While cannabis legalization moves full steam ahead through much of the Northeast, the southeastern U.S. has been notably slow to uptake major reforms. These states haven’t made major headlines for their progressive cannabis policies, but together they constitute a major market that has, nevertheless, dipped its toe in the water. As such, we thought we’d take a moment to round up the status of cannabis legalization in the South, an area worth watching.
Alabama legalized medical a medical cannabis program on May 17, 2021 when Governor Ivey signed SB 46 into law. The law created the Alabama Medical Cannabis Commission (AMCC), which is generally responsible for regulating the medical cannabis program, including licensing facilities that process, transport, test, or dispense medical cannabis. The law provides for up to 12 cultivator licenses, up to four processor licenses, up to four dispensary licenses, and up to five integrated facility licenses.
The law also charged the Alabama Department of Revenue with collecting (1) a 9% excise tax on the gross proceeds from the retail sale of medical cannabis; and (2) an annual medical cannabis privilege tax on every person doing business under the medical cannabis law in Alabama, calculated on the person’s net worth in the same manner as the annual privilege tax on Alabama corporations.
Although medical cannabis program was signed into law last year, it has yet to be fully implemented. The AMCC anticipates that applicants may submit licenses to grow and/or manufacture medical cannabis on September 1, 2022. Nor have any physicians been approved to issue medical cannabis cards in Alabama.
Arkansas voters approved a medical cannabis program on November 8, 2016, and the legislature subsequently amended the program through the Arkansas Medical Marijuana Amendment of 2016. The law created the Medical Marijuana Commission within the Department of Finance and Administration, which is responsible for administering and regulating the issuance of licenses to operate medical cannabis dispensaries and cultivation facilities. The law provides for at least 20 to 40 dispensary licenses (there are currently 33) and four to eight cultivation facility licenses. Although there is no excise tax on medical cannabis, there is a medical cannabis special privilege tax of 4% of the gross receipts or gross proceeds derived from the sale of usable cannabis to be collected by cultivation facilities, dispensaries, or other cannabis businesses and remitted to the Department of Finance and Administration.
Typically regarded as a very strict medical cannabis program, the legislature has not made any serious attempts to substantially overhaul the program since 2016. Nor do there appear to be any significant proposed bills that would do so.
Florida first legalized the limited use of medical cannabis through the Compassionate Medical Cannabis Act of 2014. Since then, the legislature has passed a number of laws that have expanded the state’s medical cannabis program. Under current law, the Florida Department of Health (FDOH) is responsible for overseeing the medical cannabis program, including issuing licenses to medical cannabis treatment centers. There are currently 22 vertically integrated Medical Marijuana Treatment Centers authorized to dispense medical cannabis, and each one of these has been permitted to open additional dispensary-only locations. The state has close to 400 dispensaries total. There is no excise tax on medical cannabis.
There also are a number of proposed bills in the most recent legislative session that would affect the medical cannabis program in some way if they survive the legislative process and become law. In particular, HB 679 proposes to:
- Revise physician, advertising, and lab testing requirements;
- Create a Medical Marijuana Testing Advisory Council; and
- Prohibit a certified medical cannabis testing laboratory from having an economic interest in or financial relationship with a Medical Marijuana Treatment Center.
The push for adult-use legalization in Florida has grown louder in recent months, but two attempted ballot initiatives were struck down by the Florida Supreme Court because of issues with the ballot titles and summary. Advocates now have turned their sights to the 2024 election cycle.
As far back as 2015, Georgia established a Low THC Oil Patient Registry, which allowed qualified patients to possess cannabis oil with a total THC content of not more than 5%. Until 2019, however, no law provided a way to access that oil. With the passage of HB 324 and the creation of the Georgia Access to Medical Cannabis Commission in 2019, Georgia seemed poised to begin licensing producers and dispensaries. Three years later, however, the state still has neither. Production licensees were chosen through a competitive licensing process in 2021, but the process has been hampered by numerous administrative appeals from losing applicants; these appeals must be resolved before the winning licenses can be finalized. A judge for the U.S. District Court for the Northern District of Georgia recently heard oral argument in Georgia Atlas Inc. v. Andrew L. Turnage, et al., a federal case challenging the producer licensing process, and an opinion is expected soon. Meanwhile, the dispensary application process has not even begun.
Louisiana has had a limited medical cannabis program since 2020. There are currently nine dispensaries in the state, spread across nine regions of the state, and doctors may recommend the plant for any debilitating condition. Only two entities have licenses to cultivate medical cannabis and produce medical cannabis products: Louisiana State University’s Agricultural Center and Southern University’s Agricultural Center. These are overseen by the Louisiana Department of Agriculture and Forestry, while the dispensaries are licensed by the Louisiana Board of Pharmacy. There is no excise tax on medical cannabis sales. As of 2021, patients could access whole-plant cannabis flower for smoking, which was previously unlawful. Also in 2021, Governor John Bell Edwards signed HB 652, making possession of up to 14 grams of cannabis punishable only by a fine of $100 instead of prison time. Governor Edwards, however, has said that adult use legalization, while inevitable, is unlikely in Louisiana during his term.
In November 2020, Mississippi voters approved a medical cannabis program in the state, but the Mississippi Supreme Court struck down the ballot initiative on procedural grounds. Despite the failed ballot initiative, the legislature moved forward with legalization efforts. On February 2, 2022, Governor Reeves signed bipartisan legislation, SB 2095, and Mississippi became the 37th state to legalize medical cannabis. The Mississippi Medical Cannabis Act delegates oversight of the licensing and tax program to the Mississippi Department of Health (MDOH) and Mississippi Department of Revenue (MDOR). Specifically, the MDOH is responsible for:
- Licensing, oversight, and inspection of cannabis testing facilities and cannabis research facilities;
- Licensing of cannabis cultivation facilities, cannabis processing facilities, cannabis transportation entities, and cannabis disposal entities;
- The application and licensing of registry identification cards for qualifying patients and designated caregivers;
- Registering practitioners; and
- Selection, certification, and oversight of the statewide seed-to-sale tracking system.
The MDOR is responsible for:
- Licensing, inspection, and oversight of medical cannabis dispensaries; and
- Collecting the excise tax on cannabis cultivation facilities, which is based on the sales price for which a cannabis cultivation facility first sells cannabis flower or cannabis trim to a medical cannabis establishment at the rate of 5% of the sales price or the fair market value of the cannabis flower or cannabis trim if there is common ownership or other interest between the cannabis cultivation facility and the medical cannabis establishment to which the cannabis cultivation facility first sells or transfers the cannabis flower or cannabis trim.
Notably, there is no statutory cap on the number of licenses that can be issued, and the DOH and DOR will jointly create and maintain a public registry of medical cannabis establishments.
Other than on Cherokee Indian land, medical cannabis remains inaccessible to North Carolinians. That may change if North Carlina’s Compassionate Care Act, SB 711, which has bipartisan support among the state’s senators, passes in 2022. The Senate is expected to take up the bill during the state’s 2022 short legislative session that starts in May, but the bill already has cleared the Senate’s Judiciary, Finance, and Health Care committees. If it passes in the full Senate, it will move on to the House. Unlike South Carolina’s Compassionate Care Act (described below), SB 711 would not ban smokable cannabis, and currently contemplates only two types of licenses: medical cannabis suppliers to grow and manufacture the products (10 supplier licenses are contemplated), and medical cannabis centers to sell it to patients. Only medical cannabis suppliers would be granted medical cannabis center licenses, but no supplier would be permitted to hold more than four medical cannabis center licenses. The bill exempts medical cannabis sales from sales and excise taxes, but suppliers would be obligated to pay a monthly fee equal to 10% of their gross revenue. The program would be administered by the state’s Department of Health and Human Services and new Medical Cannabis Production Commission that will operate under the DHHS.
Along with North Carolina, South Carolina is one of the few states remaining with no form of medical cannabis program. On January 26, 2022, South Carolina’s Senators began debate on the Compassionate Care Act, which, if passed, would be among the strictest of the 37 other medical cannabis bills in the country. SB 150 would open up access to medical cannabis only for those patients with a “debilitating medical condition” — there are 13 such conditions listed in the bill (which list may be expanded by a Medical Cannabis Advisory Board) — and a written certification from a doctor. Smoking medical cannabis or possessing it in plant form would still be illegal. The bill currently contemplates the issuance of the following types and number of licenses:
- 15 cultivation center licenses;
- 30 processing facility licenses;
- four transporter licenses;
- one “therapeutic cannabis pharmacy” (a medical cannabis retailer with a pharmacist on site) for every 20 pharmacies in the state; and
- five licenses for testing labs.
Medical cannabis sales would be subject to a 6% sales tax plus a possible local option tax, and the program would be administered by the South Carolina Department of Health and Environmental Control.
On February 10, 2022, after weeks of debate, the state’s Senate held the third and final vote needed to pass the bill and send it to the House of Representatives.
Medical cannabis is still illegal in Tennessee. As of 2015, however, Tennessee authorizes the use of cannabidiol oil with less than 0.9% total THC to treat intractable seizures or epilepsy in certain circumstances. The bottle containing the oil needs to be labeled by the manufacturer as containing cannabidiol in an amount less than 0.9% of tetrahydrocannabinol on a printed label that includes the manufacturer’s name and the expiration date, batch number or lot number, and tetrahydrocannabinol concentration strength of the oil; and the person in possession of the oil must retain:
- Proof of the legal order or recommendation from the issuing state; and
- Proof that the person or the person’s immediate family member has been diagnosed with at least one (1) of the following diseases or conditions by a medical doctor or doctor of osteopathic medicine who is licensed to practice medicine in Tennessee:
- Alzheimer’s disease;
- Amyotrophic lateral sclerosis (ALS);
- Cancer, when such disease is diagnosed as end stage or the treatment produces related wasting illness, recalcitrant nausea and vomiting, or pain;
- Inflammatory bowel disease, including Crohn’s disease and ulcerative colitis;
- Multiple sclerosis;
- Parkinson’s disease;
- Human immunodeficiency virus (HIV) or acquired immunodeficiency syndrome (AIDS); or
- Sickle cell disease. See Code Ann. § 39-17-402.
Although medical cannabis is illegal in Tennessee, in 2021, the state signed SB 0118 into law, which created the Tennessee medical cannabis commission to study federal and state laws regarding medical cannabis and the preparation of legislation to establish an effective, patient-focused medical cannabis program in Tennessee upon the rescheduling or descheduling of cannabis from Schedule I of the federal Controlled Substances Act.