By Steve Levine, Megan Herr, Meghan Brennan No Comments
On Thursday April 23, 2020, Representatives Earl Blumenauer (D-OR) and Ed Perlmutter (D-CO) introduced the “Emergency Cannabis Small Business Health and Safety Act” in the House. Blumenauer and Perlmutter have been influential in protecting state-legal cannabis businesses from federal interference, most recently under the 2020 federal appropriations rider.
If passed, the Act would allow state-legal medical and recreational cannabis businesses to take advantage of the multi-trillion dollar stimulus packages designed to help small businesses harmed by COVID-19.
As we previously discussed, cannabis businesses harmed by COVID-19 remain ineligible to receive federal financial assistance due to their engagement in “federally illegal” activities. Consequently, cannabis businesses cannot receive assistance from the Small Business Administration (SBA) thereby making them ineligible to receive Paycheck Protection Program (PPP) loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), traditional 7(a) loans, 504 loans, and microloans.
To provide the industry with much needed economic relief, the legislation states that cannabis businesses would no longer be prohibited from (i) participating in the PPP, (ii) receiving EIDL loans, or (iii) receiving emergency EIDL grants purely on the basis that the business is a “cannabis-related legitimate business”1 or “service provider.”2
Additionally, the Act clarifies that the SBA and its officers, directors and employees would “not be held liable pursuant to any Federal law or regulation solely for providing a loan or a loan guarantee to a cannabis-related legitimate business or a service provider.”
Even though states have varied in their approach to continue medical and retail cannabis operations amid the coronavirus outbreak, a majority of states that allow some form of sale and consumption of cannabis have designated the cannabis industry as “essential” and open for operation.3 Some states have gone as far as allowing home delivery, curbside pick-up, and telemedicine consultations.
Nonetheless, despite the cannabis industry’s designation as “essential,” cannabis businesses (including those who service the cannabis industry) will continue to be precluded from receiving federal financial assistance until the Emergency Cannabis Small Business Health and Safety Act, or similar legislation, is passed. It is important to note that, even if passed, the Emergency Cannabis Small Business Health and Safety Act would likely provide little relief, as the majority of the funds to be administered by the SBA have already been accounted for.
What does this mean to you?
Although the COVID-19 pandemic has highlighted the need for the heavily-taxed and financially burdened cannabis industry to receive assistance under the stimulus packages, the Act, even if passed by Congress, faces an uphill battle in the Republican-held Senate.
The term “cannabis-related legitimate business” means a manufacturer, producer, or any person that – (A) engages in any activity described in subparagraph (B) pursuant to a law established by a State or a political subdivision of a State, as determined by such State or political subdivision; and (B) participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.”
The term “service provider” (A) means a business, organization, or other person that – (i) sells goods or services to a cannabis-related legitimate business; or (ii) provides any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to cannabis; and (B) does not include a business, organization, or other person that participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.”
On July 18, 2019, the Riverside County Sheriff’s Department in California served search warrants at 56 illegal cannabis cultivation sites. This operation was spearheaded by 390 law enforcement personnel, whose mission was to combat the ongoing problem of illegal cannabis cultivation sites throughout California.
The raids resulted in:
47,939 marijuana plants confiscated
2,132 pounds of processed cannabis
47 tons of cannabis plants disposed
2 Butane Honey Oil Labs located
The target of the operation was illegal cultivation sites. Individuals or licensed businesses with permits to grow cannabis legally were not affected.
Illegal cultivation is far from just a California problem. For example, if Oregon halted cannabis production today, the state would not experience a shortage as it has a six-year surplus.
The fear for investors and legal growers is that, if some growers turn to the black market to unload excess inventory, federal enforcement will come into play, which will set back the legal cannabis industry to the stone age. Oregon is currently making moves to limit licensure for legal production, but some active licenses may also need to be revoked, which would leave those licensees with vast investment losses. In other words, legalized cannabis’s massive economic market is not without financial problems of its own.
Don’t Make a Federal Case Out of It
Several states have legalized recreational cannabis with the intention of reimagining this vast underground market as an above-board business that bolsters the state’s economy via transparent dealings. To date, however, the federal government has refused to budge regarding cannabis’s status as an illegal Schedule 1 substance. This classification puts cannabis on a par with opioids. As such, those states that have legalized recreational cannabis are extremely motivated to keep these businesses on the up and up and not to pique federal interest.
Black Market Vulnerability
One of the tenets of legalizing cannabis is stemming the proliferation of black-market suppliers and minimizing the negative effects that the “war on drugs”has had in minority communities. These positive impetuses have yet to flourish. As a result of the illegal status of cannabis at the federal level, cannabis-legal states are forced to operate as islands.
Generally, taking legally purchased cannabis across state lines – from a legal to an illegal state – is illegal, and this is not only confusing but is also a recipe for complications. This leaves cannabis-legal states vulnerable to black market activity. These pockets of legal recreational cannabis that are popping up around the country loosen the constraints of the cannabis movement while the legality of this movement remains problematic. The results are an environment that’s extremely hospitable to black market activity.
Supply and Demand
The reality is that – due to supply and demand – cannabis costs about half as much in cannabis-legal states as it does in states in which it’s illegal. Black market growers in legal states destabilize the market. Those legit companies which remain above board, pay their taxes and jump through every legal hoop, cannot compete with black market interlopers who eschew such niceties.
The point made by detractors of legal cannabis isn’t lost on the rest of us – the black market is burgeoning.States that have legalized production have inadvertently made it easier for illegal producers to hide in plain sight, and the line between legal and illegal operations can become blurred. This creates new frustrations for law enforcement and naturally cuts into the legal cannabis trade. The situation has left some opponents to legalization demanding new crackdowns – others characterize such suggestions as amounting to a new war on drugs.
No Going Back
Detractors of legalized cannabis claim the somewhat chaotic effects related to the current patchwork approach to legalization are a result of opening the gates to legalization in the first place. However, putting the genie of legalized recreational cannabis back in the bottle simply isn’t feasible for operational, financial and political reasons. With the proliferation of attendant illegal operations, however, it is becoming more and more clear that leveling the playing field – via some form of federal legalization – is inevitable. The current state-by-state solution leaves too much wiggle room for the illegal transport of cannabis from those states with looser restrictions to those states with tighter protocols. If politics is choosing between the disastrous and the unpalatable, the billion-dollar cannabis conundrum is a great example. The question may no longer be should we legalize cannabis but, instead, how do we legalize cannabis.In other words, we need to find a path forward, and focusing only on the pitfalls that we’ve experienced so far isn’t going to get us where we need to be.
A Tale of Two Choices
The point made by detractors of legal cannabis isn’t lost on the rest of us – the black market is burgeoning. As such, we have an important decision to make. A blanket prohibition of cannabis may no longer be practicable, so we’re left to choose between legal and overt practices across the board or a hodgepodge of semilegal practices with covert ops in tow. Fostering illegal activity is rarely in our nation’s best interests, which leaves legalizing cannabis at the federal level as possibly the most practicable solution.
Protecting Public Health
As more states embrace the legalization of recreational cannabis, public health concerns remain an issue. Many of these illegal cultivators use chemicals that are banned in the United States and do not properly dispose of chemicals or waste products that destroy the environment, contaminate drinking water and have the potential to harm or even kill residents and domestic animals. Not only is this activity harmful, growers often steal electricity and water from surrounding residents.
Cobbling together a pastiche of laws, however, inevitably bolsters black market activity and does nothing to help protect public health. Even the staunchest proponents of legalizing cannabis don’t want minors involved in the equation. Additionally, few debate that unchecked usage is a healthy option. Quasi-legislation at the state level (and on a state-by-state basis), however, provides neither a check nor a balance.
Onward and Upward
The most likely next step for safeguarding public health, for stemming black-market activity, and for generating maximum revenues is toward thoughtful and comprehensive national legalization that comes sooner rather than later. In the meantime, law enforcement should protect the public, legal operations, investors, and the environment from the black market.
The opinions expressed are those of the author and do not necessarily reflect the views of Guidepost Solutions or its clients.
AOAC INTERNATIONAL is an independent, third party, not-for-profit association and voluntary consensus standards developing organization. Founded in 1884, AOAC INTERNATIONAL was originally coined the Association of Official Agricultural Chemists. Later on, they changed their name to the Association of Official Analytical Chemists. Now that their members include microbiologists, food scientists as well as chemists, the organization officially changed its name to just AOAC INTERNATIONAL.
Much of AOAC’s work surrounds promoting food safety, food security and public health. Their work generally encompasses setting scientific standards for testing methodology, evaluating and adopting test methods and evaluating laboratory proficiency of test methods. The organization provides a forum for scientists to develop microbiological and chemical standards.
In December of 2018, they appointed Dr. Palmer Orlandi as deputy executive director and chief science officer. Dr. Orlandi has an extensive background at the U.S. Food and Drug Administration (FDA), serving the regulatory agency for more than 20 years. Most recently, he was the CSO and research director in the Office of Food and Veterinary Medicine at the FDA. He earned the rank of Rear Admiral and Assistant Surgeon General in 2017.
Where It All Began With Cannabis
As recently as three years ago, AOAC began getting involved in the cannabis laboratory testing community, with a working group dedicated to developing standard method performance requirements for AOAC Official MethodsSM for cannabis testing. We sat down with Dr. Palmer Orlandi and a number of AOAC’s leaders to get an update on their progress working with cannabis testing as well as food security and food fraud.
According to Scott Coates, senior director of the AOAC Research Institute, they were approached three years ago to set up a working group for cannabis testing. “We created standards that we call the standard method performance requirements (SMPR®), which are detailed descriptions of what analytical methods should be able to do,” says Coates. “Using SMPRs, we issued a series of calls for methods and looked for methods that meet our standards. So far, we’ve completed four SMPRs- cannabinoids in plant material, cannabinoids in plant extracts, cannabinoids in chocolate (edibles), and one for pesticides in cannabis plant material.” AOAC doesn’t develop methods themselves, but they perform a comprehensive review of the methods and if they deem them acceptable, then the methods can be adopted and published in the AOAC compendium of methods, the Official Methods of Analysis of AOAC INTERNATIONAL.
Deborah McKenzie, senior director of Standards and Official MethodsSM at AOAC, says the initial working group set the stage for really sinking their teeth into cannabis testing. “It started with methods for testing cannabinoids in plant dried material and plant extract,” says McKenzie. “That’s where our previous work has started to mold into the current effort we are launching.” McKenzie says they are looking forward to getting more involved with methods regarding chemical contaminants in cannabis, cannabinoids in various foods and consumables, as well as microbial organisms in cannabis. “We are pretty focused on testing labs having reliable and validated analytical solutions as our broad goal right now.”
Moving Forward, Expanding Their Programs
Coates says the work they’ve done over the past few years was more of a singular project, developed strictly for creating standards and to review methods. Now they are currently developing their Cannabis Analytical Science Program (CASP), which is expected to be an ongoing program. “We are looking to fully support the cannabis analytical community as best we can, which will potentially include working on reference materials, proficiency testing, education, training and ISO 17025 accreditation, all particularly as it applies to lab testing in the cannabis industry,” says Coates. “So, this CASP work is a much bigger and broader effort to cover more and to provide more support for labs doing the analysis of cannabis and its constituents, as well as hemp.”
According to Dr. Orlandi, they want this program to have a broad reach in the cannabis testing community. “As Scott pointed out, it’s not just strictly developing standards and methods,” says Dr. Orlandi. “It is going to be as all-encompassing as possible and will lead to training programs, a proficiency testing program and other areas.” Arlene Fox, senior director of AOAC’s Laboratory Proficiency Testing Program, says they are actively engaging in proficiency testing. “We are in the process of evaluating what is out there, what is possible and what’s needed as far as expanding proficiency testing for cannabis labs,” says Fox.
Regulatory Challenges & Obstacles
The obvious roadblock to much of AOAC’s work is that cannabis is still considered a controlled substance. “That creates some challenges for the work that we do in certain areas,” says Dr. Orlandi. “That is why this isn’t just a one-year project. We will work with these challenges and our stakeholders to address them.” AOAC had to put some limits on participation- for example, they had to decide that they cannot look for contributions or collaborations with producers and distributors, so long as cannabis is still a Schedule I controlled substance in the US.
Muddying the waters even further, the recent signing of the Farm Bill puts a clear distinction between most types of cannabis and industrial hemp. David Schmidt, executive director of AOAC realizes they need to be realistic with their stakeholders and in the eye of federal law.
While scientifically speaking, it’s pretty much the same plant just with slightly different chemical constituents, AOAC INTERNATIONAL has to draw a line in the sand somewhere. “As Palmer suggests, because of the Farm Bill being implemented and hemp being defined now as a legal substance from a controlled substance standpoint, industrial hemp has been given this exclusion,” says Schmidt. “So, we are trying to be realistic now, working with our stakeholders that work with hemp, trying to understand the reality of the federal law. We want to make clear that we can meet stakeholder needs and we want to distinguish hemp from cannabis to remain confident in the legality of it.” Schmidt says this is one of a number of topics they plan on addressing in detail at their upcoming 9thannual 2019 Midyear Meeting, held March 11-14 in Gaithersburg, Maryland.
Uniformity in Methodology: The Future of Cannabis Testing
Dr. Orlandi says his experience at the FDA has prepared him well for the work being done at AOAC. “The role that I served at the FDA prior to joining my colleagues here at AOAC was very similar: And that is to bring together stakeholders to accomplish or to solve a common problem.” Some of their stakeholders in the CASP program include BC Testing, Inc., the Association of Food and Drug Officials (AFDO), Bia Diagnostics, Bio-Rad, Industrial Laboratories, Materia Medica Labs, PerkinElmer, R-Biopharm AG, Supra R & D, TEQ Analytical Laboratories, Titan Analytical and Trilogy Analytical, among others.
“The underlying reason behind this effort is to create some level of harmonization for standards and methods,” says Dr. Orlandi. “They can be used in the near future to stay ahead of the curve for when regulatory agencies become involved. The idea is that these standards for analytical methods will already be established and as uniform as possible.”
When comparing cannabis to other industries in the US, Scott Coates mentions that most standards are signed off by the federal government. “When we started looking at pesticides in cannabis, it became really clear that we have a number of states doing things differently with different limits of quantification,” says Coates. “Each state, generally speaking, is setting their own standards. As Palmer was saying, one thing we are trying to do with this CASP program eventually will be to have some harmonization, instead of 30 different states having 30 different standards and methods.” So, on a much broader level, their goal for the CASP program is to develop a common set of standard methods, including hemp testing and even the Canadian market. “Hopefully this will be an international collaboration for standards for the methodology,” says Coates. They want to create a common set of standards, setting limits of quantification that will be accepted internationally, that will be accurate and repeatable and for the entire cannabis industry, not just state by state.
Food Authenticity & Fraud
One of the other activities that AOAC just launched recently is the food authenticity and fraud program. As the name implies, the goal is to start developing standards and methods and materials to look at economically adulterated foods, says Dr. Orlandi. That includes non-targeted analyses looking at matrices of food products that may be adulterated with an unknown target, as well as targeted analytes, identifying common adulterants in a variety of food products. “One example in the food industry is fraudulent olive oil,” says Dr. Orlandi. “Honey is another commodity that has experienced adulteration.” He says that in most cases these are economically motivated instances of fraud.
The majority of this cost will not be picked up by private health insurers but rather the federal governmentActually, according to industry analysis, this is about 70% more than the price of one comparable drug (Onfi), and slightly more expensive than Banzel, the two competing (non-cannabinoid based) medications now available in the U.S. for this market.
Here is the other (widely unreported) kicker. The majority of this cost will not be picked up by private health insurers but rather the federal government, which is also not negotiating with GW Pharma about that high price (unlike for example what is going on in Europe and the German bid).
Why the difference?
Two reasons. The first is that Epidiolex has obtained “orphan drug” status (a medication for a disease that affects fewer than 200,000 patients in the U.S.) The second is that the majority of the insurance that will be picking up this tab is Medicaid. The patient pool will be unable to afford this. As a result, the bulk of the money will remit not from private insurance companies but rather federal taxpayers. And, unlike in say, Germany, none of this is pre-negotiated in bulk.
Co-payments are expected to range from $5 to $200 per month per patient after insurance (read: the government) picks up the tab. This essentially means that the company plans to base participation at first at least on a sliding scale, highly subsidized by a government that has yet to reschedule cannabis from a Schedule I in the U.S.
Creating, in other words, a new monopoly position for GW Pharmaceuticals in North America.
A Hypocrisy Both Patients And The Industry Should Fight
The sordid, underhanded politicking that has created this canna monster is hardly surprising given the current political environment in both the U.S. and the U.K. right now. The people who benefit the most from this development are not patients, or even everyday shareholders, not to mention the burgeoning legitimate North American cannabis industry, but in fact highly placed politicians (like British Prime Minister Theresa May). Philip May, the PM’s husband’s firm is the majority shareholder in GW Pharma. Her former drugs minister (with a strong stand against medical cannabis) is married to the managing director of British Sugar, the company that grows GW Pharma’s cannabis stock domestically.
So far, despite a domestic outcry over this in the UK (including rescheduling), there has been no political backlash in the United States over this announcement. Why not?
Look To Europe For A More Competitive Medical Market
This kind of pricing strategy is also a complete no go in just about every other market – including medical-only markets where GW Pharma already has a footprint.
For example, German health insurers are already complaining about this kind of pricing strategy for cannabis (see the Cannabis Report from one of the country’s largest insurers TK – out earlier this year). And this in an environment where the government, in fact, does negotiate a bulk rate for most of the drugs in the market. Currently most German cannabis patients are being given dronabinol, a synthetic form of THC which costs far less.
On top of this, there are also moves afoot by the German government to begin to bring the costs of medical cannabis and medicines down, dramatically. And this too will impact the market – not only in Europe, but hopefully spark a debate in every country where prices are also too high.
The currently pending German cultivation bid for medical cannabis has already set an informal “reference” price of at most 7 euros a gram (and probably will see bid competitors come in at under half that). In other words, the government wholesale price of raw, unprocessed cannabis flower if not lightly processed cannabis oil is expected to be somewhere in the neighbourhood of 3-4 euros per gram come early next year. If not, as some expect, potentially even lower than that.
Processed Cannabis Medicine vs. Whole Plant Treatment
The debate that is really raging, beyond pricing, is whether unprocessed cannabis and cannabis oil is actually “medicine.” At the moment, the status quo in the U.S. is that it is not.
GW Pharmaceuticals, in other words, a British company importing a CBD-based derivative, is the only real “medical cannabis” company in the country, per the FDA. Everyone else, at least according to this logic, is placed in the “recreational camp.” And further, hampered still, with a lack of rescheduling, that affects everyone.
If that is not an organizing issue for the American cannabis industry, still struggling with the many issues inherent in the status quo (from insurance coverage and banking to national distribution across state lines) leading up to the midterms, nothing will be.
Federal trademark registrations are invaluable tools for emerging businesses. They put the world on notice of a company’s name; they can secure nationwide priority over others using similar names; they distinguish a product in the marketplace; they provide crucial advantages in trademark infringement lawsuits; and they are instrumental in building goodwill. But if you sell cannabis, a federal trademark registration will not do any of those things for you … because you can’t get one.
Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations.The United States Patent and Trademark Office (USPTO) continues to refuse to register federal trademarks for cannabis businesses, even if the sale of cannabis is legal in the state where the businesses are located. The USPTO’s reasoning goes something like this: federal trademark law allows for the registration of trademarks associated with goods in “lawful” commerce, which means that the goods are not illegal under federal law. Cannabis, and its psychoactive component, THC, remain Schedule I substances under the federal Controlled Substances Act (CSA). Therefore, irrespective of state laws to the contrary, and irrespective of whether the federal law is actually enforced, the manufacture and sale of cannabis is not “lawful” commerce.
This reasoning is of fairly recent vintage. In 2009, by which time about fifteen states had legalized medical cannabis, Attorney General Eric Holder announced that the Drug Enforcement Administration would cease raids on state-sanctioned medical cannabis facilities. The USPTO followed Holder’s lead in 2010 and created a new category of acceptable goods and services for marks related to “medical marijuana.” Within months, however, the USPTO had retreated from this “mistake” and changed its practice manual expressly to preclude such registrations.
Many argue that the USPTO’s position is unjustifiable as a matter of public policy. Making it easier to infringe the trademarks of state-sanctioned businesses does not advance the purposes of the CSA, and it directly undermines a key goal of trademark law, which is to prevent the proliferation of confusingly similar trademarks. But the merits of these arguments have been lost on the USPTO, which continues to refuse to register marks for anything it perceives to be prohibited by the CSA.
So if you own a cannabis business, what can you do to protect your goodwill while the federal government maintains its current policy? Below are some ideas. Admittedly, none of them– individually or collectively – is a substitute for federal registration. But each of them is better than nothing, and all of them may help to establish your ownership and priority when and if the USPTO changes its policy.
State Trademark Registrations. Each state has its own trademark registration system. State registration may offer protection from infringers within the state, or at least within the parts of the state where the registrant operates, and for that reason alone it is probably worth the small cost involved. However, state registration will have little to no efficacy outside the state. You cannot use a State A registration to file a lawsuit in State B, or to stop infringement in State B, or even to prevent conflicting registrations in State B. Additionally, most state trademark registrants, unlike federal registrants, do not benefit from presumptions of validity and ownership in the litigation context.
Related Federal Registrations. Many cannabis businesses also pursue federal registrations for whatever aspects of their business are not prohibited by the CSA. For example, even though the USPTO refused the POWERED BY JUJU mark for cannabis vaporizers (because it was CSA-prohibited “paraphernalia”), it allowed the same company to register the same mark for “vaporizers for smoking purposes not for use with cannabis.” The USPTO has also allowed registrations for cannabis-related business consulting (e.g., CANNACARD; PRAIRIEJUANA); investment analysis (e.g., FORTUNE420); clothing (e.g., CANNABIS COUTURE, THE MARIJUANA COMPANY); and for CBD – as opposed to THC – derivatives (e.g., CBD LIQUID GOLD). Once the USPTO permits federal registrations for cannabis marks and the inevitable disputes over ownership arise, such federal registrations for these related products and services are likely to be highly persuasive evidence in the registrants’ favor. Moreover, even in the current legal climate, federal registrations (especially when cited in a demand letter) are of great practical use in convincing others not to use confusingly similar marks.
Common Law Unfair Competition. Unfair competition is a state common law cause of action that was a precursor to modern trademark law, and it is still available to protect commercial goodwill even in the absence of a state or federal trademark registration. However, unfair competition law has similar territorial restrictions as state registration. In some cases, the protected territory may be even narrower, limited only to the area within which the plaintiff can prove consumer recognition of the mark.
Other Intellectual Property Protection. Copyright law, unlike federal trademark law, has no “lawful” commerce requirement, and the U.S. Copyright Office regularly issues registrations for cannabis-related copyrights. While copyright will not protect a short phrase such as a business name, it will protect a creative logo design or original packaging, and can be very effective when it comes to getting infringing uses taken down from the internet. Note also that the USPTO does not appear to have the same qualms about legality when it comes to patents, and it often grants patent protection to useful, new and non-obvious inventions related to the cannabis industry.
Save stuff. Finally, if you do nothing else, save stuff. Document that first sale; keep a copy of that first shipping invoice; and save that file containing your original packaging design. Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations. Your lawyer is going to ask you for proof of your first uses of the mark, and you don’t want your response to be a glassy stare. So keep your eyes on the eventual prize and stay ready.
British Home Secretary Sajid Javid appears to have become the most high ranking cannabis advocate in the British government. He has just launched a review into medicinal uses of cannabis in the UK. However, this dramatic change in policy has only come after a series of high profile campaigns and escalating battles for access waged by patients and their families against a government which has remained stubbornly intransigent in the face of growing evidence of medical efficacy and reform elsewhere. In fact, the cannabis “Battle of Britain” has come to resemble the contretemps in Israel over the same issue four years ago that led to a national review of medical use and greater patient access.
It is expected that this recent turn of events will open better access for more British medical users. The fact that the timing of all of this comes as GW Pharma has received the right to distribute Epidiolex in the U.S. as the first FDA-approved cannabis-based medicine is not only part of the irony but the underlying problematic politics surrounding all of this. Starting with the timing of who has access to what, and under what circumstances. As it stands, Epidiolex is also the only cannabis-based drug now eligible in the United States for healthcare coverage. The rest of the market is so-far excluded from it. Unlike, it should be pointed out the situation in the UK, the rest of the Commonwealth, and of course, the EU. Starting with Germany.
A Major Win for Patients
Celebrate one for Alfie! Alfie Dingley that is – the British 6 year old with epilepsy who has become one of the most well-known faces of medical justice for cannabis users in the UK. Dingley and his parents waged a battle since last fall over his right to consume low THC cannabis oil that allows him to manage his epilepsy. He has just been granted an emergency license to import the oil from the Netherlands.
But this is also a victory for Billy Caldwell, the twelve-year-old who ended up in emergency care in hospital recently after his medical oil (from Canada) was confiscated at the border. Video of border control agents at Heathrow Airport removing the oil from the Caldwells caused a national outcry in the UK. Caldwell’s mother, Charlotte, has also waged a high profile battle for access, including at the doors of the hospital her son was admitted to last week. She has also started her own CBD company named after her son.
Like the rest of Europe, which the UK still technically is part of until Brexit, the focus here has very much been on medical use.And of course, this new indication in change of policy is seen as a major victory if not step forward for literally thousands if not millions of Britains who suffer from chronic conditions that are still drug resistant (like Epilepsy but not limited to the same.)
As he addressed the House of Commons on the issue of medicinal cannabis use, Javid said “It has become clear to me since becoming home secretary that the position that we find ourselves in currently is not satisfactory…I have now come to the conclusion that it is time to review the scheduling of cannabis.” As in the US, cannabis is still considered a Schedule I drug in the UK – with supposedly no medical efficacy. This new development clearly challenges that scheduling – but where and how?
Recreational Is Still Not On The Table
Like the rest of Europe, which the UK still technically is part of until Brexit, the focus here has very much been on medical use. This is for several reasons, including a much better and more inclusive public health system – despite imminent fears about the longevity of the British National Health Service (NHS).
In the UK, however, further reform is not likely to move fast. Unlike anywhere else, cannabis production is essentially limited to one company – GW Pharmaceuticals – who themselves have high standing political connections that continue to oppose reform. This is not based on science but rather profit. Despite the fact that the British Isles are the largest exporter of medical cannabinoid pharmaceuticals in the world, British patients are still largely excluded from access. The only reason that these children and their parents were able to pierce the wall of privilege and profit that has driven the debate here since the late 90’s is that GW Pharmaceutical’s cannabinoid concoctions do not work on this kind of epilepsy. Plus the failure of a recent trial of their new drug (shamefully in Europe, not even conducted in the UK).
As a result, GW Pharmaceuticals and the well placed scions of British society who have profited directly and personally from this situation have little choice but to back down – but not by much. As soon as Javid announced his intention to do a review of British policy, former Tory (conservative) leader Lord William Hague called for full legalization. An initiative that as of June 19 was rejected by the government.
Is Medical Finally About To Get Its Due?
In Europe, politically, the frustration is clearly growing. And much like in the United States circa 2012, activists and advocates realize that medical access is the first step towards full reform. However here there is a marked difference to what is going on in both the U.S. and Canada. And in turn, this may bring a long overdue focus on the medical issue that has continually been obscured and overlooked by the industry itself as soon as recreational seems it is in reach.
When real and regulated medical markets are allowed to flourish, the first beneficiaries are both children and women, not middle-aged men. That is clearly the face of the “average” German patient now that the data of the first year has come in. It is also likely to be the case of the British patient as well as Europeans across the continent.In Europe, politically, the frustration is clearly growing
Further, as cannabis has become more of an accepted treatment, this is in turn forcing governments (and even the industry itself) to begin, for the first time, to consider funding widespread trials – and of the raw plant itself along with extracts and other forms the drug can be consumed in.
What does this really herald, in fact then besides relief for chronically ill patients? The first widespread scientific inquiry into the efficacy of cannabinoids outside of Israel.
And that too, is cause for celebration. Congrats Alfie and Billie! And all the people who helped move the issue forward.
In less than two weeks on November 8th, voters in five states will head to the polls to decide if they want to legalize recreational cannabis. California, Nevada, Arizona, Massachusetts and Maine all have initiatives on the ballot that could legalize recreational cannabis for adult use. Polls in each state show a majority of voters support the initiatives.
This New York Times article suggests that November 8th could be a major turning point in the movement to legalize cannabis in the United States. Even if the initiatives fail in most of those states, California’s initiative, which is expected to pass, could be the linchpin for federal legalization. California’s giant economy, coupled with its ability to drive national policy on social issues, sets the stage for rapid industry growth.
According to Matt Karnes, founder of GreenWave Advisors, the significance of California’s measure also lies in the merging of medical and recreational regulatory schemes. His firm sees a trend where “initially bifurcated marijuana markets will merge under a shared regulatory system into substantially larger enterprises.” Karnes believes the California market will conservatively reach $2.6B in 2016 and grow to $6.7B by 2021, which represents a 5-year compound annual growth rate of roughly 21%. “Should California vote to legalize recreational use this November, we expect implementation of a combined regulated market as soon as 2018,” says Karnes. “A combined California market is significant, not only because of its sheer size (~55% of the U.S. market), but it would also mark the first state to implement regulations for a fully legal market without initial oversight of medical use purchases.”
The presidential election is equally as important for the future of the legal cannabis industry. According to Hillary Clinton’s campaign, if she is elected into office then she will “reschedule marijuana from a Schedule I to a Schedule II substance.” This would have a dramatic impact on the growth of the industry, most notably by easing banking and financing restrictions. Whether she will actually follow through with her plans, if elected, to reschedule cannabis is yet to be known. Regardless, this is the first time in history that a candidate with a majority of the country’s support is introducing this concept. That represents a serious shift in mainstream attitude toward cannabis. That represents the normalization of cannabis.
Jane West, chief executive officer of the lifestyle brand Jane West and co-founder of Women Grow, believes this represents the country finally taking cannabis legalization seriously. “Given the poll results that have been publicly available, it seems likely that three or more of the initiatives will pass,” says West. “By November, about 20% of Americans will be living in states where it is legal to consume cannabis. This will accelerate the process of bringing marijuana out of the shadows, and more adults will be comfortable using this enjoyable, relatively benign substance socially and openly.” Normalizing cannabis can look like a lot of things, but mainly it takes away the counterculture stigma and puts it in a light where its regular use is not frowned upon, which could be instrumental in gaining public support.
Leah Heise, chief executive officer of Women Grow, agrees with West’s prediction that at least three of those states will vote to legalize recreational cannabis, citing Maine, Massachusetts and California as favorites. “Additionally, with the likelihood that more than half the states in the United States support some type of cannabis program within their boundaries, a clear message is being sent to the federal government regarding legalization on a federal level,” says Heise. “I don’t think the federal government will be able to continue to enact its cannabis policy through executive orders and funding bills. Real legislative attention will have to be given to the issue.” That legislative attention could come in the form of the CARERS Act, which would reschedule cannabis.
If you are in favor of legalizing cannabis and want to see some change within your lifetime, what can you do to help? Vote. There has never been a more important election year for legal cannabis.
On August 11, 2016, the widely anticipated Drug Enforcement Agency (DEA) announcement on federal cannabis policy yielded fairly anticlimactic results. According to the statement, the federal agency denied two petitions to reschedule cannabis under the Controlled Substances Act (CSA). The U.S. Food and Drug Administration (FDA) and the National Institute on Drug Abuse (NIDA) conducted a scientific and medical evaluation that deemed cannabis “does not meet the criteria for currently accepted medical use in treatment in the United States, there is a lack of accepted safety for its use under medical supervision, and it has a high potential for abuse.” The announcement reiterates the agency’s previous statements on the matter, stating that they believe clinical trials under the investigational new drug (IND) applications and the drug approval process are how the FDA can assess the safety and effectiveness of cannabis-derived medicine.
This avenue for bringing a cannabis-based drug to market is extraordinarily cost-prohibitive, allowing only pharmaceutical companies with deep coffers in the space. The DEA did however make one announcement in the statement that has the potential to lift many barriers to researching the plant’s medical value. The policy change allows more institutions to grow cannabis for research, which was previously allowed only at the University of Mississippi under a contract with NIDA. This is a very significant policy change that could be viewed as a step in the right direction. There is plenty of research currently that proves cannabis’ medical value and its safety and efficacy, but allowing more research opportunities signals that the DEA could be open to revisiting a rescheduling recommendation in the future.
One can speculate endlessly about when the DEA may reschedule cannabis, but in reality, no one knows when that might happen, no one knows what a new administration would do, if Congress would act on it or if the courts would. It seems even the FDA and DEA are sitting on their hands as the federal government does what they do best– inaction.
However, one important ruling in the U.S. Court of Appeals for the 9th Circuit highlights the baby steps taken toward some form of federal acceptance of legal cannabis. The court ruled that the Department of Justice couldn’t prosecute individuals in states where cannabis is legal. More specifically, the court ruling “prohibits the Department of Justice from spending funds to prevent states’ implementation of their medical marijuana laws.” The ruling basically reaffirms the Rohrabacher-Farr amendment, which states that the DOJ cannot interfere with states where cannabis is legal, but this time also for those individuals complying with state law.
The DEA’s inaction on rescheduling cannabis should not be perceived as a loss to the legalization movement, rather as an upholding of the asinine status quo. Policy change in the United States is an arduous and very slow process. These things take time. One can look to the same-sex marriage movement and find striking similarities to the cannabis legalization movement. For example, Massachusetts and California were some of the first states to introduce legislation legalizing same-sex marriage and are also some of the first states that have introduced legislation legalizing cannabis. These states that are typically drivers of national policy have opportunities to pass important ballot initiatives this November that could have ripple effects throughout the country. Five states have ballot initiatives for recreational legalization and potentially up to eight states with initiatives for medical legalization, all being voted on this November.
What can the average citizen do to help with progress in cannabis legalization? For starters, you can vote. If you live in a state that has a ballot initiative for legalizing cannabis, show up at the polls and make your voice heard. If you live in a state where no such ballot initiative exists, you can still take action to get cannabis legalized. You can sign this petition or write your member of Congress to support the Compassionate Access, Research Expansion, and Respect States (CARERS) Act (S. 683). The CARERS Act, among many other important changes, would most notably reschedule cannabis to Schedule II.
So not all is lost with the DEA’s inaction. As more states legalize cannabis, we are seeing a rising tide lift all boats.
In a letter sent to lawmakers last week, the Drug Enforcement Agency (DEA) announced plans to make a decision on rescheduling cannabis by mid-2016. The announcement could represent the culmination of a shift in the federal government’s attitude toward cannabis legalization.
Currently, cannabis is a Schedule I narcotic, meaning the government views it as lacking medical benefits and have a high potential for abuse. The rescheduling of cannabis has the potential to open the floodgates for research, including much needed clinical trials.
Derek Peterson, chief executive officer at Terra Tech, a cannabis-focused agriculture company, believes this bodes well for the growth potential of the cannabis industry. “From the perspective of quality and safety standards, I find it unlikely that rescheduling it would negatively impact the degree to which cannabis is examined,” says Peterson. “It’s unnecessarily high position on the DEA drug schedule does nothing but limit the industry’s potential for growth, stall any meaningful pharmaceutical testing and increase law enforcement’s ability to prosecute non-violent drug offenders,” adds Peterson.
The rescheduling could also potentially allow for the prescribing of cannabis for patients. Stephen Goldner, founder of Pinnacle Labs and president of Regulatory Affairs Associates, is hopeful this will lead to a greater shift in public attitude towards cannabis. “The DEA’s announcement is a clear message to all States and possibly even to United Nations policy makers: even the DEA is willing to reconsider cannabis,” says Goldner. “Since the DEA is reconsidering cannabis, state politicians and local police departments can also be flexible and move away from prohibition, towards the regulation of cannabis.”
The rescheduling of cannabis could have a tremendous impact on the growth of the cannabis industry, including more clinical trials, medical research and physician participation. It could also open the door for more federal agency involvement, as the Schedule I status inhibits any EPA research on cannabis pesticide use or FDA guidance on food and drug good manufacturing practices. When reached for comment, the FDA’s press office said they could not speculate on any involvement in the matter.
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