The National Cannabis Industry Association (NCIA) presents the 7th Annual Cannabis Business Summit & Expo, December 15 – 17, 2021 at the Moscone Center in San Francisco, California. As one of the industry’s most influential national trade shows, it is the only event to combine a lineup of business-building education, exhibitors representing the entire cannabis ecosystem and exclusive experiences, all under one roof.
NCIA’s Cannabis Business Summit & Expo is known throughout the industry for its unmatched education opportunities and high-profile speakers. The upcoming event in San Francisco is no exception. Highlighting next month’s conference agenda is groundbreaking keynote speaker Troy Datcher, CEO of The Parent Company.
NCIA will welcome 2021 Cannabis Business Summit Keynote Speaker for Thursday, December 16, Troy Datcher, CEO of The Parent Company. Leading a new generation of c-suite innovators, Chief Executive Officer Troy Datcher, together with Chief Visionary Officer Shawn “JAY-Z” Carter, helms a cannabis business for the post-prohibition era at The Parent Company. Combining best-in-class operations with leading voices in popular culture and social impact, The Parent Company focuses on building brands that will pave a new path forward for a legacy rooted in equity, access, and justice.
Datcher joined The Parent Company from The Clorox Company, where he deployed global sales plans for over $6.7 billion in cross-portfolio annual revenue throughout a 20-year tenure as Senior Vice President and Chief Customer Officer. In an intimate “fireside chat” setting, moderated by Adrian Farquharson, journalist and founder of MARY Magazine, Datcher will share personal stories and detail the impact he is working to make in the cannabis space.
The cannabinoid industry has faced an uphill battle from the beginning due to a lack of reliable scientific awareness about cannabinoids, fueled by decades of the hemp plant’s status as an illegal Schedule 1 drug. Today, scientists finally are free to explore the hemp plant’s 115+ cannabinoids and their relationships with the body’s endocannabinoid system. One cannabinoid, THCV, is currently undergoing scrupulous research.
ECS Brands is an established provider of whole-plant extracts. In the first-ever clinical trial for an organic THCV-rich extract, ECS received support from the National Institutes of Health and guidance from the Mayo Clinic to assess its potential for weight loss, anxiety treatment and other therapies using Nitro-V Hemp Extract, an ECS Brands product containing high concentrations of THCV, CBDV and other cannabinoids. Early outcomes of the 90-day, randomized, double-blind placebo-controlled human study were recently released. 100 out of 100 people lost weight, making no changes to exercise while taking the product for 90 days.
We interviewed Arthur Jaffee, Founder & CEO of ECS Brands. Prior to founding ECS, Arthur was co-founder of Elixinol, a company manufacturing and distributing industrial hemp-based products. Arthur took Elixinol public on the Australian stock exchange in 2018.
Aaron Green: How did you get involved in the cannabis industry?
Arthur Jaffee, Founder & CEO of ECS Brands
Arthur Jaffee: I originally was planning on starting a fitness equipment company. I got introduced to my partner at Elixinol, Gabriel, who my old physical therapist at University of Colorado said I had to meet. By the end of our lunch meeting, we shook hands in agreement to partner up on the fitness equipment concept. The timing happened where he got this opportunity to distribute CBD just following our handshake partnership. I didn’t know what it was at the time. He asked me if I wanted to join and get involved. I did my research into the benefits and discovered CBD’s anti-inflammatory and neuro-protective benefits, which for me was relevant given my football experience. I quickly realized what the vast potential CBD could offer with inflammation, neuroprotection and so many of the health and safety concerns arising from contact sports at the time. So, ultimately the opportunity presented itself through a friend of a friend in Australia who had a supply chain in Europe. This was right when CBD first appeared in the media in 2014. It was almost like it just fell into my lap.
I’ve been fortunate to really see that transition, and the evolution of the industry. Back then was probably the most valuable time because growth was so slow. Nobody knew what CBD was back in 2014. The primary demographic was cancer patients and epilepsy patients which presented a significant challenge to develop sales and marketing materials and communicate compliantly. Our first hire was a Medical Doctor to communicate in a more compliant fashion. I had to learn everything there was about the science and the medical research that existed at that time. For me, that was very valuable.
The valuable learning experiences from the early days of the industry is what laid the foundation today with ECS brands where we are focused on education promoting awareness of the endocannabinoid system to take it a step beyond just CBD because in order to understand what constitutes a quality product, or why CBD can have all these various benefits for people, you must first understand how the body is naturally configured to receive and respond to these amazing phytochemicals such as CBD. CBD is just one of hundreds of phytonutrients that the human body is designed to use. The endocannabinoid system is so significant in the grand scheme of things, because once you start accepting that the system is your overarching regulatory system in the body, we can start to look at the endless therapeutic potential.
Green: Being an early player in the CBD space, how would you say you’ve evolved over time to where you’re at today?
Jaffee: Innovation. That’s what really drove me to start ECS brands. Back in 2014, I originally co-founded Elixinol. After we took Elixinol public on the Australian exchange in the very beginning of 2018, there was a shift in direction away from innovation. Nearly all emphasis was placed on just doing what we’re doing better – meaning improving margins. In such a new and young industry and being a pioneer, you don’t get many opportunities to discover and create something for the first time. So, the past three years with ECS brands is with a heavy focus on innovation and technology.
Green: How do you think about innovation for the endocannabinoid system?
Jaffee: One of the early discoveries for me that was most inspiring, was research that evaluated endocannabinoid receptor sites, basically little keyholes for cannabinoids to perfectly fit in – that are made for cannabinoids. When evaluating the number of receptor sites in different individuals experiencing stress and illness it showed there was a higher concentration of receptor sites in those that were sick and experiencing systemic stress. To me, that was that was powerful because if that doesn’t communicate the body’s need for cannabinoid nourishment to heal and restore back to homeostasis as a natural and involuntary response really motivated me to play a part in getting quality cannabinoid products out to the masses and specifically those in most critical need. Our first interaction with cannabinoids is in mother’s breast milk, the cannabinoids that our bodies naturally produce. After breastfeeding, our diets are completely stripped of virtually all cannabinoids, leaving the endocannabinoid system starving, and likely leading to many of the most common and chronic health deficiencies that causes detriment to so many. Rather than cannabinoids, we then get introduced to pharmaceuticals. The writing is on the wall – this must get accepted and integrated into our society.
The Nitro-V Hemp Extract, an ECS Brands product
When it comes to innovation surrounding the public system it requires research and requires scientific evidence. It requires functional products because you can have all these great benefits, but if you don’t have efficient and effective ways of delivering these chemicals to the body, it can almost be meaningless. It’s a delicate balance between consumer appeal, functionality and efficiency when it comes to the delivery into the body. We’re focusing on delivery systems, making things more bioavailable and integrating other natural botanicals that react and influence the system in similar ways as there are more than just cannabis-derived cannabinoids that can create positive impact and ultimately alter the way that the endocannabinoid system can regulate.
Green: An important aspect of innovation is clinical validation. How do you think about clinical trials and designing clinical trials for products?
Jaffee: Clinical trials are instrumental and required to validate claims because otherwise, it’s just speculation. Directional application without the clinical evidence to support in the appropriate way is setting yourself up for failure. Designing a clinical trial is just as important as performing the trial. If it’s not set up right, it can be a waste of time and money. Trials really need to be held to the gold standard of double-blind placebo controlled and thoughtfully organized.
We did organize a clinical trial at the beginning of this year, and it was incredible. We learned so much about a unique extract of ours that’s naturally rich in THCV and CBDV. We intentionally set it up to be a very broad and encompassing study. I personally wanted to see the different mechanisms and how the endocannabinoid system responded and worked together with other systems in the body. We evaluated a broad range of measurements, with complete safety tox study – blood panels to test every organ – measuring kidney enzymes, liver enzymes, ALT, AST, ALP, bilirubin, albumin, creatinine as well as cholesterol – with HDL, LDL and triglycerides, GFR and Complete Blood Count. We also measured blood sugar hemoglobin A1C and five major inflammatory markers of IL-1, IL-6, C-Reactive protein, Homocysteine and TNF. In addition to performing a full safety run-up of the product, we also measured weight, BMI, girth, questionnaires for anxiety, appetite, pain, mood and finally – we bought brand new Fitbit Versa 3’s for all 125 study participants which gave us objective measurements for REM sleep, deep sleep, awake time, systolic/diastolic BP, SpO2 blood oxygen levels and daily caloric output values – which was really cool because it provided tangible objective evidence that participants weren’t going out and secretly exercising. So, we had 100 people taking the product and then 25 on placebo.
Green: Was this a safety trial?
Jaffee: Yes. The primary endpoint study was safety. That’s how we enrolled participants – as a general product safety study for a natural product. I decided to include a lot of additional efficacy measurements, including weight loss, measuring body mass index as well as heart rate for all the blood markers that we looked at. In addition to that we purchased brand new Fitbit Versa 3’s for the entire study group, which was great because they gave us objective measurements for three different sleep readings, deep sleep, REM sleep and rest asleep as well as lower output and blood oxygen levels.
We saw everything kind of working together. We saw deep sleep improve 300% within two weeks. We saw blood sugars come down significantly from those that are considered high, pre-diabetic ranges of hemoglobin A1C. You saw inflammatory markers reduce to normal levels, with 92% efficacy, which basically just means that those who were experiencing inflammation by means of these major inflammatory markers, after 90 days, 92% of subjects were reduced to nominal ranges. So, it was really fascinating to see how, with all the different measurements. that we can correlate different objective measurements. Then, we did subjective measurements too. We had standardized questionnaires for anxiety and pain, as well as an internally developed appetite and cravings questionnaire.
Green: Based on the results of that safety study, are there particular disease states you want to target going forward?
Jaffee: Moving forward, we are interested to look at each blood sugar and Hb A1C. I think one of the most exciting and popular successes of the study was the fact that we had 100 out of 100 participants lose weight without diet and exercise. Because we incorporated the Fitbit, we were able to obtain objective evidence that participants weren’t going and secretly working out. The Fitbit provided a caloric output value. It is basically an algorithm taking the number of steps taken, stairs climbed, heart rate, movement, etc. to populate a caloric expenditure value, which remained completely stable in our study population. Subjects were specifically instructed NOT to change any lifestyle behavior – specifically diet, exercise, and sleep, and that if any changes were to occur naturally that was acceptable. What this ultimately told us is that diets changed, and metabolisms increased, and we were able to support that notion with the appetite and cravings questionnaire that we had participants fill out where cravings did reduce and desire for sugary foods reduced 63%. These were questions that we internally developed for the appetite and cravings questionnaire, which were based on feedback that we received prior to the study.
Green: What are in your personal life or in cannabis are you most interested in learning about?
Jaffee: It’s changed a little bit over the years. My biggest passion I would say is performance. I think the hemp plant has so much to offer when it comes to superior nutrition and healing. Once I learned about the benefits and the potential of hemp with its food applications and specific protein composition – the powerful oxygenating properties of Hemp Seed Oil, the brain health properties it encompasses, and of course the cannabinoid potential… It got me very motivated to commit myself to this plant. It wasn’t long before learning all the incredible industrial applications and solution the plant also offers – such as plastics, textiles, biofuel, building materials – and as an environmental science major – learning about these amazing applications got me that much more excited, but knowing and trusting that CBD would be the first stepping stone in an industry that needs to evolve into all the amazing sustainable applications because it’s all it’s all very real. It will get there, but it won’t be easy.
Green: Thanks Arthur, that concludes the interview.
Conduction heating is a method used in most dab rigs and vape pens that relies on heating concentrate or flower on a metal surface to vaporize cannabis compounds for consumption. Care must be taken with conduction heating to avoid overheating the material, resulting in combustion or decomposition. Convection heating (think of heating food in an oven) can also be used to vaporize cannabis compounds and has the benefit of being able to control the heating temperature of the material more precisely.
Hanu Labs recently announced the launch of their Hanu Labs EVO Petra. The tabletop device leverages their convection heat-based Perpetual Heat Thermal Technology, which avoids combustion while efficiently extracting the desired compounds from cannabis flower or concentrates.
Prior to becoming the CEO of Hanu, Ricardo worked in sales at Jetty Extracts where he helped to build the Northern California territory. Ricardo is also a classically trained French chef who used to run a cannabis tourism company in California.
Aaron Green: How did you get involved in the cannabis industry?
Ricardo Willis, CEO of Hanu Labs
Ricardo Willis: I moved to California in 2016. I was a professional chef at the time and had just finished up my master’s degree after eight years of schooling. My business partner and I decided we wanted to get into the cannabis space. So, we started a cannabis tourism business. Cannabis tourism wasn’t in the Bay Area at the time. We were kind of first and we were about two years ahead of legalization. We ran a few tours and we started to get into the cannabis game. I found out I didn’t know as much as I thought I did about cannabis. So, I decided to go and work for Jetty Extracts and that eventually led to where I’m at today.
Green: What was your motivation for joining Jetty?
Willis: Education. I knew about flower, but I did not know as much about the manufacturing process. I was first exposed to concentrates in San Francisco and I was really fascinated by it. I wanted to learn more, because I knew that this was going to be the wave at the time. Coming from the east coast, I had never seen a vape pen. So, I come out to Cali, and I see all these different dabs and I’m like, “I need to know more about this.” Jetty was an opportunity for me to educate myself while also helping them build their Northern California division that had only been around for a few years, and they were trying to expand. It was a great opportunity working for those guys, I learned a lot.
Green: I got a chance to see the Petra in action last night. It’s a bit different from your standard dab rig. Can you talk about the standard dab conduction heating versus the Petra and convection heating?
The mica-encapsulated chamber and heating element
Willis: Think about your standard dab rig in the sense of taking a hot plate and dropping your dab onto that hot plate. It just sits there and begins to bubble and then evaporate from the heat. With the Petra, you take in all those same components, but you’re putting the concentrate into this mica-encapsulated chamber, where you have an all-glass air path that is one of the best surfaces for heating, and one of the safest. Those components with our perpetual heating system allow the dab rig, when we drop that nail in or we drop a basket for flower, that convection air circulates around the actual product. The oil begins to sublimate, or the vapor begins to make it through the flower, and it releases all those molecules that are found in the cannabis plant. And because of our glass air hydro tubes, when you pop those on, it basically filters it through water, and gives you one of the fastest and cleanest hits you’ve ever experienced.
Green: You mentioned flower as well as concentrates. Am I correct in hearing that you can also use flower with the Petra?
Willis: Yes. Dual functionality was one of the things found in our original model, the Vape Exhale that we first released nine years ago. I think that that’s very important for products. If a customer is going to spend anywhere between $300 to $500 retail, you need to give them more bang for their buck. Being able to vaporize flower and concentrates fits for the markets that we’re going into. People are consuming flower and concentrates at about the same percentage rate. So, we want to make sure that our devices can give the customer the ability to do both, either at home or on the go.
Green: So, you worked in the cannabis tourism industry. One of the trends we’ve got coming up in California is consumption lounges. How do you see the consumption lounges evolving over time? What are the challenges you see in California?
Willis: It’s a little different in Southern California versus Northern California. We’ve had consumption lounges in San Francisco, as well as Oakland for the past three years. We outfitted the entire lounge with VapeExhales at Barbary Coast, one of our early clients that we work with, which is downtown San Francisco. For us, we knew this is a space that would be thriving.
The Hanu Labs EVO Petra
I’m a big fan of the lounges, because I think people need a safe place where they can go to smoke. Those lounges offer that to people. It also gives them a chance to experiment with different technology and actually test it out before purchasing. Because of my hospitality and restaurant background, I’m always looking for the opportunity for people to become repeat customers. If you offer these things like consumption lounges, instead of people going to bars, they end up at your lounge after work. I think that is something that’s going to continue to grow.
I do think some of the challenges are going to be around single servings. A person doesn’t need to buy a full gram. Maybe they just need to buy a quarter of a dab or something like that. Companies will need to identify those potential pain points in that process, and then offer those smaller products that can be enjoyed while at the lounge.
Green: There’s a certain experience around the Petra. Where it’s really like a centerpiece of the table. How did you think about designing the user experience and designing around that conviviality?
Willis: That’s a great question. For the Petra, what we decided to design was slightly different from the VapeExhale. With the VapeExhale, the purpose of the device wasn’t super obvious, but the Petra has more of a centerpiece design. I’m a big fan of technology, so when I was designing the Petra, I was thinking about the KitchenAid mixer. That may seem strange, but the KitchenAid mixer is something that as a cook, either at home or in a restaurant, they own these things literally for 20 years. It has a very long product life. I wanted the Petra to be the same. I wanted it to look more like an appliance, I wanted it to be built with stability and durability so that when the customer purchases that product, it becomes a centerpiece that they can set up. If your grandkids come in, they see your vaporizer, it becomes more of an educational opportunity, and less about feeling embarrassed about your cannabis pieces. So, for me, design is all about ease of use, but also being appealing to the eye. The Petra is its own show, and it deserves to make a splash.
Green: What in your personal life or in cannabis are you most interested in learning about?
Willis: I am very interested in the customers. I started off in customer service when I was around 16 years old. The one thing that I learned is that the customer is the most important part of the sales cycle. I think that sometimes people focus on the B2B side and making our business partners happy, but my focus is, and always will be on the customers. I need to understand what customers want and how they want it. I’m intrigued by the science behind customer acquisition and want to learn more about how to make my customers happy. If they want cheaper pricing, I’m going to find a way to develop products to give them what they want at the price point they want. There is always going to be a customer who wants premium, or mid-tier or a customer who just wants something fully functional. Maybe they want something that provides the right experience for them, and they don’t have to break the bank to get it.
Green: Thanks Ricardo. That concludes the interview.
Welcome to the Cannin Commentary Column. We’re happy to announce our partnership with Cannin Investment Group, a cannabis investment analysis firm. In this new column, we will provide readers with a taste of Cannin’s insights and analysis that they offer to their members. Throughout the new installments of this column, you’ll find articles that will touch on investment tips, trends, predictions, market updates and more.
Companies in the cannabis sector have the potential to increase your wealth at an enviable rate over the upcoming decade. But what are the 3 cannabis stocks that can gain over 50% according to analyst estimates?
The wave of cannabis legalization sweeping through the U.S. right now as well as the prospect of decriminalizing or even legalizing adult-use will be key drivers for licensed producers.
Here, we take a look at three cannabis stocks in Columbia Care, Green Thumb Industries and Cresco Labs that should be on your buying radar right now. Each of these stocks is also trading at a deep discount according to Wall Street estimates, allowing investors to derive market-beating gains in the next year.
Columbia Care
U.S.-based multi-state operator, Columbia Care (OTC: CCHWF) is valued at a market cap of $1.12 billion. The company has already increased revenue from $77.4 million in 2019 to $179 million last year.
Now, Wall Street expects sales to more than triple year over year to $625 million in 2021 and surpass $970 million next year. These stellar growth rates in revenue should allow Columbia Care to improve its bottom-line from a loss per share of $0.48 in 2020 to earnings per share of $0.3.
Columbia Care has a presence in 18 jurisdictions across the U.S. and Europe where it operates 31 cultivation and manufacturing facilities.
The company generated $110 million in revenue in Q2 which was 232% higher than the prior-year period. Columbia Care has 73 active dispensaries and another 26 under development, enabling it to target a rapidly expanding addressable market that is forecast to touch $31.6 billion by 2026.
So, is Columbia Care a cannabis stock that can gain over 50%? Well, analysts tracking Columbia Care stock have a 12-month average price target of $9.38 for the stock which is more than 200% higher than its current trading price.
Green Thumb Industries
A cannabis giant trading 46% below its all-time high, Green Thumb Industries (OTC: GTBIF) is valued at a market cap of $4.4 billion. Headquartered in Illinois, Green Thumb Industries has 13 manufacturing facilities, licenses for 111 retail locations and currently operates in 14 domestic markets.
In the second quarter of 2021, the company’s revenue rose by 85% year over year to $222 million – driven by strong demand in Pennsylvania and Illinois. The Q2 of 2021 was also the fourth consecutive quarter where Green Thumb reported a profit, with a net income of $22 million compared to a loss of $13 million in the prior-year period.
Green Thumb currently has 65 retail stores and just opened a third store in the state of New Jersey which is a market that recently legalized cannabis for adult use. While retail sales in New Jersey are expected to begin next year, Green Thumb’s presence in the medical space will enable the company to gain traction in the highly competitive adult-use cannabis vertical as well.
So, is Green Thumb Industries a cannabis stock that can gain over 50%? Well, analysts expect Green Thumb stock to rise by 95% in the next 12-months given its average price target of $37.54.
Cresco Labs
The final stock on our list is Cresco Labs (OTC: CRLBF), another cannabis heavyweight valued at a market cap of $2.16 billion. A vertically integrated cannabis operator, Cresco Labs currently has 40 dispensaries in 10 states and has grown its sales from $43 million in 2018 to $476 million in 2020.
Most states have a limit on the licenses they are allowed to issue and this barrier to entry allows Cresco and peers to enjoy a competitive advantage in the markets they operate in. Cresco Labs reported revenue of $210 million in Q2, a rise of 123% year over year.
It reported a net profit of $2.7 million in Q2 compared to a loss of $41 million in the prior-year quarter. Cresco expects to generate $1 billion in sales by the end of 2021, making it among the first cannabis companies to reach the milestone.
We believe Cresco is certainly a cannabis stock that can gain 50%. Wall Street expects Cresco Labs stock to gain over 60% compared to its current trading price.
On October 14, Canopy Growth announced their plans to acquire Wana Brands, the number one cannabis edibles brand based on market share in North America. The two companies entered into an agreement that gives Canopy the right to acquire 100% of the membership interests of Wana Brands (a call option to acquire 100% of each Wana entity) once a “triggering event,” such as when plant-touching companies begin trading on major US stock exchanges or full federal legalization, occurs.
As part of the agreement, Canopy Growth makes an upfront payment of $297.5 million to Wana Brands. Until the United States moves on cannabis legalization or companies can start trading on U.S. exchanges and Canopy uses the call option to acquire Wana Brands, they don’t get any voting or economic interest in Wana Brands. The two companies are essentially operating completely independently of each other until the US legalizes cannabis.
Nancy Whiteman co-founded Wana Brands in 2010 and since then the company has expanded significantly. Following the legalization of adult-use cannabis in Colorado, their sales skyrocketed. Over the next few years, Whiteman oversaw the company’s expansion into a number of new states. In 2016, they moved into Oregon’s market and quickly grew their brand presence, seemingly overnight. Then they expanded into Nevada, Arizona and Illinois in 2017. After that the company made a major East Coast push, expanding into Maryland, Florida and Massachusetts, with other major northeast markets expected to be added soon. The brand now has products available in twelve US states and nine Canadian provinces, with plans to add four additional states by the end of the year.
Nancy Whiteman, CEO & Co-Founder of Wana Brands
Shortly after the announcement, we sat down together over coffee in Las Vegas to discuss Whiteman’s journey to success, her plans for the company’s expansion and what the future might hold for Wana Brands.
Aaron G. Biros: First of all, congratulations on the acquisition. As a co-founder and CEO, it must be amazing to see the success of your company and all you’ve accomplished. How do you feel?
Nancy Whiteman: I feel ecstatic. I am so excited and so proud of what Wana has accomplished. Just all around a great feeling.
Biros: What was it like leading up to this moment? From the inception of the business, did you ever have any doubts you’d make it this far?
Whiteman: A thousand times. Absolutely. Anyone in cannabis that tells you they didn’t have any doubts is probably not being very honest. I had been thinking about partnership for a while. I felt the timing was right because of a variety of reasons, but also the possibility of federal legalization. I wanted to make sure that Wana was really going to be well positioned for future growth. One of the things that I said in our employee meeting – I quoted the old proverb of ‘If you want to go fast, go alone, but if you want to go far, go together.’ We’ve been going it alone for eleven years and we’ve gone very fast. But I want Wana to continue to be a major player in the industry and to go far. I really felt that this was the time in the industry to strike a partnership.
So that’s a little bit of the thinking behind it. I think when there is federal legalization, there is going to be a host of competitors entering the industry that are going to be unlike anything we’ve faced before. I think it’s going to be challenging for independent brands to scale as rapidly as they’re going to need to scale to compete against all of this new competition on their own. So that’s the why behind the timing of it.
In terms of why Canopy, I’ve known Canopy for quite a while. I met them when we were looking for partners about three and a half years ago. We did not end up putting together a deal at that point in time, but I did get to know the company quite a bit. Since then that company has changed significantly with leadership changes and became a very different company with the Constellation Brands investment behind them.
When I think about the future of the industry and particularly post-legalization, I have certain things that I am looking for in partners. Of course, I am looking for financial strength in a partner. I was really looking for a company that has a very long-term perspective on the industry, with both the proper resources and the proper mindset to make long-term investments for the future. And then my belief is that post-legalization, we’re going to see radical changes in the industry including where products are cultivated in a global market, more distribution outside of dispensaries – and I think liquor stores could be a likely form of distribution at some point in time, so the relationship with Constellation was very interesting and appealing to me. But all of those things wouldn’t mean as much to me if I didn’t feel we didn’t have a good fit in terms of our shared values and how we saw the industry. We spent a lot of time talking about that and I think one of the aspects that really attracted me to Canopy was that we are very aligned on how we see the future of the industry shaping up. Certainly, I think there is a wonderfully viable position for cannabis as an alcohol replacement, however we also have a lot of focus on innovation and the health and wellness aspects of cannabis. I was really looking for a partner that felt the same, and it ended up that we really were aligned on those values.
Biros: What does it look like going forward? Since you’re staying on board, how will your new role change?
Whiteman: My new role doesn’t change at all actually. I woke up last Monday—the week after the big announcement–and it felt very normal getting back to work and having my usual meetings. This was my fifteen minutes of fame and thankfully its diminishing so now it’s just back to work as usual.
But moving forward, we have big plans. Wana is launching in four new markets over the next couple of months, we’re in discussions to launch in an additional six markets, and we have very robust innovation pipeline. So, we’re just really busy right now just executing on our strategy. I am looking forward to getting to know our new colleagues at Canopy better and exploring different collaboration possibilities.
I feel very optimistic. I was thrilled our employees were delighted with the news and morale is very high. The feedback from the rest of the industry has been really positive and overall, I am feeling very good about this decision.
Biros: So you mentioned some expansion plans for four new markets in the next few months. How does the acquisition help Wana Brands expand?
Whiteman: You know we haven’t announced the new states so I can’t speak to those publicly yet. They were all in the works before this deal and are currently in the process of being onboarded. Where it will get interesting is how this deal impacts new states that we move into. Until Canopy decides to exercise the call option [to acquire 100% of membership interests in each Wana entity], we are still an independently owned and run company. So we are still going to be looking for the best partners that we can find in new markets, and the Canopy connection will certainly be helpful to us. But to your point about the plans, we’ll be announcing those new market expansions in the coming weeks.
Biros: As a woman leader with an extremely significant position in the cannabis industry, do you have any advice for young aspiring entrepreneurs, women leaders or other women in the cannabis space?
Whiteman: I do. I posted something on LinkedIn the other day and I’m going to make the same comment to you as I made in that post because I think it’s important and particularly important for young women. People have said a lot of nice things about me in the past couple of weeks and of course everybody loves to hear nice things about themselves. But the truth is, some of them are not true. And one of them that is definitely not true is that I am somehow fearless. And I guess what I would say to women and young entrepreneurs is that fearlessness is a myth.
Being an entrepreneur is hard. You’re putting your money on the line, you’re putting your time on the line, you’re putting your reputation, you’re potentially putting your family’s, your friends’ and your investors’ money on the line. Who would not be afraid against that backdrop? We all have times of feeling fearful, of feeling anxious, of having sleepless nights. So, what I would say is don’t aspire to be fearless. There are other aspirations that are much more useful. For example, aspire to be resilient, aspire to be persistent, aspire to be of service to other people, aspire to be very true to your values and your strategy. Don’t let this mythology of what a “leader” is supposed to look like make you feel bad about your emotions. It’s not about having those emotions, it’s what you do with them.
That’s what I would say to young entrepreneurs and especially to women. Because I do believe that women hold themselves to a very high standard a lot of the time and have a lot of misconceptions of what they’re supposed to be living up to when it comes to leadership.
Biros: What an incredible perspective to have. Okay, one last question for you: what are you doing to celebrate?
Whiteman: So far, I’ve been too busy to celebrate! This just happened so recently. I would like to take a great trip with my kids. I don’t really know I have not had time to figure that out. People tell me I need to go to Disney. But right now, it’s still taking a little while to let it all sink in.
Biros: Wonderful! And Nancy, thank you so much for your time I really appreciate it.
Whiteman: And thank you! So nice to see you in person.
The supply chain for consumer cannabis products is complex, involving cultivation, extraction, manufacturing and packaging. While global best practices exist for Good Agricultural Practices (GAPs) and Good Manufacturing Practices (GMPs), the certifications are not tailored to the cannabis industry.
CSQ has developed tailored standards for the cannabis industry to assist cannabis companies in improving their quality. As a division of ASI, a woman-owned business that’s provided safety solutions to the food industry since the 1940s, the CSQ standards were built in 2020 to meet ISO requirements, GFSI requirements and regulatory cannabis requirements from seed-to-sale. CSQ is the first cannabis certification program to meet the GFSI Benchmarking Requirements with plans to be benchmarked in 2022.
We interviewed Tyler Williams, CTO and founder of CSQ. Tyler founded CSQ after working at ASI – a family-owned food safety company in St. Louis.
Aaron Green: Nice to meet you, Tyler. How did you get involved in the cannabis industry?
Tyler Williams: It’s kind of a long story, but it’s a good story. My mom worked for ASI for 15+ years. That company has been around since the 1940s and is one of the oldest food safety companies in the world. The owners were ready to sell about five or six years ago, and my mom ended up using a small business loan to purchase the company. That’s how I got started in a food safety and dietary supplement space.
About three to four years ago, we started getting inquiries from cannabis companies asking about GMP audits and certification and different things. We started doing certifications to our GMP food processing standard or dietary supplements depending on what they wanted but realized that there were a lot of things that weren’t applicable to cannabis companies or there were extra things needed for cannabis companies. That’s how I started working with cannabis companies to start developing the CSQ certification program and it has just kind of grown over the years.
Tyler Williams, CTO and founder of CSQ
We currently have four standards at the CSQ level. CSQ plans on being benchmarked to GFSI which stands for Global Food Safety Initiative. We plan on going through that process to get the benchmark next year. There are four standards underneath CSQ: one for growing and cultivation; one for extraction; one for food and beverage edibles; and then cannabis dietary supplements. We’re looking to add standards for cosmetics, cannabis contact packaging materials, retail and consumption lounges.
Last year, when we were doing our pilot audits, we realized that the CSQ standard was great for medium to big sizedMSOs because they’re already doing these best practices. It’s easier for them to, you know, implement a few things, and then get certified, whereas for the smaller guys who might be coming from the illicit market, it’s a lot harder – it’s a lot bigger jump from them to go from zero to 100. Last month, we released our unaccredited cGMP, cGMP+, cGAP and cGAP+ standards. The difference between the regular and the plus is that the plus has HACCP (Hazard Analysis Critical Control Point) and then it also includes a recall module where the site must do a mock recall while the auditor is on-site.
CSQ doesn’t perform the audits. We license the use of our standard to accredited certification bodies and then they must get accredited to be able to certify companies under the CSQ name.
Green: Can you tell me a bit about the genesis of CSQ and the structure of the organization?
Williams: We’re a for-profit company. We thought about going the non-profit route but it’s a lot more intricate and a lot more people involved when you go that route. Our parent company is ASI, and we are under the ASI global standards division which is responsible for developing standards. So, CSQ is one of those standards under that brand and that’s kind of the foundation of it. We have two licensed certification bodies right now. ASI has a certification body, and they are one of our licensed CBs and then WQS, who’s based out of North Carolina and has a big presence in South America which is great because we’re starting to get inquiries from companies in South America as well.
Green: How do you go about building industry awareness and acceptance of the standard?
Williams: Building awareness really started with going out to the medium- to large-sized companies and saying, “Will you open your doors and let us come and basically do all these audits for free at your facility just so we can kind of get a baseline across the industry?” So, that started the conversation with industry. The MSOs in the medium- to large-sized companies, are more ready to go through the certification process because they know that federal legalization is around the corner. They know these things are going to have to be in place already so they’re just doing it as preparation. There isn’t much demand for retailers right now like there is in the food and or dietary supplement space. So that’s where the demand is really coming from – wanting to self-regulate in preparation for federal legalization.
Most of our outreach is education-based. We speak at a lot of conferences. We host a lot of webinars and free events and things like that, just to get the word out about CSQ. A lot of people know what GMPs are, or know that they should be following GMPs, but they don’t necessarily know how to get from point A to point B. Our job is to educate them that it’s not as hard as they think it is and it’s not as expensive as they think it is. The cost of an audit is relatively inexpensive. What I always tell people is the sooner you start preparing, the cheaper the whole process is. What happens a lot of times is a facility will not build out their facility to GMP specifications, and then they want to get GMP certified so they must move the hand washing station from the back of their facility to the front where the employee entrance is or things like that. The sooner these companies start thinking about it, the better and that’s basically what we’re trying to do is just educate the industry about that kind of preparation.
Green: cGMP and cGAP are perhaps more broadly accepted outside of the cannabis industry. Do cGMP and cGAP fall under the CSQ certification?
Williams: There are four ingredients that make up the CSQ standard. There are industry best practices, which are specific to just the cannabis industry. There are good manufacturing practices, or good agricultural practices, that are just accepted globally. Then we look at the Codex Alimentarius, which is the global food code. Every country mustwrite their federal rules on food based off this standard. We use the Codex when we’re talking about edibles and things like that. And then the last aspect of CSQ is the GFSI benchmarking requirements. So that’s kind of the basis of our program, making sure that the auditors have certain amount of audit hours, and we have training and processes in place for that. That’s where the GFSI benchmarks are coming out. So, all those four things kind of really create the CSQ standard.
Green: There are clear internal benefits to a company for holding to a quality standard. What are the downstream benefits to the companies that have CSQ? How do the end-users know about it?
Williams: I come from the food industry and if you go to the grocery store, you just assume that everything’s safe.Consumers don’t even think about the certifications that those companies must get to even be able to sell their product in retail stores. They don’t necessarily put those certifications on the packaging material, because as a consumer “SQF” means nothing to most consumers, right? It would only mean something if you’re in the industry.We’re trying to be different with CSQ and get more consumers aware of it. One of the things that we have is a database of certified facilities. Consumers will be able to say, “Okay, maybe I’m interested in this new brand. Are they certified to this program or not?” and be able to see that. We’re also trying to get companies to put the CSQ logo once they’re certified on their marketing materials.
Now, one thing that we cannot do yet is put the logo on the finished product packaging, because we don’t have a testing addendum, but we’re working on that. There’s not a lot of demand for it right now and it’s more expensive audit costs, where you’re talking about lab tests, and things like that. So, it’s something that we’re working on, but we haven’t fully developed yet.
Green: Next question is around d-8 THC and federal regulations. What’s your position on d-8 and how are you thinking about d-8 trends in the future?
Williams: d-8 THC itself as a product, I think it’s fine. I think if it’s made safely, we know all the components I think it’s fine from that aspect. The problem that we have right now is it’s not regulated. That’s where I think we need to have these states that have legalized THC or hemp to then implement rules and regulations and bring d-8 THC into those rules and regulations. And so maybe then it’s only those licensed facilities that are inspected by the state that are producing those products and not just some guy out of his garage. I think a lot of people right now are just wanting to ban it completely and I don’t think that’s the best approach. There’s nothing wrong with the product itself, it’s just how it’s being produced right now in the gray area where no one’s regulated.
Green: What in your personal life or in cannabis are you most interested in learning about?
Williams: I love what I do. I’m always looking at and reading regulations and then trying to learn something new. I’ve been going through organic certification training right now. At some point, CSQ will probably go down the route of having some sort of organic certification. So that’s been kind of what I’ve been working on and learning right now. But I’m a sponge and I like to absorb new information about the industry.
Green: Thanks Tyler, that concludes the interview!
As we continue to witness and experience the medical cannabis industry grow and mature, many of us are wondering where the head-to-head clinical studies are, and why aren’t there more clinical research studies taking place?
Cannabis products created with the intention for medicinal use often state that their formulations and products stack up against traditional pharmaceutical treatments. However, without a substantial number of clinical studies being performed, it’s difficult to truthfully make such a claim. It’s one thing to share testimonials from people who use particular products and report what their experiences were like. However, to go head-to-head in a controlled environment where factors such as underlying conditions, height, weight, medication, lifestyle and nutrition habits are taken into account to accurately compare the efficacy of a traditional pharmaceutical product versus a cannabis-derived product are two completely different things.
The Need for More Capital
Wouldn’t you agree that if a company is having tremendous success with a particular product, that they’d reinvest capital into a true clinical study to have data to support their marketing efforts? Investing into proper studies would not only benefit a company working hard to earn market share, it would benefit those who are relying on a particular product to regain a quality life. As we’ve learned over the years from numerous scientists and researchers digging into the cannabis plant at a more granular level, there’s much more to the medicinal benefits than meets the eye. Discovering new information about how cannabinoids such as CBG and CBN combined with CBD and certain terpenes can create specific effects has helped make a greater impact on the medical cannabis community. Bringing these powerful blends of anti-inflammatory, cannabis-derived compounds and other immune boosting nutraceuticals to head-to-head clinical studies could be a huge step forward towards further legitimizing the healing effects that cannabis has to offer.
Measuring Efficacy Goes Beyond COAs & Product Reviews
Determining the efficacy of medical cannabis products should be viewed in the same light as traditional pharmaceutical products. Traditional clinical studies are designed with an Institutional Review Board (IRB) approval, subject recruitment, electronic data capture as well as electronic patient reported outcomes. Some companies within the cannabis space have made attempts to conduct surveys with measuring efficacy in mind, but using outdated survey technology that hasn’t been validated only leads to insufficient data collection.
Discovering new information about how cannabinoids can create specific effects has helped make a greater impact on the medical cannabis community. Image: Peggy Greb, USDA
There is nothing wrong with adult-use cannabis. However, for the medical cannabis space to be taken more seriously, it is time for organizations to step up their efforts and take note of certain practices from traditional biotech organizations when it comes to clinical research and collecting data to correctly quantify efficacy of certain products. Well-thought-out studies designed with clinical endpoints and validated questionnaires is a strategic way for the industry to take big steps towards doing what is right for patients.
Patients Are Asking For More Research
After speaking with patients who are interested in pursuing a treatment that includes the responsible use of medicinal cannabis, the one thing they all have in common is the desire for more information that they can rely on to make better decisions. Is it time for patients to push the envelope and not purchase products from companies that are not willing to perform the clinical studies? If companies suffered a loss in sales as a result, would they reconsider their stance on reinvesting capital into clinical trials with their products?
Equally as important as proper research is perpetual tele-monitoring. The value in perpetual tele-monitoring is the data. We can showcase miraculous, life-changing stories of how medical cannabis has helped people turn their lives around. However, when seeking greater buy-in from groups like the FDA, data is key. Qualitative data can go only go so far. It’s the quantitative data that will help move the medical cannabis community forward. The ability to be able to review data on an ongoing basis would enable medical cannabis companies to evaluate how products are working based on the electronic data capture, along with questions that a company may develop to ascertain individualized product feedback.
Imagine having the ability to see patients’ data based on real-time, daily, through something as convenient as a wearable device. Understanding test results and correspondence with doctors for patients would significantly improve.
As the legality and availability of hemp and non-hemp cannabis products continues to grow, having strong, recognizable brands will become increasingly important in order to stand out from the competition. Unfortunately, strong brands invite knock-offs and can require aggressive policing. Registering your trademarks makes policing much easier, but registration of marks used to sell hemp and non-hemp cannabis products requires strategy and forethought.
Why Register?
Trademark rights flow from use, so a registration is not required for enforcement. However, “common law” rights based on use alone must be proven in each instance, and you must show that your use of the mark has been sufficient such that consumers recognize and associate it with your goods or services. This can be difficult, expensive and time consuming. Also, common law rights are territorially limited. Even if you can prove such rights in Oregon (for example), you may have no right to prevent use of your mark in other states. State trademark registrations are similarly limited, but are presently all that is available for marks used exclusively to sell non-hemp cannabis products.
By contrast, a federal trademark registration provides the registrant a nationwide, exclusive and presumed right to use the mark in association with the designated goods and services. In addition, counterfeit use of a federally registered trademark can lead to statutory damages. That is, you don’t have to prove an amount of harm—a court may simply award damages based on statute. Yet another benefit is the ability to file based on an “intent to use.” You can thereby reserve a mark nationwide for up to three years before you must show use. Federal registration is available for marks used to sell hemp products, but with some strict limitations as discussed below.
Use in Commerce Requirement
Federal registrations are issued by the United States Patent and Trademark Office (the Office) once an application is approved and use in commerce is demonstrated. To satisfy the “use in commerce” requirement, an applicant must show that a mark is being used in association with the sale of goods or services that are legal to trade under federal law. Sale of products not legal under federal law simply does not count to establish trademark use for purposes of federal registration. This is where the vast majority of federal trademark applications for use with cannabis products get rejected. A search of the federal registry shows that, of over 8000 trademark applications for products containing cannabis extracts, only about 1,300 have resulted in registrations. But these 1,300 illustrate that there is a path to success.
Allowable Goods
The Office traditionally rejected all applications for use with products containing any cannabis extracts under the Controlled Substances Act (CSA). The Agricultural Improvement Act of 2018, commonly known as the Farm Bill, created an exception to the CSA for hemp, defined therein as cannabis extracts containing < 0.3% THC by dry weight. Based on this, the Office began allowing applications provided they designate only goods having 0.3% THC content or less. But even that limitation isn’t sufficient for some types of goods.
Unless specifically disclaimed, the Office will assume the presence of CBD in products containing cannabis extracts, regardless of THC quantity. On that basis it will reject applications for hemp products that are ingestible (food, drinks, nutritional supplements, etc.), or that claim a medical or therapeutic purpose, under the Food, Drug & Cosmetic Act (FDCA). The FDCA requires Federal Drug Administration (FDA) endorsement to add “drugs” to such products, the FDA classifies CBD as a “drug,” and the FDA has authorized only a few products that include CBD. Thus, an allowable good that is ingestible or therapeutic must not only contain the low THC disclaimer, but must also state an absence of CBD. Notably, the Office has not been rejecting products on the basis that they contain CBG (cannabigerol) or other naturally occurring non-THC, non-drug cannabinoids.
Are the Goods Sold Really Allowable?
Of course this scheme of word-smithing designations to obtain allowance of federal trademark registrations invites error, if not fraud. Registrations are subject to cancellation if use of the mark with the designated goods is not maintained, or if it can be shown that the registration was fraudulently obtained. Thus, critical to a claim of use is that the applicant offers products that actually meet the designation description. The Office does not check for THC levels or CBD presence, and most purveyors of hemp products don’t either. Indeed, there is not even a standardized method for measuring these things. However, studies show that more than half of hemp products either purposefully or accidentally misrepresent their actual THC and CBD levels.i Though legally untested, this presents a potential problem for many existing federal registrations.
If a mark registered for use with goods having < 0.3% THC is found to be used only with products that actually have a greater amount of THC in them, the registration could be canceled. The same fate could befall a registration for goods claiming to have no CBD that, when tested, actually do contain more than trace levels. Even if non-hemp cannabis products are legalized under federal level, registrations obtained with THC and/or CBD limitations would still require the registrant to use the mark with products meeting such limitations.
Keeping Evidence for Insurance
So long as a registrant has maintained use of the registered mark “in commerce” in association with the designated goods, the registration is insulated from attack based on claims of non-use or fraud. The fact that the registrant also uses the mark for goods that are not legal on the federal level is of no consequence to the registration. Thus, it is wise to include in the product lineup under the brand to be protected at least some good that meets the present requirements for federal trademark registration.
One option is to include a product where the only cannabis extract is from hemp seed oil. Without even testing it, you can be reasonably assured that such a product will contain little or no CBD or THC. Another option short of testing is to obtain a certification or warrant from your supplier that particular ingredients truly are hemp, i.e., have < 0.3% THC by dry weight. This could be relied on as evidence should no original product be available for testing to show that use was legitimate at the time registration was obtained. If you can’t obtain such a certification, testing the occasional sample and keeping records over time would also work. Product samples can now be tested for THC content for around $100 per sample, with results back in about a week.ii
Zone of Natural Expansion
Though non-hemp cannabis products cannot be covered directly by federal registrations, a federal registration for CBD/hemp products can have spillover benefits. This is because the scope of a registration may expand to cover things similar to what is designated. The question comes down to likelihood of confusion. Imagine a company holds a registration covering LOOVELA for “nutritional supplements containing hemp seed oil having no CBD and < 0.3% THC by dry weight.” It would be logical for a consumer to assume that non-hemp cannabis products sold under the LOOVELA mark would likely be made by the same company. Thus, provided the company actually sold products complying with its designation, it could assert the CBD-based registration to prevent sale of LOOVELA branded non-hemp cannabis products. Also, should such products be legalized federally, the company would likely be the only applicant able to obtain an additional federal registration for LOOVELA for use with them, because any competing attempt would be confused with their pre-existing registration for CBD/hemp products.
In conclusion, it should be noted that the law in this space is evolving rapidly and is nuanced. Every situation is unique in some way, and there are many reasons an application may fail or a registration may be attacked that are not addressed above. But there is value in obtaining a federal registration for your hemp brands, and there is an overall strategy to be employed for brand protection in the cannabis space.
The content above is based on information current at the time of its publication and may not reflect the most recent developments or guidance. Neal Gerber Eisenberg LLP provides this content for general informational purposes only. It does not constitute legal advice, and does not create an attorney-client relationship. You should seek advice from professional advisers with respect to your particular circumstances.
References
See, e.g., Bonn-Miller, Marcel O., et al., “Labeling Accuracy of Cannabidiol Extracts Sold Online,” Journal of the American Medical Association, Vol. 318, No. 17, pp. 1708-09 (Nov. 7, 2017); Freedman, Daniel A. and Dr. Anup Patel, “Inadequate Regulation Contributes to Mislabeled Online Cannabidiol Products,” Pediatric Neurology Briefs, Vol. 32 at 3 (2018).
Practicing Law Institute Press’s Legal Guide to the Business of Marijuana: Cannabis, Hemp and CBD Regulation is a one-of-a-kind deep dive into the many regulations governing the industry. Aimed at attorneys representing clients in this space, the treatise offers guidance on a range of interrelated topics including state regulation of medical and non-medical cannabis; federal law, enforcement and preemption and their implications for employment, taxes and banking; and the various aspects of establishing and managing a cannabis enterprise, from growth to licensing, transport and distribution. We spoke with co-authors James T. O’Reilly, professor of Public Health Policy at the College of Medicine of the University of Cincinnati and author of leading references on food and drug law, and Edgar J. Asebey, a founding partner of Keller Asebey Life Science Law and a life sciences attorney with over twenty years of experience, about the intersection of the cannabis business and the law.
Q: From the legal industry’s perspective, how has this area of the law evolved over the past few years – and what would you advise clients in cannabis to look for when engaging legal assistance for their businesses?
James T. O’Reilly & Edgar J. Asebey: Over the past few years, we have seen a growing acceptance of the idea that lawfully serving the needs of cannabis consumers is a commendable business initiative. This evolution in thinking – tied to the myriad business opportunities cannabis presents – has given large, mainstream corporate law firms the incentive to grow practices and develop specialists in this area, which is a very positive development.
But it is not enough for lawyers to know their way around M&A and the capital markets; they must also have experience with federal regulatory bodies. As regulations continue to evolve, it is essential for practitioners to be familiar with the Food, Drug and Cosmetics Act as well as the Federal Trade Commission Act. The framework for regulating cannabis products already exists, as can be seen in the Warning Letters sent to hemp and CBD companies by both the Federal Trade Commission and Food and Drug Administration (as well as, most recently, the FDA and CDC’s warning about delta-8 THC). If a client places their hemp or CBD product into the stream of commerce, that product will be subject to FDA, FTC and relevant state laws. We strongly recommend seeking out advisors who truly understand these regulations and how they align with the regulatory agencies’ procedures and agendas.
Q: What are the most urgent legal and regulatory topics the industry is watching these days?
O’Reilly & Asebey: Our treatise follows and analyzes the most pressing legal issues facing those in the cannabis and hemp space. In our most recent edition, we add discussion of the Final Rule for the establishment of a domestic hemp production program. We think this is a significant development in that it attempted to address some of the industry’s criticism of some provisions found in the Interim Final Rule, particularly around issues of sampling and testing for THC content. The Final Rule clarified issues around THC percentage testing methodologies, but disappointed many in the industry by leaving in place the low 0.3% dry weight threshold for an acceptable hemp THC level. On the other hand, The Final Rule raises the threshold for a negligent violation from 0.5% to 1.0% total THC and limits the number of violations a grower can receive in one year to one, easing potential penalties for violations.
Of course, the regulation of CBD products is on the minds of many in the industry. Key questions remain about whether cannabinoids such as delta-8 THC can be lawfully sold. Since the FDA has provided no clear guidance with regard to the sale and use of CBD and other hemp-derived cannabinoid-containing products, well-meaning businesses find themselves operating in a regulatory gray area. While some states have raced to place delta-8 THC on their controlled substances lists or otherwise regulate it, at the federal level it remains unclear. Our book provides a legal argument showing that current regulations support the lawful production and sale of delta-8 THC. To date, this and other legal arguments have not been tested in the courts and, without FDA guidance, the delta-8 THC sector will remain gray.
Editor’s Note: The Legal Guide to the Business of Marijuana: Cannabis, Hemp and CBD Regulation is now available for purchase here.
About James T. O’Reilly
James T. O’Reilly of the University of Cincinnati College of Medicine is former chair of the 8,000-member Section of Administrative Law & Regulatory Practice of the American Bar Association and has been active in numerous ABA, Federal Bar Association, and state and local bar activities. He retired as Associate General Counsel of The Procter & Gamble Company to teach full-time, and served as a consultant to three federal agencies and to the Deputy Secretary General of the European Commission. He has authored fifty-six texts and more than 230 articles, and his work was cited numerous times in appellate opinions, including “The experts have written . . . ” in a March 2000 opinion of the U.S. Supreme Court (Food & Drug Administration v. Brown & Williamson Tobacco Corp., 120 S. Ct. 1291). He has received numerous honors and awards for his professional and electoral activities and has been listed in Who’s Who in American Law for twenty-five years. He is a graduate of Boston College and the University of Virginia School of Law.
About Edgar J. Asebey
Edgar J. Asebey, a partner at Asebey Life Sciences Law PLLC, is a regulatory and transactional attorney with over two decades of experience in federal regulation of pharmaceutical, biotechnology, medical device, food, dietary supplement and cosmetics companies. Since 2015, he has been working on cannabis-related matters and transactions, and since 2018, he has provided regulatory compliance, business transactional, venture finance and international trade services to hemp/CBD companies. Mr. Asebey practices before the FDA, the USDA, the CBP, the EPA, and the FTC, representing client companies on regulatory compliance, product approval/registration and FDA enforcement defense matters. He founded and served as president of Andes Pharmaceuticals, Inc., a natural products drug discovery company, from 1994 to 2000, and has served as in-house counsel to two life sciences companies. Mr. Asebey is a member of the American Bar Association (Section on Administrative Law & Regulatory Practice: Food and Drug Committee and International Committee), the Food & Drug Law Institute (FDLI), the Dade County Bar Association, and BioFlorida.
The cannabis industry is approaching a crossroads. While cultivators must ensure they are getting the greatest yield per square foot, an increasingly competitive landscape and sophisticated consumer means growers must also balance the need for volume with quality, consistent and award-winning cannabis strains.
Tissue culture propagation represents a significant leap forward in cannabis cultivation, ultimately benefiting both the grower and the consumer. The proprietary technology behind our sterilization and storage process results in the isolation of premium cannabis genetics in a clean, contaminant-free environment. Since our inception, we’ve been focused on setting a higher standard in medical (and one day adult use) cannabis by growing craft cannabis on a commercial scale through utilization of this cutting-edge cultivation technique. When taken in total, Maitri boasts access to a library of 243 unique cannabis strains, one of the largest collections in the U.S.
Trouble with Traditional Cultivation
Pathogens, insects and cross contamination all threaten the viability and value of cannabis plants. In many ways, current cannabis cultivation techniques compound these issues by promoting grams per square foot above all else and packing plants into warehouse sized grows where issues can quickly spread.
In these close quarters, pests can swiftly move from plant to plant, and even from generation to generation when propagating from clones or growing in close quarters. Similarly, pathogens can leap between susceptible plants, damaging or killing plants and cutting into a cultivator’s bottom line.
Hemp tissue culture samples
Of particular concern is hop latent viroid. Originally identified in hops, a genetic relative of cannabis, this infectious RNA virus has torn through the cannabis industry, endangering genetics, causing sickly plants and reducing yields. Plants cloned using traditional methods from an infected mother are vulnerable to the disease, making hop latent viroid a generational issue.
Minimizing or even eliminating these threats helps to protect the genetic integrity of cannabis strains and ensures they can be enjoyed for years to come. That is where the sterilization stage in tissue culture cultivation stands out.
Like cloning, tissue culture propagation offers faster time to maturity than growing from seed, allowing for a quicker turnaround to maximize utility of space, without overcrowding grow rooms. However, it also boasts a clean, disease-free environment that allows plants to thrive.
Tissue Culture Cultivation
Tissue culture cultivation allows for viable plant tissue to be isolated in a controlled, sterilized environment. Flowering plants can then be grown from these stored genetics, allowing for standardization of quality strains that are free of contamination and disease from the very beginning. Tissue culture cultivation also takes up less room than traditional cloning, freeing up valuable square footage.
A large tissue culture facility run in the Sacramento area that produces millions of nut and fruit trees clones a year.
This propagation process begins with plants grown to just before flowering and harvested for their branch tips. These branch tips undergo a sterilization process to remove any environmental contamination. This living plant material (known as explants) gets fully screened and tested for potential contaminants.
If it passes, the sample is stabilized and becomes part of the Maitri genetic library for future cultivation. If any contamination is discovered, the plant is selected for meristem isolation, an intensive isolation technique at the near cellular level.
Once sterilized and verified to be clean, the samples — often just an inch tall — are isolated into individual test tubes in our proprietary nutrient-rich medium for storage indefinitely. The cuttings are held in these ideal conditions until tapped for cultivation. This process allows Maitri to maintain an extensive library of clean, disease-free cannabis genetics ready to be grown.
Benefits for Medical Cannabis Patients
Tissue culture creates exact genetic replicas of the source plant
One of the chief benefits of tissue culture propagation is that it creates exact genetic replicas of the source plant. This allows growers like Maitri to standardize cannabis plants, and thus the cannabis experience. That means patients can expect the same characteristics from Maitri grown strains every time, including effects, potency and even taste and smell. Keeping reliable, top quality strains in steady rotation ensures patients have access to the medicine they need.
Preserving Plant Genetics
Beyond the benefits that tissue culture cultivation provides for the patient, this approach to testing, storing and growing cannabis plants also goes a long way towards protecting cannabis genetics into the future.
Cannabis strains are constantly under assault from pests and disease, potentially destroying the genetics that make these strains so special. Over-breeding and a dwindling demand for heirloom strains also threatens the loss of some individual plant genetics. Having a collection of genetics readily available means we can quickly cultivate strains to best meet consumer demand. Additionally, maintaining a rich seed bank that features both legacy and boutique strains allows us to have options for future tissue culture cultivation or for future new strain development.
Advancing Cannabis Research
Due to federal prohibition, researching cannabis, especially at the university level, can be extremely difficult. Additionally, the cannabis material that researchers have access to is largely considered to be subpar and wildly inconsistent, placing another barrier to researching the physiological effects of the plant. Clean, safe and uniform cannabis is a necessity to generate reliable research data. Utilizing tissue culture cultivation is a smart way to ensure researchers have access to the resources they need to drive our understanding of the cannabis plant.
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