In the Weeds: Employer Reimbursement of Medical Marijuana, THC Mislabeled as CBD, Possible Legislation in Iowa

December 29, 2021
Newsworthy Highlights

New York Groups File Amicus Brief on Worker’s Comp Reimbursement of Medical Marijuana. Three groups — the New York state affiliate of the National Organization for the Reform of Marijuana Laws (Empire State NORML), the New York City Cannabis Industry Association and the Hudson Valley Cannabis Industry Association — filed an amicus brief in Supreme Court Case No. 21-676, urging the Minnesota Supreme Court to decide whether an employer can be required to reimburse the costs of medical marijuana used to treat a work-related injury. In the underlying case, the Supreme Court held that employees cannot be reimbursed for such costs because cannabis is classified as a controlled substance under federal law. State worker’s compensation laws are split as to whether they require reimbursement for medical marijuana-related costs; these groups have asked the Supreme Court to resolve the issue.

The amici hope the Supreme Court will use this case to evaluate the Schedule 1 classification of cannabis under the Controlled Substances Act. David C. Holland, executive and legal director of Empire State NORML, explained: “The United States Supreme Court needs to step in and hear this case to resolve not only the split amongst state supreme courts regarding medical cannabis reimbursement laws, but also whether Schedule 1 classification of cannabis under the federal Controlled Substances Act is still enforceable in light of the 25 years of flourishing programs in [many] states.”

Missouri Supreme Court to Rule on Confidentiality of Medical Marijuana Business License Applications. When Missouri legalized medical marijuana in 2018, it also passed a confidentiality provision allowing the state’s Department of Health and Senior Services (DHSS) to keep secret the applications of businesses awarded medical marijuana licenses. DHSS used a blind scoring system to process license applications, ranking applications against each other to determine which to grant.

In May 2021, a state appeals court ruled that keeping approved applications confidential denied other applicants who did not receive licenses the ability to meaningfully challenge the blind scoring system. In December 2021, the state Supreme Court heard the case on appeal. DHSS argued that maintaining confidentiality is important to allow for careful regulation of the market and to provide companies wishing to invest in the state’s growing market with confidence through the application process. Oral arguments in the case can be found here. The state Supreme Court is expected to issue a ruling in 2022.

Company Faces Lawsuits Related to Mislabeled Products. A multistate cannabis operator is defending lawsuits related to product labeling errors. As noted in a mandatory recall in September 2021 from the Oregon Liquor and Cannabis Commission (OLCC), the company labeled a product containing “undisclosed levels of THC” as a hemp CBD tincture. The OLCC estimated that approximately 700 units of the mislabeled product were distributed to OLCC retailers and at least 500 were sold between June and September 2021. The company issued a statement noting that:

[a] team member confused two containers during the filling and packaging process, one containing CBD and one containing THC. This resulted in a single batch of [CBD] tincture being labeled as THC [tincture] and vice versa. The amount of THC was within the regulatory limit for a normal batch of our THC drops, but we understand that some consumers may have consumed multiple doses.

A lawyer representing several customers in actions related to the product mislabeling noted that most of the claims are relatively straightforward product liability cases. While some cases have settled, others are expected to proceed in 2022.

Seizure of Mushrooms and Marijuana. According to news articles, on Dec. 17, 2021, Ohio State Highway Patrol troopers seized $153,000 worth of marijuana and psilocybin-laced tablets and mushrooms during a traffic stop in Madison County, Ohio. The state troopers found 20 pounds of marijuana, 50 pounds of psilocybin mushroom and 3 pounds of psilocybin-laced tablets during a search of the vehicle owned by a Louisiana woman. The woman faces felony drug charges and could serve up to 14 years in prison if convicted.

Grassroots Federal/State Legislative Highlights

Iowa Ends 2021 With Possible Marijuana Legislation. In response to rising costs for marijuana laws and enforcement, news articles indicate several Iowa state senators are proposing a constitutional amendment to legalize marijuana. The amendment effort is led by state Sens. Joe Bolkcom, Janet Petersen and Sarah Trone Garriot. The proposed constitutional amendment would legalize cannabis possession for anyone older than 21 and place cannabis regulation in the same realm as alcohol. As part of the legislative effort, the lawmakers cited the high cost to Iowa taxpayers for cannabis incarceration. The Des Moines Register/Mediacom Iowa March 2020 poll revealed that 53% of Iowa residents support cannabis legalization.

According to the state senators who introduced the amendment, the results of the survey reflect the desire of Iowa residents to join many other states in legalizing marijuana. The proposed amendment has been called a “gimmick” by some and the legislation may not come up for a vote, according to state Sen. Brad Zaun, chairman of the Senate Judiciary Committee.

Des Plaines Chicago Council Denies Downtown Cannabis Dispensary. According to a news article, the Des Plaines City Council voted 6-1 to deny allowing a cannabis dispensary’s request to operate in a vacant restaurant a short distance from the newly restored Des Plaines Theatre. According to the article, while the council initially seemed supportive, they reversed their position after receiving constituent input. The meeting minutes have not yet been published on the council’s website.

Maryland Introduces Legalization Referendum. Maryland House Delegate Luke Clippinger recently introduced a constitutional amendment to allow and regulate the adult (anyone 21 and older) use and possession of cannabis in the state. The bill will be reviewed by the state’s legislature on Jan. 12, 2022, and if passed, the question of marijuana legalization will appear on the state’s 2022 general election ballot. If further approved by voters, the measure will go into effect on or after July 14, 2023, and state lawmakers will develop regulations surrounding the use, distribution, possession, regulation and taxation of cannabis in the state. The bill comes in the wake of Clippinger’s cannabis workgroup, which convened regularly in 2021 to discuss topics such as cannabis’ potential impact on health and criminal justice, as well as taxation and business implementation.

Minnesota Board of Pharmacy Clarifies Delta-8 is Illegal Under State Law. The Minnesota Board of Pharmacy published a summary of 2021 legislation. In that summary, the board clarified its position that state law does not allow for the sale of Delta-8 products in the state and that state law similarly prohibits the sale of any product that “contains nonintoxicating cannabinoids extracted (not indirectly derived) from hemp.” The summary indicates the board is working with other state agencies, such as the Minnesota Department of Agriculture, on substances extracted from hemp and sold for human or animal consumption.

Investments and Transactions Highlights

Pfizer to Acquire Pharmaceutical Company with Cannabinoid Pipeline Product. On Dec. 13, 2021, Pfizer announced that is has entered into a $6.7 billion agreement to acquire Arena. Arena is a clinical stage company that develops therapies to treat immuno-inflammatory diseases. Pfizer will acquire all the outstanding shares in an all-cash transaction. One of Arena’s pipeline products, Olorinab, is a cannabinoid type 2 receptor that is being explored for several indications including potential pain relief.

“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.