Half-Baked: An Overview Of Current Cannabinoid Laws & Regulations –

Over 50 years ago President Nixon declared a “War on
Drugs,” leaving housewives over the country proclaiming
marijuana¹ to be the devil’s lettuce and urging
sweet Billy to steer clear of the gateway drug. However, as time
has progressed, marijuana’s use and presence in society has
become less taboo. Some credit public acceptance of the three
leafed plant commonly referred to as ganja or hemp to medical
advances and promises of the drug’s potential to soothe pain,
ease anxiety, and ease the effects cancer. Perhaps the drug’s
popularity (or notoriety depending on one’s perspective)
developed lyrically through Willie Nelson’s infamous “Roll
Me Up and Smoke Me When I Die,” or Afroman’s four little
words “Because I Got High.” Others find comfort in Mary
Jane’s economic benefits, citing its exponential positive
impact on tax revenue, generation of jobs, sources of potential
investment, or enforcement funds returning to the Fed’s piggy
bank. Whatever the source, there is no debate individual
determinants of support for marijuana are extremely personal and
range widely.

While smoking marijuana, either medically or recreationally, may
be socially tolerated, the drug is nonetheless illegal pursuant to
federal law. Under the Controlled Substances Act, marijuana, in any
form, is prohibited for consumption, production, processing, and
sale. However, most states have legalized the use of cannabinoids
in some form. Here we discuss the cannabinoid legal landscape,
including conflicting federal and state laws and regulations, two
unanticipated— yet controlling— federal acts, hurdles
affecting business operations, and pending legislative bills urging
the federal government to “Just Say Yes.”

Alright, Alright, Alright²

What are Cannabinoids?

Cannabinoids are a group of substances found in the cannabis
plant.³ While there are around 540 chemical
substances found in the cannabis plant, the two most common
cannabinoids are cannabidiol (“CBD”) and
tetrehydrocannabinoil (“THC”).⁴ CBD is
the main non-psychoactive cannabinoid in
cannabis.⁵ CBD may be derived from hemp or non-hemp
plants, which is any part of the cannabis satvia plant with less
than 0.3% of THC.⁶ As long as CBD products contain
less than 0.3% THC, they are legal under federal
law.⁷ CBD may be ingested in multiple
ways—just ask Martha Stewart as she “preheat[ed] the
oven” for the Silent Generation and Baby Boomer’s
acceptance of cannabinoids with her line of CBD
products.⁸ CBD may be consumed through inhalation,
via vapors or smoke, through aerosol spray into the cheek, by mouth
as capsules or as a liquid solution.⁹

“Cannabis,” on the other hand, refers to all products
derived from the cannabis sativa plant.
“¹⁰ Different forms of cannabis contains
different levels of THC—with higher levels of THC producing a
stronger effect. Claimed by Willie Nelson to have “saved his
life,” “marijuana” refers to all parts of the
cannabis sativa plant that contain substantial amounts of
THC— the main psychoactive cannabinoid that gives consumers a
“high” feeling.¹¹ Marijuana may be smoked
as a cigarette, referred to as a joint, in a pipe or bong, or
through electronic vapes.¹² It may also be mixed
with foods, brewed as teas, or infused with
candies.¹³

Forty-seven states allow for the use of CBD and low THC
products, while thirty-seven states and four territories allow the
medical use of cannabis products.¹⁴ Nineteen states
and three territories have implemented laws allowing for
non-medical, recreational adult cannabis
use.¹⁵ Currently, Idaho, Nebraska, and Kansas have
no public cannabinoid access program available.¹⁶

Indisputably, both cannabis and CBD have incredible potential to
generate revenue. Over 48 million people, or 18% of Americans,
report kissing the sky with marijuana in
2019.¹⁷ Colorado became one of the first states to
legalize recreational marijuana in 2012. Since the state’s
legalization of marijuana, sales totals for medical and retail
marijuana exceed $13 billion and the state has collected over $2
billion in sales tax.¹⁸ Nevada, a state that
legalized recreational marijuana in 2017, reported $152,334,798 in
total cannabis excise tax revenue, including the state wholesale
and retail tax, for its 2022 fiscal year.¹⁹ The
state’s taxable sales reported by adult-use retail stores and
medical dispensaries blaze higher at
$965,091,123.²⁰ In the United States, CBD sales
reached 4.6 billion in 2020, and the industry shows no signs of
slowing down.²¹ CBD sales are expected to reach $15
billion by 2024 and $20 billion in 2025.²²

Without a doubt, the cannabis industry is poised to fly high.
But the industry faces significant hurdles before full
normalization—most notably federal legalization. Knowledge of
four federal acts is critical to understanding the legal framework
for cannabinoids. These include the Controlled Substances Act
(“CSA”), the Agriculture Improvement Act of 2018 (the
“Farm Bill”), the Federal Food, Drug, and Cosmetic Act
(the “FD&C Act”), and the Federal Trade Commission
Act (the “FTCA”).

Up in Smoke²³

The Controlled Substances Act

Enacted as an essential component of President Richard
Nixon’s “War on Drugs,” the Controlled Substances Act
(“CSA”) makes the possession, production, and
distribution of marijuana illegal— without
exception.²⁴ Under the Act, “Marihuana”
is a Schedule I drug, alongside heroin, LSD, and
methamphetamine.²⁵ Schedule I drugs are classified
by their purported potential for abuse, lack of accepted medical
use treatment in the United States, and lack of accepted safety for
use under medical supervision.²⁶ Despite
cannabis’ status as legal under many state laws, the CSA
subjects cannabis consumers and businesses to civil and criminal
penalties, including the risk of asset forfeiture under federal
law.²⁷

 To clarify the apparent conflict in federal and state
treatment of cannabis, the Department of Justice (“DOJ”)
has issued several memoranda to federal prosecutors offering
guidance concerning marijuana enforcement and
prosecution.²⁸ In August 2013, the DOJ confirmed
the federal government’s treatment of marijuana in the Cole II
Memorandum (“Cole II”), noting “Congress has
determined that marijuana is a dangerous drug and that the illegal
distribution and sale of marijuana is a serious crime that provides
a significant source of revenue to large-scale criminal
enterprises, gangs, and cartels.”²⁹ Despite
this statement, Cole II presented eight defined goals of the DOJ,
recognizing the need to define its marijuana enforcement priorities
amidst state legalization.³⁰ Cole II also
emphasized the DOJ’s reliance on states to “implement
strong and effective regulatory and enforcement systems that will
address the threat [legalized marijuana] could pose to public
safety, public health, and other law enforcement
interests.”³¹

In 2018, Attorney General Jeff Sessions rescinded prior
guidance, including Cole II. However, in practice, the DOJ
continues to follow Cole II, making it clear that while the federal
government continues to criminalize the cultivation, distribution,
sale, and possession of marijuana, the DOJ’s intent is to allow
state “prosecutorial discretion” in regulation and
enforcement of marijuana-related activity.³² 

Pursuant to the CSA, the Attorney General may add, transfer, or
remove any drug from any schedule in the CSA through a rulemaking
proceeding.³³ As such, marijuana could potentially
be removed as a schedule I drug under the Act. Procedurally, in
order for this to occur, the Administrator of the Drug Enforcement
Administration (“DEA”), the Secretary of Health and Human
Services (“HHS”) or any interested party may bring a
petition.³⁴

Can You Take Me Higher³⁵

Supreme Court Hesitation?

From 1990 to present, the federal government’s prohibitive
stance on cannabis has been tested several times through
litigation. However, federal courts in the United States have yet
to rule in opposition of the CSA.

The Supreme Court held in United States v. Oakland
Cannabis Buyers Co-op, there are no medical necessity defenses
to a violation of the CSA.³⁶ This ruling reinforced
the notion that individuals who manufacture and distribute medical
cannabis, albeit legally under state law, are still in violation of
federal law. In 2005, the Supreme Court, provided guidance on the
effect of purely local cultivation and use on interstate commerce
in Gonzales v. Raich, finding Congress can enforce
the prohibition even when the product does not enter into the
interstate market.³⁷ The Ninth Circuit,
in Conant v. Walters, held that any doctor
prescribing medical cannabis to a patient would be aiding and
abetting a violation of the CSA.³⁸ Consequently, a
physician in cannabis-legal states may “recommend”
cannabis to his or her patients, but may not “prescribe”
cannabis.³⁹

Several cannabis cases now before the Supreme Court and federal
appeals courts could have a significant impact on the cannabis
industry in 2022.⁴⁰ Notably, in Northeast
Patients Group et al. v. Figueroa, the First Circuit explored
the constitutionality of Maine’s law that bars or restricts
nonresidents from holding cannabis licenses, or investing in
cannabis business.⁴¹ The First Circuit found the
dormant commerce clause applies to the cannabis industry, meaning
out-of-state companies can enter the cannabis market in Maine. The
State of Maine may appeal the decision to the Supreme Court.
However, as the First Circuit’s decision presently stands,
Maine may not interfere with interstate commerce by imposing a
residency requirement. This residency requirement is similar to the
framework many other states employ—which could drive
additional challenges to the legitimacy of the requirements, or
even a potential circuit split in the future.

Feelin’ Alright?⁴²

The Agriculture Improvement Act (Farm Bill)

The CSA proves the cannabinoid industry can’t always get
what it wants, but the 2018 Agriculture Improvement Act (the
“Farm Bill”) gave those in the CBD market a taste of what
they needed.⁴³ The Farm Bill removed hemp as an
illegal substance under the CSA.⁴⁴ It also carved
out an exception for the cannabis plant and derivatives that
contain less than 0.3 percent THC on a dry weight
basis—making hemp-based CBD products with less than 0.3
percent THC legal under federal law.⁴⁵ The Farm
Bill expressly preserved the FDA’s authority to control and
regulate products containing cannabis or cannabis-derived compounds
under the Food & Drug Cosmetics Act. In essence, this means
hemp and low-level THC, although no longer illegal, are still
subject to the same requirements as FDA-regulated products
containing any other substance and FTCA guidance with respect to
customer complaints regarding hemp and marijuana businesses.

While hemp’s effectiveness and medical credibility are
wildly debated, there is no debate that demand of hemp products is
increasing. In 2021, the United States Department of Agriculture
estimated the total value of hemp production at $824
million.⁴⁶ Despite the economic surge from
hemp’s legalization in 2018, the hemp and low-level THC
industry is still faced with regulatory challenges. Many hemp
advocates are hopeful the 2023 Farm Bill will address crucial
issues that affect the industry.⁴⁷ At the top of
industry leaders’ list is the inclusion of a provision to
increase the allowable THC threshold in the hemp plant from 0.3% to
1%. Hemp cheerleaders also desire revised banking regulations to
ease complications and light up greater sources of funding for hemp
cultivation and processing.

Midnight Toker⁴⁸

The Federal Food, Drug, and Cosmetic Act 

 Totally separate from the CSA and the Farm Bill, the
Federal Food, Drug, and Cosmetic Act (the “FD&C Act”)
establishes a federal scheme to regulate food, drugs, and
cosmetics, among other things.⁴⁹ The FD&C Act
is regulated by the Federal Drug Administration (“FDA”).
The FD&C Act requires any substance intended for use as a drug,
including cannabis and hemp, to be approved by the
FDA.⁵⁰ In addition, the Act prohibits marketing
cannabis or hemp for medical or health use without approval of a
new drug application for its use and prohibits marketing food and
dietary supplements that contain cannabis or hemp.⁵¹

Although the Farm Bill legalized hemp and low levels of THC, it
also explicitly preserved the power of the federal government to
regulate products containing CBD.⁵² In the haze of the
Farm Bill’s passage, the FDA issued a statement declaring that
the FDA will treat products containing cannabis or cannabis-derived
compounds as any other FDA-regulated product, regardless of the
source of the substance.⁵³ The FDA does not
recognize CBD as a dietary supplement and has issued warning
letters to companies that market new, unapproved CBD drugs
promising to cure and mitigate
diseases.⁵⁴ Additionally, the FDA has issued
letters to companies misrepresenting the level of CBD contained in
their products.⁵⁵

In response to the FDA’s roaring issuance of warning
letters, consumers are lighting up class actions around the
country. However, plaintiffs have seen little to no success, as
defendants have employed the primary jurisdiction doctrine as a
defense against these claims.⁵⁶ In Dasilva
v. Infinite Product Company, plaintiff alleged a CBD company
intentionally marketed and sold illegal CBD products, citing the
FDA’s warning letter to the company as
evidence.⁵⁷ A federal court in the Central District
of California stayed the case in early 2021, stating “it is
unclear how the Court can adjudicate Plaintiff’s claims given
the lack of clarity as to which of Defendant’s CBD Products are
drugs, dietary supplements, or food products, and what standards
apply to those Products.”⁵⁸

Despite consumer demand and the federal government’s
decriminalization of CBD, the FDA has approved only four cannabis
related drugs to date.⁵⁹ One is a CBD-derived oral
product called Epidiolex, which contains .1% THC and is used to
treat epilepsy conditions.⁶⁰ Three are synthetic
cannabis-related drug products: Marinol, Syndros, and
Cesamet.⁶¹ All four drugs were subject to
substantial clinical investigations prior to their marketing as
supplements.⁶² To date, the FDA has not approved
any product containing cannabis—effectively concluding that
marijuana has no medical use.⁶³

One Toke Over the Line⁶⁴

The Federal Trade Commission Act

In addition to regulation by the FDA, the Federal Trade
Commission (“FTC”) also retains regulatory authority over
CBD.⁶⁵ Specifically, the FTC requires scientific
substantiation before any health-related products may be marketed
or branded with an advertised health
claim. ⁶⁶ The FDA takes the position that a
lack of uniform consumption standards leaves questions unanswered
regarding the safety of cannabis
products.⁶⁷ Additionally, the FDA is concerned a
number of CBD manufacturers market their products with
unsubstantiated medical claims or omit warning labels from their
goods or advertisements.⁶⁸ A rapid surge in CBD
consumer utilization has prompted the FTC to take action against
companies advertising unsupported health claims.⁶⁹

In December 2020, the FTC announced a crackdown— termed
“Operation CBDeceit”– on deceptively marked CBD
products.⁷⁰ Specifically, the FTC challenged
numerous CBD entities promoting products that claimed to prevent or
treat serious diseases or health conditions, like cancer, diabetes,
Alzheimer’s, and more. The FTC announced proposed settlements
with six companies during its first raid. Utah based Epichouse,
LLC, sold CBD oils, gummies, coffees, and creams with promises that
the products prevented migraines, hypertension, heart disease,
cognitive decline, and diabetes, among several others. In its
complaint against the company, the FTC alleged the company falsely
claimed that scientific research supported many of their
prevention, treatment, and cure claims. Not only did the FTC order
Epichouse to pay the Commission $30,000, it also ordered the
company to provide notice of its misleading claims to customers, to
conduct testing, and preserve records of testing. 

Just as the number of consumer class actions has risen in
response to the FDA’s warning letters, FTC warning letters are
also expected to set the litigants on
fire.⁷¹ Complaints backed by FTC warning letters
include a wide variety of allegations, including a plaintiff’s
inability to understand a CBD company’s claims placed on the
CBD label. While these complaints may seem frivolous, they have the
potential to pack heat, as many deceptive trade practice statutes
allow for civil penalties per violation, treble damages, and the
recovery of attorney’s fees.⁷²

Companies representing, whether expressly or impliedly, that
their products prevent, treat, or cure medical conditions can
expect a high level of scrutiny from the FTC. Additionally, the FTC
may require competent and reliable scientific evidence of
health-related representations in order for the product to reenter
the market.

Hey, You, Get Off of My Cloud⁷³

Challenges in Cannabis Operations

Undoubtedly, the cannabis industry is budding with financial
opportunity for business owners and investors. In many ways,
cannabinoid businesses are just like any other business—an
entity is created with the state and appropriate corporate
formalities are enacted. Yet, cannabis’ regulatory overlay and
federally illegal status present business owners, financial
institutions, legal service providers, and any business touching
the cannabis industry with unique operational risks.

INTERSTATE COMMERCE & REGULATION

Notwithstanding federal prohibition on the possession,
production, and distribution of marijuana, states continue to
create their own intrastate regulatory models for the legalization
of marijuana. As a result, each state has developed its own
regulatory structure with varying approaches. However, regardless
of the decided approach, the federally unregulated market means the
same thing for all states – no cannabis product may cross
state lines.⁷⁴

The inability to transport the product across states lines
presents quite the conundrum for multistate cannabis companies. Due
to the prohibition on interstate transport, a multistate producer
must establish a supply chain in each state, each with specific
state-compliant regulations and controls. This supply chain
headache in turn reduces product consistency and quality control,
duplicates overhead costs, and increases labor
costs.⁷⁵

INSURANCE

Perhaps one of the most challenging aspects of cannabis business
operations is the lack of affordable, broad, and available
insurance coverage. Cannabis industry risks are widespread,
including product recalls, theft of product, misrepresentation and
shareholder fraud, employee injuries, failure to notify regulatory
agencies of ownership change, personal injuries at dispensaries,
violations of licensing and production, failure to tag cannabis
products, failure to maintain equipment, transportation accidents,
and even flood, wildfire, and natural disaster damage. Because
cannabis is federally illegal, many insurance carriers and
underwriters have either been slow to provide, or altogether refuse
to provide, insurance policies covering commercial general
liability, transportation, cargo, and automobile liability,
products liability, management liability policies and even
directors and officers (“D&O”)
policies.⁷⁶

Automobile policies are necessary to any business transporting
cannabis; however, the premiums for automobile liability and
physical damage policies are often four to five times higher than
the cost an ordinary retailer would pay.⁷⁷ Cargo
insurance is hard to find, which forces companies to split
shipments— which in turn requires more labor/vehicles, and
increases the wait time on the delivery of the goods. 

The problems of the leaf do not end
here.⁷⁸ Regulatory compliance and market volatility
have led to a number of shareholder and investor disputes,
third-party litigation, securities litigation, and allegations of
mismanagement. However, D&O insurance is extremely difficult to
obtain in the cannabis market. Its high cost, coupled with a
plethora of carve-out exclusions, nonexistent reinsurance, and
insufficient policy limits make attracting high-quality,
experienced leadership a challenge for most large-scale cannabis
companies. For example, Grupo Flor, a licensed cultivator,
distributor, and manufacturer pays $85,000 to $100,000 annually for
$1 million of D&O coverage.⁷⁹ Without iron-clad
D&O protection, executives could expose their personal assets
to risk when full indemnification or protections are
unavailable. 

Although not perfect, cannabis businesses combat these insurance
hurdles through the use of alternative insurance methods, such as
captive groups or risk retention groups.⁸⁰ However,
because insurance is regulated at the state level, a particular
state must first allow domicile for cannabis captives. Then, an
entity must commit to fronting the carrier and any reinsurance.

Up Up & Away⁸¹

Looking to the Future

There are several proposed pieces of cannabinoid legislation
currently before Congress that, if passed, will result in more
predictable operations, increased capacity, and greater protections
for cannabis businesses. But, let’s be blunt—the
following bills, while widely supported by the cannabis industry,
face challenges generating enough support to pass to the
President. 

THE MARIJUANA OPPORTUNITY AND REINVESTMENT ACT (THE “MORE
ACT”)

The Marijuana Opportunity and Reinvestment Act (the “MORE
Act”) decriminalizes marijuana by removing it from the list of
scheduled substances under the CSA.⁸² The MORE Act
was first passed by the House in December 2020, but the Senate did
not give the Act a hearing or a vote. In 2021, the MORE Act was
filed a second time and passed in the House. In April 2022, the
Senate referred the MORE Act to the Finance Committee, but it has
not yet been released from the Senate.

The MORE Act removes cannabis from the list of drugs regulated
by the CSA, eliminates criminal penalties for federal criminal
offenses, and expunges past federal cannabis
convictions.⁸³ It also places the regulation and
enforcement of marijuana in the state’s hands. As drafted, a
popular tax starting at 5% and increasing to 8% over three years,
would also be imposed on the retail sale of
cannabis.⁸⁴ It effectively eliminates criminal
penalties for individuals who manufacture, distribute, or possess
marijuana as well.

THE CANNABIS ADMINISTRATION AND OPPORTUNITY ACT
(“CAOA”)

 On July 21, 2022, The Cannabis Administration and
Opportunity Act (the “CAOA”) was officially submitted to
the United States Senate.⁸⁵ The proposed act would
direct the U.S. Attorney General to remove cannabis as a scheduled
drug under the CSA.⁸⁶ A new definition of cannabis
would be supplemented under the FD&C Act, following a schema
similar to that of tobacco and other drugs. The CAOA is comparable
to the MORE Act in many regards. State law would continue to govern
with respect to possession, production, and the distribution of
cannabis. The FD&C Act would establish 21 years of age as the
minimum age required to purchase cannabis and limit the any retail
sales transaction to 10 ounces of cannabis or the equivalent amount
of any cannabis derivative. However, the CAOA imposes a much higher
cannabis sales tax, initially starting at 10% and increasing to 25%
over 5 years.

THE SECURE AND FAIR ENFORCEMENT BANKING ACT (THE “SAFE
BANKING ACT”)

Only a handful of U.S. banks and credit unions work with
cannabis companies, which lead many in the industry to operate in
cash. As of December 31, 2021, only 553 banks and 202 credit unions
offer cannabis programs.⁸⁷ The lack of available
banking services prohibits access to payment processing services,
commercial loans, and other sources of capital that would otherwise
be accessible to typical businesses.

H.R. 1996, the Secure and Fair Enforcement Banking Act of
2021(the “Safe Banking Act”), has passed in the House of
Representatives more than six times in the past three years.
However, the bill continues to stall in the Senate, presumably due
to the bill’s lack of cannabis sentencing reform. Most
recently, the Safe Banking Act was passed in the U.S. House of
Representatives on July 14, 2022. The Safe Banking Act, more narrow
than the MORE Act or CAOA, generally prohibits a federal banking
regulator from penalizing a depository institution, as well as
their insurers, for providing banking services to a legitimate
cannabis-related business.⁸⁸ Additionally, proceeds
from a transaction involving activities of a legitimate
cannabis-related business are not considered proceeds from unlawful
activity.⁸⁹

If passed, transactions involving activities with
cannabis-related businesses would no longer be considered as
generating proceeds from unlawful activities and institutions are
not subject to federal law or regulation for providing services to
a federally illegal industry. Not only would the passage of the Act
provide protections to financial institutions involved in
cannabis-related businesses, but it would also increase the
availability of commercial loans, reduce insurance premiums and
deductibles, and decrease the number of D&O insurance
losses.

THE CAPITAL LENDING AND INVESTMENT FOR MARIJUANA BUSINESS ACT
(THE “CLIMB ACT”)

The Capital Lending and Investment for Marijuana Business Act
(the “CLIMB Act”), H.R. 8200, was introduced in the House
on July 23, 2022.⁹⁰ The CLIMB Act has been referred
to the House Committee on Financial Services. Effectively, the
bi-partisan bill seeks to expand cannabis industry’s access to
financial opportunities by providing public or private capital
sources for investment in and financing of cannabis business.

The CLIMB Act differs from the SAFE Banking Act in two ways.
First, it prohibits any federal agency from civility and criminally
penalizing any business or individual that provides financial
services to a state-legal marijuana business. This ensures
businesses, including consultants, lawyers, insurers, advertisers,
and debt or equity lenders, that receive funds or compensation from
legitimate marijuana businesses would not be subject to civil or
criminal repercussions. Second, the CLIMB Act provides a securities
safe harbor, allowing cannabis businesses to list securities on the
national securities exchange.

PRESIDENT BIDEN’S MARIJUANA REFORM PRESS RELEASE

On October 6, 2022, President Joe Biden released a statement on
marijuana reform.⁹¹ This statement marks President
Biden’s first official position on the legalization of
marijuana. It contained three parts: 1) the President granted a
pardon of all prior Federal convictions for simple possession of
marijuana; 2) He requested state Governors likewise to pardon
simple marijuana possession offenses; and 3) He asked the Secretary
of Health and Human Services and the Attorney General to initiate
proceedings to review marijuana’s current classification in
Schedule I of the Controlled Substance Act.

Point Me Towards the Sky⁹²

Conclusions

After decades of societal condemnation and use restrictions,
it’s apparent we will be dancing with Mary Jane for years to
come. The question no longer remains a matter of if, but a question
of when the federal government will legalize and embrace cannabis.
Despite the path toward legalization, operational risk uncertainty,
such as FDA approval, FTC regulation, limited insurance, funding,
and banking options nonetheless linger for cannabinoid
businesses.

Federal legislation legalizing cannabis and all forms of CBD
would provide greater clarity and security to the industry;
however, it is naïve to think the problems and dilemmas
plaguing the cannabis industry will vanish with the stroke a pen in
Washington. Decriminalization of cannabis would certainly allow
financial institutions and insurers to “go green,” but
state specific regulations still control. Therefore, any product
traveling via interstate commerce would require compliance with its
state of origin and each state it crosses through—a
logistical quandary for manufacturers, distributors, transporters,
and regulators. Until marijuana is federally legalized and the
entire cannabinoid industry reaches full normalization, the
industry will continue to inhale risk with the hope of hig

Footnotes

1. The United States Code employs an antiquated
spelling of “marihuana” and does not refer to
“cannabis.” For the purposes of this Article, the modern
spelling of marijuana is used unless quoting a specific statute.
Additionally, for the purposes of this Article, any use of the term
“cannabis” means “marijuana” and not
“hemp” (as the terms are defined in the
CSA). 

2. “Alright, alright, alright,” coined by
Matthew McConaughey in Dazed and Confused (1993).

3. National Center for Complementary and Integrative
Health, Cannabis (Marijuana) and Cannabinoids: What You
Need to Know, (Nov. 2019) 
https://www.nccih.nih.gov/health/cannabis-marijuana-and-cannabinoids-what-you-need-to-know.

4. U.S. Food & Drug Administration, FDA
Regulation of Cannabis and Cannabis Derived Products, Including
Cannabidiol (CBD), (Jan. 1, 2021) 
https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd.

5. Id.

6. Centers for Disease Control and Prevention, CBD:
What You Need to Know, (Aug. 8,
2022) https://www.cdc.gov/marijuana/featured-topics/CBD.html.

7. Agricultural Improvement Act of 2018, Pub. L.
115-334.

8. Katie Shapiro, Forbes, Martha Stewart on
How Snoop Dogg Got Her Into The Cannabis Business, Her New CBD
Line, And Aging Well, (June 24, 2019), 
https://www.forbes.com/sites/katieshapiro/2019/06/24/martha-stewart-on-how-snoop-dogg-got-her-into-the-cannabis-business-her-new-cbd-line-and-aging-well/?sh=a394ee056d29.

9. Id.

10. Supra, at n. 2.

11. Alline Cristina Campos et al., Multiple
mechanisms involved in the large-spectrum therapeutic potential of
cannabis in psychiatric disorders, in SERIES B, 367
Philosophical transitions of the Royal Society of London 3364-78
(2012); National Center for Complementary Integrative
Health, Cannabis (Marijuana) and Cannabinoids: What You
Need to Know, (Nov. 2019) 
https://www.nccih.nih.gov/health/cannabis-marijuana-and-cannabinoids-what-you-need-to-know#:~:text=The%20cannabis%20plant%20contains%20about,on%20a%20person’s%20mental%20state; 
see also James Minchin III, Rolling
Stone, Willie Nelson: The High Life, (Apr. 29,
2019) 
https://www.rollingstone.com/music/music-features/willie-nelson-weed-issue-826290/.

12. Drug Enforcement Administration; Drug Fact
Sheet, Marijuana/Cannabis (April 2020).

13. Id.

14. National Conference of State
Legislatures, State Medical Cannabis Laws (Aug.
23, 2021) 
https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx.

15. Id.

16. Id.

17. Center for Disease Control and
Prevention, Marijuana and Public Health, Data and
Statistics, Centers for Disease and Control, (June 8,
2021) 
https://www.cdc.gov/marijuana/data-statistics.htm#:~:text=Marijuana%20is%20the%20most%20commonly,at%20least%20once%20in%202019.&text=Recent%20research

%20estimated%20that%20approximately,marijuana%20have%20marijuana%20use%20disorder.; 
see also Jimi Hendrix, Purple Haze
(1967)(“‘scuse me while I kiss the sky”).

18. Colorado Department of
Revenue, Marijuana Sales Reports, 
https://cdor.colorado.gov/data-and-reports/marijuana-data/marijuana-sales-reports; 
see also  Colorado Department of
Revenue, Marijuana Tax Reports,   
https://cdor.colorado.gov/data-and-reports/marijuana-data/marijuana-tax-reports (Tax
revenue comes from the state sales tax (2.9%) on marijuana sold in
stores, the state retail marijuana sales tax (15%) on retail
marijuana sold in stores, and the state retail marijuana excise tax
(15%) on wholesale sales/transfers of retail
marijuana).

19. Nevada Department of Revenue Cannabis Tax
Revenue, Excise Tax and Taxable Sales FY 2022, (Aug. 25,
2022), 
https://tax.nv.gov/uploadedFiles/taxnvgov/Content/TaxLibrary/NV-Cannabis-Revenue-FY22(5).pdf?n=2150.

20. Id.

21. Mike Sill, Forbes Business Council, The
Future of the CBD Industry in 2022 and Beyond, (Oct. 21,
2021), 
https://www.forbes.com/sites/forbesbusinesscouncil/2021/10/21/the-future-of-the-cbd-industry-in-2022-and-beyond/?sh=3a0d2f1525fd.

22. Id.

23. “Up in Smoke,” the title of Cheech
& Chong’s first film (1978).

24. 21 U.S.C. § 801, et seq.

25. 21 U.S.C. § 812.

26. 21 U.S.C. § 812.

27. 21 U.S.C. § 841, et seq.

28. David Ogden, Deputy Attorney General, U.S.
Department of Justice, Memorandum for Selected U.S.
Attorneys: Investigations and Prosecutions in States
Authorizing the Medical Use of Marijuana  (Oct. 19,
2009)(confirming that the DOJ remained committed to the enforcement
of the CSA in all states); James M. Cole, Deputy Attorney General,
U.S. Department of Justice, Memorandum for US
Attorneys: Guidance Regarding the Ogden Memo in
Jurisdictions Seeking to Authorize Marijuana for Medical Use
1-2 (June 29, 2011)(expressing DOJ’s position that
the Ogden Memo was not intended to shield from federal enforcement
action and prosecution marijuana-related cultivation and
distribution for medical use or lower-level marijuana related
crimes being prosecuted by state law); James M. Cole, Deputy
Attorney General, U.S. Department of Justice, Memorandum
for All United States Attorneys, Guidance regarding Marijuana
Enforcement (August 29, 2013).

29. James M. Cole, Deputy Attorney General, U.S.
Department of Justice, Memorandum for All United States
Attorneys, Guidance regarding Marijuana
Enforcement (August 29, 2013). 

30. Id. (Preventing (1) the distribution of
marijuana to minors; (2) revenue from the sale of marijuana from
going to criminal enterprises, gangs, and cartels; (3) diversion of
marijuana from states where it is legal under state law in some
form to other states; (4) state-authorized marijuana activity from
being used as a cover or pretext for the trafficking of other
illegal drugs or other illegal activity; (5) violence and the use
of firearms in the cultivation and distribution of marijuana; (6)
drugged driving and the exacerbation of other adverse public health
consequences associated with marijuana use; (7) growing of
marijuana on public lands and the attendant public safety and
environmental dangers posed by marijuana production on public
lands; and (8) marijuana possession or use on federal
property).

31. Id.

32. Id. 

33. 21 U.S.C. § 812.

34. United States Drug Enforcement Administration,
The Controlled Substances Act, https://www.dea.gov/drug-information/csa; 
see also Id. 

35. Creed, Higher (1999).

36. US v. Oakland Cannabis Buyers’
Co-op, 532 U.S. 483 (2001).

37. Gonzales v. Raich, 545 U.S. 1
(2005).

38. Conant v. Walters, 309 F.3d 629 (9th
Cir. 2002).

39. Id.

40. See also Bierbach v. Digger’s Polaris
and Musta v. Mendota Heights Dental Center, No. 21-676 and
21-998, 2022 WL 1560177 (U.S. May 16, 2022); Empyreal
Enterprises LLC v. United States, No. 5:22-cv-00094 (C.D. Cal.
Jan. 14, 2022).

41. Northeast Patients Group et al. v.
Figueroa, 2022 WL 94114
(1^st Cir.).

42. Joe Cocker, Feelin’ Alright?
(1969)(“Hey, you feelin’ alright?”).

43. You Can’t Always Get What You Want, The
Rolling Stones (1969).

44. Agricultural Improvement Act of 2018, Pub. L.
115-334.

45. Id.

46. Alexandra Nseir, Value of hemp
production totaled $824 million in 2021, U.S. Dept. of
Agriculture (Feb. 17, 2022), 
https://www.nass.usda.gov/Newsroom/2022/02-17-2022.php#:~:text=The%20value%20of%20U.S.%20hemp,United%20States%20totaled%20%24112%20million. 

47. Dario Sabaghi, How the 2023 Farm Bill
May Reshape the Hemp Industry, Forbes, (Aug. 3, 2022) 
https://www.forbes.com/sites/dariosabaghi/2022/08/03/how-the-2023-farm-bill-may-reshape-the-hemp-industry/?sh=6aaa3bca7a67.

48. The Joker, Steve Miller Band
(1973)(“I’m a joker, I’m a smoker, I’m a midnight
toker.”).

49. 21 U.S.C.A. § 301 et seq.

50. Id. 

51. 21 U.S.C. 321, 355.

52. Supra note 37. 

53. FDA Commissioner Scott Gottlieb,
M.D., Statement from FDA Commissioner Scott Gottlieb,
M.D., on signing of the Agriculture Improvement Act and the
agency’s regulation of products containing cannabis and
cannabis-derived compounds (Dec. 20, 2018), 
https://www.fda.gov/NewsEvents/Newsroom/Press
Announcements/ucm628988.thm.

54. Id. 

55. U.S. Food & Drug
Administration, Warning Letters and Test Results for
Cannabidiol-Related Products, (May 6, 2022), 
https://www.fda.gov/news-events/public-health-focus/warning-letters-and-test-results-cannabidiol-related-products.

56. See Ahumada v. Global Widget, LLC, 2020
WL 5669032, at *1 (D. Mass. Aug 11, 2020)(The primary jurisdiction
doctrine is “a set of precedents that guide court s in
deciding when an issue should be resolved in the first instance by
an agency that has special competence to address
it.”).

57. Dasilva v. Infinite Product Company,
2021 WL 900642 (C.D. Cal. Mar. 3, 2021).

58. Id. at *2.

59. U.S. Food & Drug
Administration, FDA and Cannabis: Research and Drug
Approval Process, (Oct. 1, 2022). 
https://www.fda.gov/news-events/public-health-focus/fda-and-cannabis-research-and-drug-approval-process.

60. Id.

61. Id.

62. Id. 

63. U.S. Food & Drug
Administration, FDA Regulation of Cannabis and
Cannabis-Derived Products, Including Cannabidiol (CBD), (Jan.
2021) (
https://fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd); 
see also Drug Enforcement Administration; Drug Fact
Sheet, Marijuana/Cannabis (April 2020).

64. One Toke over the Line, Brewer & Shipley
(1970).

65. Because no form of cannabis is currently legal
federally, the FTC has not shifted its focus to the cannabis
market.

66. Lesley Fair, The Federal Trade
Commission, One thing marketers of CBD products need to
know right now, (Dec. 17, 2020), 
www.ftc.gov/business-guidances/blog/2020/12/one-thing-marketers-cbd-products-need-know-right-now.

67. Lesley Fair, Federal Trade
Commission, FTC and CBD: Latest case challenges unproven
health claims (May 17, 2021) 
https://www.ftc.gov/business-guidance/blog/2021/05/ftc-cbd-latest-case-challenges-unproven-health-claims.

68. Supra, at n. 62.

69. Id.

70. Supra, at n. 62.

71. The Doors, Light my Fire (1967)(“Come on,
baby, light my fire. Try to set the night on
fire.”)

72. California Business and Professions Code §
17500, et seq.; New York General Business Law
§§ 349, 350, et seq; Florida Deceptive and
Unfair Trade Practices (Fla. Stat. §501, et
seq.); Illinois Unfair Deceptive Trade Practices Act (815 ILCS
510).

73. Get Off of My Cloud, The Rolling Stones
(1966).

74. 21 U.S.C. § 863.

75. Kimberly E. Blair, Jonathan E. Meer, and Ian A.
Stewart, Cannabis directors and officers liability: Cause
for optimism?, 2021 WL 28877838 (July 9, 2021).

76. Id.

77. Id.

78. Mexico, Jefferson Airplane (1974)(“Come to
the Poet’s Room, talking about the problems of the
leaf”). 

79. Alwyn Scott, Reuters, U.S. cannabis
insurers get ready to roll as federal legalization
nears,  (Aug. 19, 2021), 
https://www.reuters.com/article/us-usa-insurance-cannabis-focus-idCAKBN2FK1AO.

80. National Cannabis Risk Management Association
(NCRMA), a conglomerate of 3,000 cannabis businesses, set up a
captive insurer to offer coverage for property, general premises
liability, and product liability to its members. Additionally,
CannGen Insurance Services is another captive group offering
worker’s compensation, product liability, transportation, and
D&O coverage.

81. Up Up & Away, Kid Cudi (2009).

82. The Marijuana Opportunity and Reinvestment Act
of 2020, H.R. 3884, 116th Cong. (2019-2020); The Marijuana
Opportunity and Reinvestment Act of 2021, H.R. 3617,
117^th Cong. (2021-2022).

83. Id.

84. Id. While cannabis businesses are
currently subject to federal income taxes and certain state excise
taxes, cannabis products are not subject to any federal excise
taxes.

85. The Cannabis Administration & Opportunity
Act, S.B. 4591, 117th Cong. (2021-2022).

86. Id.

87. Federal Crimes Enforcement
Network, FinCEN Marijuana Banking
Update, Monthly Count of Depository Institutions
Providing Banking Services to Marijuana-Related
Businesses (SARs filed through 30 September
2021), 
https://www.fincen.gov/sites/default/files/shared/305326_MJ%20Banking%20Update%204th%20QTR%20FY2021_Public_Final.pdf. 

88. The Secure and Fair Enforcement Banking Act of
2021, H.R. 1996, 117th Cong. (2021-2022).

89. Id.

90. The Climb Act, H.R. 8200, 117th Cong.
(2021-2022).

91. Press Release, The White House, Statement from
President Biden on Marijuana Reform (Oct. 6, 2022)(on file with The
White House).

92. Willie Nelson, Roll Me Up and Smoke Me When I
Die (2012)(“Point me towards the sky, and roll me up and smoke
me when I die”).

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