultivation and processing.
Midnight Toker[48]
The Federal Food, Drug, and Cosmetic Act
Totally separate from the CSA and the Farm Bill, the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”) establishes a federal scheme to regulate food, drugs, and cosmetics, among other things.[49] The FD&C Act is regulated by the Federal Drug Administration (“FDA”). The FD&C Act requires any substance intended for use as a drug, including cannabis and hemp, to be approved by the FDA.[50] In addition, the Act prohibits marketing cannabis or hemp for medical or health use without approval of a new drug application for its use and prohibits marketing food and dietary supplements that contain cannabis or hemp.[51]
Although the Farm Bill legalized hemp and low levels of THC, it also explicitly preserved the power of the federal government to regulate products containing CBD.[52] In the haze of the Farm Bill’s passage, the FDA issued a statement declaring that the FDA will treat products containing cannabis or cannabis-derived compounds as any other FDA-regulated product, regardless of the source of the substance.[53] The FDA does not recognize CBD as a dietary supplement and has issued warning letters to companies that market new, unapproved CBD drugs promising to cure and mitigate diseases.[54] Additionally, the FDA has issued letters to companies misrepresenting the level of CBD contained in their products.[55]
In response to the FDA’s roaring issuance of warning letters, consumers are lighting up class actions around the country. However, plaintiffs have seen little to no success, as defendants have employed the primary jurisdiction doctrine as a defense against these claims.[56] In Dasilva v. Infinite Product Company, plaintiff alleged a CBD company intentionally marketed and sold illegal CBD products, citing the FDA’s warning letter to the company as evidence.[57] A federal court in the Central District of California stayed the case in early 2021, stating “it is unclear how the Court can adjudicate Plaintiff’s claims given the lack of clarity as to which of Defendant’s CBD Products are drugs, dietary supplements, or food products, and what standards apply to those Products.”[58]
Despite consumer demand and the federal government’s decriminalization of CBD, the FDA has approved only four cannabis related drugs to date.[59] One is a CBD-derived oral product called Epidiolex, which contains .1% THC and is used to treat epilepsy conditions.[60] Three are synthetic cannabis-related drug products: Marinol, Syndros, and Cesamet.[61] All four drugs were subject to substantial clinical investigations prior to their marketing as supplements.[62] To date, the FDA has not approved any product containing cannabis—effectively concluding that marijuana has no medical use.[63]
One Toke Over the Line[64]
The Federal Trade Commission Act
In addition to regulation by the FDA, the Federal Trade Commission (“FTC”) also retains regulatory authority over CBD.[65] Specifically, the FTC requires scientific substantiation before any health-related products may be marketed or branded with an advertised health claim. [66] The FDA takes the position that a lack of uniform consumption standards leaves questions unanswered regarding the safety of cannabis products.[67] Additionally, the FDA is concerned a number of CBD manufacturers market their products with unsubstantiated medical claims or omit warning labels from their goods or advertisements.[68] A rapid surge in CBD consumer utilization has prompted the FTC to take action against companies advertising unsupported health claims.[69]
In December 2020, the FTC announced a crackdown— termed “Operation CBDeceit”– on deceptively marked CBD products.[70] Specifically, the FTC challenged numerous CBD entities promoting products that claimed to prevent or treat serious diseases or health conditions, like cancer, diabetes, Alzheimer’s, and more. The FTC announced proposed settlements with six companies during its first raid. Utah based Epichouse, LLC, sold CBD oils, gummies, coffees, and creams with promises that the products prevented migraines, hypertension, heart disease, cognitive decline, and diabetes, among several others. In its complaint against the company, the FTC alleged the company falsely claimed that scientific research supported many of their prevention, treatment, and cure claims. Not only did the FTC order Epichouse to pay the Commission $30,000, it also ordered the company to provide notice of its misleading claims to customers, to conduct testing, and preserve records of testing.
Just as the number of consumer class actions has risen in response to the FDA’s warning letters, FTC warning letters are also expected to set the litigants on fire.[71] Complaints backed by FTC warning letters include a wide variety of allegations, including a plaintiff’s inability to understand a CBD company’s claims placed on the CBD label. While these complaints may seem frivolous, they have the potential to pack heat, as many deceptive trade practice statutes allow for civil penalties per violation, treble damages, and the recovery of attorney’s fees.[72]
Companies representing, whether expressly or impliedly, that their products prevent, treat, or cure medical conditions can expect a high level of scrutiny from the FTC. Additionally, the FTC may require competent and reliable scientific evidence of health-related representations in order for the product to reenter the market.
Hey, You, Get Off of My Cloud[73]
Challenges in Cannabis Operations
Undoubtedly, the cannabis industry is budding with financial opportunity for business owners and investors. In many ways, cannabinoid businesses are just like any other business—an entity is created with the state and appropriate corporate formalities are enacted. Yet, cannabis’ regulatory overlay and federally illegal status present business owners, financial institutions, legal service providers, and any business touching the cannabis industry with unique operational risks.
Interstate Commerce & Regulation
Notwithstanding federal prohibition on the possession, production, and distribution of marijuana, states continue to create their own intrastate regulatory models for the legalization of marijuana. As a result, each state has developed its own regulatory structure with varying approaches. However, regardless of the decided approach, the federally unregulated market means the same thing for all states – no cannabis product may cross state lines.[74]
The inability to transport the product across states lines presents quite the conundrum for multistate cannabis companies. Due to the prohibition on interstate transport, a multistate producer must establish a supply chain in each state, each with specific state-compliant regulations and controls. This supply chain headache in turn reduces product consistency and quality control, duplicates overhead costs, and increases labor costs.[75]
Insurance
Perhaps one of the most challenging aspects of cannabis business operations is the lack of affordable, broad, and available insurance coverage. Cannabis industry risks are widespread, including product recalls, theft of product, misrepresentation and shareholder fraud, employee injuries, failure to notify regulatory agencies of ownership change, personal injuries at dispensaries, violations of licensing and production, failure to tag cannabis products, failure to maintain equipment, transportation accidents, and even flood, wildfire, and natural disaster damage. Because cannabis is federally illegal, many insurance carriers and underwriters have either been slow to provide, or altogether refuse to provide, insurance policies covering commercial general liability, transportation, cargo, and automobile liability, products liability, management liability policies and even directors and officers (“D&O”) policies.[76]
Automobile policies are necessary to any business transporting cannabis; however, the premiums for automobile liability and physical damage policies are often four to five times higher than the cost an ordinary retailer would pay.[77] Cargo insurance is hard to find, which forces companies to split shipments— which in turn requires more labor/vehicles, and increases the wait time on the delivery of the goods.
The problems of the leaf do not end here.[78] Regulatory compliance and market volatility have led to a number of shareholder and investor disputes, third-party litigation, securities litigation, and allegations of mismanagement. However, D&O insurance is extremely difficult to obtain in the cannabis market. Its high cost, coupled with a plethora of carve-out exclusions, nonexistent reinsurance, and insufficient policy limits make attracting high-quality, experienced leadership a challenge for most large-scale cannabis companies. For example, Grupo Flor, a licensed cultivator, distributor, and manufacturer pays $85,000 to $100,000 annually for $1 million of D&O coverage.[79] Without iron-clad D&O protection, executives could expose their personal assets to risk when full indemnification or protections are unavailable.
Although not perfect, cannabis businesses combat these insurance hurdles through the use of alternative insurance methods, such as captive groups or risk retention groups.[80] However, because insurance is regulated at the state level, a particular state must first allow domicile for cannabis captives. Then, an entity must commit to fronting the carrier and any reinsurance.
Up Up & Away[81]
Looking to the Future
There are several proposed pieces of cannabinoid legislation currently before Congress that, if passed, will result in more predictable operations, increased capacity, and greater protections for cannabis businesses. But, let’s be blunt—the following bills, while widely supported by the cannabis industry, face challenges generating enough support to pass to the President.
The Marijuana Opportunity and Reinvestment Act (the “MORE Act”)
The Marijuana Opportunity and Reinvestment Act (the “MORE Act”) decriminalizes marijuana by removing it from the list of scheduled substances under the CSA.[82] The MORE Act was first passed by the House in December 2020, but the Senate did not give the Act a hearing or a vote. In 2021, the MORE Act was filed a second time and passed in the House. In April 2022, the Senate referred the MORE Act to the Finance Committee, but it has not yet been released from the Senate.
The MORE Act removes cannabis from the list of drugs regulated by the CSA, eliminates criminal penalties for federal criminal offenses, and expunges past federal cannabis convictions.[83] It also places the regulation and enforcement of marijuana in the state’s hands. As drafted, a popular tax starting at 5% and increasing to 8% over three years, would also be imposed on the retail sale of cannabis.[84] It effectively eliminates criminal penalties for individuals who manufacture, distribute, or possess marijuana as well.
The Cannabis Administration and Opportunity Act (“CAOA”)
On July 21, 2022, The Cannabis Administration and Opportunity Act (the “CAOA”) was officially submitted to the United States Senate.[85] The proposed act would direct the U.S. Attorney General to remove cannabis as a scheduled drug under the CSA.[86] A new definition of cannabis would be supplemented under the FD&C Act, following a schema similar to that of tobacco and other drugs. The CAOA is comparable to the MORE Act in many regards. State law would continue to govern with respect to possession, production, and the distribution of cannabis. The FD&C Act would establish 21 years of age as the minimum age required to purchase cannabis and limit the any retail sales transaction to 10 ounces of cannabis or the equivalent amount of any cannabis derivative. However, the CAOA imposes a much higher cannabis sales tax, initially starting at 10% and increasing to 25% over 5 years.
The Secure and Fair Enforcement Banking Act (the “SAFE Banking Act”)
Only a handful of U.S. banks and credit unions work with cannabis companies, which lead many in the industry to operate in cash. As of December 31, 2021, only 553 banks and 202 credit unions offer cannabis programs.[87] The lack of available banking services prohibits access to payment processing services, commercial loans, and other sources of capital that would otherwise be accessible to typical businesses.
H.R. 1996, the Secure and Fair Enforcement Banking Act of 2021(the “Safe Banking Act”), has passed in the House of Representatives more than six times in the past three years. However, the bill continues to stall in the Senate, presumably due to the bill’s lack of cannabis sentencing reform. Most recently, the Safe Banking Act was passed in the U.S. House of Representatives on July 14, 2022. The Safe Banking Act, more narrow than the MORE Act or CAOA, generally prohibits a federal banking regulator from penalizing a depository institution, as well as their insurers, for providing banking services to a legitimate cannabis-related business.[88] Additionally, proceeds from a transaction involving activities of a legitimate cannabis-related business are not considered proceeds from unlawful activity.[89]
If passed, transactions involving activities with cannabis-related businesses would no longer be considered as generating proceeds from unlawful activities and institutions are not subject to federal law or regulation for providing services to a federally illegal industry. Not only would the passage of the Act provide protections to financial institutions involved in cannabis-related businesses, but it would also increase the availability of commercial loans, reduce insurance premiums and deductibles, and decrease the number of D&O insurance losses.
The Capital Lending and Investment for Marijuana Business Act (the “CLIMB Act”)
The Capital Lending and Investment for Marijuana Business Act (the “CLIMB Act”), H.R. 8200, was introduced in the House on July 23, 2022.[90] The CLIMB Act has been referred to the House Committee on Financial Services. Effectively, the bi-partisan bill seeks to expand cannabis industry’s access to financial opportunities by providing public or private capital sources for investment in and financing of cannabis business.
The CLIMB Act differs from the SAFE Banking Act in two ways. First, it prohibits any federal agency from civility and criminally penalizing any business or individual that provides financial services to a state-legal marijuana business. This ensures businesses, including consultants, lawyers, insurers, advertisers, and debt or equity lenders, that receive funds or compensation from legitimate marijuana businesses would not be subject to civil or criminal repercussions. Second, the CLIMB Act provides a securities safe harbor, allowing cannabis businesses to list securities on the national securities exchange.
President Biden’s Marijuana Reform Press Release
On October 6, 2022, President Joe Biden released a statement on marijuana reform.[91] This statement marks President Biden’s first official position on the legalization of marijuana. It contained three parts: 1) the President granted a pardon of all prior Federal convictions for simple possession of marijuana; 2) He requested state Governors likewise to pardon simple marijuana possession offenses; and 3) He asked the Secretary of Health and Human Services and the Attorney General to initiate proceedings to review marijuana’s current classification in Schedule I of the Controlled Substance Act.
Point Me Towards the Sky[92]
Conclusions
After decades of societal condemnation and use restrictions, it’s apparent we will be dancing with Mary Jane for years to come. The question no longer remains a matter of if, but a question of when the federal government will legalize and embrace cannabis. Despite the path toward legalization, operational risk uncertainty, such as FDA approval, FTC regulation, limited insurance, funding, and banking options nonetheless linger for cannabinoid businesses.
Federal legislation legalizing cannabis and all forms of CBD would provide greater clarity and security to the industry; however, it is naïve to think the problems and dilemmas plaguing the cannabis industry will vanish with the stroke a pen in Washington. Decriminalization of cannabis would certainly allow financial institutions and insurers to “go green,” but state specific regulations still control. Therefore, any product traveling via interstate commerce would require compliance with its state of origin and each state it crosses through—a logistical quandary for manufacturers, distributors, transporters, and regulators. Until marijuana is federally legalized and the entire cannabinoid industry reaches full normalization, the industry will continue to inhale risk with the hope of high rewards.
[1] The United States Code employs an antiquated spelling of “marihuana” and does not refer to “cannabis.” For the purposes of this Article, the modern spelling of marijuana is used unless quoting a specific statute. Additionally, for the purposes of this Article, any use of the term “cannabis” means “marijuana” and not “hemp” (as the terms are defined in the CSA).
[2] “Alright, alright, alright,” coined by Matthew McConaughey in Dazed and Confused (1993).
[3] National Center for Complementary and Integrative Health, Cannabis (Marijuana) and Cannabinoids: What You Need to Know, (Nov. 2019) https://www.nccih.nih.gov/health/cannabis-marijuana-and-cannabinoids-what-you-need-to-know.
[4] U.S. Food & Drug Administration, FDA Regulation of Cannabis and Cannabis Derived Products, Including Cannabidiol (CBD), (Jan. 1, 2021) https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd.
[5] Id.
[6] Centers for Disease Control and Prevention, CBD: What You Need to Know, (Aug. 8, 2022) https://www.cdc.gov/marijuana/featured-topics/CBD.html.
[7] Agricultural Improvement Act of 2018, Pub. L. 115-334.
[8] Katie Shapiro, Forbes, Martha Stewart on How Snoop Dogg Got Her Into The Cannabis Business, Her New CBD Line, And Aging Well, (June 24, 2019), https://www.forbes.com/sites/katieshapiro/2019/06/24/martha-stewart-on-how-snoop-dogg-got-her-into-the-cannabis-business-her-new-cbd-line-and-aging-well/?sh=a394ee056d29.
[9] Id.
[10] Supra, at n. 2.
[11] Alline Cristina Campos et al., Multiple mechanisms involved in the large-spectrum therapeutic potential of cannabis in psychiatric disorders, in SERIES B, 367 Philosophical transitions of the Royal Society of London 3364-78 (2012); National Center for Complementary Integrative Health, Cannabis (Marijuana) and Cannabinoids: What You Need to Know, (Nov. 2019) https://www.nccih.nih.gov/health/cannabis-marijuana-and-cannabinoids-what-you-need-to-know#:~:text=The%20cannabis%20plant%20contains%20about,on%20a%20person’s%20mental%20state; see also James Minchin III, Rolling Stone, Willie Nelson: The High Life, (Apr. 29, 2019) https://www.rollingstone.com/music/music-features/willie-nelson-weed-issue-826290/.
[12] Drug Enforcement Administration; Drug Fact Sheet, Marijuana/Cannabis (April 2020).
[13] Id.
[14] National Conference of State Legislatures, State Medical Cannabis Laws (Aug. 23, 2021) https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx.
[15] Id.
[16] Id.
[17] Center for Disease Control and Prevention, Marijuana and Public Health, Data and Statistics, Centers for Disease and Control, (June 8, 2021) https://www.cdc.gov/marijuana/data-statistics.htm#:~:text=Marijuana%20is%20the%20most%20commonly,at%20least%20once%20in%202019.&text=Recent%20research%20estimated%20that%20approximately,marijuana%20have%20marijuana%20use%20disorder.; see also Jimi Hendrix, Purple Haze (1967)(“’scuse me while I kiss the sky”).
[18] Colorado Department of Revenue, Marijuana Sales Reports, https://cdor.colorado.gov/data-and-reports/marijuana-data/marijuana-sales-reports; see also Colorado Department of Revenue, Marijuana Tax Reports, https://cdor.colorado.gov/data-and-reports/marijuana-data/marijuana-tax-reports (Tax revenue comes from the state sales tax (2.9%) on marijuana sold in stores, the state retail marijuana sales tax (15%) on retail marijuana sold in stores, and the state retail marijuana excise tax (15%) on wholesale sales/transfers of retail marijuana).
[19] Nevada Department of Revenue Cannabis Tax Revenue, Excise Tax and Taxable Sales FY 2022, (Aug. 25, 2022), https://tax.nv.gov/uploadedFiles/taxnvgov/Content/TaxLibrary/NV-Cannabis-Revenue-FY22(5).pdf?n=2150.
[20] Id.
[21] Mike Sill, Forbes Business Council, The Future of the CBD Industry in 2022 and Beyond, (Oct. 21, 2021), https://www.forbes.com/sites/forbesbusinesscouncil/2021/10/21/the-future-of-the-cbd-industry-in-2022-and-beyond/?sh=3a0d2f1525fd.
[22] Id.
[23] “Up in Smoke,” the title of Cheech & Chong’s first film (1978).
[24] 21 U.S.C. § 801, et seq.
[25] 21 U.S.C. § 812.
[26] 21 U.S.C. § 812.
[27] 21 U.S.C. § 841, et seq.
[28] David Ogden, Deputy Attorney General, U.S. Department of Justice, Memorandum for Selected U.S. Attorneys: Investigations and Prosecutions in States Authorizing the Medical Use of Marijuana (Oct. 19, 2009)(confirming that the DOJ remained committed to the enforcement of the CSA in all states); James M. Cole, Deputy Attorney General, U.S. Department of Justice, Memorandum for US Attorneys: Guidance Regarding the Ogden Memo in Jurisdictions Seeking to Authorize Marijuana for Medical Use 1-2 (June 29, 2011)(expressing DOJ’s position that the Ogden Memo was not intended to shield from federal enforcement action and prosecution marijuana-related cultivation and distribution for medical use or lower-level marijuana related crimes being prosecuted by state law); James M. Cole, Deputy Attorney General, U.S. Department of Justice, Memorandum for All United States Attorneys, Guidance regarding Marijuana Enforcement (August 29, 2013).
[29] James M. Cole, Deputy Attorney General, U.S. Department of Justice, Memorandum for All United States Attorneys, Guidance regarding Marijuana Enforcement (August 29, 2013).
[30] Id. (Preventing (1) the distribution of marijuana to minors; (2) revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels; (3) diversion of marijuana from states where it is legal under state law in some form to other states; (4) state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; (5) violence and the use of firearms in the cultivation and distribution of marijuana; (6) drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; (7) growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and (8) marijuana possession or use on federal property).
[31] Id.
[32] Id.
[33] 21 U.S.C. § 812.
[34] United States Drug Enforcement Administration, The Controlled Substances Act, https://www.dea.gov/drug-information/csa; see also Id.
[35] Creed, Higher (1999).
[36] US v. Oakland Cannabis Buyers’ Co-op, 532 U.S. 483 (2001).
[37] Gonzales v. Raich, 545 U.S. 1 (2005).
[38] Conant v. Walters, 309 F.3d 629 (9th Cir. 2002).
[39] Id.
[40] See also Bierbach v. Digger’s Polaris and Musta v. Mendota Heights Dental Center, No. 21-676 and 21-998, 2022 WL 1560177 (U.S. May 16, 2022); Empyreal Enterprises LLC v. United States, No. 5:22-cv-00094 (C.D. Cal. Jan. 14, 2022).
[41] Northeast Patients Group et al. v. Figueroa, 2022 WL 94114 (1st Cir.).
[42] Joe Cocker, Feelin’ Alright? (1969)(“Hey, you feelin’ alright?”).
[43] You Can’t Always Get What You Want, The Rolling Stones (1969).
[44] Agricultural Improvement Act of 2018, Pub. L. 115-334.
[45] Id.
[46] Alexandra Nseir, Value of hemp production totaled $824 million in 2021, U.S. Dept. of Agriculture (Feb. 17, 2022), https://www.nass.usda.gov/Newsroom/2022/02-17-2022.php#:~:text=The%20value%20of%20U.S.%20hemp,United%20States%20totaled%20%24112%20million.
[47] Dario Sabaghi, How the 2023 Farm Bill May Reshape the Hemp Industry, Forbes, (Aug. 3, 2022) https://www.forbes.com/sites/dariosabaghi/2022/08/03/how-the-2023-farm-bill-may-reshape-the-hemp-industry/?sh=6aaa3bca7a67.
[48] The Joker, Steve Miller Band (1973)(“I’m a joker, I’m a smoker, I’m a midnight toker.”).
[49] 21 U.S.C.A. § 301 et seq.
[50] Id.
[51] 21 U.S.C. 321, 355.
[52] Supra note 37.
[53] FDA Commissioner Scott Gottlieb, M.D., Statement from FDA Commissioner Scott Gottlieb, M.D., on signing of the Agriculture Improvement Act and the agency’s regulation of products containing cannabis and cannabis-derived compounds (Dec. 20, 2018), https://www.fda.gov/NewsEvents/Newsroom/Press Announcements/ucm628988.thm.
[54] Id.
[55] U.S. Food & Drug Administration, Warning Letters and Test Results for Cannabidiol-Related Products, (May 6, 2022), https://www.fda.gov/news-events/public-health-focus/warning-letters-and-test-results-cannabidiol-related-products.
[56] See Ahumada v. Global Widget, LLC, 2020 WL 5669032, at *1 (D. Mass. Aug 11, 2020)(The primary jurisdiction doctrine is “a set of precedents that guide court s in deciding when an issue should be resolved in the first instance by an agency that has special competence to address it.”).
[57] Dasilva v. Infinite Product Company, 2021 WL 900642 (C.D. Cal. Mar. 3, 2021).
[58] Id. at *2.
[59] U.S. Food & Drug Administration, FDA and Cannabis: Research and Drug Approval Process, (Oct. 1, 2022). https://www.fda.gov/news-events/public-health-focus/fda-and-cannabis-research-and-drug-approval-process.
[60] Id.
[61] Id.
[62] Id.
[63] U.S. Food & Drug Administration, FDA Regulation of Cannabis and Cannabis-Derived Products, Including Cannabidiol (CBD), (Jan. 2021) (https://fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd); see also Drug Enforcement Administration; Drug Fact Sheet, Marijuana/Cannabis (April 2020).
[64] One Toke over the Line, Brewer & Shipley (1970).
[65] Because no form of cannabis is currently legal federally, the FTC has not shifted its focus to the cannabis market.
[66] Lesley Fair, The Federal Trade Commission, One thing marketers of CBD products need to know right now, (Dec. 17, 2020), www.ftc.gov/business-guidances/blog/2020/12/one-thing-marketers-cbd-products-need-know-right-now.
[67] Lesley Fair, Federal Trade Commission, FTC and CBD: Latest case challenges unproven health claims (May 17, 2021) https://www.ftc.gov/business-guidance/blog/2021/05/ftc-cbd-latest-case-challenges-unproven-health-claims.
[68] Supra, at n. 62.
[69] Id.
[70] Supra, at n. 62.
[71] The Doors, Light my Fire (1967)(“Come on, baby, light my fire. Try to set the night on fire.”)
[72] California Business and Professions Code § 17500, et seq.; New York General Business Law §§ 349, 350, et seq; Florida Deceptive and Unfair Trade Practices (Fla. Stat. §501, et seq.); Illinois Unfair Deceptive Trade Practices Act (815 ILCS 510).
[73] Get Off of My Cloud, The Rolling Stones (1966).
[74] 21 U.S.C. § 863.
[75] Kimberly E. Blair, Jonathan E. Meer, and Ian A. Stewart, Cannabis directors and officers liability: Cause for optimism?, 2021 WL 28877838 (July 9, 2021).
[76] Id.
[77] Id.
[78] Mexico, Jefferson Airplane (1974)(“Come to the Poet’s Room, talking about the problems of the leaf”).
[79] Alwyn Scott, Reuters, U.S. cannabis insurers get ready to roll as federal legalization nears, (Aug. 19, 2021), https://www.reuters.com/article/us-usa-insurance-cannabis-focus-idCAKBN2FK1AO.
[80] National Cannabis Risk Management Association (NCRMA), a conglomerate of 3,000 cannabis businesses, set up a captive insurer to offer coverage for property, general premises liability, and product liability to its members. Additionally, CannGen Insurance Services is another captive group offering worker’s compensation, product liability, transportation, and D&O coverage.
[81] Up Up & Away, Kid Cudi (2009).
[82] The Marijuana Opportunity and Reinvestment Act of 2020, H.R. 3884, 116th Cong. (2019-2020); The Marijuana Opportunity and Reinvestment Act of 2021, H.R. 3617, 117th Cong. (2021-2022).
[83] Id.
[84] Id. While cannabis businesses are currently subject to federal income taxes and certain state excise taxes, cannabis products are not subject to any federal excise taxes.
[85] The Cannabis Administration & Opportunity Act, S.B. 4591, 117th Cong. (2021-2022).
[86] Id.
[87] Federal Crimes Enforcement Network, FinCEN Marijuana Banking Update, Monthly Count of Depository Institutions Providing Banking Services to Marijuana-Related Businesses (SARs filed through 30 September 2021), https://www.fincen.gov/sites/default/files/shared/305326_MJ%20Banking%20Update%204th%20QTR%20FY2021_Public_Final.pdf.
[88] The Secure and Fair Enforcement Banking Act of 2021, H.R. 1996, 117th Cong. (2021-2022).
[89] Id.
[90] The Climb Act, H.R. 8200, 117th Cong. (2021-2022).
[91] Press Release, The White House, Statement from President Biden on Marijuana Reform (Oct. 6, 2022)(on file with The White House).
[92] Willie Nelson, Roll Me Up and Smoke Me When I Die (2012)(“Point me towards the sky, and roll me up and smoke me when I die”).
Finis
