Tag Archives: cannabis

July 12, 2016

NCIA and BDS Analytics Partnership: Analyzing the Market Data Tool

By Aaron G. Biros

In May, the National Cannabis Industry Association (NCIA) announced a partnership with BDS Analytics, a cannabis market intelligence and data firm, according to a press release. Beginning in June of this year, NCIA members received access to market and sales data via BDS Analytics’ GreenEdge sales tracking software.

According to Aaron Smith, executive director of NCIA, market intelligence was previously very scarce in the emerging cannabis industry. “We hear from our members all the time that one of their biggest challenges is the scarcity of reliable market intelligence and data in the industry,” says Smith. “Being able to offer this kind of data as an included benefit of NCIA membership is incredibly valuable. We’re proud to partner with BDS and grateful for their support of NCIA’s mission.”

The GreenEdge reports span numerous product categories as well as high-level market reporting. According to Roy Bingham, chief executive officer of BDS Analytics, NCIA member-businesses can take part in a tutorial to familiarize them with the interface. Bingham says they have extraordinarily comprehensive data on Colorado and Washington; they will have Oregon’s data ready in less than three months and roll out nationally to all major markets during the rest of 2016 and 2017.

Through using the interactive GreenEdge reports, we were able to identify key market figures and growth percentages, such as percent of the market share held by dry flower, average infused chocolate bar prices and much more. We found that Colorado’s recreational and medical markets totaled $996.5 million in 2015, just shy of a billion dollars. 28% of that market was held by infused products and concentrates, which grew by 111% over the previous twelve months. The average infused chocolate bar sold at retail in Colorado was priced at $14.47 last year. Overall, Colorado’s cannabis marketplace grew by over 41% between 2014 and 2015.

According to Bingham, for most mature industries, a ten percent transaction value of the market is sufficient to scale data so that it speaks to the entire market. “However, this is not a stable, mature industry so we are more comfortable with a sample size of around twenty percent of the total market,” says Bingham. “We are well over those numbers in Colorado and Washington.” In order to get the data, BDS Analytics makes direct arrangements with dispensaries on their panel to get access to their point-of-sale data, which can be done in almost real time or in a download at the end of each month. “It is then standardized with a learning software system, assisted by personnel, that gets better over time at categorizing data points,” says Bingham. “We use algorithms to scale the data to the total industry size, and there are a number of adjustments made to those algorithms to make sure the data is normalized.” The program has recorded more than 20 million transactions to date.

Dispensaries provide their data because they get the full service that comes with being a member of the panel, including details down to the brand level, according to Bingham. “This enables dispensaries to offer consumers what they are purchasing on average in their market,” says Bingham. “You get to see a breakdown of the most popular brands and items if you join the panel and submit data.” They have categorized more than 20,000 unique products, such as a number of different types of concentrates, different types of infused products and more.

The interactive data tool holds tremendous value for NCIA members and business owners in the cannabis space, giving them access to market data previously unavailable or difficult to find.

July 12, 2016

Quality From Canada

Cannabis in Canada: 6 Key Considerations for Recreational Legal Distribution

By Tegan Adams

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

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

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

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

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

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

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

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

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

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

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

June 29, 2016

Q&A with Dan Anglin: Cannabis Safety is an American Duty

By Aaron G. Biros

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Dan Anglin, a Marine Corps veteran and chairman of the Colorado Cannabis Chamber of Commerce, is the founder and chief executive officer of Americanna, an infused products business in Colorado with a heavy focus on regulatory compliance, consistent dosing and product safety. The company was the very first to implement the THC stamp, a requirement for all infused products in Colorado this coming October 1^st.

As a veteran of Operation Desert Storm, Anglin began his career as a legislative analyst in Arizona, and then moved to Colorado where he worked for the Colorado Legislative Council. Soon after, he became a lobbyist for the Colorado Association of Commerce and Industry. With a focus on health policy, he became the primary lobbyist for anything related to healthcare at the state level.

After running his own lobbying firm, he was hired by EdiPure, which was at the time the largest infused product manufacturer, to lobby against an amendment in the state legislature that would have all but shut down the infused products industry. Within six months, he was made a partner and co-owner of EdiPure for almost three years where he focused on regulatory compliance and legislative matters. In April of 2015, Anglin left EdiPure to buy Boulder Pharma with Frank Falconer, rebranding the company as Americanna making primarily edible products.

According to him, over the past few years, public opinion has grown in favor of differentiating cannabis products from other food products beyond just the packaging. Anglin said he saw this coming and embraced it as a core concept of his business model. Americanna produces gummies in the shape of a cannabis leaf with the THC stamp on each individual gummy. “This is a matter of public safety that you can clearly tell it is a cannabis product by its shape and symbol,” says Anglin. “We should be proud of cannabis products as an expression of American liberty, it is our duty not to hide it in an unrecognizable food product, but celebrate it with a clear shape and stamp, providing for consumer safety.” In this Q&A, we sit down with Dan Anglin to learn about his quality and safety controls, manufacturing processes and why his business embodies American freedom.

CannabisIndustryJournal: How do you see what you are doing as exercising your American liberties?

Dan Anglin: I served my country and protected the rights of Americans overseas. Because the people of Colorado have chosen this [adult use cannabis legalization] to be a right expressed in the state constitution, I feel that every day our 38 employees come to work and make cannabis products, we are exercising our rights as citizens of Colorado and of the United States.

The adult use side of the cannabis industry is a true expression of liberty in choice. This is what freedom is all about! In the past five years, the United States has given more and more groups of people more freedoms and liberties; this is another group of people that believe they deserve rights, in this case the liberty to consume cannabis freely.

This is an issue of states’ rights too. The people of Colorado voted to make the adult use of cannabis a right in their state constitution. We are abiding by the Cole Memo by doing everything we can to protect public safety. There is still a long way to go, but the fact that my employees and I are paying taxes and selling this in a regulated environment is absolutely an expression of our American liberty.

CIJ: Walk us through some of your quality controls in manufacturing infused products.

Dan: We have a contract manufacturer with a white label agreement, so our food products are of the same quality as any food product you would find in major retailers. Quality controls begin as soon as we unpack the food product, making sure it has been stored at the right temperature with all of the right conditions. We toss any products that do not meet our quality standards. Post-infusion, we go into packaging and separate them into flavors. As packagers are putting them into the child resistant packaging as required by law, they are doing QC checks on every single gummy.

The most important part of our quality control system is the testing for potency, homogeneity and microbial contamination. Post-harvest, the cannabis is tested and after it is extracted, the product is tested again but this time also for residual solvents. Once we infuse the product, we test it again. This is so important because making any type of food product requires doing everything you can to prevent bacterial contamination.

CIJ: How do you view cannabis safety as your responsibility?

Dan: Frank and I developed the business based on compliance and consistency. We already comply with rules expected to be enforced six months from now. We want consumers to be able to count on the consistency of the dosing in our products. Our semi-automated process of infusion can precisely dose every single product to ten milligrams. It is an infusion that soaks through the product, not a spray, and is one of the most homogenous products available.

Because we are creating food products, we have the same responsibility as any other food producer. When you make something that people ingest, it is your responsibility to follow health codes that provide guidelines for food handling. Every one of my employees is ServSafe certified. We are treating cannabis as an ingredient in a food product. Food safety is paramount and should be at the top of every infused product manufacturer’s mind.

June 29, 2016

The Practical Chemist

Internal Standards– Turning Good Data Into Great Data

By Amanda Rigdon

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Resources:

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

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

June 29, 2016

Going Beyond the Strain Names with PotBot

By Aaron G. Biros

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David Goldstein, co-founder and chief executive officer of PotBotics, launched a medical cannabis recommendation engine called PotBot with the goal to better inform patients to target their conditions with more accurate recommendations based on scientific research. “This is a tool to help move the market away from the thousands of strain names that are mainly just marketing or branding indicators,” says Goldstein. The medical application is designed to inform patients on peer-reviewed data, research on the treatment of their ailments with cannabis and the specific cannabinoids that are necessary for treating their condition. They began development on PotBot in October of 2014, launching the beta version to 400 users in November of 2015. On April 20^th, 2016, Goldstein launched officially in the Apple Store, and the program will be available on Android in July.

goldstein potbot — David Goldstein (left) alongside co-founder, Baruch Goldstein (right)

Rather than focusing on strain names, PotBot focuses on the cannabinoid values to help patients gain an understanding of the correlation between which compounds might best target their condition. “This is a great tool for patients trying to familiarize themselves with what strains might work best,” says Goldstein. “For example, insomnia patients generally need cannabis with higher CBN levels, so we first educate the patient on cannabinoid ranges to shoot for and what strains might help. PotBot would recommend the strain Purple Urple because it is an indica found to have higher CBN values,” adds Goldstein. The program goes into great detail with the patient’s preferences including everything down to consumption methods so they know why it might recommend certain strains.

A screenshot showing a recommended cannabinoid ratio for a patient

The recommendation tool is accessible via kiosks at dispensaries, on a desktop version for the computer as well as on the Apple Store for iPads and iPhones. “I do not see it as a way of replacing budtenders, rather supplementing them with knowledge,” says Goldstein. PotBot is designed as a tool to supplement the budtender’s understanding of cannabis, so the budtender does not need to know everything off the top of their head or recommend strains based on anecdotal information, according to Goldstein.

Goldstein’s team at PotBotics performed extensive research prior to launching PotBot, spending two years doing strain testing to develop the program. “There is currently no regulatory body [for strain classification] so we took it upon ourselves to work with the best testing laboratories for truly robust analyses and properly vetted growers to get the most valid data,” says Goldstein. “The current strain classification system and nomenclature is rather unscientific so we focus on cannabinoid values and soon we will be able to incorporate terpene profiles in the recommendation.” Moving away from the common focus on taste, smell and other qualitative values, they focus on medical attributes of cannabinoid profiles because they have the most peer-reviewed research available today.

As an OEM, the company designed the tool to work with each dispensary’s inventory, to provide recommendations for strains that a patient can access on site, however anyone can access the recommendation tool for free at PotBot.com. Goldstein’s company and their mission represent an important development in the cannabis industry; this could begin a key transition from thousands of understudied strain names to a more scientific and calculated method to treating patients’ conditions with cannabis.

June 24, 2016

NCIA Brings Cannabis Business Summit to Oakland

By Aaron G. Biros

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The National Cannabis Industry Association (NCIA) with their California affiliate, California Cannabis Industry Association (CCIA), hosted over 3,000 business professionals at this week’s Cannabis Business Summit in Oakland, CA. According to Aaron Smith, executive director of the NCIA, this event drew their largest-ever gathering of attendees and well over 100 sponsors on the expo floor. In an exclusive interview prior to the event, Smith expected this would be a wildly successful year. “Last year we had just over 2,000 attendees in Colorado and we are expecting over 3,000 this year in California,” says Smith. “There is tremendous interest in the California market and it is so great to be here with all of the excitement leading up to the ballot initiatives in November.”

aaronsmithncia — Aaron Smith, executive director of NCIA

The theme of the conference was set early on from industry progress to sustainable growth. “I am really proud that NCIA’s events always bring out the best and brightest in the industry,” says Smith. “It is mostly members of NCIA attending, which are the folks invested in the future of the industry and not just in it to make a quick buck; they are here to build a new business sector.” On Tuesday morning, Smith gave his opening remarks and introduced the first keynote delivered by Ahmed Rahim, co-founder and chief executive officer of Numi Organic Tea alongside Kayvan Khalatbari, founding partner of Denver Relief Consulting, to discuss the triple bottom line in business, emphasizing the need for social responsibility, which includes environmental stewardship, fair labor and trade laws and community integration among cannabis businesses. California Lieutenant Governor Gavin Newsom also delivered a keynote address that was received with a standing ovation after discussing the November ballot initiative, which would legalize, regulate and tax the adult use of cannabis in the state.

businessummit — The first keynote panel of the Cannabis Business Summit

Newsom’s speech highlighted the state’s opportunity to make considerable progress in the cannabis legalization arena this November. The substance of his speech echoed that of many attendees focused on moving the industry forward sustainably. “We need to right the wrong of the failed war on drugs in America,” says Newsom. Boisterous cheers and applause followed almost every sentence as he continued to emphasize the need for social and criminal justice reform. “We are not doing this to be the next California gold rush or to make tax revenue; our purpose and focus is social justice,” adds Newsom.

Gavin Newsom, Lieutenant Governor of California, delivering the keynote

The Lieutenant Governor also mentioned the sheer massive size of California’s market opportunity and their pragmatic regulatory framework in development. “The entire retail of recreational and medical [cannabis sales] in Colorado was just shy of $1 billion last year; we are talking about our 58 counties up in the northern part of this state that produce anywhere from $9-13 billion [sic] of wholesale cannabis- it’s a game changer,” says Newsom. “We have had the benefit of seeing where other states have fallen short or struggled [in regulatory frameworks] and will present that to voters this November.” Newsom also mentioned that members of the cannabis industry need to act as stewards of the environment and protect the small farmers.

Panel discussions throughout the afternoon and following day deliberated a wide variety of topics from laboratory testing standards to the state of affairs in education, training and certification across the country. John MacKay, senior director of strategic technologies at Waters Corporation, led a panel titled Validation of Analytical Methods, Lab Certifications and Standard Methods with Cynthia Ludwig, director of technical services at the American Oil Chemists’ Society (AOCS), Shawn Kassner, senior scientist at Neptune and Company, Inc. and David Egerton, vice president of technical services at CW Analytical Laboratories.

The panel: Validation of Analytical Methods, Lab Certifications and Standard Methods

The panel addressed many of the current problems facing the cannabis testing space. “It is a very difficult plant to work with and labs are doing their best to provide reproducible results,” says Mackay. Cynthia Ludwig emphasized the need for collaborative studies and method validation in cannabis labs. “We [AOCS] provide official, validated laboratory testing methods, but the cannabis industry really has no official methods to work with,” says Ludwig. Egerton echoed Mackay’s concerns over difficult sample preparation and the difficulty of working with cannabis in the lab. “The problem is the matrix of the cannabis sample; the matrix is a critical aspect of method validation- ensuring we find the signal through the noise,” says David. “In the absence of official methods, cannabis labs need to perform method validation in-house for each type of sample, ranging from dry flower to different types of infused products and concentrates.” In addition to those difficulties of providing robust and reproducible lab tests, the panel emphasized that there is currently no laboratory accreditation program required by California regulators.

The cannabis industry in California is still rather unregulated and lacks consistency in safety standards across the market in almost every sector. Attendees seemed to look forward to the November 8^th vote on the ballot initiative in California as a solution for the state’s current problems, hoping consumers and patients alike will find solace in a more regulated, standardized and safe market. The NCIA will be hosting a “Seed To Sale Show” focused on best practices and case studies January 31^st and February 1^st, 2017 in Denver. The next Cannabis Business Summit will be held from June 12^th to the 14^th of 2017 in Oakland, CA.

June 17, 2016

Microsoft Enters Cannabis Compliance Software Market; Industry Outlooks

By Aaron G. Biros

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In a New York Times article published yesterday, news broke of Microsoft’s entry into the cannabis marketplace, teaming up with KIND Financial to launch its Microsoft Health and Human Services Pod for Managed Service Providers, which is essentially a seed-to-sale tracking technology. Their goal is to provide local and state governments with software solutions for traceability in the burgeoning cannabis industry.

In a press release yesterday, Kimberly Nelson, executive director of state and local government solutions from Microsoft said, “KIND’s strategic industry positioning, experienced team and top-notch-technology running in the Microsoft Azure Government cloud, made for an easy decision to align efforts.” According to KIND Financial founder and chief executive officer, David Dinenberg, the cannabis marketplace will continue to have strict oversight and government regulations. “I am delighted that Microsoft supports KIND’s mission to build the backbone for cannabis compliance,” says Dinenberg.

This move could represent an opening of the floodgates for corporate interest in the space. According to Matt Karnes, founder of GreenWave Advisors, a cannabis financial data analysis firm, this could potentially result in an increase in capital flow into the cannabis industry. “This signals a wider acceptance of cannabis and perhaps that changes to national policies are more likely now that we see a large corporation stepping in,” says Karnes. “This could certainly mean an inflow of capital from larger, mainstream enterprises that were previously unwilling to take the risk.” Microsoft also made news recently for the acquisition of LinkedIn for $26.2 billion. The move to get into the cannabis space could represent a diminishing stigma associated with the market and a wider mainstream acceptance in business.

According to Nic Easley, chief executive officer at Comprehensive Cannabis Consulting (3C), this is another legitimizing factor for the cannabis industry. “It shows that cannabis is here to stay, and the fact that Microsoft is now spending resources on software, further validates that,” says Easley. “Many of the first mover seed-to-sale companies, entered the industry too early, had problems with their technology and lacked quality customer service, which created opportunities for new companies to emerge to dominate and capitalize upon the first ‘Netscapes’ of the cannabis industry’s failures.” Additionally, this could rationalize the market for other quality software companies such as Compliant Cannabis, according to Easley.

While Microsoft publicly announced their entrance into the cannabis marketplace, one can speculate that other large companies are planning their entrance as well. “We are fielding inquiries from Fortune 500 companies, Wall Street investors and even major foreign investors on a weekly basis,” says Easley. “In the past week alone, we received calls from three different Fortune 500 companies asking us how they can get into the industry.” It appears that because Microsoft is in the cloud business and they are offering this ancillary service that not only does this further legitimize the industry, but it could be quelling the dated stigma associated with cannabis.

June 14, 2016

Marijuana Matters

Patent Options Available for Breeding Cannabis

By David C. Kotler, Esq.

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

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

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

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

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

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

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

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

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

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

June 13, 2016

Soapbox

A Case To Not Reschedule Cannabis

By Tyler Dautrich

4 Comments

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

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

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

Those benefits come with a steep cost.

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

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

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

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

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

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

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

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

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

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

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

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

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

June 1, 2016

Soapbox

Cannabis, Soil Science and Sustainability

By Drew Plebani

5 Comments

The average commercial cannabis cultivator seems to be following the modern agricultural paradigm. That model is based on questionable and, one might say, ineffective soil systems management.

In the high-yield cannabis world, amidst decades of prohibition, following the lead of the modern agricultural model has resulted in the adoption of cultural practices that go something like this: Use and destroy the soil, then dispose of it once it is rendered lifeless and useless due to repeated heavy applications of chemical fertilizers, pesticides, and other poisons.

commercialcultivator — (Left) unimproved site soil next to (right) improved site soil. Notice the root mass developing on the right

Certainly conventional agricultural food production and the soil management systems underpinning them are faltering, evidenced by soil systems deteriorating many times faster than they are being improved. This qualifies as a failure in my book.

What will be the fate of profit margins, sustainability and medicine in the cannabis industry if we continue to follow blindly in the footsteps of chemical agriculture? Perhaps it is time to turn over a new leaf.

A little context for the discussion: scientists say the Earth has lost a third of arable land in the past 40 years, and some say soil erosion is the number one challenge facing the world today. Why? How?

Well…world agricultural production accounts for about three-quarters of the soil erosion worldwide. This steep decline in arable soil is occurring during a time when the world’s demand for food is rapidly increasing. It is estimated that the world will need to grow 50% more food by 2050, and it is important to note that, the total volume of food necessary, remains relative to the nutrient density of the food.

Time for a radical solution, and cannabis can lead the way.

Currently, cannabis is the most profitable crop per land area and very likely the most resource-consumptive crop grown (due to the current legal and regulatory climate and thus limited supply vs. demand).

As the cannabis industry continues to grow, now more than ever we have the opportunity, and I believe the responsibility, to cultivate in ecologically mindful ways, improve the end product and it’s positive impacts, increase both short-term and long-term profits, decrease or eliminate waste and lower the carbon footprint of cannabis cultivation operations.

Most importantly, we have the opportunity to fund, implement and lead the way in research and development of sustainable, medical, phytonutrient-dense crop production methodologies.

Only by implementing more rigorous scientific methods to cannabis cultivation can we hope to provide truly meaningful improvements in and contributions to the fields of agriculture, science, medicine and human health.

While dumpsters of potting soil continue to roll off to the landfill, complex health and human science and the cultivators truly engaged in science will continue to provide meaningful data regarding plant compounds and what factors influence the best outcome for the desired end product.

I am willing to bet that what is best will not be coming from the business models employing antiquated, wasteful and destructive cultivation strategies, and that in due time these models will fade into distant memories.

This is the first in a series of articles, in which we will explore topics related to the pursuit of high yield, phytonutrient-dense “high brix” cannabis production.

The next article will provide a historical and geologic context to the cannabis plant, as viewed from the scope of soil biology and the progression of ecosystems and soil types, and how maximized genetic expression, through maximized soil and plant health influence the production of high quality cannabis.