Backwards Down the Number Line: Assessing the State of Alabama’s Medical Cannabis Program Four Years After Its Enactment
Ronald Reagan famously asked voters, on the eve of the 1980 presidential election, to ask themselves whether they were better off than they were four years ago. It was a powerful question that asked Americans to take stock of how they saw their lives at that time versus four years before.
When it occurred to me recently that almost four years have passed since the enactment of Alabama’s medical cannabis program, it took me back. I decided to scroll through the pictures on my phone from the Spring of 2021 – seeing pictures of my family in earlier times with different haircuts and different perspectives on life – and I found myself feeling like the Kodak executives must have felt when Mad Men’s Don Draper (played perhaps in only the way Jon Hamm could play him) first introduced them to The Carousel.
“Nostalgia,” Don said, “literally means ‘the pain from an old wound… It’s delicate, but potent… It takes us to a place where we ache to go.”
So perhaps this is my meditation on nostalgia, through the lens of the Alabama medical cannabis program.
Where Are We Now?
So here we are, four years later. And I ask myself whether Alabama’s medical cannabis program is better off than it was four years ago. The easy answer is, of course, no. After all, not one Alabamian has received legal medical cannabis in that time. How, one could reasonably ask, is that possible?
I’m reminded of the lyrics from the title of this post:
Laughing all these many years
We’ve pushed through hardships, tasted tears
We made a promise one to keep
I can still recite it in my sleep
While many might find it hard to find laughter in what has transpired over these years (unless you have a particularly perverse sense of humor, in which case the author requests the privilege of a beer soon), we have certainly pushed through hardships and likely shed tears. But there are many of us committed to keeping a certain promise, one that I can recite in my sleep: Alabama will provide medical cannabis to patients with qualifying conditions who can benefit from that medicine.
How Did We Get Here?
To determine where we are, we need to know where we came from. Ah, the salad days of 2021. The sky was the limit. Patients were going to finally access medicine they had sought for years. Operators saw opportunities to help (and make a dime at the same time). Lawyers, including the author, were in high demand, and the conversations were cutting edge and exciting. Heady times, indeed.
Alabama became the 36th state to allow cannabis for medical use when Gov. Kay Ivey signed into law the Darren Wesley ‘Ato’ Hall Compassion Act on May 17, 2021. The act established a process through which applicants would compete for a limited number of licenses in the following categories: (1) cultivator; (2) processor; (3) dispensary; and (4) “integrated facility” (which can cultivate, process, transport, and dispense medical cannabis under one license), as well as a to-be-determined number of licenses for secure transporters and testing laboratories. A Medical Cannabis Commission was established to license and regulate the medical cannabis program, with input from the Alabama Department of Agriculture and Industries on cultivation matters.
Many assumed – based on the statutory requirements that the commission accept licenses by September 1, 2022, and that the commission make a decision within 60 days – that licenses would be awarded late that year. Others, including the author, assumed that licenses would be awarded by the commission in early 2023. I’m wrong about things probably every day of my life, but I might not have been more wrong in my life than I was about that assumption.
Rather than require applications to be submitted on September 1, 2022, the AMCC set out a detailed timeline for the application and license awarding processes. The key takeaways:
Applicants could “request” a “License Application Form” from the commission between September 1 and October 17.
The deadline for submitting applications was December 30.
The commission intended to issue licenses on July 10, 2023.
All 94 applicants who submitted an application by the December 30, 2022, deadline received a deficiency notice of some kind, and applicants were provided an opportunity to cure those deficiencies. The University of South Alabama was assigned with the responsibility of leading the efforts to grade the applications.
On June 12, the AMCC announced its intent to issue 21 licenses to cultivators, processors, dispensaries, secured transporters, laboratory testing facilities, and integrated facilities.
In a shocking development, only four days later, the Alabama Medical Cannabis Commission voted to stay all proceedings related to the current offering of medical cannabis business licenses. The stay was issued because of the commission’s discovery of potential inconsistencies in the tabulation of scoring data and the commission’s need for additional time to seek an independent review of all scoring data.
In August 2023, the AMCC announced new awards. The results were largely the same as the June 12 awards, but they differed in a couple of ways. First, three additional cultivation licenses were awarded and one of the secure transportation licenses that received an award in June was not awarded a license in August. Second, there was a significant change in the integrated facility category: Verano Alabama, which scored highest in the University of South Alabama’s grading in both June and August, was removed from the list of awardees, replaced by INSA Alabama, which finished seventh in the August scoring but was nevertheless awarded an integrated license.
Care to guess what happened next? Yep, lawsuits. I probably qualify for medical cannabis based on the PTSD I experienced during this period, but I’ll summarize:
Many applicants argued that the AMCC violated the Open Meetings Act when it retired to executive session and engaged, according to the challengers, in improper deliberations and a secret ballot in violation of Alabama law. The logic of the balloting is fairly straightforward. Challengers point out that (1) there must have been deliberations about the applicants in order to lead to the changes in the scoring, particularly in the integrated facility category, and (2) the “nominating” process essentially ensured that the nominations made in executive session would dictate the award of licenses because those receiving the most nominations were essentially ensured of receiving the most votes and the voting stopped before other applicants were considered. The AMCC denies that deliberations occurred and points to the fact that commissioners could have changed their nominations at any point, including before submitting the nominations to AMCC staff in public session.
Applicants have challenged the process by which rules, regulations, and decisions made by the AMCC violated the Alabama Administrative Procedures Act. These claims go to the heart of the entire licensing process and, if successful according to challengers, call for the process to essentially begin again. Several other applicants have raised challenges to the manner in which applications were scored and whether the AMCC requirement that dissatisfied applicants pay the entire license fee (ranging from $30,000 to $50,000) in order to seek an administrative appeal of the AMCC’s decision violates due process.
Verano Alabama has argued that the AMCC lacked the authority to stay its June 12 awarding of licenses and that it should be awarded a license. In prior hearings the court has expressed skepticism about this argument, but it remains a live issue.
As these lawsuits were filed, the court held a number of hearings. At each opportunity, the court expressed its strong preference that the AMCC work with challengers to find a path forward that would allow for the awarding and issuance of licenses. The court concluded that the applicants had established a prima facie case that the commission had violated the Open Meetings Act and stated that it would enter a temporary restraining order preventing the issuance of licenses while the court conducted an evidentiary hearing on the alleged violations of the act.
In October 2023, in an effort to turn things around (and avoid more litigation), the AMCC adopted new regulations and changes to existing regulations:
An emergency rule creating additional application procedures;
An almost-identical permanent rule that is due for public comment; and
A set of technical changes to current rules.
The new rules created new procedures for:
Re-submitting any exhibits that existed on December 30, 2022, but which were adversely affected by the 10-megabyte file size limit on portal submissions;
Reducing the amount of material that is redacted in each application and opening the applications for additional public comment;
Any applicant who failed a pass/fail item to show cause why they should not have their application rejected;
Applicants to present their application to the AMCC and advocate for themselves in person;
Disclosing certain scoring and grading information; and
Considering, voting on, and awarding licenses in an open meeting, which the public can attend.
Finally, it seemed, we came to an end game as 2023 neared its close. We detailed the complex process – which was the result of a mediated settlement among some, but not all, litigants in the Montgomery County case – here, but the gist was that applicants would each have the opportunity to plead their case in an open hearing of the AMCC, and the AMCC would render its decision shortly thereafter.
Those hearings occurred and the AMCC awarded a third round of licenses. And everyone lived happily ever after, right? Not so fast my friend. Almost immediately, the court enjoined the issuance of dispensary and integrated licenses.
Those injunctions remain in place today, more than a year later. Applicants, advocates, and other stakeholders have been stuck in a sort of limbo since the final week of 2023. I can’t believe what I just wrote and how many lives have been impacted in the meantime. What a mess.
So Now What?
It’s hard not to become cynical observing this process play out. To pull from another Phish song:
The packaging begins to breakAnd all the points I tried to makeAre tossed with thoughts into a binTime leaks out, my life leaks in
But, as I have written recently, I believe that we have made progress – painfully slow and halting to be sure – and may well be on the precipice of getting this program off the ground:
But somehow in the face of years of advising clients and potential patients going through the hell that can be waiting on lawmakers, regulators, and courts to get a medical cannabis program off the ground, I became an optimist. At first, I’m sure it was little more than putting on a brave face for disappointed, frustrated, and even angry folks wondering why they couldn’t simply get resolution to their dreams. Perhaps this was the “fake it ‘til you make it” phase of my journey, but over time I actually became optimistic that Alabama would be able to launch a medical cannabis program that could provide relief to Alabamians so desperate for a different kind of therapy for what ails them.
Conclusion
I asked for a crystal ball for Christmas, but instead I got a bunch of quarter-zip sweaters (not the most perfect styling for a self-professed cannabis lawyer), so I can’t promise you what is going to happen. What I can promise you is that, while there are certainly those who seem committed to watching the whole structure burn down if they aren’t awarded a license, there are more on the side of making this work. More people looking to the court system – and particularly the appellate courts giving direction to the trial court – to bring some closure to this process. I remain optimistic this is the path forward.
If we can do that, we can stand up a medical cannabis program with integrity, decency, and empathy that Alabama can be proud of. Wouldn’t that be nice? That is a place where I ache to go.
Lawsuit Alleges FDA Has Unduly Delayed Response to PFAS Petition
Last month a lawsuit filed by plaintiffs including the Tucson Environmental Justice Task Force (TEJTF) filed suit against FDA and now former FDA commissioner Robert Califf alleging that FDA had unduly delayed in responding to a petition filed by TEJTF in 2023 which had requested that FDA set tolerances for 30 types of PFAS in lettuce and blueberries and 26 types of PFAS in bread, milk, eggs, salmon, clams, and corn silage.
The lawsuit argues that FDA has unduly delayed because it has not acted consistent with its statutory mandate to “promote public health by promptly and efficiently reviewing clinical research and taking appropriate action on the marketing of regulated products in a timely manner” (21 USC § 393) and the delay allegedly is to the determinant of the public health. The lawsuit argues that prior decisions holding that courts should defer to FDA on whether to promulgate tolerances is no longer good law post-Chevron and that the “only discretion FDA may exercise for such chemicals [harmful substances] is the level of tolerance to be set.”
We will continue to monitor and report on the regulation of PFAS and other chemicals, including any changes in approach that may be implemented by the new administration.
FTC COPPA Updates Provide New Protections for Children
In the waning days of the Biden administration, the FTC published an update to its COPPA Privacy Rule. The status of this update, however, is unclear. The revisions to the rule were posted on the FTC website prior to the Trump administration, but had not yet been published in the Federal Register.
Trump’s Presidential Memorandum freezing pending federal regulations means that it has not yet been published. And publication is the next step towards it going into effect. Second, and relatedly, the current FTC chair (Ferguson) had expressed concerns about the rule. It is thus likely that it will not be published, at least as currently drafted. As we wait for next steps, for those companies that offer websites directed to or appealing to children, a quick recap. First, the items that were not of concern for Ferguson (and thus likely to be implemented as are):
Website notice (privacy policy). The content of website notice for those subject to COPPA under the rule as revised will require new content. This includes steps a site takes to make sure persistent identifiers used for operational purposes are not used for behavioral advertising. Additionally, for sites collecting audio files, the privacy policy must indicate how the files are used and deleted.
Verifiable parental consent. The revised rules provide for new methods of parental verification. This includes comparing a parent’s authenticated government ID against their face (using a camera app, for example). It also includes a “dynamic, multiple-choice” question approach, if the questions would be too hard for a child 12 or under to complete. The revision also permits texting for what has been traditionally known as the “email-plus” verification process, which can be used when children’s information is not disclosed. Also added is another “one time use” exception to parental consent. Namely collecting and responding to a question submitted by a child through an audio file.
Security. The new rule will require sites to have a written information security program. This goes beyond the current obligation to have “reasonable measures” in place. The security obligations are detailed, and mirror security obligations that exist under various state data security laws.
Definitions. As revised the rule will add “biometric identifiers” to the list of personally identifiable information. These are elements like fingerprints or voiceprints that can be used to identify someone. The definition also includes someone’s “gait.” The rule will also include the definition of “mixed audience” site, a term currently used by the FTC in its COPPA FAQs.
Putting it into Practice: While we await the publication of the revised rules, whether in the format that they took before the new administration, or in a revised format, companies that operate websites subject to COPPA can keep in mind the parts of the new rule that were not of concern to Ferguson. These include new content in privacy policies.
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FDA Delays Effective Date for ‘Healthy’ Rule
FDA has delayed the effective date of the final rule on use of the term “healthy” in food labeling until April 28, 2025, in response to a presidential memorandum recommending a regulatory freeze to review questions of fact, law, and policy that recently published rules may raise. We previously blogged about the “healthy” final rule here and the regulatory freeze here.
According to the Agency, the temporary delay “is necessary to give Agency officials the opportunity for further review and consideration of the new regulation, consistent with the memorandum described previously.” FDA is not seeking public comment due to the limited impact of the delayed effective date, since the February 25, 2028 compliance date remains unchanged. FDA also reiterated that “parties are free to begin implementing the rule earlier than the compliance date.”
GLP-1 Receptor Agonists: New Frontiers and Challenges
Obesity and diabetes have been two of the greatest public health challenges for decades. Many different diets and fads have promised the public a quick fix and a path to losing excess weight or resolving their diabetic issues.
Recently, a new class of drugs, based on GLP-1, are revolutionizing medicine and the treatment of patients with diabetes, obesity, and other disorders associated with obesity. GLP-1 is a short-acting hormone that is released after eating. This hormone helps regulate glucose levels in the body by causing the pancreas to release insulin, which lowers sugar levels in the blood. Furthermore, the hormone causes individuals to feel full by both causing the gut to reduce how quickly it processes food and acting on different parts of the brain which control hunger and satiety.
GLP-1 receptor agonists are a new class of drugs which mimic the activity of GLP-1 and maintain the benefits of the GLP-1 hormone in patients. The U.S. Food & Drug Administration (FDA) has approved many drugs in this class over the past couple of years including Ozempic, Wegovy, Mounjaro, and Zepbound to name a few. These drugs are approved to treat different conditions, including obesity and type 2 diabetes, and are now being tested for treatments far beyond obesity and diabetes. Studies to treat cardiovascular disease, addictive behavior, and rheumatologic diseases are just a few of the ongoing trials. Together, this new class of drugs could lead to sales in the tens of billions of dollars in the upcoming years.
The rapid expansion of this area of technology raises many business and legal questions. We will explore many of these throughout the upcoming articles in this series. These topics include:
Issues related to deals and licensing for GLP-1 therapeutics
Patent/IP challenges to consider for GLP-1 therapeutics
Clinical trial issues for GLP-1 therapeutics
FDA/regulatory issues for GLP-1 therapeutics
Litigation issues for GLP-1 therapeutics
For additional resources on GLP-1 Drugs and how they will change the health care & life sciences and technology industries, click here to read the other articles in our series.
Food & Chemicals Unpacked: Making-up for Lost Time: FDA’s Increased Oversight of Cosmetics [Podcast]
In this episode of Food & Chemicals Unpacked, we are joined by guest speakers, Partners Cynthia Lieberman and Rick Stearns, who dive into the recent evolution of FDA’s cosmetics regulations. They explore the Modernization of Cosmetics Regulation Act (MOCRA), including new requirements relating to adverse event reporting, Good Manufacturing Practices, and other topics. The discussion also provides insights on how cosmetics and personal care product manufacturers and their suppliers can ensure that finished products (makeup, soaps, sunscreen, shampoo, etc.) maintain compliance with MOCRA and other current legal obligations in the United States.
A Deepened Divide: Appellate Court Joins False Claims Act Circuit Split in Favor of Health Care Defendants
On February 18, 2025, the United States Court of Appeals for the First Circuit issued its opinion in United States v. Regeneron Pharmaceuticals Inc., finding that, in Anti-Kickback Statute (AKS) cases, the government must show a claim would not have been submitted “but for” the AKS violation to establish False Claims Act (FCA) liability.1
This appeal stemmed from allegations that Regeneron Pharmaceuticals induced prescriptions of Eylea, an ophthalmological drug, by covering copayments for certain recipients of the drug. The government contended that the funding of copayments constituted kickbacks and therefore resulted in false claims made to Medicare in violation of the FCA. At issue for the First Circuit was the interpretation of “resulting from” in the 2010 amendment to the AKS, which provides that a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].”2 The Court ultimately decided that “statutory history provides no reason to deviate from the ordinary course, in which we treat ‘resulting from’ as requiring but-for causation” and that this interpretation would not render it difficult for the government to establish liability. 3
The First Circuit’s ruling is favorable for health care providers, as it sets a higher bar for the government to prove causation in FCA cases involving AKS violations. Nevertheless, the decision deepens a circuit split regarding the causation requirements of FCA claims arising from AKS violations. While this decision aligns the First Circuit with the Sixth and Eighth Circuits, the decision contrasts with the Third Circuit, which requires only a demonstration of a link “between the alleged kickbacks and the medical care received . . .”4 This circuit split will continue to persist until the Supreme Court addresses the issue. However, the timing of such a decision is uncertain, especially after the Supreme Court declined to hear a related appeal from the Sixth Circuit in 2023.5
As courts continue to take on this issue, health care providers and FCA litigants should closely monitor developments in this area, particularly if they operate in jurisdictions without controlling case law. Understanding the applicable causation standard is crucial for navigating FCA litigation effectively and staying informed will be key to managing potential risks and liabilities as the legal landscape evolves.
[1] United States v. Regeneron Pharmaceuticals Inc., No. 23-2086, 2025 WL 520466 (1st Cir. Feb. 18, 2025).
[2] See 42 U.S.C. § 1320a-7b(g).
[3] Regeneron Pharmaceuticals Inc., 2025 WL 520466, at *8-9.
[4] United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89, 93 (3d Cir. 2018).
[5] United States, ex rel. Martin v. Hathaway, 63 F.4th 1043 (6th Cir. 2023), cert. denied, No. 23-139, 2023 WL 6378570 (Oct. 2, 2023).
GLP-1 Drugs: FDA Removes Semaglutide from the Drug Shortage List
On February 21, 2025, the U.S. Food and Drug Administration (FDA) issued a Declaratory Order determining that the semaglutide drug shortage has been resolved. The timing of this order was unexpected due to the ongoing litigation between FDA and the Outsourcing Facilities Association (OFA) involving tirzepatide, though the decision was not. Our prior blog “GLP-1 Drugs: FDA Sued Over Removing Tirzepatide from the Drug Shortage List” discusses the litigation. On February 24, 2024, OFA initiated a similar action against FDA challenging the removal of semaglutide from the drug shortage list.
FDA’s Declaratory Order: FDA’s 13-page order describes the process that FDA undertook to come to this conclusion and explains that FDA obtained information both from the manufacturer (Novo Nordisk) as well as from patients, health care providers, and others, including compounders. FDA concluded that based on the available evidence, that the supply of semaglutide “meets or exceeds current demand, and that, based on our best judgment looking at the available information with its limitations, supply will meet or exceed projected demand.”
FDA acknowledges in the Declaratory Order that:
[E]ven when a shortage is considered resolved, patients and prescribers may still see intermittent localized supply disruptions as products move through the supply chain from the manufacturer and distributors to local pharmacies.
Current Status of Compounding of Semaglutide: With respect to the current status of compounding of semaglutide, FDA noted that it wished to “avoid unnecessary disruption to patient treatment,” and outlined the current enforcement policy moving forward:
[T]he agency does not intend to take action against compounders for violations of the Federal Food, Drug, and Cosmetic Act (FD&C Act) arising from conditions that depend on semaglutide injection products’ inclusion on FDA’s drug shortage list:
For a state-licensed pharmacy under section 503A of the FD&C Act compounding, distributing or dispensing semaglutide injections within 60 calendar days from today’s announcement, until April 22, 2025.
For outsourcing facilities under section 503B compounding, distributing or dispensing semaglutide injections within 90 calendar days from today’s announcement, until May 22, 2025.
FDA may still take action regarding violations of any other statutory or regulatory requirements, such as to address findings that a product may be of substandard quality or otherwise unsafe.
In addition to the Declaratory Order, FDA also published an update to its website entitled “FDA Clarifies Policies for Compounders as National GLP-1 Supply Begins to Stabilize.” This update also included FDA’s enforcement policy described above, as well as stated that although dulaglutide remains “in shortage”, the manufacturers have reported all presentations are available. Liraglutide is also still in shortage, but the manufacturer has reported two presentations are available but three have limited availability. Finally, FDA notes that “[w]hen a status is noted as ‘available,’ that reflects the most current information from the manufacturer but is not an FDA determination that the shortage has been resolved.”
In the ongoing case with the OFA involving tirzepatide, the parties are currently filing briefs on the Plaintiff’s motion for preliminary injunction. Briefing will be completed on February 25, 2025. We expect the Court to rule on the motion sometime in March. Depending on the Court’s ruling, the outcome could have an impact on the continued availability of semaglutide as well.
On Monday, February 24, 2025, OFA filed a lawsuit against FDA in Fort Worth Texas over FDA’s decision to remove semaglutide from the drug shortage list. The lawsuit claims the FDA’s finding that there was no longer a shortage of semaglutide was arbitrary and capricious. We expect this case to proceed on a similar track as tirzepatide and the cases may be consolidated.
Key Takeaways. FDA’s determination to remove semaglutide from the drug shortage list is not surprising. The only surprise here is the timing. Compounding of semaglutide will continue until at least May 22, 2025, for 503B Pharmacies (also known as 503B Outsourcing Facilities, which are compounding pharmacies that can produce large batches of medications without patient-specific prescriptions). Whether it will extend beyond that timeframe will depend on the outcome of the OFA litigation and FDA’s reaction to the case.
It will also be very interesting to watch developments on certain GLP-1 products that continue to be compounded under the rationale that certain compounded products are required to meet the individual needs of patients. There are a number of different doses, different dosage forms, and combination of ingredients being compounded, and FDA has not yet taken a position with respect to these compounded products.
Want To Learn More? See our prior blogs.
FDA Targets GLP-1 Providers with Warning Letters
GLP-1 Drugs: FDA Removes Lilly’s Zepbound® and Mounjaro® (semaglutide injection) from its Drug Shortage List
GLP-1 Drugs: Brand Companies Push FDA to Limit Compounding
The Story of the Ghost: How a “Loophole” Created a Behemoth of Intoxicating Cannabis Products and What (If Anything) Congress Intends to Do About It
I feel I never told youThe story of the ghost
To paraphrase the legendary Dave Chapelle, in the midst of impersonating Rick James, “cannabis is a hell of a drug.” Thankfully I don’t mean that in the same sense as Mr. Chapelle/James did. I mean that marijuana and its relatively newly defined sister plant “hemp” are unique in that they have experienced explosive growth and remarkable evolutions in legal status even though marijuana has, for the entirety of this growth and evolution, remained a Schedule I substance under the federal Controlled Substances Act.
There are several reasons for this almost unprecedented legal anomaly, including federal guidance documents and a federal appropriations rider discouraging state-authorized medical cannabis use. But the thousand-pound gorilla in the room – or the ghost, for this title to make sense – is the development of intoxicating cannabinoids that Congress arguably (if unwittingly) allowed when it passed the 2018 Farm Bill. In a few short years, intoxicating cannabinoids have exploded on the scene, as anyone who walks into a gas station, grocery store, or convenience store can attest. This multibillion-dollar industry grew from scratch to become a thorn in the state-licensed marijuana industry and poses challenging questions for Congress as it debates the next Farm Bill this year.
Let’s get into it.
A Law, a “Loophole,” or a Trojan Horse?
If you talk to marijuana operators, you will almost certainly hear about the “loophole” in the 2018 Farm Bill that allowed for the creation and subsequent explosion of non-marijuana products that compete with marijuana products.
So, what exactly is this “loophole”?
At the federal level, the Controlled Substances Act has defined “marijuana” for more than 50 years as:
The term [marijuana] means all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.
In the 2014 and 2018 Farm Bills, Congress created a legal definition of “hemp”:
the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.
Shortly after Congress created this separate definition of hemp, savvy (and, in some instances, unsavory) operators concluded that Congress had created a loophole of sorts that would allow for products that contained cannabinoids from the cannabis plant – even those with psychoactive or intoxicating effects – as long as the concentration of delta-9 THC on a dry weight basis is not more than 0.3%. It was this interpretation of the Farm Bill, replicated in the 2018 version, that led to the proliferation of consumable products containing delta-8 THC, delta-10 THC, and the like.
Ergo, the loophole. And it makes me think of these lyrics:
For this was my big secretHow I’d get ahead
His answer came in actionsHe never spoke a word
I somehow feel forsakenLike he had closed the door
I guess I just stopped needing himAs much as once before
In this author’s opinion, Congress did not intend in 2018 for the intoxicating hemp boom as we know it today. I also believe the Farm Bill on its face allows for many of the intoxicating hemp products we now see today, be it at a dispensary that resembles an Apple Store to a row of shelves at a gas station. I further believe that most legislators probably didn’t have the first idea of what they were voting on in 2018. Maybe that makes me a simpleton or maybe someone who can keep more than one idea in my head at the same time.
Those dual concepts pose an interesting challenge to those who consider whether one should look to the words of a statute or the intent of those who enacted the law. As a general principle, I tend to look to the former, but I certainly understand those who take the position that an unintended loophole should not be used to end-run legislative intent.
I guess there are some people out there who could argue that Congress knew it was creating an expansive legal hemp market, but (1) I haven’t seen many people whose opinion I value seriously press that argument, and (2) I would have expected Congress to create a regulatory framework to accompany this broad new category of intoxicating products.
So, What’s Next?
Regardless of how you view the implications of the 2018 Farm Bill, it is hard to disagree that it led to the development of a substantial industry in intoxicating hemp. Intoxicating hemp companies have generated hundreds of millions (if not billions) of dollars in tax revenue for state and federal coffers and have offered millions of Americans jobs and therapies that were not previously available. Whether that is a good thing or a bad thing is, I suppose, in the eye of the beholder.
And that brings us to the next Farm Bill and what it may portend for intoxicating hemp products. Though the cannabis portion of the bill will make up a tiny percentage of the Farm Bill’s text and there are enormous consequences to so many other provisions of the massive legislation, one would be wrong to assume there isn’t a street fight occurring in Washington between marijuana operators and hemp operators. Tens of millions of dollars – at least – are being spent on lobbying efforts to influence federal cannabis policy. Lawmakers are regularly fielding questions from constituents and their local media about the proliferation of hemp in its various forms. This is going to come down to the wire, and the specific language (likely with tweaks imperceptible to the average American and even many in Congress) will have enormous consequences for the cannabis industry in America. Truly, the devil – ahem, ghost – will be in the details.
At the end of the day, I suspect Congress will land on some sort of compromise that allows for at least some versions of intoxicating hemp products. If true, I would expect Congress to direct some agency or agencies to adopt regulations governing the manufacturing, testing, marketing, and sales of such products. Operators targeting children or making health claims aimed at vulnerable populations are in the most jeopardy, and purveyors of novel cannabinoids and high-THC products should be concerned as well. Low-THC products, including the increasingly popular hemp beverages, seem to have occupied a different place in the public eye and may be codified, albeit subject to more definite regulation.
If I’m right, marijuana operators won’t be completely satisfied, but neither will hemp operators. Maybe I’m just crazy enough to believe Congress can find a compromise.
Conclusion
For the past almost seven years, intoxicating cannabinoids have — in the eyes of many — become a sort of ghost haunting marijuana industry. I’m not sure that’s the right way to look at it. While I have no doubt, and certainly understand why, many marijuana operators would prefer to exist in a world without the perceived competition from these hemp products, I’ll ask again: Why can’t weed be friends?
Opioids and Common Law Liability for Indirect Economic Harm
Earlier this month, the Law Court weighed in on a hot-button legal issue—the potential liability of opioid manufacturers for the costs of the drug epidemic. In Eastern Maine Medical Center v. Walgreen Company, the Law Court affirmed a decision granting a motion to dismiss hospitals’ claims for negligence, public nuisance, unjust enrichment, fraud and negligent misrepresentation, fraudulent conspiracy, and civil conspiracy. The Court’s opinion reinforced several important principles circumscribing the scope of potential liability for economic harm under the common law.
The basic theory of the complaint was that various opioid sellers (pharmaceutical manufacturing and sales companies, and retail pharmacies and distributors) had created an epidemic of opioid misuse that required the plaintiff hospitals to incur high costs that were only partially reimbursed.
Before reaching the merits of the complaint, the Law Court first addressed Maine Rule of Civil Procedure 8, which requires a “short and plain statement” of a plaintiff’s claim. The complaint was anything but short—it was 509 pages, with over 1,800 paragraphs. Without resolving the case on this basis, the Law Court noted that the complaint was “decidedly not short or plain,” but was instead unnecessarily filled with “eye-watering detail” and repetition that would justify dismissal of the complaint. The Court’s discussion is an important reminder, in an age where complaints are growing (needlessly) ever longer, that Rule 8’s limitations have real teeth.
On the merits, the Court concluded—in an admirably concise opinion—that the hospitals’ theories of liability were insufficient because the hospitals had not directly suffered the harm allegedly caused by the opioid sellers. Instead, they had suffered only indirect and purely economic harm. Importantly, the Court observed that
[A]n actor has no general duty to avoid the unintentional infliction of economic loss on another.
Among the notable limits to economic liability reaffirmed by the Law Court were the following:
Under principles of duty and proximate causation, a hospital cannot assert an independent negligence claim to recover the costs of treating a victim injured by a negligent act.
A claim for fraud, fraudulent concealment, or negligent misrepresentation cannot be maintained absent a good faith allegation of reliance on the misrepresentation.
A public nuisance claim can be maintained by a private plaintiff only if the nuisance “infringe[d] on a right particular to the plaintiff” and “cause[d] injury different in kind from the injury to the public generally”—requirements that are not satisfied when the claim is based on widespread economic injury broadly affecting the public.
Given the increasing prevalence of negligence, fraud, and public nuisance claims for alleged instances of widespread harm, EMMC will provide an important guidepost for both plaintiffs and defendants in cases involving private causes of action. Time will tell whether it will cause such injuries to be addressed primarily through actions by government officials on behalf of the public.
PFAS Lawsuit Against Industrial Users of PFAS Highlights Risks
We have written numerous times over the past several years regarding the risks posed to current and historical corporate users of PFAS (whether knowingly or unknowingly), even as the stagelight focused most brightly for some time on risks from federal regulatory actions with respect PFAS. A PFAS lawsuit against industrial users of PFAS filed this month, though, provides further support for the notion that the greatest risks to corporations from PFAS lies in lawsuits likely to be filed against them in coming years for environmental pollution and personal injury. The City of Savannah, Georgia took legal action against numerous companies for contamination of its water systems. While some of the defendants include PFAS manufacturers, several defendants are alleged to be prior users of PFAS that discharged PFAS-contaminated effluent into waterways. This case should be at the forefront of corporate concern for PFAS risks as risk assessment and diligence programs are conducted in earnest.
PFAS Lawsuit Against Industrial Users
The lawsuit was filed by the City of Savannah against several PFAS manufacturers, as well as PFAS users, for discharge of PFAS into local waterways. Notably, the defendants from the “PFAS Users” group include coating resins, polymerization, paper, packaging, fabric coating, metal finishing, surfactants, textiles, roofing, insulation, and radiator manufacturing companies, among others. The defendants are alleged to have caused or contributed to the discharge of PFAS chemicals found in the city’s drinking water. Savannah is seeking compensatory damages from the defendants to pay for filtration and associated remediation technology. Savannah is also seeking punitive damages in the complaint.
Significance of Lawsuit for All Manufacturers
The lawsuit is notable for several reasons, one if which is that the defendants may not have used PFAS intentionally in its products or processes, yet the companies may still be liable for pollution damages from an unintentional and perhaps unknowing use of PFAS. A common refrain from companies assessing PFAS risks is that “we do not and did not use PFAS, so these risks do not apply to us.” The Savannah lawsuit shows otherwise, as even unknowing use of PFAS (or PFAS that gets into manufacturing processes as a contaminant) may be liable for class action lawsuit damages.
Further, while discovery has not yet begun, it is likely that many of the named defendants were historically permitted to discharge effluent into the waterways now alleged to be contaminated with PFAS. Of course, prior to the past couple of years, no regulatory entity set PFAS effluent discharge levels, nor was testing for PFAS prior to discharge required in many circumstances. Nevertheless, despite the legality of the discharges under permitting strictures, the companies nevertheless find themselves embroiled in PFAS litigation for pollution.
The lawsuit highlights the risks that we have predicted for several years to companies that have not manufactured PFAS, but rather have used PFAS in their manufacturing process or have used chemical mixtures that may have been contaminated with PFAS. The historical nature of such uses will not shield companies from litigation, and it is critical that manufacturing and industrial companies examine current and historical uses, assess legacy insurance policies, and conduct a full risk assessment to understand the business disruption potential that PFAS might have on their company.
Multiple States Propose Bans on Food Additives and “Ultra-Processed Foods”
Since the start of February, at least four states have introduced or advanced proposals to ban various food chemicals and address concerns over the use of ultra-processed foods (UPFs). New food chemical bans have surfaced in recent days in Florida, Arizona, and Utah, while lawmakers in Illinois advanced a food chemicals ban that has long raised concerns for industry stakeholders.
The Illinois chemicals ban (SB 93) would prohibit brominated vegetable oil, potassium bromate, propylparaben, and Red No. 3, effective in 2028.
Florida has been one of the latest states to introduce a food chemical ban. If passed, the bill (SB 560) would prohibit food companies from manufacturing, selling or distributing food that contains nine food chemicals, including potassium bromate, propylparaben, Blue No. 1, Yellow No. 5, benzidine, butylated hydroxyanisole (BHA) and butylated hydroxytoluene (BHT).
In Arizona, Republican Sen. Leo Biasiucci said he was inspired by the MAHA movement to introduce HB 2164, which would ban any food that contains eleven chemicals: potassium bromate, propylparaben, titanium dioxide, brominated vegetable oil, Yellow No. 5 and 6, Blue No. 1 and 2, Green No. 3, and Red No. 3 and 40. The bill would also ban UPFs in school meals – however, the definition for UPFs included in this bill categorizes these as foods that contain any of the eleven chemicals set to be banned by the proposal. This definition differs significantly from other approaches, by focusing more on specific additives, rather than the degree of processing.
Utah has followed a similar approach to Arizona with HB 402. If passed, this bill would ban certain ultra-processed foods from being served at schools. UPFs are defined here as foods containing one or more of the following ingredients: brominated vegetable oil, potassium bromate, propylparaben, titanium dioxide, Blue No.1 and 2, Green No. 3, Red No. 3 and 40, and Yellow No. 5 and 6.