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Protecting Innovative Strains with a Strong Intellectual Property Strategy: Part 1– Why IP & Why now?

By Dr. Travis Bliss
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This three-part series will provide an in-depth look at intellectual property (IP) protection that is available for innovative and new varieties of cannabis. In this first installment, we will examine the reasons why cannabis breeders should adopt a strong IP strategy and look briefly at the types of IP that they should be considering. In the second and third pieces, we will look at the types of IP protection that can be used to protect innovative cannabis varieties and the unique IP issues the cannabis industry faces right now. Taken together, these articles will provide insight into IP strategies that cannabis breeders and growers can employ today to help prepare for the day that cannabis becomes legal nationally.

Why should I use IP to protect my cannabis varieties?

First and foremost, as the cannabis industry continues to move from a small, tight-knit community of breeders and growers into a ‘big-business’ industry, IP is the only way for breeders to protect the investment of time, energy and money that they put into developing new and innovative strains of cannabis. At a recent cannabis growing conference, one sentiment felt among numerous breeders was a feeling of frustration– stemming from the fact that they had spent many years developing new varieties of cannabis and, now that the industry is exploding, they are not getting recognition for all that effort. The way to avoid this issue is to protect novel varieties with IP to ensure that you are given proper credit for all of your hard work.

Moreover, an examination of industries that have strong similarities to the cannabis industry, such as other plant-based industries and ‘vice’ industries, provides compelling evidence that IP will become a main driving force in the cannabis industry as it continues to mature. For example, the fruit and hops industries have been relying upon strong plant patent and trademark protection for many years. The extremely popular Honeycrisp apple is a patented variety and the Amarillo hops variety (officially called ‘VGXP01’) is protected by both a U.S. Plant Patent and a federally registered trademark. Similarly, the alcohol and tobacco industries rely upon strong trademark and branding strategies, with many consumers being extremely brand-particular.

Additionally, there is strong evidence that the cannabis industry is primed for intellectual property protection. Since long before cannabis was legalized, consumers who were buying cannabis on the black market often sought out a particular variety from their dealer, something that becomes more prevalent as the industry continues to mature.

Why is now the time to think about IP?

First, the relevant governmental bodies have now provided some clarity as to the types of IP protection that can, and cannot be obtained for cannabis. For example, it is now clear that the U.S. Patent and Trademark Office (USPTO) will issue patents that cover new cannabis plant varieties and related innovations, such as novel growing methods. In fact, the first U.S. Plant Patent that covers a novel cannabis strain, called ‘Ecuadorian Sativa’, issued in late 2016.

Similarly, though federal trademark registration is not currently available if the product being protected is a cannabis product that is illegal under federal law. Federal trademark registration may be available to protect products related to the cannabis industry that are not themselves federally illegal (e.g., grow lights, fertilizer, etc.). Many states with legalized cannabis will grant state trademark registrations for cannabis products regardless of whether the products are viewed as illegal under current federal law. With this increased clarity, companies can now begin to formulate a comprehensive IP strategy that ties together the various types of IP protection.

Additionally, cannabis breeders and growers should look to adopt an IP strategy now because there are certain time bars that exist that may result in loss of rights if they wait. For example, as we will discuss in Part 2 of the series, patent protection can only be sought if the variety to be patented was not sold, offered for sale, or otherwise made publicly available more than one year before the patent application is filed. So if a breeder chooses to wait to seek patent protection for a new variety, the ability to ever get that protection may be lost.

The bottom line is that, to solidify their place in the market, cannabis breeders and growers should be formulating an IP strategy sooner rather than later. Those forward-thinking growers and breeders that adopt a comprehensive IP strategy up front will gain a distinct competitive advantage over competing growers and breeders down the road – an advantage that will become even more important if and when large corporations begin to move into the cannabis space. Those companies that have strong brands in place will be better equipped to survive and thrive in the face of pressure from legal teams at larger companies.

The next two installments of this series will examine the specifics of the types of IP protection that can be sought and the unique issues that the cannabis industry faces with each of them.

Legal disclaimer: The material provided in this article is for informational purposes only and not for the purpose of providing legal advice. The opinions expressed herein are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. The provision of this information and your receipt and/or use of it (1) is not provided in the course of and does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter.

ASTM International Begins Crafting Cannabis Standards

By Aaron G. Biros
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Last week, the American Society for Testing and Materials (ASTM International) approved the formation of a committee to develop standards for the cannabis industry. ASTM International is a standards development organization that develops voluntary consensus-based standards for industries. United States regulatory bodies and the World Trade Organization have recognized the organization’s standards in other industries.

On March 1st, the non-profit announced the formation of a committee for ““creating technical standards and guidance materials for cannabis and its products and processes.” So now that the vote has passed, what is the next step? They will begin the process of member training, appointment of leadership and writing the bylaws. ASTM will have two online briefings before their official meeting for the cannabis committee (D37) in June. Those meetings will discuss how the committee was formed and how it’ll be structured. The first official meeting of the cannabis committee will take place June 11th and 12th in Toronto.

Lezli Engelking
Lezli Engelking, founder of FOCUS

Voluntary consensus-based standards means there is a balance of interests, an appeals process and an overall consensus has been reached. The areas of focus for the cannabis standards include indoor and outdoor horticulture and agriculture, quality management systems, laboratories, processing and handling, security and transportation, and personnel training, assessment and credentialing. Many standards will be developed under each of these broad categories. A large component of consensus-based standard development is openness…so anyone who wants to participate in the development of the standards is welcome and encouraged to do so. They are still looking for participants from the cannabis industry and those interested can register here.

Lezli Engelking, founder of the Foundation of Cannabis Unified Standards (FOCUS), says this is terrific news for the cannabis industry. “To have a global organization like ASTM, that federal governments actually work with and respect, is a huge stride forward for the cannabis industry,” says Engelking. “FOCUS is thrilled to be working with ASTM.” FOCUS and ASTM International have a derivative work license agreement that provides ASTM the FOCUS standards to use as a baseline for developing their standards. “FOCUS will continue to certify cannabis businesses to the FOCUS standards, but we will be able to add in the ASTM standards to our certification platform,” says Engelking. “It helps us expand our depth and reach in tools for our clients.”

FOCUS standards and ASTM standards are both voluntary consensus-based, meaning it is the businesses and stakeholders participating that ultimately write the standards. The organizations’ staff does not actually contribute to and develop the standards; they are more like a vehicle for the industry and stakeholders to come to a consensus, according to Engelking. “ASTM does the same thing that we do for the cannabis industry, just on a much larger scale,” says Engelking. “Its role is to fulfill the development, not actually develop it.” Because of that, ASTM and FOCUS standards can work in harmony.

Judging a Craft Cannabis Competition

By Aaron G. Biros
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Willamette Week, a Portland-based publication, is hosting the 2017 Cultivation Classic with Farma, Cascadia Labs, Phylos Bioscience and the Resource Innovation Institute on May 12th. The event is a benefit for the Ethical Cannabis Alliance, an organization that promotes sustainability, labor standards and education surrounding the integrity and ethics of growing cannabis. Cultivation Classic is a competition for pesticide-free cannabis grown in Oregon, according to a press release.

Congressman Earl Blumenauer speaking at last year’s Cultivation Classic
Photo: Bridget Baker, 92bridges.com

While the event’s focus is on the competition, it is just as much a celebration of the craft cannabis community in Oregon. This year’s competition incorporates scientific collaboration like genetic sequencing for the winners by Phylos Bioscience and carbon accounting for all competitors. Keynote speakers include Ethan Russo, medical director of PHYTECS and Dr. Adie Po, co-founder of Habu Health. Congressman Earl Blumenauer, a prominent cannabis legalization advocate in Oregon, will also be speaking at the awards ceremony. You can check out the full schedule and speaker lineup here.

Raymond Bowser, breeder at Home Grown Natural Wonders, is a judge for this year’s Cultivation Classic. He speaks at cannabis conferences around the country and his business created a number of different strains, so he has experience with a myriad of growers and strains. “This time around everyone has really stepped up their game,” says Bowser. “The entries are noticeably better than last year.” When looking at the different samples sent to him, he sees a few key factors as most important in judging the quality. “What I am looking for is simple; a nice smell and a decent look, generally speaking,” says Bowser. “Aesthetics can tell you a lot about how it was grown, temperature changes and the overall care taken in cultivating and curing the flower.” For him, flavor, smell and aesthetics are the big variables to consider.

Photo: Bridget Baker, 92bridges.com

Those are factors that his company holds to high standards in their work, so he judges the samples based on the same variables. “It is what we strive for in our gardens and so far the samples I have tried are fantastic in that regard,” says Bowser. In other competitions that Bowser has judged in the past, they sent him between 40 and 60 strains to judge in seven days. “That is not conducive to a fair evaluation,” says Bowser. “Here, we are getting fourteen or so different strains, so we can sample one strain a day which is how I personally like to do it.”

Bowser is supportive of Cultivation Classic because of their emphasis on the craft industry. “We talk about craft cannabis and breeding craft cultivars at conferences around the country,” says Bowser. “With the rec industry growing so much, we see so many people cutting corners to save money, that it is refreshing to see growers take pride in the craft.” He also stresses the need for good lab testing and sound science in the trade. “I am big on lab testing; it is very important to get all the right analytics when creating strains,” says Bowser. “Cascadia is a solid choice for the competition; they have been a very good, consistent lab.” Emphasizing the local, sustainability-oriented culture surrounding the craft market, Bowser is pleased that this competition supports that same message. “We need to stay true to our Oregon roots and continue to be a clean, green, granola-eating state.”

Photo: Bridget Baker, 92bridges.com

Cascadia Labs is conducting the pesticide and cannabinoid analytics for all submissions and Phylos Bioscience will perform testing for the winners. According to Julie Austin, operations manager at Cascadia Labs, pesticide testing for the Oregon list of analytes was of course a requirement. “Some of the samples submitted had previous tests from us or from other accredited labs, but if they didn’t have those results we did offer a comprehensive pesticide test,” says Austin. The competition’s fee for submission includes the potency and terpenes analysis.

Jeremy Sackett, director of operations at Cascadia Labs, says they test for 11 cannabinoids and 21 terpenes. The samples are divided into groups of THC-dominant samples, CBD-dominant samples and samples with a 1:1 ratio of the two. “The actual potency data will be withheld from judges and competitors until the day of the event,” says Sackett. “We are data driven scientists, but this time we want to have a little fun and bring the heart of this competition back to the good old days: when quality cannabis was gauged by an experience of the senses, not the highest potency number.” The event will take place on May 12th at Revolution Hall in Portland, Oregon. Click here to get tickets to the event.

Pennsylvania Temporary Rules for Doctors Released

By Aaron G. Biros
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Pennsylvania Department of Health Secretary Dr. Karen Murphy recently released a draft of temporary regulations for physicians, asking for feedback via a survey from the medical community. “The process for a patient to obtain medical marijuana will begin with the physician, so it’s vital to ensure that our regulatory process for those physicians is open and transparent,” says Secretary Murphy. “Our focus remains to implement a patient-focused medical marijuana program that gives help to those who need it, and these temporary regulations mark an important step forward in achieving that goal.” The temporary rules, published on April 11th, outline physician and practitioner registration, patient certifications, physician training and other key regulations.

Steve Schain, Esq. practicing at Hoban law Group

In the temporary rules lie some stipulations for doctors, which seem intended to limit corruption or financial conflicts of interest. According to Steven Schain, Esq., consumer finance litigation, banking law and cannabis law expert practicing with Hoban Law Group, the market’s growth will hinge on doctor participation. “The entire program will rise and fall based on the speed in which we involve doctors,” says Schain. “If the doctors don’t certify for medical conditions and make recommendations, the market won’t go anywhere.” Pennsylvania’s program, under the current language, requires doctors to issue patient certifications, similar to what other states might call a doctor recommendation or prescription.

According to Schain, other states with similarly worded regulations experience a lack of physician participation, and tepid market growth at best. “If you look at New York, New Jersey or Maryland, they run into issues where there just is no incentive for doctors to participate,” says Schain. “If you look at the existing language of the regulations, there is no financial incentive for doctors to get involved, they can’t charge for a recommendation, which is good and bad.”

“The good part is it reinforces that doctors can’t really be a financial backer of a grow operation or a dispensary,” says Schain. Under the current language, physicians can’t solicit, accept or offer any form of compensation from any patient, prospective patient, caregiver or anyone involved in a medical cannabis business if they intend to register with the Department to issue patient certifications for cannabis. “Some doctors thought this would be a cottage industry for them, it’s not.” Doctors are also not allowed to advertise as a practice issuing patient certifications for cannabis. “Another benefit of the language in the proposed regulations is the continuing care of a physician,” says Schain. “They want the people doing the bulk of referring or recommendations to be primary care physicians. Those are the people doing most of the recommendations, as it should be.” 

Those rules contrast starkly with what many are familiar with in California’s regulations where doctors could advertise freely and charge fees without the need for ongoing care. “Looking at previous regulations in a state like California, where there were no requirements for ongoing care, we saw doctors making a business out of writing recommendations for cannabis,” says Schain. “The PA regulations are much stricter, which I think is great.”

In addition to those preventative measures, the temporary rules require physicians to actively use the Prescription Drug Monitoring Program. This means doctors must consider a patient’s history of controlled substance prescriptions to see if that might impact their medical cannabis use. Doctors have to take this into account before issuing or modifying a patient certification. The rules also provide for a 4-hour training course, required for all physicians seeking to register as a practitioner who can certify patients for medical cannabis use. The Department of Health expects the program will be fully implemented by 2018.

Bipartisan Cannabis Reform Effort Unveiled in Congress

By Aaron G. Biros
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According to National Cannabis Industry Association (NCIA) executive director Aaron Smith, seven measures were introduced today at the Capitol, covering a variety of issues that, if signed into law, would ease many of the legal implications on the federal level affecting cannabis businesses in legal states currently.

In a very important development, Rep. Carlos Curbelo (R-FL), a member of the House Ways and Means Committee, joined Rep. Earl Blumenauer as a lead sponsor of the 280E tax reform bill. According to an NCIA press release, that bill is The Small Business Tax Equity Act of 2017 and was introduced in the Senate by Sen. Ron Wyden (D-OR), Sen. Rand Paul (R-KY) and Sen. Michael Bennet (D-CO).

Aaron Smith, executive director of NCIA

That bill gives cannabis businesses in legal states the opportunity to take business deductions like any other legal business. Right now cannabis businesses cannot deduct any expenses related to sales, given its Schedule I status. “Cannabis businesses aren’t asking for tax breaks or special treatment,” says Smith. “They are just asking to be taxed like any other legitimate business.”

Rep. Jared Polis (D-CO) introduced the Regulate Marijuana Like Alcohol Act in the House, which would put cannabis in the section of code that regulates intoxicating liquors, essentially giving the ATF oversight authority. “The flurry of bills on the Hill today are a reflection of the growing support for cannabis policy reform nationally,” says Smith. “State-legal cannabis businesses have added tens of thousands of jobs, supplanted criminal markets, and generated tens of millions in new tax revenue. States are clearly realizing the benefits of regulating marijuana and we are glad to see a growing number of federal policy makers are taking notice.”

Rep. Earl Blumenauer (D-OR), Photo: Michael Campbell, Flickr

Sen. Wyden and Rep. Blumenauer introduced The Responsibly Addressing the Marijuana Policy Gap (RAMP) Act, which addresses banking and tax fairness for businesses, civil forfeiture, and drug testing for federal employees. Both Blumenauer and Wyden represent Oregonians, who could benefit tremendously if it becomes legislation. Rep. Blumenauer also introduced The Marijuana Tax Revenue Act, which would put a federal excise tax of initially 10% on cannabis sales, then rising to 25% after five years, according to the NCIA press release.

New York Adds Chronic Pain to List of Qualifying Conditions

By Aaron G. Biros
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The New York State Health Department announced last week a series of changes in their medical cannabis program that is expected to increase patient access in more rural parts of the state. The news comes after reports earlier this month highlighting the lackluster state of the market.

The press release announces that the state’s Health Department will add chronic pain as a qualifying condition, effective March 22nd. That rule change came after the Health Department’s two-year report, which recommended conducting a review of evidence for using medical cannabis to treat patients suffering from chronic pain.

In addition to that, physician assistants may now register with the Health Department to certify patients for medical cannabis, given the supervising physician is registered as well. In November of last year, the Health Department announced they would allow nurse practitioners to certify patients. By increasing the number of eligible practitioners, the state hopes to improve patient access across the state, and particularly in rural areas where there are fewer physicians. “Improving patient access to medical marijuana continues to be one of our top priorities, as it has been since the launch of the program,” says Health Commissioner Dr. Howard A. Zucker. “These key enhancements further that goal. Medical marijuana is already making a difference for patients across New York State, and we are constantly evaluating the program to see how we can make it better.”

Photo: Peter McConnochie, Flickr

Speaking with The Buffalo News earlier this month, Ari Hoffnung, president of Vireo Health of New York told reporters that companies are having a hard time getting by in New York’s cannabis industry. “Our company is not close to break-even yet,” says Hoffnung. “And based on my understanding, no one has made a dime here in New York.’’ It is possible that the recent move by the Health Department could increase the size of the market, according to Matt Karnes, founder and managing partner of GreenWave Advisors, based in New York City. “Expanding the list of qualifying conditions to include chronic pain and to allow for nurse practitioners to make a recommendation will serve to jumpstart the fledgling medical marijuana market in New York State,” says Karnes. “Assuming similar chronic pain conditions apply to New York as is the case in other states, we could expect a large increase in the total number of patients.”

At this time, it is unclear exactly how the new regulations will affect the market size, but they can undoubtedly benefit patients seeking medical treatment. Dr. Scott Gottlieb, board-certified anesthesiologist and pain management specialist from Pearl River, New York, is optimistic this will help more patients get the treatment they need. “Having chronic pain added as a diagnosis is tremendously helpful,” says Dr. Gottlieb. “There are a lot of patients that don’t meet the current criteria for a qualifying condition and this will be very beneficial for them.” From his own experience, Dr. Gottlieb says he has found cannabis to be helpful in treating neuropathy (nerve-related pain.) “As a pain management physician we have a large population of patients with recent spinal cord surgery that do require continuous medications,” says Dr. Gottlieb. “It will be nice to have another option as a feasible medical treatment.”

ASTM International Launches Cannabis Committee

By Aaron G. Biros
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According to a press release published March 1st, ASTM International formed a committee focusing on “creating technical standards and guidance materials for cannabis and its products and processes.” ASTM, founded in 1898, as the American Section of the International Association for Testing Materials, predates other standards organizations such as IEC (1906), ANSI (1918) and ISO (1947). ASTM International is a non-profit organization devoted to the development of international standards. For more than a century, ASTM has served as a leading venue for consumers, industry and regulators to work collaboratively under a balanced and consensus–based process to craft voluntary consensus standards.

Logo_of_ASTM_International,_Oct_2015ASTM International meets the World Trade Organization (WTO) principles for developing international standards, and maintains the attributes outlined in the National Technology Transfer and Advancement Act (NTTAA) for a voluntary consensus standards development organization. ASTM International is known throughout a variety of industries for creating voluntary consensus standards for products, systems, services and materials. ASTM standards are used globally in research and development, product testing, quality systems, commercial transactions, and more.

Lezli Engelking
Lezli Engelking, founder of FOCUS

On January 18th, 2017, the American Public Health Association hosted thirteen industry stakeholders representing state laboratories, standards developers, research institution, academia, cultivation centers, auditors and software compliance providers, according to Lezli Engelking, founder of the Foundation of Cannabis Unified Standards (FOCUS), who is involved and familiar with the process. The planning meeting discussions included a summary of where the request was initiated, why a standards activity was necessary and the results of ASTM’s exploratory efforts. At the conclusion of the planning meeting, it was decided by vote, that ASTM should move forward with the activity.

On February 28th, 2017, roughly 60 stakeholders and cannabis industry representatives met at ASTM International’s headquarters in Conshohocken, Pennsylvania. The volunteer committee on cannabis, designated D37 by ASTM, is a result of inquiries flooding the company regarding cannabis since 2015, states the press release.

The committee will focus on six technical areas, forming subcommittees:

  • Indoor and outdoor horticulture and agriculture,
  • Quality management systems,
  • Laboratory,
  • Processing and handling,
  • Security and transportation, and
  • Personnel training, assessment, and credentialing.

Dr. Ralph Paroli, immediate past chairman of the board and director of R&D in measurement science and standards at the National Research Council of Canada, was voted to serve as the committee’s first chairman. “With its decades of experience in industries such as pharmaceuticals, medical devices, packaging, agriculture, pesticides, and more, ASTM International is the perfect place for standards development for the cannabis industry,” says Paroli.

Pending ASTM International board of directors’ approval (anticipated late April 2017), a shift of standards development efforts has been made from FOCUS to the ASTM International technical committee D37 on cannabis and its products and processes.FOCUSlogo

“FOCUS could not be more pleased by ASTM’s decision to further the development of internationally harmonized cannabis standards,” says Engelking. “This is desperately needed, and an enormous step in the right direction of legitimizing the cannabis industry. We are thrilled FOCUS standards will be included, and honored to be a part of this exciting process.” During this transition period, interested stakeholders can get directly involved through the FOCUS website and then follow directions provided by FOCUS.

According to Engelking, third-party, cannabis-specific certifications for cultivation, retail, extraction, infused products and laboratories are provided by FOCUS for cannabis businesses committed to providing safe, consistent and quality products. FOCUS certification helps businesses decrease liability and risks, maximize efficiency, reduce costs and differentiate their brands.

“FOCUS encourage all stakeholders to participate in this important process,” says Engelking. “ASTM has an incredible standards development system in place that allows for many different levels of participation.” During 2017, ASTM is offering free temporary memberships. After 2017, stakeholders will need to join as a participating member.

Biros' Blog

2016 Year in Review: Why the Cannabis Industry Needs Resiliency

By Aaron G. Biros
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2016 was a tumultuous, but productive year for the cannabis industry. Larger companies began to take interest in the fledgling market, like Microsoft and Scotts Miracle-Gro. This year brought major innovations in technology like market data tools, advances in LED tech, efficient cultivation tech and patient education tools. The Supreme Court set an important precedent by shutting down a challenge to Colorado’s cannabis market.

Voters legalized cannabis in 8 states last month Photo: Nicole Klauss, Flickr
Voters legalized cannabis in 8 states on Election Day.
Photo: Nicole Klauss, Flickr

Election Day brought a renewed sense of vigor to the market with voters in eight states legalizing forms of cannabis. California, Nevada, Maine and Massachusetts passed recreational cannabis measures, making legalization’s momentum seem exponential.

But November 8th also gave Donald Trump the presidency, and his cabinet appointments, namely Sen. Jeff Sessions as Attorney General, gave many a feeling of uncertainty for the future of federal legalization. Adding insult to injury, the DEA repeatedly stood by their antiquated and ludicrous judgment for cannabis to remain a Schedule 1 narcotic.

Gage Skidmore, Flickr
Trump nominated Sen. Jeff Sessions (R) for Attorney General Photo: Gage Skidmore, Flickr

A lot of the fervor surrounding public safety could be described as overdramatic or somewhat unwarranted. 2016 was the year of misinformation. Fake news spread like wildfire with people sharing stories like this or this that turned out to be very misleading or just downright false.

States with legal cannabis came under heavy public scrutiny and addressed problems like consumer education, public safety and lab testing. Pesticides became a highly publicized and persistent issue in a number of areas, with some states regulating it heavily and addressing public health concerns. Plenty of new rules were formed surrounding labeling and testing, with Oregon, Colorado and Washington experiencing some regulatory growing pains.

Those growing pains shed light on the need for regulators to craft rules that allow for changes, adding rules where necessary and getting rid of cumbersome rules that might thwart market growth. Rules need to be able to adapt as the industry grows, much like businesses need to adapt to a changing market climate to stay afloat. This is all the more reason why cannabis businesses need to make their voices heard and work with regulators to move things forward.

Pesticide Use was a major issue of 2016 Photo: Michelle Tribe, Flickr
Pesticide use was a major issue in 2016
Photo: Michelle Tribe, Flickr

With so much uncertainty surrounding the future of legal cannabis in America, the word of the year for 2017 should be resiliency. In a social-ecological context, resiliency is “the capacity of a system to absorb or withstand perturbations and other stressors such that the system remains within the same regime, essentially maintaining its structure and functions. It describes the degree to which the system is capable of self-organization, learning and adaptation.”

img_6245
A warning label for cannabis in Oregon after the October 1st compliance deadline

Self-organization, learning and adaptation are three very important attributes of a resilient system. Without knowing what will happen when Trump’s cabinet takes the reigns of federal agencies, it is important to prepare for the unexpected. Adhering to standards like FOCUS allows cannabis businesses to prepare for unexpected events like recalls or product safety failures.

Those standards could also become the law down the road, as government officials often look to an industry’s voluntary consensus-based standards when deciding how to regulate it. In 2017, a number of state governments will embark on the heavy undertaking of writing the regulatory framework for legal cannabis.

2017 will bring opportunities and challenges to the cannabis industry. The industry’s rapid growth juxtaposed with political, economic and regulatory uncertainties create a climate that requires resilience to be built into the system at all levels. It is critical, now more than ever, that cannabis businesses build strong relationships with industry groups, advocacy groups and regulators to craft the institutional capacity and mutual trust needed to weather the uncertainty ahead.

amandarigdon
The Nerd Perspective

Pesticide Detection in Cannabis: Lab Challenges and Why Less Isn’t Always More

By Amanda Rigdon
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amandarigdon

Almost as soon as cannabis became recreationally legal, the public started to ask questions about the safety of products being offered by dispensaries – especially in terms of pesticide contamination. As we can see from the multiple recalls of product there is a big problem with pesticides in cannabis that could pose a danger to consumers. While The Nerd Perspective is grounded firmly in science and fact, the purpose of this column is to share my insights into the cannabis industry based on my years of experience with multiple regulated industries with the goal of helping the cannabis industry mature using lessons learned from other established markets. In this article, we’ll take a look at some unique challenges facing cannabis testing labs, what they’re doing to respond to the challenges, and how that can affect the cannabis industry as a whole.

Photo: Michelle Tribe, Flickr
Photo: Michelle Tribe, Flickr

The Big Challenge

Over the past several years, laboratories have quickly ‘grown up’ in terms of technology and expertise, improving their methods for pesticide detection to improve data quality and lower detection limits, which ultimately ensures a safer product by improving identification of contaminated product. But even though cannabis laboratories are maturing, they’re maturing in an environment far different than labs from regulated industry, like food laboratories. Food safety testing laboratories have been governmentally regulated and funded from almost the very beginning, allowing them some financial breathing room to set up their operation, and ensuring they won’t be penalized for failing samples. In contrast, testing fees for cannabis labs are paid for by growers and producers – many of whom are just starting their own business and short of cash. This creates fierce competition between cannabis laboratories in terms of testing cost and turnaround time. One similarity that the cannabis industry shares with the food industry is consumer and regulatory demand for safe product. This demand requires laboratories to invest in instrumentation and personnel to ensure generation of quality data. In short, the two major demands placed on cannabis laboratories are low cost and scientific excellence. As a chemist with years of experience, scientific excellence isn’t cheap, thus cannabis laboratories are stuck between a rock and a hard place and are feeling the squeeze.

Responding to the Challenge

One way for high-quality laboratories to win business is to tout their investment in technology and the sophistication of their methods; they’re selling their science, a practice I stand behind completely. However, due to the fierce competition between labs, some laboratories have oversold their science by using terms like ‘lethal’ or ‘toxic’ juxtaposed with vague statements regarding the discovery of pesticides in cannabis using the highly technical methods that they offer. This juxtaposition can then be reinforced by overstating the importance of ultra-low detection levels outside of any regulatory context. For example, a claim stating that detecting pesticides at the parts per trillion level (ppt) will better ensure consumer safety than methods run by other labs that only detect pesticides at concentrations at parts per billion (ppb) concentrations is a potentially dangerous claim in that it could cause future problems for the cannabis industry as a whole. In short, while accurately identifying contaminated samples versus clean samples is indeed a good thing, sometimes less isn’t more, bringing us to the second half of the title of this article.

Less isn’t always more…

Spiral Galaxy Milky Way
The Milky Way

In my last article, I illustrated the concept of the trace concentrations laboratories detect, finishing up with putting the concept of ppb into perspective. I wasn’t even going to try to illustrate parts per trillion. Parts per trillion is one thousand times less concentrated than parts per billion. To put ppt into perspective, we can’t work with water like I did in my previous article; we have to channel Neil deGrasse Tyson.

The Milky Way galaxy contains about 100 billion stars, and our sun is one of them. Our lonely sun, in the vastness of our galaxy, where light itself takes 100,000 years to traverse, represents a concentration of 10 ppt. On the surface, detecting galactically-low levels of contaminants sounds wonderful. Pesticides are indeed lethal chemicals, and their byproducts are often lethal or carcinogenic as well. From the consumer perspective, we want everything we put in our bodies free of harmful chemicals. Looking at consumer products from The Nerd Perspective, however, the previous sentence changes quite a bit. To be clear, nobody – nerds included – wants food or medicine that will poison them. But let’s explore the gap between ‘poison’ and ‘reality’, and why that gap matters.

FDAIn reality, according to a study conducted by the FDA in 2011, roughly 37.5% of the food we consume every day – including meat, fish, and grains – is contaminated with pesticides. Is that a good thing? No, of course it isn’t. It’s not ideal to put anything into our bodies that has been contaminated with the byproducts of human habitation. However, the FDA, EPA, and other governmental agencies have worked for decades on toxicological, ecological, and environmental studies devoted to determining what levels of these toxic chemicals actually have the potential to cause harm to humans. Rather than discuss whether or not any level is acceptable, let’s take it on principle that we won’t drop over dead from a lethal dose of pesticides after eating a salad and instead take a look at the levels the FDA deem ‘acceptable’ for food products. In their 2011 study, the FDA states that “Tolerance levels generally range from 0.1 to 50 parts per million (ppm). Residues present at 0.01 ppm and above are usually measurable; however, for individual pesticides, this limit may range from 0.005 to 1 ppm.” Putting those terms into parts per trillion means that most tolerable levels range from 100,000 to 50,000,000 ppt and the lower limit of ‘usually measurable’ is 10,000 ppt. For the food we eat and feed to our children, levels in parts per trillion are not even discussed because they’re not relevant.

green apple with slice isolated on the white background.

A specific example of this is arsenic. Everyone knows arsenic is very toxic. However, trace levels of arsenic naturally occur in the environment, and until 2004, arsenic was widely used to protect pressure-treated wood from termite damage. Because of the use of arsenic on wood and other arsenic containing pesticides, much of our soil and water now contains some arsenic, which ends up in apples and other produce. These apples get turned into juice, which is freely given to toddlers everywhere. Why, then, has there not an infant mortality catastrophe? Because even though the arsenic was there (and still is), it wasn’t present at levels that were harmful. In 2013, the FDA published draft guidance stating that the permissible level of arsenic in apple juice was 10 parts per billion (ppb) – 10,000 parts per trillion. None of us would think twice about offering apple juice to our child, and we don’t have to…because the dose makes the poison.

How Does This Relate to the Cannabis Industry?

The concept of permissible exposure levels (a.k.a. maximum residue limits) is an important concept that’s understood by laboratories, but is not always considered by the public and the regulators tasked with ensuring cannabis consumer safety. As scientists, it is our job not to misrepresent the impact of our methods or the danger of cannabis contaminants. We cannot understate the danger of these toxins, nor should we overstate their danger. In overstating the danger of these toxins, we indirectly pressure regulators to establish ridiculously low limits for contaminants. Lower limits always require the use of newer testing technologies, higher levels of technical expertise, and more complicated methods. All of this translates to increased testing costs – costs that are then passed on to growers, producers, and consumers. I don’t envy the regulators in the cannabis industry. Like the labs in the cannabis industry, they’re also stuck between a rock and a hard place: stuck between consumers demanding a safe product and producers demanding low-cost testing. As scientists, let’s help them out by focusing our discussion on the real consumer safety issues that are present in this market.

*average of domestic food (39.5% contaminated) and imported food (35.5% contaminated)

Election Day Results for Cannabis: California, Nevada, Massachusetts, Maine Legalize Recreational Cannabis

By Aaron G. Biros
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Update: With 100% reporting (589 of 589 precincts), voters in Maine passed Question 1, legalizing recreational cannabis by a very narrow margin of 50.2% to 49.8% (378,288 in favor and 375,668 against is a margin of only 2,620 votes)


Voters in California, Massachusetts, Maine and Nevada passed ballot initiatives legalizing the recreational use of cannabis, creating huge new markets for the cannabis industry overnight. Voters in North Dakota, Florida, Montana and Arkansas passed ballot initiatives to legalize forms of medical cannabis. Voters by a margin of 52.2% to 47.8% rejected Arizona’s Proposition 205, which would have legalized recreational cannabis.

With 100% of the votes in for Maine’s Question 1, voters narrowly passed legalizing recreational cannabis, the polls show it won by a very slim margin, less than 3,000 votes.

newfrontier_logo_finalNew Frontier Data and Arcview Market Research released an Election Day update to their growth projections for the cannabis industry by 2020. The release projects: “The legalization of cannabis in California, Massachusetts, Nevada, Florida, Arkansas and North Dakota will result in new markets that account for $7.1 billion in sales by 2020. We project the overall U.S. cannabis market will exceed $20.9 billion by 2020.” Those numbers include overall cannabis sales and assume the markets are all fully operational by 2018.

Giadha DeCarcer, (photo credit: CNN Money)
Giadha DeCarcer, founder and CEO of New Frontier (photo credit: Frontierfinancials.com)

According to Giadha DeCarcer, founder and chief executive officer of New Frontier, there is overwhelming support for medical cannabis and a majority of Americans are in favor of legalizing recreational cannabis as well. “The ten initiatives on the ballot reflect the accelerating public debate on legal cannabis access,” says DeCarcer. “The passage of California’s adult use measure and Florida’s medical initiative expand legal access into two of the country’s most populous states.” The market potential is notably enormous in California, it currently being the 6th largest economy in the world. “Additionally, the passage of the measure in Massachusetts opens the first adult use market in the Northeast extending the reach of legal adult use access from coast to coast,” says DeCarcer. “The passage of the measures in Arkansas and North Dakota shows that public support on this issue is not solely confined to urban, liberal markets but extends into conservative rural states as well.”

According to the release, by 2020 California could reach a total market size of $7.6B and Massachusetts could grow to $1.1B. Massachusetts being the first mover in the Northeast to legalize recreational cannabis will be watched very closely by a number of surrounding states that appeared bullish on cannabis legalization previously.

Leslie Bocskor, president and founder of Electrum Partners
Leslie Bocskor, president and founder of Electrum Partners

Leslie Bocskor, president and founder of Electrum Partners, believes the Election Day results will bring an influx of investing opportunities to the industry. “We are going to see a diverse approach from the irrationally exuberant to the sophisticated and experienced investor and entrepreneur getting involved, creating businesses and investing in the industry that will create innovation, jobs, wealth and tax revenue far beyond the consensus expectations,” says Bocksor. “The cannabis industry is more than one industry; it is an entire ecosystem, impacting so many verticals, such as agriculture, industrial chemicals from hemp, pharmaceuticals, nutraceuticals and more. We see the funding of innovation that might have been absent without the velocity and heft that has come from this phenomenon,” adds Bocksor. As these newly legalized markets begin to launch, it will require a considerable amount of time to see the industry flesh out in each new state.

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Tom Lohdan, Flickr

Donald Trump winning the presidential election and the GOP retaining control over the House and Senate could mean a lot of uncertainties for the future of the cannabis industry on a national scale. President-elect Trump has previously flip-flopped on the issue of cannabis legalization, but has said in the past he favors leaving the issue of medical use up to the states, advocating for access to medical cannabis, while recently saying he opposes regulating cannabis for adult use, according to the Marijuana Policy Project. The MPP gave him a C+ grade for his views toward cannabis.

On The O’Reilly Factor in February 2016, Trump told the conservative political commentator that he supports medical cannabis while opposing the recreational use. “I’m in favor of it [access to medical cannabis] a hundred percent. But what you are talking about [recreational use], perhaps not. It’s causing a lot of problems out there [in Colorado],” says Trump. It is still unclear at this time exactly what Trump’s policy will be for the now 28 states that have some form of legal cannabis.

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Aaron Smith, executive director of NCIA

Aaron Smith, executive director of the National Cannabis Industry Association (NCIA), appeared optimistic regarding the outcomes of Election Day. “More than 16 million voters, including in two of the three most populated states in the nation, chose legal, regulated cannabis programs that promote safety, boost the economy, help sick patients and address social injustices,” says Smith. In the press release, the NCIA spelled out their priorities for congressional action on cannabis policy: Opening up bank access for state-compliant cannabis businesses, ending the effects of federal tax code Section 280E on cannabis businesses and removing cannabis from the Controlled Substances Act via descheduling. “Last night’s results send a simple message – the tipping point has come,” says Smith.