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First in the South – Virginia’s Legalization Focuses on Public Safety, Health and Social Justice

By Gregory S. Kaufman, Jessica R. Rodgers
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With the signing of the Cannabis Control Act (the Act) on April 21, 2021, Virginia became the first southern state to legalize adult use cannabis and just the fourth state to do so through the legislature. Legalizing adult use cannabis through the legislature, as opposed to through the ballot box, is not the typical route states have followed up to now. Eleven of the sixteen states and the District of Columbia have legalized adult use cannabis through the use of ballot measures. Virginia joins Vermont, Illinois, New York and New Mexico (which legalized after Virginia) as one of the few states that have gone the legislative route. Under Governor Northam’s administration, the path to legalization was swift, taking less than four months from introduction to passage.

Governor Northam added amendments to the already passed Senate Bill 1406 and the General Assembly voted to approve those amendments, with the Lieutenant Governor breaking the tie in the Senate’s vote. Upon signing, Governor Northam called the law a step towards “building a more equitable and just Virginia and reforming our criminal justice system to make it more fair.” This message and the opportunities to promote social equity through a legal cannabis industry have been consistent points of advocacy made by supporters as the bill advanced to becoming law.

Prior to the Governor’s amendments, the Act under consideration set July 1, 2024 as the date on which both legal possession and adult use sales would begin. The Governor decided to accelerate the date for legal possession to July 1 of this year, a decision believed to have been influenced by data showing that Black Virginians were more than three times as likely to be cited for possession, even after simple possession was decriminalized in the state a year prior. The regulated adult use market is still set to begin making sales on July 1, 2024; however, it remains possible that this date could be advanced through the legislature in the meantime. Nevertheless, Virginia is on track to becoming the first southern state with an operating regulated commercial cannabis market.

Creating an Administrative Structure for the Adult Use Program

Virginia became the first state in the South to legalize adult use cannabis

This sweeping fifty-page law creates the Cannabis Control Authority to regulate the cultivation, manufacture, wholesale and retail sale of cannabis and cannabis product. The Act further lays the groundwork for licensing market participants and regulating appropriate use of cannabis; defining local control; testing, labeling, packaging and advertising of cannabis and cannabis products; and taxation. The Act also contains changes to the criminal laws of the Commonwealth. Companion to the Act are new laws addressing the testing, labeling and packaging of smokable hemp products and manufacturing of edible cannabis products. Additionally, the Cannabis Equity Reinvestment Board was created to address the impact of economic divestment, violence and criminal justice responses to community and individual needs through scholarships and grants.

While persons 21 years or older may possess up to one ounce of cannabis and cultivate up to four plants for personal use per household beginning on July 1, 2021, there are a host of regulations to be written in order to regulate the adult use market. These regulations will be the devil in the details of how the regulated market will work. Regardless, the Cannabis Control Act does establish the framework for adult use cannabis that is unique to Virginia and designed to promote and encourage participation from people and communities disproportionately impacted by cannabis prohibition and enforcement.

The Cannabis Control Authority (CCA) will consist of a Board of Directors, the Cannabis Public Health Advisory Council, the Chief Executive Officer and employees. The Board will have five members appointed by the Governor and confirmed by the legislature, each with the possibility of serving two consecutive five-year terms. The Board is tasked with creating and enforcing regulations under which retail cannabis and cannabis products are possessed, sold, transported, distributed, and delivered. It is expected that the Board will begin discussing regulations next year and that applications for licenses for cannabis cultivation facilities, manufacturing facilities, cannabis testing facilities, wholesalers, and retail stores will begin to be accepted in 2023. Importantly, a Business Equity and Diversity Support Team, led by a Social Equity Liaison, and the Equity Reinvestment Board, led by the Director of Diversity, Equity and Inclusion, are to contribute to a plan to promote and encourage participation in the industry by people from disproportionately impacted communities.

Regulating Participation in the Market

The Act empowers the Board to establish a robust and diverse marketplace with many entry opportunities for market participants. Up to 450 cultivation licenses, 60 manufacturing licenses for the production of retail cannabis products, 25 wholesaler licenses and 400 licenses for retail stores can be granted. These numbers do not include the four permits granted to pharmaceutical processors (entities that cultivate and dispense medical cannabis) under the Commonwealth’s medical program.

Virginia Governor Ralph Northam
Image: Craig, Flickr

In addition to the sheer number of licenses that can be granted, the Act devises a unique approach to addressing concerns of a concentration of licenses in too few hands and a market dominated by large multi-state operators. At the same time, it sets up a mechanism to capitalize two cannabis equity funds intended to benefit persons, families and communities historically and disproportionately targeted and affected by drug enforcement through grants, scholarships and loans. Over-concentration and market dominance concerns are addressed by limiting a person to holding an equity interest in no more than one cultivation, manufacturing, wholesaler, retail or testing facility license. This eliminates the ability of companies to be vertically integrated from cultivation through retail sales operations. However, there are two exceptions to the impediment to vertical integration. First, the Board is authorized to develop regulations that permit small businesses to be vertically integrated and ensure that all licensees have an equal and meaningful opportunity to participate in the market. These regulations will be closely scrutinized by those looking to enter Virginia’s regulated market once they are proposed. Qualifying small businesses could benefit substantially from the economic advantages commensurate with being vertically integrated, assuming they have the access to the capital needed to achieve integration and operate successfully. The second exception allows permitted pharmaceutical processors and registered industrial hemp processors to hold multiple licenses if they pay $1 million to the Board (to be allocated to job training, the equity loan fund or equity reinvestment fund) and submit a diversity, equity and inclusion plan for approval and implementation. Consequently, Virginia is attempting to fund, in part, its ambitious social equity programs by monetizing the opportunity for these processors to participate vertically in the adult use market.

Those devilish details of how this market will function, and how onerous compliance obligations will be, will emanate from those yet to be proposed regulations covering many areas and subject matters including:

  • Outdoor cultivation by cultivation facilities;
  • Security requirements;
  • Sanitary standards;
  • A testing program;
  • An application process;
  • Packaging and labeling requirements;
  • Maximum THC level for retail products (not to exceed 5 mg per serving or 50 mg per package for edible products);
  • Record retention requirements;
  • Criteria for evaluating social equity license applications based on certain ownership standards;
  • Licensing preferences for qualified social equity applicants;
  • Low interest loan program standards;
  • Personal cultivation guidelines; and
  • Outdoor advertising restrictions.

Needless to say, the CCA Board has a lot work ahead in order to issue reasonable regulations that will carry out the dictates in the Act and encourage the development of a well-functioning marketplace delivering meaningful social equity opportunities.

Much work needs to be done before July 1, 2024 to prepare for its debutThe application process for the five categories of licenses will be developed by the Board, along with application fee and annual license fee amounts. It is not clear how substantial these fees will be and what effect they will have on the ability of less-well-capitalized companies and individuals to compete in the market. The Act dictates that licenses are deemed nontransferable from person to person or location to location. However, it is not entirely clear that changes in ownership will be prohibited. The Act contemplates that changes in ownership will be permitted, at least as to retail store licensees, through a reapplication process. Perhaps the forthcoming regulations will add clarity to the transferability of licenses and address the use of management services agreements as a potential workaround to the limitations in license ownership.

Certain requirements particular to certain license-types are worthy of highlighting. For example, there are two classes of cultivation licenses. Class A cultivation licenses authorize cultivation of a certain number of plants within a certain number of square feet to be determined by the Board. Interestingly, Class B licenses are for cultivation of low total THC (no more than 1%) cannabis. Several requirements specific to retail stores are noteworthy. Stores cannot exceed 1,500 square feet, or make sales through drive-through windows, internet-based sales platforms or delivery services. Prohibitive local ordinances are not allowed; however, localities can petition for a referendum on the question of whether retail stores should be prohibited in their locality. Retail stores are allowed to sell immature plants and seek to support the home growers, an allowance that is fairly unique among the existing legal adult-use states.

Taxing Cannabis Sales

Given the perception that regulated cannabis markets add to state coffers, it is little surprise that Virginia’s retail market will be subject to significant taxes. The taxing system is straightforward and not complicated by a taxing regime related to product weight or THC content, for example. There is a 21% tax on retail sales by stores, in addition to the current sales tax rates. In addition, localities may, by ordinance, impose a 3% tax on retail sales. These taxes could result in a retail tax of approximately 30%.

Changes to Criminal Laws

Changes to the criminality of cannabis will have long lasting effects for many Virginians. These changes include:

  • Fines of no more than $25 and participation in substance abuse or education programs for illegal purchases by juveniles or persons 18 years or older;
  • Prohibition of warrantless searches based solely on the odor of cannabis;
  • Automatic expungement of records for certain former cannabis offenses;
  • Prohibition of “gifting” cannabis in exchange for nominal purchases of some other product;
  • Prohibition of consuming cannabis or cannabis products in public; and
  • Prohibition of consumption by drivers or passengers in a motor vehicle being driven, with consumption being presumed if cannabis in the passenger compartment is not in the original sealed manufacturer’s container.

These changes, and others, represent a balancing of public safety with lessons learned from the effects of the war on drugs.

Potpourri

The Act contains myriad other noteworthy provisions. For example, the Board must develop, implement and maintain a seed-to-sale tracking system for the industry. Plants being grown at home must be tagged with the grower’s name and driver’s license or state ID number. Licenses may be stripped from businesses that do not remain neutral while workers attempt to unionize. However, this provision will not become effective unless approved again by the legislature next year. Banks and credit unions are protected under state law for providing financial services to licensed businesses or for investing any income derived from the providing of such services. This provision is intended to address the lack of access to banking for cannabis businesses due to the federal illegality of cannabis by removing any perceived state law barriers for banks and credit unions to do business with licensed cannabis companies.

The adult use cannabis industry is coming to Virginia. Much work needs to be done before July 1, 2024 to prepare for its debut. However, the criminal justice reforms and commitment to repairing harms related to past prohibition of cannabis are soon to be a present-day reality. Virginia is the first Southern state to take the path towards legal adult use cannabis. It is unlikely to be the last.

How ERP Tech Helps Companies Manage Traceability & Process Control

By Scott Deakins
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Commercial real estate took a dive last year as companies began to work from home, but changing regulatory environments have opened doors to a new industry in need of property: cannabis. Growing rapidly at both the medical and adult use levels, cannabis businesses have been eager to move into vacant buildings, quickly buying up space as more states adjust their laws regarding cannabis.

Cannabis businesses cannot go at it blindly, however. Legal cannabis firms of all sizes – from the smallest startup to the biggest enterprise – will face regulatory challenges, traceability requirements, process control standards and, ultimately, the right technology to keep them moving forward in this promising industry.

Use data to keep track of plants, patients and regulations 

As a highly regulated industry, cannabis companies could be investigated at any time. Regulatory authorities may, at the very least, request proof that they are compliant with state restrictions. Cannabis enterprises will only be able to quickly and easily provide that proof if they have immediate access to accurate historical data. With that information, they can generate the necessary reports at a moment’s notice and maintain a reliable audit trail.

Cultivation is where the tracking process begins.

Historical data is also useful for both growers looking to evaluate why certain plants are more successful than others and for sellers looking to improve their customer experience. By tracking everything from mother plants to clones, growers can build a strong genetics profile and gain a powerful competitive edge. Historical data also aids sellers, who can use it to enhance their digital storefronts and keep track of customer information, shopping history and other details that could improve the e-commerce experience.

In addition to customer details, sellers must also keep track of patient information when selling in a medical-only environment. Prescriptions need to be carefully managed to ensure that patients only receive products that they have been approved to purchase and use.

Utilize process control to foster scalable and repeatable processes

Process control is another vital component that every cannabis grower, manufacturer, processor and distributor must possess. They need scalable and repeatable processes to prevent steps from being bypassed, ensuring that every finished product matches the same high-quality standards. If there are no stopgaps in place, steps could be missed if employees are rushing to meet a deadline or simply think that a particular test or check isn’t needed. Those kinds of mistakes can be hugely detrimental to any cannabis company and may waste product, diminish profits and turn off customers.

PlantTag
A plant tagged with a barcode and date for tracking

Similarly, visibility and control over inventory is a top priority for any business, but it reigns supreme in the cannabis space. Managers should always, at all times, know where the product is as it moves throughout the warehouse, or risk costs and waste. By directly tying scanners and barcodes to the right technology, organizations can ensure that all product is accounted for and easily located using real-time data.

Build a foundation for scalability 

Cannabis businesses don’t have the time to manually keep track of these aspects, and it wouldn’t even be possible as they grow and expand their operations. As they evolve, so too will the list of software requirements that are needed to operate smoothly, reliably and efficiently.

Cannabis processors have traditionally invested in seed-to-sale technology, relying on barcodes to track products throughout their lifecycle. While it is critical for cannabis enterprises to keep a strong level of control over lot tracking, this type of software is very limited. Cannabis firms would therefore be better served by an ERP solution with a single data source that provides centralized, real-time access to vital business information.

ERP technology can also help cannabis businesses better manage their production schedule, material requirements planning, accounting, purchasing, inventory management and document generation. The key, however, is to choose the right technology, avoiding ERP solutions that rely on customizations and bolt-ons, which will impede an organization’s ability to scale. Cannabis businesses should instead use technology that makes all of its features, enhancements and extensibility available to all customers, ensuring that every user has access to the same benefits.

Americans for Safe Access Accredited to ISO 17065

By Cannabis Industry Journal Staff
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Late last week, the American Association for Laboratory Accreditation (A2LA) granted ISO/IEC 17065 accreditation to Americans for Safe Access (ASA). This is the first accreditation ever issued to a product certification body in the cannabis market.

ASA is a member-based organization founded in 2002 that seeks to ensure safe and legal access to cannabis for medical purposes and research. Back in 2016, A2LA and ASA partnered on a collaboration to develop the Patient Focused Certification (PFC) program.

What started as a supplement to ISO 17025 for cannabis testing labs to demonstrate a dedication to patient safety, has grown into a more comprehensive certification and consulting program that offers training, business services, company certifications. With the ISO 17065 accreditation, ASA can now deliver PFC certifications that confidently identify reliable and high-quality medical cannabis products, business and services.

Jonathan Fuhrman, program manager at A2LA, says this is a big milestone for ASA’s platform. “ISO/IEC 17065 and product certification can play a decisive role in the evolution of cannabis as medicine,” says Fuhrman. “With its high standards for competence and impartiality, adopting ISO/IEC 17065 represents a major win for healthcare providers and patients.”

Heather Despres, the director of ASA’s Patient Focused Certification program, says she is thrilled to be the first cannabis compliance organization to attain the accreditation. “The PFC program was developed by ASA in an effort to continue our commitment to protect patients, many of whom are medically fragile, and consumers who may be seeking medicine outside of conventional medicinal channels,” says Despres. “There is no other process that can demonstrate that continued commitment more than achieving ISO 17065 accreditation.”

Charlotte’s Web Poised for Canadian Expansion

By Cannabis Industry Journal Staff
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Charlotte’s Web Holdings, the company that just about launched the entire CBD industry, announced this week that they have just been approved for registration on Health Canada’s list of approved cultivars (LOAC) for 2021. Three of their proprietary hemp cultivars have made the cut, gaining the company access to the Canadian market.

Jared Stanley, co-founder and chief cultivation officer at Charlotte’s Web, says they plan to lead the market in Canadian hemp-derived CBD products. “The majority of approved cultivars on the LOAC to date have been for industrial hemp grown to produce food, fiber, and animal feed,” says Stanley. “Now our approved cultivars are paving the way for full-spectrum hemp CBD demand in Canada and most importantly, will provide access to Charlotte’s Web products in Canada.”

Largely due to the difference in regulatory approaches between Canada and the U.S., the CBD product market in Canada is somewhat small. Health Canada currently regulates CBD products the same as products containing more than 0.3% THC. In the U.S., a checkerboard of state laws, the 2018 Farm Bill and the subsequent state hemp programs led to massive growth for the CBD product marketplace.

Charlotte’s Web is one of the leading hemp-derived CBD companies operating in the United States. With the soon-to-be expansion into Canada, the company hopes to develop a global footprint, says Deanie Elsner, president and CEO of Charlotte’s Web. “Today, Charlotte’s Web is the leading hemp wellness company in the U.S. with the most recognized and trusted hemp CBD extract,” says Elsner. “We aspire to be the world’s leading botanicals wellness company, entering countries with an asset light model where federal laws permit hemp extracts for health and wellness. Israel and Canada are included in the first steps of our international expansion.”

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.

Leaders in Cannabis Formulations: Part 2

By Aaron Green
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Editor’s Note: In Part 1 of this series, green sat down with Drew Hathaway, senior food scientist at Stillwater Brands. Click here to see Part 1.

Natural cannabinoid distillates and isolates are hydrophobic oils and solids, meaning that they do not mix well with water and are poorly absorbed in the human body after consumption. By formulating these ingredients using a patented delivery system technology, trademarked VESIsorb®, Geocann has overcome common obstacles associated with fat-soluble active ingredients, including poor stability, bioavailability, absorption, and solubility. In addition, Geocann has peer-reviewed, published evidence of the dramatic improvements in Cmax, AUC, and Tmax (“time to peak absorption” directly related to “fast-acting” benefits).

Geocann is a cannabis formulation company with its headquarters in Fort Collins, Colorado, and additional offices in Chicago, Illinois and Zurich, Switzerland. The company is led by an impressive leadership team of scientists, pharmacists, researchers and natural product industry leaders. Geocann’s technology platform has been successfully applied to a wide range of cannabis product applications, including soft gel and hard-shell capsules, functional foods (e.g. gummies) and beverages, powder systems, tinctures, sublingual sprays and topically applied formulations. Brand partners in the U.S. utilizing Geocann’s technology for hemp applications include Nestlé Health Science, Cannaray and Onnit, and brand partners for medical and adult-use cannabis applications include Curaleaf, Sunderstorm and CannaCraft, among others.

We spoke with Jesse Lopez, CEO and Founder of Geocann, about their product formulation technology in cannabis and how they work with brand partners in the U.S and internationally. Lopez started Geocann in 2018 alongside the success he’s experienced at SourceOne Global Partners (founded in 2003 by Lopez), a leading formulation company in the nutraceuticals space with a reputation for pioneering innovative products that combine science-backed ingredients with patented drug delivery system technologies to address the most pressing consumer health concerns, such as heart health, cognitive function, inflammatory response, metabolic syndrome and type II diabetes, among others.

Aaron Green: Jesse, first off, how did you get involved in the cannabis industry?

Jesse Lopez: Our focus at SourceOne Global Partners has been on natural products for nearly two decades. Some of the folks involved with our natural products business decided that they would get involved in the cannabis business and they asked for my support at the Advisory Board level. I agreed to serve and figured I better learn about the cannabis industry! We realized that there was a tremendous opportunity for utilizing our drug delivery system technology to enhance the value of these cannabis-based products. Due to the regulatory environment, strategic legal counsel and new investments necessary to take an immediate leadership position in the cannabis industry we launched Geocann in 2018 with an office in a fully legal state at the time, Colorado.

Green: How do you select the natural products you work with at SourceOne?

Jesse Lopez, CEO and Founder of Geocann

Lopez: We really focus on science-backed natural product ingredients that may require high doses to reach therapeutic blood levels. By combining these science-backed ingredients with patented technologies – which we own the global rights to – these products offer desirable differentiation for leading brands, such as dramatically improved absorption and bioavailability, patent protection and trademarked “intel inside” branding.

Green: What are some of the other natural products you have experience with?

Lopez: We work with a range of some of the most popular nutraceuticals such as coenzyme Q10 and omega-3 fish oil to the more innovative natural products like resveratrol. We also work with vitamin D, and other immunity-based ingredients that can be enhanced using our delivery system technology to deliver greater benefits to the people that are taking those products.

Green: What is the technology and how does it work?

Lopez: I think it’s important to recognize our technology partner, Vesifact, in Zurich, Switzerland, who is the inventor of the VESIsorb® technology platform and serves as the scientific research, technical support, production, and product development arm of SourceOne and Geocann. We are very proud of this symbiotic relationship where our role at Geocann and SourceOne is to provide the commercial development, sales, marketing and strategic distribution infrastructure. We promote our partnership openly on our website and in our marketing materials because of their unrivaled leadership position in the global marketplace.

They have consistently been recognized as a top 10 global organization for health-related nanotechnology patent activity, ahead of many of the most well-known pharmaceutical companies in the world. It is an intellectual property portfolio that has been used to provide solutions to the most difficult product formulation challenges over the years in pharmaceuticals, medical devices, nutraceuticals, cosmetics, and now cannabis applications. Together, our focus has been on delivering novel solutions in these diverse fields of use and product applications based upon VESIsorb® formulation technology.

Each active compound identified with its own set of formulation, absorption and bioavailability challenges requires a customized solution that allows the full potential health benefits to be realized from success in the lab to commercial scale up. This is the process and we have successfully delivered unmatched solutions for close to twenty years from coenzyme Q10 to now both psychoactive and non-psychoactive cannabinoid product formulations in a wide range of product applications.

We saw the exploding interest in CBD with our nutraceutical partners and demanding consumers worldwide but chose to start Geocann to keep the markets served separate. We were confident that the VESIsorb® technology would provide much needed solutions for CBD as a wellness product, but also adult-use and medical cannabis products regarding “fast acting” and “product stability” needs.

Green: What’s the problem in cannabinoid bioavailability that Geocann’s technology helps to solve?

Lopez: It is well-recognized in the scientific literature that CBD, THC and other cannabinoids, in general, show limited bioavailability due to their lipophilicity, poor aqueous solubility and extensive first-pass metabolism.

Our VESIsorb® technology was designed to address the poor bioavailability of drugs and natural bioactives like cannabinoids exhibiting poor water solubility but high membrane permeability (Biopharmaceutical Classification System: Class II compounds). The VESIsorb® technology is a lipid-based formulation that self-assembles on contact with an aqueous phase into a colloidal delivery system. This colloidal solubilization improves the transport of the cannabinoids through the aqueous phase of the GI-lumen to the absorptive epithelium, dramatically improving bioavailability.

VESIsorb® is typically characterized as a SEDDS (self-emulsifying drug delivery system). What’s unique about our VESIsorb® SEDDS is the long history of safe and effective use worldwide and the large number of products that, over the years, we’ve successfully developed. With decades of experience delivering novel formulation solutions, there is significant and valuable “know how” that we bring to each formulation challenge.  This “know how” allows us, for example, to develop cannabinoid formulations that provide lymphatic absorption pathway advantages in addition to standard gastrointestinal absorption, therefore optimizing therapeutic blood levels for maximum benefits.

Needless to say, there are various methods that attempt to address the poor cannabinoid bioavailability. Unfortunately, too often, companies make claims that they have water soluble cannabinoids but offer little evidence to validate their claims. The popular misconception is that some degree of water solubility will consistently translate to improved bioavailability. This is clearly not accurate. We know scientifically that pharmacokinetic performance is highly variable. A review paper I read recently comparing water soluble delivery system formulation types illustrated this fact. There was greater than an eight-fold difference in bioavailability amongst the various water-soluble formulations.

Green: Can you tell me some details about your global license with Vesifact?

Lopez: Our technology exclusivity is based upon given categories. So, when we say we have global exclusivity for nutraceuticals, that can be as I’ve already mentioned, omega-3, coenzyme Q10, or resveratrol as examples, and this business is managed by SourceOne. With regards to our global exclusivity for cannabinoids and terpenes– whether we formulate these ingredients to create a functional drink, or we’re creating a gummy, or creating a softgel capsule or powder-filled hard-shell capsule, or sublingual, or topical – all of those product applications are covered by ourexclusivity for the technology and is managed by Geocann.

The beauty of our technology is that we’ve already achieved success with all of those product applications. That’s one of the big advantages of our technology versus some other approaches trying to address the challenges of cannabinoid bioavailability.

Green: What kind of validation and clinical studies have you done so far in the cannabinoid space?

Lopez: We were the first to have stability data with creating our formulation in a soft gel capsule with CBD. We recently submitted to the European market for novel food application. We invested hundreds of thousands of dollars in proprietary safety studies that are required to achieve novel food status in Europe and FDA GRAS in the U.S. We have proprietary stability data as well as proprietary toxicology data from multiple, self-funded clinical studies. Many companies that submit for the EU novel food application are only referencing the existing scientific literature about the pharmacokinetics of cannabinoids, whereas we have our own peer-reviewed, published study. In our study, we compared our VESIsorb®-CBD formulation to the industry standard MCT Oil-CBD formulation in a crossover design where we were able to demonstrate how we could dramatically improve the bioavailability of CBD.

Green: Can you talk about the benefits of your technology with regards to bioavailability and onset time?

Lopez: When you start talking about onset time we move into a broader discussion relative to cannabinoids. We’ve been very successful with marijuana, especially as it relates to THC, because of the dramatic improvement in time to Tmax, and how much faster we reach Tmax than a standard THC formula. Our formulation is generally four times faster compared to standard formulations.

When it comes to area under the curve and Cmax, we show improvements of four to six times a standard THC or CBD product. Further, when we start looking at the differences between other studies that have been published, we show an even greater improvement based upon study comparisons to what other people have done, even compared to products like GW Pharmaceuticals’ Sativex Oromucosal Spray.

Green: Can you address the SEDDS formulation and liver metabolism?

Lopez: We’ve dramatically overcome challenges with the first-pass effect. We have also formulated our products to address lymphatic absorption. So, we’re coming at it from a number of different angles.

We disagree with people who talk about water solubility as an end-all be-all solution. When you look at the range of published studies, whether it’s nanoparticles or liposomal systems or micro-emulsions, they all are water soluble systems, but yet the data shows there’s dramatic differences in the real efficacy of those approaches, and what the actual improvement in blood levels are. Ultimately, those blood levels represent the efficacious nature of the products whether we’re talking about CBD, or talking about THC.

Green: As a Colorado-based company you work with cannabis partners across the US. Can you tell me about your relationship with marijuana product formulators and brands and how you structure your licensing agreements across state boundaries?

Lopez: In a recent article about the leading fast acting gummies, the two companies they focused on were Sunderstorm with the Kanha Nano gummies and Curaleaf with their Select Fast Acting Nano gummies. Both of those companies use our VESIsorb® technology. We’re very proud of our relationship and the success they’re having as leaders in most dominant states with that particular product application.

Onset time has always been a challenge with gummies. And we’ve dramatically improved onset. Actually, we’ve shown statistically significant improvements for all measured pharmacokinetic parameters in a recent peer-reviewed published study.  We demonstrated much higher total absorption in maximum plasma concentration (Cmax), total exposure [area under the curve (AUC)]) and the time to reach the peak concentration (Tmax).

We say powered by VESIsorb® technology the product is faster, stronger, longer.

Green: How does the experience differ from a standard oil- or isolate-based formulation?

Lopez: The only way that I can answer that question is we’ve had 100% success with the companies we work with in their initial trials. When someone tells me that a group of employees are going to try the product and they’re heavy users of cannabis and they are smokers, I think, “wow, you know, gummies have to be really successfully formulated for someone like that to be pleased with the high.” Then they come back and say, “that’s the best that I’ve had in four years!” and they’re totally blown away. That’s completely different than a peer reviewed published study, but for sure, that’s the kind of feedback and anecdotal evidence that we get. I think that’s why that application is growing so much faster now because we’ve overcome this onset issue.

Green: Do you give exclusive rights on a state-by-state basis?

Lopez: We’re very selective about who we work with. Exclusivity is always part of the discussion. But at the same time, it’s really more about protecting the investment in the people that we partner with and not cannibalizing a given market. So, there are some exclusive relationships in the U.S. and internationally, like Heritage Cannabis and Pathway Health Corp in Canada, but for the most part, I would say simply, we were very selective about who we do business with and open to new partnerships.

Green: What kind of support do you provide to your licensing partners?

Lopez: We provide 100% formulation and technical support. We provide the SEDDS and then they use their own legal, licensed cannabis and their own equipment. Our system requires no special equipment or investment in changes to their process. So, not only do we provide formulation expertise, but our system is really easy to use both in a lab environment as well as producing large scale commercial productions.

Green: What geographies are you in currently with the cannabinoid formulations?

Lopez: We are global in scope. We’ve been very fortunate to have success not only in the US and Canada, but Europe, Brazil and Australia as well. Our level of participation will vary whether we’re talking about medical marijuana, adult-use or hemp extract and CBD.

Green: If somebody is interested in learning more about your product or potentially becoming a license partner, how would they how would they reach out to you to set that up?

Lopez: If they went to our website, www.geocann.com, it’s pretty easy to reach us and I am grateful that so many companies are doing that.

Green: Great, thanks Jesse that concludes the interview!

Five Things Every Cannabis Business Needs Before They Open

By Tim Allen
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When it comes to small business opportunities these days, few phrases give people the old dollar-sign-eyes more than “legal cannabis”.

From states like Michigan where it’s been approved for both medicinal and adult use, to places like South Carolina where legalization has been a popular topic for ballots and voters, cannabis is slowly turning into one of America’s biggest businesses.

You don’t need us to tell you that – Investopedia reports that (as of Nov. 2020) over 340,000 American jobs were devoted to the handling of plants at various stages along the retail cycle, and the industry was estimated at over $13 billion as of 2019.

Not bad for a plant that’s still technically illegal under federal law, huh?

If you’ve read this far, it probably means you’re hoping to be among the lucky ones who can strike it rich with their own cannabis business. A noble undertaking, but are you really prepared to make your mark? In a field as competitive – and occasionally complicated – as cannabis can be, you really need to lead with your best foot forward, and make sure you’re as well prepared for the various challenges of a fairly new industry as possible.

With that in mind, below is a list of the five things you’ll need to double-check and make sure you actually have access to before embarking on your new business venture.

The right shelving & equipment

You see this a lot with smaller businesses as well as, er, ‘independent growers’. A lot of people assume that they can just buy some greenhouse shelves, line the walls of their business with it, and call it a day, right?

Offering rare or unique cannabis strains is a great way to differentiate

This approach leads to problems more often than not. Even above and beyond the inherent concerns of helping your plants grow safely (and productively!), the sort of equipment you use should reflect the sort of business you’re trying to run. A cannabis retail outlet, for example, is going to need different sorts of shelves and tables than a dispensary or growing facility, as the work being done is completely different.

It will take a little research, but it helps that a lot of businesses these days are starting to offer shelving specifically designed for various cannabis operations. Check to see if any of the big warehouse suppliers near you have gotten into the cannabis game yet – Shelving Inc, Metro, and Rack & Shelf are a few of the bigger shelving names with cannabis offerings as of this writing.

Strong branding

Long gone are the days when all you needed to be successful in cannabis was a booth at the shady flea market, a pun name and a big sign that said “Head Shop” to throw off the authorities.

Far too many cannabis businesses launch themselves headlong into a business plan without stopping to think of a good name, or just settling for the first one they think of. With as crowded as the playing field is quickly becoming, it might honestly be worth it to pay someone to help you come up with a decent logo and branding – it’ll go a long way towards helping you stand out against everyone else using a green font. Places online like HIGHOPES specifically offer these services for cannabis businesses, so you know they’ll be able to figure out what you’re about more quickly.

An understanding of your consumer base

The exact sort of work your cannabis business performs is going to affect what your potential customer base can be – and vice versa.

Brands are embracing contemporary design more and more

Early on in the planning stages, make sure to figure out exactly who you’re going to sell your products to, as this will inform nearly every other decision your business makes. Do you want to sell directly to the customer, or to work as a distributor for CBD/cannabis retail outlets? Are you prepared to manage and run your own storefront, or are you just going to rent warehousing space to sell your plants to other retailers? If so, do you know who the businesses are in your area that you could work with? Or, if you are planning on entering the retail space, do you know how many other cannabis businesses could be operating in your desired geographical area? Finding an audience may be the hardest part of opening any business, but it’s important work.

Banking that understands your industry

Maybe the biggest drawback to being involved in an industry as comparatively new as cannabis, is that a lot of the old methods of doing business aren’t quite available to you. Many financial institutions of various sizes are limited in the ways they can help finance cannabis businesses, from not understanding the regulations and needs of your industry, all the way to being unable to assist cannabis businesses with banking in the first place.

Finding the right banking services can be challenging

It might be advantageous to look into banks, credit unions or financing companies in your area that specifically offer banking services (like business accounts and the like). A few examples include Aery Group from New Mexico, or Seed to Sale in Michigan. (It’s important to note that many of these companies, such as Aery Group, can only service the state they’re located in due to different state-by-state regulations – check ahead to make sure you find a place that can help you!)

Knowledge of the needed licensing and regulatory requirements

Getting a license to open any business is a tricky prospect on a good day, but for an industry as wide-ranging and varied as cannabis, getting licensed can require a lot of homework.

Even if you’re lucky enough to be setting up shop in a state that allows for the sale of cannabis, the licensing process can vary widely from state-to-state. In New Mexico, for example, it can take months to acquire a license simply due to the amount of paperwork, research and submissions required to cement your business. Before going too far down the rabbit hole of opening your business, make sure to take the time you need to completely research and understand the various local and state regulations you’ll need to adhere to for your business to get off the ground.

Obviously, there’s going to be a lot of other hurdles and requirements that come with starting a business – but by remembering these five things, you’ll be off to a much better start than many others.

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A Look at the Rise Of The East Coast Cannabis Market

By Serge Chistov
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The rise of the East Coast cannabis market gained another foothold in late March 2021 when New York became the most recent state to legalize adult use cannabis, joining ranks with other Atlantic stalwarts, including New Jersey, Maine, Massachusetts, Vermont, Virginia and Washington, D.C.

In doing so, it opened the door to an industry that many experts agree could exceed $7 billion annually, once the market is fully established. That’s potential the cannabis market hasn’t seen since Washington became the first Pacific state to legalize adult use cannabis, almost 10 years ago (followed shortly after by Colorado, then Oregon in 2014 and California in 2016).

Unfortunately, the leaders of this great country have yet to follow suit, and cannabis remains illegal at the federal level. For those in the cannabis market, this means that state-licensed cannabis businesses must cultivate and sell their products within the confines of the state in which they are licensed. Nothing can cross state lines. Even if a business is licensed in both Vermont and New York, it can’t ship product from one state to the other without running afoul of federal legislation. Most in the East Coast cannabis market view this as a negative.

Virginia became the first state in the South to legalize adult use cannabis

While it certainly makes things more difficult, a small group of forward-thinking investors and entrepreneurs see this for what it really is: an opportunity to get in on the ground floor and establish state-specific grow operations and other supply-chain waypoints, where none or few currently exist. Think of the current state of the East Coast cannabis market as a beachhead. Right now, the industry is defined by state lines. But when the federal government finally legalizes adult use cannabis from coast to coast—and it’s only a matter of time before it does—those state lines will essentially disappear. When they do, the beachheads established now will become the infrastructure for the entire Eastern seaboard.

Take Virginia, for example. It shares its border with five states that have legalized medical cannabis but have yet to cross the bridge into adult use sales (West Virginia, Maryland, Kentucky, Tennessee and North Carolina). A Virginia-based grow operation built now has the potential to serve not just those five states but other contiguous markets including Pennsylvania, Ohio, South Carolina, and even Alabama, Georgia and Indiana. A relatively small investment now could pay huge dividends in just a few years, when the market literally blows wide open.

It’s this incredible potential that makes the rise of the East Coast cannabis market one of the most important developments in the last five years. And while the potential scale of grow operations and other cannabis businesses is certainly essential to the conversation, let’s not forget that “niche products” within the East Coast cannabis market are still very much up for grabs.

If the past decade has taught us anything, it’s that consumers are willing to pay a premium for high-quality, organically grown cannabis. Both new and long-time cannabis enthusiasts will choose — even demand — high-quality, organically grown cannabis that looks, smells and tastes fresh and doesn’t rely on harmful fertilizers, heavy metals or pesticides. They’re also enthusiastic about supporting brands that have a commitment to sustainable, eco-friendly operations.

The demand for high-quality, organically grown cannabis continues to increase

It’s very much like the current trends we see in the grocery store aisles. Manufacturers and consumers alike are seeing the value of “whole foods.” After decades of relying on heavily processed fare, both suppliers and end-users are benefiting from higher-quality ingredients. Consumers want to know what’s in the stuff they’re putting into their bodies. When it comes to cannabis, they want to know that what they’re taking to alleviate their anxiety doesn’t include harmful chemicals. This demand has the capacity to push revenue even higher.

And when the dam finally breaks and businesses can ship product from state to state, the idea is for growers to be well-positioned geographically to become suppliers of high-quality, organically grown cannabis, for every state east of the Mississippi.

Cannabis businesses in states such as Colorado have had the past decade to prepare for the coming boom, but that doesn’t mean it’s too late to join the party. The rise of the East Coast market parallels what Colorado and the other Pacific states experienced in the early-to-mid teens—the potential to become a very real industry, with huge capacity for growth and profit. Get in on that action now!

The East Coast cannabis market—and, indeed, the entire U.S. market—also sits on the verge of another game-changing trend: following in the footsteps of other markets and realizing sooner rather than later that high-quality, organically grown, eco-friendly cannabis is the next stage of the game. Few investors and entrepreneurs see that right now, but the astute businessperson can capitalize on both trends now and position themselves and their businesses for huge returns in the very near future. The rise of the East Coast cannabis market makes that a very real possibility.

Virginia Finalizes Legalization Plan

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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.

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.