Tag Archives: compliance

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Aurora Cannabis Burnishes Its Medical and Recreational Game

By Marguerite Arnold
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It has been a busy couple of weeks for Aurora executives, no matter what else is going on. And all signs indicate that Aurora is not only keeping its pressure on major competitors Tilray and Canopy in particular, but playing a highly sophisticated political and global game right now.

Where the company in other words is not “winning,” Aurora is clearly establishing an effective global footprint that is ensuring that it is at least keeping pace with the speed of market development and even breaking new ground more than once recently.

The Aurora Tour Of The Global Stage In Late October

Forget what is going on in Canada for a moment, if that is possible. Global investors, certainly, in the aftermath of the post legalization glow, certainly seem to be. So are the big LPs like Aurora. They are looking elsewhere, to medical markets and to Europe, for more clarity on where the market will go.

Aurora certainly has been, even if unwittingly, caught in the middle of that conversation, in part because of where and how the company has been positioning itself lately.

Last time around, the company announced it was in the top ten finalists. This time, it is also expected to do well.That said, what Aurora is doing, like everyone else in this space right now, is playing a global game of hopscotch in terms of both raising equity and then where that capital gets spent. Aurora’s recent victories, certainly this year, indicate that it will continue to be a formidable presence in the room.

For now, however, it is clear that retail investors are suddenly cautious and institutional investors are clearly still very leery. So where does that leave Aurora?

Road Trip To Germany

CEO Cam Battley at a conference in Frankfurt
CEO Cam Battley at a conference in Frankfurt

Consider these interesting series of events. Canadian recreational reform “goes live” on October 17. Instead of sticking around Canada, however, CEO Cam Battley spoke at a recent investor road show for the Canadian public cannabis companies over the weekend of October 21-22 in Frankfurt, Germany. Three well placed, but anonymous industry sources confirmed to Cannabis Industry Journal that a meeting between all the major cannabis companies in Frankfurt over the weekend (including not only Aurora, but Wayland Corporation, Canopy, Aphria, Green Organic Dutchman and Hexo) was either planned or attempted with federal Minister of Health, Jens Spahn sometime during this period of time.

Even more interestingly, this conference had clearly been planned to coincide with the original due date of the new German cultivation bid, in which Aurora is also well positioned. Last time around, the company announced it was in the top ten finalists. This time, it is also expected to do well.

Whenever the bid finally is decided, that is.

As of October 23, the day of the IPO in New York and the day after the conference in Frankfurt concluded, news circulated that the bid had been delayed a second time, with rumours of further lawsuits swirling.

IPO In New York

That day, Tuesday October 23, Aurora announced its IPO on the NYSE, not in Frankfurt after announcing this possibility the month before. This is significant, namely because all of the cannabis companies listed here are essentially in what is known, colloquially, auf Deutsch, as being “in the dog house.” Namely, financial regulators are looking closely at listed companies’ profiles on the exchange. If a listed company is too associated with the recreational industry, trades will be barred from clearing by Clearstream, the daughter company of the Deutsche Börse and located in Luxembourg. Earlier in the summer, all of the major LPs were briefly on the restricted list.

The next day after Canadian recreational reform became reality in fact, on October 18, the Deutsche Börse made the latest in a series of comments regarding its intentions about their future decisions on the clearing of cannabis stocks. Namely, that at their discretion, they can prevent the clearing of stock purchases of a cannabis company at any time. In other words, essentially delisting the stock.

Aurora, with its ties to mainstream, “adult use” in North America, is absolutely affected by the same, certainly in the short term. Including of course, all those rumours about Coke’s interest in the company (still unconfirmed by both Aurora and Coke).aurora logo

Looking Toward Poland

Yet here is where Aurora stays interesting. Just two days after its debut on the NYSE, the company announced that Aurora would be the first external company to be allowed to import medical cannabis to Poland (to a Warsaw hospital and pain clinic). The same day, incidentally, as the Polish government announced that medical cannabis could indeed begin to be imported.

This came after a stunning move earlier in the year when the company bagged the first medical cultivation license in Italy.

Clearly, Aurora is keeping good, if not powerful, company. And that will position it well in the long run. Even if, for now, its IPO on the NYSE got off to a less than powerful start.

Why Does Aurora Stand Out?

Like all the major cannabis companies on the global stage right now, Aurora understands what it takes to get into the room (wherever and whatever that room might be) in politically and regulatorily astute ways, much like Tilray. Both companies are also very similar in how they are continuing to execute market entry and public market strategy. Tilray, it should be remembered, went public over the summer, in North America too, right around the announcement of the final recreational date in Canada.

And while Aurora is clearly playing a still retail-oriented stock market strategy, it has proved over the last 18 months that it is shaping up to be a savvy, political player on the cusp of legislative change in multiple European states so far. They are courting the much bigger game now of institutional investment globally.

Richard Naiberg
Quality From Canada

Protecting Intellectual Property in Canada: A Practical Guide, Part 6

By Richard Naiberg
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Richard Naiberg

Editor’s Note: This is the sixth and final article in a series by Richard Naiberg where he discusses how cannabis businesses can protect their intellectual property in Canada. Part 1 introduced the topic and examined the use of trade secrets in business and Part 2 went into how business owners can protect new technologies and inventions through applying for patents. Part 3 raised the issue of plant breeders’ rights and Part 4 discussed trademarks and protecting brand identity. Part 5 took a detailed look at copyright laws for cannabis companies and how they can protect works of creative expression.  

In Part 6, the conclusion of this series, we take a look at nine key takeaways from the series:We hope you enjoyed this series and found the information provided to be useful. If you’d like to learn more about intellectual property law in Canada as it relates to the cannabis industry, feel free to reach out to Richard Naiberg at rnaiberg@goodmans.ca 

Summary of Practical Considerations For Cannabis Producers

  1. Cannabis producers should establish procedures by which the technological innovations achieved by their employees are kept confidential and are quickly reported to management for consideration as to whether the innovation should be protected as a trade secret, by patent, by plant breeder’s right or not protected at all.
  2. If a trade secret protection is desired, the producer must invoke systems that limit knowledge of the secrets to those in the company with a need to know it, and make sure that departing employees understand their obligations of confidentiality and do not take any documentation of the secrets with them when they go.
  3. The nature of the innovation under consideration will drive the choice between a patent and a plant breeder’s right. Plant breeder’s rights only protect whole plants. Patents protect other innovations, subject to the limitations described above. Patents may be drafted to protect whole plants, albeit indirectly: a patent on genetic sequences or engineered cell can be infringed by a whole plant that incorporates those sequences or cells.
  4. The decision as to whether to file an application for a patent or a plant breeder’s right, and in what jurisdiction(s), should be made with careful consideration of whether the producer will employ the invention/variety in its business (and in what countries), as well as the potential value of the invention/variety to other producers who may eventually become licensees of the resulting patent(s) or plant breeder’s right.
  5. Cannabis producers must remain up-to-date on patent and plant breeder’s rights applications that are filed in the jurisdictions in which they operate so as to be in a position to identify patents and plant breeder’s rights that will potentially affect their freedom to operate. Such due diligence will also allow the producer to predict the technological and business focuses of their competitors.
  6. Cannabis producers must select a trademark that is immediately distinctive or can quickly become distinctive of its goods and services. The trademarks ought to be fully available, in the sense that they are not in use by any competing business in any of the jurisdictions in which the producer intends to do business. Ideally, the trademark ought to be available as a domain name to ensure that there is no confusion on the Internet.
  7. Once the trademark is selected, the cannabis producer should make consistent and extensive use of that trademark. The more consistent and ubiquitous the use, the stronger the producer’s brand and trademark will be.
  8. The owner of the trademark must routinely conduct searches to ensure that no third party is using a trademark that is similar that of the owner. If such unauthorized use is discovered, the owner must act quickly to restrain that use or potentially license the use.
  9. Cannabis producers ought to contract to ensure that they are the first owners or assignees of any copyright subsisting in the artwork, literature and websites the company creates or hires other to create. Producers ought also to obtain waivers of the moral rights of any authors of this work.

We hope you enjoyed this series and found the information provided to be useful. If you’d like to learn more about intellectual property law in Canada as it relates to the cannabis industry, feel free to reach out to Richard Naiberg at rnaiberg@goodmans.ca

Why Does GDPR Matter for The Cannabis Industry?

By Marguerite Arnold
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The global cannabis industry is hitting thorny regulatory challenges everywhere these days as the bar is raised for international commerce. First it was recognition that the entire production industry in Canada would basically have to retool to meet European (medical and food) standards. And that at least for now for the same reasons, American exports are basically a no go.

However, beyond this, the battle over financial reporting and other compliance of a fiscal kind has been a hot topic this year on European exchanges.

As of this summer, (and not unrelated to the other two seismic shifts) there is another giant in the room.

If you haven’t heard about it yet, welcome to the world of EU GDPR (European Union General Data Privacy Regulation).

The German version is actually Europe’s highest privacy standard, which means for the cannabis industry, this is the one that is required for operations here across the continent if you are in this business.

What is it, and what does it mean for the industry?

GDPR – The Elevator Pitch

Here is why you cannot ignore it. The regulation affects bankers as much as growers, distributors as much as producers and of course the entire ecosystem behind medical production and distribution across Europe and actually far beyond it. Starting of course, with patients but not limited to them. The law in essence, applies to “you” whoever you are in this space. That is why it becomes all that much more complicated in the current environment.

While this is complex and far reaching, however, there are a couple of ways to think about this regulation that can help you understand it and how to manage to it (if not innovate with it).

The first is, to American audiences at least, that GDPR is sort of like HIPAA, the federal American privacy civil rights statute that governs medical privacy law. Except, of course, this being Europe, it is far more robust and far reaching. It touches every aspect of electronic privacy including data storage, retention, processing and security that is applicable to modern life. And far, far, beyond just “patients.”

On the marketing side, GDPR is currently causing no end of headaches. Broadly, the legislation, which came into force this year, with real teeth (4% of global revenues if you get it wrong), applies to literally every aspect of the cannabis industry for two big reasons beyond that. Medical issues, which are the only game in town right now in Europe (and thus require all importers to also be in compliance) and financial regulatory requirements.

The requirements in Germany are more onerous than they are in the rest of Europe. Therefore, they also affect the cannabis industry in a big way, especially since there is at this point a great deal of European cultivation with the German (and now British) medical market in mind. Further Germany is becoming European HQ for quite a few of the Canadian LPs. That means German standards apply.

The UK, for those watching all Brexit events with interest, will also continue to be highly affected by this. Whether it stays in the EU or not, it must meet a certain “trusted nation” status to be able to transact with the continent in any kind of favoured nation status.

Bottom line? It is big and here and expensive if you screw it up. If considering doing any kind of business with European customers, start hitting the books now. Large mainstream media organizations in the United States and Canada right now are so afraid of the consequences of getting this wrong that they have blocked readership from Europe for the present. Large financial institutions also must not only be in compliance but compliance of companies also guides their investment mandates on the regulatory front.

For all of these reasons, the cannabis industry would do well to take note.

What Does This Mean for The Cannabis Industry?

The Canadian and rest of the global industry is still struggling with compliance and this will have some interesting repercussions going forward.patient data must be handled and stored differently

Immediately, this means that all websites that are targeted to German eyes (read Canadian LPs and international, even English-only press) should hire German side compliance experts for a quick GDPR audit. There are few European experts at this point, and even fewer foreign ones. It is worth a call around to find out who is doing this auf Deutschland and bite the bullet.

It also means that internally, patient data must be handled and stored differently. And furthermore, it is not just “patients” who have this right, but everyone who transacts with your electronic or other presence. That includes consumers, subscribers to email newsletters and other stakeholders in the industry.

As the cannabis industry also starts to embrace technology more fully, it will also have highly impactful influence on what actually passes for a compliant technology (particularly if it is customer facing) but not limited to the same.

On the marketing side, GDPR is currently causing no end of headaches. Starting with PR and customer outreach teams who are trying to figure out how much of their master mailing lists they can keep and which they cannot. On this front, Mail Chimp is undeniably the go-to right now and has also implanted easy to understand and use technology that is being adopted by European marketers and those targeting Europe.

Stay tuned for more coverage on GDPR as we cover how data protection and privacy regulations will impact cannabis businesses, their marketing and outreach, plus service design efforts (in particular to patients) and other areas of interest.

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Designing a Recall Plan for Your Company

By Ellice Ogle
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Bearing through four voluntarily recalls in the first two months since the transition window ended, the California cannabis industry showed its commitment to providing safe goods for its consumers. Recalls are considered the removal of products deemed unsafe at the point of retail. With unsafe product already on shelves, it is that much more important to have a thought out strategy if a recall need arises. Currently, the California Department of Public Health-Manufactured Cannabis Safety Branch is the only regulatory agency in the state of California with recall stipulations for California cannabis companies. Thus, the onus is on individual cannabis companies to initiate their own recall plans.

Why establish a recall plan if one is not compulsory? To start, a cannabis product recall is more challenging than recalls in other industries because of the classification as a Schedule 1 drug and the misunderstanding and stigma of the drug that promotes fake news. These considerations affect the way both the government officials and consumers perceive cannabis recalls – not preparing ahead of time could be devastating to your brand. Furthermore, a recall is not just a one day headache – in December 2017, the Inspector General of Department of Health and Human Services  found that food companies took 57 days on average to initiate a recall after the Food and Drug Administration (FDA) first learned a product was potentially hazardous. Not only is a recall tricky to navigate and time intensive, a recall can also be costly – a joint study by the Food Marketing Institute (FMI) and the Grocery Manufacturers’ Association (GMA) in the USA found that 77% of the study respondents estimated the financial impact to be up to $30 million dollars; 23% reported even higher costs. One major factor of the financial impact to consider is that many retailers do not remove only the affected products, instead sweeping entire lines and brands. To estimate how much a food recall would cost your company, researchers Moises Resende-Filho and Brian Burr developed a model to estimate the direct costs of a food recall. To take a step back, it is true that, while recalls can be tricky to navigate, time intensive and costly, recalls are generally infrequent. At the same time, you never know where or when a recall could happen. For example, your manufacturing process might be flawless, but a supplier may suddenly issue a recall or the retail facility is compromised. Moreover, not all recalls are equal – imagine that consumers would react differently to an undeclared allergen on the label versus a life threatening pathogen in a product distributed to patients with weakened immune systems. Ergo, it is strategic for every cannabis company (grower, manufacturer, retail, etc.) to have a recall plan to be ready for any type of recall situation.

Take these 6 tips in designing a recall plan:

Food processing and sanitation
Product recalls due to manufacturing errors in sanitation cause mistrust among consumers.

Before a Recall

1) Be familiar with how recalls work by staying up to date with recalls

2) Write a recall plan. Select a recall template and fill in your company information, but also take into consideration any regulations on recalls at the federal, state, and county levels.

During a Recall

3) Record everything that was said and done. If there was no prewritten recall plan, during a recall is a good time as any to begin documenting all actions and communication – internal within the management team and external with business partners (suppliers, retailers) and external with the consumers.

4) Find the flaw in the product. Why is the product being recalled? This is important to know, whether it was your item or not, to better answer the next question of “What happens with the recalled product?” The most common causes for a recall in the USA are identified in the joint study mentioned above by the FMI and GMA.

After a Recall

5) Reevaluate the recall plan. Compare to a reputable third-party auditing standard (example here is Safe Quality Food Institute’s SQF Food Safety Code for Manufacturing Edition 8). Updates to the recall plan are inevitable and constant. The changes may be due to updates in company products, adjustments in the recall network or the experience gained when going through a recall. Also keep an eye out for updates to templates of recall plans. Conduct mock recalls with different recall origins.

6) Reevaluate the food safety plan. After finding the flaw in the product, identify the flaw in the process and improve. Examples to improve the food safety plan may be to: amend the supplier approval program, refine process flow, polish the sanitation program or revise the preventative maintenance program. The foundation of a recall plan is having a robust food safety plan to minimize the risk of running a recall.

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Food Safety Planning for Cannabis Companies

By Radojka Barycki
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Radojka Barycki picture

Food safety incidents can be prevented. However, prevention requires planning, which requires the effort of everyone in a company to create a culture of quality and food safety. How exactly do you plan for food safety? Food safety planning implies the building of a food safety management system. Food safety management systems allow for an efficient management of hazards that may be present in the food by the development and implementation of pre-requisite programs (PRPs) and a food safety plan, while supported by management commitment. So, let’s take a closer look at each of these building blocks:Radojka Barycki will lead a plenary session titled, “Cannabis: A Compliance Revolution” at the 2018 Food Safety Consortium | Learn More

Management Commitment

The development and implementation of a food safety management system requires financial, equipment, and technically sound personnel in order to be successful and sustainable. The management team of any cannabis product manufacturer must be committed to food safety, so the needed resources to develop and implement a food safety management system are provided. Management commitment creates a culture within the operation that supports, sustains and continuously improves food safety. 

Pre-Requisite Programs (PRPs) 

Pre-requisite programs are procedures that establish the minimal operations conditions to produce safe and quality products. Pre-requisite programs are the foundation of food safety and must be developed and implemented prior to creating a food safety plan. They keep potential hazards from becoming serious enough to adversely impact the safety of products produced. Pre-requisite programs include but are not limited to:

  • Document Control
  • Supplier Verification Programs
  • Raw Material Receiving (ingredients, processing aids and packaging)
  • Good Manufacturing Practices (GMPs)
  • Preventative Maintenance (PM) Program
  • Calibration Program
  • Integrated Pest Management (IPM)
  • Environmental Monitoring Programs (EMPs)
  • Water Management Programs (WMPs)
  • Allergen Management Program
  • Standard Sanitation Operating Procedures (SSOPs)
  • Standard Operating Procedures (SOPs)
  • Storage and Transportation Procedures
  • Crisis Management
  • Traceability
  • Recall
  • Record keeping
  • Waste Management
  • Training

Food Safety Plan (FSP)As you can see, food safety planning requires the development and implementation of a lot of programs.

A food safety plan is a documented systematic approach that follows the Codex Alimentarius HACCP Principles to identify, prevent and minimize to an acceptable level or control hazards that may be present in food and that can cause an illness or injure the consumer. The first step in this systematic approach is the formation of a food safety team, which main responsibility is to identify the scope of the food safety plan and to oversee all of the activities associated with the plan (e.g. monitoring, verification, validation, etc.) After the food safety team is formed, the steps outlined below are followed in order (systematically):

  1. Product Description
  2. Product Intended Use
  3. Development of the flow diagram
  4. Verification of the flow diagram
  5. Conduct a Hazard Analysis
  6. Identify Critical Control Points (CCPs) or Preventive Controls
  7. Establish Critical Limits
  8. Monitor Critical Limits
  9. Establish Corrective Actions
  10. Establish Verification Procedures
  11. Establish Record Keeping Procedures

As you can see, food safety planning requires the development and implementation of a lot of programs. Therefore, I highly recommend that you hire a food safety consultant that can guide you through this process.

California Midterm Ballots To Bring Green Wave of Cannabis Tax Regulations

By Jasmine Davaloo
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As state and local jurisdictions rake in millions of dollars in tax revenue from the state’s legal cannabis industry, new states, counties and cities are piling onto the cannabis tax bandwagon. There are currently hundreds of local cannabis business taxes in place in California. On the November ballots, there are 47 new local cannabis tax measures. In fact, even some local jurisdictions that outlaw cannabis operations want a piece of the green pie and are asking voters to impose cannabis business taxes.

More cannabis tax measures being passed means more regulations and compliance responsibilities for cannabis businesses. This is especially taxing (pun intended) for multi-licensed and multi-location cannabis businesses. With hefty monetary penalties and even revocation of business licenses as consequences of noncompliance, adherence to state and local tax regulations is of paramount concern to cannabis businesses. Below is a list that Taxnexus has put together showing all of the cannabis tax measures on the November 6 ballots in California:

Taxnexus is an automated transaction-to-treasury cannabis tax compliance solution for the entire cannabis supply chain that provides point-of-sale state and local cannabis sales and use tax calculation, tax data management as the authority of record, and timely filing of returns with all applicable taxing authorities.

California City and County Cannabis Tax Measures November 6, 2018 Ballots

City County Measure Name Proposal
Adelanto San Bernardino S Adelanto Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $5.00 per square foot on nurseries and up to 5% on other businesses.
Atascadero San Luis Obispo E-18 Atascadero Cannabis Business Tax To impose a tax on cannabis businesses at annual rates not to exceed $10.00 per canopy square foot for cultivation, 10% of gross receipts for retail cannabis businesses, 2.5% for testing laboratories, 3% for distribution businesses, and 6% of gross receipts for all other cannabis businesses.
Atwater Merced A Atwater Marijuana Tax To authorize the city to impose a 15% tax on marijuana businesses.
Benicia Solano E Benicia Marijuana Business Tax To authorize the city to impose a tax of up to $10 per square foot for marijuana nurseries and 6% of gross receipts for other marijuana businesses.
Capitola Santa Cruz I Capitola Marijuana Business Tax To authorize the city to tax marijuana businesses at a rate of up to 7% with no expiration date to fund general city purposes.
Chula Vista San Diego Q Chula Vista Marijuana Business Tax To authorize the city to tax marijuana businesses at the following rates: 5% to 15% of gross receipts or $5 to $25 per square foot for cultivation.
Colfax Placer C City of Colfax Cannabis Business Tax To tax cannabis businesses at annual rates not to exceed $10.00 per canopy square foot for cultivation (adjustable for inflation), 6% of gross receipts for retail cannabis businesses, and 4% for all other cannabis businesses.
Colton San Bernardino U Colton Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $25.00 per square foot on nurseries and up to 10% on other businesses.
Emeryville Alameda S Emeryville Marijuana Business Tax To enact a marijuana business tax at a rate of up to 6% of gross receipts to fund general city purposes.
Fresno Fresno A Fresno Marijuana Business Tax To tax marijuana businesses at rates of up to $12 per canopy square foot and up to 10% of gross receipts for medical dispensaries and other marijuana businesses, with revenue dedicated to the city’s general fund an a community benefit fund.
Goleta Santa Barbara Z2018 Goleta Marijuana Business Tax To authorize the city to tax marijuana businesses at the following initial rates with a cap at 10% of sales: 5% for retailers; 4% for cultivators; 2% for manufacturers; and 1% for distributors/nurseries.
Hanford Kings C Hanford Cannabis Business Tax To tax cannabis businesses at an annual maximum rate of $7 per square foot of canopy for cultivation businesses using artificial lighting only, $4 per square foot of canopy for cultivation businesses using a combination of artificial and natural lighting, $2 per square foot of canopy for cultivation businesses using natural lighting only, and $1 per square foot of canopy for nurseries, 1% of gross receipts of laboratories, 4% of gross receipts of retail sales, 2% of gross receipts of distribution and 2.5% of gross receipts of all other types of cannabis businesses.
Hesperia San Bernardino T Hesperia Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $15.00 per square foot on nurseries and up to 6% on other businesses.
La Mesa San Diego V La Mesa Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of up to 6% gross receipts and up to $10 per square foot of cultivation.
Lassen Lassen M Lassen County Commercial Marijuana Business Tax To authorize the county to enact a tax on commercial marijuana at rates of between $0.50 to $3.00 per square foot for cultivation and 2.5% to 8% on gross receipts for other businesses, such as retail, distribution, manufacturing, processing, and testing.
Lompoc Santa Barbara D2018 Lompoc Marijuana Business Tax To authorize the city tax marijuana businesses at the following rates: $0.06 per $1 of non-medical retail sales proceeds; $0.01 per $1 of cultivation proceeds; $15,000 for net income less than $2 million of manufacturing/distribution proceeds; $30,000 for net income $2 Million or more of manufacturing/distribution proceeds; a total aggregate tax of $0.06 per $1.00 of microbusinesses proceeds; and no tax on testing.
Malibu Los Angeles G Malibu Marijuana Business Authorization and Tax To authorize the sale of recreational marijuana in the city and imposing a general tax at the rate of 2.5% of gross receipts on the sale of recreational marijuana.
Marina Monterey V Marina Marijuana Business Tax To authorize marijuana businesses to operate in the city and authorizing the city to tax marijuana businesses at rates of up to 5% of gross receipts, with revenue funding general city purposes.
Maywood Los Angeles CT Maywood Marijuana Business Tax To authorize the city to tax marijuana businesses at a maximum rate of 10% of gross receipts to fund general city purposes.
Moreno Valley Riverside M City of Moreno Valley Commercial Cannabis Activity Tax To enact a tax on cannabis sales and cultivation, not exceeding 8% of gross receipts and $15 per square foot of cultivation.
Morgan Hill Santa Clara I Morgan Hill Marijuana Business Tax To authorize the city to tax marijuana businesses at annual rates up to $15.00 per canopy square foot for cultivation and up to 10% of gross receipts for all other marijuana businesses.
Mountain View Santa Clara Q Mountain View Marijuana Business Tax To enact a tax on marijuana businesses of up to 9% of gross receipts to fund general city purposes.
Oakland Alameda V Oakland Marijuana Business Tax Amendments To amend the marijuana business tax law to: allow marijuana business to deduct the cost of raw materials from their gross receipts and to pay taxes on a quarterly basis; and allow the city council to amend the law in any manner that does not increase the tax rate.
Oroville Butte T Oroville Marijuana Tax To authorize an annual gross receipts tax on cannabis businesses at rate not to exceed 1%, with initial rates of 5% on retailers and manufacturers; 4% on cultivators; 3% on distributors; 2% on nurseries; 0% on testing laboratories; and 7% on microbusiness to generate approximately $300,000 to $600,000 in annual revenue.
Paso Robles San Luis Obispo I-18 Paso Robles Cannabis Business Tax To impose a maximum tax rate on every person or entity operating or conducting a cannabis business within the City a cultivation tax of up to$20.00 per square foot of space utilized in connection with the cultivation and processing of cannabis; a gross receipts tax of up to 10% for all cannabis transportation; a gross receipts tax of up to 15% for all cannabis manufacturing, testing, and distribution; and a gross receipts tax of up to 10% for dispensaries.
Pomona Los Angeles PC Pomona Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of $10.00 per canopy square foot for cultivation and up to 6% of gross receipts for all other marijuana businesses to fund general city purposes.
Riverbank Stanislaus B City of Riverbank Cannabis Business License Tax To authorize the City Council of the City to impose a business license tax at a rate of up to 10% of gross receipts on cannabis businesses and dispensaries, to help fund general municipal services.
San Bernardino San Bernardino W San Bernardino Marijuana Tax To authorize the city to impose a tax on marijuana businesses of up to $10.00 per square foot on nurseries and up to 6% on other businesses.
San Diego San Diego AA City Council Marijuana Business Tax Measure To authorize the city to tax marijuana businesses at the following rates: $14 per square foot; up to 8% on manufacturing and distribution; up to 10% on medicinal retail; up to 12% on adult-use retail; and up to 3.5% on testing.
San Francisco San Francisco D San Francisco Marijuana Business Tax Increase To tax marijuana businesses with gross receipts over $500,000 at a rate between 1% and 5%, exempting retail sales of medical marijuana, and expanding the marijuana business tax to businesses not physically located in San Francisco.
Santa Ana Orange Y Santa Ana Recreational Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of $0.25 to $35.00 for gross square footage and up to 10 percent for cultivating, manufacturing, distributing, selling, or testing.
Santa Clara Santa Clara M Santa Clara Marijuana Business Tax To authorize the city to tax commercial marijuana businesses up to 10% of gross receipts and up to $25 per square foot for cultivation.
Simi Valley Ventura Q Cannabis Business Tax To enact a maximum tax on gross receipts of cannabis businesses in the City after January 1, 2019, as follows: for testing, 2.5%; for retail sales, retail delivery, or microbusiness retail, 6%; for distribution not to consumers, 3%; for manufacturing, processing or nonretail microbusiness, and any other type of business not otherwise specified, 4%; and for cultivation, a tax per square foot of canopy ranging from $2.00 per square foot of canopy to $10.00 per square foot of canopy, depending on the type of lighting (artificial or natural) used.
Solvang Santa Barbara F2018 Solvang Marijuana Business Tax To authorize the city to tax marijuana businesses at an initial rate of 5 percent of gross receipts with a cap of 10 percent and a maximum annual increase of 1 percent.
Sonora Tuolumne N City of Sonora Cannabis Business License Tax To enact a business license tax at a rate of up to 15% of gross receipts on cannabis businesses, to help fund general municipal services; and increasing the City’s appropriations limit for the Fiscal Years 2019-2023 by the amount of tax proceeds received.
Suisun Solano C Suisun Marijuana Business Tax To authorize the city to impose a tax of up to $25 per square foot and 15% gross receipts for marijuana businesses.
Union City Alameda DD Union City Marijuana Business Tax To authorize the city to tax marijuana businesses at rates of $12.00 per square foot for cultivation and 6 percent of gross receipts for other businesses to fund general municipal services.
Vista San Diego Z Vista Retail Medical Marijuana Sales and Tax Initiative (November 2018) To authorize commercial retails sales of medicinal marijuana for up to 11 retailers and enacting a 7% tax on the business’ gross receipts.
Contra Costa R Contra Costa County Marijuana Business Tax To authorize Contra Costa County to tax commercial marijuana businesses in the unincorporated area in the amount of up to $7.00 per canopy square foot for cultivation and up to 4 percent gross receipts for all other cannabis businesses to fund general County expenses.
El Dorado N, P, Q, R, S Commercial Cannabis Tax Measures To impose a general tax on any independently authorized commercial cannabis activity in the unincorporated areas of El Dorado County at rates up to: $30 per square foot or 15% for cultivation; 10% for distribution, manufacturing, and retail; and 5% for testing laboratories, effective until amended or repealed, with estimated annual revenue of $1,900,000 to $52,800,000.

To authorize outdoor and mixed-light (greenhouse) commercial cannabis cultivation for medicinal use on parcels of at least 10 acres zoned Rural Lands, Planned Agricultural, Limited Agricultural, and Agricultural Grazing that are restricted in canopy size, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

To authorize outdoor and mixed-light (greenhouse) commercial cannabis cultivation for recreational adult use on parcels of at least 10 acres zoned Rural Lands, Planned Agricultural, Limited Agricultural, and Agricultural Grazing that are restricted in canopy size, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

To authorize the retail sale, delivery, distribution, and indoor cultivation of commercial cannabis for medicinal use on parcels zoned Community Commercial, Regional Commercial, General Commercial, Industrial High, and Industrial Low that are restricted in number and concentration, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

To authorize the retail sale, delivery, distribution, and indoor cultivation of commercial cannabis for recreational adult use on parcels zoned Community Commercial, Regional Commercial, General Commercial, Industrial High, and Industrial Low that are restricted in number and concentration, required to pay a County commercial cannabis tax, and subject to a site-specific review and discretionary permitting process with notification to surrounding property owners and environmental regulation.

Lake K Lake County Marijuana Business Tax To authorize the county to enact a marijuana business tax at the rates of $1.00 per square foot for nurseries and cultivators and between 2.5% and 4% for other businesses.
San Joaquin B Unincorporated County of San Joaquin Cannabis Business Tax To impose a special tax on commercial cannabis businesses in unincorporated San Joaquin County at a rate of 3.5% to 8% of gross receipts, with an additional cultivation tax of $2.00 per square foot of cultivation space.
Tuolumne M Tuolumne County Commercial Cannabis Business Tax The County to impose a 0%-15% gross receipts tax on commercial cannabis businesses (but no less than $0-$15 per square foot for cultivation businesses as annually increased by a consumer price index) in the unincorporated area of Tuolumne County, and to authorize the Board of Supervisors to implement and adjust the tax at its discretion, with funds staying local for unrestricted general revenue purposes, including but not limited to public safety, health,environmental protection and addressing industry impacts, unless repealed or amended by voters.

Steep Hill Expands Hawaii Operations

By Aaron G. Biros
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According to a press release published yesterday, Steep Hill Hawaii announced the opening of their second location on the Big Island. Their first location located on Oahu and operating for a little over a year, was the first cannabis-testing laboratory to be certified by the State of Hawaii Department of Health (HDOH). It’s also the first ISO/IEC 17025:2005 accredited cannabis testing lab in the state.

steep-hill-labs-logoOwner and CEO of Steep Hill Hawaii, Dana Ciccone announced the second location yesterday. “”We are thrilled to open up our new location in Kailua Kona, Hawaii,” says Ciccone. “We have been working closely with the Department of Health and we look forward to working together with the large patient population and the two new dispensaries opening very soon.” Ciccone says with the new location they are focusing on quick turnaround times, good service and competitive prices.

According to Dr. Andrew Rosenstein, CEO of Steep Hill, they want to help provide safe medicine and quality testing to the Hawaii medical cannabis community. “In extending its services, Steep Hill Hawaii is committed to providing safe medicine and high quality testing to Hawaii’s patient community,” says Rosenstien. “Dana and the Steep Hill Hawaii team have worked hard to open up this new location and will continue to support cultivators and dispensaries in this emerging market.”

Greece Gets Growing

By Marguerite Arnold
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The Greek government changed the law on medical cannabis as recently as February of this year. Now it has issued its first cultivation license.

Who Is The First Beneficiary?

The lucky (first but far from last) firm to receive a cultivation license? Intriguingly, a South American-Canadian cultivation company called ICC Cannabis Corp.

The most recent agreement received from the Greek government supersedes and augments its previous hemp cultivation license in the country. The license, however is not final yet but rather a conditional pre-approval for medical cannabis cultivation.Things in Greece are proceeding fast with no internal or external opposition.

The company already has secured a 16 acre grow facility in Northern Greece. ICC also has a distribution network of over 35,000 pharmacies spread across 16 countries which it says will “complement” its current Greek victory.

ICC will pay USD $200,000 in connection with the license issuance, pay a finder’s fee and issue 12 million shares.

Company executives are quick to point out that the success is a result of staff cultivating close relationships with local politicians.

The ICC of course is not the only company now engaged in solidifying their business opportunities in Greece. Hexo, a Canadian LP with about a million feet of grow space at home by end of 2018, in partnership with local Greek QNBS, is also rapidly moving to establish a 350,000 square foot growing facility in country as well. With a similar eye, it should be added on the European medical market.

European Legal Cultivation Is Exploding

Medical cultivation, in other words, is getting underway regionally, with authority. And the bulk of such crops not consumed locally, are already being primed for export to more expensive labour markets across the continent with increasing demand for high quality, low cost, medical grade.

Not only is this procedural development fast and relatively efficient, it sets up a serious competitor within the EU to provide cheap flower, oil and other processed cannabis products to a continent that is now starting to place bulk orders as individual countries struggle with the issue of how much local cultivation to allow and what patient conditions should be covered.

Even more interesting, at least so far, are a lack of punitive punishments being meted out to the country from the EU for considering this economic route to self-sufficiency again. That is not true for Albania, in direct contrast, which is being penalized with its membership to the Union on the line, for the level of black market cannabis grown in the country.

That said, it might also be the progress of Greek cultivation that has caused such a furore – led by France in Brussels within the EU. A country far behind regional leaders on reform it is worth noting. Even on medical.

A Quick History Of Cannabis Reform In Greece

Greek politicians decided fairly early as the cannabis ball got rolling in Europe that the industry was the perfect cash injection to an economy still emerging from troubled times and massive financial defaults. In fact, Greek officials are estimating that legalizing the medical industry here will inject approximately USD$2 billion into the country’s economy.

It could be, of course, much higher. Especially when exports are added to medical tourist consumption.

The amazing thing so far, for all the other issues in just about every other legalizing country within the EU of late? Things in Greece are proceeding fast with no internal or external opposition.

Who Is ICC?

The firm used to be known by the hard to pronounce Kaneh Bosm Bio Technology and Shogun Capital Corp. The firm has an interesting footprint with production in Uruguay but already exporting CBD and other derivatives to the Canadian market, including via a deal with Emblem Cannabis.

The company began trading on the TSX Venture exchange in November 2016. In late September, the company announced that it was also securing a 55-acre grow facility in Denmark, with other Canadian cannabis heavyweights like Canopy, Aurora and Green Dutchman Holdings.

FSC logo

Edibles Discussion Comes To Food Safety Consortium

By Aaron G. Biros
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The Food Safety Consortium, taking place November 13-15 in Schaumburg, Illinois, will host a series of talks geared towards the cannabis industry this year. The newly launched Cannabis Quality Track features a number of panels and presentations designed to highlight the many intersections between food safety and cannabis.

Jenna Rice, Director of Operations at Gron Artisan Chocolates
Jenna Rice, Director of Operations at Gron Artisan Chocolates

The track will have presentations discussing food safety planning in cannabis manufacturing, HACCP, GMPs, regulatory compliance and supply chain issues among other areas.

Ben Gelt, board chair of the Cannabis Certification Council, is moderating a panel titled What’s In My Weed? that will delve into issues like supply chain, production and other difficulties in creating cannabis products and the challenges inherent in teaching consumers to be more discerning.

Ben Gelt, Board Chair of the Cannabis Certification Council
Ben Gelt, Board Chair of the Cannabis Certification Council

Panelists will include:

Kimberly Stuck, Founder of Allay Compliance Consulting
Kimberly Stuck, Founder of Allay Compliance Consulting

Ben Gelt and the Cannabis Certification Council orchestrated the development of this panel to help promote their #WhatsInMyWeed consumer awareness and education campaign. “The Cannabis Certification Council believes consumer education campaigns like #Whatsinmyweed are critical to drive standards and transparency like we see in food,” says Gelt. “What better place to discuss the food safety challenges the cannabis industry faces than the Food Safety Consortium”

Before Kim Stuck founded Allay Compliance Consulting, she was the first Marijuana Specialist for a public health authority in the nation, where she was working with regulators in Denver, Colorado. She is currently a cannabis food safety expert and a Certified Professional of Food Safety (CP-FS) through NEHA. She has helped Colorado and California develop cannabis food safety requirements. “I will discuss pitfalls we have experienced in the regulation of cannabis in Denver and what mistakes not to make,” says Stuck. “I’d also like to talk about how to be prepared for when those regulators start to come in to facilities.”

Kristen Hill, MIP Director at Native Roots Dispensary
Kristen Hill, MIP Director at Native Roots Dispensary

Kristen Hill is the MIP Director at Native Roots, arguably one of the largest dispensary chains in the world. She oversees 30 employees in Native Roots’ MIP facility where product testing and quality assurance of products are all led under her guidance. Her background includes managing quality assurance and regulatory compliance with FDA regulations, among other areas. She said she’s particularly excited to talk about implementing manufacturing best practices in the cannabis space. “Cannabis is maturing and is beginning to shape operations around long standing best practices in other industries,” says Hill.

Leslie Siu, Founder and CEO of Mother & Clone
Leslie Siu, Founder and CEO of Mother & Clone

Leslie Siu brings to the panel 17 years of liquor, tobacco and pharma marketing and operational oversight plus global digital and experiential campaigns. Her company, Mother & Clone, produces infused, sublingual cannabis sprays. Based in Colorado, Mother & Clone’s team of biochemists are Merck alumni, currently working towards GMP standards in preparation for Canada, slated to be on shelf in the spring of 2019. Her main consideration for cannabis product development comes from what she has learned from the FDA in traditional industries- what they will and will not tolerate.

To learn more about the panel, other topics presented and see the full agenda for the upcoming Food Safety Consortium, click here.

East Coast Market Update

By Lindsay Engle
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There are going to be some states that are less progressive in the pro-cannabis movement, the same way there were states that were slow to move past alcohol prohibition. This is normal for any country moving towards change, better economic standing and safer healthcare.

There are only four states that completely ban recreational and medical cannabis altogether, and those states are Idaho, Kansas, Nebraska, and South Dakota. Although, there is no doubt that more and more states are moving towards a pro-recreational and medical cannabis stance. There are some states in the Northeast that are making strides to legalize cannabis.

Most of the states in the Northeast already have some form of medical cannabis law in the books already, but some are moving towards recreational legalization surprisingly quickly. Massachusetts already has legalized recreational cannabis and is setting up their regulatory framework currently while Vermont, New Jersey and New York, all of which already have medical laws, appear to be just steps away from legalizing it recreationally.

Northeast States Moving Towards Legalization

With Canada’s recent recreational legalization, a number of states just south of the border appear to be eyeing the issue for themselves. While some of these states have somewhat strict regulations in place, they look like promising emerging market opportunities.

New Jersey

New Jersey is closer than ever to legalizing recreational cannabis. Governor Phil Murphy built his campaign on the pledge to end cannabis prohibition. Murphy says having recreational cannabis legalized this year is his goal.

Murphy says that he wants legal recreational cannabis to be available because he believes it is a way to improve social justice in New Jersey and to bring the state new tax revenue. The biggest issue is what the legislation will look like and how it can be tied to expanding the states medicinal cannabis program.

New Jersey Governor Phil Murphy
New Jersey Governor Phil Murphy

Their current medical program, while still small in market size, appears to be gaining steam and growing in terms of patients getting access. Six months ago, The New Jersey Department of Health added a number of qualifying conditions patients can get a cannabis prescription for. The program still has its limits, like a 10% THC potency cap, small selection of types of products and other various restrictions.

New York

It was just last year when Governor Andrew Cuomo said cannabis was a “gateway drug” and he was opposed to legalization. After conducting a study on cannabis legalization, the result was a July Health Department report that determined the positive effects of legalization outweighs the potential negative impacts.

The debate between Andrew Cuomo and Cynthia Nixon in the gubernatorial race has highlighted their views of cannabis as well as other important issues; it’s important that New Yorkers vote in the primary election to have the best opportunity for the future.

If New York legalizes recreational cannabis, it could open up a huge new market. Medical cannabis users will likely see a price drop in their medication. Similar kinds of restrictions that plague the New Jersey market are also affecting medical patients in New York. Currently, smoking and edibles are both prohibited even for patients. Back in 2017, the state added chronic pain to its list of qualifying conditions, undoubtedly increasing the number of patients.

Companies with large amounts of capital are planting their flags in New York, like MedMen’s dispensary in Manhattan, even if the medical market might still be in its infancy.

MassachusettsOver the next six months, this market will be one to watch closely

Recreational cannabis became legalin the last couple months for Massachusetts, while the state legalized medical cannabis some time ago. Their medical program is relatively advanced compared to New York or New Jersey. Online registration, a large number of qualifying conditions, and a less restrictive business environment seemed to encourage a much larger number of patients and businesses supporting them.

Regulators in Massachusetts are currently consideringthe option of allowing delivery operations for the recreational market. The roll out for the recreational industry might seem somewhat slow, but regulators are tackling a wide range of issues and making considerable progress towards the highly anticipated recreational market opening. Just last week, regulators issued licenses to two cannabis-testing laboratories, and, according to the Boston Globe, the debut could be just weeks away.

While the industry and regulators get ready for the recreational debut, a recent crackdown on pesticide usehighlighted some of the growing pains that come with it. Over the next six months, this market will be one to watch closely as dispensaries begin selling recreational cannabis and the industry develops.

Vermont

The recent Canadian legalization of recreational cannabis will no doubt put pressure on states sharing a border with them to consider adjusting their laws.

Legalizing recreational cannabis will likely increase tourism to Vermont, the way other states saw an influx in tourism when they legalized. Unfortunately, Vermont has only decriminalized recreational cannabis. You can possess, grow and consume cannabis, but you can’t buy or sell it, which obviously restricts the ability of any business to enter the market.

Vermont Statehouse, Montpellier, VT
Image: Tony Fischer, Flickr

However, their legal medical program is relatively laissez-faire compared to other states in the region. They allow for cultivation at home or through a caregiver and there are a number of small businesses working under the legal medical program.

Maryland

Recreational cannabis isn’t legal in Maryland yet, but medical cannabis has been legal since 2014. It’s illegal for patients and caregivers to grow their own. Attempts have been made to make recreational cannabis in 2016, but the bill didn’t move forward.

Maryland’s industry was off to a rocky start, when the application process for businesses wanting to enter the market slowed to a crawl. This month, the state just approved four new medical dispensaries and one new processor for the market. The latest round of approvals brings the total to 69 dispensaries serving patients, while back in 2016, the state pre-approved 102 dispensaries originally.

Delaware Expect to see another attempt at legalizing via the legislature in early 2019.

Delaware is looking at the possibility of legalizing the recreational use of cannabis for adults over 21 years of age. Even though medical cannabis is legal, recreational use isn’t. Back in June, lawmakers in the state were close to recreational legalization but fell short of the mark by four votes. Expect to see another attempt at legalizing via the legislature in early 2019.

The Delaware Department of Health will continue to accept applications for medical cannabis cards, which is required for patients seeking to obtain their medicine from a compassion center. Patients are not allowed to grow their own cannabis. The state’s program has been operational for quite a while, and a small number of companies have established footprints in the state, like the Israeli brand Tikun Olam.

Pennsylvania

In 2016, Pennsylvania legalized medical cannabis. In contrast to some of the other states discussed earlier, PA is off to a more streamlined start. The second phase of their medical program allowed for more businesses to enter the market, a wider range of qualifying conditions and a larger number of patients registering. The industry is maturing here fast and could make for an exciting opportunity with recreational legalization potentially on the horizon.

A state lawmaker recently introduced legislation to legalize recreational cannabis. The bill would allow adults 21 and older to possess cannabis products such as edibles and up to six cannabis plants, but not more than three mature plants that are flowering.

The bill would call for the immediate release of people jailed for cannabis-related crimes. This would also allow anyone with a criminal history related to cannabis to have that expunged.

If the bill passes, the tax imposed is estimated to generate $500 million a year.