Connecticut Accepts Unlimited Applications Through Cannabis License Lottery
In February 2022, Connecticut’s Department of Consumer Protection (DCP) started accepting applications for certain cannabis licenses for a period of 90 days. The cannabis licenses will be awarded through a lottery process in which six general retail licenses and six social equity licenses initially will be available. Social equity applicants must provide proof of income and residency, among other requirements, and will be selected outside the lottery process by DCP. Additionally, DCP cannot award a license to an applicant that already has two or more licenses in the same license category (e.g., dispensaries, retailers and hybrid retailers are in the same category).
There is no cap on the number of applications an applicant can submit; therefore, one applicant could submit hundreds of applications for the same license type to increase its chances in the lottery system. Applicants were instructed to take their time completing submissions because there is no benefit to submitting early. According to news articles, DCP’s system requires submissions to be entered one at a time, so there could be uploading issues or system errors as the deadline approaches. As of late February, DCP had already received 143 applications, and officials expect an influx of applications in days leading up to the deadline.
General lottery application fees range from $250-$1,000, depending on the license category. Information on accessing applications is available on the DCP website, and all applications must be completed through the online portal. More information about the lottery process is available at ct.gov/cannabis.
Illinois Cannabis License Delays Prevent Winners From Opening Shop
Illinois cannabis license winners have been in a holding pattern, unable to open their businesses for over seven months. Illinois awarded 185 licenses through its marijuana license lottery system; however, COVID-19 and a legal battle over the state’s social equity program have caused major delays. Illinois assured applicants it would prioritize social equity applicants, but no new license holders have been allowed to open their businesses in Illinois.
According to news articles, there has been no minority representation in Illinois’ cannabis industry and the licensing delays are predominantly affecting minorities. There is concern that the entrepreneurs awarded dispensary licenses will not be able to afford to open when licenses are released. This process has halted not only marijuana dispensaries but also marijuana growers. More information on the Illinois Adult Use Cannabis Program and Social Equity Justice Involved Lottery is available online.
Michigan to Allow Universities to Grow, Process and Study Cannabis
The Michigan Marijuana Regulatory Agency recently created a new license type that allows universities to procure, grow, process and study marijuana and marijuana products. The educational research license is available to any organization accredited by the Higher Learning Commission that obtains and provides proof of registration by the U.S. Drug Enforcement Administration and attests that it will not operate in any municipality that prohibits marijuana establishments or marijuana educational licenses.
Each applicant must provide a research plan, which, among other requirements, must include:
- A written plan for documenting all individuals who will have access to the location and marijuana or marijuana products.
- A description of the research that will be conducted.
- A written plan to ensure secure delivery and receipt of marijuana at the licensed location.
- A written plan to ensure the safe storage of marijuana at the licensed location.
- A written plan for the tracking of marijuana quantities at the licensed location.
- A written plan for the disposal of marijuana after research.
The license is valid for one year and there is no fee for the application or license.
There is speculation that universities may be hesitant to seek licenses out of concern they may jeopardize their federal funding, given that marijuana is still illegal at the federal level.
More information about the March 7, 2022, Rule Modifications is available online.
Federal Marijuana Prosecutions Continue to Decline
According to the U.S. Sentencing Commission, there were only 996 federal marijuana trafficking cases in 2021, which represents only 5.7% of all federal drug-related cases. This is a decline from 2020, when there were 1,118 federal cases, accounting for 6.9% of all federal drug trafficking cases, and 2019, when there were 1,675 federal cases, accounting for 8.5% of all federal drug trafficking cases. This trend signals a shift in federal enforcement priorities, which may correspond to the increasing number of states that have legalized marijuana.
A New Day for Georgia Cannabis?
Although medical-use cannabis has been legal in Georgia since 2015 (as low-THC oil), the state has yet to implement commercial sales of such products. Consequently, registered patients in the state have been unable to actually buy the products needed to treat their conditions.
Georgia’s medical marijuana board formally selected six companies to receive licenses to grow, sell and distribute medical marijuana, but several companies who were not selected subsequently filed administrative protests and lawsuits, causing years of delay. Aiming to resolve this unfortunate stall in the process, in March 2022, the state House and Senate passed separate measures containing various paths forward for issuing licenses for medical cannabis businesses. Next, each chamber will consider the other’s bill, and the two must agree to move forward with one version during the current legislative session.
U.S. Department of Transportation Proposes Saliva Drug Testing Options
For years, the U.S. Department of Transportation (DOT) has required drug testing of urine specimens, and alcohol testing by saliva or breath. Under a notice of proposed rulemaking, DOT has signaled its move to allow drug tests by analyzing saliva as an alternative to urine.
DOT proposed adopting this change because oral fluid testing: (1) will help combat cheating on drug tests; (2) is cheaper; (3) is less intrusive than urine tests; (4) narrows the window for detecting THC use, from up to 67 days for urine testing, to up to 24 hours for oral fluid testing; and (5) makes drug testing easier. Critics counter that, while oral fluid testing offers some benefits, the saliva test provides a narrower time frame to detect use, which can frustrate the purpose of some drug tests.
Employers have been eager for a drug test that can accurately identify the window of cannabis ingestion within 24 hours of use. DOT cites two studies in support of its claim that saliva tests can detect cannabis use only in the preceding 24 hours. The first is a 2007 article, which in turn relies on testing research conducted in 2004 on six individuals. In that study, researchers were able to detect THC in only one individual 12 hours after he smoked a high-dose cannabis cigarette. The second is a 2014 article that studied 24 individuals. In that study, 79% of frequent users and 40% of occasional users tested positive 24 hours after smoking cannabis, using a .0005 ng/mL cutoff (compared to the proposed 2 ng/mL confirmatory test cutoff).
DOT published the proposed rule in the Federal Register on Feb. 28, 2022, and the public has until March 30, 2022, to submit comments on the proposal. Comments may be submitted using the Federal eRulemaking Portal.
Black Market and Corruption in California’s Marijuana Market
More than five years have passed since California legalized marijuana with the passage of Proposition 64, the Adult Use of Marijuana Act, in November 2016. However, marijuana black markets still thrive and corruptions continue in California today.
While the government focuses on tougher enforcement and penalties, the industry points out the root cause as Proposition 64 empowering municipalities to control their local market. With this authority, two-thirds of the cities and counties still ban the sales of marijuana. As for the one-third that legalized marijuana, local governments have imposed high taxes, capped the number of licenses and required expensive and complicated local regulations. This has deterred both buyers and sellers from becoming legal participants.
Corruption is another problem stemming from municipalities’ power over local markets. The limited legal market space and capped number of licenses foster corruption for zoning and licenses. For example, in August 2021, the former mayor of Adelanto was arrested for allegedly crafting commercial marijuana zones and ensuring licenses in exchange for bribes and kickbacks. In July 2021, a marijuana farm and dispensary owner was charged with bribing a San Luis Obispo County supervisor and former Grover Beach mayor for operational permits and dispensary licenses.
“In the Weeds” is McGuireWoods’ biweekly ounce of highlights in the budding cannabis, hemp and CBD industries. For more information, see our newsletter archive, our Edible Bites podcast series (available on Apple and Spotify), or visit our Cannabis, Hemp & CBD practice.