Tag Archives: policy

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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
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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.

Former Deputy Attorney General James M. Cole

James Cole to Keynote Cannabis Business Summit

By Aaron G. Biros
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Former Deputy Attorney General James M. Cole

The National Cannabis Industry Association (NCIA) announced last week their newest addition to the Cannabis Business Summit: former Deputy Attorney General James M. Cole as the keynote speaker. Cole will be joining Aaron Smith, executive director of NCIA, for a fireside chat where they will take a look at his legacy in the cannabis industry as author of the Cole Memo. They will also discuss his predictions for the future of federal cannabis policy under the Justice Department.

Former Deputy Attorney General James M. Cole
Former Deputy Attorney General James M. Cole

As author of the Cole Memo, James Cole was an instrumental figure in the fight for legal cannabis in the United States. The Cole Memo was a policy directive issued in 2013 that instructed U.S. attorneys general in states that have legalized cannabis to use their resources in prosecuting Controlled Substances Act offenses only if they violated specific federal enforcement priorities. The Obama-era policy directive essentially served to protect state-legal medical cannabis businesses from federal raids and prosecution as long as they were abiding by the state’s regulations.

In January of 2018, current Attorney General Jeff Sessions rescinded the Cole Memo. The new policy leaves it up to federal prosecutors to determine how they wish to enforce federal law and the Controlled Substances Act.

At the Cannabis Business Summit, James Cole will share insights on the future of the Justice Department’s policy towards cannabis. “The Justice Department holds a huge number of cards when it comes to the future of our industry, but its inner workings and internal debates on cannabis policy aren’t well understood,” says Smith. “That’s what makes this keynote with Jim Cole so exciting and valuable for anyone trying to predict what comes next for the industry.”

This year’s 5th annual Cannabis Business Summit will be held in San Jose, California on July 25 to 27. Cole and Smith’s keynote discussion will be held on Thursday, July 26.

Ex-Im Europe: The Face of the Current Cannabis Market

By Marguerite Arnold
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In the United States, the idea of transporting cannabidiol (CBD), let alone medical cannabis across state lines is still verboten. As a result, a patchwork of very different state industries has sprung up across the map, with different regulatory mandates everywhere. While it is very clear that California will set the tone for the rest of the United States in the future, that is not a simple conversation. Even in-state and in the present.

In the meantime, of course, federal reform has yet to come. And everywhere else, there is a very different environment developing.

In Canada, “territorial” reform does mean there will be different quality or other regulatory guidelines depending on where you are. The main difference between the territories appears to be at point of retail – at least for now. Notably, recreational dispensaries in the East will be controlled by the government in an ABC package store model. That will not be the case across all provinces however. Look for legal challenges as the rec market gets underway.

EU flagIn Europe, the conversation is already different – and based on the realities of geopolitics. Europe is a conglomeration of federally governed nation-states rather than more locally administered territories, supposedly under federal leadership and control (as in the US). That said, there is common EU law that also governs forward reform everywhere now, just as it hindered national drug reform until a few years ago on the cannabis front.

However, now, because European countries are also moving towards reform but doing so in very different ways in an environment with open borders, the market here is developing into one of the most potentially fertile (and experienced) ex-im markets for the cannabis plant anywhere. On both the consumer and medical fronts, even though these labels mean different things here than they do elsewhere.

The Drivers

Medical reform in Europe basically opens the conversation to a regulated transfer of both non and fully loaded narcotic product across sovereign national borders. This is already happening even between nation-states where medical (read THC infused) cannabis is not federally legal yet, but it is has been accepted (even as a highly restricted drug). This means that Europe has already begun to see transfer of both consumer and medical product between states. In the former case, this is also regulated under food and cosmetic safety laws.

Cannabis in this environment is “just another drug.”While a lot of this so far has been via the strategic rollout of the big Canadian LPs as they attempt to carve up European cannabis territory dominance and distribution like a game of Risk, it is not limited to the same.

Pharmaceutical distributors across Europe are hip to the fact, now, that the continent’s largest drug market (Germany) has changed the law to cover cannabis under insurance and track its issuance by legal prescription. So is everyone in the non-medical CBD game.

As a result, even mainstream distributors are flocking to the game in a big way. Cannabis in this environment is “just another drug.” If not, even more significantly, a consumer product.

Game Time

The race for Europe is on. And further, in a way that is not being seen anywhere else in the world right now. And not just in pharmacies. When Ritter Sport begins to add cannabis to its famous chocolate (even if for now “just” CBD) for this year’s 4/20 auf Deutschland, you know there is something fundamental and mainstream going on. Lidl – a German discount grocery chain that stretches across Europe, has just introduced CBD-based cannabis edibles – in Switzerland.

As a result of this swift maturation, it is also creating from the beginning a highly professional industry that is essentially just adding cannabis to a list of pharmaceutical products already on a list. Or even just other grocery (or cosmetic) items.

spektrum logo
Spektrum, Alcaliber and Canopy are part of some of the larger deals in Europe

In general, and even including CBD, these are also products that are produced somewhere in Europe. As of this year, however, that will include more THC from Portugal, Spain and most certainly Eastern Europe. It will also mean hemp producers from across the continent suddenly have a new market. In many different countries.

This means that the industry itself is far more sophisticated and indeed used to the language and procedures of not only big Euro pharma, but also mainstreamed distribution (straight to pharmacy and even supermarket chains).

It also means, however, understanding the shifting regulations. In general, the focus on ex-im across Europe is also beginning to standardize an industry that has been left out of the global game, on purpose, for the last 100 years. Medical cannabis, grown in Spain under the aegis of Alcaliber (a major existing opioid producer) can enter Germany thanks to the existing partnership with Spektrum and Canopy, who have a medical import license and source cannabis from several parts of Europe at this point. It also means that regular hemp producers, if they can establish the right brand and entry points, have a new opportunity that exists far outside of Switzerland, to create cross-European presence.

And all of this industry regulation is also setting a timeline, if not deadline, on other kinds of reform not seen elsewhere, anywhere, yet.

Massachusetts Prepares for Adult-Use

By Aaron G. Biros
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Last month, the Cannabis Control Commission, the regulatory body overseeing Massachusetts’ newest industry, finalized their regulations for the market. At the beginning of this month, the state began accepting applications for business licenses. Now with the full implementation of adult-use sales on the horizon, businesses, regulators, consumers and local governments are preparing themselves for the legalization of adult-use cannabis. Sales are expected to begin June 1st.

On March 29th, the Cannabis Control Commission announced their finalized rules were filed, published and took effect. Leading up to the filing, the Commission reports they held 10 listening sessions, received roughly 500 public comments and conducted 7 hearings for roughly 150 policy decisions. The license categories that businesses can apply for include cultivator, craft marijuana cooperative, microbusiness, product manufacturer, independent testing laboratory, storefront retailer, third-party transporter, existing licensee transporter, and research facility, according to the press release.

What separates Massachusetts’ rules from other states’ rules are a few of the license categories as well as environmental regulations, as Kris Kane highlights in this Forbes article. Experimental policies, like the microbusiness and craft marijuana co-op licenses, Kane says, are some tactics the Commission hopes may help those affected by the drug war and those who don’t have the capital and funding required for the larger license types.This is a groundbreaking reform previously unseen in states that have legalized cannabis. 

The Commission will also establish a Social Equity Program, as outlined in the final rules (section 17 of 500.105). That program is designed to help those who have been arrested of a cannabis-related crime previously or lived in a neighborhood adversely affected by the drug war. “The committee makes specific recommendations as to the use of community reinvestment funds in the areas of programming, restorative justice, jail diversion, workforce development, industry-specific technical assistance, and mentoring services, in areas of disproportionate impact,” reads one excerpt from the rules (section 500.002) identifying the need for a Citizen Review Committee, which advises on the implementation of that Social Equity Program.

This is a groundbreaking reform previously unseen in states that have legalized cannabis. Massachusetts may very well be the first state to actively help victims of the prohibition of cannabis.Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.

For environmental rules, Kane notes the Commission is taking unprecedented steps to address energy usage in the cultivation process, pushing the industry to think about environmental sustainability in their bottom line and as part of their routine regulatory compliance. He says the Commission mandates a 36 watts-per-square-foot maximum for indoor cannabis cultivators.

On Monday, April 2nd the state began accepting applications for businesses seeking licensure. Within a few days, nearly 200 businesses have applied. That number is expected to grow significantly over the next few weeks.

While businesses continue applying for licenses, local governments are preparing in their own way. Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.

A couple weeks ago, the City Council of Springfield, Massachusetts passed a six-month moratorium on cannabis sales, citing the need for more time to draft local regulations for businesses first. “I believe the moratorium is in place to make sure that we get it right the first time,” Councilor Adam Gomez, chairman of the council’s Economic Development Committee told MassLive. “We don’t have a chance to get it right the second time. The residents of Springfield supported this.” There are also talks of a potential temporary ban in Truro, MA.

Meanwhile in the city of Attleboro, ABC6 News reports Mayor Paul Heroux is “working to make his city marijuana friendly as city councilors work to draft regulation ordinances.” In Peabody, two businesses just received approval to begin operating as medical dispensaries.