New York lawmakers have rolled out a revised bill to legalize marijuana as uncertainty abounds about the state legislative and budgetary process amid the coronavirus outbreak.
The proposal filed on Thursday, which would allow individuals 21 and older to purchase cannabis from licensed retailers and cultivate up to six plants for personal use, has undergone several changes from prior versions as lawmakers continue negotiations.
Gov. Andrew Cuomo (D) included legalization in his budget proposal for the second year in a row, and he discussed the importance of passing the reform legislation in his State of the State address in January.
The governor has repeatedly insisted that the budget should be the vehicle to enact reform, and this bill seems to position lawmakers to accomplish that ahead of an April deadline. However, advocates say complications may arise as the administration and legislature grapples with the ongoing crisis caused by the spread of coronavirus.
“In an ideal world for advocates, language from the revised bill would be inserted into the budget before it arrives at Cuomo’s desk,” Melissa Moore, New York deputy state director of the Drug Policy Alliance, told Marijuana Moment. “But that prospect seems dimmed in light of the current crisis, which has shifted legislative priorities.”
But even as officials work on the health response, Cuomo has insisted that pushing the reform move through the budget is still the surest way for it to succeed. And, because of the urgency of cutting down on public gatherings at a time when at least two state lawmakers have already tested positive for coronavirus, the budget may actually be considered on a “accelerated” basis with a deal being made as soon as this week.
“We have to make the political decisions. The budget is the time to make the political decisions,” he said on a conference call with reporters on Saturday, adding that “without the budget, the easiest thing for a legislative body to do is to do nothing.”
"Yes" Cuomo says he will be pushing for amending bail reform and legalizing marijuana in the "accelerated" budget process that could have lawmakers and governor making a deal by end of upcoming week "We're not talking about a bare-bones budget"
— Zach Williams (@ZachReports) March 14, 2020
Cuomo was asked again at a Monday press conference whether he still wanted to include policy issues such as cannabis legalization in the budget.
“I want to do as much as we can do,” he said. “Only caveat: If it has not been thought through, that’s a different story.”
It’s not clear if the new marijuana language filed just days ago has been “thought through” enough for the governor, who also said at the presser that recent efforts to regionally coordinate a legalization plan have inadvertently helped Northeast states communicate more effectively on a coronavirus response.
Senate Deputy Leader Mike Gianaris (D) threw some cold water on the prospects of passing legalization through the budget, however. Legislators will be discussing various pieces of legislation remotely in light of the coronavirus before coming in to vote, but he indicated that issues like marijuana reform could be delayed.
“We’re trying to be incredibly effective this week, to only come in as necessary,” he told the North Country Public Radio. “But in that short time do as much as we can to move the state forward.”
Advocates are similarly hearing that cannabis reform may be put on the back burner again.
“I think at this point it’s pretty unlikely that adult use moves in the expedited budget the NY legislature is working on,” Moore, of DPA, told Marijuana Moment. “Sounds like they’re focusing on essential items only and policy provisions like this are falling out as they try to close the budget by Friday.”
While the governor spent months negotiating with lawmakers over the details of a legalization bill last year, a deal ultimately did not work out as disagreements persisted on issues such as how to allocate tax revenue. Cuomo has expressed optimism that it will be different this time around.
To that end, the revised bill includes a variety of changes that could help get it past the finish line.
A spokesperson for Sen. Liz Krueger (D), the lead sponsor of the standalone legislation, shared a summary of the key changes from a prior version with Marijuana Moment. Those include clarifying regulatory responsibilities, establishing a chief equity officer, providing training for law enforcement to detect impaired driving and reducing the overall effective tax rate for cannabis.
The recreational home grow option is notable. While it appeared in earlier versions of the Krueger’s bill, it was absent from the governor’s budget plan, which only allowed home cultivation for medical cannabis.
Text of the legislation also includes a series of provisions aimed at restorative justice and social equity. For example, it provides for automatic expungements for those with prior cannabis convictions and it also includes low- or zero-interest loans for qualifying equity applicants who wish to start marijuana businesses.
An 18 percent tax would be imposed on cannabis sales. After covering the costs of implementation, revenue from those taxes would go toward three areas: 25 percent for the state lottery fund, so long as it’s designated for the Department of Education; 25 percent for a drug treatment and public education fund and 50 percent for a community grants reinvestment fund.
Moore said that reform advocates are encouraged by the social equity provisions of the revised bill. And she said that generally speaking, there is consensus in favor of the reform move despite the complications arising due to the accelerated timetable for th budget.
The legislation also outlines various penalties for violating its provisions. Individuals can possess up to three ounces of cannabis, for example, but if they possess more than that, it’s punishable by a $125 fine.
Prohibitionist group Smart Approaches To Marijuana said in a press release on Thursday that “the changes to the marijuana legalization bill make it much less palatable” to legalization opponents.
Today, New York State Assembly and Senate sponsors of a bill to commercialize marijuana released amended versions of the bill.
Our statement: pic.twitter.com/asHH76Hy3r
— SAM (@learnaboutsam) March 12, 2020
Cuomo has also taken the step of meeting with governors of neighboring states to develop a regionally coordinated legalization plan. In December, the top state officials met and agreed to a set of governing principles their respective cannabis models should adhere to.
Part of the governor’s plan to push for legalization this year involved a trip to legal cannabis states, where he intended to learn from their experiences and take those lessons back home. But in a recent press conference, he indicated the tour may be delayed as the administration grapples with its response to the coronavirus outbreak.
Photo courtesy of WeedPornDaily.
Businesses That ‘Indirectly’ Work With Marijuana Industry Ineligible For Federal Coronavirus Loans
It’s not just state-legal marijuana retailers and growers that stands to miss out on federal relief loans amid the coronavirus outbreak. In addition to that restriction, which the federal Small Business Administration (SBA) confirmed last month, a wide range of businesses that indirectly service the cannabis industry are also ineligible under recently enacted legislation.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which the President Trump signed last month, provides for a Paycheck Protection Program that offers a significant amount of forgivable loans to companies with 500 or fewer employees. Cannabis businesses—as well as ancillary firms that contribute to them with products or services—are specifically excluded from those benefits, however.
In a notice about the draft rules of the CARES Act, SBA points to a document from last year outlining businesses that are generally ineligible for its programs. One section describes how “Businesses Engaged in any Illegal Activity” can’t receive federal loans.
“SBA must not approve loans to Applicants that are engaged in illegal activity under federal, state, or local law,” it states. “This includes Applicants that make, sell, service, or distribute products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the Applicant’s intended market.”
“Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity,” it continues. “Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.”
To that end, it’s no surprise that businesses such as dispensaries and cultivation facilities would be excluded. But it’s also the case that a large class of companies that indirectly work with the cannabis industry could also lose out on the benefits.
An ineligible “indirect marijuana business” is defined by SBA as “a business that derived any of its gross revenue for the previous year (or, if a start-up, projects to derive any of its gross revenue for the next year) from sales to Direct Marijuana Businesses of products or services that could reasonably be determined to aid in the use, growth, enhancement or other development of marijuana.”
SBA provides specific examples of such companies. The list includes “businesses that provide testing services, or sell or install grow lights, hydroponic or other specialized equipment, to one or more Direct Marijuana Businesses; and businesses that advise or counsel Direct Marijuana Businesses on the specific legal, financial/accounting, policy, regulatory or other issues associated with establishing, promoting, or operating a Direct Marijuana Business.”
Businesses that sell paraphernalia like bongs or pipes intended for cannabis use are also ineligible for the loans, SBA said.
However, the agency said its interpretation of an indirect cannabis business doesn’t extend to companies that provide general services such as plumbing or tech support for laptops that marijuana firms use, for example.
The penalty for submitting an application for the relief loans with fraudulent information is up to five years in prison and up to a $250,000 under one federal statute. Another statute makes it punishable by imprisonment of up to two years and a maximum $5,000 fine. Finally, if the application was submitted to a federally insured institution, the penalty is up to 30 years in prison and up to a $1 million fine.
“As a starting point, it is incredibly unfair that state-legal cannabis companies are not eligible for these SBA loans,” Josh Kappel, founding partner at Vicente Sederberg, told Marijuana Moment. “These companies pay Social Security and Medicare taxes, unemployment taxes, and, of course, federal corporate taxes. In every way, they deserve to be treated like any other business when it comes to these emergency loans.”
“It is even more egregious when the SBA determines, not by law but by its own regulations, that companies will be ineligible for loans if they derived any revenue in the previous year from selling products or services to state-legal cannabis companies,” he added. “In a state like Colorado, when you consider law firms, accounting firms, advertising and marketing firms, HVAC companies, lighting companies, and on and on, there are literally hundreds of small businesses that could be deemed ineligible.”
Advocates are pushing for Congress to add language to future coronavirus-related spending legislation to free up access to SBA services for state-legal marijuana businesses. But it remains to be seen whether that will materialize.
Eleven senators did recently send a letter to leadership in a key committee asking that they add a provision allowing marijuana businesses to access federal loan services in an upcoming annual spending bill, however.
“While we would like to see loans available to all cannabis companies, the SBA, at the very least, should immediately modify its regulations to remove the prohibition on COVID-19-related loans to ‘indirect marijuana businesses,'” Kappel said. “Countless jobs and small businesses could be at risk if they do not.”
Because hemp was legalized under the 2018 Farm Bill, businesses that sell the crop or those that indirectly service those companies are eligible for federal relief programs—a point SBA stressed in a recent blog post.
Photo courtesy of Philip Steffan.
CBD Prescription Drug Is No Longer A Federally Controlled Substance, DEA Says
The Drug Enforcement Administration (DEA) has removed a marijuana-based medication from the list of federally controlled substances.
GW Pharmaceuticals announced on Monday that Epidiolex, a prescription drug it developed that’s derived from cannabis and used in the treatment of epilepsy, had been taken off Schedule V of the Controlled Substances Act. Effectively immediately, the CBD medication is no longer a controlled substance, the company said.
That means individuals will be able to more easily obtain Epidiolex. GW said in its notice that it will “begin the process of implementing these changes at the state level and through the EPIDIOLEX distribution network.”
After that point, state reporting requirements under prescription drug monitoring programs will no longer be applicable. Like many non-controlled drugs, people will still need to get a prescription from a doctor, but those prescriptions will be valid for up to a year and can be transferred among pharmacies.
“This notification from DEA fully establishes that EPIDIOLEX, the only CBD medicine approved by FDA, is no longer a controlled substance under the federal Controlled Substances Act,” Justin Gover, CEO of GW, said in a press release. “We would like to thank DEA for confirming the non-controlled status of this medicine.”
“Importantly, the descheduling of EPIDIOLEX has the potential to further ease patient access to this important therapy for patients living with Lennox-Gastaut Syndrome and Dravet syndrome, two of the most debilitating forms of epilepsy,” he said.
The Food and Drug Administration (FDA) approved the medication in 2018. DEA said it would be placed in Schedule V, rather than Schedule I like marijuana and its derivatives.
FDA pushed back in a letter to the agency, arguing that CBD carries minimal risks and has established health benefits and so it shouldn’t be controlled at all. DEA replied that international treaty obligations warrant its control, albeit in the least restrictive category of Schedule V. FDA then said that if that changed, the agency should “promptly” revisit its status as a controlled substance.
Last year, the World Health Organization clarified that CBD containing no more than 0.2 percent THC is “not under international control.”
Meanwhile, FDA is in the process of developing regulations for hemp-derived cannabidiol products that aren’t approved as medications following the 2018 Farm Bill’s legalization of the crop and its derivatives. The agency said in a report to Congress last month that the rulemaking process is ongoing, but it is actively exploring pathways to allow for lawful sales of the cannabis compound as a dietary supplement, and it’s developing enforcement discretion guidance for products that are currently on the market.
Photo by Aphiwat chuangchoem.
Delaware Officials Allow Medical Marijuana Delivery Amid Coronavirus Outbreak
Home delivery of medical marijuana may soon be available to patients in Delaware under an emergency program being rolled out by state regulators. It’s yet another step designed to ensure safe access to medical cannabis products while limiting the risk of coronavirus transmission.
Delivery from one company, Columbia Care, which has locations in Wilmington, Smyrna and Rehoboth Beach, is expected to begin as soon as this week, regulators confirmed to Marijuana Moment on Friday. The program is being allowed under Delaware’s state-of-emergency declaration, although regulators intend to allow deliveries to continue even after the COVID-19 pandemic stabilizes.
“The Office of Medical Marijuana is not establishing this as a convenience option,” Paul Hyland, director of the state Office of Medical Marijuana, said via a spokesperson, “but as a stop-gap system to allow homebound and the most vulnerable patients to obtain products safely.”
Hyland added that there are “a number of steps to be completed” and “no firm date has been set” on when deliveries will begin, “however Columbia Care is looking to launch delivery” this week.
Columbia Care representatives didn’t immediately respond to a request for comment, but its website says it is “proud to be the first medical marijuana company in Delaware to deliver products to patients and designated caregivers.”
The program could eventually expand to other dispensaries in the state, such as Fresh Delaware and First State Compassion. Those other operators “can participate” in the delivery program, Hyland said, “however at this time, they were not in a position to accommodate delivery in the time necessary to respond to the current situation.” Neither company responded to requests for comment on Friday.
Hyland said patients won’t need to take any additional steps to register for Columbia Care’s delivery service. “It will work the same way as in-store pick-up currently works for Columbia Care,” he said, “through an option on their website.”
In a blog post Friday that broke news of the delivery program, the Delaware chapter of NORML, a leading cannabis advocacy organization, said it was “thrilled” by the development and urged officials to implement the plan quickly.
“Some patients may not drive and many do not have an authorized caregiver,” the group wrote. “Ordering online with pick up options isn’t enough when a vast majority of patients are now homebound with little resources to facilitate those services. By definition, medical patients are the most at risk and we should be doing everything we can to ensure their safety.”
Laura Sharer, the director of Delaware NORML, had urged the state last week to allow delivery options for patients who needed it. She cheered the move in an email to Marijuana Moment on Friday. “This is historic advocacy action,” she wrote. “To have expressed an urgent need an have it quickly met is not something that has happened within (Delaware’s medical marijuana) program before. I truly applaud our state officials for stepping up to meet patients’ needs.”
Sharer said that she understands Columbia Care plans to make delivery available for orders of $50 or more and will charge a $10 delivery fee. Patients will be able to place orders online or by phone. “As of now, there are no other requirements or extra steps for the patients,” Sharer said, although she stressed that delivery “is a new process and I anticipate they may adjust if needed.”
NORML in its blog post asked patients to continue to use existing curbside-pickup options if they’re able, which will minimize demand on delivery drivers and help them service the state’s most vulnerable patients. “Please be mindful that for many patients this will be their *ONLY* option,” the group wrote. “If you can facilitate the online ordering with pick up option safely, please continue to do so and save this service for those who need it most.”
“I would like to convey that this one center will not be able to meet the demands of the 12,000+ current patients” in the state, Sharer said on Friday, adding that she hoped more dispensaries will soon offer delivery. “I would urge patients to only facilitate this service if they must, reminding that some patients are homebound and this would be their only option.”
Delaware NORML also provided Marijuana Moment with recent email correspondence between activists and Delaware regulators, who wrote in the emails that they began working on a delivery plan in late March.
“Last week we started working with Columbia Care to start a delivery service,” Alanna Mozeik, a policy head at the state Department of Health and Social Services, wrote in a message on Wednesday. “Not all of the vendors are on board at this time, but Columbia Care has the digital infrastructure already in place and they are working diligently to develop the other necessary processes and procedures so that this can occur safely.”
As Mozeik explained in an earlier email to NORML, Delaware law doesn’t expressly forbid cannabis delivery. Prior to the coronavirus pandemic, however, the state hadn’t put together a formal process to evaluate and approve delivery proposals. “While the governing statute does not prohibit delivery, OMM (the Office of Medical Marijuana) would still require compassion centers to submit a plan for delivery implementation for review,” she wrote on March 26.
In the email to Marijuana Moment on Friday, Hyland, the director of Delaware’s Office of Medical Marijuana (OMM), said that his office plans to “create a more defined delivery program” going forward.
“Once the (state of emergency) is over, the Office of Medical Marijuana will work to create the proper regulatory and operational framework to standardize delivery across the program,” he said. “Prior to the impacts of COVID-19, the Office of Medical Marijuana was already in initial discussions with compassion center vendors on how to operate a delivery service in Delaware. This planning phase is on pause until the pandemic is over, but at that time the OMM will create a more defined delivery program.”
Nearly all U.S. states with legal cannabis programs have deemed retail outlets essential businesses and allowed them to remain open, with one notable exception being Massachusetts, which has shuttered adult-use cannabis businesses and allowed only medical dispensaries to remain open. Many states have also relaxed regulations in order to allow for curbside pickup, designed to improve social distancing, although only a handful of states currently allow delivery.
In Colorado, regulators last month issued that state’s first delivery license to The Dandelion, a Boulder dispensary operated by the company Native Roots. The store began medical marijuana deliveries last week but for now can deliver only to Boulder and the nearby town of Superior.