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CONTENTS WINTER 2015
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highlights
INDUSTRY INSIDER
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Volo Trading founders Mark Staiano and Dan Talbot open up about their journey to success.
#NONEWFRIENDS
Cannabis business banking and the inevitable changes that need to happen.
20 Cannabis-Infused Edible Law
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The 50-state breakdown of medible rules and regulations.
EDIBLE Facts AND Fictions
Getting down to titration, testing and the decision whether to inhale or ingest.
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The Future of Cannabis Identities Chemical fingerprinting promises to protect brands and empower consumers like never before.
CannaBusiness IP Legal Tips
Seven intellectual property law tips for cannabusiness entrepreneurs and professionals.
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8 News Bytes 10 By the Numbers 40 Trade 46 Legal 52 Product Highlights
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Vol 1 IssUE 2
Publisher Jeremy Zachary Editor-In-Chief Evan Senn associate Editor Ashley Bennett Editorial coordinator Victoria Banegas Editorial Contributors Hilary Bricken, Jasen T. Davis, Sean Donahoe, David Downs, Sarah Reith, Lanny Swerdlow Art Director Steven Myrdahl Graphic Designers Tanya Delgadillo, Tommy LaFleur Account Executives Callie Belo, Jon Bookatz, Eric Bulls, Kim Cook, Ryan Dunn, Cole Garrison, Gene Gorelik, Yolanda Imoberstag, Justin Marsh, Emily Musser, Beau Odom, Paulina Porter-Tapia, Chris Thatcher, April Tygart Office Manager Iris Norsworthy Office Assistant Angelina Thompson digital media Editor Kimberly Johnson Distribution Manager Cruz Bobadilla CultureB2B Magazine速 is published quarterly and distributes 20,000 copies at over 5,000 locations throughout the United States. No articles, illustrations, photographs, or other matter within may be reproduced without written permission. CultureB2B Magazine速 is a registered trademark. All rights reserved.
Phone / Fax (888) 694-2046 B2B@iReadCulture.com
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CULTUREB2B速 is printed using post-recycled paper.
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news bytes Cannabis Industry Thriving In Uruguay
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ruguay became the first country to legalize cannabis over a year-and-a-half ago, as well as regulate the market. Now, the country is experiencing success and improvement in a number of areas. There is an estimated 20,000 home growers in Uruguay taking advantage of the country’s regulatory efforts to keep cannabis from being sold on the black market, according to the Cannabis Studies Association. About 15 cannabis clubs are currently operating, with each one allowed to cultivate up to 99 plants per club. Many locals, especially entrepreneurs, are embracing the newfound law, such as young businessman Enrique Tubino, “Business is booming. Tourists come looking for souvenirs, and locals come to buy everything you need to grow it and smoke it,” he noted. Once pharmacies are up and running (there is currently no set date), citizens of Uruguay will be able to purchase up to 40 grams of cannabis for their medical needs.
Major Deal Struck To Manufacture Cannabis Products In Jamaica
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Medical Cannabis Is Legal In Georgia
Canada-based company, Timeless Herbal Care (THC), has announced the agreement of a $100 million deal to develop cannabis products in Jamaica to sell international. Only months after Jamaica announced the decriminalization of cannabis, THC hopes to soon be creating more job opportunities through this deal. During the announcement, THC CEO Courtney Betty asked physicians and private sector businesses in attendance to begin considering medical cannabis as a legitimate treatment, “This is not about smoking marijuana, but it is about developing medical products that will be able to help patients” stated Betty. He continued to praise Jamaica as the heart of the cannabis industry. As of this writing, no details have been released regarding any new products that will be made.
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overnor Nathan Deal signed House Bill 1 which that legalizes medical cannabis in the state of Georgia. Effective immediately, patients who suffer from cancer, Crohn’s diseases, Lou Gherig’s disease, mitochondrial disease, Multiple Sclerosis, Parkinson’s disease, seizure disorders and sickle cell disease, can legally possess up to 20 ounces of cannabis oil, as long as their physician approves it. Thousands of Georgia residents are said to be eligible to use cannabis, according to Atlanta Journal Constitution, which also notes that an estimated 17 families have moved from Georgia to other states like Colorado where medicine is more easily accessible for their children. Cannabis oil may be legal in Georgia, but it is still illegal to cultivate cannabis. Families qualified to register for a medical card and other advocates are working to get the law changed. They want the law to allow growers to harvest and distribute cannabis within the state.
First Genetic Study Of Cannabis Published
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anadian researchers from Dalhousie University have completed the very first cannabis genetic study, having examined over 81 cannabis and 43 hemp samples. The study found that the current classifications, often referred to as C. sativa, C. indica and C. ruderalis, are incorrectly labeled., according to PHYS.org. While verifying the exact components of a strain is a common problem, researchers also discovered that there is less of a relation between cannabis strains and the ancestry that is inferred from DNA. Researchers found that one study of a sativa strain sample was identical to an indica strain from Afghanistan, on a genetic level. Hemp, on the other hand, has an obvious genetic difference from cannabis (due to unique breeding). “Right now, the genetic identity of a marijuana strain cannot be accurately determined by its name or reported ancestry. Ultimately we require a practical, accurate and more reliable classification system of this plant,” stated Jonathan Page, co-leader of the study. 8
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Cannabis Ingredient Grown From Yeast
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cientists have discovered a way to make THC, and reportedly cannabidiol as well, from a new strain of genetically engineered yeast. Tests by Hyasynth Bio, the company behind the newfound discovery, took place at the Technical University of Dortmund in Germany. This study follows closely behind similar testing with yeast, which scientists used to create the painkiller hydrocodone. The yeast in these particular tests yielded only a small amount of THC using precursor molecules (instead of simple sugars), but scientists at Dortmund believe this could pave the way to creating synthetic cannabis on an industrial scale. “This is something that could literally change the lives of millions of people,” said Kevin Chen, Chief Executive of Hyasynth Bio.
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BY THE NUMBERS
20,000 The number of home growers who grow cannabis on their property in Uruguay: 20,000 (Source: Ganjapreneur)
100
162
The amount of money, in millions of dollars, agreed upon by Canadian company Timeless Herbal Care Limited, to develop medical cannabis products in Jamaica for the international market: 100 (Source: Jamaica Observer)
The estimated number of cannabis clubs operating in Catalonia, Spain: 162 (Source: The Local ES)
73.5 The number of women who were chosen as Fortune Magazine’s 2015 Most Promising Women Entrepreneur award, one of which is an executive from a cannabis software company based in Denver, Colorado: 8 (Source: Fortune)
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The amount of money, in millions of dollars, which the state of Colorado made from recreational and medical taxes and fees within the first seven months of 2015: 73.5 (Source: The Guardian)
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4 The number of licenses that cannabis cultivation company GrowBLOX Sciences has obtained to operate in Nevada: 4 (Source: Marijuana Index)
175
The number of adults in Iceland who use cannabis, out of every 1,000: 175 (Source: Daily Mail)
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INDUSTRY INSIDER Mark Staiano and Dan Talbot of VOLO Trading
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by R. Scott Rappold
nyone who has ever smoked through a dugout, especially the porcelain cigarette-looking ones that have been around forever, knows they have one major problem. The damn thing always clogs up. For Mark Staiano, it was a serious design flaw. “I’d find a coat hanger or a stick, whatever solution was available,” he said. Then at a New Year’s party in 1996, he asked himself why nobody made a dugout with a poker. And why couldn’t he? The result was the Krypto Kit, a small zippered wallet with pockets for your pipe, lighter, rolling papers and, of course, a poker. He’s sold about half a million of them since. “I really personally like having a portable system and it didn’t exist. It was just a classic ‘necessity is the mother of invention story.’ My solution worked really well. That’s the American way. Next thing you know, you’ve got a product,” he said. Fifteen years later, his company VOLO Trading continues to be a trend-setter in the world of smoking accessories, improving grinders and storage in ways no others have. They’re innovations for smoking enthusiasts by smoking enthusiasts. “We just design stuff for ourselves. We’re a pretty good focus group.”
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In the closet When he started going to trade shows in 2000, cannabis was still very much illegal in every state, so he had to be careful about how he marketed the Krypto Kit. Head shops could be raided at will, so many owners were reluctant even to sell the Krypto Kit, given the word’s connotation with cannabis in some circles. “Not everyone remembers what it was like to try and operate back then. Our marketing was all grass roots, just get it on the shelf and word would spread through wordof-mouth,” he said. Along with smoking savvy he has business savvy, so to ease the concerns, he changed the brand name to RYOT®, which today represents several hundreds skus of category leading products and several patented items. The company was based in Athens, Georgia, but now operates a globally driven business out of offices in the U.S., Canada and Costa Rica. Many of the products cater to the discrete minded—and with cannabis still illegal in most states, it’s good to keep it discrete for the on-the-go smoker. And many have those one or two extra innovations to set them apart from the herd. The patented 14
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RYOT® Super (bat not included) is a dugout style system—with a magnetically secured poker tool and an integrated bottle opener. The poker is secured deep in the body to keep it from making a mess in your pocket. And so on. In an industry which can be very volatile, Staiano has shown remarkable staying power. “We’re one of a handful of companies that brought brands to market in the early 2000s that are really still around and thriving,” said Staiano. Not that there haven’t been hiccups, like in 2010, when the federal government seized $70,000 worth of merchandise.
Volo spent five years and $100,000 in legal fees to recover it. “That was a tough thing to deal with, but we came out of it stronger than ever” said Staiano. “What Customs Border Patrol took from us was basically wooden boxes that we’d been importing for eight years. They’re all handmade in an amazing Taiwanese factory. They weren’t pipes or bongs—which we don’t sell. Coming out of the deep recession in 2010, to kneecap our succeeding business just seemed really dumb.” Despite that setback, cannabis legalization has been great for business. And VOLO recently unveiled what may be its biggest innovation yet.
A great GR8TR™ by Kannastör® An herb grinder, Staiano believes, should not be one-size-fits-all. That’s the inspiration behind the Kannastör® GR8TR™, released this year. “Do you want to roll, use a vape, use a pipe, one hitter? Most users I know tend to use a little of all these. What the GR8TR™ allows you to do is control the consistency of your grind,” he said. With it’s patented interchangeable grinding plates and easy to change screens, Staiano says he sold $100,000
worth in just the first couple weeks of availability. He was asked about the popularity of e-cigarettes and oil vaporizers. Many people who once used a dugout to puff nonchalantly use these devices for subtle consumption today. “I think the herb will never be replaced. You’re talking about such large numbers and dry herb is so embedded. That’s where it all comes from and that’s what most people still want. It’s exciting when you have other ways to consume it. Plus, we’re doing some cool things for the oil and vape market, especially with our RYOT® cases.” he said. He promises plenty of new innovations in the future, ideas from the herb-loving people who make up VOLO and the customers who are encouraged to provide feedback. VOLO has been putting profits back into the business, streamlining and automating to keep up with what seems like an inevitable tide of cannabis legalization. He has his eye on being a $50 million business within five years. “You definitely sense there’s a rising tide. Things have definitely changed and having made it this far these are exciting years.” d
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Why Banks Say No To Medical Cannabis Businesses and How that May Eventually Change by Meital Manzuri
+ Cannabis banking consultant Paula Givens says “capital expenditures” like these are one of several necessary but still legal alleyways for cannabis businesses that are shut out of a basic checking account.
Big Banks Backed Away
We all know that, historically, banks have been unwilling to work with cannabis businesses even in states where it is legal. Why, you ask? . . . Mainly for fear of being labeled as money launderers and putting them at risk of federal racketeering charges. Recently, the American Bankers Association vice president and associate chief counsel, Rob Rowe, expressed, “Marijuana is still illegal under federal law, and if we process funds from a marijuana business and something turns out to be wrong, we risk losing our charters.” As a result, for years, cannabis’ status as a no-no at the federal level forced cannabis businesses into cash-only operations. The problem? Cannabis’ allcash business creates a safety risk and a logistical nightmare. For example, cannabis businesses cannot take care of simple tasks such as paying taxes and payroll without a great deal of effort. Further, without access to bank accounts, medical cannabis businesses often pay sales tax by hauling large bags of cash to the board’s office. This hardly encourages a picture of legitimacy and invites unwanted criminal activity— questionable behavior at best. These cash-only operations also pose specific problems for California. For example, reporting on sales tax to the State Board of Equalization is highly susceptible to allegations of fraud as the State Board has no idea how to effectively audit MMJ businesses. In the alternative, letting banks open their doors to cannabis businesses would create transparency and increase compliance with tax law. CultureB2B WINTER 2015
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Obama’s Rules for Banks Encouraged Little Progress
In February 2014, the Obama administration told the federal banks and medical cannabis businesses that they could be friends. This green light came with the announcement that the federal government would not be targeting banks working with legal and regulated cannabis-related businesses and then issued a set of guidelines. Of course, with thick strings attached. Under these guidelines, banks now opening accounts to cannabis businesses must report suspicious or criminal activities, aka (SAR). SAR creates three types of reporting—first there is a “limited” reporting, which means banks let the feds know they are working with medical cannabis businesses believed to be in compliance with federal guidance or state laws. Next, “priority” and “terminated” business reports are filed if and when the bank believes the business is in violation of state or federal laws and plans to terminate. With those rules some banks started opening their doors to cannabis-related businesses— but not without hesitation. There is major due diligence, ongoing monitoring and detailed reporting needed when taking on a medical cannabis account. Unfortunately, you can’t rely on bean counters to take risks and, as a result, most banks have decided not to bother with the cannabis industry. “Guidance or regulation doesn’t alter the underlying challenge for banks. As it stands, possession or distribution of marijuana violates federal law, and banks that support those activities risk of prosecution and sanctions,” said a spokesman for The American Bankers Association. Not everyone’s running and hiding though. Despite 18
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the potential risk, financial institutions in 25 states filed more than 1,700 “limited” reports for cannabis-related businesses receiving banking services.
Where to put the cash
If these businesses can’t deposit their money for safe keeping into the bank . . . where does it go? Besides tucking it under the mattress and burying it in the yard, the typical trend is to invest back into the business. However, these businesses have done all types of things to keep their money safe— everything from investing in multi-million dollar collections of one-of-a-kind glass pipes to laundering their money through legitimate small businesses, like sandwich chains and wineries. Cannabis banking consultant Paula Givens says “capital expenditures” like these are one of several necessary but still legal alleyways for cannabis businesses that are shut out of a basic checking account.
More Positive Change in Banking Laws
In July, 2015, the Senate Appropriations Committee approved a measure intended to ensure cannabis businesses have access to banking services. This measure would prohibit the Treasury Department and the Financial Crimes Enforcement Network from using federal funds to punish banks that provide services to cannabis businesses operating legally under state laws. Although this is a step in the right direction, the term “legal” is a term of art here in California and other states. Thus, this sounds a lot like something Obama did with the Department of Justice . . . Stay tuned . . . Reform of U.S. drug policy continues. d
TIPS ON How to Stay Compliant Create a defensible non-money laundering compliance program: Show that your revenue is coming from legitimate activities
Use city-based and state-based laws as a starting point
Keep a close eye on regulatory changes
Cover your basics (insurance, employment policies, accounting and taxes)
Consult your law professional if you’re ever uncertain
Marijuana is still illegal under federal law, and if we process funds from a marijuana business and something turns out to be wrong, we risk losing our charters.
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Cannabis-Infused Edibl A State-By-State Breakdo
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les Laws: down by Jamie Durante
Edibles are in their own league of delivering a unique cannabis experience. For this reason and more, the regulations regarding cannabisinfused edibles vary from state-tostate. Check out our breakdown of where you can enjoy treats as a medical or recreational patient compared to the states that just say no to medicated edibles. CultureB2B WINTER 2015
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Alabama
Medical cannabis edibles are not permitted in The Heart of Dixie, although it was the second state to approve CBD oil for patients with severe epilepsy. The medical cannabis bill that was supposed to allow for patients suffering from 25 different conditions safe access to medical cannabis failed in June.
Alaska
Considering that Alaska legalized recreational cannabis not too long ago, the state absolutely permits cannabis edibles for recreational or medical use. Recreational users are allowed to grow their own plants, and adults ages 21 and older can possess most cannabis substances from flower to edibles. However, there aren’t regulations in place yet that allow for the legal purchase of these products in the state. Alaska is working toward this goal.
Arizona
Arizona has a solid medical cannabis program. Medical cannabis edibles are permitted when they meet strict labeling regulations and are produced by Arizona Department of Health Services-approved dispensaries.
Arkansas
The only type of cannabis allowed in the state of Arkansas is high CBD, low THC medical cannabis extracts for patients with debilitating seizure disorders. This is not a state that allows edibles.
California
California is seen by many as one of the instigators of medical cannabis laws nationwide. Still on the brink of recreational legalization, Prop 215 does allow patients to possess medical cannabis, which includes edibles.
Colorado
Colorado absolutely allows recreational and medical use of cannabis edibles, as they allow the use of recreational cannabis at large. Strict packaging, labeling and potency regulations have been increased even further since cannabis’ legalization in Colorado.
Connecticut
Connecticut’s medical cannabis program is finally in working order. Public Act 12-55 was passed in 2012, while just this month
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the first dispensary was up and running. The laws allow medical cannabis in the forms of pills, creams and edibles, given they are in compliance with the Connecticut Food, Drug and Cosmetic Act and various Connecticut General Statutes.
Delaware
Delaware does have a medical cannabis program, which allows patients to obtain cannabis from state permitted compassion centers, and edibles are permitted for Delaware medical cannabis patients.
Florida
The only permitted medical cannabis in Florida is high CBD, low THC oil used to treat severe epileptic conditions. However over 100,000 petitions in Florida aim to get a medical cannabis proposal to voters in 2016, so legal edibles for medical use may be a possibility in the future.
Idaho
Idaho does not have a medical cannabis program, and medical cannabis edibles are illegal. Possession of three-ounces or less of cannabis is punishable at a minimum by a misdemeanor, as well as a fine and one year imprisonment.
Illinois
The Cannabis Control Act allows for the sale of edible cannabis-infused products given they follow strict guidelines. Patients in Illinois are facing difficulty obtaining legal medical cannabis, as the state’s program is a work in progress.
Georgia
Indiana
Edibles are not permitted for medical cannabis use in Georgia. Georgia has only legalized low-grade THC oil to patients who have one of eight qualifying medical conditions, although there are no regulations in place for how a patient should obtain the oil.
Medical cannabis edibles are not permitted in Indiana, because they do not allow medical cannabis. In recent years, they have lowered penalties against cannabis convictions. Senate Bill 284 would have created a state medical cannabis program failed in February 2015.
Hawaii
Iowa
Hawaii is another state that allows patients safe access to medical cannabis. Flower is the only permitted form of cannabis currently allowed, until state licensed medical dispensaries are set to start operating in July 2016. Therefore, edibles are not currently permitted.
Medical cannabis edibles are not legal in Iowa. Patents with severe seizure disorders are only allowed to possess CBD oil, and the state does not have a system for patients to obtain the oil. Senate Bill 484 would have allowed medical cannabis, including edibles, failed in June 2015.
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Maine
Maine has a great medical cannabis program, which allows for the use of medical cannabisinfused edibles given their production, sale and possession is within strict guidelines. Certain cities in the state permit the recreational use of cannabis.
Maryland
Maryland has a medical cannabis program, which allows for medical cannabis-infused products given they meet the requirements outlined by The Maryland Medical Cannabis Commission.
Massachusetts
Medical cannabis is alive and well in Massachusetts, and cannabis-infused products like edibles are okay under the state government’s regulations.
Michigan
Michigan allows for medical cannabis, and while cannabis edibles made with flower are allowed, medibles made with oil and concentrates are not permitted. This is because the concentrates are not allowed.
Minnesota
Kansas
Cannabis in general is strictly prohibited in Kansas. They hold strict anti-cannabis policies; therefore, the possession or sale of cannabis edibles is illegal. Two bills that would have allowed for the use of cannabis for specific conditions failed in February 2015.
Kentucky
Currently, medical cannabis infused edibles are not permitted in the state. The only cannabis permitted is under Senate Bill 124. This bill started a program to test the results of CBD on patients. Senate Bill 40 and House Bill 3 both set out to create a system for medical cannabis use in the state, however they both failed in March of this year.
Louisiana
In June, Governor Bobby Jindal allowed medical cannabis to patients with specific conditions in Louisiana by signing Senate Bill 143. However it could be up to two years before patients can obtain medical cannabis, including cannabis infused edibles.
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Only pills, oils and vapors are allowed for medical cannabis patients in Minnesota, and they have to be suffering from debilitating conditions such as AIDS and HIV, cancer and epilepsy.
Mississippi
An extremely limited medical cannabis bill was passed in Mississippi in 2014. This bill allows cannabis extracts with less than 0.5 percent THC and more than 15 percent CBD for patients with epilepsy and other severe seizure disorders.
Missouri
Missouri has a very restrictive medical cannabis policy that only allows CBD-only cannabis; therefore edibles are not permitted.
Maryland
Medical cannabis and medical cannabisinfused edibles are allowed under the regulations of the Montana Marijuana Act.
Nebraska
While Nebraska has made some steps toward decriminalization, there is still no medical cannabis program in the state. The bill that was proposed this year for the state to adopt the Cannabis Compassion and Care Act was
not passed this year but will carry over into 2016 for consideration.
Nevada
Nevada’s medical cannabis program does allow for edible cannabis products, and they are upheld to strict standards for testing the safety and consistency of edibles in permitted dispensaries.
New Hampshire
House Bill 573 allows for the use of medical cannabis in New Hampshire, and cannabis infused edibles are permitted for medicinal use under this legislation.
New Jersey
The New Jersey Compassionate Use Medical Marijuana Act allows for the use of medical cannabis. In March, they expanded their program to allow for the state’s three qualified dispensaries to make and sell edibles to patients.
New Mexico
New Mexico has a medical cannabis program that allows for concentrates and edibles to be sold under specific regulations.
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program. This means that edible cannabis products are illegal.
Texas
Texas just signed legislation last June to allow patients suffering from severe forms of epilepsy access to CBD oil. That is unfortunately the current extent of their medical cannabis program, and therefore edibles are not permissible by state law.
Utah
Although Utah’s governor sounds favorable toward regulating medical cannabis, the only type of cannabis permitted is high CBD, low THC cannabis oil for patients suffering from severe seizures.
Vermont New York
New York’s Compassionate Care Act, successfully passed in 2014, allows for the consumption of medical cannabis for qualified patients—users are not permitted to smoke the plant, and rather can only ingest the plant through capsules, oils, liquids and pills. Smoking and edibles are not currently permitted. The strict medical cannabis program officially begins in January 2016, with 20 state-run dispensaries planned for the state.
North Carolina
North Carolina’s medical cannabis program permits CBD-only cannabis to certain patients for research purposes. House Bill 78 had hopes of enacting the North Carolina Medical Cannabis Act, however it did not pass in March 2015. As of now, edibles are not allowed in the state.
North Dakota
Cannabis of any kind, including edibles, is illegal in this state. The state does not have a medical cannabis program, and House Bill 1430, which aimed to regulate medical cannabis for patients, failed in February 2015.
Ohio
All types of cannabis are illegal in Ohio; therefore edibles are illegal as well. A bill for recreational use of cannabis will be on the November 2015 ballot.
Oklahoma
Oklahoma does not have a medical cannabis program, and edibles are illegal. The only
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permitted cannabis is CBD oil, which was legalized in April 2015.
Vermont has a pretty established medical cannabis program. Licensed dispensaries are allowed to sell cannabis-infused products such as edibles.
Oregon
Virginia
Recreational cannabis laws allow for adults ages 21 and over the use of dried cannabis flower. The state’s legal medical cannabis program allows for edibles, but recreationally, edibles can only be baked at home or received as gifts.
Pennsylvania
Pennsylvania does not allow for medical or recreational cannabis, so edibles are not permitted.
Rhode Island
Rhode Island’s comprehensive Medical Marijuana Act does allow for the use of all types of cannabis, which specifies edibles and baked goods as okay.
South Carolina
Patients with severe epilepsy can sign up for a clinical trial using CBD oil in the state of South Carolina. Various bills to change the state’s view on medical marijuana failed in June 2015.
South Dakota
All types of medical cannabis are not permitted in South Dakota, with no exception made for edible forms of cannabis.
Tennessee
The only type of cannabis permitted in Tennessee is through a CBD oil research
Although medical cannabis and infused products like edibles are not permitted in Virginia, they did sign a CBD bill just this year to allow patients with epilepsy access to the medication.
Washington
In Washington, adults 21 and over are allowed use cannabis recreationally. Edibles and concentrates are permitted but concentrates must have a THC concentration of 0.3 percent or less.
West Virginia
West Virginia failed to pass proposed medical cannabis legislation this year, and all types of cannabis, including edibles, are illegal.
Wisconsin
Wisconsin only allows for patients with epilepsy access to high CBD extracts of medical cannabis. This means that psychoactive edibles are definitely not allowed.
Wyoming
The Cowboy State is not a place you want to consume edibles. Non-psychoactive cannabis extracts are only permitted for medicinal use by those with severe seizure disorders. d
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The Challenging Banking Climate for Cannabis Businesses Total U.S. Banks, Savings and Loans & Credit Unions:
13,118
Edible Facts & Fictions Getting down to titration, testing, and the decision whether to inhale or ingest
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by Lanny Swerdlow
n March 2014, a 19-yearold male consumed a small portion of a cannabisinfused cookie. Feeling no effects after 30 minutes, he consumed the entire cookie. From Washington D.C. to Los Angeles, print, broadcast and cable news reported that a short while later, he jumped off a balcony and fell four stories to his death. While researching a story on Colorado’s recently enacted cannabis legalization law, New York Times columnist Maureen Dowd ate too much of a
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cannabis-infused brownie, had a bad trip and millions read about it. Children eating a cannabis edible is the most sensational of all even though most children who get hold of one of mommy or daddy’s edibles will not have any problems other than getting temporarily disoriented—kind of akin to going round and round on a playground merry-go-round. Like adults, if kids consume too much, they may get very disoriented resulting in an emergency room visit. These visits often serve more to assuage adult fears then provide medical treatment to the child. If treatment
U.S. Banks, Savings and Loans & Credit Unions Working with Dispensaries and Recreational Shops:
105 SOURCE
is needed, the child is provided appropriate observation and medication, and then goes home. No child has died from eating a cannabis edible, yet the media has made cannabis edibles into a major health calamity even though the number and severity of problems from cannabis edibles fade into insignificance compared to the deaths and hospitalizations of children and adults from either alcohol, pharmaceuticals or caffeine. That being said, it must be acknowledged that a person can overdose on a cannabis edible—not lethally, but until the overdose wears off, the symptoms can be very disconcerting and uncomfortable. As compared to inhaling, cannabis that is orally ingested produces a significantly different effect that lasts considerably longer and is potentially more potent. When inhaled cannabis’s psychoactive ingredient, delta9-THC, goes directly to the brain
U.S. Department of Treasury, FDIC and CUNA
producing effects within a few minutes. Ingesting orally is an entirely different body ball game. Cannabis consumed orally is metabolized in the digestive system. When the delta-9-THC passes through the liver it is transformed to 11-hydroxyTHC. This new metabolite is significantly more potent then delta-9-THC producing a high of more intensity and longer duration. This secondary metabolite is not produced when smoked and is the reason why eating cannabis can get a person more zonked. How cannabis edibles effects a person depends on their unique biochemistry, genetics, body mass and life experiences. This is something that can only be determined by trial and error. Although an error is not dangerous, it can be very uncomfortable. A person ingesting a cannabis edible for the first
A Sampling of Top Cannabusinesses Top Funding Deals Company
Product/Service
Capital Raised Recently
Type of Funding
Aerogrow International
Cultivation
$4,500,000
Term loan from another
Apeks Supercritical
Extraction Equipment
$1,200,000
Bank loan
Eaze Solutions
MMJ Delivery App
$11,500,000
Private equity
GrowBLOX Sciences
Biotechnology
$5,000,000
Private placement of stock
Vaporin
Consumption Devices
$2,530,000
Private placement of stock
SOURCE 2014 Viridian Cannabis Industry Report, Marijuana Business Daily, Apeks Supercritical, CB Insights, Inc.com
time should only consume a small portion and then wait at least an hour to determine its effect before consuming any more. Another variable is the timing of the onset of the effect. When inhaled, these effects are experienced in minutes and decline rapidly over the next halfhour. Inhaling allows consumers to quickly determine the effect and titrate the amount accordingly. Not so with edibles. Due to the length of time it takes to be absorb in the digestive system, cannabis edibles can take 30 minutes or more before being felt and take up to two hours to peak. Complicating the matter, the length of time of onset of a cannabis edible can be considerably longer if an edible is consumed after a heavy meal. In either case a new user may conclude they have not eaten enough and eat more of the edible leading to an overdose.
Accurate dosing is critical in edibles. Without lab testing it is next to impossible to gauge potency of homemade edibles which can lead to an overdose. Although commercially produced edibles usually have their potency listed on their labels, studies have shown the potency to be inaccurate in many products. Usually they are less potent then listed so that will lessen the chance of an overdose, but significantly higher concentrations have been found. There are other variables such as a person’s own metabolic processes which can affect the length of time for digestion and absorption to occur. All of this means caution must be exercised when first consuming edibles if an unpleasant experience is to be avoided. “If you want to have better control over the onset, depth and duration, it is better to inhale
whether smoked or vaporized,” advises Dr. Donald Abrams, cancer and integrative medicine specialist at the UCSF Osher Center for Integrative Medicine and a leading researcher into the therapeutic uses of cannabis for AIDS and cancer patients. Dr. Robert Melamede, retired Professor of Molecular Biology from the University of Colorado and author of the ground breaking study Harm Reduction – the Cannabis Paradox, is a veteran cannabis edible consumer. “I actually prefer the oral route. It’s a different kind of a high. When you smoke it goes right to your head and kind of hits your head in an imbalanced way. Not to say that I don’t enjoy that as well, but it goes up and comes down quick. When you eat an edible you can stay in a nice place longer.” The decision whether to inhale or ingest centers on why cannabis is used. If being used
for seizures or feeling nauseous, time is of the essence so inhaling would be most appropriate. For chronic conditions like arthritis, oral ingestion would allow the anti-inflammatory properties of cannabis to provide relief over an extended time period. For getting a good night’s many people give edibles an edge. Although edibles may take a bit longer to kick in, its longer lasting effects provide a night’s sleep less likely to be interrupted by waking up. Ingestion of edibles is a viable means for obtaining the benefits of cannabis and many people will find it an enjoyable and effective route of administration. The bottom line is that with cannabis edibles, a person cannot self-titrate as easily or as quickly as when smoking or vaporizing, but with care and common sense, the likelihood of going from euphoria to dysphoria can be significantly reduced. d
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The End of Counterfeit Cannabis
Chemical fingerprinting promises to protect hit brands and empower consumers like never before by David Downs
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U
sing bare human senses and mental insight, the globe’s elite cannabis craftsmen have done a pretty bangup job categorizing the plant and its effects during a century of modern prohibition. But cannabis’ naming systems promise to rapidly evolve now that modern analytical labs— working under full legalization—can quantify each component of the plant. Chemical analysis is validating much of cannabis’ folk taxonomy, but also promises to rapidly supplant it, according to a new
paper published in the journal Natural Products Chemistry and Research. For the paper “Cannabinoids and Terpenes as Chemotaxonomic Markers in Cannabis,” California-based lab The Werc Shop took chemical snapshots of 494 flowers and 170 extracts, looking for 36 compounds— everything from common THC and CBD, to exotic terpenes like Isoborneol. The team found a continuum of “chemotypes,” not distinct indica-sativa phenotypes—or what we folks call “strains.” Science roughly classifies cannabis as “sativa,” “indica” and “ruderalis.” Folk taxonomy correlates the look of an indica versus a sativa to their effects. Patient reports back up this loose, binary, indica-sativa difference in effect, but scant clinical data exists. In this study, The Werc Shop’s Jeffrey Raber said his team, “tried to see what we could see out there.” Raber said his data shows you can’t tightly link a type of physical response to the designation “indica” or “sativa.” “Indica and sativa should be left to plant morphology. It’s not an indication of the chemicals the plant will produce and therefore it cannot indicate which physical response a user may be able to predict. You need a much more detailed understanding of what’s in that plant to know that.” Raber’s study has some big caveats. The team used strain name data from unregulated Southern California growers or dispensaries who were self-reporting to the lab. The Werc Shop was also using indica-sativa designations from the consumer website leafly.com. There’s a danger of ‘garbage in, garbage out’ when it comes to such data. “[The danger is] tremendously possible,” Raber said. For example, the 494 samples amounted to 35 strains, with at least eight samples per alleged strain. Some strains had up to a fivetimes variance in THC levels. “Is that misnaming, cultivation conditions?” Raber said. “We had seen the misnaming problem. We did a small survey of Jack Herer across California and 30 percent of it was not even close, in a chemical sense. “That’s what someone called it and that’s what we’re given, and then we try to say, ‘does this make sense? Did the dispensary or cultivator tell us what they thought it was?’” The team used Leafly data because the website has “tried to do a lot of research, so we said, ‘We’ll just use that as the current state of understanding.’” Yet even amongst the all guaranteed bad data, the noise and the outliers, some chemotype clusters did emerge. Strains reported as CBD-rich Harlequin showed
“We need to look at these strains in a more detailed and different fashion, if we’re going to understand how to utilize this plant to the best of our abilities." a consistently clustered chemotype of cannabinoids and terpenes. Raber thinks that’s because CBD-rich Harlequin is new and “it has value being Harlequin from day one.” Also, some of the most popular strains tended to each have a cluster, including Trainwreck, Jack Herer, Blue Dream and Green Crack. These strains may have benefited from being closely held at first, very distinct to the nose, with specific, highly sought-after effects. It may be much harder to pass off fake Trainwreck or Jack Herer to skilled wholesale vendors and the public. “People were really sure when they were getting them to start with,” said Raber. And even in all the data’s noise, Raber could pick out clusters for indicas and specifically both OGs and Kushes. Indicas tended to have “high levels of limonene, fenchol, α-terpineol, camphene, linalool, THCmax, camphor, geraniol, β-pinene and β-caryophyllene . . . represented in strains like 1st Generation Diablo, Black Mamba, Skywalker, Neptune OG and True OG,” the paper states. “OG strains had relatively higher levels of α-terpineol, fenchol, limonene, camphene, terpinolene and linalool whereas Kush samples were characterized mainly by the compounds trans-ocimene, guaiol, β-eudesmol, myrcene and α-pinene.” Raber said regulations on brand names and testing should enable us to see “really tightly controlled clusters.” CultureB2B WINTER 2015
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This type of chemical fingerprinting will be crucial to trademarking strains. “When breeders come up with a varietal, they could register it and they could make sure to say, ‘This is the name and this is what the chemotype looks like.’ And then you can really start identifying them even at a much finer detail than we’re able to today.” But for right now, cannabis naming is way more fuzzy than people might hope. If some grower says, ‘I got a 65 percent Vanilla
legalization promises to end the confusion. “When regulations require it is in labelled, sealed packages, and people are really trying to protect their brand—then we’ll really know what we have. We’re just kind of at that starting point, and the future looks bright in that respect . . . [Studies like these] kind of enlighten all of us to say, ‘We need to look at these strains in a more detailed and different fashion, if we’re going to understand how to utilize this plant to the best of our abilities.’” d
Comparison of 2014 Investment Activity in Cannabis vs. Other Industries
2014 Performance of Cannabis Stocks By Quarter
Software Firms 1,799 Deals
$100,000
$19.8 Billion
Internet-Specific companies 1,005 Deals
$11.9 Billion
Environmental Services and Equipment Companies 66 Deals Cannabis Businesses 59 Deals
34
Kush Haze’, you should definitely raise your eyebrows. It’ll be really hard to confirm that, versus, someone saying ‘I have a sativa Jack Herer.’ Chances are better that’s Jack Herer. Cannabis’ taxonomical integrity is simultaneously being reinforced by one part of this multi-billion dollar global industry that comes up with in-demand strains, brands them, and maintains brand integrity to profit. At the same time, counterfeiters are undermining the taxonomy. Further
CANNABIS INDUSTRIES
95
MILLION total
[NOTE: Chart reflects gain/loss of a hypothetical $10,000 investment at the start of each quarter—and sold at the end of it.]
$93,856
$80,000 $60,000 $40,000
$274 million
OTHER INDUSTRIES
31.947 BILLION total
$95 million
WINTER 2015 CultureB2B
$20,000
$283
$0
-$3,333
-$20,000 First Quarter
SOURCE CB Insights
-$3,207
Second Quarter
Third Quarter
Fourth Quarter
SOURCE Viridian Cannabis Stock Index
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7 TOOLS OF THE TR Seven Intellectual Property Law Tips For Cannabusiness Entrepreneurs And Professionals
W
e have noticed over the years that people often come to us and know they want to protect something of theirs, but they are not quite sure what it is. Often people mix up terminology and will say something like: “I want to patent my idea.” Or . . . “How do I trademark my invention (or strain),” or “How can I copyright the name of my company?” However they say it, what they are trying to say is: “I have an idea or something I created that I want to protect.” Also, what we know from experience is that there is some form of intellectual property (IP) protection that can help them. This is as true for cannabis professionals and entrepreneurs as it has been for every other new industry for the last two centuries.
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1
IP In a Nutshell:
IP law is the umbrella term law for products of the intellect such as inventions (patents), creative content (copyrights), brand names (trademarks) and secret formulas and processes (trade secrets).
2
The Four Tools:
Essentially there are four basic intellectual property tools—and they all can be vital to a cannabusiness: Patent: A grant made by a government that confers upon the creator or owner of an invention the right to exclude others from making, using and selling an invention that is new, novel and non-obvious for a set period of time. There are three main types of patents: utility, design and plant. Copyright: The legal right to control the duplication,
distribution display, performance and adaptation of an “original work of authorship” such as a song, book, screenplay, poster, t-shirt design, work of art or computer program. Trademark: A word or words, logo, sound, smell, color or product configuration—or any combination of them—that identifies and distinguishes one product or service from another. Examples of trademarks include EXXON, YAHOO, GOOGLE, the Nike “swoosh” design and the sound of the Yahoo yodel.
Trade Secret: A formula, practice, process, design or compilation of information which is not generally known, and provides the trade secret owner with an economic advantage over competitors. Examples of trade secrets are secret customer lists, the formula for Coca-Cola and KFC’s 11 secret herbs and spices.
When It Comes To Patents, Time is of the Essence: 3
The general worldwide rule is that a patent application must be filed before the invention is disclosed to the public: In the U.S., inventors more or less have one year to file their patent application—unless someone else files an application for the invention before them. Therefore, if you believe you might have a patentable invention, organize your notes and get to a Registered Patent Attorney ASAP.
Develop a Trademark Protection Plan: 4
RADE T
hese topics have become very important to cannabusinesses in the last several years and there is a lot we can say about all of this. But in the interests of time, here is a short check-list of some basic tips and steps to take to protect and enhance your IP: “Audit” is Not Necessarily a “FourLetter Word:” Start by looking around your company and making a list of all of the potentially important IP you have created or are using. Make sure of at least two things: (1) you’re not using someone else’s IP without permission; and (2) you are taking reasonable steps to protect and increase the value of your IP by registering and watching your copyrights, trademarks, patents and trade secrets.
This is hypercritical for cannabusinesses— especially because the U.S. Patent & Trademark Office (PTO) will not register a trademark for cannabis or products that contain cannabis. But the PTO will register trademarks for any related or ancillary products that don’t violate the Controlled Substances Act (CSA). This is a good way to “plant a flag” and stake out your trademark territory for the future when and if federal law changes. Meanwhile, make sure that any words or names you are using are not descriptive, generic, geographic (e.g., California Cannabis) or common. For example, already there are simply too many trademarks out there that use “can” and “canna” in their names and trademarks—it’s hard to distinguish between them. 5
Symbology Matters:
The proper use of copyright and trademark notices is an age-old favorite and a neverending source of confusion. Legal rights (and dollars!) can hang in the balance. Let’s see if we can simplify it:
A proper copyright notice: © 2015 David P. Branfman
A proper trademark notice for an unregistered trademark: APPLE™ Computers
A proper trademark notice of a federally registered trademark: APPLE® Computers
Domain Names: One is Not Enough: 6
Businesses these days own one—maybe two—domain names related to their business. But due to clever and unscrupulous cybersquatters, one domain name is not enough. At approximately $11 per year per domain name, it makes sense to allocate a few hundred dollars a year to occupy some internet real estate and block out cybersquatters by registering a batch of domain names. Spending a few hundred dollars a year on your inventory of domain names is a lot cheaper than hiring a lawyer to send a cease and desist letter to a cybersquatter. And compared to the cost of a lawsuit? Small potatoes!
Copyright Protection is the Best IP Deal Around: 7
Review all copyrightable material (websites, CDs, DVDs, flyers/brochures, computer programs, procedures manuals, etc.) to make sure you’ve placed a proper copyright notice on each and that you’ve registered the materials with the Copyright Office in Washington, D.C.; it only costs $55 per copyrightable work if you do it yourself. Avoid Photo-Shock: Did your website designer grab some nice photos from somewhere to put up on your website? If so, it’s time to check the terms and conditions of the license your web designer entered into for you (or didn’t) to make sure you have the right to use those photos for what you are using them for. Three large photo libraries (Corbis, Getty Images, and MasterFile) have embarked on a massive litigation campaign to extract thousands of dollars (or more) from innocent businesses that have no idea they are using photos on their websites that aren’t properly licensed.
Conclusion: It is not too soon to start understanding what IP you own (and use) and what you can do to protect it and avoid unintended infringement lawsuits. d Dave Branfman is the principal attorney at Branfman Law Group, P.C. in San Diego, CA; he’s been an IP attorney since 1983 and is a member of the NORML Legal Committee; has been writing and lecturing about the intersection between IP law and cannabis since 2010.
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Average Sales Per Retail Square Foot:
Cannabis vs. Other Industries High-end athletic wear
$1,936 1
Luxury Jewelry
$3,017
2
Recreational cannabis retailer
$1,773
Recreational cannabis ranks third and medical cannabis ranks fourth in comparison to seven other industries in sales per retail square foot.
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3
Medical cannabis dispensary
$1,143
4 5
Specialty tea store
$893
6
Boutique shoe store
$887 7
High-end department store
8
$503 Liquor Store
$250
9
Pharmacy
$241
SOURCE: statista.com, BizBuySell.com, 3rd Annual Marijuana Business Media survey
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B B TRADE 2
By Addison Herron-Wheeler
Nevada
Next Level of
Legalization Expected markets, benefits and betterment with cannabis legalization
I
t is well-known that a handful of states are considering cannabis legalization on the upcoming ballot, and those that aren’t yet ready for full legalization are beginning to loosen regulations and analyze possibilities for the future. Even now, it’s clear that the states that have legalized cannabis so far are seeing an enormous increase in economic benefits: Jobs are being created, income is being generated and tax money is going to schools and other worthy causes. But how exactly will these prospective states benefit
economically if they do end up legalizing? We took a close look at a few of the states that are expected to be next in the full legalization movement.
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It’s no surprise that Nevada has recently loosened its policies on cannabis, and that it is considering full legalization. It doesn’t take a rocket scientist, or even a Wall Street shark, to predict that if Las Vegas starts allowing legal cannabis, it will be able to add more income to the already massive amount it generates annually. But there are some other less dynamic numbers that support this legalization initiative as well. According to an article for USA Today, when police arrest rates were looked at in 2012, there were about 8,500 cannabis-related arrests in the state. That made them the 14th highest in the country as far as arrest rates for cannabis, and showed that they had a real problem. If legalization passes, those thousands of arrests would no longer be an issue, saving a ton of money for the police force. They’d be freed up to focus on the real crimes that are very much an issue in the Las Vegas area. With the money saved by the police force, combined with the money made in Las Vegas, legalization is bound to make things safer and more lucrative for this state.
New York
New York could clearly benefit from legal cannabis for much the same reasons that Nevada could. The obvious reason is that New York is the most populous and active place in the country, and as a result pulls in tourists from all over the world ranging from touring musicians, people on business conferences, visitors staying with family, transplants moving to the area for opportunity and more. The sheer industry that could be generated by tourism is astounding. But New York has also reported some astronomically high arrest rates for cannabis use. In 2013, according to 24/7 Wall Street, these rates clocked in at 577.24 per 100,000 people, which was more than twice the rate for the entire country. If we could knock that factor out completely and instead focus on only taking down crime rings, gangs and other serious problems, the state could save considerably in their police budget.
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Vermont
This state taking a step towards legalization would have an astronomical effect on the local economy simply because the folks in this state are already big spenders, and have laid down a considerable amount of green on the green stuff, even though cannabis is only medical and there are still a lot of medical restrictions. According to a research study by Rand, in 2014, Vermont residents spent between $125-$225 million on cannabis and imbibed between 15 and 25 metric tons of the plant. Considering the size of the state and its population, this is a pretty considerable feat. Bear in mind, this is only what was spent by medical patients who had specific qualified conditions and were able to make it to the dispensaries in the area.
Rhode Island
One of the main ways that cannabis has generated funds for the states that have already legalized is through taxation. Once cannabis becomes a taxed commodity instead of a black market item, it starts making a significant amount of money for the states in question. Rhode Island is considering legalization, and if the law goes through, they intend to regulate cannabis in a similar manner to alcohol. A 2014 poll conducted in 2015 by Public Policy Polling determined that 57 percent of the state’s residents wanted cannabis to be legal, and wanted it to be regulated and taxed just like booze. This could mean plenty of revenue for the state when
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it is tax time at the end of the year, and a nice refund for schools or consumers.
Delaware
This is another state that could definitely benefit from legalization due to the crime rate in the area. According to 24/7 Wall Street, as of 2012, there were 2,912 cannabis-related arrests in Delaware, which made them the 12th highest in the country when it comes to crimes booked only for cannabis possession. This means that the economy could be hugely benefited by fewer arrests per capita, and more money could be relegated to take care of real crimes. Also, if other nearby states that plan to legalize go through with it, this could create a network of tourism and generate some great income for the area. d
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B B TRADE 2
TREND FORECAST
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UPCOMING TRENDS IN THE CANNABIS SECTOR
Stocks
Job Opportunities
Packaging
Themed Shops
Many of the market trends include those outside of physical contact with selling the herb, and in fact, many have focused on hemp as a source of health-related elements according to Yahoo Finance. Companies like FBEC Worldwide (FBEC) and Cannabis Science, Inc. (CBIS) have relied upon cannabis by harnessing the medical aspects of the plant while CannaGrow Holdings, Inc. (CGRW) has literally built upon the growing industry by implementing a more consultative approach as a facilitator and liaison to cannabis growers.
Cannabis job opportunities will flourish as well. Medical cannabis production requires several vocations, including farmer, seed harvester, trimmer and concentrates processor. The sale of cannabis brings additional positions, such as dispensary security guard and shop owner. Cannabis supported industries, such as seed-to-sale software development, will also be hiring in upcoming years.
The packaging area of the cannabis market is also going to be expanding in the next few years. Prepackaging streamlines the purchasing process while also conveying potency information and safety warnings. With new rules and regulations coming up all over the country, with specific requirements, we can expect to see a larger arena for packaging manufacturers.
The fully legal markets are beginning to explore the themed dispensary arena as well. Portland’s Brooklyn Holding Company is ahead of the curve on dispensary branding. The dispensary has established a prohibition-era speakeasy atmosphere. As cannabis consumption goes mainstream, expect dispensaries to distinguish themselves with unique themes and designs.
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Eco-Friendly Medical cannabis patients can produce a substantial amount of garbage—plastic baggies and tubes— most of which end up in the landfill. A few shops are going out of their way to help this inevitable problem with earth-friendly cannabis product packaging. There are also some collectives or shops that offer credit for returned plastic containers. In the future, I think it’s safe to say, we can expect more shops to emphasize planetfriendly recycling programs and products. d
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B B LEGAL 2
By Alex Distefano
PESTICIDE PROBLEMS The growing concern about pesticide use on cannabis plants
S
o far in the United States, Alaska, Colorado, Oregon and Washington, (along with the District of Columbia) have legalized the recreational use of cannabis for adults, while 19 other states have some form of medical cannabis laws on their books. With this influx of legality, and supply for the cash crop, arises the unregulated, misuse of toxic pesticides to protect against mold, fungus, mites, or other pests that can leave plants decimated beyond recovery. Massive problems with high levels of dangerous chemicals being found in tested cannabis (both dried flowers and concentrates) have been reported in Oregon, Washington and even Nevada, under that state’s medical cannabis law. Thousands of crops have been destroyed throughout these states, and tens of millions of dollars lost at the hands of growers. These federal limitations on cannabis pesticides, or lack thereof, has left farmers scrambling to find anything they can to save their plants from pests, creating a legal wild west, when it
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comes to regulating what can and cannot be used safely to grow cannabis. Some growers have even been known to use toxic insect repellent, or leave mold or fungus on the plant, which can be detrimental to consumers. According to John Scott, Pesticide Program Manager, with the Colorado Department of Agriculture, what makes things complicated for states is the legal
“Ultimately, without federal participation, this leaves the state in a position to address and enforce existing pesticide labeling that was not created with marijuana cultivation in mind.”
limbo cannabis finds itself in. Although several states have decriminalized, under federal law, the cannabis plant is still considered to be illegal, and is classified as a Schedule I drug, under the same category as heroin, ecstasy or LSD. “Ultimately, without federal participation, this leaves the state in a position to address and enforce existing pesticide labeling that was not created with marijuana cultivation in mind,” Scott told CULTURE in an interview. “To address some of the areas that federal law usually covers, the state is developing rules that specify the criteria pesticide products must meet to be used in the cultivation of marijuana.” In other states like California, state and federal regulations are just as confusing, or even nonexistent. For instance, under Prop 215, there are no California state guidelines or mandates for testing cannabis for pesticides, although some companies, growers and dispensaries have labs test, for potency of THC and CBD levels. In the next state over, Nevada, after months of delays, dispensaries are finding new setbacks to opening their doors for patients: A shortage of medicine. Many plants and products
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B B LEGAL 2
have been destroyed or taken off shelves, due to strict state guidelines, which have shown higher than normal levels of concentrations of toxic chemicals, and heavy metals, deemed to be unfit for consumption. In June, Oregon newspaper The Oregonian conducted a report that revealed that several products claiming to be free of pesticides and labeled organic were tested to contain high levels of pesticides and insect poisons. Out of 10 samples of cannabis flowers, edibles and concentrates, only two passed safe levels fit for consumption, while the other eight were found to have over 14 chemicals that have been deemed unsafe for use, or banned outright. Also, the state recently warned against cannabis farmers to not use illegal pesticides that could contaminate their plants, due to health concerns, that exposure to certain toxins might have possible links to cancer. A similar situation went down in Denver in September, when The Denver Post did an investigation, which also showed flaws in the testing systems in place in Colorado. The paper independently tested eight samples of
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concentrates, and other cannabis products from Denver area retailers, and found that at least two contained alarming levels of pesticides, some of which are deemed unsuitable for food crops due to safety concerns. According to Scott, the testing requirements for contaminants in Colorado falls under the Department of Revenue’s authority, “But, the Colorado Department of Agriculture is active and involved in tests for pesticides during investigations, when misuse of a pesticide is suspected,” Scott said. “We will also conduct follow-up inspections of growers that have been found to be in violation of the Pesticide Applicators’ Act (PAA) and re-sample crops during these follow-up inspections.”
Scott again reiterates the legal stalemate of cannabis being legal in some states but not federally. He tells CULTURE that strangely enough, this doesn’t mean state and federal agencies can’t work together. “The Department continues to work closely with both EPA and recently the FDA as we work through this gap between state and federal law,” he said. “We are searching to find solutions to address issues these gaps create and help provide information to these federal agencies, to help them understand the need for changes at the federal level.” As the demand for cannabis (both medicinal and recreational) increases in many states, Scott told CULTURE that ultimately, the responsibility lies in the hands of the farmers. “The growers need to understand that they are applying pesticides, which have not been tested for use on marijuana, or on plants that are being consumed by the public, including adults and children who are medically compromised, who use it for actual medicinal purposes,” he said. “They have an obligation, like any other agricultural producer, to ensure the safety of consumers by using pesticides responsibly and according to the label directions.” d
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B B LEGAL 2
By Hilary Bricken
Cleaning Up Consumer Safety and Products Liability Paying attention to pesticides, cannabis and safety practices
I
n June of this year, The Oregonian blew the lid off Oregon’s lack of any real testing or standards for its medical cannabis products. In her series, A Tainted High, reporter, Noelle Crombie calls into question the safety of cannabis in Oregon. This is the kind of story that will lead to major realizations, significant changes I cannot stress enough as to how important it is for everyone in the industry to read A Tainted High. A lack of quality testing is not necessarily the most shocking part of Ms. Crombie’s series, as several states still do not require such testing. Rather, it is that so many commercial medical cannabis manufacturers in Oregon are endangering consumers by using large quantities of unsafe pesticides and other chemicals on and in their products. I have for some time now preached to the cannabis community that products liability will eventually affect it, and this series just emphasizes how shoddy safety practices are putting people at great risk of getting sick or worse. To put it bluntly, if the cannabis industry (and not just in Oregon) does not clean up its act when it comes to consumer safety, we can likely expect three things to happen:
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1
State government will come in and force a clean up
will be a backlash 2 There against legalization cannabis sales will 3 Legal stall or decline Ms. Crombie reports the following disturbing facts: “Ten marijuana concentrates, popular extracts made from the plant’s leaves and flowers, were screened. Pesticides were found in nearly all of them. Many of the pesticides detected aren’t regulated under Oregon’s medical marijuana rules, which mean that products that contain these chemicals can still be sold. A total of 14 chemicals were found in eight of the samples, including a half-dozen that the federal government has classified as having possible or probable links to cancer.”
“Among them: A common household roach killer and another whose health risks prompted the federal government to eliminate it for most residential uses more than a decade ago. Though many growers say they follow organic practices, only one of the pesticides detected in the analysis is approved for use in organic agriculture.” The foregoing means that qualifying medical patients are consuming pesticidelaced cannabis, even in many instances after having been assured by producers, manufacturers, testing companies and retailers that their products are “organic” or fit for consumption. Ms. Crombie also indicts “[a] combination of lax state rules, inconsistent lab practices and inaccurate test results has enabled pesticide-laced products to enter the medical marijuana market.” The lack of state mandated testing standards for pesticides and other chemicals is not unique to Oregon, as the following state rundown shows: California. California has no mandatory quality assurance testing and no mandatory testing for pesticides under its Compassionate Use Act or under any corresponding state regulations.
below [including] . . . any pesticide/herbicide/ fungicide used during production of the medical marihuana product.” Washington. Though Washington requires quality assurance testing, it makes testing for pesticides optional. According to WAC 314-55102(8), “[t]he general body of required quality assurance tests for marijuana flowers and infused products may [but not must] include moisture content, potency analysis, foreign matter inspection, microbiological screening, pesticide and other chemical residue and metals screening, and residual solvents levels.” Washington producers and processors can only use pesticides approved by the state and any product that uses a pesticide must include a statement setting forth exactly what pesticides were used on it. As for Washington’s new MMJ program (which goes into full effect on July 1, 2016), SB 5052 dictates that “medical specific regulations [should] be adopted as needed and under consultation of the departments of health and agriculture so that safe handling practices will be adopted and so that testing standards for medical products meet or exceed those standards in use in the recreational market.”
Colorado. Recreational cannabis must be tested for pesticides, but medical cannabis products formerly did not have the same requirements. With the passage of SB-260 this summer, pesticide testing will be mandatory for MMJ, but such testing will not go into effect until July 1, 2016. Nevada. Nevada requires medical cannabis establishments and independent testing labs abide by its pesticide screening policy. Florida. Pesticide testing is nowhere even mentioned in either Florida’s Compassionate Medical Cannabis Act of 2014 or in its accompanying administrative regulations. Illinois. Illinois’ medical cannabis administrative rules on laboratory testing mandate that: “Immediately prior to
manufacturing or natural processing of any cannabis or cannabis-infused product or packaging cannabis for sale to a dispensary, each batch shall be made available at the cultivation center for an employee of an approved laboratory to select a random sample, which shall be tested by the approved laboratory for . . . pesticide active ingredients . . .” Minnesota. Minnesota selected two labs to test all of its cannabis and, under its permanent manufacturer rules, those labs must accurately test for “pesticide residue” in all products. New York. New York’s medical cannabis rules require”[t]esting for contaminants in the final medical marihuana product shall include but shall not be limited to those analytes listed
Alaska. Alaska’s recreational ballot measure doesn’t set forth any specific testing requirements yet, but it does mandate that the Alaska Marijuana Control Board create rules surrounding the “[h]ealth and safety regulations and standards for the manufacture of marijuana products and the cultivation of marijuana.” So, we will have to see what Alaska does for particular testing standards in the future. Concerning medical cannabis, under Alaska’s Medical Uses of Marijuana for Persons Suffering from Debilitating Medical Conditions Act, there is no mention of quality assurance testing at all. Could a cannabis product containing high levels of dangerous pesticides and chemicals be considered a dangerous or defective product? Absolutely. Could a cannabis producer, processor or retailer be sued for its involvement with a pesticide-laced cannabis product? Absolutely. The ultimately bottom line is that, if businesses want to avoid being sued for products liability or consumer protection claims, or having their reputations sullied for unsafe cannabis product, they have no real choice but to clean up their act, regardless of middling or non-existent state law standards. d
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B B PRODUCT HIGHLIGHT 2
AC Greebs Smoking Steel
The Smoking Steel is portable, compact, gravity smoking piece. The durable, efficient bowl is easily cleaned, drops neatly in your pocket, and can be used in nearly any smoking context. The tapered shape seals airtight in most standard two-liter and smaller bottles, yet it’s easily removed. Made by a machinist, the groundbreaking Smoking Steel is great for any cannasseur.
$29.00
www.acgreebs.com
Source Orb Vaporizer
$89.99
The most advanced wax vaporizer we’ve seen in such a sleek little package, this thin and light weight unit has superb airflow, great build and multi-functional atomizers. Solid steel body and an open air chamber give consistent performance while the eight different atomizers help make it easy to use with all your favorite concentrates; and even works with herbs and oils. This is a great all-in-one vaporizer.
www.vapornation.com
$79.95
GR8TR™ by Kannastor®
The world’s first and only customizable grinder, with huge storage capacity, the GR8TR™ is a beautiful grinder. Instead of the traditional grinder bed design, the GR8TR™ uses unique Micro-Teeth and Dish Press design to employ effortless grinding with any bud. The interchangeable aluminum GR8TR™ plates are what make your grinder your own—whether your preference is Vaporizers, Pipes, RYO—or all of the above—the GR8TR™ has the grind you’re looking for.
www.kannastor.com
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