CDC Issues “Best Practices” for Businesses on Employed Drivers and Cannabis Use. The Centers for Disease Control and Prevention (CDC) published workplace guidance for creating marijuana policies and drug testing procedures for employed drivers, including education for drivers on marijuana’s effects on safe driving. The CDC promoted a policy that prohibits employees from using marijuana while on the job but recognized that a zero-tolerance policy for marijuana use may not be possible, depending on the relevant state law. Because recreational use of marijuana is increasing, especially as more states legalize it, the CDC believes it’s important for all workplaces to implement and address marijuana policies in their motor vehicle safety programs.
Uber Canada Announces Partnership With Tokyo Smoke for Cannabis Ordering in Ontario. Uber Canada announced its partnership with Tokyo Smoke, a cannabis retailer, to offer ordering in the cannabis category from Tokyo Smoke’s flower collection on the Uber Eats app. Customers can then pick up their orders at the Tokyo Smoke Store within an hour. According to the news release, Tokyo Smoke is the first cannabis merchant to use the Uber Eats software. Customers will get a warning that they must be of legal age to enter the virtual storefront through the app. Customers must provide proper identification at the store, as required by Canada’s regulations.
Delta-8 Testing. On Dec. 2, 2021, the nonprofit scientific organization U.S. Pharmacopeia (USP) issued a statement on delta-8 THC, offering several considerations to help prevent consumer harm resulting from substandard, contaminated or adulterated products containing the cannabinoid. While federal law limits the delta-9 THC content of hemp to not more than 0.3 percent on dry weight basis, the content of other cannabinoids or their isomers, such as delta-8 THC, are not explicitly restricted. According to USP, products labeled as containing delta-8 THC have a high probability of being synthetically derived under conditions that may be conducive to the formation of reaction byproducts and impurities. The organization offered a number of mitigation strategies, including systematic clinical investigations, the use of scientifically valid analytical methods, and recognition of risks from other synthetic modifications of cannabinoids (such as delta-10 THC and hexahydrocannabinol). USP emphasized that synthetically derived cannabinoids are not inherently unsafe if they are quality-controlled and shown through systematic studies to be safe.
Grassroots Federal/State Legislative Highlights
New California Law Standardizes Weed Testing. California has approximately 40 weed testing facilities that historically have faced inconsistent testing issues and laboratory inconsistencies. In October 2021, Gov. Gavin Newsom signed Senate Bill 544, which requires the Department of Cannabis Control to create criteria and guidelines for standardized testing of cannabis compounds, pesticides and other contaminants. The law’s intent is to raise quality and reliability standards in the cannabis industry, which will in turn protect consumers and minimize false test results. Additionally, standardized testing procedures will help consumers ascertain that cannabis product labels are accurate. Standardized methods must be implemented on or before Jan. 1, 2023, under the new law. The new standards will be implemented in two California state-run laboratories to determine operating procedures before rolling out to other cannabis testing laboratories throughout the state. This initiative is part of a state partnership with the University of California, San Diego, which will be one of the two state-operated laboratories. New Jersey and New York have also implemented standardized cannabis testing practices.
Low Percentage of New York Towns Opts Out of Recreational Cannabis. Local municipalities in New York have until Dec. 31, 2021, to decide whether to “opt in” or “opt out” of allowing cannabis retail dispensaries to operate in their jurisdictions now that cannabis is legal in the state. Based on the Associations of Towns of New York’s current data, only 9 percent of villages and towns have chosen to opt out of legal cannabis dispensaries and the retail sale of cannabis in their townships. A town has the option to later opt back in; however, the state will be issuing a limited number of dispensary licenses. A research director for the Association of Towns said the 9 percent is not expected to increase dramatically before the end of the year and the opt-out percentage is likely to remain low.
New Mexico Cannabis Business Loans Begin. With adult-use cannabis slated to begin next year, the New Mexico legislature’s Finance Authority Oversight Committee recently approved a process to allow the New Mexico Finance Authority (NMFA) to begin issuing loans to cannabis businesses. NMFA is a state agency responsible for providing low-cost financing for New Mexican businesses to help support state infrastructure. With the approval of the loan program, NMFA will be able to provide up to $250,000 for businesses whose owners were impacted by New Mexico’s prior drug laws or are in rural communities. This program gives New Mexico an edge in the growth of cannabis infrastructure. Loan applications will be available Feb. 1, 2022.
Nevada Cannabis Compliance Board Takes Action for Tax Payment Failures. The Nevada Cannabis Compliance Board has filed a complaint for disciplinary action against NNV OPERATIONS I, INC., doing business as Silver State Cultivation, for allegedly failing to properly remit tax payments. According to the complaint, a routine investigation was initiated after Silver State Cultivation’s bank returned multiple payments due to insufficient funds. The complaint alleges a history of intentionally or unintentionally failing to remit tax payments due for six separate periods. The complaint seeks revocation of four separate licenses and civil penalties against Silver State Cultivation in the amount of $90,000 if the violations are intentional and, in the alternative, $220,000 if unintentional. Silver State Cultivation has an opportunity to request a hearing.
Investments and Transactions Highlights
Harborside Combines With Urbn Leaf Cannabis and Loudpack to Form StateHouse Holdings Inc. Harborside Inc., a California vertically integrated cannabis company announced that it has entered into definitive agreements to acquire Urbn Leaf, a California cannabis retailer, and Loudpack, a cannabis manufacturer, cultivator and distributor. According to the announcement, once the transaction is complete, Harborside will be renamed StateHouse Holdings. Consideration for the transaction will take place through the issuance of subordinate voting shares of Harborside, the assumption and restructuring of debt, and the issuance of 2 million warrants at a strike price of $2.50 (US) per subordinate voting share.
“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.