Tag Archives: state

July 19, 2019

Sustainable Plastic Packaging Options for Your Cannabis Products

By Danielle Antos

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

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

Consider Alternative Resins

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

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

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

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

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

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

Consider Alternative Manufacturing Processes

Flame Treatment Elimination

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

Source Reduction (Right-Weighting)

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

Convert to Plastic Pallets

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

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

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

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

July 17, 2019

The Face Of Cannabis Education In Europe

By Marguerite Arnold

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More than a few cannabis “education companies” – mostly from Canada and the U.S. but some with Israeli ties, plus German and British efforts have targeted Europe as the next logical expansion plan in their global roadmap.

These include most recently Cannvas Medtech Inc., and several initiatives funded by Canopy Growth, including teaching children about the drug. It also includes training programs for frontline staff, launched by Organigram (although in this case it appears to be geared towards “brand education.”)

There are also doctor training programs launching in the UK.

In Germany, there are several efforts underway, helmed by both doctors and cannabis advocates generally, in several cities around the country.

But how effective is all of this “education” in both preventing illegal use, and promoting legitimate sales?

Particularly if such “education” platforms are exported from a foreign market for use in Europe?

Education Is Desperately Needed, But So Is Channel Penetration

Nobody is arguing that “education,” as well as trials and more information for payers and doctors are not required. The problem is that some education is more effective than other campaigns. And most of the talk in most places is more a discussion of the need for further regulatory reform, more trials and more investigation.

That has to get paid for somewhere.

That, at least in Europe is also tricky, as both early educational movers Weedmaps and Leafly have both found out, especially in medical only markets in the EU. Why? There are also highly limited opportunities for advertising either a drug, or to doctors.

Different Regulatory Environments Cause Bigger Issues

Even in Canada and the United States, there is an ecosystem of supplying the demand that has very much grown up customized by the strange paths to reform if not the first mover discussion.

That is not going to be the case in Europe, which in effect creates a brand-new ecosystem to educate, with new players, and every ecosystem participant group has a different kind of educational needs.

Here is one example of where this shows up. So far, in most countries, doctors are still highly resistant to prescribing the drug. Nurses, on the other hand, in both the United States and Canada at least, have proven to be a much more reliable source of converts for the cannabis cause. That approach of course is not possible in places like Germany where only doctors may issue prescriptions, including of the cannabis (and narcotic) kind.

Access issues also play a big role in just about every country- from cost to privacy. And on the privacy front, it is not just foreigners who are getting used to new rules. So are German doctors.

The pharmacy discussion is also very much in the room – and this is not “just like” approaching a “dispensary” from North America. They are regulated chemists. Which causes a whole new set of issues and a serious need for new kinds of educational materials.

In Germany, for example, pharmacists are being recruited and trained by not only staff recruiters specializing in the same, but also sent on special training courses funded by the big Canadian companies (Tilray being the noticeable one recently). The brick and mortar vs. online discussion is also a big topic across Europe. Notably, where it is allowed and where it is, as in Deutschland, verboten.

And, of course, the big green giant in the room everywhere in Europe, in particular, is payer/insurance approvals, which are based on a kind of education called proven medical efficacy.

And that, so far, is in markedly short supply.

In the UK, it is so far the main reason that NHS patients (for example) cannot access coverage for the drug to treat conditions like chronic pain.

In the meantime, the most widespread “education” that is going on, is still mostly at the patient level. Especially when patients sue their insurers, or lobby doctors to prescribe.

The cannabis industry may be maturing, in other words, to be able to answer these questions – but there is also clearly a long way to go.

July 16, 2019

How Half-Baked Labels Can Destroy a Cannabis Business

By Greg Boulos

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Cannabis manufacturers and consumers are currently in a honeymoon phase. Consumers love their CBD gummies and believe wholeheartedly in the benefits of cannabis-related products. But it is only a matter of time before industrious plaintiffs’ lawyers take a close look at ways to attack manufacturers. We know from other industries that product labels tend to be the entry point for plaintiff lawyers eyeing manufacturers and looking for easy targets. Any company in the business of manufacturing cannabis-related products needs to devote significant time and resources to developing labels that minimize the risk of bet-the-company litigation down the road. Most notably, manufacturers need to think through whether there are any adverse effects associated with their products of which consumers should be aware. Also, manufacturers must scrutinize any “all natural” or “organic” claims on their labels to ensure that they are not misleading consumers.

Failure to Warn of Potential Detrimental Effects

Most manufacturers are well aware of state mandated labels for cannabis products. And, based on the recent FDA public hearing on cannabis, the industry will likely see FDA labeling requirements in the near future. However, simply complying with these requirements does not insulate a manufacturer from litigation, particularly failure to warn claims. One example, dating back to the 1970s, relates to OSHA’s regulation of asbestos-containing products as it became more and more clear that certain types of asbestos could cause a rare form of cancer, mesothelioma. Among other things, OSHA required manufacturers of asbestos-containing products to add a warning to all packaging. The mandated warning included very specific language. Manufacturers largely complied and added the OSHA-mandated label to their product packaging.

Fast-forward 40 years and today, several of those manufacturers are now bankrupt due to litigation based on their alleged failure to warn consumers that asbestos can cause cancer. Plaintiffs have been successful in bringing these claims because the OSHA label only warned that asbestos could cause harm, but it did not mention the word cancer. Some juries have found that the language in the warning was not sufficient to caution end users of the increased risk of developing cancer. While there have also been numerous defense verdicts in asbestos litigation and many asbestos-related cases lack merit – especially against certain defendants – the plaintiffs’ verdicts and legal fees to defend these cases are staggering. Recent plaintiffs’ verdicts have ranged from $20 to $70 million.

Of course, asbestos is an extreme example since CBD has not been associated with an increased risk of developing cancer. But there are other health concerns that manufacturers should consider. For instance, one group of doctors claim to have linked consuming cannabis before the age of twenty-five to development delays. Another study purports to link cannabis consumption to increased risk of premature birth. If there are legitimate studies underpinning these concerns, manufacturers can become the target of potential lawsuits. Beware that when plaintiff law firms find a manufacturer to target, they often file thousands of cases around the country – not just one. Even if the claims are entirely bogus, the legal fees to merely defend these cases are crippling and can lead to a swift bankruptcy.

While there are risks involved with failing to warn consumers of possible adverse effects of a product, manufacturers should not try to mention every alleged adverse effect on its labels. Rather, manufacturers must do their due diligence and investigate whether claimed adverse effects are legitimate, then warn of those that appear to be based on valid scientific studies. Each manufacturer’s research department should assess the credibility of any study linking cannabis use to an adverse health effect and have a candid discussion with their attorneys on whether a warning is warranted. Do not fear lawsuits, they are unavoidable. Rather, work toward ensuring that the company and product(s) have a strong, defensible warning in the event litigation arises.

Questionable “All Natural” and “Organic” Claims

It seems like every CBD product on the market has an “all natural” or “organic” claim on the label. If the product is truly organic, fantastic. Flaunt that organic label. But several food companies have landed in hot water with these labels when there is a hidden ingredient that is not natural. What’s more, manufacturers have been sued when their product contain genetically modified organisms, or GMOs. These lawsuits come in the form of class actions at the state and federal level. Class action litigation is very expensive to defend. And they typically result in settlements for beaucoup bucks – typically multi-million-dollar settlements. Plaintiffs lawyers love these claims because their fees typically also end up in the millions. One example of this kind of class action is a case involving the well-known Kashi brand. Kashi was accused of misleading consumers by including the words “All Natural” on some of its products. Plaintiffs asserted that the products contained bio-engineered, artificial and synthetic ingredients. The class action was settled for $3.9 million.

Just some of the many CBD products on the market today.

How can all natural or organic claims lead to millions of dollars in damages? Here is an example of how these cases usually work: A group of consumers determine that an “all natural” product is not “all natural.” Let’s call this Product A and assume it sells for $5 per unit. The consumers then find a similar product that is not labeled “all natural.” That product is $2 per unit. The consumers argue that they overpaid for Product A by $3 per unit because they thought the product was all natural. Three dollars may not sound too bad, but if the class consists of two-million consumers, each entitled to $3, that’s a $6 million damages claim against a company. That does not count the hundreds of thousands of dollars that will be spent on legal fees defending the class action.

Cannabis manufacturers should not use all natural labels loosely and should consult with an attorney experienced in product labeling class actions to determine whether they should forgo these labels. The same is true for any labels that claim a product provides unique health benefits.

Key Takeaway

When manufacturers are excited about introducing a product to the market, trying to compete with other manufacturers and already dealing with miles of regulatory red tape, it may be tempting to avoid self-imposed labeling requirements. But to ensure their businesses are sustainable over the long-term, manufacturers need to take necessary steps now that will limit future litigation risk. The cost of taking preventative measures to develop a meaningful label is considerably less than the types of product labeling verdicts and settlements affecting other industries. Focus on warnings and the use of all natural labels as a starting point. Then speak with an attorney about the unique aspects of your product, potential adverse effects and the adequacy of your warning. We are here to help.

July 11, 2019

Soapbox

Medical Cannabis in Georgia: Federal Policy Effects on State Industries

By Reggie Snyder

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Under the U.S. Drug Enforcement Administration’s (DEA) Controlled Substance Act (CSA), drugs are classified into five distinct schedules depending upon their acceptable medical use and their overall potential for abuse or dependency. The DEA currently lists cannabis as a Schedule I drug, which the CSA defines as drugs having no currently accepted medical use and a high potential for abuse. It appears, however, that the DEA may soon reconsider its current Schedule I classification of cannabis.

This article considers how the DEA’s potential reclassification of cannabis potentially could affect Georgia’s medical cannabis industry. Specifically, the article discusses: (1) how Georgia medical cannabis distributors would operate within this new regulatory framework; (2) how this change would affect registered Georgia patients who are either currently purchasing medical cannabis or are planning to do so; and (3) whether this reclassification would cause big pharmaceutical companies to enter Georgia’s medical cannabis market, and if so, how.

The DEA’s Reclassification of Cannabis Would Likely Affect the Regulatory Framework of Georgia’s Medical Cannabis Industry

On April 2, 2019, Georgia became the 34th U.S. state to legalize cannabis for medicinal use when the Georgia Legislature passed House Bill 324 (“HB 324”), which recently took effect on Monday, July 1, 2019. In Georgia, medical cannabis is defined as a “low-THC oil” that contains 5% or less of tetrahydrocannabinol (THC)—the psychoactive chemical in cannabis that causes a “high.”

If the DEA reclassifies cannabis, the regulatory framework of Georgia’s medical cannabis industry under HB 324 would likely be affected. For instance, depending on how the DEA elects to reclassify cannabis, low-THC oil products manufactured and sold in Georgia could become subject to the U.S. Food and Drug Administration’s (FDA) costly, complicated and time-consuming drug approval process. Then, any low THC oil products that the FDA approves will be subject to federally mandated quality, efficacy and potency standards for FDA-approved drugs. Also, any federal standards that stem from the DEA’s reclassification of cannabis will trump any conflicting provisions in HB 324 or any other conflicting rules, regulations or procedures established by the Georgia Access to Medical Cannabis Commission (GAMCC), the seven member state agency responsible for promulgating and implementing the state-based rules, regulations and procedures necessary to produce and distribute low-THC oil in Georgia, and the Georgia State Board of Pharmacy (Pharmacy Board). However, even if the DEA reclassifies cannabis, the following state regulatory framework established by HB 324 will remain unaffected:

The GAMCC will likely continue to oversee the state’s medical cannabis industry.
The following two different types of dispensary licenses issued under the legislation will still likely remain: retail outlets (issued by the GAMCC) and pharmacies (issued by the Pharmacy Board).
Licensed dispensaries will still likely not be located within a 1,000-foot radius of a school or church, and licensed production facilities will still not be located within a 3,000-foot radius of a school or church.
Pharmacists who dispense low-THC oil will still likely have to review each registered patient’s information on the state’s Prescription Drug Monitoring Program (PDMP) database to confirm that they have been diagnosed with one or more of the 17 approved conditions and diseases. The legislation does not require retail outlet dispensaries to review patient information on the PDMP database or employ a pharmacist to dispense the drug.
Registered patients will still likely be prohibited from vaping low-THC oil or inhaling it by any other electronic means. The legislation does not expressly prohibit the use of other, non-electronic delivery methods of low THC oil such as pills or nasal spray.
All licensed dispensaries (and all licensed production companies) will still likely be subject to an “on-demand” inspection when requested by the Georgia Bureau of Investigation (GBI), the GAMCC, the four-member Medical Cannabis Commission Oversight Committee (MCCOC), or local law enforcement. The GAMCC and the Georgia Drugs and Narcotics Agency (GDNA) will also still likely be able to conduct one, annual inspection of dispensary locations. And, upon request, licensed dispensaries will still likely be required to immediately provide a sample of their low-THC oil for laboratory testing to the GBI, GAMCC, MCCOC, GDNA or local law enforcement.
All licensed dispensaries (and all licensed production facilities) will still likely be required to utilize a GAMCC-approved seed-to-sale tracking software.
All licensed dispensaries (and all licensed production companies) will still likely be prohibited from advertising or marketing their low-THC oil products to registered patients or the public. However, they will still likely be allowed to provide information about their products directly to physicians, and upon request, physicians will still likely be allowed to furnish the names of licensed dispensaries (and licensed production companies) to registered patients or their caregivers.

The DEA’s Reclassification of Cannabis Would Likely Affect the Availability of Low THC Oil

To date, approximately 9,500 Georgians are registered with the state’s Low-THC Registry, which allows them to purchase low-THC oil from licensed dispensaries. Since the legislation’s passage, the number of registered patients has increased significantly and continues to steadily rise. If the DEA reclassifies marijuana, this patient number will likely increase at an even faster rate because the public will likely perceive reclassification as an acknowledgement by the federal government that marijuana possesses health and medicinal benefits. If that occurs, statewide demand for low THC oil could quickly outstrip the supply.

Georgia Gov. Brian Kemp
Image: Georgia National Guard, Flickr

Under HB 324, the GAMCC is tasked with ensuring that the state has a sufficient number of retail outlet dispensaries across the state to meet patient demand but is limited to issuing only six production licenses. As the number of registered patients continues to grow, the GAMCC may be forced to recommend amendments to the statute allowing it to issue additional production licenses to increase the state’s supply of low THC oil, and depending on how many additional patients are added to the state’s Low-THC Registry, the GAMCC may also have to issue additional dispensary licenses to keep up with patient demand by relaxing the geographic limitations on locating dispensaries.

Thus, the DEA’s reclassification of cannabis likely would affect the amount of low THC oil available to registered patients in Georgia.

The DEA’s Reclassification of Cannabis Would Likely Cause Large Pharmaceutical Companies to Enter Georgia’s Medical Cannabis Market

Large pharmaceutical companies typically manufacture, market, sell and ship their products on a national and international scale. Given cannabis’ current status as a Schedule I drug under the CSA, these companies have largely steered clear of the burgeoning medical marijuana industry because of the inherent risk of violating federal law. If the DEA reclassifies cannabis, that risk will be diminished greatly, and the companies therefore will likely decide to enter the market by acquiring existing medical marijuana companies with established national or state-level medical cannabis brands.

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways.Depending on how the DEA reclassifies cannabis, low-THC oil in Georgia could be subject to stringent federal standards, including the FDA’s complex and expensive drug approval process. Georgia medical cannabis companies will likely not be accustomed to complying with such federal regulations. Large pharmaceutical companies, on the other hand, are very accustomed to dealing with the federal government, including FDA drug approval. So, if the DEA reclassifies marijuana, pharmaceutical companies will likely view reclassification as a tremendous opportunity to enter the Georgia market by leveraging their experience and institutional knowledge dealing with federal law to acquire or partner with a licensed Georgia cannabis company that has an established brand of low -HC oil.

Entering Georgia’s medical cannabis market won’t be easy, however, because HB 324 prohibits licensees from transferring their licenses for five years and requires that the original licensee be a Georgia business. But, HB 324 does not prohibit them from selling their businesses, which necessarily includes any licenses the business owns. Purchasing a licensed Georgia medical cannabis company requires payment of a production license business transfer fee. The fee for the first sale of a business with a Class 1 production license is $100,000 and the fee for a Class 2 license is $12,500. The fee for the second sale is $150,000 for a Class 1 production license, and $62,500 for a Class 2 license. The fee for the third and fourth sales is $200,000 for a Class 1 production license, and $112,500 for a Class 2 license.

Conclusion

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways. Specifically, depending on how the drug is reclassified, the regulatory framework for medical cannabis companies likely will change to include both state and federal requirements, potentially including the FDA’s complex drug approval process. Also, the amount of low-THC oil available for registered patients to purchase likely will be diminished precipitating the need for the GAMCC to modify the statute to allow for issuing additional production licenses and relaxing the geographic limitations on locating dispensaries. Finally, large pharmaceutical companies likely will attempt to enter Georgia’s medical cannabis market by purchasing existing, licensed Georgia companies that have established low-THC oil brands.

July 11, 2019

Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 3

By Carl Silverberg

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Part 1 in this series went into a discussion of resource management for cannabis growers. Part 2 presented the idea of land use and conservation. In Part 3 below, we dive into pesticide use and integrated pest management for growers, through an environmental lens.

Rachel Carson’s book Silent Spring in 1962, is often credited with helping launch the environmental movement. Ten years later, VP Edmund Muskie elevated the environment to a major issue in his 1972 Presidential campaign against Richard Nixon. 57 years after Ms. Carson’s book, we’re still having the same problems. Over 13,000 lawsuits have been filed against Monsanto and last month a jury in Alameda County ruled that a couple came down with non-Hodgkin’s lymphoma because of their use of Roundup. The jury awarded them one billion dollars each in punitive damages. Is there a safer alternative?

“Effectively replacing the need for pesticides, we use Integrated Pest Management (IPM) which is a proactive program designed to control the population of undesirable pests with the use of natural predators, a system commonly known as “good bugs (such as ladybugs) fighting bad bugs”, states the website of Mucci Farms, a greenhouse grower. While this applies to cannabis as well, there is one major problem with the crop that isn’t faced by other crops.

While states are moving rapidly to legalize it, the EPA is currently not regulating cannabis. That is in the hands of each state. According to a story in the Denver Post in 2016, “Although pesticides are widely used on crops, their use on cannabis remains problematic and controversial as no safety standards exist.” Keep in mind that it takes a lot more pesticides to keep unwarranted guests off your cannabis plant when it’s outdoors than when it’s in a controlled environment.

We’re accustomed to using endless products under the assumption that a range of governmental acronyms such as NIH, FDA, OSHA, EPA, USDA are protecting us. We don’t even think about looking for their labels because we naturally assume that a product we’re about to ingest has been thoroughly tested, approved and vetted by one of those agencies. But what if it’s not?

Again, cannabis regulation is at the state level and here’s why that’s critical. The budget of the EPA is $6.14 billion while Colorado’s EPA-equivalent agency has a budget of $616 million. According to the federal budget summary, “A major component of our FY 2019 budget request is funding for drinking water and clean water infrastructure as well as for Brownfields and Superfund projects.” In short, federal dollars aren’t going towards pesticide testing and they’re certainly got going towards a product that’s illegal at the federal level. That should make you wonder how effective oversight is at the state level.

What impact does this have on our health and what impact do pesticides have on the environment? A former Dean of Science and Medical School at a major university told me, “Many pesticides are neurotoxins that affect your nervous system and liver. These are drugs. The good news is that they kill insects faster than they kill people.” Quite a sobering thought.

“We have the ability to control what kinds of pesticides we put in our water and how much pesticides we put in our water.”Assuming that he’d be totally supportive of greenhouses, I pushed to see if he agreed. “There’s always a downside with nature. An enclosure helps you monitor access. If you’re growing only one variety, your greenhouse is actually more susceptible to pests because it’s only one variety.” The problem for most growers is that absent some kind of a computer vision system in your greenhouse, usually by the time you realize that you have a problem it’s already taken a toll on your crop.

Following up on the concept of monitoring, I reached out to Dr. Jacques White, the executive director of Long Live the Kings, an organization dedicated to restoring wild salmon in the Pacific Northwest. Obviously, you can’t monitor access to a river, but you certainly can see the effects of fertilizer runoff, chemicals and pesticides into the areas where fish live and eventually, return to spawn.

“Because salmon travel such extraordinary long distances through rivers, streams, estuaries and into oceans they are one of the best health indicators for people. If salmon aren’t doing well, then we should think about whether people should be drinking or using that same water. The salmon population in the area around Puget Sound is not doing well.”

We talked a bit more about pesticides in general and Dr. White summed up the essence of the entire indoor-outdoor farming and pesticides debate succinctly.

“We have the ability to control what kinds of pesticides we put in our water and how much pesticides we put in our water.”

If you extrapolate that thought, the same applies to agriculture. Greenhouse farming, while subject to some problems not endemic to outdoor farming, quite simply puts a lot fewer chemicals in the air we breathe, the water we drink and the food we eat.

July 10, 2019

When You Don’t Know What You Don’t Know: Debunking Cannabis Insurance Myths

By , T.J. Frost

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For all of today’s growing acceptance and legitimacy with cannabis, the reality is that today’s operators – whether growers/producers or dispensary operators – still face risks in running their businesses. If, in the old days, a customer got deathly ill from cannabis contaminated with something from somewhere during the distribution chain, oh, well. But now that there’s a legal system of checks and balances; there’s recourse when issues arise.

The problem is that the business is so new that most people don’t know what they don’t know about mitigating those risks. And that, unfortunately, extends to many in the insurance business who need to be doing a better job helping put the right protections in place.

One grower bemoaned to me at a cannabis trade show, “I sure wish I could insure my crops.” What? “You can,” I told him. His old-school ag broker didn’t know any better and didn’t do him any favors with his ignorance. But it brought home the point: We have to start treating cannabis like the real business it is.

Reviewing the existing insurance policies of today’s cannabis businesses uncovers some serious gaps in coverage that could be financially crippling if not downright dangerous should a claim be triggered. Retail dispensaries, for example, are high-cash businesses, making banking and trusted employees a must-have.Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days.

And a close eye must be cast to lease agreements for hidden exposures, too. We know a Washington state grower that had no property insurance on its large, leased indoor growing facility. The company’s lease made its owners, not their landlord, responsible for any required building improvements. It was one of a variety of serious exposures that had to be fixed.

Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days. Rather than find themselves under-insured, they can start by learning what they probably have wrong about insurance. Dispelling three of the most common myths is a good place to start.

Myth #1: Nobody will insure a cannabis business.

Not remotely true. You can and should get coverage. Think property and casualty, product liability, EPLI and directors and officers, employee benefits and workers comp. Additionally, you should be educated on what crop coverage does and doesn’t cover. Depending on your business’ role in production and distribution, you might also consider cargo, stock throughput, auto, as noted, crime and cyber coverage. It pays to protect yourself.

Myth #2: If my business isn’t doing edibles, I don’t have to worry about product liability insurance.

The reality is that product liability may be the biggest risk the cannabis industry faces, at every level on the supply chain. There’s a liability “trickle down” effect that starts with production and distribution and sales and goes down to labeling and even how the product is branded. Especially when a product is an edible, inhalable or ingestible with many people behind it, the contractual risk transfer of product liability is an important consideration. That means the liability is pushed to all those who play any role in the supply chain, whether as a producer or a retailer or an extractor. And all your vendors must show their certificates of insurance and adequate coverage amounts. Don’t make the mistake of being so excited about this new product that you don’t check out the vendors you partner with for this protection.

Myth #3: Any loss at my operation will be covered by my landlord’s policy.

As the example I cited early illustrated, that’s unlikely. Moreover, your loss might even cause your landlord’s insurance to be nullified for having rented to a cannabis business. It’s another reason to examine your lease agreement very carefully. You want to comply with your landlord’s requirements. But you also need to be aware of any potential liabilities that may or may not be covered. Incidentally, even if your landlord’s policy offers you some protection, your interests are going to be best served through a separate, stand-alone policy for overall coverage.

These are interesting times for the burgeoning legal cannabis business. Getting smart – fast – about the risks and how to manage them will be important as the industry grows into its potential.

July 10, 2019

Transporting Cannabis Can Be a Costly Business Risk

By Susan Preston, T.J. Frost

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Did you know that the use of personal vehicles for transporting cannabis products is one of the most frequent claims in the cannabis industry? It surpasses property, product liability and even theft. Businesses are either unaware of the risks involved in using personal vehicles for transporting cannabis, or they aren’t taking them seriously enough.

Considering the strict statutes many states have placed on transporting cannabis should be reason alone to be more diligent. For example, the California Bureau of Cannabis Control’s proposed regulations require cannabis business owners to ensure their drivers have designated permits to transport the product. The state’s current legislation mandates inspections at any licensed premises, and requires employers to provide detailed tracking and schedules on the transport of product. Further, the state prohibits using minors to transport cannabis, and considers it a felony to do so.

Regulatory concerns, combined with the potential liabilities that could come from driver behavior, are keeping insurers from offering auto coverage to the cannabis industry. In fact, just four insurers currently offer the industry auto coverage, with premiums running as high as $17,000 per auto on average. It is important to note that personal auto insurance falls short because it doesn’t cover cargo loss.

Alternatively, because the stakes are so high, many companies are using courier services to transport cannabis product. But cargo insurance is still an issue. Without it, the care, custody and control of someone else’s products, and insurance limits are lacking. Even when the courier has cargo coverage, because they are delivering for multiple companies, the claims payout would have to be split amongst all the customers – likely below the value of your loss.

Consider the following best practices when transporting cannabis:

Conduct background checks/review DMV records. Uncovering any potential driver issues prior to hiring is critical. Look for previous DUIs or drug related history. Employees who might use product before getting behind the wheel are a significant danger to other drivers and a major liability to the employer. Even after hiring, be on alert for signs that indicate poor driving performance. Use check-in/check-out processes for all drivers, and conduct regular vehicle walk-arounds to look for scratches, dents or other damage that otherwise might be unreported to the employer.First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk.
Implement quarterly driver training. Educate employees on proper procedures. While minor fender benders and sideswipe accidents are most common, even these can be costly if not handled properly. Once law enforcement get involved in an accident the car’s transportation of cannabis could become a secondary issue. Teach drivers how to handle accidents while on the scene, including informing law enforcement about the cargo and the employer.
Use unmarked vehicles. Drivers carrying a significant amount of product and/or cash are tempting targets for thieves. Company cars used for transporting product should be newer, and have no fleet serial numbers or anything identifying the company.
Require increased personal liability limits. If an employee is using their own personal vehicle for business purposes, the business owner should require that person carry more than minimum limits of personal liability. Ideally, they should have $300,000 or more, at an absolute minimum $100,000.

Get started now

First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk. Secure the right insurance coverage, and ask your broker/underwriter to provide any additional recommendations to best mitigate your transportation, delivery, and cargo exposures.

To learn more, please visit our website.

July 9, 2019

Flooring Tips for Cannabis Growing Facilities

By Sophia Daukus

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In the burgeoning cannabis market, grow facilities are facing more and more competition every day. New indoor cultivation enterprises are often being set up in formerly vacant industrial buildings and commercial spaces, while in other cases, companies are planning and constructing new grow facilities from the ground up. For all these establishments, continually lowering production costs while supplying the highest possible quality in ever-increasing yields is the way forward.

Whether in existing or new structures, concrete floors are ubiquitous throughout the majority of cannabis growing facilities. With the right treatment, these indoor concrete traffic surfaces can greatly contribute to a company achieving its operational objectives. Alternatively, insufficiently protected concrete floors can create annoying and costly barriers to accomplishing company goals.

Challenges in Cannabis Grow Facility Construction

As with any emergent industry, mainstream acceptance and market growth is bringing regulation to cannabis cultivation. Local governments are paying more attention to how cannabis growing facilities are constructed and operated. In addition to the standard business matters of building safety, employee working conditions and tax contributions, elected officials are increasingly under pressure from constituents to analyze the overall effect of grow facilities on their communities at large.

High consumption of energy for grow room lights and high water usage are just part of the equation. The temperature and humidity needs of a grow facility can be similar to that of an indoor swimming pool environment. While warmth and moisture are ideal for cannabis growth, they also provide the ideal conditions for the growth and proliferation of fungi and other undesirable microorganisms. Therefore, to help preserve plant health in the moist indoor climate, fumigation often comes into play.

Carbon dioxide (CO2) enrichment of grow room air, a common practice proven to increase crop yields, presents another set of safety and health considerations in dense urban environments.

Adding to these challenges, many cannabis grow facilities are producing plants destined for either pharmacological or nutritional use. This in itself demands scrutiny by regulators for the sake of the consuming public.

As a result, grow room managers and owners must stay informed about the evolution of the industry in terms of local and federal agency regulations concerning their facilities, their overall operation and their products.

Bare Concrete Floors in Grow Rooms

As a foundational construction material, concrete continues to lead the way in commercial and industrial construction. Despite the many advantages of concrete floors, when left unprotected they can present significant challenges specific to cannabis grow rooms.

Untreated, bare concrete is naturally porous, easily absorbing liquids and environmental moisture. Substances found in grow rooms, such as fertilizers, fungicides and other chemicals, can leach through the porous concrete floor slab into the soil and ground water. Whether organic or synthetic, concentrations of such substances can be highly detrimental to the surrounding environment.
Whether in an existing or newly constructed facility, it is not uncommon for the under-slab vapor barrier to be compromised during construction. When this occurs, moisture from the soil beneath the floor slab can enter the concrete and move osmotically upward, creating a phenomenon known as Moisture Vapor Transmission (MVT). The resulting moisture and moisture vapor tends to become ever more alkaline as it rises upward through the concrete slab. MVT can result in blistering, bubbles and other damage to floor coverings.
The warm temperatures, regular watering of plants and high relative humidity maintained within many grow rooms can contribute to a weakening of the structural integrity of unprotected grow room slabs.
Within the confined space of a grow room, the warm, moist air invites microbe proliferation. Food and pharmaceutical plants are high on the priority list when it comes to facility hygiene levels, as demanded by code.

Public health guidelines for cannabis cultivation facilities in various parts of the country are increasingly mirroring those of food processing. Typical requirements include having smooth, durable, non-absorbent floor surfaces that are easily cleaned and in good repair, possessing proper floor slope towards a sanitary floor drain, with no puddling, as well as an integral floor-to-wall cove base. These directives cannot be met with bare concrete alone.

Optimal Grow Room Flooring Performance

In some locations, cannabis growing facilities are already subject to strict building codes and regulations. This will no doubt be spreading to other regions in the near future. For example, the Public Health Agency of Los Angeles County publishes construction guidelines to ensure cannabis facility floors meet standards mirroring the food processing and pharmaceutical manufacturing industries, where sanitation, facility hygiene and safety are paramount. In these types of facilities, bare, unprotected concrete floor slabs are not allowed as a general rule, due to the material’s innate porosity and absorbency.

Flooring in grow rooms, like in their food and pharma industry counterparts, should optimally:

Provide a monolithic and virtually seamless surface to help eliminate crevices, grout lines and other dark, damp locations where soil and pathogens tend to hide
Be impervious and non-porous, providing a surface that can isolate toxic materials on the surface for proper clean-up where needed
Enable correction or improvement of the floor slope for proper drainage, with no low spots to help avoid puddling
Be installed with integral floor-to-wall cove options for easier wash-down and sanitizing
Have the strength and thermal shock resistance, plus the tenacious bond, to undergo steam-cleaning and/or hot power washing, where needed
Enable seamless, continuous surface installation over concrete curbs and containment areas
Offer antimicrobial options for highly sensitive locations
Demonstrate high compressive strength and impact resistance for durability under heavy loads

Display excellent abrasion resistance, allowing the system to perform under grueling daily wear-and-tear
Present customizable slip-resistance options that can be balanced with easy clean-ability
Facilitate the use of floor safety markings, such as color-coded traffic and work area designations

Be formulated with low odor, low-VOC chemistries that meet all EPA and similar regulations
Be able to contribute LEED Green Building Credits, where desired
Include options for refurbishing old or damaged concrete surfaces to allow reuse of existing facility resources, as opposed to having to be demolished, thus unnecessarily contributing to landfill waste
Withstand and perform in continually damp grow room conditions, without degrading
Be compliant with FDA, USDA, EPA, ADA, OSHA, as well as local regulations and/or guidelines
Include MVT mitigating solutions where Moisture Vapor Transmission site issues are present
Provide waterproofing underlayment options for multi-story facilities
Demonstrate excellent resistance to a broad range of chemicals, fertilizers and extreme pH substances

Finding an affordable floor system with all the above features may seem like a tall order. Luckily, innovative manufacturers now offer cannabis facility flooring that meets sanitation, regulatory compliancy, durability and budgetary needs of growers.

Resinous Flooring Value for Cannabis Facilities

Choosing the right floor solutions for a given cultivation facility may be one of the most important decisions an owner or manager makes. Since floors are present throughout the structure, poor selection and compromised protection of concrete slabs can end up wreaking havoc with profits and yields over time.

Few facilities can afford the inconvenience and expense of an otherwise unnecessary floor repair or replacement. Having to suddenly move cumbersome plant beds and heavy pots in order to give workers access to the floor area can be headache. In addition, the unscheduled downtime and overall juggling of resources that invariably must take place make a strong case for investing in optimal grow room flooring from the start.

An excellent long-term value, professional-grade resinous floor systems present cannabis growers with a unique set of solutions for cultivation rooms. Not only does this type of flooring offer all the desirable features listed above, but also furnish a host of added benefits to grow room operations, including:

Very High Gloss Finish

Highly reflective floor surfaces enable light entering the space from overhead to bounce back upward, exposing the underside of leaves to the light and potentially increasing yields
Exceptionally high gloss floor finishes in light colors help make the most of your existing lighting sources, significantly increasing room illumination
Achieving greater illumination without adding fixtures helps reduce energy consumption and associated costs

Virtually Seamless Surface

Fluid-applied resin-based flooring provides an impermeable, monolithic surface that is exceptionally easy to clean and maintain
The virtually seamless finish of resinous coated floors greatly reduces the number of locations for soil, pathogens and microbes to gather
Resinous floors, by incorporating integral cove bases to eliminate ninety degree angles, correcting floor slope to eliminate puddling, and allowing for a virtually seamless surface, provide an optimally sanitary flooring solution

Outstanding Moisture Tolerance

Designed specifically for use in wet industrial environments, cementitious urethane flooring is a top choice for humid grow rooms
Also called “urethane mortar”, this type of floor can help mitigate certain undesirable site conditions, such as Moisture Vapor Transmission (MVT)

Chemical, Acid and Alkali Resistance

Whether organic or synthetic, many soil enhancers and substances used to eradicate undesirable fungi and pests can damage concrete and shorten the usable life of foundational slabs
Protecting concrete slabs with monolithic, non-absorbent and appropriately chemical resistant coating systems allows concrete to perform as designed, for as long as intended
A proper barrier coating on the floor allows spilled or sprayed substances to be properly cleaned up and disposed of, rather than allowing the liquids to seep through the porous slab, and into the surrounding natural environment

Added Safety

Resinous coating systems’ slip-resistance is completely customizable at the time of installation, enabling growers to request more traction in pedestrian walkways and less slip-resistance under raised beds.
Epoxy, urethane and polyaspartic resinous flooring systems accommodate the installation of safety and line markings, as well as varying colors to delineate specific work areas
The antimicrobial flooring options available from some manufacturers offer further hygiene support in highly sensitive facilities
Today’s industrial resinous floor coatings from reputable suppliers are very low to zero V.O.C. and compliant with EPA and other environmental regulations

Resinous coating systems provide ideal value to informed growers who require durable, reliable and long-lasting high performance flooring for their facilities.

Support from the Ground Up

From incredible medical advances to high tensile fiber in construction materials, the expanding cannabis industry is bringing exciting opportunities to many areas of the economy. As more and more growers enter the market, so increases the pressure to compete.

By choosing light reflective, seamless and moisture tolerant resinous flooring that meets regulatory guidelines for grow rooms, managers can help reduce their overhead costs on multiple fronts — and get a jump on the competition.

July 9, 2019

Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 2

By Carl Silverberg

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The first article of this series discussed resource management for cannabis growers. In this second piece of the series on how indoor farming has a reduced impact on the environment, we’re going to look at land use & conservation. There are really two aspects and we have to be up front and acknowledge that while our focus is on legal cannabis farming, there’s a significant illegal industry which exists and is not subject to any environmental regulation.

“Streams in Mendocino run dry during the marijuana growing season impacting Coho salmon and steelhead trout who lay their eggs in the region’s waterways.” One biologist reported seeing “dead steelhead and Coho on a regular basis in late August and September, usually due to water reduction or elimination from extensive marijuana farming.” The quotes are from an extensive article on cannabis land use by Jessica Owley in the U.C. Davis Law Review.The concept that land will stay in its natural state is a mixture of idealism and reality.

This is going to continue until it’s more profitable to go legit. For this article, we’re going to focus on the legitimate cannabis grower. On the land use side, we usually hear four main reasons for indoor growing: remaining land can stay in its natural state, fewer space usually translates to fewer waste, you conserve land and natural resources when you don’t use fossil fuels, greenhouses can be placed anywhere.

The concept that land will stay in its natural state is a mixture of idealism and reality. Just because someone only has to farm five acres of land instead of one hundred acres doesn’t necessarily mean they’re going to leave the rest in its pristine natural state. Granted the footprint for automated greenhouses is significantly less but the key is what happens to that extra space. Assuming that it will all be preserved in its natural state isn’t realistic. What is realistic is the fact that a developer may not want to build tract houses abutting a commercial greenhouse operation. If they do, likely there’s going to be more land set aside for green space than if a farm was sold outright and a series of new homes were plunked down as if it were a Monopoly board.

Combined with workforce development program funding, urban indoor farming is getting more attractive every day.That’s not the same kind of issue in urban areas where the situation is different. Despite the economic boom of the past ten years, not every neighborhood benefitted. The smart ones took creative approaches. Gotham Greens started in Greenpoint, Brooklyn and has expanded to Chicago as well. “In early 2014, Gotham Greens opened its second greenhouse, located on the rooftop of Whole Foods Market’s flagship Brooklyn store, which was the first ever commercial scale greenhouse integrated into a supermarket.”

Green City Growers in Cleveland’s Central neighborhood is another example. “Situated on a 10-acre inner-city site that was once urban blight, the greenhouse—with 3.25 acres under glass–now serves as a vibrant anchor for the surrounding neighborhood.”

The beauty of greenhouse systems even those without greenhouse software, is they can be built anywhere because the environmental concerns of potentially contaminated soil don’t exist. The federal government as well as state and local governments offer a myriad of financial assistance programs to encourage growers to develop operations in their areas. Combined with workforce development program funding, urban indoor farming is getting more attractive every day.

As for the argument that greenhouses save energy and fossil fuels, I think we can agree that it’s pretty difficult to operate a thousand-acre farm using solar power. To their credit, last year John Deere unveiled a tractor that will allow farmers to run it as a fully autonomous vehicle to groom their fields while laying out and retracting the 1 kilometer long onboard extension cord along the way. It’s a start although I’ll admit to my own problems operating an electric mower without cutting the power cord.

In a 2017 article, Kurt Benke and Bruce Tomkins stated, “Transportation costs can be eliminated due to proximity to the consumer, all-year-round production can be programmed on a demand basis, and plant-growing conditions can be optimized to maximize yield by fine-tuning temperature, humidity, and lighting conditions. Indoor farming in a controlled environment also requires much less water than outdoor farming because there is recycling of gray water and less evaporation.”

The overall trend on fossil fuel reduction was verified this week when the Department of Energy announced that renewables passed coal for the first time in U.S. history. And on the water issue, Ms. Owley had a salient point for cannabis growers. “The federal government will not allow federal irrigation water to be used to grow marijuana anywhere, even in states where cultivation is legal.” That’s not a minor detail and it’s why outdoor farming of cannabis is going to be limited in areas where water resources and water rights are hotly debated.

June 27, 2019

Hemp: A Growing Market Ripe for Protection

By David Holt, Whitt Steineker

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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