Cannabis Insights

CBD Use in Consumer Products Under the Farm Bill and NJ Law

Published on: June 19, 2019 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Industrial hemp has a long and rich history throughout the world. This is largely because hemp is dynamic and can evolve into products such as clothing, animal feed, building materials, bio plastics, biofuels, paper, fiber and food. Hemp seeds, or grains, are smooth and about one-eighth to one-fourth of an inch long. Hemp seeds can also be used to make a variety of products for industrial and cosmetic use. Of particular interest in New Jersey are the agricultural benefits associated with the hemp plant. Hemp has been known to kill weeds, thereby negating the need for herbicides on crops. Hemp also can absorb metals in the soil thereby acting as a natural filter, mitigating sediment runoff, through which eroded soils carry nutrient pollution into water resources.

Given its multipurpose capabilities, it is no surprise that Congress passed the Agriculture Improvement Act of 2018 (“2018 Farm Bill” or “Farm Bill”). Section 297A of the Farm Bill defines hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” The Farm Bill effectively decriminalizes hemp by removing it from the Controlled Substances Act. The Farm Bill also expands the commercial cultivation of hemp beyond the limited state-approved pilot programs, legalizes hemp production in US territories and on Indian tribal land and authorizes the coverage of hemp as a commodity under crop insurance.

Because hemp is no longer viewed as a controlled substance, the Drug Enforcement Agency has been removed from oversight and replaced with United States Department of Agriculture (“USDA”). As such, the USDA exercises primary regulatory authority over hemp production. According to the New Jersey Department of Agriculture (“NJDOA”), the USDA intends to issue regulations in the fall of 2019 for states that wish to submit hemp production plans. These regulations will address requirements for testing the THC levels of hemp and address disposal of hemp plants and products produced that contain more than .3% THC.

Flurry of Legislative Developments Impacting New Jersey’s Cannabis Industry

Published on: June 4, 2019 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Spring 2019 has been a busy season for New Jersey’s Cannabis Industry. On May 23, 2019 the New Jersey Assembly approved proposed revisions to the Jake Honig Compassionate Use Medical Marijuana Act that would effectively expand the state’s existing Medicinal Marijuana Program. The following week the Senate passed the bill 33-4.

May 31, 2019 saw the Food and Drug Administration (“FDA”) hold its first public hearing to assess the safety of CBD products. In opening remarks, Acting Commissioner of the FDA, Ned Sharpless, acknowledged that hemp derived CBD in food products is unchartered territory for the Agency. As such, in order to carefully evaluate potential pathways for CBD products, the FDA has formed an internal working group to address concerns such as how much CBD is safe for daily consumption, CBD’s combined effect if used both topically and orally and potential dangers to children should they consume a CBD edible.

On June 3, 2019, the New Jersey Department of Health announced that it is seeking new applicants to operate up to 108 additional Alternative Treatment Centers (“ATC”): Up to 38 in the northern region of the state, up to 38 in the central region, and up to 32 in the southern region. Three types of endorsements will be available for ATCs: cultivation, manufacturing and dispensary. In total, the Department will seek up to 24 cultivation endorsements, up to 30 manufacturing endorsements, and up to 54 dispensary endorsements. Permit application forms for ATCs will be available on July 1. Applications are due August 15.

Medical Marijuana and Employee Benefit Funds

Published on: May 14, 2019 | by Elizabeth Engert Manzo

In May 2019 Employee Benefits Shareholder Elizabeth Manzo spoke at the International Foundation of Employee Benefits Plans’ Heatlhcare Management Conference on the topic of medical marijuana and how changes in state laws will impact employers and benefit funds.

Kenneth Corbin wrote an overview of Elizabeth’s presentation for Employee Benefit News titled, Will Medical Marijuana Become Part of Your Benefits Mix.

Many health plans might not want to touch marijuana with a 10-foot pole, but it might be time to start thinking differently about including cannabis in the benefit mix.

Loans and Financing for Cannabis Businesses: Everything You Need to Know about the SAFE Banking Act

Published on: April 15, 2019 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Despite the rapid growth of the cannabis industry, banks have been reluctant to provide financial services to cannabis-related businesses. Banks and other financial institutions fear that providing financial services to those in the cannabis industry could violate federal criminal laws and financial regulations such as “The Bank Secrecy Act” (“BSA”) and the “Money Laundering Control Act” codified under both sections 1956 and 1957 of title 18, of the United States Code.

In an attempt to create protections for banks that wish to provide financial services to cannabis-related legitimate businesses and service providers, the U.S. House of Representatives has each year since 2013 introduced the “Secure and Fair Enforcement Banking Act” (or “SAFE Banking Act”). With a change of control of the U.S. Senate in 2021, this may be the year that the SAFE Banking Act is finally enacted into law.

The SAFE Banking Act would provide a “safe harbor” for banks that provide financial services to legitimate cannabis-related businesses, specifically: (1) prohibiting federal banking regulators from terminating or limiting deposit insurance of the bank; (2) prohibiting or discouraging banks from providing financial services to such a business; (3) recommending, incentivizing, or encouraging a bank to not offer financial services to such a business; or (4) taking adverse or corrective supervisory action on a loan made to a person solely because the person owns such a business or owns real estate or equipment leased or sold to such a business.

Murphy Administration Strikes Deal Concerning Proposed Legislation to Legalize Adult-Use Marijuana in New Jersey

Published on: March 22, 2019 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

UPDATE: “The much-anticipated vote, tentatively scheduled for Monday afternoon in both the General Assembly and the state Senate, was called off when it became clear there were not enough votes in the Senate to pass it.” Read full coverage at ROI-NJ.com

Governor Phil Murphy, Senate President Steve Sweeney, Assembly Speaker Craig Coughlin, Senator Scutari, and Assemblywoman Quijano announced last week that they have reached an agreement concerning the legislation to legalize adult-use marijuana in New Jersey.

While the proposed legislation will likely be released in the coming days, this is what we know so far based on pending Senate Bill S2703.

Is CBD Legal in New Jersey? – The ABC’s of CBD

Published on: February 14, 2019 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Marijuana comes from plants that have hundreds of chemicals known as cannabinoids. The two most notable cannabinoids are the psychoactive Tetrahydrocannabinol (“THC”) and the non-psychoactive Cannabidiol (“CBD”). Hemp, while also derived from the cannabis family, has virtually no THC present thereby causing no psychoactive effect.

The Controlled Substances Act (“CSA”) is the statute under federal law regulating drug policies in the United States. It regulates everything from the manufacturing, possession, use and distribution of certain substances. Under the CSA, Marijuana is considered a Schedule I controlled substance while CBD is considered a Schedule V controlled substance, the least restrictive under the Act. Hemp is no longer treated as a controlled substance pursuant to the Agricultural Improvement Act of 2018 (“Farm Bill”).

Given the extremely small level of THC present in CBD, many people have been asking: is CBD legal in New Jersey? While this is arguably unchartered territory for New Jersey, both the New Jersey State Assembly Bill 1330 and Farm Bill offer some guidance.

Recreational Marijuana Bill Stalls, But Employers Should Nevertheless Brace For Its Passage

Published on: December 17, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

On November 26, 2018 a Joint Committee of New Jersey lawmakers advanced a bill that would legalize recreational marijuana use in the state. Although the bill had widespread support, including from Gov. Murphy, disagreements among Senate Democrats over the percentage of state taxes on marijuana stymied the vote on the bill that was expected in mid-December. Predictions that the bill will be re-introduced and voted upon early this year may be overly optimistic given other pressing issues pending in Trenton. If the bill is ultimately passed, New Jersey will join 10 other states that have legalized recreational marijuana.

When reintroduced, it is not expected that there will be any changes to the bill’s provisions addressing marijuana in the workplace. A single paragraph of the prior version of the sweeping legislation specifically addresses recreational use and the workplace, and simply provides that nothing in the bill requires an employer

to require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growing of marijuana items in the workplace or to affect the ability of employers to have policies prohibiting marijuana use or intoxication by employees during work hours. No employer shall refuse to hire or employ any person or shall discharge from employment or take any adverse action against any employee with respect to compensation, terms, conditions, or other privileges of employment because that person does or does not smoke or use marijuana items, unless the employer has a rational basis for doing so which is reasonably related to the employment, including the responsibilities of the employee or prospective employee.

How Does the Expansion of New Jersey’s Medical Marijuana Laws Impact Employers?

Published on: June 25, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Under New Jersey’s Compassionate Use Medical Marijuana Act enacted in 2010, registered physicians may prescribe medical marijuana to qualified individuals for the treatment of certain conditions. As designed and implemented under prior state administrations, it was often hard for medical marijuana patients to qualify and difficult for cultivators to operate. And previously, the qualifying conditions approved for treatment with marijuana were limited to a few select conditions for debilitating illnesses such as HIV, ALS, MS, IBS, Crohn’s disease, terminal cancer or other terminal illnesses.

However, last month Governor Phil Murphy issued an Executive Order for a wide ranging expansion of New Jersey’s medical marijuana program with significant changes to the number of approved conditions for treatment, the cost for registration, dispensary locations, as well as other immediate and future changes which will significantly impact the use of medical marijuana in state. Under this expansion, the qualifying conditions eligible for treatment with marijuana now include relatively common medical illnesses such as anxiety, migraines, Tourette’s syndrome, as well as chronic pain related to musculoskeletal disorders and chronic visceral pain. According to Governor Murphy, this expansion is aimed at changing “the restrictive culture of [New Jersey’s] medical marijuana program to make it more patient-friendly.”

The program will also cut registration and renewal fees from $200 to $100 every two years, with senior citizens and veterans added to the category of patients who pay only $20. And while patients must still be referred to the program by physicians who are registered and in good standing to practice in the State, this amendment has abolished the public physician registry, which will allow physicians to prescribe marijuana for patients without appearing on a public roster. In a state with roughly 28,000 physicians, just 536 physicians were registered under the prior public registry system. According to Murphy, many physicians were deterred from registering out of fear of the stigma associated with prescribing marijuana which is still illegal under federal law. As a result, the old public registry requirement had the effect of limiting patient access to registered providers who could prescribe medical marijuana. Medical marijuana expansion also allows Alternative Treatment Centers to apply to open satellite locations. New Jersey currently has only 5 (soon to be 6) approved Alternative Treatment Center statewide. Recent reforms will also allow registered caregivers to assist more than one qualified patient. As a result of these changes and others, New Jersey has added approximately 1,500 patients to the roughly 18,000 current medical marijuana users registered for this program in the past month alone.