Tag Archives: production

Sustainable Plastic Packaging Options for Your Cannabis Products

By Danielle Antos
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A large part of your company’s brand image depends on the packaging that you use for your cannabis product. The product packaging creates a critical first impression in a potential customer’s mind because it is the first thing they see. While the primary function of any cannabis packaging is to contain, protect and identify your products, it is a reflection of your company in the eyes of the consumer.

For all types of businesses across the US, sustainability has become an important component for success. It is increasingly common for companies to include sustainability efforts in their strategic plan. Are you including a sustainability component in your cannabis business’ growth plan? Are your packaging suppliers also taking sustainability seriously? More and more, consumers are eager to purchase cannabis products that are packaged thoughtfully, with the environment in mind. If you are using or thinking about using plastic bottles and closures for your cannabis products, you now have options that are produced from sustainable and/or renewable resources. Incorporating sustainable elements into your cannabis packaging may not only be good for the environment, but it may also be good for your brand.

Consider Alternative Resins

Traditionally, polyethylene produced from fossil fuels (such as oil or natural gas), has been used to manufacture HDPE (high density polyethylene) bottles and closures. However, polyethylene produced from ethanol made from sustainable sources like sugarcane (commonly known as Bioresin) are becoming more common.

HDPE bottles produced with Bioresin.

Unlike fossil fuel resources which are finite, sustainable resources like sugarcane are renewable – plants can be grown every year. For instance, a benefit of sugarcane is that it captures and fixes carbon dioxide from the atmosphere every growth cycle. As a result, production of ethanol-based polyethylene contributes to the reduction of greenhouse gas emissions when compared to conventional polyethylene made from fossil fuels, while still exhibiting the same chemical and physical properties as conventional polyethylene. Although polyethylene made from sugarcane is not biodegradable, it can be recycled.

Switching to a plastic bottle that is made from ethanol derived from renewable resources is a great way for cannabis companies to take positive climate change action and help reduce their carbon footprint.

For instance, for every one ton of Bioresin used, approximately 3.1 tons of carbon dioxide is captured from the atmosphere on a cradle-to-gate basis. Changing from a petrochemical-derived polyethylene bottle to a bottle using resins made from renewable resources can be as seamless as approving an alternate material – the bottles look the same. Ensure that your plastic bottle manufacturer is using raw materials that pass FDA and ASTM tests. This is one way to help reverse the trend of global warming due to increasing levels of carbon dioxide (CO2) in our atmosphere.

PET bottles derived from 100% recycled post-consumer material.

Another option is to use bottles manufactured with recycled PET (polyethylene terephthalate). Consisting of resin derived from 100% recycled post-consumer material, it can be used over and over. This is an excellent choice because it helps keep plastic waste to a minimum. Regardless of the resin you select, look for one that is FDA approved for food contact.

Consider Alternative Manufacturing Processes

Flame Treatment Elimination

When talking about plastic bottle manufacturing, an easy solution to saving fossil fuels is eliminating the flame treatment in the manufacturing process. Historically, this process was required to allow some water-based adhesives, inks, and other coatings to bond with HDPE (high density polyethylene) and PP (polypropylene) bottles. Today, pressure-sensitive and shrink labels make this process unnecessary. Opt out and conserve natural gas. For instance, for every 5 million bottles not flamed approximately 3 metric tons of CO2is eliminated. This is an easy way to reduce the carbon footprint. Ask your cannabis packaging manufacturer if eliminating this process is an option.

Source Reduction (Right-Weighting)

When considering what type and style of bottle you want to use for your cannabis product, keep in mind that the same bottle may be able to be manufactured with less plastic. A bottle with excess plastic may be unnecessary and can result in wasted plastic or added costs. On the other hand, a bottle with too little plastic may be too thin to hold up to filling lines or may deform after product is filled. Why use a bottle that has more plastic than you actually need for your product when a lesser option may be available? This could save you money, avoid problems on your filling lines, and help you save on your bottom line. In addition, this will also help limit the amount of natural resources being used in production.

Convert to Plastic Pallets

If you are purchasing bottles in large quantities and your supplier ships on pallets, consider asking about plastic pallets. Reusable plastic pallets last longer than wood pallets, eliminate pallet moisture and improve safety in handling. They also reduce the use of raw materials in the pallet manufacturing process (natural gas, metal, forests, etc.) aiding in efforts towards Zero Net Deforestation. And, returnable plastic pallets provide savings over the long term.

If You Don’t Know, Ask Your Cannabis Packaging Partner

It is important to find out if your plastic packaging partner offers alternative resins that are produced from renewable sources or recycled plastics. It is also prudent to partner with a company that is concerned about the impact their business has on the planet. Are they committed to sustainability? And, are they eliminating processes that negatively affect their carbon footprint? What services can they provide that help you do your part?

When you opt to use sustainably produced plastic bottles and closures for your cannabis products, you take an important step to help ensure a viable future for the planet. In a competitive market, this can improve the customer’s impression of your brand, increase consumer confidence and help grow your bottom line. Not only will you appeal to the ever-growing number of consumers who are environmentally-conscience, you will rest easy knowing that your company is taking action to ensure a sustainable future.

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Corporate CBD Production Gets Underway in UK

By Marguerite Arnold
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Any thought that established British and Canadian growers were not already cooperating and in the throes of establishing a UK cannabis production base was put to bed in early July.

Namely, the news that Sundial, an Alberta based Canadian company, is buying Bridge Farms, the winner of the Overall UK Grower of the Year Award in 2017, is a sign that the age of British cannabinoid production (and in bulk) is here. The agriculture group has a 75-acre production facility in Lincolnshire (strategically on the border with Norfolk) and a recent ₤18 million equity injection.

This also means that large-scale CBD production in the UK is now underway with authority.

What it also means, however, is that the winds of trade, even if historically, are already cultivating some interesting partners as the entire British cannabis discussion gets underway.

Sundial Growers also almost simultaneously filed documents to list on the Nasdaq in the U.S. In this, they look remarkably similar to Tilray.

British Sugar Is Now Not The Only Game In Town

The links to the cannabis industry in this part of the UK are not new. Namely, the county of Norfolk (the east-coast “bump” of the British coastline just south of Lincolnshire) is home to British Sugar, the cultivator for GW Pharmaceuticals cannabis crop.

GW logoThis part of the world is also historically associated not only with major international British trade, but in the past at least, of the German kind in particular. See the port of Kings Lynn and the Hanseatic trading route that put the eastern town on the global shipping map until the advent of the railroads in the UK leached its importance south, to London in the 19th century.

Foreign investment in agriculture, in other words, in this part of the world is not new. Nor is shipping the final product elsewhere.

What Does This Mean For The British Market?

That is an interesting question on the advent of a potential Brexit. Is this newly constructed agricultural centre designed, like Canopy’s newest hempire in New York State, for domestic consumption, and-or overseas trade?

For that reason, a fully automated CBD production facility in such a strategic and historic part of the country seems to indicate the commercial production of CBD has begun at a level virtually unseen in any other European country so far. And further, that its backers have an international, not just domestic market, in mind.

What Does This Mean For the European Market?

Unless the UK is planning on eviscerating all worker safety and pay regulations, it is unlikely that British-grown cannabis will be price competitive with what is going on in Europe right now. The German market, in fact, is a very good precursor to the kinds of growing pains the UK is likely to see in this regard.

european union statesExports, in other words, are highly unlikely, at least to Europe.

What this does mean however, is that licensed producers, with international roots and global financing, are clearly moving into the more or less corporate production market that is slowly getting going in Britain.

And just like elsewhere, post Canada, there is no chance, at this point at least, for any “mom and pop” industry to develop.

Given a lack of patient access at this point that is also not likely to fly politically for long.

Regardless, as of the summer of 2019, there are beginning to be the signs that large scale production of both THC and CBD, is getting going in Britain.

No matter where their customers are located.

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Hemp: A Growing Market Ripe for Protection

By David Holt, Whitt Steineker
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With recent changes in federal and state law, and growing consumer awareness, the long-dormant hemp industry may finally be able to take heed of George Washington’s advice, “Make the most you can of [India Hemp] … The Hemp may be sown anywhere.”1

Hemp has a long and varied history in the United States. Throughout his lifetime, George Washington cultivated hemp at his Mount Vernon Estate, and, for a time, Washington even considered replacing tobacco with hemp as the Estate’s primary cash crop.2 Like Washington, Thomas Jefferson grew hemp at Monticello and his lesser-known Poplar Forest plantation.3 Both Founding Fathers primarily used the hemp cultivated on their property for making household items like clothing, rope, and fishing nets.

From the colonial era until 1970, hemp was routinely cultivated across the United States for industrial use. But, with the passage of the Controlled Substances Act (“CSA”) in 1970, U.S. hemp production ceased.4 The CSA banned cannabis of any kind, eliminating any distinction between hemp and other types of cannabis. As a result, hemp production became illegal in the United States.

A wide variety of hemp products can be found throughout the Untied States markets. Image courtesy of Direct Cannabis Network

More recently, the U.S. government finally began to ease restrictions on hemp cultivation and production. The 2014 Farm Bill introduced the USDA Hemp Production Program.5 Under the Program, universities and state departments of agriculture are allowed to cultivate hemp if:

  1. The industrial hemp is grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research; and
  2. The growing or cultivating of industrial hemp is allowed under the laws of the state in which such institution of higher education or state department of agriculture is located and such research occurs.

The 2014 Farm Bill did not remove hemp from the auspices of the CSA, nor did it address the continuing application of federal drug control statutes to the growth, cultivation, manufacture, and distribution of hemp products.

The 2018 Farm Bill built upon the deregulation that began in 2014.6 Although both the 2014 and 2018 bills define hemp as the plant Cannabis sativa L. and any part of that plant that has a delta-9 THC concentration of 0.3% or less by dry weight,7 the 2018 Farm Bill took the additional step of removing hemp from the federal list of controlled substances and categorized it as an agricultural product. As a result, the production of hemp is now subject to USDA licensure and regulation. However, until the USDA completes its rulemaking process for implementing hemp regulation, hemp production remains illegal unless done in compliance with the terms of the earlier 2014 bill.8 For the time being, legal cultivation of hemp still must occur in a state that has authorized hemp research9 and the researcher must be either an institute of higher education or a state department of agriculture (or its designee).

With the increasingly favorable changes to federal and state law allowing for the expanded cultivation and production of hemp in the United States, the market is expected to grow significantly in the coming years. In 2014, the U.S. industrial hemp market was estimated at approximately $504 million.10 In only one year after the passage of the 2014 Farm Bill, the industrial hemp market was estimated to have increased by over $95 million to almost $600 million. By 2017, the worldwide market for industrial hemp was estimated to be $3.9 billion and growing at a compound annual growth rate (CAGR) of 14%.

In addition to favorable changes in U.S. law, the hemp market is benefiting from growing consumer awareness and demand for hemp-based food products.11 High in omega-3 and omega-6, amino acids and protein, hemp is growing in popularity as a cooking oil, dairy substitute, flour source and bakery ingredient. Among other things, hemp is considered by some to provide positive health effects for those seeking help with insulin balance, cardiac function, mood stability, and skin and joint health.

Although hemp cultivation is now allowed in the U.S.—at least for research purposes—and the market is forecasted to rise steadily under growing demand for hemp-based products, broad access to viable, legal seeds continues to present a challenge for researchers and commercial growers. In order to legally implement authorized cultivation programs and take economic advantage of a swiftly growing market, farmers must have access to seeds that can be guaranteed to consistently produce plants that fall under the legal definition of hemp. In an attempt to alleviate the problem, several states, including California, Indiana, Maine and Oregon, have implemented programs to license or certify compliant seed distributors and producers.

The importance of hemp seed availability and development has also been recognized on the federal level. On April 24, 2019, the USDA Agricultural Marketing Service published a Notice to Trade announcing that the USDA’s Plant Variety Protection Office (“PVPO”) is now accepting applications of seed-propagated hemp for protection under the Plant Variety Protection Act (“PVPA”). Among other things, the PVPA provides intellectual property protection to breeders who have developed new varieties of seed-propagated plants. Under the new guidance, breeders of new hemp varieties can now secure protection pursuant to the PVPA. Those holding a certificate of protection from the PVPO can exclude others from marketing or selling a registered hemp variety and manage how other breeders and growers use their protected variety.

The process for requesting protection under the PVPA is fairly straightforward. Breeders, or their attorneys, must complete all application forms, pay the required fees,12 submit a distinct plant variety name, and provide a deposit of at least 3,000 viable and untreated seeds of the variety (or 3,000 seeds of each parent variety for a hybrid). One required form for a completed PVPA application is the Objective Description of Variety form.13 This form provides a series of questions that identify the distinct aspects of the variety in question, including, among other things, plant and leaf characteristics, seed properties and anticipated uses. Upon receipt of the completed application and fees, the PVPO examines the application to determine whether the listed plant variety is new, distinct, uniform, and stable. If the PVPO determines that the requirements are satisfied, it will issue a certificate of protection granting the owner exclusive rights to the registered variety for a period of 20 years.Now is the time for farmers, researchers, and hobbyists alike to take advantage of the expanded opportunities available for protecting intellectual property for proprietary hemp varieties.

Although hemp has traditionally been used in the textile and fiber industries, the estimated 17.1% CAGR in the hemp seed segment is being driven by the increase in demand for hemp oil, seedcakes, and other food and nutraceutical products. These products are primarily derived from the hemp seed as opposed to its fibers. Presently, hemp seeds contain approximately 30-35% oil, of which approximately 80% is essential fatty acids, and 25% crude protein.14 Under the new PVPA guidelines, if a breeder is able to cultivate a sustainable plant that increases the plant’s production of the desirable compounds, he or she could achieve a significant position in the growing market.

The protection provided by the newly expanded PVPA builds upon other avenues of intellectual property protection now available to hemp breeders and growers. In addition to the PVPA, plants meeting certain criteria may also be protectable under a plant patent or a utility patent, both of which are administered by the U.S. Patent and Trademark office. Generally speaking, PVPA protection may be available for seeds and tubers, plant patent protection applies to asexually propagated plants, and utility patent protection may be available for genes, traits, methods, plant parts and varieties.15

With a market that is expected to grow substantially in the near future, and with the passing of increasingly friendly federal and state legislation, the hemp industry is on the cusp of significant expansion. Now is the time for farmers, researchers, and hobbyists alike to take advantage of the expanded opportunities available for protecting intellectual property for proprietary hemp varieties.


  1. George Washington to William Pearce, 24 February 1794.
  2. George Washington and Agriculture, https://www.mountvernon.org/library/digitalhistory/digital-encyclopedia/article/george-washington-and-agriculture, last visited May 14, 2019.
  3. Hemp, Thomas Jefferson Encyclopedia, https://www.monticello.org/site/research-and-collections/hemp, last visited May 14, 2019.
  4. Controlled Substances Act, Pub.L. 91-513, 84 Stat. 1236.
  5. Agricultural Act of 2014, Pub.L. 113-79.
  6. Agriculture Improvement Act of 2018, Pub.L. 115-334.
  7. Any plant having a THC content in excess of 0.3% is considered marijuana and remains illegal as a controlled substance under the CSA.
  8. See, e.g., https://www.ams.usda.gov/rules-regulations/farmbill-hemp.
  9. To date, at least 41 states have passed legislation authorizing hemp cultivation and production programs consistent with federal law. As of the date of this article, those states that have not enacted legislation allowing the cultivation of hemp for commercial, research, or pilot purposes include: Connecticut, Georgia, Idaho, Iowa, Louisiana, Mississippi, Ohio, South Dakota, Texas, and the District of Columbia.
  10. Industrial Hemp Market – Market Estimates and Forecasts to 2025, Grand View Research, https://www.grandviewresearch.com/industry-analysis/industrial-hemp-market, last visited May 14, 2019.
  11. Currently, the Food and Drug Administration prohibits hemp-based CBD in food and beverages. However, the FDA has set a public hearing to discussing the legalization of CBD in food and beverages for May 31, 2019.
  12. The PVPA application fee is currently $4,382 with an additional fee of $768 due upon issuance of a certificate of registration.
  13. The Objective Description of Variety form for Hemp (Cannabis sativa L.) can be found at https://www.ams.usda.gov/sites/default/files/media/113HempST470.pdf.
  14. Hemp Seed (Cannabis sativa L.) Proteins: Composition, Structure, Enzymatic Modification, and Functional or Bioactive Properties,Sustainable Protein Sources (Ch. 7), R.E. Aluko (2017).
  15. Regulations are currently under consideration that could expand or otherwise modify the scope of protection available under each of the enumerated intellectual property protection schemes. Consult a licensed attorney for questions regarding the specific program that may apply to a particular set of circumstances.
Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 1

By Carl Silverberg
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Core values often get wrapped into buzzwords such as sustainability, locally sourced and organic. In the first part of a series of four articles exploring greenhouses and the environment, we’re going to take a look at indoor vs. outdoor farming in terms of resource management.

Full disclosure; I love the fact that I can eat fresh blueberries in February when my bushes outside are just sticks. Is there a better way to do it than trucking the berries from the farm to a distribution plant to the airport, where they’re flown from the airport to a distribution center, to the grocery store and finally to my kitchen table? That’s a lot of trucking and a lot of energy being wasted for my $3.99 pint of blueberries.The largest generation in the history of the country is demanding more locally grown, sustainable and organic food. 

If those same blueberries were grown at a local greenhouse then trucked from the greenhouse directly to the grocery store, that would save diesel fuel and a lot of carbon emissions. People who can only afford to live near a highway, a port or an airport don’t need to ask a pulmonary specialist why their family has a higher rate of COPD than a family who lives on a cul-de-sac in the suburbs.

Fact: 55% of vegetables in the U.S. are grown under cover. The same energy saving principles apply to indoor cannabis and the reasons are consumer driven and producer driven. The largest generation in the history of the country is demanding more locally grown, sustainable and organic food. They want it for themselves and they want it for their kids.

The rapid proliferation of greenhouses over the past ten years is no coincidence. Millennials are forcing changes: organic fruit and vegetables now account for almost 15% of the produce market. A CNN poll last month revealed that 8 of 10 of registered Democrats listed climate change as a “very important” priority for presidential candidates. The issue is not party I.D.; the issue is that a large chunk of Americans are saying they’re worried about the direct and indirect impacts of climate change, such as increased flooding and wildfires.

So how does the consumer side tie into the cannabis industry? Consumers like doing business with companies who share their values. The hard part is balancing consumer values with investor values, which is why many indoor growers are turning to cultivation management platforms to help them satisfy both constituencies. They get the efficiency and they get to show their customers that they are good stewards of their environment. The goal is to catch things before it’s too late to save the plants. If you do that, you save the labor it costs to fix the problem, the labor and the expense of throwing away plants and you reduce pesticide and chemical usage. When that happens, your greenhouse makes more money and shows your customers you care about their values.

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers.Let’s add some more facts to the indoor-outdoor argument. According to an NCBI study of lettuce growing, “hydroponic lettuce production had an estimated water demand of 20 liters/kg, while conventional lettuce production had an estimated water demand of 250 liters/kg.”  Even if the ratio is only 10:1, that’s a huge impact on a precious resource.

Looking at the pesticide issue, people often forget about the direct impact on people who farm. “Rates in the agricultural industry are the highest of any industrial sector and pesticide-related skin conditions represent between 15 and 25% of pesticide illness reports,” a 2016 article in The Journal of Cogent Medicine states. Given the recent reports about the chemicals in Roundup, do we even need to continue the conversation and talk about the effects of fertilizer?

I’ll finish up with a quote from a former grower. “The estimates I saw were in the range of between 25%-40% of produce being lost with outdoor farming while most greenhouse growers operate with a 10% loss ratio.”

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers. Lastly, most Americans simply have a moral aversion to seeing farms throw away food when so many other people are lined up at food banks.

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Why International Trade Agreements Are Shaping The Cannabis Industry

By Marguerite Arnold
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If you have wondered over the past several years, why the big Canadian companies (in particular) are following the global strategy they are, there is actually a fairly simple answer: Newly implementing trade agreements, particularly between Europe and North America.

More specifically, they are highly technical trade agreements that are also called Mutual Recognition Agreements, (or MRAs).

In fact, look at the schedule of the MRA agreements signed between the U.S. and individual EU countries over the last several years, and it also looks like a map of the countries that have not only legalized at least medical cannabis, but where the big Canadian companies (in particular) have begun to establish operations outside of their home country.

But what is going on is actually more than just CETA-related and also will affect cannabis firms south of the Canadian-U.S. border.

All of these swirling currents are also why the most recent MRA to come into full force in July this year, between the U.S. and Europe, is so interesting from the cannabis perspective. Even before federal reform in the U.S. If this sounds like a confusing disconnect, read on.

What Are MRAs?

MRAs are actually a form of highly specialized trade agreement that allow trading countries to be certain that the pharmaceuticals they purchase from abroad are equivalent to what is produced at home. This includes not only ingredients but processing procedures, production plant hygiene, testing, labeling and more.

When it comes to the  EU-US MRA agreement, this means that individual states of the EU can now recognize the American Food and Drug Administration (or FDA) as an effective federal regulator of American pharmaceutical production that is equal to the procedures in Europe. US GMP standards, in other words, will be recognized as equal to those of EU states.

This will now also, by definition, include GMP-certified medical cannabis formulations.

What is so intriguing, however, is how this development will actually place certain American (and Canadian) manufacturers in a first place position to import cannabis into Europe ahead of the rest of the American cannabis industry.

What Are Mutual Recognition Agreements All About?

One of the most important quality and consumer safety aspects of establishing a clean supply chain is tied up in the concept of GMPs (Good Manufacturing Practices). These are procedures, established by compliant producers of pharmaceuticals, to ensure seed (or source) to sale reliability of the medication they make. In the cannabis industry, particularly in the advent of Canadian-European transatlantic trade in cannabis, this has been the first high hurdle to accept and integrate on the Canadian side.

GMPIf European countries recognize a country’s GMP certifications are equivalent to its own, in other words, and cannabis is legal for export, a country can enter the international cannabis market without facing bans, in-country inspections and the like. In the interim, imported products still have to be batch tested until the agreements are fully accepted and operational.

Israel, for example, already had an MRA with the EU, and medical cannabis is legal in the country. However, Israel was prevented from selling cannabis abroad until a legislative change domestically, passed on Christmas Day.

That is why the MRA agreement between the US and EU with Canadian companies in the middle also put both Israeli and U.S. firms at an extreme disadvantage in comparison. Both in entering the market in the first place, and of course associated discussions, like the German tender bid. That is now changing- and as of this year.

A Specialized Map Of Global Medical Cannabis Exporters

Ironically, what the new US-EU MRA could also well do is create a channel for pharmaceutical cannabis from the United States to Europe (certainly on the hemp and CBD front) just as Israel is expected to enter the international cannabis export industry (later this summer or fall). It could well be also, particularly given the Trump Administration’s tendency to want to not only “put America first” if not pull off “a better deal” in general and about everything, that this is why President Trump offered the delay to Israel’s president Benjamin Netanyahu in the first place.

Regardless of the international individual developments and subtleties however, what is very clear that from the time the first bid stalled in Germany in the summer of 2017 until now, the U.S.-EU MRA has been in the room even if not named specifically as a driver.

For example, the FDA confirmed the capability of Poland and Slovenia to carry out GMP inspections in February of 2019.  It was only last fall that Aurora pulled off its licensing news in the former (on the same day licensing reform was announced by the government). Denmark was recognized in November of last year during the first year of its “medical cannabis pilot progam.” Greece was recognized in March 2018. Italy, Malta, Spain and the UK came online in November of 2017.

Overlay this timetable with a map of cannabis reform (and beyond that, cannabis production) and the logic starts to look very clear.

The upshot, in other words, is that while cannabis still may be “stigmatized” if not still “illegal” in many parts of the world, more generalized, newly negotiated and implementing, specialized global trade agreements between the US, Europe and Canada in particular have been driving the development of certain segments of the cannabis industry globally and since about 2013.

The Biggest News?

As of this year, as a result, expect at least from the GMP-certified front at least, that such international trade will also include medical cannabis from the U.S.

Want an example of the same? First on that list if not early in the game will now undoubtedly be Canadian-based Canopy Growth, with Acreage on board, headquartered in New York.

Federal Funding Is Flowing To Canada’s Cannabis Production

By Marguerite Arnold
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The Canadian federal government is going where the U.S. (for now) is not: namely allowing provinces to channel federal agricultural funds into commercial cannabis production on the provincial level. The program is called the Canadian Agricultural Partnership (or CAP), which is a $2.2 billion annual initiative designed to support agricultural businesses across the country.

So far, not every province has opened this funding to cannabis production, although British Columbia already has, and Alberta is currently considering it.

Even more intriguing of course, are other programs that tie into such agricultural subsidies (including government support for exporting product). See Europe for one.

These programs are of course nothing new, including in the United States.

What is new, different and intriguing, is that unlike the United States, for the first time such government funds are being used to support not only the domestic cultivation of cannabis, but its global export. If there ever was the beginning of a “green new deal” then this might be it.

Canadian companies are certainly seeming to benefit from this federal largesse at the production point. For example, in the first weeks of April, CannTrust Holdings Inc. announced that its entire 450,000 square foot, perpetual harvest facility in Pelham, Ontario is fully licensed and will be online by summer 2019. THC BioMed just announced that it received Health Canada’s permission to begin additional production at its flagship location in Kelowna, B.C. And Beleave has just commenced sales of cannabis oil products at licensed facilities in Hamilton, Ontario.

The Rise of Government Funding In a “Publicly Owned” Company Environment

One of the more intriguing impacts of the rise of government funding for the industry comes at a time when the industry itself, certainly coming out of Canada, is facing a bit of a zeitgeist moment.

Sure, the industry has gained legitimacy, and there might be nascent cannabis funds in the UK, Switzerland and Germany, but the entire “public cannabis company” discussion is hitting a bit of a reset at the moment.

It was after all, ostensibly “public” Wayland that just dusted much higher fliers from the stock price perspective on winning the German cultivation bid. In fact, some insiders on the ground have commented that it is precisely because Wayland is not a stock market favorite, rather focused on fundamentals that they got chosen in the first place. Starting with the old-fashioned idea of committing resources and elbow grease to create production on the ground, locally.

There are also firms who are benefitting from the first tax funds that have flowed to promote the hemp industry (those are available from state governments here).

However, it is not just Germany where this discussion is going on in Europe right now. In Spain, there is political discussion about ensuring that the nascent and valuable cannabis industry does not end up in the control of “outsiders.” Namely international firms who have more of an eye on profit than community building. The idea of the cannabis industry as an economic development tool has certainly caught on in Europe (see Greece and Macedonia). And core in that idea is that the euros generated by this still remarkably price-resilient plant, and the products produced from it, should stay local.

Cannabis Socialism?

For now, and certainly in Canada, federal public funding looks pretty much like a fancy agricultural grant. But in the future as prices drop and the wars over strains and “medical” vs. “recreational” really begin to rage in Europe, the idea of government-funded cannabis cultivation may be an idea whose time has come.

The German automobile industry, for example, did not come from nowhere – and even today receives massive government funding. For now, certainly in Deutschland, that is not the case with cannabis, but things may be changing with the resolution of the first tender bid.

In the future, in other words, as countries across Europe begin to think about posting their own production bids and Germany contemplates additional ones, government funding of the industry and certainly incentives to help its growth will become much more widespread.

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German Cultivation Bid Appears To Have Three Finalists

By Marguerite Arnold
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The Frankfurt-based newspaper Handelsblatt Zeitung is reporting that three Canadian firms (actually two Canadians and a German start-up cofounded by another Canadian company) have now been selected as the first cannabis cultivation bid finalists, however insiders on the ground say that this is not necessarily a final decision.

A Berlin-based subsidiary of Wayland in Germany called Demecan, along with Aphria and Aurora have all been named as bid finalists pending a normal review period.

However, there are other complications still looming. This is far from over.

The first issuance of the bid in 2017 went down in court over a technical fault on the part of the issuing agency. The current iteration was posted last summer and saw its application moved several times because of further legal challenges.

As Peter Homburg, partner and head of the European Cannabis Group at Dentons said when contacted by Cannabis Industry Journal, “This is of course not an official announcement. I have a tendency to believe that others involved in the tender process historically may well challenge this decision.”

BfArM, the federal German agency in charge of the cannabis cultivation tender process, did not respond to a request for a comment as of press time.

The Decision Is Far From Over

Here are the basic challenges still ahead:

There is a lawsuit pending against the bid itself from applicants that has yet to be decided. The Klage (formal hearing in court) is due next week. If that does not derail the process, here are the next considerations.

While all three firms named in the bid have international reputations, there are some pending questions.

Wayland is far ahead of the other two firms in terms of production capability in the country. Their facility in eastern Germany has just been certified GMP standard – which means they are qualified to produce the quality of flower required for medical consumption. This news is also far from a surprise.

As Ben Ward, CEO of Wayland Group, commented when contacted by CIJ for a response via email: “At Wayland, we believe in meaningful partnerships, investing in Germany from day one, demonstrating a long-term commitment to the market,” says Ward. “Wayland GmbH is a German company, operated by Germans, existing in Dresden and Munich and is committed to this market. The companies awarded lots received the allocation based on a rigorous application process, not media sensation.”

Of all the Canadian firms, in fact, despite its lack of high-flying stock price, Wayland has made the most concerted effort to show its commitment to producing in Germany by a large investment of capital and expertise. Further, the firm has shown itself to be the most culturally sensitive to German culture, including hiring a female member to the board (a hot topic far from the cannabis industry). However, there are other issues looming. On the same day that Wayland issued a press release announcing its position in the bid, it also issued one announcing the merger talks with ICC had failed.

The second is that Aphria’s main cultivation center in Canada is not EU-GMP certified although they have applied for the same and now also own one of Germany’s largest distributors (with approximately a 6% market share).

Other firms not only kicked off the entire cannabis discussion in Germany, but have established GMP-compliant facilities both in Canada and across Europe, namely Canopy Growth, which was widely believed to have also applied to the second tender. However prevailing rumours about a Canadian “crop failure” in British Columbia (described by the company as a deliberate destruction of plants created by delays in the licensing process) last fall may have also played a role in the German decision.

Canopy_Growth_Corporation_logoAurora is also in interesting waters. Having distinguished itself as Canopy’s closest rival across Europe, winning significant kudos in Denmark, Italy, Poland and Luxembourg last year, the company is also clearly not “just” a medical cannabis company and apparently was refused an opportunity to go public on the Deutsche Börse last fall. The selection of the firm by BfArm for the bid in a situation where the company is on a watch list created by the stock market regulatory agency in Frankfurt is also an intriguing one. Especially given the company’s announcement of its Polish success on the same day as the decision to import was announced, and the fact that so far it is the only Canadian cannabis company to successfully import to Luxembourg.

And The Import Game Is Just Getting Hot…

The unsurprising news that the bid appears to be moving forward is actually not the hottest news in Europe right now. The reality on the ground is already shifting. Several weeks ago, a Frankfurt-based distribution start-up announced that they had successfully imported cannabis into the country from Macedonian-based Nysk Holdings via Poland.

At the International Cannabis Business Conference (ICBC) in Berlin last weekend, Australian producers (for one) were also reporting a German demand for their product that was greater than they could fill. And there were many Israelis present for what is expected to be an official opening of their import ability by the third quarter of this year.

Price Wars Are Looming

The bid itself is going to have a powerful impact on pricing in both the German and European market beyond that. It represents the first time in any country that a government has attempted to pre-negotiate prices for the drug as a narcotic beyond Israel and in this case, it will have at least regional implications.

aurora logoAt the same time, it is also clear that producers like Nysk and beyond them, Israeli and Australian firms (in particular) are actively finding ways to have their product enter the country- and further at prices that are catching the Canadians on the hop. Indeed Aurora is reporting that it actually lowered its “usual” prices to win European contracts which have been reported as being 3.2 euros a gram in Italy and 2.5 euros a gram in Luxembourg.

To put this in perspective, this is a range of about CA$3-5 a gram of flower which is also well below what Canopy (for one) has reported selling its product even to recreational users in Canada and significantly below medical export prices as reported by recent company corporate reports.

Wayland in contrast, is reporting that its production price in Germany will be at least a euro-per-gram cheaper than this. Or in other words, more in line with prices expected to be generated from both the bid itself and the cannabis now entering the country from other sources.

And of course, this is only the first of what is expected to be a series of new tenders. The original amount, itself increased in the two years the issue has been pending, is clearly not enough to even begin to meet demand as proved by the levels of competitively priced imports now entering the country.

Beyond questions about whether this time the tender will actually stand, are those now pending about new ones potentially in the offing – and not just in Germany but across Europe as cannabis continues to see a very green spring.

Marguerite Arnold

Farmako Inks Deal To Import 50 Tonnes of Polish Cannabis Into Germany

By Marguerite Arnold
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Marguerite Arnold

The ex-im cannabis map of Europe has been promising to get interesting for some time. And in March, it’s long promised potential just bloomed a little more as Frankfurt-based Farmako announced a first-of-its kind import deal of 50 tonnes of medical cannabis (and from Poland no less) over the next four years.

Farmako was just founded in September 2018. They began distribution to German pharmacies this month. They also have an office in London and cross-European aspirations.

While Farmako is the first to announce such a unique cross-border production and distribution agreement, however, they are far from the only ones planning the same. In fact at least Tilray is expected to announce that their newly-minted Portuguese crop is being processed into oil bound for German pharmacies any day now. It is also not unrealistic to expect that (at least) Canopy Growth, of the big Canadian producers at least, will soon announce the same situation for their crops in countries across the continent, starting with Spain.

Outside Germany of course, this kind of entrepreneurial endeavour is already underway. In the UK, a new import group just announced the first bulk shipment of Dutch medical cannabis into the country, distributed directly to over 1,000 pharmacies nationwide.

There still are a couple of jaw-dropping things to consider about this new German development. Namely, that the amount of just this deal over the next four years between two (relatively new, non-Canadian) companies is approximately five times the amount currently called for in the still pending domestic cultivation bid in Germany.

The second, of course, is that the Polish company on the other side of the border and this ex-im deal, PharmaCann Polska, is a uniquely positioned conglomeration of individuals with apparently Canadian and Israeli market experience. This means that they are already positioned to access the biggest two production markets in the world and are certain to be looking to exploit other Eastern European connections (at minimum). If not ones further afield than that.

One thing is absolutely certain far beyond the particulars of this one deal. The current import limitations from Canada and the Netherlands into the German market appear to be a thing of the past. And the cross-border trade for medical cannabis is now clearly entering a new phase.

Implications

Farmako clearly intends to go after the existing Canadians in the market on price, which means both Canopy Growth and Tilray. But it also means Wayland, at this point is the largest domestic certified producer (albeit with Canadian roots and partners) and an entire licensed facility in eastern Germany ready to go. That is not an insignificant threat and sets up another looming question: Which will actually be cheaper in the long run? Domestically grown German cannabis, or that imported from adjacent countries with lower paying labor markets?

This announcement also means that the “cannabis shortage” in the country is officially over as of this spring. And that won’t just come from Farmako but others already in the market and those angling now to get in via other creative means.

Regardless, what that will do to overall sales, patient numbers and overall speed is another matter.

Other Looming Problems

There are two big issues that this development does not solve of course. The first is the ability of patients to find doctors willing to prescribe the drug, and further to make sure they spend the time filling out the paperwork and negotiating with the patient’s insurer, to make sure that patients can actually get it. Starting with affording medical cannabis in the first place. Most patients on what is known as “statutory” health insurance (90% of the country) cannot afford the out of pocket cost at pharmacies without insurance approvals. Once they get them, they pay up to $12 for a month’s supply (in the case of flower, about an ounce).

german flag
Photo: Ian McWilliams, Flickr

The second issue is that it is currently unclear, mostly due to the lack of granularity provided by the country’s statutory health insurers, what is actually being prescribed for which kind of condition and to whom. Earlier this month, new information was made available about the overall growth of coverage of medical cannabis in Germany. While the total spending, and rough breakdown of flowers vs. product was provided, it is unclear beyond that, where this is going. There were also apparently just over 46,000 patients in Germany as of December 2018. And this is a growth trend that while clearly on an upward trajectory for the last three quarters is slow and steady as she goes. The sudden uptick in the market seen in the second quarter of last year appears to be an anomaly.

Further, understanding market price points is also hard. Flos and prepared pharmaceuticals such as Sativex are highly expensive right now. In the case of the Canadian firms, their medical exports are being sold at about twice the price of their domestic recreational sales points. Look for this to change dramatically as real competition heats up across Europe (and from more distributors than just this Frankfurt upstart).

What the news in other words about Farmako really signifies is that the price barriers in the medical market are about to come down at the point of sale- and hopefully in the short term, patients will not have to rely on the approval of their insurance companies to be able to access the drug because they will be able to afford it themselves. No matter what happens with the bid. Although this too will also serve to lower prices.

The great medical normalization race for medical cannabis in Europe is now officially “on.” And that is good news not only for patients, but of course, the industry.

British Barristers Take On Cannabis “Novel Food” Regulation In Brussels

By Marguerite Arnold
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The first thing to understand about the significance of the British barristers now challenging the EU’s classification of hemp extracts as a novel food is that this is like jumping into the middle of an action adventure by coming in at the second act. In other words, you miss the introduction and the first couple of car chases.

That said, this action movie also features a cannabis-flavored plot. Those used to the maddening hair splitting now going on just about everywhere as the industry gains legitimacy, in other words, are familiar with the larger story line.

Here are the “CBD Cliff’s Notes.”

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

It is highly significant that a major British cannabis trade organization, the Cannabis Trades Association, hired a leading law firm in London to go sue the EU over its recent decision to lump all CBD extracts into the same “novel” distinction. Up until now, only CBD sourced from cannabis had fallen prey to this strange regulation. Thus, the lawsuit. No Brexit themes involved. Yet. Although that too will play a role in all of this.

What Is This Really About?

If those in the CBD business are honest with themselves, the real reason for this segmented part of the cannabis industry to even exist in the first place is the race, desire and need to actually be allowed to operate in relative regulatory peace. No matter what the battles are on the THC front. CBD has been seen as a result, pretty much since the beginning of the new age of legalization, as the “safer” political and market entry choice by those in regions such as U.S. southern states and the burgeoning, can’t-wait-to-be-off-to-the-races, market in Europe. See the new federal hemp legalization bill in the United States as Exhibit A.

However, in Europe this has run into more than a few problems since the Swiss put “low THC” or “Cannabis Lite” on the map more locally. Starting with the whole discussion about licensing in general. And then, even more confusingly, about what to actually classify the plant. Especially when it is used in food and cosmetics as opposed to “medicine.”

Specifically, where does the cannabis plant in general, let alone its individual components, really fall when it comes to regulated human consumption?

european union states
Member states of the European Union

For the time being- read last year when the industry in Spain was facing police busts over CBD cookies on the shelves at health stores- the conventional industry wisdom was that this whole furore was “just” over the use of concentrates, tinctures and other products made from cannabis-sourced CBD. However, given the noise that Austria managed to make over Christmas about the entire “licensing” issue (namely who has the right to produce, sell and package even CBD as a cannabinoid no matter where it is sourced), the EU also moved all CBD products and tinctures- even those made from good old hemp- into the novel food category.

This means in effect, that even CBD extracts produced from the hemp plant (which is actually the majority of such product in Europe) must now be regulated as a “novel food” too. Even though in poor old hemp’s case, it is certainly the case that health food nuts have been consuming the same in Europe long before (and certainly after) standing EU “novel food” regulations were put into place back in the late 90’s.

Thus, the lawsuit, launched from a country unsure of whether it will even be in the EU post-May (either the month or the current PM).

According to the EU at least for now, CBD itself is a “novel food” no matter from where it is sourced. And that, according to not only science but food history is an absolute fallacy.consumer safety, from factory to pharmacy or farm to table, is never far from the discussion

Likely Outcomes

Those who were hoping that CBD would remain unregulated in the EU should think again. It is highly likely that what will happen is that CBD production licensing is in the cards and just about everywhere. Think GMPs but with a consumer-food twist.

While indie producers might groan at the prospect of fees and licensing procedures, remember this is Europe. And consumer safety, from factory to pharmacy or farm to table, is never far from the discussion.

While this lawsuit, in other words, is likely to make the EU think more closely about regulating CBD in general, what is most likely to happen is that entire enchilada will be lumped under a regime to insure that high quality production, particularly of crops bound for consumption, is also extended to anything that ends up in either a food or cosmetic product.

CBD Producers Have To Keep Current On Regs

Given the current murkiness that exists, in other words at this point across Europe, in every country and for every CBD product, exports here from other places are still not a great idea.

There are labeling, licensing and of course, ultimately legislative issues that are all still in flux. And while the outcome of the lawsuit might eventually regulate and standardize things, the idea that a license-free CBD production industry is clearly now dead in the water.

Stratos: Quality, Expansion & Growth in Multiple Markets

By Aaron G. Biros
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Jason Neely founded Stratos in 2014, when he and a small group of people left the pharmaceutical industry in search of a new endeavor in the cannabis marketplace. The concept was straightforward: Apply pharmaceutical methodologyof production to cannabis products. Back then, Stratos offered a range of THC-infused tablets in the Colorado market.

Brenda Verghese, vice president of research & development

Brenda Verghese, vice president of research & development, was one of five people on staff when Stratos launched. Now they have about 30 team members. Consumers were looking for a cannabis product that would be consistent and reliable every time, taking the guesswork out of infused products dosage. That’s where Brenda Verghese found her skillset useful.

Transitioning to the pharmaceutical industry right out of college, Verghese started her career as a chemist and worked her way up to the R&D business development sector. “I specializedin formulations and taking a product from concept to commercialization in the pharmaceutical space,” says Verghese. “Jason Neely approached me with the idea of a cannabis company and focusing on making products as effective and consistent as possible, so really bringing pharmaceutical science into the cannabis space. In the matter of 4 years we grew substantially, mainly focusing on the efficacy of products.”

Behind the scenes at packaging and labeling Image credit: Lucy Beaugard

Soon after the success of their THC products became apparent, Stratos launched a CBD line, quickly growing their portfolio to include things like tinctures and topicals as well. According to Verghese, they are hoping that what’s been established on the THC side of their business as far as reproducibility and consistency is something that consumers will also experience on the CBD side. “Quality and consistency have definitely driven our growth,” says Verghese. “That is what consumers appreciate most- the fact that every tablet, tincture or swipe of a topical product is going to be consistent and the same dose every time.” This is what speaks to their background in the pharmaceutical sciences, FDA regulation has taught the Stratos team to create really robust and consistent formulations.

Quality in manufacturing starts at the source for Stratos: their suppliers. They take a hard look at their supply of raw materials and active ingredients, making sure it meets their standards. “The supplier needs to allow us to do an initial audit and periodic audits,” says Verghese. “We require documentation to verify the purity and quality of oil. We also do internal testing upon receipt of the materials, verifying that the COAs [certificates of analysis] match their claims.”

Process validation in action at the Stratos facility
(image credit: Lucy Beaugard)

Verghese says maintaining that attention to detail as their company grows is crucial. They implement robust SOPs and in-process quality checks in addition to process testing. They test their products 5-6 times within one production batch. Much of that is thanks to Amy Davison, director of operations and compliance, and her 15 years of experience in quality and regulatory compliance in the pharmaceutical industry.

Back in August of 2018, Amy Davison wrote an article on safety and dosing accuracy for Cannabis Industry Journal. Take a look at this excerpt to get an idea of their quality controls:

Product testing alone cannot assess quality for an entire lot or batch of product; therefore, each step of the manufacturing process must be controlled through Good Manufacturing Practices (GMP). Process validation is an aspect of GMPs used by the pharmaceutical industry to create consistency in a product’s quality, safety and efficacy. There are three main stages to process validation: process design, process qualification and continued process verification. Implementing these stages ensures that quality, including dosing accuracy, is maintained for each manufactured batch of product.

Fast forward to today and Stratos is looking at expanding their CBD products line significantly. While their THC-infused products might have a stronger brand presence in Colorado, the CBD line offers substantial growth potential, given their ability to ship nationwide as well as online ordering. “We are always evaluating different markets and looking for what suits Stratos and our consumer base,”says Verghese.