Oregon cannabis lawIn January, we put together a summary of 30 or so draft bills up for consideration in the 2017 Oregon legislative session. As predicted, many of these bills have fallen by the wayside; others have been revised or consolidated. As of today, Oregon has enacted four new laws related to marijuana, with three more bills pending. In addition, three draft bills wait in the wings, regarding industrial hemp.

Today, we are one month away from the state’s constitutional deadline for adjournment sine die, which is Monday, July 10. Everyone goes home at the end of that day, and if a bill hasn’t been approved by both chambers, we say “so long” until 2018.

Below is a summary of Oregon’s four new marijuana laws, its three proposed marijuana laws, and its three proposed hemp laws.

Oregon’s New Marijuana Laws

Senate Bill 1057

A few weeks back, we gave a comprehensive overview of Senate Bill 1057, the most impactful bill to date, and another large step in combining Oregon’s medical and recreational marijuana programs. The bill has since been signed into law by Governor Brown and because it was an “emergency” bill, it took effect on May 30.

Senate Bill 302

This bill quietly became law back on April 21. It removes provisions related to marijuana offenses from the state Uniform Controlled Substances Act. It also removes and/or reduces various criminal penalties related to marijuana crimes by unlicensed operators. The thrust of this bill was to treat marijuana crimes more like alcohol crimes, and it achieves that purpose. Because penalties for marijuana offenses were scattered throughout the Oregon statutes, this one has an enormous amount of tedious, conforming amendments, to something like 125 statutes.

Senate Bill 303

This law is similar in nature to SB 302, albeit much shorter, and it also took effect back on April 21. The takeaway here is the amendment, clarification, and reconciliation of statues related to minors possessing and purchasing both marijuana and alcohol. Pretty basic stuff.

Senate Bill 863

This one concerns consumer privacy, and it serves as a further attempt by Oregon to shield its citizens’ information from the federal government. The new law prohibits marijuana retailers from recording, retaining and transferring “information that may be used to identify a consumer.” This bill was short, sweet and non-controversial: it was signed into law by Governor Brown on April 17.

Oregon’s Proposed Marijuana Laws

House Bill 2197

This is a classic “gut and stuff” bill, which started out as a measure to promote cannabis research, but now, in its fourth proposed amendment (“Dash 4”), deals with intergovernmental taxation as to the state and Indian tribes. Specifically, it would allow the Oregon Department of Revenue to enter into agreements with the governing body of federally recognized Indian tribes (read: The Confederated Tribes of Warm Springs). Under those agreements, the state would make rebate payments to the tribes for the estimated tax on marijuana items sold by tribes. This one left the Joint Committee on June 5, and was referred to Ways and Means, which is what happens whenever a bill has a fiscal impact. It’s hard to say right now whether a version of this bill will become law, but it seems probable.

House Bill 2198

This bill would establish an Oregon Cannabis Commission, to report back to the legislature on the status and condition of the Oregon Medical Marijuana Program (which the legislature keeps curtailing). The idea here is to find a way to help medical marijuana patients who might otherwise be left behind. Among other things, this bill contains the controversial “20 pound amendment” which would allow designated medical growers to sell up to 20 pounds of excess flower annually into the OLCC market. Like HB 2198, this one also recently made it out of the Joint Committee, and was referred to Ways and Means.

Senate Bill 56

This is the 2017 Oregon cannabis “Christmas tree bill” and it was given a “do pass” recommendation on June 6 by the Joint Committee, following its 39th proposed amendment (“Dash 40”). It’s now in the Senate Committee. The myriad of changes are too lengthy to summarize here, but a few notable planks include: (1) a requirement for the immediate suspension of any marijuana licensee for diversion of product to the black market; and (2) an allowance for limited processing by small, licensed OLCC producers (<5,000 square feet of canopy; water or mechanical extraction only).

Oregon’s Proposed Industrial Hemp Laws

Senate Bill 1015

This bill would allow hemp licensees to deliver hemp to OLCC processors, for non-THC based processing (which will be welcome news to both hemp and marijuana licensees). This bill was passed by the Senate on June 7, and does not create a fiscal impact. This means it will avoid the quagmire of Ways and Means, and should become law.

House Bill 2371

This bill would tidy up the industrial hemp regulatory scheme generally, which is a slender program with many gaps. Among other things, it would create a pilot research program, create a seed certification program, and provide for accreditation of testing laboratories for industrial hemp commodities, as well as products that are ingested, inhaled or topically applied. This bill was referred to Ways and Means on April 26, but seems likely to pass.

House Bill 2372

This bill would create on Oregon Industrial Hemp Commission, and nothing more. Like HB 2371, it was referred to Ways and Means on April 26, but is non-controversial and also likely to pass.

CBD

We previously discussed the two-tier industrial hemp registration system Oregon adopted last year. In brief, the Oregon Department of Agriculture allows registration as either a grower (producer of industrial hemp), or a handler (processor of industrial hemp into commodities, products or agricultural hemp seed). Currently, only registered hemp handlers can process industrial hemp or sell industrial hemp products. However, a bill winding its way through the Oregon legislature could significantly upend the status quo for CBD concentrates and extracts.

Oregon’s hemp advocates should keep a close eye on Senate Bill 1015. When it comes to CBD concentrates and extracts, the bill would open up industrial hemp processing to Oregon Liquor Control Commission (OLCC) licensed recreational marijuana processors. The processed CBD concentrates and extracts could then be delivered to recreational marijuana retailers for sale in OLCC licensed dispensaries.

Of course, the bill places some restrictions on OLCC processors:

  • The recreational processor must be registered with OLCC for the express purpose of processing industrial hemp into CBD concentrates and extracts. Presumably, the OLCC would create a new registration process for this purpose;
  • The grower must provide the recreational processor with all test results on the hemp and the recreational processor must retain the test results in its records; and
  • The industrial hemp must still be tracked as outlined in ORS 475B.150.

The bill would also allow the processed CBD products to be delivered to an industrial hemp handler for resale provided that:

  • The CBD products were produced “independently” of any marijuana products. This might require separate processing facilities to prevent cross-contamination;
  • The products have been properly tested;
  • The products are tracked as required by ORS 475B.150; and
  • The THC concentration in the products are below a threshold to be set by the OLCC (probably .3 percent if the OLCC follows the Department of Agriculture’s lead).

The bill is now before the Joint Committee on Marijuana Regulation, which will hold a public meeting on Senate Bill 1015 today (May 9), at the Oregon Capitol Building. If you want to get involved in the future of Oregon’s hemp industry, arrive at Room HR B before 5:00pm. Also, take note that the Committee will be considering this classic “gut-and-stuff” amendment, so you can safely ignore the text of the bill as originally introduced.

Is CBD legalThe DEA announced a new Final Rule late last year regarding “marihuana extracts” that left many in the industrial hemp and CBD industries concerned. The new rule created a separate classification for “marihuana extracts,” which it broadly defined as “any extract containing one or more cannabinoids that has been derived from any plant of the genus Cannabis.” This definition facially includes hemp-based goods running the gamut from hemp rope sandals to hemp lotion to therapeutic CBD oils, but critics have countered that such a definition exceeds the prohibition of “marihuana” created by the Controlled Substances Act. Some fear the DEA’s broadening of what constitutes marijuana extracts foreshadows a more aggressive federal enforcement posture that could devastate hemp-related companies the DEA now (and always) regards as criminal enterprises.

The DEA’s rule will soon be put to a court test as The Hemp Industries Association, Centuria Natural Foods, Inc. and RMH Holdings, Inc. last week filed a challenge to the DEA rule in the federal Ninth Circuit Court of Appeals. Whatever the result, this court’s ruling will likely significantly impact the future of the hemp-related industry and implicate key components of the burgeoning cannabis reform movement as well.

The core of the plaintiffs’ argument is that the DEA rule conflates “marihuana”—the substance prohibited by the Controlled Substances Act—with all cannabinoids and all parts of the cannabis plant, which it lumps into “marihuana extracts.” Plaintiffs point to legislative history that in 1937 Congress chose to use the term “marihuana” because at the time there was no meaningful and scientifically valid way to distinguish between the plant itself and the constituent parts Congress sought to outlaw. Plaintiffs also point to the 2014 Farm Bill, which permitted industrial hemp production so long as the plants remain below a threshold THC level, and the Consolidated Appropriations Act, which prohibited using federal funds to enforce the Controlled Substances Act against certain cannabis business. Plaintiffs contend that these legislative moves, along with greater scientific understanding of the cannabis plant and the ability to isolate specific components of the cannabis plant, all indicate Congress’s intent to carve out space for these businesses to operate legally. Plaintiffs also contend that the Ninth Circuit itself, in a 2004 case, recognized that not all naturally-occurring cannabinoids are per se prohibited by the Controlled Substances Act.

Plaintiffs contend the DEA exceeded its scheduling and enforcement authority under the Controlled Substances Act by undertaking a “de facto scheduling” of substances not contemplated by the Controlled Substances Act and that Congress views as distinct from marijuana as a “drug.” Plaintiffs essentially allege that with this rule the DEA is attempting to enforce a law Congress never enacted. This is a common challenge to expansive administrative rulemakings, but its application to any particular situation can be hard to predict and it usually hinges on the court’s reading of the underlying statute and the level of deference the agency’s action deserves.

We will keep an eye out as this case progresses and pass along any important updates as they come in.

Remember when the DEA adopted a “Final Rule” criminalizing “marihuana extract,” presumably including all extracts from the cannabis plant? Well, the DEA recently clarified that Final Rule, and based on the DEA’s own explanation and interpretation, marijuana extracts derived from mature stalks of the cannabis plant or industrial hemp not illegal under the federal Controlled Substances Act (CSA).

The DEA’s highlights of its clarification are that:

  • The “marihuana extract” definition does not include materials or products excluded from the definition of marijuana set forth in the CSA.
  • The rule includes only those extracts that fall within the CSA definition of marijuana.
  • If a product consists solely of parts of the cannabis plant excluded from the CSA definition of marijuana, such product is not considered “marihuana” or a “marihuana extract.”

This is a significant departure from a plain reading of the Final Rule, which creates a new “Controlled Substances Code Number” for marijuana extracts “containing one or more cannabinoids from any plant of the genus Cannabis.” When the DEA adopted this Final Rule in December of last year, our opinion was that it formally outlawed all CBD products, including those derived from hemp, because CBD is a cannabinoid and hemp is a plant of the genus Cannabis.

Marijuana is prohibited by the CSA and any CBD product derived from marijuana is therefore prohibited. However, the CSA exempts from the definition of “marijuana” the plant’s “mature stalks.” The logical conclusion is that CBD products derived from mature stalks containing no THC were not illegal (though the FDA would disagree). Another arguably legal route existed for CBD products derived from industrial hemp (part of the cannabis plant with less than 0.3 percent THC on a dry weight basis) lawfully grown in a State that has enacted hemp laws in compliance with section 7606 of the 2014 US Farm Bill. Because congress sanctioned industrial hemp, there was an argument allowing the sale of industrial hemp extracts in states with compliant programs. This meant that prior to adoption of the Final Rule, CBD products derived from mature stalks that did not contain THC or industrial hemp existed in a legal “gray” area.

Under the DEA’s Final Rule clarification, CBD products derived solely from mature stalks or industrial hemp containing little-to-no THC are not prohibited under the “marihuana extract” rule. However, this clarification is not an official ruling by the DEA as it does not have the same authority as a formal rule. Instead, this clarification provides guidance as to how the DEA will enforce the “marihuana extract” Final Rule. In addition, the marihuana extract Final Rule is currently subject to a lawsuit filed in the Ninth Circuit Court of Appeals by members of the hemp industry, and this clarification may cause that court to rule that the clarification limits the Final Rule.

The bottom line is that this clarification should be taken with a grain of salt as the Final Rule itself carries more legal authority and this clarification is not an official ruling by the DEA — it’s just the agency’s interpretation of its own rule, which can change as the DEA so desires. So, if you’re selling hemp-based CBD products with little to no THC, keep your head on a swivel as the DEA develops and implements this Final Rule.

 

Cannabis regulatory lawyersIn December 2016, the DEA issued a rule defining “Marihuana Extracts” to include extracts “containing one or more cannabinoids from any plant of the genus Cannabis.” This rule went into effect on January 13, 2017. That same day, The Hemp Industry Association, Centuria Natural Foods Inc., and RMH Holdings LLC filed a petition with the US Court of Appeals for the Ninth Circuit challenging that DEA rule.

The Controlled Substances Act is a federal law that determines what substances are illegal drugs. Congress authorized the Department of Justice to add and remove substances to the Controlled Substances Act (CSA), and the DOJ has delegated that authority to the DEA. The DEA promulgated the “Marihuana Extract” rule pursuant to that grant of authority, meaning that products the DEA defines as fitting the “Marihuana Extract” definition are illegal substances.

Rules can have a similar effect as laws but if a rule conflicts with a law, the law will prevail. In other words, Congressional laws that conflict with a DEA rule should outweigh the DEA rules. The Petitioners who are appealing the DEA rule are arguing that the “Marihuana Extract” rule outlaws parts of the cannabis plant that Congress specifically made legal in the CSA and in the 2014 Farm Bill.

Congress placed marijuana on Schedule I of the CSA and defined it to include all parts of the plant Cannabis sativa L., except the mature stalks of the plant and seeds incapable of germination. Stalks and products derived from those stalks are not illegal because they are not marijuana. This distinction allowed for legal production of hemp products even though marijuana remains federally illegal. The 2014 Farm Bill also allows states to implement programs to legally grow industrial hemp. “Industrial hemp” is defined to mean “the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

Prior to the “Marihuana Extract” rule, only one cannabinoid was explicitly named in Schedule I of the CSA: THC which is known for causing marijuana’s euphoric “high.” Other cannabinoids, like CBD, were not specifically prohibited. This meant products derived from mature stalks of cannabis that did not contain THC were arguably legal as no part of that product was prohibited by the CSA. Now those same products are illegal because they contain other cannabinoids that are now defined as controlled substances according to the “Marihuana Extract” definition. The definition also applies to industrial hemp grown pursuant to the Farm Bill. The Petitioners who are appealing to the Ninth Circuit argue that the DEA’s rule is inconsistent with the CSA and the Farm Bill and that the court should therefore find the rule invalid.

Petitioners also argue that the DEA failed to comply with the Administrative Procedure Act in creating this rule. In addition to complying with the CSA, the DEA must also follow the Administrative Procedure Act, which essentially sets forth the procedures governmental bodies must follow in enacting new rules. The Petitioners argue that under the APA the “Marihuana Extract” rule invalid as it:

  • Is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with other law (such as the Farm Bill and the CSA);
  • Is unconstitutional;
  • Exceeds the DEA’s statutory authority; and
  • Was created without following necessary procedures.

This is not the first time the DEA has faced legal challenges for interfering with legal hemp. In 2001-2003 the DEA attempted to treat hemp food products as Schedule I substances because they contained trace amounts of THC. The Ninth Circuit Court of Appeals ruled that the presence of THC does not alone make a product a controlled substance. Petitioners plan to use this ruling to assert that cannabinoids that occur in legal portions of the cannabis plant are not controlled by the CSA and may not be regulated as marijuana by the DEA.

Since the DEA issued this rule my firm’s cannabis regulatory lawyers have received a daily stream of calls from businesses wanting to know whether the CBD products they are producing, selling or buying are now illegal. Specifically, most of these callers want to know whether products containing CBD that are derived from hemp and do not contain THC are still legal. At this point, the jury (or really the judge) is still out and we — like everyone else — will be waiting to see how the courts rule.

Barcelona lawyersOur Barcelona lawyers have lately been receiving a steady stream of calls about producing and distributing cannabidiol-based products around the world, from Spain. Cannabidiol  (CBD) is a compound found in cannabis but unlike tetrahydrocannabinol (THC), the compound in cannabis that gives users a high, CBD is non-psychoactive. Studies suggest CBD can be effective in treating epilepsy and other neuropsychiatric disorders including anxiety and schizophrenia. CBD may also be effective in treating post-traumatic stress disorder and may have anxiolytic, antipsychotic, antiemetic and anti-inflammatory properties. With so many potential benefits, it should come as no surprise that our Barcelona attorneys are so often asked about the legality of CBD oil in the European Union?” In short, it depends on what part of the cannabis plant from which the CBD oil was derived.

CBD can be extracted from marijuana plants (cannabis sativa) or from industrial hemp plants. Both are cannabis varieties but grown for a different purpose and with a different “legal personality” reflecting the legal status of extracted CBD oil in the EU. Hemp has been cultivated throughout the world for industrial and medical purposes, and for the production of useful objects such as clothing, candles, paper, and thousands of other products. Hemp oil and hemp seeds also contain many essential nutrients. In Europe and in Spain, hemp must be grown under EU regulations. Industrial hemp must contain no more than 0.2% THC on a dry weight basis. If the EU criteria are met, then a hemp producer may obtain EU certification for the product. Failure to follow protocol can lead to trouble. Local Spanish farmers producing hemp are right now facing criminal charges for crimes against public health for having not fulfilled current regulations in production. This adds uncertainty for foreign investors in finding the right provider of raw material. Medical marijuana contains high levels of THC, concentrated mainly in flowers and trichromes of the plant.

Those wishing to import CBD based products into Spain face labeling requirements. The number of CBD products available on the Spanish market has increased but most consumers are unaware of the exact amount of CBD they should take, or do not know the exact composition of the CBD oil or tincture they are buying. Clear labeling is essential when distributing CBD in Spain. A product’s label should describe the exact concentration of CBD as an active ingredient, the content of the solution, the specified amounts of each ingredient, the manufacturing method used, and the instructions for use and dosage. The label should also refer to a website with more detailed information.

Uncertainty also comes from a recent change in US law. Previously, the legal status of CBD products in the US also turned on the part of the cannabis plant from which the product was extracted. However, the Drug Enforcement Administration recently promulgated a rule creating a new “Controlled Substances Code Number” for “Marihuana Extracts” and extends that classification to extracts “containing one or more cannabinoids from any plant of the genus Cannabis.” CBD is a cannabinoid and hemp is a plant of the genus Cannabis so the rule explicitly applies to CBD products sold in the US. Though we vehemently dislike this new rule, it does mean that companies should not distribute CBD products in the US unless they are doing so pursuant to state law in a state where marijuana is legal in some form.

The Spanish market has an appetite for CBD dietary supplements that is not being met by the many other plant-based dietary products being launched and accepted by the Spanish public. The opportunities for CBD products are clearly there in both the EU and in Spain, but this is a complicated legal arena that calls for caution.

Oregon Cannabis lawsThe 2017 Oregon legislative session begins two weeks from tomorrow, on Wednesday, February 1. Already, there are many proposed bills, measures and resolutions posted on the legislature’s website, ranging from marquee bills to tackle the state budget shortfall and its gun registry loopholes, to resolutions naming an official state horse (the Kiger Mustang) and a dog (the Border Collie). For our faithful readers, there is also a generous helping of cannabis bills. We count 28 of them.

Back in October, we wrote that issues surrounding public consumption, like cannabis cafés and special event (temporary) licenses, would be up for discussion. As shown below, that has proven to be true. We have also written time and again (and again and again) about the need to merge Oregon’s medical and recreational marijuana programs. That appears to be up for serious consideration as well. Finally, we have written about the state’s burgeoning industrial hemp program, which is also addressed.

Below is a compilation of the 28 introduced cannabis bills, sourced from the Oregon legislature’s website. Each bill is linked to its summary page, and you can click through to the text of any proposal of interest. When reading a bill, it’s important to understand that any text in bold letters would be new, while language in [italics and brackets] would be removed from existing law. It’s also important to note that each proposed bill has a specific enactment date: some are “emergency” laws, effective on passage, while others would take effect at a future date. Finally, some of these bills would sunset after a certain period; others are proffered as evergreen.

As in the 2016 short session, many of the bills listed below will fall by the wayside as the senate and house convene and begin to knock heads. Others will be revised, consolidated or otherwise modified, but it is altogether certain that we will see some changes in Oregon cannabis law this session.

Draft Senate Bills

SB 56. Authorizes Oregon Liquor Control Commission to require cannabis-related licensees, certificate holders and applicants for licenses and certificates to submit information related to persons who hold financial interest in business operating or to be operated under license or certificate.

SB 108. Modifies certain definitions for purposes of regulating cannabis. Imposes tax on retail sale of marijuana seeds. Conforms terms throughout statutes governing regulation of cannabis.

SB 130. Waives fees for obtaining a medical marijuana card for veterans who have total disability rating of at least 50 percent as result of injury or illness incurred or aggravated during active military service, and who received discharge or release under other than dishonorable conditions.

SB 300. Establishes Oregon Cannabis Commission to fulfill duties, functions and powers relating to medical use of marijuana. Directs Oregon Health Authority to transfer duties, functions and powers relating to Oregon Medical Marijuana Act to commission. Makes commission operative January 1, 2018.

SB 302. Removes provisions related to marijuana offenses from Uniform Controlled Substances Act. Moves crimes, penalties, defenses to crimes and procedural provisions in Uniform Controlled Substances Act that apply to marijuana offenses to Control and Regulation of Marijuana Act. Adjusts penalties for certain crimes. Makes corresponding changes to statutes referencing controlled substances to clarify applicability to cannabis and cannabis-derived products.

SB 303. Amends, clarifies and creates consistency in statutes setting forth prohibitions and procedures related to minors possessing, purchasing, attempting to purchase or acquiring alcoholic beverages or marijuana items.

SB 304. For purposes of laws regulating cannabis-related businesses, standardizes language with respect to issuing, renewing, suspending, revoking or refusing to issue or renew licenses.

SB 305. Clarifies law requiring notice to Oregon Liquor Control Commission when person licensed by commission to engage in cannabis business is convicted of violation of state law or local ordinance of which possession, delivery or manufacture of marijuana item is element.

SB 306. Repeals provisions regulating marijuana grow sites, marijuana processing sites and medical marijuana dispensaries on June 30, 2018. Updates and creates provisions providing for licensing of marijuana grow sites, marijuana processing sites and medical marijuana dispensaries by Oregon Liquor Control Commission.

SB 307. Provides for regulation by Oregon Liquor Control Commission of consumption and sale of marijuana items at temporary events, including licensure of premises on which temporary events are held. Provides for regulation by commission of consumption of marijuana items at cannabis lounges, including licensure of premises where cannabis lounges are located. Prohibits licensing temporary events or cannabis lounges in cities or counties that have not adopted ordinances allowing for the consumption of marijuana items at temporary events or cannabis lounges. Excepts from prohibitions on public use, including restrictions set forth in Oregon Indoor Clean Air Act, consumption of marijuana items in designated areas of premises for which temporary event or cannabis lounge license has been issued. Applies current law regulating licensed marijuana producers, processors, wholesalers and retailers to new types of licensees. Makes certain exceptions.

SB 308. Establishes Task Force on Social Consumption of Cannabis.

SB 319. Authorizes local governments to allow medical marijuana dispensaries and marijuana retailers licensed by Oregon Liquor Control Commission to be located within certain distance [500 feet] of schools.

SB 342. Clarifies total number of mature marijuana plants and immature marijuana plants and total amount of usable marijuana, medical cannabinoid products, cannabinoid concentrates and cannabinoid extracts that patients and caregivers registered under Oregon Medical Marijuana Act may possess.

SB 570. Creates crime of intentionally administering marijuana item to body of person who is under 18 years of age. Punishes by maximum of 20 years’ imprisonment, $375,000 fine, or both. Creates crime of knowingly administering marijuana item to body of person who is under 18 years of age. Punishes by maximum of 1 year’s imprisonment, $6,250 fine, or both.

Draft House Bills

HB 2151. Allows property tax exemption for food processing machinery and equipment newly acquired by persons engaged in business of producing cannabinoid edibles, alcoholic beverages and alcoholic liquors.

HB 2197. Directs Oregon Liquor Control Commission to enter into agreement with nongovernmental entity that conducts or funds research on cannabis and cannabis-derived products. Specifies terms of agreement. Requires public dissemination of data, information, analysis and findings procured pursuant to research.

HB 2198. Changes name of Oregon Liquor Control Commission to Oregon Liquor and Cannabis Commission. Changes composition of Oregon Liquor and Cannabis Commission by adding commissioners from cannabis retail industry. Specifies that Oregon Health Authority may not register marijuana grow sites, marijuana processing sites and medical marijuana dispensaries. Creates within authority, for purposes of administering Oregon Medical Marijuana Act, Medical Use of Cannabis Board. Becomes operative June 30, 2018. Repeals provisions regulating marijuana grow sites, marijuana processing sites and medical marijuana dispensaries on June 30, 2018. Updates and creates provisions providing for licensing of marijuana grow sites, marijuana processing sites and medical marijuana dispensaries by Oregon Liquor Control Commission. Makes other technical changes to laws regulating cannabis. Creates alternate registry system administered by State Department of Agriculture for growers that produce marijuana for registry identification cardholders. Directs Oregon Liquor and Cannabis Commission to coordinate with department for purpose of regulating marijuana producers.

HB 2199. Eliminates provision indicating that cannabis-related business licenses may be for term other than one year. Qualifies provision providing that cannabis-related business license expires upon death of licensee.

HB 2200. Changes name of Oregon Liquor Control Commission to Oregon Liquor and Cannabis Commission. Changes composition of Oregon Liquor and Cannabis Commission by adding commissioners from cannabis retail industry. Directs commission to coordinate with State Department of Agriculture for purpose of regulating marijuana producers. Makes other technical changes to laws regulating cannabis. Specifies that Oregon Health Authority may not register marijuana grow sites, marijuana processing sites and medical marijuana dispensaries. Repeals provisions regulating marijuana grow sites, marijuana processing sites and medical marijuana dispensaries on June 30, 2018. Updates and creates provisions providing for licensing of marijuana grow sites, marijuana processing sites and medical marijuana dispensaries by Oregon Liquor and Cannabis Commission.

HB 2201. Corrects and conforms definitions for “cannabinoid concentrate” and “cannabinoid extract” in laws regulating cannabis.

HB 2202. Modifies statute under which lien may be imposed against building or premises used to illegally produce, process, sell or use marijuana items.

HB 2203. Changes distribution of moneys collected by Department of Revenue as tax imposed on retail sale of marijuana items.

HB 2204. Changes statutory limitation on local government’s authority to impose local tax or fee on retail sale of marijuana items. Specifies that if electors of city or county approve ordinance imposing tax or fee, governing body of city or county may amend ordinance, without referring amendment to electors, to adjust rate of tax or fee.

HB 2205. Directs State Department of Agriculture to solicit proposals from third party vendors to create for producers of cannabis efficiency standards for energy and water consumption and certification protocols for meeting those standards.

HB 2371. Specifies that, for purposes of statutes regulating seeds, agricultural hemp seed is flower seed. Directs Director of College of Agriculture and dean of College of Agricultural Sciences of Oregon State University to establish program for labeling and certification of agricultural hemp seed.

HB 2372. Establishes Oregon Industrial Hemp Commission.

HB 2556. Restricts sale and delivery of marijuana paraphernalia. Creates violation for unlawful sale or delivery of marijuana paraphernalia. Punishes by maximum of $2,000 fine.

Altogether, the index above seems to support the sentiment that Oregon is committed to getting it right with cannabis. We will continue to offer updates as events unfold. In the meantime, please let us know if you have comments on any of the specific bills listed above, or on the Oregon legislature’s approach to cannabis this session.

Cannabis lawyersWalking home one freezing night in December 2014, I was taken aback to look up and see a storefront with a bright neon sign that read “CBD OIL SOLD HERE” in the window. It was not the “what” of the sign that startled me – CBD oil is, of course, a product with many therapeutic qualities and a wide range of uses – but the “where.” Far from cannabis-friendly Seattle, I was home for the holidays in southwest Missouri, a socially conservative state where attempts to even put medical marijuana on the ballot face fierce opposition. Though only a first-year law student at the time, I knew enough to know something did not add up: CBD is derived from the cannabis plant, and marijuana is illegal under federal — and, in Missouri, state law. Therefore, I thought, CBD is illegal. How were they getting away with this?

As I now know – and as we have explained before – the business in question was relying on an ambiguity in the Federal Controlled Substances Act’s definition of “marijuana.” The Controlled Substances Act does not include in its definition of “marijuana” the plant’s “mature stalks.” Mature stalks are the part of the cannabis plant used to make hemp, which is not prohibited by the Controlled Substances Act either. The stalks also contain CBD oil that can be extracted and used just the same as CBD derived from other parts of the plant. The ambiguity was enlarged with the passage of the 2014 farm bill, which allowed some cultivation of hemp with THC levels below 0.3%. Ergo, CBD oil is not technically illegal – right?

Wrong.

Two days ago, the Drug Enforcement Administration issued regulations that effectively put the kibosh on attempts to dance around the Controlled Substances Act’s definition of “marijuana” when it comes to CBD oil. The new rule creates a new “Controlled Substances Code Number” for “Marihuana Extract” and extends that classification to extracts “containing one or more cannabinoids from any plant of the genus Cannabis.” Because CBD is a cannabinoid and hemp is a plant of the genus Cannabis, the rule explicitly applies to the many CBD products currently being widely sold online and in shops like the one I encountered in Missouri. DEA confirmed as much in response to public comment on its initially proposed rule, stating that “[f]or practical purposes, all extracts that contain CBD will also contain at least small amounts of other cannabinoids. However, if it were possible to produce from the cannabis plant an extract that contained only CBD … such an abstract would fall within the new drug code 7350.” DEA justifies its new rule as necessary to fully comply with the UN Convention on Narcotic Drugs and finds its statutory authority to promulgate the rule in the Controlled Substances Act.

What does this mean for sellers of CBD extracts online or in states with unfriendly cannabis laws? It means the DEA is explicitly saying that it considers your product to be illegal under the Controlled Substances Act along with other illicit cannabis products. It also means that they are enhancing their ability to track CBD and enforce its interpretation of the law.

In truth, CBD merchants were probably always on the wrong side of the gray area in DEA’s eyes because CBD extracts almost necessarily contain other cannabinoids. As DEA stated in its justification: “Although it might be theoretically possible to produce a CBD extract that contains absolutely no amounts of other cannabinoids, the DEA is not aware of any industrially-utilized methods that have achieved this result.” The difference now is that the DEA is officially putting CBD sellers on notice that their businesses are subject to enforcement action.

Though our cannabis lawyers are unhappy with the DEA’s statement, we would be remiss if we did not tell you that you would be wise to heed this warning: selling CBD is illegal.

Cannabis Business LawyersI have a five-year old mastiff and though she’s showing no signs of slowing down, I’m starting to worry about things like her longevity and risk of arthritis. I’ve even begun scoping out products that address aging and pet comfort. I wasn’t shocked to see that the pet store near my house has started carrying pet products that allegedly contain CBD. What does surprise me though is how few states have addressed the issue of pots and pets. The FDA has remained pretty silent on this issue as well.

A couple of years ago, I wrote about pets getting a hold of their owner’s cannabis and the need for better packaging and labeling to prevent this. Since then, there have been a number of stories on pet owners who use hemp-based or medical cannabis products to treat their pets’ various ailments, including seizures and anxiety. But to date, only Nevada has made any real effort to address the issue of cannabis for pets. In March 2015, Nevada State Senator Tick Segerblom proposed Senate Bill 372 which would have allowed veterinarians to issue medical marijuana cards to pets if their owners were Nevada residents and if the vet believed marijuana could treat the pet’s ailments. That bill didn’t pass. In most other medical cannabis legal states, manufacturers and retailers make MMJ products for pets even though there’s no law allowing for or regulating such practices and no standard for vets evaluating cannabis as a medical treatment. All this means that MMJ dosing and quality control standards are at the whims of industry best practices and anecdotal evidence and not much else.

The federal government has been of no help in this arena either. Any product that contains any active THC is considered illegal under the federal Controlled Substances Act so giving Fido a cannabis cookie or cannabis oil is therefore illegal under federal law. But what about hemp-derived CBD? Many pet stores have hemp-based CBD products that do not violate the federal Controlled Substances Act (and can even cross state lines) because they have no active THC. But the FDA has a serious beef with this kind of CBD if its manufacturer makes medical claims about it. The FDA doesn’t consider CBD from hemp to be a supplement exempt from drug testing under the Federal Food, Drug and Cosmetic Act and that means you can’t make any medical claims about the product without first going through FDA-mandated testing. This includes making medical claims about animal treatments.

The FDA has been diligent in pursuing shut downs of hemp-CBD operators, including those pedaling pet CBD. For example, in the first round of cease and desist letters the FDA sent out in February 2015, Canna-Pet, LLC was on the list. In the letter to Canna-Pet, the FDA wrote:

We have determined that your products are drugs as defined by section 201(g)(1)(B) of the Federal Food, Drug, and Cosmetic Act (“the FD&C Act”) [21 U.S.C. § 321(g)(1)(B)], as the products are intended for use in the mitigation, treatment, or prevention of disease in animals.  As discussed below, the products are unapproved new animal drugs and your marketing of them violates the FD&C Act. . . . Statements on your website and product labeling that establish these intended uses of your products include, but are not limited to, the following: From the home page, www.canna-pet.com:
  • FAQs about Canna-Pet™: “We find medical benefits, behavioral benefits, prolonged life, reduced stress, and improved quality of life with our pets.” (http://canna-pet.com/how-to-use/faqs/).
  • Medical Benefits: “We Recommend Canna-Pet™ as a daily food additive for all pets, but especially for those with arthritis, allergies, anxiety or behavior issues, compromised immune systems, diabetes, digestive issues, nausea, chronic pain, cancer, seizures, and those receiving palliative care.” (http://canna-pet.com/how-it-works/the-basics/).
  • Health Benefits of Cannabidiol (CBD) Canna-Pet: “Antitumor, Antiepileptic, Anticancer, Anti-inflammatory, Bone stimulant, Analgesic, Anti-depressant, Antibacterial, Antipsoriatic, Antidiabetic, . . . Anti-nausea, Anti-anxiety, . . . Antipsychotic, . . . Immunosuppressive.” (http://canna-pet.com/how-it-works/phytochemistry-active-compounds/).

Canna-Pet™ MaxCBD Capsules

For pets with extreme issues, who require larger doses of CBD. Most commonly these are pets suffering from seizures, although we often see pets with cancers and aggressive tumors, severe chronic pain, and in end-of-life care using our MaxCBD products.” (https://canna-pet.com/how-it-works/our-products/).

The above referenced products are only intended to be a sampling of the violative products you are currently marketing. Similarly, the above referenced claims are only intended to be a sampling of statements that demonstrate the intended uses of your product.

You should probably think twice before giving pet store CBD to your beloved dog or cat because these products haven’t gone through the gauntlet of FDA testing and are very likely violating federal law as a result. Not to mention that it is difficult to know if these products will be medically effective for your pet.

Kentucky cannabis and hempThis is proving to be a big year for cannabis. As a result, we are ranking the fifty states from worst to best on how they treat cannabis and those who consume it. Each of our State of Cannabis posts will analyze one state and our final post will crown the best state for cannabis. As is always the case, but particularly so with this series, we welcome your comments.

This particular state was one of the hardest to place, and we know its placement may be somewhat controversial. Though this state does not have a workable medical program, it does have fairly lenient criminal laws and is a true leader in industrial hemp. The state of Kentucky comes in at number 15 in our series.

Our previous rankings are as follows: 16. Pennsylvania; 17. Delaware; 18. Michigan; 19. New Hampshire; 20. Ohio; 21. New Jersey; 22. Illinois; 23. Minnesota; 24. New York; 25. Wisconsin; 26. Arizona; 27. West Virginia; 28. Indiana; 29. North Carolina; 30. Utah;  31. South Carolina; 32. Tennessee; 33. North Dakota; 34.Georgia; 35. Louisiana; 36. Mississippi; 37. Nebraska; 38. Missouri; 39. Florida; 40. Arkansas; 41. Montana; 42. Iowa; 43. Virginia; 44. Wyoming; 45. Texas;  46. Kansas;  47. Alabama;  48. Idaho; 49. Oklahoma;  50. South Dakota.

Kentucky

Criminal Penalities. A person possessing under 8 ounces (or one-half pound) of cannabis faces a maximum 45-day jail sentence and fine up to $250. However, a court can place the defendant in a treatment program in lieu of any jail time and may set aside the conviction and we understand that is what generally happens.  Possession of any amount over 8 ounces is evidence of an intent to sell.

Kentucky classifies offenses for selling marijuana by weight of the plant and number of prior offenses:

  • Less than 8 ounces earns up to 1 year in prison and a maximum fine of $500. Any subsequent offenses earn a sentence of 1-5 years in prison and a maximum $10,000 fine.
  • Between 8 ounces and 5 pounds earns a sentence of 1-5 years and a fine of $1,000-$10,000. Any subsequent offense earns a sentence of 5-10 years and a maximum fine of $10,000.
  • The sale of more than5 pounds earns a sentence of 5-10 years and a fine of $1,000-$10,000. Any subsequent offense earns a sentence of 10-20 years in prison.

Hemp. In 2014, we predicted Kentucky would lead the nation in industrial hemp. Kentucky was one of the first states to pass legislation allowing farmers to produce industrial hemp and provide regulations to implement a workable program. Kentucky was also one of the first states to legally obtain hemp seeds. The state had to fight the dreaded DEA in federal court in order to obtain those seeds. The DEA reluctantly allowed Kentucky farmers to plant hemp seeds and the initial crop was a success with plants growing to “shoulder height.“

Kentucky’s Department of Agriculture oversees the industrial hemp program. Farmers must apply to the Department in order to grow hemp. Universities can also apply to research hemp. Kentucky Agriculture Commissioner James Comer expressed his support for the program at a 2015 news conference:

With their investment, jobs have been created, jobs are going to be created, and they’ve signed contracts with family farmers. Hemp equals jobs and true economic growth, which is what we predicted when we launched Senate Bill 50 two years ago.

With support coming from the top, Kentucky hemp is likely to continue to thrive.

Medical marijuana. On April 10, 2014, Kentucky passed SB 124 which allowed physicians to direct patients to use non-psychoactive CBD. The program has flaws (as reported by Marijuana Policy Project) but it isprogress.

In 2016, the Kentucky legislature considered bills to legalize medical marijuana but the legislative session ended without any reform. However, expectations are high that it will happen in 2017. Lawmakers invited members from the community to debate medical marijuana months ago. Kentucky may be seriously considering medical marijuana legalization this year.

Bottomline. Kentucky’s criminal penalties for possession of marijuana are more reasonable than most of the other states we have examined in this series since possession of less than one-half pound of cannabis only faces a 45-day prison sentence, and that is usually not given. Additionally, Kentucky was willing to challenge the DEA to grow hemp. Kentucky falls flat on medical marijuana, but that is expected to change soon. We ranked Kentucky at number 15, higher than many states with strong medical marijuana programs, because it has relatively light criminal penalties and becuase it has shown leadership in moving forward with industrial hemp.