June 29, 2018

Significant Developments This Week in Cannabis Law

This week saw three significant legal developments for the cannabis industry in the United States – the first FDA approval of a cannabis-derived drug, Oklahoma voters’ support of a medical marijuana bill, and the introduction in the U.S. Senate of legislation that would federally decriminalize marijuana.

FDA Approves the First Cannabis-Based Pharmaceutical

On June 25, 2018, the U.S. Food and Drug Administration (FDA) approved EPIDIOLEX®, a cannabis-derived drug for the treatment of seizures associated with rare forms of epilepsy. An advisory committee recommended the drug for approval in April, and the agency had until this week to make a final decision. Calling the approval “an important medical advance” in a statement on June 25, FDA Commissioner Scott Gottlieb noted that “this product approval demonstrates that advancing sound scientific research to investigate ingredients derived from marijuana can lead to important therapies.”

EPIDIOLEX® is the first FDA-approved drug that contains a purified substance derived from the marijuana plant. Cannabidiol (CBD), a chemical component of the cannabis sativa plant that comprises up to 40% of the plant’s extract, is the active ingredient in the drug. While it has been found to contain medicinal properties, CBD does not cause the euphoria or “high” that comes from another chemical in cannabis, tetrahydrocannabinol (THC).

In clinical trials, EPIDIOLEX® was effective in reducing the frequency of seizures in patients with Lennox-Gastaut syndrome, which causes multiple types of seizures beginning in early childhood, and Dravet syndrome, a rare genetic dysfunction of the brain that begins in the first year of life. The twice-daily oral solution is now approved for use in patients two-years-old and older. GW Pharmaceuticals plc, the UK-based biopharmaceutical company that developed EPIDIOLEX®, is currently conducting Phase 3 clinical trials for tuberous sclerosis complex, another seizure-inducing condition that begins in infancy.

As part of the approval process, EPIDIOLEX® must be rescheduled from its current Schedule I before it can be made available to patients. According to GW, rescheduling is expected to occur within 90 days.

Oklahomans Vote in Favor of Legalizing Medical Marijuana

On June 26, 2018, Oklahoma residents backed the medicinal use of marijuana at the polls, with 57% of voters choosing to favorably answer State Question 788 (SQ 788), the first marijuana question on a state ballot in 2018. The campaign in favor of the law did not have significant funding, while those opposing the proposal spent roughly half a million dollars on television ads seeking to undermine support. Despite this, Oklahoma followed the growing national trend, becoming the 30th state to legalize medical marijuana.

Under the new law as drafted, legal patients in Oklahoma will receive state ID cards and be allowed to possess three ounces of cannabis in public, and store up to eight ounces at home. Home cultivation of six mature plants and six seedlings is allowed, as is possession of up to one ounce of cannabis concentrates and 72 ounces of marijuana-infused edible products. Patients could also designate a caregiver to purchase or grow cannabis for them. Unlike most other states’ medical marijuana use laws, which delineate a specific list of diseases and disorders for which physicians can authorize patients’ cannabis use, SQ 788 allows doctors to recommend marijuana for any medical condition they see fit. In addition, the new law would give some level of protection for patients who do not obtain a state-issued identification card: individuals who are caught with 1.5 ounces or less of marijuana and can “state a medical condition” would face a misdemeanor offense punishable by no more than a $400 fine.

This recent approval may indicate that voters in other moderate and conservative states – like Michigan and Utah, who will have marijuana questions on state ballots later this year – will also vote to legalize medical marijuana in 2018.

Chuck Schumer Introduces the Marijuana Freedom and Opportunity Act

Finally, on June 27, 2018, Senate Democratic Leader Chuck Schumer (D-NY) formally introduced the Marijuana Freedom and Opportunity Act (the Act), cosponsored by Senators Bernie Sanders (I-VT), Tim Kaine (D-VA), and Tammy Duckworth (D-IL). The new legislation would decriminalize marijuana at the federal level by removing it from the list of Schedule I substances under the Controlled Substances Act of 1970 (CSA). The Act would effectively defer to the states to determine if marijuana should be legal within each state’s borders. The Act would, however, continue to criminalize federally the trafficking of marijuana across state boundaries, particularly into and out of states that themselves have not legalized any form of marijuana use. The Act would likewise allow the Department of Treasury to continue to regulate marijuana advertising.

To ensure public safety, the Act would authorize $250 million, over five years, for targeted investments in highway safety research to ensure federal agencies have the resources they need to assess the pitfalls of driving under the influence of THC and develop technology to reliably measure impairment. To address public health, the bill would also invest $500 million, across five years, for the Secretary of Health and Human Services, the Director of the National Institute of Health (NIH) and the Commissioner of the Food and Drug Administration (FDA) to study the impact of marijuana, including the effects of THC on the human brain and the efficacy of marijuana as a treatment for specific ailments.

The proposed legislation would set aside $100 million over five years for the Department of Justice (DOJ) to authorize grant programs to encourage state and local governments to administer, adopt, or enhance expungement or sealing programs for marijuana possession convictions. In addition, the Act would create a dedicated funding stream to aid entrepreneurs from affected communities who want to participate in the new marijuana industry. The bill instructs the Treasury Department to transfer a percentage of annual federal income tax revenue generated by businesses in the marijuana industry to a trust fund to be administrated by Treasury. These funds would be made available to the Small Business Administration’s Microloan Program for the purpose of awarding grants and loans to support women and minority-owned marijuana businesses.

“The time to decriminalize marijuana is now,” said Senator Schumer on Wednesday. “The new Marijuana Freedom and Opportunity Act is about giving states the freedom to be the laboratories that they should be and giving Americans – especially women and minority business owners as well as those convicted of simple possession of marijuana intended for personal use – the opportunity to succeed in today’s economy. This legislation is simply the right thing to do and I am hopeful that the balanced approach it takes can earn bipartisan support in Congress and across the country.” General Jeff Sessions has stated that he has not spoken to President Trump about legislation to decriminalize marijuana at the federal level, but he believes the president would support a bill that protected states that do so.

Schumer’s introduction of the Act follows the introduction of the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, which was introduced on June 7, 2018, by Senators Cory Gardner (R-CO) and Elizabeth Warren (D-MA). The STATES Act would, among other things, amend the CSA so that it would not apply “to any person acting in compliance with state law relating to the manufacture, production, possession, distribution, dispensation, administration, or delivery of marihuana.”

President Trump has indicated that he supports the STATES Act, and its initial list of co-sponsors is bi-partisan, bi-cameral and national. Because the measure was born, in part, from a deal Sen. Gardner cut with the Trump administration earlier this year, some political observers believe the STATES Act has a real chance of gaining traction and becoming law. Gardner, who represents the nation’s first state to legalize adult-use cannabis, responded to Attorney General Sessions’ rescinding of the Cole memorandum – a Department of Justice memo that created a federal policy of non-interference in cannabis-legal states – by blocking Justice Department nominees until he reportedly received assurances from President Trump that the president would support legislation to protect each state’s right to regulate cannabis without federal interference. After its introduction, the bill was referred to the Senate Judiciary Committee, where it awaits consideration. No committee actions have been planned, and Congressional leaders have not yet backed the STATES Act. Despite the current lack of progress, debate on both sides of the aisle is expected to expand over the next six months, and it is possible that the midterm elections could shift the balance of power in favor of the STATES Act.

This week’s legal developments demonstrate increasing legislative and agency action regarding marijuana use. Across party lines, politicians have augmented support for marijuana legalization, responding to the fact that the majority (61%) of Americans favor the legalization of marijuana, which is nearly double American support in 2003 (31%).

This alert was prepared with assistance from Kristina Jacobs, a summer associate at Goodwin.