Tag Archives: safety

Building An Integrated Pest Management Plan – Part 1

By Phil Gibson
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This is the first part of a series of articles designed to introduce an integrated pest management framework for cannabis cultivation facilities. Part one details an overview of the plan as well as pest identification. Part two comes out next week and will delve into the world of pest monitoring and record keeping. Stay tuned for more!

Figure 1: Integrated Pest Management Cycle

Background

Integrated Pest Management (IPM) is a philosophy of pest prevention and control that integrates cultural, mechanical, physical and chemical practices to control pest populations within an acceptable degree of economic tolerance.

IPM encourages growers to take a step-wise approach to determine the most appropriate means necessary for avoiding pest-related economic injury through careful consideration of all available pest control practices.

When practicing IPM, less invasive non-chemical practices are given priority, until escalation necessitates otherwise.

This is Part 1: Pest Identification & Monitoring/Communications

Personal experience in a facility is a great place to start. Review your history and identify a list of pests that you have experienced in this or previous grows. Point out which pests currently exist where they were or are currently and possible sources of the contamination/infestation.

Figure 2: Healthy Aeroponic Mother Stock

Map out your facility with clear entry/exits, plumbing & drainage and air flow access to visually see and understand potential access points for crawling, flying or airborne pests.

From your nursery mother room to cloning and vegetation areas, what are the transfer methods as you move from one area to another. Are pests present in these areas? Where could they have come from? Oftentimes, a cultivator may not have the space for their own mother and cuttings/cloning space. In these cases, where did the outsourced clones come from? What are the IPM controls in place for these genetic sources? Are they carriers of the challenges transferred to your own facility? It is important to identify the possible source of pest potentials

Does your flower room have white flies or fungus gnats? Locating these and identifying the likely source is a good place to start if you have an ongoing infestation.

Figure 3: Example Aeroponic Facility Layout For IPM Planning

Powdery mildew is a routine challenge if air into your facility is not filtered and sterilized to eliminate these spores.

What is the Source of Your Irrigation/Fertigation Water?

Water is a crucial element for high-value indoor farms such as those that grow cannabis. However, water can also be a source of disease-causing microorganisms that can negatively impact the growth and yield of crops. Monitoring, filtering and sterilizing the biological contents of water is therefore crucial in ensuring the health and quality of high-value crops.

Unfiltered water can contain a range of pathogens such as bacteria, viruses, fungi and parasites that can cause root, stem and bud rot. These diseases can cause significant losses in crop yield and quality, which can be devastating for indoor farmers growing high-value crops.

Figure 4: Precision Aeroponics at FarmaGrowers GMP Facility, South Africa

Monitoring the quality of water that is brought into the indoor farm is the first step in ensuring that the water is free from harmful pathogens. This involves regular testing of the incoming water for parameters such as pH, dissolved oxygen, TDS, nutrient content and microbial load. This allows cultivators to identify aspects of the incoming water they need to address before the water is provided to their crops to prevent potential problems.

Is your plumbing building biofilm that is feeding into your irrigation lines? Obviously, there are many potential sources when you go through an inventory of the risks for your facility. From that initial step, you will build your management team and label who should be contacted when a pest is found. Do you have an IPM specialist or is this a resource that needs to be contracted to address an infection?

Building this communications tree is your first step to fewer pest issues and higher yields and potency.

For the complete white paper on Integrated Pest Management Recommendations, download the document here. Part two comes out next week and will delve into the world of pest monitoring and record keeping. Stay tuned for more!

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Cannabis Seeds: The Fundamental Building Blocks of the Thriving Regulated Industry

By Landra DeLoach
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Spring is a time of renewal, growth and planting. While many gardeners focus on traditional crops, there is a growing community of cannabis enthusiasts who are also embracing the opportunity to cultivate their own cannabis plants.

Research from New Frontier Data reveals that approximately 3 million people worldwide grow their own cannabis at home, resulting in a staggering yield of approximately 11 million pounds of smokeable flower each year. This number is projected to reach 15 million pounds annually by 2030. Amidst all the excitement around planting and growing, it is essential not to overlook the indispensable foundation of all cannabis plants: the seeds.

The Power of Cannabis Seeds

Affordable and versatile, cannabis seeds provide growers with the ability to cultivate specific strains tailored to their health and wellness needs. These seeds are typically the size of a peppercorn, characterized by an ovular shape tapering to a pointed end. While seeds can vary in color and striation, they typically exhibit a brown hue. Unfertilized seeds, on the other hand, appear off-white and are considerably smaller in size.

Economic Impact

These tiny powerhouses enable growers to cultivate customized strains, while also contributing to the economic growth of the global seed market.

The global cannabis seeds industry was valued at $1.3 billion in 2021, according to Allied Market Research. Experts predict that this figure will surge to $6.5 billion by 2031. Notably, North America accounted for more than 80 percent of the global seed market in 2021.

Benefits for Home Growers

According to New Frontier Data, 70 percent of home growers purchase seeds and cultivate cannabis for the sheer enjoyment of the process while 52 percent find it to be a convenient option. In addition to these advantages, numerous research studies highlight the multiple health benefits of growing one’s own crops, including reduced stress levels, decreased anxiety and increased exposure to the outdoors. Some innovative chefs have even begun incorporating cannabis seeds into their culinary creations, further expanding the versatility and appeal of these seeds.

Seed Safety Considerations

Given that cannabis seeds form the foundation of the entire cannabis industry, it is crucial to understand the various options for obtaining them. One increasingly popular method is through online seed banks, such as Rocket Seeds. However, it is important for those new to purchasing seeds online to thoroughly research the legalities surrounding these transactions. Cannabis seeds are subject to legislation similar to other cannabis products such as flower, concentrates and edibles. The legality of purchasing seeds varies depending on the state in which one resides. It is vital to check local legislation before making any decisions. In states where adult use cannabis is legal, buyers only need to be 21 years or older to order seeds online. Conversely, in states where adult or medicinal use is not permitted, purchasing seeds online remains completely illegal.

Purchasing Seeds Online

Selecting a reputable online seed bank is critical. Ensure that the chosen seed bank has positive customer reviews, offers quality customer service and provides germination guarantees. Researching the available strains, payment options and shipping policies is also essential. It is advisable for beginners to start small by purchasing only a few seeds at a time. Prior to planting, conducting thorough research is necessary, as there are numerous variables to consider and a steep learning curve to navigate. Fortunately, abundant resources are available to assist in this journey. For example, we offer valuable advice on getting started. Additionally, individual seed manufacturers, as well as online resources and apps like Seedtracker, provide guidance and support.

Continued Growth

The U.S. legal cannabis market is projected to exceed $31.8 billion in annual sales by the end of 2023, according to leading cannabis research firm Brightfield Group. Furthermore, they anticipate that within five years, the market will surpass $50 billion in annual sales. Amidst this flourishing industry, it is important to recognize that seeds form the backbone of this expansive market.

As the cannabis industry continues to thrive and expand, it is crucial to acknowledge the fundamental role played by seeds. These tiny powerhouses enable growers to cultivate customized strains, while also contributing to the economic growth of the global seed market. By recognizing the benefits of growing one’s own cannabis and taking proper precautions when purchasing seeds, individuals can partake in this exciting and rapidly growing industry while savoring the rewards of their own harvests.

Rise of the Machines: The Case for Automation in the Cannabis Industry

By Kyle Loucks
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The Case for Automation in the Cannabis Industry

History has shown that if companies fail to innovate when new technology emerges, even household name brands with enormous market share can squander their success if they are blind to anything that could ever unseat them from the top.

Kodak developed digital camera technology in the 1970s but didn’t envision a world where the film market wasn’t dominant. Toys R’ Us failed to adapt to the changing retail landscape, and Amazon became the chief source of online toy sales. Blockbuster famously laughed Netflix out of the room when the now-$149 billion behemoth sought to sell for a measly $50 million.

A “knockbox”-style unit for producing prerolls

Brands in the cannabis landscape can also fall victim to this same misstep. New technologies are driving the industry forward, yet many brands are still standing by sub-par processes. Whether due to misplaced beliefs around automation or an unwillingness to invest, cannabis brands could suffer the same fate as many of these bygone-era brands.

The Financial Argument: Automation Reduces Overhead 

The financial argument for automation is at the top of the list of motivators for most cannabis businesses. A great example of this is with pre-roll production. For cannabis brands still employing a “dexterous approach” to their pre-roll manufacturing, staying afloat to keep up with demand is a constant battle. Rebel Spirit, currently the number one pre-roll brand in Oregon, was burning through eye-welling amounts of money in labor costs to produce 300,000 pre-rolls per month. With a crew of 22 full-time pre-roll manufacturers, the team at Rebel Spirit quickly realized their process was unsustainable, and they were headed for an economic crisis if they didn’t cut costs.

The Blackbird atuomated system

They were using a knockbox-style unit which they had modified themselves in an attempt to force it to fit their needs. But this “semi-automated” solution simply wasn’t working. Rebel Spirit then turned to our team at RollPros to clean up and fully automate their production process, helping them to create quality pre-roll at scale with a fraction of the labor costs. (We are the Vancouver, WA-based designer and manufacturer of the Blackbird automated joint rolling system.) For them, it wasn’t a matter of greed, as some opponents of automation sometimes claim; it was simply a choice of going out of business or not. In competitive markets like the Beaver State, where every dollar counts, the case for automation was a no-brainer.

The Remote Argument: Automation Reduces Risk Of Human Error 

It’s a basic concept: the more human interaction in your processes, the more risk for error. We, as flawed humans, are simply not capable of being as precise or consistent in our work as a machine can be. Consider the cultivation process. Most experienced cultivators will tell you that growing cannabis is easy, but growing quality cannabis is very difficult, with a lot that can go wrong.

Enter one of the most valuable automation tools for cannabis cultivators – automated irrigation systems. With your irrigation systems and nutrients on autopilot, cultivators can ensure plants get the ideal mix of nutrients regardless of whether you are on-site, remote or facing a staffing crunch. Sensors can provide real-time data so that water, nutrients or even light can be adjusted as needed. In many cases, even these adjustments can be automated. (Think AI hasn’t entered the cannabis space yet? Think again!) Sure, there is always a potential for issues no matter how advanced a system you use. But when you compare this to a farmer using a manual watering and nutrient system, there are far fewer opportunities for mistakes. Does a human feel the difference between .94 gallons of water and 1 gallon of water? No. But a well-calibrated irrigation system can tell the difference and even alert you if it goes outside of whatever tolerance limits you set.

When the cost of flower is high, human errors that lead to damaged or inferior product are often overlooked. But when flower prices drop as markets mature, success versus failure can be balanced on a knife-edge, and cultivators can’t afford to make mistakes.

The Skynet Argument: Automation Increases Productivity Without Taking Your Job 

Whether AI is coming for our jobs or will destroy human creativity as we know it has been argued ad nauseum since the release of AI tools like ChatGPT and Midjourney. The good news? Automating your business doesn’t mean enlisting the T-1000 from Terminator 2 to terminate your 9-to-5. Think of automation as Arnold Schwarzenegger telling you to come with him if you want to live.

The Green Vault automated packaging system

The truth is that any task that needs to be completed frequently or on a set schedule is ripe for automation. Automation eliminates tethering your most talented employees to cog-in-the-machine work that wastes their time and abilities. Freeing them up to focus on more high-value tasks like customer service, marketing, or new product development will likely make your business more profitable long term, and make your employees happier with their work.

No industry has been spared from the impacts of industrial automation, says Amar Olgeirsson, CEO and founder of Green Vault Systems, but, “labor is typically not reduced as a result of automation.” Instead, “production is increased, and workers’ value increases because of higher production in terms of units produced per labor time. By increasing worker efficiency, companies and corporations are able to pay their workers a higher salary,” says Olgeirsson.

The Performance Argument: Automation Guarantees Consistent Quality Every Time 

Expansion across state lines means consumers know they can buy the same quality product whether they buy it on the East Coast or West Coast. You know that you can buy your favorite Red Blend wine whether you’re in Denver or Atlanta and expect to enjoy the same tasting glass (barring any unintended oxidization). If a customer purchases that same glass of wine, and it doesn’t meet their expectations of what it should be (it’s inconsistent with the last time they had it), a brand is essentially breaking a promise to that customer. When a customer doesn’t get what they want and expect out of a product, they’ll quickly move on to a competitor. Consistency builds loyalty… inconsistency destroys it.

A preroll infusion automated system

The cannabis industry is notorious for producing inconsistent products. It’s not surprising, considering the near-total ban on state-to-state commerce, (thanks federal government!) And, of course, the variation that can occur from crop to crop, batch to batch or facility to facility. There are so many variables to just the cultivation process; the amount of light a crop gets, the type and dosage of nutrients, the growing medium that’s used, the amount of air flow in the facility… The list goes on, and that’s just the first of many processes needed before a product ends up on shelves! It’s nearly impossible for humans to manually manage and ensure consistency of all these variables without the help of some level of automation.

Nohtal Partansky, ex-NASA-JPL engineer and CEO of Los Angeles-based Sorting Robotics, teamed up with fellow NASA Jet Propulsion Laboratory colleagues Cassio Santos and Sean Lawlor to found their firm that creates next-generation hardware and software for cannabis industry producers.

“Automation in the cannabis industry plays a crucial role in maintaining product consistency by reducing human error and standardizing processes across cultivation, extraction, and packaging,” says Partansky. “If brands are going to expand across states, consistency is a requirement if customer loyalty is ever going to be a market driver for sales.”

The Contamination Argument: Automation Limits Human Error & Contamination Risk and Improves Product Safety

Our industry demands very strict safety standards. Our customers deserve safe products, but beyond that, the testing requirements mandated by regulations in most markets are very, very strict. Each and every human touchpoint in your processes carries with it additional contamination risk. Even with stringent protocols, mold, mildew and other unwanted crits can more easily venture their way into final products as the human variable increases.

Automation minimizes these risks and improves the safety of the product for consumers, and reduces the risk of recalls or other regulatory issues. Consider that for many cannabis businesses in hyper-saturated, competitive markets, a significant product recall can be the end of the road. Automating production processes provides a reliable and consistent solution in an industry that demands the highest safety and quality standards.

“The new and burgeoning Cannabis industry and its consumers are no exception and possibly benefit it more than other industries.  The medicinal qualities of Cannabis products make consistency, quality, safety, and traceability paramount to the consumer.  Cannabis products are most often consumed by ingestion into the lungs which means product cleanliness and quality are essential to safety.  Chemically derived oils and extracts would not be possible without automation equipment. Again, industrial automation is a huge benefit to the Cannabis space, to the producers, their employees, and maybe most importantly to the consumer”.

Amar Olgeirsson, CEO & Founder, Green Vault Systems

Olgeirsson’s take on products created on specialized automation equipment? “Products produced on purpose-built machinery are more consistent and of a higher quality which lends itself to better oversight, enhanced traceability, and improved product safety.”

The Physical Argument: Automation Eliminates Tedious & Overhead-Heavy Tasks

In an increasingly competitive marketplace like cannabis, streamlining processes and reducing the liabilities that come with human labor – like being sidelined from Carpal Tunnel – is key. Let’s consider the trimming component of the post-harvest process. Manual trimming is monotonous, low-paying for workers, and an unrealistic way to harvest cannabis at scale. Also, it’s hard to be successful when team-wide prescriptions for night-time wrist splints are a threat.

The Mobius M108S Trimmer

Leaning into “hand-trimmed” as a differentiator for your brand? Many connoisseurs will argue that hand-trimmed bud is superior because buds stay aesthetic and trichomes aren’t lost. That may have been true in the early days of automated trimming machines, but with today’s crop of super-sophisticated trimming technology, it is now nothing more than a myth. (Yes, myths and misled traditions can be difficult to overcome in our industry, but I digress…)

The Mobius M108S Trimmer, for example, allows operators to reduce the staff required to process thousands of pounds of product every year without compromising quality. It’s next-gen tech not found on traditional trimmers can produce hand-trim quality buds with minimal trichome loss.

When flower prices are high, especially in the case of newly-legalized markets, it can be easy for operators to overlook the cost of trimming, and pay their employees higher wages to offset the physical risks to their bodies. But what about when product prices inevitably fall once the post-legalization honeymoon period wears off? It’s unrealistic (and unethical, I believe), to pay employees minimum wage while putting their health and safety at a significant risk. In the above example, at some point, your operations will grow to a point where hand-trimming will dig you further into a fiscal hole every time you harvest.

The Future Argument: Automation Isn’t Going Away (and Your Competitors Know It)

Automation could cause you to lose people, just not in the way you might think. Ultimately, competitors in any space will invest in new technology to streamline people, processes and tools to establish a competitive advantage. This investment puts them in a better position to attract talented employees that stick around for the long term.

Automation is like a boat motor in the 21st century, and companies that don’t use it are paddling against the current. Sure, you can use a wooden oar, but your competitors know paddling is too much work and will strap a motor to theirs. The truth is that companies that drag their feet out of stubbornness or inability to see how the current situation could ever change will often find their employees jumping ship to go elsewhere.

An automated vape cart filling system

“I strongly believe that automation not only propels our industry forward but also sets the stage for a more profitable future in cannabis production for those that embrace technology rather than fight it,” says Ryan Hoitt, CEO, developer & founder of Vape Jet in Portland. “I can confidently say that it enables businesses to fine-tune operations, improve product quality, and achieve unmatched consistency.”

Saying that you will eventually be forced to automate sounds harsh, but it’s largely true. As soon as your competitors deploy automated processes, they gain an advantage. If you don’t do the same, it will become more difficult to compete, stay profitable and stay in business.

The Consumer Argument: Automation Provides Consumers More Options

Automation isn’t going away, and it’s certainly not a fad like pogs or planking. Automation drives lower production costs, which means lower-priced products for consumers. This process has been behind the dramatic increases in global living standards and population growth since the birth of the Industrial Revolution and is not likely to change anytime soon.

Automation allows producers to manufacture a broader range of products and focus on providing the consumer with more options. Consumers want to be in control of their purchasing decisions, and companies that deliver variety will be the ones to reap the rewards.

Embrace the Future with Automation

History has shown us time and again that failure to innovate can lead even the most prominent brands to fall victim to their inability, or unbelief, in the necessity to evolve. Automation is a no-brainer in crowded and competitive markets.

No doubt, the future of the cannabis industry will trend toward automation. Businesses embracing it will have a significant advantage over those that do not. Companies that drag their feet in the face of disruptive automation risk resigning to the same fate as those brands that underestimated technology at the expense of their own existence. No industry is immune from disruption, and there will be dynamic entrepreneurs who will come along and see to it. Embrace the change, embrace automation and technology, and you’ll increase your chances of winning in the cannabis industry!

New Jersey Market Grows, Regulators Make Licensing Progress

By Cannabis Industry Journal Staff
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2023 has so far been a productive year for the New Jersey Cannabis Regulatory Commission (CRC), the government body tasked with overseeing the state’s medical and adult use cannabis markets. The licensing process since New Jersey first launched its adult use cannabis market has been slow, but intentional and systematic.

When the state first launched adult use sales in April of last year, only thirteen dispensaries in the Garden State had their doors open for customers. A little more than a year has passed and now 27 dispensaries at this time have opened their doors for adult use customers.

Holistic Solutions, a dispensary based in southern NJ

The CRC has been a busy body this year, issuing hundreds of conditional licenses to microbusinesses and standard licensees (temporary licenses awarded to applicants giving them the green light to obtain local approval, find real estate and apply for a conversion to an annual license). Of the annual licenses they have awarded in 2023 so far, 18 have gone to cultivators, 12 to manufacturers, 35 to retailers and one laboratory. That’s an additional 65 cannabis businesses given approval to start operations.

Just last week, Holistic Solutions, based in Waterford, New Jersey, announced that they started serving adult use customers. Holistic is New Jersey’s first Black woman-owned cannabis licensee, with Suzan Nickelson at the helm. “We are thrilled to have the opportunity to serve adult-use customers at Holistic Solutions,” says Nickelson. “Our mission has always been to provide education and access to natural healing solutions, and we are excited to continue that mission for all of our customers.”

The Cannabis Quality Conference takes place in New Jersey this year, October 16-18, 2023. Click here to learn more.Valley Wellness, the first independently owned dispensary to open in the state, also opened its doors to adult use customers last week in Somerset County. “While the market is expanding, it takes cannabis companies months, if not years, to open,” Sarah Trent, owner of Valley Wellness, told reporters. “So we expect our product selection will remain stable and similar over the next year or so. That said we are anxious to add new products made from local New Jersey growers and manufacturers.”

With all these new licensees and a larger marketplace comes tax revenue the state is eager to see. Back in March, legislators in the state approved a bill that would allow cannabis businesses to deduct ordinary business expenses on their state tax return that they are prohibited from deducting on their federal tax return, the dreaded 280E tax code that cannabis stakeholders know as a painful thorn in their side. Governor Murphy signed that bill into law yesterday, which should lessen the massive tax bills that cannabis businesses in the state are accustomed to seeing.

As the state’s cannabis market continues to blossom, a large number of those new licensees are expected to come online before the end of the year.

Facing Cybersecurity Risk? Here are 6 Ways to Minimize it.

By Brian J. Schnese
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The cannabis industry is the latest target for cybercriminals. Why? Because many cannabis operations employ less than 100 workers and few are equipped with sophisticated IT systems and knowledgeable on-staff IT personnel, so they are often easier to exploit.

Add the all-cash nature of the business, along with the large amounts of protected health data and personally identifiable information medical dispensaries may store and the industry’s shift toward operational automation to increase yields and lower labor costs and you’ve got an industry that’s extremely vulnerable and a prime target for cyber extortion.

Safeguard your corporate networks and internet connections by encrypting information and using a firewall.

Take the cannabis businesses in Ontario that lost millions after a local distributor was hit by a cyberattack and was incapable to process or deliver orders to local retailers. In another cyberattack, hackers stole $3.6 million that an Australian medicinal cannabis firm intended to send to an overseas contractor.

A still prevalent tactic is for hackers to target workers with email-based phishing scams that enable the installation of malware or ransomware to obtain protected health information to sell or lists of high-profile clients to extort.

While there’s a lot to fear and be on the alert for, there’s also a lot that cannabis businesses can do to both reduce their risk of an attack and proactively protect themselves.

Six hallmarks of a strong cyber-defense program:

  1. Assess the risk. One place to start building a comprehensive approach to cybersecurity is to conduct an appropriate cyber vulnerability or risk assessment of your cannabis business. This exercise can reveal gaps, but it also helps prioritize your effort and develop a vision for your goal state.
  2. Train and test. Train employees on the importance of cybersecurity. Make sure employees undergo phishing training and conduct refresher courses at least annually. Then, test them. Are employees retaining the information shared in training? Send simulated phishing emails and track performance to determine if training hits the mark.
  3. Secure the perimeter. Safeguard your corporate networks and internet connections by encrypting information and using a firewall. If your employees work remotely, consider use of a Virtual Private Network (VPN) to allow them to safely connect to your network from out of the office.
  4. Engage protective tools. In addition to using antivirus software and keeping all software updated and patched, multifactor authentication (MFA) and endpoint detection and response (EDR) are crucial for maintaining a secure network. Most carriers require MFA for remote network access, on email, and to protect privileged user accounts. EDR monitoring of devices connecting to the network is also increasingly a minimum requirement for insurance coverage.
  5. Develop a backup strategy. A solid data backup strategy makes companies less susceptible to ransomware attacks by allowing organizations to restore operations. Perform frequent backups — every day if possible — and consider leveraging cloud solutions along with storing backups in an immutable state off-site or off-network.
  6. Build an incident response plan. Cannabis companies should have a plan for responding to an attack, a system for validating what happened and the resources to remediate the issue.

What if a breach occurs?

Even with a great incident response plan in place, the road to recovery from a cyberattack is a complex and rapidly evolving landscape. Should we communicate with the threat actor? Should we pay the ransom demand? How do we capture forensic evidence? What are the laws guiding notification of impacted employees or clients?  When an organization has armed itself with a cyber insurance policy, they not only transfer much of their risk, but they often gain access to a carrier panel of specialized response providers that include breach coaches, forensic investigations firms and privacy attorneys.

In addition to leveraging the specialized post-breach expertise offered by carriers, insureds should also consider familiarizing themselves with and leveraging any pre-breach resources provided, which often include no-cost external vulnerability scans, employee awareness training and discounted technical security solutions.

SC Labs Expands, Acquires C4 Laboratories

By Cannabis Industry Journal Staff
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According to a press release published on Monday, SC Labs has acquired C4 Laboratories, a cannabis testing lab located in Scottsdale, Arizona. The acquisition means SC Labs has expanded their footprint into five states total. Originally based in California, the cannabis testing company now has locations in Arizona, California, Colorado, Michigan and Oregon.

Ryan Tracy, Founder/CEO of C4 Labs.

Ryan Treacy founded C4 Laboratories and has been a vocal advocate for product safety testing since 2016. As CEO of the company, he led the laboratory through regulatory upheaval and a lot of changes the state has seen since legalization.  He also co-founded the Arizona Cannabis Laboratory Association and led lobbying efforts on behalf of patients and stakeholders to require lab testing.

He says they are excited to join forces, becoming the largest cannabis testing platform in the US. “Our combined leverage of top scientists with specialized cannabis testing knowledge and a leadership team of industry experts will allow us to do everything from harmonizing R&D efforts to improving the data experience to pushing for positive regulatory change,” says Treacy. All current employees of the C4 team will stay on, joining the new SC Labs team.

Jeff Journey, CEO of SC Labs

This acquisition represents another important milestone for the SC Labs expansion plan. Last year, they hired a new CEO, Jeff Journey, and launched their national hemp testing partnership based in Colorado. That, coupled with the expansion through Can-Lab into Michigan last year along with the C4 acquisition, SC Labs has expanded into three new states within the last twelve months.

Journey says they’re thrilled to acquire the C4 team and that they have shared values, a proven track record and good expertise. “With this acquisition, we can continue to expand best-in-market cannabis testing services and the opportunity to service multi-state growers and manufacturers,” says Journey. “It is truly an exciting time for growth, and we know that the C4 team will be an invaluable addition to our team, culture and operations.”

2023 Infused Products Virtual Conference

By Cannabis Industry Journal Staff
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2023 Infused Products Virtual Conference

Click here to watch the recording

Agenda

Beyond GMPs: Assessing Hazards at Your Facility

  • Dr. Kathy Knutson, Principal, Kathy Knutson Food Safety Consulting LLC

Have you implemented GMPS? Do you have a quality management system headed by a dedicated Quality Manager? Yes! Great! Then you know that quality management is never done, and you desire continuous improvement. The cannabis industry will always have Good Manufacturing Practices (GMPs) along with Good Agricultural Practices, Good Laboratory Practices, and Good Distribution Practices from seed to sale. Beyond GMPs is the writing and implementing of a hazard analysis, preventive controls, and a recall plan for the manufacture of edibles. It’s what the food industry does in writing a food safety plan, and the cannabis-infused edibles industry is expected to do the same with an edible safety plan. As the cannabis industry continues to lead ahead of federal regulation, assessing hazards at your facility is the next step. This presentation will introduce you to the importance of a hazard analysis and prepare you to perform a hazard analysis of processing steps.

How to Create a Bulletproof Food Safety Plan: Supplier Controls & Other Preventative Strategies

  • Matt Regusci, Technical Director, CSQ

Food safety is the bare minimum in a quality and safety program for plant touching businesses in cannabis, and yet it is constantly being overlooked. One important element of a food safety plan in this industry is implementing proper supplier controls, considering whether your suppliers and/or Contract Manufacturers are including a 2nd or 3rd party auditing program in their standardization of processes. This is a crucial step for MSOs, because although brands aim to do everything they can to ensure the product remains consistent across borders, there’s no guarantee that each manufacturing facility will adhere to the same Good Manufacturing Practices (GMPs) as in your own facility. Why does this matter? At the end of the day, if your company has to undergo a recall due to a mishap in one of the partner facilities, this reflects badly on the entire brand, not the individual facility.  According to long-time food safety expert Matt Regusci, when it comes to navigating safety & quality- quality is a mere strategy, but food safety is a requirement. During this discussion, Regusci will share insights to help brands craft a food safety plan, while keeping the entire supply chain in mind.

Mitigating Potency Loss in Cannabis Infused Beverages

  • Dr. Harold Han, Chief Science Officer & Co-Founder, Vertosa

THC and CBD are prone to losing potency when infused into beverages, leading to unknown cannabinoid concentrations and thus unpredictable effects for the end user — in other words, a brands’ worst nightmare. In this session, Harold will discuss the drivers behind scalping through packaging and oxidation reactions in the manufacturing process for cannabis-infused beverages. He will reference Vertosa’s studies on how antioxidants and the materials used to fabricate can liners affect cannabinoid potency over time, outlining the materials and additives most effective at mitigating cannabinoid potency loss holistically for longer shelf-life. Harold will end the session by explaining why consistent, stable products are vital in ensuring consumer safety and building a responsible cannabis industry.

Click here to watch the recording

Montana Revisited: How Did Its Cannabis Gold Rush Pan Out?

By Abraham Finberg, Simon Menkes, Rachel Wright
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A little over a year ago, we at AB FinWright took a look at the newly-opened adult-use cannabis market in Montana and posed the question: Is Cannabis the Next Gold Rush for Montana? Now, with our 20-20 hindsight, we can see that cannabis sales have taken off in the Treasure State and the tax dollars are rolling in. But political infighting has arisen that threatens to derail the will of the voters who approved adult-use. In addition, arbitrary local approval has set many cannabis entrepreneurs on edge, wondering if they’ll have a business a year from now.

Sales: Predicted Versus Actual

When voters passed Initiative I-190 in 2020 and adult-use commenced January 1, 2022, the Cannabis Control Division (CCD) of the Montana Department of Revenue expected total adult-use sales in 2022 to top $130M. Montana’s imbibers blew that figure out of the water. By the end of last year, the Treasure State had notched up almost $210M of adult-use sales, alongside $93M of medical sales, for a total of almost $304M. With a state population of only 1,085,000, that translates into $280 of cannabis sales per capita. For context, Oklahoma sold $214 of cannabis per person in 2022, while California did only $135/person last year. (It’s estimated that 55% of California’s sales are made by illegal dispensaries, which would translate into a far more robust total of $301 of cannabis/person.)

How Has the Tax Situation Changed in Montana?

At the beginning of 2022, we noted that Montana charges a 4% cannabis tax on medical sales and a 20% cannabis tax on adult-use sales. A 3% maximum local tax was part of the new law, but only 3 counties had enacted it. Fast forward a year and 17 more counties have chosen to enact the local tax, all of them charging the maximum 3%. 10 states allow adult-use sales and have no local tax, which leaves 26 counties that have prohibited adult-use sales (the red counties).

The good news: wholesale sales are exempt from cannabis taxes, and there is no regular sales tax on retail sales, so there is no tax-on-tax (unlike California, which has sellers calculate and collect sales tax on the sale price of their cannabis products plus the cannabis excise tax they’re required to collect).

Montana does not follow Internal Revenue Code 280E and allows normal business deductions for licensed (legal) cannabis corporations, as well as pass-through entities and individuals with licensed cannabis operations.

As State Cannabis Tax Revenue Goes Up, Fights Break Out Over the Funds

Total cannabis tax revenue for 2022 was almost $46M and is projected to rise to $53M for the fiscal year 2023-2024, which starts this July 1, 2023.

Eyeing this revenue, Governor Gianforte (R) initiated House Bill HB 462 on February 17, 2023, whose intent is to funnel revenue away from state parks and wildlife as approved by the voters, and more towards law enforcement and the state’s general fund.

I-190, along with approving adult-use cannabis, specified that the first $6M in tax revenue would go for the state program Healing and Ending Addiction through Recovery and Treatment. All remaining funds would be split between the general fund 65%, various parks and wildlife programs (32%) and veterans and surviving spouses (3%).

HB 462 would see the general fund receiving 75%, law enforcement 7.5%, veterans and surviving spouses 5%, with parks and wildlife reduced to 12.5%. Many feel this subverts the will of the electorate.

On almost the same day as HB 462 was introduced, another bill was put forward, AB 420, which would eliminate the 4% cannabis tax and 3% local tax on medical marijuana. The bill’s sponsor, Representative Mike Hopkins, a Republican from Missoula, believes that adult-use tax revenues are “more than capable” of funding the adult-use program as well as the other addiction and parks and wildlife programs enumerated in I-190. The bill is being countered by the Montana League of Cities and Towns which believes that repealing that tax would create a $4.5M dent across those communities who instituted the local tax.

Both bills have been tabled in committee and will continue to be debated in the second half of the 2023 legislative session.

Retail, Cultivation & Manufacturing – Grandfathered Licenses Only, for Now

Original adult-use legislation stated that, from January 1, 2022, until July 1, 2023, only Montana medical licensees who were licensed on November 3, 2020 (or had an application pending with DPHHS on that date) might be issued a license for cultivation, manufacture or sale of adult-use marijuana. In an explicit effort to give current Montana-based dispensaries a temporary advantage over out-of-state players, the new law imposed an 18-month moratorium on all new licenses. Once the moratorium expires, new license holders will be limited to a small Tier 2 license, which restricts the amount of cannabis they can grow.

New license holders will need to show one year of Montana residency in order to even apply. That being said, there’s nothing stopping an out-of-state business from buying an existing business from a current Montana resident.

Near the North entrance of Yellowstone in Park County, Montana

In an update to this legislation, a rider was recently added to HB 128 that would extend the licensing moratorium two more years, to July 1, 2025. The bill was approved by committee on February 14, 2023 and will come before the House later in this legislative session. In a recent presentation on cannabis in Montana, Bozeman cannabis attorney Christopher Young commented, “I’ve talked to Jason Ellsworth (R, Senator, President of the Montana Senate), and I’ve been told HB 128 is going to pass.”

HB 128 Has Many Medical Cannabis Businesses Worried

The number of medical cannabis cardholders has dropped drastically since adult-use became legal, from 40,522 registered cardholders on January 1, 2022, to 22,325 on January 1, 2023, a reduction of 45%. For those dispensaries that initially chose to remain exclusively medical (18% of all dispensaries), as well as those that, for one reason or another, missed the boat to sell adult-use, they have seen a significant decline in revenue. Consequently, a significant number have been eagerly awaiting the July 1, 2023 to apply to sell adult-use cannabis. The possibility of having to wait an additional two years has them very concerned.

At a hearing on HB 128, Norman Huynh of Pacific Valley told lawmakers he believes he can’t continue to sell only to medical cannabis cardholders because he doesn’t make enough. “There are only a finite amount [sic] of cardholders left,” he stated.

An adjustment in HB 128 is being debated which would allow 16 medical shops to become adult-use that had applied for adult-use before January 1, 2022 but who didn’t complete the process. Without this adjustment, many of these medical dispensaries believe they’ll face bankruptcy.

Opt-In, Opt-Out – Fickle Counties Have Cannabis Companies Nervous

Initiative 190 legalized adult-use cannabis by default in the counties that voted for it. In 2021, the Montana legislature hammered out implementation of adult-use cannabis in House Bill 701, and one provision of this bill allows counties and municipalities to vote to opt-out of legalization.

Pray, a town near Livingston, Montana

Granite County, which became a green county when nearly 55% of voters approved I-190, chose to do just that, opting-out of adult-use sales on June 7, 2022. The county’s sole dispensary, Top Shelf Botanicals, had begun selling to recreational users and estimates 80% of its customers are now adult-use. It has responded to the opt-out by drafting a new initiative to get voters to opt-back-in to adult-use sales. Their struggle to re-win the hearts of Granite County’s voters is ongoing and appears to be an uphill battle.

While Granite is the first county to opt-out of adult-use sales, changing them from a green county to a red county, movement is under way to opt-out in Cascade County, Carbon County, Ravalli County and Flathead County, among others. The opt-out movement is gaining strength in the state and has Montana dispensaries concerned. “The opt-out provision is very problematic, and I think it’s more problematic than people recognized at the time,” says Kate Cholewa, lobbyist with the Cannabis Industry Association. “What other business would people accept being in the position of potentially losing their business every two years?”

Taxability of Discounted Products – Department of Revenue Parses the Details

Initially, it was thought that the Department of Revenue required cannabis tax to be assessed on the regular retail price of a product, even though that product might be discounted. However, the DOR now says this is not always the case. “If the discount is offered to all customers, as opposed to a discount that is offered to only a particular individual or group, the established retail price can change.”

Examples where the discounted price becomes the new, lower established retail price: every Friday you offer everyone a 20% discount on certain products, or, you offer discounts to medical cardholders only. An example of when you must charge cannabis tax on the original, non-discounted price: a discount offered to a particular group, such as veterans or students. (Why medical cardholders are not considered a particular group is unclear, but this information is from the state’s website.)

Tax Comparison to Other States

We stand by our original assessment that Montana is actually a low-tax state for cannabis operators. First of all, it doesn’t follow federal statute 280E, but instead allows the deduction of regular operating expenses on state income taxes. In addition, unlike some states like California, Montana does not charge sales tax on top of cannabis taxes i.e., it doesn’t charge tax-on-tax.

If one examines tax rates, while Montana’s adult-use tax is high at 20%, its medical tax of 4% is a low one. The local tax of 3% (compared with Los Angeles’s 10% adult-use local tax, for example) is quite low and is not charged by 37% of the counties that have adult-use sales.

And if AB 420 is passed and the medical and local cannabis taxes are repealed, Montana will truly enter the ranks of low tax cannabis states.

Kentucky Legalizes Medical Cannabis

By Cannabis Industry Journal Staff
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Following years of attempts by legislators and activists to get legal medical cannabis moving in Kentucky, the state just legalized medical cannabis last week, making it the 38th state in the country to legalize medical cannabis. In front of a crowd of stakeholders, advocates, patients and legislators, Governor Andy Beshear signed SB 47 into law along with a sports betting bill as the crowd erupted in applause.

Crowds cheer as Gov. Beshear signs the bill into law

“I have been pushing for medical cannabis and sports betting for years,” Gov Beshear wrote in a tweet. “Today, I signed these two bills into law. Team Kentucky delivers and we get results. Congrats, Kentucky.” The Cabinet for Health and Family Services is tasked with developing the regulations for medical cannabis, which are due by July 1, 2024. The law doesn’t go into effect until 2025 though. That agency will be in charge of implementing the medical cannabis program, operation, oversight and regulation for growing, retail and production.

Each state legalizes cannabis in its own weird way and Kentucky is no different. The bill does not allow cannabis smoking, but does allow for raw cannabis flower to be sold and vaporization. Qualifying conditions include PTSD, epilepsy, cancer, nausea, MS and pain management, but the bill allows for more conditions to be approved for medical cannabis prescriptions later on. This sort of foot-in-the-door approach has been used by plenty of other states and often carves a path for a broader, more sensible medical cannabis framework following legalization.

Rep. Jason Nemes, R-Louisville is a major proponent of medical legalization in Kentucky and has sponsored bills in the past. While he stressed the importance of the weird no-smoking provision, he also praised the legislature for finally getting this done. “There are thousands and thousands of Kentuckians who just want to be and want to feel better, and this will help them with that,” says Rep. Nemes.

Product Liability in the Cannabis Industry: Insights From 2022 & Looking Forward

By Andrew Solow, David Kerschner, Alessandra Lopez
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In 2022, product liability lawsuits in the cannabis/cannabidiol (CBD) industry continued to focus on levels of THC and the psychoactive ingredient in cannabis, while federal agencies continued issuing warning letters for CBD products (including CBD-infused food and dietary supplements) that made misleading medical claims. Against this backdrop of ongoing litigation and regulatory enforcement, 2022 showed that at the Federal level, there is more recognition that marijuana is becoming increasingly normalized. For example, President Biden pardoned federal offenses of simple marijuana possession and requested a reassessment of marijuana’s classification as a Schedule I drug under federal law. Additionally, Congress passed its first standalone piece of cannabis reform with the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) which, among other things, will ease restrictions on cannabis research and allow for more clinical trials. And even though the Food and Drug Administration (FDA) declined to act on CBD products, the agency announced that it will work with Congress to create a new regulatory framework for CBD products (2023 FDA Announcement).

These events of the past year provide a glimpse into what the future may hold for cannabis and CBD companies when it comes to product liability risks. This article looks at the types of product liability actions that the cannabis and CBD industry faced in 2022 and may encounter in the future, and provides some basic guidance on how to best mitigate, and if necessary, defend these potentially costly litigations.

Focus on Cannabis and CBD Risks

FDAlogoA central part of any product liability lawsuit—regardless of whether brought under a design defect and/or adequate warning theory—is that a product caused or was a substantial contributing factor to a Plaintiff’s injury or illness. Thus, any potential safety concerns over cannabis/CBD could end up as the subject of litigation in the future. In the 2023 FDA Announcement, the FDA recognized that “the use of CBD raises various safety concerns, especially with long-term use,” including potential harm to the liver and negative interactions with certain medications. The agency also noted that questions still exist on how much CBD can be consumed, and for how long, before causing harm. Furthermore, on December 2, 2022, President Biden signed the MMCREA into law, which is intended to advance research on the potential risks and medical benefits of cannabis and cannabis products.1 This additional funding will not only help researchers learn more about possible safety risks that may lead to future product liability claims, but will also allow for better exploration of the benefits of these products to possibly expand product indications and help reach new customers.

Given the FDA’s statements and the increased funding for new research, CBD and cannabis companies should ensure that they are properly monitoring both regulatory communications and new research regarding risks that may be associated with their products. As new information is released, companies should evaluate how their product labels and marketing messages should be altered. Announcements like this one by the FDA can be seen as providing industry participants with knowledge about certain risks, and how companies react could be analyzed, post hoc, in any litigation down the road.

2022 Product Liability Actions  

Over the last year, misbranding/mislabeling issues presented some of the most prevalent litigation risks for industry participants.

An example of a warning letter the FDA sent to a CBD products company making health claims

For example, at the Federal level in 2022, the FDA issued thirty-three warning letters to CBD companies, a nearly 400% increase from 2021. These letters generally focused on CBD products that made medical claims. Some of these warning letters addressed misbranding, where the product labels provided inadequate directions for consumer use. In one letter, the FDA noted that because the CBD products were “offered for conditions that are not amendable to self-diagnosis and treatment by individuals who are not medical practitioners,” ranging from cancer to diabetes, labeling compliance was only possible if the product was an FDA-approved prescription drug with FDA-approved labeling. Other companies received warning letters in March of 2022 for making misleading representations that their CBD products were safe and/or effective to prevent or treat COVID-19. Many of these representations were made via companies’ websites and social media platforms. The warning letters—often triggers for product liability actions, as well as consumer protection/fraud actions—serve as a reminder that companies cannot make medical claims on non-FDA approved drug products and must otherwise present accurate information to consumers not only on product packaging, but any form of marketing or advertising, including company websites and social media platforms.

Turning to state-level regulatory actions, Oregon’s Liquor and Cannabis Commission fined a cannabis company $130,000 and suspended the company’s license for 23 days over an alleged label mix-up between its CBD and THC products. According to the state’s investigative report, a company employee allegedly confused two product buckets with similar identification numbers, one that contained THC and the other CBD, and accidentally switched the labels of the two products. In addition to the fine and license-suspension, the state agency also issued a mandatory recall on the CBD drops based on the alleged undisclosed levels of THC.

This same incident also spurred a string of civil lawsuits, resulting in several settlements by the company in 2022.2 Numerous customers reported experiencing “paranoia,” “mind fog,” and feeling “extremely high,” with at least five people going to the emergency room with serious health issues due to use of the CBD drops. One lawsuit, which was publicly settled for $50,000 in January of 2022, alleged that the company failed to warn the plaintiff that the CBD drops contained THC or that the product may have been contaminated with foreign substances like THC, and that the company failed to exercise quality control standards that would have detected the THC.3 Nine other lawsuits made similar failure to warn allegations based on the same batch of CBD drops and were settled by January of 2022, although those settlements were not disclosed.4 In October of 2022, the company agreed to pay a settlement of $100,000 in a class action suit, which alleged that the company failed to disclose that the CBD product contained substantial amounts of THC.5 The class action focused on unlawful trade practices claims, including that the company falsely represented that the product had the characteristics, uses, and benefits of a CBD product that did not contain THC.6 Also in October 2022, the company settled a wrongful death lawsuit—alleging that the company failed to warn the plaintiff that the drops contained THC and had negligent quality control standards—stemming from the same CBD drops,7 where the plaintiff suffered stroke-like-symptoms, allegedly due to the tainted CBD product, and ultimately died.8

Other recent lawsuits have also focused on mislabeled cannabis products, alleging that companies failed to inform customers that products contained THC. For example, in Kentucky, a man who drove into a bus after using a CBD vape sued both the CBD manufacturer and retailer on December 14, 2022, claiming that he was not warned that the vape contained a substance that would make him intoxicated.9 According to the complaint, the store employees told the man that the vape was “all natural” but made no mention that the product contained THC.10 The man alleged that the vape actually contained Delta-8 THC and brought negligence, failure to warn, and state consumer protection law claims.11

As noted above, in addition to traditional product liability actions, companies are likely to face increased consumer fraud and false advertising actions in the absence of personal injuries. Two class actions brought in December of 2020 against a hemp tea maker alleged that the company’s website and the product’s packaging fraudulently stated that a tea contained zero THC.12 Plaintiffs claimed that they tested positive for THC after drinking the tea and that product testing similarly revealed that the tea contained some THC.13

Potency inflation marketing communications from a laboratory

Last year also saw a rise in cases focused on potency inflation, alleging that cannabis companies knowingly overstated the amount of THC in their products to charge higher prices.14 Again, while these actions focused on consumer fraud allegations rather than product liability claims, these cases underscore the importance of accurate labeling. Due to potency inflation concerns, states have started investigating licensed cannabis testing labs within their respective jurisdictions, resulting in product recalls and fines. Some states have also updated their regulations, requiring cannabis companies to test their products through two separate labs.

Finally, contamination and the existence of impurities and other byproducts has been a recent focus of several product liability lawsuits across the life sciences space, and this trend is something that cannabis and CBD companies should be aware of and take steps to mitigate.

For example, a Canadian cannabis producer reached a $2.31 million settlement over a class action brought in March of 2017 regarding pesticide-contaminated medical marijuana. The marijuana was recalled due to the presence of myclobutanil and bifenazate pesticides, neither of which were authorized for use on cannabis plants in Canada. The lead plaintiff experienced nausea and vomiting, allegedly from consuming the medical cannabis, and brought numerous claims on behalf of the class, including negligent design, development, testing, manufacturing, distribution, marketing, and sales.15 In the United States, California’s Department of Cannabis Control issued a mandatory recall on January 26, 2022 for a batch of cannabis flower that was contaminated with mold. On March 25, 2022, the New Mexico Cannabis Control Division recalled cannabis products sold by a local medical cannabis company because the product contained impermissibly high levels of mold. New Mexico’s Cannabis Control Division also required the company to immediately cease and desist operations at its production and manufacturing site.

A Look at the Future and What Companies Can do to Mitigate Product Liability Risks  

The FDA’s 2023 announcement means that the industry will have to wait for Congressional action for the development of a regulatory scheme that can help standardize requirements and provide industry players additional defenses when facing product liability actions. Many of the proposed risk management tools in the FDA Announcement could help companies mitigate future litigation risks if implemented. These risk management tools may include “clear labels, prevention of contaminants, CBD content limits, and measures, such as minimum purchase age, to mitigate the risk of ingestion by children.” Although the FDA has had regulatory oversight over CBD and other hemp-derived products for nearly four years, the agency has not developed a regulatory framework for these products aside from issuing warning letters, leaving manufacturers and distributors without much guidance. The FDA has also left the states to fill the void, resulting in a patchwork of differing—and sometimes conflicting—state laws. Additional guidance and regulation on labeling at the federal level for cannabis and cannabis-derived products will make compliance a more straightforward proposition and may provide avenues for industry participants to explore preemption defenses in the face of future mislabeling claims.

Just some of the many CBD products on the market today

In addition to following the changing regulatory landscape and understanding how regulatory changes can impact litigation defenses, cannabis and CBD companies can continue to take various steps to help mitigate future litigation risks.

Quality Control: Adequate testing procedures and effective quality control procedures can help avoid contamination issues and situations where products are mixed up during the manufacturing process. For example, the company whose license was suspended in Oregon due to the alleged mix up between CBD and THC subsequently implemented new ingredient tracking protocols, adopted a policy to retain samples from each batch of product, and now sends additional samples to an independent lab to ensure product compliance before anything is sold.

Proper documentation of testing and quality control procedures, as well as maintaining records of compliance checks, can also help companies put together a defense to state regulatory actions or lawsuits relating to contamination or manufacturing defects. Indeed, in February of 2022, an Arizona marijuana testing lab was fined $500,000 for various incomplete records and documentation as well as improperly calibrated machines for contamination testing, with an inspector also noting that one of the employees was trained to use a technique that produced inflated potency results.

Ongoing Safety & Regulatory Review: Keeping up to date with regulations and science will play a key role in making sure labels are accurate and defendable. Working directly with regulators and seeking guidance from regulators on labeling can help potential defendants present a clear and compelling labeling defense. Moreover, the 2023 FDA Announcement made clear that the agency will not pursue rulemaking on CBD’s potential use in foods and dietary substances. Thus, industry players should monitor agency announcements and engage with the FDA’s Cannabis Product Committee (CPC) and Congress to better understand the potential structure of this new regulatory pathway.

Stay on Top of the Science: A boost in cannabis research is on the horizon, as the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) will advance research on the potential risks and benefits of cannabis products and promote the development of FDA-approved drugs derived from marijuana and CBD. On the litigation front, causation is an essential element in most causes of action, and plaintiffs will have to prove that the cannabis caused their injury. Thus, industry players should be aware of the current science, including potential side effects.

Litigation Monitoring: Finally, companies will also be well served by following court decisions involving CBD and cannabis products. For example, courts in 2022 were split over the legality of Delta-8 THC, a substance typically manufactured from hemp-derived CBD. The Ninth Circuit held in AK Futures v. Boyd Street Distro that Delta-8 THC found in e-cigarettes and vape products is legal under the 2018 Farm Act, at least in the intellectual property context.16 But in Kansas, a federal judge ruled that the 2018 Farm Act does not make selling hemp-derived products such as Delta-8 THC legal.17 In Texas, litigation initiated in 2021 is ongoing over the legality of Delta-8 THC.18 There, a hemp company sued the Texas Department of State Health Services for its classification of Delta-8 THC as a Schedule I drug, making the sale of this substance a felony offense. A temporary injunction was granted on November 8, 2021—temporarily lifting the ban on sales of Delta-8 THC products—but the plaintiff’s request for a permanent injunction remains pending.19 As these lawsuits show, the legality of different products may vary by jurisdiction, whether by regulation or a judicial decision.


References

  1. Medical Marijuana and Cannabidiol Research Expansion Act, Pub. L. 117–215, 136 Stat. 2257 (2022).
  2. Agbonkhese v. Curaleaf Inc., No. 3:21-cv-01675, (D. Or. Jan. 5, 2022).
  3. Agbonkhese v. Curaleaf Inc., No. 3:21-cv-01675, ECF 1, 6 (D. Or.).
  4. See Crawforth v. Curaleaf, Inc., No. 3:21-cv-1432 (D. Or. Sept. 29, 2021); Lopez v. Curaleaf, Inc., No. 3:21-cv-1465 (D. Or. Oct. 6, 2021);
  5. Williamson v. Curaleaf, Inc., No. 3:22-cv-782, ECF 1, 8 (D. Or.).
  6. Williamson v. Curaleaf, Inc., No. 3:22-cv-782 (D. Or. May 30, 2022).
  7. Estate of Earl Jacobe v. Curaleaf, Inc., No. 3:22-cv-00001, 19 (D. Or. Oct. 18, 2022).
  8. Estate of Earl Jacobe v. Curaleaf, Inc., No. 3:22-cv-00001 1 (D. Or. Jan. 1, 2022).
  9. Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
  10. Complaint at ¶ 11, Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
  11. Complaint at ¶¶ 15-33, Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
  12. Williams v. Total Life Changes, LLC, No. 0:20-cv-02463 (D. Minn. Dec. 3, 2020); Santiago v. Total Life Changes LLC, No. 2:20-cv-18581 (D.N.J. Dec. 9, 2020).
  13. Complaint at ¶¶ 54-59, Williams v. Total Life Changes, LLC, No. 0:20-cv-02463 (D. Minn. Dec. 3, 2020); Complaint at ¶¶ 21-25, Santiago v. Total Life Changes LLC, No. 2:20-cv-18581 (D.N.J. Dec. 9, 2020).
  14. See Centeno v. Dreamfields Brands Inc., No. 22STCV33980 (Cal. Superior Ct. L.A. Cnty. Oct. 20, 2022); Shanti Gallard v. Ironworks Collective Inc., No. 22STCV38021 (Cal. Superior Ct. L.A. Cnty. Dec. 6, 2022).
  15. Downton v. Organigram Holdings Inc., Hfx No. 460984 (Sup. Ct. Nova Scotia Mar. 3, 2017).
  16. AK Futures LLC v. Boyd St. Distro, LLC, 35 F.4th 682 (9th Cir. 2022).
  17. Dines v. Kelly, No. 2:22-cv-02248, 2022 WL 16762903 (D. Kan. Nov. 8, 2022).
  18. Hometown Hero v. Tex. Dep’t of State Health Services, No. D-1-GN-21-006174 (Travis Cnty., Tex. Oct. 20, 2021).
  19. Hometown Hero v. Tex. Dep’t of State Health Services, No. D-1-GN-21-006174 (Travis Cnty., Tex. Nov. 8, 2021).