This is not a discussion of climate change, it’s a discussion of the impact of weather on the agriculture industry. The question for the cannabis & hemp industry, and basically the entire specialty crop industry, is what will be the impact? According to the U.S. National Climate Assessment, “Climate disruptions to agriculture have been increasing and are projected to become more severe over this century.” I’m sure that’s not much of a shock to anyone who owns a farm, orchard or greenhouse.
Every national newspaper for the past two weeks has published at least one article a day about the flooding in the Midwest, while industry newsletters and blogs have contained more in-depth stories. The question is, what can agriculture professionals do to mitigate these problems?
Relying on state and national legislators, especially heading into a presidential election year is likely to be frustrating and unrewarding. Governments are excellent at reacting to disasters and not so good at preventing them. In short, if we depend on government to take the lead it’s going to be a long wait.Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors.
Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors. Gone are the days when people grew hemp and cannabis indoors in an effort to hide from the police. Pineapple Express was a funny movie but not realistic in today’s environment.
Today’s hemp and cannabis growers are every bit as tech savvy as any other consumer-oriented business and one could argue that given the age of their customers (Statista puts usage by 18-49-year-olds at 40%), distributors must be even more tech savvy to compete effectively. Some estimates put the current split of cultivation at about one-third indoors/two-thirds outdoors. To date, the indoor focus has been on efficiency, quality and basically waiting for regulators to allow shipping across state lines.
A major driver in the indoors/outdoors equation is that as the weather becomes more unfriendly and unpredictable, VC’s are factoring climate disruption into their financial projections. When corn prices drop because of export tariffs, politicians lift the ban on using Ethanol during the summer months. It’s going to be a while before we see vehicles running on a combination of gasoline and CBD.
Leaving aside the case that can be made for efficiency, quality control and tracking of crops, climate change alone is going to force many growers to reassess whether they want to move indoors. And, it’s certainly going to weigh heavily in the plans of growers who are about to launch a cannabis or hemp business. Recently, one investment banker put it to me this way: greenhouses are the ultimate hedge against the weather.
For all the excitement about the “CBD” or “Cannabis-Lite” possibilities in Europe thanks to Switzerland over the last few years, the reality as of 2019 is proving to be a little different.
As of the end of May, Italy’s top court, the Court of Cessation, ruled that selling derivatives of cannabis sativa (from the buds and leaves to oils and resins) is illegal. Hemp of course, is excluded from this decree. And in fact, this decision was intended to close a loophole that was created in 2016 for so-called “Cannabis-Lite.” In other words low THC, CBD products and extracts that are showing up in the market as is or as an ingredient in something else (from food to makeup).
While this development is certainly a blow to those who were not in the know already, it is hardly surprising– especially given current events next door. German authorities just declared that they could find no use for “CBD”. This of course confuses the issue even further (since CBD is obviously found in both hemp and cannabis sativa.) Austria did the same thing late last year- and further did so on a level unseen anywhere else in Europe (namely putting cosmetics on the list too).Novel food regulation, at its heart, is all about the source of the plant and how it is processed.
In fact, and certainly in comparison, far from being nebulous, Italy appears to have taken, surprisingly, a rather scientific, if not clear-headed, approach to the issue in general. Not to mention a step that is absolutely in line with current EU policy on the same.
Novel food regulation, at its heart, is all about the source of the plant and how it is processed. This entire discussion about CBD falls squarely within that- although of course, hardly limited to just this one cannabinoid or in fact, plant genus.
What Should Investors Be Aware Of?
There is, as always, a hype around CBD. That is true in almost every legalizing market, but Europe, with a much stricter regional regulatory regime and at least a four-year path to recreational, has seen an odd twist in all of this for the last two years.
There is the potential for a CBD play in Europe, but it is niche, and country-by-countryIn the EU, the distinction between hemp and cannabis-derived cannabinoids (including but not limited to THC), is a well-known fact for those with any stripes in either the cannabis, or beyond that, mainstream food and drug industry. The largest confusion, in other words, is strictly at the lower rungs of the biz. Not to mention all foreigners.
Proof of the same? Purvey the contents of even the most wide-ranging Dutch Seed shop catalogue, and you will be hard-pressed to find non-hemp products. And even though such entities know how to get around loopholes themselves (starting with the online sale across Europe of cannabis seeds from all over the world), novel food is not a regulation even these cannabis entrepreneurs want to cross.
In other words, there is the potential for a CBD play in Europe, but it is niche, and country-by-country in an environment where both local and regional rules are shifting. And further are likely to do so for some time to come.
And in the meantime, those who make the grade, are certainly freed from one pressing if not looming question. The market in Italy is, in fact, not only far from “illegal,” but opening up both in terms of import and export to cannabis products from all over the world. Including of course, Canada and the United States.
In a sign of how widely the German government is now casting its net for medical cannabis, even South America is not off the table. At the end of last month, two firms– one from Uruguay and another from Columbia- announced that they would begin importing medical cannabis of the THC and CBD kind.
Fotmer Life Sciences (from Uruguay) and Clever Leaves (Columbia) are entering a market where domestic cultivation has been on the drawing board for two years so far, but so far, brought down by lawsuits.
At present, Aphria, Aurora and Wayland are the big Canadians in front position on the German bid- but so far that is only importing. There are legal challenges against what appears to be the domestic cultivation licenses that appear so far to be unresolved. And against that backdrop, the big Canadians are also facing competition from indie German distributors now casting a wide net for product, globally.
Due to the timing of the announcement from South America and the firm involved in the import, CanSativa GmbH is clearly connected to the large gap in demand that is now developing in the German market and supply requirements. Further CanSativa is also a German firm engaged in what insiders on the ground admit is basically the only way to enter the market here right now, namely via an agreement with one of the new (and Frankfurt-based) distributors who are interested in this space.
Cannabis Central Is Not Berlin
To the great surprise of outsiders, who have long believed that Berlin is the center of all things cannabis in Germany, CanSativa is now one of quite a few firms who have not only called Frankfurt home, but have begun to put the city on the global cannabis map. That started of course with MedCann GmbH (later acquired by Canopy Growth), now with a huge new office in the center of the banking district.
However that also includes the now controversial Farmako, and several other new distributors who are setting up shop with a “Mainhatten” address.
Why Frankfurt? It has one of the best and busiest airports in the world just 20 minutes from the center of the city, and of course, it is home to the Deutsche Börse, the center of not only German, but European finance.
What Does This Announcement Mean?
For those interested now in setting sail for Europe, there is clearly a strategic path to get there, even if it means picking up stakes and setting down cultivation roots in places where there is an ex-im market. While the announcement about Latin American exports is not unexpected, it is also surprising that the very competitive young distributors now popping up in Germany, in particular, cannot find closer sources to bring cannabis into the country from.
However, it is early days yet. The Israelis are coming as of this summer. German inspectors are also on the ground in Macedonia through June, certifying the early movers in the market there to begin importing presumably just before Israel enters the global ex-im business, finally.
There will also be an uptick in firms exporting at least medical grade (GMP-certified) CBD and hemp in the direction of Europe from the United States, although at present that traffic is a trickle as firms begin to find out about the possibility.
Regardless of the source, however, the news is yet another sign that the medical market is taking root, no matter how ambiguous the numbers still are, and no matter how hard it is on the ground to obtain.
Cannabis is now, indeed, entering Europe via Germany from all over the world, and it’s only going to get hotter this year.
The novel foods discussion in Europe is a thorny one- and further one very misunderstood by natives, let alone those who would take Europe by canna storm. Within Europe, this discussion has festered and percolated for the better part of two years. Last year, despite a huge bump in sales in certain regions (see Switzerland), police were directly involved on the ground in Spain and rumblings of the same possibility took place in Austria at the end of the year. Early this year, further indecision at the EU level has continued to confuse the entire discussion.
This year, while there have been recent blow-ups in the UK, and fights at the EU level, the main action has been in the DACH region of the EU. The DACH trading alliance includes Germany, Switzerland and Austria.
In fact, the debate in this region of the world may drive not only European but UN policy. For that reason, the road currently is a thorny one, with lots of drama shaking out along the way in policy fights that still, at least in many European countries, involve the fuzz and what has been ostensibly packaged and labelled as “health food.”
It is for that reason that the most recent move by the German Federal Office of Consumer Protection and Food Safety (or BVL), which said that CBD should not be sold in food at all, has gotten all the attention lately. Especially and more worrying for the nascent CBD industry across the continent, the agency also opined that it does not see a case where CBD-containing cannabis would be marketable in foods or health supplements.
Last month, on April 11, the European Industrial Hemp Association (IEHA) issued a sharp rebuttal to the same. As they have just been asked to serve in an advisory role in setting EU regulations on novel foods and hemp extracts, this is likely to move the conversation forward regionally. Including in the DACH region where this issue is all over the place.
What Exactly Does Novel Foods Regulation Cover?
Novel Foods regulation in Europe covers two things, and this is true far from cannabis. It is consumer rights legislation and guidelines that cover all plant-based food and supplements across the continent. It also covers beauty products (since the skin is the body’s largest external organ) although so far, this tiny part of a niche industry has largely escaped attention. Do not expect that to last.
Where this crosses with cannabis is an interesting discussion. Hemp and cannabis of course have been consumed in Europe for thousands of years. As such, food and extracts of the plant, from species that occur naturally here, normally would not raise a fuss. However, this discussion has also become complicated for a few reasons. Starting with the fact that the seeds and strains now being developed in the U.S. and Canada are not “native” to the European region.
In fact, the early exports across the Atlantic (and there have now been a few) are all on the hemp side of the equation. Currently hemp is the only plant containing CBD that is recognized as viable under novel foods. Cannabis sativa strains that are low in THC are where this whole discussion gets dodgy. The strain, Girl Scout Cookies, and its contents including CBD for example, would under this regime, never be allowed. Nor would cannabis strains bred for their low THC in the United States.
The second issue is how such plants are processed and the cannabinoids extracted. That is another issue that directly relates to how concentrates, tinctures and extracts are made in the first place. This is also in the room.
But that is also where the entire debate also spins off into other semantic hair-splitting that the industry so far has found not only tedious but largely impenetrable.
Why Is The German Announcement So Cynical?
Germany is following its DACH neighbour Austria to directly put the brakes on the CBD and THC discussion across the border with Switzerland. In contrast to its Teutonic trading partners, the Swiss have been experimenting with all kinds of CBD products, from all sorts of sources, and are now talking THC recreational trials (even if sold out of pharmacies).
The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.
In contrast, over the last six months, both Germany and Austria have come out with statements and official pronouncements not about hemp, per se, but rather CBD- a cannabinoid found in all instances of both hemp and cannabis sativa. While politically this might send a statement that both countries are not ready to engage the cannabis debate on the next level (beyond medical in other words), scientifically of course, this is a silly argument to make. A cannabinoid is a chemical compound that acts the same whether it comes from cannabis, hemp or synthetic sources (see the synthetic dronabinol).
In the meantime, CBD itself has not been declared a “novel food.” In other words, for all the legal regulatory “brakes” and excuses, the dust is starting to clear on the debate as both regional and international bodies finally take on the entire cannabis discussion, albeit in a plodding, multi-year way. That, however, is undeniably under way at this juncture.
In the meantime, look for political grandstanding about every cannabinoid under the sun and further such drama will not abate even with “recreational” reform. Even when Europe accepts full boat regulated, recreational, novel food regulation will still be in the room. Even if politicians no longer play games with individual cannabinoids.
That said, at this point, that is also unlikely. In other words, expect the battle on the novel food front to continue for the entire industry, and shift, when recreational comes, to merely another cannabinoid, unless policy makers address the bottom-line issues now.
Today in the states where medical and recreational cannabis is legal, cannabis products purchased from licensed facilities are required to have undergone testing by accredited labs. The compliance testing verifies advertised potency levels and checks for microbial contamination, herbicides, pesticides, fungicides and the presence of mold and mildew, among other potential contaminants.
Until recently, little attention has been given to disposable gloves and their possible involvement in the contamination of the products they handle. What factors should you consider when purchasing gloves?
Disposable Gloves Facts
Disposable gloves, like cannabis products, are not made of equal quality. There are several different types of disposable gloves on the market, and huge variations in glove quality and chemical compositions exist between and within each glove type.
Recent scientific studies have revealed how gloves produced in factories with poor manufacturing standards and raw material ingredients can contaminate the products they handle. High-level toxins in disposable gloves were found to affect lab results, toxins in gloves contaminated the food they touched, and pathogen contamination of unused disposable gloves has been proven. Should the cannabis industry take more interest in the disposable gloves they are using? With so much at stake if compliance test results are compromised, we think so!
Glove Procurement: Factors to Consider
What factors should you consider when purchasing gloves?
Industrial grade gloves- There is no such thing as an industrial grade glove certification, although it does give an incorrect impression that gloves are strong and resilient. Industrial grade means they have not been subjected to inspection nor have passed any specific testing requirements.
Food contact gloves are certified under FDA Title 21 CFR Part 177, which states the components of the glove comply with the FDA regulations and the gloves consist of “substances generally recognized as safe for use in food or food packaging.” Few controls exist for glove manufacturing relating to the reliability of raw materials and manufacturing processes, and costs can be reduced with the use of cheap, toxic materials.
Medical grade gloves have to pass a series of technical tests in order to meet the safety requirements specified by the FDA. Gloves are tested for puncture and abrasion resistance, must meet tension and elongation tests and are also tested for chemical substance resistance. Manufacturers of these gloves must receive 510k certification. As this study shows, even medical gloves can contain high levels of toxic ingredients, affecting laboratory test results.
The Acceptable Quality Level (AQL) refers to a quality standard for measuring pinhole defects- the lower the AQL, the less defects the gloves have. There are no AQL requirements for food grade or industrial grade gloves, meaning there are no guidelines for the number of failures per box. Medical grade gloves must have an AQL of 2.5 or less, meaning 2.5 failed gloves per 100 gloves is an acceptable level.
For Californian cannabis companies, are your disposable gloves Prop. 65 compliant? Accelerator chemicals, such as 2-Mercaptobenzothiazole (MBT) found in some nitrile gloves, have recently been added to the Prop. 65 chemicals known to cause cancer.
How Gloves Can Contaminate Products
Physical, chemical and microbiological hazards have been identified in disposable glove supply chains. Gloves of any grade are not tested for cleanliness (microbial and bioburden levels), raw material toxicity and chemical composition, or pathogen contamination.
100% of glove factories supplying the United States are based in Southeast Asia. These factories are generally self-regulated, with FDA compliance required for a rough outline of the ingredients of the gloves rather than the final product. Few controls are required for glove manufacturing relating to the reliability of raw materials, manufacturing processes and factory compliance or conditions. A clear opportunity exists for accidental or intentional contamination within the glove-making process, especially to reduce costs.
In order to safeguard their customers from product contamination, a selection of tests and certifications, some of which are unique within the glove industry, are being implemented by glove supplier Eagle Protect. These tests make sure Eagle’s gloves coming into the United States are made in clean, well run factories, free of any type of contamination and are consistent in material makeup to original food safe specifications. This glove Fingerprint testing program, consists of a number of proprietary risk reduction steps and targeted third-party testing methods, includes gas chromatography combined with mass spectroscopy (GC/MS); surface free energy determination; in vitro cytotoxicity analysis; and microbial viability-linked metagenomic analysis.
With a great deal of faith placed on a glove supplier’s ability to deliver disposable gloves sight unseen, we believe these tests are essential to further reduce risks or pathogen contamination associated with them, keeping your cannabis products safe.
Folks from around the country and the world tuned into the U.S. Food & Drug Administration (FDA) website as they held a public hearing on Friday, May 31. Manufacturers and suppliers asked the FDA to regulate CBD like food or dietary supplements, while the FDA seemed to want more evidence on the safety of CBD products before giving the greenlight.
Background On The Hearing
For the uninitiated, after President Trump signed the Farm Bill into law back in December 2018, Scott Gottlieb, now former director of the FDA, issued a statement the same day the Farm Bill passed, clarifying the FDA’s regulatory authority. In the statement, Gottlieb explained that Congress preserved the FDA’s authority to regulate products containing cannabis and its constituents under the Federal Food, Drug, and Cosmetic Act (FD&C Act).
In April 2019, around the same time he resigned from the FDA, Gottlieb issued another statement, acknowledging the quickly growing industry throughout the country and total lack of federal regulatory guidance. This time around, Gottlieb laid out a handful of steps that the FDA plans on taking to address regulations around hemp and cannabidiol (CBD). Those included scheduling the public hearing for May 31, where written and oral public comments were submitted by stakeholders, sharing “their experiences and challenges with these products [hemp and CBD products], including information and views related to product safety.”
That statement also announced the formation of an internal agency working group to “explore potential pathways for dietary supplements and/or conventional foods containing CBD to be lawfully marketed; including a consideration of what statutory or regulatory changes might be needed and what the impact of such marketing would be on the public health.”
Fast-forward to May 31, the day of the public hearing, and all eyes in the industry focused on what all these stakeholders had to say to the FDA about CBD. The day started off with about two hours of oral comments, each speaker had roughly two minutes to deliver their thoughts.
Karen Howard, CEO of the Organic and Natural Health Association, speaks about the quality of CBD products
Oral Comments
Industry stakeholders representing cannabis businesses sang much of the same tune, clamoring for wise regulations on safety, testing, banking and interstate commerce, among other standards. NCIA Policy Director Andrew Kline’s comments included running through five major positions of the industry trade organization representing CBD companies. Those included recommending the FDA act quickly in setting up regulations, stressing the massive economic impact of the industry, saying that CBD products are generally safe, clamoring for voluntary, consensus-based standards and informing consumers of any potential risks. “The bottom line is this – an overwhelming preponderance of evidence indicates that cannabis and cannabis-derived compounds present minimal health and safety concerns,” Kline told the folks at the FDA. “Time is of the essence. Hemp-derived CBD products are in very high consumer demand and the industry is eagerly awaiting FDA’s regulatory framework for these products. We strongly recommend that FDA act quickly to clarify the regulatory environment because there is significant confusion in the market.”
Anna Williams, representing the American Association for Laboratory Accreditation (A2LA), stressed the importance of testing for contaminants and adulterants as well as advocating for national standards on lab testing, instead of the state-by-state network of different standards.
Patients & Public Safety
After industry stakeholders had their chance to speak, the FDA allowed a group of advocacy organizations representing patients time to speak. That included representatives for the Alzheimer’s Association and the American Epilepsy Society, both of which were hesitant to throw their full support behind CBD as medicine. Kevin Chapman with the American Epilepsy Society said he wants to see clear warning labels, testing standards, more clinical trials and more studies before the group is ready to form a position on using CBD as medicine. Keith Fargo with the Alzheimer’s Association supports clinical trials to study it more, but thinks CBD is risky for patients without serious evidence of efficacy. A representative from the Tuberous Sclerosis Alliance also echoed similar concerns. They want to see labeling of drug interactions on labels of CBD products.
One section of the oral comments included discussions about patients, public safety and retailers/distributors.
After those comments, some organizations had the chance to speak followed by comments from retailers and distributors. Patrick Bird, owner of PMB BioTek Consulting, spoke on behalf of AOAC International, where he primarily discussed public safety. He said they want cannabis products to be regulated with food safety in mind, asking for FSMA to apply to hemp products. They want to adequately ensure product safety with things like mandating HACCP plans, recall readiness, saying hemp products should be treated just like food products.
Retailers & Distributors
Peter Matz, representing the Food Marketing Institute, the trade association for the supermarket industry, said that regulatory ambiguity is a serious issue that needs addressing. “There is mass confusion in the marketplace for the public, suppliers, retailers and state regulators,” says Matz. “Demand for CBD products in human and animal use is growing rapidly. ¼ of American have already tried it. We are fielding questions from companies seeking clarity regarding the current federal regulatory framework.” He added, what many others also mentioned, that the FDA needs to move swiftly to provide a pathway to regulation.
State Regulators
Next on the docket came presentations from state government entities, including state departments of agriculture, followed by healthcare professionals. The state regulators that spoke mentioned a lot about food safety, standards, testing regulations, GMPs and things like that to protect consumer safety. “Currently states are struggling with the lack of sound scientific research available in CBD and long-term health impacts,” said Pam Miles, representing the Virginia Department of Agriculture.
The docket for state regulators delivering presentations
One interesting aspect on their talks however was telling the FDA just how large their markets have gotten already and how they need guidance on how to regulate markets in their own states. Joseph Reardon, with the North Carolina Department of Agriculture, said they already have about 600 farmers growing hemp and thousands of processors working with the product in their state. “We urge the FDA to resolve the statutory issues improperly establish a legal pathway for CBD products to enter the market place,” Reardon commented. He also asked that the FDA extend the written comment period from July to August. “We are simply looking for a regulatory framework on the extraction, production and reconstitution of CBD or cannabinoid related products.”
Healthcare & Research
Healthcare providers, and physician testimony also echoed a lot of the same concerns, including the lack of research done, concerns about effects on at-risk populations and concerns about use as ingredients in dietary supplements and food. Some of the presentations also highlighted the room for nefarious activity in an unregulated marketplace. Some went as far as to mention cases where they found CBD vape juices with DXM in it (the active ingredient in cough syrup), CBD products found to contain THC, as well as synthetic cannabinoids responsible for drug overdose deaths. Some advocates in the hemp and CBD community have equated these arguments similar to reefer madness.
The major takeaway from this hearing is that everyone wants to see more data. Researchers and healthcare providers want to study the efficacy of CBD used in medicine, regulators want public safety information, patient advocates want to see data about effects on at-risk populations, trade organizations want data to back up label claims and the FDA wants to see just how safe CBD really is.
Illinois lawmakers came one step closer to legalizing adult use cannabis this week. The Illinois Senate voted 38-17 to pass HB 1438, which is now headed to the House for a vote. Sponsors of the bill, Senator Heather Steans (Chicago-D) and Representative Kelly Cassidy (Chicago-D), along with Governor J.B. Pritzker, have been viewed as the architects of this piece of legislation.
Illinois Governor J.B. Pritzker
This is not the first time that Democrats in the Illinois legislature have attempted to legalize adult use cannabis. Back in 2017, state Representative Kelly Cassidy and state Senator Heather Steans, the two lawmakers sponsoring this bill, sponsored a legalization bill that failed to garner support.
It is clear that Illinois is excited about cannabis, including the less-than-0.3%-THC variety, or legal hemp under the Farm Bill. Within two days of announcing the opening of license applications for growing hemp, the Illinois Department of Agriculture received roughly 350 applications.
Regarding the bill that just cleared the Senate, one particularly contentious issue raised was the allowance for “home grow.” The Senate approved the bill after a provision was added allowing just medical cannabis patients to grow their own, not everyone.
If this bill manages to pass through the House, Governor Pritzker is expected to sign the bill immediately. The bill would legalize and regulate sales of cannabis and cannabis products on January 1, 2020.
Good news came to patients using medical cannabis in Arizona earlier this week: Lawmakers in Arizona unanimously passed SB1494 through the state’s House and Senate, the bill requiring mandatory lab testing for medical cannabis products. Arizona Governor Doug Ducey is expected to sign the bill and has ten days to do so.
Arizona Governor Doug Ducey
When Governor Ducey signs the bill into law it will mark the first time since the state legalized medical cannabis in 2011 that a measure to protect patient safety via lab testing will be implemented. According to the bill, beginning November 1, 2020, all cannabis products shall be tested prior to sales “to determine unsafe levels of microbial contamination, heavy metals, pesticides, herbicides, fungicides, growth regulators and residual solvents and confirm the potency of the marijuana to be dispensed,” (Page 6, Section 36-2803).
The bill requires dispensaries to provide test results to patients immediately upon request. Dispensaries need to display a sign notifying patients of their right to see “certified independent third-party laboratory test results for marijuana and marijuana products for medical use,” according to the text of the bill (Page 7, Section 36-2803.01).“There will have to be some serious planning, but other states have achieved this and we can too.”
Under the new bill, the Arizona Department of Health Services will adopt rules to certify and regulate labs, establishing requirements like health and safety protocols, mandatory quality assurance program and standards, chain of custody and sampling policies, adequate records, accreditation, proficiency testing, among other requirements (Page 6-7, Section 36-2803).
Ryan Treacy, co-founder of the Arizona Cannabis Laboratory Association (ACLA) and CEO/Founder of C4 Laboratories, says this is a major turning point for Arizona’s cannabis industry. “We have been devoid of regulations with regard to testing the entirety of the program since it was legalized; This will be a significant change,” says Treacy. “Now patients can make sure they are getting a safe and clean product and getting exactly what they paid for.”
For those in the know when it comes to cannabis testing in the United States, the new requirements will look very similar to other states with testing requirements. One particularly unique aspect of the new program, however, is the establishment of a “Medical Marijuana Testing Advisory Council,” made up of stakeholders representing different interests in Arizona’s cannabis industry. Members of the council will include representatives from dispensaries, labs, cultivators, concentrate producers, edibles producers, as well as registered patients, caregivers, a representative from the Arizona Department of Public Safety, a licensed health care provider and “any other members deemed necessary by the director,” reads the text of the bill (page 16, Section 36-2821).
Ryan Tracy, co-founder of the ACLA and founder/CEO at C4 Labs.
“Other states like California have complained about detection limits, while Arizona is taking a unique approach with an advisory council with stakeholders in the cannabis industry,” says Treacy. “So that when the Department of Health Services promulgates rules, they are taking into account the challenges in the cannabis industry specifically. We have a chance to do this right and avoid pitfalls we’ve seen in other states.”
One problem worth mentioning for Arizona’s cannabis industry: Dispensaries have not been required to test products for patients since medical cannabis was legalized back in 2011. That means many producers could be very used to operating procedures that don’t account for lab testing. With mandatory lab testing, some producers may be behind the curve when it comes to mitigating contamination.
According to Treacy, this could disrupt the supply chain a little bit. “When testing becomes mandatory in November 2020, dispensaries will need a full panel of tests performed on their samples,” says Treacy. “With the entire market now required to complete a full panel in depth analysis on each product, product testing will become a more time-consuming stop in the supply chain. So companies will need to work that into their plan to meet regulation requirements to prevent a bottleneck and maintain patients’ access to their cannabis medicine.”
Arizona has a chance to prevent that type of bottleneck seen in states that implemented testing requirements, like California for example. “When you have a habitual history of not testing products, it can be very hard to change, which adds to Arizona’s challenges,” says Treacy. “We need to make sure this does not affect access for patients and the ability of the industry to continue to flourish and grow.”
While Treacy thinks the transition will be difficult for some, it’s absolutely necessary for Arizona’s patients to access clean and safe medicine. “There will have to be some serious planning, but other states have achieved this and we can too.”
CBD-infused coffee? CBD-infused chewing gum? Many think cannabis and its derivatives are the next big wellness craze that will make the demand for flax, fish oil and turmeric combined seem meager. The food and drink industries are cautiously exploring the cannabis market, trying to determine the optimal timing to introduce their own product lines.
The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.
The cannabis plant produces chemicals known as cannabinoids, one of which is cannabidiol, or CBD.When the Agriculture Improvement Act of 2018 (also known as the Farm Bill) passed, the food and drink industries jumped into the hemp-derived CBD world with both feet because the Farm Bill lifted the federal ban on hemp production, which previously classified hemp as a controlled substance akin to heroin. Lifting the ban led to an explosion in the number of CBD products hitting the market around the country. However, repeated and recent actions by the U.S. Food and Drug Administration (FDA) provide clear warning signs that the legal pitfalls surrounding CBD in food and drinks are not yet resolved.
CBD is marketed as a featured ingredient for a wide variety of products ranging from pain relievers, to protein bars beverages and supplements. Both CVS and Walgreens have announced plans to carry CBD products in their stores. However, despite the money pouring into CBD products, federal agencies are not relinquishing their controls.
In the Farm Bill, the FDA retained authority to regulate products containing cannabis or derivative products. The FDA has regulatory authority over foods (including dietary supplements and food additives), drugs (prescription and non-prescription), cosmetics, veterinary products and tobacco products, among other categories. Therefore, vendors of virtually all products containing CBD are regulated by the FDA.
It is important to note that the FDA does not view CBD derived from hemp differently than any other CBD despite the fact that it is non-psychoactive. CBD is an active ingredient in at least one FDA-approved prescription drug—Epidiolex. Therefore, under the logic of the Federal Food, Drug & Cosmetic Act (FDCA), CBD is a drug. If a substance has been “approved” by the FDA as an active ingredient in a drug product, it is per se excluded from being defined as a “dietary supplement” under sections 201(ff)(3)(B)(i) and (ii) of the FDCA and it cannot be included as an ingredient in food.
It is highly unusual that CBD has been able to proliferate in the marketplace given the FDA’s technical legal position on it. FDA regulations on drugs are much more stringent than for food or dietary supplements. Generally, the FDA’s position on CBD in food and beverages is that it is unlawful to engage in interstate commerce with products containing CBD. The given reason is that the Federal Food, Drug, and Cosmetic Act prohibits the introduction of a food product into interstate commerce that contains an active ingredient in an approved drug. While arguments against this position exist, they have not carried the day, yet.
An example of a warning letter the FDA sent to a CBD products company making health claims
In March 2019, FDA Commissioner Scott Gottlieb announced he would be resigning on April 5, 2019, but he sent clear warning signals to the CBD industry prior to his departure. In early April, the FDA cracked down on websites making “unfounded, egregious” claims about their CBD infused products. The FDA sent warning letters to three companies who made claims about their CBD products including that their CBD products stop cancer cell growth, slow Alzheimer’s progression, and treat heroin withdrawal symptoms. Commissioner Gottlieb issued a statement that he believed that these were egregious, over-the-line claims and deceptive marketing that the FDA would not tolerate.
The FDA also announced in early April that it will hold a public hearing on May 31, 2019, to obtain scientific data and information related to safety concerns, marketing and labeling cannabis and cannabis-derived compounds including CBD. The FDA expressed interest in hearing whether drug companies would still be motivated to develop drugs with CBD and other compounds if their use in food and beverages became more widespread. The FDA also announced plans for an internal working group to review potential pathways for legal marketing of CBD foods and dietary supplements. Of particular concern to the FDA is online retail products available nationwide such as oil drops, capsules, teas, topical lotions and creams.
Still, some states are trying to take matters into their own hands. For example, the California State Assembly recently passed bill A.B. 228 that permits the inclusion of CBD in food and beverages. Colorado has already passed a similar bill. Other states such as Ohio and cities such as New York City have gone the other way, prohibiting CBD from being added to food or beverages.
The May 31 FDA hearing is an opportunity for interested parties to give feedback and help focus where the FDA should be creating clear industry standards and guidance. In the meantime, the industry should continue to expect warning letters from the FDA as well as possible state-level scrutiny. Companies would be wise to proactively review their labels and promotional practices in order to mitigate the risk of forthcoming actions and engage in the FDA’s provided avenues for industry input. Companies must also look to the laws of the states and even to the counties where they are selling their products.
As of today, Arizona is the only state in the country that has legalized medical cannabis but does not require producers to test their medical cannabis. States throughout the country that legalize medical cannabis routinely implement regulations that require third-party, independent lab testing to protect patient and consumer safety. Arizona legalized medical cannabis for a number of qualifying conditions back in 2011, but still has no measure like other states to protect patient safety.
Lawmakers in Arizona now have the opportunity to change that with SB1494, which passed unanimously through the state’s Senate back in March of 2019. According to the Arizona Cannabis Laboratory Association (ACLA), the bill awaits action in the House of Representatives. The ACLA says in a press release that “supporters of the bill are calling on lawmakers to move on a bill that unanimously passed in the Senate earlier this year.” The bill would require producers to use independent, third-party labs to test cannabis for things like harmful toxins and molds.
Ryan Tracy, co-founder of the ACLA and founder/CEO at C4 Labs.
According to Ryan Treacy, co-founder of the ACLA and CEO/Founder of C4 Laboratories, the ACLA was formed for a few important reasons: “We feel it is very important that we encourage and cultivate a professional and collaborative rapport among the reputable Arizona cannabis labs,” says Treacy. “So that we can call upon the collective groups’ years of experience to help provide insight and suggestions on how we as a group can insure the most accurate and consistent results for our clients throughout the state and ultimately their patients.” Treacy went on to add that it is particularly important their collective voice be heard at the State Capitol as lawmakers work towards passing SB 1494.
“There isn’t any reason to wait for someone to get sick before the legislature passes this bipartisan bill. Let’s get it done!”George Griffeth, President of the ACLA, says there is a sense of urgency in passing this bill before the voters decide on legalizing recreational adult-use cannabis next year. “Everyone agrees that now is the time to be proactive to protect patients from unsafe contaminants,” says Griffeth. “Currently 61 tons of medical marijuana is consumed by patients and many believe that the number of people using the medicine will continue to grow. With a ballot initiative related to the recreational use of marijuana facing voters next year, Arizona must act now to make sure standards are in place.”
They say the bill has bipartisan support and many stakeholders in Arizona’s cannabis industry express support for it as well. For Ryan Treacy, he is worried about patients consuming harmful chemicals and toxins. “My colleagues and I are deeply concerned that more than two-hundred thousand people who use medical marijuana could be inadvertently exposing themselves to toxic chemicals, E. Coli, Salmonella or mold,” says Treacy. “There isn’t any reason to wait for someone to get sick before the legislature passes this bipartisan bill. Let’s get it done!”
Treacy says this bill is particularly difficult to pass because the original measure to legalize medical cannabis was a ballot initiative. That means the bill needs 75% support in both the House and the Senate in order to amend the original measure. “The passing of this bill would be a huge win for the patients and will help to ensure honesty and transparency for those that operate in the current medical cannabis program here in AZ,” says Treacy. “This testing bill is also written with legislative intent to cover any and all future adult use or recreational use legislative laws or ballot initiatives. We hope to have a final verdict on this bill by end of this week or early next.”
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