Tag Archives: policy

Cannabis Legalization in Massachusetts: An Interview with Steven Hoffman, Chairman of the Cannabis Control Commission

By Aaron G. Biros
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On February 13 at the upcoming Seed To Sale Show in Boston, MA, Steven Hoffman, Chairman of the Cannabis Control Commission of Massachusetts, will deliver a keynote discussion. Hoffman will sit down with National Cannabis Industry Association (NCIA) Executive Director Aaron Smith to discuss the first few months of recreational legalization, challenges and the path forward for the state. We caught up with Hoffman to hear about some of the biggest obstacles and successes when it came to standing up a regulated adult-use cannabis market.

On November 8, 2016, voters in Massachusetts ushered in a new era for the East Coast, when they passed a ballot initiative to legalize adult-use cannabis. Almost immediately after that, the Massachusetts Legislature put a hold on implementation in order to study the issues and revise the legislation, which was ultimately signed in July of 2017. That September, Steven Hoffman and his colleagues at the Cannabis Control Commission were appointed to figure out how the state should regulate the market, enforce its regulations and roll out the new adult-use program.

Steven Hoffman, Chairman of the Massachusetts Cannabis Control Commission

The Commission was tasked with creating something brand new, without a roadmap in place and developing rules around some very contentious issues. “I think the biggest obstacle was that we were doing something unprecedented,” says Hoffman. “Every state is different demographically and the laws differ state to state, and we got a lot of help from other states sharing their experiences with us, but we were still going down an uncharted path for Massachusetts.”

Hoffman told us the very first thing they needed to do in 2017 was conduct listening sessions in which the commissioners listened to citizens for recommendations and heard people’s thoughts on cannabis legalization. “We did that immediately. We needed to conduct a process that was transparent, thoughtful and inclusive,” says Hoffman. “We then, in public, debated policies around adult-use marijuana regarding licensing processes, criteria and enforcement.”

They debated policies in a public forum for four days and came back the following week to embed their decisions in draft regulations that were submitted to the Secretary of State in December 2017. Then, they had 10 more public hearings, made some modifications to the rules, and promulgated a final version of the adult-use regulations in March 2018, keeping everything as transparent and inclusive as possible. “I don’t think anyone has been critical of that process behind it,” says Hoffman.

Certain pieces of the regulations stand out as particularly inclusive and progressive for Massachusetts’ cannabis program. For example, certain mandates encourage diversity and support communities affected by the drug war. Hoffman says the Commission couldn’t take credit for those completely because their objectives are explicit in the legislation, however, the agency still made sure the state followed through. “The mandate said the industry should look like the state of Massachusetts in terms of our diversity,” says Hoffman. That includes creating a diverse industry with respect to ethnicity, gender, LGBTQ, veteran and disabled participation. Additionally, he added, “it was a very explicit set of requirements that those communities who were disproportionally harmed by the drug war are full participants in the new industry we set up. Those were both legislative mandates, so we take them very seriously and I wouldn’t have taken this appointment if I didn’t think it was absolutely essential.”

You can expect to hear more from Hoffman on this and other matters related to implementing cannabis regulations at the upcoming Seed To Sale Show in Boston, MA, February 12-13, 2019. On November 20, 2018, the first adult-use dispensaries in the state opened their doors for business and began selling cannabis. Hoffman says he is most proud of their rollout of the program as well as the transparency and inclusiveness through which they conducted the process. “I think this is a very controversial issue; the voters approved this issue by 53-47%,” says Hoffman. “No matter what we do, we won’t make everyone happy, but we’ve done everything possible to allow people to participate and feel like they’ve been listened to. We made our decisions publicly and transparently.”

Beyond that, the Commission wanted to take their time to make sure things were done the right way the first time. “From day one, we decided we were going to do this right rather than meet an arbitrary timeline,” says Hoffman. “It’s gradual, it’s maybe slower than some people would like, but our rollout has been well-received and relatively smooth. I think a gradual and thoughtful process, not focused on a deadline, went very well. Hopefully we have given other states a model when they plan their own rollout.”

Hoffman wouldn’t comment on whether or not he would encourage other states down a similar path, but he did say they could probably learn a thing or two from them. “I expect other states will do what we did,” says Hoffman. “They will talk to other states ahead of them like us and hopefully will benefit from learning from our experiences. I don’t know what the laws will look like but I expect other states need to make it work for them specifically.”

You can expect to hear more from Hoffman on this and other matters related to implementing cannabis regulations at the upcoming Seed To Sale Show in Boston, MA, February 12-13, 2019. Make sure to check out his keynote discussion with Aaron Smith on Wednesday, February 13 at 10:30am.

israel flag

Israel and Thailand Approve Cannabis Exports

By Marguerite Arnold
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israel flag

On Christmas Day, not only did Israel, global leader in medical cannabis in particular, finally decide to legalize medical exports, but in a surprise move, so did Thailand.

Both developments are likely to have huge implications on the entire global cannabis discussion, albeit in slightly different ways.The impact will be interesting to watch.

Israel’s Export Decision

The issue of exports from the original home of the medical cannabinoid revolution has been a perennial sticky wicket for the last several years. As the Israeli medical market liberalized at home and certainly in the last five years, the government steadfastly refused to export the drug. Further, the country’s president Benjamin Netanyahu also cut a political deal with Donald Trump to move the Israeli capital from Tel Aviv to Jerusalem that delayed this discussion over the last 18 months. With a global market now exploding that Israel to date has been excluded from and Netanyahu’s political capital tarnished with corruption, things are about to change.

The impact will be interesting to watch. Especially with the network of Israeli production farms also sprinkling around particularly Eastern Europe and Greece.

Thai Surprise

Thailand’s parliament voted to legalize the use of medical cannabis, making it the first country in Southeast Asia to do so.

Here is also what is intriguing: The country is, like Israel, looking at creating a domestic boon with a tightly controlled domestic economy booster. Not to mention clearing the jails, which are filled to bursting with people on even low level drug offenses.

Thailand’s Parliament

And just like Israel, Thailand is also, already, talking protectionist measures to shield domestic producers from being bought out by foreign interests, certainly of the corporate kind.

The Combination Package

In the short term this means, at least on the export front, that there will be more competitors to the Canadian giants now entering the room. And between Israel and Thailand alone, this also means that new strains on the medical side, will begin to enter global medical markets.

For all the future promise of tweaked product, cheap cannabis flower and oil flooding markets globally by importers and distributors realizing that the game is far from over, is going to be the first real challenge the Canadian cannabis companies have yet faced.

In the wake of the news that Epidiolex is not as effective longer term as hoped (which is a common phenomenon in the pharmaceutical industry known as a “drug holiday” where users initially improve and then develop tolerance to the drug), this is also an intriguing new development. This means that new strains are entering the global market at an unprecedented pace, literally competing with pharmaceutical products at a time when reform continues apace.

At a time when cannabis investments (particularly in the US), quadrupled in 2018, this also means that western dollars, if not companies, will begin to find other markets and market outlets.

And that is a Christmas present in 2018 that will reverberate long into the future.

Wayland Group Makes European Waves

By Marguerite Arnold
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While it is news that Wayland Group has just signed a definitive production agreement in Italy with a local CBD producer (Factory S.S. – a subsidiary of Group San Martino), it is not that Wayland has been establishing itself in Europe for the past two years.

Nor is it surprising that the new Italian plant (named CBD Italian Factory) will feature world-class cleantech production technology (fuelled by biogas). Even more intriguingly the joint venture also includes a relationship with the University of Eastern Piedmont, which is developing a research center to study the development of cannabinoid products for both animals and people.

Why not?Europe is far from the only region on Wayland’s global expansion map.

Wayland has been establishing itself in an interesting way as the company expands globally that distinguishes its corporate strategy from its other cannabis competitors. It was only April of this year, after all, that Wayland received its ex-im license to ship dried cannabis flower from Canada to Germany. At a time when the company also used to be known as Maricann. That corporate name change happened this year too, as the company continues to build its global brand in very interesting if far-flung markets.

A Busy Fall So Far

Europe is far from the only region on Wayland’s global expansion map. In the first week of November, in fact, the company also signed an agreement to buy 100% of Colma Pharmaceutical SAS, a Columbian-licensed producer of THC. This will be an outdoor THC play, and produce two crops a year. They also just announced a land acquisition in Argentina to begin cultivating cannabis there as well.

In October, the company announced not only plans to raise $50 million, but also brought on three new board members with significant European legal and business experience (including M&A and access to equity markets). This includes the company’s first female board member, Birgit Homburger, based in Berlin.

And this is on top of its record-breaking hemp harvest in Germany, which outperformed internal forecasts by a factor of 2. This is an important benchmark domestically, as German cultivation licenses will require successful firms to prove they can bring large quantities of flower to market successfully and repeatedly.

A Marked Interest In Cannatech

Like many firms, Wayland is already showing a marked interest in new cannabis technologies, in particular, innovative cultivation solutions, but not limited to the same. In August, the company unveiled its first product launch in Europe – a soft gel with 25mg of CBD that utilizes multi-patented technology allowing optimum absorption and bioavailability. Its German unveiling is significant because the insurance and medical industries here are unclear about dosing. That lack of clarity is also now holding back policy and underwriting issues, including the approval of medical cannabis in the first place.

These capsules, a non-medical product and marketed under the name “Mariplant” were first shipped to pharmacies in both the Munich and Cologne area in the late summer.It has continued to expand both its Canadian and foreign as well as tech expansions ever since.

The Road So Far

The company, which started with a facility in Langton, Canada in 2013, earned a license from Health Canada to sell cannabis extracts in early 2016. By December of that year (a good four months before the German cultivation bid was announced) Maricann GmbH was formed in Munich. By March, the month before the cultivation bid was first announced, the company began retrofitting the Ebersbach facility, near Dresden.

In April of 2017, Maricann went public. It has continued to expand both its Canadian and foreign as well as tech expansions ever since.

While not a “high flier” on the stock market (like competitors Tilray, Canopy and Aurora), the company is carefully plotting its position in a global market that is still very much a “blue ocean” opportunity.

It is also carefully plotting a path into both production and delivery systems that are optimized by tech in a universe that is rapidly upgrading not only its image, but finding ways to prove if not justify medical efficacy.

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Aurora Cannabis Burnishes Its Medical and Recreational Game

By Marguerite Arnold
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aurora logo

It has been a busy couple of weeks for Aurora executives, no matter what else is going on. And all signs indicate that Aurora is not only keeping its pressure on major competitors Tilray and Canopy in particular, but playing a highly sophisticated political and global game right now.

Where the company in other words is not “winning,” Aurora is clearly establishing an effective global footprint that is ensuring that it is at least keeping pace with the speed of market development and even breaking new ground more than once recently.

The Aurora Tour Of The Global Stage In Late October

Forget what is going on in Canada for a moment, if that is possible. Global investors, certainly, in the aftermath of the post legalization glow, certainly seem to be. So are the big LPs like Aurora. They are looking elsewhere, to medical markets and to Europe, for more clarity on where the market will go.

Aurora certainly has been, even if unwittingly, caught in the middle of that conversation, in part because of where and how the company has been positioning itself lately.

Last time around, the company announced it was in the top ten finalists. This time, it is also expected to do well.That said, what Aurora is doing, like everyone else in this space right now, is playing a global game of hopscotch in terms of both raising equity and then where that capital gets spent. Aurora’s recent victories, certainly this year, indicate that it will continue to be a formidable presence in the room.

For now, however, it is clear that retail investors are suddenly cautious and institutional investors are clearly still very leery. So where does that leave Aurora?

Road Trip To Germany

CEO Cam Battley at a conference in Frankfurt
CEO Cam Battley at a conference in Frankfurt

Consider these interesting series of events. Canadian recreational reform “goes live” on October 17. Instead of sticking around Canada, however, CEO Cam Battley spoke at a recent investor road show for the Canadian public cannabis companies over the weekend of October 21-22 in Frankfurt, Germany. Three well placed, but anonymous industry sources confirmed to Cannabis Industry Journal that a meeting between all the major cannabis companies in Frankfurt over the weekend (including not only Aurora, but Wayland Corporation, Canopy, Aphria, Green Organic Dutchman and Hexo) was either planned or attempted with federal Minister of Health, Jens Spahn sometime during this period of time.

Even more interestingly, this conference had clearly been planned to coincide with the original due date of the new German cultivation bid, in which Aurora is also well positioned. Last time around, the company announced it was in the top ten finalists. This time, it is also expected to do well.

Whenever the bid finally is decided, that is.

As of October 23, the day of the IPO in New York and the day after the conference in Frankfurt concluded, news circulated that the bid had been delayed a second time, with rumours of further lawsuits swirling.

IPO In New York

That day, Tuesday October 23, Aurora announced its IPO on the NYSE, not in Frankfurt after announcing this possibility the month before. This is significant, namely because all of the cannabis companies listed here are essentially in what is known, colloquially, auf Deutsch, as being “in the dog house.” Namely, financial regulators are looking closely at listed companies’ profiles on the exchange. If a listed company is too associated with the recreational industry, trades will be barred from clearing by Clearstream, the daughter company of the Deutsche Börse and located in Luxembourg. Earlier in the summer, all of the major LPs were briefly on the restricted list.

The next day after Canadian recreational reform became reality in fact, on October 18, the Deutsche Börse made the latest in a series of comments regarding its intentions about their future decisions on the clearing of cannabis stocks. Namely, that at their discretion, they can prevent the clearing of stock purchases of a cannabis company at any time. In other words, essentially delisting the stock.

Aurora, with its ties to mainstream, “adult use” in North America, is absolutely affected by the same, certainly in the short term. Including of course, all those rumours about Coke’s interest in the company (still unconfirmed by both Aurora and Coke).aurora logo

Looking Toward Poland

Yet here is where Aurora stays interesting. Just two days after its debut on the NYSE, the company announced that Aurora would be the first external company to be allowed to import medical cannabis to Poland (to a Warsaw hospital and pain clinic). The same day, incidentally, as the Polish government announced that medical cannabis could indeed begin to be imported.

This came after a stunning move earlier in the year when the company bagged the first medical cultivation license in Italy.

Clearly, Aurora is keeping good, if not powerful, company. And that will position it well in the long run. Even if, for now, its IPO on the NYSE got off to a less than powerful start.

Why Does Aurora Stand Out?

Like all the major cannabis companies on the global stage right now, Aurora understands what it takes to get into the room (wherever and whatever that room might be) in politically and regulatorily astute ways, much like Tilray. Both companies are also very similar in how they are continuing to execute market entry and public market strategy. Tilray, it should be remembered, went public over the summer, in North America too, right around the announcement of the final recreational date in Canada.

And while Aurora is clearly playing a still retail-oriented stock market strategy, it has proved over the last 18 months that it is shaping up to be a savvy, political player on the cusp of legislative change in multiple European states so far. They are courting the much bigger game now of institutional investment globally.

World Health Organization November Meeting To Review Cannabis

By Marguerite Arnold
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In a sign that cannabis reform is now on the march at the highest level of international discussion, the World Health Organization (WHO) will be meeting in November to formally review its policies on cannabis. This will be the second time in a year that the organization has met to review its policies on the plant, with a direct knock-on effect at the UN level.

According to documents obtained by Cannabis Industry Journal, including a personal cover letter over the committee’s findings submitted to the Secretary-General Antonio Guterres by Dr. Tedros Adhanom Ghebreyesus, Director-General of the WHO, the November review will “undertake a critical review of the…cannabis plant and resin; extracts and tinctures of cannabis.”

What Exactly Will The WHO Review?

The November meeting will follow up on the work done this summer in June – namely to review CBD. According to these recommendations, the fortieth meeting of the Expert Committee on Drug Dependence (ECDD) in Geneva will include the following:

  1. Pure CBD should not be scheduled within International Drug Control Conventions.
  2. Cannabis plant and resin, extracts and tinctures of cannabis, Delta-9-THC and isomers of THC will all be reviewed in November.
  3. Finally, and most cheeringly, the committee concluded that “there is sufficient information to progress Delta-9-THC to a critical review…to address the appropriateness of its placement within the Conventions.” In other words, rescheduling.

Industry and Patient Impact

Translation beyond the diplomatic niceties?

The drug war may, finally, and at a level not seen for more than a century, come to a close internationally, on cannabis.

Here is why: The WHO is effectively examining both the addictive impact and “harm” of the entire plant, by cannabinoid, while admitting, already that current scheduling is inappropriate. And further should not apply to CBD.

This also means that come November, the committee, which has vast sway on the actions of the UN when it comes to drug policy, is already in the CBD camp. And will finally, it is suspected, place other cannabinoids within a global rescheduling scheme. AKA removing any justification for sovereign laws, as in the U.S., claiming that any part of cannabis is a “Schedule I” drug.

What this means, in other words, in effect, is that as of November, the UN will have evidence that its current drug scheduling of cannabis, at the international level, is not only outdated, but needs a 21stcentury reboot.

International Implications

From a calendar perspective, in what will be Canada’s first recreational month, Britain’s first medical one and presumably the one in that the German government will finally accept its second round of cultivation bids, the world’s top regulatory body will agree with them.

This also means that as of November, globally, the current American federal justifications and laws for keeping cannabis a Schedule I drug, and based on the same, will have no international legal or scientific legitimacy or grounding.

Not that this has stopped destructive U.S. policies before. See global climate change. However, and this is the good news, it is far easier to lobby on cannabis reform locally than CO2 emissions far from home. See the other potentially earth-shaking event in November – namely the U.S. midterm elections.

The global industry, in other words, is about to get a shot in the arm, and in a way that has never happened before in the history of the plant.

And that is only good news for not only the industry, but consumers and patients alike.

Marguerite Arnold

Canadian Regulatory Authorities Struggling To Define Rules

By Marguerite Arnold
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Marguerite Arnold

Now that Canada finally has a date for the recreational market start, the federal government, provinces and other regulatory authorities are beginning to issue guidelines and rules that are going to define the early days of the recreational industry.

These include regulations on retail trade, medical sales and use. However this is precisely where the confusion is growing.

The Government Will Continue To Run The Medical Cannabis System

In a move to protect patients, Health Canada has announced that it will continue to run the medical part of the market for at least the next five years. In good news for medical users, this announcement was made against calls from the Canadian Medical Association for the medical infrastructure developed on Canada’s path to recreational reform to be phased out. The reason, according to the CMA? Many doctors feel uncomfortable prescribing the drug because of a lack of research and a general lack of understanding about dosing.

Both patients and advocates have expressed support for continuing the medical system. This includes organizations like the Canadian Nurses Association who fear that if a focus is taken off of medical use, producers will ignore this part of the market to focus only on recreational sales.

In the future, after legalization, Health Canada will also continue to support more research and trials.

Provinces Are Setting Their Own Rules For Recreational Sales

Despite early statements, the recreational market is still in the throes of market creation and regulation. The laws are also changing in progress, a situation one regulator has described as building an airplane as it hurtles down the runway for take-off.

Athletes in Canada are still banned from using any kind of cannabis.For example, Ontario, the largest provincial market, is also delaying private sector sales in retail shops until next year. It is also moving away from a government-run dispensary model. Government sales will begin in October, but private dispensaries will have to wait until next April to open their doors (and existing operations will have to close their doors while they apply for licenses). This is also a reversal of the regional government’s position that it would only allow government-controlled shops to sell recreational cannabis.

But perhaps the largest unknown in both national and provincial policy outside of retail brick and mortars is in the area of online sales. A major fight is now brewing in many places where the established industry is now siding with the government about unregistered dispensaries (see Ontario) and established if not registered producers are competing directly with the government not only on main street but online as well.recreational users are beginning to sound alarms that they do not want the government to have so much personal information about them

Retailers with a web presence operating in a grey space will continue to pose a significant challenge to the online system now being implemented by the government for two reasons. Product availability (which will be far more limited on the government-run sites) and privacy.

Beyond the lack of diverse products and strains to be initially offered via the online government portals, recreational users are beginning to sound alarms that they do not want the government to have so much personal information about them – and point specifically to the differences in the regulated alcohol industry vs. the new regulations for the recreational cannabis market.

Beyond Market Rules, There Are Other Guidelines Coming

The Canadian military has now issued guidelines for active duty personnel and cannabis. It cannot ban it from soldiers entirely of course, and as it stands, the situation will be ripe for misunderstandings. For example, soldiers are prohibited from consuming cannabis 8 hours before any kind of duty, 24 hours before the operation of any kind of vehicle or weapon and 28 days before parachuting or serving on a military aircraft.

The only problem, of course, is being able to enforce the same. Cannabinoids, notably THC, can stay in the body for up to 30 days for casual users long after the high is over.

Athletes in Canada are still banned from using any kind of cannabis. The reason? They are subject to the Canadian Anti-Doping Program (CADP) under which the use of cannabis will still be prohibited.

That said, the Canadian Hockey League is reportedly now examining how to revise how it addresses the issue of medical use.

Epidiolex-GW

GW Pharma’s Enormous Price for Epidiolex

By Marguerite Arnold
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Epidiolex-GW

In a fascinating early August conference call with Seeking Alpha, British-based GW Pharmaceuticals finally revealed their retail price point for CBD-based drug, Epidiolex, as it goes into distribution in the U.S.

The drug is designed for the treatment of certain kinds of childhood epilepsy – although not all kinds. Also notable of course, is that GW Pharma’s “other” drug for treatment of resistant epilepsy failed in late stage trials in Eastern Europe earlier this year. It also knocked off 5% of the price of the company’s stock.The company is estimating it has a potential patient pool of between 25,000- 30,000 patients in the U.S.

British Advocacy Over Access And Pricing

The ineffectiveness of GW Pharma’s drugs for many patients (along with the cost charged for them) was responsible for pre-empting the entire access discussion in the UK this year. The mother of an epileptic British child tried to import a personal store of cannabis oil (produced by Canadian LP Tilray) only to have it confiscated at the airport this summer. Her son ended up in the hospital shortly thereafter.

The national uproar this caused pushed forward the country’s new medical cannabis policy– indeed drug rescheduling is due to go into effect in October. Conveniently, right as Epidiolex goes on sale in the U.S. (where cannabis remains a Schedule I drug).

The company is estimating it has a potential patient pool of between 25,000- 30,000 patients in the U.S.

Price Tags and Politics

What is the price of Epidiolex? $32,500 per patient, per year. If that sounds high, the company insists it is pricing the drug to be “in line” with other drugs for this segment of the market.

The majority of this cost will not be picked up by private health insurers but rather the federal governmentActually, according to industry analysis, this is about 70% more than the price of one comparable drug (Onfi), and slightly more expensive than Banzel, the two competing (non-cannabinoid based) medications now available in the U.S. for this market.

Here is the other (widely unreported) kicker. The majority of this cost will not be picked up by private health insurers but rather the federal government, which is also not negotiating with GW Pharma about that high price  (unlike for example what is going on in Europe and the German bid).

Why the difference?

Two reasons. The first is that Epidiolex has obtained “orphan drug” status (a medication for a disease that affects fewer than 200,000 patients in the U.S.) The second is that the majority of the insurance that will be picking up this tab is Medicaid. The patient pool will be unable to afford this. As a result, the bulk of the money will remit not from private insurance companies but rather federal taxpayers. And, unlike in say, Germany, none of this is pre-negotiated in bulk.

Epidiolex-GW
What is the price of Epidiolex? $32,500 per patient, per year.

Co-payments are expected to range from $5 to $200 per month per patient after insurance (read: the government) picks up the tab. This essentially means that the company plans to base participation at first at least on a sliding scale, highly subsidized by a government that has yet to reschedule cannabis from a Schedule I in the U.S.

Creating, in other words, a new monopoly position for GW Pharmaceuticals in North America.

A Hypocrisy Both Patients And The Industry Should Fight

The sordid, underhanded politicking that has created this canna monster is hardly surprising given the current political environment in both the U.S. and the U.K. right now. The people who benefit the most from this development are not patients, or even everyday shareholders, not to mention the burgeoning legitimate North American cannabis industry, but in fact highly placed politicians (like British Prime Minister Theresa May). Philip May, the PM’s husband’s firm is the majority shareholder in GW Pharma. Her former drugs minister (with a strong stand against medical cannabis) is married to the managing director of British Sugar, the company that grows GW Pharma’s cannabis stock domestically.

So far, despite a domestic outcry over this in the UK (including rescheduling), there has been no political backlash in the United States over this announcement. Why not?

Look To Europe For A More Competitive Medical Market

This kind of pricing strategy is also a complete no go in just about every other market – including medical-only markets where GW Pharma already has a footprint.

For example, German health insurers are already complaining about this kind of pricing strategy for cannabis (see the Cannabis Report from one of the country’s largest insurers TK – out earlier this year). And this in an environment where the government, in fact, does negotiate a bulk rate for most of the drugs in the market. Currently most German cannabis patients are being given dronabinol, a synthetic form of THC which costs far less.

GW logo-2On top of this, there are also moves afoot by the German government to begin to bring the costs of medical cannabis and medicines down, dramatically. And this too will impact the market – not only in Europe, but hopefully spark a debate in every country where prices are also too high.

The currently pending German cultivation bid for medical cannabis has already set an informal “reference” price of at most 7 euros a gram (and probably will see bid competitors come in at under half that). In other words, the government wholesale price of raw, unprocessed cannabis flower if not lightly processed cannabis oil is expected to be somewhere in the neighbourhood of 3-4 euros per gram come early next year. If not, as some expect, potentially even lower than that.

Processed Cannabis Medicine vs. Whole Plant Treatment

The debate that is really raging, beyond pricing, is whether unprocessed cannabis and cannabis oil is actually “medicine.” At the moment, the status quo in the U.S. is that it is not.

GW Pharmaceuticals, in other words, a British company importing a CBD-based derivative, is the only real “medical cannabis” company in the country, per the FDA. Everyone else, at least according to this logic, is placed in the “recreational camp.” And further, hampered still, with a lack of rescheduling, that affects everyone.

If that is not an organizing issue for the American cannabis industry, still struggling with the many issues inherent in the status quo (from insurance coverage and banking to national distribution across state lines) leading up to the midterms, nothing will be.

NCIA Releases Cannabis Testing Policy Guides

By Aaron G. Biros
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The National Cannabis Industry Association (NCIA) announced earlier this week the release of two white papers at their Cannabis Business Summit in San Jose, California. The first white paper, dedicated to cannabis testing policy, offers recommendations for state’s addressing cannabis testing, advising them on how to write rules for the testing market.“As wonderful as cannabis is, we’ll face a crisis together as an industry way too soon.  When it happens, the key will be how we respond to it,” says Moss.

The NCIA Policy Council is like a think tank for helping for and shape state and federal level policy related to cannabis. Kurshid Khoja, principal at Greenbridge Corporate Counsel and member of the Policy Council, says this release of the testing policy recommendations demonstrates how we can help shape policy on the state level. “As both an NCIA Board member and a member of the Policy Council, I am really excited about the Council’s work,” says Khoja. “Somewhat under the radar, the Policy Council is establishing itself as the think tank for the cannabis industry. On topics ranging from tax policy to pesticides to international competition, the Policy Council is churning out quality papers to raise awareness and educate policy makers in DC. With the release of its testing policy recommendations this week, the Policy Council is demonstrating that it could also help shape policy on the state level.”

The second white paper is meant to provide guidance to businesses dealing with crisis communications. The manual describes best practices in crisis communications, showing businesses how to identify and avoid potential public communications issues in the cannabis industry.

Jeanine Moss, Crisis Manual Subcommittee Chair of NCIA’s Marketing & Advertising Committee, says the creation of a crisis manual is meant to preempt problems we might face soon in the cannabis industry. “As wonderful as cannabis is, we’ll face a crisis together as an industry way too soon.  When it happens, the key will be how we respond to it,” says Moss. “That’s why we think it is so important for NCIA members to have an easy and practical guide that can not only help protect businesses during a crisis, but also the industry as a whole. This manual will help businesses prevent problems, keep issues from spiraling out of control, and share positive messages during times of stress.”

The guides will be presented this week at the NCIA’s Cannabis Business Summit & Expo in San Jose, California.

David Kluft headshot

How to Protect Your Trademarks When You Can’t Protect Your Trademarks

By David Kluft
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David Kluft headshot

Federal trademark registrations are invaluable tools for emerging businesses. They put the world on notice of a company’s name; they can secure nationwide priority over others using similar names; they distinguish a product in the marketplace; they provide crucial advantages in trademark infringement lawsuits; and they are instrumental in building goodwill. But if you sell cannabis, a federal trademark registration will not do any of those things for you … because you can’t get one.

Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations.The United States Patent and Trademark Office (USPTO) continues to refuse to register federal trademarks for cannabis businesses, even if the sale of cannabis is legal in the state where the businesses are located. The USPTO’s reasoning goes something like this: federal trademark law allows for the registration of trademarks associated with goods in “lawful” commerce, which means that the goods are not illegal under federal law. Cannabis, and its psychoactive component, THC, remain Schedule I substances under the federal Controlled Substances Act (CSA). Therefore, irrespective of state laws to the contrary, and irrespective of whether the federal law is actually enforced, the manufacture and sale of cannabis is not “lawful” commerce.

This reasoning is of fairly recent vintage. In 2009, by which time about fifteen states had legalized medical cannabis, Attorney General Eric Holder announced that the Drug Enforcement Administration would cease raids on state-sanctioned medical cannabis facilities. The USPTO followed Holder’s lead in 2010 and created a new category of acceptable goods and services for marks related to “medical marijuana.” Within months, however, the USPTO had retreated from this “mistake” and changed its practice manual expressly to preclude such registrations.

David Kluft headshot
David Kluft, partner in the Boston office of Foley Hoag, LLP

Many argue that the USPTO’s position is unjustifiable as a matter of public policy. Making it easier to infringe the trademarks of state-sanctioned businesses does not advance the purposes of the CSA, and it directly undermines a key goal of trademark law, which is to prevent the proliferation of confusingly similar trademarks. But the merits of these arguments have been lost on the USPTO, which continues to refuse to register marks for anything it perceives to be prohibited by the CSA.

So if you own a cannabis business, what can you do to protect your goodwill while the federal government maintains its current policy? Below are some ideas. Admittedly, none of them– individually or collectively – is a substitute for federal registration. But each of them is better than nothing, and all of them may help to establish your ownership and priority when and if the USPTO changes its policy.

  1. State Trademark Registrations. Each state has its own trademark registration system. State registration may offer protection from infringers within the state, or at least within the parts of the state where the registrant operates, and for that reason alone it is probably worth the small cost involved. However, state registration will have little to no efficacy outside the state. You cannot use a State A registration to file a lawsuit in State B, or to stop infringement in State B, or even to prevent conflicting registrations in State B. Additionally, most state trademark registrants, unlike federal registrants, do not benefit from presumptions of validity and ownership in the litigation context.
  2. Related Federal Registrations. Many cannabis businesses also pursue federal registrations for whatever aspects of their business are not prohibited by the CSA. For example, even though the USPTO refused the POWERED BY JUJU mark for cannabis vaporizers (because it was CSA-prohibited “paraphernalia”), it allowed the same company to register the same mark for “vaporizers for smoking purposes not for use with cannabis.” The USPTO has also allowed registrations for cannabis-related business consulting (e.g., CANNACARD; PRAIRIEJUANA); investment analysis (e.g., FORTUNE420); clothing (e.g., CANNABIS COUTURE, THE MARIJUANA COMPANY); and for CBD – as opposed to THC – derivatives (e.g., CBD LIQUID GOLD). Once the USPTO permits federal registrations for cannabis marks and the inevitable disputes over ownership arise, such federal registrations for these related products and services are likely to be highly persuasive evidence in the registrants’ favor. Moreover, even in the current legal climate, federal registrations (especially when cited in a demand letter) are of great practical use in convincing others not to use confusingly similar marks.
  3. Common Law Unfair Competition. Unfair competition is a state common law cause of action that was a precursor to modern trademark law, and it is still available to protect commercial goodwill even in the absence of a state or federal trademark registration. However, unfair competition law has similar territorial restrictions as state registration. In some cases, the protected territory may be even narrower, limited only to the area within which the plaintiff can prove consumer recognition of the mark.
  4. Other Intellectual Property Protection. Copyright law, unlike federal trademark law, has no “lawful” commerce requirement, and the U.S. Copyright Office regularly issues registrations for cannabis-related copyrights. While copyright will not protect a short phrase such as a business name, it will protect a creative logo design or original packaging, and can be very effective when it comes to getting infringing uses taken down from the internet. Note also that the USPTO does not appear to have the same qualms about legality when it comes to patents, and it often grants patent protection to useful, new and non-obvious inventions related to the cannabis industry.
  5. Save stuff. Finally, if you do nothing else, save stuff. Document that first sale; keep a copy of that first shipping invoice; and save that file containing your original packaging design. Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations. Your lawyer is going to ask you for proof of your first uses of the mark, and you don’t want your response to be a glassy stare. So keep your eyes on the eventual prize and stay ready.

Canada Legalizes Recreational Use of Cannabis

By Marguerite Arnold
1 Comment

In what has already been called an “historic” vote, the Canadian Senate voted to legalize cannabis on June 19.

C-45 – or the Cannabis Act, passed overwhelmingly in the Senate by a vote of 52-29. Canadian Prime Minister Justin Trudeau has subsequently announced that the legislation will pass into law on October 17. The intent behind the legalization effort was to cripple organized crime and protect minors.

Only one other country in the world has taken such a dramatic step – Uruguay.

Now what?

The Medical Discussion Is Just Getting Underway

While legalization advocates and the increasingly corporate industry have everything to celebrate, this does not necessarily change the other conversation on the ground – in fact it only strengthens it.

Clearly this is a blow against prohibition still in force just south of the border in the U.S. This move alone is also likely to drive the debate in an environment where California and other states are clearly thumbing their noses at the federal government and proceeding apace with its own (and largest) U.S.-based marketplace.

However, there is another topic floating around this conversation. If cannabis is “harmless” enough for recreational use, its use for medical purposes has become the third rail that is now driving the conversation in other places – most certainly Europe.In the meantime, Canadian firms are in an unparalleled position to enter global markets (as they have already begun to do) and set the tone and debate.

Here, full legalization is absolutely off the table as policymakers and scientists begin to seriously contemplate integration of cannabinoids into comprehensive health systems. This week’s dramatic announcement in the UK to that effect, which came the same day as the Canadian vote, is one indication of that. Germany’s own cautious foray into medical use is another. The change in the law last year mandating public health insurance coverage of the same has created a population of 15,000 patients in the last year with many more lining up to obtain it. This population of patients will reliably use more cannabis every month than even the most dedicated recreational consumer.

What Comes Next?

Four and a half years after Colorado took the plunge, the world of cannabis acceptance has clearly changed – and for good.

But what is the next step? Clearly the pressure is now on in the U.S. to consider rescheduling to at least a Schedule II if not Schedule III drug. Marinol, the synthetic version of the drug, became a Schedule III drug in 2010. Epidiolex, GW Pharma’s drug derived from cannabis, just received FDA approval too.  GW Pharma is the only British company allowed to develop cannabinoid medications. Let’s see how long that flag flies in the new commonwealth, with Canada fast behind the UK now as the two compete for the title of largest canna exporter. Globally.

The drug war, in other words, is finally coming to close for cannabisHowever full legalization – even in the United States and most certainly in Europe – is at least several years away.

In the meantime, Canadian firms are in an unparalleled position to enter global markets (as they have already begun to do) and set the tone and debate. How they will position themselves – as medical pharmaceutical or recreational companies – is another discussion that is still unfolding. Particularly because cannabis is a hybrid substance. And further, it is not entirely understood (nor has of course it been studied) where cannabis stops becoming a drug. If a consumer uses CBD, for example, as part of a wellness routine but  also heads off a more serious condition, is the use of the plant “medical” or “recreational?”

These are all questions now on the table. But at least they are.

The drug war, in other words, is finally coming to close for cannabis. But the horizons beyond that, widely unexplored, promise blue ocean opportunities for decades to come. And not “just” in recreational use, but in the amazing worlds of science, technology and medicine that now lie within reach.