Cannabis Producers Have Everything to Gain From Shift in US Regulation and Public Sentiment

A major shift of regulation in the United States is gathering momentum and removing barriers for the legalization of medicinal and recreational marijuana. Public support for marijuana legalization in the US is more popular than ever. A recent Gallup poll indicates that 64% of US voters, and 72% of Democrats support legalizing marijuana. The mid-April price-boost in marijuana stocks is evidence that the winners in this sea-change will be developers and distributors of marijuana and hemp-based products; recreational, medicinal and consumable.

Most recently, Chuck Schumer, the top Democrat in the Senate, announced April 19 he is introducing legislation to decriminalize marijuana at the federal level as early as next week. Schumer joins a growing chorus of bipartisan lawmakers who are advocating for marijuana legalization. Schumer's bill would remove marijuana from the Drug Enforcement Administration's (DEA) list of controlled substances and would leave it up to states to decide how to regulate the drug, he said in an interview with Vice News. "My personal view is legalization is just fine," he said. "The best thing to do is let each state decide on its own."[1]

Earlier in April, Republican Senator Cory Gardner of Colorado, a state that has legalized marijuana was ensured by the US President that the Feds will apply a hands-off approach to state-level marijuana legalization. An article published April 13th by the Washington Post, stated, “the US President has promised Gardner that he will support congressional efforts to protect states that have legalized marijuana.” Gardner said it would be “a legislative fix that would, in effect, make clear the federal government cannot interfere with states that have voted to legalize marijuana.” Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.”

Gardner was irate in January when US Attorney General Jeff Sessions revoked guidance from the Obama administration in 2013, known as the Cole memo, that had discouraged prosecutors from enforcing federal marijuana laws in states that had legalized the drug. Especially infuriating, from Gardner’s perspective, was that Sessions had pledged during his confirmation process for attorney general that he would leave states that had legalized marijuana alone, according to the senator.[2]

The recent moves by the US administration will have a significant impact on Sessions’ ability to push further federal enforcement against state legislated legalization. Gardner said new legislation would be a “universal fix” for challenges to the cannabis industry, including access to banks, a significant barrier for financing marijuana and hemp related businesses and research.

On April 11th it was reported that former Speaker of the House John Boehner was joining the advisory board of a private U.S cannabis company. Mr. Boehner was previously a staunch opponent of cannabis legalization in the US but has since shifted in his opinions. "I'm joining the board of #AcreageHoldings because my thinking on cannabis has evolved," the Ohio Republican tweeted." I'm convinced de-scheduling the drug is needed so we can do research, help our veterans, and reverse the opioid epidemic ravaging our communities."[3]

Another pro-cannabis development in the US, reported by Newsweek in January of this year, centers around a prescription medication made from marijuana that may be approved by the US food and drug administration this summer.[4] The medication expected to break through this milestone is Epidiole. Derived from cannabidiol, or CBD, Epidiole is an anti-seizure drug for combatting the effects of epilepsy. GW Pharmaceuticals, the company behind the drug, started the approval process with the FDA last year and is currently in Phase III clinical trial awaiting the FDA’s final approval.

[1] https://news.vice.com/en_us/article/7xdjqz/sen-chuck-schumer-to-introduce-bill-to-decriminalize-marijuana
[2] https://www.washingtonpost.com/politics/trump-gardner-strike-deal-on-legalized-marijuana-ending-standoff-over-justice-nominees/2018/04/13/2ac3b35a-3f3a-11e8-912d-16c9e9b37800_story.html?noredirect=on&utm_term=.b54e83ddabdc
[3] https://www.cnn.com/2018/04/11/politics/boehner-cannabis-company-board/index.html
[4] https://www.newsweek.com/pharmaceutical-industry-brings-cannabis-drug-fda-after-decades-us-denying-789947


Meanwhile, according the Hemp Industry Association (HIA), hemp businesses and consumers could soon be celebrating the end of the DEA’s attempts to prevent Americans from producing or selling cannabidiol (CBD) extracts. Back in December 2016, the DEA published a rule establishing a new drug code for “marijuana extracts.” The rule states that extracts from the “genus cannabis” plant containing any cannabinoid “will continue to be treated as Schedule I controlled substances.”

This development clearly did not sit well with the HIA who, along with other petitioners, has challenged this rule in the US Court of Appeals for the Ninth Circuit. In addition, a group of lawmakers have declared their support for CBD, filing a document in the case insisting that Congress already made CBD legal, and that it remains legal thanks to the Agricultural Act. This HIA argues the federal Controlled Substance Act creates an exemption for the stalks and seeds of the cannabis plant as legal substances because they only contain traces of THC.

In the 2014 Farm Bill, Congress expanded this exemption of stalks and seeds to include all parts of the industrial hemp plant grown in an authorized research program, only requiring that hemp products contain 0.3 percent THC or less. But the DEA has not acknowledged this fact, as it continues to assert that any CBD extract — even one made from legal industrial hemp — is a controlled substance under federal law.

“While consumers continue to freely access CBD oil, the DEA’s rule has cast a shadow over producers
and vendors, and this lawsuit could go a long way towards easing their worries,” said the HIA’s lawyer.

The movement is getting support from high places US government. As recent as March 26, McConnell, the Senate Majority Leader from Kentucky, announced a proposed hemp legalization legislation. “Hemp has played a foundational role in Kentucky’s agricultural heritage, and I believe that it can be an important part of our future,” McConnell said. The goal is to remove agricultural hemp from the Controlled Substances Act, preventing government agencies like the DEA from interfering with hemp growers or vendors of hemp products like CBD oil. The “Hemp Farming Act of 2018,” which is expected to be introduced in early April, could complete the process of re-legalizing hemp which began under the 2014 Farm Bill.[5]

Industry experts applaud the moves in the US. John-David Belfontaine is Chairman and President of Vancouver-based Phivida Holdings Inc. (CNX: C.VIDA, OTC:PHVAF, Forum), a maker of functional beverages and clinical health products infused with CBD. “The regulatory and political landscape is now catching up with consumer sentiment and the opinions of the medical community,” he said.

Belfontaine feels the pro-CBD argument is strong. As the non-addictive and the non-psychoactive component of marijuana or hemp plant, CBD is widely researched for its benefits as an anti-inflammatory, anti-oxidant, and as neuroprotectant. It has also been deemed safe by the World Health Organization (WHO) and the World Anti-Doping Agency (WADA). “The DEA took a backward step particularly on the area of medicinal applications of both THC and the non-psychotic CBD whereby it’s rule won’t allow the development of drugs that could be beneficial to humankind.”

Meanwhile, companies such as Phivida Holdings Inc. (CNX: C.VIDA, OTC:PHVAF, Forum) continue to rapidly develop and aggressively market their wares, sensing that the tide is unstoppable. The July deadline for Justin Trudeau’s Canadian government to legalize recreational and medicinal marijuana is fast approaching. It appears the US Federal government will not interfere in the four states that have already legalized marijuana, while other states are moving in that direction.

5. https://ministryofhemp.com/blog/mitch-mcconnell-hemp/

Phivida for example has an assertive multi-market approach, competing for a leadership share in Canada, the US and overseas. Already it has agreements with a licensed partner in California, a global online agreement with Namaste, initially targeting the EU and Australia, and one in the Asia-Pacific with Japan-based Asayake.

The company is developing its Nano-CBD Iced Teas for gut health and hired the management team behind the successful Red Bull brand; including its former president, James Bailey, originally on the board of Phivida, who is now the company CEO. Phivida and Ontario-based WeedMD (WMD.V) formed a new joint venture company, Cannabis Beverages Inc. (CanBev), with plans to develop a production facility at WeedMD’s 610,000 sq. ft., state-of- the-art greenhouse in Strathroy, Ontario. CanBev will operate one of the first cannabis-infused beverage production facilities in Canada. Phivida continues in full throttle and recently closed a $10 million financing which boost its treasury to nearly $18 million.

US CBD sales could be north of $1.9 billion by 2022, while the hemp-based CBD market is projected to hit
$646 million, according to Hemp Business Journal.

“A market that size cannot be ignored,” says Belfontaine. “As the rules and regulators are getting caught up, we’ll be ready for the markets. All of these developments offer a groundswell support for a return to our whole plant medicine as a replacement to opiate pharmaceuticals, and for functional and organic based nutrition as a method of preventative health and wellness.”

Full Disclosure: Phivida Holdings Inc. is a paid client of Stockhouse Publishing.


Sources:
https://news.vice.com/en_us/article/7xdjqz/sen-chuck-schumer-to-introduce-bill-to-decriminalize-marijuana

https://www.washingtonpost.com/politics/trump-gardner-strike-deal-on-legalized-marijuana-ending-standoff-over-justice-nominees/2018/04/13/2ac3b35a-3f3a-11e8-912d-16c9e9b37800_story.html?noredirect=on&utm_term=.b54e83ddabdc

https://www.newsweek.com/pharmaceutical-industry-brings-cannabis-drug-fda-after-decades-us-denying-789947

https://www.cnn.com/2018/04/11/politics/boehner-cannabis-company-board/index.html

https://ministryofhemp.com/blog/mitch-mcconnell-hemp/