A Massachusetts legislative committee held a virtual hearing on Tuesday to get input from members and stakeholders about a bill that would establish a state-level coronavirus relief program for marijuana businesses and other companies that are left out of federal aid.
The proposal, which was discussed by the Joint Committee on Community Development and Small Businesses, would address that unique problem that the cannabis industry in particular is facing during the pandemic. These businesses—as well as those that work indirectly with the marijuana market—are specifically prevented from receiving congressionally authorized aid due to ongoing prohibition.
The problem is especially pronounced in Massachusetts, where medical cannabis dispensaries are allowed to operate as essential services but recreational shops have been temporarily shuttered. Witnesses from the industry testified that the state could help their businesses stay afloat and prevent layoffs if they approve the bill, which would establish a state-level Paycheck Protection Program (PPP).
The legislation is being sponsored by the committee’s chair, Sen. Diana DiZoglio (D).
Watch the hearing below:
Mitzi Hollenbeck, a partner at Citrin Cooperman who founded the firm’s cannabis advisory services practice, told the committee that the cannabis market already faces a “huge economic burden” because of ongoing federal prohibition, which prevents these businesses from taking tax deductions that are available to other industries, for example.
“We’ve seen lots of the issues at the federal level that I think Massachusetts has a great opportunity to get correct in this version of the bill,” she said.
“The creation of a Massachusetts PPP loan for cannabis businesses like mine would be a momentous step in the right direction to remedy the inequity that legal, tax-paying cannabis-related businesses like mine are facing during the COVID-19 crisis,” Beth Waterfall, executive director of the cannabis events company ELEVATE Northeast, said in written testimony.
Angela Brown, CEO of the Massachusetts-based recreational marijuana company T. Bear Inc., told lawmakers that her business was forced to shut down one day before it was set to launch its first sales.
“We were forced to furlough our entire team, lock the building and walk away. All I can do now is wait with no income and no revenue,” she said. “And while I wait, I still pay my rent, my lenders, my utilities and my health insurance for my furloughed employees.”
“All small business owners are dealing with these issues. The bills and debt continue to mount as the shutdown prolongs,” she added. “But the difference is that cannabis companies don’t even have access to this economic relief.”
Brian Moran, an executive at the cannabis retailer Garden Remedies, said the company “not only lost the vast majority of our revenues when the state-mandated essential services order was enacted in late March but the lifeline extended to help small businesses across our country survive during this pandemic has not been extended to us.”
“This has resulted in a perfect storm for our industry that has caused massive problems,” he said.
“Massachusetts’s cannabis industry is intentionally organized by law to promote equity. Massachusetts was the first state to pass explicit equity measures in the adult-use cannabis industry for farmers, veterans, women, minorities and those disproportionately harmed by drug laws,” Shaleen Title, who serves as a member of the Massachusetts Cannabis Control Commission, said in written testimony.
“The lack of federal PPP support puts the fragile progress we have made over the past three years at risk,” she continued. “The harm is likely to fall more sharply on the very small businesses, workers, families, and communities that our state’s cannabis equity measures are intended to protect.”
Title later told Marijuana Moment that based on the hearing, “it was clear that there are many small businesses, including cannabis businesses, that are not eligible for federal aid even though they pay taxes and employ people and are trying to survive just like the businesses that are receiving loans and grants.”
“They didn’t cause this crisis; their businesses have been shut down through no fault of theirs. We shouldn’t be picking winners and losers,” she said. “Standing up for those being left behind is exactly what public officials should be doing right now. I commend Senator DiZoglio and the other sponsors of the bill for looking out for them.”
A vote on the proposal hasn’t yet been scheduled, but the chairwoman said at the close of the hearing that the matter will be taken up again “in the near future.”
“Our small businesses are in crisis, as you well know. They not only face a one-size-fits-all attempt at relief by the federal government, which doesn’t take into account the unique commercial makeup and different recovery timelines of individual states,” DiZoglio said. “It’s up to the Commonwealth to close the gaps for all of our small businesses and to provide equitable relief in the absence of that relief from the federal government.”
“We must be realistic and we must adapt as our states faces significant financial constraints in the foreseeable future,” she said.
Under the proposal, a public agency would be tasked with developing regulations for the state service within 30 days of the bill’s enactment. Cannabis businesses aren’t explicitly mentioned in the text of the legislation, but they are a standout example of an industry that is specifically excluded from federal relief and would qualify for benefits through the proposed Massachusetts program.
The federal Small Business Administration (SBA) confirmed last month that the marijuana industry isn’t eligible for its relief program, prompting advocates, lawmakers and stakeholders to press for reforming eligibility requirements as part of future stimulus packages.
While a bill was introduced to that end in Congress—and members of both the House and Senate have sent letters urging leadership to include such language in COVID-19 legislation—it remains to be seen whether the proposed policy change will be enacted.
To that end, a coalition of industry associations sent a letter to state officials last month, imploring them to set up independent relief programs like the one currently being considered in Massachusetts.
Beside passing legislation to extend benefits at the federal level, or providing relief through a state-level system, there is another option identified by a group of cannabis associations and credit unions last week. The coalition is asking Congress to issue pandemic relief block grants to states so they can decide on their own how to allocate the funds.
Nine Members Of Congress Tell DEA To Revise Proposed Hemp Rule On THC Content
Nine members of Congress sent a letter to the Drug Enforcement Administration (DEA) on Tuesday, urging the agency to revise its proposed hemp regulations.
DEA released an interim final rule (IFR) for the crop in August, and it said the regulations were simply meant to comply with the 2018 Farm Bill that legalized hemp and its derivatives. But stakeholders and advocates have expressed serious concerns about certain proposals, arguing that they could put processors at risk of violating federal law and hamper the industry’s growth.
Reps. David Joyce (R-OH) and Denver Riggleman (R-VA) led the letter and pointed specifically to a provision of DEA’s IFR that could impact processing hemp extracts. The agency stipulated that “any such material that contains greater than 0.3% of Δ9-THC on a dry weight basis remains controlled in schedule I.”
That’s problematic, the lawmakers said, because in many cases the process of extracting cannabinoids from hemp temporarily causes THC levels to increase beyond that threshold. And so while Congress intended to legalize those extracts, businesses that produce the materials could find themselves inadvertently breaking the law.
I sent a letter to the @DEAHQ asking them to protect hemp producers and clarify hemp regulations.
The DEA must specify their requirements and streamline hemp directives by clarifying the legal means of processing hemp products. Read more here, #VA05:https://t.co/wGabQePrts
— Congressman Denver Riggleman (@RepRiggleman) October 21, 2020
“Our offices have received countless calls from constituents involved in the hemp industry who are extremely fearful that simply following the provisions of the Farm Bill will result in criminal liability under the IFR,” the lawmakers’ letter states. “The IFR will likely have the effect of inhibiting these nascent state hemp programs thereby harming those American companies and workers who chose to pursue careers in the hemp industry and made significant investments to effectuate those aspirations.”
Therefore, the lawmakers are “requesting a resolution to this issue as quickly as possible,” adding that “DEA must revise the IFR to eliminate the ambiguities set forth above and provide peace of mind to all Americans who have chosen to pursue a career in the hemp industry.”
Reps. Rodney Davis (R-IL), Morgan Griffith (R-VA), Glenn Grothman (R-WI), Don Young (R-AK), Anthony Gonzalez (R-OH), Earl Blumenauer (D-OR) and Matt Gaetz (R-FL) also signed the letter.
A public comment period on DEA’s proposed rules closed on Tuesday. It saw more than 3,300 submissions, many of which focused on issues with the “work in progress” hemp THC issue.
“This IFR’s criminalizes work in progress hemp extract, a fundamental component of any consumer hemp/CBD product, and will negatively impact the hemp/CBD industry at a time when financial pressure is already high,” one commenter wrote. “Hemp and subsequent extracts are not controlled substances.”
Another issue identified by more than 1,000 commenters concerns delta-8 THC. The most widely known cannabinoid is delta-9 THC, the main component responsible for creating an intoxicating effect, but delta-8 THC from hemp is also psychoactive and is an object of growing interest within the market.
Because DEA’s proposed regulations state that all “synthetically derived tetrahydrocannabinols remain schedule I controlled substances,” some feel that would directly impact the burgeoning cannabinoid, as its converted from CBD through the use of a catalyst—and that could be interpreted as a synthetic production process.
In any case, it’s not clear whether DEA deliberately crafted either of these rules with the intent of criminalizing certain hemp producers—but stakeholders and advocates aren’t taking any chances.
The U.S. Department of Agriculture (USDA) has faced separate criticism over its own proposed hemp rules, though it has been more proactive in addressing them. Following significant pushback from the industry over certain regulations it views as excessively restrictive, the agency reopened a public comment period, which also closed this month.
USDA is also planning to distribute a national survey to gain insights from thousands of hemp businesses that could inform its approach to regulating the market.
Read the congressional coalition’s letter to DEA on its hemp rule below:
Pennsylvania House Votes To Protect Medical Marijuana Patients From DUI Charges
The Pennsylvania House of Representatives approved an amendment on Tuesday that would protect medical marijuana patients from being penalized under the state’s DUI laws for using their legal medicine.
The proposal cleared the chamber as an amendment to a broader piece of legislation concerning motor vehicle policies. It passed in a 109-93 vote.
As it stands, registered medical cannabis patients can be convicted of driving under the influence of a controlled substance if THC metabolites are detected in their blood. That’s despite the fact that marijuana can remain present in the body well after someone is considered impaired.
The House-approved amendment, which is now attached to a bill previously passed by the Senate, exempts “marijuana used lawfully in accordance with” the state’s medical cannabis law from DUI statutes.
“I think that you can ask any veteran or anybody that’s using medical cannabis right now, if they took the prescription on Monday, [on] Wednesday, they’re not high,” Rep. Ed Gainey (D) said in a floor speech before the vote. “And if they got pulled over, they darned shouldn’t be charged for being intoxicated or under the influence of medical marijuana.”
Medical marijuana has helped the people of the Pennsylvania. But even if you have a medical card, you can still get a DUI even if you’re not high – if you have a trace of THC in your system. Today I fought to pass a bill that would end that. pic.twitter.com/uxj8IsuVO9
— Ed Gainey (@RepGainey) October 21, 2020
“I think we’re putting an undue burden on the people of Pennsylvania if we’re saying this is what we want to do after we fought so hard to pass medical marijuana and we know what it’s done to help the people of Pennsylvania,” he said.
The amendment is similar in intent to separate standalone legislation introduced by Sen. Camera Bartolotta (R) in June to end the “zero tolerance” DUI policy for medical marijuana.
While Pennsylvania legalized medical cannabis in 2016, with the first dispensaries opening two years later, the law has not caught up as it concerns impaired driving. A person can test positive for THC for weeks after last consuming marijuana, rendering traditional roadside tests incapable of determining active impairment.
Several legal cannabis states have enacted per se THC limits in blood, similar to blood alcohol requirements. However, evidence isn’t clear on the relationship between THC concentrations in blood and impairment.
A study published last year, for example, concluded that those who drive at the legal THC limit—which is typically between two to five nanograms of THC per milliliter of blood—were not statistically more likely to be involved in an accident compared to people who haven’t used marijuana.
Separately, the Congressional Research Service in 2019 determined that while “marijuana consumption can affect a person’s response times and motor performance… studies of the impact of marijuana consumption on a driver’s risk of being involved in a crash have produced conflicting results, with some studies finding little or no increased risk of a crash from marijuana usage.”
The modest cannabis DUI reform approved by the Pennsylvania House comes amid repeated calls from the state’s leaders to more broadly legalize marijuana for adult use.
Last week, Gov. Tom Wolf (D) in a speech stressed that marijuana reform could generate tax revenue to support the state’s economic recovery from the coronavirus pandemic and that ending criminalization is necessary for social justice.
That marked the third time in three months that the governor has held events focused on making the case for legalization. Last month, he took a dig at the Republican-controlled legislature for failing to act on reform in the previous session. And in August, he suggested that the state itself could potentially control marijuana sales rather than just license private retailers as other legalized jurisdictions have done.
Lt. Gov. John Fetterman (D), a longstanding legalization advocate, has been similarly vocal about his position. In speeches and on social media, the official has expressed frustration that Pennsylvania has yet to enact the policy change, especially as neighboring like New Jersey are moving in that direction.
He said last month that farmers in his state can grow better marijuana than people in New Jersey—and that’s one reason why Pennsylvania should expeditiously legalize cannabis before voters next door in the Garden State enact the policy change this November.
Fetterman also recently hosted a virtual forum where he got advice on how to effectively implement a cannabis system from the lieutenant governors of Illinois and Michigan, which have enacted legalization.
While Wolf initially opposed adult-use legalization, he came out in support of the reform last year after Fetterman led a statewide listening tour last year to solicit public input on the issue.
Shortly after the governor announced that he was embracing the policy change, a lawmaker filed a bill to legalize marijuana through a state-run model.
A majority of Senate Democrats sent Wolf a letter in July arguing that legislators should pursue the policy change in order to generate revenue to make up for losses resulting from the COVID-19 pandemic.
Montana Supreme Court Rejects Challenge To Marijuana Legalization Initiative
The Montana Supreme Court on Wednesday rejected a lawsuit seeking to invalidate a marijuana legalization initiative that will appear on the state’s November ballot.
With weeks before the election, opponents asked the court to quash the measure, arguing that because it involves appropriating funds, it violates state statute on citizen initiatives.
The court didn’t weigh in on the merits of the challenge; rather, it said the petitioners with the campaign Wrong for Montana (WFM) failed to demonstrate “urgency or emergency factors” that would justify moving the case into its jurisdiction instead of going through trial and appeals courts first.
It left the door open for the opponents to take its challenge through the traditional process. Brian Thompson, the attorney representing the plaintiffs, told Marijuana Moment that they now intend to file the suit in district court “soon,” but he wasn’t able to provide an exact timeline.
“We express no opinion on the merits of WFM’s constitutional challenge, nor to its right to pursue this challenge in district court,” the justices wrote. “However, WFM’s claim does not present an appropriate basis on which to invoke this Court’s original jurisdiction. Even if it did, WFM has wholly failed to establish that urgency or emergency factors make litigation in the trial courts and the normal appeal process inadequate.”
Dave Lewis, policy advisor to the pro-legalization New Approach Montana, said in a press release that this “was an easy decision for the Montana Supreme Court.”
“At best, this lawsuit was a frivolous longshot,” he said. “At worst, it was an intentional effort to create confusion right before the election.”
The measure in question would establish that adult-use marijuana system. The lawsuit did not target a separate, complementary initiative that would specify that only those 21 and older could participate in the legal market.
It is the case that state statute says citizens “may enact laws by initiative on all matters except appropriations of money and local or special laws” and that the initiative does allocate cannabis tax revenue to certain programs. But prior measures that have appeared on the state’s ballot have done so as well.
Under the proposal, half of the public revenue generated from marijuana sales would go toward environmental conservation programs—a provision that earned the campaign key endorsements last month.
The initiative is already on the ballot and voting has started, so presumably if the court had sided with the plaintiffs, the votes simply wouldn’t have been counted or implementation would have been prevented. It is also possible that a court could rule that monies raised by legal cannabis sales under the initiative would simply into the state’s general fund instead of toward the specific programs delineated in its current text.
“We’re receiving strong support from voters across the state,” Lewis, who is a former Republican state senator and former budget director for three Montana governors, said. “Instead of making a coherent argument against the initiatives, our opponents tried to deprive Montanans of their constitutional right to a citizen initiative process.”
“Our opponents are desperately throwing everything at the wall in the hope that something sticks,” he added. “They’re resorting to fear tactics and misinformation because they know that a majority of Montana voters are ready to vote yes on legalizing, regulating, and taxing marijuana for adults 21 and over.”
In neighboring Nebraska, the state Supreme Court did rule last month that a measure to legalize medical cannabis that had qualified for the November ballot could not proceed because it violated the state’s single-subject rule for ballot initiatives.
Recent polling indicates that Montana voters are positioned to approve the legalization proposal. Forty-nine percent of respondents in a survey released last week said they support the policy change, with 39 percent opposed and 10 percent remaining undecided.
This story has been updated to include comment from Thompson.
Read the Montana Supreme Court’s ruling on the marijuana challenge and the original lawsuit below: