Good morning.
Before you head out for Easter weekend, there’s news coming out of DC — on both the hemp front and the Attorney General front. Never a dull moment!
Let’s get to it.
-JR, CC
Today’s newsletter is 1,012 words or about an 8-minute read.
💡 What’s the big deal?
HEMP
Capitol Hill staff receptive to a hemp THC fix — but the Nov. 12 deadline is closing fast
Jim Higdon, co-founder of Cornbread Hemp Co., provided some insights on social media on the ongoing high stakes negotiations on Capitol Hill regarding the future of hemp-derived THC products.
“We’ve seen an extraordinary amount of understanding among staff looking to help find a solution to the crunch that we're under,” he said in a LinkedIn video post.
He highlighted the Centers for Medicare and Medicaid Services (CMS) signaling approval of 3 milligram hemp-based THC products for its newly launched program that allows up to $500 in hemp-derived CBD and THC products covered by Medicare and Medicaid.
Higdon also touted lobbying efforts to raise that threshold up to 5 milligrams in THC beverages in a three-tiered distribution system that’s championed by the alcohol industry, distributors and regional liquor store chains since it essentially mimics the system for U.S. alcohol sales.
“We’re going to need help,” he said “but we’re going to get this done.”
The clock is ticking with a looming federal prohibition on most intoxicating hemp products set to take effect Nov. 12.
Higdon had some extra incentive to mention the CMS sign-off.
His Louisville, Ky.-based company last week announced it secured an exclusive contract with Alliant Purchasing to be the exclusive hemp product supplier for the landmark Substance Access Beneficiary Engagement Incentive (BEI) administered by CMS.
The program, which launched April 1, faces legal challenges.
-CC
⏩ Quick hits
U.S. Attorney General Pam Bondi is out, ending a controversial one-year tenure as President Donald Trump’s law enforcement czar, Washington Post first reported. Personal Trump lawyer and Deputy Attorney General Todd Blanche is in. At CPAC last week Blanche bragged about the mass firings of Justice Department personnel involved in the Trump criminal prosecution and touted the assassinations of purported drug cartel members carried out by U.S. agencies. “We are now treating terrorists, and treating these narco dealers as they should be treated. We’re blowing them up,” he said. It remains to be seen how Blanche’s ascension will affect rescheduling.
Colorado’s Democratic Gov. Jared Polis signed a bill authorizing hospitals and other state health care facilities to allow terminal ill patients to use cannabis on-premise but the legislation also carries an opt-out option for properties, Marijuana Moment reported. Opponents argue that undercuts the spirit of the law. Though not the same, commercial cannabis optouts by municipalities has been one of the largest barriers to market growth, and are particularly widespread in California and New York.
⚖️ Lawsuits
A Michigan trade group has filed another lawsuit aiming to overturn a 24% cannabis wholesale tax implemented in January.
The Michigan Cannabis Industry Association (MCIA) and other plaintiffs filed the suit against the Michigan Department of Treasury, claiming the tax is unconstitutional, WZZM-TV in Grand Rapids, Mich. reported.
The latest challenge contends:
The levy is a "disguised sales tax."
It supersedes the state’s maximum 6% sales tax rate.
The tax violates the equal protection clauses of the U.S. and Michigan constitutions by treating marijuana retailers and consumers differently from other tax payers.
"This is a tax-on-tax ploy that is resulting in consumers getting hit with an effective sales tax rate that is higher than what's legal," MCIA spokesperson Rose Tantraphol told WZZM. "The State of Michigan can call this a wholesale tax but, effectively, this acts as a sales tax on Michigan consumers."
Michigan cannabis sales in January fell nearly 16% from December, the largest percentage decline over that period since adult-use sales launched in December 2019, though January typically sees big sales drops annually.
The trade group last year filed a lawsuit centering on the constitutional process of creating the 24% wholesale tax, a case still pending.
The tax is projected to generate more than $400 million to rebuild Michigan roads.
🧳 People moves
Cannabis policy expert Keegan Gendron has been hired as a public affairs manager at Ascend Wellness Holdings amid a tumultuous time for the vertically-integrated New Jersey-based company. $AAWH.U.CSE ( ▲ 2.17% )
“It’s an exciting and chaotic time in the cannabis world (when is it not?), and I’m eager to continue navigating the legislative and regulatory challenges of the industry that has captured my intellect and my heart,” he said in an April 1 LinkedIn post.
Gendron has been a policy analyst, research associate and consultant since 2020, with prior roles at Cannabis Public Policy Consulting, Weedmaps, and Consumers Energy, according to his LinkedIn profile.
He assumes the role with Ascend embroiled in a few notable lawsuits.
The multistate operator, along with eight others, has been accused of price rigging in Ohio and limiting product availability from smaller, independent suppliers at stores.
The Feb. 5 complaint brought by the State of Ohio and its attorney general alleges the companies:
Used reciprocal supply agreements in different states, thereby reducing competition among themselves while preventing other brands shelf space.
Exchanged non-public information on promotions and terms with non-MSO suppliers.
Implemented discriminatory supply arrangements and promotional terms that favored each other, violating Ohio’s antitrust laws.
On Monday the U.S. Equal Employment Opportunity Commission (EEOC) sued Ascend citing sexual harassment and claimed its Collinsville, Ill. operations manager and other male employees continually harassed female employees, including touching, sexual comments and advances, requests for sexual relations, and comments about the appearances and bodies of female employees and customers.
According to the EEOC, several female employees complained to Ascend’s human resources personnel about the harassment, but the company failed to act. At least one woman was forced to resign because the environment was intolerable, the EEOC said.
The allegations stem from as early as February 2021.