Cannabis Industry

March 31, 2025March 31, 2025 by Haley Ferise

Pennsylvania House of Representatives Votes to Increase Regulation of Medical Cannabis Prescribers

In a 194-8 vote on March 17, the Pennsylvania House of Representatives has approved a bill that would greatly empower the State Department of Health to regulate medical cannabis prescribers. The State Senate Law and Justice Committee will consider the bill next.

Should the bill pass the Senate, the department would have authority to place specific prescribers on probation, limit the number of medical cannabis certifications prescribers are allowed to issue, require prescribers to be supervised by another physician, and enact reporting requirements. Further, the department could create any other condition it “determines is necessary to protect the health and safety of patients in the program.”

Representative Tim Twardzik (R., Schuylkill) proposed including the additional Department of Health authority in regulation of medical cannabis as an amendment to a cannabis lab testing bill. The House Health Committee unanimously approved the proposal.

State senators on both sides of the aisle have expressed interest in the bill. State Senate Majority Leader Joe Pittman (R., Indiana) said “it is clear Pennsylvania’s medical marijuana program was not implemented well and could benefit from potential changes to make the program more airtight, efficient, and productive.” Similarly, State Senate Minority Leader Jay Costa (D., Allegheny) explained that he supports oversight in the Commonwealth’s medical cannabis program, saying such measures “protect our medical cannabis patients from bad actors, dishonest laboratory practices, and dangerous contaminants.”

Still, lawmakers remain focused on bringing recreational cannabis to Pennsylvania. Senator Costa made that clear, stating “our ultimate goal is the creation of an adult-use recreational cannabis program.” State Senator Dan Laughlin (R., Erie) likewise supports adult-use legalization, commenting “legislation involving cannabis deserves thorough review and I remain committed to using my position as Chairman to achieve this goal.” And Governor Josh Shapiro has urged the legislature to include recreational cannabis in its budget, due by the end of June.

Stakeholders in the cannabis industry in Pennsylvania should pay particular attention to these simultaneous legislative goals, as regulation of the medical cannabis program and the introduction of a recreational cannabis program would both have profound effects on the industry’s landscape in the Commonwealth. We will continue to provide updates on the legislature’s movement with respect to both medical and recreational cannabis.

March 19, 2025March 20, 2025 by Tim Stafford

SB 3 Rolls into the Texas House of Representatives

After an hour and a half of debate on the Senate floor, Senate Bill (SB) 3 is engrossed. The bill received 24 ayes and 7 nos.

Senators who support the bill told stories of children and young adults losing all function after ingesting products containing intoxicating hemp. They emphasized how important it is for law enforcement officers to be able to immediately tell whether a product is illegal during a traffic stop, rather than make an assumption.

Opponents of the bill requested regulation instead of a total ban and raised the issue of veterans and other individuals who rely on these products rather than relying on alcohol and opioids for relief. Senator Charles Perry assured them that physician-prescribed hemp products will be more accessible under the Texas Compassionate-Use Program after a corresponding bill—SB 1505—is introduced and passes this Legislative Session.

March 18, 2025March 21, 2025 by Tim Stafford

Is Delta-8 Going Away in Texas?

The 89^th Legislative Session in Texas officially began on January 14, 2025, and one of the hottest topics during this session is Senate Bill (SB) 3, which proposes to ban all forms of consumable THC in Texas. According to Texas Lieutenant Governor Dan Patrick, SB 3, carried by Senator Charles Perry (R – Lubbock), is intended to prevent the sale of products that, on the surface, appear to be compliant with federal law as they are purportedly hemp products, but in reality are oftentimes manufactured in such a way that resulting THC concentrations are higher than cannabis products sold in state-licensed retail dispensaries. Importantly, recreational cannabis use remains illegal in Texas, but is legal for medicinal use with a physician’s prescription through the state’s Compassionate Use Program.

December 12, 2024February 25, 2025 by Haley Ferise

Pennsylvania Legislature Weighs Possibility of Adding Recreational Cannabis to the Purview of the Liquor Control Board

Pennsylvania state representatives Dan Frankel (D-Allegheny) and Rick Krajewski (D-Philadelphia) plan to propose a bill in the House of Representatives that would legalize recreational cannabis. Under their proposal, cannabis would be controlled by the state’s Liquor Control Board, the name of which would be changed to the Liquor and Cannabis Control Board. Cannabis would be sold at existing state liquor stores; meanwhile, private businesses would be permitted in the industry in cultivation and consumption sites, similar to bars.

However, there has been debate about the merits of this state-run system for liquor sales, and Republican members of the state legislature have made efforts to privatize liquor sales in the past.

Proponents of the state-run system argue that this system provides stable jobs, including consistent benefits and reliable pensions, for over 5,000 Pennsylvanians, while also returning millions of dollars in profits to the state. Furthermore, this system gives the state more control to prevent underage liquor sales.

Opponents of this system argue that Pennsylvanians should have more freedom over decisions regarding liquor sales. They also hypothesize that privatizing liquor sales would allow more stores to arise and more sales to occur, which would increase tax revenue for the state. For example, less than three years after Washington State privatized liquor sales, the number of liquor stores increased by approximately 327%, and the industry’s revenue collections increased by approximately 18%.

Despite this debate, Pennsylvania’s state-run system for liquor sales has remained in place. However, a state-run system for cannabis dispensaries may run into a separate issue: the potential conflict with federal law. Cannabis remains a controlled substance under Schedule I of the Controlled Substances Act, and Section 280E of the Internal Revenue Code disallows all tax deductions or credits for amounts paid or incurred in carrying on trade or business that consists of “illegally trafficking” a Schedule I controlled substance. As recently as June 2024, the IRS has issued reminders that this section applies to businesses selling marijuana, even if they operate in states which have legalized the sale of cannabis. It remains to be seen whether state-run dispensaries would be subject to this same provision.

Representatives Frankel and Krajewski’s bill would also provide for the possibility of expungement for people charged with cannabis-related crimes, invest revenue into communities impacted by prohibition policies, implement public health protections, and assist minority business owners in entering the industry.

The legislators have not officially proposed the bill but did release a memorandum to all House members seeking co-sponsors on December 2, 2024.

December 5, 2024December 5, 2024 by Duane Morris

What New Calif. Law Means For Cannabis Lounges

For years, movies, music and other aspects of popular culture have hailed Amsterdam as the number one destination for openly consuming cannabis purchased from “coffee shops.” […] However, one difference — at least in California where adult use cannabis was legalized in 2016 with the passage of Proposition 64 — is that consumption lounges have been unable to offer prepared noncannabis food and beverages on-site. This changed on Sept. 30, when California Gov. Gavin Newsom signed California A.B. 1775 into law.

Read the full Law360 article by Tracy Gallegos.

September 27, 2024September 27, 2024 by Duane Morris

Webinar Replay: Legal Challenges and Considerations for Social Consumption Lounges

A replay of Mainstreaming Cannabis: Legal Challenges and Considerations for Social Consumption Lounges is now available for viewing.

September 3, 2024February 25, 2025 by Duane Morris

Duane Morris Attorneys Recognized by Cannabis Law Report

Tracy Gallegos and Paul Josephson, Duane Morris partners and team leads of the Cannabis Industry Group, are once again recognized in Cannabis Law Report‘s list of Global Top Lawyers.

The list honors cannabis practitioners via the publication’s annual survey of clients and lawyers in the cannabis legal services sector as well as its personal editorial decisions based on its reporting of the industry for nearly 10 years.

August 28, 2024 by Duane Morris

Webinar: Legal Challenges and Considerations for Social Consumption Lounges

The Duane Morris Cannabis Industry Group will present a webinar, Mainstreaming Cannabis: Legal Challenges and Considerations for Social Consumption Lounges, on Thursday, September 26, 2024, from 12:30 p.m. to 1:30 p.m. Eastern time.

Continue reading “Webinar: Legal Challenges and Considerations for Social Consumption Lounges”

August 15, 2024 by Danielle M. Dwyer

Employers Must Engage in the Interactive Process with Medical Marijuana Users and Cannot Refuse to Hire a Job Applicant Based on Marijuana Use Alone.

By: Kathleen O’Malley and Danielle Dwyer

Recently, Attorney General Matthew J. Platkin announced a Finding of Probable Cause by the New Jersey Division on Civil Rights (DCR) against Prince Telecom LLC (Prince) for declining to hire a medical marijuana user as a cable installation technician. The DCR found the job applicant was subject to disability discrimination in violation of the New Jersey Law Against Discrimination (LAD). The basis for the DCR’s determination was Prince’s rescission of a job offer after the applicant, a medical marijuana user, tested positive for cannabis in connection with a pre-employment drug screen.

Prince, a company that constructs and maintains telecommunications and cable systems, offered a technician job to the applicant pending a drug test. The applicant informed the company that he had a medical marijuana prescription and used marijuana to treat a disability. When the applicant tested positive for cannabis, he provided his medical marijuana prescription card to the company, after which Prince rescinded the job offer. Prince maintained that it could not provide the applicant with any accommodation given the safety-sensitive nature of the job duties of the position (such as, driving company vehicles, operating machinery, working with electrical wires, climbing ladders and lifting 50 pounds or more). According the DCR, Prince assumed that hiring a medical marijuana user to perform such tasks would expose the company to “enormous” liability.

The DCR issued a Finding of Probable Cause because Prince did not ask the applicant for additional information about the nature of his disability; how often and what time of day the applicant used marijuana; and what effect, if any, his medical marijuana use might have on him during work hours. By failing to initiate discussions of that nature with the applicant, the DCR concluded that Prince did not meet its obligation to engage in the interactive process. Under the LAD, employers have an affirmative duty to consider reasonable accommodations for applicants and employees. Broadly speaking, this means an employer should have a dialogue with a disabled applicant or employee and should ask questions to determine whether the individual can perform the essential functions of the job with or without a reasonable accommodation. Once the employer has sufficient information from the individual and/or the individual’s healthcare provider about the disability and any proposed accommodations, the employer can evaluate whether it is able to offer a reasonable accommodation without posing an undue burden on the company. Employers who fail to engage in this interactive process violate the LAD—which is exactly what the DCR has accused Prince of doing.

While the LAD protects individuals with disabilities, it is also worth noting that both medical and adult marijuana use are legal in New Jersey and the state has enacted protections for the use of marijuana. The Jake Honig Compassionate Use Medical Cannabis Act (CUMCA) prohibits an employer from taking an adverse employment action against an employee or applicant (e.g., terminating or refusing to hire) based on the fact that the employee is registered as a medical marijuana user. The Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA) protects adult use of marijuana and prohibits employers from taking adverse employment actions due solely to a positive drug test for cannabis. CREAMMA also has specific and stringent protocols with respect to drug testing in the workplace. Because CREAMMA went into law after Prince rescinded the applicant’s job offer, the DCR did not review Prince’s conduct to determine whether it violated that statute as well.

Notably, the DCR did not find that Prince had to accommodate the applicant’s use of marijuana in workplace or that it had an obligation to hire him. The agency found that Prince had an obligation to engage in the interactive process—to gather information sufficient to consider whether it could have reasonably accommodated the applicant’s disability. If Prince had learned the applicant used medical marijuana after work hours and would not be impaired or under the influence when reporting for duty, Prince may have been able to reasonably accommodate the applicant’s disability. The laws in New Jersey are clear that employers have a right to maintain a drug-free workplace and do not have to accommodate use of medical marijuana in the workplace or during work hours. Based on the DCR’s finding, Prince’s error was that it made too hasty a decision and did not gather any information from the applicant to determine whether it could have accommodated his disability.

Of note, a Finding of Probable Cause is not a final determination on the merits. It means the DCR determined that there is sufficient evidence to warrant further proceedings against Prince. The parties will now have the opportunity to resolve the case voluntarily through conciliation. If the parties cannot resolve the matter, the case will move to the Office of Administrative Law or the Superior Court for further adjudication.

August 2, 2024February 25, 2025 by Jim Hearon

Federal Court Affirms Crackdown on Intoxicating Substances Synthesized from Hemp

In the absence of federal enforcement action, state legislatures have stepped into the breach, enacting laws regulating products containing intoxicating substances that are chemically synthesized versions of chemicals in hemp. Those substances are referred to here as hemp-synthesized intoxicants or HSIs. Challenges to state authority to regulate HSI are being filed. In a recent decision that may foreshadow what is to come, a federal court declined to enjoin Wyoming’s hemp law.

As we have previously reported, the passage of the Agriculture Improvement Act, commonly referred to as the 2018 Farm Bill, opened the floodgates to unregulated intoxicating hemp products across the country. Though the 2018 Farm Bill authorized the U.S. Food and Drug Administration to regulate hemp-derived products intended for human consumption, the FDA has yet to promulgate rules for such products or HSIs. In the absence of federal regulations, states have begun to enact their own rules.

In Green Room LLC, et al. v. State of Wyoming, et al., a group of HSI wholesalers, retailers, and manufacturers filed a federal suit challenging amendments to Wyoming’s hemp laws and requesting a preliminary injunction. In pertinent part, the amendments expanded the definition of THC to include any psychoactive structural, optical, or geometric isomers of THC, encompassing both CBD and the popular Delta-8 THC. Because cannabis remains illegal in Wyoming, the amendments effectively prohibited the possession, sale, transport, and production of intoxicating substances synthesized from hemp. The plaintiffs argued, in part, that the amendments were unconstitutional because they were preempted by the 2018 Farm Bill, which they claim legalized all hemp substances, including intoxicating substances synthesized from hemp, for intrastate and interstate purposes.

On July 19, 2024, the federal court denied plaintiffs’ request to enjoin enforcement of the new law, finding that they do not have a substantial likelihood of success on the merits.

Specifically, the court found that the 2018 Farm Bill does not prevent states from regulating HSIs. The court found the 2018 Farm Bill did not confer any right on plaintiffs to manufacture or sell intoxicating products resulting from hemp, but merely redefined the term hemp. Most important, it held the 2018 Farm Bill contains an express “no preemption” clause permitting states to regulate hemp more stringently than federal law. The no preemption clause expressly permits a state to enact laws regulating intoxicating substances synthesized from hemp in a manner “more stringent” than the 2018 Farm Bill. The court further concluded that Wyoming’s amendments do not violate the dormant commerce clause, do not amount to a regulatory taking, and are not unconstitutionally vague or overbroad.

Green Room is not the first challenge to state restrictions on HSIs. In Bio Gen LLC et al. v. Sanders et al., the State of Arkansas appealed a trial court decision enjoining Arkansas regulations that restrict the manufacture and distribution of products that contain synthetic cannabinoids that could be intoxicating, such as Delta-8 THC. In Northern Virginia Hemp and Agriculture LLC, et al. v. Commonwealth of Virginia, et al., the plaintiffs, an HSI product manufacturer/distributor and consumer, appealed a trial court decision that denied their motion to enjoin the State of Virginia from enforcing Virginia regulations that restrict the manufacture and distribution of products that contain synthetic cannabinoids that could be intoxicating, such as Delta-8 THC.

Those pending appeals present the possibility of a federal circuit split on the question whether the 2018 Farm Bill legalized intoxicating substances that could be derived from hemp. On behalf of the American Trade Association for Cannabis & Hemp, Duane Morris filed an amicus brief in each case that asserts that the 2018 Farm Bill did not legalize hemp-synthesized intoxicants, and it reserved for states the right to regulate such substances in the interest of public safety.

As more states roll out new restrictions on intoxicating hemp products and operators, we expect to see more challenges. Though not a final ruling on the merits of the suit, the court’s decision suggests these plaintiffs and others challenging state intoxicating hemp laws have an uphill battle ahead.