Small Study Finds Regular Cannabis Users Need More Sedation For Medical Procedures

A small study by Colorado researchers has determined that regular cannabis users may need more sedation during medical procedures. A report on the two-year study, conducted by researchers at Community Hospital in Grand Junction, Colorado, was published on Monday in The Journal of the American Osteopathic Association.

The authors of the study noted that the continuing legalization of cannabis “has created both challenges and opportunities in medicine. More patients are using cannabis, and more patients are now willing to admit cannabis use than in the past, which increases the likelihood that they will be forthcoming about use during medical questioning. Cannabis use may have implications during medical care, including procedural sedation.”

To conduct the study, researchers reviewed the medical records of 250 patients who had undergone endoscopic procedures during 2016 and 2017 and reviewed the amount of three anesthesia drugs, fentanyl, midazola, and propofol, that were used.

“Researchers found that compared with people who did not regularly use cannabis, people who regularly used cannabis required an amount of sedation for endoscopic procedures that was significantly higher,” according to the results of the study.

Patients who reported that they used cannabis on a daily or weekly basis needed on average 14 percent more fentanyl, 20 percent more midazolam, and 220 percent more propofol to reach the optimum level of sedation. The difference was so significant that the researchers recommended that anesthesiologists discuss cannabis use with patients before sedation.

“Determining cannabis use before procedural sedation can be an important tool for planning patient care and assessing both medication needs and possible risks related to increased dosage requirements during endoscopic procedures,” they wrote.

Researchers also noted that the “continued increase in legalization and use of cannabis, the field of anesthesia and sedation needs further studies with greater depth.”

More Study Needed

Dr. Roderic Eckenhoff, a professor of anesthesia at the University of Pennsylvania who did not participate in the research, agreed that the subject needed further research. He characterized the results of the study as “really tenuous at best” for several reasons. He said that the amount of sedation surgeons determine to be enough is subjective and researchers should have instead studied the effects for specific quantities of medication. He also believes that the sample size of only 25 cannabis users is too small.

“I would consider this a pilot study that maybe somebody should pick up on and do a more complete trial,” said Eckenhoff.

He noted that some patients can be unreliable and may not inform their doctors about “everything else that they take,” which may have skewed the results of the study.

“Some people who use marijuana also take other drugs recreationally,” Eckenhoff said.

He also said that the amount of resistance to propofol cited in the study was not consistent with his knowledge of the drug.

“Even if you give someone propofol for a long time, they get a little tolerant to it, but not by 200 percent,” Eckenhoff said.

He said that while more than 200 percent resistance might be “possible, I’d be surprised if that held up in a bigger study.”

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Taxes & Cannabis: 280E, R&D Credits, 199A & Qualified Opportunity Funds: Part 2

Editor’s Note: This is the second piece in a two-part series delving into tax issues. Part one discussed tax code 280E as it pertains to cannabis businesses. Part two will go into research and development credits, 199A and a discussion of risk as it relates to Qualified Opportunity Zones. 

While 280E is the most influential code section for the cannabis industry, structuring never happens in a vacuum. There are many open questions that each business must answer for themselves without court adjudication. We believe that among the riskiest of questions is whether a cannabis business can claim research and development credits.

There is no clear legal authority that either allows these credits or disallows them but certainly utilizing such credits comes at great risk. At the beginning of this article we talked about Congress and the purpose of 280E. Congress’s intention was to make sure that only the minimum required tax deductions were available to Schedule 1 and 2 sellers. A cannabis business receiving a research and development credit would not be with the intension of Congress. While the credits would be computed based on COGS expenditures, at this time we do not believe that a cannabis business should take this credit. Disallowance of COGS would create a constitutional challenge which is why Congress allowed the COGS deduction. Disallowance of Research and Development Credits does not open up the same constitutional issue since the credit is not part of COGS although calculated based on COGS expenditures. 280E states very clearly that credits arising from other code sections are disallowed in the entirety.

More recently the Tax Cut and Jobs Act (TCJA) opened up new issues for cannabis companies that are still unfolding. Two of the most publicized are Qualified Opportunity Funds and Section 199A, the 20% deduction (Qualified Business Deduction).

The 199A deduction allows eligible pass-through entities to claim an additional deduction of 20% of the income (subject to certain limitations) at the individual level potentially lowering the tax rate from 37% to 29.6%. While the American Institute of Certified Public Accountants (AICPA) and others have asked the IRS to clarify if 280E would make a cannabis business ineligible, the final regulations on the subject did not address this issue. There are other significant limitations and hurdles in 199A regulations that any business would have to first pass to be considered for the rate deduction. If a cannabis business meets all other eligibility and limitation criteria, should the pass-through income to their investors be qualified income under 199A? The answer will depend on whether the courts will treat this “deduction” as falling under the general prohibition of 280E.

We believe that there is a reasonable chance that the courts will allow the 199A deduction for cannabis companies. That does not mean, however, that we advise cannabis companies to claim this on their pass-through returns as Qualified Business Income. Much like everything else, it depends on the particular business and the risk profile that management is willing to tolerate. This is one area of tax law that is sure to be challenged in court. The more risk-averse business should pass on claiming this deduction on their returns, but monitor development with an eye to amending at a later date if favorable precedent emerges. If the amounts are large enough, consideration should be given to applying for a Private Letter Ruling, but that also has its own tax risks.

Another new tax incentive that was in the TCJA was Section 1400Z or Qualified Opportunity Zones (QOZ). The incentive allows for the deferral of capital gains until December of 2026. The use of 1400Z also results in up to a 15% decrease in capital gains tax- and tax-free appreciation if all requirements are met. While the IRS has only released proposed regulations and we anticipate significant changes to them when they are released as final, there was nothing in the proposed regulations limiting cannabis businesses from using Qualified Opportunity Funds (QOF) in their structure. It is interesting to note that the TCJA and proposed regulations did list other types of businesses that could not make investments under 1400Z along with all its benefits. Liquor stores, golf courses and sun tan parlors were among those listed but cannabis growers and dispensaries were not.

As the industry continues to mature, new issues and precedents will require CPAs and attorneys to find new solutions to best serve the industry.Using Opportunity Zones to entice investors sounds like a great opportunity, but there are significant risks. The first risk is that the proposed regulations, while currently proposed, may not be final. There is always a chance that the IRS will take a different position when the final regulations are released and add cannabis to the type of businesses that do not qualify. Another risk, and one that was previously mentioned as part of 199A and other areas of structuring, is that the IRS and the courts can always disagree with the taxpayer’s position. This is a new area of tax law and will eventually be litigated. The loss of the Opportunity Zone benefits can significantly change the return to the investors and lead to other issues.

All of these issues come into play when structuring businesses in this industry. These issues must be evaluated as they pertain to the business needs. This can be very complex and requires a great deal of research for each business opportunity. We have found that professionals operating in this industry like to know about all of their options. The most important thing we can do for the industry is to continue to educate the professionals working in it.

Accountants should be available to assist their clients and their clients’ attorneys with structuring techniques aimed at asset protection and minimizing 280E disallowances. Accountants should also be ready to speak to the questions outlined above and be prepared to explain the risks associated with each choice. As the industry continues to mature, new issues and precedents will require CPAs and attorneys to find new solutions to best serve the industry.

The post Taxes & Cannabis: 280E, R&D Credits, 199A & Qualified Opportunity Funds: Part 2 appeared first on Cannabis Industry Journal.

Hunting for Terpenes with True Terpenes

The phone alarm goes off at 5 AM, but True Terpenes co-founder Ben Cassiday is already awake. He couldn’t sleep last night. Cassiday just tasted his great white whale.

All hunters have the one quarry they’re still hunting. Captain Ahab had Moby Dick, King Arthur had the Holy Grail, and for Cassiday it’s a candy-sweet, berry scented cannabis that he got from a Columbia University botany professor when he was 18 and involved in the Michigan medical cannabis program.

Those early days in medical cannabis also led Cassiday to Oregon and True Terpenes co-founder Chris Campagna. Cassiday and Campagna founded True Terpenes to educate patients about terpenes at the medical cannabis clinics they ran. Terpenes are the compounds responsible for the flavor, scent, and effects of cannabis.

The demand for terpenes in cannabis products, food, drinks, and cosmetics quickly outpaced the medical clinic market and True Terpenes, as you know it, was born.

True Terpenes has become the household name in terpenes by replicating the flavors and effects of cannabis. Their strain profiles are created from triple-distilled isolated terpenes and use industry-leading analytics to make blends that are as close to the original flower as humanly possible. The strain profiles are developed using botanical terpenes such as linalool from lavender or beta-caryophyllene from hops which have been formulated to recreate the taste, aroma and effects of cannabis without any of the legal concerns.

However, in order to recreate something you first have to find it. Like all great hunts, hunting for terpenes starts with scouting.

Cassiday’s expeditions have taken him to Hawaii, Israel, and beyond in search of rare cannabis and terpene profiles to bring to True Terpenes audience and the world. Cassiday knows more growers than he can count and speaks with researchers like Ethan Russo routinely, but often it’s the unexpected moments of life that bring the greatest results.

A decade and several states after his meeting with the Columbia University botanist, Cassiday found himself at yet another cannabis convention. Thankfully this event featured an after party at a mansion with open consumption. That’s where the smell of berries drew him to a dark, cloudy section of the mansion and a gentleman with two very pungent zip lock bags.

A couple joints later and they had drew up plans to deliver samples to a lab for a custom terpene profile formulation project. Cassiday has to secure multiple harvests or vintages of a strain for testing to give the formulation team the best picture of what he experiences in the field.

The strains that caught Cassiday’s nose that evening? Strawberry Cheesecake and Blueberry Cookies.

“Usually I am evaluating for the bag appeal, the smell once the nug is broken, and then how that does or does not transfer to the experience when smoking,” Cassiday said. “I like to break it up with a grinder to get the most scent activation.”

These techniques showcase an important fact about terpenes and cannabis. Terpenes are volatile and will evaporate at different temperatures depending on their mass. As such you’ll mostly be smelling the monoterpenes that have evaporated and built up when you open a jar. As such it’s important to have a process like this to experience the entire profile in the flower.

“I’m always mentally taking notes of what terpenes I’m tasting,” Cassiday said. “I like to be able to compare that to what we see when we get the data back.”

It was thoughts of this data that were dancing in Cassiday’s mind as the alarm again went off. Time to catch the plane back to Portland.

Finding unique cannabis is only the first step in the process to develop True Terpenes Strain Profiles.

The True Terpenes formulation team gets to work piecing together the terpene and volatile profile of the strain once the analytical data comes in from the lab. But not before Cassiday takes a moment to compare his blind terpene tasting to the numbers coming from the machine.

“I knew these would have high linalool and terpinolene,” Cassiday said. “Those two are responsible for that floral, sweet, tart taste in blueberries, cranberries and strawberries. There’s definitely some surprises though.”

The surprises came in the form of a ketone this time. Most of the tastes, aromas and effects we love about the plant are created by terpenes. However, there are some other interesting compounds in cannabis from alcohols and esters to ketones that provide unique mouthfeel, scents and flavors. True Terpenes tests for and utilizes these compounds to create a mirror of the cannabis experience. These volatiles provide a next level of flavor for True Terpenes profiles and their new custom formulation services.

Despite utilizing cutting edge science, the process often requires several iterations to find the best recreation of the profile. Just like with cooking from a recipe, it’s always important to taste before you serve. The formulations team at True Terpenes serves as our terpene sommeliers. Our team makes sure our profiles or your custom project go beyond matching the analytical data from cannabis, to matching the experience of cannabis.

If you’re ready to level up your cannabis experience, or want to bring the flavor of cannabis and terpenes into your food, beer, or skincare find True Terpenes. True to the plant. True Experience. True Terpenes.

Written by David Heldreth

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