By Dr. Ginette M. Collazo

Recently Puerto Rico approved the law that regulates the production, manufacturing, dispensing and consumption of medical cannabis. Although medical cannabis was already “legal” through an executive order and was “supervised” by local regulation, there was no law to back up the industry and protect investors.

The creation and approval of laws resides in the hands of elected individuals. Expecting absolute knowledge is unrealistic, especially when we refer to cannabis as a medicine. Sadly, the lack of knowledge is affecting the patients, and an emerging industry that can be the solution to the Island’s current economic crisis.

I am in no way insinuating that Puerto Rico is the only example. I have seen this type of faulty thinking in many places, but cannabis is the perfect manifestation of this human defect. Check some of your laws, and you will find a few that nearly qualify for the same characterization.

As we can see, lack of knowledge can be dangerous. Objective, factual information needs to be shared, and our leaders need a formal education program. Patients need them to have a formal education program to better understand and regulate the drug.

The approval of this law is a significant step for the Island. Still, many Puerto Ricans are not happy with the result. The lack of legitimate information coupled with conservative views made the process an excruciating one. It took many hearings, lots of discussions and created tensions between the government and population, not because of the law, but for the reasons behind the proposed controls. Yes, it was finally approved, but with onerous restrictions that only serve as a detriment to the patient’s health, proving the need for an education program designed specifically to provide data as well as an in-depth scientific analysis of the information, then, you address the issue at hand.

Let’s take a look at some of the controls implemented and the justification for each one as stated by some members of the government.

Patients are not allowed to smoke the flower in its natural state unless it is a terminal patient, or a state-designated committee approves it. Why? Because the flower is not intended for medical use (just for recreational) and the risks associated with lung cancer are too high. Vaporize it.
It was proposed to ban edibles because the packaging makes it attractive for children. Edibles made it, but with the condition that the packaging is monochromatic (the use of one color), yes, insert rolling eyes here.
It only allows licensed pharmacists to dispense medical cannabis at the dispensary (bud tending). The rationale? Academic Background.
The new law requires a bona fide relationship between the doctor and the patient to be able to recommend medical cannabis, even if the doctor is qualified by the state and is a legitimate physician. This is contrary to their policy with other controlled substances, where a record is not required.

When there are different beliefs on a particular topic like it is with medical cannabis, you are not only dealing with the technical details of the subject; there is an emotional side to it too. Paradigms, stigma, stereotypes, beliefs and feelings affect the way we think. We let our judgment get in the way of common sense. When emotions, morals and previous knowledge are hurting objectivity, then we have to rely on scientific data and facts to issue resolution. However, when the conflict comes from opinions, we rely on common sense, and this one is scarce.

Now education: what can education do with beliefs, morals and emotional responses?

David Burns in his book “Feeling Good: The New Mood Therapy” discusses ten thinking errors that could explain, to those like me that want to believe this is a legitimate mistake, that there are cognitive distortions that affect the result of ours thoughts.

Now let’s analyze …

There are many things wrong with this prohibition. First, the flower is natural and organic. It is the easiest to produce and the cheapest alternative for patients; there are more than 500 compounds all interdependent to make sick people feel better. There are seas of data, anecdotal information, serious studies collecting information for decades and opinions of highly educated individuals that support the consumption of flower in its natural state for medical purposes. The benefits are discarded, and personal opinions take the lead. Based on Burns’s work this is a textbook case of Disqualifying the Positive: dismissing or ignoring any positive facts. Moreover, let’s not forget the benefit for illegal growers and distributors.
Keep out of reach of children, does it ring a bell? For years and years, we have consumed controlled substances, have manipulated detergent pods, bleach and so many other products that can be fatal. The warning is enough, just like is done with other hazardous Here we can notice how we can fall into the Fortune Teller Error, which believes that they know what will happen, without evidence.
Not even the largest drug stores in the USA have this requirement. There is one pharmacist per shift, and a licensed pharmacist supervises pharmacy technicians. Medical cannabis is not even mentioned in current Pharmacy’s BA curricula. Most pharmacists take external courses in training institutes. On the other hand, bud tenders go through a very comprehensive certification process that covers from customer service to cash management and safety and of course all technical knowledge. If anything, a botanist (plant scientist) makes more sense. What a splendid example of magnification (make small things much larger than they deserve). This is an unnecessary requirement.
The relationship between a certified doctor and patient has to be bona fide (real, honest). In practical terms, the doctor has to treat the patient for some time (sometimes six months) and have a history of the patient. Even though this sounds logical, not all doctors are certified to recommend cannabis, but all can diagnose. Are we penalizing the doctor or the patient? The only thing that you need to qualify as a patient is the condition. Besides, I had prescriptions filled for controlled medications at the drug store with no history. Why are we overgeneralizing Do we think that all doctors are frauds?

August 8, 2017

How Science Is Going To Save Your Cannabis Business

By Kay Smythe

2 Comments

Marketing cannabis and the products that accompany recreational use is set to become one of the biggest industries in the United States. With 29 states promoting legal medical cannabis, 14 with it decriminalized and 8 having legalized it completely, you might be thinking this will be the easiest ad-campaign of all time. Unfortunately, science suggests otherwise.

The Science of Marketing

You heard correctly, marketing is a science, but almost half of what we know about the process cannot be applied to cannabis. Why? Because cannabis lives in the grey area of the American psyche. How do I know this?

Science.

In 2015, I completed and published The Safe Haven theory, a socio-demographic linguistic analysis of attitudes toward recreational drug use in the United Kingdom. I won’t bore you with the intricacies of the study, but the findings are important.

The study, using theoretical sociological trends, found that even non-recreational drug users in the United Kingdom favor cannabis legalization. A great number of police jurisdictions have chosen to not longer punish cannabis users, meaning that the law is (mostly) on our side – the side of full legalization and taxation of cannabis as a product for recreational usage, not so dissimilar from alcohol.

In the UK, we could easily put a huge billboard of someone’s grandmother smoking a spliff and make a million on the first day.

Unfortunately, the same can’t be done in the United States.

Advertising law aside, Americans just don’t have the same view of cannabis as Brits. In the last two years, I applied the same framework to a host of American demographics, and – as I hypothesized – localism rules the American market.

If you live in a Red town and you’re a recreational cannabis user, stigma will prevail over the scientific data, and changing that stigma is almost impossible without hard scientific evidence to back-up the marketing campaign.

Qualitative research is key when understanding why people buy into particular industries. This might not be the general belief held by most folks in advertising, as stats and numbers are distinctly easier to work with. However, as last year’s General Election and Brexit vote showed: numbers can lie. Therefore, the best means of understanding what people really want is to actually talk to them – and I mean in-person.

Marketing rules are shifting. More and more, the heads of marketing departments are turning to scientific and scholarly data to assess the current trends in social development, molding their campaigns around this data as a means of showing that they are industry leaders in understanding the phenomena, as well as speaking to target buyers in their own language.

Am I being too wordy? Let me put it simply.

Say your new product is an indoor indica strain with sleep/stress aid properties, this is how you should market it to three specific demographics:

Californian recreational smoker in the 50+ age demographic with a moderate knowledge of cannabis strains, “Indoor indica, grown locally with minimal chemical input, good as a sleep aid and positive for stress reduction.”
New York medical user, 30+, business background, “This strain is an excellent sleep aid, can decrease stress without taking off the edge of your day-to-day workload; highly recommended for those employed in a full-time, private sector position.”
Small town with predominantly low-income demographic employed in blue-collar industry, “affordable means of relaxing after a tough day at work that won’t give you the same cancer risk as tobacco.”

We market the same strain to each of these demographics, but the language used in the campaign is more important than the product itself. In the UK, the same strain would be marketed across the country using something like:

“Dank strain with sleep aid and relaxation properties, best for chilling out at the end of the day – definitely not recommended prior to work!”

What this means for the United States cannabis marketing specialist is simple: you need to invest as much as you can in getting scholarly researchers out into the field and figuring out the local socio-demographic linguistic trends for your target buyers. Luckily, this can be a fairly affordable means of research.

Marketing specialists have two options in uncovering this data:

Use students currently enrolled in universities and colleges, either offering paid internships or college credit for bulk research.
Hire an academic consultancy corporation. This is rapidly becoming a norm in for companies looking to expand their marketing by using scientific data, particularly in industries related to sport and the outdoors.

Just like how Pepsi really missed the mark with their latest failed advertising campaign, cannabis companies are at significant risk of ostracizing themselves from a wealth of demographics that would otherwise be open to recreational or medical cannabis use as an alternative to harsh pharmaceuticals, alcohol and even some forms of therapy.

Language is key, and if you can’t talk to your buyers on their level then you’ve already lost your edge over the competition.

August 3, 2017

Soapbox

Clear vs. Pure: How Fallacies and Ignorance of Extraction Misrepresent the Cannabis Flower

By Dr. Markus Roggen

16 Comments

Demand for cannabis extracts, in particular vaping products, is at an all-time high. People want good oil, and they want to know something about the quality of it. It is therefore time to take a step back and consider the process from plant to cartridge. What is the current industry standard for cannabis extraction, what constitutes quality and where might we need to make some adjustments?

Right now, “clear” oil is hot. Customers have been led to believe that a pale gold extract is synonymous with the best possible cannabis concentrate, which is not necessarily the case. Producing a 95% pure THC extract with a translucent appearance is neither a great scientific feat nor a good representation of the whole cannabis flower. Moreover, it runs counter to the current trend of all-natural, non-processed foods and wellness products.

“My carrots are organic and fresh from the farmers market, my drink has no artificial sweeteners and my honey is raw, but my cannabis oil has undergone a dozen steps to look clear and still contains butane.”Cannabis is a fascinating plant. It is the basis of our livelihood, but more importantly, it enhances the quality of life for patients. The cannabis plant offers a plethora of medicinally interesting compounds. THC, CBD and terpenes are the most popular, but there are so many more. As of the most recent count, there are 146 known cannabinoids¹. Cannabinoids are a group of structurally similar molecules², including THC and CBD, many of which have shown biological activity³.

Then there are terpenes. These are the smaller molecules that give cannabis its distinct smell and flavor, over 200 of which have been identified in cannabis⁴. But wait, there’s more. The cannabis plant also produces countless other metabolites: flavonoids, alkaloids, phenols and amides⁵. All these components mixed together give the often-cited entourage effect^6,7.

Current industry standards for cannabis oil extraction and purification stand in marked contrast to the complexity of the plant’s components. Due to an unsophisticated understanding of the extraction process and its underlying chemistry, cannabis oil manufacturers frequently produce oil of low quality with high levels of contamination. This necessitates further purifications and clean up steps that remove such contaminants unfortunately along with beneficial minor plant compounds. If one purifies an extract to a clear THC oil, one cannot also offer the full spectrum of cannabinoids, terpenes and other components. Additionally, claiming purities around 95% THC and being proud of it, makes any self-respecting organic chemist cringe⁸.

Precise control of extraction conditions leads to variable, customized concentrates. THC-A crumble, terpene-rich vape oil, THC sap (from left to right).

The labor-intensive, multi-step extraction process is also contrary to “the clean-label food trend”, which “has gone fully mainstream”⁹. Exposing the cannabis flower and oil to at least half a dozen processing steps violates consumer’s desire for clean medicine. Furthermore, the current practice of calling supercritical-CO₂-extracted oils solvent-less violates basic scientific principles. Firstly, CO₂ is used as a solvent, and secondly, if ethanol is used to winterize¹⁰, this would introduce another solvent to the cannabis oil.

We should reconsider our current extraction practices. We can offer cannabis extracts that are free of harmful solvents and pesticides, give a better, if not full, representation of the cannabis plant and meet the patients’ desire for clean medicine. Realizing extracts as the growth-driver they are¹¹ will make us use better, fresher starting materials¹². Understanding the underlying science and learning about the extraction processes will allow us to fine-tune the process to the point that we target extract customized cannabis concentrates¹³. Those, in turn, will not require additional multi-step purification processes, that destroys the basis of the entourage effect.

The cannabis industry needs to invest and educate. Better extracts are the result of knowledgeable, skilled people using precise instruments. Backroom extraction with a PVC pipe and a lighter should be horror stories of the past. And only when the patient knows how their medicine is made can they make educated choices. Through knowledge, patients will understand why quality has its price.

In short, over-processing to make clear oil violates both the plant’s complexity and consumers’ desires. Let us strive for pure extracts, not clear. Our patients deserve it.

[1] Prof. Meiri; lecture at MedCann 2017

[2] ElSohly, Slade, Life Sciences 2005, 539

[3] Whiting, et. al., JAMA. 2015, 2456

[4] Andre, Hausman, Guerriero, Frontiers in Plant Science 2016, 19

[5] Hazekamp, et. al., Chemistry of Cannabis Chapter 3.24; 2010 Elsevier Ltd.

[6] Ben-Shabat, et al.; Eur J Pharmacol. 1998, 23

[7] Mechoulam, et al.; Nat Prod Rep. 1999, 131

[8] Medical and Research Grade chemicals are generally of purities exceeding 99.9%

[9] Bomgardner, Chemical & Engineering News 2017, 20

[10] Winterization is the industry term for what is correctly referred to as precipitation.

[11] Year-over changes to market shares in Colorado 2015 to 2016: Concentrates 15% to 23%; Flower 65% to 57%, BDS Analytics, Marijuana Market Executive Report, 2017

[12] Further reading about the whole extraction process: B. Grauerholz, M. Roggen; Terpene and Testing Magazine, July/Aug. 2017

[13] Further reading about optimizing CO₂ extraction: M. Roggen; Terpene and Testing Magazine, May/June 2017, 35

July 27, 2017

Soapbox

Cannabis Industry Needs Leadership, Not Pesticides

By Ben Ward

5 Comments

The medical cannabis sector is currently attracting increased attention, as patients, doctors, regulators and investors take a closer look at our industry. There is a lot for them to learn and to benefit from as our industry matures under the glare of the proverbial spotlight. And there’s a lot for those of us in the industry to be proud of. We’re helping patients manage pain, for example. We’re helping them get their lives back.

But that same spotlight is also revealing some problems in our industry.

Take ingredients for example. When I look at the ingredient list in my natural medicines, I don’t expect to see Myclobutanil, Piperonyl Butoxide, Pyrethrin, Bifenezate, and Avermectin listed. Yet, that’s exactly what some licensed producers of cannabis in Canada and some cultivators in California have been selling to their patients. You have to ask yourself why, when pesticides are the only toxic substances released intentionally into our environment to kill living things. Patients don’t take cannabis to harm themselves. They do it to improve their quality of life.

Yet some cannabis companies have violated their patients’ trust in supplying them with something that could harm them. Indeed, recalls for cannabis, unfortunately, are now becoming somewhat commonplace on both sides of the border. These licensed producers – audited and approved by government – are entrusted to produce safe, reliable, consistent medicine for patients. They are entrusted to put safety at the core of their business at all times. But that is clearly not the case in certain circumstances.

In the past year, a few of the 52 licensed producers in Canada have been found to have pesticide contamination in their cannabis products. From what I can see, the explanations given for the presence of these pesticides don’t make sense. Pyrethrin, for instance, has been found on some medical cannabis products shipped out of certain growing facilities. However, pyrethrin does not naturally appear on plants. It has to be intentionally applied, accidentally or otherwise.

That means, in cases where this pesticide has been found on products after they left the growing facility, two things had to have happened. First, someone introduced it onto the plants to deal with an insect infestation. And second, lax quality control standards – perhaps influenced by a short-term focus on profits over patients – allowed infected products to enter their supply chain and, in many cases, to be consumed by patients.

When revealed, those responsible for companies using pesticides such as pyrethrin say they are “shocked”, publicly declaring that they have no clue as to how these toxic substances entered their cultivation processes. The fact is, if you don’t test your inputs, if you fail to test your outputs, and if you manage your business for short-term profits, you shouldn’t be producing cannabis.

There’s no place in healthcare for people who disregard a patient’s well being, because – from a patient’s perspective – what you don’t know could hurt you. No one who grows something can absolutely guarantee that a mistake will never be made, granted. But as the cannabis sector expands, experienced cannabis firms know there’s a direct correlation between attention and leadership: as the world pays more attention to our sector, the onus on us to be stewards in and for our industry also rises.

That means putting patient safety at the centre of everything we do. And that means ensuring patients are consuming safe cannabis produced by licensed companies that are committed to the long-term health and prospects of our growing industry.

July 19, 2017

Biros' Blog

Should PA Revoke a Cannabis License For Their Parent Company’s Past?

By Aaron G. Biros

2 Comments

Pennsylvania Medical Solutions, LLC (PAMS), won a license to grow medical cannabis in Pennsylvania, but some think the Pennsylvania Department of Health (PA DOH) should reconsider awarding that license. PAMS is a subsidiary of Vireo Health, which has medical cannabis licenses in New York and Minnesota, as well as quite the blemish on their business record. In December 2015, two former employees were accused of breaking state and federal laws by transporting cannabis oil from Minnesota to New York. Because of that history, some are questioning why exactly they were awarded the PA medical cannabis license.

In that school of thought is Chris Goldstein, a Philadelphia-based cannabis advocate and author of an article on Philly.com, which calls PAMS’ license into question. According to Goldstein, Vireo Health could lose their licenses in New York and Minnesota, and those former employees involved might even face federal prosecution. “On the surface it would seem that Vireo broke every rule in the book,” says Goldstein. “Not only could the company lose its permits in both of those states, but employees could face federal prosecution for interstate transport and distribution.” But does that previous wrongdoing by two former employees have any bearing on their application in PA? In Maryland, it did. According to The Baltimore Sun, concerns surrounding MaryMed’s parent company, Vireo Health, is the main reason why their permit to grow medical cannabis was revoked.

In response to some of those concerns about their PA license, Andrew Mangini, spokesman for Vireo Health, issued the following statement, which appeared in Goldstein’s article: “While we’re aware of allegations against two former employees of an affiliate, those individuals have never had a role in our application or in the management of PAMS,” says Mangini. “It’s also important to note that our Minnesota affiliate and our parent company Vireo Health have not been accused of any wrongdoing in connection with those allegations.”

Below is a timeline of events leading up to the PA DOH defending their decision to give PAMS a license:

December 2015: Two former employees of Minnesota Medical Solutions, a subsidiary of Vireo Health, transported a half-million dollars worth of cannabis oil from Minnesota to New York, violating state and federal laws.
February 9^th, 2017: The two former employees were formally charged with crimes in Minnesota for illegally transporting cannabis across state lines.
February 20^th-March 20^th, 2017: PAMS submitted a license application to the PA DOH between these dates, listing their business state as Minnesota on the application.
May 2017: Maryland DOH suspended the licenses of MaryMed LLC, a subsidiary of Vireo Health, over concerns that the company did not provide information related to the Minnesota and New York licenses on their application, according to the Washington Post.
June 20^th, 2017: PA DOH releases a list of license winners; PAMS was listed among winners for a cultivation license in Scranton.
June 26^th, 2017: PA DOH officials defend their decision to award PAMS a license, according to a Philly.com article. That same day, The Baltimore Sun reported the Maryland Medical Cannabis Commission revoked MaryMed, LLC their license, citing concerns about Vireo Health.

April Hutcheson, spokeswoman for the PA DOH, told Philly.com in June, “Remember, the permits are given to business entities, not people.” The point she is making refers to the charges being filed against former employees, not any of the businesses who hold medical cannabis licenses.

Steve Schain, Esq. practicing at the Hoban law Group

Steve Schain, Esq., an attorney with Hoban Law Group in Pennsylvania, has seen no objective evidence of anything wrongful in either PAMS’ application or the DOH’s processing of it. “Marijuana related businesses often have distinct, affiliated components and the Department of Health faces two critical issues,” says Schain.

“First, whether grow applicant PA Medical Solutions, LLC (PAMS) had a duty to disclose alleged wrongdoing on its application, failed to fulfill this duty and, if so, whether PAMS’ application should be amended, re-scored or disqualified. Second, as part of its ongoing license reporting requirements, whether grow licensee PAMS has any duty to disclose the alleged wrongdoing. The answer to much of this hinges on whether criminal or administrative charges were leveled against just Vireo Health’s former employees or also included the entity and whether these individuals or enterprise fell within Pennsylvania Medical Marijuana Organization Permit Application definition of an “Applicant” (“individual or business applying for the permit”) or applicant’s “Principals, Financial Backers, Operators or Employees” of PAMS. Either way, it does not presently appear that the [PA] DOH missed anything.”

This does raise the question of whether or not Vireo Health is under investigation, which is yet to be determined. According to Goldstein in his Philly.com article, the Minnesota DOH declined to comment on Vireo Health and the New York DOH says the department’s investigation is ongoing. “The selection of a Vireo Health affiliate to grow and process medical cannabis in Pennsylvania has cast a serious shadow over the integrity of the program even before it has started,” says Goldstein.

In Maryland, the DOH revoked their license as a direct result of those former employees in Minnesota committing crimes, according to The Baltimore Sun. Commissioner Eric Sterling said there is “a reasonable likelihood of diversion of medical cannabis by the applicant.” So should Pennsylvania do the same? Do those crimes by former employees have any bearing on their application? This story raises a number of questions regarding applications for state licenses that are largely left unanswered. One thing we know for certain: each state handles applications very differently.

July 12, 2017

Marketing Automation for Dispensaries

By Arnab Mitra

4 Comments

What is Marketing Automation?

Typically when most people think of marketing automation, they imagine a platform that automates activities such as lead scoring, customer segmentation, cross-selling and campaign management. Well that type of automation is primarily for B2B companies, who are looking to reach a mass audience at once. Plus, B2B marketing automation platforms usually only provide one channel, which is email, to reach their customers.

B2C companies are looking to grow their brand and reach their customers through personalized messages. A B2C marketing automation platform helps businesses understand where each individual customer is in their journey and determine what actions need to be taken to move each customer forward. Plus they get the option of multiple channels to reach their customer, including email, text message, IM, push notifications and more.

Why is Marketing Automation Important for Dispensaries?

The first obvious reason why marketing automation is important is for the simple fact that reaching your customers is now automated; you don’t have to send out messages yourself. Thus helping save time and scale your reach at once. But marketing automation is much more important than the simple reason of saving time and scaling your reach. At SailPlay, we believe the automation of these activities helps dispensaries be able to deliver the right message at the right time to the right customer, helping the long-term success of the business.

For example, knowing where each of your customers are in their journey helps you to not only segment them into different groups, but also create specific campaigns per group. Through marketing automation you will know if you have a new lead, repeat customer and loyal customer, helping you tailor a campaign for each group.

New Lead Campaign

Each time a new lead visits your dispensary or your website, run an email or SMS campaign to provide them with a discount code to entice them to make a purchase. And after their first purchase, send a communication one day later to ask them about their experience and the product purchased.

Repeat Customer Campaign

For any repeat customers, you know which products they have purchased in the past. Run campaigns that are specific to the product groups they have purchased before. These customers are more likely to engage in your campaign if they are interested in the product.

Loyal Customer Campaign

For loyal customers, run exclusive campaigns based on their specific past purchases. For example, if John prefers to purchases edibles, run a campaign for John about an exclusive offer on a new edible.

The more personalized your campaigns are for your customers, the more engagement you can expect. According to Experian, there is a 26% increase in engagement with a personalized campaign when compared to a non-personalized campaign.

Plus with more engagement, your chances of increased sales greatly rise. According to a VB Insight study, 80% of businesses that use marketing automation have seen an increase in leads, with the majority being quality leads.

What Dispensaries Should Focus On For Marketing Automation

With there being so many marketing automation software companies to choose from, we thought we would help you focus on a couple of key features.

B2C Marketing Automation

Be sure to choose a B2C marketing automation platform. When you search for “Marketing Automation” through Google or any search engine, you will find many B2B marketing automation platforms. B2B marketing automation platforms are different because B2B platforms are interested in bulk marketing and messaging, while B2C platforms are focused on the personalization and customer journey. And as an FYI, some B2B platforms will say they have a B2C platform as well, but they will be focusing most of their features to B2B since there are more B2B companies using marketing automation.

Selecting More Than Just an Email Service Provider

If your goal is to just send out emails, then choosing an email service provider is the way for you to go. But if your goal is to go beyond that, then choose a B2C marketing automation platform. With a B2C marketing automation platform you should expect the following:

Loyalty Platform: Through a loyalty platform, you can build out a customer loyalty program that will help increase customer retention. Through the loyalty platform, you can create a rewards system, providing your customers for points for various actions, including purchases and social media actions.
Communication Platform: Within the communication platform, you can create powerful email, SMS, IM and push notification campaigns to reach each customer with the right message at the right time.
CRM Platform: The CRM platform helps you manage your entire customer list from one place. Through the CRM you can create customer segments, dive deep into each customer and more.
Analytics Platform: Within the Analytics platform, you can analyze your clients’ actions, their purchases, and socio-demographic data. Plus you can measure the effectiveness of your loyalty program, marketing campaigns, promotions and more to improve future results.

Before it gets too saturated, dispensaries need to invest in marketing automation. As stated, marketing automation can help your dispensary create a personalized experience for each of your customers, leading to higher engagement and ideally more sales.

June 27, 2017

The Practical Chemist

Instrumentation for Heavy Metals Analysis in Cannabis

By Chris English

2 Comments

Determination of Toxic Metals in Cannabis

Heavy metals are common environmental contaminants often resulting from mining operations, industrial waste, automotive emissions, coal fired power plants, amount other sources. Several remediation strategies exist that are common for the reduction/elimination of metals in the environment. Phytoremediation is one method for removing metals from soil, utilizing plants to uptake metals which then bioaccumulate in the plant matter. In one study, cesium concentrations were found to be 8,000 times greater in the plant roots compared to the surrounding water in the soil. In 1998, cannabis was specifically tested at the Chernobyl nuclear disaster site for its ability to remediate the contaminated soil. These examples demonstrate that cannabis must be carefully cultivated to avoid the uptake of toxic metals. Possible sources would not only include the growing environment, but also materials such as fertilizers. Many states publish metal content in fertilizer products allowing growers to select the cleanest product for their plants. For cannabis plant material and concentrates several states have specific limits for cadmium (Cd), Lead (Pb), Arsenic (As) and Mercury (Hg), based on absolute limits in product or daily dosage by body weight.

Analytical Approaches to Metals Determination

Inductively Coupled Plasma, Ionized Argon gas stream. Photo Courtesy: Sigma via Wikimedia Commons

Flame Atomic Absorption Spectroscopy (Flame AA) and Graphite Furnace Atomic Absorption Spectroscopy (GFAA) are both techniques that determine both the identity and quantity of specific elements. For both of these techniques, the absorption in intensity of a specific light source is measured following the atomization of the sample digestate using either a flame or an electrically heated graphite tube. Reference standards are analyzed prior to the samples in order to develop a calibration that relates the concentration of each element relative to its absorbance. For these two techniques, each element is often determined individually, and the light source, most commonly a hollow cathode lamp (HLC) or electrodeless discharge lamp (EDL) are specific for each element. The two most common types of Atomic Emission Spectroscopy (AES) are; Inductively Coupled Plasma Optical Emission Spectroscopy (ICP-OES) and ICP-Mass Spectrometry (ICP-MS). Both of these techniques use an argon plasma for atomization of the sample digestates. This argon plasma is maintained using a radio frequency generator that is capable of atomization and excitation of the majority of the elements on the periodic table. Due to the considerably higher energy of the plasma-based instruments, they are more capable than the flame or furnace based systems for measurement of a wide range of elements. Additionally, they are based on optical emission, or mass spectrometric detection, and are capable of analysis of all elements at essentially the same time.

Technique Selection

Flame AA is easy to use, inexpensive and can provide reasonable throughput for a limited number of elements. However, changes to light sources and optical method parameters are necessary when determining different metals. GFAA is also limited by similar needs to change the light sources, though it is capable of greater sensitivity for most elements as compared to flame AA. Runtimes are on the order of three minutes per element for each sample, which can result in lower laboratory throughput and greater sample digestate consumption. While the sensitivity of the absorption techniques is reasonable, the dynamic range can be more limited requiring re-analyses and dilutions to get the sample within the calibration range. ICP-OES allows the simultaneous analysis of over 70 elements in approximately a minute per sample with a much greater linear dynamic range. ICP-OES instruments cost about 2-5 times more than AA instruments. ICP-MS generally has the greatest sensitivity (sub-parts-per-trillion, for some elements) with the ability to determine over 70 elements per minute. Operator complexity, instrument expense and MS stability, as well as cost are some of the disadvantages. The US FDA has a single laboratory validated method for ICP-MS for elements in food using microwave assisted digestion, and New York State recently released a method for the analysis of metals in medical cannabis products by ICP-MS (NYS DOH LINC-250).

The use of fertilizers, and other materials, with low metal content is one step necessary to providing a safe product and maintaining customer confidence. The state-by-state cannabis regulations will continue to evolve which will require instrumentation that is flexible enough to quickly accommodate added metals to the regulatory lists, lower detection limits while adding a high level of confidence in the data.

June 20, 2017

Cannabis M&A: Practice Pointers and Pitfalls When Buying or Selling a Cannabis Business

By Soren Lindstrom

2 Comments

The Stage is Set

According to the Marijuana Policy Group, the U.S. cannabis industry is expected to reach more than $13 billion in sales by 2020 and create more jobs than the U.S. manufacturing industry. According to Viridian Capital’s Cannabis Deal Tracker, there were close to 100 M&A transactions in the U.S. cannabis industry in 2016 and approximately $1.2 billion was raised in equity and debt. As the cannabis industry has grown more mature and businesses begin to have more capital available, the M&A activity within the industry is poised to grow significantly over the next years to assist businesses gain necessary scale and take advantage of synergies and diversification.

The Obvious Wrinkle

U.S federal law has prohibited the manufacture and distribution of cannabis since 1935. The U.S. regulates drugs through the Controlled Substances Act, which classifies cannabis as a Schedule I drug (i.e., drugs determined to have a high potential for abuse with no currently accepted medical use and a lack of accepted safety regarding their use). Yet, more than 25 states have by now legalized cannabis for medical and/or recreational purposes and, as a result, there is a clear conflict between such state laws and existing federal law. To possibly help bridge that conflict, the U.S. Attorney General’s office in 2013 issued guidance directing the federal government not to intervene with state cannabis laws except in specific, limited circumstances, but, contrarily, the DEA has shown no desire to re-classify cannabis. To add to the confusion, President Trump and the new U.S. Attorney General have provided mixed statements and signals about their positions.

All of this means that it continues to be risky to acquire cannabis businesses. The requirements to legally grow, distribute, prescribe, and use cannabis for either medical or recreational purposes vary widely by country, state, and local jurisdiction, making it tricky to determine whether such businesses can be legally combined, in particular, across state lines.

Pick the Right Team of Advisors

When preparing to sell or buy a cannabis business, it is important to pick the right team of advisors. Your regular legal counsel, accounting firm or CPA may not be the right advisors for a cannabis M&A transaction. Choose a legal counsel that not only has experience with cannabis laws and regulations, but also has cannabis M&A experience and can offer expert advice on areas like IP, employment, tax matters, etc. Similarly, verify that your accounting firm or CPA has real experience with financial and quality of earnings analysis and due diligence.

Conduct Gating Due Diligence Up Front

In any contemplated M&A transaction, it is wise to prioritize your due diligence investigations. There will always be some more prominent risks and business objectives in a particular industry or with respect to a specific target business. It will be more cost and time effective if those specific risks and business objectives are prioritized early in the due diligence process. These can dictate whether you even want to pursue the target further before you dig into a deeper and broader due diligence investigation. Conducting gating due diligence up front is even more important in an industry like cannabis that contain complex and thorny regulatory hurdles.

So, before you spend money and time on a broader legal, business and financial due diligence investigation, have your legal counsel analyze and confirm that the potential transaction is feasible from a regulatory perspective. This will include whether it is possible to obtain or transfer necessary local and/or state licenses and whether a combination or sale can occur across state lines if necessary. Early on in the process, It is also advisable to request that the target business complete a legal compliance questionnaire or discuss with the target its regulatory compliance program, policies and training. Such up front due diligence will either clear a path to negotiations and broader confirmatory due diligence or flush out “red flags” that may kill a possible deal or require the buyer to investigate further before proceeding.

Important Terms and Pitfalls in the M&A Agreement

Generally, a sale or purchase agreement for a cannabis business does not appear to vary much from a similar agreement in any other industry. However, the complex environment and the premature nature of the industry impacts certain deal terms and processes in different ways from most other developed industries.

Here are few examples to keep in mind when preparing and negotiating a sale or purchase agreement:

Third Party and Governmental Consents: Buyer’s legal due diligence must focus on the consents that may be required from seller’s suppliers, customers, landlords, licensors or other third parties under relevant contracts. Additionally, the due diligence should focus on consents and approvals required by local and state regulators as a result of the sale. The M&A agreement should contain solid seller representations and warranties about all such consents and approvals and any such material consents and approvals should, from a buyer’s perspective, be a condition precedent to closing of the transaction.
Legal Compliance: A buyer should not agree to a boilerplate seller representation about the target’s compliance with laws. Be specific and tailor seller’s legal compliance representation to relevant state and local cannabis laws, regulations and ordinances. From a seller perspective, be careful and thoughtful about any appropriate exceptions (including the federal prohibition) to be disclosed to buyer in the disclosure schedules underlying the sale or purchase agreement.
Financial statements: The cannabis industry is very fragmented and consists of many small businesses. Many of these small businesses do not have financial statements prepared in accordance with GAAP and may consist of only management prepared financials. In that scenario, a buyer should have its financial advisor do an analysis of the financials available and ask seller to provide a representation and warranty about the accuracy and good faith preparation of the provided financials.
Escrow: Typically, a buyer will request some part of the purchase price be placed with an independent financial institution for a period of time post-closing as a source of recovery for losses as a result of breaches by seller of any of the representations and warranties in the definitive sale or purchase agreement. Due to the federal cannabis and banking regulations, many of the larger commercial banks will not provide financial services to cannabis businesses, in particular if the business touches the plant. The parties must therefore consider alternatives, including local financial institutions with more relaxed compliance requirements or perhaps place the escrow in a trust account of a law firm or other independent party.
Working Capital Dispute Procedures: Similar to the escrow, larger accounting firms generally do not provide services to cannabis businesses. Due to the rapid evolution of cannabis related regulations, if the terms of the transaction include provisions for a post-closing working capital/purchase price adjustment and related dispute procedures, it is advisable to not name an arbiter in the agreement. Instead, parties should agree to mutually select the arbiter if and when a dispute should arise.
Indemnification: Because of the tricky legal environment of the cannabis industry, it may be prudent for a buyer to request, at the very least, that certain parts of seller’s legal compliance representation and warranty not be subject to the “regular” caps, deductibles and other indemnification limitations. Also, if a buyer has unearthed a significant issue in its due diligence investigation, it should consider asking seller for a special indemnity for such issue that would be indemnifiable regardless of buyer’s knowledge of the issue and not be subject to the general indemnification limitations.
R&W Insurance: If there’s a lot of competition for the purchase of a target, particularly in a bidding process, it is now common for buyer to offer to purchase a representation and warranty insurance policy (“R&W Insurance”) to possibly gain an advantage by limiting the seller’s post-closing indemnification exposure. The good news is that many of the R&W Insurance carriers do offer such insurance in connection with the sale and purchase of cannabis businesses. However, typically, R&W Insurance cannot be obtained for insured amounts of less than $5 million. Experienced M&A counsel can advise of the advantages and disadvantages of R&W Insurance and assist in the negotiation of the related terms.

The above are just some examples of what to expect in a cannabis M&A transaction. Every M&A transaction will have its unique issues that will need to be appropriately reflected in the sale or purchase agreements and good M&A practices will continue to evolve with the industry. If you are an owner of a successful cannabis business, buckle your seat belt and be prepared for an exciting ride as the industry gets closer to significant consolidation.

June 12, 2017

Biros' Blog

Washington Changes Course, Selects MJ Freeway as New ASV

By Aaron G. Biros

3 Comments

Two weeks ago, we reported on the State of Washington choosing Franwell as their apparent successful vendor (ASV) for their seed-to-sale traceability system contract. Late last week, the Washington State Liquor and Cannabis Board (WSLCB) sent out an email explaining that they are no longer going with Franwell and the new ASV is MJ Freeway.

The email (left) consisted of a letter sent by Peter Antolin, Deputy Director of the WSLCB, to licensees “who had written to the Board and staff regarding the marijuana traceability Apparent Successful Vendor and RFID tags.” Apparently, the reason behind switching the ASV to MJ Freeway is because Franwell’s system requires only one method for tagging plants- RFID tags. According to the letter, Deputy Director Antolin says the initial request for proposal (RFP) stated that the traceability system needs to support a variety of tagging methods, including bar codes and RFID. “The RFP requirements did not allow a vendor to make any assumptions regarding use of a single tagging methodology or allow vendors to include any such costs affecting the state or our licensees in their proposal,” says Antolin. As they made clear in the previous press release, the ASV is not the official contract winner until they complete negotiations and sign the contract.

On June 7^th, Franwell withdrew their proposal for the state’s traceability system, thus Washington went with the second highest scoring vendor, MJ Freeway. Deputy Director Antolin says they submitted a strong bid, but there are still many questions left unanswered. How could such a glaring mistake be overlooked when the state named Franwell the highest scoring bidder? Is MJ Freeway’s system robust enough and capable of handling the state’s cannabis licensees’ traceability requirements even though they were not the highest scoring bidder? The deadline for the new system to be in place is October 31, 2017, which is quickly approaching for such a massive systems overhaul.

The WSLCB’s oversight highlights a few inadequacies with the state’s regulatory agency, particularly their indecision and lack of foresight. So much of the concept behind seed-to-sale traceability rests on Cole Memo compliance. A big reason why some states seek to implement a robust tracking system is to remain compliant with the Cole Memo; preventing diversion to crime organizations with regulatory oversight is a key tool that states use to tell the federal government they are complying with their directive and intend to protect their state’s legal cannabis operations from federal prosecution. Without a proper system in place, the state runs the risk of exposing their entire cannabis market to threats of federal enforcement, a scenario that seems unlikely but could be disastrous to cannabis businesses and the local economy.

The WSLCB needs to get their act together fast.

June 1, 2017

What Does it Really Mean To Be Organic in Cannabis?

By Dr. Allison Justice

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If you ask an organic chemist, it’s any molecule with a carbon attached. If you ask a consumer of USDA Certified Organic vegetables, they might say it is food produced without chemicals pesticides, that it is safer and cleaner and even more nutritious. Possibly another consumer will say it’s just a hoax to pay more for food, but what does the USDA Certified Organic Farmer say?

Most will agree it is a very rigorous process of record keeping, fees, rules and oversight. The farmers have limited choices for pesticides and fertilizers; they incur higher labor costs, suffer potentially lower yields and generally have higher input costs. However, at the end of the day the farmer does get a higher price point.

With so many misconceptions about organic food, it is difficult to know what is actually organic by definition. First let’s think about what the word pesticide means. A pesticide is “a substance used for destroying insects or other organisms harmful to cultivated plants or to animals.” By definition, a vacuum used to suck off spidermites is a pesticide, so instead we should say that no synthetic pesticides are used. These are pesticides that enter and reside for long periods of time within the plant, which are potentially harmful to the end consumer. Though organic food does not contain synthetic pesticides, the perception of the food being healthier is also not always accurate. Growers often use foliar applied teas or manures, which increase the chance of the product containing E. coli or other harmful microbes. In addition, certain sanitizing agents or gamma irradiation is not allowed, so the post-harvest cleaning is not always as thorough as for conventional foods. When cannabis is sold as a dried product, the consumer cannot wash the flower as they might do before eating an apple. As growers, we should make sure we are disinfecting the flower before harvest and keeping the plant/processes clean throughout curing.

I often hear cannabis growers saying they are producing an organic product, but this simply cannot be true. The term “organic” is a labeling term for agricultural products (food, fiber or feed) that have been produced in accordance to the federal government’s USDA organic regulations. Due to our (cannabis growers) ongoing disagreements with the federal government, this is not a term we can put on our product. However, we can still grow to the same standards as USDA-certified farmers. How can we do this? By using OMRI (Organic Materials Review Institute) approved products. OMRI is a third-party, nonprofit organization that lets growers know if a product can be used in certified Organic production. You can find this seal on many fertilizers or pesticides.

Next, if it is a pesticide product that is not OMRI approved, check to see if it is registered by the EPA (Environmental Protection Agency). The EPA will provide ingredients and crops that are approved, amounts which can be used safely and storage/disposal practices on the label. Products that are put through the EPA registration are evaluated for their environmental, human and residual risks. Companies pay a hefty fee for this process, and much research goes into providing this information – ALWAYS READ THE LABEL!

A couple of exceptions to an EPA registration are pesticides that are 25B-exempt and biological control. 25B-exempt pesticides are pesticides that pose minimal or no risk to humans. A complete list of these products can be found here. Examples of these pesticides include rosemary, garlic, spearmint, etc.

Biological control is a method for controlling pests by the use of natural enemies. Biological control agents are allowed in organic production. If you are still wondering which pesticides or fertilizer are OK to use in cannabis and you do not live in a state with already enforced regulation, check out allowed lists in states that do.

So we know we cannot be considered a USDA organic cannabis farmer, but we CAN strive to meet the same standards:

Follow your state’s regulations; they are there for a reason!
Use OMRI products, 25B-exempt products and BCAs.
Keep an eye out for upcoming third-party certification companies, such as Clean Green or MPS (beware of the ones that want you to only use their products), because we need more than the state to regulate what we put onto our crop.
Finally, always think about the microbial load you’ve put on your plants. Although many can be very beneficial and help to produce high quality crops, many species can be harmful to the end user.