Tag Archives: legalization

How Cannabis Moves Around the World: Inside the Global Supply Chain

By Pam Chmiel
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Global cannabis trade is well underway as legalized countries move forward to establish a supply chain infrastructure in a newly formed and rapidly evolving industry. At the forefront of transportation logistics is Cannabilog, an Israeli company led by pharmaceutical industry veteran Yoram Eshel. In an interview, he shared his playbook for building a compliant, efficient, and scalable supply chain for global cannabis import and export trade.

 

The Complex Web of Global Cannabis Trade Regulations

According to Eshel, not surprisingly, the global cannabis trade hinges on regulatory compliance and requires expertise to manage the movement of products across continents. Unlike pharmaceuticals, where harmonized frameworks such as those of the European Union apply across borders, cannabis regulations differ drastically from country to country.

Some nations permit imports, while others ban them entirely. Even within importing countries, the rules vary by product category. “Some will allow flower, others only oil or genetics,” Eshel explains. “It’s never a simple straight line.”

Every aspect of the supply chain requires specific licensing under narcotics laws, from cultivation and storage to import and export. Adding to the challenge is the constant evolution of these laws. For example, Thailand initially embraced its booming local market and export-friendly policies, but the new government abruptly switched course and limited cannabis use to medical purposes only. In addition, Thai producers seeking to export face roadblocks because European authorities do not recognize their local GACP certifications, which are based on “Good Cultivation and Harvesting Practices for Medicinal Plants.”

Eshel emphasizes that failing to keep pace with changing laws can be costly.

 

“If you export cannabis products to another country and they can’t clear customs, the shipment is destroyed. There’s no way back.”

 

Medical Cannabis Must Meet Pharmaceutical Standards

The second major pillar of the international cannabis trade is adherence to pharmaceutical-grade standards. “Governments treat medical cannabis as a medicine,” says Eshel. “It’s exactly like Tylenol or any other drug.”

Even though cannabis has not gone through the traditional drug registration process, regulators treat it as a pharmaceutical product, which means it must comply with strict Good Distribution Practice (GDP) requirements. That includes temperature control, data logging, and rigorous quality management throughout the supply chain. Every shipment is audited and must be approved by a Qualified Person (QP) on the receiving end before entering the market. If any quality parameters are unmet, the product is rejected.

Logistics providers like Cannabilog must operate under EU GDP certification and maintain pharmaceutical-grade systems and documentation. “We are audited constantly,” Eshel says.

The difference between the medical and recreational markets often catches producers off guard, especially those in countries like Canada, which has a more recreational mindset, similar to that of the US. “When you move into the medical space,” Eshel notes, “you suddenly need temperature-controlled vehicles, validated packaging, and specialized labeling. It requires training and experience.”

Globally, countries such as Germany, Australia, and Israel classify cannabis exclusively as a medical product. “It’s not even close to recreational,” Eshel stresses. “And in most countries, recreational use is still illegal and requires special licensing.”

 

Managing Cold Chain Logistics

After navigating complex regulations and meeting pharmaceutical-grade standards, the final piece of the international cannabis trade puzzle, says Eshel, is execution.

 

“You can have your licenses, your permits, your quality system, but if you don’t execute correctly, everything can fail.”

 

Execution means maintaining control over every step, including packaging, labeling, documentation, temperature regulation, and secure transportation. Shipments must move through carefully selected routes using temperature-controlled vehicles, warehouses, and flights, with continuous monitoring to ensure product integrity is preserved. In some countries, even armed escorts are required for security.

Eshel explains that cannabis logistics is not one-size-fits-all. Each product type, including genetics, flower, and concentrates, has unique handling and storage protocols. For instance, cannabis clones present one of the most challenging forms of transport. “Most clones are unrooted,” he says. “From the moment you cut them from the mother plant, you have three to four days to keep them alive. That requires special packaging, rapid shipping, and customs clearance to get them back into water in time.”

Temperature management is another major operational challenge. Most global regulators require cannabis products to be stored and transported between 59 °F and 77 °F, known in the pharmaceutical world as Controlled Room Temperature (CRT). In the United States, many recommend that temperatures should not exceed 70 °F for optimal cannabis preservation. Eshel clarifies that maintaining actual CRT conditions demands active temperature monitoring and specialized packaging, not just insulated boxes.

For every shipment, Cannabilog conducts a route risk assessment to evaluate potential environmental extremes along the supply chain. Eshel cites the example of shipments from Canada to Australia, where opposite seasons create complex thermal risks.

 

“Winter in Canada is summer in Australia, making temperature management a challenge from continent to continent; you have to plan for that,” he says.

 

To minimize exposure, Cannabilog uses pharma-grade airline partners that store and handle products under strict temperature conditions and prioritize loading and unloading to reduce time on the tarmac. Each shipment includes data loggers that record temperature throughout transit.

 

“If there’s an excursion outside the allowed range,” Eshel notes, “the products are rejected.”

 

European regulators, he adds, tend to enforce these standards more rigorously than their U.S. counterparts. While the United States has many GMP-certified cannabis facilities, most are not EU-GMP certified, which limits their ability to export to Europe when the time comes, even though the differences are not that big.

Eshel contrasts this with Canada, where much of the market remains recreational. While medical exporters adhere to strict temperature control and quality management, domestic recreational products are often transported under looser conditions.

 

“You can’t count on the weather,” he says. “Temperature management is part of the medical cannabis infrastructure.”

 

The Last Mile in Cannabis Preservation

Most of Cannabilog’s shipments are from a cultivation or production facility to a licensed wholesaler or distribution center, rather than directly to pharmacies.

 

“We verify that every facility we deliver to is properly licensed and has temperature-controlled storage,” Eshel says.

 

Cannabilog provides insurance coverage for every shipment, including losses related to temperature excursions or other transport issues. However, ultimate product responsibility remains with the manufacturer, much like in the pharmaceutical industry.

 

“If something goes wrong, it’s the manufacturer’s duty to investigate, and if needed, issue a recall,” Eshel explains.

 

Each transfer of custody, whether at the port, airport, or distribution warehouse, marks a shift in responsibility defined by the buyer-seller agreement. Still, Eshel stresses that all parties must adhere to Good Distribution Practices (GDP) and maintain detailed documentation, including lab tests and Certificates of Analysis (COAs), to ensure transparency and traceability.

Without mandatory cold-chain standards, products are often transported in “hot trucks,” leading to product degradation. Eshel agrees: “The last mile is often the weakest link in the supply chain infrastructure as the industry strives to build a cold chain custody from seed to sale.”

Even last-mile deliveries must be temperature-controlled. The difference, Eshel says, comes down to mentality. “In Europe, it’s purely medical. There’s no confusion between recreational and medical use, so cannabis is treated just like any other medicine.”

 

The United Nations Poised To Recognize Cannabis Culture

Beyond its wellness benefits, cannabis carries a rich and diverse cultural legacy that spans the globe. In a  technical paper submitted to Mondiacult 2025, the Cannabis Embassy calls for global recognition of cannabis cultures as an integral part of humanity’s cultural diversity, and as essential to building inclusive, rights-based, and peace-oriented cultural policies in the 21st century.

Mondiacult 2025, UNESCO’s World Conference on Cultural Policies and Sustainable Development, will be held in Barcelona, Spain, from September 29 to October 1, 2025. The gathering brings together ministers, policymakers, cultural professionals, and civil society leaders from all 194 UNESCO Member States to shape the global cultural agenda for the years ahead.

The Roots of Cultural Erasure

The paper begins by tracing how cannabis’s regulation transformed into prohibition. In 1925, the International Opium Convention first put cannabis derivatives under international control. But it was the 1961 Single Convention on Narcotic Drugs that went further, specifically mandating in its Article 49 that traditional or non-medical uses of cannabis should be “abolished” as soon as possible.

This legal architecture effectively criminalized centuries of cultural practices almost overnight, without regard for the histories, traditions, or worldviews of communities that had used cannabis as part of their heritage.

The authors highlight a stark paradox: although Article 49 attempts to eradicate non-medical uses, cannabis use and culture never disappeared. Instead, they persisted and adapted underground, often at great social and legal risk to the people involved.

Culture of Resilience

Criminalization has driven cannabis traditions underground, disrupting the transfer of knowledge across generations and forcing communities to safeguard their heritage in secrecy. The war on drugs has made it risky to openly celebrate or develop cultural practices tied to the plant.

Yet despite decades of stigma and repression, cannabis cultures have shown remarkable resilience. Communities have preserved knowledge orally, sustained clandestine cultivation networks, and reinvented social practices to keep traditions alive.

Still, criminalization has silenced open expression, marginalized traditional growers and knowledge holders, and left indigenous and legacy communities sidelined in legalization efforts that rarely create fair or inclusive opportunities.

Human Rights, Cultural Rights & the Need for Reconciliation

The technical paper frames this struggle in the language of cultural and human rights. International human rights instruments (e.g., UDHR, ICESCR, ICCPR, and treaties protecting indigenous and minority cultures) affirm that all peoples have the right to participate in cultural life, to transmit traditions, and to enjoy “the moral and material interests” tied to their cultural expressions.

Yet, the authors argue, cannabis communities have been systematically denied these rights through prohibition, stigma, and exclusion. Tools of cultural safeguarding (such as UNESCO’s 2003 Convention on the Safeguarding of Intangible Cultural Heritage) have rarely been applied to cannabis-related practices. The paper calls for a recalibration of international norms so that cannabis communities can access recognition, protection, and support.

Policy Recommendations & Pathways Forward

As the world convenes for Mondiacult 2025, this moment presents a window for structural change. The paper sets out key recommendations:

  1. Acknowledge a cultural crisis: explicitly recognize how prohibition has impaired the cultural rights and heritage of cannabis-associated communities.
  2. Reexamine conflicting treaties: address the tensions between Article 49 of the Single Convention and human rights frameworks (UDHR, ICESCR, ICERD).
  3. Support community-led safeguarding efforts by investing in participatory processes to document, revitalize, and protect cannabis-related cultural expressions.
  4. Create enabling environments at national and regional levels, and remove legal and social barriers that prevent communities from freely maintaining or developing their traditions.
  5. Promote equitable benefit–sharing and protections: guard against exploitation or biopiracy of cannabis genetic resources and traditional knowledge.

By recognizing cannabis cultures as part of the global mosaic of cultural expression, and by re-centering rights, dignity, and community control, the authors argue, we can shift from a “war on drugs” mindset toward a culture for peace paradigm.

Read the full report from the Cannabis Embassy here:

Quality From Canada

Inside Red Light Holland’s Plan to Bring Psilocybin Products to the Global Market

By Pam Chmiel
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Red Light Holland (CSE: TRIP) has established its foundation in the Netherlands, where psilocybin truffles, the underground sclerotia of psilocybin mushrooms, are legally permitted for cultivation and sale. The above-ground mushroom is prohibited, but the truffle is treated differently under Dutch law, despite delivering the same psychoactive effects.

“It’s really the same thing, with the same effects,” says CEO Todd Shapiro, “but because it forms underground, it can be sold in compliance with Dutch law.”

From its cultivation facility, RLH distributes truffles through a wholesale partnership to over 150 wellness shops under its brands iMicrodose and Maka. “We like to think of them as wellness shops rather than smart shops, like they are referred to in Holland,” Shapiro explains, underscoring the company’s emphasis on education, QR-code-based information, and community engagement. While regulations prevent RLH from turning truffles into edibles such as gummies or chocolates, its vacuum-sealed, raw truffles have become a steady revenue stream. “They’re a bit walnut-y,” Shapiro notes, “but they sell well and people rarely complain.”

 

Canada: Positioning for a Regulated Future                                                           In Canada, RLH is preparing for the potential regulatory shift that could pave the way for the legalization of psilocybin products. The company has already developed psilocybin gummy formulations, but for now, it only sells them as functional mushroom products that don’t contain psilocybin. This approach not only helps build brand recognition, but it also keeps the company R&D-ready, allowing it to move quickly if Health Canada establishes a legal framework for psilocybin.

 

United States: Research Partnerships for Validation                                        South of the border, RLH has partnered with Irvine Labs, a DEA-registered laboratory in California. The lab is testing RLH’s truffles, imported from the Netherlands, to confirm potency, safety, and pharmacological value. The partnership is central to RLH’s long-term vision of formulating psilocybin capsules tailored to various needs, including microdosing, therapeutic use, and wellness.

Shapiro frames the multi-pronged approach as deliberate groundwork for the future. “The Netherlands gives us a legal, revenue-generating business today. Canada positions us for tomorrow. And in the U.S., we’re laying the foundation with science so that when the regulatory environment changes, we’ll be ready.”

 

Research & Consumer Insights                                                                                In addition to building commercial distribution, Red Light Holland is investing in research that could help shape future regulations. Through its iMicrodose app, the company collects voluntary, anonymized data from consumers in the Netherlands on how they are using psilocybin truffles, whether for trauma, pain management, recreation, or general wellness. Shapiro points to a substantial interest in using psilocybin to tame menopause symptoms from their data.

 

“We ask our consumers if they’d like to participate in the app and give us data on how they’re using it,” explains Shapiro.

 

The data was analyzed in collaboration with Drug Science UK under the leadership of renowned neuroscientist Professor David Nutt, one of the most respected voices in psychedelic research and policy. The published study confirmed that RLH’s data provided meaningful evidence of consumer benefit. “A lot of it is anecdotal research, which is key research,” says Shapiro. “It’s almost like its own Phase 1.”

The findings also carried a regulatory impact. RLH presented its consumer data to lawmakers in Oregon as they developed the state’s psilocybin program, contributing to the inclusion of microdosing language in the final bill. “This was a huge win for the company,” Shapiro says. “It adds credibility, validation, and shows how we can responsibly influence policy through science-backed data.”

For RLH, consumer research serves a dual purpose: it provides a self-regulatory framework for the safe distribution of products today, and it informs the company’s plans for future formulations as regulations evolve.

 

Standardization & Medical Pathways                                                                   Red Light Holland is also working behind the scenes to prepare psilocybin for the medical market. The company has partnered with labs in both Canada and the U.S. to analyze and standardize its products, laying the groundwork for future pharmaceutical-style formulations.

In Canada, RLH has collaborated with Seacrest Laboratories in Montreal, securing multiple permits for the import of psilocybin from Health Canada. These projects have produced certificates of analysis (COAs) to understand psilocybin content better and explore standardized dosing formats. “We’re learning about the standardization of our product,” says Shapiro, “whether that eventually becomes ground into powder form or an extract. The end goal is to move toward a consistent, pill-like product for microdosing.”

In the U.S., RLH works with Irvine Labs in California, a rare FDA-approved, DEA-compliant facility, to advance similar objectives. The partnership underscores RLH’s long-term ambition: validating its Dutch truffles as a source for medical-grade psilocybin products that could one day be distributed under compassionate care or special access programs.

“It’s a slow path,” Shapiro admits. “No one would normally start a business that they could only sell in about one percent of the world. But if you want to be an outlier versus an outlaw, you take the careful approach by generating sustainable revenue in Holland while advancing science and regulations in North America.”

 

Slow and Steady                                                                                                    While regulatory doors are starting to crack open in places like Germany, Australia, New Zealand, and the Czech Republic, RLH isn’t rushing in. Shapiro is careful to point out that the company has no interest in repeating the mistakes of many cannabis operators who built massive facilities before the market was ready, only to burn through cash and collapse in oversaturated conditions. Instead, RLH is pacing itself, positioning products, standardizing formulations, and preparing for the moment commercialization becomes viable.

“It’s frustrating for some investors who want instant results,” Shapiro admits, “but the reality is we can only sell in one percent of the world right now. We’d run out of money if we tried to scale too fast. Every move has to be deliberate.”

For RLH, the mission remains steady: take psilocybin from the underground to the mainstream. Until regulations evolve, the company is committed to cautious progress, ensuring it will be ready to deliver once legalization expands.

 

Market Readiness                                                                                                       To help normalize psilocybin, RLH has leveraged functional mushrooms with its Happy Caps grow kits and mushroom gummies to establish brand awareness. Happy Caps started as homegrow kits for lion’s mane, shiitake, and oyster mushrooms, products that ended up on the shelves of Costco and other major Canadian retailers. The idea is simple: just as Canada allowed adults to grow cannabis at home after legalization, psilocybin might one day follow a similar path. If that happens, RLH will already be positioned with both the distribution channels and consumer familiarity to shift from lion’s mane to psilocybin.

More recently, RLH launched mushroom gummies in Canada made with a lion’s mane and shiitake blend. These gummies carry a Health Canada–approved NPN number, which allows the company to make validated health claims, such as immune-boosting and antioxidant properties that most competitors cannot legally advertise. Shapiro says this not only sets RLH apart in the crowded functional mushroom category, but also provides a ready-made blueprint for psilocybin gummies once regulations allow. “It’s a much easier way to consume than chewing on a raw truffle,” he explains. In other words, today’s Happy Caps gummies are tomorrow’s psilocybin edibles.

In parallel, RLH is deepening its scientific foundation through a partnership with Irvine Labs. The company has already imported truffle samples for testing, focusing on potency, shelf-life stability, and consistency—critical steps in moving psilocybin from a naturally variable product to a standardized medicine. “If you’re microdosing for medical reasons, you want to be sure each dose delivers the same effect,” Shapiro explains.

That requires rigorous testing under pharmaceutical standards, much like cannabis research has revealed the complexities of the entourage effect.

Shelf stability has emerged as one of the biggest challenges. Like fresh produce, truffles degrade quickly if not kept under controlled conditions. For RLH, understanding how to preserve potency over time is key to developing future formulations, whether in pill or extraction form. “Consistency is always the goal when it comes to drug discovery,” Shapiro notes.

 

Strategic Growth Through M&A                                                                    Beyond consumer products and R&D, RLH is also exploring mergers and acquisitions as a path to scale. Shapiro says the focus is on acquiring brands with strong recognition and the potential to be cash flow positive, rather than companies burning capital. “A great Instagram account and loyal customers can be half the battle,” he notes. The idea is to consolidate products, share resources, and expand distribution while maintaining financial discipline.

Still, opportunities are scarce. After reviewing more than 40 companies over the past two years, Shapiro says nearly all were losing money. The demands of major retailers compound the challenge—fulfilling large orders requires significant upfront inventory and the ability to survive long payment cycles, which can stretch 90 days or more.

While RLH has heard of pioneering efforts, such as Oregon’s first psilocybin edibles, local ownership laws, and public company reporting requirements make direct entry into that market difficult. For now, the company continues to evaluate partnerships and acquisitions that align with its strategy, while supporting others that advance the industry. As Shapiro puts it, “Rising tides lift all boats.”

 

Looking Ahead                                                                                                        Red Light Holland is narrowing its focus on CPG products, leveraging its experience in the Netherlands while preparing for a global market. While the company continues some cultivation, its strategy centers on creating standardized, science-backed psilocybin products that can reach more people and address the growing mental health crisis. “We’re a psilocybin company at the end of the day,” says Shapiro, “focused on products that can help people, responsibly and sustainably, while navigating complex regulations and building a foundation for future growth.” By combining research, consumer insights, careful regulatory planning, and selective M&A, RLH is positioning itself to take psilocybin from niche wellness shops to mainstream markets worldwide.

From The Lab

MJBowl Comes For New York Brands

By Pam Chmiel
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MJBizCon, the largest and one of the most influential gatherings in the cannabis industry, is adding a new element to its lineup: a cannabis competition.

This year marks the debut of the MJBowl awards on December 4th in Las Vegas, produced in partnership with Budist, the first-ever review platform to combine consumer feedback with expert ratings from seasoned professionals.

Elevating Cannabis Standards

Often compared to Wine Spectator, the influential magazine known for expert ratings, detailed tasting notes, and industry news, Budist applies a similar model to cannabis.

“Cannabis needed a professional ratings and review platform that elevates a brand’s standards,” said Claudio Miranda, co-founder and COO of Budist. “Just like wine, coffee, or craft beer, cannabis deserves a transparent, unbiased system for measuring quality.”

The inaugural event will feature separate competitions in California and New York, with winners crowned in each state. While future editions may pit markets against one another, for now, the MJBowl is designed as a celebration of excellence rather than a direct state-to-state showdown, since cannabis remains federally illegal and cannot be shipped across state lines.

Driving Premiumization in Cannabis

Beyond ratings and reviews, Budist is also tackling one of the industry’s most persistent challenges: the lack of education around products. Miranda points out that cannabis is often reduced to a race to the bottom, where products are judged primarily on low prices and high THC percentages.

By introducing expert-driven evaluations, Budist aims to help consumers understand why some products command a higher price, just as wine drinkers learn to distinguish between a $10 and a $100 bottle. The platform also shines a spotlight on cultivators and brands that invest in craftsmanship, such as high-quality sun-grown flower, which is often undervalued in today’s market.

“Education is key,” Miranda explained. “Some consumers want value products, and that’s fine. But others are willing to pay more for craftsmanship and quality, and they want to know why that product is worth the premium. That’s where we come in—helping consumers make sense of the differences.”

Budist vs. Ganjier: Complementary Roles

Because Budist is often compared to the Ganjier program, Miranda clarifies the distinction and how they complement one another.

  • Ganjier, founded by renowned cultivator Kevin Jodrey, is the industry’s first sommelier-style certification program. It provides deep product knowledge, professional credentials, and evaluation training similar to earning a degree.
  • Budist is a platform. It gives certified experts, including many Ganjiers, an outlet to apply their skills in the marketplace.

In addition to expert reviews, Budist also includes consumer ratings, creating a dual system modeled after platforms like Rotten Tomatoes, where both critics and everyday users contribute.

 

“Both perspectives are valid,” Miranda said. “Our professionals might include Ganjiers, longtime competition judges, journalists, or educators, but they all share a commitment to standardized, unbiased product evaluation. At the same time, consumer input provides balance and insight into what everyday users value.”

 

Together, programs like Ganjier and platforms like Budist help professionalize cannabis evaluation, giving the industry tools to recognize quality while also educating consumers about the nuances that distinguish one product from another.

California vs. New York: Different Stages, Different Stories

One of the most compelling aspects of the MJBowl will be seeing how winners differ between California and New York.

California has had a legal cannabis framework for over 20 years and is a hub of innovation for brands, product formats, retail experiences, and cultivation and extraction methods. New York’s regulated market, by contrast, is still in its early stages. While its traditional market is longstanding, the legal side has fewer brands and less product diversity, making it more of a developing market than a mature one.

It’s not just about the products. Each MJ Bowl competition reflects the culture of its state. In New York, social equity license holders make up a majority of the market, accounting for approximately 54 percent across cultivation, manufacturing, and retail. Many of these operators come from the legacy market and support one another as they transition into the legal industry. Growers supply brands, brands support retailers, and retailers provide visibility for their community peers. This longstanding network of collaboration is now thriving in the regulated space, giving New York’s cannabis scene a uniquely cooperative spirit.

California, by contrast, brings decades of product innovation and a deep bench of brands, with judges steeped in West Coast cannabis culture. New York’s judging team is being built from within its own community. “This isn’t about California going to New York and telling them what we think of their products,” Miranda said. “It’s about letting each market speak for itself, from producers to consumers and professionals alike.”

How Judges Decide What Wins

According to Miranda, winning products don’t follow a single formula; trends, innovation, and what’s bubbling up in the market all matter. Years ago, hydrocarbon extracts such as shatter and wax dominated competitions, while today’s connoisseurs favor solventless products like rosin. Edibles have evolved from simple brownies to precisely dosed chocolates, beverages, and nanotech-infused products. Judges also reward innovation across hardware and packaging, not just flower or concentrates.

Budist is working to elevate standards by implementing a 100-point evaluation rubric that scores aroma, flavor, appearance, and effect, weighted differently according to category. For example, concentrates are judged heavily on aroma and flavor, while medicinal capsules are judged primarily on whether they deliver the promised effect.

The scoring system also recognizes that consumer expectations vary widely across categories. “You can’t measure rosin against distillate and call one better than the other; they’re different products serving different purposes,” Miranda explained. That’s why products compete within subcategories, ensuring fair comparisons and allowing each style to shine on its own merits.

For the MJBowl, there are five main competition categories:

  • Flower
  • Pre-rolls
  • Vaporizers
  • Concentrates
  • Edibles

Within these, entries are divided into 11 subcategories—such as distillates, live resin, solventless extracts, chocolates, gummies, and beverages to ensure recognition across the full spectrum of cannabis products.

What Winners Receive

In addition to honoring winners on the national stage at MJBizCon, the MJBowl ups the stakes with event tickets, an awards show entry, and a travel voucher to Las Vegas. Winning brands also gain major visibility through post-event press coverage, Budist social promotion, and amplification from MJBiz.

Retail partners in each state, such as The Artist Tree, with 10 California locations, and Gotham, with four dispensaries in New York, have committed to showcasing winners on their shelves.

“This isn’t an award that disappears once the show ends,” Miranda said. “It translates directly into new opportunities for brands. So we hope everybody enters.”

 

Hear Claudio Miranda’s full interview on the Innovating Cannabis Podcast and YouTube.

Making the Cannabis Industry SAFER for America

By Melissa Kuipers Blake, Osiris Morel
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After nearly a decade of conversation and education on the Hill, the Senate Banking, Housing and Urban Affairs Committee finally held a markup on the Secure and Fair Regulation (SAFER) Banking Act. Previously known as the SAFE Banking Act, the “R” was included to account for Sen. Jack Reed’s (D-RI) concerns with Section 10. The senator shared his concerns publicly on May 11 during the “Examining Cannabis Banking Challenges of Small Businesses and Workers” hearing. Sen. Reed said that Section 10’s language “would make it more difficult for federal regulators to raise the alarm about relationships with any customer that presents significant risks to the bank” and shared that such a provision is “not limited to the marijuana industry or the cannabis industry,” but that it “could allow pyramid schemes or all sorts of other interesting activity to go on without an effective response by the regulator.” Since then, he and a group of bipartisan members, including Majority Leader Chuck Schumer (D-NY), Senate Banking Committee Chair Sherrod Brown (D-OH), and Sens. Steve Daines (R-MT), Cynthia Lummis (R-WY), Kevin Cramer (R-ND) and Kyrsten Sinema (I-AZ), have worked endlessly to develop language to resolve such concerns while maintaining GOP support, leading to the SAFER Banking Act.

Number of Depository Institutions Actively Banking
Cannabis-Related Businesses in the United States
(Reported in SARS)

The difference between the SAFE Banking Act and the SAFER Banking Act can mainly be found in Section 10. Changes focus on and determines:

  • How regulators terminate bank accounts;
  • How the Federal Deposit Insurance Corporation (FDIC) develops guidance for financial institutions serving state-licensed cannabis businesses;
  • How income derived from state-legal cannabis business activity is managed;
  • That personal and political beliefs cannot impact a financial regulator’s decision making;
  • That federal banking regulators and state banking supervisors and their secretaries of Commerce and Treasury would create rules to increase access to deposit accounts and how such individuals would enhance customer relationships with rural, low- and moderate-income, unbanked and tribal communities; and
  • How the FDIC would conduct a biennial survey and report on barriers for small- and medium-sized businesses.

During the markup on Wednesday, members introduced and discussed a range of amendments related to criminal justice reform, the racial wealth gap, federal regulators and their processes, rescheduling and the opioid epidemic. In total, there were six amendments, one by Chairman Brown, as well as Sens. Mike Crapo (R-ID), Bill Hagerty (R-TN), Mike Rounds (R-SD) and two by Sen. Raphael Warnock (D-GA). Sen. Brown’s amendment, which would make technical changes to the bill, was the only amendment to prevail on a 17-6 vote.

Senate Majority Leader Chuck Schumer (center), Senate Finance Committee Chair Ron Wyden (right) and Senator Cory Booker (left)

To begin the markup, Chair Brown said that propelling this legislation is a critical step in reversing the damage done by the war on drugs and clarified that the SAFER Banking Act would create a better financial system for small and medium-sized cannabis businesses that lack access to such traditional banking services. Sen. Daines, who served as the committee ranking member in place of Sen. Tim Scott (R-SC), who was in California preparing for the Republican presidential debate, shared that although he opposes legalization or decriminalization, he agreed to sponsor and support the SAFER Banking Act because it would fix the current banking system for cannabis businesses nationwide. After hearing remarks from Sens. Lummis, Catherine Cortez Masto (D-NV) and Sinema, the committee voted on the bill, and approved its passage to the Senate floor on a 14-9 vote. Senators voting in favor of the bill were Brown, Tester, Warren, Reed, Menendez (by proxy), Smith (by proxy), Warner, Fetterman, Cortez-Masto, Sinema, Van Hollen, Lummis, Cramer and Daines, and voting against the measure were Sens. Warnock, Scott (by proxy), Crapo, Tillis, Kennedy, Haggerty, Vance and Britt.

After the vote, Sen. Jeff Merkley (D-OR) thanked Sen. Rand Paul (R-KY) and former Republican Sen. Cory Gardner (CO) for their early efforts and for bringing the legislation and issue to the chamber’s attention and concluded that he hopes to have a robust discussion with the full Senate chamber.

With the bill out of committee, it heads to the Senate floor for additional input, discussion and potentially a vote. Majority Leader Schumer has said he intends to bring the SAFER Banking Act to the floor “with all due speed” and noted that he is committed to attaching Rep. Dave Joyce’s (R-OH) Harnessing Opportunities by Pursuing Expungement (HOPE) Act and Rep. Brian Mast’s (R-FL) Gun Rights and Marijuana (GRAM) Act to the final legislation. Sen. Schumer also shared that such provisions would address the war on drugs, bolster social equity and criminal justice reform and protect Second Amendment rights for medical cannabis patients.

When the SAFER Banking Act will receive floor time remains unclear, but Leader Schumer has made numerous representations that he would like to see it done this year.

Sustainability in Cannabis Packaging: Balancing Preservation and Environmental Impact

By Jack Grover
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Even a cursory review of cannabis reveals that the market has been notoriously wasteful, polluting the environment with chemical fertilizers, misused pesticides, contaminated plants, and—perhaps most problematically—thoughtlessly excessive packaging.

The industry is in dire need of sustainable practices, and the easiest way to start an impactful new trend is from the outside in: a.k.a., adjusting how you’re parceling your products.

Honing in on sustainable packaging isn’t just a good move for the environment. It’s also more cost-effective, less labor-intensive and allows you to provide consumers with the best possible version of your flower—no matter how far through the supply chain it’s had to travel before hitting retail shelves.

Cannabis has progressed: It’s time for its packaging to do the same

By the time legalization began sweeping the nation, the industry already had several decades of experience operating underground. With that discretion came a lot of built-in habits around not attracting attention, and for packaging, the focus was solely on not looking like a cannabis product.

An overabundance of plastic isn’t cutting it anymore—not only when it comes to environmental friendliness, but for the integrity of the product itself.

Today, increased legalization grants operators the freedom to expand without the fear of being seen, and as a result, there’s no longer any excuse for wasteful packaging to be the industry’s norm. Glass jars, Ziplocks and an overabundance of plastic isn’t cutting it anymore—not only when it comes to environmental friendliness, but for the integrity of the product itself.

“I’ve been designing packaging in the cannabis industry since 2013, and a lot of trends have come and gone. We used to put flower in plastic Rx jars and paper envelopes. In general, there was a lot of waste: excess boxes and jars that all get thrown away,” says Legacy’s Chief Cannabis Officer Ryan Hedrick. “And when consumers pull the products out of those containers, your marketing doesn’t remain intact. The box gets thrown away, and now they’re just carrying around a labelless jar. Not only is it bad for the environment, but it isn’t helping you promote your brand at all.”

How sustainable storage optimizes curing and shelf life of flower

As for the curing process, Hedrick used to use airtight buckets, which both took up a lot of room and wasn’t at all effective for maintaining cannabis’s ideal humidity levels. He’s since switched to passive atmospheric packaging, which utilizes increasingly popular technology to keep humidity—and sustainability—in mind. “The buckets weren’t letting any moisture out. On top of that, you can imagine how much room 165 five-gallon buckets takes up in a grow space,” Hedrick says.

The same goes for long-term storage. With humidity-controlled bags, operators can rest assured that their product will maintain its efficacy, because as soon as that pack is sealed, the humidity level is guaranteed to stay the same.

Cannabis brand Lava Leaf Organics relies on passive atmospheric packaging for efficient storage—mainly because of the reduction in carbon footprint and increase in terpene preservation.

“When we think about the energy involved in packaging and shipping large amounts of heavy glass jars compared to TerpLoc bags, it was an easy decision for us,” said Lava Leaf Organics CEO Tony Martinez.

“The bags are recyclable, and compared to glass jars with child-resistant lids, they’re much better at preserving terpenes. Using sustainable packaging allows us to put our best foot forward and to better control our customer’s brand experience.”

Tips for making sustainable storage work for you

Sustainable storage is an environmentally-responsible move for the cannabis industry to make, but when weighing the pros and cons of a big switch like this, operators should also keep in mind how positively it will impact their end product, consumer’s experience, and, subsequently, their industry-wide reputation.

Some product packaging examples in the market today

Placing your products in eco-friendly bags is just the start. There are definitely more tips and tricks operators can take advantage of to prolong the use of sustainable materials and ensure they’re leaving as small a footprint as possible. For example, Hedrick’s team reuses their passive atmospheric packaging for maximum efficiency—especially when it comes to bulk storage or curing.

“We mark all of our storage bags with the original strain, so we can reuse that bag for the same strain as long as it passes testing along the way. When I do so, I take a mixture of SaniDate and water to make sure everything is sanitized and clean,” Hedrick said. “That allows me to reuse them for about 3-4 months’ worth of curing and storage. You can reuse a bucket in that same way, but when it’s time to replace it, you’re still spending another $15-$17.”

Sustainable, humidity-controlled packaging is also ideal for testing consistency. If you send in five buckets of the same strain to be tested, you run the risk of them all sitting at wildly different humidity levels, which means some might pass, and others might be rendered trash.

All of the environmental benefits aside, using sustainable packaging just makes cents—literally. “Essentially, I’m saving a minimum of half a million in packaging every year. That’s my entire staff’s salary for two months. That’s incredible, impactful, significant savings that can make a huge difference for a business trying to expand.”

Cannabis in Texas: A Look Ahead to Legalization and Beyond

By Abraham Finberg, Rachel Wright, Simon Menkes
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A Uniquely Texas Approach to Cannabis

The last few decades have seen the United States move forward state-by-state with the legalization of cannabis. Every state is charting its own unique path, and nowhere is this truer than with the state of Texas.

The Lone Star State has made its way from being staunchly anti-cannabis to expressing its own blend of temperance and careful action, combined with a medical cannabis program that’s expanding.

Any predictions regarding the future of cannabis in Texas must take into consideration both the state’s past and its values. In the end, it’s clear that Texas will embrace cannabis in its own individual way and at its own pace, but with a timeframe that appears to be arriving sooner rather than later.

The Debate Continues

108 years after Texas first banned cannabis and the debate continues. Even though Texas has a medical cannabis program, cannabis is still illegal in the state, with possession of less than two ounces a misdemeanor. Possession of more than four ounces is a felony punishable by a $10,000 fine and from 2-99 years in jail.

Texas’s 2015 Compassionate Use Act created the state’s medicinal cannabis program, which now makes treatment available only in the form of low-THC oil of a maximum strength of 1%, and only to a small list of serious conditions: epilepsy, terminal cancer, autism, multiple sclerosis, amyotrophic lateral sclerosis (ALS), seizure disorders, incurable neurological disorders such as Alzheimer’s, Parkinson’s, Huntington’s Disease and PTSD.

Support for a Stronger Medicinal Cannabis Program Comes from Prominent Politicians

Texas Department of Agriculture Commissioner Sid Miller, a leader in Texas politics and one of the architects of Texas’s burgeoning hemp industry, has encouraged Texas legislators to create a more complete medical cannabis program.

Texas Department of Agriculture Commissioner Sid Miller

“I am for medical use,” Miller said in an August 2023 interview. “We have so much good science now. And we know what diseases it can treat, yet our legislature picks winners [and] losers. If you’ve got this disease, you can get treated, but if you’ve got this disease and cannabis will help you, you can’t get treated. We need to let the doctor-patient relationship make those medical decisions and not some bureaucrat or some politician … I’m not a supporter of recreational marijuana, but if someone has a condition that this chemical will help, they should be able to use it.”

Texas Representative Joe Moody from El Paso has worked for many years to promote adult-use cannabis. He recently co-authored two pro-cannabis bills, HB 1805, which would have expanded covered medical conditions and defined a per-doze THC limit instead of a percentage limit on cannabis products, and HB 218, which would have decriminalized cannabis.

Although both bills passed the House of Representatives, they were stopped in the Senate. The next session of the state legislature, which happens every two years, won’t begin until January 2025, so that is the earliest any change in cannabis statutes could take place.

The Future of Medicinal Cannabis

There are currently only three dispensaries in Texas. They appear to be servicing the state’s 268,000 square miles through a series of weekly drop-offs to satellite “partner locations,” which are open an average of only two days per week. This is not exactly a corner-CVS type of arrangement, and the need for new dispensaries for the state’s 61,000 registered patients is high.

The Texas Department of Public Safety took applications for new medical dispensary licenses between January and April 2023. Tony Gallo, managing partner of Sapphire Risk Advisory Group, which helped twelve licensees prepare their applications during this round, anticipates around ten new dispensaries being approved.

All licensees must be vertically integrated – product must go from seed-to-sale under one license – and each applicant paid $7,356 to apply. If approved, the applicants will owe another $488,520.00 for a two-year period.

Many knowledgeable Texans, including Agriculture Commissioner Sid Miller, predict a fully-functioning medicinal cannabis market is just a few years away. “If you can get it to the floor, probably 70% or 80% of the legislative body will vote in favor of it because we have such good science on it. [Originally] we thought, ‘Well, that’ll lead to recreational use or more drug use,’ but it’s not. It’s a plant derivative. Medical marijuana is not nearly as addictive as some of the prescription drugs we use now.”

The Push is On for Adult-Use

Representative Joe Moody believes that adult-use is not too far away in Texas’s future either, and that the way to speed its arrival is through education. He recently sponsored HB 3652, the Texas Regulation & Taxation of Cannabis Act, in order to start a dialogue on what a retail cannabis market will look like in Texas.

Texas Representative Joe Moody

On April 26, 2023, Moody and his bill received a public hearing in the House Committee for Licensing and Administrative Procedures in which many points about setting up a retail market in Texas were discussed. A 10% cannabis tax was proposed by Moody, to be split evenly between the state and local government. Licenses would be required for those growing, selling, transporting or testing cannabis, although individuals would be allowed to grow or possess it in small amounts for personal use. Legal sale and consumption would be limited to adults 21 years of age and older, like alcohol. And of course, cannabis possession would be decriminalized.

How Strong is the Market Potential for Cannabis?

One indication of how strong even a fully-open medical cannabis market might be in Texas came during Moody’s hearing from the testimony of Estella Castro. Castro owns two medical dispensaries in Oklahoma just across the state line from Texas and suspects most her buyers are from Texas. “They have a Texas plate and they come in and buy $500 to $600 worth of product,” she said. Her two shops generated $158,000 in taxes to Oklahoma, most of which she believes should have gone to Texas.

New Mexico recently legalized adult-use cannabis, and the small towns along the Texas-New Mexico border are seeing a lot of traffic from Texas. In the first week of adult-use sales, the New Mexico did adult-use sales totaling $6 million. Of those sales, $1.5 million came from dispensaries in 5 small border towns.

Florida and California Suggest the Scope of a Mature Cannabis Market in Texas

The potential for a fully developed medical cannabis market can be gleaned by studying the next smaller state, Florida, which has an open, mature, medical cannabis market. Florida, with 20 million people, is about two-thirds the size of Texas, which has 30 million inhabitants. Right now, Florida boasts 700,000 cannabis patients whereas Texas only has 61,000. Simple math suggests a fully open, mature, medical cannabis market in Texas could see over a million patients gain relief.

California is the nation’s most populous state with 39 million inhabitants, and its cannabis revenue gives some perspective as to the size of a Texas adult-use market. 2024 estimates of California’s cannabis revenue suggest the Golden State will see $7.2 billion legal cannabis sales while the illegal market will generate another $6.4 billion for a total of $13.6 billion. With a reduction for Texas’s smaller size, these numbers suggest a fully-mature Texas adult-use cannabis market could generate close to $10 billion in annual revenue.

Large adult-use states like California and New York are notorious for having an illicit market that threatens to derail their legal, tax-paying cannabis license holders. Texas’s strong business-friendly focus should help deter such an illicit marketplace from gaining too significant a foothold.

The Back-Door Cannabis Industry

Meanwhile, an extensive “back door” cannabis industry is in full swing in Texas. CBD shops now sell delta-9 (fully psychoactive) THC/CBD gummies and tinctures made from the hemp plant, which is the low THC-version of the cannabis plant. These THC/CBD products adhere to the 0.3% definition of hemp as required by the federal 2018 Farm Bill and are legal and available for over-the-counter or online purchase in Texas’s CBD stores.

Gummies, tinctures and other products made form them hemp plant

Current estimates are that there are over 5,000 hemp, CBD and cannabinoid retailers, manufacturers and distributors in Texas that employ more than 50,000 workers and generate more than $8 billion in annual revenue. With these numbers, the 1,100+ licensed Texas hemp growers are sitting well where they are and are poised to take advantage of a legal adult-use market if and when Texas decides it is ready to go down that path.

Next Steps for Texas’s Cannabis Market

People familiar with Texas’s cannabis market believe that adult-use is a ways down the road for the Lone Star State, and that the near-term focus needs to be on decriminalization and achieving an unincumbered medical cannabis system. Tony Gallo of Sapphire Risk Advisory Group advises the Texas cannabis community to concentrate on “increasing what conditions are allowed for medicinal use” and “increasing what areas of the state it’s allowed to be sold.”

There is a groundswell of public support for decriminalizing cannabis as well as for allowing adult-use. A December 2022 poll showed 55% of Texans support legalizing at least small amounts of cannabis for recreational purposes, and another 28% said it should be legal for medicinal purposes.

A February 2023 poll by the University of Houston found that 82% of Texans support the Legislature passing a bill that would allow people to use marijuana for a wide range of medical purposes with a prescription. The belief that cannabis is a “gateway drug” that would make people more likely to use other illegal drugs is losing traction as well – 70% said it would make people less likely to do so or would have no impact.

Final Thoughts

The demand for cannabis in the Lone Star State is strong. With the likelihood of a fully-functioning medical cannabis market coming soon, and the possibility of decriminalization not too far behind, it’s clear that the future of cannabis is bright in Texas.

While the legalities around adult-use will take longer to work out, and the place of hallucinogenic hemp in the mix needs to be examined and clarified, one fact is certain. The path forward that Texas cannabis takes will certainly be a unique one, as unique and as individual as the Texan people themselves.

Employee Management & Human Resources: An Often-Overlooked Part of Building a Business

By Cannabis Industry Journal Staff
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Well before cannabis businesses win a license application, they need to have traditional business plans outlining how they’ll run the company. While this obviously includes things like the property, the building, products and inventory, it also includes a lot of things that are often overlooked: things like payroll, human resources and employee management.

Before a cannabis company should even hire their first employee, they need to have a few thing squared away. The timeframe and order of operations will differ for every business and every state, but there are a number of things to consider like workers comp, employee training, handbooks and of course, everyone’s favorite topic: insurance. There’s crop insurance, general liability insurance, unemployment insurance, workers comp insurance and more. Working with the right brokers, not breaking the bank and understanding what you need and when can be crucial to keeping the doors open.

Ahead of the Cannabis Quality Conference, we sit down with Nick Murer, the founder of WECO, to ask him some questions about what businesses need to know and when. Nick will be available at the event in New Jersey this October 17 and 18 during our “Ask the Expert Roundtables” to answer these questions and much more.

Cannabis Industry Journal: Does a company need to have workers comp and unemployment insurance before they’re licensed?

Nick Murer: They don’t need to have it figured out before they’re licensed, but they should want to have a strategy in place as they’re going through the process, knowing what they need to accomplish. There are some cases where states may require insurance upfront in the licensing process, but not always. It is however required before a business opens their doors, and absolutely necessary to have insurance before staffing and their first employees comes on board.

CIJ: What types of insurance should companies look into as they’re submitting our license application?

Nick: As you’re submitting your license application, you should have it figured out or at least speak with a broker about your options. You probably don’t have it yet, since you’re not an entity, but you’ll need general liability insurance, and if you’re a grower, you should have crop insurance too. Prior to opening, you should have your workers comp insurance, unemployment insurance, FICA, SUTA and FUTA figured out with the state. Prior to licensing, you need to make sure you are working with the right insurance broker and managing the cost aspect. We can help with that; we work with a couple of great brokers that are industry-specific. As folks go through the licensing process, it’s important to work with people like us that have the right resources and the right tools to provide that necessary support.

Nick Murer will be available at the CQC in New Jersey, October 16-18 to answer questions and provide a resource for new and existing businessesDuring the application process, you need to be aware of insurance and the options that are available, as well as what’s required, but you might not need to have all of those in place. It’s different for every state.

CIJ: What important parts of human resources and employee management should companies have figured out before they get licensed?

Nick: I think the first area they need to start with is making sure they have their workers comp set up, their GL [general liability insurance] set up, I think they should have their employee handbook figured out, their onboarding procedures, their strategies for discontinuing employment figured out prior to bringing them on. Where we come in and assist with that is making sure that these businesses are properly set up with the state to handle workers comp, unemployment insurance, their FICA, FUTA and SUTA, social security taxes, healthcare benefits and being able to deploy all of that within thirty days properly. We work with a lot of clients making sure they have their onboarding programs fully figured out before they take that leap.

CIJ: As cannabis companies get licensed and begin operating, what are some often overlooked HR functions?

Nick: I think the number one area they need to understand in their hiring process prior to bringing people on is really having a thorough, compliant handbook that they’ve also participated in, and have worked towards creating a better document so when these employees come on they know the expectations and the standards that need to be met in order to be a successful member of the team. I think their employment onboarding practices need to be dialed in where they understand what is going on between the onboarding, timing, the documentation needed all before effective start date to stay in compliance. Understanding labor compliance and being able to understand how you properly onboard and offboard an employee is a really critical part. Where we like to come in and assist our clients is helping train managers and being their resource. Everyone works with humans and there are always unforeseen problems that arise We’re in the people business and there will be people problems and mitigating those should be everyone’s number one priority. The more we can help protect cannabis businesses, the less risk they bring to their own company, people and the industry.

Texas Takes Advantage of the 2018 Farm Bill

By Abraham Finberg, Rachel Wright, Simon Menkes
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When Texas Governor Greg Abbott signed Senate Bill 339, also known as the Texas Compassionate Use Act, into law in 2015, many Texans expressed frustration. The purpose of the act was to allow the THC treatment of illness via prescription, opening up the state’s medicinal cannabis market. However, the act authorized only low-THC cannabis oil (maximum strength 0.5% THC) and only for epilepsy. Many Texans with other medical conditions that would have benefited from cannabis were unable to access it, and the dosage was seen as weak and minimally effective.

In addition, those residents hoping the Lone Star State would take a significant step forward towards legalizing adult-use cannabis experienced a rude awakening. A long road was still left to travel before recreational cannabis sales would be allowed to take place.

The Texas Department of Public Safety, which oversees the Compassionate Use Program, did a study of other state’s compassionate use programs and determined that three licenses were the minimum needed to supply the state’s epilepsy population. They updated Health and Safety Code to require a minimum of three licenses, and only three licenses were issued in 2017. This, for a state with a population of 29 million.

Then, the following year, a quiet revolution began. It started with the passage of the federal 2018 Farm Bill, signed into law by President Donald Trump as the Agriculture Improvement Act of 2018. Among its many provisions were several sections dealing with the production of hemp. Because the hemp plant and the cannabis plant are the same plant, the Farm Bill defined hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3 per-cent.”

The Farm Bill also removed hemp from the Drug Enforcement Administration’s schedule of Controlled Substances and authorized states to submit plans to administer hemp programs, making sure to keep the THC of plants and products under 0.3%.

The Texas Department of Agriculture, led by its enthusiastic three-term commissioner, Sid Miller, was instrumental in promoting the hemp section of the 2018 Farm Bill. Upon the bill’s passage, Miller backed Texas House Bill 1325 which authorized the production, manufacture, retail sale and inspection of industrial hemp crops and products. HB 1325 passed unanimously in June 2019, and the Texas Department of Agriculture opened the online hemp licensing and permit application process on March 16, 2020. The cost to be licensed by the Department of State Health Services is a yearly fee of $258; a licensee either purchases a license to grow, manufacture and sell hemp products wholesale or a license to sell hemp products retail in-store and online.

The hemp is tested before harvesting to make sure the THC level stays below 0.3%; otherwise, it must be destroyed. (The type of THC being measured is delta-9 THC, the same THC used in cannabis flower, gummies and other products being sold in fully legal states.)

That being said, what the hemp farmers realized was that, by keeping the delta-9 THC content of their hemp and hemp oil to 0.3%, they could still make CBD gummies with strong psychoactive properties. A typical 4-gram gummy would support 10mg of THC and a 6-gram gummy would support THC of 15mg, while still maintaining the 0.3% legal hemp concentration. This is a similar number of milligrams of THC found in cannabis gummies sold in cannabis shops in states such as California.

The Texas state list of approved hemp varietals reads like the list of cannabis flower sold in a dispensary: names like Hemp Kush, Bubba Kush and Blu Haze abound. Additionally, because it is still hemp by the 0.3% strength definition, there is no age limit to purchases and products may be purchased online by anyone and mailed anywhere.

There were 1,123 licensed hemp growers in Texas in 2021. “We started out growing hemp for CBD oil,” commented Agriculture Commissioner Miller recently. “Typical farmers saw a lot of profit in doing that.”

A 2023 study revealed that the Texas hemp industry currently employs more than 50,000 workers and generates more the $8 billion in annual revenue. Also, between $19.1 and $22.4 billion in economic activity is generated by the 5,033 hemp, CBD and cannabinoid retailers, manufacturers and distributors in Texas.

“It is vital that Texas continues to support the hemp industry, which has become a key component of the state’s overall economy,” said Cynthia Cabrera, chair of the cannabinoids council of the Hemp Industries Association and chief strategy officer at Austin-based Hometown Hero CBD. “The results of this study demonstrate the positive economic and social impact of hemp in Texas, and that its small businesses and farmers need to be protected to continue to thrive, providing jobs and tax revenue.”

In 2020, smokable hemp, including vapes, was banned in Texas, a ban that was upheld by the Texas Supreme Court. The only allowed consumable hemp products are oil-based products, like tinctures and gummies.

The only allowed consumable hemp products are oil-based products, like tinctures and gummies.

Agriculture Commissioner Miller lobbied against the ban and feels it puts Texas hemp farmers in an uncompetitive position compared to other state’s hemp farmers. “After three years of administering our hemp program, it’s clear the legislature’s effort to ban smokable hemp products has reduced our competitiveness to other states and harmed our farmers,” he said earlier this year. “The ban on smokable hemp products has confused and discouraged licensed growers and forced out processing facilities on which those growers depend.”

Meanwhile, the medicinal cannabis industry has expanded, at least in terms of the conditions for writing a medical prescription and the allowable THC strength. Terminal cancer, autism, multiple sclerosis, amyotrophic lateral sclerosis (ALS), seizure disorders, and incurable neurological disorders such as Alzheimer’s, Parkinson’s, and Huntington’s Disease were approved in 2019, and in 2021, House Bill 1535 raised the THC concentration from 0.5% to 1.0% and added PTSD to the list of approved medical conditions.

From January to April 2023, Texas Department of Public Safety took applications to open more dispensaries at an applicant cost of $7,356 for each application. All licensees must be vertically integrated – product must go from seed-to-sale under one license. If approved, the applicants will owe another $488,520.00 for a two-year period. This will allow them the opportunity to serve almost 61,000 registered patients who are supported by 747 physicians approved by the Regulatory Services Division to prescribe low-THC cannabis through the Compassionate Use Program.

Tony Gallo, managing partner of Sapphire Risk Advisory Group, helped twelve of the recent license applicants prepare their applications. In addition, his firm has been assisting cannabis companies in Texas since 2017. 420CPA reached out to Tony for an “in-the-trenches” view of cannabis in Texas. Gallo believes an adult-use market is a long way away.

“Concerning growth in the Texas cannabis industry,” Gallo says, “two factors come into play — increasing what conditions are allowed for medicinal use, and increasing what areas of the state it’s allowed to be sold.”

420CPA co-founder Abraham Finberg CPA suggests hemp companies position themselves to enter the cannabis market should state legislators and the people of Texas have a change of heart and decriminalize cannabis and authorize an adult-use market. “Hemp entrepreneurs can start with CBD products as they’re doing now and expand their offerings as the laws change,” Finberg says.

Lone Star Cannabis: What’s Holding Texas Back?

By Abraham Finberg, Rachel Wright, Simon Menkes
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Adult-use cannabis has gained steam across the nation as more and more states jump on the legalization train. As of the writing of this article, 23 states have legalized adult-use while another 15 have allowed the sale of cannabis for medicinal purposes, for a total of 38 green states.

Meanwhile, Texas still has stiff penalties for possession. Two ounces or less is a misdemeanor with a maximum fine of $2,000 to $4,000 if one has between two and four ounces. Possession of more than four ounces is a felony punishable by a $10,000 fine and between 2-99 years in jail. And that’s just for possession.

Quasi-medicinal use was approved with the 2015 Texas Compassionate Use Act, and just for epilepsy, to be only treated by low-THC cannabis oil with a maximum strength of 0.5%. Since then, the number of conditions approved for low-THC treatment has been opened up to terminal cancer, autism, multiple sclerosis, amyotrophic lateral sclerosis (ALS), seizure disorders, incurable neurological disorders such as Alzheimer’s, Parkinson’s, Huntington’s Disease and PTSD. At the same time, the allowable strength of cannabis oil has been increased to a still-minimal 1.0%.

So, what’s holding back the Lone Star State? And what can be done to obtain full legalization for both medicinal and adult-use cannabis? The answers lie within the Texan psyche which has a strong streak of self-reliance in it that has made the state go its own way before. Legalize cannabis just because 75% of the other states have already done so? If your friends jumped off a cliff, would you jump off a cliff too?

Texas is the only state to have been its own country. When its leaders declared independence from Mexico in 1836 and General Sam Houston defeated Mexican General Santa Anna later that year, Texas became the Republic of Texas. While many Texans wanted their country to join the United States, the push within the new republic to remain a separate country was strong. It took nine years of heated debates before Texas entered the Union.

Fast forward 178 years to 2023, and many of the heated debates taking place in Texas today revolve around cannabis. Some Texans see the push to legalize adult-use cannabis as a moral issue, and that it is the responsibility of state government to hold the line against what they view as a gateway drug. Others argue cannabis can be beneficial by providing a safe alternative to opioids for pain relief, and that it is already easy to access on the black market.

Several recent cannabis bills: HB 1805, which would have expanded covered medical conditions and defined a per-dose THC limit instead of a percentage limit, and HB 218, which would have decriminalized cannabis, both passed the state House of Representatives in April 2023 but died in the Senate when Lt. Gov. Dan Patrick, who presides over the chamber, refused to refer the bills to a state Senate committee for review.

“We’re always listening on the health issues, but we’re not going to turn this into California,” Patrick said in 2021, “where anybody can get a slip from the doctor and go down to some retail store and say, ‘You know, I got a headache today so I need marijuana,’ because that’s just a veil for legalizing it for recreational use.”

The Texas legislature only meets every two years, and the next session is scheduled to begin in January 2025. Since Texas does not have a statewide ballot initiative process, statewide decriminalization and possible passage of adult-use legislation will only be possible then.

Law enforcement has a stronger voice in public policy in Texas than in many other states, and law enforcement organizations have expressed serious reservations about decriminalizing cannabis in Texas. In a joint statement in 2019, the Texas Police Chiefs Association and the Sheriffs’ Association of Texas expressed concerns that legalization would bring increased crime, entice a dangerous black market and lead to increased use of other, more addictive drugs. They also opposed expanding the state’s restrictive medical program until “validated, peer-reviewed medical research shows a proven medical benefit.”

Despite these setbacks, there is a growing groundswell of public support for decriminalizing cannabis as well as for allowing adult-use. A December 2022 poll showed 55% of Texans support legalizing at least small amounts of cannabis for recreational purposes, and another 28% said it should be legal for medicinal purposes.

A February 2023 poll by the University of Houston found that 82% of Texans support the Legislature passing a bill that would allow people to use cannabis for a wide range of medical purposes with a prescription. The belief that cannabis is a “gateway drug” that would make people more likely to use other illegal drugs is losing traction as well – 70% said it would make people less likely to do so or would have no impact.

Austin, Texas

Voters in some cities passed local ordinances in 2022 decriminalizing cannabis although not all of these ordinances have been implemented by their mayors and city councils. One large city, Austin, passed such a law and is no longer arresting or citing anyone for misdemeanor possession. Other cities, including Dallas, have gone as far as to implement cite-and-release policies, which directs police to ticket someone with less than four ounces of cannabis. Though this policy keeps cannabis possessors from being arrested and detained, they still must appear in court and face the same fines and possible jail time.

These individual city and county efforts to decriminalize cannabis are helping build momentum for eventual statewide decriminalization when the state legislature returns in 2025.

The keys to achieving the goals of state-wide decriminalization and adult-use lie in implementing a multi-pronged approach of changing the public perception of cannabis through education coupled with promoting the economic benefits to the state of increased jobs and tax revenue.

Representative Joe Moody has taken a unique approach to educate lawmakers and Texas citizens. He recently sponsored HB 3652, the Texas Regulation & Taxation of Cannabis Act, in order to start a dialogue on what a retail cannabis market would look like in Texas. Moody received a public hearing in the House Committee for Licensing and Administrative Procedures on April 26, 2023 in which many points about setting up a retail market in Texas were discussed, including a 10% cannabis tax.

Moody didn’t expect the bill to move forward and, in the end, no vote was taken. But that wasn’t his goal. “No cannabis retail market bill has ever gotten a hearing like this in the Texas Legislature,” he told the committee. “The time is coming where this will be the law of the land, and so we might as well get in front of that.”

Many Texans in favor of legalization and the establishment of an adult-use market are optimistic. Recently, 420CPA’s Tara O’Connor attended a meeting of cannabis executives in Dallas. The Texas Cannabis Roundup, billed as “one of the largest gatherings of cannabis business professionals in the South”, was packed with close to 200 people, all there for an evening of good food and drink and to hear speeches on the progress of legalization in the Lone Star State. The mood was upbeat. “People here are really hopeful and energized,” commented Tara afterward. “They really want recreational cannabis to come to Texas.”

In the last analysis, Texans are an independent lot, and they do things their own way. Decriminalization will happen when the people of the Lone Star State are ready to allow it. And whether it’s a fully functioning medicinal cannabis program with an adequate number of dispensaries and a strong enough cannabis product to bring relief to all who need it, or if, in the end, Texas approves adult-use cannabis for its citizens, one thing is for certain: such progress will happen in a time-frame that is right for Texas and in a uniquely Texan way.