The Food Safety Consortium, taking place November 13-15 in Schaumburg, Illinois, will host a series of talks geared towards the cannabis industry this year. The newly launched Cannabis Quality Track features a number of panels and presentations designed to highlight the many intersections between food safety and cannabis.
Jenna Rice, Director of Operations at Gron Artisan Chocolates
The track will have presentations discussing food safety planning in cannabis manufacturing, HACCP, GMPs, regulatory compliance and supply chain issues among other areas.
Ben Gelt, board chair of the Cannabis Certification Council, is moderating a panel titled What’s In My Weed? that will delve into issues like supply chain, production and other difficulties in creating cannabis products and the challenges inherent in teaching consumers to be more discerning.
Ben Gelt, Board Chair of the Cannabis Certification Council
Kimberly Stuck, Founder of Allay Compliance Consulting
Ben Gelt and the Cannabis Certification Council orchestrated the development of this panel to help promote their #WhatsInMyWeed consumer awareness and education campaign. “The Cannabis Certification Council believes consumer education campaigns like #Whatsinmyweed are critical to drive standards and transparency like we see in food,” says Gelt. “What better place to discuss the food safety challenges the cannabis industry faces than the Food Safety Consortium”
Before Kim Stuck founded Allay Compliance Consulting, she was the first Marijuana Specialist for a public health authority in the nation, where she was working with regulators in Denver, Colorado. She is currently a cannabis food safety expert and a Certified Professional of Food Safety (CP-FS) through NEHA. She has helped Colorado and California develop cannabis food safety requirements. “I will discuss pitfalls we have experienced in the regulation of cannabis in Denver and what mistakes not to make,” says Stuck. “I’d also like to talk about how to be prepared for when those regulators start to come in to facilities.”
Kristen Hill, MIP Director at Native Roots Dispensary
Kristen Hill is the MIP Director at Native Roots, arguably one of the largest dispensary chains in the world. She oversees 30 employees in Native Roots’ MIP facility where product testing and quality assurance of products are all led under her guidance. Her background includes managing quality assurance and regulatory compliance with FDA regulations, among other areas. She said she’s particularly excited to talk about implementing manufacturing best practices in the cannabis space. “Cannabis is maturing and is beginning to shape operations around long standing best practices in other industries,” says Hill.
Leslie Siu, Founder and CEO of Mother & Clone
Leslie Siu brings to the panel 17 years of liquor, tobacco and pharma marketing and operational oversight plus global digital and experiential campaigns. Her company, Mother & Clone, produces infused, sublingual cannabis sprays. Based in Colorado, Mother & Clone’s team of biochemists are Merck alumni, currently working towards GMP standards in preparation for Canada, slated to be on shelf in the spring of 2019. Her main consideration for cannabis product development comes from what she has learned from the FDA in traditional industries- what they will and will not tolerate.
There are going to be some states that are less progressive in the pro-cannabis movement, the same way there were states that were slow to move past alcohol prohibition. This is normal for any country moving towards change, better economic standing and safer healthcare.
There are only four states that completely ban recreational and medical cannabis altogether, and those states are Idaho, Kansas, Nebraska, and South Dakota. Although, there is no doubt that more and more states are moving towards a pro-recreational and medical cannabis stance. There are some states in the Northeast that are making strides to legalize cannabis.
Most of the states in the Northeast already have some form of medical cannabis law in the books already, but some are moving towards recreational legalization surprisingly quickly. Massachusetts already has legalized recreational cannabis and is setting up their regulatory framework currently while Vermont, New Jersey and New York, all of which already have medical laws, appear to be just steps away from legalizing it recreationally.
Northeast States Moving Towards Legalization
With Canada’s recent recreational legalization, a number of states just south of the border appear to be eyeing the issue for themselves. While some of these states have somewhat strict regulations in place, they look like promising emerging market opportunities.
New Jersey
New Jersey is closer than ever to legalizing recreational cannabis. Governor Phil Murphy built his campaign on the pledge to end cannabis prohibition. Murphy says having recreational cannabis legalized this year is his goal.
Murphy says that he wants legal recreational cannabis to be available because he believes it is a way to improve social justice in New Jersey and to bring the state new tax revenue. The biggest issue is what the legislation will look like and how it can be tied to expanding the states medicinal cannabis program.
New Jersey Governor Phil Murphy
Their current medical program, while still small in market size, appears to be gaining steam and growing in terms of patients getting access. Six months ago, The New Jersey Department of Health added a number of qualifying conditions patients can get a cannabis prescription for. The program still has its limits, like a 10% THC potency cap, small selection of types of products and other various restrictions.
New York
It was just last year when Governor Andrew Cuomo said cannabis was a “gateway drug” and he was opposed to legalization. After conducting a study on cannabis legalization, the result was a July Health Department report that determined the positive effects of legalization outweighs the potential negative impacts.
The debate between Andrew Cuomo and Cynthia Nixon in the gubernatorial race has highlighted their views of cannabis as well as other important issues; it’s important that New Yorkers vote in the primary election to have the best opportunity for the future.
Companies with large amounts of capital are planting their flags in New York, like MedMen’s dispensary in Manhattan, even if the medical market might still be in its infancy.
MassachusettsOver the next six months, this market will be one to watch closely
Recreational cannabis became legalin the last couple months for Massachusetts, while the state legalized medical cannabis some time ago. Their medical program is relatively advanced compared to New York or New Jersey. Online registration, a large number of qualifying conditions, and a less restrictive business environment seemed to encourage a much larger number of patients and businesses supporting them.
Regulators in Massachusetts are currently consideringthe option of allowing delivery operations for the recreational market. The roll out for the recreational industry might seem somewhat slow, but regulators are tackling a wide range of issues and making considerable progress towards the highly anticipated recreational market opening. Just last week, regulators issued licenses to two cannabis-testing laboratories, and, according to the Boston Globe, the debut could be just weeks away.
While the industry and regulators get ready for the recreational debut, a recent crackdown on pesticide usehighlighted some of the growing pains that come with it. Over the next six months, this market will be one to watch closely as dispensaries begin selling recreational cannabis and the industry develops.
Vermont
The recent Canadian legalization of recreational cannabis will no doubt put pressure on states sharing a border with them to consider adjusting their laws.
Legalizing recreational cannabis will likely increase tourism to Vermont, the way other states saw an influx in tourism when they legalized. Unfortunately, Vermont has only decriminalized recreational cannabis. You can possess, grow and consume cannabis, but you can’t buy or sell it, which obviously restricts the ability of any business to enter the market.
Vermont Statehouse, Montpellier, VT Image: Tony Fischer, Flickr
However, their legal medical program is relatively laissez-faire compared to other states in the region. They allow for cultivation at home or through a caregiver and there are a number of small businesses working under the legal medical program.
Maryland
Recreational cannabis isn’t legal in Maryland yet, but medical cannabis has been legal since 2014. It’s illegal for patients and caregivers to grow their own. Attempts have been made to make recreational cannabis in 2016, but the bill didn’t move forward.
Maryland’s industry was off to a rocky start, when the application process for businesses wanting to enter the market slowed to a crawl. This month, the state just approved four new medical dispensaries and one new processor for the market. The latest round of approvals brings the total to 69 dispensaries serving patients, while back in 2016, the state pre-approved 102 dispensaries originally.
Delaware Expect to see another attempt at legalizing via the legislature in early 2019.
The Delaware Department of Health will continue to accept applications for medical cannabis cards, which is required for patients seeking to obtain their medicine from a compassion center. Patients are not allowed to grow their own cannabis. The state’s program has been operational for quite a while, and a small number of companies have established footprints in the state, like the Israeli brand Tikun Olam.
Pennsylvania
In 2016, Pennsylvania legalized medical cannabis. In contrast to some of the other states discussed earlier, PA is off to a more streamlined start. The second phase of their medical program allowed for more businesses to enter the market, a wider range of qualifying conditions and a larger number of patients registering. The industry is maturing here fast and could make for an exciting opportunity with recreational legalization potentially on the horizon.
The bill would call for the immediate release of people jailed for cannabis-related crimes. This would also allow anyone with a criminal history related to cannabis to have that expunged.
If the bill passes, the tax imposed is estimated to generate $500 million a year.
Cannabis businesses must not only protect their investments in their technical creations, but also must protect their brand identities. A cannabis producer can invest heavily in making a desirable, high-quality product, and can advertise and sell this product so as to generate customer interest and goodwill, but if the customer cannot distinguish the producer’s product from that of its competitor, this investment is for not. Trademarks become unenforceable when they are no longer distinctive.
A trademark provides its owner with the right to have the Court stop another entity from using the trademark, or using a similar trademark in a way that confuses the public. When the trademark is infringed, the Court can also make a monetary award in favor of the trademark owner.
Trademarks are identifiers of a particular source of manufacture and they can take virtually any form. Trademarks can be words, phrases, symbols, names, designs, letters, numbers, colors, three-dimensional shapes, holograms, moving images, modes of packaging, sounds, scents, tastes, textures, or any other distinguishing element. What a trademark cannot be is a mere descriptor of the goods or services themselves because such a trademark would prevent other entities from describing their products in their ordinary terms.
Trademarks can be registered, but they do not have to be. In choosing a trademark, the cannabis producer must balance competing impulses: the desire to choose a trademark that is suggestive of the product itself so as to have an immediate meaning to customers without need of an expensive marketing campaign; and the desire to coin a unique and striking trademark which is instantly eye-catching and memorable, but which must be advertised before customers can understand the product to which it refers.
For example, a depiction of cannabis leaf or a word that plays on the ordinary terms used to refer to cannabis will not make a strong mark that can be enforced against those who adopt something similar. On the other hand, a coined word, such as “Kodak”, may have no independent association with cannabis but, after a time, use of this mark in association with a cannabis product can create a very strong mark with a wider ambit of exclusivity.
All that said, even a very suggestive mark can serve as a trademark where the use of the mark is so longstanding and ubiquitous that the suggestive mark acquires a secondary meaning as an indicator of its source of manufacture. Cannabis producers can and should also consider adopting specific colors, scents or tastes of their products as trademarks, where appropriate.
Trademarks become unenforceable when they are no longer distinctive. For this reason, trademark owners must keep abreast of any use of trademarks similar to their own by third parties, and must act quickly to either license such uses or to restrain them.Cannabis businesses have been very busy applicants for trademarks. More than 1700 such applications are now on file, though a comparative few have yet been registered.
Trademarks can be registered, but they do not have to be. When a company’s product or service becomes known to its customers or potential customers with reference to a mark through ordinary business use, a trademark has been created.
Registration does however provide certain advantages. Under the amendments to the Trademarks Act coming in 2019, a registered trademark can be obtained for without any proof of use or goodwill. By contrast, and as noted above, an unregistered mark must be used and possess goodwill before it can be said to exist at all. A registered trademark provides protection for its owner across Canada. An unregistered trademark can only be enforced in the geographical area in which its owner has established its reputation. A registered trademark is protected from those who use it in a manner that is likely to depreciate the goodwill of the trademark. An unregistered trademark only protects against consumer confusion.
Registration under the Trademarks Act also makes it an offence to sell goods or services on a commercial scale in association with another’s registered trademark, or to traffic in infringing labels. Further, a trademark owner can request that the import or export of such goods in Canada be arrested. No similar rights accrue for unregistered trademarks.
Finally, a registered trademark is published at the CIPO web site, providing notice of its existence to new market entrants before these entrants commit to using a similar trademark. Unregistered marks are not always easily discovered and a new market entrant may commit to a mark before having any opportunity to discover that it is the unregistered trademark of another.
Registering a trademark is straightforward. The applicant prepares an application that identifies the applicant, the trademark and the goods and/or services with which the trademark is being used or is intended to be used. Once satisfied that the application complies with the Trademarks Act, CIPO publishes the application to allow potential opponents of the registration to come forward. If there is no opposition, or if an opposition proceeding is brought and dismissed, the trademark is issued.
There is an interaction between the Trademarks Act and the Plant Breeder’s Rights Act. As discussed above, when a denomination has been adopted for a plant variety under the Plant Breeder’s Rights Act, nothing similar can be adopted or registered as a trademark. This is so other traders may use the denomination in their sale of the variety after expiry of the plant breeder’s right.
Cannabis businesses have been very busy applicants for trademarks. More than 1700 such applications are now on file, though a comparative few have yet been registered. Trademark applications in this area are likely to increase further with the coming changes to the Trademarks Act and the removal of the requirement that applicants show use of the trademark prior to registration. Companies will be encouraged to apply for trademarks they may only be considering using, and for any trademarks that they think their competitors may be planning to use. There is some concern that the changes to the Trademarks Act will lead to the rise of trademark trolls.
Before adopting a particular trademark, the producer must do what it can to minimize the likelihood that a third party will assert that the trademark infringes the third party’s prior rights. Searches of Canadian and international trademarks, particularly United States trademarks, are advised. National intellectual property offices, such as CIPO and the United States Patent and Trademark Office, maintain easily searchable databases of registered and applied-for trademarks that should be reviewed. Search professionals can also assist in identifying trademarks that have never been the subject of a trademark application. With the result of the searches in hand, the cannabis producer can determine whether or not to proceed to adopt the contemplated mark and invest in its promotion.
In Part 5, Naiberg will explain how to use a copyright to protect works of creative expression. Stay tuned for more!
Read the glossy website or encounter their expensive marketing materials and lush swag at any upscale international cannabis business conference these days and you get a certain kind of impression. The new, modernist, chic European HQ in central Frankfurt, for example, with its floor-to-ceiling windows and breath-taking view of the city, river and mountains, continues to give that perspective far from home.The company has been at the forefront of the Canadian cannabis industry since 2013 and has subsequently weathered several mergers, buyouts and creative partnerships of all kinds.
But what’s of great interest about Canopy is that its highly slick corporate image is backed up by a solid performance elsewhere to date– and on a number of important, and globally impactful levels. Further, the company’s willingness to think strategically, globally, and take calculated, well-timed risks at the same time proves to be effective.
The Canadian Beginnings
The company has been at the forefront of the Canadian cannabis industry since 2013 and has subsequently weathered several mergers, buyouts and creative partnerships of all kinds. In the process it has also made financial history in the cannabis industry, becoming the first publicly listed cannabis company in the world a year after its founding.
So much of its iconic corporate history is in fact, ironically fading in the rapid birth of the full on recreational market at home. However, here is the elevator pitch. Born as Tweed, in 2013, in an abandoned former Hershey chocolate plant and the recipient of one of Canada’s first medical cultivation licenses, the company rapidly expanded with increased market access that reform brought. Inevitably, its success also spawned one of its closest competitors (Cannabis Wheaton Income Corp) after co-founder Chuck Rifici was ousted by a unanimous vote of the Canopy board.
In 2018, Canopy Growth still maintains its reputation as the first Canadian cannabis unicorn, even though its stock price is just half that of close competitor, Tilray.
In Canada, the company has long expanded adroitly beyond its central HQ with strategic partnerships and buyouts that range the gamut of grow and branding opportunities that are becoming increasingly as mainstream as, well, beer. These days, Canopy is well-poised to take advantage of the shifting Canadian regulatory landscape on several fronts.
The first is undeniably medical. The company has made patient access a cornerstone of its continuing market development strategy. In fact, current CEO and original cofounder, Bruce Linton, has recently told the press that in his view the medical market globally is the company’s first and most profitable focus.
No matter how many beer companies come calling. And that is also one of the company’s more notable, if not newsworthy accomplishments.
International Aspirations
However it is on the international side that the company has really distinguished itself. That starts with the early (relatively speaking) and active interest in what was going on far from Canadian shores. Initially in Europe (but not limited to it). And even more centrally, how and where the company expanded its global medical reach.Canopy has spread its influence widely throughout Europe already
That started, from the Canopy perspective, with the decision to buy the small German GmbH called MedCann (now Spectrum Cannabis, the global medical brand of Canopy). Located just south of Frankfurt, an international but small team of globally experienced entrepreneurs managed to obtain the first import license for medical flower from Canada into Germany in the summer of 2016. Guided by the industry knowledge and business savvy if not entrepreneurial zeal that so often leads to naught, Pierre Debs and team faced a market still sceptical of medicinal cannabis domestically, and the burden of being “first.” Canopy was not yet in Europe, but they had more ready access to the market and capital. The Canopy buyout of MedCann was accomplished on December 12, 2016, six months before the first iteration of the German cultivation bid was announced. Canopy later announced that it had become one of the top ten finalists in the first iteration of the now restarted German cultivation bid.
Beyond Germany however, this unique team with deep local and global knowledge also began an immediate expansion policy in Europe and beyond that is still unfolding. Apparently in similar strategy adopted at home in the Canadian provinces, Canopy has spread its influence widely throughout Europe already. With an enormous supply contract from Spain’s Alcaliber and operations in Denmark, the Czech Republic, Poland, Italy and a few more (still currently unnamed) operations rolling out any day, the company is clearly building a solid, strategically dispersed infrastructure that reaches far beyond Europe, with global impact and influence.
Exhibit A? In April of this year, the company launched Spectrum Australia with support from the Victorian government.
Controversies
The biggest controversy facing the company so far, albeit indirectly, involves pesticides. This issue occurred during the acquisition of an outside company called Mettrum. In other words, Canopy inherited the production liabilities of a purchased company. The acquisition, however, which passed the buck to Canopy to fix, was actually an opportunity for Canopy to implement its own high internal production and quality controls throughout Mettrum facilities.
This was not inexpensive or of small impact (it affected 21,000 medical users). In addition to taking a leadership role in addressing their acquisition’s production issues, CEO Linton publicly apologized to affected patients.
Plant Breeders’ Rights: Protection For New Plant Varieties
Unlike the Patent Act, Canada’s Plant Breeders’ Rights Act does provide intellectual property protection for whole plants. Plant breeder’s rights are available for new cannabis plants, whether they are the product of genetic engineering or more traditional cross breeding.
The applicant must also propose a name (referred to as a “denomination”) for the new variety that is acceptable to the Commissioner.The Plant Breeders’ Rights Act focuses on the material used to propagate a new variety of plant, such as its seeds. The owner of a plant breeder’s right can stop others from selling, producing or reproducing the propagating material, conditioning the propagating material for use, exporting or importing the propagating material, repeatedly using the protected variety to commercially produce another variety, and stocking the propagating material for the purpose of doing any of the above acts. The owner can also assert these same rights to stop another’s activities as they relate to another plant variety that is essentially derived from the protected variety. The owner can also recover for the damages it suffers as a result of any infringement. For cannabis plants, the term of a plant breeder’s rights endures for 20 years from the date of its issuance.
To register a plant-breeder’s right, a breeder provides an application to the Commissioner of Plant Breeders’ Rights Office, which is part of Canadian Food Inspection Agency.
To be registrable, the plant variety must be new, meaning that the propagating material has not been sold in Canada more than 1 year prior to the application (or elsewhere more than 4 years prior to the application); it must be distinguishable from all varieties that are known to exist at date of filing of the application; it must be sufficiently homogeneous, meaning that its relevant characteristics are predictable and commercially acceptable; and it must be stable in its essential characteristics over successive generations. Registration under the Plant Breeders’ Rights Act provides plant breeders’ rights in Canada only. However, Canada is a signatory to a treaty (UPOV) that allows an application originally filed in Canada to provide priority for registration in other member countries, and vice versa.The Commissioner also has the power to require the performance of tests on a sample of the propagating material, such as to verify its stated characteristics.
The applicant must also propose a name (referred to as a “denomination”) for the new variety that is acceptable to the Commissioner. The Plant Breeder’s Rights Act puts limits on what may be chosen as the denomination. Among other things, the denomination cannot refer to characteristics the variety does not have, suggest that it is derived from another variety or bred by a particular breeder when this is not case, or comprise laudatory descriptives that could cause confusion. The denomination cannot be used or registered as a trademark and, once accepted by the Commissioner, must be used by all traders when selling the propagating material, even after the expiry of the plant breeder’s right. Indeed, the Plant Breeders’ Rights Act makes it an offence to misuse or misapply the name. The same denomination will be used for the same variety in all UPOV countries.
The application process can involve some back-and-forth with the Commissioner, as well as the opportunity for others to oppose the registration. The Commissioner also has the power to require the performance of tests on a sample of the propagating material, such as to verify its stated characteristics.
A unique feature of a plant breeder’s right is that it can be enforced even before the Commissioner finishes his or her review against infringers who are given notice of the applicant’s application.
As of this writing, there are three registered denominations of cannabis plants under the Plant Breeders’ Rights Act. Chris Griffin has registered “Big C” – cannabis sativa subsp. indica; and MedReleaf Corp. has registered MR2017001 and MR2017002, both being varieties of cannabis sativa. It is expected that further registrations will follow.
There are some important limitations to the plant breeder’s rights. Farmers who harvest the plant variety on their “holdings” are given a privilege: they can store, produce and reproduce (but cannot sell) the variety on such holdings. The Commissioner also has the power to issue compulsory licenses when a protected variety is not available to the public at reasonable rates. Further, the plant breeder’s right is not infringed when the protected variety is used for non-commercial or experimental purpose.
In Part 4 of the series, Naiberg will discuss trademarks and how cannabis businesses should go about protecting their brand identity in Canada. Stay tuned for more!
This collection of leaders in the European cannabis market is by no means completely neutral. Much less comprehensive. It is however, German and European centric, because these people, by definition and geography, are now sitting at the nexus of a global, and even within Europe, international industry. Europe for that reason, will be the place, and for some time, where the global cannabis industry comes to make deals across borders, meet the high levels of compliance required here that is setting global standards and push the medical revolution forward for (at least) the next five to ten years.
For that reason, the people listed below carry influence far beyond one country or even region, by definition. But they are also not the only people redefining an industry.
Most notably, of course by their exclusion, are women, although there are some exceptions to that and women are increasingly establishing their place at high executive levels although not yet founder or cofounder or, auf Deutsch, Geschäftsfüherin– (Managing Director) at any of the establishing global companies with European presence. That said, they are beginning to make their appearance in every place and career path within the industry.
Movers and Shakers
Dr. Pierre Debs, Ph.D. An American expat with a German Ph.D., and twenty five plus years’ experience in stem cell research, including endocannabinoid system function. Debs is also the often uncredited individual who opened the current medical market in Germany in particular, but with immediate impact throughout Europe. As the scrappy start up MedCann, Debs, his cofounders and a skeleton team based just south of Frankfurt, not only got into the game first, they beat other established companies to obtain the first import license for Canadian flower in the summer of 2016. Including and most notably Tilray. MedCann GmbH at that point became the only other company besides Bedrocan, the perennial Dutch provider for the last twenty years to be able to provide medicinal, GMP-certified flower to the German market. That market distinction of course, did not last long as other companies quickly jumped into the ring but as the medical brand of Canopy, Debs has continued to lead industry development across Europe. Today, as the Geschäftsführerof Spektrum Cannabis GmbH (as MedCann was renamed after its purchase by Canopy sometime in Q4 2016-Q1 2017) and as Canopy Growth Corp Managing Director Europe, Debs has not only established but currently oversees operations in multiple European countries as Canopy Cannabis expands its global medical brand. From, it should also be added, its swanky new digs in central Frankfurt.
Tjalling Erkelens, Bedrocan founder and CEO. Bedrocan is the legacy cannabis player here in a game that is rapidly changing as it expands. The first exporter of medical cannabis in the world, the family owned company currently produces five different cannabis strains bound for the medical market, and is expected to be the beneficiary of the newly expanded import quota into Germany from Holland for medical grade flower, as well as place well in the German cultivation bid.
Gerhard Muller of the Wayland Group
Gerhard Müller. The unassuming Chair of the Audit Committee of Wayland Group, the cannabis company formerly known as Maricann. Müller is less often in the English-speaking press than Ben Ward, company CEO. However, Müller is a force to be reckoned with as Wayland begins to unfold its usually understated strategy in Germany and Europe from its Munich HQ base. Müller is the former head of Ernst and Young’s GSA Tech Practice, also adding household names like Birgit Homburger and Christopher Peterka to Wayland’s German Advisory Board. Also of note is GM for Wayland Germany Josef Späth now tasked with bringing his connections and previous experience as a top, internationally experienced clean tech architect and engineer to the build out of Wayland’s infrastructure. This includes previous work with NASA Jet Propulsion Lab alumni to develop new techniques for harvesting and processing of cannabis. German ingenuity and engineering at its best!
Patrick Hoffmann, CEO of Aurora Deutschland (formerly Pedianos). This firm too, was one of the early start-ups to get into the distribution and cultivation game and so far they have proven to be adept at navigating the complex path to winning cultivation rights. Aurora placed in the top ten finalists for the last German cultivation bid. As Pedianos, the firm won the first distribution and cultivation deal for Italy, sourced via Berlin. They have already proven to be highly skilled at finding market advantages in an exploding European market puzzle.
David Henn, CEO of Cannamedical Pharma
David Henn, CEO of Cannamedical Pharma. The millennial at the front of the cannabis import and distribution craze in Germany, founded his start up in November 2016. Henn then obtained one of the first issued licenses for trading and ex-im of medical cannabis just as the law changed in Germany officially to mandate insurance coverage of medical cannabis by prescription. Since then, the fiercely independent entrepreneur has turned down multiple acquisition offers from companies in Canada, Israel and Australia. The Cologne-based company supplies a growing network of German pharmacies and entered into off-take agreements with major companies in Europe, Canada and Australia. Bolstered by its cash flow in the existing distribution business, Cannamedical is continually expanding and has already established European subsidiaries that are in the progress of obtaining additional production and distribution licenses for the company.
Peter Homburg. Partner, Denton’s Law Firm. Peter has already had an established career as a high-powered partner and the head of the firm’s Life Sciences Division. Yet like many people of different paths and persuasions, he began to explore the world of the legal end of the business several years ago. These days, albeit based in Frankfurt, he has helped establish the firm’s reputation internationally as a leading law firm in the cannabis space.
Rob Reid, co-founder of European Cannabis Holdings
Rob Reid. Reid wears several influential hats based out of his offices in London. As the director of publicly listed, SOL Investments Corp (formerly Scythian), he invests in the U.S.-based cannabis industry. He is also the co-founder of European Cannabis Holdings (ECH), which is investing in a portfolio of private medical cannabis companies on this side of the pond. He is also the co-founder of Prohibition Partners, the increasingly prolific market intelligence and consultancy firm, and Cannabis Europa, a conference and networking platform. Finally, he is involved in a number of cultivation JVs around the world.
Marla Luther. As co-director for Tilray Europe (along with Sean Carney) and based in Berlin, Marla has the most senior leadership title of any woman in the cultivation and distribution industry in Europe. She has also been in the position for the last several years.
Alex Rogers. As the founder of the International Cannabis Business Conference (ICBC), Alex has established perhaps the first truly international cannabis conference brand catering to the professional end of the regulated industry but retaining the soul of the advocacy movement. The Berlin conference going into its third year in 2019, literally reset the standards if not stage for the next upgrade of the industry conference concept. Within a year of its first international conference in Berlin, Alex and his team had also established conferences in Canada and are establishing the B2B conference of Spannabis under their rubric in Barcelona as of next year.
Just a couple weeks away, the California Cannabis Business Conference, taking place in Anaheim, CA October 22-23, will host a series of panel discussions where attendees can expect to learn from industry leaders on a variety of topics. As businesses in the state adjust to new regulations and the market matures, one particular topic seems to highlight a challenging new space: distribution.
Track 1 at the CA Cannabis Business Conference, Distribution, Retail and Delivery, will begin early afternoon on Monday at the show, where a panel discussion titled State of Cannabis Distribution: Scaling Cannabis Distribution and Expectations of a Distributor, will tackle a range of issues involving logistics and supply chain management in California’s cannabis industry.
Michael Wheeler, vice president of Policy Initiatives at Flow Kana, will host the panel, joined by Chris Coulombe, CEO of Pacific Expeditors, Jesse Parenti, programs director of Nine Point Strategies and Brian Roth, vice president of sales at KUDU Technologies. According to the agenda, the session will cover inventory management, shipping and transport, managing product data, order fulfillment, manifest creation and reporting on it all. Michael Wheeler says regulatory compliance is one issue they plan on discussing. “Currently the biggest pressure on compliance is the desire by some operators to live under the proposed regulations, instead of the current emergency regulations,” says Wheeler. “Add to this recently signed legislation and we have lots of opportunistic actions each with their own perception of compliance.”
Another important topic they plan on discussing is driver training and hiring practices. According to Chris Coulombe, drivers are one of the top two most important customer-facing teams in the organization. “Between the sales team and the fleet operation, drivers represent half of the face of your company,” says Coulombe. “Much like the sales team, they interface with your retail partners directly, and subsequently provide a sizable portion of the foundation that retailers will use to judge your company’s competency and efficiency.”
Chris Coulombe, CEO of Pacific Expeditors
When hiring new drivers, Coulombe recommends the standard background and driver record checks, but urges looking for experience in sales and driving as well. “Find those that have leadership experience and are comfortable operating in quasi-structured environments,” says Coulombe. “To that end, we seek solution oriented candidates that are personable, experienced in troubleshooting on their feet, and understand how to operate inside the structure of an organization.”
Coulombe also emphasizes the importance of driver training in any distribution company. “We built our driver training from scratch based on collective experiences from the military,” says Coulombe. “However, creating this from scratch is not necessary at this point, some insurance companies, such as our broker, Vantreo, provide in house driver training and certification solutions as a risk mitigation measure for companies that they represent. We recommend speaking with your insurance company to find what packages they have available.” Proper training for your drivers can help increase efficiency in operations, decrease maintenance and insurance costs and provide for better employee engagement. Coulombe also says many insurance companies have standard operating procedures for drivers to help supplement your company’s protocols.
The Food Safety Consortium, taking place November 13-15 in Schaumburg, Illinois, will host a series of talks geared towards the cannabis industry this year. The newly launched Cannabis Quality Track features a number of panels and presentations designed to highlight the many intersections between food safety and cannabis.
The track will have presentations discussing food safety planning in cannabis manufacturing, HACCP, GMPs, regulatory compliance and supply chain issues among other areas. One particular topic of interest in the quality and safety of cannabis products is laboratory testing. At the event this year, leading laboratory accreditation bodies in the country will sit together on a panel titled Accreditation, Regulation & Certification: Cannabis Labs and Production.
Laboratories that are new to the industry and looking to get accredited should be aware of the new ISO/IEC 17025:2017 standard, which was released last year. According to Tracy Szerszen, labs that have already been accredited to the 2005 version will be required to transition to the 2017 version by November 29, 2020. “This can be done in conjunction with routine assessments scheduled in 2019 and 2020,” says Szerszen. “However, laboratories are cautioned to transition within a reasonable timeframe to avoid their 17025: 2005 certificate from lapsing prior to the transition deadline. Some of the changes to the standard include but are not limited to: the re-alignment of clauses similar to ISO 9001:2015 and other ISO industry standards, modifications to reporting and decision rules, the addition of risked based thinking and a new approach to managing complaints.” Szerszen, along with the other panelists, will go much more in-depth on changes to the new ISO 17025 and other topics during the panel at the Food Safety Consortium.
Some of the other topics the panel will discuss include:
ISO/IEC 17025 –what’s expected, benefits of accreditation, common deficiencies, updates to the new 17025 standard
Standards available for production facilities-GMPs & GFSI standards
How standards can be used to safeguard the quality of production and safety requirements
An open discussion with panelists from leading accreditation bodies on the state of cannabis lab testing
Christopher Gunning, life sciences accreditation manager with A2LA
According to Chris Gunning, many states are requiring accreditation to ISO/IEC 17025, the standard used throughout the world in many other high-profile industries such as the testing of food and pharmaceuticals, environmental testing, and biosafety testing. “In an industry where there are few standard methods, where one hears that you can ‘pay to play,’ and where there are ‘novice’ laboratories popping up with little experience in operating a testing laboratory, it is extremely important to have an experienced, independent, 3rd party accrediting body evaluating the laboratory,” says Gunning. “This process confirms their adherence to appropriate quality management system standards, standard methods or their own internally developed methods, and can verify that those methods produce valid results. Ultimately, the process of accreditation gives the public confidence that a testing laboratory is meeting their state’s requirements and therefore consumers have access to a quality product.” He says most states with legal cannabis recognize the need for product testing by a credentialed laboratory.
Lauren Maloney, food safety program accreditation manager, Perry Johnson Registrars Food Safety, Inc. (PJRFSI)
Another important topic that the panel will address is the role of food safety standards in the cannabis industry. Lauren Maloney says cannabis product manufacturers should consider GMP and HACCP certifications for their businesses. “Food safety is important to the cannabis industry because although individual states have mandated several food safety requirements there still considerable risks involved in the production of cannabis products,” says Lauren Maloney. “Consumers want the assurance that the cannabis products are safe and therefore should be treated like a food product. Because FDA does not have oversight of these production facilities, third party certification is essential to ensure these facilities implement a robust food safety system.”
Editor’s Note: This is the second article in a series by Richard Naiberg where he discusses how cannabis businesses can protect their intellectual property in Canada. Part 1 introduced the topic and examined the use of trade secrets in business. Part 2 goes into how business owners can protect new technologies and inventions through applying for patents.
Patents: Protection For New And Inventive Technology
Patents, which are issued in accordance with Canada’s Patent Act, provide their owners with the right to have a Court prevent anyone else in Canada from making, using, selling, importing or exporting what is claimed as the patent’s invention. The owner of the patent enjoys this monopoly for a period of 20 years from the date the patent is applied for. A patent is infringed even if the infringer arrives at the invention independently, without actual copying. If a patent owner brings a lawsuit and the Court finds infringement, the Court will typically order the infringing activity to cease and require the infringer to pay the owner a suitable amount of compensation.
There are several drawbacks to applying for a patent from the point of view of the applicant.Patents are meant to protect only inventions, meaning novel, non-obvious and useful solutions to practical problems. In the cannabis field, such inventions could include engineered genetic sequences or new plant cells that lead to useful improvements in the whole plant, new cultivation processes, new methods of extraction, new methods of storage or means to enhance stability, new formulations for administration, and new uses for the plant. It would not be uncommon for a cannabis producer to hold a suite of different patents that cover a whole range of innovative technologies and innovative business methods.
Not all classes of technical innovations are protectable by patent. For example, patents are not available for a whole cannabis plant because no patents are allowed on higher, multicellular organisms. Patents are not issued for genetic sequences or cells that are the result of cross breeding. Patents are also unavailable to monopolize methods of using cannabis as a medical treatment. That said, patent agents are skilled at casting innovations in areas such as these in terms that do provide some patent rights.
To obtain a patent, the applicant hires a patent agent to prepare and submit an application to the Canadian Intellectual Property Office (CIPO). An examiner at CIPO reviews the application for compliance with the statutory requirements and enters into a correspondence with the applicant’s patent agent in a process known as a patent prosecution. Third parties also have the opportunity to oppose the grant of a patent on limited grounds. The prosecution may continue for a period of years before the application is either allowed to issue to patent, or is ultimately rejected. Separate patent applications must be filed in every country in which patent rights are sought, though there are international treaties that facilitate these separate filings and preserve early priority filing dates.there can be a significant cost in obtaining patents, particularly if patent rights are sought in multiple countries.
It is important to emphasize that if an invention had been disclosed to the public more than one year before the application for the patent is filed, a patent cannot issue. Cannabis producers must therefore ensure that disclosures of their innovative work be controlled, including when working with partners. This can typically be handled with the use of appropriate non-disclosure agreements.
The prospect of market exclusivity makes the filing of patent applications a must for cannabis businesses, including those just starting out. For a start-up, simply filing a patent application projects that the company has value and a clear vision of its business. Venture capital often seeks companies with patent applications on file because the applications can mature into assets which can be monetized either by protecting a market for the owner, or through assignment or license to others.
cannabis researchers and producers have already filed hundreds of patent applications in Canada. There are several drawbacks to applying for a patent from the point of view of the applicant. Unlike the case for a trade secret, an applicant for a patent must make full and correct disclosure of the invention and how to use it in the patent itself. This disclosure will allow competitors to understand the applicant’s technology. The public disclosure provides a blueprint for competitors to build upon the patent’s disclosure, and to design around it to avoid infringement. Also, and unlike trade secrets, patents have an expiry date after which the public is free to practice the invention. The Commissioner also has the power to issue compulsory licenses to third parties in several circumstances, including when the demand for the patented article is not being met on reasonable terms. Further, the patent right is not infringed when the patented invention is used for non-commercial or experimental purpose. Finally, there can be a significant cost in obtaining patents, particularly if patent rights are sought in multiple countries.
Disadvantages or not, cannabis researchers and producers have already filed hundreds of patent applications in Canada. These applications relate to a wide range of inventions in the cannabis field including new cannabis resins and oils, methods of producing cannabis having improved properties, specific new growing processes, new harvesting methods, new extraction techniques, new formulations for human and veterinary use as foods, medicines and supplements, new delivery devices, new purification methods, new analytical methods, and new stabilization methods. Interested companies can access these disclosures from the public record.
As cannabis companies rush to obtain patent monopolies for their technologies, minefields are created for operating companies. Cannabis producers should obtain reports on what patent applications exist and might be asserted against their operations if and when these applications mature to issuance. With that intelligence in hand, the cannabis producer can understand what threats can be safely ignored and what patents must be addressed by assignment or license, by ‘design around’ or by developing an argument as to why the patent is invalid and thus unenforceable.
Editor’s Note: In Part 3 of this series, which will be published next week, Naiberg will discuss plant breeders’ rights and protecting new plant varieties. Stay tuned for more!
With all the attention on the pending regs for the recreational industry in Canada plus the huge medical market under construction in the EU, it is easy to forget the other cannabis discussion in the room right now. Namely CBD in commercial food ingredients and supplements. Battles in the beauty space, while surfacing, are still much less avidly fought.
As a result, edible CBD is also rapidly becoming (another) big green elephant in the room. Globally. Starting with all the changing rules about mostly medical use of cannabinoids in general.
In Europe, however, this is already a different animal.
The regulatory hammer also appears to be coming down in strategic country markets, with strange hybrid fights and issues emerging as a result.
For example, as cannabis crops (designed for both markets) begin to flourish in Spain buoyed by both the clubs in Barcelona and the growth of legitimate medical and other kinds of cannabis cultivation across the country – and much of that for export, authorities are cracking down on a federal level about labelling of not cannabis bound for clubs, but the CBD used in edibles.
In the last month, CBD industry blogs are reporting that the Spanish government is sending both warning letters to distributors and the police are apparently taking products off of shelves directly.
For all the direct showdowns about the cannabis plant this year, not to mention CBD, including British children ending up in hospital, this has got to make the top five list.
A Brief Modern History Of CBD Controversies On The Continent
The current complications have their roots in both the regulation of medical cannabis, health supplements and what are called “novelty” food items.
The food issue has been cooking for several years and for botanicals and additives far from cannabidiol. This year, on January 1, however, the entire EU brought in a new directive about the use of certain plants in food which seems to be affecting the edible cannabis conversation all over the continent. That said, countries are interpreting the same at different speeds and with different enthusiasm.
The EU looks poised to hop on the legalization train
Switzerland (not a member of the EU) is actually the only country on the European continent where so far, things have gone relatively smoothly. Their lack of EU membership is actually why. This also does not mean they have overcome some of the larger problems inherent in this entire discussion, but, if things go to form, it will be relatively drama free.
That is not the case in other places.
For example, at the end of 2016, British authorities made a splash about medical labelling with the Medicine and Health Care products Regulatory Agency (MHRA) also leaving the entire edibles discussion in limbo. Technically, low strength CBD can be sold in the UK but it must be labelled as a food product if not specifically made for the medical market. That flap is likely to take off again with the direct competition now of not only Tilray but Namaste and the changing scheduling of cannabis in the UK to a Schedule II in October. See the recent furore over the “unauthorized claims” supposedly made by the nascent Cannabis Trades Association in meeting, lobbying if not “working” with local authorities. The organization has literally blossomed within the last 18 months to over 300 members and 1,200 sellers in part to figure out what exactly the rules are, as authorities grapple with changing times.
Now jump the channel to Spain. The international focus of late has not been just the medical cannabis now sprouting in greenhouses owned by established pharmaceutical companies, or that bound for semi medical use in Barcelona, but the entire CBD edibles discussion.
Why?
On some levels, it is clearly an attempt to continue to set less than grey rules for the Spanish cannabis industry, which even in the club scene is regulating. But beyond that, this fight is altogether more complicated, and far from just regional, or even just a Spanish conversation.
European Food Regulation Meets The Cannabis Industry
CBD in edible products will, according to European regulation, make it a novel food or “additive” – namely that products containing the cannabinoid have not been used “safely”. Translated into English that crosses cultural boundaries, this definition really means that the substance in question must have been part of a regulated federal procedure – for at least 25 years in any third country. As such, it will have to be tested and regulated accordingly.In other words, until the EU can move to classify CBD as a novel food, in Spain, CBD products on the market must be labelled “external use only.”
One does not have to be an industry analyst to know this clearly excludes all parts of the cannabis plant. Everywhere. This is why the situation now unfolding in Spain is all the more worrying for the industry across Europe.
In Spain at least, the crackdown appears to be on any food item containing cannabis, which, according to European-wide regulations, has yet to be classified as a “novel food.” Namely, a food product which has not been consumed in a significant degree in the EU before May 15, 1987. See the guide for new applicants here.
In other words, until the EU can move to classify CBD as a novel food, in Spain, CBD products on the market must be labelled “external use only.”
Where Does This Leave The CBD Industry Across Europe?
As any manufacturer or vendor in any EU country could technically be required to register their new food, this means that cannabis producers and distributors in Europe need to be on their toes for the next several years as the regulatory schemata is worked out. Bottom line? Expect as much hullabaloo over this sector of the market as other places (even if over other issues).Both producers and distributors could easily face labelling problems
Here is the critical take-away. Regulation is coming to the entire industry in Europe in a way unseen in both Canada and the U.S. and from a much more granular perspective.
What “reigns in Spain” in other words right now, is a wake-up call for CBD producers across the continent, even if not involved in the medical space. Not to mention both U.S. and Canadian producers (in particular) looking for profitable market entry strategies. Labelling and standards, in other words, are clearly on the way, and beyond the drawing board, for all cannabinoids, not just those of the “medical” kind.
In the meantime, edible CBD products in Europe and in every country are ripe for the institution of new guidelines that are, as yet, formalized. Both producers and distributors, therefore, could easily face labelling problems for all their CBD products and product lines for the next several years.
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