Sustainability for the Cannabis Industry, Part II: The New Cannabis Consumer

By Olivia L. Dubreuil, Esq., Brett Giddings

Most readers ought to be well aware that the cannabis industry is rapidly growing. The Arcview Group, an Oakland-based investor network, estimates the retail and wholesale cannabis market will reach $22.8 billion by 2020. That number represents a lot of people consuming cannabis in many different ways.

The average cannabis consumer is changing. A new range of social groups is consuming cannabis-based products. From yoga diehards, to middle-aged men and women, veterans that have ‘tried everything else’ and young professionals looking for a different way to relax, the market is broadening.

This new segment of cannabis consumers are often not looking to get high- they are looking for anti-inflammatories, relaxants and ways of dealing with chronic pains and stress. For these health and wellness seekers, the last thing they want is a product dosed with pesticides, insecticides or butane residues. We can expect to see these consumers to follow broader consumption trends- specifically when it comes to a product like cannabis that people are inevitably placing in or on their bodies.

These consumers come with new sets of expectations, similar to those when they buy fruit, vegetables, coffee or chocolate. They are increasingly curious about the contents of the products they purchase- they are a large part of the reason that the sales of organic produce has ‘ballooned’. They are asking questions like: Does the product contain pesticides? Has the product been cultivated in a way that minimizes negative environmental impacts? How do we know that the supply chain quality controls are rigorous enough to ensure no one has tampered with the product? Who is growing and picking this product and how are those people being treated?

When a curious consumer enters a modern American supermarket, they are guided by a range of messages relating to the contents and supply chain that was part of making each product. Organic, non-GMO, pesticide-free, fair trade, free-range and locally produced are some of the common criteria. The more credible labels are supported by codes and procedures in which the whole supply chain is audited, monitored and approved by the certifying body according to certain standards- for example the USDA certifies organic foods.

Being a Schedule I controlled substance under federal law, cannabis is probably not going to receive USDA organic certification any time soon. However there are organizations out there that are committed to increasing the availability of cannabis grown with organic practices. Certifying bodies like Certified Kind and the Organic Cannabis Growers Society are gaining popularity among growers who see the market evolving in that direction. At the same time, businesses such as Delicious Fog (an ‘organic-focussed’ delivery service in Santa Clara County) and Harvest (an ‘organic’ dispensary in San Francisco)- are specializing in the sale of these ‘organic’ cannabis products.

Just like any sustainability issue- ensuring your cannabis product comes from a well-managed supply chain cannot be a last minute add-on. Whether a business is small, large, mature or emerging, developing a strategic approach to the diverse spread of sustainability challenges is critical.

As a cannabis business what can you do to appeal to the new cannabis consumer?

July 27, 2016

Soapbox

Sustainability for the Cannabis Industry: Part I

By Olivia L. Dubreuil, Esq., Brett Giddings

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The cannabis industry is an unusual creature. It is so new and fluid that nothing in its space is yet crystallized. Product types, brand names, generally accepted processes and procedures are all still being invented and tested. Consumer market segments are defining themselves as the progression of legalization advances through the states. Seniors, children, veterans, women, and professionals of all backgrounds are feeling the health and wellness benefits of the flower that is slowly losing the negative stigma inherited from the so-called war on drugs. The potential is enormous. Money is already flooding to the lucky entrepreneurs with enough foresight to work in the space, and corporate business leaders from many other traditional sectors are slowly, but steadily flocking to the market.

This is economically encouraging. A whole new industry that creates new jobs, generates tax revenue and creates wealth. But there is a worrying scenario. In that scenario, traditional cannabis business owners and entrepreneurs are pushed out of the market as corporate competitors enter the game. In that scenario the industry grows faster than its regulatory framework, with little to no voluntary regulations, no sustainability leadership, and the industry’s practices and reputation finish in the gutter. In that scenario, federal and state regulators ramp up indiscriminate bans and phony prohibitions. In that scenario the new cannabis industry exacerbates the world’s social and environmental problems by being non-inclusive, by creating a divide within communities, by adding its own share of pollution, by pushing unhealthy and unsafe products – all for the sake of an easy buck.

That scenario is not a certainty – it does not have to see the light of day. This industry has the potential to be different. It has the unique opportunity to integrate sustainability practices from the start, to create a space where business meets mindfulness, and where corporate profits do not trump consumer health, worker welfare, community engagement or environmental preservation.

Sustainability strategy is the best risk management tool available to the cannabis businesses emerging today that hope to stay relevant in the future. A sustainable cannabis industry is one where women and minorities feel included, where the consumer recognizes and is loyal to brands and labels, where businesses are thriving while having a positive influence on their peers, a positive impact on their community and on the environment, where the race to the top breeds best practices and innovation.

Three levers can push sustainability: the consumer, the industry (and the businesses that comprise it) and the government (local, regional, national and international). Surprisingly, businesses can have a significant influence on all three. Consumers make and shape a market. What will happen when the consumer becomes aware of fossil-fuel (benzene) extraction in the age of climate change, when they request organic flowers that fits their ‘Wholefoods lifestyle’, or when they boycott non-biodegradable packaging? What will happen when a scandal breaks, linked to an avoidable health and safety accident, or when they realize people of color do not have equal opportunity in a cannabis business?

It is preposterous to think, that in this day and age – where information travels at the speed of light, some type of potentially damaging information about a product manufacturing process will not get out at some point or another (in some cases they have). There is absolutely no need to gamble with that. The solution is simple: adopt sustainable practices from the start.

The third lever is the government – we will come back to the second lever later. The cannabis industry, better than any other industry, knows how the government can make or break a business. If the government decides, like they did in Colorado, that in nine months cannabis packaging needs to be resealable and childproof, businesses will have to sit on several weeks worth of sales until they can find new suppliers, they will probably have to rethink their processes, while absorbing the costs of the packaging they had bought in advance. Worse case, they also have marketing and merchandising to rethink. All of that is costly.

However there is good news; government can be channeled, generally speaking, by doing the right thing. If an industry actively demonstrates a desire to do the right thing, and there is not an exaggerated amount of complaints (or accidents), then regulators will leave it alone. Businesses can and should invest as a group into drafting and endorsing generally accepted industry practices and organizing industry self-regulations. Those will guide governments when they draft regulations, but they could also preempt a lot of nonsensical top down rules

The second lever is the most important, and that is the business lever. Cannabis businesses can make or break this industry. Those who believe that the unsustainable practices that worked in the context of an illegal/black/grey market will work in the context of a 21st century legal industry may need a reality check. Those who continue to promote and endorse them are dangerous for the industry because they breed a climate of distrust, and they bring the industry under closer scrutiny. The cannabis industry needs businesses that display exemplary behaviors, think about their impact, and elevate the discussion as well as their peers.

Whether a business is small, large, mature or emerging, developing a strategic response to these challenges can and will create a sustainable business model. Businesses can gain robust competitive advantages over their peers, reap the rewards of having loyal customers, create thriving communities, and foster healthy natural environments by doing the right thing and embedding sustainability within their business decisions.

Tomorrow’s cannabis industry business leaders will be those that chose to be part of the solution, those that understood that sustainability was vital to their business model and took action early on.

Editor’s Note: Project Polaris is a California non-profit corporation, offering sustainability coaching and guidance to cannabis industry businesses. By becoming a member of Project Polaris, businesses have access to sustainability experts throughout the year, to set, support and carry out cost-effective, meaningful and impactful sustainability solutions.

July 27, 2016

Marijuana Matters

Education & Experience: Understanding the Operations

By David C. Kotler, Esq.

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I often write about the legal side of and opinions about the cannabis industry. Much of what I write about is culled from anecdotal experiences within either my personal practice or observations in regard to the industry. I recently had a trip to Portland, Oregon to spend time learning and understanding a little bit about a particular client’s operations so that I could provide counsel to that particular client, where permissible. For me, it was an important part of the education, which I stress and serve as the basis for this article.

With education comes understanding. What I see in the cannabis industry is often those who are critical of the use of cannabis, either recreationally or medically, seem to demonstrate some lack of understanding. In Florida, as the “No on Amendment 2″ commercials and videos roll out, I see much information that clearly comes from a lack of understanding or potentially a willful desire to distort the truth.

I share the following, less as a means to correct those distortions, but more as an opportunity to educate one who may be reading this and who may not have the same experience, which I just had the opportunity to receive. My time in Oregon was spent predominately in Portland and Salem as this is where the particular client has locations that I was able to view and experience.

My observation from a zoning perspective was that there was not a dispensary on every corner and that at times I had to be patient before seeing a dispensary during our drive. Of note in regard to the dispensaries that I did see was often the use of “cannabis” or “marijuana” in the name or associated with signage at the dispensaries, in addition to a green cross. However, there were many that did not take as visible an approach. I recall seeing, pursuant to the rules of the Oregon Program, windows covered so that one cannot see in. From time to time there were billboards advertising dispensaries. What I noticed most was in part, the clean presentation of the particular client I was seeing versus what was presented on the outside of many dispensaries we passed. This may be highlighted in part based on viewing dispensaries through what one might consider an East Coast lens. There are others that might argue that this perspective, particularly in emerging markets, is much different than that which has been developed over time in the West Coast markets, many of which have now gone recreational.

Overall, like anything, what I saw ranged the gamut from unprofessional and a little unsightly to professional and clean looking, which generally fit into the surrounding neighborhood. In particular, my client’s dispensary in Salem was in a retail shopping center along with a Little Caesars, Aaron’s Rentals, a nail salon, and other normal and expected retailers. Unless you poked your head inside the door, it would not be readily apparent that it was a dispensary.

My experience with the types and looks of the dispensaries running the gamut was mirrored by a particularly unique experience I had in viewing customers/patients. What was clear from a very limited time of viewing who it is that goes into a dispensary in Oregon was that it was impossible to pigeonhole the types of patients and ailments or, in the recreational setting, who the end user might be. On the Saturday morning of my visit, while viewing operations in Salem, I was approached and began to speak with an older gentleman with a long straggly gray beard who appeared to be in his late 60’s to early 70’s. During the course of our conversation he let me know that he is looking forward to taking it easy, and that he was a veteran. He had two friends with him and it looked like they were going to enjoy some time relaxing together, but he was also able to tell me that it was assistive to him at times when his anxiety got the best of him. His purchases were economical, and it was apparent that he and his friends were of limited socio-economic means; however, his purchases were notably and significantly cheaper for use than potentially alcohol if, in fact, he was not medicating and using with his friends recreationally.

Within minutes after the gentleman left, the exact opposite walked in the store. Candidly, I was mildly surprised by whom I held the door for to walk in as I was leaving. For a moment I was transported from Salem, Oregon to any town in central New Jersey or main street USA. Decked out in what could have been Lily Pulitzer or other preppy outfit were two soccer moms. They had stepped out of the newest model of a particular German automobile manufacturer. Unfortunately, I did not have the opportunity to engage with the soccer moms in discussion, but it was clear through their knowledge of the layout and interaction with the employee behind the counter that this was not their first trip to this particular location.

So what does the foregoing illustrate? For me it illustrates the development of perspective through education. It is that perspective that I hope to bring to the advice and counsel of clients. Perhaps I can use the knowledge to be assistive in making recommendations on regulatory issues, if consulted on them, helping to explain to politicians and bureaucrats or zoning and planning officials what might or might not be important in their considerations when dealing with a client. My observations should ultimately help me assist in educating others as to what the business and operation of cannabis related businesses might actually entail and look like. It is absolutely necessary, irrespective of one’s role in the cannabis industry, whether it be on the real estate side, insurance brokerage, providing legal or consulting advice (especially as individuals transition from those areas of practice in non-cannabis related spaces) that one take the time to understand the industry and its practice from the inside out. Only then can one be an effective resource to a cannabis related business wherein once the layers of the onion are peeled back, there is actually substance and information.

July 26, 2016

From The Lab

HPLC Column Selection for Cannabis Chromatographers

By Danielle Mackowsky

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If your laboratory utilizes an HPLC system for cannabinoid and pesticide analysis, it can be a daunting task to select a stationary phase that is both practical and sufficient for the separation at hand. Typically, when developing a new method, an analyst will either evaluate a column they already have in house or seek out a referenced phase/dimension in the literature before exploring other available alternatives.

Chemical structure of Tetrahydrocannabinol (THC)

A C18 phase is an excellent first choice for non-polar or slightly polar compounds. If the analyte in question has a minimum ratio of three carbon atoms for every heteroatom, it will be sufficiently retained on this phase. THC and other relative cannabinoids are prime candidates for separation via C18 due to their non-polar nature and structural components.

In addition to a universal C18 phase, alternative selectivity options do exist for laboratories concerned with the analysis of cannabinoid content. Another prevalent column choice features an aromatic or poly-aromatic stationary phase. Compatible with highly aqueous mobile phases, aromatic and poly-aromatic columns primarily rely on hydrophobic and π-π interactions as their main analyte retention mechanisms. Poly-aromatic phases provide enhanced retention and are more hydrophobic when compared to a single phenyl ring structure. While C18 phases are not ideal for resolving structural isomers, poly-aromatic columns are capable of separating these ring-based compounds. Chromatographers with a background in forensic analysis may be very familiar with this type of HPLC column due to its extensive use in drug testing applications.

Chemical structure of chlormequat, a hazardous polar pesticide commonly banned for use in cannabis cultivation

Besides cannabinoid content, many cannabis scientists are equally concerned with accurate quantitation of pesticides within a given sample. Many pesticides that have found themselves on regulatory lists in states such as Massachusetts, Washington or Nevada are extremely polar. In order to increase retention of these compounds, and thus improve your overall chromatographic method, it can be extremely advantageous to select a column that allows you to start your gradient at 100% aqueous mobile phase. An aqueous or polar modified C18 column contains an embedded polar group, polar side chain or polar end-capping to allow for separation of polar compounds, while still retaining and resolving non-polar analytes. For laboratories that necessitate the use of only one analytical column, an aqueous C18 phase will allow for separation of monitored pesticides without compromising the quality of cannabinoid data produced.

One must also take into account column length, pore size and particle size when purchasing a column. For the purposes of any cannabis related analysis, a pore size of 100-120Å will suffice. Larger pore columns are typically reserved for large peptides, proteins and polymers. Depending on the sensitivity and resolution needed within your laboratory, particle size can range from 1.8-5um, with the highest sensitivity and resolution coming from the smaller particle size. Core shell technology is also a popular option for laboratories who want to keep the pressure of their HPLC system low, without sacrificing any quality of their resolution. Column lengths of 50 or 100 mm are common for chromatographers who want to achieve sufficient sample separation while keeping their run times relatively short.

Regardless of the HPLC phase selected, it is very important that a guard cartridge is also used. Guard cartridges are traditionally the same phase and particle size of the HPLC column choice and help to prolong analytical column life. They provide additional sample clean up and are widely recommended by the majority of chromatography experts. Upon reviewing one’s options for HPLC phases and acquiring the necessary guard column, your cannabis laboratory will be ready to get the most out of your HPLC system for your analysis needs.

July 14, 2016

Soapbox

Learning from the Horticultural Industry at Cultivate’16

By Nic Easley

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This past week, over 10,000 individuals traveled to Columbus, Ohio to attend Cultivate’16, a conference hosted by AmericanHort, an organization dedicated to leading and unifying the horticultural industry. Cultivate’16 had hundreds of vendors displaying the latest technology and equipment for greenhouse production, design and controls along with the latest innovations in software, manufacturing, automation and more.

For all of the energy surrounding the nascent cannabis industry, there was very little representation from it at Cultivate’16. Our associates encountered an estimated thirty cannabis industry professionals, compared to an estimated total of 10,000 attendees. This further compounds the reality that the cannabis industry is still a very young industry when compared with the more mature and well established industries such as conventional agriculture, finance, information technology and others.

At Cultivate’16, there was enormous potential for businesses in the cannabis industry to learn from the traditional horticultural industry. The horticultural industry has had to become extremely efficient with its capital, resources and time in a manner which the cannabis industry has not had to accommodate yet. There were automated container filling machines, cost effective nutrient solutions and greenhouses that are controlled wirelessly. Those were just a fraction of the products and systems that could save cannabis cultivators hundreds of thousands of dollars.

Horticulturalists have been forced through shrinking margins to increase their output and savings. The horticultural market is expanding at an average rate of 5% per year as opposed to the cannabis market which is currently growing at a rate of 68% year over year. Cannabis operators can still get anywhere from $1,200 to $1,400 a pound in most legal markets on the lower end. This is in comparison to basil at $4 a pound. This difference is stark. It means that cannabis cultivators are not under the same pressure to be efficient as other traditional crop cultivators. It is clear though that with increasing legalization of cannabis in both the medical and adult use markets that the price of cannabis will fall. Therefore, it would be wise for the cannabis professionals to attend events such as Cultivate’16 in greater numbers to prepare for the eventual decrease in price.

3C Consulting was present at Cultivate’16 because we understand the importance of looking to other successful industries for guidance. We were able to converse with a diverse array of vendors and business owners to further our own knowledge on the best practices to bring to the cannabis industry. To be able to learn from those that have come before you is a strength, not a weakness. Far too often the cannabis industry seeks to reinvent the wheel. It does not have to be this way.

By learning from other industries, utilizing the latest horticultural technology and becoming more cost-effective the cannabis cultivators will be able survive and thrive. It is those that prepare for turbulence that are best able to capitalize on change. In the Chinese language, the word for crisis is the same as the word for opportunity. It is wise to prepare for a crisis so that when it does occur you are able to transform it into an opportunity.

July 12, 2016

Quality From Canada

Cannabis in Canada: 6 Key Considerations for Recreational Legal Distribution

By Tegan Adams

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Canada has been undergoing many changes in the cannabis marketplace, most notably in the last two years. Originally, the system began with increasing access to cannabis for those with medical conditions under a “grow your own” model, the Medical Marihuana Access Regulations (MMAR). After running for a while, our regulatory authority, Health Canada, decided that among other faults, the MMAR program could pose a security risk to individuals growing at home. Following the dissolve of the MMAR, later released was a set of regulations, called Marihuana for Medical Purposes Regulations (MMPR) to license commercial producers now called Licenced Producers (LPs). While some MMAR patients were grandfathered in, the MMPR began as the mainstream cannabis production platform. MMPR LPs are inspected with high security and quality standards to produce and distribute cannabis exclusively to medical patients with a doctor-prescribed medical document. Patients register with one LP exclusively and receive cannabis by a mail-order system, and mail order only.

Why mail order with a medical document? What about all the dispensaries selling cannabis across Vancouver and Toronto? Where is all this cannabis coming from, if the MMPR LPs can only distribute direct to a patient through mail order?

These are good questions. And they are questions you should be asking. There are a few different factors contributing to the vast array of consumer confusion across borders in the Canadian system. People are passionate about cannabis, as well as their own personal freedom to have it. Some are passionate for medical reasons, others for the pure punch of liberation. Either way these passions have resulted in an interesting series of court decisions including a more recent one that deemed the MMPR unsuitable to provide enough access to cannabis for those in need. Effective close to the end of August this year in 2016, the MMPR as it is currently written will cease to be in effect and require revisions or a new system entirely for the legislation to be accepted and continued with.

There are a few different critiques of the MMPR which include: not enough variety, no ability to “see and feel” products before purchase, limitations on supply sources, limitations on dosage formats (i.e. oil and dried flowers only) and some might try to argue the rise in cost. While cannabis remains illegal to traffic without adequate controls across Canada, it is low on the priority list for the RCMP to spend resources on. Depending on which town and situation you are caught carrying it in, you would be hard pressed to be charged for carrying cannabis unless you ask for it. So, Canada has seen a surge in retail dispensaries, licensed or not, at the municipal level to the point where hundreds of them now exist across the country, distributing hundreds of millions of dollars of cannabis products per year.

Dispensaries vary in degree of professionalism, prices and strains available. Some have over sixty strains while others hold only four or five. Because Health Canada does not require laboratory testing of these products, most do not know their cannabis’ potency or that it is safe from bacteria, moulds, pesticides and aflatoxins. If they wanted to know, they could not find out since those with Narcotics Licences for testing are unable to accept their products under any regulatory framework.

We have seen false and unaccredited labs pop up on street corners accepting the unregulated products, but what we have not seen is information on the methods these labs are using, how they are validated and whether or not they are accurate. Regardless, the general consumer base does not seem to mind. Many of these locations have been reportedly selling $20,000-$30,000 CAD per day per 5,000 square feet or less of an operation. That is on average $600,000 per month and if continued for a full year as some have done, around $7.2M per year. All unregulated, and all up until recently tolerated by our RCMP and local policy authorities.

Finally, given the industrial-scale distribution that was not just occurring in the black market anymore, different neighbourhoods that did not like cannabis complained. LPs complained. And other regulated product industry members complained. They all complained that the unregulated distribution of cannabis was negatively affecting them in one way or another. And so, Canada saw raids. Hundreds of dispensaries raided, and many people were arrested if only temporarily. Products were seized. However, these raids generally proved ineffective and we saw most of these dispensaries open the next day. While the daily amounts seized might have sounded like a lot, they were only about one day’s sales for most of these locations, providing the authorities with a better glimpse into just how much diversion of the supposedly controlled substance was going on.

Given that cannabis is promised for recreational legalization in the spring of 2017 in Canada, many are wondering about what sort of business opportunities there might be on the horizon. We know that while control of production will probably remain similar to how it is now, our distribution models will change. Here are a few points Health Canada is considering in their latest discussions:

A phased-in approach to distribution will probably be necessary. First, continuing with the mail-order system would be the easiest phase in approach.
Regulated storefronts as an alternative to the current dispensaries. It is doubtful that dispensaries operating as they are will continue. There are rumors floating around that Shopper’s Drug Mart and other pharmacies will be able to help with distribution. Time will tell if these rumors evolve.
Provincial and Territorial uniqueness. Distribution could be altered at regional levels and different models could be developed across the country, similar to liquor regulations in effect. Some of our provincial liquor distribution entities have inquired to become distributors.
Keep cannabis away from minors. Health Canada is considering a look at locations, hours of operation, density of retailers and producers and consumption of cannabis outside of personal dwellings all as factors in the new system.
Guarding against impaired driving. Our regulators want to make sure they have enough tools to monitor those who may have been driving after consumption of cannabis.
Sound product packaging and labeling. A focus on understanding THC & CBD potencies as well as appropriate health warning messages. Packaging and Labeling, and effectively sound testing, will all be necessary.

Want to know more, or see for yourself? Check out Health Canada’s latest discussion document.

Curious to know what this will mean for packaging and labeling? Get in touch with me to better understand what Eurofins-Experchem currently tests for with our Licensed Producers. Contact me at 416 665 2134 ext 252 or teganadams@eurofins.com

June 29, 2016

The Practical Chemist

Internal Standards– Turning Good Data Into Great Data

By Amanda Rigdon

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Everyone likes to have a safety net, and scientists are no different. This month I will be discussing internal standards and how we can use them not only to improve the quality of our data, but also give us some ‘wiggle room’ when it comes to variation in sample preparation. Internal standards are widely used in every type of chromatographic analysis, so it is not surprising that their use also applies to common cannabis analyses. In my last article, I wrapped up our discussion of calibration and why it is absolutely necessary for generating valid data. If our calibration is not valid, then the label information that the cannabis consumer sees will not be valid either. These consumers are making decisions based on that data, and for the medical cannabis patient, valid data is absolutely critical. Internal standards work with calibration curves to further improve data quality, and luckily it is very easy to use them.

So what are internal standards? In a nutshell, they are non-analyte compounds used to compensate for method variations. An internal standard can be added either at the very beginning of our process to compensate for variations in sample prep and instrument variation, or at the very end to compensate only for instrument variation. Internal standards are also called ‘surrogates’, in some cases, however, for the purposes of this article, I will simply use the term ‘internal standard.’

Now that we know what internal standards are, lets look at how to use them. We use an internal standard by adding it to all samples, blanks, and calibrators at the same known concentration. By doing this, we now have a single reference concentration for all response values produced by our instrument. We can use this reference concentration to normalize variations in sample preparation and instrument response. This becomes very important for cannabis pesticide analyses that involve lots of sample prep and MS detectors. Figure 1 shows a calibration curve plotted as we saw in the last article (blue diamonds), as well as the response for an internal standard added to each calibrator at a level of 200ppm (green circles). Additionally, we have three sample results (red triangles) plotted against the calibration curve with their own internal standard responses (green Xs).

Figure 1: Calibration Curve with Internal Standard Responses and Three Sample Results

In this case, our calibration curve is beautiful and passes all of the criteria we discussed in the previous article. Lets assume that the results we calculate for our samples are valid – 41ppm, 303ppm, and 14ppm. Additionally, we can see that the responses for our internal standards make a flat line across the calibration range because they are present at the same concentration in each sample and calibrator. This illustrates what to expect when all of our calibrators and samples were prepared correctly and the instrument performed as expected. But lets assume we’re having one of those days where everything goes wrong, such as:

We unknowingly added only half the volume required for cleanup for one of the samples
The autosampler on the instrument was having problems and injected the incorrect amount for the other two samples

Figure 2 shows what our data would look like on our bad day.

Figure 2: Calibration Curve with Internal Standard Responses and Three Sample Results after Method Errors

We experienced no problems with our calibration curve (which is common when using solvent standard curves), therefore based on what we’ve learned so far, we would simply move on and calculate our sample results. The sample results this time are quite different: 26ppm, 120ppm, and 19ppm. What if these results are for a pesticide with a regulatory cutoff of 200ppm? When measured accurately, the concentration of sample 2 is 303ppm. In this example, we may have unknowingly passed a contaminated product on to consumers.

In the first two examples, we haven’t been using our internal standard – we’ve only been plotting its response. In order to use the internal standard, we need to change our calibration method. Instead of plotting the response of our analyte of interest versus its concentration, we plot our response ratio (analyte response/internal standard response) versus our concentration ratio (analyte concentration/internal standard concentration). Table 1 shows the analyte and internal standard response values for our calibrators and samples from Figure 2.

Table 1: Values for Calibration Curve and Samples Using Internal Standard

The values highlighted in green are what we will use to build our calibration curve, and the values in blue are what we will use to calculate our sample concentration. Figure 3 shows what the resulting calibration curve and sample points will look like using an internal standard.

Figure 3: Calibration Curve and Sample Results Calculated Using Internal Standard Correction

We can see that our axes have changed for our calibration curve, so the results that we calculate from the curve will be in terms of concentration ratio. We calculate these results the same way we did in the previous article, but instead of concentrations, we end up with concentration ratios. To calculate the sample concentration, simply multiply by the internal standard amount (200ppm). Figure 4 shows an example calculation for our lowest concentration sample.

Figure 4: Example Calculation for Sample Results for Internal-Standard Corrected Curve

Using the calculation shown in Figure 4, our sample results come out to be 41ppm, 302ppm, and 14ppm, which are accurate based on the example in Figure 1. Our internal standards have corrected the variation in our method because they are subjected to that same variation.

As always, there’s a lot more I can talk about on this topic, but I hope this was a good introduction to the use of internal standards. I’ve listed couple of resources below with some good information on the use of internal standards. If you have any questions on this topic, please feel free to contact me at amanda.rigdon@restek.com.

Resources:

When to use an internal standard: http://www.chromatographyonline.com/when-should-internal-standard-be-used-0

Choosing an internal standard: http://blog.restek.com/?p=17050

June 14, 2016

Marijuana Matters

Patent Options Available for Breeding Cannabis

By David C. Kotler, Esq.

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Patent No.: 909554. Date of patent: August 4, 2015. Years from now, historians and academics may look back on this patent number and date as a watershed mark in the evolution of legal cannabis. Feel free to read the 147 pages of the patent documents but, in short, it “leads to many innovations, provides compositions and methods for breeding, production, processing and use of specialty cannabis.” It was the first time that the U.S. Patent Office (USPTO) had issued a patent for a plant containing significant amounts of THC. One USPTO spokesman recently discussed with a journalist that “there are no special statutory requirements or restrictions applied to marijuana plants.” The following is a broad, and I mean really broad, overview of the options available to protect intellectual property within the cannabis species and strain realm.

Generally speaking, to be patent eligible, an invention must be useful, it must be new, it cannot be obvious and it must be described in a manner so that people of skill in the relevant specialty can understand what the invention is, make it and use it without engaging in undue experimentation. In terms of cannabis, essentially the breeder must have created a new and non-obvious strain over what already exists that is useful such as being highly resistant to molds or having a specific concentration of CBD.

Breeders potentially have a number of options available to them, despite the common belief otherwise. In the U.S. there are five types of intellectual property protection that breeders can obtain for new plant varieties or their use of clones:

One may seek protection for seeds and tubers, known as Plant Variety Protection. A tuber is essentially a swelled root that forms a storage organ. The Plant Variety Protection Office provides this protection. To apply for Plant Variety Protection, the applicant submits information to show that the variety is new, distinct, uniform and stable.

For asexually propagated plants except for tubers, a Plant Patent may be sought. These are sought through the USPTO. This is relatively inexpensive compared with a Utility Patent covering the genetics.

Trade secrets are often used to protect inventions that will not be commercially available or cannot be reverse engineered. For example, if a new strain is invented but is only commercially available in its final form, trade secret protection may be the best form. The most important thing to remember is that a company must follow a strict set of requirements to keep the trade secret confidential.

The last patent type protection could be through a Utility Patent. A Utility Patent can be issued for any type of plant showing its utility. These are issued by the USPTO. Seeking and obtaining a Utility Patent is expensive and complex.

In addition to Patent Protection, breeders may seek Contractual Agreements restricting the use of the clones (i.e. a material use agreement). The parameters that a breeder wishes to craft can essentially be crafted into the language of any type of agreement that is drafted to memorialize the relationship and terms between the parties.

A few broad-stroke items to keep in mind with regard to patents particularly relative to the patenting of cannabis strains and the like: First, is the passage of the America Invents Act which among other changes allowed for the U.S. to transition from a First-to-Invent patent system to a system where priority is given to the first inventor to file a patent application. Second, there are the potential bars based on different types of prior use.

Any discussion about the foregoing topic should necessarily include the question: Is it really good for the cannabis industry and its evolution? The dialogue moves out of one steeped in tradition, lure of trips through mountain passages, and potentially patient benefit or in search of higher quality and into connotations of business law and big businesses sweeping in to take over. It is an expensive process. It may be inevitable. In the meantime, protect yourself as best you can and as you see fit.

June 14, 2016

Biros' Blog

NCIA Guest Post: Waiver Program Could Clear Path for State Legalization

By Aaron G. Biros

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In last week’s guest post on the National Cannabis Industry Association (NCIA) blog, I discussed The State Marihuana [sic] And Regulatory Tolerance (SMART) Enforcement Act, bill H.R. 3746, and its potential to alleviate a number of problems in the cannabis industry.

The bill would exempt states from the federal prohibition of cannabis via a waiver program. The Attorney General could grant those waivers to states that operate a robust regulatory framework and oversight of the cannabis marketplace. It also has measures in place to help prevent diversion of cannabis into the black market, protecting consumer safety and public health, eliminating criminal enterprise involvement and more.

Cody Stiffler, vice president of Government Affairs at BioTrackTHC, believes this bill could be a panacea for many ailments facing the cannabis market. “They [Congress] plan to give the U.S. Attorney General powers to offer waivers to state governments, exempting that state from federal law regarding cannabis, allowing banks and other institutions to take part in the industry without fear of federal backlash under the Controlled Substances Act,” says Stiffler. Perhaps the most significant effect this bill could have on the cannabis industry is knocking down the burden of the 280E tax code on cannabis businesses primarily because it would exempt states from The Controlled Substances Act. Click here to read the full guest post on the NCIA blog.

June 13, 2016

Soapbox

A Case To Not Reschedule Cannabis

By Tyler Dautrich

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As many probably already know, last month the DEA announced that the organization was going to reconsider its position on cannabis and would come to a decision about whether or not to reschedule cannabis on The Controlled Substance Act (CSA) by June of this year. Many would say this is long overdue, considering the DEA has cannabis listed as a Schedule I drug, the same as heroin and LSD.

Rescheduling cannabis to Schedule II would place it in the same category as Vicodin, cocaine, methamphetamine, Adderall, oxycodone, and many more. These substances are defined as drugs with a high potential for abuse, with use potentially leading to severe psychological or physical dependence. However, they are recognized as having some potential medical benefits.

If cannabis were to become a Schedule II drug, it would allow further research on the plant. This could be beneficial to the industry because further medical research would finally provide the scientific validation that cannabis does have medical benefits and that it should be accepted as a form of medicine.

Those benefits come with a steep cost.

If cannabis becomes Schedule II it means the federal government finally sees cannabis as a plant (drug) that can provide some medical value. Which, at face value, is good because that is what many advocates have been fighting for. On the other hand, the only reason that larger pharmaceutical companies have largely kept out of the industry so far is because it is a Schedule I drug and the government did not officially recognize that it had any medical value. If this were to change, there is no reason for those pharmaceutical companies to continue watching from the sidelines. There is also no industry better fit than the pharmaceutical industry to run, manufacture, control, and profit from medical cannabis. The infrastructure is already in place.

There is also not another industry that has the money and the historical relationship with the FDA like the pharmaceutical industry. If the FDA were to regulate cannabis, it would have to regulate every single product on the shelf of every single dispensary, which would require more stringent lab testing guidelines. Just because one of your brownies made it through the FDA regulation process, does not mean the cookie next to it will. Entering into this process would take companies years to complete and cost more than $1 billion per product. Think about how many products some dispensaries have. Think about the number of different strains that dispensaries carry. That requires years of testing and multiple billions of dollars, just for the strains.

Big Pharma is positioned perfectly to come in and take control of the entire process if this happens. It will be a mad rush from all pharmaceutical companies to come in and quickly obtain market share. I know that as an industry we think we are seeing a lot of money in sales and profit, but compared to the pharmaceutical industry, it is merely a drop in the bucket. These companies will easily, and willingly, out-spend every company currently in the industry to the point where we can no longer compete. All the work that advocates and business professionals have put in to get the industry to where it is today could be lost.

Schedule II status would also turn the adult-use industry into utter chaos. The only reason we are able to have an adult-use market right now without the interference of the FDA is because cannabis is federally illegal. If cannabis is moved to Schedule II it will be recognized by the government, which means the FDA will have to come in and start the approval process for every product on the shelf. How smoothly do you think that will go for the adult-use retail centers in the industry? The cost alone will force shops to close. There is also not another substance that has a Schedule II classification that we have an adult-use industry for. Could cannabis be the first? I would not want to take that chance with the government or have to go through that process as an adult-use cannabis business owner.

When discussing this matter with several colleagues, some would ask “But what about now? We are in direct violation of the federal law right now, and they are leaving us be.”

Yes, that is for the most part true, but it is true because cannabis is now a Schedule I, federally illegal drug. Meaning the government does not even recognize it. The FDA will not regulate anything that is not recognized by the federal government because they are a federal agency. If the FDA were to implement regulations and an approval process, that would mean that a federal agency is recognizing cannabis as a consumer product. Right now that goes directly against the government’s public stance on the issue. And pharmaceutical companies cannot start selling a drug that is federally illegal and has been classified by the government as having no medical value. But as soon as the government recognizes cannabis as a form of medicine, it opens the doors for these organizations to get involved because it is justifiable now.

If that were to happen all the money that has been generated in this industry, and has made several people very wealthy and successful, will slowly, but surely get stuffed into the pockets of Big Pharma, the FDA and the government.

That is a lot of individuals that stand to lose a very significant amount of money. This could be devastating for Colorado. Colorado’s entire economy is booming right now largely because of the cannabis industry. Colorado’s Real Estate market has seen tremendous growth since legal cannabis took effect with home values going up 13%, which is nothing compared to commercial properties. Cannabis is the driver behind half of Colorado’s tourism, and provided the state with $35 million to put into schools.

In my mind, rescheduling cannabis to a Schedule II substance will create more issues for the industry than it will benefits.

If the government were to take any stance on cannabis, it should completely declassify it. It should not be listed on any type of controlled substance list by the government. It is a natural plant, not a man-made substance. If the government will not declassify cannabis, I would rather them keep it as a Schedule I substance. At least this way it protects the industry and keeps it as is, belonging to the people.

Opportunities like the cannabis industry are once in a lifetime. It would be a shame to see it taken by Big Pharma, or controlled by the government.

For those that have made it this far down on this post, please understand that this is a worst-case scenario. A very drastic, but realistic outcome down one of the many paths the industry could go. But the motto in this industry since the beginning was, “prepare for the worst, and pray for the best.” I think we should follow those instructions now more than ever.

Editor’s Note: This article represents the opinion of the author, not necessarily that of Cannabis Industry Journal. We invite all readers who agree or disagree with the author’s opinion to join the conversation in the comments section below the article.