Hemp and regulatory uncertainty
The hemp industry is increasingly fertile in Europe.
However, this industry continues to suffer from the lack of clarity of the law and the asymmetrical interpretations of the Courts, which do not yet allow a certain development. A situation for which, however, the latest ruling of the European Court of Justice on the Kanavape case could be revolutionary.
On the subject of the so-called cannabis light market, the Centro Studi Italia-Canada has already intervened on this site and on the occasion of international business forums, underlining the uncertainty of the legislation that risks crushing the future of many companies.
The Italian law
As regards Italy in particular, Law 242/2016, as formulated, has for example generated countless interpretative doubts on the sale of light hemp inflorescences. We talked about it here.
The term Cannabis / Hemp generally refers to the plant in its entirety (stem, roots, flowers). It is the inflorescences of the hemp plant that can be characterized, however, by a high level of THC which, once dried, can be used for recreational activities or for healing purposes.
THC is the abbreviation for tetrahydrocannabinol, which is the psychotropic substance produced by cannabis flowers. That said, the alleged legalization of cannabis light inflorescences and the volume of business recorded understandably continue to attract the attention of both Italian and foreign investors.
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Regarding the lack of clarity that actually inhibits operators, it is enough to remember that a sentence of the Supreme Court of Cassation declared the seizure of cannabis light inflorescences unlawful and It is therefore lawful to market cannabis-derived products (and, in particular, inflorescences) containing an active ingredient THC lower than 0.6%.
But the debate on cannabis light and its marketing did not end, inhibiting a successful business that has already had an important history in Italy.
This type of harvest was in fact very widespread in Italy: in the 1940s Italy was even the second largest producer of hemp in the world, after the Soviet Union.
Hemp cultivation: investments from Canada to Italy
Today, Italy is one of the favorite destinations for Canadian investors in the business of medical and industrial hemp.
In this sense, the news of the millionaire investments arrived in Sicily thanks to Canopy Rivers, the financial arm of the Canadian multinational Canopy Growth, is to be welcomed. In the international scenario, Canada could be an excellent partner for Italian operators.
As announced in a previous article, the Cannabis Act, which legalized recreational cannabis in Canada, has been seen by many as a pioneering opportunity to enter the international trade in the sale of cannabis.
A study, developed by a major Canadian bank, estimated that cannabis production could reach a global market value worth $194 billion in the next 7 years.
To complete the framework, we, therefore, come to the latest ruling of the European Court of Justice. The Court actually affirmed the possible free marketing of CBD products as cannabinol cannot be considered a narcotic.
“a Member State may not prohibit the marketing of CBD lawfully produced in another Member State when it is extracted from the Cannabis sativa plant in its entirety and not solely from its fibre and seeds”
In the following article, published by Nctm Studio Legale, we report the details of the ruling that suggest the prospect of harmonizing the European regulation on cannabis products, of which the Italian hemp industry and its commercial partners could benefit enormously.
EU Court rules in Kanavape Case: a big step forward for CBD
Article published by Nctm Studio Legale, by Paolo Quattocchi Paolo Quattrocchi (partner Nctm Studio Legale, founder of Centro Studi Italia - Canada and vice president of Chamber of Commerce - Canada West), Guido Foglia (partner Nctm Studio Legale) and Michelle Pepe ( Senior Associate Nctm Studio Legale).
On 19 November 2020 the Court of Justice of the European Union ruled on one of the most debated and controversial issues of the moment: the marketing of CBD-based products.
According to the Court, “a Member State may not prohibit the marketing of CBD lawfully produced in another Member State when it is extracted from the Cannabis sativa plant in its entirety and not solely from its fibre and seeds”.
In its judgment, the Court holds that EU law, in particular the provisions on the free movement of goods, precludes restrictive laws such as the French legislation which is the subject of the case.
As mentioned in our article of 5/06/2020, “What do we know about CBD? Opinion of Advocate General Evgeni Tanchev – Case C-663/2018”, French national law restricts the cultivation, importation, exportation as well as the industrial and commercial use of hemp solely to its fibre and seeds.
The dispute in question originates from the marketing by a French company, Kanavape, of electronic cigarettes the liquid in which contains cannabidiol (‘CBD’), imported from the Czech Republic, where extraction from the entire hemp plant, including leaves and flowers, is allowed.
The directors of the French company were convicted by the Criminal Court of Marseille (Tribunal Correctionnel de Marseille), inter alia, for breach of the rules on trade in poisonous plants, based on the restrictions under the French legislation, on the grounds that the production of hemp oil to be put into the electronic cigarette cartridges should be deemed lawful only if obtained by pressing the seeds, while, since the CBD oil imported from the Czech Republic had been extracted from the whole plant, such use should be deemed unlawful.
Subsequently, the Court of Appeal of Aix-en-Provence, hearing the appeal from the French company, decided to suspend the proceedings and to refer a question to the European Court of Justice for a preliminary ruling on the conformity of the French legislation with EU law, and, in particular, with Articles 34 and 36 TFEU.
Well, the Court of Justice of the European Union first and foremost clarifies that the regulations relating to the Common Agricultural Policy (CAP) apply only to the “agricultural products” under Annex I to the Treaties, which do not include CBD extracted from the Cannabis sativa plant in its entirety.
That being said, the European judges declare that the provisions relating to the free movement of goods within the Union must instead be deemed to apply, since cannabidiol (CBD) cannot be regarded as a “narcotic drug”.
CBD is indeed not mentioned in the Convention on Psychotropic Substances signed in Vienna in 1971, nor, to date, is there any scientific evidence of its psychotropic effect or any other harmful effect on human health.
Now, the prohibition on marketing CBD constitutes a measure having equivalent effect to quantitative restrictions on imports, prohibited by Article 34 TFEU.
As is known, such a restriction can only be justified on the grounds of public interest set out in Article 36 TFEU, namely: grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States .
While that latter assessment is for the national court, the European judges clarify the reasons why, in the case at hand, the general grounds under Article 36 TFEU (and, particularly, the ground of protection of public health) allowing restrictions on imports among Member States cannot be deemed to exist.
First, it would seem that the prohibition on marketing does not affect synthetic CBD.
In this way, the legislation at issue would not seem appropriate for attaining, in a consistent and synthetic manner, the objective of protecting public health.
Second, the national court must assess available scientific data to be able to argue that there is a real risk to public health.
Well, as mentioned, to date there is no scientific evidence on the psychotropic, and therefore harmful, effects of CBD.
So much so that, in January 2019, the Secretary-General of the World Health Organization (WHO) recommended that the United Nations amend Schedule I to the Single Convention so as to clarify that CBD is not a narcotic drug, first, by deleting therefrom “ extracts and tinctures of cannabis” and, second, by adding a footnote to read “Preparations containing predominantly cannabidiol and not more than 0.2 per cent of delta-9-tetrahydrocannabinol are not under international control”.
The judgment under examination stands out as a particularly significant precedent, on the basis of which a process of harmonisation of the European laws on cannabis products may be undertaken.
 Court of Justice of the European Union, press release No. 141/2020, Luxembourg, 19 November 2020: “A Member State may not prohibit the marketing of cannabidiol (CBD) lawfully produced in another Member State when it is extracted from the Cannabis sativa plant in its entirety and not solely from its fibre and seeds”.
 It is worth recalling here that, according to an opinion of the World Health Organization (WHO) of 2017, “the WHO Expert Committee on Drug Dependence (ECDD) concluded that, in its pure state, cannabidiol does not appear to have abuse potential or cause harm. As such, as CBD is not currently a scheduled substance in its own right (only as a component of cannabis extracts), current information does not justify a change in this scheduling position and does not justify scheduling of the substance”.
 Article 34 of the Treaty on the Functioning of the European Union (TFEU) provides that “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States”.
 Article 36 of the Treaty on the Functioning of the European Union (TFEU) provides that “The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States”.
- What do we know about CBD?
- Light cannabis in Italy: products are booming in Italy, but recreational consumption is still illegal
- Cannabis, even if light, is illegal. Sales banned by Italy’s Supreme Court?
- For the Italian Supreme Court seizing light hemp inflorescences is unlawful
- The legalization of recreational cannabis in Canada
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