Colorado Issues Recall, Pesticides Found In Cannabis

By Aaron G. Biros
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Last week, the Colorado Department of Revenue (DOR), the Colorado Department of Agriculture (CDA) and the Colorado Department of Public Health and Environment (CDPHE) announced a health and safety advisory for a large number of cannabis products grown and produced by Tree of Wellness Inc., doing business as Tree of Wellness. The health and safety advisory, synonymous with a product recall, was issued due to the detection of off-label pesticides in cannabis grown by Tree of Wellness.

Tests found Myclobutanil present in batches going all the way back to May, 2017, with some contaminated batches as recent as late October.

According to the press release, the CDA confirmed the presence of Myclobutanil, a near-ubiquitous fungicide used in a wide range of agricultural practices. The chemical has been a thorn in the side of the cannabis industry for being used off-label, or inappropriately, on cultivating cannabis.

Here are the batch numbers included in the recall

Myclobutanil is the active ingredient in Eagle 20, a pesticide used frequently in other agricultural fields like grapes, apples and spinach. According to UC Davis professor and Steep Hill scientist Dr. Don Land, Myclobutanil becomes significantly more dangerous when heated, or smoked. That chemical reaction produces hydrogen cyanide, an extraordinarily toxic chemical. Because of this, and the lack of research on what happens when these chemicals are burned or heated, there is a growing public concern that cannabis laced with a chemical like Myclobutanil can cause adverse health reactions.

The public health and safety advisory says they detected Myclobutanil in cannabis flower, trim, concentrates, and infused-products from Tree of Wellness. The CDPHE and DOR recommend consumers that have the affected products return them to where they were purchased for proper disposal.

Consumers in Colorado should check their labels to see if their products fall under the recall. Look for the Medical Optional Premises Cultivation License 403-00664 and/or Medical Marijuana Center License 402-00443. The recall includes batches of 23 different strains grown by Tree of Wellness.

Hoban Law Group Expands Internationally

By Aaron G. Biros
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Last week, Hoban Law Group announced a major international expansion, with new offices in Latin America and the European Union. The Denver-based law firm said they will have four new offices across the EU by late fall and two new offices in Latin America by spring of 2018.

BobHobanAttorney
Bob Hoban, managing partner

Bob Hoban, managing partner and co-founder of Hoban Law Group, says they have already been working internationally for years. “HLG steps in to global markets quickly as our direct work with government officials on policy and regulation has kept us in this important global curve,” says Hoban. “We have accepted the challenge of being global cannabis industry leaders & experts and will work with strategic industry-leading partners, such as New Frontier Data, to move the industry forward across six countries.”

The press release says the law firm has been advising governments around the world on cannabis policy for several years, as well as working on a handful of international business transactions in the past. These new offices will work mainly with structured finance, mergers and acquisitions, worldwide trade, regulatory law and equity placement in the cannabis (including industrial hemp) industry. “Combining the firm’s corporate practice, with our intellectual property and tax practice groups will position our firm’s client’s to succeed at the highest levels in this international marketplace,” says Hoban.

The press release also announced they have added Andrew Telsey, an experienced securities attorney, to their firm. He has helped take more cannabis businesses public in the U.S. than any other attorney.

Hoban Law Group, founded in 2009, is the nation’s largest cannabis business law firm. They have attorneys in every state that has legalized cannabis in the United States.

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FDA Issues Warning To CBD Companies

By Aaron G. Biros
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On November 1st, the U.S. Food and Drug Administration (FDA) published a press release addressing warning letters issued to four companies. The warning letters, sent to companies marketing cannabidiol (CBD) products with therapeutic claims, cites unsubstantiated claims about their products’ ability to treat or cure cancer and other diseases.

A snippet of the warning letter issued to Greenroads

According to the press release, the four companies that received warning letters are Greenroads Health, Natural Alchemist, That’s Natural! Marketing and Consulting, and Stanley Brothers Social Enterprises LLC. The press release called their marketing campaigns “deceptive” for “unproven treatments.” Here is the letter they sent to Greenroads Health.

“As part of the U.S. Food and Drug Administration’s ongoing efforts to protect consumers from health fraud, the agency today issued warning letters to four companies illegally selling products online that claim to prevent, diagnose, treat, or cure cancer without evidence to support these outcomes,” reads the FDA statement. “Selling these unapproved products with unsubstantiated therapeutic claims is not only a violation of the Federal Food, Drug and Cosmetic Act, but also can put patients at risk as these products have not been proven to be safe or effective.”

According to the press release, the FDA has issued ninety warning letters in the past ten years, with around twelve this year, to companies making fraudulent claims about cancer therapies. Here are some examples of claims made by companies that the FDA took issue with:

  • “Combats tumor and cancer cells;”
  • “CBD makes cancer cells commit ‘suicide’ without killing other cells;”
  • “CBD … [has] anti-proliferative properties that inhibit cell division and growth in certain types of cancer, not allowing the tumor to grow;” and
  • “Non-psychoactive cannabinoids like CBD (cannabidiol) may be effective in treating tumors from cancer – including breast cancer.”

“Substances that contain components of marijuana will be treated like any other products that make unproven claims to shrink cancer tumors,” says FDA Commissioner Scott Gottlieb, M.D. “We don’t let companies market products that deliberately prey on sick people with baseless claims that their substance can shrink or cure cancer and we’re not going to look the other way on enforcing these principles when it comes to marijuana-containing products. There are a growing number of effective therapies for many cancers. When people are allowed to illegally market agents that deliver no established benefit they may steer patients away from products that have proven, anti-tumor effects that could extend lives.”

 

Shimadzu, Cure And CK Sciences Partner On R&D of Pharmaceutical Cannabis Products

By Aaron G. Biros
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Yesterday, Shimadzu announced the formation of a partnership with Cure Pharmaceutical Group and CK Sciences to research and develop pharmaceutical cannabis-based products, according to a press release. The three organizations entered a collaborative agreement with the goal of researching and developing products, then moving them through clinical trials using FDA guidelines.

According to the press release, the partnership’s primary goal will be researching and profiling the synergistic effects of the cannabinoids and terpenes, called the “Entourage Effect.”

Shimadzu, a well-know analytical instrument manufacturer, has been making a name for itself in the scientific cannabis space with a number of exciting new ventures. They have worked extensively with cannabis laboratories throughout the country in refining methods and improving analytical chemistry in the space. For example, Shimadzu powers EVIO Labs Florida with over $1.2 million in the latest testing instrumentation.

The Cannabis Analyzer For Potency

Tracy Ryan, chief executive officer and founder of CK Sciences, says outfitting their lab for pharmaceutical research was a big priority for starting their venture. “When we met with Shimadzu, and we saw their passion for our mission, we knew we were in incredible hands! When analyzing cannabis everything has to be so precise,” says Ryan. “With Shimadzu’s platforms and team of brilliant scientists supporting our efforts, we have already set ourselves up for success.”

Back in March, Shimadzu launched their Cannabis Analyzer for Potency, a high-performance liquid chromatograph (HPLC) designed specifically for quantitative determination of cannabinoid content. The organizations in the partnership will be using that instrument, in addition to a headspace Gas Chromatograph Mass Spectrometer (GCMS) for terpene profiling. Both Cure and CK will use the instruments to generate data, with the goal to validate cannabis as a viable pharmaceutical treatment, according to the press release.

Bob Clifford, Ph.D., general manager of marketing for Shimadzu, says they are excited to work with the organizations. “The emerging pharmaceutical cannabis market requires dedicated, thoughtful leaders eager to showcase the pharmaceutical benefits of cannabis on a scientific level,” says Clifford. “The Cure/CK Sciences group has continuously demonstrated such a leadership commitment, and we’re excited about the opportunities this agreement provides.”

NCIA, CCIA Host Fundraiser For Those Impacted By CA Fires

By Aaron G. Biros
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On Monday, the National Cannabis Industry Association (NCIA) sent an email announcing their Cannabis Industry Fire Relief Fundraiser in Santa Rosa, CA on November 6th. Co-hosted by the California Cannabis Industry Association (CCIA), the fundraiser will take place 6:30-9:00 p.m. at the Hyatt Vineyard Creek (170 Railroad St, Santa Rosa, CA 95401). All proceeds from the event will go to the Redwood Credit Union’s North Bay Fire Relief Fund.

According to the announcement email sent on Monday, the North Bay Fire Relief Fund, established in partnership with California State Senator Mike McGuire and The Press Democrat, provides financial support for relief efforts to displaced victims of the fires. Representatives of the fund will also be on hand at the event to take cash donations directly.

The fundraiser will have sponsorship opportunities and host committee sponsoring for companies looking to participate. All of the money raised from sponsorships will be donated to the same relief fund.

According to Lindsay Robinson, executive director of CCIA, this is an opportunity for the cannabis industry to help the community rebuild. “The devastation caused by the Northern California wildfires are unmeasurable, yet the sense of community and humanity displayed in this tragedy reminds all of us of our commonalities and not our differences,” says Robinson.  “I’m hopeful this event will raise much needed funds to help our friends and neighbors rebuild. The cannabis industry is here to help.”

When we reported on the wildfires impacting communities and cannabis businesses, we provided a link to a fundraising campaign specifically designed to help victims in the cannabis community. Citing federal laws prohibiting dealing with controlled substances, the payment processor of that campaign, WePay, refused to actually give the $13,000 raised to the victims. This is just one reason why this NCIA & CCIA fundraiser is so important. This gives those in the cannabis industry who want to help an effective route to do so, knowing their money will immediately go to help the victims.

Hezekiah Allen, a confirmed speaker at the November 6th fundraiser and executive director of the California Growers Association told reporters last week they are hopeful that the $13,000 will actually be given to the victims, but are unsure if that’ll be the case. “We’ve got folks who have needs who we would like to start like to start helping,” says Allen. “We’re still hopeful that they’ll process those payments. We’re waiting with fingers crossed.”

For tickets, sponsorship opportunities and more information please go online and register for the event or make a donation here.

MJ Freeway Hardships Linger

By Aaron G. Biros
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MJ Freeway, a seed-to-sale traceability software company with a number of government contracts, has been making headlines this year for all the wrong reasons. A series of security breaches, website crashes and implementation delays have beleaguered the software company throughout 2017.

Just this morning, the Philadelphia Inquirer reported the company’s services crashed Saturday night and Monday afternoon. That article also mentions an anonymous hacker tried to sell sensitive information from the Washington and Nevada hacks in September. Back in April, when Pennsylvania awarded the state’s contract to MJ Freeway for its tracking system, Amy Poinsett, co-founder and chief executive officer of MJ Freeway told reporters “I think I can confidently say we are the most secure cannabis company in this particular industry.” It is safe to say this is now being called into question.

Earlier this week, New Cannabis Venture’s Alan Brochstein reported that MJ Freeway is unable to meet Washington’s October 31st deadline to integrate their software with the state, forcing customers to manually report data.

Roughly a month ago, Nevada suddenly cancelled their contract with MJ Freeway, just two years into their five-year deal. Back in June, the company’s source code was stolen and published online. And back in January of this year, the company’s sales and inventory system was the target of a cyber attack.

According to an email we obtained, all of MJFreeway’s clients in Spain experienced an online outage, but that services were restored within 24 hours. In an email sent to clients in Spain, the company told customers that the problems were the result of a system failure. “Our initial analysis indicates that this was a system failure and unfortunately none of the data was able to be successfully retrieved from the backup archive due to an error but we can assure you that none of your data was extracted or viewed at any moment,” reads the email. “We are extremely distressed regarding the event that occurred with the system and the service interruption that occurred yesterday. We recognize that this is a situation that is very serious and negatively impacts your club.” The email says that MJ Freeway is addressing those problems in a few ways, one of which being ongoing audits of their data backups. “The event has led us to reconstruct our “hosting environment” in Europe to use the latest technology from Amazon Web Services with the best redundancy, flexibility and security, using the highest stability measures in the AWS environment,” reads the email. While the site will be restored fully, according the email, historical data is lost. The company is working with their clients to help them get data back into the system. 

What Is Going On With Germany’s Cannabis Bid?

By Marguerite Arnold
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Germany is proceeding down the path to officially grow its own medical cannabis crops. Medical use became legal this year, along with a federal mandate for cheap access. That means that public health insurance companies, which cover 90% of Germans, are now firmly on the hook if not front line of the cannabis efficacy issue. As such, Germany’s medical market is potentially one of the most lucrative cannabis markets in the world, with a total dollar amount to at least challenge, if not rival, even California’s recreational market. Some say Canada’s too.

However, before “home grow” enthusiasts get too excited, this legislative move was an attempt to stymie everything but commercial, albeit medical production. Not to mention shut off the recreational discussion for at least another four years.

How successful that foray into legalization will be – especially given the chronic shortages now facing patients – are an open question. Not to mention other infrastructural issues – like doctor unfamiliarity with or resistance to prescribing cannabinoids. Or the public insurers’ so-far reluctance to cover it even though now federally mandated to do so.

Regardless, Germany decided to legalize medical use in 2017 and further to begin a sanctioned domestic cultivation for this market. The decision in the Bundestag to legalize the drug was unanimous. And the idea to follow UN regulations to establish this vertical is cautiously conservative but defendable. Very predictably German in other words.

Since then, however, the path has been far from smooth. Much less efficient.

Trouble in Germany’s Medical Cannabis Paradise

In April the government released its tender bid. And no matter how exciting it was to be in the middle of an industry who finally saw a crack of light, there were also clouds to this silver lining that promised early and frequent thunderstorms on the horizon.

By the time the tender bid application was due in June, it was already clear who the top firms were likely to beIn fact, by the end of the ICBC conference, which held its first annual gathering in Berlin at the same time the bid tender was announced, the controversy was already bubbling. The requirements of the bid, for a laughably small amount of cannabis (2,000 kg), mandated experience producing high qualities of medical marijuana in a federally legitimate market. By definition that excluded all German hopefuls, and set up Canada and Holland as the only countries who could provide such experience, capital and backlog of crop as the growing gets started.

The grumbling from Germans started then.

However, so did an amazingly public race to gain access to the German market directly – by acquisition or capital expenditures that are not refundable easily (like real estate or even buyouts). The common theme? They were large amounts of money being spent, and made by major Canadian Licensed Producers who had the right qualifications to meet the standards of the bid. In fact, by the time the tender bid application was due in June, it was already clear who the top firms were likely to be. They were the only ones who qualified under the judging qualifications.

And while nobody would commit publicly, news of the final decision was expected by August. Several Canadian LPs even issued press releases stating that they were finalists in the bid. But still no news was forthcoming about the official list.

Delay, Delay and More Delay

A month later, as of September, and there was still no official pronouncement. Nor was anybody talking. BfArM, the regulatory agency that is supervising this rollout as well as the regulation of all narcotic drugs (sort of like a German version of the FDA) has been issuing non-statement statements since the late summer. Aurora, however, one of the top contenders for cultivation here, was quietly issued an ex-im license by both Canadian and German authorities. Publicly, this has been described as an effort to help stem the now chronic cannabis shortage facing patients who attempt to go through legitimate, prescribed channels. On the German side, intriguingly, this appears to be a provisional license. Privately, some wondered if this was the beginning of a backdoor approval process for the top scoring bid applicants for cultivation. Although why that might be remains unclear.

Whispered rumours by industry sources that wish to remain anonymous, have suggested that the entire bid is still hanging in jeopardy. Late in the month, rumours began to fly that there were now lawsuits against the bid process. Nobody had much detail. Not to mention specifics. But CannabisIndustryJournal can now confirm in fact that there have been two lawsuits (so far).

The summary of the complaints? It appears that two parties, filing with the “Bundeskartellamt” (or regulatory office focusing on monopolies and unfair business practices) did not think the bid process or scoring system was fair. And both parties also lost.

But as of mid-October, there is still no public decision on the bids. What gives?

Whispered rumours by industry sources that wish to remain anonymous, have suggested that the entire bid is still hanging in jeopardy. Even though the plaintiffs failed, some have suggested that the German government might force a complete redo. Others hint that it will likely be slightly revised to be more inclusive but the regulatory standards must remain. If a redo is in the cards, will the German government decide to increase the total amount of yearly cannabis to be delivered? At this point, it is only calling for 2,000 kg per year by 2019. And that, as everyone knows, is far too little for a market that is exploding no matter the many other obstacles, like insurance companies refusing to compensate patients.

What Is Behind The Continued Delays?

There are several theories circulating the higher levels of the cannabis industry internationally right now even if no one is willing to be quoted. The first is that the total number of successful applicants, including the recent litigants, will be slightly expanded, but stay more or less the same. There is a high standard here for the import of medical cannabis that the Germans intend on duplicating domestically.

The Comprehensive Economic Trade Agreement (CETA – the often controversial free trade alliance between Europe and Canada) is still in the final stages of approval.The second is that the German government will take its time on announcing the final winners and just open the doors to more imported product. This will not be popular with German insurers, who are on the hook to pay the difference. However with Tilray now on track to open a processing facility in Portugal and Canopy now aligned with Alcaliber in Spain, cross-continent import might be one option the government is also weighing as a stop-gap provision. Tilray, who publicly denied in the German press that they were participating in the cultivation license during the summer, just issued a press release in October announcing a national distribution deal to pharmacies with a German partner – for cannabis oil.

But then there is another possibility behind the delay. The government might also be waiting for another issue to resolve – one that has nothing to do with cannabis specifically, but in fact is now right in the middle of the discussion.

The Comprehensive Economic Trade Agreement (CETA – the often controversial free trade alliance between Europe and Canada) is still in the final stages of approval. In fact, on September 19, a prominent German politician, Sigmar Gabriel of the Social Democrats (SPD) made a major statement about his party’s willingness to support Germany’s backing of the deal. It might be in fact, that the German government, which is supportive of CETA, got spooked about the cannabis lawsuits as test trials against not cannabis legalization, but a threat to the treaty itself.

Quality control, namely pesticides when it comes to plant matter, and the right of companies to sue governments are two of the most controversial aspects of this trade deal. And both appear to have risen, like old bong smoke, right at the final leg of closing the cannabis cultivation bid.

Will cannabis be seen as a flagship test for the seaworthiness of CETA? On a very interesting level, that answer may be yes. And will CETA in turn create a different discussion about regulatory compliance in an industry that has been, from the beginning of this year, decidedly Canadian-Deutsch? That is also on the table. And of great concern to those who follow the regulatory issues inherent in all. Not to mention, of course, the industry itself.

Conclusions?

Right now, there are none to be had.

However at present, the German bid process is several months behind schedule as Canadian producers themselves face a new wrinkle at home – the regulation of the recreational crop in the provinces.

It is also clear that there are a lot of questions and not a whole lot of answers. Not to mention a timeline when the smoke will clear.

Colorado To Begin Requiring Potency Testing For Medical Infused Products

By Aaron G. Biros
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After a delay due to their proficiency testing program roll out, the Colorado Marijuana Enforcement Division (MED) will now require all medical infused products and concentrates be tested for potency and homogeneity, starting November 1st, 2017.

After November 1st, all production batches of concentrates from medical product manufacturers will need to have a potency test before being sold, transferred or processed. The same goes for medical infused products, such as edibles and topicals. The homogeneity test refers to making sure THC or other active ingredients are distributed evenly throughout the product.

According to Alex Valvassori, author of a regulatory compliance-focused blog post on Complia’s website, these new testing requirements could lead to a surge in pricing, passed on to patients. He also recommends dispensaries take a close look at labels coming in from suppliers. They need to make sure potency data is listed clearly on the label to stay compliant.

Production batches created before November 1st are not required to meet the new testing regulations, but any and all batches after that date will be required to perform those tests.

Enforcement of Intellectual Property Rights for Cannabis Put to Test in Federal Court

By Dr. Travis Bliss
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A number of cannabis businesses have pursued federal intellectual property protection for their cannabis-related innovations, such as U.S. patents that protect novel cannabis plant varieties, growing methods, extraction methods, etc. Enforcement of such federal IP rights requires that the IP owner file suit in federal court asserting those rights against another cannabis company. However, given that cannabis is still illegal under federal law, the industry is uncertain about whether a federal court will actually enforce cannabis-related IP rights. This question might be answered soon.

The potential impact of this case goes way beyond the two parties involvedOrochem Technologies, Inc. filed a lawsuit in federal court in the Northern District of Illinois on September 27, 2017, seeking to assert and enforce trade secret rights against Whole Hemp Company, LLC. According to the complaint, Orochem is a biotechnology company that uses proprietary separation methods to extract and purify cannabidiol (CBD) from industrial hemp in a way that produces a solvent-free and THC-free CBD product in commercially viable quantities.

The complaint goes on to say that Whole Hemp Company, which does business as Folium Biosciences, is a producer of CBD from industrial hemp and that Folium engaged Orochem to produce a THC-free CBD product for it. According to the allegations in the complaint, Folium used that engagement to gain access to and discover the details of Orochem’s trade secret method of extracting CBD so that it could take the process and use it at their facility.

The complaint provides a detailed story of the events that allegedly transpired, which eventually led to an Orochem employee with knowledge of the Orochem process leaving and secretly starting to work for Folium, where he allegedly helped Folium establish a CBD production line that uses Orochem’s trade secret process. When Orochem learned of these alleged transgressions, it filed the lawsuit, claiming that Folium (and the specific employee) had misappropriated its trade secret processes for extracting and purifying CBD.

While the particular facts of this case are both interesting and instructive for companies operating in the cannabis industry, the potential impact of this case goes way beyond the two parties involved.

If it moves forward, this case will likely provide a first glimpse into the willingness of federal courts to enforce IP rights that relate to cannabis. Orochem is asserting a violation of federal IP rights established under the federal Defend Trade Secrets Act (DTSA) and is asserting those rights in federal district court. As a result, the federal district court judge will first need to decide whether a federal court can enforce federal IP rights when the underlying intellectual property relates to cannabis.

If the court ultimately enforces these federal trade secret rights, it could be a strong indication that other federal IP rights, such as patent rights, would also be enforceable in federal court. Since the outcome of this case will likely have a far reaching and long lasting impact on how the cannabis industry approaches and deals with intellectual property, it’s a case worth watching.