Part 3: State of the Cannabis Industry

See the State of the Cannabis Industry Panel here.

As previously blogged, Burns & Levinson hosted its third annual State of the Cannabis Industry Conference on October 23rd with over 200 attendees present. The conference began with its State of the Cannabis Industry Panel that examined where things presently stood on a national and local level within the industry. The panel opened with a reflected upon what has transpired over the past year and dug into what may be expected as legalize marijuana continues to come online throughout the country. Such an examination was led by Frank A. Segall, who moderated the panel of speakers in the State of the Cannabis Industry Panel.

Public support for cannabis legalization is at an all-time high, with nearly two-thirds of the country supporting federal legalization. Pursuant to such trends, the House of Representatives has shown increased willingness to support the increasing popularity of federal legalization. The “McClintock Amendment,” which would protect adult-use marijuana programs similar to that of the “Rohrabacher–Farr amendment,” which protects medical-use marijuana programs, passed the full House by a vote of 265-167; the Senate has yet to take action on the Amendment. Furthermore, the House passed the SAFE Banking Act, which aims to ensure that state-authorized and regulated cannabis businesses are not forced to operate with cash only, by a vote of 321 – 103; the related Senate bill, S. 1200, has 33 co-sponsors, including 5 Republican senators. Panelists noted the necessity and desirability of the SAFE Banking Act given the current roadblocks to banking services, especially for social equity applicants who may not have such easy access to capital.

On the local level, the State of Illinois joined the fray and made history when it became the first state to approve legalizing and regulating adult-use marijuana legislatively, rather than via voter initiative, on June 25, 2019. With 11 states having legalized adult-use, 33 states having legalized medical-use, and 26 states having decriminalized or legalized simple possession, states throughout the country continue to introduce and consider initiatives and bills to legalize/regulate cannabis. Over the past year, 27 states introduced bills to legalize or regulate adult-use cannabis, 14 states introduced bills to legalize or regulate medical-use cannabis, 17 states introduced bills to decriminalize or legalize simple possession, and nearly 26 ballot initiatives have been initiated related to cannabis.

Overall it has been a very exciting year for the cannabis industry. On-top of the developments set forth above, the farm bill greatly expanded hemp cultivation this year – an estimated 285,000 acres of hemp were planted nationwide compared with about 78,000 acres in 2018 – in which about 87% of hemp grown this year will be used for CBD. This year has seen wider adoption of such products as the result of national retailers, such as CVS, Walgreens and Kroger, announcing sales of hemp-derived CBD products in their stores. The increasing focus on CBD products was noted amongst the panelists and the audience as a high-growth and highly-competitive business focus within the industry.

However, 2019 saw continued warning letters from the FDA to companies selling CBD products that claimed to prevent, diagnose, treat, or cure serious diseases, such as cancer or because they were marketed as dietary supplements or involved the addition of CBD to food. Recent reported warnings were as late as September, 2019, and come despite the FDA’s efforts to expedite creating a regulatory framework for CBD. Furthermore, this year, and as recently published, many states rushed to ban the distribution of vaping products in response to the growing crisis around vaping-related illnesses. The issues related to the vaping bans did not worry panelists as they believed such issues merely relate to patient and consumer education of cannabis products.