Tag Archives: business

CannaSafe Accredited to ISO 17025

By Cannabis Industry Journal Staff
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According to a press release sent out last week, Perry Johnson Laboratory Accreditation, Inc. announced the accreditation of CannaSafe Labs to ISO/IEC 17025. CannaSafe is based in Van Nuys, California and provides a number of different testing services, including full regulatory compliance testing for the state’s requirements.

CannaSafe was allegedly the first to break the news about vaping health issues caused by EVALI, the lung condition responsible for the 2019 vape crisis. According to the press release, they provided testing data that proved black market vapes contained dangerous chemicals, likely including vitamin E acetate, the chemical that the CDC says is linked to EVALI.

CannaSafe say they have plans to expand into a number of states beyond California. They are also planning to build a facility dedicated to CBD testing to meet market needs in the near future.

Former Vice Chancellor of Germany Joins Swiss Company Board

By Marguerite Arnold
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Dr. Philipp Rösler, the former federal Minister of Economics and Technology and Vice Chancellor of Germany from 2011-2013 has just joined the board of Swiss cannabis company Pure Holding AG.

The move is interesting for a number of reasons, not the least of which is that it signals how political currents are moving in Germany, if not Europe beyond that.

To American eyes, Pure Holding looks like a very organized, corporate farm and cannabis manufacturer, organized to produce and test high quality cannabis, extracts and white label products for the coming storm of interest – no matter where European regulatory winds may temporarily go on hemp extracts.

Geopolitics At Play
The fact that the farm is on the Swiss side of the border is also a signal that many Germans (at least) expect the EU to drag its feet on what kind of animal even low-THC and THC-free cannabinoids are while consumers vote with their pocket books across the continent and buy online imports.

The fact that Rösler is politically associated with the Free Democratic Party (FDP) of which he was also chair, is another indication that Germans in general are deeply upset about the slow movement of the CDU party (the Christian Democratic Union) on this issue (just like many others).

The FDP, like all other parties (except the extreme right wing Alternativ für Deutschland or Afd) has been much more forward about cannabis reform. That said, the party currently at the helm of the ruling coalition (CDU) has also been repeatedly accused of dragging its feet on the issue – no matter that medical cannabis was approved here as a therapy mandated for coverage by public health insurers.

The difficulties however that most patients have had to go through is not over. Reform has come here, but still for most, in name only.

The fact that Rössler was also a cardiothoracic surgeon before his stint in national politics is also a sign that the medical community is taking notice of the health effects of cannabis. That he was also federal minister of health of Germany (between 2009 and 2011 in Angela Merkel’s second cabinet) is also a clear indication that the topic of more cannabis reform is on the agenda at home in Germany, including Europe beyond that.

Even if, right now, certainly compared to what is developing in the UK, on a much slower boat to at least commercially accessible, low THC reform.

Philipp Rösler, former vice chancellor of Germany

The Current Debacle Over Hemp In The EU

It is unclear what the fate of hemp is in the EU at present. With the region’s administrators coming to a legally non-binding and decidedly non-scientific holding pattern on “CBD,” (namely that it is a narcotic) it could very well be that the Swiss, English and importers from the rest of the world bring in flower, extracts and products that the region cannot keep out, but is not quite copacetic about embracing, just yet.

That said, with major health food producers now stocking hemp seed extract on the stores of major German grocery stores, it is clear that the worm is turning, one former politician and now board member at a time.

Why The Fuss Over Hemp At All?

The bigger debate is actually a scientific one. It boils down to parsing cannabinoids from the same plant correctly, while also understanding the role that they play together.

That this is now happening, roughly twenty years after the discovery of the human endocannabinoid system – and the recognition that the human body itself creates cannabinoids that are mimicked by external phyto (or plant sourced) cannabinoids, is a victory, even if a late one.

It also signals that at a high level, the debate about cannabis as a drug if not a tool for maintaining overall body wellness, is not abating, but indeed proceeding even as the debate stymies politically at a country-by-country if not regional level.

What Will Reform In The EU Look Like?

While the analogy is not exactly the same, and for a variety of reasons starting with the fact that European countries are sovereign and independent states of Europe and not part of a single federal country, it appears that cannabis reform will look very similar to the progress of the same as it has unfolded so far in the United States.

Trichome Analytical Accredited to ISO 17025

By Cannabis Industry Journal Staff
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According to a press release sent out last week, the American Association for Laboratory Accreditation (A2LA) announced the accreditation of Trichome Analytical to ISO/IEC 17025:2017. Trichome Analytical is the first cannabis testing lab accredited to the standard in the state of New jersey.

Based in Mount Laurel, New Jersey, Trichome Analytical is a DEA-registered third-party cannabis testing lab that offers hemp compliance testing for state and federal guidelines.

Kristen Goedde with Trichome Analytical says they are hoping to provide testing for consumer safety and accurate labeling for the state’s new hemp market. “The evolution of the hemp and cannabis industries increasingly demands rigorous, high quality analytical testing,” says Goedde. “Obtaining accreditation is an essential measure for laboratories seeking to ensure consumer safety and reliable labeling. Trichome is honored to have our quality systems validated by A2LA, and we look forward to elevating cannabis and hemp operations to new heights – right here in our home state.”

C4 Labs Accredited, Ready for Compliance Testing

By Cannabis Industry Journal Staff
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Since Arizona legalized medical cannabis in 2011 , regulators have not required testing for cannabis products. That is about to change in a little more than a month.

After a long and hard-fought battle by patients and stakeholders in the Arizona cannabis industry, Governor Ducey signed SB1494 into law last year, a bill that requires independent labs to test cannabis products for contaminants. More specifically, the bill requires that cannabis products be tested “to determine unsafe levels of microbial contamination, heavy metals, pesticides, herbicides, fungicides, growth regulators and residual solvents and confirm the potency of the marijuana to be dispensed.”

Ryan Treacy, co-founder of the ACLA and founder/CEO at C4 Labs.

Ryan Treacy, CEO/Founder of C4 Labs and co-founder of the Arizona Cannabis Laboratory Association (ACLA), has been a vocal advocate for mandatory product safety testing since 2016. After several failed lobbying attempts and forming the ACLA with three other labs in Arizona, SB1494 finally passed in May of 2019.

Under this bill, the Arizona Department of Health Services has been in charge of building the new laboratory regulations. Those rules include certifying and regulating labs, establishing requirements like health and safety protocols, mandatory quality assurance program and standards, chain of custody and sampling policies, adequate records, accreditation, proficiency testing, among other requirements.

In a press release published by Perry Johnson Laboratory Accreditation (PJLA), they announced that C4 Laboratories was accredited to ISO/IEC 17025 this week, in time for the new requirement in Arizona.

According to Treacy, the Department of Health Services is still in the process of finalizing the technical accreditation for labs in the state. He says C4 Labs will be ready to accept compliance samples in the coming weeks. “There will no doubt be a flood of samples and a lot will be asked of the lab operators to continue to build their business to better accommodate sample volume,” says Treacy. They want to minimize any disruption to the supply chain, keeping patients and clients at top of mind.

C4 Labs has been preparing for the flood of compliance testing samples beyond just their accreditation. “Over the last 16 months we have added a new fully renovated lab space, doubled our lab staff and have invested significant monetary resources in additional state of the art analytical instruments to allow for more analysis and expanded lab sample capacity,” says Treacy. “We intend to make efficiency and capacity our focus while maintaining our commitment to sound science and data integrity for our clients and patients alike.”

C4 Labs is currently in its sixth year of operating and was one of the original labs to serve Arizona patients. “We are very proud of the work we have put in to advocate for safe, lab-tested cannabis products and we intend to continue to lead from the front as Arizona’s premier cannabis testing laboratory.”

The DEA’s Interim Final Rule and its Impact on the Industrial Hemp Industry

By Seth Mailhot, Steve Levine, Emily Lyons, Megan Herr
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On August 20, 2020, the Drug Enforcement Administration (DEA) published an Interim Final Rule on industrial hemp and hemp derivatives (the interim rule), which immediately went into effect, to conform DEA regulations with the Agriculture Improvement Act of 2018 (the 2018 Farm Bill).

The 2018 Farm Bill effectively removed industrial hemp from the definition of “marijuana” in the Controlled Substances Act (CSA). Additionally, tetrahydrocannabinols contained in industrial hemp, such as cannabidiol (commonly known as CBD), were also removed from the purview of the CSA.

The 2018 Farm Bill defines hemp as:

the plant Cannabis Sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.

Accordingly, because cannabis and its “derivatives, extracts, [and] cannabinoids” are not considered “marihuana,” so long as their delta-9 tetrahydrocannabinol (THC) concentration is at or below 0.3% on a dry weight basis, the regulation of hemp fell outside the authority of the DEA. However, the DEA’s interim rule attempts to draw a hard line in the sand as to when the plant, and any products derived therefrom, are considered “marihuana,” thereby still subject to the DEA’s purview.

Specifically, the interim rule promulgates the DEA’s position that hemp processors can convert otherwise legal hemp into illegal “marihuana,” thereby bringing it back under the DEA’s authority, if such processing and extraction increases the THC content above the 0.3% THC threshold, even momentarily. Specifically, the interim rule states:

[T]he definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from [S]chedule I, the derivative must not exceed the 0.3% Δ9-THC limit. The definition of ‘marihuana’ continues to state that ‘all parts of the plant Cannabis sativa L.,’ and ‘‘every compound, manufacture, salt, derivative, mixture, or preparation of such plant,’ are [S]chedule I controlled substances unless they meet the definition of ‘hemp’ (by falling below the 0.3% Δ9-THC limit on a dry weight basis) or are from exempt parts of the plant (such as mature stalks or non-germinating seeds) . . . As a result, a cannabis derivative, extract, or product that exceeds the 0.3% Δ9-THC limit is a [S]chedule I controlled substance, even if the plant from which it was derived contained 0.3% or less Δ9-THC on a dry weight basis.

Accordingly, the DEA’s stance creates a substantial risk for processors who will be considered to be in possession of a Schedule I controlled substance during the extraction process if the THC content exceeds the 0.3% THC threshold at any point during processing, an almost inevitable result of the extraction process. Nevertheless, the interim rule states:

the definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from [S]chedule I, the derivative must not exceed the 0.3% Δ9-THC limit.

Although the DEA impliedly recognizes the fact that hemp processing can result in a temporary increase in THC content, it still took the position that, should the THC content exceed 0.3% THC at any point during the extraction process, processors will be considered to be in possession of a Schedule I controlled substance, regardless of whether the finished product complies with federal law.

Just some of the many hemp-derived CBD products on the market today.

Consequently, the interim rule creates significant criminal risk for anyone processing industrial hemp, as the DEA has asserted that the processing of hemp into extracts, derivatives and isolated cannabinoids (which are arguably legal under the 2018 Farm Bill) can result in unintentional violation of federal law, thereby subjecting processors to the risk of significant criminal liability. That said, the interim final rule does not appear to be a shift in DEA policy since the passage of the 2018 Farm Bill in December 2018, nor has DEA issued any warnings to industrial hemp manufacturers or otherwise signaled a change in enforcement policy by issuing the Interim Final Rule.

In addition, the DEA took several other steps in the interim final rule towards the deregulation of hemp products:

  • Adding language stating that the definition of “tetrahydrocannabinols” does not include “any material, compound, mixture, or preparation that falls within the definition of hemp set forth in 7 U.S.C. § 1639o”.
  • Removing from Schedule V a “drug product” in an FDA-approved finished dosage formulation that contains cannabidiol (CBD) and no more than 0.1 percent (w/w) residual tetrahydrocannabinols (e.g. Epidiolex).
  • Removing DEA import and export controls for hemp extract that does not exceed the statutory 0.3% THC limit.

Why You Should Consider Parametric Insurance to Protect Your Outdoor Cannabis Crop

By Evan Stait
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In May 2019, there were 4,400 reports of tornadoes, hail and high winds across the U.S. That’s the highest number of similar weather incidents on record since 2011. This increasing number of weather incidents has a huge effect on the cannabis industry, which has turned more frequently to outdoor cultivation since legalization.

While outdoor cultivation can develop the flavor of the cannabis crop, much like wine, it also brings with it some unique challenges. Each component of the weather – wind, rain, temperature – plays a role in whether a crop succeeds or fails. While conditions one year may easily lead to a bumper crop, the conditions the following year may not be as favorable. And as the weather becomes more volatile due to climate change, growers are ever more at risk, especially when they aren’t insured.

Evan Stait, author and commercial account executive for HUB International

Unfortunately, traditional crop insurance isn’t available for outdoor cannabis cultivators, primarily because of a lack of data on yield performances – and the impact the weather has on yields. Insurance companies don’t create policies until they have the data to back the policy. But meanwhile, the growers are assuming all the risk.

Enter parametric insurance. Parametric insurance is a program that pays out after a certain parameter is met. In the case of cannabis growers, the parameters are weather-related. The policy is triggered when the weather varies from the average – if there is too much rain during a specific period of time, for example, or an occurrence of large hail. Because the policy is related to average weather, it has to be tailored to the specific growing region – which means the parameters for Colorado won’t be the same as a policy for Maine.

For cannabis crops, coverage can be created for the following parameters:

  • Rain (recorded in inches of rainfall over a period of time)
  • Wind (recorded in miles per hour)
  • Early freezing (using recorded temperatures)
  • Hail (measures intensity and size of the hail)
  • Drought (for non-irrigated plots)

Once a parameter has been set, the policy starts to pay out at the strike point, or the average measurement specified in the policy. Coverage continues to pay out until the exhaust point, or the entire limit of the coverage is paid out. It works well because it’s straightforward: The further away from the average, the more the likelihood of catastrophic loss.

Parametric insurance isn’t for everyone. It’s a program designed to fill gaps that exist within the traditional insurance system. Nor is it designed to stand alone. But it can protect outdoor cannabis cultivators from weather risks that are truly beyond their control, especially given the hardening property insurance market.

In addition, it works for two simple reasons:

  1. Simplicity: Recorded weather events leave no room for ambiguity or dispute. You don’t even need an adjuster to guide the claims process. The official weather data proves what happened.
  2. Correlation: There is a high degree of correlation between measurable weather events and potential damage to outdoor crops.

Parametric coverage is not widely available. Many insurance professionals may not even know of it. But with the property insurance market hardening and a growing need to protect you and your cannabis business from weather-related disaster, parametric coverage may be your best bet. Make sure you speak to a broker who knows about it.

Oklahoma Announces Contract with Metrc

By Cannabis Industry Journal Staff
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In a press release published last week, the Oklahoma Medical Marijuana Authority (OMMA) announced they have awarded their seed-to-sale traceability contract to Metrc, a national company with contracts for the same service in 14 other states.

According to OMMA Interim Director Dr. Kelly Williams, working with Metrc will help them protect public health, by expediting recalls. “The seed-to-sale system will greatly expand our compliance capabilities and improve the effectiveness and speed of any future recall efforts,” says Dr. Williams. “It will also allow us to detect unusual patterns that may indicate product diversion.”

Metrc has begun work towards their rollout of the system, which they expect to have ready by February 2021. “We know that businesses will have many questions in the coming weeks, and we will answer them as quickly as possible,” says Dr. Williams.

Oklahoma legalized medical cannabis in 2018 and the market has expanded considerably. There are more than 300,000 patients and almost 10,000 licensees. It has the highest number of dispensaries per resident in the country.

Jeff Wells, CEO of Metrc, says Oklahoma has done a good job so far in developing one of the fastest growing markets in the country. “We’re honored Oklahoma selected Metrc to implement the state’s first cannabis tracking system,” says Wells. “With one of the fastest growing medical cannabis markets in the United States, the OMMA has done a tremendous job developing this new industry, and we’re excited to support its ongoing success. We look forward to working with state regulators and licensees to launch our system and ensure cannabis products are safe and secure for patients.”

Vermont Senate Approves Cannabis Regulation Bill

By Cannabis Industry Journal Staff
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On Tuesday, September 22, the Vermont Senate voted (23-6) to pass a bill that would legalize, tax and regulate adult use cannabis sales. The bill, S. 54, was approved by 92-56 in the Vermont House of Representatives last week. The bill has now made it to Governor Phil Scott’s desk, where although he has not said whether or not he’ll sign it, supporters think it is likely he will.

Vermont Gov. Phil Scott

If the Governor signs this piece of legislation into law, it’ll make Vermont the 11th state to regulate and tax cannabis sales. The Marijuana Policy Project (MPP) has a helpful summary of the legislation you can find here.

Back in 2018, Vermont actually voted to legalize adult use possession and cultivation of cannabis, just not to tax and regulate it. Governor Scott signed that bill into law, which is why some supporters are hopeful he will sign S. 54 into law as well.

Currently, only Vermont and Washington D.C. have legislation that legalized cannabis, just not the sale of it. Technically speaking, it is still illegal to sell cannabis in D.C. or Vermont.

The Vermont Senate is also expected to pass a bill that would automatically expunge criminal records for past low-level cannabis possession charges. Check out the MPP summary for that bill here.

It’s High Time for the Cannabis Industry to Pay Attention to Contact Compliance

By Daniel Blynn
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Communicating with consumers through the telephone—either by text messages or by calls—is a great way to engage with them. Indeed, a recent analysis of text messaging trends reveals that most consumers check their cell phones more than 20 times a day, with almost 20% saying they check it more than 50 times.1 Text messages have a nearly five-times higher open rate than email, and the average consumer has 96 unread emails in his inbox compared to about one unread text message at any given time.2 In short, used properly, text messaging is an effective medium to reach consumers. And cannabis companies have embraced texting with open arms, especially given that other forms of advertising currently are off limits to the industry.

But with the utility of text messaging consumers comes substantial risk. Cannabis companies are frequent targets of private litigation arising out of their texting practices. Over the past two years, dozens of class action lawsuits alleging unlawful text messages have been filed against cannabis companies, including well-known multistate operators and less recognizable ones. Most of these cases are ongoing and may rightfully be considered “bet the company” litigations. For example, a pending case against cannabis delivery company Eaze Solutions, Inc. alleges that unsolicited text messages were sent to 52,104 individuals.3 Assuming each putative class member received just one text from Eaze, the statutory damages exposure ranges between $26 million and $78 million. The court twice has rejected proposed class settlements of $1.75 million and, later, $3.5 million as being too low. Given the potential exposure, before cannabis companies click the send button on a text message, they need to ensure that they’re abiding by the law.

At the federal level, the Telephone Consumer Protection Act (TCPA) regulates all types of text messages, telemarketing and transactional/informational alike. Generally speaking, the TCPA governs how text messages are sent (i.e., manually versus automatically dialed), and how calls are conducted and voicemail messages delivered (live representative versus “artificial or prerecorded voice”).4 The TCPA also contains do not call rules applicable to marketing messages. The TCPA is enforced by the Federal Communications Commission (FCC) and, notably, through private lawsuits, including class actions. Under the TCPA, a private plaintiff can seek statutory damages of $500 for each unsolicited autodialed text message (or unsolicited call that utilizes an artificial or prerecorded voice or delivers a prerecorded message). If a solicitation text is sent to a telephone number registered on the National Do Not Call Registry or the cannabis seller’s own internal do not call list, the statutory damages are “up to” $500 per call or text. In all cases, statutory damages may be trebled to $1,500 if the TCPA violation was committed either knowingly or willfully.

These rules fit atop myriad state telemarketing and do-not-call laws, which may be more restrictive than the TCPA.

While I could fill up this entire website with the various calling and texting issues with which sellers generally struggle under the TCPA—such as the use of artificial or prerecorded voices and prerecorded messages, how to handle reassigned numbers, revocation of consent issues, etc.—this article focuses on the basic rules governing how cannabis companies can text consumers, and what types of consent they need to do so under the Act.

Overview of TCPA’s Consent Rules

Under the TCPA, a seller is required to have a consumer’s “prior express consent” in order to send an autodialed non-marketing text message to a cell phone; The consent rule for autodialed marketing text messages to cell phones are different in that they require “prior express written consent” (EWC). No consent is needed in order to manually send a text message (and note that “manually” does not necessarily mean that an individual must dial all ten digits and click send from a standard smartphone).

“Prior express consent” is a lower level form of consent and generally exists where a consumer voluntarily has provided her telephone number to the seller.

“Prior express written consent,” on the other hand, is a heightened consent standard requiring a written agreement bearing (1) the signature of the person called (either traditional “wet” signature or an electronic/digital one) that clearly authorizes the seller to deliver or cause to be delivered to the consumer telemarketing messages; and (2) the telephone number to which the signatory authorizes such telemarketing messages to be delivered. If the seller utilizes an autodialer to send a marketing text message to a cell phone, then the written agreement with the consumer must also clearly and conspicuously disclose both that (a) the text may be sent using an autodialer, and (b) the consumer is not required to provide his consent as a condition of purchasing any goods or services. This EWC to be contacted must have been provided by the consumer before the text is sent. Unlike the lower standard for prior express consent, the mere provision of a cell phone number to the seller does not constitute the required EWC to be contacted at that number via an autodialer marketing purposes.

Confusing enough? Don’t worry, a table summarizing the current TCPA consent rules is below:

What Type of Text Are You Sending?

Generally, the type of consumer consent that is needed to send a text message is a function of the type of text and how it is being sent. “Telephone solicitations” are subject to more restrictions than purely informational or transactional text messages. The TCPA defines “telephone solicitation” to be “the initiation of a [text] message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.”

On the other end of the spectrum lie pure informational or transactional text messages. These are communications designed to provide information, rather than promote products and services (in the case of informational calls), and to “facilitate, complete, or confirm a commercial transaction that the recipient has previously agreed to enter into” (in the case of transactional calls). For example, customer satisfaction survey texts and texts to confirm orders and deliveries are informational and transactional, respectively.

Finally, the TCPA also covers a third category of text messages—“dual purpose” texts. These are texts with either a customer service or informational component as well as a marketing one. Because courts and the FCC take an expansive view of what constitutes telemarketing, dual purpose texts are treated as pure marketing messages and subject to the more rigorous standards to obtain the requisite level of consumer consent.

Common examples of texts that cannabis companies send and the corresponding level of consent needed are as follows: 

  • Autodialed Text Messages: Under the TCPA, an autodialer is defined to be equipment, which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator, and to dial such numbers without a requisite level of human involvement. However, there currently is a “significant fog of uncertainty” as to what is and is not an autodialer, with different courts reaching conflicting decisions as to, for example, whether simply dialing from a curated list of targeted telephone numbers constitutes autodialing, or whether the numbers on that list must have been randomly or sequentially generated in order for a platform to constitute an autodialer.
  • While proceedings are ongoing at the FCC to clarify the autodialer definition, the Supreme Court recently agreed to decide the autodialer issue during its next term in a TCPA case filed against Facebook; a decision is expected by May or June 2021. Notably, in mid-September 2020, the Department of Justice filed a “friend of the court” brief taking the industry-favorable position that a platform itself must randomly or sequentially generate the telephone numbers that it texts to be considered an autodialer under the statute.
  • Texts sent by autodialer (whether the autodialing functionality is actually used to send the text or not) require consent from the recipient. Note that this rule generally applies to both individual and business cell phone numbers. As long as the text is not a solicitation message, then consent may be obtained orally. Alternatively, if a consumer provides his cellular telephone number to you via an online lead form or during the checkout process, then this should be sufficient to constitute “prior express consent” to receive autodialed non-solicitation texts, such as order confirmations or delivery updates. The key to obtaining prior express consent, however, is that the consumer provide you with his telephone number voluntarily.
  • However, EWC is required to send a text for marketing purposes using an autodialer. The EWC requirements are described above and examples of EWC are below.
  • Note that, under the TCPA, the seller has the burden of demonstrating that it had the requisite level of consent to send the text in question. Thus, cannabis companies should maintain records evidencing such consent. A good rule of thumb is to maintain such records for a period of five years from the date of text, which covers the TCPA’s statute of limitations and the limitations periods under most state telemarketing laws.
  • Manually-Dialed Text Messages: If a cannabis company manually sends text messages—e., using a device that does not have the capacity to autodial—then no special consent is needed. However, even for manually-dialed texts, applicable do not call lists must be checked.
  • Texts to Numbers on Do Not Call Lists: The TCPA also prohibits companies from sending marketing texts to consumers whose telephone numbers are registered on either the National Do Not Call Registry or the seller’s own internal do not call list, unless an exemption applies, such as calls with the consumer’s EWC or to consumers with whom the seller has an “established business relationship.”5 The TCPA’s do not call rules are agnostic to how a telephone number is dialed, whether it be manually or by automated means. Be sure to scrub against relevant do not call lists.

Best Practices for Obtaining Proper Consent

As noted above, for autodialed non-marketing text messages to cell phones, the lower level of simple “prior express consent” is required. Prior express consent is deemed to exist by virtue of a consumer having provided his telephone number to a cannabis company, either orally or in writing.

EWC for autodialed solicitation text messages, however, requires more. First, specific disclosures must be made “clearly and conspicuously” to the consumer. Specifically, a consumer should be advised and agree that, by providing his telephone number to the cannabis company, he is agreeing (1) to receive potentially autodialed (2) marketing text messages, and (3) that he is not required to provide his consent as a condition of making a purchase. This disclosure should not be placed beneath a submission button on a lead form or checkout page (unless an unchecked check box is utilized to demonstrate that the consumer has reviewed and accepted the disclosure); it needs to be unavoidable. The disclosure should be presented in readable, crisp font, both in size and in color, that contrasts against its background. For example, the following disclosures likely would pass muster to demonstrate EWC:

As you may now appreciate, the TCPA is a minefield (and this article just scratches the surface). However, with planning and a good compliance program, the law can be navigated to minimize risk while, at the same time, allowing for communications with cannabis consumers. Remember, an ounce of compliance now can lead to a pound of litigation prevention later.


Disclaimer: Using, distributing, possessing, and/or selling marijuana is illegal under existing federal law. Compliance with state law does not guarantee or constitute compliance with federal law. This informational overview is not intended to provide any legal advice or any guidance or assistance in violating federal law.


References

  1. Zipwhip, 2020 State of Texting, at 4 (2020).
  2. Id. at 11.
  3. See Lloyd v. Eaze Solutions, Inc., No. 3:18-cv-05176 (N.D. Cal.).
  4. Although the TCPA utilizes the term “calls,” courts have found the statute applies with the same force to text messages. This article focuses on text messaging but most of the principles extend to calls as well.
  5. There are two types of “established business relationships” (EBRs) under the TCPA: (1) inquiry EBRs and (2) transactional EBRs. Pursuant to a transactional EBR, a seller may text a consumer whose telephone number is listed on the National Do Not Call Registry for up to 18 months after the consumer’s last purchase, delivery, or payment—i.e., from the date of the seller’s last transaction with the former customer—unless the consumer asks the seller to stop calling him. In that case, the seller must honor the do not call request by placing the consumer’s telephone number on its own internal do not call list. Under an inquiry EBR, the seller may text a consumer who has inquired about its products or services, but only for up to three months. Again, if the consumer asks the seller to stop calling within that three-month timeframe, it must honor the request and add the consumer’s telephone number to its internal do not call list. Telephone numbers on the seller’s internal do not call list should remain on that list indefinitely or until the consumer subsequently provides her prior express written consent (or explicitly asks to be removed from the internal do not call list); a new EBR will not override an internal do not call request. Indeed, as to the latter, the Federal Trade Commission and several state attorneys general made this point clear in their briefing in a recent TCPA and Telemarketing Sales Rule litigation then-pending in Illinois federal court; the practical reason for the rule is that a consumer may wish to do business with a seller yet not receive telemarketing calls.
Biros' Blog

Judge Dismisses Claims in Vaping Illness Lawsuit

By Aaron G. Biros
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In September of 2019, Charles Wilcoxen fell seriously ill after vaping cannabis oil from a cartridge. Just days after he began experiencing symptoms he was hospitalized and later diagnosed with lipoid pneumonia, the mysterious lung illness now known as EVALI associated with the 2019 vape crisis.

Wilcoxen spent three days in the hospital and ever since he was diagnosed, he has been unable to exercise, return to work full time or even play with his daughter. Attorneys for Herrmann Law Group representing Wilcoxen filed a product liability lawsuit, Wilcoxen v. Canna Brand Solutions, LLC, et al., in Washington State Court, naming six cannabis companies as defendants: Canna Brand Solutions, Conscious Cannabis, Rainbow’s Aloft, Leafwerx, MFused and Janes Garden.

This image came from the complaint filed, alleging that Mr. Wilcoxen believes this was a CCELL product.

This case was allegedly the first lawsuit in the wake of the 2019 vape crisis. The Vanderbilt University Law School Blog has a very comprehensive post on this case that has the original complaint and a lot of information on the lawsuit.

Canna Brand Solutions, the primary defendant named in the complaint, is a packaging supplier and distributor for CCELL vaping products (heating elements, pens and batteries) in the state of Washington. The complaint alleges that Wilcoxen believes he used a CCELL vape. CCELL is a Chinese company, which makes it notoriously difficult to pursue legal action against them, hence why Canna Brand Solutions was listed as a defendant instead.

On August 31, 2020, Judge Michael Schwartz dismissed all claims against Canna Brand Solutions. “All claims asserted by Plaintiff against Canna Brand in the above-mentioned matter shall be voluntarily dismissed without prejudice and without costs or fees to any of the parties to this litigation,” Judge Schwartz says in the dismissal. Judge Schwartz dismissed the case without prejudice, meaning it could be brought to the court again should the plaintiff’s attorneys decide to do so.

With the allegations against Canna Brand Solutions focusing on CCELL products, it seems that the case was dismissed largely due to a lack of evidence connecting exactly which product resulted in the illness, as well as the lack of culpability for a distributor of products they did not manufacture.

These are the vape cartridges that Mr. Wilcoxen purchased

Daniel Allen, founder and president of Canna Brands Solutions, claims that the product mentioned in the complaint did not come from his company. “We stand by our high quality and customizable CCELL vaporization products,” says Allen. “We feel vindicated in this case by the judge’s decision, which shows the claims against our company and products were completely unfounded from the beginning.”

He also added that the quality and safety of the products they distribute is their highest priority. “The product in question involved in this case did not come from Canna Brand Solutions,” says Allen.

Wilcoxen’s illness and subsequent long-term lung injury is extremely unfortunate. Thousands of people have been hospitalized and 68 deaths have been confirmed by the CDC. The CDC is still calling the illness EVALI (e-cigarette, or vaping, product use-associated lung injury). According to the CDC, there is no real known cause of EVALI, but they have found that vitamin E acetate is “strongly linked” to the outbreak. Knowing that, it is entirely possible that Mr. Wilcoxen’s illness was a result of one of the cannabis products he consumed, just most likely not anything that came from Canna Brand Solutions. A closer look at the contents with an independent lab test of the THC oil he consumed could shed some more light on what exactly caused the illness.

I would venture to guess that one of the products he consumed did have vitamin E acetate. Because the case was dismissed without prejudice, it could be brought to the court again if, say, Mr. Wilcoxen’s attorneys were to obtain more evidence, such as an independent lab report showing vitamin E acetate in the contents of one of the products he consumed. If Mr. Wilcoxen’s attorneys can figure out which product actually contained vitamin E acetate, perhaps the lawsuit could get a second shot and Mr. Wilcoxen could have a greater chance at getting some long-overdue and much-deserved restitution.