Canopy Growth Signs U.S. Distribution Deal

By Cannabis Industry Journal Staff
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Canopy Growth Corporation, the Canadian cannabis powerhouse moving its way throughout international markets, has signaled another move into the United States to push their new CBD beverage line. The company inked a deal with Southern Glazer’s Wine & Spirits, a large U.S. alcohol distributor.

Canopy_Growth_Corporation_logoThis follows the launch of their first CBD-infused beverage line sold in the United States, Quatreau. In the initial phase of the agreement, Southern Glazer’s will distribute the beverage line in seven states, with plans to expand that footprint considerably in the coming months.

Being a national distributor with a strong presence throughout the country, Southern Glazer’s will be moving Canopy’s beverage line in conventional retail stores. The press release seems to credit Canopy’s partnership with Constellation Brands as the catalyst for the new distribution deal. “The agreement also showcases the benefits of the company’s strategic relationship with Constellation Brands, the global beverage leader,” reads the release.

Back in 2018, Constellation Brands made a $4 billion bet on Canopy, but immediate profitability did not come to fruition. This new deal with Southern Glazer’s, as well as the launch of the Quatreau beverage line, seems to prove Constellation’s bet is beginning to pay off, or at least showing signs of a long term play for market share.

Virginia Finalizes Legalization Plan

By Cannabis Industry Journal Staff
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Update: On April 21, 2021, Virginia Governor Ralph Northam signed the legislation into law, making Virginia the first state int he American South to legalize adult use cannabis.


On April 7, 2021, legislators in Virginia finally came to an agreement for their adult use cannabis legalization plan. Back in February of this year, lawmakers passed a bill to legalize adult use cannabis with a launch date of 2024, but Governor Ralph Northam wanted to move quicker than that.

Virginia Governor Ralph Northam
Image: Craig, Flickr

Last week, Gov. Northam issued a number of amendments to the legalization bills (Senate Bill 1406 and House Bill 2312) that essentially tapers the time frame of legalization to July of this year. With the legislature approving those amendments yesterday, the state of Virginia has now finalized their legalization plans, setting in motion the launch of the very first legal adult use cannabis market in the American South.

Beginning July 1, 2021, Virginia will allow adults to possess up to an ounce of cannabis and up to four plants per household. The commercial cannabis market, and the regulatory framework accompanying it, will be set to legalize sales July 1, 2024.

The bill establishes the Virginia Cannabis Control Authority as the regulatory body overseeing the legal cannabis market. A five-member Board of Directors in that agency will develop and issue regulations and licenses. According to the bill, the Board can set the number of licenses, with a maximum of 400 retailers, 25 wholesalers, 450 cultivators and 60 manufacturers, aside from any medical cannabis and hemp processing license already issued. The Board is also in charge of licensing testing labs.

Vertical integration is not permitted under Virginia’s new legalization plan, but all of the medical cannabis licensees in the state are already vertically integrated. According to the bill, they can keep their vertical integration for a small fee of $1 million and after they submit a diversity, equity and inclusion plan.

In addition to Virginia’s normal 6% sales tax, a state tax of 21% is added to retail sales of adult use cannabis, excluding medical dispensaries. Local municipalities are allowed to issue up to 3% in additional taxes.

Political & Corporate Lobbying Influences Emerge in Cannabis

By Cannabis Industry Journal Staff
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In a press release sent out this morning, a new coalition announced their launch to “end the prohibition, criminalization, and overregulation of cannabis in the United States.” The Cannabis Freedom Alliance (CFA) says their core values include federal descheduling, criminal justice reform, “reentry and successful second chances,” promoting entrepreneurship in free markets and reasonable tax rates.

Who’s Behind the CFA?

The organizations that founded the CFA are Americans for Prosperity (AFP), Mission Green/The Weldon Project, the Reason Foundation, and the Global Alliance for Cannabis Commerce (GACC). Take a look at that list and see if you recognize the names. AFP is a well-known conservative and libertarian political lobbying group founded and funded by the Koch brothers. The Reason Foundation, another Libertarian think-tank and an advocate for prison privatization, also listed the Koch brothers as some of their largest donors in disclosures filed in 2012.

The Koch family business, Koch industries, makes hundreds of billions of dollars a year in the oil and gas industry and has held massive political influence for decades. They regularly donate hundreds of millions of dollars to Republican campaigns. Historically, they’ve played a major role in opposing climate change legislation. They’re widely known as conservative advocates for lower corporate taxes, less social services and deregulation.

Interestingly enough, prominent criminal justice reform advocate Weldon Angelos and rapper Snoop Dogg appear to have joined forces with the Koch-backed group, CFA, following a Zoom meeting where Charles Koch told them he thinks all drugs should be legalized, according to Politico. “We can’t cut with one scissor blade. We need Republicans in order to pass [a legalization bill],” Angelos told Politico. The tie between cannabis legalization and traditional Republican and Libertarian values is obvious: their free market, personal liberties and small government ideology fits well within the legalization movement.

Big Oil, Alcohol and Tobacco, Oh My!

The Coalition for Cannabis Policy, Education and Regulation (CPEAR) is a group that was founded in March 2021. Two of the founding members are Altria, the company that makes Marlboro cigarettes, and Molson Coors, a multinational alcohol company. The CPEAR website says that they want to work on responsible federal reform. “We represent a vast group of stakeholders — from public safety to social equity — focused on establishing a responsible and equitable federal regulatory framework for cannabis in the United States.”

Founding members of CPEAR also include: The Brink’s, a private security firm, the National Association of Convenience Stores, the Council of Insurance Agents & Brokers and the Convenience Distribution Association. In other words, the group is made up of large and powerful corporate interest groups that represent the alcohol, tobacco, insurance and security industries.

Both NORML and the Drug Policy Alliance (DPA) have spoken out against CPEAR. Erik Altieri, executive director of NORML, says it’s a matter of corporate interests coming in and working to change laws for their companies to capitalize on legalization. “We’ve seen how big corporate money and influence have corrupted and corroded many other industries,” says Altieri. “We can’t let the legal marijuana industry become their next payday.”

The DPA also released a statement opposing CPEAR. Kassandra Frederique, executive director of the DPA, says that she urges caution to elected officials in taking counsel from these corporate powers. “We have long been concerned about the entry of large commercial interests into the legal marijuana market,” says Frederique. “Big Alcohol and Tobacco have an abysmal track record of using predatory tactics to sell their products and build their brands – often targeting low-income communities of color and fighting public health regulations that would protect people.”

While their motives and desired outcomes remain unclear, it is apparent that we’re reaching a new age in the cannabis legalization movement, one where powerful corporations outside of the cannabis space want in. Whether its oil and gas, insurance, security, tobacco or alcohol, these groups are using their power and money to influence cannabis policy reform.

New Mexico Poised to Legalize Adult Use Cannabis

By Cannabis Industry Journal Staff
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Update: Governor Michelle Lujan Grisham signed the bill into law on April 12, 2021, making New Mexico the fifth state to legalize cannabis via the legislature. 


On March 31, 2021, legislators in New Mexico reached an agreement on SB2/HB2, a bill that legalizes adult use cannabis. The bill now heads to Governor Michelle Lujan Grisham’s desk, where she is expected to sign it.

Following the conclusion of the regular legislative session, the New Mexico House and Senate reconvened for a special session to finalize the cannabis legalization deal at the governor’s request.

New Mexico Governor Michelle Lujan Grisham

The Cannabis Regulation Act (SB2/HB2) decriminalizes possession for adults over 21 and sets up a regulatory framework for licensing, commercial production and sales by April 1, 2022 (a year from now).

Governor Grisham is expected to sign the bill, and when she does, will become the 17th state to legalize adult use cannabis, following New York that legalized it yesterday.

According to AP News, the New Mexico bill gives the governor’s office a lot of power in licensing the industry and “monitoring supplies.” That includes the power to appoint a superintendent of the Regulation and Licensing Department, which is in charge of regulatory oversight in the new market.

The Cannabis Regulation Act sets up an excise tax on adult use sales of 12% that rises to 18% over time, in addition to the “current gross receipts on sales that range from 5% to 9%.” The bill also removes taxes on medical sales.

New York Legalizes Adult Use Cannabis

By Cannabis Industry Journal Staff
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On March 31, 2021, New York Governor Andrew Cuomo signed The Marijuana Revenue and Taxation Act (MRTA) into law, legalizing adult use, home cultivation and possession of cannabis for adults over 21 immediately. Upon signing the bill this morning, previous cannabis-related convictions are automatically expunged, according to the Governor.

The bill establishes the Office of Cannabis Management, which will launch and manage the regulatory system for the commercial cannabis market in New York.

According to Steve Schain, senior attorney at Hoban Law Group, the Office of Cannabis Management will have a five-member board that will oversee not just the adult use cannabis market, but also medical cannabis as well as the state’s hemp market. For the medical market, the new legislation provides for more patient caregivers, home cultivation and an expanded list of qualifying conditions.

New York Governor Andrew Cuomo
Image: Chris Rank, Flickr

Troy Smit, deputy director of the New York NORML chapter, says the bill might not be perfect, but it’s a massive win for the cannabis community. “It’s taken a great amount of work and perseverance by activists, patients, and consumers, to go from being the cannabis arrest capital of the world, to lead the world with a legalized market dedicated to equity, diversity, and inclusion,” says Smith. “This might not be the perfect piece of legislation, but today, cannabis consumers can hold their heads high and smell the flowers.”

The MRTA sets up a two-tier licensing structure that separates growing and processing licenses from dispensary licenses. The bill includes a social equity aspect that requires 50% of the licenses to be awarded to, “minority or women-owned business enterprise, service-disabled veterans or distressed farmers,” says Schain.

New York City
Image: Rodrigo Paredes, Flickr

Melissa Moore, New York State director of the Drug Policy Alliance, says she’s proud of the social equity plan the bill puts in place. “Let’s be clear — the Marijuana Regulation and Taxation Act is an outright victory for the communities hit hardest by the failed war on drugs,” says Moore. “By placing community reinvestment, social equity, and justice front and center, this law is the new gold standard for reform efforts nationwide. Today we celebrate, tomorrow we work hard to make sure this law is implemented fairly and justly for all New Yorkers.”

Schain says the new tax structure in the bill shifts to the retail level, with a 9% excise tax and 4%-of-the-retail-price local excise tax (split 25%/75% between the respective counties and municipalities). Revenue from cannabis taxes will enter a fund where 40% will go to education, 40% to community grants reinvestment fund and 20% to drug treatment and public education fund.

It appears that businesses already established in New York’s medical market get a head start on the new adult use market, while other businesses enter the license application process, according to Schain. “Although the existing Medical Marijuana licensees should be able to immediately to sell Adult-Use Cannabis, it will take up to two years for the New York’s Adult Use Program to launch and open sales to the public,” says Schain.

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FDA Issues Warning Letters on Marketing and Sale of OTC CBD Products

By Seth Mailhot, Steve Levine, Emily Lyons, Leah Kaiser, Marshall Custer
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The U.S. Food and Drug Administration (FDA) issued warning letters this month to two companies concerning the marketing and sale of over-the-counter (OTC) drug products containing cannabidiol (CBD) as an inactive ingredient. The letters allege violations of the Federal Food, Drug, and Cosmetic (FD&C) Act related to current good manufacturing practice requirements and marketing of new drugs without FDA approval.

At issue: labeling, NDAs and active ingredients

The companies subject to the warning letters market OTC drug products that contain CBD as an inactive ingredient. In the warning letters, the FDA states that it has not approved any OTC drugs containing CBD. According to the FDA, an approved new drug application (NDA) is required to legally market nonprescription or OTC drug products containing CBD, regardless of whether the CBD is an active or inactive ingredient. The FDA notes that CBD has known pharmacological effects and demonstrated risks, and that CBD has not been shown to be safe and suitable for use, even as an inactive ingredient. As a result, the FDA states that CBD cannot be marketed in OTC drug products.

Further, the warning letters noted the marketing of several CBD products that highlighted the benefits of CBD for a range of conditions in such a manner that, according to the FDA, “misleadingly suggests that [their] . . . products are approved or endorsed by FDA in some way when this is not true.” The FDA also took issue with the way products were labeled, which included callouts on the front label regarding the CBD content of the product (a requirement under most state laws that permit CBD as an ingredient). Similarly, the FDA also noted that some of the products advertised CBD as an active ingredient in a topical pain reliever product. According to the FDA, no company may legally market such a product, since there are no OTC monographs or NDAs that allow the use of CBD in an OTC drug.

What this means for you

These warning letters highlight the FDA’s vigilance regarding OTC CBD products. Regardless of whether the CBD is labeled as an active or inactive ingredient, the FDA has taken the position that nonprescription CBD drugs are in violation of the FD&C Act. Companies marketing CBD products should be careful to ensure their marketing practices, as well as their product formulations, do not present a heightened risk of FDA enforcement.

Wyoming Lawmakers Introduce Bill to Legalize Cannabis

By Cannabis Industry Journal Staff
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Update: The House Judiciary Committee has passed the legalization bill, HB0209, by a 6-3 vote. After moving out of the Judiciary Committee, the bill now awaits a floor hearing, which is expected to come within the next week or two during the legislative session that ends on April 2. 

A bipartisan group of lawmakers in Wyoming have introduced a bill to legalize cannabis in the state’s legislature. First reported by Buckrail.com, HB0209 was assigned on March 2. The bill would legalize possession, home grow and sales for adults, as well as establish a regulatory framework for licensing, tracking and taxation.

In November 2020, voters in Montana and South Dakota passed ballot measures that legalize adult use and sales of cannabis. About a month after Election Day, the University of Wyoming conducted a poll that found roughly 54% of Wyoming residents now support legal adult use cannabis. In 2018, UW found that 85% of Wyoming residents support medical cannabis legalization.

In March of 2019, Wyoming Governor Mark Gordon signed a bill into law that essentially legalized hemp in the state. That bill was a boon for the state’s agricultural economy, giving many farmers a much-needed boost in their crop diversity.

Wyoming Governor Mark Gordon

You can find the current version of HB0209 here. Sponsors of the bill include: Representatives Jared Olsen (R-Laramie), Mark Baker (R-Sweetwater) Eric Barlow (R-Campbell/Converse), Landon Brown (R-Laramie), Marshall Burt (L-Sweetwater), Cathy Connolly (D-Albany), Karlee Provenza (D-Albany), John Romero-Martinez (R-Laramie), Pat Sweeney (R-Natrona), Cyrus Western (R-Sheridan), Mike Yin (R-Teton) and Dan Zwonitzer (R-Laramie) and Senators Cale Case (R-Fremont) and Chris Rothfuss (D-Albany).

According to Buckrail, if the bill becomes law, Wyoming could get roughly $49.15 million in tax and license fee revenue in 2022. That number would mean a sizable windfall for the state that saw an 8.5% decline in tax revenue in 2020. Governor Gordon proposed budget cuts as high as 15% for agencies across the state last year. Most of the revenue generated from cannabis taxes would be earmarked for education.

Wyoming’s tax revenue is notoriously limited when it comes to diversity: the state makes its money on oil and gas, and that’s about it. Earlier this year, the Biden administration halted oil and gas leasing on federal land, hitting pause on a nearly half-million-acre deal. If the pause on oil and gas leasing on federal lands continues or were to become permanent, Wyoming stands to lose tens, if not hundreds, of millions of dollars every year.

So, what does the least populous state in the country do when they can no longer generate revenue from oil and gas? Simple. Legalize cannabis.

New Jersey Legalizes Adult Use Cannabis

By Cannabis Industry Journal Staff
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On February 22, 2021, New Jersey Governor Phil Murphy signed three bills into law, all of which legalize adult use cannabis in the state. A21 is the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act. A1897 is the accompanying decriminalization legislation and A5342 addresses discrepancies between the bills referencing underage possession.

Back in November 2020, voters in New Jersey overwhelmingly approved Question 1 by a 66% to 33% margin. That ballot measure made it to voters by way of the legislature, after New jersey lawmakers failed to pass a legalization bill in 2019. The legislation that Governor Murphy signed yesterday essentially put the will of the voters into law.

New Jersey Governor Phil Murphy
New Jersey Governor Phil Murphy

The legislation becomes effective immediately upon the Governor signing the bills, but New Jersey residents won’t see legal adult use cannabis until June 2021, the deadline for the five-member Cannabis Regulatory Commission to establish detailed regulations. Possession of cannabis will also not be legal until sales are underway.

The license application window will open 30 days prior to the regulatory deadline. The legislation provides for licenses in cultivation, manufacturing, wholesale, distribution, retail, delivery and testing labs. Until 2023, cultivator licenses will be capped at 37. 25% of all of the licenses are earmarked for microbusinesses that are owned locally and have less than ten employees.

According to New Jersey-based cannabis lawyer Jennifer Cabrera of Vicente Sederberg LLP, the bills include a number of provisions aimed at promoting social equity in the cannabis industry and repairing damage caused by prohibition. The language mandates that 30% of licenses must go to businesses owned by women, minorities or disabled veterans. At least 25% should be allocated to residents of impact zones, which are municipalities that have more than 120,000 residents that: rank in the top 40% of municipalities in the state for cannabis-related arrests; have a crime index of 825 or higher; and have a local average annual unemployment rate that ranks in the top 15% of municipalities.

The Capitol in Trenton, New Jersey

Advocates across the state are applauding the government’s work to include social equity provisions in the bills. States like Illinois and Massachusetts initially received a lot of praise for including a number of social equity provisions in their legalization plans, but the rollout has left a lot to be desired. Social equity applicants in Illinois are still waiting on licensing as lawsuits play out in court following allegations of corruption and ineffective distribution.

However, it looks like New Jersey is taking a much more thorough approach to social equity issues than other states. “New Jersey has adopted some of the strongest social equity provisions we’ve seen,” says Cabrera. “Contemplating these issues at the outset of the process will likely prove to be a big advantage for the state. It is much easier to build these considerations into the system than it is to go back and incorporate them later.” In other words, there is still a lot of work to be done to ensure an equitable regulatory framework is established.

Amol Sinha, executive director of the American Civil Liberties Union (ACLU) of New Jersey says the state’s laws can set a new standard for what justice can look like. “This is a new beginning – and the culmination of years of advocacy – and we must keep in mind that it is only the start,” says Sinha. “Signing these laws puts in motion the next phase of this effort: to work relentlessly to transform the principles of legalization into greater racial and social justice in New Jersey.”

It is estimated that New Jersey’s adult use cannabis market could be worth more than a billion dollars. As the state begins their rollout and implementation, all eyes are on New York and Pennsylvania, which are both expected to legalize adult use cannabis within the next two years. Both Governor Cuomo of New York and Governor Wolf of Pennsylvania have been clamoring for adult use legalization in recent months.

Cannalytics Becomes First Accredited Cannabis Lab in Puerto Rico

By Cannabis Industry Journal Staff
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In a press release sent out this week, A2LA announced they have accredited Cannalytics to ISO 17025:2017. With the finalized accreditation in December 2020, Cannalytics is the first cannabis testing laboratory in Puerto Rico to get accredited to the standard.

Jorge Diaz, owner and director of Cannalytics, says their two main objectives are business excellence and quality. “Being the first ISO/IEC 17025 accredited cannabis laboratory in Puerto Rico affirms our mission to provide continuous quality science to our clients while safeguarding the health of Puerto Rico’s medical cannabis patients,” says Diaz.

Cannalytics is a medical cannabis and hemp testing lab based in San Juan, Puerto Rico. They offer compliance and R&D analysis in their suite of testing services.

“We are glad to see the continued growth of our cannabis program in a new territory, which further promotes the value that accreditation adds in ensuring quality in this emerging industry,” says Anna Williams, A2LA Accreditation Supervisor.

New Guidance on Waste Disposal for Hemp Producers

By Stephanie McGraw, Emily Sellers
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On January 15, 2021, the USDA published its final rule on US hemp production. The rule, which becomes effective on March 22, 2021, expands and formalizes previous guidance related to waste disposal of noncompliant or “hot” crops (crops with a THC concentration above .3 percent). Importantly for the industry, the new disposal rules remove unduly burdensome DEA oversight and provides for remediation options.

Producers will not be required to use a DEA reverse distributor or law enforcement to dispose of noncompliant plants. Instead, producers will be able to use common on-farm practices for disposal. Some of these disposal options include, but are not limited to, plowing under non-compliant plants, composting into “green manure” for use on the same land, tilling, disking, burial or burning. By eliminating DEA involvement from this process, the USDA rules serve to streamline disposal options for producers of this agricultural commodity.

Alternatively, the final rule permits “remediation” of noncompliant plants. Allowing producers to remove and destroy noncompliant flower material – while retaining stalk, stems, leaf material and seeds – is an important crop and cost-saving measure for producers, especially smaller producers. Remediation can also occur by shredding the entire plant to create “biomass” and then re-testing the biomass for compliance. Biomass that fails the retesting is noncompliant hemp and must be destroyed. The USDA has issued an additional guidance document on remediation. Importantly, this guidance advises that lots should be kept separate during the biomass creation process, remediated biomass must be stored and labeled apart from each other and from other compliant hemp lots and seeds removed from non-compliant hemp should not be used for propagative purposes.

The final rules have strict record keeping requirements, such rules ultimately protect producers and should be embraced. For example, producers must document the disposal of all noncompliant plants by completing the “USDA Hemp Plan Producer Disposal Form.” Producers must also maintain records on all remediated plants, including an original copy of the resample test results. Records must be kept for a minimum of three years. While USDA has not yet conducted any random audits, the department may conduct random audits of licensees.

Although this federal guidance brings some clarity to hemp producers, there still remains litigation risks associated with waste disposal. There are unknown environmental impacts from the industry and there is potential tort liability or compliance issues with federal and state regulations. For example, as mentioned above, although burning and composting disposal options for noncompliant plants, the final rule does not address the potential risk for nuisance complaints from smoke or odor associated with these methods.

At the federal level, there could be compliance issues with the Resource Conservation and Recovery Act (RCRA), Comprehensive Environmental Response Compensation and Liability Act (CERCLA) and ancillary regulations like Occupation Safety and Health Administration (OSHA). In addition to government enforcement under RCRA and CERCLA, these hazardous waste laws also permit private party suits. Although plant material from cultivation is not considered hazardous, process liquids from extraction or distillation (ethanol, acetone, etc.) are hazardous. Under RCRA, an individual can bring an “imminent and substantial endangerment” citizen suit against anyone generating or storing hazardous waste in a way the presents imminent and substantial endangerment to health or the environment. Under CERCLA, private parties who incur costs for removal or remediation may sue to recover costs from other responsible parties.

At the state level, there could be issues with state agency guidance and state laws. For example, California has multiple state agencies that oversee cannabis and hemp production and disposal. CA Prop 65 mandates warnings for products with certain chemicals, including pesticides, heavy metals and THC. The California Environmental Quality Act (CEQA) requires the evaluation of the environmental impact of runoff or pesticides prior to issuing a cultivation permit. Both environmental impact laws permit a form of private action.

Given the varied and evolving rules and regulation on hemp cultivation, it remains essential for hemp producers to seek guidance and the help of professionals when entering this highly regulated industry.