Tag Archives: compliance

Legend Technical Services Accredited for Hemp Testing

By Aaron G. Biros
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According to a press release issued last week, the American Association for Laboratory Accreditation (A2LA) accredited Legend Technical Services to ISO/IEC 17025:2005 for industrial hemp testing. Legend Technical Services, based in St. Paul, Minnesota, is currently the only accredited cannabis testing in the state.

The lab is now accredited for medical cannabis testing as well as all industrial hemp testing for the Minnesota Department of Agriculture. According to Carissa Prekker, business development specialist of Legend Technical Services, the accreditation allows them to greatly expand their testing suite. “Our A2LA accreditation has opened up many new opportunities for us to expand our testing capabilities, including industrial hemp”, says Prekker. “We pride ourselves in being the preferred testing laboratory for the Minnesota Industrial Hemp Pilot Program (IHPP) and for offering these services to other industrial hemp growers and processors. In doing so, we have built strong relationships throughout Minnesota with other hemp businesses.”

Trace McInturff, Vice President of Accreditation Services, says Legend Technical Services has been a customer of A2LA for ten years now. “As the only hemp testing laboratory recognized by the Minnesota Department of Agriculture, we are proud they have chosen to expand their A2LA accreditation to include hemp testing,” says McInturff. “We are also very proud to add yet another state to the ever-growing list of states that are relying upon A2LA as their accreditation body”.

Gaps in Standard Property Insurance Can be an Unknown Hazard for Cannabis Businesses

By Susan Preston, T.J. Frost
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Basic business liability coverage is not enough for those cultivating, selling and distributing cannabis. General liability, property and even commercial renter’s insurance policies all exclude aspects of cannabis operations, leading to significant gaps in coverage.

Unfortunately, many cannabis operations purchase traditional property policies, assuming they’re insured. Then, when a claim comes to light, they find out they’re not covered.Consider the following common exclusions that could lead to a costly business interruption – or worse

Although the production, sales and distribution of cannabis is legal in many U.S. states, it is still illegal federally. This disparity can cause confusion when it comes to insurance compliance. Cannabis companies will want to secure industry specific coverage for risks associated with property, business interruption, and auto as well as general liability.

Consider the following common exclusions that could lead to a costly business interruption – or worse – a shutdown of operations when not properly insured:

  • Property coverage does not cover crops. Cannabis crops require specific coverage for different growth stages, including seedling, living plant and fully harvested. The insurance industry has designed policies specifically for indoor crop coverage for cannabis operations. There is some market availability for normal insured perils such as fire and theft, to name a few. Work with your broker to review your property policy and any potential exclusions related to cannabis operations. There is currently not much availability for insurance for outdoor crop.
  • Auto policies exclude cannabis transport. Some states require separate permits for transportation. Review coverage options with a knowledgeable broker before moving forward with driver hiring. Implement driver training sessions on a regular basis, conduct background checks and review MVRs prior to hiring company drivers. Teach drivers how to handle accidents on the scene, including informing law enforcement of the cannabis cargo. Remember that transporting cannabis across state lines (even when legal in both states) is still illegal due to federal law.
  • Equipment damage and/or breakdown coverage may be excluded from property policies. Consider the expenses and potential loss of revenue due to mechanical or electrical breakdown of any type of equipment due to power surges, burnout, malfunctions and user error. Having the right equipment breakdown insurance will help you quickly get back into full operation, with minimal costs. Conduct an onsite risk assessment of your equipment to get a comprehensive picture of your risk exposure, and review current insurance policies to identify key exclusions. 

Organizations looking for cannabis business insurance are best off working with a qualified broker who is knowledgeable in the cannabis space.As the cannabis industry continues to expand, more and more insurance options have become available. And yet as with any fast-paced industry, not every option that appears legitimate is a good risk for your cannabis business.

Be a contentious insurance consumer. Review the policy closely for exclusions and coverage features so you understand the premium rates and limits of the policy.  Discuss with your broker the history of the carrier as to paying claims in a timely fashion.

Organizations looking for cannabis business insurance are best off working with a qualified broker who is knowledgeable in the cannabis space.

Soapbox

California Banned Ozone Generator “Air Purifiers”

By Jeff Scheir
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California was the first state to step up to defend consumers from false marketing claims that ozone generators are safe, effective air purifiers. In reality, ozone is a lung irritant, especially harmful to allergy and asthma sufferers. In 2009, California became the first state in the nation to ban ozone generators. The Air Resources Board of the California Environmental Protection Agency states:

Not all air-cleaning devices are appropriate for use — some can be harmful to human health. The ARB recommends that ozone generators, air cleaners that intentionally produce ozone, not be used in the home or anywhere else humans are present. Ozone is a gas that can cause health problems, including respiratory tract irritation and breathing difficulty.

The regulation took effect in 2009 along with a ban on the sale of air purifiers that emit more than 0.05 parts per million of ozone. The ARB says that anything beyond this is enough to harm human health; however, some experts say that there is no safe level of ozone.

The National Institute for Occupational Safety and Health recommends an exposure limit to ozone of 0.1 ppm and considers levels of 5 ppm or higher “immediately dangerous to life or health.”

If you’re shopping for an air purifier, it’s best to avoid ozone generators, especially if you have a respiratory condition. Ozone generators, and ionic air cleaners that emit ozone, can cause asthma attacks in humans while doing little to nothing to clean the air.

O3 is a free radical, an oxidizer; when it meets any organic molecule floating around it bonds to it and destroys it. In a grow room, organic molecules include the essential oils in cannabis which produce the fragrance. When using ozone within your grow room, too much will not only all but eliminate the smell of your flowers but with prolonged exposure, it begins to actually degrade the cell walls of trichomes and destroy the structure of the glands.

Despite the claims of some manufacturers, ozone does not have an anti-microbial effect in air unless levels far exceed the maximums of the regulation and is therefore harmful humans.

Keeping the grow room clean of mold and bacteria is important, but ozone is not the technology you want to employ to satisfy this goal. Looking into a combination of UVC and Filtration will better meet the goal while keeping both your plants and staff healthy.

FDA

FDA Warning Letter to CBD Company Provides Many Lessons for Burgeoning Market

By Seth Mailhot, Emily Lyons, Steve Levine
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FDA

The U.S. Food and Drug Administration (FDA) issued a warning letter to Curaleaf Inc., a multi-billion-dollar market cap company that is publicly traded on the Canadian Securities Exchange. The FDA determined, based upon a review of the company’s website and social media accounts (Facebook and Twitter), that several of Curaleaf’s cannabidiol (CBD) products are misbranded and unapproved new drugs sold are in violation of the Federal Food, Drug, and Cosmetic Act(FD&C Act). The FDA also determined that Curaleaf’s “Bido CBD for Pets” products are unapproved new animal drugs that are unsafe and adulterated under the FD&C Act2. This action by FDA holds many lessons and cautions for companies already in or looking to break into the CBD market.

Unapproved New Human Drug Claims and Misbranding
The FDA identified a variety of statements in its review of the Curaleaf website and social media accounts that it said established the CBD Lotion, CBD Pain-Relief Patch, CBD Tincture, and CBD Disposable Vape Pen products as drugs. It is important to highlight that these claims were not made on the products’ label and, in some instances, referred to CBD generally. The FDA characterized these claims as demonstrating an intent to market the products for use in the diagnosis, cure, mitigation, treatment or prevention of disease, as well as to affect the structure or any function of the body. For example, FDA asserted that Curaleaf made a variety of drug and disease-related claims that its products or CBD in general could be used:

  • To treat chronic pain;
  • To reduce the symptoms of ADHD, anxiety, depression, post-traumatic stress disorder, and schizophrenia;
  • As a natural alternative to pharmaceutical-grade treatments for depression and anxiety;
  • To address eating disorders;
  • To reduce the severity of opioid-related withdrawal;
  • To deter heart disease;
  • As an effective treatment for Parkinson’s disease and Alzheimer’s; and
  • To kill breast cancer cells and counteract the spread of cancer.

The FDA stated that the Curaleaf products are not generally recognized as safe and effective for the uses described on their website and social media accounts and, therefore, the products are new drugs under the FD&C Act3. The FDA stated that, because the products have not received approval from the FDA, they may not be legally introduced or delivered for introduction into interstate commerce.

FDAlogoThe FDA further declared that the Curaleaf products are misbranded within the meaning the FD&C Act, because their labeling fails to bear adequate directions under which a layperson can use a drug safely and for the purpose for which it is intended. The FDA will frequently add this charge when citing a product marketed as an unapproved new drug. In its warning letter, the FDA noted that Curaleaf’s products are offered for conditions that are not inclined to self-diagnosis and treatment by individuals who are not medical professionals (e.g. Parkinson’s, Alzheimer’s, etc.). Therefore, the products would need to bear adequate directions for use, as well as obtain appropriate new drug approvals from FDA prior to being marketed as human drugs.

Unapproved Dietary Supplement Labeling 
The FDA further concluded that Curaleaf intended to market their CBD products as dietary supplements. For example, under the disclaimer section of the Curaleaf products the FDA noted that it says that “Cannabidiol (CBD) . . . is a dietary supplement.” However, the warning letter reiterated the FDA’s longstanding position that CBD products do not meet the definition of a dietary supplement because they contain an active ingredient in a drug product that has been the subject of public research and drug approval by FDA. While the warning letter states that FDA is not aware of any evidence that counters the agency’s position that CBD products are excluded from the definition of dietary supplement, Curaleaf may present the FDA with any evidence that is relevant to the issue.

Further, the FDA noted that the Curaleaf products do not meet the definition of dietary supplement because those products are not “intended for digestion”. The CBD Lotion and the CBD Pain-Relief Patch products’ labeling states that they are intended to be applied directly to the skin and body, while the CBD Disposable Vape Pen is intended for inhalation. In addition, the CBD Tincture products contain a “Suggested Use” section on labeling that includes both edible and topical uses. According to the FDA, the addition of the topical use to labeling established that the tincture products are not intended for ingestion and therefore do not meet the definition of a dietary supplement.

Unapproved New Animal Drugs 
The FDA also concluded that Curaleaf’s “Bido CBD for Pets” products are unapproved new animal drugs as statements on Curaleaf’s website show that the products are intended for use in the mitigation, treatment or prevention of diseases in animals. For example, the company’s website states that its products will decrease dog separation anxiety, distressed feelings, anxiety and seizures, as well as reducing or stunting the growth of cancer, relieve muscle spasms and treat arthritis issues. The FDA stated that the products are “new animal drugs” because they are not generally recognized among experts qualified by scientific training and experience as safe and effective for use under the conditions prescribed, recommended or suggested in the labeling. In order to be legally marketed, a new animal drug must have an approved new animal drug application, conditionally approved new animal drug application, or index listing. As these products are not approved or index-listed by the FDA, these products are considered unsafe and adulterated.

What This Means to You 
The FDA is paying close attention to companies marketing CBD products with unapproved drug claims for both human use and animal use. It is important for companies that currently market or are considering marketing CBD products to ensure that their marketing materials and labeling generally comply with FDA requirements and avoid making unapproved human or animal drug claims.  Additionally, it underscores the fact that FDA will review more than just the label of the product, and will scrutinize statements made about the product on the company’s website and social media accounts to determine the product’s intended use. Even though the FDA is in the process of determining how to regulate CBD products, the agency will not withhold enforcement actions against companies that make unapproved drug claims, particularly those that FDA believes will steer patients from receiving approved treatments.

The receipt of an FDA warning letter may also potentially result in class action lawsuits based on state consumer protection laws or lawsuits by competitors under the Lanham Act or state competition laws. While the FD&C Act does not include a private right of action, publicly issued warning letters may form the basis of a claim that statements are false and misleading and actionable under state or other federal laws.


References to the Federal Food, Drug, and Cosmetic Act (FD&C Act).

  1. Sections 502(f)(1), 505(a) and 301(d)
  2. Sections 501(a)(5) and 512(a)
  3. Section 201(p)
Jennifer Whetzel

Branding for Cannabis Companies 101: Part 3

By Jennifer Whetzel
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Jennifer Whetzel

Editor’s Note: In Part 1, Jennifer Whetzel introduced the concepts of branding, marketing and advertising for cannabis companies. Part 2 took a closer look at the benefits of branding. Part 3, published below, illustrates the different archetypes to use in branding.


People talk a lot about consistency when it comes to branding; after all, it’s a feature of the world’s most lucrative consumer brands (just ask Apple, Nike and Starbucks). As a result, companies will spend buckets of money on ensuring that their look and sensibility are uniform when marketing materials are out in the wild.

This consistency makes it easier for customers to recognize your brand. But the most important effect of consistent branding isn’t just that customers will recognize you– it’s that they’ll trust you.

 Trust is the product of familiarity and consistency, and it’s far easier to be consistent across platforms when you have a strong sense of who you are as a brand. Strong branding helps you stick out in a crowd, and repeated viewing reinforces who you are to consumers. By extension, a consumer’s ability to quickly recognize you means that when they see your brand in public, they’re more focused on your message than picking you out of the crowd. And one way for consumers to recognize you is through archetypes.

What a Character!

Branding: Who
Marketing: What & Why
Advertising: Where & When

Archetypes are typical examples of a person or concept that appear across different fields of literature, art and behavior; in other words, archetypes are familiar concepts that appear in storytelling. An outlaw is an example of an archetype. If an outlaw appears in a story, you may find yourself immediately drawing conclusions about that character’s motivations and sensibility and imagining how the outlaw fits into the story.

This demonstrates how archetypes can serve as a kind of shorthand when you’re telling your own brand story. We’ve created 16 archetypes–brand characters, if you will–for the cannabis industry, such as the Activist, the Doctor and the Stoner, among others. These archetypes all have a specific look and tone that you can use in your communications to keep your messaging consistent and effective so that people are focusing on your message rather than sussing out who you are and what you stand for.

For one thing, this makes your marketing efforts easier on you because you’ll be able to tell what makes sense in the context of your archetype. For example, the Doctor Archetype wouldn’t be sharing a 4/20 playlist, and an Activist Archetype wouldn’t be arguing the merits of different CBD bath bombs. You don’t want consumers scratching their heads, and having an archetype helps to determine what kind of behavior is appropriate for your brand.

Moreover, it helps to establish consistent behavior that your consumers see. Consistency helps to build trust because it helps customers build expectations. When you build expectations and you act in a way that immediately feels familiar to them, they’ll feel more comfortable with you. Imagine your closest friends; you have a strong sense of who they are. You know that your friend will refuse to order their own fries and then pick at your own. But there’s some comfort in this because when a person acts exactly as you expect, it makes you feel as though you know them deeply. And when there aren’t any mysteries, you can focus on what lies ahead in your friendship.

You know that Apple stands for sleek design and innovation.

Brands operate the same way. When you see an Apple ad, you don’t have to rack your brains for context before you absorb their message. You know that Apple stands for sleek design and innovation, so when you see an Apple ad, Apple doesn’t have to keep reintroducing those values. Instead, you can focus on the new product or idea being featured, knowing that the sleek design and innovation are already baked in– and it’s because Apple has done decades of legwork making sure that that’s the case.

Archetypes make that legwork even more efficient by giving you those values as part of a character. If you think of your brand as a character, it immediately makes your communication more human. For instance, like Apple, the Scientist Archetype also values innovation. But when you write social posts as a Scientist Archetype rather than a brand, it makes it easier to connect with folks because you’re writing from a particular person’s perspective rather than a bulleted list of company values.

It also grants you more structure in your brand strategy because it allows you to envision a whole person. When you’re writing a post, for example, you can ask yourself, “Would the Scientist say this?” You can envision this Archetype’s mannerisms and sensibility, and being able to do that makes it far easier to know what will feel real to consumers– and by extension, trustworthy.

That ability to build trust is what will ultimately decide how successful your brand is in this burgeoning industry. You’ll be facing more competition than ever and you may eventually find yourself facing companies selling near-identical products. The brands that will win out will be the ones that know how to build trust with consumers with a cohesive brand strategy. With the right strategy, that could be you.

Denver Plans Crackdown on Contaminants

By Aaron G. Biros
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Earlier this month, Colorado cannabis producer Herbal Wellness LLC recalled dozens of batches of cannabis due to positive yeast and mold tests. The Colorado Department of Public Health and Environment (CDPHE) issued a health and safety advisory following the news of microbial contamination.

The Colorado Department of Revenue then identified batches of both medical and recreational cannabis produced by Herbal Wellness that were not even tested for microbial contaminants, which is a requirement for licensed producers in the state. Just a few days later, the Denver Department of Public Health & Environment (DDPHE) issued a bulletin announcing their plans to conduct random tests at dozens of dispensaries.

“In the coming weeks, the Denver Department of Public Health & Environment (DDPHE) will be conducting an assessment in approximately 25 retail marijuana stores to evaluate contaminants in products on store shelves,” reads the bulletin. “DDPHE has worked with epidemiological partners at Denver Public Heath to create the assessment methodology. Participating stores will be randomly identified for inclusion in the assessment.”

“Current METRC inventory lists for each store will be used to randomly identify samples of flower, trim/shake, and pre-rolls. Each sample will be tested for pesticides and total yeast and mold by a state- and ISO-certified marijuana testing facility. Results of their respective testing will be shared with each facility and will also be shared broadly within a write-up of results.”

The Fall of Farmako?

By Marguerite Arnold
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Chances are if you follow the European cannabis scene, particularly out of Germany, that you might have heard of a firm called Farmako. They have certainly, in the three quarters or so they have been in business, been given a lot of “good press.” They certainly worked hard to get into the headlines.

The problem is that no matter how scintillating initial claims were to many members of the media if not industry beyond, the bloom was quickly off the rose in the same circles. Since at least March, these grumbles have earned the company increasingly bad press. Industry insider complaints and background knowledge also began appearing in places like Manager (a top German business magazine), Vice and Business Insider Germany. Behind the headlines and insider quotes, however, quite a few people are admitting, even if off the record, that while initially impressive enough to be believed – at least on the surface – most of Farmako’s claims have panned out so far to be just hot air. And there have been a lot of them, not only from the sourcing perspective but also from the research, scientific development and certainly tech fronts.

The rebutting, editing and confronting of which has also set off a round of really bad press.

Live by the sword, die by the sword.

Further, apparently even the embarrassing fallout (and of course resulting reorganization) is not what it seems to be. Which of course has also been described so far publicly by the Frankfurt-based company itself, and Berlin-based tech funder, Heartbeat Labs. The former of which are so far unsuccessfully walking back just about every claim made over recent months. The latter of which has a great deal of embarrassing egg on its face on the compliance front.

When reached for comment by Cannabis Industry Journal, Heartbeat Labs responded via email that they had none.

While Farmako is struggling to regain the confidence of the industry if not regulators and appears to be trying to hang on to its distribution license, the story itself is also illustrative of many of the failings of the so-far establishing cannabis industry. In Germany and elsewhere. Coming as it does within the summer of scandal involving both larger companies and start-ups, bigger questions about industry practices, in general are in the room. If not the backgrounds of those boasting about “industry experience” (or even worse when caught, “oops I have none, really”). Highly stereotypical fixes so far have also not helped.

Everyone makes mistakes in a world where everything is new and one where the regulations are constantly changing. The problem with Farmako in particular, is that there were so many.All the bragging in the English and German language press had consequences.

The Story So Far

Farmako made headlines earlier this year when they issued a press release claiming that they had inked a deal to “import 50 tonnes of cannabis from Poland.” They further claimed, when contacted by CIJ that they stood by the story. At this point, their claims were clearly about a future delivery. However, Farmako CEO Niklas Kouparanis then embellished further on Bloomburg. Kouparanis claimed that they were already distributing product from Macedonia.

The reality of course was nothing of the sort. While Farmako was distributing product it had sourced from other places, no Macedonian product had ever crossed the border. But as May rolled into June, it was clear that there was something else afoot. All the bragging in the English and German language press had consequences. The German press had a field day with the storied and very colourful past of both Farmako founders. The regulatory agency, BfArM conducted an investigation. Kouparanis was out by the beginning of July.

Producers Do Not Trust Them

Cannabis industry insiders (both producers and distributors) who contacted CIJ about this story, but wished to remain off the record, confirmed that many producers who had initially heard of the firm in both Poland and Macedonia, in particular, were distancing themselves from Farmako. But the stories were not limited to Eastern Europe. In the UK, where Farmako had used a chunk of its investment from Heartbeat Labs to also open a London office, cannabis professionals expressed scepticism of almost all of the company’s claims including not just sourcing, but on the tech and R&D side. One senior executive in the Canadian industry said on deep background that he was tired of the lies from Diemer in particular, and never wanted to speak to anyone associated with the company ever again.

And clearly all was not well within Farmako itself, no matter the constant cheery optimism, if not “shucks we didn’t know” attitude of all involved when actually confronted or questioned about their behaviour – and or statements – particularly to the press.

What Has Been The Upshot To Date?

Kouparanis may be history but Diemer remains with the company. Although Heartbeat Labs claims this has nothing to do with the subsequent company re-org and Kouparanis’ departure, insiders in the industry claim otherwise. Further, several also suggested that any attempt on the part of Farmako to enter into contracts until July was fundamentally compromised by the actions of Farmako execs themselves.

Diemer certainly, has been remarkably candid at least in review about one aspect that most in the cannabis industry who have encountered him so far agree with. He has come clean in interviews that he knows very little about the legitimate cannabis industry. Perhaps that is also why he has continued to claim that there is no crisis at the company.

Both statements of course also raise questions about why he is still there.

The company is still in business although apparently finding it very difficult to source product.The appointment of a new CEO, Geschäftsfüherinen– a female and first head of any kind of cannaspecialist distribution company auf Deutsch, Katrin Eckmans is also interesting. Eckmans makes her apparent cannabis industry debute with a professional background that includes ex-im at Frankfurt airport, after the quick departure of Kouparanis. Particularly given that he co-founded the company with Diemer after leaving a year long stint at Cannamedical (the second indie cannabis specialty distributor in Germany, established in 2017 by David Henn). And she is apparently being hired for both complementary experience and her gender (which while refreshing in a still male dominated industry is widely also regarded as at this point fairly easy-to-spot window dressing conveniently proffered to regain confidence of investors if not customers in a gender-friendly twist when a company or organization hits an existential crisis).

Calling in even a highly competent if inexperienced in the cannabis niche woman, in other words, even in this industry, does not necessarily “fix” things. This goes from company culture to critical relationships within the industry (upon which distributors like Farmako depend on at this point).

For now, at least, Farmako, and its financier in Berlin appear to have deflected criticism of their efforts although those who have had interactions with the staff are placing bets on when the doors in both Germany and the UK will shutter.

Farmako’s detractors may yet also lose such wagers. The company is still in business although apparently finding it very difficult to source product. Not, in this case because they cannot find it – but rather because producers are flat out refusing to work with them.

In the meantime, particularly other German canna specialty distributors are taking a lesson from this story. If Farmako survives, in other words, it will do so by overtaking the competition that has sprung up all around them – which is not only unburdened by the baggage, but is also determined not to make the same mistakes.

UKflag

How Much Cannabis Astroturfing Is Afoot In The UK?

By Marguerite Arnold
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UKflag

Astroturfing is the practice, in political messaging and campaigns, of creating what seems to be a legitimate, grassroots inspired campaign that is actually bought and paid for by an industry lobby or other corporate interests.

It is also clear that this practice is now entering the cannabis space, certainly in the UK.

How and Where?

On August 1, the British Conservative Drug Policy Reform Group sent out a group email entitled “Strategic litigation on medical cannabis access in the UK.” The email, from the group’s senior communications manager, was to announce the kick-off of a crowdfunding campaign to defend a cannabis patient.

It’s beneficiary? A British female MS patient, Lezley Gibson, now facing prosecution for growing her own cannabis after being unable to afford what was on offer at her local pharmacy.

Here is the first flag: MS is the only condition for which Sativex (manufactured by British firm GW Pharma) is prescribed on label (in other words without special approvals).

The problem is that the NHS (along with most of the German statutory approvers) feels that Sativex is still too expensive and not effective enough. And that problem won’t be solved with either patient home grow access or a lawsuit to gain that right, but rather funded trials.

UKflagHowever, more disturbingly, the email referenced the supposed success of a similar legal tactic in Germany several years ago. This is to say it used a highly inaccurate analogy. In Germany, a male chronic pain patient sued the government for the right to grow his own cannabis. He won the right temporarily, but this was taken away from him after the law changed in March 2017. Now he, like every other cannabis patient in Germany, must get his cannabis from a pharmacy. German patients also must get their initial prescription approved by health insurers – which is for everyone – but particularly non MS patients – the biggest fight in the room right now on the topic of medical efficacy.

Further, the right to grow one’s own medical cannabis, no matter the condition suffered, has been removed from patients in every legal jurisdiction where there is no constitutional right to it first – namely patients sue for the same.

As such, it is entirely conceivable that as a “strategic” case, this is more likely to put pressure on the NHS to pay the sky-high price of Sativex for MS patients (which it has already refused to do) than create any other kind of access for anyone else.

When contacted by Cannabis Industry Journal, a CDPRG spokesperson said that the patient had given her support for the crowdfunding campaign and needed help.

piechart
Most German Patients Are Still Only Getting Dronabinol

However, there are other issues here. Namely that when selecting a strategic case (no matter how harsh this sounds to the individual patient), the entire discussion at this point – certainly from an efficacy point of view, might be better served with supporting the case of a patient who has less access because of either physical condition or economic status.

In fact, in Germany so far, thanks to the change in the law that the British group references, while there certainly are tens of thousands of cannabis patients at the moment (including many MS patients), the majority of them receive Dronabinol or Sativex. And all of them have to fight for medical access and approval from their insurers. That is of course, when they can find a doctor to prescribe in the first place. There are also estimates that there are close to a million patients in Germany who cannot get access, thanks to the change in the law created by one patient’s law suit.

Is this flavour of litigatious advocacy now afoot in the UK, in other words, the kind of lawsuit that is designed to benefit the industry more than patients looking for affordable, home-grown, if regulated product?

Astroturfing Cannabis Issues Under Brexit Colors?

No matter the real versus stated intent of the instigators of the Gibson case, or the eventual outcome of such litigation, there is no doubt that cannabis is being brought into larger political debates. And further, no surprise, “patient access” is an issue just as ripe for “issue manipulation” and astroturfing as anything else.

“Strategic” if not “crowdfunded” cause or tactical lawsuits are another form of this technique.

That foreign cannabis money is already in the room is also no surprise. The British press was alight with stories during June of the amount of money contributed to the CDPR Group from Canadian sources.

Seen within the context of Brexit itself, this is disturbing locally.There are other issues involved in this kind of challenge to the law.

Not to mention the fact that in May, none other than Arron Banks, the self-styled backer of the Leave Campaign, decided, suddenly, to throw his hat into the CBD oil ring on Twitter. Not to mention repeated the same information repeatedly, including his $4 million investment into the space during the following months so far. Plus, of course, wildly optimistic valuations of the U.S. market.

Suing For Patient Justice Or A Backdoor For Canadian and Other Corporate Interests?

There are other issues involved in this kind of challenge to the law.

The first is that in the British case this is actually not a constitutional case per se, but a human rights one. See the problems that those who are trying to define the British constitution right now on other matters (see Brexit) are running into.

The second is that while the patient in question in this case (Ms. Gibson) is undoubtedly relieved at the prospect of a legal defence for growing her own medication in the face of insurmountable cost, on the “positive” side, her case is unlikely to do much more than make impoverished patients fight NHS paperwork if they can find a doctor. See Germany, as a prime example.This lawsuit, in other words, no matter how it might get one woman out of a terrible legal situation, is not necessarily “pro-patient.”

But what it will do is something else. It may well remove the current widespread prohibition on the harvesting of cannabis flower in the UK. And while patients would face again being moved into the slow lane of NHS approvals (with lots of fights over efficacy looming and still unsolved), corporate growers and processors if not importers, already investing millions into such efforts across the UK and Ireland, benefit.

At the exclusion, also, as has been the case in Germany, of local producers who are not already large corporate interests or existing farms.

This lawsuit, in other words, no matter how it might get one woman out of a terrible legal situation, is not necessarily “pro-patient.” It also may well do everything to frustrate, slow down and further complicate medical access for those at the end of the chain, while only opening up “investment opportunities” for large companies and well-heeled interests who have nothing but profit, if not the destruction of the NHS in mind.

Luxembourg Announces Plans For Two Year Transition To Recreational Use

By Marguerite Arnold
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For those who have been watching, Luxembourg has played an inordinately influential role on the entire cannabis discussion in Europe for the past year.

This summer, the country announced that it had plans to implement recreational use (for residents only) within two years.

Last summer, the country not only changed its medical use policy as the Deutsche Börse tried to halt the clearances of cannabis trades made in Germany (Luxembourg is the place where the stock trades clear), but set a five-year mandate and timeframe as well.

This new announcement certainly is an attempt to signal at any rate, that the government is not going to run out the clock. But, realistically, with the extra six months already in front of the start date necessary to enshrine the legislation, plus whatever complications arise after that, Luxembourg could initiate its market on January 1, 2022.

Or, as is more likely, it could not. Including rolling delays caused by everything from EU objection and internal logistical hurdles of other kinds to lack of access to product.

Refom Redux?

Will Luxembourg be the “Colorado of Europe?” Probably not.

Will Luxembourg “be the next Canada?” Probably not either. However it is also worth noting that legislators and lawmakers from Luxembourg have drawn recent inspiration via numerous fact finding trips to Canada of late.

It is also worth remembering that even Canada’s great, green, “well-oiled” cannabis machine delayed its recreational market start by months last year. And that was a scenario already a generation in the making.

Further, as some would argue this summer, certainly post CannTrust, the relative “speed” with which Canada embraced its recreational market is again being criticized for not only being precipitous but a direct cause of problems in financial compliance and tracking.

The lack of regulatory muster, in other words, that even allowed a CannTrust to happen, will not fly in Europe. Certainly not in a country where regulations, including that of the European kind, are decided upon (the other center of EU regmaking is of course Brussels).

For that reason, no matter how exciting the news to an industry fighting an uphill battle on medical efficacy, there is plenty of room to temper enthusiasm.

Luxembourg is not going to be “just like” anywhere seen so far. The needle has moved. And the conversation is morphing if not moving on.

One of the most intriguing aspects of all of this, of course, is how insurers will treat the entire discussion.

Holland Round 2?

Here is what Luxembourg also won’t be. A new tourist mecca for out of towners. At least according to the current discussion. How the government will prevent that, is of course unclear. The same grey areas exist in the law behind Barcelona’s social clubs. The Dutch have tried for most of this decade to discourage this – and have largely failed.

What it very well might be, however, is a catalyst for change.  A before and after moment if you will.

european union statesThe Swiss are moving ahead with recreational and medical trials. The British, whatever their relationship with the world after Halloween, are too.

Luxembourg, whatever it ends up being, in other words, is well timed, if nothing else, to be a reference point if not conversation starter about real reform.

Including of course, medical impact, if not, beyond that, efficacy.

Here is where Luxembourg might in fact, be much closer to the Dutch experiment than any other place. Despite the fact the country has had a coffee shop culture for over 30 years, and Dutch medical cannabis is exported to countries all over the world, here is what is missing in Holland: Medical health insurance coverage for patients. In fact, Dutch insurers, en masse, stopped reimbursing the drug as soon as Germany changed its insurance rules in March 2017.

If that is on the agenda for Luxembourg, in other words, no matter how exciting a timeline for recreational is anywhere in Europe, this will be a pyrrhic victory indeed.

Who’s Afraid of Biotech Institute LLC?

By Brett Schuman, Daniel Mello, Nicholas Costanza, Olivia Uitto
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While cannabis patenting activity is still in its infancy, relatively speaking, a lot has been written already about the cannabis patenting activity of an entity called Biotech Institute LLC (BI) of Westlake Village, California.1 BI is building a sizable portfolio of utility and plant patents covering various aspects of the cannabis plant. According to some commentators, BI’s patents have “many in the cannabis industry concerned.”2

But how concerned should members of the cannabis industry really be about BI’s patents? Generally, patents are susceptible to numerous challenges in multiple fora. From 2012-2016, approximately 80% of challenged patents were invalidated by the Patent Trial and Appeal Board (PTAB) each year.3 The PTAB was created in 2011 by the Leahy-Smith America Invents Act, 35 U.S.C. § 6, to create a process for eliminating improvidently issued patents. And the statistics suggest that the process may be working as intended by Congress.

BI may be building its portfolio by taking advantage of some unique challenges in the cannabis patenting area. First, even though cannabis has been cultivated and consumed by humans for thousands of years, there is a relative lack of published prior art available to patentees and patent examiners examining patent applications.4 Second, patent examiners are not as familiar with cannabis patent applications as they may be with other types of patent applications.

So, we examined carefully BI’s earliest and arguably broadest utility patent, U.S. Patent No. 9,095,554, and concluded that maybe the cannabis industry need not be so concerned about this and some of BI’s other utility patents. Although the ’554 patent is lengthy – 247 columns of text and over an inch thick when printed in hardcopy – there appears to be little if any novelty to the claimed invention. Alternatively, the patent appears to be obvious in light of the available prior art.

In a patent, the claims define the metes and bounds of the patentee’s intellectual property. Claim 1 of the ’554 patent recites:

  1. A hybrid cannabis plant, or an asexual clone of said hybrid cannabis plant, or a plant part, tissue, or cell thereof, which produces a female inflorescence, said inflorescence comprising:
  1. a BT/BD genotype;
  2. a terpene profile in which myrcene is not the dominant terpene;
  3. a terpene oil content greater than about 1.0% by weight; and
  4. a CBD content greater than 3%;
  5. wherein the terpene profile is defined as terpinolene, alpha phelladrene, beta ocimene, careen, limonene, gamma terpinene, alpha pinene, alpha terpinene, beta pinene, fenchol, camphene, alpha terpineol, alpha humulene, beta caryophyllene, linalool, cary oxide, and myrcene, and wherein the terpene oil content is determined by the additive content of the terpenes in the terpene profile; and wherein the terpene contents and CBD content are measured by gas chromatography-flame ionization detection (GC-FID) and calculated based on dry weight of the inflorescence; wherein a representative sample of seed producing said plants has been deposited under NCIMB Nos. 42246, 42247, 42248, 42249, 42250, and 42254.

While claim elements define the metes and bounds of the invention, typically only certain claim elements are intended to distinguish the claimed invention from the prior art. Other claim elements merely help to describe the invention. For example, the preamble in the ‘554 patent, or the part of the claim before subpart (a), describes the flowering part of the cannabis plant. This is not intended to describe anything novel about the claimed invention, but rather it simply describes the part of the cannabis plant that is relevant to the invention.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

Before the priority date of the ’554 patent, it was known in the prior art that BT/Bgenotypes produce nearly equal amounts of THC and CBD (both are dominant; one is not recessive).5 Thus, it is not unexpected to have a CBD content greater than 3% in a genotype that can produce large amounts of CBD (known references state as high as 21% in CBD-dominant strains and 3%-15% in BT/Bgenotypes).6 Further, it was known in the prior art that terpenes generally constitute more than 1.0% percent by weight (usually between 2-4%) of the flower.7

As these databases continue to grow and studies of cannabis are publicly disclosed, cannabis patents like BI’s ’554 patent will become more and more susceptible to patent challenges and invalidation.Claim element (b), reciting a terpene profile in which myrcene is not the dominant terpene, appears to be one of – if not the only – claimed element of novelty of the BI invention. Terpenes are aromatic compounds produced in plants, and the cannabis plant has more than 100 different terpenes. Claim element (e) simply lists the most abundant terpenes in the cannabis plant. A majority of cannabis strains express high levels of myrcene; however, there are known prior art strains that express high levels of other terpenes, such as caryophyllene, limonene, pinene, etc. Additionally, it is well known in the art that terpenes have different therapeutic effects. For example, pinene and linalool are known to have antidepressant activity.8 Thus, a prior disclosure of a BT/Bgenotype that has a terpene profile where myrcene is not the dominate terpene very likely invalidates this claim. And even assuming there is any novelty to a high-CBD strain where myrcene is not the dominant terpene, there is a motivation to breed for a dominant terpene besides myrcene.

Because cannabis has been and remains a Schedule I drug under the Controlled Substances Act, previously known and used strains generally have not been chemically characterized, studied, researched, and the subject of publications that can be used as prior art for purposes of challenging cannabis patents. But that is changing. For example, the Open Cannabis Project (OCP) attempted to characterize and publish chemical details of cannabis plants. Even though OCP closed as of May 31, 2019, is database is still publicly available. Another example is CANNA, a non-profit initiative of the CANNA Espana Fertilizantes SL company, which carries out studies and conducts research on cannabis and its active compounds.9 In one study,10 CANNA found that some strains have terpene profiles where myrcene is not the dominant terpene, which could be relevant to a novelty-based or obviousness challenge to claim 1 of the ‘554 patent. As these databases continue to grow and studies of cannabis are publicly disclosed, cannabis patents like BI’s ’554 patent will become more and more susceptible to patent challenges and invalidation.


References

  1. See, e.g.,Amanda Chicago Lewis, The Great Pot Monopoly Mystery, GQ (August 23, 2017), https://www.gq.com/story/the-great-pot-monopoly-mystery;  Brian Wroblewski, Utility Patents on Marijuana? Who is BioTech Institute LLC?, The National Marijuana News, https://thenationalmarijuananews.com/utility-patents-marijuana-biotech-institute-llc/; Eric Sandy, Biotech Institute Has Applied for Patents on 8 Individual Cannabis Cultivars, Cannabis Business Times(June 24, 2019), https://www.cannabisbusinesstimes.com/article/biotech-institute-cannabis-patent-applications/.
  2. Nicole Grimm, George Lyons III, and Brett Scott, Biotech Institute’s Growing Patent Portfolio — U.S. Patent No. 9,095,554 and the Path Forward, JD Supra (November 17, 2017), https://www.jdsupra.com/legalnews/biotech-institute-s-growing-patent-17433/.
  3. World Intellectual Property Organization, An overview of patent litigation systems across jurisdictions,World Intellectual Property Indicators 2018, https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2018-chapter1.pdf.
  4. Brett Schuman et al., Emerging Patent Issues In The Cannabis Industry, Law360(February 20, 2018), https://www.goodwinlaw.com/-/media/files/publications/emerging-patent-issues-in-the-cannabis-industry.pdf.
  5. Chandra, et al. Cannabis sativa L. – Botany and Biotechnology, pages 142-144, Springer, 2017 (citing de Meijer, Genetics163: 225-346 (2003)). See alsoMolecular Breeding (2006) 17:257-268, doi/10.1007/s11032-005-5681-x. 
  6. American Journal of Botany 91(6): 966:975 (2004). doi.org/10.3732/ajb.91.6.966; See e.g., Jikomes, Peak THC: The Limits on THC and CBD Levels for Cannabis Strainshttps://www.leafly.com/news/science-tech/peak-thc-cbd-levels-for-cannabis-strains.
  7. PLoS One. 2017; 12(3): e0173911. doi: 10.1371/journal.pone.0173911.  See also, Fischedick J. T., Hazekamp A., Erkelens T., Choi Y. H., Verpoorte R. (2010). Phytochemistry712058–2073 (2010). 10.1016/j.phytochem.2010.10.001
  8. J Ethnopharmacol. 2012 Sep 28;143(2):673-9. doi: 10.1016/j.jep.2012.07.026. Epub 2012 Jul 31.
  9. Retrieved from https://www.fundacion-canna.es/en/about-us, on August 6, 2019.
  10. Retrieved from https://www.fundacion-canna.es/en/variations-terpene-profiles-different-strains-cannabis-sativa-l, on August 6, 2019.