A Look at Hemp Legalization and Some of the Most Significant Legal Developments Impacting the Cannabis Industry in 2018
Once President Donald Trump signs the 2018 Farm Bill into law, industrial hemp will be legal in the United States. The bi-partisan legislation, which is expected to fuel massive growth in hemp research, cultivation, distribution, and sales, is just one of the significant cannabis law developments that took place in 2018.
Photo courtesy of Alex Person (Unsplash.com)
The year began with former Attorney General Jeff Sessions rescinding the Cole Memo, which rattled the cannabis industry at the time but never really materialized into heightened enforcement. Rather, momentum continues to build towards legalization of both medical and recreational marijuana. In fact, more bills to end or amend marijuana prohibition under federal law were filed in the 115th Congress than ever before.
Below is a brief review of some of the most significant legal developments impacting the cannabis industry in 2018:
Industrial Hemp: The Industrial Hemp Farming Act of 2018 will facilitate the commercial cultivation of industrial hemp by amending the Controlled Substances Act (CSA) to exclude “industrial hemp” from the statutory definition of marihuana. Industrial hemp will be defined based on its THC content and set at a threshold of 0.3% THC. Going forward, hemp will be regulated as an agricultural product, which means farmers and medical researchers can apply for insurance, grants, and other funding.
STATES Act: Despite great strides under state law, cannabis remains illegal under federal law, and businesses in states where it is legal still have difficulty securing loans, leasing commercial space, obtaining insurance, and accessing banking services. On June 7, 2018, a bipartisan group of senators and representatives introduced the “Strengthening the Tenth Amendment Through Entrusting States Act” (STATES Act). The proposed legislation (S. 3032; H.R. 6043) amends the CSA to exempt marijuana legalized at the state level.
Notably, the STATES Act does not legalize marijuana on the federal level. Rather, it provides that the CSA would no longer apply to persons manufacturing, producing, possessing, distributing, dispensing, administering, or delivering marijuana if doing so in compliance with applicable State law, which would clear the way for banks to transact with cannabis businesses. While its likelihood of passage is uncertain, it enjoys support from both Democrats and Republicans. In addition, President Donald Trump has indicated that he will sign the STATES Act if it reaches his desk.
Cannabis in the Workplace: The tension between state and federal law continues to cause headaches for employers and employees, with courts reaching divergent decisions on how cannabis should be treated in the workplace. In Cotto v. Ardagh Glass Packaging, Inc., a federal judge ruled that New Jersey’s Compassionate Use of Medical Marijuana Act (CUMMA) does not compel a New Jersey employer to waive mandatory drug testing requirements for a disabled worker. In support, U.S. District Judge Robert Kugler cited that neither the LAD and CUMMA require an employer to waive a drug test as a condition of employment for federally-prohibited substance. “We therefore find that Plaintiff has failed to show that he could perform the ‘essential functions’ of the job he seeks to perform. Ardagh Glass is within its rights to refuse to waive a drug test for federally-prohibited narcotics,” Kugler ruled. In another case decided in 2018, a New Jersey Workers’ Compensation Judge held that Freehold Township must pay for an injured worker’s medical marijuana treatment. In that case, the judge rejected the argument that it’s unconstitutional for a court to order an insurance carrier to pay for treatment because it conflicts with federal law.
Expansion of New Jersey Medical Marijuana Program: Since Gov. Phil Murphy took office in January, the New Jersey’s Medical Marijuana Program has grown significantly, with the addition of new qualifying conditions and patients. In July, the Department of Health announced that the Medicinal Marijuana Program has grown by 10,000 patients since Gov. Phil Murphy took office. To keep up with demand, DOH is currently reviewing nearly 150 applications submitted by businesses vying to be one of the state’s six new Alternative Treatment Centers. The New Jersey Legislature is also poised to approve legislation to significantly expand the state’s medical marijuana program. On November 26, three legislative committees approved a Senate substitute bill combining key provisions of Senate Bill 10 and Senate Bill 2426. Now named the “Jake Honig Compassionate Use Medical Cannabis Act,” the measure would increase the maximum amount of cannabis that may be dispensed to two and one-half ounces, allow advanced practice nurses and physicians assistants to prescribe medical cannabis, and further expand the number of ATCs, among other key changes.
Legalizing Recreational Cannabis: In January, Vermont became the first state in the country to legalize marijuana via legislation rather than a ballot initiative. New Jersey is slowly working towards doing the same, clearing a major hurdle last month. On November 26, the Senate Budget and Appropriations Committee and Assembly Appropriations Committee approved the latest version of Senate Bill 2703, which would legalize the possession and personal use of marijuana for people age 21 and older. Among other key provisions, the bill sets the tax rate on cannabis sales at 12%, with municipalities authorized to assess a 2% tax on sales occurring within their boundaries. Licenses would be available for cannabis growers, processors, wholesalers and retailers, all of which would be overseen by the five-member “Cannabis Regulatory Commission” (CRC).
Looking Ahead to 2019
The cannabis industry is poised to undergo even more changes in the New Year. In New Jersey, legal recreational marijuana should finally become a reality. On Capital Hill, Democratic lawmakers are already planning how to use their new majority in the House of Representative to advance legalization efforts.
The attorneys of Scarinci Hollenbeck Cannabis Law Practice group will continue to closely monitor legal developments impacting the cannabis industry. We encourage current and prospective members of the New Jersey cannabis industry to check back regularly for updates.
If you have any questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.
This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:
Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.
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