In the Weeds: New USDA Hemp Survey, FBI Allegedly Investigates State Licensing and DEA Raises Production Quotas

September 7, 2021

Newsworthy Highlights

  • USDA Hemp Survey. The U.S. Department of Agriculture (USDA) asked hemp growers to complete a survey gathering information on the total planted and harvested area, yield, production and value of hemp in the United States. According to the USDA website, the survey will “collect data for hemp produced in the open as well as under cover (greenhouses, low or high tunnels, hoop houses, etc.).” The agency will mail notices and reminders to operators to encourage participation. According to the website FAQs, the information provided will be used for statistical purposes only, and all responses will be kept confidential and will not be disclosed in identifiable form.
  • Cannabis License Investigations. According to news articles, the Federal Bureau of Investigation is allegedly investigating whether corrupt practices were potentially involved in issuing Nevada’s cannabis licenses. Nevada is one of several states where the licensure process is being called into question.
  • DEA Increases Production Quotas. On Sept. 2, 2021, the U.S. Drug Enforcement Administration (DEA) issued a proposed rule to adjust aggregate production quotas (APQs) for schedule I and II controlled substances, which includes significant increases to the APQs of psilocybin, psilocin, marijuana and marijuana extract. According to the proposed rule, these increases are directly related to increased interest by DEA registrants in the use of hallucinogenic controlled substances for research and clinical trial purposes. The proposed rule further states that DEA believes in supporting regulated research of schedule I controlled substances and the APQ increases reflect the need to further research for the production of new drug products, and the study of marijuana effects in particular, as necessary steps toward potential Food and Drug Administration approval of new drug products. Written comments must be postmarked on or before Oct. 4, 2021.

Grassroots Federal/State Legislative Highlights

  • California continues to advance California Bill AB-45 to allow hemp-derived CBD products in food and dietary supplements. The bill would require manufacturers of dietary supplements and food that include industrial hemp to register with the state Department of Public Health and require those manufacturers to demonstrate that all parts of the plant used come from a state or country that has an established and approved industrial hemp program.
  • The Texas ban on smokable hemp was ruled unconstitutional. On Aug. 23, 2021, the court issued a ruling in Crown Distributing LLC, et al. v. Texas Department of State Health Services, et al. (345th District Court of Travis County, Texas, Cause No. D-1-GN-20-004053). The ruling declared unconstitutional Texas Health and Safety Code Section 443.204(4), which applies to the processing or manufacturing of a consumable hemp product for smoking, and Texas Agriculture Code Section 122.301(b), which applies to the manufacture of a consumable hemp product for smoking. The ruling also declared 25 Texas Administrative Code Section 300.104 invalid in its entirety.
  • North Carolina continues to consider a bill to legalize medical marijuana. The bill would allow patients to access cannabis if they have a “debilitating medical condition” such as cancer, epilepsy, HIV/AIDS, Parkinson’s disease, multiple sclerosis or post-traumatic stress disorder. As currently drafted, the bill would allow patients to possess up to one and a half ounces of cannabis, but it would not allow home cultivation.

Investments and Transactions Highlights

  • TerrAscend will acquire Gage Growth. On Sept, 1, 2021, TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF), a North American cannabis multistate operator, and Gage Growth Corp. (CSE: GAGE), a Michigan-based cannabis brand and operator, announced a definitive agreement under which TerrAscend will acquire all of the issued and outstanding subordinate voting Gage shares.
  • Cresco Labs Inc. (CSE:CL) (OTCQX:CRLBF), a vertically integrated multistate operator, announced on Sept. 3, 2021, the completion of the company’s previously announced acquisition of Cultivate, a Massachusetts-based operator of adult and medical use cannabis dispensaries. The transaction increases in-state combined canopy to approximately 64,000 square feet. The transaction also includes space available to further expand cultivation capacity.

“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, or visit our Cannabis, Hemp & CBD practice.