Originally Published To JD Supra
When Alabama’s Legislature convenes for its annual session on February 2, lawmakers will once again be asked to consider a bill that would provide certain Alabamians with access to medical cannabis. And this time, supporters of the legislation will look west towards neighboring Mississippi, where last November voters overwhelmingly approved a medical cannabis initiative that will provide for a state regime to regulate the cultivation, production and sale of medical cannabis to patients with qualifying conditions.
Our regular readers know that Alabama surprised the cannabis world first in 2019 and then again last year when the state Legislature very nearly passed medical cannabis legislation. Here we’ll discuss the substance of the current legislation and our view on its chance of passage.
What’s in the Bill?
The bill that will be introduced by Sen. Tim Melson will seek to create an 11-member Medical Cannabis Commission. The Medical Cannabis Commission would oversee a statewide “seed-to-sale” tracking and licensing system that would permit the medical use of smokeless cannabis products for a select number of patients with qualifying conditions and a doctor’s prescription. The “seed-to-sale” system would require that any cannabis sold in Alabama would also need to be cultivated and processed within the state. The Medical Cannabis Commission would establish packaging and labeling standards for medical cannabis products, as well as marketing and advertising restrictions. There is a specific prohibition on advertising, marketing, and packaging material that appeals to minors. The Medical Cannabis Commission would also be responsible for developing a universal state symbol that would be placed on all packages of medical cannabis.
The Medical Cannabis Commission will be responsible for licensing, and is authorized under the bill to determine the number of licenses of a specific license category (cultivation, processing, retail). The number of licenses for each category will be based on the state population, number of active registered patients, market demand, the unemployment rate, the need for agricultural and other business opportunities, access to healthcare and other factors the commission deems relevant. Additionally, 20-25% of all licenses granted by the Medical Cannabis Commission must be awarded to minority-owned businesses. Applicants for cultivation and processing licenses must have worked full time in either commercial horticulture or agronomic production for the eight years preceding their application.
The bill includes key protections for employers by including language that protects an employer’s right to terminate employees who use cannabis even for medical purposes. Employers would not be required to allow the use of medical cannabis in the workplace and would not be prohibited from refusing to hire employees because they use medical cannabis (although such provisions are likely to be challenged as violating federal disability laws). Additionally, the bill contains a provision that would prevent employees who use medical cannabis from collecting workers’ compensation benefits in certain situations. Insurance plans and healthcare plans would also not be required to cover the use of medical cannabis.
The proposed bill calls for a 9% state tax on the gross proceeds of the medical cannabis products sold at retail stores, as well as an annual privilege tax on every person doing business under the new law. Part of those funds would go toward creating a grant program for studying cannabis, and part will go to the state’s General Fund and Education Trust Fund. The 9% sales tax would go towards the state’s Education Trust Fund, as well as the Public Welfare Trust Fund. Beginning October 1, 2025, 60% of any funds in the Medical Cannabis Commission Fund in excess of actual expenses from the previous year will be transferred to the state’s General Fund. This tax is likely to be a critical point of discussion for those who may be leery of medical cannabis but who understand the need to replenish the state’s diminished coffers.
The list of qualifying conditions in the proposed bill includes agitation associated with dementia; autism spectrum disorder; cancer-related weight loss; Crohn’s disease or irritable bowel syndrome; epilepsy or a condition causing seizures; fibromyalgia; HIV/AIDS-related nausea or weight loss; menopause and premenstrual syndrome; post-traumatic stress disorder; sleep disorders; spasticity from diseases such as ALS and multiple sclerosis or from spinal cord injuries; and any terminal illness in which the life expectancy is six months or less. The power to add qualifying conditions to this list will rest solely with the state legislature. It is also notable that the bill will restrict minors’ consumption to cannabis medical products containing a maximum of 3% THC. Additionally, the bill will impose a consumption cap of 75mg a day for all users, adult or minor.
So, What Will Happen?
It is difficult to make predictions, especially about the future. And the challenge is particularly exacting when the issue – medical cannabis – is in the news and cuts across a variety of political fault lines. But information is emerging that allows us to begin to read the tea leaves.
The fact that a medical cannabis bill was nearly passed during the 2019 legislative session and then again during the 2020 session (perhaps only derailed by the consequences of the coronavirus) is one of the best indications that there is a chance Alabama will see medical cannabis legalized in 2021. The political will that pushed the bill successfully through the state Senate the past two years appears to remain in place. Melson, who proposed the prior medical cannabis bills and chaired the Medical Cannabis Study Commission, remains a staunch supporter of medical cannabis in the Senate. Further, the Senate’s incoming president voted against medical cannabis in 2020 but said he is open to letting the issue advance in the new session. Between the state House and Senate, the Senate likely can be counted on to pass a medical cannabis bill again.
The House is more difficult to call one way or the other and is the most likely roadblock to the passage of a medical cannabis bill. The House speaker has said that “if the bill comes up and it has proper restrictions in it, then I’m open to at least debating it.” This is where Mississippi’s recent passage of medical cannabis may tip the scales. Although there has not been widespread polling in Alabama on the issue of medical cannabis, Mississippi’s overwhelming support of medical cannabis – to the tune of over 70% – provides a compelling proxy to how Alabamians will likely view the issue.
What remains to be seen then is whether organized opposition will emerge to push against medical cannabis. Law enforcement is always an important constituency in these debates, and Alabama is proving no exception. Attorney General Steve Marshall previously announced his opposition to medical cannabis. Marshall cited (1) the direct conflict Alabama’s medical cannabis law would create with federal law (cannabis is still illegal at the federal level); (2) his concern that cannabis is an addictive substance that will not help the state’s opioid crisis; and (3) that the state is not prepared to properly regulate medical cannabis in a responsible way.
Questions remain about the legal viability of certain provisions in the bill. For instance, the bill would require licensed medical cannabis companies to be majority owned by an Alabama state resident who has lived in the state for eight years or longer. This durational-residency requirement for a cannabis business license could conflict with the dormant Commerce Clause of the U.S. Constitution. The U.S. Supreme Court previously declared Tennessee’s durational-residency requirement for a liquor license unconstitutional. The court found overall that “it would be hard to avoid the conclusion that [the] overall purpose and effect is protectionist,” and that the state’s two-year residency requirement to obtain a liquor permit is not needed to “enable the State to maintain oversight over liquor store operations” or to “promote responsible alcohol consumption.” It is possible that a court would likewise find Alabama’s durational-residency requirement impermissible.
We will continue to monitor this legislation throughout the session. If you have questions about the status of this legislation or the rapidly changing legal landscape for cannabis in the United States, you should contact an attorney with experience in this emerging area of law.