Tag Archives: industry

Steep Hill Hawaii Launches, Receives ISO 17025 Accreditation

By Aaron G. Biros
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Spectra Analytical LLC, doing business as Steep Hill Hawaii, was the first cannabis-testing laboratory to be licensed by the State of Hawaii and opened for business on August 1st. Today the lab announced they received ISO 17025:2005 certifications in biological and chemical testing from Perry Johnson Laboratory Accreditation, Inc., according to a press release.

Dana Ciccone, chief executive officer of Steep Hill Hawaii, has been a patient advocate and leader in cannabis education in Hawaii, as well as a member of the Hawaii Medical Marijuana Dispensary Task Force, an organization formed by the University of Hawaii College of Social Sciences Public Policy Center to develop regulations for the state. “We are proud not only to be the first cannabis lab to be licensed in the State of Hawaii, but also now the first lab to achieve ISO certification as well,” says Ciccone. “Industry businesses, medical professionals, state regulators, and patients can be confident that our lab and its testing standards will operate to the highest international standards.”

According to the press release, the laboratory will offer services for testing cannabinoid profiles (potency), terpenes, pesticides, heavy metals, biological screening, and residual solvents, testing for 17 Cannabinoids and 43 terpenes. The release states they are locally owned and operated, providing testing services for not just industry businesses, but in-state card-holding patients as well.

“This is a turning point for the industry – we have moved very quickly to raise the industry standards in Hawaii to internationally recognized certification,” says Ciccone. “I am very proud our scientific team for the professionalism and hard work they put in to achieve this certification.”

german flag

Is There a Medical Cannabis Crisis Brewing in Germany?

By Marguerite Arnold
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german flag

There is a great deal to be happy about with medical cannabis legalization in Germany. This is the first country that has mandated insurance coverage of the drug – at least at the federal legislative level.

However, as the government evaluates the finalists in the first tender bid for domestically grown and regulated cannabis, a real crisis is brewing for patients on the ground. And further one that the industry not only sees but is trying to respond to.

Spektrum Cannabis GmbH, formerly MedCann GmbH began trying to address this problem when they obtained the first import license for Canadian cannabis last year. They are also one of the apparent five finalists in the pending government bid to grow the plant domestically for medical purposes. According to Dr. Sebastian Schulz, head of communications for Spektrum, “Shortly after the new cannabis law was reformed we experienced a huge increase in demand from the side of patients. We had prepared for that. The German population is very curious about cannabis as a medicine and in general very open to natural remedies.”

People are curious here. But like other places, the law in Germany has evolved slowly. Much like Israel, the government has allowed a trickle of patients to have access to cannabis by jumping through multiple, time consuming hoops. The process of getting cannabis prescribed, much less getting a pharmacy to stock it, was difficult. Patients had to pay out of pocket – a monthly cost of about $1,700. While that is expensive by American standards, to Germans, this is unheard of. The vast majority of the population – 90% – is on public health insurance. That means that most Germans get medications for $12 a month, no matter what they are. Allegedly, German patients were supposed to get about 5oz a month for this price. At least that is what the law says.

People are curious here. But like other places, the law in Germany has evolved slowlyAs in other countries, no matter what Germans think about recreational reform, the clear majority of them at this point support medical use. And at this point, both legislatively and via the courts, the government has said and been required to provide the drug to Germans patients at low cost.

Unintended Effects & Consequences

Since the law went into effect in March of this year however, things have suddenly turned very dire for patients.

The handful of people who had the right to grow at home – established under lawsuits several years ago – were suddenly told they could no longer do so. They had to go to a doctor and regular pharmacy. Even regular patients in the system found that their insurance companies, allegedly now required to pay, are refusing to reimburse claims. Doctors who prescribed the drug were abruptly informed that they would be financially responsible for every patient’s drug cost for the next two years (about $50,000 per patient).

Photo: Ian McWilliams, Flickr

To add a final blow to an already dire situation, German pharmacies that carried the drug, then announced an additional fee. It is about $9 extra per gram, added at the pharmacy, pushing the price of legitimate cannabis north of $20 dollars per gram. This is justified as a “preparation fee.” Cannabis bud is technically marked as an “unprocessed drug.” This means the pharmacies can charge extra for “processing” the same. In reality this might be a little bud trimming. If that. The current distributors in the market already prep and pre-package the drug.

What this bodes for a future dominated by infused products, oils and concentrates is unclear. However the impact now is large, immediate and expensive in a country where patients also must still go to the pharmacy in person for all prescription drugs.

There is no mail order here, by federal law. Online pharmacies are a luxury for Auslanders.

At minimum, this could mean that without some relief, German patients will go right back into the black market and home grow.While nobody has challenged this situation yet en masse, it is already a sore point not only for patients but across the industry. It means that an already expensive drug has gotten even more expensive. It also means that the government regulations are not working as planned.

At least not yet. For the large Canadian companies now coming into the market with multimillion-dollar investments already sunk in hard costs, Germany will be a loss-leader until the system sorts itself out.

According to Schulz, whose company is now in the thick of it, the new law is very vague. “Currently, there are almost no cannabis flowers available in German pharmacies because companies like us are not allowed to sell them,” says Schulz. “Various different regulatory demands come up that seemed to change on a monthly basis. We are ready to deliver even large amounts of cannabis for a market that might well explode soon – but we first need to overcome the regulatory nightmare that leads to the suffering of so many patients here these days.”

At minimum, this could mean that without some relief, German patients will go right back into the black market and home grow. Black market costs for cannabis are about $10-15 a gram. In other words, exactly the situation the government was hoping to avoid.

What Is Causing The Situation?

The intended effect of the legislation was twofold, according to industry insiders: To legalize cannabis in such a way to meet a rising public demand and, in the face of a court decision, to limit the home grow movement. The latter of which, despite federal regulations, is thriving here. Germans like to grow things, and cannabis is a rewarding plant to nurture.

High attendance at the Mary Jane Grow Expo in Berlin in June is just one sign that the genie is out of this particular bottle. BfArM – the federal agency in charge of regulating narcotics and medical devices – cannot stuff it back.Patients are going back to the way things were

However home grow does not build a professional, high volume cannabis market, much less a highly regulated medical one make. The government also made clear that it is going to have strict inspections and quality controls, and will technically buy all the cannabis produced, per the terms of the bid application process.

However, it is not entirely clear when the government will start actually doing the buying. And why the buying has not started yet. If insurance companies are refusing to pay, this means the government is not reimbursing them. The same government, which has also agreed to do so, as of March 2017.

What Gives On Good Old German Efficiency?

On the streets, patients are going back to the way things were. Many are used to fighting for the only drug that makes them feel better. The euphoria in May, for example, has been replaced with weary acceptance that things might get a bit worse before they really improve.

That said, there is also a realization that more activism and lobbying are required on just about every front. If an extrapolation of data from say Colorado or California is applied to Germany, there are already at least a million eligible patients here, based on the qualifying conditions. The government is planning for an annual increase in medical patients of about 5-10,000 a year, including in the amount of cannabis they are planning on buying from the licensed producers they choose. The numbers, however, are already not matching.Even existing patients are literally being forced into the black market again.

Added to this wrinkle is the other reality that is also looming, particularly now.

With one exception, all of the firms now apparently in contention as finalists for the German government bid will also be supplying a domestic market in Canada that is going rec next summer. One year, in other words, before the German companies even begin producing.

What Is The Upshot For Patients?

Guenther Weiglein is one of the five patients who sued for home grow rights in 2014. He is now suing again for the right to extend home grow privileges until the government figures out its process. He is not the only one. Earlier this year he was told he had to stop his home grow and integrate into the “mainstream” system. So far, he, along with other patients who are suing, including for insurance coverage, have not been able to get cannabis easily through the system, although they are starting to make progress.

Weiglein’s situation is made even more frustrating by the fluidity of the situation. As of late July, he had finally gotten agreement from his insurance company to cover the drug. But now he cannot find a doctor willing to accept the financial risk of prescribing it to him. And in the meantime he has no access to medication.

Talk to any group of advocates right now, and there is one ongoing story. Even existing patients are literally being forced into the black market again.

And those that can’t afford it? They are out of luck. Some patients say a tragedy like someone dying will create the impetus to move this into public eye. A hunger strike here by a leading cannabis doctor earlier this summer has so far not had much impact on policy. There is a great deal of pessimism here, as promised change earlier this year has turned into a long and drawn out multiyear question mark.

If this sounds like a bubbling and untenable situation, especially before a national election, it is. The prospect of another four years of Angela Merkel does not bode well for fast cannabis reform.

That said, the German government is now in an interesting situation. The law has now clearly changed to say that sick Germans are allowed to use cannabis as a drug of choice for chronic diseases when all else fails. Further, the national government has bound the insurance industry to cover it. So far, every patient who has sued for coverage has won. That has not, however, moved the insurance industry altogether. Nor has it solved the problem with doctors prescribing the drug.

Many now ask what will? It is clear, however, that it will change. The question is when, how fast, and in what situations.

The problem will undoubtedly ease by 2019, when the first German crops are finally ready, although it will be far from completely solved.

Florida Medical Cannabis Market Growth Stymied By Red Tape

By Aaron G. Biros
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The demand for medical cannabis in Florida might be growing steadily, with patient numbers soaring, but that doesn’t mean the market will grow accordingly. Due to hampering regulations and a lack of state guidance, the industry in Florida is tiny and patients have limited options for medical cannabis products.

A little more than three years ago, Governor Rick Scott signed a bill into law, legalizing medical cannabis, but only for terminally ill patients and only for one strain, Charlotte’s Web. That stipulated a low-THC, concentrated oil form of cannabis. That bill also set up the licensing framework for what is now an extremely limited market.

Florida Gov. Rick Scott has been accused of making the licensing process secretive Photo: Gage Skidmore, Flickr

In November of 2015, the Office of Compassionate Use, now called the Office of Medical Marijuana, issued licenses for five dispensaries. To get a license, applicants needed to meet a variety of absurd requirements. That included being a nursery in business for thirty years, growing a minimum of 400,000 plants at the time of applying, paying $300,000 in fees and a $5 million performance bond.

Fast forward to Election Day last year when voters passed Amendment 2 by a wide margin, amending the state’s constitution and legalizing medical cannabis for a broader scope of qualifying conditions. What hasn’t changed, however, is the old vertical licensing framework. Critics have dubbed this a “pay-to-play” market, with massive barriers to entry prohibiting small businesses from gaining market access.

David C. Kotler, Esq.

David Kotler, Esq., attorney and partner at CohenKotler P.A., says we shouldn’t expect to see a viable market for years as a result of all this red tape. “Honestly the State of Florida, with their limited licenses and odd requirements to qualify for licensure have stunted what could be a good market both for businesses and patients,” says Kotler. “It has been an inefficient roll-out and is truly an embarrassment for the state, legislature and the Department of Health.” Kotler says he’s heard reports of extremely limited product selection, poor quality, as well as no dried flower being offered.

But the patients are pouring in by the thousands- on July 27th, the Office of Medical Marijuana reported 26,968 registered medical patients, with more than 10,000 patients signing up since June 7th. “Despite my belief that it would be a slow roll out, it appears the patient count is picking up,” says Kotler. “The elimination of the 90-day doctor-patient relationship will certainly help this.” He is referring to the reversal of a waiting period policy, where patients had to wait 90 days before receiving a medical cannabis certification. “But there still seems to be a backup with issuance of cards and poor guidance from the Department of Health leaving many doctors unsure of what they should be doing,” says Kotler. The rules and guidelines for physicians participating in the program are still not established, but the Florida Board of Medicine expects to vote on them this week, reports say.

Matt Karnes, founder and managing partner of GreenWave Advisors

With seven licensees right now and a total of ten licensees by October allowed to grow and distribute cannabis products, the question remains if that is enough to satisfy the growing number of patients. According to Matt Karnes, founder and managing partner of GreenWave Advisors, the state is adjusting by adding more licensees and allowing them to operate more dispensaries, potentially trying to sate that demand. “Both of these amendments will likely serve as a catalyst for revenue growth but could be tempered by a lack of physician participation (as we have seen in other states) in the medical marijuana program,” says Karnes. “For every incremental 100,000 patients who register in the Medical Marijuana program, four more licenses will be issued and existing licensees will be allowed to open another four dispensaries (current cap is 25). We do not expect an incremental 100,000 patients until sometime in 2021.” His firm’s market projections account for those increases and edibles now being sold, but still no dry flower allowed. They project total sales figures in the state to reach $712 million by 2021.

Those figures are contingent on the increase in registered patients and more licensees. If Florida’s vertical licensing model remains, it’s quite possible the state will see a cannabis shortage, much like Nevada during their opening month of adult use sales. “Instead of learning from so many states before it, Florida forged a path down the rabbit hole that may limit Florida’s potential until either a legislative change or a backlash at the polls in the form of an amendment bringing forth adult use,” says Kotler. In New York, that vertical licensing model arguably created a monopoly, with only a select few businesses controlling the entire market. That doesn’t foster market growth; it hurts quality, keeps prices high and prevents real competition. “We see how that worked out for New York,” says Kotler. “We cling to that despite what could be a large patient base with the potential to service tourists who wish to have reciprocity.”

Florida’s market could be a powerhouse for the state, with the potential to generate millions in tax revenue, create thousands of jobs and actually help patients get the medicine they need. But until the state ditches their conservative, closed-door approach, we won’t see the industry truly flourish. .

Human Resources and the Cannabis Workforce

By Aaron G. Biros
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Cannabis businesses encounter a variety of problems when hiring and managing employees. Some of those are issues that every business runs into and some of them are quite specific to the cannabis industry. Chris Cassese, co-founder and managing director of Faces Human Capital Management, has some solutions for cannabis businesses facing seemingly daunting workforce management issues.

Cassese co-founded Faces HCM with Caela Bintner after two decades of working in the human resources and sales strategy across a variety of financial institutions. He oversees software platform development, daily operations, sales, and business development for their organization. Before co-founding the company, Cassese held a variety of operational and product development roles during his ten-year tenure at Merrill Lynch, worked in marketing at HSBC and was a sales and performance advisor at Insperity, a professional employment organization. Faces HCM is a professional employment organization that handles workforce compliance, education, and other HR needs for cannabis companies. They work with companies like Dixie Elixirs, LivWell and Women Grow, among other cannabis businesses.

Chris Cassese, co-founder and managing director of Faces Human Capital Management

According to Cassese, the cannabis industry faces a roughly 60% turnover rate, which is on par with the turnover rates in retail and call centers. Those are industries that typically have high turnover rates simply because the nature of the business. However, Cassese says it doesn’t have to be so high for the cannabis industry. “It is easy to say it is just high turnover by nature, but we found there are some steps that we can put in place that seem relatively easy, but are key tenants of Fortune 500 companies’ hiring strategies,” says Cassese. “Engaging in a needs-based analysis with companies will help us figure out exactly what’s going on.” They start by looking at the onboarding process, or what happens immediately after an employee is hired. “We start by looking at their pay rate, employee handbook and the paid time off policy, which are some of the points that a lot of the owners are familiar with coming from other high-end industries outside of cannabis.” He says things like swag bags, free ski passes after reaching quotas and other perks can keep employees engaged on the team. “Things like that go a long way and can reduce turnover by up to 20 or 30 percent,” says Cassese. “Sometimes [business owners] are so stressed with regulatory compliance that they don’t have time to tackle these issues so employee dissatisfaction often starts with onboarding procedures.” That can include anything from analyzing the overall compensation structure to making a video displaying the company’s vision, mission and values. “There is no panacea for reducing turnover. It requires conducting a needs-based assessment, taking pieces of what we know works well in other companies and bringing that to the cannabis industry.” Making an employee feel like they are part of the team can help boost retention and keep turnover low.

One area they often help companies with is performance reviews. “Performance reviews are a big part of any business,” says Cassese. “You can’t make progress if you don’t know where you’re going. If you don’t know how you’re doing you can’t get better.” Looking at the supervisor level, they have often found employees have never given a performance review before. “We implement processes to teach them how to deliver positive or negative performance reviews and help make them feel comfortable delivering that,” says Cassese. They might have employees perform a DISC analysis (dominance, influence, steadiness and conscientiousness), a personality test akin to the Meyers-Briggs test. “From this we can help figure out the stressors and motivators of people and create effective teams,” says Cassese. “If an employee might be more outgoing or humble, high-spirited, results-oriented, analytical or good working on teams.” These are approaches to workforce management that have been adopted from Fortune 500 companies.

Caela Bintner, Co-Founder and Managing Director of Faces Human Capital Management

Cassese says one of the most overlooked items for companies are proper I-9 verification forms. This goes back to basic record keeping and documentation, but if overlooked, companies can get hefty fines for improper record keeping. “You are supposed to have a separate binder, in a separate locked drawer where your I-9 forms are housed, but a lot of people don’t know about that, which could come back to bite them in the form of large fines” says Cassese. “Businesses can’t afford to have sloppy record keeping. We help businesses take a look at their process and how they put their files in the cloud or physical locations, which is an area where companies often need guidance.” Civil fines can reach up to $20,000 for mistakes on I-9 forms.

Employee education is another crucial aspect of managing the workforce. Faces HCM has a learning management system that gives companies the ability to push education to their employees. Education is of course a broad term and can cover a wide variety of needs for employees. “We can help them take leadership, teamwork, excel, OSHA, safety classes and more,” says Cassese. “Training that shows you active listening, empathy skills and other types of training can really help budtenders deal with customers appropriately.” They have developed customized training programs for cannabis companies expanding beyond their own state too. “As you find certain cannabis companies growing in different states they want to create a repeatable, consistent and predictable experience,” says Cassese. “Putting those standard operating procedures online is important to streamline the process and ensures that you are creating a learning or education plan to meet your employees’ needs.” That can look like requiring employees to take an online course once every quarter, or offering them books on subjects pertaining to their specific job function.

Little things like improving the employee experience, implementing an education program and keeping up with employee records can make or break a business. They all add up to solid workforce management, which if done correctly, can enhance a business’ bottom line and keep employees working for you.

Washington Selects Franwell’s METRC for Traceability Program

By Aaron G. Biros
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The Washington State Liquor and Cannabis Board (WSLCB) announced today they plan to choose Franwell as their technology partner for the state’s cannabis seed-to-sale traceability system. While the release states they have not yet officially awarded them the contract, it says Franwell is the apparent successful vendor (ASV) to replace their current system. “An ASV is the procurement term used for the highest scoring, responsive vendor,” says the press release.

Rick Garza, director of the WSLCB, says they plan on making a number of changes that they couldn’t under their current contract. “Over the last four years we have learned a lot about this industry, including aspects to the industry that were unknown when the current traceability system was implemented,” says Garza. “We need a system that will grow and flex with Washington’s maturing marijuana system.”

Seven companies submitted bids for the new contract and the agency narrowed that down to three finalists, each of which gave presentations and demonstrations on their software products to WSLCB staff last week. They also worked with folks in the cannabis industry, selected by trade organizations, that provided input on the requests for proposal. Those industry stakeholders that participated with input will get a demonstration of the new software system in early June.

They plan on transitioning to the new system no later than October 31, 2017. Franwell’s METRC product is currently used in Colorado, Oregon and Alaska.

NCIA: 280E, Federal Reform & Cannabis Lobbying Efforts

By Aaron G. Biros
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With the 2017 Cannabis Business Summit just around the corner, we sat down with Taylor West, deputy director of the National Cannabis Industry Association (NCIA), to hear about their lobbying efforts and what they’ll discuss in the keynote panel discussion on Taxes, 280E and the Path to Federal Reform. Henry Wykowski, Esq., attorney, Steve DeAngelo, founder of Harborside Health Center and Michael Correia, director of Government Relations for NCIA will join her on that panel discussion.

According to West, the 280E tax code issue has an enormous impact on the industry. This tax code essentially means that businesses cannot make deductions for normal business operations from the sale of schedule I narcotics. Because cannabis is still listed as schedule I, businesses touching the plant often pay a majority of their profits to federal taxes. “When they are handing over 80% of their profit to the federal government, which is a lot of money that isn’t being pumped into the local economy, that is a big problem,” says West. “We want to highlight how 280E isn’t just harmful to businesses, but also harmful to the local economies and states that have businesses dealing with cannabis in them.” As the primary organization lobbying on behalf of the cannabis industry in Washington D.C., they have three full-time staff as well as a contracted lobbying firm working there. “We are the voice on Capitol Hill for the businesses of the cannabis industry,” says West. “We primarily focus on a couple of core issues, and one of them is 280E tax reform since that is such a significant issue for our members touching the plant.”

Taylor West, deputy director of NCIA

Another important issue they have been lobbying on is banking access. According to West, banks and credit unions are regulated on the federal level, and as a result, are largely still reluctant to serve cannabis businesses. “The inconsistency between federal and state law means they are concerned their federal regulators will flag them for working with cannabis businesses,” says West. “It is very difficult to operate without a bank account- this creates a lot of transparency, logistical and safety issues. We are working with lawmakers to try and make a change in the law that would make it safe for banks to serve state-legal cannabis businesses.” NCIA’s lobbying efforts have long engaged a few core allies on Capitol Hill, including the representatives that formed the Congressional Cannabis Caucus. “They have been champions of broader reform issues around cannabis,” says West. “But we are also starting to see new faces, new members of congress getting interested in these issues, beyond the traditional champions.” A lot of NCIA’s recent lobbying efforts have focused on recruiting members of Congress for those issues.

One example of their success came by teaming up with Rep. Carlos Curbelo, a Republican Congressman from Florida serving on the House committee overseeing tax issues. “He hasn’t previously been involved with cannabis legislation, but because Florida moved forward with the medical program, he got more interested in the issue and we helped educate him about the problem with 280E,” says West. “Having a republican that sits on the committee dealing with these issues is a huge step forward as we build the case for reform in D.C.” A lot of these efforts will be discussed in greater detail at the upcoming Cannabis Business Summit June 12-14. “We want to talk about the work we are doing just now in Washington D.C.; we have been doing a significant amount of work helping to draft legislation that would fix the 280E issue,” says West. “We will talk about those efforts as well as what businesses are currently doing to deal with the issue of 280E.” For readers interested in getting tickets, seeing the agenda and learning more about NCIA’s lobbying efforts, click here.

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.