Law Enforcement Files Lawsuit Against South Dakota’s Voter-Approved Adult-Use Cannabis Legalization Measure
Pennington County Sheriff Kevin Thom and South Dakota Highway Patrol Col. Rick Miller say the measure violates the state’s one-subject rule and the amendments and revisions article of the South Dakota Constitution.
Pennington County Sheriff Kevin Thom and South Dakota Highway Patrol Col. Rick Miller have filed a lawsuit challenging Amendment A, South Dakota’s voter-approved adult-use cannabis legalization measure, arguing that it violates the state’s one-subject rule and the amendments and revisions article of the South Dakota Constitution, according to a Dakota News Now report.
South Dakota made history on Election Day when voters passed two separate measures to legalize both medical and adult-use cannabis in the state.
Amendment A is a constitutional amendment that legalizes the use of cannabis for adults 21 and older, and allows the possession of up to one ounce of cannabis per adult.
The lawsuit against Amendment A alleges that it violates South Dakota’s one-subject rule, which says voters can only amend one subject at a time, Dakota News Now reported. The plaintiffs argue that Amendment A actually has five subjects, according to the news outlet, which include legalizing cannabis, regulating cannabis, taxing cannabis, requiring the legislature to pass laws regarding hemp and ensuring access to medical cannabis.
The plaintiffs also argue that Amendment A does not amend the South Dakota Constitution, but actually revises it, according to Dakota News Now. An amendment is a “change to a specific part or subject,” the news outlet reported, while a revision is defined as a “fundamental change to the constitution.” A revision to the state’s constitution requires a three-fourths vote from both chambers of the South Dakota Legislature, the news outlet reported.
New Southeast Hemp Association Establishing a Regional Hemp Industry
The association is working to enhance supply chains and establish best practices and standards across seven southern states.
The new Southeast Hemp Association (SEHA) will focus on collaborative opportunities in North Carolina, Georgia, Florida, Maryland, South Carolina, Tennessee, and Virginia to establish a regional industry and provide a unified voice to address any upcoming state and federal challenges.
The new association, formed from the North Carolina Industrial Hemp Association (NCIHA), will represent 650 growers, processors, retailers, and ancillary service providers addressing every step of the supply chain from cultivation to processing to products, according to a SEHA release. The association was formed to overcome any state-specific differences and work with other hemp trade organizations to coordinate messaging and goals, according to SEHA Executive Director Blake Butler.
"State borders should not define us when it comes to this multi-use agricultural commodity," Butler says. "Our goal is to establish a better network of communication to address all the upcoming state and federal challenges in our industry."
Mark Gignac, executive director of the Institute for Advanced Learning and Research in Danville, Virginia, and a founding voting member of the SEHA, agrees, adding that the new association will continue the work of the NCIHA while helping to advance the emerging industrial hemp industry in the Southeast.
"The North Carolina Industrial Hemp Association has served as an invaluable resource for our organization to connect with other like-minded stakeholders and help advance the emerging industrial hemp industry," Gignac says. "As it transitions to the Southeast Hemp Association and promotes wider spread collaboration, I feel the benefits and impact will only continue to grow."
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West Virginia Issues 10 Medical Cannabis Processing Licenses
Regulators will now move forward with scoring dispensary applications, the last stage in the licensing process.
The West Virginia Office of Medical Cannabis has issued 10 medical cannabis processing licenses, according to a local WOWK report.
The licensees are Trulieve WV, Inc. in Huntington, Harvest Care Medical, LLC in Bridgeport, Buckhannon WV Processing, LLC in Buckhannon, Holistic WV Farms I, LLC in Beaver, Verano WV, LLC in Beaver, Columbia Care WV, LLC in Falling Waters, Tariff Labs, LLC in Left Hand, Armory Pharmaceutical, Inc. in Buckhannon, Mountaineer Integrated Care, Inc. in Fort Ashby, and V3 WV GP, LLC in Maxwelton.
Licensed medical cannabis processors can manufacture pills, oils, topicals, vaporizable products and tinctures, WOWK reported, which can then be sold to the state’s licensed dispensaries.
The Office of Medical Cannabis will now move forward with scoring dispensary applications, according to the news outlet, which is the last stage in the state’s cannabis licensing process. Regulators plan to issue medical cannabis cards to patients in the spring of 2021, WOWK reported.
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California Judge Rules Cannabis Billboards Are Illegal Under Prop. 64
The decision strikes down a regulation that the California Bureau of Cannabis Control adopted in 2019 to allow cannabis billboards on highways that cross state borders.
San Luis Obispo County Superior Court Judge Ginger Garrett ruled Nov. 20 that cannabis billboards are illegal under California’s Prop. 64, according to a local KSBY report.
Two San Luis Obispo attorneys, Saro Rizzo and Stew Jenkins, filed a public interest lawsuit in San Luis Obispo Court in October 2019 on behalf of Matthew Farmer, a San Luis Obispo resident who argued that the advertising was wrongfully exposing his children to cannabis use, the news outlet reported.
Rizzo and Jenkins alleged in the case that the billboards are illegal under Prop. 64, the 2016 voter-approved initiative that legalized adult-use cannabis in California, according to KSBY.
A ban on billboards advertising cannabis, similar to one that prohibits billboards promoting tobacco products, was enacted as part of Prop. 64 to protect youth from cannabis advertising, the news outlet reported, and the provision bans cannabis billboards on the Interstate Highways and State Highways that cross the California border.
Garrett sided with Farmer on Friday, striking down a regulation that the California Bureau of Cannabis Control (BCC) adopted in 2019 to allow cannabis billboards on highways that cross state borders, KSBY reported.
Roughly 35 of California’s highways will be impacted by the ruling, according to the news outlet, although cannabis can still be advertised on billboards along highways that don’t cross state borders.
The BCC must now notify cannabis businesses about the new regulations, and operators in noncompliance could be penalized with fines or even the revocation of their license, KSBY reported, although a deadline to remove existing cannabis billboards has not been set.
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New Rules in New York: Q&A with Empire Standard’s Kaelan Castetter
For growers and processors alike, the regulations mark an important step in the development of a robust hemp marketplace.
Last month, the state of New York released its regulations for food, beverages and dietary supplements containing cannabidiol (CBD) and other hemp-derived cannabinoids for human consumption. The news teed up a public comment period and, in the long run, opened the state’s burgeoning hemp industry to a new market segment: the in-demand CBD retail product space.
For growers and processors alike, it was an important step in the development of a robust hemp marketplace.
Empire Standard, based in Binghamton, is one of more than 100 licensed processors in New York. CEO Kaelan Castetter says the regulatory news was welcome as a normalizing factor for the industry. We spoke with him to learn a bit more about how the new rules will affect growers and processors in the state—and what we can expect to see as we head into 2021.
Eric Sandy: On first blush, what’s your impression of these new regulations?
Kaelan Castetter: It’s interesting, because I'm also the vice president of New York Cannabis Growers and Processors Association. We’re very active in Albany. Since 2019, I've been working with the sponsor of the bill that resulted in the hemp extract law and these regulations. The original intent of the hemp extract law was legitimatizing the industry here and to push forward and preempt the FDA—in New York, at least—in saying, OK, we can regulate safe supplements and food and beverage products and a host of other products that are quality and that the consumer knows are quality. We can really take the lead on this. It's taken a while. It took a while for these regulations to come out and the regulations—they didn't necessarily really line up with the intent of the bill completely.
So, food and beverages are allowed, and that's excellent. We see supplements and some of the standardization around that and who's manufacturing, the GMPs, etc. But, of course, you see a ban on the retail sale of hemp flower, which is astonishing because it is definitely one of the hottest parts in the market. And many, if not most hemp growers in New York state are selling or growing for high-quality flower. For the state to take that market away now, of all times, is the strange. And it doesn't bode well necessarily for the marketplace. I think some of [the guidance] is a little overly regulated, too; for instance, the cap of 3000 milligrams per unit for supplements. It doesn't really have any scientific or logical basis to it. Some of the disclosures to put on the labeling are a little onerous, but I do think it's a necessary step as we look to legitimize the industry.
ES: Have you picked up on similar reactions across the state?
KC: Yeah, absolutely. I think the outrage is mostly placed on the ban on hemp flower sales. It’s a bright spot in the marketplace, and many people have been setting up to grow [flower]. That’s where a lot of frustrations in the industry are, and through the NYCGPA that is what we're hearing from our members. But I think, generally, most industry members understand the need for these regulations. When you look past that, the food and beverage piece of it is big, right? The New York marketplace is massive. And so, now, for companies to be able to sell food and beverage into New York City and then surrounding suburbs and even in the bigger cities in upstate New York, that’s huge. There’s a lot of excitement around that. There’s also a lot of trepidation around the flower and a couple of the other stringent pieces that could be changed. There’s a public comment period up until Jan. 11. So, I am pretty confident, and I've had some good talks with some of the regulators in the governor's office and Department of Health, and they're very open for change and they're looking for industry in play for, for sure.
ES: From a market standpoint, I wanted to ask about the 2020 harvest how things have been going. I know we're sort of in the thick of it still, but how's the season been going for you?
KC: I think there is—not just in New York, but across the country—a glut of supply in terms of material and intermediate ingredients. As a manufacturer, we buy from extractors throughout the state. I know, talking with them, that they do have good supply and they are moving it. They are moving their products, which is a good sign. We are more so getting a lot of feedback from the retail market. We have a lot of brands who we work with, and we distribute a lot of products throughout the state. The retail market is strong. It is not strong on oils, which is interesting. We’ve seen that part of the market certainly weaken. Flower sales are probably the fastest-growing product on retail shelves, for sure.
Other products, such as gummies and these other food and beverage products, supplement beverages: We have a product that we just released, an energy shot, like a 5-Hour Energy, a two-ounce bottle that we expect to be very well-received in the marketplace and very well-received by the owners of these stores. I think that what we're seeing as the market starts to mature is people looking more so for familiar products with CBD and hemp-derived cannabinoids as an ingredient, as opposed to, “Oh, let me get my CBD in sublingual oil form.” I think that’s an interesting trend.
ES: In terms of the growers themselves, do you see that base of farmers increasing into 2021?
KC: Unfortunately, I don't see it continuing to grow. There's 700 licensed farmers in the state of New York. Growing hemp for its cannabinoid content is a specialty crop. I don't think there is a need for that many growers. And I think they're seeing it, unfortunately; they've dived into the marketplace, and they’ve spent a lot of money and they don't have an outlet for their crop because the market just doesn't demand it. A little bit of crop, in terms of acreage, goes a long way. I do see the New York landscape for hemp growers transitioning more to the landscape of organic vegetable growers, where we're seeing one- to five-acre operations spread amongst maybe 100 to 200 growers.
I do think that you're going to see a contraction in terms of the amount of growers and the amount of acreage that they grow. Really, I don't see the ability for growth in that area until we have a more robust supply chain for fiber and grain, because I do think fiber and grain could hold huge promises. In New York, the climate is very conducive to fiber growing with an August harvest. We have very dry, very beautiful Augusts here in New York and it's ahead of soy and corn harvest season. The agricultural landscaping in New York is ready for large-scale fiber and grain production. But we need the federal government to incentivize the growth of these crops and to open up these markets before I really see the outlook for hemp growing to be a little more positive. Unfortunately, there's just not much that I can say in the way positivity for hemp growers in New York.
ES: I did also want to touch on Binghamton just in general. I know there's been a lot of hemp business news out of that city and that area of the state. After a number of headlines, Empire Standard is standing tall. I wanted to get a sense from you about the importance of being based in Binghamton.
KC: I'm from Binghamton. I was born and raised. And so, this has been my home and is the home of my father, who works with me, and my CFO and COO Amman Weaver, who is also from Binghamton. The interesting thing about Binghamton is, yeah, we're seeing a lot of big headlines with Canopy Growth and these other large companies that have kind of fizzled out and haven’t really executed on their plans. And we’re still here. I think that's more of a reflection of the culture of Binghamton as a hub of innovation and growth. IBM started in Binghamton. Endicott Johnson Shoe Company, the precursor to Nike, being a behemoth in the shoe manufacturing world, started in Binghamton. We have this history of deep innovation and manufacturing.
Binghamton does have one of the best research institutions in the Northeast with Binghamton University, so our talent pool that we can draw from is excellent. Most of our people that we bring on are from Binghamton University. I'm super bullish on Binghamton as a hub for cannabis, not only in New York and not only regionally, but across the United States and across the world—because of our infrastructure, not just in our buildings but our human infrastructure. That’s our ability to pull innovators and to support innovators. So, I do think that this is where we're going to see a lot of small business growth, not necessarily these big headline companies, big companies with ticker symbols, etc. I think you're going to start to see a lot of entrepreneurial pursuits in Binghamton and the cannabis industry really start to break into the larger marketplace and the industry across the world. I can attest that to not just the infrastructure we have here and the people that we have here, but also the support amongst local politicians the support of the governor's office and really making Binghamton the place to be.
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