Tag Archives: funding

Federal Funding Is Flowing To Canada’s Cannabis Production

By Marguerite Arnold
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The Canadian federal government is going where the U.S. (for now) is not: namely allowing provinces to channel federal agricultural funds into commercial cannabis production on the provincial level. The program is called the Canadian Agricultural Partnership (or CAP), which is a $2.2 billion annual initiative designed to support agricultural businesses across the country.

So far, not every province has opened this funding to cannabis production, although British Columbia already has, and Alberta is currently considering it.

Even more intriguing of course, are other programs that tie into such agricultural subsidies (including government support for exporting product). See Europe for one.

These programs are of course nothing new, including in the United States.

What is new, different and intriguing, is that unlike the United States, for the first time such government funds are being used to support not only the domestic cultivation of cannabis, but its global export. If there ever was the beginning of a “green new deal” then this might be it.

Canadian companies are certainly seeming to benefit from this federal largesse at the production point. For example, in the first weeks of April, CannTrust Holdings Inc. announced that its entire 450,000 square foot, perpetual harvest facility in Pelham, Ontario is fully licensed and will be online by summer 2019. THC BioMed just announced that it received Health Canada’s permission to begin additional production at its flagship location in Kelowna, B.C. And Beleave has just commenced sales of cannabis oil products at licensed facilities in Hamilton, Ontario.

The Rise of Government Funding In a “Publicly Owned” Company Environment

One of the more intriguing impacts of the rise of government funding for the industry comes at a time when the industry itself, certainly coming out of Canada, is facing a bit of a zeitgeist moment.

Sure, the industry has gained legitimacy, and there might be nascent cannabis funds in the UK, Switzerland and Germany, but the entire “public cannabis company” discussion is hitting a bit of a reset at the moment.

It was after all, ostensibly “public” Wayland that just dusted much higher fliers from the stock price perspective on winning the German cultivation bid. In fact, some insiders on the ground have commented that it is precisely because Wayland is not a stock market favorite, rather focused on fundamentals that they got chosen in the first place. Starting with the old-fashioned idea of committing resources and elbow grease to create production on the ground, locally.

There are also firms who are benefitting from the first tax funds that have flowed to promote the hemp industry (those are available from state governments here).

However, it is not just Germany where this discussion is going on in Europe right now. In Spain, there is political discussion about ensuring that the nascent and valuable cannabis industry does not end up in the control of “outsiders.” Namely international firms who have more of an eye on profit than community building. The idea of the cannabis industry as an economic development tool has certainly caught on in Europe (see Greece and Macedonia). And core in that idea is that the euros generated by this still remarkably price-resilient plant, and the products produced from it, should stay local.

Cannabis Socialism?

For now, and certainly in Canada, federal public funding looks pretty much like a fancy agricultural grant. But in the future as prices drop and the wars over strains and “medical” vs. “recreational” really begin to rage in Europe, the idea of government-funded cannabis cultivation may be an idea whose time has come.

The German automobile industry, for example, did not come from nowhere – and even today receives massive government funding. For now, certainly in Deutschland, that is not the case with cannabis, but things may be changing with the resolution of the first tender bid.

In the future, in other words, as countries across Europe begin to think about posting their own production bids and Germany contemplates additional ones, government funding of the industry and certainly incentives to help its growth will become much more widespread.

From The Lab

I Was Wrong… und das ist auch gut so!

By Dr. Markus Roggen
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I was wrong. And that’s a good thing! Based on all available data, I assumed that evaporating ethanol from a cannabis oil/ethanol solution would result in terpene loss. As it turns out, it doesn’t. There are so many beliefs and assumptions about cannabis: Cannabis cures cancer!1 Smoking cannabis causes cancer!2 Sativas help you sleep; Indicas make you creative!3,4 CBD is not psychoactive!5 But are these ‘facts’ backed by science? Have they been experimentally tested and validated?

I postulated a theory, designed experiments to validate it and evaluated the results. Simply putting “cannabis backed by science” on your label does not solve the problem. Science is not a marketing term. It’s not even a fixed term. The practice of science is multifaceted and sometimes confusing. It evolved from the traditional model of Inductivism, where observations are used in an iterative process to refine a law/theory that can generalize such observations.6 Closely related is Empiricism, which posits that knowledge can only come from observation. Rationalism, on the other hand, believes that certain truths can be directly grasped by one’s intellect.7 In the last century, the definition of science was changed from the method by which we study something, such as Inductivism or Rationalism, and refocused on the way we explain phenomena. It states that a theory should be considered scientific if, and only if, it is falsifiable.8 All that means is that not the way we study something is what makes it scientific, but the way we explain it.

I wonder how can we use empirical observations and rational deliberations to solve the questions surrounding cannabis? And more importantly, how can we form scientific theories that are falsifiable? Cannabis, the plant, the drug, has long been withheld from society by its legal status. As a result, much of what we know, in fact, the entire industry has thrived in the shadows away from rigorous research. It’s time for this to change. I am particularly concerned by the lack of fundamental research in the field. I am not even talking about large questions, like the potential medical benefit of the plant and its constituents. Those are for later. I’m talking about fundamental, mundane questions like how many lumens per square centimetre does the plant need for optimal THC production? What are the kinetics of cannabis extraction in different solvents? What are the thermodynamics of decarboxylation? Where do major cannabinoids differ or align in terms of water solubility and viscosity?

The lack of knowledge and data in the cannabis field puts us in the precarious position of potentially chasing the wrong goals, not to mention wasting enormous amounts of time and money. Here’s a recent example drawn from personal experience:Certainly, I cannot be the only one who has made an incorrect assumption based on anecdotes and incomplete data?

Some of the most common steps in cannabis oil production involve ethanol solutions. Ethanol is commonly removed from extraction material under reduced pressure and elevated heat in a rotary evaporator. I expected that this process would endanger the terpenes in the oil – a key component of product quality. My theory was that volatile terpenes9 would be lost in the rotary evaporator during ethanol10 removal. The close values of vapor pressure for terpenes and ethanol make this a reasonably assumed possibility.11 In the summer of 2018, I finally got the chance to test it. I designed experiments at different temperatures and pressures, neat and in solution, to quantify the terpene lost in ethanol evaporation. I also considered real life conditions and limitations of cannabis oil manufacturers. After all the experiments were done, the results unequivocally showed that terpenes do not evaporate in a rotary evaporator when ethanol is removed from cannabis extracts.12 As it turns out, I was wrong.

We, as an industry, need to start putting money and effort into fundamental cannabis research programs. But, at least I ran the experiments! I postulated a theory, designed experiments to validate it and evaluated the results. At this point, and only this point, can I conclude anything about my hypothesis, even if that is that my working theory needs to be revised. Certainly, I cannot be the only one who has made an incorrect assumption based on anecdotes and incomplete data?

There is a particular danger when using incomplete data to form conclusions. There are many striking examples in the medical literature and even the casual observer might know them. The case of hormone replacement therapy for menopause and the associated risks of cardiovascular diseases showed how observational studies and well-designed clinical trials can lead to contradicting results.13 In the thirties of the last century, lobotomy became a cure-all technique for mental health issues.14 Dr. Moniz even won the Nobel Prize in Medicine for it.15 And it must come as no surprise when WIRED states “that one generation’s Nobel Prize-winning cure is another generation’s worst nightmare.”16 And with today’s knowledge is impossible to consider mercury as a treatment for syphilis, but that is exactly what it was used as for many centuries.17 All those examples, but the last one in particular should “be a good example of the weight of tradition or habit in the medical practice, […] of the necessity and the difficulties to evaluate the treatments without error.”18 There is the danger that we as cannabis professionals fall into the same trap and believe the old stories and become dogmatic about cannabis’ potential.

We, as an industry, need to start putting money and effort into fundamental cannabis research programs. That might be by sponsoring academic research,19 building in-house research divisions,20 or even building research networks.21 I fully believe in the need for fundamental cannabis research, even the non-sexy aspects.22 Therefore, I set up just that: an independent research laboratory, focused on fundamental cannabis research where we can test our assumptions and validate our theories. Although, I alone cannot do it all. I likely will be wrong somewhere (again). So, please join me in this effort. Let’s make sure cannabis science progresses.


References

  1. No, it does not. There are preliminary in-situ studies that point at anti-cancer effects, but its more complicated. The therapeutic effects of Cannabis and cannabinoids: An update from the National Academies of Sciences, Engineering and Medicine report, Abrams, Donald I., European Journal of Internal Medicine, Volume 49, 7 – 11
  2. No, it does not. National Academies of Sciences, Engineering, and Medicine. 2017. The Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research. Washington, DC: The National Academies Press. https://doi.org/10.17226/24625.
  3. No, it does not. The chemical profile of the plant dictates the biological effects on humans, not the shape of the leaf.  Justin T. Fischedick, Cannabis and Cannabinoid Research, Volume: 2 Issue 1: March 1, 2017
  4. Indica and Sativa are outdated terms. Piomelli D, Russo EB. The Cannabis sativa versus Cannabis indica debate: An Interview with Ethan Russo, MD. Cannabis Cannabinoid Res 2016; 1: 44–46.
  5. No, it is. CBD’s supposed “calming effects” is indeed a psychoactive effect. However, it is not intoxicating like THC. Russo E.B., Taming THC: potential cannabis synergy and phytocannabinoid-terpenoid entourage effects.Br. J. Pharmacol. 2011; 163: 1344-1364
  6. As attributed to Francis Bacon.
  7. See the work by philosopher Baruch Spinoza.
  8. As theorized by Karl Popper.
  9. Monoterpenes have a vapor pressure in the low to mid hundreds of Pascals at room temperature.
  10. Vapor pressure of 5.95 kPa at 20˚C.
  11. Furthermore, there is always the possibility of azeotropes in complex mixtures. Azeotropes are mixtures of two or more liquids that have different boiling points individually, but in mixture boil together.
  12. Terpene Retention via Rotary Evaporator Application Note, Heidolph North America
  13. https://www.pharmaceutical-journal.com/research/review-article/establishing-the-risk-related-to-hormone-replacement-therapy-and-cardiovascular-disease-in-women/20202066.article?firstPass=false
  14. https://psychcentral.com/blog/the-surprising-history-of-the-lobotomy/
  15. https://en.wikipedia.org/wiki/António_Egas_Moniz
  16. https://www.wired.com/2011/03/lobotomy-history/
  17. https://www.infezmed.it/media/journal/Vol_21_4_2013_10.pdf
  18. https://www.ncbi.nlm.nih.gov/pubmed/11625051
  19. Canopy Growth funds a professorship of cannabis science at UBC. Tilray collaborates with UCSD on a phase I/II clinical trial.
  20. For examples see: NIBR, PMISCIENCE.
  21. For examples see: CEMI, theAIRnet, Future Sky.
  22. Research that does not lead to short-term stock value spikes but long-term progress

PA Cannabis Banking Committee Announces Formation

By Aaron G. Biros
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The Hoban Law Group announced today the formation of a committee to address banking access issues for the Pennsylvania cannabis market. Steve Schain, Esq., nationally recognized consumer finance litigation, banking law and cannabis law expert practicing with national cannabis law firm Hoban Law Group, is the committee’s spokesman and chair.

Steve Schain, Esq. practicing at Hoban law Group and chairperson of the committee.
Steve Schain, Esq. chair and spokesperson of the committee.

Limited access to banking is an ongoing issue plaguing cannabis businesses due to its federally illegal status. According to Steve Schain, cannabis businesses across the country are forced to pay their vendors, utility bills, payroll, taxes and insurance in cash. “At any time, a dispensary or cultivation operation could have up to $200,000 in cash on site- not having a place to bank opens opportunities for criminal activity,” says Schain. It also presents operational issues for business owners like record keeping or even personal bank accounts getting shut down.

“All of those issues could mean less jobs, less economic activity and less tax revenue for the state,” says Schain. “Fully compliant operations should not have to deal with this.”

Schain formed the committee for a number of reasons, including “Setting the table and starting a dialogue. We want this to be scalable. In the past, the great flaws in banking efforts for cannabis were a lack of cohesion and operating credibility- we hope to approach it from a multi-disciplinary angle and change that,” says Schain.

State Senator Daylin Leach introduced the bill
State Senator Daylin Leach

The committee’s members include three PA politicians: Daylin Leach, State Senator of the 17th District, who introduced the bill that legalized medical cannabis in Pennsylvania, Derek Green, Philadelphia City Councilman and Mary Jo Daley, Representative of the 148th District. Tom Fleming, former assistant director of the Office of Compliance at the Treasury Department’s Financial Crimes Enforcement Network, is also a member of the committee.

A number of committee members are actively involved in the legal cannabis industry and cannabis banking initiatives. Sundie Seefried, a member of the committee, is the chief executive officer of Partner Colorado Credit Union, which is

Lindy Snider, advisor at Greenhouse Ventures and KIND Financial
Lindy Snider, advisor at Greenhouse Ventures and KIND Financial

currently handling over half of Colorado’s estimated billion-dollar cannabis banking market, according to Schain. Lindy Snider, founder and chief executive officer of LindiSkin, advisory board member of KIND Financial and Greenhouse Ventures, is also listed as a member of the committee.

“According to the treasury department, only 301 financial institutions have reported banking cannabis cash,” says Schain. “Few federally chartered banks or credit unions will work with cannabis businesses, but two states-Washington and Maine- have banking regulators sensitive to cannabis banking and we have found 36 banks and credit unions providing financial services to cannabis enterprises.”

The goal with forming this committee is to change that and create an environment where banking for cannabis businesses is much easier. “We plan on drafting a white paper with best practices on compliant and profitable banking on behalf of cannabis-related businesses and financial institutions,” says Schain.

Working from a banker’s perspective is the key here, says Schain. They want to create a working, compliant and profitable system for banks to do business with cannabis cash. One of the problems in the meantime is the high-risk nature of dealing with cannabis companies, leading to an inability to get insurance on those accounts. In the eyes of the federal government currently, conducting cannabis-related transactions may be deemed money laundering and highly illegal. “The real issue is with the federal government and I strongly suspect this is not an issue at the top of the Trump White House agenda.”

Soapbox

Best Practices for Submitting a Winning Application

By Leif Olsen
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Even though half of U.S. states and the District of Colombia now permit the possession of medical or recreational cannabis, state regulatory bodies differ greatly in their approaches to managing our industry. In Washington, anyone over the age of 21 can legally possess one ounce of usable cannabis and/or seven grams of concentrate. In Minnesota, patients are only allowed to purchase non-smokable cannabis in pill, liquid or oil form.

Given these substantial differences, it is no surprise that the application process to open a dispensary or cultivation facility also varies from state to state. The question I am most often asked (and catch myself mulling over late at night) is what can applicants do to ensure their success, regardless of where they are applying?

Recently we helped a client secure one of the first 15 licenses issued to grow medical cannabis in Maryland. The Maryland application process was particularly unique because most of the applicants had political or law-enforcement ties, or were connected to successful out-of-state growers. That experience, along with our work in places like Arizona, Colorado and Florida, has shown me the importance of teamwork, diversity and security in developing a winning application.

So here are my suggestions for ensuring a successful submission, regardless of which state you are operating in:

  1. Build the Right Team. My dad likes to say, “Use the right tool for the right job.” I think the same is true about creating the team for your application. Do not assume one or two people will be able to fill all of the required roles. You will need experts in a range of different areas including medicine, pharmacology, capital investment, cultivation, real estate, security and law.
  2. Focus on Diversity. I think one of the reasons we have been successful in helping clients secure applications (we are six for six, in six different states) is our commitment to gender, racial and even geographic diversity. For example, we recently helped a client secure a license in an economically underdeveloped area. I think our choice to headquarter the new business outside of the metropolitan corridor was at least partially responsible for our success.
  3. The Devil is in the Details. According to ArcView Market Research, the cannabis industry is expected to be worth $23 billion by 2020. If you want to be one of the organizations selected by your state to sell cannabis, you need to have your act together. Most applications ask incredibly detailed questions. Therefore it is essential that you answer them thoroughly and accurately. All answers should be in compliance with your state’s regulations.
  4. Put Safety First. You will need a comprehensive plan that takes all aspects of security into account. This includes everything from hiring security guards to purchasing cameras, and implementing internal anti-theft procedures. Regardless of the size of your operation, safety should be a primary consideration.
  5. Secure Funding. Successful cannabis businesses require capital. It’s important to be realistic about the amount of money you will need to have on hand. Application costs typically range from $500,000 to $1 million. This will cover things like hiring an architect or leasing land. Ideally, your organization will have another $5 to $10 million or more available to start your project once you’ve been approved so that you can quickly become operational.
  6. Connect With Your Community. It is essential to consider the impact of your business on the community. Being a good corporate citizen means being transparent and engaging in a two-way dialogue with neighbors, government officials and patients. I strongly recommend that my clients develop a comprehensive community outreach plan that designates which organizations they plan to work with, (hospitals or universities, for example) and what the nature of those partnerships will be.