Last week at the MJBizCon, a major cannabis industry event held annually in Las Vegas, urban-gro launched the first technology line for cannabis growers utilizing Internet-of-Things (IoT). urban-gro, a cultivation technology company for commercial-scale growers, announced the launch of announced Soleil® Technologies, an integrated portfolio of hardware, software, and services that uses IoT.
“The solution suite includes per-plant sensing, environmental monitoring, machine diagnostics, fertigation management, lighting controls, inventory management, and seed-to-sale tracking,” reads the press release. IoT is essentially a network of devices embedded with sensors and software that allow the devices to connect and exchange data. IoT devices are used extensively in the food industry, including for integrated pest management, restaurant food safety and management and tracking product conditions such as temperature and humidity throughout the supply chain, among other uses.
Soleil consists of three primary lines:
Soleil 360 is the cloud-based software-as-a-service (SASS) platform that integrates all Soleil solutions.
Soleil Sense is the brand for all of urban-gro’s low-power wireless sensors that deliver data with the scale, precision and resolution needed for analytics and machine learning.
Soleil Controls is urban-gro’s product set for climate and irrigation controls, lighting systems, and other focused controls.
The core, low-power sensor that makes this unique was licensed from Edyza, a wireless innovator that specializes in low-power wireless grids that scale. urban-gro then developed on top of that sensor, including its cloud-based management, analytics, what the sensors detect and cover, etc., to make it ideal for cannabis growers.
According to Brad Nattrass, urban-gro’s chief executive officer, finding an IoT solution that can easily scale was a key goal for their business. “When evaluating the most advanced market-ready sensor technology available, it was crucial that we deliver a solution that can easily scale to thousands of sensors in order to satisfy the needs of large-scale commercial cultivators,” says Nattrass. “The introduction of Soleil demonstrates urban-gro’s commitment to going beyond simply supplying equipment, to truly serving our clients as an ongoing technological innovator and advisor, enabling cultivators to leverage today’s more advanced technologies to rise above the competition.”
“Cultivators will be able to monitor substrate moisture and EC (electrical conductivity) levels on a per plant basis, as well as track key environmental metrics like temperature, humidity, air movement, and probability of infestation,” reads the press release. “With multiple device options, cultivators can choose between several deployment options.” With the data hosted on the cloud, users can access it through web browsers, Android and iOS devices.
According to Jay Nichols, a representative of urban-gro, they have hired (and is hiring) code developers, product developers, etc. in order to expand this unit. Plant sensors are just one piece of the system, with the goal to automate the entire cultivation process, including controlling lights, pest management, irrigation and fertigation. They say it will be available in late Q1/early Q2.
Patent litigation can be costly; the median cost can be more than $3 million. Even as the owner of a patent, you should explore all options before deciding to file an infringement suit. Litigation should be your last resort, even if your lawyer is convinced you can win. Winning a patent lawsuit is not likely your true goal. Remind your confident lawyer that the stronger your case, the greater your options.
Patent litigation is expensive and distracting for everyone. The expense is astronomical. A recent survey by the American Intellectual Property Law Association, “2017 Report of the Economic Survey,” stated that the median cost to litigate a patent case is $3,000,000. In addition to the out-of-pocket costs, there are the distractions that keep you from running your business. Patent litigation means years of endless meetings, depositions, document productions, and days in court.
William H. Honaker, member and attorney at Dickson Wright
Patent litigation is also uncertain. Like my 92-year-old father who recently was cut off on the highway. He chased down the young guy at a red light, jumped out and pounded on the guy’s window, and said. “ONE of us is getting his ASS kicked.” Patent litigation is the same; someone is getting their ass kicked. Many surprises can develop in a patent case leaving the outcome a question.
As cannabis-related businesses grow and enter the business main stream, patent litigation will increase. More businesses will get patents. Patents are valuable to businesses: they protect margins, protect market share and increase the asset value of the business. They do this by preventing competition.
The winds of change are blowing, as I read the article by Walters, G. “What a Looming Patent War Could Mean for the Future of the Marijuana Industry.” The article referenced United States Patent No. 9,095,554, stating:
“On August 4, 2015, US officials quietly made history by approving the first-ever patent for a plant containing significant amounts of THC, the main psychoactive ingredient in marijuana, according to the patent’s holders, their lawyers, and outside experts in intellectual property law.”
At first, this made me acutely aware that we are on the threshold of a brave new world, where legalized cannabis is driving great changes in the way we look at a now-legitimate industry.
Then, I had a little chuckle when I read the words of a longtime cannabis activist:
“It’s going to be a mess,” said Tim Blade, a longtime grower and activist who founded California’s annual Emerald Cup cannabis competition. “Marijuana growers developing new varieties are going to have to spend a lot of money on attorneys.”
It’s clear Mr. Blake was starting to see through the haze of an unregulated industry that’s been under the radar until now. And what he saw was going to be a real buzz-kill. So how can you avoid litigation?
Both sides of the lawsuit will suffer. Typically, litigation should be avoided if at all possible. The good news is there are alternatives. You can take advantage of your patents without suing for infringement.
By knowing what you want, you can then know the options you have.The Myth About Patent Litigation
Before we explore alternatives, you may find some comfort in the fact that about 90% of patent suits are settled; (see Pridham, D. “The Patent Litigation Lie”, found in Forbes. Of those not settled, only 1% to 5% are litigated, (see LaBelle, M. “Against Settlement of (Some) Patent Cases” found in Catholic University of America, Columbus School of Law, 2014.) The cases not settled and not litigated are concluded through summary judgment or other motions prior to trial. But, even though only 1% to 5% make it to trial, getting to settlement or other non-trial resolutions is still uncertain, expensive and distracting.
Avoiding Patent Trials
Options open up when you understand what you want, and what you are willing to accept. First, you must know what you want to achieve, what you will sacrifice and how that will affect the accused infringer. Maybe you want to put the accused infringer out of business. You might be satisfied if they changed their product. You may want then to pay for their infringement, or only sell in certain geographic areas. By knowing what you want, you can then know the options you have.
Simple Agreement
Talk to the accused infringer and discuss your position and listen to theirs. You may be able to come to terms. I represented a client who was faced with asserting their patents against a competitor. The product was a huge success, and the patent was very strong. The competitor was clearly cornered, and like any cornered animal, it had no alternative but to fight. But there was an alternative. The client realized this and offered the competitor a different design. Not as good, but acceptable. The two agreed to the re-design, saving both millions in litigation costs and giving both certainty in the outcome.To avoid the loss of the patent, the owner decided to license, rather than sue, infringers.
License Agreement
Work out a license. As the patent owner, you have the ability to grant others the right to use your invention, for a fee or other terms. You define the terms and allow the accused infringer to continue their activities, or a variation of them. You can limit sales to certain industries, geographic areas, customer size, charge a royalty, allow for a specific time period to continue selling, etc. You can even cross-license technology with the accused infringer.
A client had a very successful product, but it was protected by a weak patent. Weak because others could challenge the patent and likely win. To avoid the loss of the patent, the owner decided to license, rather than sue, infringers. That allowed the owner to remain in control of the patent and receive a stream of income from the licensees. The licensed parties were limited to geographic areas, and not permitted to expand beyond them.
Mediation
Agree to have an independent third-party mediator consider your case. Mediation is an opportunity to have one or more independent mediators review the evidence and provide a decision. Every aspect of the process is agreed-upon by the participants. The parties can agree to the type of evidence that can be presented, the length of time of the mediation, the number of witnesses if any, the effect of any decision, whether evidence can be used later in a trial, whether the proceeding is confidential, whether the decision is advisory, etc.Getting the full value from a patent doesn’t always require litigation
At a minimum, mediation gives everyone an independent view of the case. This independent view can lead to more informed negotiations. It can show both parties what an independent evaluator considers the strengths and weaknesses of each side’s case.
Mock Trial
A variation of mediation is a mock trial. Again, the parties can set the rules. The difference is the Mock Trial would use actual jurors to hear each side’s case, normally a very short summary. This summary can take the form of a closing argument, brief testimony from key witnesses, or the reading of their statements. Mock trials are usually used to give the parties an idea of what a typical jury thinks, and help the parties better understand their respective positions.
Getting the full value from a patent doesn’t always require litigation. Historically, only a tiny fraction of patents are litigated. To avoid litigation as a patent owner, keep the lines of communication open with the accused infringer. Think about your actual goal. It’s rarely winning a lawsuit (that’s the goal of a lawyer, not a business person). Your goal is more likely a beneficial result that business people will both understand; a result that works for both of you.
Last week, Steep Hill announced they are expanding into Oregon with a laboratory in Portland. According to the press release, the company has licensed its testing technology to Dr. Carl Balog, a renowned pain and addiction physician.
Steep Hill has expanded significantly over the past year, including new laboratories in Pennsylvania, Maryland, Washington D.C. and Hawaii, among other states. The Berkeley-based company works in lab testing, research and development, licensing, genetics and remote testing. In 2008, Steep Hill opened the first-ever commercial cannabis-testing laboratory in the country.
Jmîchaeĺe Keller, president and chief executive officer of Steep Hill, says this is a development that will help them better understand cannabis chemistry and its medical applications. “We are pleased to announce our expansion into Oregon and especially pleased to partner with Dr. Balog, a physician who brings years of pain and addiction experience to the Steep Hill body of expertise,” says Keller. “In addition, Dr. Balog plans to use his specialized knowledge to aid Steep Hill’s research and development efforts to broaden our understanding of cannabis chemistry and to explore its wider medical applications. In partnering with Dr. Balog, we hope that Steep Hill will be able to help physicians around the United States to curb the opioid epidemic by offering Steep Hill Verified™ medicinal cannabis as an alternative to a crisis that plagues this country.”
Examination of cannabis prior to testing- credit Steep Hill Labs, Inc.
Dr. Balog, now owner and medical director of Steep Hill Oregon, says medical cannabis could be an excellent harm reduction tool, and hints at it being a possible tool in the opioid crisis. “I deal with the consequences of the opioid epidemic on a daily basis as a pain and addiction specialist,” says Dr. Balog. “The growing trend of using cannabis products as an alternative to opioids highlights the need for regulated testing. Because of the variability of marijuana preparations, testing ensures that scientific rigor is applied in a standardized way. I am dedicated to ensuring that patients have access to safe, tested cannabis, free from contaminants and to verified labels that can be trusted for their content.”
They expect Steep Hill Oregon to be open for business in the second quarter of 2018.
I’m not much of an oenophile but I recently came across a very interesting set of documentaries about sommeliers, which are experts on the science of wine and, most importantly, how wines are to be paired with food. What struck me as the most fascinating topic pertained to how mistakes made in the vineyard could be concealed by the barrel in which the wine is stored. For example, if the weather conditions throughout the season had been particularly tumultuous, and you end with sub-optimal grapes that are lacking complexity, then you can compensate for this by aging the wine in a variety of different oak barrels to enhance the flavor. To me, this is synonymous with the way that I’ve seen cannabis concentrates being handled, particularly with respect to terpenes. More specifically, it has recently become somewhat fashionable to supplement cannabis extracts with commercially available terpenes to reestablish an aroma profile that is most representative of the original stock material. Taken one step further, I have even heard of hemp extracts being supplemented with terpenes to achieve a particular strain phenotype, which I cannot imagine pans out very well. In my opinion, this is a very bad idea for two reasons:
One, cannabis is incredibly complex and can contain over 100 different terpene molecules, which can collectively act as anti-inflammatories (Chen et al., 2014), anti- microbial agents (Russo, 2011), sleep aids (Silva et al., 2007), bronchodilators (Falk et al., 1990), and even insulin regulators (Kim et al., 2014). So let’s say that you get your stock material tested and the laboratory screens the product for the top 25 most-prevalent terpenes: alpha- and beta-pinenes, linalool, limonene, beta-myrcene, etc. At that point you utilize this information to supplement your extraction product with these terpenes. However, you still may be missing information about other important molecules such as trans-2-pinanol, alpha-bisabolene and alloaromadendrene that are produced at extremely low, yet therapeutically relevant concentrations in the plant. So essentially with the limited information of the terpenes actually present in your stock material, you would be trying to rebuild a puzzle with only a small fraction of the pieces. Even Ben Affleck’s character in the movie ‘The Accountant’ can’t effectively pull this off.
An example of some commercially available terpenes on the market
Secondarily, not all commercially available terpenes are created equal. I’ll be the first to admit that I don’t have decades of experience vetting the quality of terpenes currently on the market; however, the several times that I have thrown samples into the GC-FID (Gas Chromatograph equipped with a Flame Ionization Detector) I have been unpleasantly surprised. Expecting beta-caryophyllene and detecting caryophyllene oxide is frustrating and in my opinion, such inaccuracies are wrong and should not be accepted as colloquialisms.
The moral of the story here is that in order to produce premium cannabis extracts/concentrates, the stock material needs to be handled with extreme care in order to retain the bouquet of terpenes in their natural ratios. This is incredibly important given the volatile nature of terpenes and their seemingly ephemeral, yet vital, nature in cannabis. Thankfully in this bourgeoning industry there are a number of extraction professionals who are delicately navigating the balance between art and science to produce premium products that are incredibly terpene-rich. However, for every alchemyst there is also someone trying to circumvent nature and while as a scientist I am inherently in favor of experimentation, I am also an admirer of natural processes.
According to a press release published this morning, BioTrackTHC successfully implemented their Universal Cannabis System (UCS) in Washington State, a temporary solution for the state’s seed-to-sale cannabis tracking system, while the new system is yet to be deployed.
BioTrackTHC had a contract with Washington State for four years, which expired just weeks ago at the beginning of November. Back in June, after a few minor hiccups, the state announced that MJ Freeway would be the successive software platform used for the state’s seed-to-sale traceability system.
The deadline for the new software to be ready for deployment was set for November 1st, when the BioTrackTHC contract would expire and the MJ Freeway contract would begin. Between when the contract was awarded and the deadline for implementation, MJ Freeway made headlines for a series of security hacks and systems failures. Subsequently, MJ Freeway said they could not deliver the software platform until January of 2018, leaving a two-month gap where businesses have no state-mandated software to use for the tracking system.
The contingency plan that the state laid out consisted of business owners manually inputting data in excel spreadsheets. When first pressed for a Band-Aid solution, representatives of BioTrackTHC cited security concerns related to MJ Freeway’s hacks as reason for being hesitant to extend their contract through the interim period.
In an open letter to the Washington cannabis industry back in October before the end of their contract, Patrick Vo, president and chief executive officer of BioTrackTHC, laid out an explanation for what went wrong and provided an alternative solution, essentially a private sector version of their government-mandated traceability software system.
The open letter to the Washington cannabis industry, written by Patrick Vo
Announced this morning, the new system, UCS, is being used by over 1,600 of the 1,700 cannabis licensees in Washington. The UCS has so far submitted 39,000 individual excel spreadsheets to the Washington State Liquor and Cannabis Board (WSLCB). “After the WSLCB announced that their replacement system would not be ready in time and that the only other option was for all 1,700 licensees to submit their seed-to-sale data via manual spreadsheets, BioTrackTHC created the UCS—a privatized clone of the government system—within a few days and deployed it minutes after the termination of the old system to minimize the impact on all licensees,” reads the press release.
The UCS allows business owners to streamline data recording, instead of manually entering information into spreadsheets. It is also integrating with 3rd party software competitors such as WeedTraQR, GrowFlow, Mr. Kraken, TraceWeed, GreenBits, S2Solutions and DopePlow. “After the WSLCB’s announcement, we knew that we had only a few days to provide a universal system to which the whole industry could submit compliance data and enable communication across the supply chain between licensees and their seed-to-sale system,” says Vo. “Our priority was to ensure that licensees could continue to operate in the absence of a government seed-to-sale system. Not having that system in place could have left Washington licensees vulnerable to noncompliance in a variety of ways, not to mention the potentially crippling volume of extra work needed to manually track a business’ entire inventory.”
Washington State’s new traceability software system by MJ Freeway is expected to deploy in January of 2018.
Poland has now legalized cannabis for medical purposes.
That said, it will be some time before patients have access to the drug. While Poles can now technically access medical pot, the scheme approved by the Polish Parliament that went into effect on November 1st is regressive, to say the least. Certainly compared with even other countries in Europe that are now finally admitting that cannabis is a drug with medical efficacy, the Polish experiment looks “old-fashioned.”
What Does Medical Cannabis Reform Look Like in Poland?
Like most conservative countries, Poland is sticking with a highly restrictive approach that still puts patients in the hot seat. In addition to getting a doctor’s prescription, the chronically ill must be approved by a state authority – a regional pharmaceutical inspector. They must get a license first, in other words. They must then find about $500 a month to pay for cannabis. To put this in perspective, that is roughly the total amount such patients get from the state to live on each month.
Warsaw, Poland Image: Nikos Roussos, Flickr
The multiple steps mean that only patients with financial resources– and an illness which is chronic but still allows them to negotiate the many government hurdles, including cost –will now be able to access medical cannabis. Unlike Germany which makes no such distinctions, Polish law now recognizes the drug as an effective form of treatment only for chronic pain, chemo-induced nausea, MS and drug-resistant epilepsy.
The heavily amended legislation also outlaws home growing. And while 90% of pharmacies will be able to dispense the drug, this is again, a technicality. Where will the pharmacies get the cannabis in the first place?
So the question remains: will this step really mean reform? There is no medical cultivation planned. And no companies (yet) have been licensed to import the drug.
This is what is clear. Much like the conversation in Georgia and other southern American states several years ago, legislators are bowing to popular demand if not scientific evidence, to legalize medical use. But patients still cannot get it – even if they jump through all the hoops.
In Poland, patients who cannot find legal cannabis in the country (which is all of them at this point) now do have the right to travel to other EU countries in search of medicine. But the unanswered question in all of this is still present. How, exactly is this supposed to work? Patients must come up with the money to pay for their medical cannabis (at local prices) plus regular transportation costs. Then they must pay sky high fees to access local doctors (if they can find them) at “retail cost” uncovered by any insurance.
The issue of countries legalizing cannabis on paper, but not in action, is a problem now facing legalization advocates in the EUThe most obvious route for Polish patients with resources and the ability to travel is Germany. The catch? Medical cannabis costs Just on this front, the idea of regular country hopping for script refills – even if “just” across the border – is ludicrous. And who protect such patients legally if caught at the border, with a three month supply?
Poland, in other words, has adopted something very similar to Georgia’s regulations circa 2015. Medical cannabis is now technically legal but still inaccessible because of cost and logistics. Reform, Polish-style, appears to actually just be more window-dressing.
And while it is an obvious step for the country to start issuing import licenses to Canadian, Israeli and Australian exporters, how long will that take?
The Next Step Of Reform – Unfettered Patient Access
While things are still bad in Poland, right across the border in Germany where presumably Polish patients could theoretically buy their medical cannabis, all is still not copacetic. Even for the “locals.” Germany’s situation remains dire. But even before legalization in March, Germany was importing bud cannabis from Holland and began a trickle of imports last summer from Canada. That trickle has now expanded considerably with new import licences this year. And presumably, although nobody is sure, there will be some kind of domestic cultivation by 2019.
At Deutsche Hanfverband’s Cannabis Normal activist’s conference in Berlin held on the same weekend as Poland decided to legalize medical cannabis, a Gen X patient expressed his frustration with the situation of legalization in general. Oliver Waack-Jurgensen is now suing his German public insurer. He expects to wait another year and a half before he wins. In the meantime, he is organizing other patients. “They [political representatives] are bowing to political expediency but completely ignoring patient needs,” says Waack-Jurgensen. “How long is this conversation going to take? I am tired of it. Really, really tired of this.”
The issue of countries legalizing cannabis on paper, but not in action, is a problem now facing legalization advocates in the EU and elsewhere who have achieved legislative victories, but still realize this is an unfinished battle. Germany is the only country in Europe with a federal mandate to cover the drug under insurance (for Germans only). And that process is taking time to implement.But even in Germany, patients are having to sue their insurance companies
Germany, Italy and Turkey are also the only countries in Europe as of now with any plans to grow the drug domestically under a federally mandated regulation scheme. Import from Holland, Canada and even Australia appears to be the next step in delaying full and unfettered reform in Europe. See Croatia, Slovenia and Bosnia. How Spanish or Portuguese-grown cannabis will play into this discussion is also an open question mark. Asking Polish patients suffering from cancer to “commute” to Portugal is also clearly unfeasible.
Unlike the United States, however, European countries do have public healthcare systems, which are supposed to cover the majority of the population. What gives? And what is likely to happen?
A Brewing Battle At The EU Human Rights Court?
While the Polish decision to “legalize” medical use is a step in the right direction, there is still a long way to go. If the idea is to halt the black market trade, giving patients real access is a good idea. But even in Germany, patients are having to sue their insurance companies. And are now doing so in large numbers. In a region where lawsuits are much less common than the U.S., this is shocking enough.
But the situation is so widespread and likely to continue for some time, that class action lawsuits – and on the basis of human rights violations over lack of access to a life-saving drug – may finally come to the continent and at an EU (international) level court.
Patients are literally dying in the meantime. And those who aren’t are joining the calls for hunger strikes and other direct civil action. Sound far-fetched? There is legal precedent. See Mexico.
And while Poland may or may not be the trigger for this kind of concerted legal action, this idea is clearly gathering steam in advocacy circles across Europe.
Cannabis testing laboratories around the country are expanding quickly, taking on new clients and growing their business incrementally. Many of these labs are receiving a large number of test requests from growers for potency testing, terpene profiling, pesticide screening, residual solvent screening, heavy metal testing, microbial analysis and even genetic testing. To keep pace with the number of test requests received, efficient data, sample and test management is imperative.
Considering the magnitude of cannabis testing, data management using spreadsheets is a serious impediment to quality assurance. Data being recorded in spreadsheets is error-prone and difficult to manage. Furthermore, using spreadsheets does not allow labs to adhere to regulatory guidelines that demand strict accounting for every gram of the sample, right from reception, consumption for testing, to disposal.
Log samples, keep track of Chain of Custody(CoC), track samples from initial location in the lab through disposal by recording location, custodians and other metadata
To overcome such data management challenges and improve the operational efficiency of cannabis testing laboratories, a Laboratory Information Management System (LIMS) plays a significant role. LIMS are much more capable than spreadsheets and paper-based tools for managing analytical and operational activities. LIMS enhances the productivity and quality by eliminating the manual data entry. With its built-in audit trail capability, LIMS helps labs adhere to regulatory standards.
LIMS can provide companies with a method to manage samples, records and test results, and ensures regulatory compliance by increasing traceability. LIMS can also be integrated with other lab instrumentation and enterprise systems, enabling easier transmission of information across the lab and the organization, reducing manual efforts and improving decision-making.
Account for the entire quantity of sample received, used and disposed
Multiple resources are also available to assist labs in preparing for quality assurance and accreditation, LIMS being one of them. LIMS can help cannabis labs with instrument integration, and automate reporting to help improve efficiencies and reduce errors. LIMS, such as CloudLIMS Lite, a cloud-based LIMS, automates cannabis-testing workflows right from sample collection, data recording, managing test chain of custody, sample weight accounting to report generation. With data security and audit trails, a LIMS provides traceable documentary evidence required to achieve ISO 17025 accreditation for highly regulated labs. Above all, cloud-enabled systems are often low in the total cost of acquisition, have maintenance outsourced, and are scalable to help meet the ever-changing business and regulatory compliance needs.
Incorporate all tests, instruments, sample information and result data (etc.) in one place
Cloud-based products are secure, easy to deploy and scalable. A cloud product is typically hosted on a server with a guaranteed uptime of 99.5%, allowing for a reliable system, accessible 24×7. Cloud-based LIMS have automatic data backup mechanism that allow for quick turnarounds in case of a server failure or in the eventuality of a natural disaster.
With LIMS in place, cannabis labs can manage sample and requisition-centric records, track sample quantity and location, integrate the test data, and provide online reports to clients. This in turn, reduces the turnaround time for testing and improves the operational efficiency. Besides, audit trail of each and every activity performed by the lab personnel is recorded in the system to ensure that the lab follows regulatory compliance.
Editor’s Note: This is a condensed version of a poster that was submitted and displayed at this year’s Cannabis Science Conference in Portland, Oregon. The authors of the original poster are Arun Apte, Stephen Goldman, Aditi Gade and Shonali Paul.
In rather shocking news out of Germany on the cannabis front, it appears that Canadian LP ABcann has not been selected as one of the finalists in the country’s first tender bid to cultivate cannabis domestically.
As reported in the German press, the company has not been invited to submit an offer in the final award procedures. The reason per a company spokesman as quoted in the German media? The company proved it met the required qualification thresholds – namely it could deliver the required amount of product as required by the German government. However the amount it could produce was less than other firms being considered.
That is a strange statement, especially because the ten licenses on offer only called for a total of 2,000 kgs of production total by 2019 and 6600 kgs by 2022.
Who Is ABCann?
ABcann has been in business since 2014 in Canada, when it received one of the first cultivation licenses issued by the Canadian government. It has also been aggressively positioning itself in the German and European market this year – and in multiple ways. It got itself listed on both American and German stock exchanges by summer. The company established a subsidiary headquarters in Schönefeld as of August 2017. As late as October, the company also was appearing at industry conferences, like the IACM medical conference in Cologne, as an expected finalist in the first bid.
An ABCann facility in Canada
However, the company’s plans to build a $40 million, 10,000 square meter plant somewhere in Lusatia are now also reportedly on hold. The exact location of the plant is unknown, per German government requirements that grow facilities remain secret. That said, with a year and a half to complete construction, if given the green light even by early next year, it may be that this was the reason the company has apparently not made the cut. Or perhaps the German government did not believe the company was adequately funded. A September exercise of warrants netted the company an additional $45 million in operating cash. But with expansion plans in not only Canada and Europe, but Australia too, did the company pass the German test for liquidity?
Management changes are also afoot. As of October 1, Barry Fishman, a former Eli Lilly executive took over as CEO of ABCann Global. Ken Clement, founder of the company, announced in mid-October that he was stepping down from his position as Executive Chair of the Board to be replaced by Paul Lucas a former President and CEO of GlaxoSmithKline Canada. John Hoff, the Geschäftsführer (or CEO) of ABcann’s German subsidiary, has also recently left the company. When asked by CannabisIndustryJournal about his reasons for doing so at the Cannabis Normal conference in Berlin at the beginning of November, Hoff cited “management and creative differences” with ABcann Canada as the impetus for his recent departure.
However with the news of ABcann’s apparent loss of a front-runner position in the pending bid, such news appears to herald a bit more of a shakeup at the company, if not a refocussing of overall global strategy.
A source within the company who wished to remain anonymous also said this when contacted directly by CannabisIndustryJournal. “Our top priority currently is to acquire an import license. We also fully intend to pursue all of our plans in the German market, but we have no firm dates on the construction front.”
The State of Medical Cannabis Reform Auf Deutsch
The German medical cannabis question has certainly jerked forward over the past several years through several rough patches. This year it has gotten even stranger. And nobody is quite sure where it will end up.
The news about ABcann is also the latest episode in a very strange story that has continued to develop mostly out of sight of the public.
That bid process, which was expected to announce the winners by late summer, has now dragged on through the fall.Germany began moving forward quietly on the cannabis issue in the first decade of the century. Patients could only access the drug in basically trial mode. Most patients who qualified with a doctor’s prescription and a special permit to take the drug, could also access only Sativex (which is very expensive) or the synthetic form of the drug, dronabinol, manufactured domestically in a facility near Frankfurt. All bud cannabis was imported from Holland by Bedrocan. Strictly controlled not by German, but rather Dutch law on cannabis imports.
In 2014, the first German patients successfully sued the government to grow their own plants if their insurance companies refused coverage of the drug and they proved they could not afford alternatives.
This year, in January, the German government voted unanimously to change the law to mandate public health insurance. The law went into effect in March. Mainly driven by a desire to halt home-grow, the rules changed again. Post March 2017, patient grow rights have now been revoked. Now patients are theoretically allowed to get cannabis covered under public health insurance. In reality, the process has been difficult.
In April, the German government created a new “Cannabis Agency” under the auspices of BfArM. And BfArM in turn issued a tender bid for the country’s first domestic licences in April.
That bid process, which was expected to announce the winners by late summer, has now dragged on through the fall.
When Will The Winners Be Announced?
That too is unclear. It is very likely that the final announcement will not be made by the government until the beginning of the year – after the new government is formed. The so-called “Jamaica Coalition” – of the mainstream CDU, the Greens and the liberals (FDP) is under major pressure to address the issue of access. So far Chancellor Angela Merkel has signalled her resistance for additional changes to the new cannabis law. That said, the current situation in Germany, which is untenable for patients and doctors, as well as companies trying to enter the market and investing heavily, is unlikely to hold for even the next several years.
Problems with finding doctors and medical reimbursement under insurance have kept this patient population from growing the way it would otherwise.In late October, the news broke that two legal complaints had been unsuccessfully filed against the bid itself. Both parties’ complaints were dismissed. Yet there also appears to have been a third complaint that has actually devolved in to a real Klage – or lawsuit. Lexamed GmbH’s claim directly addresses issues expressed by many German-only firms this year. Namely that they were unfairly left out of the bid process because of a supposed lack of experience. As such it is likely to be closely watched by other existing German hopefuls.
This lawsuit has now formally delayed the announcements on the bid decision until at least after December 20th of this year, when the oral arguments will be heard in the case. A decision about the bid will go forward when this has been decided, by the beginning of 2018.
In the meantime? Cannabis imports are starting to enter the country. In late summer last year, Spektrum Cannabis, formerly MedCann GmbH, located just south of Frankfurt, received the first import licenses from the German government to bring medical cannabis into Germany from Canada. Both Aurora and Tilray were granted import licenses this fall.
There are 16 different kinds of cannabis on the market right now. And about 170 kilos of cannabis were imported into the country in the last year. There are also currently about 1,000 patients although this number is artificially low. Problems with finding doctors and medical reimbursement under insurance have kept this patient population from growing the way it would otherwise. There are easily a million patients in Germany right now who would qualify for cannabis if the system worked as it was originally intended in the legislation passed in January.
That said, despite the recent news that ABcann is “out” – at least for this round– apparently the pan-European bid process is still very much alive, despite many recent rumours that it was dead in the water. And plans also seem to be afoot for a separate and additional cultivation licensing round potentially as soon as next year. Details however are unclear and nobody either in the industry or the government is willing to be quoted or give any further information.
In the first part of this series, we spoke with Michelle Bradac, senior accreditation officer at A2LA, to learn the basics of cannabis laboratory accreditation. In the second part, we sat down with Roger Brauninger, A2LA Biosafety Program manager, to learn why states are looking to lab accreditation in their regulations for the cannabis industry.
In the third part of this series, we sit down with Michael DeGregorio, chief executive officer of Konocti Analytics, Inc., to talk method development in the cannabis testing industry and his experience with getting accredited. In the final part of this series, we are going to sit down with Susan Audino, an instructor at A2LA to learn more about the requirements where she’ll offer some advice for labs seeking accreditation.
Michael DeGregorio, chief executive officer of Konocti Analytics, Inc.
Michael DeGregorio is a doctor of pharmacy with an extensive career in medicine and scientific research. He’s worked in cancer research and medicine, teaching at the University of California, San Francisco, Yale University School of Medicine, University of Texas, Health Science Center at San Antonio and University of California, Davis. Before becoming the CEO of Konocti Analytics, a laboratory based in California, DeGregorio was also a published author in a large number of peer-reviewed medical journals.
In this piece, we sit down with DeGregorio to find out what challenges labs face when getting accredited, why they sought accreditation and their experience with getting off the ground. Stay tuned for the final part of this series!
CannabisIndustryJournal: How does a laboratory go about choosing an appropriate method in an industry where, generally, there are no validated methods available?
Michael DeGregorio: Our approach to developing analytical methods for testing cannabis began with a review of the existing laboratories and their methods, where we found no standardization and inconsistent results. Since cannabis is being used by the public and as a medicine, our goal is to help make it as contaminant-free as possible for the well-being of the consumer, and this begins by developing a state-of-the-art analytical facility.
When developing new methods, we review the published literature to see what has already been done and try to arrive at a scientifically sound consensus. We then perform experiments to determine which set of conditions works best for us. Once we have developed an appropriate method, we validate it pursuant to ISO/IEC 17025 requirements.
CIJ: How do you go about choosing what type of equipment to use for testing (e.g. by limit of detection, acceptable method use of equipment for other industries, etc.)?
Michael: After reviewing the operations of other testing laboratories, we concluded that, in general, they were not taking advantage of the most advanced technologies and had limited personnel qualified to operate it. Because public safety is our main concern, we chose state-of-the-art equipment, including GC/LC-MS with Orbitrap and ICP-MS, for testing medicinal cannabis. In addition to identifying unknown pesticides, we needed the capability of performing full chemical screening of all samples for potentially harmful compounds, e.g. steroids, present in cannabis, as well as the ability to detect trace levels of metals.
Our greatest concern is the fact that pesticides in cannabis have not been adequately studied. Current pesticide regulations suggest that government authorities believe that there are a finite number of pesticides available. Smart farmers could easily avoid the pesticides on current lists. Because of this, we chose to validate our pesticide methods with a focus on chemical classes, as opposed to specific pesticides, to give us the broadest possible coverage of potential compounds. The Orbitrap mass spectrometers also allow us to detect and identify unknown pesticides. This is something not currently being done by other laboratories. The latest microbiology methods for cannabis testing include DNA analysis, and for this we use qRT-PCR technology. Finally, the high sensitivity of ICP-MS allows for the detection of metals concentrations that may be harmful, yet undetectable by other means.
CIJ: What do you feel are the benefits of being accredited?
Michael: Being accredited shows the public that we have made a commitment to quality analytics. We feel this gives our clients peace of mind when marketing their products, knowing that they have been tested by a laboratory meeting the highest international standards of operation available using the latest technology. Furthermore, being accredited requires participation in ongoing proficiency testing programs, which helps maintain analytical competency. It should be pointed out that any prospective client of an analytical facility should take into account the laboratory’s full accredited scope of testing to ensure its competency.
CIJ: What challenges did you face during the process of getting your laboratory started and/or during the accreditation process?
Michael: Developing the quality management system and getting our equipment and processes to a state where they met accreditation requirements took several months of hard work, and turned out to be a bit more daunting than we anticipated. Our pre-accreditation assessment revealed that much work remained to be done, and it gave us a real appreciation for the level of detail and documentation required. We remained determined and eventually achieved our accreditation.
CIJ: What are the benefits to the grower and dispensaries to choosing an accredited laboratory for the testing of their product?
Michael: By choosing an accredited laboratory with a full scope of testing (potency, pesticides, mycotoxins, metals, microbiology, residual solvents and terpenes), growers and dispensaries can rest assured that their products have been tested using validated methods with appropriate quality control by trained, competent personnel. For growers, this makes their products more attractive to potential buyers. For dispensaries, this means they can confidently market their products with the knowledge that the information shown on the label is accurate, which in turn gives their customers peace of mind that the product they are consuming does not contain unacceptable levels of contaminants.
CIJ: Why did you choose A2LA?
Michael: Once we decided to pursue accreditation, we researched the various accrediting bodies available as well as their reputations. We discovered that while all accrediting bodies are themselves accredited to the same standard, accreditation by the various bodies was not considered equal in practice. In our opinion, A2LA was considered the most prestigious, highly regarded accrediting body. Furthermore, some of the most prestigious laboratories in the country are accredited by A2LA, including Los Alamos National Laboratory, the Food and Drug Administration’s Center for Biologics Evaluation and Research, Lawrence Livermore National Laboratory, Centers for Disease Control, Federal Bureau of Investigation and the United States Department of Agriculture. Many of our preferred sources of scientific supplies and services are accredited by A2LA as well. As our goal was to be accredited by the best available accrediting body, we chose A2LA.
On November 1st, the U.S. Food and Drug Administration (FDA) published a press release addressing warning letters issued to four companies. The warning letters, sent to companies marketing cannabidiol (CBD) products with therapeutic claims, cites unsubstantiated claims about their products’ ability to treat or cure cancer and other diseases.
A snippet of the warning letter issued to Greenroads
According to the press release, the four companies that received warning letters are Greenroads Health, Natural Alchemist, That’s Natural! Marketing and Consulting, and Stanley Brothers Social Enterprises LLC. The press release called their marketing campaigns “deceptive” for “unproven treatments.” Here is the letter they sent to Greenroads Health.
“As part of the U.S. Food and Drug Administration’s ongoing efforts to protect consumers from health fraud, the agency today issued warning letters to four companies illegally selling products online that claim to prevent, diagnose, treat, or cure cancer without evidence to support these outcomes,” reads the FDA statement. “Selling these unapproved products with unsubstantiated therapeutic claims is not only a violation of the Federal Food, Drug and Cosmetic Act, but also can put patients at risk as these products have not been proven to be safe or effective.”
According to the press release, the FDA has issued ninety warning letters in the past ten years, with around twelve this year, to companies making fraudulent claims about cancer therapies. Here are some examples of claims made by companies that the FDA took issue with:
“Combats tumor and cancer cells;”
“CBD makes cancer cells commit ‘suicide’ without killing other cells;”
“CBD … [has] anti-proliferative properties that inhibit cell division and growth in certain types of cancer, not allowing the tumor to grow;” and
“Non-psychoactive cannabinoids like CBD (cannabidiol) may be effective in treating tumors from cancer – including breast cancer.”
“Substances that contain components of marijuana will be treated like any other products that make unproven claims to shrink cancer tumors,” says FDA Commissioner Scott Gottlieb, M.D. “We don’t let companies market products that deliberately prey on sick people with baseless claims that their substance can shrink or cure cancer and we’re not going to look the other way on enforcing these principles when it comes to marijuana-containing products. There are a growing number of effective therapies for many cancers. When people are allowed to illegally market agents that deliver no established benefit they may steer patients away from products that have proven, anti-tumor effects that could extend lives.”
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“The solution suite includes per-plant sensing, environmental monitoring, machine diagnostics, fertigation management, lighting controls, inventory management, and seed-to-sale tracking,” reads the press release. IoT is essentially a network of devices embedded with sensors and software that allow the devices to connect and exchange data. IoT devices are used extensively in the food industry, including for integrated pest management, restaurant food safety and management and tracking product conditions such as temperature and humidity throughout the supply chain, among other uses.
According to Brad Nattrass, urban-gro’s chief executive officer, finding an IoT solution that can easily scale was a key goal for their business. “When evaluating the most advanced market-ready sensor technology available, it was crucial that we deliver a solution that can easily scale to thousands of sensors in order to satisfy the needs of large-scale commercial cultivators,” says Nattrass. “The introduction of Soleil demonstrates urban-gro’s commitment to going beyond simply supplying equipment, to truly serving our clients as an ongoing technological innovator and advisor, enabling cultivators to leverage today’s more advanced technologies to rise above the competition.”
