Tag Archives: consumer

December 19, 2018

5 Compliance Reporting and Notification Requirements That You May Not Know About

By Anne Conn

New cannabis businesses must demonstrate proof of compliance to myriad laws and regulations as part of the initial license application process. And once a license is issued, it is easy to prioritize day-to-day business operations over ongoing compliance reporting requirements especially when sales are booming and compliance requirements are multi-layered, vague or obscured in non-cannabis specific programs and regulations.

But seemingly benign neglect of some minor reporting requirements can have major consequences to new and established businesses alike.

This article explores five compliance reporting requirements that cannabis businesses may not know about, and suggests ways to maintain a strong compliance posture across all regulatory agencies.

Pesticide Reporting

All licensed growers are required to prove compliance to state pesticide usage regulations. However, expectations on how and when to provide that proof of compliance vary greatly from state to state. Furthermore, the responsibility of education and enforcement for pesticide usage in the cannabis industry often falls to non-cannabis specific agencies such as state departments of agriculture or environmental compliance.

For example in California, cultivators must report detailed monthly pesticide use reports via the State’s Agriculture Weights/Measures Division reporting portal, while Washington State regulators simply expect cultivators to keep records locally on site and provide them when requested.

With so many places to look, the best place to start your pesticide reporting requirement search is with your local agriculture department. They should be able to answer your questions and provide you with a list of resources to help you better understand how to comply with state pesticide usage and reporting regulations.

Hazardous Materials Reporting

Like pesticide use and reporting, hazardous waste handling and reporting requirements are complex and vary state to state. In fact, there may even be nuanced variations in handling requirements at the county level. The best approach to ensure compliance with a complicated set of regulations is to start by consulting your local county fire department. They will have the most specific set of rules for hazardous materials handling and reporting and can help you develop a site-specific compliance plan.

Two OSHA reporting requirements

Depending on how your cannabis business is classified, you may be required to keep injury and illness incident records and provide reports to the Occupational Health and Safety Organization (OSHA) for specific time periods.

Contact your business insurance provider’s loss prevention representative for more information about how your business is classified, which specific OSHA reporting requirements apply to you, and how to stay in compliance with applicable OSHA requirements.

Click here to learn more about how OSHA organizes reporting requirements by business type.

A note of caution here: OSHA non-compliance penalties can be steep and “I didn’t know I was supposed to do that” is not an acceptable defense when it comes to explaining any OSHA violations.

Labor Law Notification Requirements

Federal labor law requires that you notify employees of their rights. At a minimum, you post information regarding wages and hours, child labor, unemployment benefits, safety and health/workers’ compensation and discrimination in a conspicuous place where they are easily visible to all employees. Some states requires additional information be posted in a similar manner, so it’s important to be sure that those notices are posted along with the federal requirements.

This is a simple, yet easily overlooked, requirement for all businesses, regardless of industry. Ask your insurance provider for a copy of the notice to print and post right away (if you have not already) for a quick compliance win!

These five reporting and notification requirements may seem tedious, overly complicated and burdensome in the face of day-to-day business operations, but compliance to these requirements not only protects your business and employees, it also enhances the overall reputation of the industry. The good news is that regulatory agencies welcome a proactive approach and are happy to work with cannabis businesses to provide guidance and information for developing compliance plans.

December 18, 2018

Product Labeling Law: A Primer and a Warning for California Cannabis Executives

By Jonathan C. Sandler

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What do you get when you combine a Schedule 1 federally controlled substance with a plethora of food, beverage and cosmetic entrepreneurs marketing new products to inexperienced users and then place that combustible combination into California’s plaintiff-friendly legal environment?

A lot of rich plaintiffs’ attorneys.

California continues to be a favored plaintiffs’ lawyers’ venue for filing consumer-related lawsuits against food and cosmetic companies. These lawsuits result in tens of millions in settlements each year and hundreds of millions in judgments. Staying current on statutes and trends is critical to doing business in California and cannabis companies are no exception.

While the Food and Drug Administration (“FDA”) has provided very little guidance on how cannabis products should be labeled, a lack of specific regulations does not mean that there are no applicable labeling requirements for cannabis. This is particularly true in states like California that have a multitude of statutes designed to protect consumers from false or misleading advertising and labeling. Below includes a brief list to help guide companies’ labelling processes:

Look to available guidance for the relevant industries. For example, food labeling of cannabis products still requires compliance with other nutritional labeling statutes. The same goes for supplements and cosmetics. The Fair Packaging and Label Act (“FPLA”) regulates labeling of all “consumer commodities” as to net contents, product identity, and manufacturer’s, packer’s or distributor’s name and location.
Consider the intended use of the product as well as the directions. For example, is the product meant to be consumed all at once or should it be consumed over a period of time? Depending upon the product, this question can affect whether compliance with the FDA dietary supplements guidance is required or whether the Food Drug and Cosmetic Act applies.
Consider your supply chains. This can be one of the most difficult aspects for cannabis companies that are looking to expand, but need more supply. However, keeping track of ingredients is a critical aspect to being able to defend against lawsuits. In the past, cannabis companies have been sued because they have expanded their suppliers without assuring consistency in the products and then combining inconsistent ingredients into one common product that is now mislabeled. While the Bureau of Cannabis Control testing requirements should help with some of the cannabis information, all ingredients need to be tracked and the final products tested.
Cannabis companies must label their products with applicable state laws. For example, the California Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Proposition 65 (“Prop. 65”)is being used by the plaintiffs’ bar as a basis to sue cannabis companies.
- Prop. 65 is a statewide initiative that regulates companies that make or sell their products in California in two ways: (1) it requires companies whose products contain certain levels of chemicals to provide clear and reasonable warnings. Prop. 65 does not ban or restrict the sale of chemicals on the list or their inclusion in products, but it requires warnings if the listed chemicals are included; and (2) It prevents companies from discharging these chemicals into the state’s water supply.
- All companies doing business in California and all products manufactured or sold in California are subject to Prop. 65 with three exceptions: (1) the company has fewer than 10 employees, (2) government agencies, or (3) the products contain less than a threshold amount of the chemicals.
- Penalties for violations can be staggering. Prop. 65 is enforced both by the California Attorney General and private lawsuits on behalf of the California Attorney General. The potential penalties for violations of Prop. 65 include a fine of up to $2,500 per day. Additionally, one of the largest drivers of litigation is that the private enforcers (plaintiffs’ bar) can recover their attorneys’ fees. The total amount paid in settlements in 2017 was over $25 million and of the more than $18 million in judgments, $13 million was attributed to attorneys’ fees.
The California Consumers Legal Remedies Act (“CLRA”) is another California statute that is intended to protect consumers from false advertising and other unfair business practices. The CLRA allows consumers to bring individual or California class action lawsuits to recover damages and enjoin the prohibited practices. The statute also allows a prevailing consumer to recover attorneys’ fees and costs. Cannabis companies need to be mindful of their representations related to their products. California courts are filled with cases involving terms like “natural” or “healthy” or “high performing.”

Product labeling, mottos and advertisements may seem straightforward, but they form the basis for hundreds of lawsuits filed every year throughout the country, and especially in California. At this stage of trying to get one’s product out the door and to the consumer, it is tempting to move quickly. However, the importance of sound research, strategy and consulting an experienced team to ensure compliance and avoid costly mistakes is critical.

December 17, 2018

Aphria Fights Shortseller Allegations Of Insider Double Dealing

By Marguerite Arnold

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Two reports published by short selling stock firm Quintessential Capital Management and forensic investor research firm Hindenburg Research on December 3, charges that Canadian LP Aphria, has bought overinflated assets in Latin America and in Florida from shell companies owned by company insiders. Added to the lingering controversy is the purchase of the German Nuuvera this spring (a company also partly owned by Aphria brass), and the reports went over like a bombshell. Globally.

However, the story has already spread far beyond one company. And the response in the market has rocked the industry for most of December.

Aphria’s shares tanked, and dragged everyone down with them. Several class action law firms in the United States began promptly looking for aggrieved shareholders.

The response by the firm? A promise of an immediate line-by-line rebuttal, due out in the second week of December. So far, however, despite news of an additional Aphria purchase in Paraguay, the rebuttal report has not been issued.

Why Is This So Damaging? Or Is It?

Aphria’s stocks promptly took a dive that halved their value although they began to recover after Aphria management appointed an independent third party firm to review the claims.

Worse, however, the entire industry saw a hit too. This report affected investor confidence across the industry. And although the hit appears to be temporary, the unfolding scenario is a perfect example of why volatility in the market is scaring away not only more conservative female retail investors but larger institutional ones that the industry is now courting assiduously as medical cannabis begins to be integrated into health systems particularly in Europe.

Why?

Bottom line? As the big cannabis companies are listing on the larger, foreign exchanges, including the NYSE and Deutsche Börse, the scrutiny is getting more direct and granular.Despite the stratospheric market caps of all the major Canadian LPs in particular, not to mention enormous expenditures for the last several years (on property and other acquisitions), the revenue picture, as other stock analysts and publications such as the normally neutral Motley Fool recently pointed out, at least so far does not justify the same. Bulk sales to a hospital, establishing a cultivation or processing facility or even getting import licenses may set one up to do business however, but it is not an automatic route to ongoing and expanding sales. And that is the key to high valuations that are rock solid and beyond the scope of such allegations.

For the moment, that pressure, particularly in global medical markets, is falling first on patients if not doctors. Not the industry.

That said, this has been a major building year. Recreational cannabis has just become legal in Canada. And in Europe, reform is still in the process of happening.

It is also a charge if not frustration that has been growing, however, against all the public cannabis companies as valuations shoot into the stratosphere. Forensic and investigative firms, particularly in Europe and the United States have been focusing on the industry for close to a year now. As a result even when firms successfully rebut charges of fraud, they are looking at different valuations from analysts at least in the short term.

Bottom line? As the big cannabis companies are listing on the larger, foreign exchanges, including the NYSE and Deutsche Börse, the scrutiny is getting more direct and granular.

Are “Short Seller” Reports Unbiased?

For all of the focus on short seller reports in this industry, however, no matter the accuracy of some of their claims, here is the next issue:

Short sellers make money by betting against not only individual firms but the industry itself. They benefit financially in other words, from volatility in the market and arbitraging even small changes in price. Even if their reports cause the same.

Such reports as a result are also not “unbiased” as industry coverage in the press is supposed to be, no matter how much more time sometimes goes into the reporting and preparation of the same.

And no matter that this industry is now going into its fifth year, there is still lingering scepticism that, in the case of Aphria, has so far not only fallen on the individual firm in question, but then rebounds across the industry, unfairly hurting all firms in this space.

December 11, 2018

Phenova Gets Accreditation For Cannabis Proficiency Testing

By Aaron G. Biros

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Phenova, Inc., a proficiency testing products and reference materials provider based in Golden, Colorado, works with labs and regulatory bodies to develop proficiency testing (PT) programs. According to a press release sent out by the American Association for Laboratory Accreditation (A2LA), Phenova is A2LA’s first ISO/IEC 17043 accredited PT provider for the cannabis marketplace.

According to Ty Garber, director of new business development for the cannabis and food and beverage markets at Phenova, they have been working with A2LA for over a decade in other industries, but the cannabis testing industry is a huge new market for them. “Our Cannabis Proficiency Testing products and services are experiencing high demand across North America and we are fortunate to offer our expertise in proficiency testing to client laboratories and regulatory agencies in their joint efforts to ensure cannabis product quality and safety,” says Garber. “By working with the laboratories and stakeholder agencies, we have been able to develop and operate Proficiency Testing Programs based on real marijuana matrices, especially where the matrix creates specific analytical challenges. This approach has proven to be very beneficial for everyone involved, and we are working diligently to expand these efforts.”

Trace McInturff, senior director of accreditation services at A2LA, says this could help fill a serious need for conformity assessments in accredited cannabis labs. “A2LA is excited to announce the expansion of Phenova’s existing ISO/IEC 17043 Proficiency Testing Provider scope of accreditation to become the first A2LA accredited Proficiency Testing Provider for cannabis,” says McInturff. “This milestone adds to the positive historical relationship between Phenova and A2LA that dates back to 2005 when A2LA implemented a new TNI SSAS program for Proficiency Testing Providers and A2LA performed one of the first assessments of its kind at Phenova.” McInturff also says that A2LA has been instrumental in establishing the initial ILAC Proficiency Testing Provider accreditation requirements which ultimately became the basis for ISO/IEC 17043.

In addition to the “real marijuana matrix PT programs” that Phenova offers in certain states and countries where legal, they also offer alternative PT standards for labs that have obtained or are working on obtaining ISO/IEC 17025 accreditation.

December 11, 2018

Soapbox

Dishonest Potency Testing In Oregon Remains A Problem

By Kelly O’Connor

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Oregon, we have a problem.

Anyone with a search engine can piece together how much THC certain strains produce and what their characteristics are. Oh wait- there’s an app for that… or dozens, I lose count these days.

Nefarious lab results are rampant in our communityLet’s take one of my favorites, Dutch Treat; relaxing, piney and sweet with a standard production of 18-25% THC, according to three different reviews online. So, did I raise an eyebrow when I saw Dutch Treat on Oregon shelves labeled at 30% THC? Did I take it in to an independent, accredited lab and have it tested for accuracy? You bet your inflated potency results I did! The results? Disappointing.

Nefarious lab results are rampant in our community; it is hurting every participant in our industry affected by the trade, commerce and consumption of recreational cannabis.

“I have had labs ask me what I want my potency numbers to look like and make an offer,” says David Todd, owner and operations manager of Glasco Farms, a craft cannabis producer in central Oregon. “It’s insane- I want to stand behind my product and show through scientific fact that I produce a superior flower.”

But without enforcement of lab practice standards, producers are being pressured to play dirty. In her third year cultivating at a two-tier recreational cannabis farm, a producer who wished to remain anonymous sent me an email about the pressures she is up against to produce high THC strains:

“The only sure way to get my product on the shelf at a profitable price is with THC 25% or above. Not a lot of strains have that potential, but the market has plenty with 28% to 32% floating around so I have to go with the same labs as the rest of the independent farmers to get the best numbers I can. The lab I use … return(s) good numbers.”

Those “good numbers,” aka high THC %, are the driving force of sales. A strain tests at 20% THC and it sells for $1,000/lb. Then it tests at 25% THC, and sells for $1300/lb. You produce cannabis for sale- this is your business. And labs are telling you that they can manipulate samples and reports to make you more money. Everyone else is doing it. If you don’t, your product isn’t “good enough” to sell. What do you do?Labs should operate ethically.

It’s a vicious cycle perpetuated by lies, lack of enforcement resources, coercion and undereducation. We are all responsible. Yet, ask who the source of the problem is and everyone points fingers across the circle.

The consumers are uneducated about cannabis and only focus on THC. The dispensaries and budtenders should be educating them. Producers should take a stand and use an honest lab. Labs should operate ethically.

I repeat: Oregon, we have a problem.

It’s time to stop living in a land where Dutch Treat is hitting 30% THC. It’s time for everyone to demand auditing and ethics.

Laws have been set forth on how to sample, prep, test and report analyses for cannabis to ensure fair commerce, consumer health and public safety. But there’s a clear need to blind test the different labs, and for unbiased, third-party research and development.

As federal eyes turn to the Oregon to investigate black market activity, regulatory bodies are tightening their grip on licensees to maintain legal validity and avoid shut down.

The time to demand change and integrity is now.The crack-down began on August 23, 2018, when the OLCC investigated several prominent producers’ practices. Black market distribution incurred the harshest penalty; the OLCC revoked their wholesale license due to multiple violations.

“We want good compliant, law-abiding partners as OLCC marijuana licensees,” says Paul Rosenbaum, OLCC Commission Chair. “We know the cannabis industry is watching what we’re doing, and believe me, we’ve taken notice. We’re going to find a way to strengthen our action against rule breakers, using what we already have on the books, and if need be working with the legislature to tighten things up further.”

Trends in METRC data lay the foundation for truth, and it’s time to put it to use. “The Cannabis Tracking System worked as it should enabling us to uncover this suspicious activity,” says Steven Marks, OLCC Executive Director. “When we detect possible illegal activity, we need to take immediate steps …”

Potency fraud might not be at the top of the list for investigation, but labs and producers are breaking the law, and there will be consequences. ORELAP and OLCC have the right to investigate and revoke licenses of labs that are falsifying data and consumers can file claims with the Department of Justice.

The time to demand change and integrity is now.

December 10, 2018

A Busy 4th Quarter Heralds An Amazing Cannabis Year Globally

By Marguerite Arnold

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In retrospect, when the cannabis history books are written, 2018 may come to represent as much of a watershed year as 2014. Much has happened this year, culminating in a situation, much like at the end of the first year of modernization, where great victories have been achieved. But a long road to true acceptance and even basic and much broader medical use still beckons. Even if the new center left ruling coalition party in Luxembourg has just announced that recreational cannabis reform is on its agenda for the next five years.

This is a quick and by no means a full review of both fourth quarter activity globally, and how that ties into gains for the year.

Canada Legalizes Rec Sales

Beyond all the other banner headlines, October 17 will go down in history as the day that Canada switched the game.

Will 1017 replace 420? Not likely. But it is significant nonetheless.

What does this mean for the rest of the industry (besides international border checks and lifetime bans for Canadian executives and presumably others traveling into the U.S. to cannabis industry conferences at present)? For starters, a well-capitalized, public industry which is building infrastructure domestically and overseas like it is going out of style.

This is important for several reasons, starting with the fact that the big Canadian LPs are clearly not counting on supplying Europe from Canada for much longer. Why? The big European grows that were set up last year are starting to come online.

So Does California…

And other significant U.S. states (see Massachusetts this month and Michigan) are following suit. However the big issue, as clearly seen at least from Canada and Europe, is there is no federal reform in sight. That opens up a raft of big complications that so far, most U.S. firms have not been able to broach. That said, this situation is starting to change this fall, with two U.S. firms entering both Greece and Denmark, but in general, a big issue. Canadian firms are still trying to figure out how to both utilize the public markets in the U.S. without getting caught in detention when crossing the border.the U.S. is continuing to be a popular place to go public for Canadian firms

Regardless, the U.S. is continuing to be a popular place to go public for Canadian firms, who are also looking for access to global capital markets and institutional capital. Right now, Frankfurt is off limits for many of them. See the Deutsche Börse. That said, with the rules already changing in Luxembourg, one firm has already set its sights for going public in Frankfurt next spring.

The German Situation

Like it or not, the situation in Germany is key to the entire EU and increasingly a global enchilada, and no matter where companies are basing their cultivation sites at this point, there are two big gems in the European cannabis crown. Deutschland is the first one because of the size of the economy, the intact nature of public healthcare and the fact that the German government decided to mandate that sick people could get medical cannabis reimbursed by their public health insurer.

Ironies abound, however. In the last quarter, it is clear from the actions of the Deutsche Börse that Frankfurt is not a popular place to go public (Aurora went public on the NYSE instead in late October).

The cultivation bid was supposed to come due, but it is now likely that even the December deadline might get pushed back again, interminably at least until April when the most recent lawsuit against the entire process is due to be argued.

In the meantime, there is a lot of activity in the German market even if it does not make the news. Distribution licenses are being granted all over the country (skip Berlin as there are already too many pending). And established distributors themselves, particularly specialty distributors, are increasingly finding themselves the target of foreign buyout inquiries.

There are also increasing rumours that the German government may change its import rules to allow firms outside of Canada and Holland to import into the country.

The German market, in other words, continues to cook, but most of it is under the surface a year and a half after legalization, to figure things out.

The UK

Next to October 17, the other date of note this fall of course was November 1. The Limeys may not have figured out Brexit (yet). But cannabis for medical use somehow made it through the national political fray this summer. Hospitalized children are compelling.

Now the question is how do other patients obtain the same? The NHS is in dire straits. Patients must still find a way to import the drug (and pay for it). And with newly imposed ex-im complications coming Britain’s way soon, there is a big question as to where and how exactly, patients are supposed to import (and from where). All looming and unanswered questions at the moment.

But hey, British doctors can now write prescriptions for cannabis.

Greece and Malta

Greece and Malta are both making waves across Europe right now. Why?

The licensing process that has continued into the fall is clearly opening up inexpensive cultivation in interesting places. Greece is growing. Malta, an island nation that is strategically placed to rival Greece for Mediterranean exports across Europe is still formalizing the licensing process, but don’t expect that to last for long.

Look for some smart so and so to figure out how to beat Brexit and import from Malta through Ireland. It’s coming. And odds are, it’s going to be Malta, if not the Isle of Mann that is going to clinch this intriguing if not historical cultivation and trade route.

Poland

Just as October came to a close, the Polish government announced the beginning of medical imports. Aurora, which went public the same week in New York, also announced its first shipment to the country – to a hospital complex.

Let the ex-im and distribution games begin!

It is widely expected that the Polish market will follow in German footsteps. Including putting its cannabis cultivation bid online whenever the Polish government decides to cultivate medical supplies domestically. The country just finalized its online tender bid system in general.

Does anyone know the expression for “pending cannabis bid lawsuit in Warsaw” in Polish?

Notable Mentions

While it gets little press outside the country, the Danish four year experiment is reaching the end of its first year. While this market was first pioneered by Canopy/Spectrum, it was rapidly followed by both Canadian LPs and others entering the market. Latest entrant this quarter? A tantalizingly American-British conglomerate called Indiva Ltd. as of November 21.

Italy is also starting to establish a presence in interesting ways as multiple firms begin to establish cultivation there.

There are also increasing rumours and reports that Israel might finally be able to start exporting next year. That will also disrupt the current ecosystem.

And most of all, beyond a country-by-country advance, the World Health Organization meeting in early November and in the early part of December is likely to keep the pressure on at a global level for rescheduling and descheduling the cannabis plant.

This in turn, is likely to set the stage as well as the timeline for rec use in Luxembourg. Look for developments soon.

A busy time indeed. Not to mention a quarter to end a very intriguing year, and certainly destined to sow returns for years to come, globally.

December 10, 2018

Luxembourg’s New Ruling Coalition To Legalize Recreational Cannabis

By Marguerite Arnold

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Stand aside Canada! Events are moving in a strategically interesting way in Europe. And for once it is not news of the German bid.

In this case, implementation of the decision in Luxembourg would actually have two immediate effects.What, where, when? Luxembourg’s new center-left coalition of the Greens, Socialists and more traditional Democrats have put recreational cannabis on their ruling mandate and five-year agenda as of November 29, 2018.

In the comments of the same at the press conference held last week, the sentiments were pretty much of one tenor: “It’s way overdue.”

What does that mean, however, for the rest of the conversation across the continent?

Luxembourg: The First Recreational “State” Market In Europe?

While local advocates are quick to say that their ambition will make them the first EU country to completely legalize recreational cannabis, this is mostly true, but not entirely.

As much as it is fashionable these days to diss Holland, the fact of the matter is that the Dutch pioneered just about everything about the modern movement except clear cut regulation. Coffeeshop envy being what it is, however, it is true that the historical marker of the Dutch market was grey areas. That, however, has been in shifting territory for the last four to five years however. Hard as it is to believe that in just 2014 the Cannabis Cup held its last expo in Amsterdam. How the world has changed since then!

There is also this fact: Switzerland (true not an EU country but just next door geographically), is also poised to use this excuse to make its next move to fully leaded THC. The country has seen a sharp uptick in the consumer, OTC CBD market over the last two years. So much so that foreign (read American and Canadian in particular) enterprises are now looking to Switzerland as one of the more interesting “semi-EU” entry strategies at present. Taxes on a highly profitable industry are also in the public discussion. Adding a bit of THC to the mix, in other words, is likely to come fast in other places too.

Will This Move The Needle In Other Places?

The answer to that question is also, undeniably, yes. How fast that will happen in individual countries across Europe is another discussion. See France, which is now the largest member of the EU to have so far successfully ducked the cannabis question except for some basic decrim ideas that the now embattled French President Emmanuel Macron might, finally, put some enthusiasm into backing.

This could also certainly galvanize the UK. One way or the other, to stay or leave the EU itself. Full recreational won’t be in the cards, however, for quite some time.

Sound incredible? See Brexit so far.it will create the first deliberately regulated recreational market in Europe.

Many other EU countries have also been chafing at the slow pace of reform. Even after basic medical use has occurred. See German advocates who long to follow both the U.S. and Canada, and at present are for the most part shut out of the medical cultivation process. They are simply being outbid by the large Canadians.

But how fast such reforms will come even in Luxembourg, not to mention have a knock on effect elsewhere, no matter how momentous, is still an undecided question.

What Is The Biggest Immediate Impact Going To Be?

As is usually the case in Europe, things are rarely as straightforward as one country deciding to do (or not do) something. In this case, implementation of the decision in Luxembourg would actually have two immediate effects.

One, it will create the first deliberately regulated recreational market in Europe. How fast that could actually roll out is up for debate, considering that the country only legalized medical use as of this summer. As Colorado, California and certainly Canada have proven in spades so far, recreational reform always need some kind of medical base to start with. And implementation of both kinds of markets always seems, at least so far, to carry litigation. Especially in young, untested markets. See the German bid, most recently, just across the border.

However here is the second, and far more intriguing reality that really may be key to the entire enchilada. The legality of cannabis in Luxembourg also has everything to do with the German public cannabis market. Namely, the German stock exchange will only allow Germans to clear stock purchases of publicly listed cannabis companies on the Deutsche Börse if they are in line with not only German cannabis law but also that in Luxembourg, where they actually clear. That was a big issue this summer, only rectified when Luxembourg first changed its medical law.

It also meant, as of this fall, that Aurora went public in New York, not Frankfurt.

In the future, however, after Luxembourg goes full recreational Monty, this will no longer be the case. This will already be tested next spring as another company hopes to go public here. And when that happens, although certainly not for the next several years, the entire discussion of recreational reform will fully and finally be in the European room.

December 3, 2018

The Ever-Pending German Cultivation Bid

By Marguerite Arnold

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It was supposed to be cut and dried. Change the law (after getting sued by patients). Eliminate “home grow” by the same. Set up a nice, neat, efficient sub-department of the German version of the FDA (or BfArM for short). Put the bid online, in an attempt to take the paperwork out of the whole process, and let it rip.

Done and dusted by last summer. Right? Wrong.

In fact, as of now, the second bid deadline has been extended to (at least) December 2018. There is already a pending lawsuit, which has pushed the deadline back this fall several times.

BfArM as usual, is sending out non-statements. They cannot comment. This is, again, a pending EU bid.

However, this is, as Germans at least are rapidly realizing, not just another bid. To begin with, there is never a normal first in this industry. And the highly bumpy road auf Deutsch is just a redo of industry realities in every other legalizing jurisdiction.

That the dramas involved are both Shakespearean and of a lesser kind is also part of the mix. Here, for our reader’s benefit, are the summaries of the acts:

The Story So Far

Cue the German Parliament. Change the law. Issue the tender. Get sued. And this is all before last summer was over. Generally speaking that was more or less Act I.

Act II, so far, has been the response. The government, along with BfArM have been engaged in a remarkable discussion in public that is already dramatic by German standards anyway.

enterprising entities are getting import licenses.First, a federal German court called out a fault by a federal agency, which was bad enough.

However, in what appears to be an ongoing act of defence in this very strange second act indeed, BfArM appears to be playing defence to prevent any more legal action. Notably, as the threat of a second lawsuit appeared this fall against the second bid and revised bid issuance, the agency just moved the deadline back, repeatedly. It is now set for some time in December, although industry rumours suggest that the agency will continue to move the goalposts back until after the court date next spring, if necessary.

That does extend the time for intermission. In the meantime, enterprising entities are getting import licenses.

The Major Drama

As in all of the greatest acts and periods of historical change, there are far greater currents that carry the main story line forward. The revolutionary rumbles surrounding cannabis legalization earlier in the decade in the United States have now been felt on a far greater, global scale. Politically, the right to take cannabis has been tied closely to states’ rights in the U.S. since the turn of the century.

Now in the second decade of all of this tumult, cannabis reform as global revolt echoes the zeitgeist of the times. The Donald is now in the second part of an already historically constitutionally convoluted time in the U.S. The U.K, potentially spurred by similar forces might appear to still be on the brink of Brexit. And the EU has begun to try to organize, both on an individual country basis as well as collectively, to deal with political populism.

Shifting regulation in Europe may be groovy, but from a public health perspective, there is much to prove.There is a great deal of political and economic discontent just about everywhere. Law suits, particularly against governments over issues as intransigent as cannabis, in other words, are a powerful tool right now for the disaffected just about everywhere. Not getting a license to grow cannabis and participate in a valuable, multi-billion dollar economy is a powerful grudge.

There is also, beyond this, the overarching flavour of a new trade agreement called CETA which specifically gives corporations the right to sue federal governments. Strange times indeed. Maybe that is why the German Minister of Health, Jens Spahn, just oversaw a historic lifting of the import quota of medical cannabis from Holland to Germany?

The Minor Drama

There are quite a few acts to this play too right now. Shifting regulation in Europe may be groovy, but from a public health perspective, there is much to prove. This is true of cannabis that is reimbursed by health insurers. It is also true of the novel food debates now springing up across the continent, particularly tied to isolates that have made their landing here.

There are also other issues in the mix that include the idea of an agriculturally based economy that might also damn the bid to a kind of strange purgatory for some time. Germans, despite their historical nostalgia for the same, are not an agrarian society. This is a culture ruled by tradition and science, for all the many conflicts that generates. This means the “cannabis as pharmaceutical” conversation is in the room is a part of the national DNA. No matter how much cheaper unprocessed flower might be.

The Players

There are two, broad camps here at the moment. The first are firms that made the cut the first time around (i.e. the large public Canadian LPs). The second is everyone else.

Nobody seriously expects more than one upstart German firm to make it through to getting a cultivation or processing license at this time. Those are widely expected to go to the major firms who have been in the front position from last spring, such as Canopy, Wayland, Aphria and the Dutch Bedrocan.

But those “upstart” Germans are furiously trying to deal themselves into the game. For some it means starting with CBD cultivation. For others it means slinging lawsuits. The last go around, one of the most serious litigants was not an agricultural producer, in fact, but a German wheelchair company.

In other words, while a bit more European in flavour, those who still clamour for a chance to cultivate are every bit as iconoclastic as those on in other climes.In the meantime, the import business is flourishing.

The Concluding Act?

There are several ways the current situation could end. The first is that the bid is concluded next April. The second is that it is not. In the meantime, the import business is flourishing. And, even better for the German government, the industry is not cultivating domestically.

In the eventuality that the bid is run off the road again next spring, in other words, the government is gamely lining up behind the idea that imports, at least for now, are the way to move into the next segue.

That said, at some point, tired of getting sued if not delayed, the German bid will conclude and German crops will be grown. For now, however, the safest conclusion for this particular drama looks to be 2019. But with plenty of room for a curtain call the year after that too.

November 30, 2018

Why Comply: A Closer Look At Traceability For California’s Cannabis Businesses

By Scott Hinerfeld

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Compliance should be top of mind for California’s cannabis operators. As the state works to implement regulations in the rapidly-growing cannabis industry, business owners need to be aware of what’s required to stay in good standing. As of January 1, 2019, that means reporting data to the state’s new track-and-trace system, Metrc.

What Is Track-and-Trace?

Track-and-Trace programs enable government oversight of commercial cannabis throughout its lifecycle—from “seed-to-sale.” Regulators can track a product’s journey from grower to processor to distributor to consumer, through data points captured at each step of the supply chain. Track-and-trace systems are practical for a number of reasons:

Taxation: ensure businesses pay their share of owed taxes
Quality assurance & safety: ensure cannabis products are safe to consume, coordinate product recalls
Account for cannabis grown vs. cannabis sold: curb inventory disappearing to the black market
Helps government get a macro view of the cannabis industry

The California Cannabis Track-and-Trace system (CCTT) gives state officials the ability to supervise and regulate the burgeoning cannabis industry in the golden state.

What Is Metrc?

Metrc is the platform California cannabis operators must use to record, track and maintain detailed information about their product for reporting. Metrc compiles this data and pushes it to the state.

Who Is Required To Use Metrc?

Starting January 1, 2019, all California state cannabis licensees are required to use Metrc. This includes licenses for cannabis: Proper tagging ensures that regulators can quickly trace inventory back to a particular plant or place of origin.

Cultivation
Manufacturing
Retail
Distribution
Testing labs
Microbusinesses

How Does Metrc Work?

Metrc uses a system of tagging and unique ID numbers to categorize and track cannabis from seed to sale. Tagged inventory in Metrc is sorted into 2 categories: plants and packages. Plants are further categorized as either immature or flowering. All plants are required to enter Metrc through immature plant lots of up to 100/plants per lot. Each lot is assigned a lot unique ID (UID), and each plant in the lot gets a unique Identifier plant tag. Immature plants are labeled with the lot UID, while flowering plants get a plant tag. Metrc generates these ID numbers and they cannot be reused. In addition to the UID, tags include a facility name, facility license number, application identifier (medical or recreational), and order dates for the tag. Proper tagging ensures that regulators can quickly trace inventory back to a particular plant or place of origin.

Packages are formed from immature plants, harvest batches, or other packages. Package tags are important for tracking inventory through processing, as the product changes form and changes hands. Each package receives a UID package tag, and as packages are refined and/or combined, they receive a new ID number, which holds all the other ID numbers in it and tells that package’s unique story.

Do I Have To Enter Data Into Metrc Manually?

You certainly can enter data into Metrc manually, but you probably won’t want to, and thankfully, you don’t have to. Metrc’s API allows for seamless communication between the system and many of your company’s existing tracking and reporting tools used for inventory, production, POS, invoices, orders, etc. These integrations automate the data entry process in many areas.As California operators work to get their ducks in a row, some ambiguity and confusion around Metrc’s roll out remains.

Adopting and implementing cannabis ERP software is another way operators can automate compliance. These platforms combine software for point of sale, cultivation, distribution, processing and ecommerce into one unified system, which tracks everything and pushes it automatically to Metrc via the API. Since they’ve been developed specifically for the cannabis industry, they’re designed with cannabis supply chain and regulatory demands in mind.

As California operators work to get their ducks in a row, some ambiguity and confusion around Metrc’s roll out remains. Only businesses with full annual licenses are required to comply, leaving some temporary licensees unsure of how to proceed. Others are simply reluctant to transition from an off-the-grid, off-the-cuff model to digitally tracking and reporting everything down to the gram. But the stakes of non-compliance are high— the prospect of fines or loss of business is causing fear and concern for many. Integrated cannabis ERP software can simplify operations and offer continual, automated compliance, which should give operators peace of mind.

November 27, 2018

Massachusetts Opens Recreational Market

By Aaron G. Biros

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Last week, on November 20, dispensaries in Massachusetts began selling cannabis to recreational consumers. The market was off to an obviously electric start, following the path of other states that legalized recreational cannabis. Consumers waited in long lines on opening day, more than two years after voters in the state legalized cannabis.

While this marks an important milestone as the first legal recreational cannabis sales began on the East Coast, regulators only approved two licensed dispensaries to begin operations on opening day. Those two retailers allowed to begin sales are Cultivate Holdings in Leicester and New England Treatment Access in Northampton.

The Cannabis Control Commission (CCC), the state’s regulatory body overseeing the new marketplace, received some criticism for taking more than a year to establish and implement regulations for the industry. In April of this year, regulators were just preparing the final rules.

It has taken them a fair amount of time to establish the regulatory framework, but much of the recent delays were due to a lack of laboratory licenses. Earlier in November, the CCC finally approved two laboratories for testing in the recreational market. Those two labs are MCR Labs LLC of Framingham and CDX Analytics LLC of Salem. With the labs approved for third-party independent testing in the recreational market, regulators began allowing retailers to open shortly after.

Shawn Collins, executive director for the CCC, told Boston 25 News that they are delivering on the voters’ requests to provide for a safe marketplace. “When Massachusetts voters legalized adult-use cannabis, they communicated a desire to purchase products that are safely regulated and properly tested,” says Collins. “The Commission has done scrupulous due diligence to make that vision a reality and ensure licensed independent testing labs maximize public health and public safety.”