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Sean HockingSean HockingMarch 15, 2019
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17min2310
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AUTHOR: Chris Nani
PUBLISHER:  CANNABIS LAW REPORT

 

Sano Ti Amo is a topical product based company in Ohio. Their new signature cream is currently being manufactured in an FDA approved facility and is undergoing the final steps for FDA registration. The cream, R &R Pain Relief cream was created by Co-Owner Paul Amoroso, a licensed Massotherapist, who has treated patients for over twenty years. Paul met Co-Owner Karen DeLuca while he was refining the cream. Karen has over fifteen years of sales experience, helping start-up companies, and product development.

 

  1. What is Sano Ti Amo and how did you come up with the idea?

Paul: The name Sano Ti Amo means healing with love because everyone that tried our cream kept saying they loved it. I’ve been developing the cream for years and really wanted to make it perfect. Our goal was to help as many patients as possible. Sano means healing and Ti Amo means love or I love you.

Karen: In addition, since the FDA won’t allow us to use the word ‘healing’ we decided to use our Italian roots instead. We’re both Italian and wanted to reflect that in our company name. Also, we picked the deaf sign of I love you as our logo to go along with our name.

  1. Can you give me a quick background on yourself?

Paul: Ever since I was young, I liked learning about alternative medicine including Eastern medicine, Native medicine, and Ayurvedic medicine. I became a Massotherapist in 1997 and now use seventeen different styles of therapy to help patients. I also learned Chinese herbal techniques and have focused on learning from as many cultures as possible. I own a 44-acre horse farm and part of my inspiration for developing our products has been from treating horses to help them recover faster. One of my goals is to help veterans with PTSD through therapy with horses. I use alternative healing methods as well as traditional therapy with licensed therapists to help veterans recover.

Karen: I started in sales and marketing with Fortune 500 companies like Kellogg’s, M&M Mars, and Pfizer. Eventually, I decided to use my business knowledge in a more direct way. I wanted to become an entrepreneur and have since helped start and run three companies. I’ve started a skincare company, a gluten-free bakery, and now my main focus is on Sano Ti Amo. I also am the author of “Living Your Life in Gratitude” but, aside from my professional life, I love baking. I wanted to make an appealing gluten-free food you wouldn’t find in a grocery store, so someone with a gluten-free or specialty diet still could have the opportunity to have great tasting food and that’s how I came up with Ovenly Delights.

 

  1. What are some of the products you sell?

Paul: Right now, we’re working on a gout and an arthritis cream, but our main product is our Relief & Repair cream. We use a full spectrum hemp oil that has all the cannabinoids in it. Now that federal legalization is occurring, we’re looking at ways to implement cannabinoids into our products. Plus, because our cream is a topical when it’s absorbed through your skin, you won’t feel any high. In other words, you’ll still have mental clarity along with all of the health benefits of the cream.

 

  1. What makes Sano Ti Amo unique? (talk about FDA cream product/what’s in it)

Karen: Our main product R&R cream has four special ingredients that have never been used before in a topical. What makes our product different is it flushes out the toxins in your body allowing for faster healing. Instead of numbing the skin like other creams, it helps repair the tissues at a deeper level.

 

  1. Why did you make the cream?

Paul: I wanted a cream for people that could penetrate the skin and go down into the muscle and nervous tissues with the intent of healing and repairing the tissues and not just masking the pain like most pharmacological ones. Pharmaceuticals are designed to mask pain signals temporarily so you end up in an endless cycle of constantly applying topicals and taking orals for the pain.

 

That’s why I worked with Dr. Ronald Anders, a veterinarian who is a triennially trained Doctor of Veterinary Medicine and he also studied Chinese herbals. Since many of the herbals we use are purified down to their essential oil or concentrated form, they provide our patients with the most potent form of the herbals. Dr. Anders’ style of veterinary medicine is to heal the patient as quickly as possible and not just mask the symptoms. He is world renowned with his practice and works on multi-million dollar breeding animals and show horses.

 

We worked together to combine our knowledge and expertise to create a cream that would not only calm and soothe the muscles and the nervous tissues that report the pain but find the right combination of ingredients that would speed the healing process by increasing the lymph flow first to remove the sludge in the tissues. The cream also increases blood flow so the damaged tissues can repair the micro tears letting the area heal from the inside out.

I also really like helping people. I have worked with over 4,000 fibromyalgia patients over the years and noticed their skin and muscle tissue was different when treating them. I was inspired to help patients with fibromyalgia and started to research the formula for our cream because massages can be expensive when they’re needed every other day. But, with the cream, it can be used as a long term solution for more people as a daily application or as needed. It only takes around fifteen minutes to start feeling the effects and there’s enough in each container for multiple applications.

 

  1. Are there any side effects from using the cream?

Paul: There have been no known side effects of the cream. However, the cream shouldn’t be used by women breastfeeding or pregnant. We have had our product triple checked by a medical doctor (MD) and medical assistant (MA) with a chemistry background who compared our ingredients against pharmaceutical drugs and interactions between ingredients to ensure our cream would be safe and the ingredients within wouldn’t cause any reactions with our patients. We also took our cream to an FDA registered facility in Streetsboro, Ohio and had their scientists test our product. We wanted to have as many eyes as possible review our product before publicly introducing it.

 

  1. What kind of feedback have you gotten from clients using the cream?

Paul: A lot of times what we hear is that our product is subtle. It has a delicate scent and it doesn’t have a freezing feel like Bio Freeze or Icy-Hot. Customers also can’t believe how fast acting our cream is for a multitude of things. People recovering from surgeries have said it helps with their pain management and recovery. We also get a lot of people with fibromyalgia who say they have more energy after using the cream. Normally, fibromyalgia requires patients to frequently rest and it causes chronic pain. The cream helps alleviate both and gives patients their lives back.

Karen: I have a friend with CMT (a foot deformity) and he has an extremely tough time walking. He needs braces to help walk and it’s extremely painful. I’ll never forget when he said “You gave me my life back”. The first time he used the cream, his entire team noticed he was walking normally and his pain was reduced. It was a very humbling experience I’ll never forget. Walking is something we take for granted, and, with the chronic pain from CMT, it was amazing to hear the results from him.

 

  1. The cream is being registered with the FDA now, what advantage does that give Sano Ti Amo?

Karen: It gives the cream credibility. The FDA has strict purity and quality requirements. The FDA registration also allows us to tell people what the cream does. Although we’re restricted with the amount of information we can share right now, having registration with the FDA means we can sell our hemp product virtually in all fifty states without any legal issues. Retailers also don’t have to worry about our product being seized because it is registered, every other product on the shelves could be recalled or seized if it isn’t FDA approved.

Getting FDA registration is definitely an arduous process but it is the only way for us to make medical claims. So far, our product has undergone stability testing to show it has a shelf life of two years but will likely have a four-year shelf life after testing is completed. The stability testing guarantees our product is safe.

Paul: Epidiolex is FDA approved as well and is in every state. What you’ll see moving forward is more and more products being FDA approved because of the credibility it gives their product. For example, labeling products with 100mgs of CBD when it isn’t true – mislabeling ­­– can cause your product to get pulled and fined and customers want consistency in their products. Also anyone with a medical license such as a doctor or nurse can legally use and recommend our product because it will be FDA approved and they won’t have to worry about losing their license.

  

  1. What was the process like for registering your product with the FDA?

Paul: We first had to become familiar with the FDA registration process, so hiring consultants and experts who know the ins and outs of the process was very helpful. It’s a very complicated process that requires tremendous amounts of time and expertise. Because the FDA isn’t a legal entity, they can only make recommendations but it’s very important to follow their directions to gain approval. It’s very time consuming with tons of hurdles; however, we’re expecting to gain approval within the upcoming weeks.

Karen: We worked extensively with an FDA facility and originally we were told it would take over ten years and around ten million dollars. By working with the facility, we were able to cut the process down to three years and save millions of dollars through our partnership. We were able to convince the facility to work with us by letting their employees test our product and vouching that it was the best product they had ever seen. The chemist at the facility actually took some of our product home for his mother’s swollen foot and within a few hours she could walk again and was able to play with her grandchildren.

 

  1. Are there any ways to support Sano Ti Amo?

Paul: Absolutely through Indiegogo, we’re looking for funding to help a major production run and launch our product on a larger scale to help as many people as we can that are ready to feel better.

Karen: The Indiegogo campaign is meant to help raise money for our first major production run and it wouldn’t just help Sano Ti Amo but it would help millions of people who suffer from chronic pain. The funds would help us get off the ground and start helping others. Our product is a need based one for patients with conditions like fibromyalgia, shingles, neuropathy, neck & back pain, and even acute injuries to name a few.

 

 


Sean HockingSean HockingMarch 13, 2019
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18min1370

Here’s their press release in full…….DeJoy, Knauf & Blood LLP Launches Cannabis and Hemp Advisory Practice

DKB’s expertise and experience with other regulated industries, especially the alcoholic beverage market, can help make sure businesses get it right

ROCHESTER, N.Y., March 12, 2019 (GLOBE NEWSWIRE) — DeJoy, Knauf & Blood LLP (“DKB”), a leading Upstate New York-based business advisory and CPA firm, has announced the launch of its Cannabis and Hemp Advisory practice area. The new practice leverages the firm’s in-depth cannabis and hemp industry knowledge and expertise of the tax implications, regulatory environment, as well as critical operating and financial procedures. DKB is among the first firms in New York State, and one of only a handful across the country, to establish a practice area dedicated to serving this complicated yet growing market.  

The Cannabis and Hemp Advisory practice will provide counsel and support to existing businesses, start-ups, and ancillary service providers within the cannabis industry, especially in the areas of: tax planning; compliance with section 280E of the U.S. tax code; banking procedures; accounting policies and procedures; licensing; operating policies; outsourced accounting; referrals to ancillary service providers; and general business consulting.

Section 280E, is just one critical area that those operating in the cannabis industry must consider.  The Federal statute states that a business engaging in the trafficking of a Schedule I or II controlled substance (such as cannabis) is barred from taking tax deductions (other than cost of sales) or credits. In short, cannabis entrepreneurs must pay taxes on all of their gross margin without the benefit of being able to deduct other common business expenses such as payroll and rent to reduce their taxable income. Careful planning surrounding 280E is one of the many ways that DKB will help cannabis business owners maximize after tax cash.

Morgan Hopkins, CPA, senior manager, who will lead the new practice area with Amy Brisson, CPA and partner, commented, “From a mis-step in the licensing process, to incorrectly structuring a banking relationship, to improper reporting of taxable income, these traditionally simple processes could immediately put a cannabis entrepreneur out of business. DKB understands the challenges and can help clients navigate these unchartered waters. Bottom line, we’ll help clients get it right.”

The DKB announcement comes as hemp-based products continue to proliferate the market with more than 25,000 products across nine sub-markets, including food and beverage, paper, personal care, and more – with sales expected to hit $1 billion by 2020.  The sale of hemp-based products is currently legal federally. The legalization of the adult recreational use of cannabis is expected to become reality with the adoption of the 2019-2020 New York State budget. Similar decriminalization initiatives are being considered in states across the country and even at the Federal level – and is expected nationwide by 2025.

Mark Blood, co-founder and partner at DKB said, “As a firm we go well beyond providing CPA services to our clients. We’re recognized business consultants who dig into the categories in which our clients compete to advise and support them on critical business decisions. The development of an emerging industry like Hemp and Cannabis comes with a lot of confusion and blurred legality. Our research into the intricacies of the hemp and cannabis industry, and our ability to cut through the confusion, made this new practice area a logical extension of our business.”

It’s not enough that the business of Hemp and Cannabis is confusing, so is the difference between the two. Hemp typically contains a higher concentration of the cannabinoid CBD, and a very low concentration of the psychoactive cannabinoid THC. On the contrary, cannabis typically has higher concentrations of THC regardless of the CBD concentrations. Hemp is legal in all 50 states, while cannabis is currently illegal under Federal law.

DKB’s launch of this new cannabis and hemp practice area is not to endorse the use of cannabis, but rather to support a growing industry and make sure companies are conducting business properly. DKB currently has clients that operate in the Hemp industry ranging from growers to retail stores.  The firm also advises multiple cannabis entrepreneurs and start-up companies.  

DKB supports clients in other regulated industries – wineries, liquor stores, and breweries – so there is every expectation that using key learnings from these industries that they can help their cannabis and hemp clients get it right – especially in the area of compliance with State and Federal regulations.

Here’s a selection of articles they’ve written already

  1. DKB Launches Cannabis and Hemp Advisory Practice

    Home » News » DKB Launches Cannabis and Hemp Advisory Practice

    The new practice leverages the firm’s in-depth cannabis and hemp industry knowledge and expertise of the tax implications, regulatory environment, as well as critical operating and financial procedures. DKB is among the first firms in New York State, and one of only a handful across the country, to establish a practice area dedicated to serving this complicated yet growing market.

    CONTINUE READING

  2. Will Banks get a Hit of the Cannabis Industry?

    Home » Blogs » Will Banks get a Hit of the Cannabis Industry?

    A subcommittee in the U.S. House of Representatives recently took up a bill that would protect banks and their employees doing business with legal cannabis enterprises.  On February 13th members of the House Financial Services Subcommittee heard testimony from representatives in the financial sector, the cannabis industry, law enforcement, and the treasurer of California in support of legislation that would make it easier for banks to work with legal cannabis businesses without fear of federal prosecution.

    CONTINUE READING

  3. NYS Budget and Cannabis Reform

    Home » Blogs » NYS Budget and Cannabis Reform

    On January 15, 2019, NYS released its budget for fiscal year 2020. This budget includes a provision which would legalize adult recreational use of cannabis in New York State. This change would provide myriad business opportunities both to entrepreneurs interested in starting a cannabis businesses, and to existing ancillary businesses which could serve the cannabis industry.

    CONTINUE READING

  4. The (proposed) STATES Act: Federal Cannabis Reform

    Home » Blogs » The (proposed) STATES Act: Federal Cannabis Reform

    Earlier today, Senators Elizabeth Warren (D-MA) and Cory Garnder (R-CO) announced their bipartisan bill* titled Strengthening the Tenth Amendment by Entrusting States Act (STATES Act). The following is a preliminary summary of the abstract from the senators’ press release and our interpretations of what’s to come in the cannabis industry in response to this bill.

    CONTINUE READING

  5. Hemp Legalization

    Home » Blogs » Hemp Legalization

    With the passage of the Agricultural Improvement Act of 2018, hemp is officially legal in the United States meaning that states may now apply to start producing hemp and hemp-derived products under the Department of Agriculture’s supervision. However, there are restrictions.

    CONTINUE READING

  6. Hemp is (almost) Legal

    Home » Blogs » Hemp is (almost) Legal

    It was announced on December 11, 2018 that the Agriculture Improvement Act of 2018 (AIA) is through reconciliation between the House and the Senate. The bill removes “hemp” from the definition of “marihuana” under the Controlled Substance Act (CSA). This effectively makes the cultivation, processing, extraction, manufacture, and retail of hemp legal under Federal law.

    CONTINUE READING

  7. Taxation of Illegal Businesses

    Home » Blogs » Taxation of Illegal Businesses

    All for-profit businesses are required to pay federal income taxes on their gross income. This is true even if a taxpayer is operating an illegal business. You might be asking yourself, “Why would an illegal business voluntarily pay taxes?” Well… what about the medical and adult recreational use marijuana businesses?

    CONTINUE READING


Sean HockingSean HockingMarch 12, 2019
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12min1380

If you wish to re-publish this story please do so with following accreditation
AUTHOR: “Jordan Zoot.  “aBIZinaBOX Inc., CPA’s”
PUBLISHER:  CANNABIS LAW REPORT

 

Back to the BRC – while 2015 seems like ancient history, however, that was when then Lt. Gov. Gavin Newsome’s Blue Ribbon Commission published “Pathways Report – Policy Options For Regulating Marijuana in California” which contained a detailed analysis of the policy choices that were to be considered in what gave California Proposition 64 and subsequently SB 94 which led to the system of regulation for the legal cannabis industry that exists in California today.

While we could devote a book length article to a present day critique of that report we are going to limit our thoughts to a review of the Tax Policy component of the report which appears on pages 48 through 56. The section, “Taxing Marijuana” begins by noting

 

“The ability to tax cannabis is one of the main political reasons given to support recreational legalization. A successful tax system will need to raise money to pay for increased education, public health and enforcement costs associated with marijuana cultivation and use.”

 

California will have to wrestle with when and, how to tax marijuana. Each decision has trade-offs that must be considered by policymakers. Yet it still remains that a logical and effective taxation system can help establish effective broader public policy. Regulators and decision makers should consider how to set up a tax scheme that will help them achieve the core goals of legalization policy that have been stated earlier in this report.

 

In drafting any taxation scheme, it is important to devise a plan that can be administered and enforced effectively. Tax policy can be the driving force for public policy only if it is effectively enforced, and effective enforcement will result only from systems that can be properly administered. Tax and regulatory compliance should be simple to execute and formulated in a way that makes compliance desirable to market participants.”[1]

 

If we were to just STOP AND REFLECT after only having gone that far, the admonishment couldn’t have been more profound. The greatest challenges that highly regulated system which was initiated by the California Legislature and embellished by the regulatory and tax agencies they created are principally burdened by excessive complexity and difficult in both participant compliance and agency administration. We have commented at length in recent articles with our suggestions to correct both aspects.

 

The BRC considered the triumvirate of Price vs. Weight vs THC and ultimately adopted Price for the Cannabis Excise Tax [“CET”] and Weight for the Cannabis Cultivation Tax [“CCT”]. We are going to expressly reserve comment on the THC choice which is CLEARLY the appropriate choice for applying tax to the product of manufacturing [eg. extraction for the production of vaping cartridges and edibles].

 

Taxing by percentage of sale price seems easy and quick. But calculating marijuana taxes as a percentage of price creates the danger that taxes will be, at first, too high, and then later too low. Initial business start-up costs and possible shortages in supply can drive up the retail cannabis cost in the beginning, artificially creating more tax revenue. But then as businesses and the market mature and production costs go down, tax revenue will decrease.

 

Taxes that are too high make prices for the legal market unattractive to consumers relative to the prices for the untaxed illicit market. This results in two negative effects:

 

  • lower actual tax collections,
  • and a continued illicit market.

 

The BRC Report continues with a comment about initial experience in Colorado

 

“That’s why Colorado’s original 15% price-based producer tax was converted to a weight base—so the state has something it can measure.   In many cases, there is no actual producer price to tax. Colorado originally required producers to sell directly to consumers (forced vertical integration). When the producer is not a separate entity from the retailer, there is no “arm’s-length,” or actual, producer price.   The absence of an arm’s-length market price caused the state to estimate an “average market rate” which it uses to compute a weight-based tax. This average market rate, adjusted every six months, applies even to sales between unrelated parties.”[2]

 

We see the consequences of this approach, particularly the imputation of an arbitrary rate of mark-up in the CET. The alternative “weight-based” approach was utilized in the CCT.

 

The BRC notes

“A weight-based excise tax has the advantage of creating a kind of price floor under the market and guaranteeing at least some government revenue even in the event of a marijuana price collapse. Assessing tax on the basis of the weight sold raises potential arguments about when the weight should be assessed (e.g., at the farm gate, at the processor, at the retail outlet) and how to account for the fact that, as a harvested plant, marijuana will change in weight as it loses moisture.

A further challenge of a weight-based tax is that it could incentivize producers to make extremely high-potency products so as to reduce the amount of tax per unit of THC sold.”[3]

 

Targeting a tax directly at intoxication might seem a theoretical best practice. Some have suggested taxing THC, the primary intoxicant, directly—or adjusting the tax down for the presence of CBD, which may have a mitigating effect on THC. Indeed, measuring THC in homogeneous concentrates, before incorporation into edibles and other products, might yield reliable and replicable results. But measuring THC in raw plant material, like dried flower, is more problematic.

 

These products are not homogeneous. Broad-brush test results, accurate enough to warn or inform consumers, may not be accurate enough for taxation.

 

Our financial modelling of California’s cannabis taxes raises a couple of additional factors that have had a significant impact on behavior by participants in the cannabis supply chain. The levels of mark-up and profits sought by Cultivators vs. Distributors vs. Dispensaries have significant impact on the market. The instances of integration such as Cultivators owning distribution and manufacturing entities through Cannabis Cooperative Associations [“CCA’s] could become significant “disruptors” to the vertically integrated, larger players such as Flow Kana which have recently emerged.

 

There are several points in the supply chain where cannabis taxes can be assessed cultivation and at the retail level. The may be additional points for assessment of tax if manufacturing or distribution components are involved in the process. We have observed that each of the state with legal cannabis has adopted a combination of the methods in different configurations. Each of the methods has advantages and disadvantges that need to be evaluated in the context of both revenue and policy objectives. .

 

Also, because marijuana prices and marijuana consumption will change over time, certain types of taxes may offer more stable tax revenue and consistent after-tax prices than others.

 

Finally, the BRC notes

 

If we put aside the risks of leakage and tax evasion, late collection has certain apparent advantages – despite the “collect early” guideline. With any chosen ad valorem tax percentage on price, imposing it as late as possible gives the state more revenue, since the price of any product ordinarily rises as it passes through the supply chain. For instance, a 20% retail tax will collect more revenue than a 20% production tax, since the retail price is normally higher than the production prices. If, instead of a particular percentage, the state seeks a specific dollar amount of revenue, taxing later in the supply chain usually results in lower consumer prices, since retailers tend to add a percentage of profit margin based on their costs, including the cost of taxes.”[4]

 

We have no illusions [or delusions] that our thoughts will become the basis for the California regulatory and tax agencies to make change in tax rates or policy. However, what we do know is that unlike many that merely speculate about forces that impacted the highly regulated cannabis market, we have derived substantial insight by “pushing the numbers” and observing relationships between both the cost components, and the behavior of the market participants.

 

We hope our readers are developing a sense of those relationships as well.

 

[1]Pathways Report – Policy Options For Regulating Marijuana in California” at Page 48

[2] Page 49

[3] Page 50

[4] Page 53

 

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Sean HockingSean HockingMarch 11, 2019
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11min1420

MARKETING MATTERS: THE ART OF BRANDING & IDENTITY

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AUTHOR: Glenn Johnson

PUBLISHER: CANNABIS LAW REPORT

 

The rise of social media has taught us that good storytelling and branding can go a long way to project success for any brand. They’re a gateway to customer conversations that when well done, can lead down a rabbit hole of discovery for any consumer to journey across your brand. Everyone loves an underdog, and in Cannabis more than any category represents an emerging class of new brands, new products and new experiences for consumers to listen, learn, sample and engage with.

The push-pull of the regulatory dance that’s occurring on a state by state basis in the US has unleashed a mashup of start-ups at every level of the industry’s verticals. Not everything is rainbows and sunshine however, and we’re all too familiar with seeing websites, social media, packaging and branding decisions that fall short in one way shape or form or another. It is quite honestly what drives me in my own work to address the needs of businesses as they’re getting started or pivoting into a larger scale.

 

From soil to oil, flowers and beyond, every brand has a unique challenge to overcome when it comes to your “branding” efforts. What people see, and what they remember may be two different things. For start-ups and entrepreneurs in the Cannabis space, there are some basic caveats that apply and should be used as a benchmark as you go about introducing yourself to the market in which you do business.

 

STEP ONE is to refine or define your Brand Identity. A company’s brand identity is what it says about who it is – the products or service it delivers, the quality it gives customers, its advantages over competing brands and what makes it unique. That’s a fancy way of being clear about who you are and what you sell. You will need to codify and agree upon a clarified brand meaning which aligns with your brand goals (setting these goals are manifold related to the market categories you serve, pricing and inventories, more on that later).

 

STEP TWO is your Brand Image, which is how a brand is perceived by the public, what they see, what they will remember–the overall Look & Feel of your brand. You want to work to ensure the brand assets align with your Brand Identity so that the end consumer, be it B2B wholesale or B2C Sales and social media makes sense and adds value to your business, whether its driven by price or perception.

 

STEP THREE is to align your “Branding” with the markets you serve and letting your brand live in the space in which you do business. Take the remarkable start-up NW Nectar, a Tier 3 Producer / Processor in Spokane, WA who, “works to provide great experiences to our retailers and customers.” Their collection of brands reflect a kickass appeal from the native northwest, from the Great PNW to their Lefty’s brand (which reckons back to the notorious “left hand cigarette,” which cannabis was once known as. Evolving beyond stigmas of yesterday to create something pleasantly nostalgic with an air of mystery and includes their portfolio is a bevy of wonders and includes Trips Kitchen, with its own unique iconography.

 

 

I bring you these thoughts, sparked by the remarkable infographic, The Art of Cannabis Culture, from the thoughtful folks at the Ganjaprint.com They know a thing or two about the visualization of a brand from their extensive printing experience and have some terrific examples of winners in the category too, many you’ve heard of like Marley’s Natural and Kiva Confections to smaller brands from Cali like Lola Lola who’s colorful confections aim to: Enhance. Every. Experience.

There’s a lot to take in here, and it’s not laid out in any particular sequence, but the Optics takeaways are a great reference point for any brand. These tips dovetail well with the steps I’ve outlined above, which are in fact from the approach I’ve found successful working with brands of every size, from larger brands in Spirits like Maker’s Mark and Knob Creek’s small batch collection to smaller brands and start-ups in numerous verticals including Cannabis. It’s definitely worth saving and sharing with your teams as you go about building your business. I welcome your feedback in the comments, and any opportunity to ask me any specific questions via email if you’d like.

 

About Glenn Johnson

I am a Marketing, Branding and Communications Consultant w/ experience in high-touch luxury consumer marketing in the travel/hospitality, wine/spirits, fashion/beauty/grooming and Cannabis categories. My talents include Branding & Brand development, Business Building, Strategy and Brand Storytelling. I excel in working with Founders, funders, start-ups, and small brands.

 

Previously I was co-founder & moderator for the Creative Mind Salon series hosted at Soho House NY w/ industry innovators, creatives & decision makers from fashion, film, photography, music and digital industries which provided IRL intelligent discourse amongst highly-curated leading edge creatives. I can be contacted at glenn.johnson@gmail.com Connect with me on LINKEDIN: https://www.linkedin.com/in/glenn-johnson-8018944/

 


Sean HockingSean HockingMarch 10, 2019
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4min1550

As any farmer knows, planting season waits for no one. Washington state lawmakers are showing they understand this as well.

While other states have moved more aggressively to encourage commercial hemp, Washington’s total hemp crop in 2018 was less than 150 acres, all grown by the Confederated Colville tribes northwest of Spokane. Lawmakers in Olympia are determined that 2019 will be better — Hector Castro, Director of Communications for the Washington State Department of Agriculture recently stated, “It makes sense to assist farmers to get seeds in the ground this season.”

Legislative changes have been proposed to harmonize Washington’s hemp laws with the federal government’s 2018 Farm Bill. A legislative fix is necessary for hemp-derived CBD sales and for out-of-state hemp export.

The Washington State Department of Agriculture is also stepping up to the hemp table and considering two rulemaking changes that would benefit the industry. If successful, these rule changes would allow hemp to be grown within four miles of marijuana cultivation and remove the requirement that hemp farmers get permission from the DEA before importing hemp seeds.

One open issue is how to pay for the hemp-licensing program that is compliant with the 2018 Farm Bill. The program is predicted to cost just over $200,000 annually. If that cost is passed on to farmers instead of being funded by the state budget, the current $300/year hemp license fee could increase dramatically and undercut the momentum that Olympia is trying to build.

Peter Becker

Peter Becker is an experienced trademark, copyright and domains attorney with experience developing and implementing global strategies and IP portfolios for billion-dollar brands, including Microsoft and Amazon.      

Peter advises senior executives on building brand equity, enforcing and monetizing non-patent IP assets, and defending IP threats. He is well versed in brand management overseeing risk analysis, clearance, prosecution, oppositions, uniform domain name dispute resolution policies, customs seizures, policing and defensive conflicts. Peter also guides clients through all aspects of IP management related to mergers and acquisitions.


Sean HockingSean HockingMarch 9, 2019
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15min3760

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AUTHOR: Mark Taylor
PUBLISHER:  CANNABIS LAW REPORT

Cannabis lawyers are heading to Brussels next week to challenge a recent decision by the European Union to reclassify food products containing cannabidiol (CBD) and prohibit their sale.

While the rest of the western world moves towards acceptance of cannabis products either medically or recreationally, the European Union pushed back in February, updating a classification of CBD under the Novel Food Regulation.

The law ((EU) 2015/2283), which applies across all member states, means any product deemed as ‘novel’ must gain authorization from food authorities before it can be sold as a foodstuff within the EU.  Food can be considered ‘novel’ if it was not consumed by humans to any significant degree prior to May 1997.

These regulations apply to food supplements, ingredients, and substances intended to be incorporated into food. In the case of CBD, this includes extracts, oils and other derived products that are intended for ingestion by humans.

The decision caused an outcry amongst pro-cannabis groups having come almost out of the blue, and now the legal troops have been mobilized in a bid to overturn the decision.

London law firm Mackrell Turner Garrett, together with a leading food and trading standards barrister, was instructed by the Cannabis Trades Association UK (CTA) to make representations to the European Food Safety Authority (EFSA).

Robert Jappie, head of cannabis law at Mackrell Turner Garrett and Jonathan Kirk QC, of Gough Square Chambers, will travel to Brussels on March 12 to meet with EFSA officials.

They are taking issue with the change by the EU in its submission for the term ‘cannabinoids’ states: “Extracts of Cannabis sativa L. and derived products containing cannabinoids are considered novel foods as a history of consumption has not been demonstrated. This applies to both the extracts themselves and any products to which they are added as an ingredient (such as hemp seed oil).”

Although EFSA’s Novel Food Catalogue is merely advisory, domestic regulators rely on it for guidance and are likely to act first, ask questions later.

Austria’s government interpreted the EU law in such to ban CBD even prior to the change, taking a hardline stance to the emergence of multiple shops selling oils, and even CBD-infused cakes, on the high street.

Such is the immaturity of Europe’s technically regulated CBD market, it’s true worth is almost impossible to price. US analysts say CBD could be a $22bn market by 2022; by comparison, any EU sector would larger.

While unexpected, the EU’s decision is a reminder to the business of its independent thinking and willingness to act quickly in cases where it observes a potential threat to consumers.

It has long kicked back against trends emerging from the US in financial and other markets, not least since the 2008 financial crisis. It has also recently begun flexing extra-territoriality muscles in regards to data regulation, positioning itself as world police of consumer data, to the chagrin of Silicon Valley’s luminaries.
European capitalists have been closely watching the green wave sweep over the US and maneuvering to cash in when it hits these shores, however, Brussels is a different beast, and member states, however desperate for cash, are perfectly capable of slowing down the tide to give themselves an advantage.

The soaring popularity in Britain is not in question, however, and can be evidenced in the CTA’s growing membership; since formation in 2016, it now boasts more than 700 members who produce a wide range of legal CBD products.

“The growth of the UK’s CBD industry has been spectacular in the last three years and its contribution to the UK economy is thought to exceed £100m ($130m) per annum,’ said Jappie.

Novel food is defined as food that was not consumed to a considerable degree by citizens of the EU prior to 1997 when the first regulation on novel food came into force.

The EU claims CBD falls into this category, however supporters say hemp flower products such as hemp seed and hempseed oil (extract) are already authorized, and the ban is unlawful

“Only food products that are enriched with isolated CBD should be considered novel,” said Mike Harlington, chairman of the CTA. “Hemp extracts are not novel and this is the position we have presented for almost two years now. Our position remains unchanged. Our members’ products remain legal, and will not be removed from sale.”

FURTHER INFO

You’ll already be aware of the Mackrell Turner Garrett Cannabis practice

Here’s some further information on

Jonathan Kirk QC specialises in consumer law and financial regulation. In recent years this has primarily focused on issues of mis-selling, misleading prices, unfair terms and EU food regulation.

He is one of the two general editors of the ‘Encyclopedia of Financial Services Law’ and the author of a textbook on financial services, ‘Modern Financial Regulation‘. He is also the general editor of ‘Consumer and Trading Standards: Law and Practice’ (‘the Pink Book’)

In 2015 he represented a parking company in the seminal case of ParkingEye Limited v Beavis, arguing before the Supreme Court that a £85 parking ticket issued for overstaying on private land was not a contractual penalty or an unfair term. He also defended several national companies against allegations of mis-selling or misleading prices.

He has substantial experience of litigation involving Part 8 of the Enterprise Act 2002, having represented parties in the OFT or CMA investigations into the supermarket, ticket reselling and furniture sectors.

He advises NTS (‘National Trading Standards’), the CTSI (‘Chartered Trading Standards Institute’), the Bar Council and the Law Society on consumer law matters.

He lectures widely on EU consumer and trading standards law. He has been an approved Bar Advocacy Trainer for 10 years and was appointed as counsel at the United Nations (ICTR) in 2005 and Queen’s Counsel in 2010.

  • R (on the application of Stephanie Hudson) v Liverpool City Council (High Court, QBD, 2016): contempt proceedings against the Council for breaching its undertaking to review its decision to restructure its consumer protection services;
  • R (Kingston upon Hull City Council) v Secretary of State for Business, Innovation and Skills, Newcastle City Council and Greggs plc (High Court, Admin, 2016): represented Greggs plc, an interested party, in a judicial review of the endorsement by BIS’ Better Regulation Delivery Office (‘BRDO’) of advice given under the Primary Authority Scheme to Greggs plc, concerning provision of sanitary facilities;
  • Competition and Markets Authority v Various Supermarkets (2016): defended a supermarket in the CMA investigation into the Consumers’ Association (Which?) super-complaint about pricing and promotional practices in the groceries market;
  • Beavis v ParkingEye Ltd [2015] UKSC 67: acted for parking company in appeal to Supreme Court concerning an £85 parking charge; case is now the leading decision on penalty clauses, re-examining the scope of the common law doctrine and the approach to challenges to unfair terms in consumer contracts;
  • Competition and Markets Authority v Seatwave, Viagogo, StubHub! and Get Me In! (2015): defended the Getmein! website in the CMA investigation into the ticket re-selling market;
  • R (Hudson) v Liverpool City Council (High Court, Admin, 2015): acted in judicial review proceedings against Liverpool CC in relation to the claim that it had drastically reduced its trading standards capacity and therefore breached its European and domestic consumer protection responsibilities;
  • Torfaen County Borough Council v Tesco Stores Limited (2015) defended Tesco in allegation of mis-selling of peanuts under the Price Marking Order 2004;
  • British Parking Association v A Private Parking Enforcement Company (2015) defended a private parking company in disciplinary proceedings brought by the British Parking Association in relation to allegations of fraud by parking wardens falsely issuing parking tickets;
  • R (Wren Kitchens Limited) v Advertising Standards Authority (2015): acted for Wren Kitchens Limited in ASA adjudication on price comparisons and in subsequent judicial review proceedings;
  • Halsall & ors v Oasis Land Development Ltd (High Court, Ch Div, 2015): represented corporate defendant in a  fraudulent misrepresentation trial concerning land in the Cayman islands;
  • OFGEM v Various Energy Companies (2015): acted for OFGEM in allegations against energy companies under Part 8 EA and the Consumer Protection from Unfair Trading Regulations 2008 (‘CPUT’);
  • Office of Fair Trading v Carpetright PLC, SCS, Dreams, Furniture Village Limited, Homestyle Operations Limited, Harveys and Bensons for Beds (2014): defended Carpetright PLC in the OFT’s investigation into alleged misleading reference pricing in the furniture retail sector;
  • Hertfordshire County Council and London Borough of Brent v Wendy Fair Markets Limited(High Court, Ch Div, 2014): claim under Part 8 EA 2002 for injunctive relief against market operators concerning consumer law infringements in relation to counterfeit goods;
  • Torfaen CBC v Douglas Willis Ltd [2013] UKSC 59 (Supreme Court): food standards and minimum durability labelling;
  • R v X Limited [2013] EWCA Crim 818 (Court of Appeal): first consideration of the meaning of ‘commercial practice’ under CPUT;
  • Birmingham CC v Tesco Stores Limited (2013): pricing under CPUT (strawberries);
  • Cheshire East v Salsa Enterprises Limited and Sean Ellman (2013): defence of company accused of breaching CPUT by selling ‘legal highs’;
  • R v Blake (2013): defence of managing director of finance company prosecuted for breach of financial conduct provisions;
  • OFT v First Step Finance Limited (2013): representation of company in relation to the revocation of its consumer credit licence;
  • House of Cars Ltd v Derby Car and Van Rental (2012): first private prosecution under CPUT;
  • East Riding of Yorks v UK Parking Control Ltd (2012) (CC, HC (QBD) and CofA): first trading standards enforcement of CPUT in private car parking enforcement;
  • R (LOCOG) v Sportsworld Limited, Events International Limited and International Corporate Events Limited (2012): defence of national ticket sales company prosecuted under the provisions of the 2006 Olympic Act;
  • Brighton & Hove CC v Towers Property Developments Ltd (High Court, Ch Div, 2011): first Part 8 EA 2002 and CPUT trading standards enforcement against land banking company.

Debra BorchardtDebra BorchardtFebruary 11, 2019
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3min4910

The National Cannabis Roundtable (NCR) was announced on Friday by the group’s new leader former speaker of the House John Boehner. The group will be lobbying to remove federal restrictions that stand in the way of medical research on cannabis and encourage the development solutions to help patients.

Other agenda items for the group include working to correct the tax code and improve the banking situation for cannabis companies. NCR will also be working to help states enact their own cannabis legislation.

Boehner has come a long way since his days as the Speaker. At one time he was very vocally anti-marijuana and opposed the very legislation he will now be fighting for. Since his time as Speaker, Boehner joined the board of one of the largest cannabis companies Acreage Holdings Inc. (ACRG.U) and has described his opinion towards cannabis as “evolved.”

“As the cannabis industry grows and matures, it’s vital that we work together for a common-sense legal framework for cannabis policy,” Speaker Boehner said in a statement. As membership grows, he says, NCR will be comprised of growers, processors, retailers, wellness centers, investors, entrepreneurs, and publicly traded companies. Acreage Holdings is a founding member of the group.

Edible company Plus Products is another company that has joined forces with the group. “As the Cannabis industry matures, leading companies have a responsibility to help keep the public safe and well informed,” said Jake Heimark, CEO of PLUS. “Our mission at PLUS is to make cannabis safe and approachable and we are excited to help further that mission by being an inaugural participant in the National Cannabis Roundtable.”

“As the top edible company in the largest state, we look forward to helping shape the national dialog around cannabis consumption and make sure the cannabis industry takes a responsible role in keeping consumers safe,” said Jennifer Tung, PLUS’ Chief Risk Officer.


Debra BorchardtDebra BorchardtFebruary 4, 2019
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9min11361

MedMen Enterprises Inc. (MMNFF) is facing a new lawsuit from the company’s former Chief Financial Officer James Parker. Parker filed his case on January 29 in the Superior Court of California in the County of Los Angeles claiming wrongful termination for an undetermined amount of damages.

MedMen spokesman Daniel Yi said that the company was unable to respond to the filing because it had not been officially served, but would do so once that happened. “These are baseless claims and we’ll defend ourselves vigorously in court,” said Yi.

Parker resigned from the company in November less than a year after the company began trading on the Canadian Securities Exchange following a reverse take over. It’s highly unusual for a company to experience a change at this level so quickly after becoming a publicly traded company. At the time, Jim Miller, who was the Vice President of accounting was appointed as the interim CFO and then in December MedMen named Michael Kramer as its official CFO. Kramer worked previously in senior jobs for retailers such as Apple Inc., Abercrombie & Fitch and Forever 21.

The Allegations

The allegations are harsh. Parker says that he to “Choose between complying with his fiduciary duty to the company and its shareholders or turning a blind eye and a deaf ear to improper and unlawful behavior, he had been constructively and wrongfully terminated without cause and in violation of public policy.” Parker claims MedMen went behind his back to begin searching for a new CFO and diminished his authority within the company.

He also complained that the company instructed him to make payments that he questioned.

“Plaintiff was ordered to spend several millions of company dollars on such items as 24-hour armed Executive Protection (security) for the CEO, President, and their families, high-tech safe rooms and security systems for their new houses, personal drivers, private jets (often with friends and family along for the ride), luxury hotels, special order pearl white Escalades for the CEO (and another car for his family), a custom $160,000 Tesla SUV demanded by the President, tens of thousands of dollars apiece on multiple extravagant custom conference room tables, and placing CEO Bierman’s personal therapist and marriage counselor on staff fulltime as a “performance improvement expert” at a pay rate in excess of $300,000 a year.”

Parker alleges that Bierman and President Andrew Modlin engaged in inappropriate name-calling.

“Mr. Parker was forced to tolerate being ridiculed by CEO Bierman and President Modlin for the way Plaintiff dressed (not hip enough to satisfy the Founders’ millennial culture); being called “fat and sloppy”; being called a “pussy-bitch;” having his office diminished in size; assigned to a shared a parking space with his executive assistant while less senior VP’s and Administrative Assistants had their own exclusive spots; subjected to hearing CEO Bierman’s racially inappropriate reference to Los Angeles City Councilman Herb Wesson as a “midget negro” and the CEO’s characterizations of cannabis social equity programs as “reparations”; CEO Bierman’s references to a representative of the Drug Policy Alliance as a “fat, black lesbian;” CEO Bierman’s and President Modlin referring to women in conflict with them as “cunts” and those with different ideas or perspectives as being “retarded;”

Parker also made serious securities violation claims saying:

  • “Ordering Plaintiff to wire hundreds of thousands of public dollars to a “consultant” in Canada to “buy up our stock when it is under attack”
  • “Ordering Plaintiff to pay prohibited success fees to unlicensed broker-dealers for various fundraising efforts, under the semblance of “consulting agreements”
  • “The CEO and President not being fully transparent about non-arm’s length deals with numerous related parties (including Pharmacann and Captor Capital)”
  • “The CEO and President failing to publicly disclose all Named Executive Officers and other Material Officer compensation packages (in violation of Canadian National Instrument Form 51-102 F6 which requires that the compensation of the CEO, CFO and next three highest-paid executives be publicly disclosed)”

Parker also claims that Bierman and Modlin have continued to treat the company as if it were still a private company and not one owned publicly by shareholders.

“Plaintiff having to deal with all of the resulting cultural fallout at the company; relegated to using his personal American Express card to fund company purchases ranging from $150,000-$250,000 a week because CEO Bierman and President Modlin, and Defendant could not obtain credit cards with high enough limits since MM Enterprises was in the cannabis industry”

MedMen Claims Performance Issues

Within the case, Parker included emails from Andrew Modlin suggesting the company was unhappy with Parker’s performance leading to his ouster.

Modlin wrote, “You have engaged in other serious neglect in the performance of your duties and you have willfully and repeatedly failed and refused to perform your duties. We will be providing you with a more detailed description of your performance deficiencies shortly as well as a plan for curing those deficiencies.”

In another email stated in the case, Modlin wrote, “We are taking the time to thoughtfully memorialize the myriad well-documented deficiencies in your performance so that both you and MedMen can understand what is expected of you in your very well compensated position. Given the amount of your base salary, the annual bonus available to you, and the value of the equity grants given to you, MedMen has every right to expect you to perform your job duties
admirably. ”

Damages

Parker was being paid $750,000 a year and if he was terminated without cause he would receive $2.2 million. In addition to other lump sum payments and unvested stock options. However, the filing states that damages would be determined in court.

Other Lawsuits

MedMen is facing another lawsuit. Brent Cox and Omar Mangalji founders of The Inception Companies founders (through an affiliated entity – MMMG-MC, Inc. – that holds a significant stake in MedMen’s management company MMMG, LLC) filed a complaint against Adam Bierman; Andrew Modlin and various MedMen Enterprises (OTC: MMNFF) entities for alleged breaches of fiduciary duty. A Los Angeles Superior Court though denied a request from the plaintiffs for a temporary restraining order and a preliminary injunction and giving the company a slight early victory.

However, similar to Parkers claims that Bierman and Modlin are self-dealing when it comes to the company, Cox and Mangali also stated, “MedMen veneer is a complex web of interconnected subsidiary entities, virtually all of which are directly managed, directed, controlled, and owned by BIERMAN and MODLIN, and all of which always pursue the best interests of BIERMAN and MODLIN, rather than the best interests of any stakeholder or entity. It is that perverse interconnectedness and rampant, brazen self -dealing that renders the actions of BIERMAN and MODLIN, and of the Entity Defendants, unlawful.”

 


Debra BorchardtDebra BorchardtDecember 18, 2018
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6min6500

The war between Terra Tech Corp. (OTC: TRTC) and its investor Heidi Loeb Hegerich is heating up. The first attack began with a lawsuit filed last week by the Reno, Nevada woman claiming fraud. Loeb Hegerich entered into a partnership with Terra Tech and became a co-owner of a Blum dispensary in midtown Reno. Loeb made some 50 different claims in the case and ultimately is unhappy that she hasn’t received any money back from her investment.

Among the claims, she says she contributed $633,156, and Terra Tech has only contributed $513,706, which was not as much as they had originally agreed to invest. Loeb also claims that Terra Tech’s financials weren’t audited properly as the company claimed and that funds were commingled with other joint ventures. The lawsuit notes that in March 2018, Terra Tech’s accounting firm Macias Gini & O’Connell issued an Adverse Opinion on Terra Tech’s internal financial controls.

The 80-page lawsuit goes on to describes various financial mishaps by CEO Derek Peterson and claims that the CFO Michael James has been involved in three companies that resulted in total shareholder wipeouts.

The lawsuit also details numerous bankruptcies by Terra Tech executives, which Loeb claims wasn’t disclosed to her prior to becoming partners. Loeb also claims that Terra Tech has tried to oust her from the company.

Terra  Tech issued a statement on Tuesday after the market closed refuting her claims.

Terra Tech said it will defend itself vigorously against the meritless claims filed in the State of Nevada. The company strongly denies these allegations and would like to highlight that these are only allegations by a business partner which have not been proven. Terra Tech also intends to pursue numerous counter-claims against Ms. Hegerich.

Terra Tech Chairman and CEO, Derek Peterson said, “Far from the image portrayed in recent interviews, Heidi Loeb Hegerich is, in fact, a wealthy, sophisticated investor with a history of disputes with business partners. We reaffirm our commitment to our shareholders to correct any misleading and inaccurate reports and remain committed to providing accurate information to our investors.”

The statement went on to say, “Ms. Hegerich’s lawsuit and recent interviews are an attempt to manipulate Terra Tech into paying money she is not owed. As Ms. Hegerich is well-aware, her allegations ignore the significant investment and expertise required to obtain a license and build out a retail facility. In fact, Terra Tech actually funded over 2.9 times the amount invested by Ms. Hegerich, including buying all of the product inventory to open the location and carrying operating losses until the opening of recreational sales.”

Ms. Hegerich believes the company tried to push her out of the company, but Terra Tech’s point of view is that it offered to purchase her share of the business at a greater than eight times return on her investment within two years.

With regards to the auditing of the company’s financials, Terra Tech said it “Is a publicly traded company audited by one of the largest accounting firms in the US. Additionally, MediFarm I has engaged an independent third-party accounting firm to review the books and records for the Reno business. Any allegations against the Company’s accounting practices are completely baseless in fact or evidence.” Terra Tech also claims that the accounting firm didn’t actually file an Adverse Opinion.

Golden Leaf 

In the middle of this battle of words, Golden Leaf decided against pursuing a potential transaction with Terra Tech as it announced on November 5. Lucky for them it was a nonbinding agreement.

Terra Tech reported that for the last nine months ending September 30, the company reported a net loss of $34 million. The company had revenues of $24 million, but expenses of $25 million.

The company is currently involved in a lawsuit with regards to its subsidiary Edible Gardens and former partners. No doubt expenses will rise for Terra Tech as it fights multiple lawsuits.

 

 


Debra BorchardtDebra BorchardtDecember 12, 2018
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8min837016

This story was updated on December 11, 2018.

The 2018 Farm Bill has passed in the U.S. Senate with a vote of 87-13. The legislation goes to the House next for a vote and if it passes there, it will head to the President’s desk to be signed. Hemp will be switched for review to the Department of Agriculture and away from the Justice Department.

Language that would ban people with felony convictions from working in the hemp industry was amended so that the ban would end 10 years after this legislation is passed.

Hemp farmers and CBD-related companies will benefit the most from the passage of the Farm Bill. CBD or cannabidiol is derived from the cannabis plant but has none of the psychotropic effects of THC. In The Farm Bill, there is language that amends the Controlled Substances Act and legalizes CBD. The passage reads as follows:

‘(B) The term ‘marihuana’ does not include— 10 ‘‘(i) hemp, as defined in section 297A of the 11 Agricultural Marketing Act of 1946; or 12 ‘‘(ii) the’’. 13 (b) TETRAHYDROCANNABINOL.—Schedule I, as set 14 forth in section 202(c) of the Controlled Substances Act 15 (21 U.S.C. 812(c)), is amended in subsection (c)(17) by 16 inserting after ‘‘Tetrahydrocannabinols’’ the following: ‘‘, 17 except for tetrahydrocannabinols in hemp (as defined 18 under section 297A of the Agricultural Marketing Act of 19 1946)’’.

It is expected to be removed from the DEA’s schedule 1 list to schedule 5, which is the lowest level and would lift the DEA’s restrictions. CBD products have already begun to explode in the marketplace in anticipation of these changes.

“The cannabis industry is closely watching the outcome of the Farm Bill. And while we are seeing a lot of startups try to move in, nobody is better suited to operate in this market than experienced licensed cannabis manufacturers,” said Nancy Whiteman, founder, and CEO of Wana Brands, makers of cannabis-infused products.” Marijuana-infused producers have been perfecting precise dosing, testing, and supply chains for the past decade, and these companies will lead the way in the next generation of CBD products.”  Wana Brands has the leading THC gummy in Colorado, but it will be producing a CBD only version in 2019.

GW Pharmaceuticals (NASDAQ: GWPH) had its drug Epidiolex approved by the FDA earlier this year and removed from the schedule 1 category. This medicine though has a very high level of CBD, unlike the mass-market versions which have fairly low levels of CBD. Plus, patients know exactly what they are getting with the prescription drug. Consumers purchasing mass market CBD products generally have no idea how much CBD is in the product or how it was manufactured.

“What is known about CBD is only the tip of the iceberg,” said Lisa Richards, co-CEO, L’eela CBD Body Care:  Consumers are just starting to understand the benefits of CBD, and when the floodgates open, they are going to need to be educated and be their own advocates. Hemp may be federally legal with the passage of the Farm Bill. However, more importantly, where is it sourced? How is it processed? The passage of the Farm Bill is only the first chapter.” All L’eela products are made with hemp that is grown and processed in the United States.

Many companies use CBD oil that is made from Chinese hemp. In 2017, the FDA issued warning letters to several CBD companies. The products didn’t contain the level of CBD that they claimed or the companies made marketing claims about health conditions for which there was no scientific proof. With these new changes, the industry has a better chance of creating standards so that consumers can make educated choices.

The Farmers

In addition to boosting the product sales of CBD brands, the Farm Bill will benefit hemp farmers. Chase Terwilliger, CEO of CBDistillery, a Balanced Health Botanicals brand said that the biggest benefit to hemp farmers is that they will be able to buy crop insurance. Most farmers have this type of insurance to protect them from weather or anything else that could hurt a harvest. Hemp has only been approved from a research standpoint and so it wasn’t eligible for crop insurance.

There is a big desire to shift some of the Chinese production of hemp back to the United States. One reason Senator McConnell has been supporting the inclusion of hemp in the Farm Bill is that it gives tobacco farmers in Kentucky a way to keep their farms productive.

“Hemp is fairly inexpensive to grow and maintain,” he said. “But we hear from farmers that harvesting is a big challenge because the farm equipment isn’t designed to handle the product which is extremely fibrous.” Terwilliger also noted that hemp is a very absorbent plant and with China’s pollution, their hemp plants tend to have heavy metal exposure. “Consumers deserve a high-quality hemp plant,” he said.

Farmers have already begun carving out small sections of their farms to begin testing hemp. 100 acres was seen as a little risk. Now, it is expected that many farmers will quickly make the switch if the plant is legal.

Options

Terwilliger also noted that like traditional agriculture, there could soon be hemp futures. Farmers like futures contracts on their crops as it locks in a price. Options traders will buy and sell these instruments like any other agricultural product. “It will turn into a commodity that futures can trade on,” he said.



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