Tag Archives: legalization

Sustainable Plastic Packaging Options for Your Cannabis Products

By Danielle Antos
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A large part of your company’s brand image depends on the packaging that you use for your cannabis product. The product packaging creates a critical first impression in a potential customer’s mind because it is the first thing they see. While the primary function of any cannabis packaging is to contain, protect and identify your products, it is a reflection of your company in the eyes of the consumer.

For all types of businesses across the US, sustainability has become an important component for success. It is increasingly common for companies to include sustainability efforts in their strategic plan. Are you including a sustainability component in your cannabis business’ growth plan? Are your packaging suppliers also taking sustainability seriously? More and more, consumers are eager to purchase cannabis products that are packaged thoughtfully, with the environment in mind. If you are using or thinking about using plastic bottles and closures for your cannabis products, you now have options that are produced from sustainable and/or renewable resources. Incorporating sustainable elements into your cannabis packaging may not only be good for the environment, but it may also be good for your brand.

Consider Alternative Resins

Traditionally, polyethylene produced from fossil fuels (such as oil or natural gas), has been used to manufacture HDPE (high density polyethylene) bottles and closures. However, polyethylene produced from ethanol made from sustainable sources like sugarcane (commonly known as Bioresin) are becoming more common.

HDPE bottles produced with Bioresin.

Unlike fossil fuel resources which are finite, sustainable resources like sugarcane are renewable – plants can be grown every year. For instance, a benefit of sugarcane is that it captures and fixes carbon dioxide from the atmosphere every growth cycle. As a result, production of ethanol-based polyethylene contributes to the reduction of greenhouse gas emissions when compared to conventional polyethylene made from fossil fuels, while still exhibiting the same chemical and physical properties as conventional polyethylene. Although polyethylene made from sugarcane is not biodegradable, it can be recycled.

Switching to a plastic bottle that is made from ethanol derived from renewable resources is a great way for cannabis companies to take positive climate change action and help reduce their carbon footprint.

For instance, for every one ton of Bioresin used, approximately 3.1 tons of carbon dioxide is captured from the atmosphere on a cradle-to-gate basis. Changing from a petrochemical-derived polyethylene bottle to a bottle using resins made from renewable resources can be as seamless as approving an alternate material – the bottles look the same. Ensure that your plastic bottle manufacturer is using raw materials that pass FDA and ASTM tests. This is one way to help reverse the trend of global warming due to increasing levels of carbon dioxide (CO2) in our atmosphere.

PET bottles derived from 100% recycled post-consumer material.

Another option is to use bottles manufactured with recycled PET (polyethylene terephthalate). Consisting of resin derived from 100% recycled post-consumer material, it can be used over and over. This is an excellent choice because it helps keep plastic waste to a minimum. Regardless of the resin you select, look for one that is FDA approved for food contact.

Consider Alternative Manufacturing Processes

Flame Treatment Elimination

When talking about plastic bottle manufacturing, an easy solution to saving fossil fuels is eliminating the flame treatment in the manufacturing process. Historically, this process was required to allow some water-based adhesives, inks, and other coatings to bond with HDPE (high density polyethylene) and PP (polypropylene) bottles. Today, pressure-sensitive and shrink labels make this process unnecessary. Opt out and conserve natural gas. For instance, for every 5 million bottles not flamed approximately 3 metric tons of CO2is eliminated. This is an easy way to reduce the carbon footprint. Ask your cannabis packaging manufacturer if eliminating this process is an option.

Source Reduction (Right-Weighting)

When considering what type and style of bottle you want to use for your cannabis product, keep in mind that the same bottle may be able to be manufactured with less plastic. A bottle with excess plastic may be unnecessary and can result in wasted plastic or added costs. On the other hand, a bottle with too little plastic may be too thin to hold up to filling lines or may deform after product is filled. Why use a bottle that has more plastic than you actually need for your product when a lesser option may be available? This could save you money, avoid problems on your filling lines, and help you save on your bottom line. In addition, this will also help limit the amount of natural resources being used in production.

Convert to Plastic Pallets

If you are purchasing bottles in large quantities and your supplier ships on pallets, consider asking about plastic pallets. Reusable plastic pallets last longer than wood pallets, eliminate pallet moisture and improve safety in handling. They also reduce the use of raw materials in the pallet manufacturing process (natural gas, metal, forests, etc.) aiding in efforts towards Zero Net Deforestation. And, returnable plastic pallets provide savings over the long term.

If You Don’t Know, Ask Your Cannabis Packaging Partner

It is important to find out if your plastic packaging partner offers alternative resins that are produced from renewable sources or recycled plastics. It is also prudent to partner with a company that is concerned about the impact their business has on the planet. Are they committed to sustainability? And, are they eliminating processes that negatively affect their carbon footprint? What services can they provide that help you do your part?

When you opt to use sustainably produced plastic bottles and closures for your cannabis products, you take an important step to help ensure a viable future for the planet. In a competitive market, this can improve the customer’s impression of your brand, increase consumer confidence and help grow your bottom line. Not only will you appeal to the ever-growing number of consumers who are environmentally-conscience, you will rest easy knowing that your company is taking action to ensure a sustainable future.

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The Face Of Cannabis Education In Europe

By Marguerite Arnold
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More than a few cannabis “education companies” – mostly from Canada and the U.S. but some with Israeli ties, plus German and British efforts have targeted Europe as the next logical expansion plan in their global roadmap.

These include most recently Cannvas Medtech Inc., and several initiatives funded by Canopy Growth, including teaching children about the drug. It also includes training programs for frontline staff, launched by Organigram (although in this case it appears to be geared towards “brand education.”)

There are also doctor training programs launching in the UK.

In Germany, there are several efforts underway, helmed by both doctors and cannabis advocates generally, in several cities around the country.

But how effective is all of this “education” in both preventing illegal use, and promoting legitimate sales?

Particularly if such “education” platforms are exported from a foreign market for use in Europe?Canopy_Growth_Corporation_logo

Education Is Desperately Needed, But So Is Channel Penetration

Nobody is arguing that “education,” as well as trials and more information for payers and doctors are not required. The problem is that some education is more effective than other campaigns. And most of the talk in most places is more a discussion of the need for further regulatory reform, more trials and more investigation.

That has to get paid for somewhere.

That, at least in Europe is also tricky, as both early educational movers Weedmaps and Leafly have both found out, especially in medical only markets in the EU. Why? There are also highly limited opportunities for advertising either a drug, or to doctors.

Different Regulatory Environments Cause Bigger Issues

Even in Canada and the United States, there is an ecosystem of supplying the demand that has very much grown up customized by the strange paths to reform if not the first mover discussion.

That is not going to be the case in Europe, which in effect creates a brand-new ecosystem to educate, with new players, and every ecosystem participant group has a different kind of educational needs.

Here is one example of where this shows up. So far, in most countries, doctors are still highly resistant to prescribing the drug. Nurses, on the other hand, in both the United States and Canada at least, have proven to be a much more reliable source of converts for the cannabis cause. That approach of course is not possible in places like Germany where only doctors may issue prescriptions, including of the cannabis (and narcotic) kind.

european union statesAccess issues also play a big role in just about every country- from cost to privacy. And on the privacy front, it is not just foreigners who are getting used to new rules. So are German doctors.

The pharmacy discussion is also very much in the room – and this is not “just like” approaching a “dispensary” from North America. They are regulated chemists. Which causes a whole new set of issues and a serious need for new kinds of educational materials.

In Germany, for example, pharmacists are being recruited and trained by not only staff recruiters specializing in the same, but also sent on special training courses funded by the big Canadian companies (Tilray being the noticeable one recently). The brick and mortar vs. online discussion is also a big topic across Europe. Notably, where it is allowed and where it is, as in Deutschland, verboten.

And, of course, the big green giant in the room everywhere in Europe, in particular, is payer/insurance approvals, which are based on a kind of education called proven medical efficacy.

And that, so far, is in markedly short supply.

In the UK, it is so far the main reason that NHS patients (for example) cannot access coverage for the drug to treat conditions like chronic pain.

In the meantime, the most widespread “education” that is going on, is still mostly at the patient level. Especially when patients sue their insurers, or lobby doctors to prescribe.

The cannabis industry may be maturing, in other words, to be able to answer these questions – but there is also clearly a long way to go.

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Corporate CBD Production Gets Underway in UK

By Marguerite Arnold
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Any thought that established British and Canadian growers were not already cooperating and in the throes of establishing a UK cannabis production base was put to bed in early July.

Namely, the news that Sundial, an Alberta based Canadian company, is buying Bridge Farms, the winner of the Overall UK Grower of the Year Award in 2017, is a sign that the age of British cannabinoid production (and in bulk) is here. The agriculture group has a 75-acre production facility in Lincolnshire (strategically on the border with Norfolk) and a recent ₤18 million equity injection.

This also means that large-scale CBD production in the UK is now underway with authority.

What it also means, however, is that the winds of trade, even if historically, are already cultivating some interesting partners as the entire British cannabis discussion gets underway.

Sundial Growers also almost simultaneously filed documents to list on the Nasdaq in the U.S. In this, they look remarkably similar to Tilray.

British Sugar Is Now Not The Only Game In Town

The links to the cannabis industry in this part of the UK are not new. Namely, the county of Norfolk (the east-coast “bump” of the British coastline just south of Lincolnshire) is home to British Sugar, the cultivator for GW Pharmaceuticals cannabis crop.

GW logoThis part of the world is also historically associated not only with major international British trade, but in the past at least, of the German kind in particular. See the port of Kings Lynn and the Hanseatic trading route that put the eastern town on the global shipping map until the advent of the railroads in the UK leached its importance south, to London in the 19th century.

Foreign investment in agriculture, in other words, in this part of the world is not new. Nor is shipping the final product elsewhere.

What Does This Mean For The British Market?

That is an interesting question on the advent of a potential Brexit. Is this newly constructed agricultural centre designed, like Canopy’s newest hempire in New York State, for domestic consumption, and-or overseas trade?

For that reason, a fully automated CBD production facility in such a strategic and historic part of the country seems to indicate the commercial production of CBD has begun at a level virtually unseen in any other European country so far. And further, that its backers have an international, not just domestic market, in mind.

What Does This Mean For the European Market?

Unless the UK is planning on eviscerating all worker safety and pay regulations, it is unlikely that British-grown cannabis will be price competitive with what is going on in Europe right now. The German market, in fact, is a very good precursor to the kinds of growing pains the UK is likely to see in this regard.

european union statesExports, in other words, are highly unlikely, at least to Europe.

What this does mean however, is that licensed producers, with international roots and global financing, are clearly moving into the more or less corporate production market that is slowly getting going in Britain.

And just like elsewhere, post Canada, there is no chance, at this point at least, for any “mom and pop” industry to develop.

Given a lack of patient access at this point that is also not likely to fly politically for long.

Regardless, as of the summer of 2019, there are beginning to be the signs that large scale production of both THC and CBD, is getting going in Britain.

No matter where their customers are located.

How Half-Baked Labels Can Destroy a Cannabis Business

By Greg Boulos
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Cannabis manufacturers and consumers are currently in a honeymoon phase. Consumers love their CBD gummies and believe wholeheartedly in the benefits of cannabis-related products. But it is only a matter of time before industrious plaintiffs’ lawyers take a close look at ways to attack manufacturers. We know from other industries that product labels tend to be the entry point for plaintiff lawyers eyeing manufacturers and looking for easy targets. Any company in the business of manufacturing cannabis-related products needs to devote significant time and resources to developing labels that minimize the risk of bet-the-company litigation down the road. Most notably, manufacturers need to think through whether there are any adverse effects associated with their products of which consumers should be aware. Also, manufacturers must scrutinize any “all natural” or “organic” claims on their labels to ensure that they are not misleading consumers.

Failure to Warn of Potential Detrimental Effects

Most manufacturers are well aware of state mandated labels for cannabis products. And, based on the recent FDA public hearing on cannabis, the industry will likely see FDA labeling requirements in the near future. However, simply complying with these requirements does not insulate a manufacturer from litigation, particularly failure to warn claims. One example, dating back to the 1970s, relates to OSHA’s regulation of asbestos-containing products as it became more and more clear that certain types of asbestos could cause a rare form of cancer, mesothelioma. Among other things, OSHA required manufacturers of asbestos-containing products to add a warning to all packaging. The mandated warning included very specific language. Manufacturers largely complied and added the OSHA-mandated label to their product packaging.

FDAFast-forward 40 years and today, several of those manufacturers are now bankrupt due to litigation based on their alleged failure to warn consumers that asbestos can cause cancer. Plaintiffs have been successful in bringing these claims because the OSHA label only warned that asbestos could cause harm, but it did not mention the word cancer. Some juries have found that the language in the warning was not sufficient to caution end users of the increased risk of developing cancer. While there have also been numerous defense verdicts in asbestos litigation and many asbestos-related cases lack merit – especially against certain defendants – the plaintiffs’ verdicts and legal fees to defend these cases are staggering. Recent plaintiffs’ verdicts have ranged from $20 to $70 million.

Of course, asbestos is an extreme example since CBD has not been associated with an increased risk of developing cancer. But there are other health concerns that manufacturers should consider. For instance, one group of doctors claim to have linked consuming cannabis before the age of twenty-five to development delaysAnother study purports to link cannabis consumption to increased risk of premature birth. If there are legitimate studies underpinning these concerns, manufacturers can become the target of potential lawsuits. Beware that when plaintiff law firms find a manufacturer to target, they often file thousands of cases around the country – not just one. Even if the claims are entirely bogus, the legal fees to merely defend these cases are crippling and can lead to a swift bankruptcy.

While there are risks involved with failing to warn consumers of possible adverse effects of a product, manufacturers should not try to mention every alleged adverse effect on its labels. Rather, manufacturers must do their due diligence and investigate whether claimed adverse effects are legitimate, then warn of those that appear to be based on valid scientific studies. Each manufacturer’s research department should assess the credibility of any study linking cannabis use to an adverse health effect and have a candid discussion with their attorneys on whether a warning is warranted. Do not fear lawsuits, they are unavoidable. Rather, work toward ensuring that the company and product(s) have a strong, defensible warning in the event litigation arises.

Questionable “All Natural” and “Organic” Claims

It seems like every CBD product on the market has an “all natural” or “organic” claim on the label. If the product is truly organic, fantastic. Flaunt that organic label. But several food companies have landed in hot water with these labels when there is a hidden ingredient that is not natural. What’s more, manufacturers have been sued when their product contain genetically modified organisms, or GMOs. These lawsuits come in the form of class actions at the state and federal level. Class action litigation is very expensive to defend. And they typically result in settlements for beaucoup bucks – typically multi-million-dollar settlements. Plaintiffs lawyers love these claims because their fees typically also end up in the millions. One example of this kind of class action is a case involving the well-known Kashi brand. Kashi was accused of misleading consumers by including the words “All Natural” on some of its products. Plaintiffs asserted that the products contained bio-engineered, artificial and synthetic ingredients. The class action was settled for $3.9 million.

Just some of the many CBD products on the market today.

How can all natural or organic claims lead to millions of dollars in damages? Here is an example of how these cases usually work: A group of consumers determine that an “all natural” product is not “all natural.”  Let’s call this Product A and assume it sells for $5 per unit. The consumers then find a similar product that is not labeled “all natural.” That product is $2 per unit. The consumers argue that they overpaid for Product A by $3 per unit because they thought the product was all natural. Three dollars may not sound too bad, but if the class consists of two-million consumers, each entitled to $3, that’s a $6 million damages claim against a company. That does not count the hundreds of thousands of dollars that will be spent on legal fees defending the class action.

Cannabis manufacturers should not use all natural labels loosely and should consult with an attorney experienced in product labeling class actions to determine whether they should forgo these labels. The same is true for any labels that claim a product provides unique health benefits. 

Key Takeaway

When manufacturers are excited about introducing a product to the market, trying to compete with other manufacturers and already dealing with miles of regulatory red tape, it may be tempting to avoid self-imposed labeling requirements. But to ensure their businesses are sustainable over the long-term, manufacturers need to take necessary steps now that will limit future litigation risk.  The cost of taking preventative measures to develop a meaningful label is considerably less than the types of product labeling verdicts and settlements affecting other industries. Focus on warnings and the use of all natural labels as a starting point. Then speak with an attorney about the unique aspects of your product, potential adverse effects and the adequacy of your warning. We are here to help.

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Medical Cannabis in Georgia: Federal Policy Effects on State Industries

By Reggie Snyder
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Under the U.S. Drug Enforcement Administration’s (DEA) Controlled Substance Act (CSA), drugs are classified into five distinct schedules depending upon their acceptable medical use and their overall potential for abuse or dependency. The DEA currently lists cannabis as a Schedule I drug, which the CSA defines as drugs having no currently accepted medical use and a high potential for abuse. It appears, however, that the DEA may soon reconsider its current Schedule I classification of cannabis.

This article considers how the DEA’s potential reclassification of cannabis potentially could affect Georgia’s medical cannabis industry. Specifically, the article discusses: (1) how Georgia medical cannabis distributors would operate within this new regulatory framework; (2) how this change would affect registered Georgia patients who are either currently purchasing medical cannabis or are planning to do so; and (3) whether this reclassification would cause big pharmaceutical companies to enter Georgia’s medical cannabis market, and if so, how.

The DEA’s Reclassification of Cannabis Would Likely Affect the Regulatory Framework of Georgia’s Medical Cannabis Industry

On April 2, 2019, Georgia became the 34th U.S. state to legalize cannabis for medicinal use when the Georgia Legislature passed House Bill 324 (“HB 324”), which recently took effect on Monday, July 1, 2019. In Georgia, medical cannabis is defined as a “low-THC oil” that contains 5% or less of tetrahydrocannabinol (THC)—the psychoactive chemical in cannabis that causes a “high.”

Georgia State Flag

If the DEA reclassifies cannabis, the regulatory framework of Georgia’s medical cannabis industry under HB 324 would likely be affected. For instance, depending on how the DEA elects to reclassify cannabis, low-THC oil products manufactured and sold in Georgia could become subject to the U.S. Food and Drug Administration’s (FDA) costly, complicated and time-consuming drug approval process. Then, any low THC oil products that the FDA approves will be subject to federally mandated quality, efficacy and potency standards for FDA-approved drugs. Also, any federal standards that stem from the DEA’s reclassification of cannabis will trump any conflicting provisions in HB 324 or any other conflicting rules, regulations or procedures established by the Georgia Access to Medical Cannabis Commission (GAMCC), the seven member state agency responsible for promulgating and implementing the state-based rules, regulations and procedures necessary to produce and distribute low-THC oil in Georgia, and the Georgia State Board of Pharmacy (Pharmacy Board). However, even if the DEA reclassifies cannabis, the following state regulatory framework established by HB 324 will remain unaffected:

  • The GAMCC will likely continue to oversee the state’s medical cannabis industry.
  • The following two different types of dispensary licenses issued under the legislation will still likely remain: retail outlets (issued by the GAMCC) and pharmacies (issued by the Pharmacy Board).
  • Licensed dispensaries will still likely not be located within a 1,000-foot radius of a school or church, and licensed production facilities will still not be located within a 3,000-foot radius of a school or church.
  • Pharmacists who dispense low-THC oil will still likely have to review each registered patient’s information on the state’s Prescription Drug Monitoring Program (PDMP) database to confirm that they have been diagnosed with one or more of the 17 approved conditions and diseases. The legislation does not require retail outlet dispensaries to review patient information on the PDMP database or employ a pharmacist to dispense the drug.
  • Registered patients will still likely be prohibited from vaping low-THC oil or inhaling it by any other electronic means. The legislation does not expressly prohibit the use of other, non-electronic delivery methods of low THC oil such as pills or nasal spray.
  • All licensed dispensaries (and all licensed production companies) will still likely be subject to an “on-demand” inspection when requested by the Georgia Bureau of Investigation (GBI), the GAMCC, the four-member Medical Cannabis Commission Oversight Committee (MCCOC), or local law enforcement. The GAMCC and the Georgia Drugs and Narcotics Agency (GDNA) will also still likely be able to conduct one, annual inspection of dispensary locations. And, upon request, licensed dispensaries will still likely be required to immediately provide a sample of their low-THC oil for laboratory testing to the GBI, GAMCC, MCCOC, GDNA or local law enforcement.
  • All licensed dispensaries (and all licensed production facilities) will still likely be required to utilize a GAMCC-approved seed-to-sale tracking software.
  • All licensed dispensaries (and all licensed production companies) will still likely be prohibited from advertising or marketing their low-THC oil products to registered patients or the public. However, they will still likely be allowed to provide information about their products directly to physicians, and upon request, physicians will still likely be allowed to furnish the names of licensed dispensaries (and licensed production companies) to registered patients or their caregivers.

The DEA’s Reclassification of Cannabis Would Likely Affect the Availability of Low THC Oil

To date, approximately 9,500 Georgians are registered with the state’s Low-THC Registry, which allows them to purchase low-THC oil from licensed dispensaries. Since the legislation’s passage, the number of registered patients has increased significantly and continues to steadily rise. If the DEA reclassifies marijuana, this patient number will likely increase at an even faster rate because the public will likely perceive reclassification as an acknowledgement by the federal government that marijuana possesses health and medicinal benefits. If that occurs, statewide demand for low THC oil could quickly outstrip the supply.

Georgia Gov. Brian Kemp
Image: Georgia National Guard, Flickr

Under HB 324, the GAMCC is tasked with ensuring that the state has a sufficient number of retail outlet dispensaries across the state to meet patient demand but is limited to issuing only six production licenses. As the number of registered patients continues to grow, the GAMCC may be forced to recommend amendments to the statute allowing it to issue additional production licenses to increase the state’s supply of low THC oil, and depending on how many additional patients are added to the state’s Low-THC Registry, the GAMCC may also have to issue additional dispensary licenses to keep up with patient demand by relaxing the geographic limitations on locating dispensaries.

Thus, the DEA’s reclassification of cannabis likely would affect the amount of low THC oil available to registered patients in Georgia.

The DEA’s Reclassification of Cannabis Would Likely Cause Large Pharmaceutical Companies to Enter Georgia’s Medical Cannabis Market

Large pharmaceutical companies typically manufacture, market, sell and ship their products on a national and international scale. Given cannabis’ current status as a Schedule I drug under the CSA, these companies have largely steered clear of the burgeoning medical marijuana industry because of the inherent risk of violating federal law. If the DEA reclassifies cannabis, that risk will be diminished greatly, and the companies therefore will likely decide to enter the market by acquiring existing medical marijuana companies with established national or state-level medical cannabis brands.

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways.Depending on how the DEA reclassifies cannabis, low-THC oil in Georgia could be subject to stringent federal standards, including the FDA’s complex and expensive drug approval process. Georgia medical cannabis companies will likely not be accustomed to complying with such federal regulations. Large pharmaceutical companies, on the other hand, are very accustomed to dealing with the federal government, including FDA drug approval. So, if the DEA reclassifies marijuana, pharmaceutical companies will likely view reclassification as a tremendous opportunity to enter the Georgia market by leveraging their experience and institutional knowledge dealing with federal law to acquire or partner with a licensed Georgia cannabis company that has an established brand of low -HC oil.

Entering Georgia’s medical cannabis market won’t be easy, however, because HB 324 prohibits licensees from transferring their licenses for five years and requires that the original licensee be a Georgia business. But, HB 324 does not prohibit them from selling their businesses, which necessarily includes any licenses the business owns. Purchasing a licensed Georgia medical cannabis company requires payment of a production license business transfer fee. The fee for the first sale of a business with a Class 1 production license is $100,000 and the fee for a Class 2 license is $12,500. The fee for the second sale is $150,000 for a Class 1 production license, and $62,500 for a Class 2 license. The fee for the third and fourth sales is $200,000 for a Class 1 production license, and $112,500 for a Class 2 license.

Conclusion

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways. Specifically, depending on how the drug is reclassified, the regulatory framework for medical cannabis companies likely will change to include both state and federal requirements, potentially including the FDA’s complex drug approval process. Also, the amount of low-THC oil available for registered patients to purchase likely will be diminished precipitating the need for the GAMCC to modify the statute to allow for issuing additional production licenses and relaxing the geographic limitations on locating dispensaries. Finally, large pharmaceutical companies likely will attempt to enter Georgia’s medical cannabis market by purchasing existing, licensed Georgia companies that have established low-THC oil brands.

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Tilray Imports Medical Cannabis Oil In Bulk To UK

By Marguerite Arnold
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Tilray has managed to successfully import its first bulk supply of medical cannabis oil into the UK.

It was a Tilray product, in fact, that was not only confiscated at the border last year – but subsequently sparked media outrage over the denial of the same to one Billy Caldwell, an epileptic child. It was not the only outcry nor was Billy the only child endangered. And the British people, in fact, finally signalled that they had lost their stiff upper lip on this one last year.

All of this despite lingering and significant problems ever since. Not to mention an intriguing and well-timing market entry for Tilray right after things have been heating up on cannabis reform in Parliament of late.

The Tilray product, which will be imported from its new production facilities in Portugal, has already been distributed in other European countries, including Croatia and Germany.

tilray-logoWhat is significant in other words, is that the UK is starting to allow bulk orders in through customs- and they are coming not from Canada, but from Europe. Even if it is a Canadian company’s brand on the same, for now at least.

Tilray of course, is not the only company engaged in a race to get imports into the country. Right after Christmas last year, Canopy/Spektrum announced the same plans. Wayland has clearly been angling for a British outpost for some time. And of course, more locally initiated groups, including European Cannabis Holdings, have been working to initiate easier access to British markets for well over a year. Let alone more locally grown interests and pursuits now clearly lining up for market entry.

But this announcement, coming so shortly after all the recent activity on cannabis reform and calls for trials in the UK, clearly means that the doors are now opening fast for the largest players angling to get in.

Bottom line? Look for the biggest Canadians with an already established European presence, to begin making similar announcements this summer.

Being “Available” Is Only The First Hurdle

One of the biggest problems facing not only the “industry” but patients in the UK, much like elsewhere, is that doctors do not know or want to prescribe cannabis and cannabinoid medicines- and for reasons stemming from fear or ignorance about medical efficacy to insurance coverage.

Medical cannabis, in all its forms so far, however, is also highly expensive and out of reach for most unless they obtain an NHS approval (or as in Germany, statutory health insurer approval) to actually obtain the drug. And then have a place to obtain it.

This basically counts out everyone who cannot pay out of pocket and cannot find a willing doctor to sign them up via onerous and ongoing paperwork. And that, of course, is the majority of the sick people in the room.

It is this basic conundrum, which the bigger Canadians have yet to solve themselves (and it is becoming more of a recognized issue in the U.S. in the days, presumably, before the 2020 election which will hopefully set a timetable for federal reform) that has been in the room for the last two years thanks to Germany.

Image credit: Flickr

It is even more of an issue in the UK. Especially with a renegotiation in Britain’s diplomatic and trade relationship with the rest of the world.

That includes, as of mid-July, a downright, undiplomatic spat between the White House and Whitehall right now over leaked comments from the British Ambassador to Washington – and about matters of competency far from cannabis. Although of course, this issue is in the room.

For that reason, the Canadian as well as the European connection to imports right now (from not just Portugal but Holland) on the medical side of the ledger, spell an intriguing fall for not only cannabis, but the real shape and direction of British politics- and by extension- British trade.

Patients Are Taking It To The Streets And To Parliament

As much as patients have so far partnered with the big Canadian companies in the attempt to get the borders open, this is not the only game in town. Dutch imports, from Dutch companies, are already showing up in the UK (see Bedrocan). And both British and Irish growers are getting in on early action, even if for now “just” on the CBD side.

Furthermore, it is clear that patients are playing a large role in making sure that they are being heard, even to the point of putting pressure on doctors. In an extraordinary admission at the parliamentary level during the last week of June, lawmakers conceded that the British public was taking matters into their own hands. And furthermore, that the change in the law had led to clear expectations that were not being met.

Namely, British patients are literally demanding medical cannabis by prescription from their doctors.

And much like in Germany, with a mandate for coverage, the government is being forced to listen, and as best as it can in a severely crimped and politicized Brexit environment, respond.

While cannabis reform is hardly the Guy Fawkes, in other words, in a tinder match environment that British politics certainly is right now, it might be a kind of spark that drives a much wider conversation in the UK about current events.

Specifically the survival of a system that is poised to provide not only access to cannabis but comprehensive medical care beyond that, even for the old or chronically ill.

Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 3

By Carl Silverberg
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Part 1 in this series went into a discussion of resource management for cannabis growers. Part 2 presented the idea of land use and conservation. In Part 3 below, we dive into pesticide use and integrated pest management for growers, through an environmental lens.

Rachel Carson’s book Silent Spring in 1962, is often credited with helping launch the environmental movement. Ten years later, VP Edmund Muskie elevated the environment to a major issue in his 1972 Presidential campaign against Richard Nixon. 57 years after Ms. Carson’s book, we’re still having the same problems. Over 13,000 lawsuits have been filed against Monsanto and last month a jury in Alameda County ruled that a couple came down with non-Hodgkin’s lymphoma because of their use of Roundup. The jury awarded them one billion dollars each in punitive damages. Is there a safer alternative?

“Effectively replacing the need for pesticides, we use Integrated Pest Management (IPM) which is a proactive program designed to control the population of undesirable pests with the use of natural predators, a system commonly known as “good bugs (such as ladybugs) fighting bad bugs”, states the website of Mucci Farms, a greenhouse grower. While this applies to cannabis as well, there is one major problem with the crop that isn’t faced by other crops.

Rachel Carson’s Silent Spring- often credited with starting the environmental movement of the 20th century.

While states are moving rapidly to legalize it, the EPA is currently not regulating cannabis. That is in the hands of each state. According to a story in the Denver Post in 2016, “Although pesticides are widely used on crops, their use on cannabis remains problematic and controversial as no safety standards exist.” Keep in mind that it takes a lot more pesticides to keep unwarranted guests off your cannabis plant when it’s outdoors than when it’s in a controlled environment.

We’re accustomed to using endless products under the assumption that a range of governmental acronyms such as NIH, FDA, OSHA, EPA, USDA are protecting us. We don’t even think about looking for their labels because we naturally assume that a product we’re about to ingest has been thoroughly tested, approved and vetted by one of those agencies. But what if it’s not?

Again, cannabis regulation is at the state level and here’s why that’s critical. The budget of the EPA is $6.14 billion while Colorado’s EPA-equivalent agency has a budget of $616 million. According to the federal budget summary, “A major component of our FY 2019 budget request is funding for drinking water and clean water infrastructure as well as for Brownfields and Superfund projects.” In short, federal dollars aren’t going towards pesticide testing and they’re certainly got going towards a product that’s illegal at the federal level. That should make you wonder how effective oversight is at the state level.

What impact does this have on our health and what impact do pesticides have on the environment? A former Dean of Science and Medical School at a major university told me, “Many pesticides are neurotoxins that affect your nervous system and liver. These are drugs. The good news is that they kill insects faster than they kill people.” Quite a sobering thought.

“We have the ability to control what kinds of pesticides we put in our water and how much pesticides we put in our water.”Assuming that he’d be totally supportive of greenhouses, I pushed to see if he agreed. “There’s always a downside with nature. An enclosure helps you monitor access. If you’re growing only one variety, your greenhouse is actually more susceptible to pests because it’s only one variety.” The problem for most growers is that absent some kind of a computer vision system in your greenhouse, usually by the time you realize that you have a problem it’s already taken a toll on your crop.

Following up on the concept of monitoring, I reached out to Dr. Jacques White, the executive director of Long Live the Kings, an organization dedicated to restoring wild salmon in the Pacific Northwest. Obviously, you can’t monitor access to a river, but you certainly can see the effects of fertilizer runoff, chemicals and pesticides into the areas where fish live and eventually, return to spawn.

“Because salmon travel such extraordinary long distances through rivers, streams, estuaries and into oceans they are one of the best health indicators for people. If salmon aren’t doing well, then we should think about whether people should be drinking or using that same water. The salmon population in the area around Puget Sound is not doing well.”

We talked a bit more about pesticides in general and Dr. White summed up the essence of the entire indoor-outdoor farming and pesticides debate succinctly.

“We have the ability to control what kinds of pesticides we put in our water and how much pesticides we put in our water.”

If you extrapolate that thought, the same applies to agriculture. Greenhouse farming, while subject to some problems not endemic to outdoor farming, quite simply puts a lot fewer chemicals in the air we breathe, the water we drink and the food we eat.

When You Don’t Know What You Don’t Know: Debunking Cannabis Insurance Myths

By , T.J. Frost
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For all of today’s growing acceptance and legitimacy with cannabis, the reality is that today’s operators – whether growers/producers or dispensary operators – still face risks in running their businesses. If, in the old days, a customer got deathly ill from cannabis contaminated with something from somewhere during the distribution chain, oh, well. But now that there’s a legal system of checks and balances; there’s recourse when issues arise.

The problem is that the business is so new that most people don’t know what they don’t know about mitigating those risks. And that, unfortunately, extends to many in the insurance business who need to be doing a better job helping put the right protections in place.

One grower bemoaned to me at a cannabis trade show, “I sure wish I could insure my crops.” What? “You can,” I told him. His old-school ag broker didn’t know any better and didn’t do him any favors with his ignorance. But it brought home the point: We have to start treating cannabis like the real business it is.

Reviewing the existing insurance policies of today’s cannabis businesses uncovers some serious gaps in coverage that could be financially crippling if not downright dangerous should a claim be triggered. Retail dispensaries, for example, are high-cash businesses, making banking and trusted employees a must-have.Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days. 

And a close eye must be cast to lease agreements for hidden exposures, too. We know a Washington state grower that had no property insurance on its large, leased indoor growing facility. The company’s lease made its owners, not their landlord, responsible for any required building improvements. It was one of a variety of serious exposures that had to be fixed.

Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days. Rather than find themselves under-insured, they can start by learning what they probably have wrong about insurance. Dispelling three of the most common myths is a good place to start.

Myth #1: Nobody will insure a cannabis business.

Not remotely true. You can and should get coverage. Think property and casualty, product liability, EPLI and directors and officers, employee benefits and workers comp. Additionally, you should be educated on what crop coverage does and doesn’t cover. Depending on your business’ role in production and distribution, you might also consider cargo, stock throughput, auto, as noted, crime and cyber coverage. It pays to protect yourself.

Myth #2: If my business isn’t doing edibles, I don’t have to worry about product liability insurance.

The reality is that product liability may be the biggest risk the cannabis industry faces, at every level on the supply chain. There’s a liability “trickle down” effect that starts with production and distribution and sales and goes down to labeling and even how the product is branded. Especially when a product is an edible, inhalable or ingestible with many people behind it, the contractual risk transfer of product liability is an important consideration. That means the liability is pushed to all those who play any role in the supply chain, whether as a producer or a retailer or an extractor. And all your vendors must show their certificates of insurance and adequate coverage amounts. Don’t make the mistake of being so excited about this new product that you don’t check out the vendors you partner with for this protection.

Myth #3: Any loss at my operation will be covered by my landlord’s policy.

As the example I cited early illustrated, that’s unlikely. Moreover, your loss might even cause your landlord’s insurance to be nullified for having rented to a cannabis business. It’s another reason to examine your lease agreement very carefully. You want to comply with your landlord’s requirements. But you also need to be aware of any potential liabilities that may or may not be covered. Incidentally, even if your landlord’s policy offers you some protection, your interests are going to be best served through a separate, stand-alone policy for overall coverage.

These are interesting times for the burgeoning legal cannabis business. Getting smart – fast – about the risks and how to manage them will be important as the industry grows into its potential.

Transporting Cannabis Can Be a Costly Business Risk

By Susan Preston, T.J. Frost
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Did you know that the use of personal vehicles for transporting cannabis products is one of the most frequent claims in the cannabis industry? It surpasses property, product liability and even theft. Businesses are either unaware of the risks involved in using personal vehicles for transporting cannabis, or they aren’t taking them seriously enough.

Considering the strict statutes many states have placed on transporting cannabis should be reason alone to be more diligent. For example, the California Bureau of Cannabis Control’s proposed regulations require cannabis business owners to ensure their drivers have designated permits to transport the product. The state’s current legislation mandates inspections at any licensed premises, and requires employers to provide detailed tracking and schedules on the transport of product. Further, the state prohibits using minors to transport cannabis, and considers it a felony to do so.

Regulatory concerns, combined with the potential liabilities that could come from driver behavior, are keeping insurers from offering auto coverage to the cannabis industry. In fact, just four insurers currently offer the industry auto coverage, with premiums running as high as $17,000 per auto on average. It is important to note that personal auto insurance falls short because it doesn’t cover cargo loss.

Alternatively, because the stakes are so high, many companies are using courier services to transport cannabis product. But cargo insurance is still an issue. Without it, the care, custody and control of someone else’s products, and insurance limits are lacking. Even when the courier has cargo coverage, because they are delivering for multiple companies, the claims payout would have to be split amongst all the customers – likely below the value of your loss.

Consider the following best practices when transporting cannabis:

  • Conduct background checks/review DMV records. Uncovering any potential driver issues prior to hiring is critical. Look for previous DUIs or drug related history. Employees who might use product before getting behind the wheel are a significant danger to other drivers and a major liability to the employer. Even after hiring, be on alert for signs that indicate poor driving performance. Use check-in/check-out processes for all drivers, and conduct regular vehicle walk-arounds to look for scratches, dents or other damage that otherwise might be unreported to the employer.First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk. 
  • Implement quarterly driver training. Educate employees on proper procedures. While minor fender benders and sideswipe accidents are most common, even these can be costly if not handled properly. Once law enforcement get involved in an accident the car’s transportation of cannabis could become a secondary issue. Teach drivers how to handle accidents while on the scene, including informing law enforcement about the cargo and the employer.
  • Use unmarked vehicles. Drivers carrying a significant amount of product and/or cash are tempting targets for thieves. Company cars used for transporting product should be newer, and have no fleet serial numbers or anything identifying the company.
  • Require increased personal liability limits. If an employee is using their own personal vehicle for business purposes, the business owner should require that person carry more than minimum limits of personal liability.  Ideally, they should have $300,000 or more, at an absolute minimum $100,000.

Get started now

First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk. Secure the right insurance coverage, and ask your broker/underwriter to provide any additional recommendations to best mitigate your transportation, delivery, and cargo exposures.

To learn more, please visit our website.

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Has Cannabis Reform Landed In The UK?

By Marguerite Arnold
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The British have finally decided that cannabis reform is overdue. In London at least, 63% of the population believe that recreational reform is a good idea.  According to a poll by The Evening Standard, the rest of England too, is getting close to a majority when the idea of recreational reform is in the room.

It is, as usual, recreational reform that is the icing on a medical cake that has yet to be baked. But that spice brownie is well on its way to the oven too. According to the British Medical Journal as of the beginning of July, the idea of broader access to regulated medical supplies for patients is mandatory.

And in the ranks of the conservative party, Crispin Blunt founded the Conservative Drug Policy Reform Group last September to lead Parliament in a long overdue discussion about the use of both medicinal and recreational cannabis use in the UK that formally “launched” during the last week of June.

But how the industry will develop here is also a big question in the room right now, especially with a country poised on the edge of one of the biggest constitutional questions in the country’s history – to Brexit or not, and how.

Justice Minister Crispin Blunt (right)
Photo courtesy of The UK Ministry of Justice, Flickr

The North American Influence Is Controversial

While Blunt, for example, sees no issue with injecting North American capital into the debate, there are others who are not so sanguine. And while the idea of Canadian reform is popular here, including the freedom of patients (and others) to grow small amounts themselves, the idea of Canadian companies influencing national policy is not. From The Daily Mail to The Guardian, there have been front page headlines about the coming financial influence of “The North Americans.”

That this discussion is also going on at a time when the UK is considering a completely new trade agreement with the world, including on pharmaceuticals, is not insignificant. Where the country’s drugs come from, far from cannabis, is absolutely on the table. Not to mention how much they cost.

Questions of basic access are likely, in other words, to be in the room for a long time here. The barriers to obtaining and filling a prescription start at its expense – which is ₤1,100 (about $1,400) per prescription. There are few people, let alone those who are chronically ill, who can afford the same. This is far from a “normalized” drug- even of last resort- at the NHS.So far, the number of actual cannabis patients in the UK (ones who go to a doctor for a prescription and fill it) is still under 100 people.

That said, it is a start. And for the first time, as of this summer, those with the money can in fact, obtain cannabis by prescription.

But what happens to those (the vast majority) who cannot? 

Patients Are Feeling Side-lined

Just as in national legalizing conversations in the United States and Canada so far, patients are being pushed aside for “the business” to take the conversation forward. But where does this business fall on matters of price and access?

So far, the number of actual cannabis patients in the UK (ones who go to a doctor for a prescription and fill it) is still under 100 people.

While patient groups are organizing, and the earliest ones to gain national attention, usually families whose children have been directly in the line of fire, are getting commercial ambitions themselves, the fact remains that patient voices are not the loudest ones in the room. Although as Blunt announced last week, he does not see recreational reform happening in the UK for the next five years.

That also means that every Canadian company entering the market (in particular) will have to continue to sing the same medical song they have been humming across Europe- at least in public.

The UK is NOT Germany – But It’s Not Canada Or The US Either…

No matter how much more “liberal” supposedly, the English people are on the whole CBD question (there is already far more CBD for sale in the UK than just about anywhere else), the UK market is still far behind Germany. Why? Since March 2017, insurance companies auf Deutschland have been required to cover the drug – from sprays and pills to floss when prescribed by a doctor.

There are, by latest calculations about 50,000 German patients.

That said, it is clear that the British do not seem to give a fig about the entire “novel food” discussion and are literally, in some cases, daring the police to raid stores and shut down establishments. The idea of rebellion against EU rules seems very obvious on the CBD front.

Beyond this, however, it is also clear that “Canadian” much less “American” cannabis reform is not necessarily the only model in town.

As the British, in other words, do finally embrace the cannabis question, it is very likely that the face of the same will be of a unique Limey strain all of its own.