legal Archives - Green Market Report

Adam JacksonAugust 5, 2022
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7min2950

Health Canada recently published a long-awaited report that experts say provides a regulatory pathway to expand the country’s cannabidiol (CBD) market.

CBD — Delta-9 THC’s chemical cousin — is a hemp-derived ingredient that can be converted into products with a variety of types and formats such as oils, gummies, capsules or topicals. It cannot produce a THC high and is typically marketed to relieve pain and anxiety, as well as insomnia.

The recommendation stems from a 2019 request by Health Canada to solicit feedback about the potential market for non-prescription health products containing cannabis.

Canadians can currently purchase CBD products through a licensed cannabis retailer or through prescription by a doctor, though the report written by the Science Advisory Committee on Health Products Containing Cannabis, an independent body, lays the foundation for purchasing them over the counter at common local retailers.

The absence of a regulated CBD regime in Canada has created confusion for consumers — fueling an illicit market that supplies unauthorized CBD products Canadians have difficulty finding at licensed dispensaries due to regulatory restrictions hemp faces under the Cannabis Act.

Retailers also have strict limits as to how they can market these products. CBD and other hemp derivatives are subject to the same restrictions as THC-oriented products, “which makes it almost impossible to build brand identity,” said Omar Khan, Senior VP of Corporate & Public Affairs at High Tide Inc.

“It is a bit of an onerous process for somebody who is not a frequent cannabis consumer,” he said. “Opening it up and allowing these products to be sold in broader retail settings I think — and we think — will help translate what is an existing demand.”

A lack of research has stifled the committee’s ability to draw conclusions on guidelines. The report said committee members agreed that “implementing a less complex regulatory framework and providing easier access to quality products to conduct studies would support the research community.”

Studying CBD in Canada currently has strict clinical trial standards and requires research and development licenses under the country’s Cannabis Act.

Sean Karl, a Vancouver-based supply-chain consultant who specializes in cannabis logistics, said that recognition for better ways to study CBD is “really encouraging.”

“We’re excited about potentially kickstarting a significant clinical trial that we had to put on ice because the sponsoring institution’s legal department won’t touch it,” he said.

CBD Is Safe

While the advisory panel concluded that CBD is “safe and tolerable for short-term use (a maximum of 30 days) at doses from 20 milligrams per day to a maximum dose of 200 mg/day,” the report recommended that separate avenues be taken to measure CBD products depending on their form and application.

“I think that the dosing guidelines reflect a fairly cautious deployment of the precautionary principle,” said George Smitherman, president of the Cannabis Council of Canada.

As stakeholders and advocates begin to provide input on the path moving forward, industry interests reflect a range of national and regional groups with varied priorities often based on the products they produce and their positions in the supply chain.

Cory Pala, Director of Investment Relations at CBD-maker Charlotte’s Web (OTC: CWBHF) said that the company — which is based in the U.S. — is “particularly excited” about the recommendation.

Charlotte’s Web cannot export its products to Canada under current law “which is sort of ironic” considering it is federally legal in both countries, he said, so it has partnered with cultivators in the country instead. The new recommendation presents a juncture for the company.

“In the US, we have 2,500 different competitors that have similar products,” Pala said. “But in Canada, we have maybe half a dozen, if that. And so it’s really, really compelling to us as a market opportunity. This is big for multiple reasons.”

Smitherman wonders how local dispensaries in Canada will feel about competing with general retailers.

“I think that there is going to be an articulation of a voice from within the currently regulated landscape that says, hey, this was an important part of my business,” he said. “Maybe it’s not the biggest part of my business, but my business is tough, so what are you going to do to actually make sure that — as this regulatory model evolves — the Canadian dispensary experience can evolve alongside it so that dispensary owners aren’t faced with loss of business in the CBD vertical.”

Such discussions will take place during stakeholder sessions in the coming months.

Despite the hefty task ahead, those with a stake in the process are excited — even if cautiously optimistic — about the future. Health Canada still has to decide on the regulations and figure out whether or not it actually wants to move in that direction before seeking approval from the Canadian government.

“Patience is the call of the day on this one,” Khan said.


Julie AitchesonApril 18, 2022
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7min1961

Legal cannabis loopholes are sparking both innovation and creative evasion in today’s cannabis industry, and a host of law professionals are taking pains to elucidate them for clients in cannabis who risk both profit and loss by operating within them. After doing our due diligence with some of the cannabis industry’s top law professionals, Green Market Report has composed a list of the top five legal loopholes keeping things interesting in cannabis right now.

CBD

According to Morgan Davis, founder and CEO of Davis Legal, CBD products for food and beverage consumption present one of the most commonly exploited legal loopholes. CBD is still not FDA-approved, but consumables are commonly available everywhere from gas stations to Whole Foods and online retailers. “There are some states that have enacted regulations allowing for hemp and CBD products for human consumption,” Davis says, “but a majority have not. Nevertheless, a consumer can buy hemp and CBD food and beverage products for consumption in almost every state in the U.S.”

David Feldman, CEO of cannabis strategic advisory firm Skip Intro Advisors, puts Delta-8 at the top of his loophole list, and he’s not alone. Legal Associate Demetria Hamilton, in a blog post for law firm Bryan Cave Leighton Paisner (BCLPDigest.com) states that while Delta-8 THC is derived from CBD extracted from hemp plants and has been found to provide a “high” distinct from Delta-9, it still falls under the Farm Bill’s definition of “hemp”. “In other words,” she writes, “while Delta-8 is another name for Tetrahydrocannabinols, its presence in any quantity provides a risky grey area for brave cannabis producers to work-and profit- within.”

Sex & Wellness

Both Feldman and Davis are of the opinion that the medical marijuana market is another realm where cannabis businesses find workarounds to get their products into consumers’ hands. Davis cites “period care”, such as CBD or THC tampons, which are not FDA-approved and, as “medical devices”, are prohibited from including THC or CBD yet are still available online and throughout the country. Sex and wellness is another avenue for loopholes.  As “medical devices”, sex toys are regulated by the FDA, thereby prohibiting cannabis as an additive. Cannabis is also not approved by the FDA to enhance the sexual experience or treat sexual dysfunction, yet products (e.g. THC strains specifically targeted to enhance sexual experience, infused lubes, cannabis condoms, etc.) that address exactly those needs are gaining in popularity. “The loophole,” says Davis, “is that most of the companies either sell their product as a topical or “novelty item” to avoid the medical device issue. Add in some creative marketing to avoid being prescriptive and, so far, these products have avoided much scrutiny or enforcement.”

Both Davis and Feldman agree that “gift culture” has long been used as a means of circumventing legal restrictions by including cannabis gifts with a different purchase, such as a sticker, patch or poster advertising the company. A “donation economy” offers a similar workaround, and one that has been utilized in California’s medical market for twenty years. Customers make a donation in an amount equivalent to the cost of a cannabis product, then receive the product as a “free gift” as a token of appreciation for the donation.

Hospitality

“Cannabis hospitality” is a sector of the market where legal loopholes are helping cannabis consumers enjoy products outside of their homes. Restaurants or lounges may offer consumption options like joints or edibles without possessing the requisite retail license, while hotels, event spaces and even campgrounds can take advantage of private property laws to allow them to host cannabis consumption on their property. This does not extend to national parks and property owned by the Bureau of Land Management, which adhere to federal regulations and where cannabis and certain CBD products are illegal at all times. State parks may be more flexible depending on the state’s marijuana regulations. For example, information officer for California State Parks Adeline Yee confirms that “persons 21 and older may possess up to 28.5 grams of marijuana” at California state parks. Smoking or ingesting cannabis in California state parks is still illegal, however, and may only occur on private property.

Morgan Davis observes that some of today’s hottest trends in cannabis are operating in many of these legal grey areas, driven by those who choose to believe that if something is not very specifically prohibited by law, it is legal. “It’s still an exciting interval to watch,” Davis says. “The first one through the wall might get the bloodiest, but they’ll clear the path for all of the monumental ways this plant can transform lives.”

 


StaffJuly 19, 2021
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12min1120

Editors Note: This is a guest post.

Cannabis has been a topic of discussion for ages. Its legalization is a topic of conflict around the entire world. Some people believe it should be legalized for recreational and medicinal purposes, whereas some don’t. But all of these laws and rules are in the government’s hands. 68% of American residents favour its legalization and hope for it to come through under President Joe Biden. It has already been legalized in 15 states entirely and in 36 states for medicinal purposes. Now, with the news of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act possibly taking place in the USA, speculations of its legalization are higher.

The MORE Act was introduced in 2019 with the thought of removing cannabis from the controlled substances list and expunge prior criminal convictions and reforms for the new laws. With its reintroduction under the presidentship of Joe Biden, several reforms to this Act were introduced which weren’t there previously. The MORE Act provides funds via two significant grants. The Community Reinvestment Grant provides funding for services for legal aid of cannabis, and the Cannabis Opportunity Grant allows companies and small businesses in the marijuana field to open up. This Small Business Administration aid will be given to gain access to marijuana, especially for employment by those who were affected due to the ‘War on Drugs’ campaign.

When the MORE Act was released initially, it did not include the people affected by the ‘War on Drugs’. Now, with the new reforms taking place, not only were their criminal records expunged but also that they were provided funds to startup businesses as a means of employment. This Act is backed by around 150 other organizations in the country, including the Drug Policy Alliance and by 120 House cosponsors, and by whopping voters. With so much support from the federal level, the transactions related to marijuana can also be approved. All of this is possible only if the ActAct is passed and converted into a law. 

Joe Biden had claimed that individual states should decide the legality of marijuana in his 2020 campaign, which continued through 2021 and legalized marijuana in 5 more states. Right now, if Joe Biden does stand by his statement and legalize cannabis federally, the economic growth is going to be exceptional and exponential only. Not only that, but medical usage will also increase, which is beneficial to a lot of diseases and can cure some forms of mental illnesses too. Most of this legalization campaign supporters put forth points such as medicinal benefits, considerable tax revenue, and safer usage with regulation. 

The news of legalization has got many companies that sell weed to get prepared for a larger market and reach a wider audience. These businesses can legally sell and transact using online payment modes as well. Many of these weed companies have large investors, but with the legalization, there will be a rise in investors, the stock market, and profits. Companies that not only sell marijuana but also other equipment such as bongs, vapes, and more have gained a larger audience and more profits. All of these businesses will also get legalized with the legalization of cannabis. The MORE Act will support them and other small businesses to achieve employment means not just for them but also for others. Online websites such as Lookah that sell bongs, vapes, and the famous dab pens have seen an increase in sales and gotten a more extensive list of customers from all over the world. 

Before, the federal laws were causing a lot of harm to all the marijuana companies as they weren’t legalized. Even in the states that it was, they could not achieve complete freedom or more customers due to it not being federally legal. Big corporations such as Canopy Growth and Cannabis Wheaton could start without funds or loans from banks, but small businesses could not do so. These big corporations have profited due to the same reason, but with the federal legalization, small businesses will also see a rise and become potential competitors for big corporations.

Unfortunately, these are all just speculations, and there is no guarantee that these laws will be passed. But there are still specific rules that may not allow the Act to be passed into a bill. We’ve seen the various benefits it has for recreation or medicines and the economic and employment field. Thus, it is necessary to legalize marijuana federally for the betterment of the country. Hopefully, Joe Biden will look into the technicalities soon and open up a new world of businesses in the USA. 

 

Prospects for Legalization of Cannabis

 

Cannabis legislation has been a topic of discussion for ages. Its legalization is a topic of conflict around the entire world. Some people believe it should be legalized for recreational and medicinal purposes, whereas some don’t. While all of these laws and rules are in the government’s hands, there is immense pressure from public opinion to consider. 

68% of American residents favor its legalization and hope for it to come through under President Joe Biden. It is already legalized in 15 states entirely and in 36 states for medicinal purposes. Now, with the news of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act possibly taking place in the USA, speculations of its legalization are higher.

The MORE Act was first introduced in 2019 with the thought of removing cannabis from the controlled substances list and expunge prior criminal convictions. With its reintroduction under the democratic leadership, the ActAct has been adjusted to help gain more significant support in the houses. The MORE ActAct provides funds via two significant grants. The Community Reinvestment Grant provides funding for services for legal aid of cannabis, and the Cannabis Opportunity Grant allows companies and small businesses in the marijuana field to open up. This Small Business Administration aid will be given to gain access to marijuana, especially for employment by those affected by the War on Drugs campaign.

When the MORE Act was released initially, it did not include the people affected by the war on drugs but now, with the new reforms taking place, not only were their criminal records expunged but also that they were provided funds to startup businesses as a means of employment. This ActAct is backed by around 150 other organizations in the country, including the Drug Policy Alliance and by 120 House cosponsors, and by the majority of voters. With so much support from the federal level, there is a big hope this newly amended ActAct will finally be approved. But all of this is possible only if the ActAct is passed and converted into a law. 

Joe Biden had claimed that individual states should decide the legality of marijuana in his 2020 campaign, which continued through 2021 and legalized marijuana in 5 more states. Right now, if Joe Biden does stand by his statement and legalize cannabis federally, the economic growth is going to be exceptional and exponential. Not only that, but medical access and use will also increase, which is beneficial to a lot of people suffering from a range of diseases and mental illnesses. Most of this legalization campaign supporters put forth points such as medicinal benefits, significant tax revenue, and safer usage with regulation. 

The news of legalization has got many companies that sell cannabis and related products to prepare for a larger market and reach a wider audience. 

These businesses will be able to transact business with a broader range of payment options as well. Many of the larger weed companies have big investors. Still, with the legalization, there will be a new influx of money that will drive up the whole sector and have a knock-on effect for supporting industries, such as cannabis paraphernalia, vaping, transportation, finance, and legal fields. 

All of these businesses and services will be legalized with the legalization of cannabis. The MORE Act will support them and other small businesses to achieve employment means not just for them but also for others. Online websites such as Lookah that sell bongs, vapes, and the famous dab pens have seen an increase in sales and noticed a marked increase in the number of wholesale and store clients anticipating the growth to come. 

Until now, only the big companies with prominent backers like Canopy Growth and Cannabis Wheaton could afford the startup costs without turning to bank loans. Still, small businesses were barred from entry due to restrictive legislation and costly licensing. 

These big corporations have profited due to the same reason. Still, with the federal legalization, small businesses will also see a rise and become potential competitors for big corporations with a more level playing field.

Unfortunately, for this vast potential to be achieved, the country’s leadership needs to follow the science and act to guarantee that these laws will be passed and result in a more equitable market for all. 

We’ve seen the various benefits it has for recreation or medicines and the economic and employment field. Thus, it is necessary to legalize marijuana federally for the betterment of the country.

 


Paula CollinsSeptember 19, 2017
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5min730

You’ve experimented with watering, lights, nutrients, soil, and harvesting techniques. Your small, dedicated team has come together like a family, nurturing the development of your product like it is the king baby. You’re finally starting to realize a profit. Suddenly, a key employee hits you with notice of resignation. She has decided to go work for a cannabis producer that is closer to where she lives, and who, coincidentally, is willing to pay her $2 an hour more than you can afford and promise her four nights off a week.

As you begin to snap back from the shock of your close-knit team getting torn apart, you realize: that key employee is about to walk out with a goldmine of experience and training that you gave her. She has intimate knowledge of dozens of processes that are unique to your product line. Suppose she takes all of those thousands of dollars of training you invested in her, and she applies that to the competitor’s benefit?

That’s when you remember: you are covered in most states by local trade secrets statutes, and for the aspects of your business that are non-cannabis related, you have federal protection as of May 2016 with the Defense of Trade Secrets Act (DTSA). Through DTSA and the state-level statutes, a trade secret is anything that you consider to be a secret, and from which you derive profit. In other words – if you say an idea, a design, a process, a marketing plan, a billing process – almost anything — is a secret, and you make money from it, it is protected under trade secrets law!

Trade secrets are exposed at any time in the life cycle of your business, but critical hotspots occur when you tour your facilities with eager potential investors, when you discuss possible mergers and acquisitions with lateral partners, or when a key employee moves to work for a competitor. Cannabis business owners, especially those who are developing and producing products, can take three action steps to protect their trade secrets, but they must be done pre-emptively – long before you see trouble brewing.

 

  • Make clear to all who gain exposure to your business what you consider confidential. You don’t want to proudly display your timers, lights, and watering systems, lest someone spot them and try to duplicate them in their own production lab. Don’t assume that all who smile and shake your hand will play as good sports.
  • Err on the side of caution when you talk to investors. Early in discussions – even before they visit your retail or production operation, have them sign non-disclosure agreements (NDA). It won’t stop them from blabbing to their posse, but it will protect you if the matter gets turned over to the lawyers!
  • Once you have decided that something is considered by you to be a secret and you derive income from it, make sure you take regular efforts to keep it under wraps. If it is an oil extraction process, make sure that the area is kept locked, with limited access, and clear records of the comings and goings of all who gain access.
  • Make sure you have an employee manual that is written down. Outline the physical areas of your operation, and the concepts, ideas, and methods, that you consider to be unique to your operation. Have employees sign that they have read it and consent to it.
  • Some states, such as Colorado, permit non-compete agreements. Non-competes generally do not hold up in court in other states, such as New York.

 

Don’t let the unique features of your business waft into thin air when your key employees leave, or when your potential business suitor takes what he can use from your business and leaves the rest. Identify features of your cannabis operation that are unique, take steps to keep them secret, and make sure that people know what you value as a trade secret.

 

 


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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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