DEA Archives - Green Market Report

StaffOctober 5, 2022
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5min6770

An active Drug Enforcement Administration (DEA) pharmaceutical cannabis license holder, Biopharmaceutical Research Company completed a $20 million Series A fundraise. BRC said the raise will help it aggressively scale its operations and increase its product offering, conduct sponsored research, and execute its go-to-market strategy.
“Receiving our DEA Schedule I registration in 2021 allowed us to significantly advance our research capabilities, optimize our cannabis growing operation, and produce novel cannabis-derived products in a federally compliant manner. This significant new financial infusion will further accelerate our ability to grow as a business, while establishing BRC as an industry leader,” said George Hodgin, BRC CEO. “Intrinsic not only provides us with the cash we need to scale aggressively, they also bring a wealth of experience in the pharmaceutical space. We’re so grateful to the Intrinsic team and to our other partners for seeing the high-growth potential of our work.”

According to the statement, BRC said that in 2021 it was one of a small number of American companies awarded a production license from the DEA to produce clean, consistent, and compliant cannabinoids for federally approved researchers across the United States. BRC said it has partnered with academic research institutions including Washington State University and the University of California-Davis.

The round was led by Intrinsic Capital Partners, with participation from Argonautic Ventures, Achari Ventures, AFI Capital Partners, Delta Emerald Ventures, Self Health America (SHAC) and a number of preeminent family offices.

“BRC has exactly the kind of high-growth potential our fund looks for in a company,” said Intrinsic Managing Partner Howard Goodwin M.D. “They’re a mission-driven company with excellent leadership in a high-growth industry, and we’re thrilled to have engaged with a business that is already in a significantly advantageous position given their unique ability to be fully compliant with the DEA.”

For years, the University of Mississippi had been the only legal place for cannabis to be grown for the government. However, in May 2021 the DEA opened the program up to other third-party applicants. “Pending final approval, DEA has determined, based on currently available information, that a number of manufacturers’ applications to cultivate marijuana for research needs in the United States appears to be consistent with applicable legal standards and relevant laws. DEA has, therefore, provided a Memorandum of Agreement (MOA) to these manufacturers as the next step in the approval process.”

That sparked several companies to apply for DEA approval. The Scottsdale Research Institute in Arizona received approval in May 2021 and Biopharmaceutical Research Co. in California received approval shortly thereafter. Royal Emerald Pharmaceuticals in California, received approval in December 2021, followed by Groff North America, based in Pennsylvania, in March 2022 and California-based Irvine Labs in April 2022. More recently, Bright Green (NASDAQ: BGXX) stated in its prospectus, “In May 2021, we entered into the MOA with the DEA, which outlines the terms of the DEA’s conditional approval of Bright Green to proceed through the DEA’s registration process, as described above. The MOA with the DEA is effective for a one-year term, renewable for up to four additional one-year terms. These terms are agreed to by both the DEA and BGC, and the MOA is filed under DEA Document Control Number W20078135E. There is no guarantee that we will obtain the necessary authorization now, or in the future for renewal purposes.”

 


Dave HodesAugust 4, 2022
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The pressure is ramping up on the U.S. Drug Enforcement Administration (DEA) as more lawyers, clinicians, researchers, investors and business owners working in the psychedelics industry are demanding clear answers about how the DEA should be evolving on its drug scheduling and enforcement strategy. 

Right now, LSD, psilocybin, MDMA and peyote (mescaline) are all listed by the DEA as Schedule 1, meaning they have been determined to have a high potential for abuse and no accepted medical use. 

The DEA’s Schedule II of supposedly less harmful drugs include cocaine, oxycontin, fentanyl and Adderall. 

Less harmful? In 2021, the United States suffered more fentanyl-related deaths than gun- and auto-related deaths combined, according to the DEA. There were 1,305 deaths from cocaine in the first six months of 2021 in Florida alone.

Clearly, these Schedule II drugs are much worse substances than the psychedelics listed on Schedule 1. This misguided scheduling of psychedelics represents an insight into the contradictions and plain bad decision-making within the DEA that is coming under increased scrutiny.

DEA Issue List

Here is a list of more actions that are mixing up the DEA in a tangled web of two-steps-forward-three-steps-back events over just the last year:

– October 13, 2021. Novamind Inc. (CSE: NM | OTCQB: NVMDF | FSE: HN2), a mental health company specializing in psychedelic medicine, announced it was been granted two Schedule 1 licenses from the DEA: one for Dr. Reid Robison, Novamind’s chief medical officer, and one for Dr. Paul Thielking, the company’s chief scientific officer. The DEA licenses are required for research sites planning to host clinical trials for psilocybin, enabling principal investigators to store and administer this controlled substance.

– November 4, 2021. Cybin Inc. (NEO:CYBN) (NYSE American:CYBN), announced that it was granted a Schedule I manufacturing license from the DEA for the company’s research lab in the Boston area.

– January 14, 2022. The DEA shocked industry watchers with a proposed rule putting relatively obscure psychedelic substances on Schedule 1—4-Hydroxy-N,N-diisopropyltryptamine (4-OH-DiPT); 5-Methoxy-alphamethyltryptamine (5-MeO-AMT); N-Isopropyl-5-Methoxy-N-Methyltryptamine (5-MeO-MiPT); N,N-Diethyl-5-methoxytryptamine (5-MeO-DET), and N, N-Diisopropyltryptamine (DiPT). The DEA based their decision on scientific and medical evaluations by U.S. Department of Health and Human Services (HHS) from 2012, after the DEA had been gathering information about the substances since 2008… leading to suspicions about the January, 2022 timing of this scheduling proposal which came just a day after the National Institutes of Health hosted a two-day psychedelics workshop about research gaps and opportunities in psychedelic drug development. The DEA proposal immediately prompted a flurry of outrage from the psychedelics community. Nearly 600 comments were collected, ranging from sarcastic historical review to downright disbelief. DEA identified 31 domestic suppliers of one or more of the listed substances; thirty of the 31 domestic suppliers are not registered with DEA to handle controlled substances and, if the proposal became DEA policy, would have to turn in their supplies. They would not likely be able to buy a DEA license. The DEA reported that it expected the lost sales to these small businesses to be minimal.

– January 18, 2022. U.S. Congressman Earl Blumenauer (D-OR) led a bipartisan group of six lawmakers in urging the DEA to stop blocking terminally ill patients’ access to therapeutic psilocybin treatments.

– May 9, 2022. More than a dozen activists staged a “die-in” outside the DEA headquarters in Arlington, Virginia, demanding that the DEA allow patients with life-threatening conditions to legally access psilocybin. 17 are arrested.

– July 6, 2022. DEA reported that it received numerous comments and four requests for a hearing on their proposed rule, as provided in 21 U.S.C. 811(a). They scheduled a public hearing on the rule for August 22, 2022.

– July 19, 2022. Dr. Sunil Aggarwal, who specializes in palliative care and is the co-founder and co-director of the AIMS Institute, an advanced integrative medical care facility for patients living with chronic and serious illness, sued the DEA, along with other plaintiffs, over their policy and pattern of “flagrant Freedom of Information Act abuse” regarding requests for the DEA to provide information about reclassifying psilocybin from a schedule I controlled substance to a Schedule II controlled substance. The plaintiffs also requested a waiver about access to psilocybin for limited therapeutic use under state and federal Right to Try Laws (RTT).

– July 20, 2022. U.S. Senators Cory Booker (D-NJ) and Rand Paul (R-KY), supported by Rep. Nancy Mace (R-SC) and Rep. Earl Blumenauer (D-OR), introduced legislation to clarify the Right to Try Act (RTT), which permits/allows eligible patients to have access to eligible investigational drugs. RTT is designed to allow terminally ill patients to have access to Schedule I drugs for which a Phase 1 clinical trial has been completed. Specifically, the Booker/Paul legislation, the Right to Try Clarification Act, would remove any obstacle from the DEA’s Controlled Substances Act and Schedule I substances listing to get access to drugs such as MDMA and psilocybin.

– July 22, 2022. The DEA’s scheduling proposal is withdrawn. “Upon further consideration, DEA has determined that it is appropriate to submit a new request to the Department of Health and Human Services (HHS) for an updated scientific and medical evaluation and scheduling recommendation for these substances. DEA is withdrawing the proposed rule and notice of hearing that was published in the Federal Register on July 6, 2022, and is canceling the public hearing and terminating the pending hearing proceedings. DEA may issue a new proposed rule in the future regarding these substances if warranted.”


Debra BorchardtMay 18, 2022
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10min3170

Bright Green (NASDAQ: BGXX) is a cannabis company with no revenue that just began trading on the NASDAQ, despite the exchange’s insistence that it won’t list U.S. cannabis companies due to the product being federally illegal. Bright Green plans to produce cannabis for research purposes with the Drug Enforcement Agency‘s (DEA) blessing, which seems to be the reason why the NASDAQ has allowed the company to trade. It would be considered federally legal cannabis. The stock is trading at $26.

Bright Green states in its prospectus, “In May 2021, we entered into the MOA with the DEA, which outlines the terms of the DEA’s conditional approval of Bright Green to proceed through the DEA’s registration process, as described above. The MOA with the DEA is effective for a one-year term, renewable for up to four additional one-year terms. These terms are agreed to by both the DEA and BGC, and the MOA is filed under DEA Document Control Number W20078135E. There is no guarantee that we will obtain the necessary authorization now, or in the future for renewal purposes.” Previously, only the University of Mississippi held such authorization.

Green Market Report has asked the DEA to confirm this agreement but has not received a response as of yet.

The company only has two employees a Chief Executive Officer and a Chief Financial Officer. No one on the board has any cannabis experience whatsoever and mostly comes from the automotive industry. Plus, the company is already involved in two lawsuits one of which is involving the company’s former CEO John Fikany. Terry Rafih is the Chairman of the Board and Edward Robinson is BGC’s Chief Executive Officer and Director. Robinson was the Chief Executive Officer of BMW Financial Services for the America’s Region from April 2005 to December 2016. Douglas Bates resigned as Chief Financial Officer in March 2022. Saleem Elmasri was appointed as his replacement in March 2022.

DEA Is the Customer

“We plan to sell cannabis to research institutions pursuant to our conditional approval from the DEA. Sales of THC cannabis products will be made only via bona fide supply agreements from existing DEA registrants, and not directly to consumers. Following final approval from the DEA, Bright Green will receive a Controlled Substances Bulk Manufacturing License to cultivate and manufacture cannabis for sale to federally funded research institutions and other purposes. There is no guarantee that we will receive final approval from the DEA.”

The company has also said that it plans to sell high CBN and CBG cannabis directly to consumers if and when cannabis legalization occurs at the federal level. “We also plan to leverage our cultivation, research, and manufacturing facilities to develop and commercialize approved medical cannabis products to sell to DEA registered pharmaceutical producers. BGC plans to sell mostly extracted oils from medicinal plants grown in these high-tech facilities and processed onsite through a proprietary system that vertically integrates the genetically altered growth of the plants to conform to automated growing systems. Once the two larger greenhouses are constructed, we estimate we can process 5,000 pounds of dry plant biomass per day to produce 220 pounds of distillate, which can create 85,000,000 milligrams of cannabinoids per day.”

Negative Cash

The company must be hoping that by going public it will raise the money necessary for the lofty building ambitions. It had a negative operating cash flow of $1,656,575 in the fiscal year ended December 31, 2021, and $513,337 for the year ended December 31, 2020. The company’s filing states it only has $1.2 million in cash on hand as of the end of 2021.

Greenhouses

The company said it plans to spend $76 million in 2022 on its greenhouse facilities, $161,200,000 in 2023, and another $60,000,000 in 2024 for a total of $297 million.

BGC owns a 70-acre parcel of land, on agricultural property, which includes an existing 22-acre greenhouse structure. The company also owns a 40-acre parcel of land nearby and holds options for two additional 300-acre properties which are adjacent to the owned properties (one is known as the “Candelaria” property, and the other is known as the “Azuz” property). The existing 22-acre greenhouse will be used to cultivate non-cannabis herbs and medicinal plants.

In addition to the existing greenhouse, BGC will be undergoing new construction to establish a state-of-the-art facility headquartered on our property in Grants, NM that will include two 57-acre greenhouses and a two-acre University Greenhouse (the “Fast Start University Greenhouse”) to begin housing our cannabis research, development, cultivation and manufacturing operations. This first greenhouse facility will have a production capacity for 50,000 cannabis plants at all times of differing maturity levels. Additionally, we estimate we will harvest approximately 300,000 mature plants per year (with multiple harvests per year).

The Fast Start University Greenhouse will house our research and development facility pursuant to potential partnerships and other arrangements with leading U.S. universities. The Fast Start University Greenhouse is expected to be complete by October 2022 though there may be delays due to global supply chain issues. “Our first harvest will be complete approximately two months from the date of completing construction. We will take a phased approach to the build out of Phase 1 and Phase 2 and will plant intermittently as phases of each greenhouse reach completion with estimated planting dates to be completed in tranches as follows: March 2023, September 2023, March 2024, September 2024.”

Aurora Larssen

The BGC process says it will draw on expertise from Aurora Larssen Projects, which has completed over 50 fully legal cannabis projects in jurisdictions throughout the world. However, BGC “has not entered into a formal agreement with the company.”  Aurora Larssen is owned by Aurora Cannabis (NASDAQ: ACB). BGC says it will start with tissue cultures from Nordic Supreme, which will provide proven cannabis genetics from Denmark, and then have best practices developed by Aurora Larssen.

 

Lawsuits

The company is already facing two lawsuits before even getting started. These cases are listed in the company’s filing:

Bright Green Corporation v. John Fikany, D-1333-CV-2020-00231, State of New Mexico, County of Cibola, Thirteenth Judicial District. In this matter, the Company filed a complaint for declaratory judgment against the former acting Chief Executive Officer of the Bright Green Group of Companies, an entity unrelated to the Company, to determine if defendant is entitled to 5,000,000 shares of the Company’s common stock, based on a failure to fulfill agreed-upon conditions precedent to earning such shares from the Company. Defendant counterclaimed and filed a third-party claim against Lynn Stockwell, founder and a director of the Company, and Ms. Stockwell’s husband, for claims including wrongful termination and breach of contract. The Company denies defendants allegations and have set forth arguments refuting defendant’s counterclaims and third-party claims. The case is in the discovery phase. The Company is exploring potential dispositive motions against the counter and third-party claims.

Bright Green Corporation v. Jerry Capussi, D-1333-CV-2020-00252, State of New Mexico, County of Cibola, Thirteenth Judicial District. In this matter, the Company and defendant, a former consultant of BGGI, a predecessor to the Company, have each filed claims for declaratory judgment seeking to determine by court order whether defendant is entitled to (i) shares of common stock in the Company (amounting to no more than 108,000 shares) or (ii) fair market value of defendant’s equity ownership of BGGI. The lawsuit is in early discovery stages, and we are preparing arguments for a summary judgment motion. There are no claims for specific monetary liability against either party.

List of the DEA approved Bulk Manufacturer Marihuana Growers:

Biopharmaceutical Research Company LLC

Groff NA Hemplex LLC

Irvine Labs, Inc.

National Center for Development of Natural Products

Royal Emerald Pharmaceuticals Research and Develop

Scottsdale Research Institute


Dave HodesApril 18, 2022
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12min1790

A group of defendants recently took on the federal government to protect their rights of using the psychedelic ayahuasca in their religious ceremonies. But things didn’t go their way.

The case involved the seizure of ayahuasca and the arrest of members of the North American Association of Visionary Churches (NAAVC), a California non-profit interdenominational association of visionary churches; and Arizona Yage Assembly (AYA), another California non-profit church. 

Opposing them according to their original complaint filed May 5, 2020, were defendants William Barr on behalf of the Department of Justice (DOJ); Uttam Dhillon on behalf of the Drug Enforcement Administration (DEA); Chad F. Wolf on behalf of the Department of Homeland Security (DHS); Mark A. Morgan on behalf of Customs and Border Protection; and Thomas Prevoznik, deputy assistant administrator of the DEA Department of Diversion Control. 

And.. the United States of America.

According to court documents (case 3:20-cv-03098-WHO), here is what happened: On April 22, 2020, NAAVC and AYA were notified that their joint property, a container of ayahuasca ordered for the use of NAAVC and AYA, had been seized by DHS during the customs process. Three other shipments of ayahuasca were allegedly seized by DHS between April and December 2020.

This was an outrageous act, the AYA lawyer said in the complaint because organizers and members of the churches believe that the experience of communion through ayahuasca is “the receipt of Divine Love and wisdom by the congregation.” 

Lawyers said that the administration of sacramental ayahuasca to congregants is protected as free exercise, but that it is “burdened by the proscriptions of the controlled substances act (CSA) and the DEA’s denial of regulatory services to visionary churches; and that the DEA is required to issue a certificate of exemption to AYA, to grant it a DEA number, and to “provide it with all regulatory services necessary to allow the importation and dispensing of ayahuasca to its congregation.”

But the DEA, as usual, is a hard nut to crack. It has a policy of denying regulatory services to visionary churches and refusing all requested religious exemptions from the CSA until and unless compelled by court order—which has happened separately with two Brazilian churches using ayahuasca, according to the complaint.

The DEA doesn’t seem interested in working with churches for the specific needs of religious ceremonies. It has guidance for such a thing, but there are legal trapdoors in it for the organizations who go through that guidance, the AYA/NAAVC lawyers allege. 

DEA’s reports to oversight agencies show no staffing expenditures for employees to consider the needs of churches and religious persons seeking exemptions from the CSA on religious grounds. DEA has no individuals uniquely tasked with evaluating requests for exemptions from the CSA on religious grounds, the complaint noted.

NAAVC and AYA attorneys tried using the first amendment and American history, citing that “diversity of religion gave fertile soil to an attitude of tolerance that, aided by the effort of principled advocates within the religious and legal communities, ripened into the commitment to universal religious freedom that the nation now embraces,” adding that “religious expression, like secular expression, is accorded the highest level of Constitutional protection.”

When DHS seized their ayahuasca shipments, it caused the parties to “suffer the seizure of sacramental ayahuasca destined for sharing with congregations in free exercise of their right to practice visionary communion in sacred ceremony,” the complaint stated. “The dangers of seizures of the sacrament, invasion of religious services, and arrest of church leaders and congregants are clear and present dangers to the visionary church community,” according to the complaint as outlined in court documents.

What really happened, they explained, was classic enforcement overreach by the DEA against churches entitled to exemption. After all, ayahuasca is an herbal preparation that is not listed as a drug of abuse in the 2020 DEA resource guide “Drugs of Abuse.” 

The church’s complaint reminded both parties that the courts have recognized that ayahuasca is almost exclusively consumed in religious ceremonies. “Visionary churches whose sacrament is ayahuasca are using a sacrament that in itself affirms their claim of religious sincerity. The very activity of drinking ayahuasca confirms their religious intent, because it is a demanding visionary experience that delivers rewards commensurate with sincerity.”

Plus, as the churchs’ lawyers pointed out, the DEA had a peyote regulatory system that was devised exclusively for the benefit of the Native American Church (NAC). The DEA established the peyote regulatory system pursuant to statutory authorization. Why not ayahuasca?

The DEA regulatory regime covers the distribution of peyote from its sole point of origin in Texas, where “peyoteros” registered with the DEA collect the sacred cactus and may lawfully deliver it to any Native American who presents a “Certificate of Indian Blood.” 

Neither the Native American Church nor its branch churches register with the DEA, and the last DEA registrant to handle a peyote button in the supply chain is the DEA-licensed peyotero. The NAC and its congregants are not subject to DEA registration or any other regulatory requirements.

So is the DEA saying: Peyote good, ayahuasca bad?

Bottom line: Without ayahuasca, AYA does not have a religious practice to share, and AYA congregants are unable to practice their religion, the complaint stated. The CSA effectively coerces the AYA and NAAVC to act contrary to their religious beliefs by the threat of criminal sanctions. The complaint added that the potential for prosecution under the CSA “places substantial pressure on AYA, its founder, and the congregation to modify their behavior and violate their beliefs, forcing them to choose between either abandoning religious principle or risking criminal prosecution.”

  1. Sounds like a reasonable case from the point of view of AYA and NAAVC. 

But later, as an amended complaint made its way through the district court of the Northern District of California, then got transferred to the District of Arizona, Senior District Judge Roslyn Silver dismissed most of the claims brought against federal and local law enforcement by religious organizations that use ayahuasca in their ceremonies, finding among other things that the plaintiffs haven’t suffered a legal wrong necessary for their Administrative Procedure Act (APA) claim. The APA outlines rulemaking procedures, addresses other agency actions such as issuance of policy statements, licenses, and permits, and provides standards for judicial review if a person has been adversely affected or aggrieved by an agency action.

Additionally, the DEA guidance issue became a sort of deal-breaker. Judge Silver found that the DEA guidance does not require the churches to do anything, or prevent them from doing anything, and therefore has not caused an actual or imminent injury. That’s not what the AYA/NAAVC lawyers thought in their original complaint filing. “The DEA’s use of the guidance as a ruse to present the appearance of a legitimate path for visionary churches to obtain regulatory services was an act of conscious indifference that caused compensable injury to the civil rights of plaintiffs.”

The DEA claims the churches lost their case due to procedural error on the part of the churches; the churches say that the DEA is sidestepping its role in regulating and managing the use of ayahuasca in religious ceremonies, and appears to be holding onto obstacles for any U.S. church to legally use ayahuasca. 

This case helps illustrate, once again, that reforms are needed at the DEA to handle psychedelics, as they work through clinical trials, get regulatory help from the FDA, and continue to be a legal part of certain indigenous religious ceremonies dating back hundreds if not thousands of years.

It may take some time. In fact, right now, the DEA is blocking access to psilocybin for terminal cancer patients, and advocates are planning protests May 9 at the DEA headquarters in Washington, D.C., citing the Right to Try Act that allows terminally ill patients to seek drug treatments.


Dave HodesMarch 4, 2022
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When you see various agencies of the U.S. government getting involved in psychedelics, or changing their stance even a little (such as the DEA), that signals that the industry has hit its stride. 

Avenues of development open up, investor confidence increases, and researchers sense the ability to achieve goals that not only science but government supports. It begins to feel like everyone is on the same page. 

Here’s a look at what various government agencies are doing about psychedelics:

 

DEA. The Drug Enforcement Administration seems to want to help the psychedelics industry more than ever, but can’t help adding caveats about what that progress looks like. For example, the DEA reported in the Federal Registry on October 18, 2021 that there has been a significant increase in the use of schedule I hallucinogenic controlled substances for research and clinical trial purposes (MDMA and psilocybin chief among them), and that it has approved new applications for schedule I research registrations and new applications for registration from manufacturers and corresponding quota applications to grow, synthesize, extract, and manufacture dosage forms containing specific schedule I hallucinogenic substances for clinical trial purposes. The DEA also reported that it supports increased production quotas proposed for 2022 compared with production quotas for these substances in 2021. That’s good news for the industry—followed by more bad news. On January 14, 2022, the DEA proposed placing five tryptamine hallucinogens(4-OH-DiPT, 5-MeO-AMT, 5-MeO-MiPT, 5-MeO-DET, and DiP) on schedule I of the Controlled Substances Act. If finalized, this action would impose the regulatory controls and administrative, civil, and criminal sanctions applicable to schedule I controlled substances on anyone who handles (manufacture, distribute, reverse distribute, import, export, engage in research, conduct instructional activities or chemical analysis with, or possess), or proposes to handle these five specific controlled substances. That could be a problem for Field Trip, a psychedelics therapy company. “Field Trip’s FT-104 is a prodrug of 4-OH-DiPT, so this will add some paperwork and delays to their efforts in the U.S.,” Matt Baggott, co-founder and CEO of Tactogen, a pharmatech company, wrote in a tweet about the DEA news.It’s worth noting that HHS provided DEA with an analysis of these compounds in 2012 and DEA failed to act until now. This raises the question of whether this scheduling is in response to the increased interest in psychedelic medicine.”

 

FDA. Probably the most active government psychedelics supporter is the Food and Drug Administration because of the critical role it plays in assessing any drug that wants to be FDA-approved and sold to the public. The agency has picked up the pace in its work with psychedelics. But it is still charged with an exceptional sense of prudence when working to legitimize novel compounds. In a commentary published in the American Journal of Medicine in January, Attorney Matt Lamkin, associate professor at the University of Tulsa College of Law, discussed the role of the FDA as research into psychedelics explodes. “Incorporating psychedelic drugs into clinical practice will require peeling back multiple layers of legal prohibition, clarifying prescribing guidelines, and developing treatment models that work for drug makers, physicians, and payers.” He went on to cite various achievements of the FDA and psychedelics: granting breakthrough therapy status to expedite the development and review of multiple psychedelic drugs; approval in 2019 of esketamine as a therapy for treatment-resistant depression; the promising results from an FDA-approved phase 2 trial of psilocybin as a treatment for major depressive disorder; and in June, when researchers published results from a phase 3 trial—the final phase before seeking FDA approval—studying 3,4-methyl-enedioxymethamphetamine (MDMA) as a treatment for posttraumatic stress disorder. Still, Lamkin was cautious about how and what the FDA could do. “Although the psychedelic research revival is yielding promising results, challenges remain before these drugs will find their way into clinical practice. Yet this plodding process could enhance the likelihood that these therapies will actually take root,” Lamkin wrote. “Given the longstanding skepticism toward psychedelic interventions, moving too swiftly might risk a backlash that could further stall research. Proceeding both with caution and openness offers the best hope for harnessing the potential benefits of these drugs while mitigating their risks.”

 

NAS. The National Academies of Science, Engineering and Medicine is focusing more attention on the psychedelics arena. For example, on March 29, the NAS will be conducting a workshop exploring psychedelics and entactogens as treatments for psychiatric disorders. The NAS noted on its website about the workshop that, with activity and interest in this field continuing to grow, the workshop “will provide a venue to explore strategies for harnessing the potential of these agents to combat mental illness.” Invited speakers will discuss the neurobiology of the therapeutic effects, strategies for optimizing the safety, efficacy, and patient stratification, and lessons learned that may help the identification of new classes of therapeutic agents. The workshop will explore the unique challenges and considerations presented by compounds that induce profound changes in consciousness, including those related to clinical trial design, medical ethics, and the psychosocial contexts of drug administration. The workshop is sponsored by the Department of Health and Human Services and the National Science Foundation.

 

NIH. The National Institutes of Health discussed psychedelics favorably at the National Institutes of Health’s FY22 Budget and the State of Medical Research hearing before the Subcommittee on Labor, Health and Human Services Education and Related Agencies on May 26, 2021. “I think as we’ve learned more about how the brain works we began to realize that these are potential tools for research purposes and might be clinically beneficial,” Francis Collins, director of the NIH said, referring to psychedelics such as psilocybin and MDMA. Collins said there has been a resurgence of interest in psychedelic drugs, which for a while “were sort of considered not an area that researchers legitimately ought to go after.” Additionally, on October 20, 2021, Johns Hopkins Medicine announced that the National Institute on Drug Abuse (NIDA) within the NIH, had awarded a grant of $4 million to fund a study using psilocybin as a therapeutic agent for smoking cessation. It is the first grant awarded by the United States government for research on psilocybin for tobacco use in 50 years. The multi-site, three-year study will be led by researchers with Johns Hopkins Medicine in collaboration with researchers at the University of Alabama at Birmingham.

 

NSF. The National Science Foundation is stepping up its support of psychedelics studies. One example is a study on how psilocybin and LSD work on brain activity, funded in part by an NSF grant for a six year study of various interdisciplinary training elements for complex networks and systems. 

 

USDA. The U.S. Department of Agriculture is on the lookout for ketamine. According to a Consumer Reports analysis of data from the Food Safety and Inspection Service, a branch of the U.S. Department of Agriculture, trace amounts of ketamine may have appeared in the U.S. meat supply more often than was previously known, pointing to new testing technologies that can better show what’s in meat today. The data for Consumer Report’s assertion came from the USDA’s Food Safety and Inspection Service (FSIS), the agency responsible for ensuring the safety of the U.S. meat supply. Emilio Esteban, chief scientist for the FSIS, said that the results should be discounted because they came from unconfirmed screening tests. “These results are credible enough that you would expect the government to take the warning signs seriously,” says James E. Rogers, Ph.D., who was a microbiologist at the FSIS for 13 years before becoming director of food safety research and testing at Consumer Reports. “You would hope the results would prompt the agency to look into why these drugs may be present, what risks they could pose, and what could be done to protect consumers.”


StaffSeptember 2, 2020
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6min1660

Editors note: This is a guest post by Robbert Dean.

In the middle of August, the US Drug Enforcement Administration (DEA) issued an interim rule which is a treat to the cannabinoid hemp market and could impact hemp pricing. Operators in this space including farmers, traders, and extractors are now racing to determine how this will impact their business and what they can do about it. Operators are facing risks and are not in a position to take the threat to their operations lightly. 

At issue is that some of the extracts that are produced can naturally exceed the legal level of hemp above 0.3%. As hemp flows through the process of becoming a final product, like CBD, is becomes compliant through dilution and blending. Despite this supply chain mechanism, there remain hundreds of thousands of kilos of crude CBD listed a schedule 1 narcotics in DEA possession. 

According to The Jacobsen, the destruction of a Willamette Valley Oregon business came at the hands of the DEA as they were forced to liquidate after spending hundreds of thousands of dollars in legal fees. The Oregon company Key Compounds used the extract from a Massachusetts company Phasex, which caught the attention of Albany police. The extraction facility was raided and charges were brought which cost the company 7-million dollars according to The Jacobsen. 

Are States Rights Federally Enforceable

The issue at hand is whether state rights enforceable. Can states forge their path with regards to CBD policy? The DEA appears to be willing to ignore how individual states are handling CBD laws and making their own interim decisions. If the DEA takes an antagonistic position, seeing hemp-derived or organic hemp cannabinoids as an illicit industry using health and wellness as a mask to distribute narcotics, they may see some political support erode due to an outdated, ideological, posture.  This could be the case as early as November if the White House and Senate flip.

The prospects for CBD for states may provide the backdrop for additional state legislation. Some might draw on other states which only have adult-use policies to protect the new industry. This leaves the issues to the DEA to determine enforcement priorities but also creates a fragmented hemp market. 

There are several ways to attack the current policy as in direct opposition to the intent of the 2018 Farm Bill, through nuanced positions on wet/dry content language in current hemp legislation.  If left in place though, the policy poses an existential threat to the cannabinoid segment, undoubtedly giving rise to the black market.  

Extractors are likely to prioritize remediation to mitigate risk.  Depending on the process, this can be costly and incredibly time-consuming, but dilution is another option. This would mean that extractors would attempt to mitigate the content they provide at the outset to comply with Federal law. Those with in-house remediation have a distinct advantage.  Biotech companies are working to produce proprietary hemp genetics, along the lines of their nicotine-free tobacco, maybe in the best position if the DEA’s strict interpretation stands.

The Bottom Line

The upshot is that the DEA and states across the US have a different interpretation of what is legal in the Hemp world. This scenario also plays out in the Marijuana industry where several states make weed recreationally legal, but it is not legal federally. The DEA is in a position to generate strife at the state level and politics will likely play a pivotal rose ahead of the 2020 election which could change the landscape for many farmers, traders, and extractors who are betting that the hemp industry has further upside and profitability in the years to come.


StaffMarch 24, 2020
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3min670

Late last week, the Drug Enforcement Administration (DEA) and the Department of Justice announced action to further expand opportunities for scientific and medical research on marijuana in the United States.

The Notice of Proposed Rulemaking was filed for public inspection on March 20.  The proposed rule was then published in the Federal Register on Monday, March 23.  The new approach will expand opportunities for marijuana growers who seek to grow marijuana for research purposes and outline the agency’s proposed process for administering the new program, consistent with applicable law.

“The Drug Enforcement Administration continues to support additional research into marijuana and its components, and we believe registering more growers will advance the scientific and medical research already being conducted,” said DEA Acting Administrator Dhillon.  “DEA is making progress to register additional marijuana growers for federally authorized research, and will continue to work with other relevant federal agencies to expedite the necessary next steps.”

This proposed rule will result in additional registered growers and a larger, more diverse variety of marijuana available for research. The new regulations will enable DEA to evaluate each of the 37 pending applications to grow marijuana for research under the applicable legal standard and conform the overall program to relevant laws.

The release of this Notice of Proposed Rulemaking is the latest and most significant action taken to expand the number of registered marijuana growers in the United States and underscores the federal government’s support for scientific and medical research with marijuana and its chemical constituents.

Since the beginning of this Administration, there has been a 58 percent increase in the number of active researchers registered with DEA to conduct research with marijuana, marijuana extracts, and marijuana derivatives – from 377 in January 2017 to 595 in March 2020. At present, more researchers are registered to conduct research on marijuana, marijuana extracts, and marijuana derivatives than on any other schedule I substance in the United States. More than 70 percent of DEA’s total schedule I research registrant population is registered to conduct research on these substances.  To accommodate this growth in research, DEA has increased the annual production quota for marijuana by 575 percent – from 472 kilograms in 2017 to 3,200 kilograms in 2020.


Debra BorchardtSeptember 27, 2018
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5min540

The Acting Administrator of the Drug Enforcement Administration has placed FDA-approved drugs that contain CBD derived from cannabis and no more than 0.1 percent tetrahydrocannabinols  (THC) in schedule V. GW Pharmaceutical’s (GWPH) Epidiolex had been a schedule I controlled substance, with this new directive Epidiolex (and any generic versions of the same formulation that might be approved by the FDA in the future) will be a schedule V controlled substance.

Schedule five drugs are considered to have a low level of abuse and include substances like Robitussin cough syrup or Lomotil diarrhea medicine.

The order made it clear that other cannabis products would remain in the schedule 1 category. The statement said, “As further indicated, any material, compound, mixture, or preparation other than Epidiolex that falls within the CSA definition of marijuana set forth in 21 U.S.C. 802(16), including any non-FDA-approved CBD extract that falls within such definition, remains a schedule I controlled substance under the CSA.” The document is scheduled to be published on September 28, 2018.

The order also said, “Now that Epiodiolex has been approved by the FDA, it has a currently accepted medical use in
treatment in the United States for purposes of the CSA. Accordingly, Epidiolex no longer meets the criteria for placement in schedule I of the CSA.”

The order went on to stress that CBD material, “which includes, among other things, a drug product containing CBD extracted from the cannabis plant, is a Schedule I drug under the Single Convention.”

Dr. George E. Anastassov, Chief Executive Officer of AXIM Biotechnologies remarked, “Today’s news is an important step for the pharmaceutical cannabinoid industry. It signifies an understanding on behalf of the regulatory agencies in the United States, such as the FDA and DEA, that cannabidiol (CBD) has therapeutic potential and a very low potential for abuse and misuse. However, this applies ONLY to Epidiolex, i.e. to the molecule contained within this particular formulation. Otherwise, CBD still remains as a Schedule I controlled substance and the current classification is non-applicable to the rest of the products available on the market.”

Thoma Kikis, Chief Communications Officer of Kannalife Sciences said, “The DEA’s rescheduling of Epidiolex from a Schedule I to a Schedule V controlled substance gives cannabidiol (CBD) more credibility and recognition as a treatment in the U.S. that does, in fact, have medical value. This is a watershed moment for the cannabinoid industry, and very encouraging for Kannalife Sciences and the work we have done to research and develop our own CBD-derived molecule (KLS-13019) for the treatment of diseases with unmet medical needs, such as Chemotherapy-Induced Neuropathic Pain (CINP), Hepatic Encephalopathy (HE), and Chronic Traumatic Encephalopathy (CTE). However, there is still more work to be done.”

GW Pharmaceutical stock jumped over 8% on the news to lately trade at $176.


Debra BorchardtSeptember 20, 2018
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8min1120

Tilray Inc. (TLRY) has been somewhat a source of pride in the cannabis community, listing on the NASDAQ (NDAQ) with a successful Initial Public Offering (IPO). It’s a well-run respectable company with strong sales and an enviable portfolio of brands.

Two things have happened this week with Tilray. The stock went on a ridiculously crazy ride that even seasoned stock traders shook their heads at. A stock does not run up a chart like that without some sort of downside response. The second thing that happened was the Drug Enforcement Agency approval for Tilray to bring in medical marijuana for a scientific study.

Stock Moves

Cowen & Co. initiated coverage on Tilray’s stock with an outperform rating on August 13 and a target price of $34. This week the stock hit $300 at one point. Cowen analyst Vivien Azer defended her $34 price target at the time, assuming readers would question how she arrived at that number. No doubt Azer is probably wondering if she has to downgrade purely based on valuation.

Tilray began the week at $117, which was already a fairly rich valuation. It closed at $154 on Tuesday and then all hell broke loose. It opened at $233 on Wednesday, shot up to $300 at one point, dropped to $151 and then the trading was halted during the day. It eventually reopened and the stock closed at $214.

The wild gyrations had short sellers screaming now was the time to sell. Cannabis stocks were being compared to bitcoins and predictions of a dot-com bust were all over the internet. This is the part that hurts all cannabis stocks. According to S3 Partners, short sellers have lost $626 million since the start of August betting against cannabis stocks.

The company wrote, “Short sellers have been very active in the cannabis sector this year, with short interest climbing to $1.5 billion spread over 33 stocks and ETFs. This is a $458 million increase in short interest, +44%, since the end of the second quarter. Most of this increase was centered on increased short activity in Canopy Growth (CGC) and Tilray, which were up $514 million in just over three months.”

The cannabis industry tends to trade in lockstep. When one stock does well, they all tend to move higher. Similarly, when one struggles, they trade down in sympathy. Tilray’s seesaw moves hurt the industry as all of the companies get lumped into one. Comparing an industry with real product and real revenue to a digital cryptocurrency that doesn’t exist except in a computer is just well, dumb. It is making the comparison purely based on a percentage of increase in value. It makes a good headline for the short seller but is based on one metric alone.

There is no argument that the valuations have gotten ahead of themselves. Market values at 150x revenue? That’s not sustainable. Most of the industry insiders agree with this unless of course, their company stocks have stayed low. Then they stare wistfully at those unrealized gains.

Market stability is something everyone would prefer. Wild rides aren’t good for cannabis stocks.

DEA Just Says Yes
Tilray Inc. announced on Tuesday that the U.S. Drug Enforcement Administration (DEA) granted approval to import a cannabinoid study drug into the U.S. from Canada for a clinical trial at the University of California San Diego Center for Medicinal Cannabis Research. The agreement had been in the works for two years and plans on examining the safety, tolerability, and efficacy for a condition known as Essential Tremor.

According to the statement, “Tilray is providing a cannabinoid formulation for the trial in capsule form, which will allow researchers to test an investigational drug product containing two active ingredients extracted from the cannabis plant, cannabidiol (CBD) and tetrahydrocannabinol (THC).  It is expected to begin in early 2019 with financial support from Tilray and the International Essential Tremor Foundation.”

At first glance, this seems like a huge positive for the cannabis industry. Cross-border cannabis would make life so much easier for the companies that have operations in both countries. However, one wonders how this makes all the medical marijuana companies in the U.S. feel?

Rep. Matt Gaetz tweeted, “Unbelievable… gives approval to import compounds from Canada, while AG Sessions is sitting on 2 dozen+ applications from domestic manufacturers. What happened to “buy American, hire American”? The Florida Republican authored a bill that would require the granting of more cannabis cultivation licenses.  The licenses would be for more cannabis to be grown for research. The bill was approved but not voted on.

Considering the amount of cannabis that is grown in California and that the state has legalized medical marijuana for the last twenty years, UC San Diego couldn’t find a company in its home state to provide product for this study?

The Justice Department is handing out lifetime bans to people in Canada that work in the cannabis industry at the border, but then the DEA (which is housed under the DOJ) approves a cross-border transfer of cannabis? The same DEA that also considers cannabis to have no medicinal benefit?

Stability

The standard line in the investment community is that the market hates uncertainty. Roller coaster moves and short seller attacks hurt all cannabis companies. Even the big moves higher.

Stability in rules and regulations is also a plus. The industry has accepted that it can’t cross state lines, much less country borders. Then the DEA throws a wrench into this machine. It’s a like a kid yelling, “new rule, new rule.” Only, who does the new rule benefit? Will the Canadians similarly offer a U.S. cannabis company a chance to export its product for testing? Would the DEA allow that?

One thing can be certain in the cannabis industry, just when it thinks the rules are set – they change.


Video StaffMay 4, 2018

3min580

May the fourth be with you!

The DEA won the case regarding Cannabidiol or CBD from the Hemp Industries Association. The Ninth Circuit appeals court ruled in favor of the DEA that wants to classify CBD as a schedule 1 controlled substance. The DEA has long believed that CBD is a marijuana extract and since marijuana is schedule 1 then so is CBD. The agency made a rule change in 2016 that worried CBD makers at the time, which the DEA talked down. Now it looks as if the DEA is setting itself up to go after CBD makers.

The Green Organic Dutchman went public this week as its shares began trading on the Toronto Exchange using the ticker TGOD. The company’s shares which were priced at $3.65 jumped almost 10% in the first three hours of trading as the company raised $115 million. The stock was lately trading at $4.06.

Earnings continue to roll out this week.

Cronos Group (CRON) reported fourth-quarter sales of $1.6 million and annual sales of $4.1 million. The company also delivered a gross profit for 2017 of $7.2 million versus last year’s gross profit of $1.9 million. The Nasdaq listed company has really turned a corner with net profits for 2017 of $2.4 million over last year’s loss of $1.1 million.

Namaste Technologies (NXTTF) reported sales for the fourth quarter were $5.6 million and gross profits of $1.9 million. The company also announced this week that it was acquiring Findify, an A.I. powered e-commerce platform. The idea is that the product will help Namaste recommend the right products for its clients.

Sunniva (SNNVF)  reported $16.1 million in annual revenue for 2017, but still delivered a net loss of $18.5 million. The losses stemmed from C$14.3 million in selling, general and administrative expenses and then the company also incurred costs of goods sold of C$9.4 million due to the contract physician compensation in NHS and product manufacturing costs in FSD.

 

 

 


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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