Food, Agriculture & Cannabis - International Legal Developments Year in Review: 2022

This article reviews significant international legal developments made in the areas of food, agriculture, and cannabis law in 2022.

I. Cannabis Legislation

In November 2021, the International Law Section hosted the first international legal conference on cannabis. It was an opportunity for global leaders in the cannabis legal arena to meet and exchange ideas. Cannabis is an emerging industry that, as with any business, intersects all areas of legal practice. According to BDSA, the international cannabis industry is expected to be a $26 billion dollar market by 2026. Accordingly, newly enacted laws and regulations materialize with regularity across the globe, and we are just at the beginning of a wave of developing case law as more businesses bring their legitimate disputes before judicial tribunals. The subject matter is intense and replete with intricacies and nuances that are more easily understood with a medical and scientific background. But the purpose of this compendium is to provide a birds-eye view of some global developments.

II. South America

A. Uruguay

Uruguay was the first country to legalize cannabis in Latin America. The government controls the program to keep prices low to discourage the illicit cannabis market because the primary policy driving cannabis legislation in Uruguay was the impact of the preceding illegal drug trade. Forty grams is the maximum possession quantity for personal use. Individuals must be at least eighteen years old and registered in a national database to track their consumption. Throughout the market, Uruguay bans all forms of cannabis advertising, promotion, and sponsorship.

Uruguay created the Institute for the Regulation and Control of Cannabis (IRCCA) to regulate the planting, cultivation, harvesting, production, processing, storage, distribution, and sale of cannabis. The IRCCA ensures that the government has a competitive edge over illegal suppliers by ensuring government cannabis rates undercut those of the black market. Further, the IRCCA mandates the National Public Education System to enact policies to educate elementary, secondary, and vocational education levels to prevent harmful cannabis use.

Under Uruguay’s home-consumption provision, individuals may keep, hold, store, or possess up to six cannabis plants in their homes each year, an amount which may not surpass 480 grams. Home growers are required to register with the IRCCA.

Uruguay also permits cannabis clubs. Cannabis clubs must have between fifteen and forty-five members. The clubs and their members must register as civil organizations with the Ministry of Education and Culture and are under the control of the IRCCA. As with residential cultivation for self-consumption, members may not cultivate more than 480 grams a year. Excess yields must be reported and turned over to the IRCCA.

Problems associated with these clubs in Uruguay include regulatory compliance, financial stability, tolerance from society, and collective action dilemmas. For example, several cannabis clubs in Uruguay have experienced financial hardships because of underestimation of operation costs. Typical cost considerations for cannabis clubs include rent, gardening, administrative staff salaries, and security. Additionally, neighbors have filed claims with the police against some cannabis clubs. These claims often result from a lack of publicly available information.

Uruguay permits some commercial cannabis sales. Individuals may purchase up to ten grams of cannabis per week, ensuring retailers are not placed under undue stress by bulk buyers. The planting, growing, harvesting, and marketing of cannabis must be authorized by the IRCCA via a license. Licenses are obtained through a bidding process.

Uruguay’s cannabis law is an example of the government monopoly model with licensed distributors because the government controls all production and governs the price, quality, and maximum production volume of cannabis. The government contracts and monitors private companies to produce cannabis on state land. The private companies then “sell the cannabis to the government, which then distributes the [cannabis] via licensed pharmacies to registered users.”

B. Argentina

Argentina legalized the use of cannabis for medical purposes in 2017. Unlike in North America, Argentina allows the plant to be home grown and grown by patient collectives rather than limiting national cultivation bids to big companies. This non-restrictive standard allows people with medical prescriptions to grow and cultivate Cannabis Sativa L. without being penalized.

Argentina also took a big step in 2020 when it decriminalized self-cultivation of plants in homes or private spaces for personal use. Recreational use, as it is commonly understood, is still illegal in Argentina.

Argentina’s most recent advance occurred on May 5, 2022, when the Chamber of Deputies of the Argentine Congress passed a law regulating the medicinal cannabis and industrial hemp industry, which had previously operated legally but without regulation. The new law established a legal framework for the cultivation, production, distribution, and commercialization of cannabis products, derivatives, and seeds and advanced a whole-plant strategy for hemp designed to exploit the crop for its health and environmental benefits in addition to its economic development potential.

As part of the regulatory process, this law grants licenses to each segment of the production chain and establishes the legal formalities for granting them. It also establishes the control mechanisms that govern licensees. The law established the Regulatory Agency of the Hemp and Medicinal Cannabis Industry (ARICCAME in Spanish) as the governing agency and overseer of other regulatory bodies involved in the production chain.

C. Colombia

The Colombian government decriminalized personal use of cannabis and possession of up to twenty grams in 2012, although cannabis use by adults is not legal in Colombia. The 2012 change did not legalize the purchase or sale of cannabis, but it removed a potential prison sentence of sixty-four months.

Three years later, the Constitutional Court in Colombia upheld the decriminalization portion of the 2012 law. Under that law, people caught with less than twenty-two grams of marijuana for personal use would not be arrested or prosecuted but could be referred to treatment. The law also decriminalized the possession of other drugs, but the amounts associated with decriminalization remain unclear.

In 2015, Colombia established a medical cannabis program to allow for research and product development, as well as growing, processing, importing, or exporting cannabis and its derivatives for medical and scientific use.

The most recent development in the cannabis regulatory framework in Colombia happened in November 2022, when the Senate approved a cannabis legalization bill to allow adult use with some restrictions on possession and public consumption in schools and certain public spaces. The bill also calls for public education campaigns and the promotion of substance misuse treatment services. Legislators have six months to pass the regulations.

III. Latin America

A. Mexico

In 2018, Mexico’s Supreme Court declared Mexico’s prohibition on personal possession and cultivation of cannabis unconstitutional and ordered the Mexican Congress to legalize recreational use within ninety days of the Court’s action. The Supreme Court extended the deadline several times, but lawmakers failed to formally end prohibition by April 30, 2021, the final extension date. In response, the Supreme Court voted to eliminate the absolute prohibition on the use of recreational cannabis, thereby resolving its previous general declaration of unconstitutionality.

The Supreme Court’s decision allows the Ministry of Health to authorize the planting, growing, harvesting, preparing, possessing, and transporting of cannabis by adults for their own cannabis and tetrahydrocannabinol (THC) consumption for recreational purposes. Under the declaration, the Comisión Federal para la Protección contra Riesgos Sanitarios [The Federal Commission for the Protection Against Sanitary Risks] (COFEPRIS) must establish guidelines “for the acquisition of seed” with the understanding that the authorization may not include “the permission to import, trade, supply, or any other act that refers to the sale and/or distribution of [cannabis].” Last, the Supreme Court held that the COFEPRIS authorizations must specify that the recreational use of cannabis and THC should not occur in the presence of minors, in public places without consent, or while engaging in activities, including driving and operating dangerous machines, that may endanger third parties.

Lawmakers came close to passing the Ley Federal para la Regulación del Cannabis [Federal Law for the Regulation of Cannabis], a bill that would have legalized recreational cannabis in Mexico. The Senate approved a version of the bill, but the Chamber of Deputies revised the bill, sending it back to the Senate for final consideration. The Senate did not pass the amended bill before the end of the congressional session on April 30, 2021.

The most recent version of the bill would have regulated cannabis production for recreational use and research and hemp production for industrial use. Recreational use is divided into three categories of production: (1) home cultivation for self-consumption, (2) production by cannabis associations for consumption by associates, (3) and production for commercialization and sale. In a previous version, the bill’s explicit goal was to preserve public health and empower marginalized and indigenous communities. Under the current version, these goals are only implicit.

Under the 2021 version of the bill, possession of more than twenty-eight, but fewer than 200, grams would have been considered an infraction punishable by a fine. Possession of 200 grams or more would have been a crime punishable by jail time.

To date, all Mexican legislative and regulatory bodies have not advanced cannabis legalization on the agenda. Prior to the beginning of the fall 2022 legislative session, Senate Majority Leader Ricardo Monreal, an advocate for reform, said that enacting regulations for cannabis would be among the top legislative priorities of the Mexican Congress in the new session. Other leaders have said the same many times before.

B. Costa Rica

On March 2, 2022, after several months of discussion between the legislative and executive powers, partial vetoes by the president, and expressions of public opinion, the government of Costa Rica approved Law N. 10113, which (1) allows use of cannabis and its derivatives for medical and therapeutic purposes and (2) authorizes the production, industrialization, and commercialization of hemp and its derivatives for industrial and food use. The law sought to promote the economic and social development of Costa Rica, particularly in rural areas, by encouraging companies and individuals to produce, industrialize, and market hemp and medicinal cannabis. This law was the entry point for hemp-related regulations enacted in September 2022.

Costa Rica differentiated hemp, or “non-psychoactive cannabis,” as the law calls it, from medical marijuana, or “psychoactive cannabis.” The concept in differentiation is essentially the same as in the United States, in that, while hemp and medical marijuana are derived from the same plant, the percentage of THC content distinguishes one from the other. In Costa Rica, if the cannabis plant and any part of it, including seeds, derivatives, and extracts, contains one percent or less of THC, which, by law, explicitly includes Delta eight, Delta nine, and Delta ten, on a dry weight basis, it is “hemp”; if it contains more than one percent of THC, it is what is commonly known as “marijuana.”

This one percent number is higher than in the United States and other jurisdictions, which use a delta nine tetrahydrocannabinol concentration of not more than 3/10 of a percent as the dividing line. Consequently, businesses in Costa Rica have more flexibility to produce and use the plant in a broader way, and the inclusion of derivatives in the definition, that is, Deltas eight, nine, and ten, provides needed clarity on the types of cannabinoids that are included.

On September 7, 2022, Costa Rica passed regulations on hemp production, cultivation, transportation, manufacturing, and other related activities, and, on September 30, 2022, the country passed regulations on medical marijuana. That said, even though the country is open for cannabis business, companies must follow requirements such as having an authorization to produce hemp products or a license for producing medical marijuana to stay in the market.

An attractive feature of Costa Rica’s approach is its free zone regimes, provided to incentivize businesses to invest in specific areas that meet specified qualifications. The most important benefit of the free zone regimes is the ability to import containers, raw materials, and other inputs for production without paying taxes. A company operating under a free zone regime in Costa Rica is exempt from sales and consumption tax on the purchase of local goods and services and from income tax, depending on the category of the business and its geographical location. The free zone incentive is expected to be used by cannabis businesses to take advantage of the significant cost and tax benefits.

These incentives open a broad world of possibilities for larger cannabis and hemp companies that want to invest in Costa Rica in accordance with the new law and coming regulations, while smaller businesses may benefit from a regulatory regime that levels the playing field and allows them to compete with larger companies.

IV. The United States and Canada

A. The United States

Unlike other countries that define marijuana as “cannabis” and hemp-derived cannabinoids as “hemp,” in the United States, the term “cannabis” denotes a plant that is further divided on the basis of its percentage of THC. In 2014, the Agricultural Act of 2014, also known as the “Farm Bill,” defined industrial hemp as “the plant Cannabis sativa L. or any part of such plant, whether growing or not with a delta nine tetrahydrocannabinol concentration of not more than 3/10 of a percent on a dry weight basis.” In the Farm Bill, hemp was excepted from the definition of marijuana under Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970, also known as the “Controlled Substances Act” (CSA), and its definition was amended to include “the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers.”

The Farm Bill also carved out requirements that state and tribal governments obtain approval of their own regulatory plans. The Farm Bill specifically preserved the U.S. Food and Drug Administration’s authority over hemp products, including over food, dietary supplements, human and veterinary drugs, and cosmetics, to help ensure consumer access to safe and accurately labeled hemp products.

Marijuana, or any cannabis that contains more than 3/10 of a percent THC, is still a Schedule I substance in the Controlled Substances Act, even though it has multiple accepted medical uses and is widely prescribed in thirty-seven of the fifty states. Adult-use marijuana has been legalized in twenty-two states, Washington D.C., and Guam.

Because marijuana is not legal at the federal level, however, state-legal marijuana businesses face several disadvantages. National banks will not open accounts for marijuana-related businesses, most tax deductions for business expenses are disallowed pursuant to Section 280E of the Internal Revenue Code, and the U.S. Patent and Trademark Office routinely rejects trademark applications because marijuana is illegal. Interstate commerce is illegal, even between two states in which marijuana is legal, and most states have complicated and expensive regulatory regimes.

Much like some Mexican legislators, American legislators campaign on, and hold press conferences about, passing financing and legalization laws, although so far, nothing has come of it, in spite of the fact that bills have been introduced in both chambers. This failure to act leaves each state to its own devices, complicating matters for multi-state operators. But an economically advantageous niche for hemp businesses has developed.

B. Canada

In 2018, Canada passed Bill C-45: An Act Respecting Cannabis. The Act allows adults eighteen years or older—depending on the province—to possess up to thirty grams of legal cannabis in public, share up to thirty grams with older adults, purchase cannabis products from a provincial or territorial retailer, and grow up to four plants per residence for personal use from licensed seeds or seedlings. The Act prohibits packaging or labeling that, among other things, may be appealing to youths; depicts persons, characters, or animals; or associates cannabis with, or evokes emotion about, “a way of life such as one that includes glamour, recreation, excitement.” Individuals must be licensed by Health Canada to grow cannabis for sale. “Fees for application, security, and license vary from approximately $5,500 (Canadian) for micro-processing/cultivation to approximately $28,000 for standard cultivation and sale.”

The Act is silent with respect to First Nations and Indigenous communities. The Indigenous Navigator service, however, supports Indigenous individuals through the federal licensing process by providing assistance from professionals who are knowledgeable about Indigenous priorities, communities, and circumstances.

Although the Act applies to all provinces, individual provinces regulate internal distribution and consumption. Consequently, provinces and territories may increase the minimum age requirement, lower the personal possession limit, restrict where adults can consume cannabis, and implement additional rules for cannabis cultivation at home.

Variations among provinces are wide. Manitoba, for example, has the highest prices and strictest regulations on cannabis. Public use of cannabis is prohibited there, and home growing is reserved for medical cannabis users. Quebec permits cannabis sales only to consumers twenty-one years old or older. Home growing is forbidden in Quebec. These restrictions likely have made the unregulated market more appealing to consumers in Quebec. Ontario took a different approach by implementing a lottery system to award the first two rounds of retail licenses, placing a cap on legal dispensaries, allowing public consumption, and permitting home growing. British Columbia allows municipalities to opt out of cannabis retail stores. Alberta restricts cannabis sales to those eighteen years old or older, allows private-sector participation in the industry, and allows public consumption. Newfoundland and Labrador have the most relaxed regulations. The table below shows the regulations implemented by each province.

Canada’s current regulation pardons people convicted for possession of up to thirty grams of cannabis instead of automatically expunging their record. In 2019, a proposed amendment to this procedure, which would allow for full expungement of certain cannabis-related convictions, failed.

While Canada has waived its application fee and expedited its application pardon process, applicants must still pay for the police or court documents and fingerprints required in the application process. Consequently, even though the fee is waived, the “most vulnerable and discriminated against members of communities in Canada continue to be disenfranchised.” “According to the Parole Board of Canada, only 436 applications for cannabis record suspensions had been received at the federal level as of April 3, 2020.” Of those applications, only 238 suspensions were ordered.