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How Legal is CBD, Really?

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The legality of CBD remains a subject of considerable debate. Despite the fact that many CBD companies[1]  have now existed for more than a decade, the legal context surrounding this non-intoxicating cannabinoid remains muddy for the average shopper. In this guide, we’ll explore the legality of CBD in detail, examining the implications along the way.

History of CBD Laws

Extracts of Cannabis sativa have been widely prepared and sold for centuries beyond count. It’s unclear exactly when human beings and cannabis intersected, but it’s believed cannabis has been a part of daily life at least as long as apples and potatoes.

 

It’s only recently that laws have turned discriminatory toward cannabis. Starting in Europe in the 19th century, this anti-cannabis fervor eventually reached the United States, spurring the “Reefer Madness” craze that ultimately led to cannabis being illegalized with the 1937 Marihuana Tax Act.

 

In 1970, the Controlled Substances Act sealed the deal, and hemp was not grown in considerable acreage until academic pilot programs began resurfacing in the early 2000s. By the early 2010s, legal loopholes were identified at the federal level that allowed CBD commerce to emerge online.

 

In 2014 and 2018, the United States Congress gave CBD the nod with Farm Bills that facilitated hemp cultivation and commerce. Not much has changed in the ensuing years, however, leading to a hemp economy that has begun to stagnate in some sectors.

Recent Developments in CBD Legislation

Cannabis-related measures continue to be proposed at both the state and federal level. Few of them focus specifically on CBD, however, which remains in a gray area loosely delineated by the 2018 Farm Bill and subsequent clarifications from the FDA, DEA, and USDA.

 

It appears the situation with CBD will remain unclear federally for the foreseeable future. There seems to be an “unwritten rule” that upstanding CBD companies will not run afoul of federal agencies as long as their conduct meets a certain unofficial threshold.

 

The FDA continues to issue warning letters to CBD companies that violate the dictates of the 2018 Farm Bill, but enforcement is rare and usually amounts to relatively small fines. At the state level, legislators continue to evolve their stances on CBD and related products, mainly in an effort to siphon tax revenue.

Potential Future CBD Regulations

Over time, the slew of largely unrelated hemp and cannabis laws continuously being produced by Congress may begin to amount to a comprehensive federal stance on cannabinoids. At this current juncture, however, cannabinoid regulations ever more commonly have less to do with the shopper’s interests and more to do with securing government revenue.

 

The ideal solution that hemp proponents have expounded for years, namely that CBD be judged an over-the-counter substance, appears further and further away as time goes by. At present, it seems the de facto approach is to not address the underlying legality of cannabinoids but to instead determine how best they should be taxed.

 

It might not be an ideal situation, but for the average CBD producer, this is still good news. There was a time in the not-so-distant past when it seemed the federal government was on the verge of attempting to ban CBD products outright. Though the current circumstances may remain muddy, at least there’s no longer any indication that the federal government is antithetical to hemp and CBD overall.

CBD Legality: The Bottom Line

As we finish up, it’s important to carefully address a few final points:

CBD regulations vary by state

For most intents and purposes, CBD can be considered federally legal. Each state has its own laws and regulations pertaining to CBD and other cannabinoids, however, some of which are more restrictive than others. CBD laws can be restrictive both in states that are firmly anti-cannabis and in those that have newer adult-use cannabis industries that suffer from direct competition with online CBD vendors.

No medical claims

CBD is certainly not legal when it is advertised as offering medical benefits. It’s fine to reference evidence that CBD might be useful for a particular ailment. To outright say that CBD treats or cures a medical condition, is tantamount to asking for the scrutiny of the federal government.

Professionalism first

The CBD companies that are currently succeeding are those that go above and beyond. Clean products, transparent communication, impeccable certification: these are the hallmarks of the future’s top CBD brands. Focusing on quality will make it less likely to flub regulations.

Respect CBD

CBD is a powerful compound, and it comes from a plant that has an amazing power to heal. Put CBD’s benefits first and foremost, and you’ll find that your company naturally begins to fit the parameters that both shoppers and regulators approve of most.



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Foreign Investment in U.S. Cannabis: Five Key Considerations

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Cannabis investments are difficult enough when the investor is a U.S.-based person or entity. But things can get immensely more complicated when foreign investment is on the table. Today I want to highlight some of the top considerations for foreign investors and U.S. cannabis companies alike.

1. Legality could cause serious headaches

To this day, cannabis remains federally illegal. State legality has zero effect on federal law. Even the possible rescheduling to schedule III of the Controlled Substances Act (CSA) will not make cannabis federally legal. Things are clearly a mess.

In our cannabis team’s experience, a huge number of foreign investors do not appreciate the nuances between state and federal law and how it could effect them. For example, federal tax laws are unforgiving and don’t allow standard deductions for marijuana businesses. Additionally, federal illegality means that businesses will be siloed without interstate commerce, can’t get access to banking, can’t get access to basically anything for market rate, and so on.

All of these things mean that investments are simply unlikely to net big returns. Sadly to say, lots of investors end up writing off their investments. While federal legality alone isn’t the only reason that businesses, and by extension foreign investments, fail, it’s certainly a big one.

2. Cannabis investment may not be compatible with home country laws

This is actually probably more important than point 1. Cannabis is still illegal in most places in the world. There are still places where possession of cannabis can lead to the death penalty. While possession in a such a country is different from investing into the U.S., the governments in those countries may not see eye to eye, and such investments could lead to a host of different penalties. I’ve spoken with attorneys and business people from other countries who have said that foreign investment directly into a cannabis company is simply not possible.

What this can often lead to is investment into adjacent or ancillary companies in overly complicated deals. And when something is ancillary to the industry and/or a deal is overly complicated, netting a healthy return on investment is even more unlikely.

3. The cannabis industry and immigration law do not mix

Probably the first issue that comes up when looking at foreign investment is immigration and visa status. Immigration law is the province of the federal government. That means that it does not mix well with cannabis. If you’ve been in this space long enough, you’ll have heard of things like denial of naturalization petitions, denial of visas, arrests, and even lifetime bans on entry into the states. So for foreign investors who plan on relocating to the U.S. or even visiting to see the company they are investing in, there are huge risks.

4. Disclosure will likely be required

All states with legal cannabis markets require disclosure of certain people affiliated with a cannabis business. In many states, this includes investors, lenders, or people with other financial interests. Sometimes, the disclosures can be relatively benign, and in other cases much more aggressive.

For reasons expressed in points 2 and 3 above, a lot of foreign investors aren’t exactly thrilled to learn that they have to give personal data (and maybe undergo background checks) over to a state agency. This is yet another reason why foreign investments are often made into ancillary companies — to avoid disclosures. But even that isn’t always likely to fix the issue, and again, overly complicated investments into ancillary companies aren’t necessarily great.

5. Investment targets may get things wrong

Foreign investors often make a critical mistake in assuming that their targets know what they are doing. I’m not talking about operational issues — though a lot of companies clearly need help there — but about legal structures. It’s not unheard of for an investor to want to invest into a company that promises something it legally cannot do — like sell stock to a foreign investor in a state with a residency requirement. Yet things like this do happen from time to time, and once a foreign investor gives money over, it’s a lot harder to get it back.

Foreign investors who know what they are doing usually work with lawyers or other professionals experienced in their target jurisdiction, not only to diligence the target’s operations, finances, etc., but also to make sure that the fundamental aspects of the investment won’t trigger massive legal liabilities.

For some of our older posts on foreign investment in the U.S. cannabis industry, see below:



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America Can’t Defend Its Border Because Border Patrol Agents Are Smoking Too Much Weed?

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border patrol marijuana policy

A Republican senator is pushing back against a recent policy change by U.S. Customs and Border Protection (CBP) that reduced the term of ineligibility for work due to past marijuana use from two years to three months. The senator doubts the trustworthiness of recruits who have used cannabis and believes that this move jeopardizes the safety and integrity of Border Patrol agents.

 

Senator James Lankford (R-OK) wrote to CBP Acting Commissioner Troy Miller, expressing severe concerns about the effects of this shift. He stated that the amendment blatantly contradicts the Border Patrol’s principal mission of safeguarding the country from illicit drugs.

 

Ironically, no one in the Senator’s office seemed worried about the US and Canadian border where cannabis has been recreationally legal for 7 years now.  Many Canadians have been stopped and banned for cannabis use, yet the security issue does not seem relevant at the Northern border, just the Southern.

 

While the exact timing of the CBP’s policy revision remains unclear, Senator Lankford disclosed that his office became aware of it during a briefing last month.

 

The senator alleges that CBP officers told his staff that ambiguity generated by disparities between state and federal marijuana regulations in places where cannabis has been legalized had a role in the policy shift. Senator Lankford did, however, emphasize that CBP, as a federal agency, is responsible for ensuring that federal rules governing the use of illegal substances are obeyed.

 

Additionally, the senator asserted that individuals who admit to past marijuana use often disclose involvement in other criminal activities, which he deemed unsurprising. He attributed this to the fact that irrespective of state laws, users frequently obtain marijuana from unlicensed vendors in the “gray market” due to its lower cost.

 

Furthermore, Senator Lankford alleged that licensed cannabis establishments frequently encounter corruption issues, citing reports of malpractices within his state’s medical marijuana program. He claimed that undocumented immigrants are exploited for labor and subjected to adverse conditions in these facilities.

 

Addressing worries about the health repercussions of cannabis usage, the senator cited a putative relationship between marijuana intake and diseases including schizophrenia and psychosis. Despite contradicting study findings on the subject, Senator Lankford emphasized the need for federal government screening for psychiatric disorders and illegal drug use during background checks for federal jobs.

 

In conclusion, Senator Lankford cautioned that regular marijuana use, particularly in states where it is legalized, could significantly affect the trustworthiness of Border Patrol recruits, especially considering the incidence of psychosis among heavy cannabis users.

 

Concerns Over Border Patrol Recruits’ Ties to Transnational Criminal Organizations Due to Altered Marijuana Use Review Period

 

Lankford expressed concern that shortening the period for reviewing marijuana use history raises the risk of Border Patrol recruits having financially supported transnational criminal organizations for marijuana cultivated by illegal immigrant labor. This scenario directly contradicts the Border Patrol’s mission and could lead to significant security and integrity issues among agents.

 

In his capacity as the Ranking Member of the Subcommittee on Governmental Operations and Border Management, Lankford emphasized his Subcommittee’s authority over Federal hiring and border management. He strongly objected to the policy change, fearing it would undermine the security and integrity of the Border Patrol workforce. Consequently, he urged CBP to revoke the policy and reinstate the two-year review period for marijuana use among Border Patrol recruits.

 

The senator presented eleven questions to CBP, seeking clarification by May 7 on various aspects, including the rationale behind the cannabis policy alteration, its impact on polygraph passage rates, and any other modifications to employment standards related to past marijuana use.

 

In essence, Lankford’s stance is clear: despite acknowledging CBP’s ongoing recruitment challenges and advocating for legalization to bolster border security and increase the agency’s personnel, he believes that hiring individuals who may have used cannabis three months prior, as opposed to two years ago, poses an unacceptable risk.

 

Meanwhile, CBP advised its employees and their families against using even federally legal CBD products last year. The federal legalization of hemp and its derivatives has complicated CBP’s enforcement efforts, prompting officials to seek portable marijuana analyzers to swiftly identify cannabinoid profiles and differentiate between marijuana and hemp.

 

Lankford’s opposition to the policy change is unsurprising, given his longstanding reputation as a fervent prohibitionist. For instance, last September, he spearheaded a separate letter urging the head of the Drug Enforcement Administration (DEA) to reject a recommendation to reschedule cannabis.

 

Potential Impact on Border Security and Drug Interdiction Efforts

 

Senator Lankford is concerned about more than just the short-term effects of shorter qualifying periods for recruits to the Border Patrol. He predicts a chain reaction that may make border security and drug interdiction efforts less successful. Lankford contends that CBP runs the danger of admitting people who may have engaged in criminal activity in the past, especially those connected to transnational criminal organizations (TCOs), by loosening the scrutiny on prior marijuana usage. Because TCOs frequently take advantage of gaps in border control to move narcotics, weapons, and people across international borders, such links directly endanger national security.

 

Furthermore, Lankford questions the reliability of background checks and polygraph tests in identifying individuals with ties to criminal organizations, particularly given the evolving nature of drug-related crimes. The shortened review period may not provide sufficient time to uncover deeper associations or patterns of behavior indicative of criminal involvement. This, in turn, could lead to the infiltration of Border Patrol ranks by individuals sympathetic to or actively engaged in illicit activities, compromising the integrity of the agency and its mission to safeguard the nation’s borders.

 

Lankford’s worries about the wider social effects of permissive marijuana laws among law enforcement agencies go beyond the direct security ramifications. He argues that CBP’s decision may undermine attempts to curb drug misuse and related criminal activity by sending a message of tolerance toward drug use. It also calls into doubt the coherence of federal drug enforcement initiatives, particularly given disparate state legalization policies for marijuana. Lankford highlights the necessity of a unified strategy for border security and drug control, one that respects federal authority while taking into account the intricacies of changing state laws.

 

Bottom Line

 

Senator James Lankford’s staunch opposition to the recent policy change by U.S. Customs and Border Protection, which shortened the term of ineligibility for Border Patrol recruits due to past marijuana use, underscores concerns about potential risks to national security and the integrity of law enforcement agencies. His apprehensions regarding the infiltration of criminal elements into the Border Patrol workforce, coupled with doubts about the efficacy of screening procedures, highlight the broader implications of drug policy shifts within federal agencies. Lankford’s stance emphasizes the importance of maintaining stringent standards in border security efforts while navigating the complex landscape of state and federal marijuana regulations.

 

US BORDERS AND CANNABIS, READ ON…

BORDER PATROL ON WEED

BORDER  PATROL ON CANNABIS USEAGE, DON’T ASK, DON’T TELL!



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Can Florida Pull 60% of the Votes Needed on Election Night to Pass Legal Weed?

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florida votes on recreational cannabis and abortion

In a blow to Gov. Ron DeSantis and other Florida conservatives opposed to the measure, the state’s Supreme Court on Monday approved a recreational marijuana constitutional amendment for the November 2024 statewide ballot.

 

The proposal, known as Amendment 3, will legalize the “non-medical personal use of marijuana products and marijuana accessories by an adult” 21 or older if approved by 60% or more of statewide voters. It would take effect six months after the election.

 

The cannabis industry may have a secret “ace card” up their sleeve if Ohio is any indication off liberal voter turnout.  You may remember that Ohio voted on cannabis legalization and abortion rights on the same ballot and voting night last year.  This dual liberal ballot caused a swell or women and liberals to hit the voting booths, passing both measures in the same night.  Florida finds itself in the same situation this November, with abortion rights on the same ballot.  A “two birds, one stone” voting night may happen again as more liberals and women come out to vote.

 

In 2021, the court rejected two proposed constitutional amendments for recreational marijuana. But this time five justices ruled favorably on the measure with only two opposing.

 

The amendment was the subject of a multi-million-dollar campaign, spearheaded by Smart & Safe Florida, a group that’s collected more than $40 million in recent years. Two dozen states have already legalized recreational weed.

 

The Florida amendment would allow non-medical marijuana possession of up to 3 ounces, with no more than 5 grams in concentrated form.

 

To get a measure on the Florida ballot, supporters must first get 891,523 signatures from residents. The Supreme Court then must decide whether the amendment language sticks to a single subject and isn’t misleading, which can be a difficult threshold to overcome.

 

But, for the majority of justices, it met that bar.

 

In light of those limited considerations, we approve the proposed amendment for placement on the ballot,” Justice Jamie Grosshans, appointed by Gov. Ron DeSantis, in the majority opinion.

 

The state Supreme Court Monday also effectively upheld a six-week abortion ban but also OK’d a ballot measure that would guarantee access to abortion, even further raising the stakes of an already pivotal presidential election.

 

Florida’s Attorney General Against Legalization of Recreational Cannabis

 

Ashley Moody, the attorney general of Florida, expressed her disapproval of the recreational marijuana ballot issue, claiming it was deceptive and did not satisfy the required requirements.

 

Additionally, Moody’s chastised the proposal for supposedly benefiting Trulieve, the biggest medicinal marijuana provider in the state and the main source of money for Smart & Safe Florida. Kim Rivers, the CEO of Trulieve, praised the court’s ruling and said she was looking forward to helping the campaign move closer to the autumn ballot.

 

The legalization of medical marijuana in Florida stemmed from a 2016 ballot measure approved by over 71% of voters. Previous polls have indicated broad support among Floridians for the 2024 recreational marijuana measure.

 

While Governor DeSantis, who has appointed five of the court’s seven justices, had anticipated the court’s approval of the recreational marijuana measure, he recently expressed concerns about its potential impact. Specifically, he mentioned worries about the odor and the lack of restrictions on where and when marijuana could be consumed, including near schools. He criticized the broad language of the amendment, stating it was the most extensive he had encountered.

 

Justice Meredith Sasso, appointed by DeSantis and one of the dissenting voices, believed the amendment misled voters, citing its language regarding the “allowance” of recreational marijuana.

 

Moody argued in court filings that describing the amendment as “allowing” marijuana use is misleading, as marijuana remains illegal federally, despite its legality in over 20 other states. However, Justice Grosshans, writing for the majority, found the amendment’s summary not misleading, noting the court’s prior rulings on medical marijuana and its jurisdiction over state, not federal, law.

 

Potential Implications for Florida’s Cannabis Industry

 

There has been much conjecture on the significant consequences that Amendment 3’s passage by the Florida Supreme Court may have for the state’s rapidly expanding cannabis sector. Leading companies in the field, including Florida’s well-known medical marijuana supplier Trulieve, are positioned to profit from the growing market as recreational marijuana use gets closer to approval. With the potential to solidify its position as a leading participant in the medical and recreational cannabis sectors, Trulieve’s significant financial support of Smart & Safe Florida’s campaign highlights the company’s strategic interest in the amendment’s successful passage.

 

However, alongside established players like Trulieve, the legalization of recreational marijuana is expected to spur increased competition within Florida’s cannabis market. As the state opens its doors to non-medical cannabis use, new entrants are likely to emerge, seeking to seize a slice of the lucrative market pie. This influx of competition could lead to innovations in product offerings, retail experiences, and branding strategies as companies vie for consumer attention and loyalty in an increasingly crowded marketplace.

 

Furthermore, Amendment 3’s adoption is likely to change Florida’s cannabis laws about retail, wholesale, and growing. The elements of the amendment, such as possession limitations and regulatory frameworks, will be crucial in determining the operational parameters that enterprises in the state’s cannabis market must adhere to. Stakeholders in the sector are keeping a close eye on changes as politicians and regulatory bodies strive to create rules for compliance and enforcement. This is so they can efficiently manage the constantly changing regulatory landscape.

 

Political Ramifications and Public Opinion on Recreational Marijuana

 

The approval of Amendment 3 by the Florida Supreme Court not only carries significant implications for the state’s cannabis industry but also holds substantial political ramifications. Governor Ron DeSantis, who has appointed the majority of the justices on the court, had previously expressed mixed sentiments regarding the legalization of recreational marijuana. While anticipating the court’s approval, DeSantis recently voiced concerns about potential societal impacts, including odor concerns and the absence of stringent consumption restrictions, especially in proximity to educational institutions.

 

In addition to DeSantis’s stance, the passage of Amendment 3 amplifies the ongoing discourse surrounding recreational marijuana at both the state and national levels. Florida’s Attorney General, Ashley Moody, echoed concerns about the amendment’s language and its potential to mislead voters. The debate surrounding the amendment reflects broader discussions on the legalization of cannabis across the United States, with advocates emphasizing social equity, criminal justice reform, and economic opportunities, while opponents highlight public health and safety concerns.

 

The public’s perception of marijuana use for recreational purposes in Florida seems to be changing despite differing opinions. Voters overwhelmingly supported the legalization of medical marijuana in 2016, demonstrating the increasing acceptability of cannabis use for therapeutic purposes. Recent polling indicates a similar trend in support of legalizing cannabis for recreational use, reflecting Floridians’ changing views on the drug. The result of the Amendment 3 vote will not only influence Florida’s cannabis industry but also act as a gauge for larger social views toward marijuana legalization in the US as the state prepares for the November 2024 election.

 

Bottom Line

 

The approval of Amendment 3 by the Florida Supreme Court marks a significant milestone in the state’s journey towards the potential legalization of recreational marijuana. Despite opposition from Governor Ron DeSantis and other conservatives, the amendment’s passage signals a shift in public opinion and could have far-reaching consequences for Florida’s cannabis industry, political landscape, and societal norms. As stakeholders navigate the evolving regulatory environment and prepare for the upcoming ballot in November 2024, all eyes will be on the outcome of the vote and its impact on the future of marijuana policy in the Sunshine State.

 

ABORTION AND WEED TOGETHER, READ ON…

VOTE ON MARIJUANA ABORTION

OHIO HAD ABORTION AND WEED ON THE SAME BALLOT?



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