By Abraham Finberg, Rachel Wright, Simon Menkes 2 Comments
Adult-use cannabis has gained steam across the nation as more and more states jump on the legalization train. As of the writing of this article, 23 states have legalized adult-use while another 15 have allowed the sale of cannabis for medicinal purposes, for a total of 38 green states.
Meanwhile, Texas still has stiff penalties for possession. Two ounces or less is a misdemeanor with a maximum fine of $2,000 to $4,000 if one has between two and four ounces. Possession of more than four ounces is a felony punishable by a $10,000 fine and between 2-99 years in jail. And that’s just for possession.
Quasi-medicinal use was approved with the 2015 Texas Compassionate Use Act, and just for epilepsy, to be only treated by low-THC cannabis oil with a maximum strength of 0.5%. Since then, the number of conditions approved for low-THC treatment has been opened up to terminal cancer, autism, multiple sclerosis, amyotrophic lateral sclerosis (ALS), seizure disorders, incurable neurological disorders such as Alzheimer’s, Parkinson’s, Huntington’s Disease and PTSD. At the same time, the allowable strength of cannabis oil has been increased to a still-minimal 1.0%.
So, what’s holding back the Lone Star State? And what can be done to obtain full legalization for both medicinal and adult-use cannabis? The answers lie within the Texan psyche which has a strong streak of self-reliance in it that has made the state go its own way before. Legalize cannabis just because 75% of the other states have already done so? If your friends jumped off a cliff, would you jump off a cliff too?
Texas is the only state to have been its own country. When its leaders declared independence from Mexico in 1836 and General Sam Houston defeated Mexican General Santa Anna later that year, Texas became the Republic of Texas. While many Texans wanted their country to join the United States, the push within the new republic to remain a separate country was strong. It took nine years of heated debates before Texas entered the Union.
Fast forward 178 years to 2023, and many of the heated debates taking place in Texas today revolve around cannabis. Some Texans see the push to legalize adult-use cannabis as a moral issue, and that it is the responsibility of state government to hold the line against what they view as a gateway drug. Others argue cannabis can be beneficial by providing a safe alternative to opioids for pain relief, and that it is already easy to access on the black market.
Several recent cannabis bills: HB 1805, which would have expanded covered medical conditions and defined a per-dose THC limit instead of a percentage limit, and HB 218, which would have decriminalized cannabis, both passed the state House of Representatives in April 2023 but died in the Senate when Lt. Gov. Dan Patrick, who presides over the chamber, refused to refer the bills to a state Senate committee for review.
“We’re always listening on the health issues, but we’re not going to turn this into California,” Patrick said in 2021, “where anybody can get a slip from the doctor and go down to some retail store and say, ‘You know, I got a headache today so I need marijuana,’ because that’s just a veil for legalizing it for recreational use.”
The Texas legislature only meets every two years, and the next session is scheduled to begin in January 2025. Since Texas does not have a statewide ballot initiative process, statewide decriminalization and possible passage of adult-use legislation will only be possible then.
Law enforcement has a stronger voice in public policy in Texas than in many other states, and law enforcement organizations have expressed serious reservations about decriminalizing cannabis in Texas. In a joint statement in 2019, the Texas Police Chiefs Association and the Sheriffs’ Association of Texas expressed concerns that legalization would bring increased crime, entice a dangerous black market and lead to increased use of other, more addictive drugs. They also opposed expanding the state’s restrictive medical program until “validated, peer-reviewed medical research shows a proven medical benefit.”
Despite these setbacks, there is a growing groundswell of public support for decriminalizing cannabis as well as for allowing adult-use. A December 2022 poll showed 55% of Texans support legalizing at least small amounts of cannabis for recreational purposes, and another 28% said it should be legal for medicinal purposes.
A February 2023 poll by the University of Houston found that 82% of Texans support the Legislature passing a bill that would allow people to use cannabis for a wide range of medical purposes with a prescription. The belief that cannabis is a “gateway drug” that would make people more likely to use other illegal drugs is losing traction as well – 70% said it would make people less likely to do so or would have no impact.
Austin, Texas
Voters in some cities passed local ordinances in 2022 decriminalizing cannabis although not all of these ordinances have been implemented by their mayors and city councils. One large city, Austin, passed such a law and is no longer arresting or citing anyone for misdemeanor possession. Other cities, including Dallas, have gone as far as to implement cite-and-release policies, which directs police to ticket someone with less than four ounces of cannabis. Though this policy keeps cannabis possessors from being arrested and detained, they still must appear in court and face the same fines and possible jail time.
These individual city and county efforts to decriminalize cannabis are helping build momentum for eventual statewide decriminalization when the state legislature returns in 2025.
The keys to achieving the goals of state-wide decriminalization and adult-use lie in implementing a multi-pronged approach of changing the public perception of cannabis through education coupled with promoting the economic benefits to the state of increased jobs and tax revenue.
Representative Joe Moody has taken a unique approach to educate lawmakers and Texas citizens. He recently sponsored HB 3652, the Texas Regulation & Taxation of Cannabis Act, in order to start a dialogue on what a retail cannabis market would look like in Texas. Moody received a public hearing in the House Committee for Licensing and Administrative Procedures on April 26, 2023 in which many points about setting up a retail market in Texas were discussed, including a 10% cannabis tax.
Moody didn’t expect the bill to move forward and, in the end, no vote was taken. But that wasn’t his goal. “No cannabis retail market bill has ever gotten a hearing like this in the Texas Legislature,” he told the committee. “The time is coming where this will be the law of the land, and so we might as well get in front of that.”
Many Texans in favor of legalization and the establishment of an adult-use market are optimistic. Recently, 420CPA’s Tara O’Connor attended a meeting of cannabis executives in Dallas. The Texas Cannabis Roundup, billed as “one of the largest gatherings of cannabis business professionals in the South”, was packed with close to 200 people, all there for an evening of good food and drink and to hear speeches on the progress of legalization in the Lone Star State. The mood was upbeat. “People here are really hopeful and energized,” commented Tara afterward. “They really want recreational cannabis to come to Texas.”
In the last analysis, Texans are an independent lot, and they do things their own way. Decriminalization will happen when the people of the Lone Star State are ready to allow it. And whether it’s a fully functioning medicinal cannabis program with an adequate number of dispensaries and a strong enough cannabis product to bring relief to all who need it, or if, in the end, Texas approves adult-use cannabis for its citizens, one thing is for certain: such progress will happen in a time-frame that is right for Texas and in a uniquely Texan way.
As of now, there are only two cannabis testing labs in Connecticut. Last year, regulators in the state approved a request from AltaSci Labs to raise the testing limits for yeast and mold at their lab from 10,000 colony forming units per gram (cfu/g) up to 1 million. The other lab, Northeast Laboratories, has kept their limits at 10,000 cfu/g.
Connecticut state flag
According to CTInsider.com, that request was approved privately and unannounced and patients were notified via email of the change. Ginny Monk at CTInsider says patients enrolled in Connecticut’s medical cannabis program have been outspoken over safety concerns, a lack of transparency and little voice in the decision-making process.
Connecticut has a small medical cannabis market with roughly 54,000 patients in the program and they are in the midst of readying the launch of their adult-use market.
A yeast and mold test showing colony forming units
Following public outcry regarding the change at the recent Social Equity Council meeting, state regulators have proposed a change to microbial testing regulations. The new rule will set the limit at 100,000 cfu/g for yeast and mold and requires testing for specific forms of Aspergillus, a more harmful type of mold.
Kaitlyn Kraddelt, spokeswoman for Connecticut’s Department of Consumer Protection, the agency in charge of testing regulations for the state’s cannabis program, told CTInsider.com that they involved several microbiologists to develop the new rule. “These new standards, which were drafted in consultation with several microbiologists, will prohibit specific types of yeast and mold in cannabis flower that may cause injury when inhaled and allow 10^5 cfu/g of colony forming units that have no demonstrated injurious impact on human health,” says Krasselt.
The rule change is now undergoing a public comment period, after which the Attorney General’s office will get a review period. If approved, it’ll head to the legislature, where a committee has 45 days to act on it.
Earlier this year, the Colorado Department of Public Health and Environment (CDPHE) announced a plan to introduce new testing rules for the state’s growing hemp industry. Under the new regulations, hemp products must be tested for residual solvents, heavy metals and pesticides, in addition to making sure they contain less than 0.3% THC.
The CDPHE are planning on a gradual rollout to prevent any supply chain issues or a lab testing bottleneck, similar to what we’ve seen in other states launching new testing requirements in years past, such as Arizona or California. Well, the Colorado rollout appears to be hitting similar snags and because of supply chain issues related to instruments and consumables in laboratories, the implementation of those testing rules is somewhat delayed. What was originally supposed to be implemented over the summer was pushed back to an October 1 deadline, and that deadline has now been pushed back to 2022.
The pesticide testing list to be implemented January 1, 2022
As a result of supply chain shortages and the learning curve to test for such a wide range of pesticides, Colorado is opening hemp testing to out-of-state labs in an effort to stay on schedule with the rollout. Dillon Burns, lab manager at InfiniteCAL, a cannabis testing company with locations in California and Michigan, just completed an audit with the CDPHE in their work to get certified and start conducting hemp testing for businesses in Colorado.
Burns says they’re well-acquainted with the list of pesticides because of how similar the list is to California’s requirements. “For the pesticide testing rules that were supposed to go into effect on August 1st, it’s basically the same list as California just with slightly different action levels,” says Burns. “I would say these action limits are generally stricter – they have much lower LOQs [limits of quantification].”
The pesticide testing list (continued) to be implemented January 1, 2022
Come January 1, 2022, they are expecting an additional 40 pesticides to be required under the new rules. “But currently, it’s still unclear when these regulations will actually go into effect,” says Burns. The full pesticide testing list is currently slated to be implemented on April 1, 2022.
The supply chain issues referenced above have a lot to do with what the state is asking labs to test for. Previously, most of the pesticides tested for under Colorado’s adult use and medical cannabis programs could be analyzed with an LC/MS. A handful of pesticides on the new list do require GC/MS, says Burns. It’s entirely possible that a lot of labs in Colorado just don’t have a GC/MS or are in the process of training staff and developing methods for using the new instrument. “Cleanliness of these instruments is such a priority that it takes time to acquire the right skill set for it,” says Burns.
Dillon Burns, Lab Manager at InfiniteCAL
The new testing rollout isn’t just another compliance hurdle for the cannabis industry; these rules are about protecting public health. Dillon Burns said he’s seen hiccups in California with the amount of new hemp farmers getting into the space. “The hemp products we’ve tested in California often fail for pesticides,” says Burns. It’s a lot easier in most states to get a license for growing hemp than it would be for growing adult use cannabis. “You’ll see a lot more novice growers getting into hemp farming without a background in it. They’ll fail for things they just haven’t considered, like environmental drift. We see a lot of fails in CA. Hemp is bioaccumulating so it presents a lot of problems. If they’re not required to look for it, they weren’t monitoring it.”
When asked how the market might react to the new rules, Burns was confident that Colorado knows what they’re doing. “I don’t anticipate that [a testing bottleneck] happening here. The regulators are reasonable, supportive of the industry and opening it up to out-of-state labs should help in preventing that.”
Hazards and Controls of Extraction with Liquified Petroleum Gases (LPG)
Alex Hearding, Chief Risk Management Officer, NCRMA
This presentation delves into how to identify the common hazards of extracting with LPG (butane and propane), understanding the where to find guidelines and standards for safe extraction practices and an introduction to best practices for: selecting equipment, extraction room construction, and filling LPG extraction equipment.
TechTalk: Environmental Monitoring in Cannabis Production and Processing
Tim Cser, Senior Technology Specialist, MilliporeSigma
Slow is Smooth & Smooth is Fast! Understanding the Kinetics & Thermodynamics of Cannabis Extraction
Dr. Markus Roggen, Founder & CEO, Complex Biotech Discovery Ventures (CBDV)
In this session, Dr. Roggen discusses how his lab undertook extensive experimental studies on the extraction behavior of various solvents. They analyzed thousands of real-world extractions, from various producers and for different instruments to build a machine learning algorithm that can optimize extraction processes autonomously.
TechTalk: A New Tool for Operational Compliance in the Cannabis Industry
Tony Martinez, Senior Vice President & General Manager, AuditPro
The Quest to Discover the Limits of CO2 Extraction
Jeremy Diehl, Co-Founder & CTO, Green Mill Supercritical
Learn why cannabis and hemp extraction is as much art as science, and how modifying and manipulating extraction methodologies and conditions can result in more refined products and significant cost savings.
TechTalk: Breaking the Limits with Solvent Recovery
Jürgen Heyder, Business Development Manager for Rotary Evaporation, Heidolph Instruments
The Future of Cannabis Concentrates: Developments in Hydrocarbon Extraction & Manufacturing
Michelle Sprawls, Laboratory Director, CULTA
Learn what closed loop hydrocarbon extraction is, what products you can make with this type of extraction method and what the advancements are for manufacturing and new techniques
Process Scale UP in the Cannabis/Hemp Industry
Darwin Millard, Committee Vice Chair, ASTM International
Darwin Millard provides real-world examples of the consequences of improper process scale up and the significance of equipment specifications, certifications and inspections, and the importance of vendor qualifications and the true cost of improper design specifications.
Carbon Dioxide (CO2) extraction is a processing technique whereby CO2 is pressurized under carefully controlled temperatures to enable extraction of terpenes, cannabinoids and other plant molecules.
Green Mill Supercritical is a Pittsburgh-based manufacturing and engineering company focused on cannabis and hemp extraction. The company offers a range of CO2 extraction equipment where users can tune and control their extraction methods.
We spoke with Wes Reynolds, CEO of Green Mill Supercritical. Wes recently joined Green Mill as CEO and investor in the company after a long career at the Coca-Cola Company in senior sales and general management roles.
Aaron Green: Wes, thank you for taking the time to chat today. How did you get involved in Green Mill?
Wes Reynolds: I came out of a 20-year career at Coca-Cola, where I lived and worked around the world. I was a sales and general management guy with Coke, and learned a lot about running businesses and how to drive growth. I left Coke in 2017. After that successful career I wanted to be in the cannabis space. I felt like cannabis was a growing space with a lot of opportunity and a lot of misperceptions out there, particularly around the foundations of what I would call the “evil reputation” of cannabis. I just found that abhorrent and wanted to be part of changing it.
Wes Reynolds, CEO of Green Mill Supercritical
So I ran the Florida operations for Surterra, which is now called Parallel, for a year out of Tampa, and we did a great job of growing that business in Florida. As the president of the Florida operation for Surterra, I saw everything seed-to-shelf for the industry. We had a 300,000-square-foot greenhouse in Central Florida, we had dispensaries, we had all the production, distribution and all the marketing. I was really able to learn the industry top to bottom.
When I left Surterra, I started looking at various investment opportunities and thinking about what I might want to do next. I came across Green Mill out of Pittsburgh, and was really impressed with the technology that they had put together. Having run a company where we used CO2 extraction, I had experiences with systems that didn’t work when they were supposed to or didn’t work the way they were promised, which led to lots of downtime, lots of frustration and lots of babysitting. I was impressed with Green Mill’s engineering approach and decided that I’d like to be involved with them. I originally considered just being an investor, but more and more conversations led to a greater understanding of some basic business administrative needs that they had as well. One thing led to another and I agreed to come on as the CEO, and I’m also an investor.
I’m excited about what we’re doing at Green Mill. I think that bar none, we make the best supercritical CO2 extraction equipment out there. We continue to innovate on that every day. We want to push CO2 beyond known limits, which is our stated goal as a company. We believe in CO2 and we’re living our goal in that we really are pushing it beyond known limits. There are new things we’re uncovering every day where we go, “Oh, my God, I didn’t know we can do that with CO2!” So, that’s kind of fun.
Aaron: Can you tell me just a high-level overview of how CO2 extraction works?
Wes: A supercritical CO2 extraction system is a collection of extraction vessels and fractionation vessels or collection vessels. In our case fractionation because we’re doing multiple collections through a single run. Then you need a system of pumps and valves and tubing, etc. to move the solvent in a supercritical state through the packed biomass, and then move the extracted compounds into a set of collection vessels. It sounds very easy. But the key to supercritical CO2 extraction is controlling temperature, flow rate and pressure. The better you can control temperature, flow rate and pressure, the more precise of an outcome you’re going to get. For example, say you run a three-hour extraction run, and you want to run it at 3500 psi. Well, you know, a competitive system might fluctuate 300 to 400 psi on either side of 3500. Whereas our system currently fluctuates more like five to 10 psi on either side of the 3500. So, there is much more control and precision.
Our whole goal, when we’re talking about pushing CO2 beyond known limits, is how do we continue to chase that holy grail of perfect control of temperature, flow rate and pressure? One of our advances so far is a proprietary pump, for example, that’s a liquid displacement pump that we engineer and build. It ensures a very even and consistent flow, independent of the pressure setting. So, that flow rate doesn’t change in our system compared to what you would see with another system. It sounds like a minor thing, except that at the end of a run, if you expected to get a certain set of molecules, you’re going to get a different set of molecules if your temperature and flow rate and pressure are varying, because what you’re doing is disrupting the density of the CO2 as it flows.
It’s about building a system that is precise in that way, I think, that requires enormously skilled engineering effort and design effort on the front end, and then requires us to have advanced production and manufacturing capabilities in our shop in Pittsburgh. Our customers are clearly impressed with the levels of consistency that they’re getting out of their system.
Aaron: You talked about precision and consistency as two items. Is there anything else that makes Green Mill different?
Wes: I’m a brand guy. I believe in brands. I came out of a 20-year Coca-Cola career.
The way that the cannabis industry is going in total, in my opinion, is the consumer is going to get more and more discerning along the way. Up until this point, everybody thinks “oh, we have THC and CBD and we have intensity.” But the more sophisticated and educated consumers get, the more discerning they’re going to be about what products they want to put in their bodies.
What makes Green Mill different is that we’re building a system that allows the operator of that system to create differentiated products for the marketplace. So, it’s not simply “CBD is CBD.” It’s: what plant did you start with? How can you maintain as many of the characteristics of that plant as possible?
We’re going to create the most sophisticated tool possible to allow the operator to create products that can be differentiated in the marketplace for a discerning consumer at a premium price. That way, you can create a market where there might not have been a market before, instead of just “hey, I’ve got X pounds of biomass that I need to extract. Give me your bluntest instrument and let me extract.”
Green Mill Supercritical’s SFE Pro
We currently make five different systems. First is the SFE Pro. We make a seven and a half liter and a 10-liter version, with two-vessel configurations of each of those. Then we have what we call a Parallel Pro, which has four 10-liter vessels and two pumps, with two streams running parallel to each other and emptying into shared collectors. It doubles the extraction rate, and you don’t expand the footprint very much. But 10-liter vessels are the biggest vessels we use. Because when you go too large with the vessel, you are giving up something in terms of the ability to control temperature, flow rate and pressure. Your efficiency starts to drop with higher vessel volume.
One of the things that makes Green Mill different is our extraction rate. Our Parallel Pro can do 145 pounds a day of biomass. We think that’s a significant amount, given the demand that’s out there for unique products. What we’re advocating for is multiple extraction systems instead of giant permanent installations of extraction systems, that end up limiting your flexibility. Big systems also prevent you from creating redundancies in your operating system. So, when your extraction system goes down, you’re done. Versus in our universe, we would say, you might want to have three or four extraction systems in different locations, running different products. Our price points are such that that’s very doable.
Aaron: How does the breakdown look between your cannabis and hemp clients?
Wes: A lot of that is legislative frankly. It has to do with what the environment is like at the moment. About 60% of our customers are small hemp farmers. And then we have the other 40% in the cannabis space that are medical or adult use producers.
CO2 extraction has a lot of applications beyond cannabis. We have a couple of customers using our system for hops extraction, for example. We see an enormous opportunity out there for non-cannabis botanical extraction, but our primary focus is cannabis. That is what we’re designing this system to do.
We find that small hemp farmers love our system because it is reliable and very automated. We have proprietary software that operates the whole system. You load and run various “recipes,” at least we call them recipes. What you are doing is setting flow rate, setting temperatures, setting pressures, etc., then that proprietary software has an unbelievable ability to control everything through the process. I’ve talked to several different operators who have used other machines, and then found themselves on a Green Mill system and couldn’t believe how easy, but also feature-rich it was.
I talk about it like it’s like an oven, you know, you set the oven at 375 degrees. And a really good oven stays right at 375. You still need to be a good chef to be able to make that perfect cheesecake. But without that oven, your hands are tied, so you are constantly trying to check those, “is it still 375? I don’t know!” With our system, if it says 375, it holds at 375. So we’re pretty excited about that.
And we’re going to continue to innovate. For example, we have a proprietary heat exchanger that we use on our systems. It’s actually 3D printed stainless steel. It’s about a 20-pound piece of steel that’s been printed to have a special tubing shape in the center only possible with 3D printing that allows us to heat CO₂ very quickly.
Aaron: That’s very cool. I’m noticing a lot actually, the innovations in cannabis are creating these adjacent market opportunities in botanicals. So, I think that’s interesting you point that out. You mentioned terpenes are one of the things you collect out of the CO2 extraction. Can you talk about the crude that comes off and how people are either monetizing or formulating that crude?
Wes: Our goal is to produce the “purest crude” possible. So, we want “less crude” crude. I think that we’re at the beginning of this, Aaron. We’re nowhere near the end, which is what I find so exciting, because all of our innovation, all of our continued development and all of our experimentation is designed to keep thinking, how do we push this further and further and further and get a more refined crude.
Green Mill Supercritical’s Parallel Pro
We just welcomed Jesse Turner to our team as Director of R&D, who is a well-known extraction guy in the industry. He came from Charlotte’s Web and Willie’s Reserve, and has been doing independent consulting. He’s just a rock star. He’s already off and running on experimenting with different stuff.
I think that we are just at the beginning of seeing more and more of that opportunity to help people realize, “Oh, my gosh, I did not know you could do this!” Terpenes are a good example. I think we are only scratching the surface of what terpenes can do. I mean, a cannabis plant has 400 plus molecules and we know a good bit about probably 10 or 12 of them. So, what are we going to find out about the other 390? And as we do, the Green Mill system will be ideal for separating those molecules that we don’t know today are valuable. So, I think that’s part of what we’re chasing as well.
Aaron: So where do you see CO2 extraction fitting into the cannabis and hemp supply chain?
Wes: For any product on the market that is not a smokable flower it helps to have an extraction process. There may be some products that come out that we don’t know about yet that are not going to qualify in that category. Whether you are talking about vape cartridges, or lozenges, or gummy bears, or whatever it is, they are going to start with extract. I think what consumers want is zero adulteration of their product. So if you take any botanical product, and if it is GMO-free, does not have any pesticides, maybe it is all organic, etc. — there is real consumer appeal to that. Whether you agree with it or not, it is what consumers want.
We believe that we can continue to push CO2 so that there’s no requirement for introduction of any other materials than just CO2, which is a completely inert gas. It’s got no residual effect whatsoever on the product. If we get where we want to go, then eventually you are talking about a pure botanical experience.
Initial upfront capital is higher than you are going to see with ethanol and butane extraction solutions for the same size equipment, but ongoing operating costs of those are much higher, when you weigh it out over a period of time. I think what we are going to find is that people are going to keep coming to CO2 because they realize there are things they can do with it that they can’t do any other way.
The end consumer is really who we want to keep in mind. I think for a long time, this industry was very demand driven. “I have X acres of cannabis product, whether that’s hemp, sativa, indica, whatever it is, and I need to extract this many pounds a day over this period of time.” And we keep asking the question, well, who’s going to buy that product on the other side? What do you want it to look like when you put it out on the market? As opposed to how much raw plant matter do you have? What’s the demand? And that was a difficult conversation. We’re starting to see more people come around to that conversation now. But I think that’s the question we want to keep answering is how do we create those products that are differentiated in the marketplace and that can pass muster in any regulatory environment? People are going to want to know what’s in their product.
Aaron: What trends are you following in the industry?
Wes: As the CEO, I’m particularly interested in the overall development of the landscape of the industry in terms of who’s playing, who’s winning, what’s happening with legislation, MSOs versus SSOs. I’m also interested in the international environment. We have a good bit of interest from multiple countries that have either ordered Green Mill systems or are talking to us about Green Mill systems, including Canada and Latin American countries, some European countries, Australia and New Zealand.“We’re really committed to educational efforts with a very rigorous scientific foundation, but in language that is approachable and people can understand.”
The trends that I’m particularly interested in are more on the business side of the equation, in terms of how this business is going to shake out particularly from a capitalization perspective, as banking laws continue to change, which is a big deal, and the legislative environment gets a little more predictable and a little more consistent.
Aaron: Okay, last question. So what are you personally interested in learning more about?
Wes: Everything, is the short answer! I constantly run this little challenge of trying to understand enough of the science. I’m not a scientist, I’m a sales guy. That was how I grew up: general management and sales. I’ve made my living over many years being wowed by the pros. Depending on the scientists and the very specialized folks to help provide the right answers to things. I’m fascinated by the chemistry and I’m fascinated by the mechanical engineering challenges of what we do at Green Mill. So, I’m always interested in learning about that.
I think there’s a need, and it is helpful to be able to talk about those things in language that the layperson can understand, as opposed to explaining everything in scientific language. I think what I am trying to do is help people put it into a language that they can get, but that is not simple. Language that is correlative to reality. I think there’s so much misunderstanding about how these things work and what’s happening. We’re really committed to educational efforts with a very rigorous scientific foundation, but in language that is approachable and people can understand.
Aaron: Okay, that’s it. Thank you for your time Wes!
By Seth Mailhot, Steve Levine, Emily Lyons, Megan Herr 1 Comment
On August 20, 2020, the Drug Enforcement Administration (DEA) published an Interim Final Rule on industrial hemp and hemp derivatives (the interim rule), which immediately went into effect, to conform DEA regulations with the Agriculture Improvement Act of 2018 (the 2018 Farm Bill).
The 2018 Farm Bill effectively removed industrial hemp from the definition of “marijuana” in the Controlled Substances Act (CSA). Additionally, tetrahydrocannabinols contained in industrial hemp, such as cannabidiol (commonly known as CBD), were also removed from the purview of the CSA.
The 2018 Farm Bill defines hemp as:
the plant Cannabis Sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.
Accordingly, because cannabis and its “derivatives, extracts, [and] cannabinoids” are not considered “marihuana,” so long as their delta-9 tetrahydrocannabinol (THC) concentration is at or below 0.3% on a dry weight basis, the regulation of hemp fell outside the authority of the DEA. However, the DEA’s interim rule attempts to draw a hard line in the sand as to when the plant, and any products derived therefrom, are considered “marihuana,” thereby still subject to the DEA’s purview.
Specifically, the interim rule promulgates the DEA’s position that hemp processors can convert otherwise legal hemp into illegal “marihuana,” thereby bringing it back under the DEA’s authority, if such processing and extraction increases the THC content above the 0.3% THC threshold, even momentarily. Specifically, the interim rule states:
[T]he definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from [S]chedule I, the derivative must not exceed the 0.3% Δ9-THC limit. The definition of ‘marihuana’ continues to state that ‘all parts of the plant Cannabis sativa L.,’ and ‘‘every compound, manufacture, salt, derivative, mixture, or preparation of such plant,’ are [S]chedule I controlled substances unless they meet the definition of ‘hemp’ (by falling below the 0.3% Δ9-THC limit on a dry weight basis) or are from exempt parts of the plant (such as mature stalks or non-germinating seeds) . . . As a result, a cannabis derivative, extract, or product that exceeds the 0.3% Δ9-THC limit is a [S]chedule I controlled substance, even if the plant from which it was derived contained 0.3% or less Δ9-THC on a dry weight basis.
Accordingly, the DEA’s stance creates a substantial risk for processors who will be considered to be in possession of a Schedule I controlled substance during the extraction process if the THC content exceeds the 0.3% THC threshold at any point during processing, an almost inevitable result of the extraction process. Nevertheless, the interim rule states:
the definition of hemp does not automatically exempt any product derived from a hemp plant, regardless of the Δ9-THC content of the derivative. In order to meet the definition of ‘hemp,’ and thus qualify for the exemption from [S]chedule I, the derivative must not exceed the 0.3% Δ9-THC limit.
Although the DEA impliedly recognizes the fact that hemp processing can result in a temporary increase in THC content, it still took the position that, should the THC content exceed 0.3% THC at any point during the extraction process, processors will be considered to be in possession of a Schedule I controlled substance, regardless of whether the finished product complies with federal law.
Just some of the many hemp-derived CBD products on the market today.
Consequently, the interim rule creates significant criminal risk for anyone processing industrial hemp, as the DEA has asserted that the processing of hemp into extracts, derivatives and isolated cannabinoids (which are arguably legal under the 2018 Farm Bill) can result in unintentional violation of federal law, thereby subjecting processors to the risk of significant criminal liability. That said, the interim final rule does not appear to be a shift in DEA policy since the passage of the 2018 Farm Bill in December 2018, nor has DEA issued any warnings to industrial hemp manufacturers or otherwise signaled a change in enforcement policy by issuing the Interim Final Rule.
In addition, the DEA took several other steps in the interim final rule towards the deregulation of hemp products:
Adding language stating that the definition of “tetrahydrocannabinols” does not include “any material, compound, mixture, or preparation that falls within the definition of hemp set forth in 7 U.S.C. § 1639o”.
Removing from Schedule V a “drug product” in an FDA-approved finished dosage formulation that contains cannabidiol (CBD) and no more than 0.1 percent (w/w) residual tetrahydrocannabinols (e.g. Epidiolex).
Removing DEA import and export controls for hemp extract that does not exceed the statutory 0.3% THC limit.
Cannabis businesses have a lot to look forward to in 2020. After a bipartisan push through the House, the Safe Banking Act currently awaits passage in the Senate and then the president’s signature. If all goes well, the bill will allow the financial sector to finally service cannabis businesses – from banking to investments and insurance.
What else can cannabis business look forward to this year? Check out HUB’s Top 5 cannabis industry predictions for 2020.
Hemp/CBD products go to market in droves. The passage of the Farm Bill and the ease of shipping hemp across state lines has led to a production boom for the crop. With little federal regulation around manufacturing and distribution, hemp/CBD products from edible oils to clothing and anti-inflammatory lotions are extremely profitable. Expect final federal Domestic Hemp Production Program rules on acceptable levels of THC in hemp/CBD products to be published sometime in 2020. These will be based on the current rule draft. There’s a strong push to move industrial hemp into the federal crop insurance program, which is also likely to happen in 2020.
Product liability insurance is no longer a luxury. Thanks to significant vaporizer, battery and contamination claims currently in the courts, cannabis business can expect higher product liability premium rates in 2020. Expect rates to jump as much as 30 to 40%, depending on the resolution of these cases. For this reason, carriers will be more diligent about underwriting and may even ask for certification of insurance from vendors, and additional insureds on third-party policies. Exercising more caution and oversight when selecting vendors is a must for cannabis businesses operating in 2020 under this premise. It’s critical for all organizations to take a hard look at business practices before entering partnerships moving forward.
Phase II industry growing pains surface. Now that the cannabis gold rush is dying down, businesses are poised to enter Phase II of their growth.Those who failed to institute proper hiring processes, including background checks, as well as protocols to promote security and prevent theft are currently facing challenges. Significant industry consolidation is making way for cannabis conglomerates to become multi-state operators. Directors and officers that made poor investments or acquisitions are facing scrutiny at the hands of the SEC or business investors. Without D&O insurance, or adequate limits, directors and officers could find their personal finances drained. Insisting on adequate D&O protection going forward is a best practice for cannabis executives.
Product and state regulatory testing expands. High-profile manufacturers and distributors of cannabis are standardizing their cannabis, hemp and CBD ingredient labeling. However, many others are taking advantage of the lack of rules currently surrounding cannabis production by falsifying labels and misrepresenting THC content in products. This has led to recent lawsuits and claims. As a result, states will begin to administer product testing and license regulations and enforce carrying time limits, track and trace and bag and tag rules. Get ready for fines, penalties and increased non-compliance liabilities in 2020.
Increased availability of policies and limits. Both the cannabis industry and the number of insurance carriers entering the market continue to grow steadily. Businesses are enjoying higher liability limits as a result – to the tune of $15M on product liability and $60M on property. Coverage for outdoor cannabis crop is now a possibility, and workers’ compensation coverage can function as a blanket policy for businesses across state lines as well. Should the Safe Banking Act pass soon, stay tuned for additional insurance opportunities as well.
2020 Growth and Beyond
The 2020 presidential election will bring the federal legalization of cannabis to the forefront of public discourse. While the law may not change yet, passage of the Safe Banking Act and increased regulatory action at the state level will highlight the successes and failures of the 33 states and the District of Columbia that have legalized cannabis in some capacity. These will serve as a guiding light for federal legalization down the road.
Across the country, a handful of states are expected to move forward with a number of bills making their way each state’s legislature. Here is a quick recap on some of the more newsworthy bills from this week.
Arizona
When Arizona legalized medical cannabis use, there was no provision in the legislation that required laboratory testing to insure the safety of cannabis products. To this day, Arizona is one of the few states left that has legalized medical cannabis, but does not require lab testing. A bill, SB 1494, that just passed through the state’s Senate could very well change that. According to azmarijuana.com, the bill passed unanimously through the Arizona Senate and would require the Arizona Department of Health Services (ADHS) to implement regulations for laboratories to test for contaminates like pesticides.
They need at least 75% of the House to vote in favor in order for it to pass. If that happens, testing could be required as soon as June 1, 2020.
The House Criminal Justice and Public Safety Committee voted 10-9 to recommend HB 481, which would legalize recreational cannabis, including growing up to 12 plants, imposing a tax of $30 per ounce on cannabis sold through retail. It would also set up a regulatory agency in charge of licensing and regulating the industry.
New Jersey Governor Phil Murphy
New Jersey
Governor Phil Murphy met with lawmakers earlier this week to discuss the legalization of recreational cannabis. According to CBS New York, the Governor reached a deal with Senate President Steve Sweeney, Assembly Speaker Craig Coughlin, Sen. Nicholas Scutari and Assemblywoman Annette Quijano to introduce a bill that he would sign into law.
The deal would legalize and regulate recreational cannabis, expunge previous cannabis-related convictions, levy a $42 tax per ounce of cannabis sold, along with setting up a commission to issue licenses and regulate the market. When Governor Murphy ran for office, his campaign included a pledge to legalize recreational cannabis, A previous attempt to get a bill through the legislature failed to get enough votes last year.
Vermont
Back in February, the Vermont Senate passed a bill to regulate and tax recreational cannabis with a veto-proof majority. SB 54 is now in committee review in the House, where it is expected to see more hurdles, according to Burlington Free Press.
Another bill was introduced in the Vermont Senate, SB 117,which would reportedly open up more access to the medical cannabis program, including increasing possession limits, allowing patients to grow more plants at a time and set up a lab testing program as well.
In Part 3 of this series on HACCP, Critical Control Points (CCPs), validation of CCPs and monitoring of CCPs were defined. When a HACCP plan identifies the correct CCP, validates the CCP as controlling the hazard and monitors the CCP, a potential hazard is controlled in the manufacturing and packaging of cannabis-infused edibles. The food industry is big on documentation. If it’s not documented, it did not happen. The written hazard analysis, validation study and monitoring of CCPs create necessary records. It is these records that will prove to a customer, auditor or inspector that the edible is safe. Here in Part 4, more recordkeeping is added on for deviation from a CCP, verification and a recall plan.
Take Corrective Action When There Is a Deviation from a Critical Control Point
Your food safety team conducts a hazard analysis, identifies CCPs and decides on monitoring devices, frequency and who is responsible for monitoring. You create an electronic or paper record of the monitoring for every batch of edible to document critical limits were met. Despite all your good efforts, something goes wrong. Maybe you lose power. Maybe the equipment jams. Nothing is perfect when dealing with ingredients, equipment and personnel. Poop happens. Because you are prepared before the deviation, your employees know what to do. With proper training, the line worker knows what to do with the equipment, the in-process product and who to inform. In most cases the product is put on hold for evaluation, and the equipment is fixed to keep running. The choices for the product include release, rework or destroy. Every action taken needs to be recorded on a corrective action form and documents attached to demonstrate the fate of the product on hold. All the product from the batch must be accounted for through documentation. If the batch size is 100 lb, then the fate of 100 lb must be documented.
Verify Critical Control Points Are Monitored and Effective
First, verification and validation are frequently confused by the best of food safety managers. Validation was discussed as part of determining CCPs in Part 3. Validation proves that following a CCP is the right method for safety. I call validation, “one and done.” Validation is done once for a CCP; while verification is ongoing at a CCP. For example, the time and temperature for effective milk pasteurization is very well known and dairies refer to the FDA Pasteurized Milk Ordinance. Dairies do not have to prove over and over that a combination of time and temperature is effective (validation), because that has been proven.
I encourage you to do as much as you can to prepare for a recall.A CCP is monitored to prove the safety parameters are met. Pasteurization is an example of the most commonly monitored parameters of time and temperature. At a kill step like pasteurization, the employee at that station is responsible for accurate monitoring of time and temperature. The company managers and owners should feel confident that CCPs have been identified and data are being recorded to prove safety. Verification is not done by the employee at the station but by a supervisor or manager. The employee at the station is probably not a member of the food safety team that wrote the HACCP plan, but the supervisor or manager that performs verification may be. Verification is proving that what was decided by the food safety team is actually implemented and consistently done.
Verification is abundant and can be very simple. First, every record associated with a CCP is reviewed by a supervisor or manager, i.e. someone who did not create the record. This can be a simple initial and date at the bottom of the record. Every corrective action form with its associated evaluation is verified in the same way. When HACCP plans are reviewed, that is verification. Verification activities include 1) testing the concentration of a sanitizer, 2) reviewing Certificates of Analysis from suppliers, 3) a review of the packaging label and 4) all chemical and microbiological testing of ingredients and product. The HACCP plan identifies CCPs. Verification confirms that implementation is running according to the plan.
Verification is like a parent who tells their child to clean their room. The child walks to their room and later emerges to state that the room is clean. The parent can believe the word of the child, if the child has been properly trained and has a history of successfully cleaning their room. At some frequency determined by the parent, the room will get a parental visual check. This is verification. In the food industry, CCP monitoring records and corrective action must be reviewed within seven days after the record is created and preferably before the food leaves the facility. Other verification activities are done in a timely manner as determined by the company.
Product recalls due to manufacturing errors in sanitation cause mistrust among consumers.
Write a Recall Plan
In the food industry, auditors and FDA inspectors require a written recall plan. Mock recalls are recommended and always provide learning and improvement to systems. Imagine your edible product contains sugar, and your sugar supplier notifies you that the sugar is recalled due to glass pieces. Since you are starting with the supplier, that is one step back. Your documentation of ingredients includes lot numbers, dates and quantity of sugar.You keep good records and they show you exactly how much of the recalled lot was received. Next you gather your batch records. Batches with the recalled sugar are identified, and the total amount of recalled sugar is reconciled. You label every batch of your edible with a lot code, and you identify the amount of each affected lot and the customer. You have a press release template in which you add the specific information about the recall and affected lots. You notify every customer where the affected edible was shipped with a plan to return or destroy the edible. When you notify your customers, you go one step forward.
How would your company do in this situation? I have witnessed the difficulties a company faces in a recall when I was brought in to investigate the source of a pathogen. Food safety people in my workshops who have worked through a recall tell me that it was the worst time of their life. I encourage you to do as much as you can to prepare for a recall. Here are two good resources:
On Election Day, voters in California passed Proposition 64, establishing a recreational cannabis market and regulatory environment. While the state won’t issue the first licenses under the new regulatory scheme until 2018, the medical cannabis industry is already well established.
Steep Hill Labs, Inc., based in Berkeley, California, found in October that 84.3% of samples submitted tested positive for pesticide residue, according to a press release. The announcement came before Election Day, but is particularly eye opening given the massive new market created overnight by Prop 64.
Particularly concerning is their detection of Myclobutanil, which was found in more than 65% of samples submitted to the lab. According to the press release, when Myclobutanil is heated (i.e. smoked or vaporized), it is converted to Hydrogen Cyanide, which is extraordinarily toxic to humans and can be fatal in higher doses.
According to Reggie Gaudino, Ph.D., vice president of science, genetics and intellectual property at Steep Hill, their more recent study shows they detected pesticides in roughly 70% of the samples they received and 50% of those contained Myclobutanil. Gaudino says that up to a third of those samples would have failed under Oregon’s regulatory standards.
If a lab test were failed, it would contain pesticides at or higher than the required action level. Oregon’s action level, or the measured amount of pesticides in a product that the OHA deems potentially dangerous, for Myclobutanil is 0.2 parts-per-million (PPM). Steep Hill’s instrumentation has a method detection limit down to the parts-per-trillion (PPT) level, which is a more precise and smaller amount than Oregon’s action level.
“Those in the cannabis community who feel that all cannabis is safe are not correct given this data – smoking a joint of pesticide-contaminated cannabis could potentially expose the body to lethal chemicals,” says Jmichaele Keller, president and chief executive officer of Steep Hill. “As a community, we need to address this issue immediately and not wait until 2018.”
Potentially harmful pesticides, and specifically Myclobutanil, have been detected in Colorado and Washington’s recreational markets on a number of occasions, proving this is a widespread issue. Steep Hill’s release suggests that California regulators take a look at Oregon’s pesticide regulations for guidance when developing the regulatory framework.
What’s even more troubling is that not all laboratories have or had the capability of detecting pesticides at sufficiently low levels and because of this, other labs had significantly lower rates of pesticide detection, suggesting possible inconsistencies in testing methods, instrumentation, sample preparation or other variations. During a 30-day period in late September and early October, Steep Hill found, using publicly available data, or data from contracted testing, that other labs were only reporting between 3% and 21% pesticide detection.
Examination of cannabis prior to testing- credit Steep Hill Labs, Inc.
It is important to note that those samples were not identical and there could be a great degree in variation on the quality of samples sent to different laboratories, so it is not an entirely accurate comparison. Steep Hill does however detect pesticides down to the parts-per-trillion level, whereas many common methods for detecting pesticides look at the parts-per-billion level.
Reggie Gaudino says the Association of Commercial Cannabis Laboratories (ACCL) is using this data to work with Steep Hill and a number of other labs to address these issues. “As a member of the ACCL, and after discussion with ACCL, we have agreed that all future discussion of this issue should not include laboratory names, as this is about educating the industry in general, and making sure all members of the ACCL are developing the best possible methods for detecting pesticides,” says Gaudino. “The ACCL has responded to this data, by inquiring on a larger, industry-wide basis, which represents a better picture of the issue, rather than only in California’s still-technically unregulated market.” The important message is this is a major issue that needs addressing urgently. “As such, the troubling issue remains, across the larger ACCL membership, there is still detection of pesticides in at least 50% of the cannabis being tested.”
According to Jeffrey Raber, Ph.D., president of the ACCL, the industry is experiencing a pesticide problem, but it is very difficult to quantify. “It is fair to say that around 50% of the cannabis being tested contains pesticides, but we really don’t know that exact number until a much more comprehensive statistical analysis is performed,” says Raber. “We agree this is a big problem and that it needs to be addressed, but we are not sure just how big of a problem it really is.” With so much variation in labs in a state where not everyone is required to test products, it is very difficult to pin down how consistent lab results are and how contaminated the cannabis really is. “If all of the labs had the same methodology, samples and shared statistical analyses for a real study then we can look at it closely but it seems we are a ways off from that. I can say confidently however that this is a pretty significant problem that needs addressing.”
Still, Steep Hill detecting pesticides in a majority of their samples and some labs finding as little as 3% should raise some eyebrows. “Unfortunately, our recent study discovered that 84.3% of the samples assessed by our triple quadrupole mass spectrometer contained pesticides,” says Keller. “As of today, this tainted product could be sold in most dispensaries throughout the state of California without any way of informing the patients about the risks of pesticide exposure.”
These findings could mean potentially enormous health risks for medical and recreational cannabis consumers alike, unless regulators, labs and growers take quick action to address the problem.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
We use tracking pixels that set your arrival time at our website, this is used as part of our anti-spam and security measures. Disabling this tracking pixel would disable some of our security measures, and is therefore considered necessary for the safe operation of the website. This tracking pixel is cleared from your system when you delete files in your history.
We also use cookies to store your preferences regarding the setting of 3rd Party Cookies.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.
Several recent cannabis bills: HB 1805, which would have expanded covered medical conditions and defined a per-dose THC limit instead of a percentage limit, and HB 218, which would have decriminalized cannabis, both passed the state House of Representatives in April 2023 but died in the Senate when Lt. Gov. Dan Patrick, who presides over the chamber, refused to refer the bills to a state Senate committee for review.
