420 with CNW — Patchy Marijuana Laws Could Expose Consumers to Contaminants

A recent Gallup survey indicates that marijuana use in the U.S. has doubled over the last ten years. In several states, cannabis is legal, and most Americans now consume it as often as they would wine or beer. However, finding safe and properly regulated marijuana products can be a challenge.

While marijuana carries health risks regardless of contamination, researchers warn that its increasing potency and widespread use can negatively impact mental health and brain function. An additional concern for users is the presence of harmful substances such as pesticides, heavy metals, and molds in vape products and edibles. Although state regulators are working to address these issues, experts suggest there is still a lot to be done.

Here’s a breakdown of key points regarding the safety of cannabis products and the current regulatory landscape.

The complexity of marijuana regulation

Each state has its own approach to regulating cannabis, which makes enforcement inconsistent. Regulators aim to keep marijuana free from contaminants that can seep in from soil. These substances can pose short-term risks, such as food poisoning symptoms, and long-term risks, including cancer and neurological issues.

Federal law complicates regulation since cannabis remains illegal at the national level. Not all states have legalized marijuana, and those that have have quite different laws.

Research conducted in 2022 found more than 600 contaminants are regulated across 30 states, but each jurisdiction monitors only between 60 and 120 contaminants. This means a pesticide considered unsafe in one state might go unnoticed in another.

However, merely increasing the number of contaminants tested does not necessarily guarantee safer products. Scientists are still determining which substances pose the greatest threats.

The persistence of the black market

Due to inconsistent state regulations and the continued federal ban, legally produced cannabis cannot be transported across state lines. This has allowed underground markets to thrive, often backed by criminal organizations. Many of these unregulated products are cultivated and processed under unsanitary conditions, with poor working environments and banned pesticides. They also lack reliable potency information.

Even many seemingly legitimate storefronts sell black-market cannabis, making it difficult for consumers to determine whether they are purchasing legally regulated products.

Improvements in legal cannabis access

Experts anticipate that as time goes on, navigating the legal cannabis market will become easier for consumers. Drug policy researchers note that transitioning from prohibition to legalization is a gradual process.

Over time, legal marijuana businesses are expected to outcompete illicit sellers, making it simpler for consumers to identify safer products.

The benefits of purchasing legal marijuana

Where available, legal marijuana is generally safer because it undergoes testing for contaminants such as mold and pesticides. States monitor these products and remove unsafe batches from shelves. Licensed growers and sellers have an incentive to maintain high standards to protect consumers and continue operating.

For instance, California saw over 60 cannabis product recalls last year, including flower buds, edibles, pre-rolls, and vape items—up significantly from just four recalls in 2023. Officials attribute this increase to expanded testing efforts.

Similarly, Maine, which has a newer regulatory system, had its first-ever marijuana recall last year due to mold concerns.

Although researchers continue to study the effectiveness of consumer protections, purchasing cannabis from licensed stores remains the safest option. Regulated products significantly reduce the likelihood of exposure to harmful contaminants, providing consumers with greater peace of mind.

If the federal government takes too long to reform its marijuana laws, the risk of contaminated products will only grow and it could reverse some of the gains that the reform movement has registered over the years. That would be a pity, because the business opportunities that were opening up at a fast pace for marijuana companies and also allied actors like Innovative Industrial Properties Inc. (NYSE: IIPR) could begin to dwindle as consumers become wary of the available products.

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CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of an article each business day at 4:20 p.m. Eastern – a tribute to the time synonymous with cannabis culture. The concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.

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420 with CNW — New Hampshire House Committee Discusses Measure to Legalize Recreational Cannabis

A House committee in New Hampshire recently convened to discuss one of three different proposals aimed at legalizing recreational cannabis in the state. The committee reviewed House Bill 186, introduced by Representative Jared Sullivan.

The proposal would permit adults from age 21 to possess up to ten grams of concentrate and two ounces of cannabis flower. It would also allow individuals to cultivate up to six marijuana plants for personal use at home.

Consumers would have the opportunity to purchase lab-tested and labeled products from stores regulated by the state. HB 186 is one of two legalization measures that Representative Sullivan has presented in this legislative session. The other proposal, House Bill 198, would legalize home cultivation and possession but does not include provisions for commercial sales.

The legislation discussed this week draws heavily from a similar measure that legislators nearly passed in the previous session. House Democrats, however, ultimately put the bill on hold after some of them voiced misgivings about its suggestion of a state-run franchise system.

Sullivan highlighted key changes in the new measure, including a lower tax rate. Instead of creating a new, marijuana-specific tax, the bill proposes using the state’s existing meals and room tax. Additionally, it seeks to establish an independent marijuana commission to set regulations and oversee the market, a shift from last year’s proposal, which would have placed oversight under the state’s liquor commission.

The committee listened to public testimony but didn’t make any immediate decisions on HB 186. Committee Chair Representative John Hunt stated that the bill would next be examined by a liquor subcommittee. Committee member Representative Merryl Gibbs expressed approval of the updated proposal, praising both the formation of a commission and the decision to base the marijuana tax on the meals and rooms tax.

Representative Heath Howard, co-sponsor of the measure, voiced his support, stressing the importance of providing adults not only with the right to possess cannabis legally but also with a regulated way to access it.

Former Representative Joe Hannon, who has a medical background and previously served on a state opioid committee, also backed the measure. Hannon noted that, without legal options in the state, residents often travel to nearby states to purchase marijuana legally, only to bring it back home.

The state Association of Chiefs of Police provided the only testimony opposing the bill during the hearing.

A poll conducted in June revealed that about 65% of New Hampshire adults support marijuana legalization, with nearly 61% backing the previous bill, House Bill 1633.

The entire marijuana industry, including firms like Curaleaf Holdings Inc. (CSE: CURA) (OTCQX: CURLF) will be hoping that the lawmakers in New Hampshire keep the interests of their voters in mind while considering the legalization bills before them.

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420 with CNW — Colorado Springs Residents Sue City Over Vote to Repeal Recreational Marijuana

Two residents of Colorado Springs have taken legal action against the city over an upcoming ballot initiative in April that seeks to overturn a voter-approved policy permitting recreational cannabis sales.

The case was submitted on Friday on behalf of Adam Gillard, El Paso County Progressive Veterans’ executive director, and Renze Waddington, a medical cannabis dispensary owner. It claims that the City Council disregarded Colorado’s Amendment 64, which states that any local ballot initiative that seeks to outlaw the sale of marijuana for recreational purposes must be on the ballot for a general election in an even-numbered year.

“This council’s attempt to undo what voters have already decided is not only shocking but also unconstitutional,” stated Tom Scudder, head of the Colorado Springs Marijuana Association. “We expect the courts to uphold the will of the people and make it clear to the Council that they don’t hold unchecked power over the community.”

In November, voters passed Question 300 by a margin of roughly 22,000 votes, allowing existing medical cannabis dispensaries to sell recreational cannabis. At the same time, a competing measure aimed at banning recreational sales was rejected. Additionally, Question 300 included a provision imposing a 5 percent recreational sales tax to fund public safety initiatives, mental health programs, and veterans’ PTSD treatment.

However, on January 28, the council voted to place the measure back on the ballot. Some council members argued that the presence of two cannabis-related measures on the November ballot may have caused voter confusion.

The lawsuit contends that such a question is not legally allowed to appear on a ballot during this type of election.

According to the legal challenge, the referred initiative essentially seeks to reverse Question 300, which is equivalent to banning recreational cannabis sales. The state constitution clearly states that any proposal to prohibit retail cannabis shops must be placed on a general election ballot held in an even-numbered year.

Additionally, the complaint argues that the ballot proposal is deceptive since it fails to disclose to voters that Question 300’s repeal would also prevent new recreational sales tax money from being collected. The plaintiffs are requesting that the court either block the repeal measure from appearing on the ballot or mandate a revision to the ballot title.

The city is required to send out ballots to military personnel and overseas voters 45 days before elections by February 14. Industry actors like Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) will be following the events in Colorado Springs and will hope that the will of the voters isn’t thwarted.

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420 with CNW — Why 2025 Could Be a Great Year for Marijuana Investors

The marijuana capital markets have encountered substantial hurdles in recent years. Investors who have been in the industry since 2019 have witnessed every phase of the market—from thrilling peaks to somber valleys.

Notwithstanding these swings, the present environment presents a remarkable chance for strategic investors because of alluring valuations, creative deal formats, and the capacity to assist top-tier management teams.

The struggle for capital access has significantly altered the industry’s competitive dynamics. Businesses have had to either adapt or collapse as a result of the drying up of various funding sources during the last two years.

Two distinct categories have emerged in this evolving market. First, resilient companies have taken proactive steps to streamline operations, embrace financial discipline, and build sustainable, profitable businesses. Challenging market conditions often highlight outstanding leadership, and these teams are proving their capabilities by driving profitability and managing complexities effectively.

On the other hand, distressed resources have surfaced as companies unable to withstand market pressures face significant financial difficulties. While this presents hardships for some, it creates an avenue for investors to acquire undervalued assets at better discounts, offering the potential for turnarounds or investments.

Uncertainty and fear have created an ideal environment for investors willing to take strategic risks. Historically, market downturns have led to some of the most rewarding investment opportunities, and this cycle will likely be no different.

Several macroeconomic factors are contributing to the industry’s potential for growth. First, the market continues to expand as more states approve recreational and medical marijuana. As of 2024, 41 states have enacted some form of cannabis reform, with the regulated market in the U.S. growing by $2.6 billion to reach $31.4 billion. Analysts project an additional 12.1% growth this year, bringing the market to $35.2 billion.

Second, progress on cannabis policy reform is making headway, with bipartisan support increasing for initiatives like federal rescheduling and SAFE Banking. A move from Schedule I to III under the CSA could significantly reduce tax burdens, improving profitability for businesses across the sector.

Lastly, shifting consumer attitudes are fueling industry growth, with 88% of adults in the U.S. supporting marijuana legalization. This shift indicates strong long-term potential for the sector.

While many investors chase rapidly rising markets, true opportunities often emerge during downturns. Investors are now favored in deal structuring, and valuations have stabilized to more reasonable levels. Many businesses are discovering a more obvious route to profitability as the industry develops.

Enterprise value-to-revenue multiples for American cannabis operators have declined to historically low levels, in some cases dropping from all-time highs of around 6X to nearly 1X. Moreover, the potential for federal policy changes represents a significant plus. If measures like rescheduling are enacted, they could attract institutional funding, which has mostly stayed out of the market.

An attractive investment case is created by the combination of disciplined leadership, favorable valuations, and possible regulatory developments. While the industry has faced considerable challenges, these difficulties have also opened doors for individuals prepared to work through the complexities.

With additional states legalizing cannabis, bipartisan policy support, and resilient management teams, this year appears to be pivotal for the industry. The cannabis capital markets may have been turbulent, but the opportunities available today are too significant to overlook. By investing today, businesses are not only setting themselves up for success but also fostering the expansion of a sector that is expected to develop in the future.

Leading marijuana companies like Canopy Growth Corp. (NASDAQ: CGC) (TSX: WEED) will be looking to leverage any favorable changes in the market so that they can bolster the standing of their brand.

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420 with CNW — Poll Finds Cannabis Helps Most People Cut Their Alcohol Intake

A recent survey reveals that over 50% of cannabis users reduce or completely stop their alcohol consumption after using marijuana. The poll, conducted by NuggMD, a marijuana telehealth platform, lends credence to the expanding theory of a substitution effect, according to which people are increasingly choosing marijuana because they believe it to be safer compared to alcohol.

When asked about the impact of marijuana use on their drinking habits, 54% of respondents reported drinking less or completely stopping. Meanwhile, 22% stated that cannabis did not affect their alcohol consumption, and 14% said it depended on the situation. Only 9% indicated that they consumed more alcohol after cannabis use. The survey was conducted between January 9 and 12, gathering responses from 381 marijuana users.

These findings align with an expanding body of research showing that user behavior is evolving as more states legalize marijuana, allowing greater access to regulated products.

For instance, a study backed by NIDA and published last month discovered that young adults are almost three times as likely to consume cannabis daily or almost daily than alcohol. The study provided more detailed, age-specific data compared to a previous study, which showed that daily marijuana use among Americans has surpassed daily alcohol consumption. Furthermore, alcohol consumers were more likely than cannabis users to acknowledge the potential benefits of reducing their intake.

Similarly, research published in the Addiction Journal last May found that more American adults now use cannabis daily as compared to alcohol.

Another study, conducted by Bloomberg Intelligence (BI), suggests that marijuana is increasingly replacing alcohol as legalization spreads and attitudes toward harm change. The survey also found that many people substitute cannabis for painkillers and cigarettes.

According to a different BI research published in September, the alcohol business is facing an increasing amount of competition as a result of the burgeoning legalization movement. The results of the survey indicate that more people are choosing cannabis over alcoholic drinks like wine and beer.

The trend is not limited to the U.S. Research from Canada, where cannabis is legal federally, revealed that legalization led to a decrease in beer sales, further indicating a substitution impact.

Additionally, a survey conducted by Morning Consult and APA last year revealed that Americans consider cannabis significantly less harmful than opioids, cigarettes, and alcohol. Respondents also rated marijuana as less addictive than the others.

These poll findings confirm some of the trends that industry firms like Aurora Cannabis Corp. (NASDAQ: ACB) (TSX: ACB) have been observing in the jurisdictions in which they operate.

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420 with CNW — Pesticides, Bacteria Found in Marijuana Available in Dutch Coffee Shops

An investigation into marijuana sold in Dutch semi-legal coffee stores has uncovered a range of contaminants, including pesticides, lead, and harmful bacteria. The Netherlands Institute of Mental Health and Addiction study was designed to find a “baseline” for contamination levels typically found in cannabis products.

The findings will guide a trial launching in April, where coffee shops in 10 municipalities will offer marijuana grown by licensed producers under strict contamination limits.

Researchers tested a hundred and five marijuana samples, including weed and resin, purchased randomly from various sellers. Approximately 20% of the samples were found to have microbiological breaches such as fungal residue or Staphylococcus aureus bacteria. Pesticides were detected in about one-third of the samples, while one hashish sample contained a lead concentration of 28.5 mg/kg—nearly six times higher than the permissible level for the upcoming trial.

While cannabis is widely perceived as legal in the Netherlands, the reality is more nuanced. Since 1976, a tolerance policy has allowed marijuana and hash sales in regulated “coffee stores,” but cultivating more than 5 plants remains illegal. Consequently, coffee shops are forced to procure their supplies from unregulated sources, which often involve criminal networks and raises concerns about product contamination and safety.

The controlled marijuana trial aims to eliminate reliance on the illicit market and ensure cleaner products. Ten approved growers who have passed criminal background checks will be licensed to sell marijuana to participating coffee shops. Four of these growers are ready to begin supplying cannabis products, which will undergo testing for contaminants such as micro-organisms, heavy metals, pesticides, and aflatoxins—dangerous toxins made by fungi.

The discovery of Staphylococcus aureus in some samples highlights the importance of proper hygiene during all stages of cannabis production, including cultivation, packaging, and distribution. However, Pieter Oomen, one of the study’s authors, emphasized that the study was exploratory and does not suggest that all marijuana products sold in the Netherlands are contaminated.

The researchers concluded that the health risks posed by contaminants are relatively minor compared to the overall impact of smoking cannabis, particularly when mixed with tobacco. “The effect of contaminants depends heavily on the immune system of the individual,” Oomen explained.

“The risks added by these contaminants are not likely to outweigh the inherent risks of marijuana use itself, which include addiction, anxiety, and impaired attention that can lead to accidents. If you want to avoid health risks entirely, the best choice is to abstain from drug use,” he added.

The findings of this baseline study make a strong case for the creation of a regulated marijuana market where licensed companies like SNDL Inc. (NASDAQ: SNDL) are allowed to mushroom and operate while adhering to strict product standards so that consumers are safeguarded from exposure to high levels of contaminants.

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420 with CNW — Nebraskan Lawmakers Consider Proposals to Implement Voter-Approved Medical Marijuana Program

Three pieces of legislation have been introduced in Nebraska aiming to implement medical marijuana legalization and regulation initiatives approved by voters in the November election.

The legislation, sponsored by Senators Terrell McKinney, Ben Hansen, and Danielle Conrad of Omaha, Blair, and Lincoln, respectively, center on setting up registry systems and outlining the Nebraska Medical Marijuana Commission’s regulating and licensing responsibilities.

The proposed bills—LB 705 (McKinney), LB 677 (Hansen), and LB 651 (Conrad)—would allow residents to acquire registry cards after obtaining a healthcare provider’s written recommendation, confirming their eligibility as a medical cannabis patient. The registry system would also cover caregivers, including those assisting minors.

Currently, the law requires the commission to finalize criteria for approving or denying applications for marijuana businesses by July 1, with licensing anticipated to begin by October 1. However, the new proposals suggest delaying the licensing process until January 1, 2026, to allow more time for regulatory preparations.

A separate proposal, LB 483, introduced by Senator Jared Storm (David City) aims to restrict the amount of delta-9 THC that can be used for medical purposes to 300 milligrams and only permit the use of liquid tinctures or pills. This restriction significantly narrows the scope compared to what voters had approved, which was overwhelmingly supported in the recent ballot measures.

Senator Conrad noted that some patients cannot consume cannabis in pill form due to medical conditions, prompting her to draft a more expansive bill to align with voters’ wishes. Senator Hansen highlighted his commitment to honoring the people’s will, citing his previous work with Senator Anna Wishart on similar efforts.

The voter-approved measures remain under legal scrutiny, with challenges still pending in state and federal courts. Attorney General Mike Hilgers and Governor Jim Pillen have raised concerns about conflicts with federal law, which classifies cannabis as a Schedule I substance. Conrad dismissed this as a political viewpoint, arguing that states have considerable authority under the Constitution to create such programs.

The measures from Hansen, McKinney, and Conrad include protection from arrest for caregivers, patients, and officials involved in medical cannabis. They would legalize medical cannabis use for patients, allowing up to 5 ounces, with exceptions for higher quantities based on a physician’s recommendation.

Each bill outlines licensing structures and fees. Conrad’s plan features five license categories: testing facility, cultivator, product manufacturer, dispensary, and vertically integrated businesses. Hansen’s bill adds a transporter license. McKinney introduces tiers for businesses—micro, small, and large-scale—and reserves over half of the licenses for social equity candidates from communities disproportionately affected by drug policies.

Tax revenue from cannabis sales would be redirected differently under each bill. Hansen prioritizes property tax relief, while McKinney and Conrad propose reinvesting funds into the cannabis program. McKinney’s plan also includes automatic expungement for specific marijuana-related offenses.

Changes or revisions to these laws need a supermajority vote in the legislature since they are the result of initiatives that were passed by the electorate. The provisions will be self-enforcing if legislators do nothing, guaranteeing that they are implemented as intended.

When the program is finally launched, numerous business opportunities will become available in the state, including for companies operating like Innovative Industrial Properties Inc. (NYSE: IIPR) that have found a niche in serving marijuana companies.

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420 with CNW — President Trump to Play Pivotal Role in Marijuana Policy Reform and Rescheduling

With cannabis rescheduling currently on hold indefinitely, the $32 billion industry’s fate hinges on critical decisions—particularly President Donald Trump’s choice of the next Drug Enforcement Administration (DEA) director.

Trump made waves in September by becoming the first presidential candidate from a major party to support a state-level recreational marijuana legalization ballot initiative. However, since then, the topic has not resurfaced in his agenda. It also remained absent during the confirmation hearings for his attorney general nominee, Pam Bondi.

In this information vacuum, speculation has emerged based on Bondi’s record and Trump’s posts on Truth Social. A notable detail is Bondi’s time as a lobbyist for Ballard Partners, a D.C.-based company. Ballard’s client list includes Trulieve Cannabis Corp., a multistate cannabis operator based in Tallahassee, Florida, though Bondi herself is not listed as a lobbyist for the company.

Trulieve’s CEO, Kim Rivers, attended Trump’s inauguration alongside Cresco Labs CEO Charlie Bachtell. Following the event, Rivers shared on X that she had productive discussions on cannabis reform and rescheduling, calling it “a new day” for the industry.

If confirmed, Bondi’s actions—along with Trump’s choice for DEA leadership—could shape the future of cannabis reform. This urgency has heightened after DEA judge John Mulrooney II halted the administrative process to move cannabis to Schedule III. Mulrooney’s January 13 order stopped hearings that were supposed to resume on January 21, citing a request to disqualify DEA director Anne Milgram due to allegations of bias against the process.

Rescheduling would significantly relieve the cannabis sector, allowing businesses to claim standard federal tax deductions currently prohibited under federal law. However, the timing and continuation of the rescheduling hearings remain uncertain. As Mulrooney noted in his order, he could recommend restarting the entire process, but any decision ultimately rests with the next DEA director.

Trump’s first nominee for DEA leadership, Chad Chronister, withdrew his name shortly after being nominated. Trump later claimed he had withdrawn the nomination himself. Observers believe Trump might select someone with deep ties to the DEA, and this seemed likely when Derek Maltz, a long-time DEA official and opponent of rescheduling cannabis, was appointed interim administrator.

Whether Maltz becomes the next director or serves temporarily, many doubt a Trump appointee would oppose his policy stance. Similarly, the GOP-controlled Congress is unlikely to challenge Trump’s directives, despite cannabis advocates’ efforts to push reform.

Under Biden, marijuana reform efforts stalled, including a Senate bill for banking protections that never reached a full vote. Blame for this failure varies, with some pointing fingers at the Republican opposition, while others blame Chuck Schumer, the former Senate Majority Leader. Speaker of the House Mike Johnson and Senate Majority Leader John Thune are not seen as advocates for cannabis reform.

Should the Trump administration prioritize rescheduling, it could drastically alter the trajectory of marijuana policy in the United States. All the eyes of marijuana industry actors like Curaleaf Holdings Inc. (CSE: CURA) (OTCQX: CURLF) will be on the new team in Washington, D.C. to see what decisions they make and how those decisions shape the future of the industry.

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420 with CNW — Arkansas Governor Says Medical Cannabis Taxes Will Help Feed Children

Gov. Sarah Huckabee Sanders of Arkansas recently highlighted the advantages of medical cannabis tax revenue in her last week’s State of the State address, announcing a significant plan.

The state approved medical cannabis through a voter-supported amendment in 2016, but it wasn’t made available to qualifying patients until May 2019. Since then, the program has seen significant growth, with nearly 109,000 active medical cannabis ID cardholders recorded at the end of 2024.

In Arkansas, medical cannabis purchases are subject to a 4 percent privilege tax and a 6.5 percent state sales tax. The revenue collected through the sales tax contributes to important public services, such as addressing food insecurity and supporting public schools. In 2024 alone, these taxes brought in $28.5 million, increasing the medical cannabis program’s total revenue to approximately $150 million since its inception.

During her address, Sanders highlighted how the funding will be utilized. She stated:

“This year, Arkansas will join the Summer Electronic Benefit Transfer (EBT) program. Today, I’m sharing plans to allocate medical cannabis funds to ensure financial stability for the Summer EBT program and to sustain our free breakfast and lunch initiatives in the long term. Additionally, these funds will allow us to offer free school breakfasts throughout the state of Arkansas.”

Gov. Sanders’s proposal is particularly noteworthy given her history of opposing broader marijuana reforms, including her stance against a measure that sought to expand the state’s cannabis program. Despite her prior resistance to recreational cannabis legalization, the governor appears committed to preserving and enhancing the existing framework. The governor even signed legislation in 2023 allowing medical cannabis patients to obtain licenses for carrying firearms.

The National School Lunch Program, a federally supported initiative, provides assistance to almost 100,000 public and not-for-profit private schools, as well as residential childcare facilities across the United States. The program offers free meals to children from households earning less than 130% of the federal poverty level. Families with incomes between 130% and 185% of the federal poverty level can access reduced-cost meals, while those above this range pay the full price but still receive some subsidies.

Despite these efforts, many children lose access to these meals during summer breaks. The Summer EBT program, introduced in 2023 by Congress, addresses this issue by offering food assistance to low-income households during the summer months when school-provided meals are unavailable.

Marijuana enterprises like Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) will be pleased that different communities in different jurisdictions are reaping the benefits of legalizing marijuana and allowing licensed companies to impact not just patients but other sections of the population as well.

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420 with CNW — US Border Patrol Asks Court to Dismiss Businesses’ Lawsuit on Marijuana Seizures in New Mexico

The U.S. Customs and Border Protection (CBP) and Department of Homeland Security (DHS) are asking a federal judge to dismiss a case brought by New Mexico-licensed cannabis businesses. The businesses allege that the agencies unlawfully seized state-regulated cannabis products and arrested staff members at checkpoints within the state.

According to CBP and DHS, federal law takes precedence over state law as long as cannabis remains prohibited at the federal level. They argue that border agents are authorized to disregard state regulations and seize cannabis products. Furthermore, they assert that protections afforded to state cannabis programs through the Department of Justice (DOJ) policies and congressional rider do not extend to CBP, which operates under DHS.

The lawsuit, brought by 8 New Mexico cannabis businesses, was filed in October last year after reports surfaced of CBP agents seizing products and other property from state-licensed cannabis businesses at border checkpoints across New Mexico.

The businesses claim these actions violate the Fifth Amendment by conducting seizures and searches without following proper procedures. CBP has countered this argument, requesting the case be dismissed on grounds of insufficient claims and lack of jurisdiction.

The lawsuit further describes incidents where CBP detained cannabis business employees for extended periods without filing charges. Although CBP did not directly address these detentions, it maintained its authority to detain individuals under current federal law.

The agency also addressed specific complaints, such as the seizure of non-marijuana property assets like vehicles and cash. CBP argued that since the vehicles were returned to the plaintiffs before the lawsuit was filed, the issue is moot, and the plaintiffs lack standing to seek further relief.

In response to allegations that their actions contradict federal regulations and policy precedents, CBP emphasized that protections for state cannabis programs only apply to the DOJ under a congressional rider and do not extend to DHS or its agencies. Additionally, they rejected claims that prior Treasury Department or DOJ guidance on cannabis reform has any legal bearing, stating that federal law continues to prohibit cannabis and provides no exceptions for CBP or DHS to stop enforcing those restrictions. CBP and DHS also reiterated that cannabis is still classified as a Schedule 1 substance under the CSA.

The plaintiffs are asking the court to require CBP to provide documentation of seized property, return the items or compensate them for their value, and establish a process to contest future seizures in compliance with the Fifth Amendment.

The issue has also drawn attention from legislators, with Representative Gabe Vasquez proposing an amendment to appropriations legislation for DHS, aiming to restrict border agents from using federal funds to confiscate cannabis products from state-licensed operators.

The marijuana industry and its leading firms like Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) will be hoping that the court system clears the air on whether it is acceptable for Border Patrol to seize cannabis products from licensed companies that are conducting their legitimate business activities in states bordering neighboring countries.

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