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Cannabis and Hemp Developments in North Carolina

By David M. Ullian, Gabriel Amatruda

Oct 5, 2023

Public support for medical cannabis in North Carolina is quite strong. In fact, according to a Meredith College poll conducted in February 2023, 73% of North Carolina voters, including 64% of Republicans, support a law allowing the use of marijuana in North Carolina for medical purposes. Thankfully for those supporters, cannabis is making headway in the Tar Heel State. Read on to learn about the medical cannabis legalization bill that is still pending in the state’s General Assembly, an appointment to the North Carolina Medical Cannabis Production Commission, an update on the Eastern Band of Cherokee Indians’ adult-use cannabis operations, and a bill to establish a state regulatory system for the sale and distribution of hemp-derived consumable products.

North Carolina Medical Cannabis Legalization Bill Is Still Pending

The North Carolina Senate voted 36-10 on March 1, 2023, to approve SB 3, The North Carolina Compassionate Care Act (NCCCA), and send the bill to the state House of Representatives for consideration. The House Health Committee held a hearing on the medical cannabis legislation in July 2023, but the bill failed to gain the support of a majority of Republicans in the House before the end of the 2023 legislative session. However, House Majority Leader John Bell has indicated that the bill will likely be considered again during next year’s legislative session.

SB 3 would allow registered patients with qualifying debilitating medical conditions to purchase cannabis and cannabis-infused products from licensed medical cannabis centers. The state’s Department of Health and Human Services and a new Medical Cannabis Production Commission (MCPC) would be responsible for regulating and issuing licenses to ten medical cannabis suppliers that would be authorized to produce cannabis and cannabis-infused products in licensed production facilities and dispense them to registered patients through medical cannabis centers. Once licensed by the MCPC, a medical cannabis supplier would be permitted to own and operate up to eight medical cannabis centers. In addition, up to five independent testing laboratories must also be licensed.

Although only ten medical cannabis supplier licenses would be available under the NCCCA, an operator that can secure one of these licenses would be well-positioned in this new medical cannabis market, particularly considering that the state population exceeds 10.5 million and there is a broad range of qualifying debilitating medical conditions and permissible cannabis product types, including flower, provided for under the new law if it is ultimately enacted.

Legislative Appointment to North Carolina’s Medical Cannabis Production Commission

Although a medical cannabis legalization bill has not yet been enacted into law, the first member of the regulatory body proposed in the legislation has already been formally appointed. In August 2023, the North Carolina General Assembly voted to approve a bill that included the appointment of Steve Windham of Brunswick County to the North Carolina Medical Cannabis Production Commission, which will be created if S.B. 3 becomes law. If the medical cannabis legislation becomes law and Mr. Windham is ultimately appointed, he would serve as a member of the MCPC through June 30, 2027.

While it may seem that an appointment to a Medical Cannabis Production Commission that does not yet legally exist is a waste of legislative time and resources, it is encouraging that the General Assembly has already approved at least one individual to lead the MCPC if and when S.B. 3 is eventually enacted into law.

Eastern Band of Cherokee Indians Votes to Regulate Adult-Use Cannabis; Dispensary Could Open in Late 2023

North Carolina is still one of only a few states in the country that has not legalized and implemented either a medical or adult-use cannabis program. However, access to both medical and adult-use cannabis will soon be available in western North Carolina once a dispensary operated by the Eastern Band of Cherokee Indians (EBCI) commences operations. The EBCI is a sovereign nation and a federally recognized Indian Tribe located on the 57,000-acre Qualla Boundary in Cherokee, NC.

In July 2021, the EBCI approved the legalization of medical cannabis and began developing plans for regulated medical cannabis cultivation, manufacturing and dispensing operations within the Qualla Boundary. EBCI members and non-tribal residents of North Carolina who are 21 years of age or older and have a qualifying medication condition are eligible to apply for medical cannabis patient cards from the EBCI’s Cannabis Control Board, which will authorize the purchase of a limited amount of medical cannabis and cannabis products at a large dispensary located within the Qualla Boundary. Sales of medical cannabis are expected to begin later this year.

Although the EBCI has been moving swiftly over the past two years to implement a regulated medical cannabis program, it was unclear if the EBCI would expand its operations to include adult use as well. However, on September 7, 2023, EBCI members overwhelmingly approved a voter referendum to legalize the possession and use of adult-use cannabis, as well as to require the EBCI to develop a regulated adult-use cannabis market. All adults 21 years of age and older, including non-EBCI members, will be eligible to purchase cannabis and cannabis products at the EBCI’s dispensary, potentially as soon as the end of this year. Once fully operational, the EBCI’s retail dispensary will be the first and only place in the state of North Carolina to legally purchase cannabis.

As the EBCI moves forward with its medical and adult-use cannabis operations, the North Carolina Generally Assembly may be more motivated than ever to authorize the state of North Carolina to implement a regulated medical cannabis program.

Regulation of Hemp-Derived Consumable and Kratom Products in North Carolina

Like many other states, the North Carolina General Assembly is now taking action to officially regulate certain hemp-derived and kratom products that are not controlled substances under current law and are commonly offered for sale across the country. On September 21, 2023, the North Carolina House of Representatives voted unanimously to approve HB 563, which would establish a state regulatory system for the sale and distribution of hemp-derived consumable products, including products containing cannabidiol (CBD), delta-8 and delta-10, as well as kratom products.

Most notably, the legislation would require a business to obtain a license from the state Department of Revenue to manufacture, distribute, or sell hemp-derived consumable products and kratom products. The bill would also require such products to be tested by an independent testing laboratory prior to distribution, establish requirements for packaging and serving sizes, and impose restrictions on advertising. Sales would be restricted to individuals 18 years of age and older, and the use of these products on school property would be prohibited.

The bill is currently under consideration by a Senate Committee, but considering the House’s overwhelming bipartisan support, it is highly likely that HB 563 will soon be passed by the full Senate and enacted into law soon.

If you have any questions or would like to schedule a call to discuss cannabis and hemp developments in North Carolina, please contact Vicente LLP attorney David M. Ullian at d.ullian@vicentellp.com or 617-752-7148.

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