U.S. Cannabis Regulation Trends in 2021

As devastating as 2020 has been, one industry has emerged with record growth, notwithstanding the pandemic, cannabis. BDSA’s market forecast projects global cannabis sales for 2020 will reach $19.7 billion, an increase of 38% over 2019 sales. In the U.S., according to Marijuana Business Daily Research, by 2024, the yearly medical and recreational cannabis sales in the U.S. could reach as high as $37 billion.

Israel is a Cannabis-Tech powerhouse and is at the forefront of medical cannabis research. It is home to Prof. Raphael Mechoulam, a scientist at the Hebrew University of Jerusalem, who decades ago, among others, first isolated and identified the cannabis compound tetrahydrocannabinol (THC), a psychotropic cannabinoid best known for its mind-altering effects. The results of the decades-long clinical trials conducted in Israel have had a tremendous global impact. Similar to other tech sectors, as the cannabis industry continues to grow in the U.S., there are clearly great opportunities for collaboration between Israel Cannabis-Tech companies and U.S. strategic partners.

During the first week of December 2020, the UN’s central drug policy-making body, CND, voted to remove cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs, to which the strictest control measures apply. The United States, which voted to remove cannabis from Schedule IV while retaining them in Schedule I, explained that the vote is “consistent with the science demonstrating that, while a safe and effective cannabis-derived therapeutic has been developed, cannabis itself continues to pose significant risks to public health and should continue to be controlled under the international drug control conventions.” Later, that same week, the U.S. House of Representatives voted to decriminalize cannabis at the federal level by removing it from the Controlled Substances Act, pursuant to the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. A few weeks later, the U.S. House approved the Medical Marijuana Research Act, bipartisan legislation that addresses unnecessary impediments to medical research. It remains to be seen if the MORE Act and other legislation will advance in the U.S. Senate. However this is a clear signal that cannabis reform legislation has significant support in the U.S. and will continue its march forward in the coming years.

Israel’s cannabis legislative reform also continued to advance in 2020. In November 2020, Israel’s Ministry of Justice presented the recommendations of the Interministerial Committee for the Legalization of Cannabis. A proposed bill and regulations setting the pathway for legalization will be brought for approval of the Israeli government and the Knesset, Israel’s parliament, in the coming months. Additionally, in early December 2020, the Israel Minister of Health approved the removal of CBD with a THC level of under 0.3% from the Dangerous Drugs Ordinance, paving the way for CBD-based food and consumer goods, as well as the import and export of such products.

Contrary to popular belief, marijuana legislation draws bipartisan support in the U.S. During the recent presidential election, citizens in numerous states voted to join the growing list of U.S. states allowing medical or recreational marijuana use, including Mississippi and South Dakota for medical use, and Arizona, Montana, New Jersey and South Dakota for recreational use. A Gallup poll concluded in mid-October 2020 found that 68% of American adults support marijuana legalization. Gallup first surveyed the public’s views of marijuana legalization in 1969, when only 12% of Americans supported it. The party identification of the current supporters of marijuana legislation according to the Gallop poll include 83% democratic, 48% republicans and 72% independents.

Any bill not signed into law by January 3, 2021, when the 117th Congress adjourns, will have to be reintroduced. That will most likely include the MORE Act, as well as other key cannabis reform measures such as the SAFE Act. One of the biggest challenges the U.S. cannabis industry faces is its current inability to access mainstream banking services. The Secure And Fair Enforcement (SAFE) Banking Act, if enacted, could free up capital access for marijuana companies and may even allow for possible trading in cannabis stocks on major U.S. exchanges. Another effort to watch is in connection with CBD in food and food additives, which the U.S. Food and Drug Administration (FDA) currently prohibits for both human and animal consumption. Congress attempted to carve CBD out as a dietary supplement legislatively, expressly permitting CBD that meets the definition of hemp (contains less than 0.3% THC) to be used as a food additive or dietary supplement. This effort is likely to be continued in 2021, as well.

On the campaign trail, both President-elect Joe Biden and Vice President-elect Kamala Harris expressed their support for marijuana decriminalization. And while it is still unclear how cannabis reform will actually advance under the Biden administration, it seems a tipping point has been reached. Israeli Cannabis-Tech companies will have to continue to monitor how regulatory developments unfold in the U.S. in 2021, but it appears a more open market is in sight.

About the Author
Meital Stavinsky is a Miami and Washington D.C. attorney, member of Holland & Knight's Public Policy & Regulation Group and Co-Chair of the firm's Israel Practice. Meital focuses her practice on business, public policy and regulation, with a particular emphasis on Israeli emerging and advanced technologies companies in the areas of AgriTech, FoodTech, CleanTech and Advanced Transpiration Technologies. Meital assists Israeli companies seeking to enter the U.S. market and expand their operations in the U.S. She has successfully advocated on behalf of leading innovative Israeli AgriTech companies in raising their profile and advancing their goals before the U.S. Congress and key U.S. federal agencies, most recently in connection with the 2018 Farm Bill.
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