In the Weeds: Kansas Seizes In-Transit Cannabis Profits, USPS Bans CBD Vape Devices, Promotional Gifting Illegal in NY

November 4, 2021
Newsworthy Highlights

Cannabis Company Contests $166K Cash Seizure by Kansas Police. According to news articles, Kansas police seized $166,000 in Missouri medical marijuana profits during a traffic stop, claiming the money smelled like marijuana. The driver was transporting the money for cannabis dispensaries from Missouri to Colorado. Marijuana is legal in both states. According to the Kansas police and federal Drug Enforcement Agency, the profits were seized because marijuana is currently illegal under Kansas law and the money was obtained in violation of the Controlled Substances Act (CSA). The company argued the money should be returned because there is no evidence it was in exchange for unlawful controlled substances in violation of the CSA, and the conduct was lawful under Missouri state law. A hearing on this dispute is set for Jan. 4, 2022.

CBD Vape Products Banned in U.S. Postal Service’s Final Rule. The U.S. Postal Service issued a final rule on Oct. 21, 2021, that bans transporting vaping products through the U.S. mail. The rule generally applies to vape devices consisting of, containing or used with marijuana or hemp-derived products. Exempt from the ban are business-to-business shipments, noncommercial shipping between private individuals, and hemp and hemp derivatives that contain no more than 0.3 percent THC by dry weight, so long as certain compliance requirements are met. Although the ban went into effect immediately, the enforcement climate of the mail ban remains unclear.

Texas Delta-8 Ban Stands, for Now. On Oct. 22, 2021, a Texas judge denied an application for a temporary restraining order, alleging that the Texas Department of State Health Services did not follow proper procedure and notice requirements when it updated its state hemp program to clarify that the state law permits consumable hemp products that do not exceed 0.3 percent delta-9 THC and all other forms of THC, including any delta-8 concentration. The company seeks to enjoin enforcement and a declaration that the modifications to the state’s hemp program are invalid. Texas is one of many states seeking to regulate the use of delta-8. The case is Sky Marketing Corp. v. Texas Department of State Health Services et al., (D-1-GN-21-006174), in the 126th District Court of Travis County, Texas.

Grassroots Federal/State Legislative Highlights

New York Declares Gifting Cannabis With Product Sales Illegal. As the New York cannabis market is gearing up, the New York Cannabis Control Board issued a statement on Oct. 21, 2021, clarifying that the practice of gifting cannabis for promotional purposes with purchase of a product is illegal. Such practices may be subject to further enforcement.

Connecticut Attorney General Warns of Hazards to Children in Cannabis Product Packaging. Just ahead of the biggest candy day of the year, Connecticut Attorney General William Tong issued a public warning on Oct. 26, 2021, about the risks of cannabis edibles and hemp derivatives in packaging designed to look like well-known snack foods and candy. Similar to recent warnings by the Food and Drug Administration and Centers for Disease Control and Prevention, the Connecticut warning focused on overdose issues and the number of calls to the national and state poison control centers related to marijuana edibles. The North Carolina attorney general tweeted a similar warning.

Investments and Transactions Highlights

Thought Leaders Inc. Announces Acquisition of UK-Based mellow. On Oct. 20, 2021, Thought Leaders Inc., a U.S. cannabis and CBD investment company, announced a $13.25 million acquisition of mellow, one of the UK’s top direct-to-consumer CBD and wellness company. The acquisition will include the mellow store, the CBD wellness brand and Grow by mellow, the end-to-end commerce service business.

Rap Artist Lil’ Kim Announces Cannabis Brand “Aphrodisiac” With Superbad Inc. Rap artist Lil’ Kim announced the launch of her own cannabis brand, Aphrodisiac, in partnership with Superbad, Inc., which will be available in California beginning in 2022.

“In the Weeds” is McGuireWoods’ biweekly ounce of highlights in the budding cannabis, hemp and CBD industries. For more information, see our newsletter archive, our Edible Bites podcast series (available on Apple and Spotify), or visit our Cannabis, Hemp & CBD practice.