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Multiple scientific studies and lab results have provided compelling evidence that terpenes and volatile metabolites in cannabis rapidly degrade when exposed to light, oxygen, heat, and time, and therefore, reduce the entourage effect that depends on a specific balance of cannabinoids and terpenes. Because of this, what the product label promises is not what the consumer is getting.

The clock starts ticking at harvest, where terpenes start degrading at a rapid rate if not handled and stored correctly. Evaporation, oxidation, or structural change can alter both the composition and balance of compounds.

Fragile Aromas, Fading Effects: The Science of Terpene Loss

Terpenes, the aromatic compounds responsible for cannabis’s distinctive scent and effects, are highly sensitive to environmental stress. Studies show that these same conditions also degrade cannabinoids like THC, which converts to the less potent CBN over time. A 2021 study in the Journal of Cannabis Research found that flower stored at higher temperatures lost both THC and terpene content, while a 2024 Scientific Reports study revealed that UV light can degrade THC and CBD within days.

Each terpene reacts differently to stress. The lighter ones, like pinene and myrcene, start to fade at even modestly warm temperatures. Mid-weight terpenes such as limonene (that bright citrus note) and linalool (the floral lavender scent) hold on a bit longer but still break down when air or light gets in. Even the heavier, more stable compounds—like caryophyllene and humulene—eventually oxidize when storage conditions are poor. As those delicate aromas disappear, so does much of what makes each strain unique, subtly changing the flavor, scent, and effects of the flower.

Beverages Under Attack

Cannabis-infused beverages are particularly susceptible to potency loss if not properly stored. One primary cause is oxidation, where THC degrades into cannabinol (CBN), a compound with significantly less psychoactive effect. This transformation can occur rapidly in beverages due to the increased surface area of emulsified droplets and the presence of oxygen in the liquid. For instance, a study by Vertosa demonstrated that exposure to light and oxygen can lead to a potency loss of up to 8 percent over 12 weeks in specific formulations.

Additionally, physical interactions between the beverage’s emulsion and packaging materials can exacerbate potency loss. Hydrophobic emulsion droplets may adhere to hydrophobic surfaces, such as the interior linings of aluminum cans, leading to a reduction in cannabinoid content over time. To mitigate these issues, it’s best to use antioxidant-rich formulations, select appropriate packaging materials, and maintain proper storage conditions to maintain the efficacy of cannabis-infused beverages.

This is why information on a certificate of analysis can differ dramatically from what a consumer ultimately experiences in the end product.

When product degradation occurs, your label no longer accurately represents the contents of the product, and now the consumer is not receiving what they were promised. The danger also here is in dosing; if THC turns into CBN and loses potency because of degradation, but the label says 10mg of THC, the customer will not have an accurate baseline for dosing.

Improper storage without temperature control can lead to microbes growing in your product, so moisture content and water activity will play a big role in sabotaging shelf stability.

Degradation in Concentrates and Formulated Products

Concentrates, vape oils, and infused products are also vulnerable, if not more so, to degradation. No matter the format, cannabinoids and terpenes are delicate molecules that break down under unfriendly environmental conditions. In fact, research shows that these environmental factors can change the very chemistry of the extract, reducing potency and altering the product’s intended effects.

According to SC Labs, which regularly tests and studies terpene stability, even “sealed” vape cartridges and concentrate jars can experience terpene evaporation and oxidation when exposed to warm or brightly lit environments. Over time, this not only dulls the aroma and flavor but can also create new by-products as terpenes and cannabinoids oxidize. Monoterpenes, the lighter, more volatile compounds that give cannabis its bright, complex aroma, are especially quick to disappear, while heavier sesquiterpenes linger longer but still degrade without proper storage.

A review by Broughton and colleagues (2023) on cannabinoid stability found that THC and CBD are highly unstable under poor conditions, and their breakdown accelerates in liquid or semi-liquid formats like vape oils and emulsions. Another study published in Chemical Research in Toxicology found that high temperatures used in dabbing or vaping can produce degradation by-products, including isoprene and benzene derivatives, especially when terpene concentrations are high. Even during extraction, terpene loss can occur; the transition from flower to concentrate often strips away the lighter aromatics, leaving a narrower and chemically altered profile.

All of this means that the degradation “clock” starts much earlier than most realize, beginning at harvest, accelerating through packaging and transport, and continuing on the dispensary shelf. Proper temperature control, opaque airtight containers, and low-oxygen environments are needed to maintain chemical integrity and preserve the original profile that the product label promises.

Packaging and Storage Impact: Terpene and THC Stability
Terpene and cannabinoid degradation in cannabis products is heavily influenced by packaging and storage conditions. The material and closure system of the packaging are critical for preservation. Semi-permeable plastics or non-airtight closures can allow water vapor and oxygen to penetrate, accelerating product degradation. Packaging specifications, such as water vapor and oxygen transmission rates, directly affect shelf life; cheaper options with higher transmission rates can drastically reduce product quality. Improper handling—leaving packages open, exposing them to heat, or subjecting them to light—can further degrade THC and terpenes, making all cannabis formats, from flower to edibles to concentrates, vulnerable to potency loss.

Retailers play an extremely important role in the preservation process. How cannabis is stored, moved, and displayed in the store can either protect or accelerate product degradation. One of the biggest offenders is the widely used deli-style showcase for selling cannabis flower, where buds are exposed to light and frequent handling, dramatically increasing the risk of terpene and THC loss. Even the most carefully cultivated and processed products can lose stability if retailers fail to maintain proper temperature, light protection, and airtight handling during storage, stocking, and transfer.

The bottom line: Protecting and preserving cannabis means keeping the supply chain cool, airtight, and out of the light, from processing all the way to the retail shelf, where it might impact the stability of your product and a consumer’s experience.

October 12, 2025

How Cannabis Moves Around the World: Inside the Global Supply Chain

By Pam Chmiel

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Global cannabis trade is well underway as legalized countries move forward to establish a supply chain infrastructure in a newly formed and rapidly evolving industry. At the forefront of transportation logistics is Cannabilog, an Israeli company led by pharmaceutical industry veteran Yoram Eshel. In an interview, he shared his playbook for building a compliant, efficient, and scalable supply chain for global cannabis import and export trade.

The Complex Web of Global Cannabis Trade Regulations

According to Eshel, not surprisingly, the global cannabis trade hinges on regulatory compliance and requires expertise to manage the movement of products across continents. Unlike pharmaceuticals, where harmonized frameworks such as those of the European Union apply across borders, cannabis regulations differ drastically from country to country.

Some nations permit imports, while others ban them entirely. Even within importing countries, the rules vary by product category. “Some will allow flower, others only oil or genetics,” Eshel explains. “It’s never a simple straight line.”

Every aspect of the supply chain requires specific licensing under narcotics laws, from cultivation and storage to import and export. Adding to the challenge is the constant evolution of these laws. For example, Thailand initially embraced its booming local market and export-friendly policies, but the new government abruptly switched course and limited cannabis use to medical purposes only. In addition, Thai producers seeking to export face roadblocks because European authorities do not recognize their local GACP certifications, which are based on “Good Cultivation and Harvesting Practices for Medicinal Plants.”

Eshel emphasizes that failing to keep pace with changing laws can be costly.

“If you export cannabis products to another country and they can’t clear customs, the shipment is destroyed. There’s no way back.”

Medical Cannabis Must Meet Pharmaceutical Standards

The second major pillar of the international cannabis trade is adherence to pharmaceutical-grade standards. “Governments treat medical cannabis as a medicine,” says Eshel. “It’s exactly like Tylenol or any other drug.”

Even though cannabis has not gone through the traditional drug registration process, regulators treat it as a pharmaceutical product, which means it must comply with strict Good Distribution Practice (GDP) requirements. That includes temperature control, data logging, and rigorous quality management throughout the supply chain. Every shipment is audited and must be approved by a Qualified Person (QP) on the receiving end before entering the market. If any quality parameters are unmet, the product is rejected.

Logistics providers like Cannabilog must operate under EU GDP certification and maintain pharmaceutical-grade systems and documentation. “We are audited constantly,” Eshel says.

The difference between the medical and recreational markets often catches producers off guard, especially those in countries like Canada, which has a more recreational mindset, similar to that of the US. “When you move into the medical space,” Eshel notes, “you suddenly need temperature-controlled vehicles, validated packaging, and specialized labeling. It requires training and experience.”

Globally, countries such as Germany, Australia, and Israel classify cannabis exclusively as a medical product. “It’s not even close to recreational,” Eshel stresses. “And in most countries, recreational use is still illegal and requires special licensing.”

Managing Cold Chain Logistics

After navigating complex regulations and meeting pharmaceutical-grade standards, the final piece of the international cannabis trade puzzle, says Eshel, is execution.

“You can have your licenses, your permits, your quality system, but if you don’t execute correctly, everything can fail.”

Execution means maintaining control over every step, including packaging, labeling, documentation, temperature regulation, and secure transportation. Shipments must move through carefully selected routes using temperature-controlled vehicles, warehouses, and flights, with continuous monitoring to ensure product integrity is preserved. In some countries, even armed escorts are required for security.

Eshel explains that cannabis logistics is not one-size-fits-all. Each product type, including genetics, flower, and concentrates, has unique handling and storage protocols. For instance, cannabis clones present one of the most challenging forms of transport. “Most clones are unrooted,” he says. “From the moment you cut them from the mother plant, you have three to four days to keep them alive. That requires special packaging, rapid shipping, and customs clearance to get them back into water in time.”

Temperature management is another major operational challenge. Most global regulators require cannabis products to be stored and transported between 59 °F and 77 °F, known in the pharmaceutical world as Controlled Room Temperature (CRT). In the United States, many recommend that temperatures should not exceed 70 °F for optimal cannabis preservation. Eshel clarifies that maintaining actual CRT conditions demands active temperature monitoring and specialized packaging, not just insulated boxes.

For every shipment, Cannabilog conducts a route risk assessment to evaluate potential environmental extremes along the supply chain. Eshel cites the example of shipments from Canada to Australia, where opposite seasons create complex thermal risks.

“Winter in Canada is summer in Australia, making temperature management a challenge from continent to continent; you have to plan for that,” he says.

To minimize exposure, Cannabilog uses pharma-grade airline partners that store and handle products under strict temperature conditions and prioritize loading and unloading to reduce time on the tarmac. Each shipment includes data loggers that record temperature throughout transit.

“If there’s an excursion outside the allowed range,” Eshel notes, “the products are rejected.”

European regulators, he adds, tend to enforce these standards more rigorously than their U.S. counterparts. While the United States has many GMP-certified cannabis facilities, most are not EU-GMP certified, which limits their ability to export to Europe when the time comes, even though the differences are not that big.

Eshel contrasts this with Canada, where much of the market remains recreational. While medical exporters adhere to strict temperature control and quality management, domestic recreational products are often transported under looser conditions.

“You can’t count on the weather,” he says. “Temperature management is part of the medical cannabis infrastructure.”

The Last Mile in Cannabis Preservation

Most of Cannabilog’s shipments are from a cultivation or production facility to a licensed wholesaler or distribution center, rather than directly to pharmacies.

“We verify that every facility we deliver to is properly licensed and has temperature-controlled storage,” Eshel says.

Cannabilog provides insurance coverage for every shipment, including losses related to temperature excursions or other transport issues. However, ultimate product responsibility remains with the manufacturer, much like in the pharmaceutical industry.

“If something goes wrong, it’s the manufacturer’s duty to investigate, and if needed, issue a recall,” Eshel explains.

Each transfer of custody, whether at the port, airport, or distribution warehouse, marks a shift in responsibility defined by the buyer-seller agreement. Still, Eshel stresses that all parties must adhere to Good Distribution Practices (GDP) and maintain detailed documentation, including lab tests and Certificates of Analysis (COAs), to ensure transparency and traceability.

Without mandatory cold-chain standards, products are often transported in “hot trucks,” leading to product degradation. Eshel agrees: “The last mile is often the weakest link in the supply chain infrastructure as the industry strives to build a cold chain custody from seed to sale.”

Even last-mile deliveries must be temperature-controlled. The difference, Eshel says, comes down to mentality. “In Europe, it’s purely medical. There’s no confusion between recreational and medical use, so cannabis is treated just like any other medicine.”

September 26, 2025

From The Lab

An Inside Look at Germany’s Cannabis Supply Chain With The Grünhorn Group

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On April 1, 2024, Germany launched Pillar 1 of its adult-use legalization framework, building on its established medical cannabis program that has been in place since 2017. Since then, the number of medical patients has surged, as prescriptions remain the only fully legal access point for cannabis aside from home cultivation or membership in non-commercial private clubs, both still limited by incomplete regulations. Unlike the United States, where dispensaries are the backbone of cannabis sales, Germany maintains a more tightly regulated model: patients must secure a doctor’s prescription and fulfill it through a pharmacy.

The next stage, Pillar 2, is expected to introduce licensed retail outlets for adult-use sales, eliminating the requirement for prescriptions. However, with the Christian Democratic Party now in office and maintaining a strong stance against cannabis legalization, these plans face significant uncertainty. While advocates remain hopeful for progress, the CDU’s opposition could delay, restrict, or even reverse parts of the rollout, leaving the future of Germany’s adult-use market in question.

In the meantime, Germany is laying the groundwork for a national infrastructure rooted in its medical system, a stark contrast to the fragmented, state-by-state patchwork in the U.S. This centralized approach not only offers greater oversight and consistency but also positions Germany as a potential model for other European nations exploring reform.

At the center of this rapidly evolving landscape is the Grünhorn Group, one of the country’s most influential players. With an estimated 20 percent market share serving between 5–7 million patients in a nation of 84 million, Grünhorn has established a vertically integrated supply chain that spans importing biomass from global producers, EU-GMP-certified manufacturing, and robust distribution networks. Beyond production, the company operates Germany’s largest online pharmacy platform, giving patients access to products from multiple manufacturers. According to Matthias Fischer, Managing Director of Canymed, Grünhorn’s distribution partner, the group generated €33 million in revenue in 2024, provided medicine to approximately 60,000 patients, and engaged with nearly 6,000 prescribing physicians.

Prioritizing Data Collection for Medical Research For Grünhorn, data is at the core of both its medical mission and its business strategy. The company systematically collects patient feedback on the effects of its products—whether for sleep, anxiety, focus, or other conditions—to inform evidence-based product development. This feedback loop allows Grünhorn to collaborate closely with cultivation partners in designing strains that balance cannabinoids and terpenes to address specific therapeutic needs.

Beyond patient-level insights, Grünhorn is also investing heavily in analytical research. The company operates a gas chromatograph to precisely measure and map the cannabinoid and terpene composition of imported biomass, creating a detailed strain database. To date, Grünhorn has cataloged between 400 and 500 strains of interest, providing one of the most comprehensive genetic and chemical libraries in Germany’s cannabis sector.

“I think the future lies in predicting and knowing which cannabinoids will effectively address specific health indications,” says Fischer, underscoring the company’s long-term vision of turning raw data into targeted, science-driven therapies.

Germany is an Import Market

While Germany has licensed domestic cultivation, led by producers such as Tilray, Demecan, and Aurora, the country remains heavily dependent on imports. According to Fischer, the quality of German-grown cannabis has not yet reached the standards set by established cultivation markets in Canada, Portugal, Denmark, and Colombia. To maintain product consistency and meet patient expectations, Grünhorn partners with a Canadian grower, underscoring the ongoing importance of international supply in Germany’s cannabis ecosystem.

Economic factors also weigh heavily on domestic production. High energy costs make large-scale cultivation within Germany particularly challenging, pushing wholesale prices above those of imported flower. As a result, most of the market is supplied by international partners who can cultivate at scale more efficiently and deliver the product at a lower cost.

This reliance on global supply chains is not unique to Grünhorn.

Cantourage, one of Germany’s largest medical cannabis manufacturers, has built its strategy around imports, maintaining partnerships with 40 cultivators across 17 countries. Together, these dynamics reinforce Germany’s role as one of the world’s largest import-driven cannabis markets, even as it develops its own infrastructure.

Bottlenecks in the Pharmacy System

Germany’s pharmacy network, spanning both retail and online channels, remains the cornerstone of cannabis dispensing in the country. As patient demand surges, many traditional pharmacies have launched digital platforms to streamline order management. Grünhorn has leaned into this shift, expanding its online pharmacy delivery while forging partnerships with local pharmacists who see cannabis as a valuable revenue driver.

Yet the system is under strain. Because only licensed pharmacists can legally fulfill prescriptions, they often face capacity challenges. Compounding, bottling, labeling, and testing must still be performed manually, creating bottlenecks in day-to-day operations. To keep pace, some pharmacists pre-produce standardized products based on everyday patient needs, despite the model being designed for on-demand compounding. Recognizing these inefficiencies, Grünhorn is investing in custom machinery and software solutions to help pharmacists scale production without compromising compliance, while maintaining oversight of quality and safety.

Another hurdle is product consistency. With prescriptions filled at thousands of independent pharmacies, often by third-party providers, slight variations in formulation are inevitable. “It’s like having 6,000 different factories manufacturing your product,” Fischer explains. To address this, Grünhorn is working on standardized fulfillment models to align independent pharmacies with the quality benchmarks already set by its own online platform.

To further streamline the process, Grünhorn has integrated telemedicine into its supply chain. Patients can now connect directly with physicians, obtain prescriptions, and submit them seamlessly for fulfillment. This innovation helps address a recurring frustration: doctors inadvertently prescribing products that are out of stock, despite having access to inventory databases, ultimately reducing delays and ensuring patients remain on consistent treatment plans.

Partnerships and Opportunities Grünhorn’s pharmacy data reveals that 20-30 percent of products generate 80 percent of revenue, indicating a potential for future product consolidation, according to Fischer. For investors, this presents an opportunity to fund medical brands with proven track records that are poised for growth and expansion.

In addition to producing its wholesale product line, Grünhorn is well-positioned and equipped to assist other brands looking to enter the German marketplace and welcomes co-branded product partnerships. They forged a partnership with Somai Pharmaceuticals, based in Portugal, resulting in a two-year, €10 million manufacturing and distribution deal.

Fischer also believes AI will play a significant role in managing the industry in the future, suggesting an opportunity for those looking to enter the German market through technological innovation.

“The biggest challenge we must overcome in the next couple of years is to generate data and medical studies,” Fischer emphasizes. “We have many products with nice ideas, interested patients, and qualifying physicians, but we need more studies and proven evidence to present to new doctors and insurance companies, who are still challenging cannabinoid therapy and requesting data studies.”

September 26, 2025

Blockchain-Powered Cannabis CTV Unlocks Advertising Opportunities

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The next evolution of marketing in the cannabis industry has arrived.

Global Compliance Application Corp. (GCAC), a publicly traded Canadian company specializing in blockchain technology, has launched Citizen Green, a connected TV (CTV) channel designed to educate viewers on various aspects of the cannabis industry. The content will cover a broad range of topics, including cannabis health and wellness, business insights, hemp, and psychedelics.

Available worldwide, Citizen Green’s programming extends beyond North America, featuring international content, such as an Australian show that focuses on building homes with industrial hemp. This global reach positions the channel as an ideal platform for advertisers seeking to establish and expand their international cannabis brands.

As consumers increasingly cut the cord on traditional cable, smart TVs are gaining traction, particularly among the 50+ demographic — an untapped, canna-curious audience. According to Statista, 40 percent of Americans stream TV content, while traditional cable and broadcast TV each account for around 20 percent.

Building the Citizen Green CTV Channel with Strategic Content Partnerships

Citizen Green’s President, Steve Peterson, is spearheading the strategy for the new CTV channel, focusing on shows with built-in audiences — after all, we live in an influencer-driven world. A key component of this strategy was GCAC’s acquisition of Weed and Whiskey, a Dallas-based CTV Roku channel. This acquisition laid the foundation for what would become Citizen Green, rebranded to appeal to a broader, health-and-wellness-focused audience beyond the niche of cannabis culture. The channel is now available on multiple platforms, including Apple, Android, Fire TV, and Android TV.

Citizen Green’s lineup also includes Grunt Style, a San Antonio-based military-themed T-shirt company founded by veterans, known for their patriotic slogans. The Grunt Style Foundation creates content with a strong following in the military community, anchoring Citizen Green’s veteran-focused messaging.

Cannabis Coast to Coast News, a popular cannabis news show anchored by former sports broadcaster Jimmy Young, boasts over a million views and is also an “anchor tenant” in Peterson’s strategy, which he likens to filling a shopping mall. “To attract vibrant tenants, I needed strong key tenants, like the Macys and Nordstroms in a mall,” Peterson explains. “There’s a lot of cannabis content out there that doesn’t have the following it deserves, and now I’m filling out the stores in the mall with a variety of content — from music and movies to podcasts, entertainment, and education — creating revenue opportunities along the way.”

Peterson is confident that Citizen Green will be a powerful brand-building and revenue-generating platform for content providers through advertising and e-commerce initiatives.

Cannabis Advertising on CTV

Cannabis brands face significant advertising restrictions on traditional TV due to regulations imposed by the Federal Communications Commission (FCC), which governs radio, satellite, and cable communications. Because cannabis remains federally illegal, the FCC restricts its advertising. However, connected TV (CTV) operates under different rules. Unlike conventional broadcast television, the FCC has limited authority over internet-delivered or streaming content, providing a new opportunity for cannabis marketers.

“We’ve established clear guardrails to ensure compliance and avoid any issues,” explains Peterson. “Transparency is key — we want to make sure there are no false or misleading statements.”

Leveraging Ethereum Blockchain for Enhanced CTV Advertising

According to Advertising Week, the future of CTV advertising is filled with opportunities, especially with AI and blockchain driving advancements in targeting, fraud prevention, and contextual relevance. As a blockchain company, Citizen Green is poised to take CTV advertising to the next level by making it more interactive while ensuring transparency and compliance within the cannabis industry.

Through blockchain technology, Citizen Green provides real-time engagement between consumers and advertisers using smart contract mechanisms. Viewers can scan QR codes on their TV screens to access exclusive deals, a product’s Certificate of Authority (COA) to verify lab testing, or landing pages for brand stories. CTV’s video-on-demand feature enables viewers to pause and engage with a brand they find interesting, making it a powerful tool for brand building. Once a coupon is downloaded into the viewer’s e-wallet, advertisers can retarget that customer, much like email marketing. The only information advertisers receive is the e-wallet ID, keeping the transaction anonymous except for details on how and where the coupon was redeemed.

Additionally, Citizen Green allows viewers to shop directly through the platform by hovering over images with their remote, bringing up a shopping cart for immediate purchase. Brands can also use on-demand printing services to sell branded merchandise, adding further value to their CTV advertising efforts.

Advertising Opportunities on Citizen Green CTV

Citizen Green offers a range of advertising opportunities beyond its regular programming, including a pay-per-view model for live-streaming events such as concerts, educational seminars, and lectures. This provides advertisers with multiple channels to promote their brands. The platform will also feature a mobile app for easy access to cannabis content.

Unlike traditional linear TV, CTV operates as a digital platform, utilizing first- and third-party data to target audiences wherever they stream. This means advertisers can reach specific viewer segments and retarget consumers with tailored CTV campaigns. Like other digital advertising platforms, performance can be tracked through tools like Google Analytics, enabling brands to measure customer journeys and return on investment (ROI). Its interactive features make Citizen Green a robust demand and lead-generation tool.

“Integrating blockchain-driven ads into streaming video content, where allowed, and delivering them to a targeted, scalable market is the next evolution of advertising and revenue generation in the cannabis industry,” says GCAC North America President Steve Peterson. Streaming TV provides advertisers with access to a broad demographic, making it a prime platform for those seeking to stand out in the competitive cannabis market.

Hear Steve Peterson’s full interview on the Innovating Cannabis Podcast featured on Citizen Green TV.

September 25, 2025

From The Lab

How To Grow Your Minor Cannabinoid Category

By Shane Johnson

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Over the course of three years, across 13 regulated U.S. markets, BayMedica, a company specializing in the production and distribution of rare cannabinoids, identified three key insights into market demand for these compounds. First, products featuring THCV posted a 23.7% higher average retail margin than comparable products without THCV in this dataset. Second, gummies remain the dominant—and most manageable—format for launching rare cannabinoids. Third, CBC is underused, and there’s no widely adopted standard for how companies combine and label these ingredients.

How should distributors, brands, and retailers consider this new data when integrating minor cannabinoids into their business offerings?

Distributors: Reduce Friction and Raise Confidence Distributors sit at the choke point where product clarity becomes market velocity. They should start by standardizing the information they pass downstream. A single-page spec for every SKU—ingredient identity, milligrams per unit, pack sizes, storage notes, and a scannable link to the current COA—turns questions into confidence at the store level.

They should keep a live COA library and make it a habit to swap links as labs update results, so retailers aren’t hosting outdated paperwork. Regarding assortment, mirror what the dataset suggests: produce gummies first, with at least one THCV gummy and one CBC gummy from different brands to compare packaging clarity, price bands, and return reasons.

Brands: Lead with Clarity and Consistent Specs For brands, the focus should be to lead with labels that say plainly what cannabinoids are in the product and how much per unit, and make the QR to the current COA impossible to miss. Because gummies dominate in the data, they’re a smart place to validate demand before branching into capsules, beverages, or tinctures. When expanding formats, explain the differences in everyday terms to avoid confusion for end users regarding cannabinoid profiles.

Retailers: Make the Shelf Make sense Shoppers buy what they understand at a glance, and the dataset helps show how consumer preferences are skewing. Organize shelves and displays by format first, such as grouping gummies, then by featured ingredient within that set, so a THCV row sits next to a CBC row and a multi-ingredient row.

At eye level, keep the labels readable and the COA QR code scannable; a small counter card that explains, “Scan this to view the current certificate of analysis,” does more to build trust than any lengthy description. Train staff on a short, factual script: “This product features THCV, the format is a gummy, and there are X milligrams per piece; you can scan the COA here.” The goal is clarity, not conjecture.

Education Wins Distributors win by moving clean information as reliably as they move boxes. Brands win by making specs so clear that sell-in becomes routine. Retailers win by arranging shelves the way people actually shop and by measuring what truly drives performance. Start with a tight set of THCV and CBC gummies and make labels and COAs effortless to read and understand for consumers. That’s how the minor cannabinoid category grows.

To review the full report findings, please request a copy here.

September 20, 2025

From The Lab

MJBowl Comes For New York Brands

By Pam Chmiel

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MJBizCon, the largest and one of the most influential gatherings in the cannabis industry, is adding a new element to its lineup: a cannabis competition.

This year marks the debut of the MJBowl awards on December 4th in Las Vegas, produced in partnership with Budist, the first-ever review platform to combine consumer feedback with expert ratings from seasoned professionals.

Elevating Cannabis Standards

Often compared to Wine Spectator, the influential magazine known for expert ratings, detailed tasting notes, and industry news, Budist applies a similar model to cannabis.

“Cannabis needed a professional ratings and review platform that elevates a brand’s standards,” said Claudio Miranda, co-founder and COO of Budist. “Just like wine, coffee, or craft beer, cannabis deserves a transparent, unbiased system for measuring quality.”

The inaugural event will feature separate competitions in California and New York, with winners crowned in each state. While future editions may pit markets against one another, for now, the MJBowl is designed as a celebration of excellence rather than a direct state-to-state showdown, since cannabis remains federally illegal and cannot be shipped across state lines.

Driving Premiumization in Cannabis

Beyond ratings and reviews, Budist is also tackling one of the industry’s most persistent challenges: the lack of education around products. Miranda points out that cannabis is often reduced to a race to the bottom, where products are judged primarily on low prices and high THC percentages.

By introducing expert-driven evaluations, Budist aims to help consumers understand why some products command a higher price, just as wine drinkers learn to distinguish between a $10 and a $100 bottle. The platform also shines a spotlight on cultivators and brands that invest in craftsmanship, such as high-quality sun-grown flower, which is often undervalued in today’s market.

“Education is key,” Miranda explained. “Some consumers want value products, and that’s fine. But others are willing to pay more for craftsmanship and quality, and they want to know why that product is worth the premium. That’s where we come in—helping consumers make sense of the differences.”

Budist vs. Ganjier: Complementary Roles

Because Budist is often compared to the Ganjier program, Miranda clarifies the distinction and how they complement one another.

Ganjier, founded by renowned cultivator Kevin Jodrey, is the industry’s first sommelier-style certification program. It provides deep product knowledge, professional credentials, and evaluation training similar to earning a degree.
Budist is a platform. It gives certified experts, including many Ganjiers, an outlet to apply their skills in the marketplace.

In addition to expert reviews, Budist also includes consumer ratings, creating a dual system modeled after platforms like Rotten Tomatoes, where both critics and everyday users contribute.

“Both perspectives are valid,” Miranda said. “Our professionals might include Ganjiers, longtime competition judges, journalists, or educators, but they all share a commitment to standardized, unbiased product evaluation. At the same time, consumer input provides balance and insight into what everyday users value.”

Together, programs like Ganjier and platforms like Budist help professionalize cannabis evaluation, giving the industry tools to recognize quality while also educating consumers about the nuances that distinguish one product from another.

California vs. New York: Different Stages, Different Stories

One of the most compelling aspects of the MJBowl will be seeing how winners differ between California and New York.

California has had a legal cannabis framework for over 20 years and is a hub of innovation for brands, product formats, retail experiences, and cultivation and extraction methods. New York’s regulated market, by contrast, is still in its early stages. While its traditional market is longstanding, the legal side has fewer brands and less product diversity, making it more of a developing market than a mature one.

It’s not just about the products. Each MJ Bowl competition reflects the culture of its state. In New York, social equity license holders make up a majority of the market, accounting for approximately 54 percent across cultivation, manufacturing, and retail. Many of these operators come from the legacy market and support one another as they transition into the legal industry. Growers supply brands, brands support retailers, and retailers provide visibility for their community peers. This longstanding network of collaboration is now thriving in the regulated space, giving New York’s cannabis scene a uniquely cooperative spirit.

California, by contrast, brings decades of product innovation and a deep bench of brands, with judges steeped in West Coast cannabis culture. New York’s judging team is being built from within its own community. “This isn’t about California going to New York and telling them what we think of their products,” Miranda said. “It’s about letting each market speak for itself, from producers to consumers and professionals alike.”

How Judges Decide What Wins

According to Miranda, winning products don’t follow a single formula; trends, innovation, and what’s bubbling up in the market all matter. Years ago, hydrocarbon extracts such as shatter and wax dominated competitions, while today’s connoisseurs favor solventless products like rosin. Edibles have evolved from simple brownies to precisely dosed chocolates, beverages, and nanotech-infused products. Judges also reward innovation across hardware and packaging, not just flower or concentrates.

Budist is working to elevate standards by implementing a 100-point evaluation rubric that scores aroma, flavor, appearance, and effect, weighted differently according to category. For example, concentrates are judged heavily on aroma and flavor, while medicinal capsules are judged primarily on whether they deliver the promised effect.

The scoring system also recognizes that consumer expectations vary widely across categories. “You can’t measure rosin against distillate and call one better than the other; they’re different products serving different purposes,” Miranda explained. That’s why products compete within subcategories, ensuring fair comparisons and allowing each style to shine on its own merits.

For the MJBowl, there are five main competition categories:

Flower
Pre-rolls
Vaporizers
Concentrates
Edibles

Within these, entries are divided into 11 subcategories—such as distillates, live resin, solventless extracts, chocolates, gummies, and beverages to ensure recognition across the full spectrum of cannabis products.

What Winners Receive

In addition to honoring winners on the national stage at MJBizCon, the MJBowl ups the stakes with event tickets, an awards show entry, and a travel voucher to Las Vegas. Winning brands also gain major visibility through post-event press coverage, Budist social promotion, and amplification from MJBiz.

Retail partners in each state, such as The Artist Tree, with 10 California locations, and Gotham, with four dispensaries in New York, have committed to showcasing winners on their shelves.

“This isn’t an award that disappears once the show ends,” Miranda said. “It translates directly into new opportunities for brands. So we hope everybody enters.”

Hear Claudio Miranda’s full interview on the Innovating Cannabis Podcast and YouTube.

September 19, 2025

Cannabusiness Sustainability

Taking Cannabis Global: Inside Somai Pharmaceuticals’ Multi-Country Strategy

By Pam Chmiel

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In an industry defined by local operators struggling to stay afloat and confined within their borders, Michael Sassano, founder and CEO of Somai Pharmaceuticals, has created a blueprint for scaling cannabis worldwide with pharmaceutical discipline and regulatory agility. With headquarters in Lisbon and operations in 12 countries today, Somai is preparing to reach 18 by year’s end.

The company has already secured distribution in Germany, the UK, Italy, Australia, and New Zealand, with France recently authorizing Somai’s products for its growing patient program. By the end of this year, six more markets, including parts of Eastern Europe, will be added to the roster.

“Every new country is like starting a company from scratch,” Sassano said in an interview. “You have to understand not only the national regulations but also how local medical communities perceive cannabis, how prescriptions are written, and what distributors are required to do. There’s no one-size-fits-all approach.”

Operating across borders has taught Somai how to adapt to widely different healthcare environments. In Germany, cannabis is covered by insurance in some instances, requiring negotiations with health funds. In the UK, the market is dominated by private clinics and cash-paying patients. Australia and New Zealand have highly structured import programs, while France is still moving cautiously through pilot projects.

This incremental, country-by-country buildout has given Somai real-world experience operating across multiple regulatory systems, positioning the company as one of the most credible voices on international cannabis harmonization.

High Standards Are Key

At the core of Somai’s global strategy is its pharmaceutical manufacturing facility in Lisbon, certified under EU-GMP (Good Manufacturing Practice). This certification is a mandatory requirement for selling medical-grade cannabis products in the EU and most international markets.

“EU-GMP is the gold standard,” Sassano says. “Without it, you simply can’t access the bulk of the world’s regulated medical markets.”

This distinction highlights one of the biggest differences between the US and international cannabis industries. In the United States, the market is fractured by a state-by-state model, with companies forced to duplicate infrastructure in every new state because products can’t cross state lines. By contrast, Somai can centralize manufacturing in Portugal and distribute to multiple countries. Products produced in Lisbon are eligible for export across Europe, Australia, New Zealand, South Africa, Brazil, and other compliant markets.

Unlike US operators who may quickly launch products like gummies with minimal oversight, a EU-GMP market-authorized medicine requires approximately two and a half years of validation, stability testing, and regulatory review before reaching patients. The payoff is consistency, safety, and the ability to meet the expectations of regulators, physicians, and patients alike.

By owning EU-GMP manufacturing and pairing it with distribution partnerships across 12 (soon 18) countries, Somai is among a select handful of cannabis companies capable of bringing pharmaceutical-grade products to the global market.

Strategic Partnerships, Cultivation, and Research

Somai’s global growth relies on a carefully balanced supply chain strategy that combines in-house cultivation with an extensive network of international partners. In addition to cultivating indoor flower at its own facilities, it also works with about 15 cultivation partners worldwide.

In most European markets, pharmaceutical cannabis must move through distributors before reaching pharmacies. Somai works with leading distribution companies, ensuring products reach doctors and patients in compliance with local laws.

Research partnerships are also part of Somai’s business strategy. The company collaborated with a university in Lisbon to conduct clinical research evaluating its manufacturing process, ensuring consistency from one product to another and from batch to batch. This validation of consistency is crucial for Somai to claim medical status and prove it.

“There are really only five global operator brands today in the market, and then a lot of localized brands, clinic brands, and white-label brands,” Sassano notes. “Our focus is on building a pharmaceutical brand with true international reach.”

Pharmaceutical Rigor from the Start

“In pharmaceuticals, quality is binary,” Sassano explains. “Either you meet the exacting standards or you don’t. There is no middle ground.”

This applies from raw material sourcing to batch release protocols. Unlike the US, which often requires independent third-party lab testing, the EU herbal medicine framework permits EU-GMP-certified facilities, such as Somai, to conduct all necessary testing in-house. Somai operates its own EU-GMP lab, a rarity in cannabis but standard in pharma.

The lab operates under strict oversight from a Qualified Person (QP), who leads the independent Quality Assurance (QA) department. The QA/QP team conducts regular onsite reviews of all procedures and documentation, ensuring that production, laboratory testing, and batch releases adhere to rigorous protocols. “Nobody can influence the lab or its reports,” Sassano emphasizes. Each product undergoes multiple checks: raw material testing, formulation verification, and random dosage confirmation.

Even packaging and labeling are treated with pharmaceutical precision. Labels must comply with each country’s language and dosage requirements, and patient information leaflets are tailored to the regulatory environment. “It might seem like a small thing, but one mistake on a label can stop a shipment at customs and delay patient access by months,” Sassano notes.

Sassano supports the rigorous framework. “Doctors will only prescribe, and patients will only trust cannabis if it meets the same standards as any other medicine on the shelf.”

Navigating a Patchwork of Regulations

Some nations allow doctors to prescribe freely, while others limit access to a narrow list of conditions. Even within the same country, patients may face dramatically different experiences.

Sassano points to Italy as a case in point. While prescriptions are permitted, the way pharmacists prepare medicines can vary region by region. “A patient in Milan might get a different preparation than a patient in Rome, even with the same prescription,” he explains. “That creates inconsistency for patients and makes it extremely challenging for producers to standardize.”

The difference between magisterial preparations and finished dosage form medicines illustrates the unevenness of the system. In newer markets, such as the UK and Australia, patients now receive finished dosage products that are fully packaged, labeled, and ready to use, just like any other pharmaceutical. But in older systems, pharmacists were often required to compound medicines themselves, a legacy from the early years when manufacturers didn’t exist and flower was the only product available.

Germany still clings to this model. Pharmacy compounding laws require pharmacists to fill vape cartridges or re-bottle oils instead of allowing manufacturers to deliver standardized, child-proof, finished dosage forms directly. “In some cases, they’re literally just swapping a cap, calling it magisterial prep, and charging patients double,”

Sassano notes. “It’s an archaic system that needs to go.”

Despite these hurdles, Sassano sees eventual harmonization as inevitable. “Europe cannot sustain a market where 27 countries have 27 different systems,” he argues. “Over time, patient demand and cross-border trade will push regulators toward standardization. Finished dosage forms are the future.”

Global Market Access

Somai’s EU-GMP certification positions it for international distribution. Unlike the US state-by-state system, where borders are closed and infrastructure must be duplicated in each market, EU-GMP allows a single production hub to supply multiple countries. As a recognized pharmaceutical standard, it enables Somai’s products to move across borders into any country that accepts EU-GMP medicines.

This flexibility is critical because cannabis is treated differently around the world. Europe and many international markets have strong herbal medicine traditions, so cannabis extracts fall under the herbal pharmacopoeia as true medicines and are subject to rigorous pharmaceutical rules. In contrast, the US market is closed off under FDA oversight, which historically favors synthetic cannabinoids over botanical extracts.

Still, Somai is positioning itself for future entry. “We’re working with the U.S. Department of Veterans Affairs because there is no federally approved cannabis extract made domestically,” Sassano says. “If cannabis is ever integrated into federal programs, it will need to be a registered medicine, not a dispensary product.”

Beyond the U.S., Somai has already secured FDA-style registrations in countries like Thailand, is pursuing approvals in Japan, and has entered France’s government-controlled medical program, where cannabis is subsidized for patients.

“These are true medicines that can travel cross-border,” Sassano says. “Wherever cannabis is accepted as a medicine, we want to be there.”

Conclusion

Michael Sassano’s insights offer a roadmap not just for his company but for the entire industry. “Cannabis is a medicine first,” he emphasizes. “Our responsibility is to show regulators, doctors, and patients that it can be produced, prescribed, and trusted like any other pharmaceutical. Once that trust is established, global acceptance will follow.”

Quick Q&A Recap

Q: Who is Michael Sassano?
A: Michael Sassano is the founder and CEO of Somai Pharmaceuticals, a company scaling cannabis globally with pharmaceutical-grade standards.

Q: What is Somai Pharmaceuticals’ global footprint?
A: Somai currently operates in 12 countries and plans to expand into 18 by the end of the year.

Q: Why is EU-GMP certification important in cannabis?
A: EU-GMP (Good Manufacturing Practice) is the gold standard for pharmaceutical products and a requirement to sell medical cannabis in most international markets.

Q: How does Somai’s model differ from U.S. cannabis companies?
A: Unlike U.S. operators confined by state borders, Somai can centralize manufacturing in Portugal and distribute across multiple countries under EU-GMP rules.

Q: What are the main challenges of international cannabis expansion?
A: Each country has unique regulations, healthcare systems, and distribution requirements, forcing companies to adapt market by market.

Q: How does Somai ensure pharmaceutical quality?
A: The company operates its own EU-GMP-certified lab with strict Quality Assurance oversight, ensuring consistency, safety, and regulatory compliance.

Q: What role do partnerships play in Somai’s strategy?
A: Somai balances in-house cultivation with about 15 global cultivation partners and works with leading distributors to reach doctors and patients.

Q: What is the future of cannabis regulation in Europe?
A: Sassano believes eventual harmonization is inevitable, with standardized finished dosage forms replacing outdated pharmacy compounding practices.

Q: Is Somai targeting the U.S. market?
A: Yes. Somai is collaborating with the U.S. Department of Veterans Affairs and preparing for potential federal approval of cannabis-based medicines.

October 13, 2023

Sustainability in Cannabis Packaging: Balancing Preservation and Environmental Impact

By Jack Grover

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Even a cursory review of cannabis reveals that the market has been notoriously wasteful, polluting the environment with chemical fertilizers, misused pesticides, contaminated plants, and—perhaps most problematically—thoughtlessly excessive packaging.

The industry is in dire need of sustainable practices, and the easiest way to start an impactful new trend is from the outside in: a.k.a., adjusting how you’re parceling your products.

Honing in on sustainable packaging isn’t just a good move for the environment. It’s also more cost-effective, less labor-intensive and allows you to provide consumers with the best possible version of your flower—no matter how far through the supply chain it’s had to travel before hitting retail shelves.

Cannabis has progressed: It’s time for its packaging to do the same

By the time legalization began sweeping the nation, the industry already had several decades of experience operating underground. With that discretion came a lot of built-in habits around not attracting attention, and for packaging, the focus was solely on not looking like a cannabis product.

An overabundance of plastic isn’t cutting it anymore—not only when it comes to environmental friendliness, but for the integrity of the product itself.

Today, increased legalization grants operators the freedom to expand without the fear of being seen, and as a result, there’s no longer any excuse for wasteful packaging to be the industry’s norm. Glass jars, Ziplocks and an overabundance of plastic isn’t cutting it anymore—not only when it comes to environmental friendliness, but for the integrity of the product itself.

“I’ve been designing packaging in the cannabis industry since 2013, and a lot of trends have come and gone. We used to put flower in plastic Rx jars and paper envelopes. In general, there was a lot of waste: excess boxes and jars that all get thrown away,” says Legacy’s Chief Cannabis Officer Ryan Hedrick. “And when consumers pull the products out of those containers, your marketing doesn’t remain intact. The box gets thrown away, and now they’re just carrying around a labelless jar. Not only is it bad for the environment, but it isn’t helping you promote your brand at all.”

How sustainable storage optimizes curing and shelf life of flower

As for the curing process, Hedrick used to use airtight buckets, which both took up a lot of room and wasn’t at all effective for maintaining cannabis’s ideal humidity levels. He’s since switched to passive atmospheric packaging, which utilizes increasingly popular technology to keep humidity—and sustainability—in mind. “The buckets weren’t letting any moisture out. On top of that, you can imagine how much room 165 five-gallon buckets takes up in a grow space,” Hedrick says.

The same goes for long-term storage. With humidity-controlled bags, operators can rest assured that their product will maintain its efficacy, because as soon as that pack is sealed, the humidity level is guaranteed to stay the same.

Cannabis brand Lava Leaf Organics relies on passive atmospheric packaging for efficient storage—mainly because of the reduction in carbon footprint and increase in terpene preservation.

“When we think about the energy involved in packaging and shipping large amounts of heavy glass jars compared to TerpLoc bags, it was an easy decision for us,” said Lava Leaf Organics CEO Tony Martinez.

“The bags are recyclable, and compared to glass jars with child-resistant lids, they’re much better at preserving terpenes. Using sustainable packaging allows us to put our best foot forward and to better control our customer’s brand experience.”

Tips for making sustainable storage work for you

Sustainable storage is an environmentally-responsible move for the cannabis industry to make, but when weighing the pros and cons of a big switch like this, operators should also keep in mind how positively it will impact their end product, consumer’s experience, and, subsequently, their industry-wide reputation.

Placing your products in eco-friendly bags is just the start. There are definitely more tips and tricks operators can take advantage of to prolong the use of sustainable materials and ensure they’re leaving as small a footprint as possible. For example, Hedrick’s team reuses their passive atmospheric packaging for maximum efficiency—especially when it comes to bulk storage or curing.

“We mark all of our storage bags with the original strain, so we can reuse that bag for the same strain as long as it passes testing along the way. When I do so, I take a mixture of SaniDate and water to make sure everything is sanitized and clean,” Hedrick said. “That allows me to reuse them for about 3-4 months’ worth of curing and storage. You can reuse a bucket in that same way, but when it’s time to replace it, you’re still spending another $15-$17.”

Sustainable, humidity-controlled packaging is also ideal for testing consistency. If you send in five buckets of the same strain to be tested, you run the risk of them all sitting at wildly different humidity levels, which means some might pass, and others might be rendered trash.

All of the environmental benefits aside, using sustainable packaging just makes cents—literally. “Essentially, I’m saving a minimum of half a million in packaging every year. That’s my entire staff’s salary for two months. That’s incredible, impactful, significant savings that can make a huge difference for a business trying to expand.”

October 4, 2023

Cannabis in Texas: A Look Ahead to Legalization and Beyond

By Abraham Finberg, Rachel Wright, Simon Menkes

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A Uniquely Texas Approach to Cannabis

The last few decades have seen the United States move forward state-by-state with the legalization of cannabis. Every state is charting its own unique path, and nowhere is this truer than with the state of Texas.

The Lone Star State has made its way from being staunchly anti-cannabis to expressing its own blend of temperance and careful action, combined with a medical cannabis program that’s expanding.

Any predictions regarding the future of cannabis in Texas must take into consideration both the state’s past and its values. In the end, it’s clear that Texas will embrace cannabis in its own individual way and at its own pace, but with a timeframe that appears to be arriving sooner rather than later.

The Debate Continues

108 years after Texas first banned cannabis and the debate continues. Even though Texas has a medical cannabis program, cannabis is still illegal in the state, with possession of less than two ounces a misdemeanor. Possession of more than four ounces is a felony punishable by a $10,000 fine and from 2-99 years in jail.

Texas’s 2015 Compassionate Use Act created the state’s medicinal cannabis program, which now makes treatment available only in the form of low-THC oil of a maximum strength of 1%, and only to a small list of serious conditions: epilepsy, terminal cancer, autism, multiple sclerosis, amyotrophic lateral sclerosis (ALS), seizure disorders, incurable neurological disorders such as Alzheimer’s, Parkinson’s, Huntington’s Disease and PTSD.

Support for a Stronger Medicinal Cannabis Program Comes from Prominent Politicians

Texas Department of Agriculture Commissioner Sid Miller, a leader in Texas politics and one of the architects of Texas’s burgeoning hemp industry, has encouraged Texas legislators to create a more complete medical cannabis program.

“I am for medical use,” Miller said in an August 2023 interview. “We have so much good science now. And we know what diseases it can treat, yet our legislature picks winners [and] losers. If you’ve got this disease, you can get treated, but if you’ve got this disease and cannabis will help you, you can’t get treated. We need to let the doctor-patient relationship make those medical decisions and not some bureaucrat or some politician … I’m not a supporter of recreational marijuana, but if someone has a condition that this chemical will help, they should be able to use it.”

Texas Representative Joe Moody from El Paso has worked for many years to promote adult-use cannabis. He recently co-authored two pro-cannabis bills, HB 1805, which would have expanded covered medical conditions and defined a per-doze THC limit instead of a percentage limit on cannabis products, and HB 218, which would have decriminalized cannabis.

Although both bills passed the House of Representatives, they were stopped in the Senate. The next session of the state legislature, which happens every two years, won’t begin until January 2025, so that is the earliest any change in cannabis statutes could take place.

The Future of Medicinal Cannabis

There are currently only three dispensaries in Texas. They appear to be servicing the state’s 268,000 square miles through a series of weekly drop-offs to satellite “partner locations,” which are open an average of only two days per week. This is not exactly a corner-CVS type of arrangement, and the need for new dispensaries for the state’s 61,000 registered patients is high.

The Texas Department of Public Safety took applications for new medical dispensary licenses between January and April 2023. Tony Gallo, managing partner of Sapphire Risk Advisory Group, which helped twelve licensees prepare their applications during this round, anticipates around ten new dispensaries being approved.

All licensees must be vertically integrated – product must go from seed-to-sale under one license – and each applicant paid $7,356 to apply. If approved, the applicants will owe another $488,520.00 for a two-year period.

Many knowledgeable Texans, including Agriculture Commissioner Sid Miller, predict a fully-functioning medicinal cannabis market is just a few years away. “If you can get it to the floor, probably 70% or 80% of the legislative body will vote in favor of it because we have such good science on it. [Originally] we thought, ‘Well, that’ll lead to recreational use or more drug use,’ but it’s not. It’s a plant derivative. Medical marijuana is not nearly as addictive as some of the prescription drugs we use now.”

The Push is On for Adult-Use

Representative Joe Moody believes that adult-use is not too far away in Texas’s future either, and that the way to speed its arrival is through education. He recently sponsored HB 3652, the Texas Regulation & Taxation of Cannabis Act, in order to start a dialogue on what a retail cannabis market will look like in Texas.

On April 26, 2023, Moody and his bill received a public hearing in the House Committee for Licensing and Administrative Procedures in which many points about setting up a retail market in Texas were discussed. A 10% cannabis tax was proposed by Moody, to be split evenly between the state and local government. Licenses would be required for those growing, selling, transporting or testing cannabis, although individuals would be allowed to grow or possess it in small amounts for personal use. Legal sale and consumption would be limited to adults 21 years of age and older, like alcohol. And of course, cannabis possession would be decriminalized.

How Strong is the Market Potential for Cannabis?

One indication of how strong even a fully-open medical cannabis market might be in Texas came during Moody’s hearing from the testimony of Estella Castro. Castro owns two medical dispensaries in Oklahoma just across the state line from Texas and suspects most her buyers are from Texas. “They have a Texas plate and they come in and buy $500 to $600 worth of product,” she said. Her two shops generated $158,000 in taxes to Oklahoma, most of which she believes should have gone to Texas.

New Mexico recently legalized adult-use cannabis, and the small towns along the Texas-New Mexico border are seeing a lot of traffic from Texas. In the first week of adult-use sales, the New Mexico did adult-use sales totaling $6 million. Of those sales, $1.5 million came from dispensaries in 5 small border towns.

Florida and California Suggest the Scope of a Mature Cannabis Market in Texas

The potential for a fully developed medical cannabis market can be gleaned by studying the next smaller state, Florida, which has an open, mature, medical cannabis market. Florida, with 20 million people, is about two-thirds the size of Texas, which has 30 million inhabitants. Right now, Florida boasts 700,000 cannabis patients whereas Texas only has 61,000. Simple math suggests a fully open, mature, medical cannabis market in Texas could see over a million patients gain relief.

California is the nation’s most populous state with 39 million inhabitants, and its cannabis revenue gives some perspective as to the size of a Texas adult-use market. 2024 estimates of California’s cannabis revenue suggest the Golden State will see $7.2 billion legal cannabis sales while the illegal market will generate another $6.4 billion for a total of $13.6 billion. With a reduction for Texas’s smaller size, these numbers suggest a fully-mature Texas adult-use cannabis market could generate close to $10 billion in annual revenue.

Large adult-use states like California and New York are notorious for having an illicit market that threatens to derail their legal, tax-paying cannabis license holders. Texas’s strong business-friendly focus should help deter such an illicit marketplace from gaining too significant a foothold.

The Back-Door Cannabis Industry

Meanwhile, an extensive “back door” cannabis industry is in full swing in Texas. CBD shops now sell delta-9 (fully psychoactive) THC/CBD gummies and tinctures made from the hemp plant, which is the low THC-version of the cannabis plant. These THC/CBD products adhere to the 0.3% definition of hemp as required by the federal 2018 Farm Bill and are legal and available for over-the-counter or online purchase in Texas’s CBD stores.

Current estimates are that there are over 5,000 hemp, CBD and cannabinoid retailers, manufacturers and distributors in Texas that employ more than 50,000 workers and generate more than $8 billion in annual revenue. With these numbers, the 1,100+ licensed Texas hemp growers are sitting well where they are and are poised to take advantage of a legal adult-use market if and when Texas decides it is ready to go down that path.

Next Steps for Texas’s Cannabis Market

People familiar with Texas’s cannabis market believe that adult-use is a ways down the road for the Lone Star State, and that the near-term focus needs to be on decriminalization and achieving an unincumbered medical cannabis system. Tony Gallo of Sapphire Risk Advisory Group advises the Texas cannabis community to concentrate on “increasing what conditions are allowed for medicinal use” and “increasing what areas of the state it’s allowed to be sold.”

There is a groundswell of public support for decriminalizing cannabis as well as for allowing adult-use. A December 2022 poll showed 55% of Texans support legalizing at least small amounts of cannabis for recreational purposes, and another 28% said it should be legal for medicinal purposes.

A February 2023 poll by the University of Houston found that 82% of Texans support the Legislature passing a bill that would allow people to use marijuana for a wide range of medical purposes with a prescription. The belief that cannabis is a “gateway drug” that would make people more likely to use other illegal drugs is losing traction as well – 70% said it would make people less likely to do so or would have no impact.

Final Thoughts

The demand for cannabis in the Lone Star State is strong. With the likelihood of a fully-functioning medical cannabis market coming soon, and the possibility of decriminalization not too far behind, it’s clear that the future of cannabis is bright in Texas.

While the legalities around adult-use will take longer to work out, and the place of hallucinogenic hemp in the mix needs to be examined and clarified, one fact is certain. The path forward that Texas cannabis takes will certainly be a unique one, as unique and as individual as the Texan people themselves.

September 26, 2023

Texas Takes Advantage of the 2018 Farm Bill

By Abraham Finberg, Rachel Wright, Simon Menkes

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When Texas Governor Greg Abbott signed Senate Bill 339, also known as the Texas Compassionate Use Act, into law in 2015, many Texans expressed frustration. The purpose of the act was to allow the THC treatment of illness via prescription, opening up the state’s medicinal cannabis market. However, the act authorized only low-THC cannabis oil (maximum strength 0.5% THC) and only for epilepsy. Many Texans with other medical conditions that would have benefited from cannabis were unable to access it, and the dosage was seen as weak and minimally effective.

In addition, those residents hoping the Lone Star State would take a significant step forward towards legalizing adult-use cannabis experienced a rude awakening. A long road was still left to travel before recreational cannabis sales would be allowed to take place.

The Texas Department of Public Safety, which oversees the Compassionate Use Program, did a study of other state’s compassionate use programs and determined that three licenses were the minimum needed to supply the state’s epilepsy population. They updated Health and Safety Code to require a minimum of three licenses, and only three licenses were issued in 2017. This, for a state with a population of 29 million.

Then, the following year, a quiet revolution began. It started with the passage of the federal 2018 Farm Bill, signed into law by President Donald Trump as the Agriculture Improvement Act of 2018. Among its many provisions were several sections dealing with the production of hemp. Because the hemp plant and the cannabis plant are the same plant, the Farm Bill defined hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3 per-cent.”

The Farm Bill also removed hemp from the Drug Enforcement Administration’s schedule of Controlled Substances and authorized states to submit plans to administer hemp programs, making sure to keep the THC of plants and products under 0.3%.

The Texas Department of Agriculture, led by its enthusiastic three-term commissioner, Sid Miller, was instrumental in promoting the hemp section of the 2018 Farm Bill. Upon the bill’s passage, Miller backed Texas House Bill 1325 which authorized the production, manufacture, retail sale and inspection of industrial hemp crops and products. HB 1325 passed unanimously in June 2019, and the Texas Department of Agriculture opened the online hemp licensing and permit application process on March 16, 2020. The cost to be licensed by the Department of State Health Services is a yearly fee of $258; a licensee either purchases a license to grow, manufacture and sell hemp products wholesale or a license to sell hemp products retail in-store and online.

The hemp is tested before harvesting to make sure the THC level stays below 0.3%; otherwise, it must be destroyed. (The type of THC being measured is delta-9 THC, the same THC used in cannabis flower, gummies and other products being sold in fully legal states.)

That being said, what the hemp farmers realized was that, by keeping the delta-9 THC content of their hemp and hemp oil to 0.3%, they could still make CBD gummies with strong psychoactive properties. A typical 4-gram gummy would support 10mg of THC and a 6-gram gummy would support THC of 15mg, while still maintaining the 0.3% legal hemp concentration. This is a similar number of milligrams of THC found in cannabis gummies sold in cannabis shops in states such as California.

The Texas state list of approved hemp varietals reads like the list of cannabis flower sold in a dispensary: names like Hemp Kush, Bubba Kush and Blu Haze abound. Additionally, because it is still hemp by the 0.3% strength definition, there is no age limit to purchases and products may be purchased online by anyone and mailed anywhere.

There were 1,123 licensed hemp growers in Texas in 2021. “We started out growing hemp for CBD oil,” commented Agriculture Commissioner Miller recently. “Typical farmers saw a lot of profit in doing that.”

A 2023 study revealed that the Texas hemp industry currently employs more than 50,000 workers and generates more the $8 billion in annual revenue. Also, between $19.1 and $22.4 billion in economic activity is generated by the 5,033 hemp, CBD and cannabinoid retailers, manufacturers and distributors in Texas.

“It is vital that Texas continues to support the hemp industry, which has become a key component of the state’s overall economy,” said Cynthia Cabrera, chair of the cannabinoids council of the Hemp Industries Association and chief strategy officer at Austin-based Hometown Hero CBD. “The results of this study demonstrate the positive economic and social impact of hemp in Texas, and that its small businesses and farmers need to be protected to continue to thrive, providing jobs and tax revenue.”

In 2020, smokable hemp, including vapes, was banned in Texas, a ban that was upheld by the Texas Supreme Court. The only allowed consumable hemp products are oil-based products, like tinctures and gummies.

The only allowed consumable hemp products are oil-based products, like tinctures and gummies.

Agriculture Commissioner Miller lobbied against the ban and feels it puts Texas hemp farmers in an uncompetitive position compared to other state’s hemp farmers. “After three years of administering our hemp program, it’s clear the legislature’s effort to ban smokable hemp products has reduced our competitiveness to other states and harmed our farmers,” he said earlier this year. “The ban on smokable hemp products has confused and discouraged licensed growers and forced out processing facilities on which those growers depend.”

Meanwhile, the medicinal cannabis industry has expanded, at least in terms of the conditions for writing a medical prescription and the allowable THC strength. Terminal cancer, autism, multiple sclerosis, amyotrophic lateral sclerosis (ALS), seizure disorders, and incurable neurological disorders such as Alzheimer’s, Parkinson’s, and Huntington’s Disease were approved in 2019, and in 2021, House Bill 1535 raised the THC concentration from 0.5% to 1.0% and added PTSD to the list of approved medical conditions.

From January to April 2023, Texas Department of Public Safety took applications to open more dispensaries at an applicant cost of $7,356 for each application. All licensees must be vertically integrated – product must go from seed-to-sale under one license. If approved, the applicants will owe another $488,520.00 for a two-year period. This will allow them the opportunity to serve almost 61,000 registered patients who are supported by 747 physicians approved by the Regulatory Services Division to prescribe low-THC cannabis through the Compassionate Use Program.

Tony Gallo, managing partner of Sapphire Risk Advisory Group, helped twelve of the recent license applicants prepare their applications. In addition, his firm has been assisting cannabis companies in Texas since 2017. 420CPA reached out to Tony for an “in-the-trenches” view of cannabis in Texas. Gallo believes an adult-use market is a long way away.

“Concerning growth in the Texas cannabis industry,” Gallo says, “two factors come into play — increasing what conditions are allowed for medicinal use, and increasing what areas of the state it’s allowed to be sold.”

420CPA co-founder Abraham Finberg CPA suggests hemp companies position themselves to enter the cannabis market should state legislators and the people of Texas have a change of heart and decriminalize cannabis and authorize an adult-use market. “Hemp entrepreneurs can start with CBD products as they’re doing now and expand their offerings as the laws change,” Finberg says.