Insurers Must Play Catch-Up to Meet Cannabis Industry Needs

As the cannabis industry continues to grow, demand for insurance products is also increasing. While insurers have been cautious about entering a market that carries the stigma of a Schedule I drug, the cannabis industry is clamoring for insurance coverage options tailored to meet the needs of key players— distributors, growers, processors and retail dispensaries.

The escalating need for insurance products tailored to these cannabis business sectors has not expedited an increase in coverage offerings. The slow entry of insurance carriers into the cannabis sector can be tied to a reluctance to insure an industry with emerging and often unknown risks. This will begin to change as more information becomes available on what loss ratio trends look like in the cannabis industry.

For now, there is a wait-and-see stance held by insurance carriers. This presents a major concern for cannabis-related businesses that are subject to risk at every stage of the supply chain, with particular exposure for theft, general liability, crop loss, and product liability.some degree of crime and theft coverage is needed for these enterprises to help manage the risks associated with a cash-based business

Theft

For cannabis companies, the use of paper currency is a huge part of their risk exposure. Federal banking regulations have limited these businesses to dealing mostly in cash, which makes them a prime target for crime and fraud. Currently, only one carrier will insure coverage for cash and theft risk, and the policy is limited to $1 million for most risks. This is inadequate coverage since many operators have more than that amount on-site.

In states with legislation legalizing cannabis, the cannabis sector will be able to move away from operating in cash if Congress passes the Secure and Fair Enforcement (SAFE) Banking Act, which would protect financial institutions from liability for federal prosecution that could arise from servicing cannabis-related businesses authorized under state law. Until banking regulations give the cannabis industry the ability to operate as legitimate businesses with the stability and safety that would deter criminal activity, some degree of crime and theft coverage is needed for these enterprises to help manage the risks associated with a cash-based business.

General Liability

Cannabis-related businesses need the same general liability coverage as other businesses to protect their premises and operations from lawsuits involving public contact. However, standard general liability policies—which exclude Schedule I substances from coverage—were not created with cannabis businesses in mind. It is still difficult for these businesses to obtain adequate general liability as a result of the legal uncertainty associated with the industry.

Product Liability

Product liability exposures for cannabis businesses encompass a wide range of areas, including edibles, vaporizers, pesticides, mold/fungus, misrepresentation, label claims, breach of warranty, deceptive practices, and failure to warn.

A major area of exposure concerns accidents resulting from impairment. A cannabis cultivator, processor, distributor, or retailer potentially may be considered liable in the event a product defect results in injury after reasonable use or when label defects fail to warn users that a product may have psychoactive effects.

Another area of risk exposure involves products that contain THC, the psychoactive compound that gives cannabis users a high. As the number of THC-containing products such as edibles and tinctures increases, so does the potential exposure to product liability claims for manufacturers and retailers.

The California Cannabis Track-and-Trace (CCTT) system also has implications for product liability. The CCTT is a statewide system used to record the inventory and movement of cannabis and related products through the commercial supply chain. All state cannabis licensees, including those with licenses for cultivation, manufacturing, retail, distribution, testing labs and microbusinesses, are required to use this system. The product liability impact lies in its capacity to determine responsibility along the supply chain from seed to sale.

For example, if a plastic vape pen explodes, a product liability lawsuit could have repercussions for many touch points across the supply chain beyond the manufacturer of the pen–all of which can be identified through CCTT. Entities that touch cannabis products such as soil suppliers or delivery persons also have product liability risk exposure. Personal injury attorneys can find incident-related parties easily and determine liability. This makes it particularly important to add these parties to the policy as additional insureds to help reduce claims exposure.

Crop Loss

Another area of concern for risk exposure is crop loss. Crop insurance is generally hard to obtain due to the significantly different nature of cannabis crops compared to traditional crops like corn or soybeans.

Fires in Sonoma County devastated cannabis crops in Northern California back in 2017.

An indoor crop insurance policy covers cultivators when there is loss resulting from threats such as fire, theft, and sprinkler leakage. However, crop insurance policies generally do not cover losses resulting from mold, rot, disease, changes in climate, or fertilization issues. Many growers forgo this coverage and instead elect to absorb losses and regrow their crops.

Outdoor crop coverage is generally unavailable, or the cost is prohibitive. Any potential for writing outdoor crop insurance for the cannabis industry essentially disappeared as a result of the recent wildfires in California. These devastating fires highlighted the pressing need for property damage and business interruption coverage for growers and dispensaries and other downstream businesses whose supply was disrupted. This lack of available outdoor crop insurance is one of the more notable gaps in available cannabis business insurance coverage.

While cannabis businesses operating in states that have legalized medical and/or recreational cannabis use have challenges getting adequate insurance coverage, there is some good news on the insurance front for those in California. Last year, California’s insurance commissioner announced approval for carriers to offer insurance coverage specifically to cannabis businesses. The state also approved a cannabis business-owners policy (CannaBOP) program that provides a package policy containing both property and liability coverage for qualifying dispensaries, distributors, manufacturers, processors and storage facilities. Colorado is on the verge of being the second state to approve its version of a CannaBOP program.

While more insurance carriers are beginning to write cannabis coverage, the limited insurance options and policies with restrictive plans currently offered todaydo not meet the needs of the cannabis industry. Insurers must catch up to the coverage requirements of this sector by offering more options tailored to growers, retail dispensaries, processors and distributors with better terms and better pricing.

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Texas House of Representatives Vote to Decriminalize Marijuana

A bill that effectively decriminalizes the possession of small amounts of marijuana was approved on Monday by the Texas House of Representatives. Under the measure, House Bill 63, a fine of up to $500 would be imposed for possession of one ounce or less of cannabis, rather than jail time. HB 63 was passed by the House with a vote of 98-43 and must be approved by the body with a second vote, a step usually viewed as a formality, before heading to the state Senate.

The bill changes possession of up to one ounce of marijuana from a Class B misdemeanor to a Class C misdemeanor. An earlier version of the bill sponsored by Democratic Rep. Joe Moody would have classified possessing small amounts of cannabis as a civil infraction, but Moody amended the measure on the House floor to achieve more support.

“I’m not going to sacrifice the good for the perfect. If this is what we can do, then this is what we must do,” Moody said. “We can’t keep hauling 75,000 Texans to jail every year.”

Moody responded to criticism that the bill had been “watered down” by telling his colleagues in the House that he feared that a bill that completely decriminalized pot would not succeed.

“When I first proposed changing our criminal penalty for personal use of marijuana to a civil penalty, there was some support and even more caution,” he said.

Moody challenged legislators who planned to vote against the bill because they feared relaxing marijuana laws will eventually lead to the legalization of recreational pot.

“We can’t legislate in fear of what some future legislators might do,” said Moody. “We’re here to solve the problems of today. It’s not about whether marijuana is good or bad; it’s about whether what we’re doing on enforcement right now is good policy, and we all know it’s not.”

No More Arrests for Weed

Those caught possessing less than one ounce of cannabis in Texas would no longer be subject to arrest under the revised version of HB 63. Offenders would instead be placed on deferred adjudication probation. Those who successfully complete their probation and do not commit more than one offense in a calendar year would have their records expunged. Possession of one ounce or less of cannabis would also no longer be grounds for the suspension of an offender’s drivers license under the measure.

Karen O’Keefe, the director of state policies for cannabis reform advocacy group the Marijuana Policy Project, applauded the approval of the bill in the House.

“This is an incredibly important step forward for Texas, and it is long overdue,” O’Keefe said. “HB 63 would save thousands of Texans from life-altering and traumatic arrests and incarceration, while freeing up police resources to focus on crimes that have victims. It deserves swift passage in the Senate.”

Will the Bill Become Law?

Although Texas Gov. Greg Abbott is opposed to broad cannabis legalization efforts, he indicated in a campaign debate while running for reelection last year that he would support legislation to reduce the penalties for small amounts of marijuana.

“One thing I don’t want to see is jails stockpiled with people who have possession of a small amount of marijuana,” Abbot said. “I would be open to talking to the legislature about reducing the penalty for possession of two ounces or less from a Class B misdemeanor to a Class C misdemeanor.”

But before a bill can get to Abbott’s desk, it must be approved by the Texas Senate, where success is nowhere near certain. Lt. Gov. Dan Patrick, who controls the work of the Senate, is opposed to any measure that lessens the prohibitions on pot. Alejandro Garcia, a spokesman for the lieutenant governor, said previously that Patrick is “strongly opposed to weakening any laws against marijuana [and] remains wary of the various medicinal use proposals that could become a vehicle for expanding access to this drug.”

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‘Workaholics’ Creator’s Band Debuts Pot-Friendly Video on HTTV

Kyle Newacheck, one of the creative forces behind the hit Comedy Central series ‘Workaholics,’ is bringing his talents to High Times TV this week with the debut of a pot-friendly video from his band Fade Up Fade Out Bye Bye. The new video, for the song ‘Don’tcha Feel (Like Loving Me),’ features a pot nug with bloodshot eyes as the lead singer and supporting vocals by a pair of backup buds.

Newacheck, who created ‘Workaholics’ with the show’s three stars and directed a majority of its episodes, told High Times that the inspiration for the nugs in the video came from his experience growing his own weed at home. While trimming his harvest one time, Newacheck noticed that one “stacked nug” had two remaining leaves that looked like hands. The bud was reminiscent of a puppet, an image that returned to him when it was time to make a video for his band’s new song.

“Wow, the song is called ‘Don’t You Feel Like Lovin’,” recalls Newacheck. “What if that’s from a nug of weed’s perspective?”

Fighting Stigma with Fun

When he shared the idea with Anjela Vega, the video’s director, she ran with the idea and created the puppets herself. Newacheck says they were perfect for the “Doobie Brothers vibe” of the song. And while they provided a fun element for the clip, Newacheck says they also make a statement that more people would appreciate cannabis if they let go of the stereotypes ingrained by generations of prohibition and misinformation.

“Don’t you feel like loving me?” he says of pot. “Just let go of all the stigma, all the bullshit that people think about weed.”

Newacheck, who has been playing with Fade Up Fade Out Bye Bye for about five years, says that “the band’s highest accolade at this point is that we got voted the worst band name at SXSW a couple of years ago.” Starting as a studio project, the group didn’t limit itself to one style of music.

“We started with an appetite for all genres,” he says. “So, if you listen to it on random, it’s much like listening to Jack FM back in the day. It kind of plays everything.”

Newacheck’s contribution to the band includes singing and playing guitar, trumpet, glockenspiel, and slide whistle, as well as work in the booth producing. He is joined by Danny Webber, Kayhan Ahmadi, Josh Wolf, and Peter Spryer in Fade Up Fade Out Bye Bye.

New Netflix Feature Drops Next Month

Newacheck, who directed shows for all seven seasons of ‘Workaholics’ as well as other television work including episodes of ‘Parks and Recreation’ and ‘Community,’ is also staying busy behind the camera. Last year he directed ‘Game Over Man’ for Netflix, which he describes as “a punk rock shock comedy that had a lot of heart,” starring Adam Devine, Anders Holm, and Blake Anderson of ‘Workaholics.’ And last year, he wrapped another feature for Netlix, ‘Murder Mystery’ starring Adam Sandler and Jennifer Aniston.

“Sandler doesn’t smoke that much,” Newcheck said when asked if he and the actor had burned some herb together on set. “He would always just tell me if I got a little wild at the monitors, he’d be like, ‘Go smoke a bone!’”

Getting high, Newacheck says, helped him “get his head straight and come back” to face the pressures of making a feature film.

“The movie was challenging and it was the biggest job I’ve ever had in my life,” he says. “I was smoking weed every day.”

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Treating Complex Post-Traumatic Stress Disorder (C-PTSD) With Medical Cannabis

“I’ve got to treat my body if I’m ever going to recover from this illness,” Kimberly Callis, an independent researcher with Complex Post-Traumatic Stress Disorder, tells High Times. “Cannabis [is] a systemic medicine; complex PTSD is a systemic condition. The two really go hand-in-hand, especially with a target on the endocannabinoid system.”

Since there is a minimal body of work around C-PTSD, most of what we know about medical marijuana and Post-Traumatic Stress Disorder comes from studies oriented around former combat soldiers. Recent research shows cannabis can have a positive effect on those with PTSD. Earlier this year, researchers finally concluded a decade-long FDA-approved study on the effects of THC and CBD in veterans with PTSD.

However, trauma has many more faces than this—particularly complex trauma, or C-PTSD. Plus, more and more are seeking medical marijuana as a treatment for mental health conditions, including anxiety, depression, and mood disorders. So what happens when we begin to look at trauma that isn’t rooted in serving in the military and overall law enforcement?

Difference Between PTSD and C-PTSD

The National Institute on Mental Health categories PTSD as “a disorder that develops in some people who have experienced a shocking, scary, or dangerous event.” Anyone can develop this condition, especially those who have survived “physical or sexual assault, abuse, [an] accident, [a] disaster, or many other serious events.” Common symptoms include, but are not limited to, flashbacks, sleep problems, nightmares, avoidance of certain places related to an event, physical tension, feelings of shame and guilt, and irritability. According to the Anxiety and Depression Association of America, 7.7 million adults in the United States experience PTSD.

Complex trauma, on the other hand, is defined a little differently. This condition often describes multiple traumatic incidents related to abuse and/or neglect during developmental years, explains the National Child Traumatic Stress Network. When a someone experiences multiple traumatic events so early on in their lives, it can greatly impact development and formation of the sense of self. It also deeply affects a child’s relationships, even into adult years. C-PTSD can more accurately describe children who have experienced war terror as civilians, for instance.

While PTSD is a very serious condition, as trauma does not discriminate, the framework of C-PTSD helps us understand how trauma impacts childhood development and sense of self. According to psychotherapist Peter Walker’s Complex PTSD: From Surviving to Thriving, Complex PTSD is more insidious form of PTSD, characterized by “emotional flashbacks, toxic shame, self-abandonment, a vicious inner critic and social anxiety.”

While there are very few studies out there about medical marijuana and PTSD, research is still incredibly valuable, as they illustrate how beneficial cannabis can be, even for folks with C-PTSD. Even in today’s climate, research involving scheduled drugs is incredibly difficult to conduct. (Even the Department of Veteran Affairs denies the power of cannabis to heal from trauma, because government agencies adheres to federal law.) As researchers are able to conduct more studies on medical marijuana and mental health, there is an untapped area of study centering C-PTSD, centering survivors of childhood abuse.

Danielle Corcione’s personal stash; Photo courtesy of the author

Consumption Methods

Although I wasn’t a stranger to feeling trauma, I’d thought PTSD was exclusively for combat veterans until I was an adult and found C-PTSD to more accurately describe my experience. In college, I started reading more about PTSD. During this time, I also got involved with my campus chapter of NORML. My peers handed me copies of High Times and encouraged me to check every book in the campus library about weed, including Martin Booth’s Cannabis: A Short History.

In my own experience consuming medical marijuana, cannabis is used to treat my symptoms of C-PTSD, such as sleep disturbances and distraction. It’s not intended to be an end-all cure; and like other methods of treatment and forms of healing, what works for one person will not work for everyone.

“The primary goal of treatment is extinction of the fear memory from its associated memory of the traumatic event so that a ‘trigger’ (a loud noise that recalls the memory of a gunshot or a smell that recalls an abusive parent, for instance) can be experienced without the associated terror response,” explains author Michael Backers in Cannabis Pharmacy: The Guide to Medical Marijuana. In other words, when we experience a trigger in our environments, weed helps ground us. It reminds us we’re not in the same place as we once were when trauma occurs.

Rumination, or the racing of thoughts without completion, is one symptom Callis identified cannabis—particularly THC, in her experience—can alleviate. She describes this rumination as the “busy brain … the constant hypervigilance … the worries, the stresses, the anxieties” that can preoccupy us. Racing thoughts, or rumination, can be a common cause of insomnia. By using cannabis as a tool to unwind, to relax, Callis has a much easier time getting shut eye.

“Cannabis helps to calm my busy brain,” explained Callis. “It gets it back to a level where I’m controlling the path of thought—that is stress-relieving in itself, that helps you if you’re struggling with sleep, with insomnia.”

But night time isn’t the only time when these symptoms pop up. Racing thoughts can lead to distraction, causing many to have great difficulty in paying attention. In my own experience, consuming hybrid strains containing both THC and CBD—Lemon G, Swamp Serum, Z7, and Harlequin—have helped me regain focus during the day.

Anti-rape activist and writer, Roslyn Talusan, had been using cannabis medically for eight years to manage anxiety and depression related to C-PTSD, but only got officially registered as a patient fairly recently, just over a year ago.

She uses a combination of CBD and THC to treat anxiety and physical tension related to C-PTSD. When she can afford it, she uses CBD oil every few hours—and when she needs to relax, she uses a few drops of THC oil. However, she also utilizes edibles (particularly gummies) and traditional smoking.

“I smoke buds out of my rose quartz pipe,” she tells High Times. “My strains right now are OG Melon (Sativa) and LA Confidential (Indica), since those are what my dispensary offers. I use OG Melon during the day, when I need a creativity boost, and LA Confidential in the evenings, when I’m unwinding and trying to sleep. The best strains I’ve ever had are Super Lemon Haze and Jack Herer, and I wish my dispensary would stock those!”

What Comes Next

While Talusan and myself are incredibly fortunate to be registered patients, we’re both incredibly aware of inaccessibility. Since Callis lives in Georgia, she relies solely on the underground market, where she doesn’t have as many options as a medical marijuana patient. While the Peach State has an established program, it is very limiting to certain types of cannabis products, similar to other southern states. On April 17, Governor Brian Kemp passed a bill to allow patients access to low-THC oil, according to the Marijuana Policy Project. However, Georgia is still one of the worst states for weed charges “with possession of a mere two ounces being punishable by up to 10 years in prison.”

There is a small, but developing, body of work on medical marijuana for PTSD. However, that body of work is even slimmer for C-PTSD. Moving forward, it’s critical to speak about our experiences (when we are ready) and the healing potential of this plant, especially while many of us still live under prohibition. Even in states with established medical marijuana programs and/or recreational policies, arrests continue to impact Black and Brown communities disproportionately.

“I’m so glad that marijuana is gaining more credibility as a way to treat PTSD, and that we’re becoming more aware that it’s not just veterans who have PTSD,” added Talusan.

“Now we just need to work on breaking down the stigma, and decriminalizing it everywhere.”

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Oregon Senate Votes in Favor of Temporary Freeze on Cannabis Production

A bill aimed at limiting Oregon’s supply of cannabis advanced out of the state Senate and will now go before the House for consideration. On Monday, Senate lawmakers voted 18-10 in favor of a temporary freeze on cannabis production. The freeze would hold marijuana production at its current level for the next two years. The bill would also suspend the issuance of any new cultivation licenses. Currently licensed growers, however, will be able to renew their licenses during the temporary freeze period.

Why is Oregon Freezing Cannabis Production?

Medical marijuana has been legal in Oregon since 1998. And in 2014, voters approved the legalization of cannabis for adult use. Since establishing a regulated retail industry for THC products, cultivation operations have exploded across the state, with growers taking advantage of Oregon’s ideal climate to produce massive quantities of high-quality flower.

Before long, Oregon’s wholesale cannabis market was absolutely saturated with product. And the large surplus of cannabis began to pose a number of problems for regulators, lawmakers and the industry itself. Growing more cannabis than the state’s retail market could possibly handle, Oregon had to ask where all that surplus cannabis was ending up.

Some suggested producers, motivated by profit, were diverting the surplus onto the so-called black market out of state. U.S. Attorney for the state of Oregon penned an op-ed about the issue in which he cited postal service data that agents had seized 2,644 pounds of outbound cannabis and more than $1.2 million in cash in 2017 alone.

Over the past couple years, that surplus and the concerns that come with it have only grown. According to State Sen. Michael Dembrow (D-Portland), Oregon has already produced enough cannabis to last it for the next 6-plus years, based on market projections.

What Does a Freeze on Cannabis Production Mean for Cultivators?

That massive surplus has an equally large impact on the cultivation industry. It drives down wholesale prices, cutting into profit margins and incentivizing illicit revenue streams. But a temporary freeze will also impact the cultivation and wholesale sectors of Oregon’s legal cannabis industry.

If passed, the bill to freeze production would also prevent state regulators from issuing new cultivation licenses. This move has drawn criticism from more libertarian politicians who feel the so-called free market, not the state, should regulate the forces of supply and demand shaping the industry.

Those criticism are not entirely without merit, considering how little the OLCC still knows about the relationship between supply and demand. According to the data, barely 11 percent of the one million pounds of cannabis produced in 2017 ended up in the hands of retail customers. But retail sales aren’t the only destination for flower. Manufacturers buy cannabis wholesale to create “value-added” THC products like oils, concentrates, edibles and tinctures.

In short, regulators don’t yet have a clear picture of how much inventory of flower Oregon needs to supply its regulated market. And that’s exactly what lawmakers hope to reveal through the two-year freeze on cultivation. Keeping production levels constant, at least for a couple years, will help give lawmakers, regulators and even the industry a better sense of how much cannabis they really need to grow.

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Baltimore Judges Deny Request to Dismiss Past Marijuana Convictions

A request by Baltimore State’s Attorney Marilyn Mosby to dismiss nearly 5,000 past cases of marijuana possession was denied by judges on Friday, according to online court records. On Monday, a spokeswoman for the State’s Attorney’s Office confirmed that the petition had been rejected by the judges.

Prosecutors had filed paperwork to dismiss cases going back to 2011, covering approximately 1,000 convictions in Circuit Court and almost 3,800 more in District Court. The judges’ reasoning for rejecting the requests is not yet clear.

Prosecutorial Policy Changed

In January, Mosby announced that her office would end the prosecution of marijuana possession cases in Baltimore and would seek the dismissal of up to 5,000 convictions already on the books. Mosby cited the racial disparity in the enforcement of cannabis prohibition laws as her reason for the change in policy.

“The statistics are damning when it comes to the disproportionate impact that the ‘War on Drugs’ has had on communities of color,” Mosby said. “As your state’s attorney, I pledged to institute change and I refuse to stand by and be a facilitator of injustice and inequity when it is clear that we can be so much smarter and do so much more on behalf of the people we serve.”

More than 90 percent of the citations for minor marijuana possession were issued to black people in Baltimore between 2015 and 2017.

“Even though white and black residents use marijuana at the same rate, the laws disproportionately impact communities of color,” Mosby added.

Collateral Damage of Pot Convictions

Olivia Naugle, a legislative coordinator for the Marijuana Policy Project, applauded Mosby’s decision to in a press release.

“Decades of arresting and prosecuting people for marijuana possession did not make Baltimore any safer, and it had a dramatically disproportionate impact on communities of color,” Naugle said. “Countless individuals have been branded with convictions and subjected to life-altering collateral consequences that cause them more harm than marijuana ever could. Unfortunately, this has continued to be the case in Baltimore City even after decriminalization in 2014.”

Mosby agreed that convictions for marijuana possession follow offenders for life, saying that they make finding a job and qualifying for social programs such as housing and educational benefits difficult if not impossible.

“When I ask myself: Is the enforcement and prosecution of marijuana possession making us safer as a city?” Mosby said, “the answer is emphatically ‘no.’”

“No one thinks spending resources to jail people for marijuana is a good use of our limited time and resources,” she added.

Mosby’s Response

Mosby released the following statement on Monday:

“The role that courts play in our society is to be a place of last resort for people who have been wronged. I am deeply disappointed that this ruling did not afford us any opportunity to present legal arguments and essentially eliminated the court from being a safe harbor for those that were harmed by the discriminatory enforcement of marijuana laws in this city.”

“My office is considering our options and will pursue all avenues to ensure we continue standing up for the people of Baltimore,” she added.

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Massachusetts Lawmakers Considering Cannabis Home Delivery Laws

Regulators in Massachusetts have reached an agreement that would allow the home delivery of cannabis products in the state. If approved, the plan would also give communities affected by the War on Drugs an expedited path to representation in the state’s newly legal cannabis industry.

The state Cannabis Control Commission voted 4-1 on Friday to adopt a group of policies to implement the home delivery program. A final vote on the detailed regulations of the plan is expected from the commission next month, according to media reports.

If approved, the program would allow the home delivery of cannabis products throughout the state, except in the many municipalities that have banned retail pot sales. Purchases would be made from licensed retail dispensaries and delivered by independent businesses licensed by the state. Delivery companies would be allowed to serve multiple dispensaries and would be required to return any undelivered product to its source at the end of each day.

Diversity in Cannabis

In an effort to comply with a statutory requirement that Massachusetts create a diverse cannabis industry, for at least two years home delivery licenses would only be available to entrepreneurs participating the commission economic empowerment and social equity programs.

“Delivery is an important thing to do,” commission chairman Steve Hoffman said after Friday’s meeting. “I believe we’re ready. This is going to make it more accessible for consumers… and it’s a very important thing from a social equity standpoint, because of the lower barriers to entry in terms of the capital requirements.”

The state’s diversity programs fast-track licensing for businesses that are owned by, employ, or benefit members of communities subject to high rates of drug arrests. The social equity program will provide technical training to those who have been arrested for a drug crime or are closely related to someone who has, or come from a community with a high rate of drug arrests. The programs are mandated by state law to address decades of inequity in the enforcement of drug laws.

The two-year period of exclusivity would begin once the empowerment and social equity programs have been implemented. The commission would evaluate the program’s success after 24 months and then decide whether to open home delivery licenses to all applicants.

“I have a concern that if we do a flat 24 months that people aren’t able to get it done,” said Commissioner Kay Doyle.

Commissioner Shaleen Title said after the meeting that incorporating social and empowerment programs into the home delivery plan will help level the playing field for access to the state’s cannabis industry.

“Exclusive access to lower-cost licenses will allow prospective entrepreneurs who aren’t necessarily well-connected or privileged with unlimited resources to have a fair chance,” Title said.

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Why International Trade Agreements Are Shaping The Cannabis Industry

If you have wondered over the past several years, why the big Canadian companies (in particular) are following the global strategy they are, there is actually a fairly simple answer: Newly implementing trade agreements, particularly between Europe and North America.

More specifically, they are highly technical trade agreements that are also called Mutual Recognition Agreements, (or MRAs).

In fact, look at the schedule of the MRA agreements signed between the U.S. and individual EU countries over the last several years, and it also looks like a map of the countries that have not only legalized at least medical cannabis, but where the big Canadian companies (in particular) have begun to establish operations outside of their home country.

But what is going on is actually more than just CETA-related and also will affect cannabis firms south of the Canadian-U.S. border.

All of these swirling currents are also why the most recent MRA to come into full force in July this year, between the U.S. and Europe, is so interesting from the cannabis perspective. Even before federal reform in the U.S. If this sounds like a confusing disconnect, read on.

What Are MRAs?

MRAs are actually a form of highly specialized trade agreement that allow trading countries to be certain that the pharmaceuticals they purchase from abroad are equivalent to what is produced at home. This includes not only ingredients but processing procedures, production plant hygiene, testing, labeling and more.

When it comes to the  EU-US MRA agreement, this means that individual states of the EU can now recognize the American Food and Drug Administration (or FDA) as an effective federal regulator of American pharmaceutical production that is equal to the procedures in Europe. US GMP standards, in other words, will be recognized as equal to those of EU states.

This will now also, by definition, include GMP-certified medical cannabis formulations.

What is so intriguing, however, is how this development will actually place certain American (and Canadian) manufacturers in a first place position to import cannabis into Europe ahead of the rest of the American cannabis industry.

What Are Mutual Recognition Agreements All About?

One of the most important quality and consumer safety aspects of establishing a clean supply chain is tied up in the concept of GMPs (Good Manufacturing Practices). These are procedures, established by compliant producers of pharmaceuticals, to ensure seed (or source) to sale reliability of the medication they make. In the cannabis industry, particularly in the advent of Canadian-European transatlantic trade in cannabis, this has been the first high hurdle to accept and integrate on the Canadian side.

GMPIf European countries recognize a country’s GMP certifications are equivalent to its own, in other words, and cannabis is legal for export, a country can enter the international cannabis market without facing bans, in-country inspections and the like. In the interim, imported products still have to be batch tested until the agreements are fully accepted and operational.

Israel, for example, already had an MRA with the EU, and medical cannabis is legal in the country. However, Israel was prevented from selling cannabis abroad until a legislative change domestically, passed on Christmas Day.

That is why the MRA agreement between the US and EU with Canadian companies in the middle also put both Israeli and U.S. firms at an extreme disadvantage in comparison. Both in entering the market in the first place, and of course associated discussions, like the German tender bid. That is now changing- and as of this year.

A Specialized Map Of Global Medical Cannabis Exporters

Ironically, what the new US-EU MRA could also well do is create a channel for pharmaceutical cannabis from the United States to Europe (certainly on the hemp and CBD front) just as Israel is expected to enter the international cannabis export industry (later this summer or fall). It could well be also, particularly given the Trump Administration’s tendency to want to not only “put America first” if not pull off “a better deal” in general and about everything, that this is why President Trump offered the delay to Israel’s president Benjamin Netanyahu in the first place.

Regardless of the international individual developments and subtleties however, what is very clear that from the time the first bid stalled in Germany in the summer of 2017 until now, the U.S.-EU MRA has been in the room even if not named specifically as a driver.

For example, the FDA confirmed the capability of Poland and Slovenia to carry out GMP inspections in February of 2019.  It was only last fall that Aurora pulled off its licensing news in the former (on the same day licensing reform was announced by the government). Denmark was recognized in November of last year during the first year of its “medical cannabis pilot progam.” Greece was recognized in March 2018. Italy, Malta, Spain and the UK came online in November of 2017.

Overlay this timetable with a map of cannabis reform (and beyond that, cannabis production) and the logic starts to look very clear.

The upshot, in other words, is that while cannabis still may be “stigmatized” if not still “illegal” in many parts of the world, more generalized, newly negotiated and implementing, specialized global trade agreements between the US, Europe and Canada in particular have been driving the development of certain segments of the cannabis industry globally and since about 2013.

The Biggest News?

As of this year, as a result, expect at least from the GMP-certified front at least, that such international trade will also include medical cannabis from the U.S.

Want an example of the same? First on that list if not early in the game will now undoubtedly be Canadian-based Canopy Growth, with Acreage on board, headquartered in New York.

The post Why International Trade Agreements Are Shaping The Cannabis Industry appeared first on Cannabis Industry Journal.


Canopy Growth Makes Multi-Billion Dollar Conditional Acquisition Deal

The first German cannabis bid may have come to an end more or less, and with a whimper rather than a bang (not to mention the inevitable still-to-be-settled legal challenges). However even as the dust settles, one of the biggest “names” in cannabis and the company formerly expected to win at least a few of the tender lots is looking elsewhere.

Namely Canopy Growth, which was a finalist in the first round of the tender, has not shown up as a finalist firm in Germany this time (at least not so far).

However, it is clear the firm has other intentions afoot, namely U.S. expansion.

In an unprecedented move, Canopy announced its intent to buy the largest U.S. based producer of cannabis, a firm called Acreage Holdings, just before Easter. The conditional deal is being consummated in both cash ($300 million) plus stock swaps, and will not finally close until federal reform has come in the U.S. In fact, the deal makes the bet that the entire issue of U.S. federal reform will be solved within the next decade.

Canopy_Growth_Corporation_logoIn the meantime, however, what this also does is place one of the world’s largest cannabis companies in the middle of what is largely seen as the world’s most valuable overall cannabis market. Further it does so in an environment where the company benefits from Acreage’s considerable market and political clout. Former speaker of the U.S. House of Representatives John Boehner (a fierce opponent of legalization until it was personally convenient and profitable) is on the board of Acreage.

But there are those who might still be confused about why this deal happened. Canopy after all is fond of saying that its first focus is the “more valuable” medical rather than recreational market. And the U.S. market has many challenges still, that stem from a lack of federal reform. In fact, Canopy has frequently said in the past that they would not enter the U.S. until federal reform occurs. What gives?

What The Deal Also Does…

It is not “just” entry into the U.S. recreational market, albeit still on a state level that is significant about the deal. That starts with its timing.

When trying to understand the motivations of Canadian cannabis companies, especially ones who have eschewed the U.S. market in the past (at least until federal reform passes), it is also necessary to understand that they operate in a shifting world of global strategy that is never as straightforward as one might think. And often has nothing to do with cannabis per se.

Namely, while this deal places Canopy in the middle of the U.S. state industry it also does something else. It positions Canopy as a U.S. producer just two months after a new international pharmaceutical trade deal went into force (on February 8) called an MRA.

MRA agreements, also known as Mutual Recognition Agreements, are essentially trade deals between countries to accept the equivalency of their pharmaceutical production and supply chain.

On the cannabis front, the existence of MRAs between existing countries as cannabis has become legal, has also largely dictated the new international cannabis trade (see Canada and Germany as a perfect example) although this has been held as a closely held secret by the largest cannabis company executives (some of whom have previously denied that this was driving their expansion across Europe).

However, thanks to the agreement on this MRA in February, as of July of this year, Europe and the U.S. will formally kick off a situation where the European and therefore German health authorities will formally recognize American GMP processes.

That means that on the pharma front, Canopy has also essentially re-entered the European market, albeit by a bit of a backdoor. It also means that Canopy can immediately start to import cannabis drugs at least, made in the U.S. into the European and by extension, German market.

Cannabis drugs have been going in the opposite direction across the Atlantic to the U.S. for at least a year now (see the GW Pharma’s Epidiolex adventure last year). And further over the U.S.-Canadian border if now only bound for academic research (see Tilray).

It also may mean that they can import medical cannabis itself to be used as “medicine” or processed into one in Europe.

Does This Mean That U.S. Federal Reform Is Imminent?

Not necessarily. In fact, keeping the U.S. market in general out of the global cannabis trade, while allowing the top companies to participate both in the cross-state market and the global pharmaceutical one benefits the biggest companies. Conveniently, this also allows U.S. cannabis “pharmaceutical” producers to enter the EU in force just as Israel is expected to (third quarter this year). This also puts the “deal” U.S. President Trump and Israeli President Netanyahu cut on the subject to delay Israeli sales in an entirely new light (and one that should outrage both Americans and Israelis in the industry on this front even more). Not to mention every European hopeful producer unaware of the larger game afoot.

That said, what federal U.S. legalization will do is drop the operating costs of the larger U.S. entities now engaged in multi-state operations.

Cannabis in other words is not likely to be legalized in the U.S. before the next presidential elections for reasons that have everything to do with the profits of a few – and for that reason will certainly be a major theme in the next national political race.

And in the meantime, the biggest companies, Canopy included, are not only laughing all the way to the bank (although their shareholders are another story), but setting themselves up to be at the ground floor DNA of the global cannabis business as it establishes itself in every country of the world.

The post Canopy Growth Makes Multi-Billion Dollar Conditional Acquisition Deal appeared first on Cannabis Industry Journal.


Wisconsin City Officials Trying to Stop Church From Distributing Cannabis

Cannabis isn’t legal in the state of Wisconsin just yet, but one Madison-based Rastafarian church has utilized a religion-based loophole that allows them to serve the plant to members who make a small donation. But despite the seemingly fool-proof statute, it appears local officials aren’t going to let this one slide without a fight.

The city has given two men from the Lion of Judah House of Rastafari church an ultimatum—stop providing its members with marijuana or face potential legal repercussions.

Wisconsin City Officials Trying to Stop Church From Distributing Cannabis, Despite Legal Loophole

According to the Wisconsin State Journal, the church’s operators, founder Jesse R. Schworck and Dylan Paul Bangert, have been both smoking and distributing cannabis to their followers, citing the parish’s Rastafarian roots—a religion that allows the use of cannabis for ritualistic use—as grounds for their otherwise illicit use. Per the  church’s official website, the church remains “Wisconsin’s first & only lawful Rastafari cannabis sanctuary.”

According to local officials, however, that description could be fleeting.

The State Journal reported that police have come to the establishment several times, confiscating jars of cannabis and corresponding paraphernalia in the process. Police also delivered the building’s landlord, Charajeet Kaur, a formal notice of public nuisance, back on April 10th. Now, things have come to an impasse, with city officials slapping a cease and desist letter to the 10,000-member church, arguing that religious beliefs do not warrant an exemption from both federal and state law.

“You have established a church and are operating this ‘church’ out of 555 W. Mifflin Street,” the letter states. “You believe that because you have established this ‘church’ you are entitled to sell cannabis and marijuana related products, … This letter is to put you on official notice that selling marijuana, cannabis and THC edibles is not legal either in the City of Madison or in the State of Wisconsin. Even if you are a legitimate ‘church’, possessing and selling a Schedule 1 Controlled Substance, which these items are, is not legal under Wisconsin State Statute. You must immediately cease and desist from continuing to possess and sell, or offering to sell, these items.”

In addition to state and federal law, the ordeal also comes down to a matter of semantics.While Schworck maintains that the operation is a tax-exempt, non-for-profit religious organization, city officials argue it’s simply a front to sell marijuana and other THC-laden products. Although the church, technically, receives only donations in exchange for cannabis, law enforcement believes this is simply a technicality  to skate around state law.

“They’re just fronting the church so they can sell cannabis, edibles and marijuana,” Assistant City Attorney Jennifer Zilavy said to Channel 3000.

Another issue at hand remains zoning law. The city’s zoning administrator, Matt Tucker, says the building hasn’t been approved as a church, but rather, for retail purposes. Schworck is allegedly also selling clothing in the space, blurring the lines between legitimate congregation and retail establishment.

An Ongoing Battle

No arrests have been made up until this point, and the organization has yet to shut its doors. Zilavy says the city will be judicious and take its time throughout the ordeal.

Schworck, on the other hand, told the State Journal that he will file a federal injunction, due to what he calls “harassment and intimidation” from local officials.

As for now, however, it remains to be seen whether or not the operation will eventually “go up in smoke.”

Figuratively, of course.

The post Wisconsin City Officials Trying to Stop Church From Distributing Cannabis appeared first on High Times.