Lil Wayne Officially Enters Cannabis Industry

One of the most prolific rappers and cannabis enthusiasts of the generation has decided to enter the cannabis industry as Lil Wayne announced his new cannabis brand GKUA Ultra Premium early this week. 

According to GKUA launch announcement, Lil Wayne wants the new brand to celebrate the best cannabis in the world. The company will attempt to merge the cutting edge of cannabis tech with experienced cultivators to create its own one of a kind experience  

In the age of celebrity cannabis the first question you have to ask is “how is the pot?” Now obviously we’re giving Weezy the benefit of the doubt; I mean he co-headlined the first Cannabis Cup in California after the adult-use market came alive. The guy has spent the better part of the last 20 years as his own traveling weather phenomenon with the cloud coverage he’s bringing in. So one would imagine someone that loves weed that much wouldn’t just throw his iconic name on some mids; according to the announcement, he’s had samples and approved everything in the lineup. This is definitely not always the case with some celeb-backed companies grabbing whatever white label product they can. 

And that’s not to be a knock on the practice of white labeling in general, plenty of people who grow good pot and didn’t want to brand themselves deserve a mechanism to sell their wares. But like most things in life, not everyone is good at it. Regardless, we’d imagine any pot that made it through Weezy’s testing protocol has a lot of potential. 

“I used to just want to get high, now I smoke to get inspired,” Lil Wayne said of his new endeavor in the announcement. “With GKUA, I’m sharing a feeling that I love.”

GKUA and Weezy

We reached out to GKUA to get the deal on the pot, specifically in hopes of identifying who is growing it with the level of branding they are going for tossing around boutique adjectives. “We are working closely with a half dozen of the most experienced growers in Northern California in the Emerald Triangle,” GKUA’s executive team told High Times. They followed up saying the specific names of the growers are confidential at this time but they plan on putting out the details of who they’re collaborating with at a later date. 

The proprietary strains they are sourcing from those cultivators is also a bit of a mystery so far. Like many, they are using company specific strain names to prepare for the forthcoming cannabis trademarking wars. Just think about what happened with Gorilla Glue’s lawsuit multiplied by a hundred. It’s going to be ugly unless you’re a lawyer billing hours. 

Currently the GKUA is showing off a lineup of three strains available to licensed California dispensaries. They are the GKUA VIP, Hollygrove, and Uproar. Now we haven’t had the chance to try any of the three, they won’t tell us who grew it and we don’t know the genetics…but it looks like pretty decent pot. They used a regular PR Photographer type person who didn’t know how to properly light up trichomes, so tough to be definitive. 

The rest of the leadership at GKUA is obviously hyped to be working with Lil Wayne on the project. 

“The combination of our incredible products, market knowledge, and commitment to quality, paired with the unmatched fanbase of Lil Wayne, the ultimate cannabis connoisseur, creates an unprecedented opportunity to create a cannabis brand that values creativity and the artistic pursuit,” said Beau Golob, President and Co-founder GKUA Inc. “It’s an honor to lead this company along with Lil Wayne, curating a premium line of products that inspires people and feeds their creativity. This is historic and really exciting!”

At launch the lineup of products will include the flower, vapes with proprietary batteries, and raw concentrates that will be dabbable. The rollout will start with a few select Los Angeles area dispensaries and then across California and beyond in 2020. 

GKUA plans to use an array of events to help get hype levels around the brand up including VIP parties, special one-off performances, and curated artistic experiences.

In the end, the goal for GKUA’s team is to be more than just a brand in the sense that it will be another platform for Lil Wayne to connect to and inspire his millions of fans. In the process they’ll celebrate “culture and artistic achievements while appreciating and sharing the benefits of quality cannabis.”

Lil Wayne Enters Cannabis Industry
Courtesy of GKUA

In recent years Lil Wayne has been a mainstay at the Cannabis Cup but his love of marijuana and advocacy are nothing new. A decade ago he famously sat down with Katie Couric as one the top musical acts in the country and defended his marijuana use. 

“You also reportedly like your weed” Couric told Weezy with a laugh. 

“Yeah, I will stand up for marijuana any day, yes,” he replied. 

Couric asked if he smoked a lot of pot. 

“Medicinal now,” he replied Couric who began to smirk and asked for specifics. 

“I have migraines. I get migraines that just make me want to kill myself,” Lil Wayne said. 

Couric wondered his recent arrests, back then, made him wonder if he should ease up on the weed. 

“I never think that,” he replied, “I’m a rapper. That’s who I am Miss Katie, and I’m a gangster, and I do what I want, and I love to smoke.”

We’ll see how Lil Wayne’s love of the game transitions over to California’s cannabis industry.

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Taking the Guesswork out of Horticultural Lighting

With 33 states and the District of Columbia having passed laws legalizing marijuana in some form, cannabis cultivation is quickly becoming a booming new business across much of the US. From an energy standpoint, unfortunately, it’s not easy being “green”.

New Frontier Data’s 2018 Cannabis Energy Report found that legal cannabis cultivation in the US consumes approximately 1.1 million megawatt hours of electricity annually – enough to power 92,500 homes or a community the size of Newark, NJ, and accounts for carbon emissions equivalent to that of 92,600 cars. And that consumption is forecasted to increase 162 percent from 2017 to 2022. The report recommended that the industry “evaluate energy-efficient and renewable energy technologies” to nip this challenge in the bud.

Growers seeking to reduce their electricity usage through more efficient lighting face a confusing landscape of options, however. It can be difficult to know what will save electricity and work well for their operations. Technology is advancing quickly and questions abound, from how long a fixture will last and whether a manufacturer’s claims about efficacy are accurate to the effectiveness of various wavelengths for growing a particular plant.

Here’s the good news: there are reliable, third-party lighting and safety standards to help indoor growers make the leap from old-school lighting to state-of-the-art light-emitting diodes (LEDs) that use a fraction of the electricity and are increasingly effective for growing crops from cannabis to tomatoes. Here’s a closer look:

Most lighting fixtures in the North American market go through rigorous inspection by certified third-party testing labs. The first part of the check is for safety – an official UL safety standard tailored for the unique challenges of the greenhouse environment was recently released (UL 8800, the Standard for Horticultural Lighting Equipment and Systems). This standard and similar safety certifications at other major labs address wiring, environmental conditions, ingress protection and worker safety related to prolonged photobiological exposure to the eyes and skin. Growers should always ask a fixture manufacturer about safety certification specifically targeted for horticultural environments.

Next on the standards checklist for horticultural fixtures is performance testing. This often happens at the same labs that do safety testing, but is designed to verify efficacy, output, spectrum and other important performance variables. Commercial labs are certified for specific standards, so that a test on a fixture is repeatable at any other lab certified to the same standard. This performance testing results in a report summarizing items like photosynthetic photon flux (PPF), input power (watts), photosynthetic flux efficacy (PPE, measured in μmol/J or micromoles of photosynthetic photons per joule of electrical input power), and spectral content (flux per nanometer (nm) between 400 and 700 nm).

Then, there are flux maintenance standards (such as IES LM-80 and IES TM-21) that help make sure the photosynthetic light output of LED products degrades at an acceptable rate to make a grower’s investment worthwhile. The testing and calculation methods that go into these standards were painstakingly developed through a consensus of knowledgeable lighting stakeholders. A key difference between general lighting and plant lighting, however, is how flux maintenance is measured and benchmarked – the bar is significantly higher for plants compared to people since their metabolism and growth are dependent on the light spectrum and amount.

A plant in flowering under an LED fixture

What’s described above just scratches the surface of the detailed testing used to determine and communicate performance features for commercial horticultural lighting fixtures. There’s a lot of important information to know, but it takes an informed reader to analyze this information and use it to select appropriate horticultural lighting. Our organization, the DesignLights Consortium (DLC), strives to make the vetting process easier for everyone, freeing up growers to focus on their core business.

In the early days of LED lighting, electric utilities had to compare these different lighting factors and reports to inform their energy efficiency rebate/incentive programs. The DLC was founded to fill this need, serving as a central clearinghouse for setting energy efficiency and other product performance minimum standards, and to evaluate products against those standards. Then and now, lighting products that pass review qualify for an online qualified products list (QPL) that utilities use to quickly and accurately incentivize high-performing products.

Credit: ProGrowTech

With its new minimum performance standards for horticultural light fixtures, the DLC seeks to accelerate the adoption of new energy-saving LED fixtures in controlled agriculture environments. To be on the new DLC Horticultural QPL, an LED fixture must be at least 10 percent more efficacious than the best non-LED alternative – a 1,000-watt double-ended high-pressure sodium (HPS) fixture. It also must have a Q90 of 36,000 hours (the number of hours before the photon flux output depreciates to 90 percent), and its driver and fan (if included) must have a rated life of at least 50,000 hours.

Most importantly, every product is listed online in a searchable, filterable database to help growers and facility designers quickly narrow their options. For example, in a retrofit, a grower might know what PPF is needed from each fixture but might also need to stay within a power budget to avoid rewiring circuits. The DLC’s Horticultural QPL can be filtered to quickly find and compare conforming products.

When a new technology is introduced, there is always uncertainty about how to optimally apply it. The horticultural world is no different. We look forward to research supporting additional predictive metrics that allow us to take advantage of the full benefits of high-performance LED and controls technologies. In the meantime, the established standards described here allow for energy efficient and safe cultivation facilities where growers can confidently produce more with less.

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Growing Up Stoner: How I Found The Perfect Bong at Age 33

It all started this year when I wanted to buy a bong. Not just any bong. A nice bong, a pretty bong, a bong I could leave out on the table without a second thought when company came over.

I wanted a grown-up bong.

But where to procure such an item? And did this item exist? What was the object and design side of “weed culture” now?

To start from the beginning, I didn’t start smoking until I was in college. And, even then, I was two years into my degree before I tried it. But cannabis had been around me since I was fourteen, and just an adorable straight-edge little thing who observed instead of imbibed. And, man, did I observe. Up until my 30’s, I would have described “stoners” by the environment they created around them; not by the amount they smoked (or ate). A stoner, in my experience, wore tie-dyes and baggy hats. Maybe tried to rock some Rastafarian colors on a poncho hoodie. They had long hair, hemp necklaces, weed patches, and listened to Phish. This wasn’t just high school; this style existed around me in college with wall hangings, blacklight posters, and a designated “chill” room in their one-too-many-people-on-the-lease apartments. To be a regular cannabis user was to be a holdover hippie and that extended to the pieces used. Big, giant bongs with fifty percolators, or acrylic pieces that looked like tourist drinks from the Vegas strip, or a glass-blown orange and aquamarine hand pipe the length of a salami— its name was probably “Dave” or something.

I thought, “that’s what it is to be in weed culture. That’s what it is to enjoy cannabis.” If you smoke more than just at parties when a joint is passed, then you’re a part of the world. And the world was inspired by Alice in Wonderland and a little musty. But I loved smoking out with my friends so… I was a stoner. I dipped my toe into “weed culture”. In fact, my first hand pipe was bright orange. And I had an orange wall hanging with a psychedelic butterfly. Honestly, I hated them both. I had two hemp necklaces my best friend made and I wore them proudly. A couple tie-dyes I’d whip out if I was feeling spunky. Whatever, I was in my 20’s having fun. Figuring it out.

A Grown-Up Ganja Lover

But now I’m 33. I am so 33. And still a regular cannabis user, in need of a new piece, and I… just can’t with a bubbler sporting a wizard on top. Or most jam bands. And I won’t sit on a dirty Persian carpet in your living room if I don’t have to. And I don’t. I’m 33, dammit. 

So what are the options? What does being a “stoner” look like? What is “weed culture” heading into your 30’s? For answers, I turned to my friends:

“I’m an everyday heavy user and I own maybe one pair of pot leaf socks as a joke. I’m drawn to less “420 blaze it” packaging and I avoid bongs, pipes, etc that feel too “college kid”. I buy them in neutral or more grown up colors; I like them to feel like part of my furniture and decor rather than a silly novelty. I like having them out all the time and don’t want it to feel like stuff someone would hide when they have company.”

“I just enjoy the product itself and ignore the culture. As for design, price first and foremost, followed by functionality for me.”

“I hate weed culture.”

Well, we were all on the same page, hard adults, but it didn’t really answer my question. Because the difficulty was less knowing what I was looking for and more knowing where to find it. A trip into any head shop (smoke shop? See, I don’t even know the current lingo) yielded me a high selection of pieces 20-year-old me would have RAVED over but secretly resent. A search on Instagram showed me many well-crafted hand and water pipes… shaped like elephants and donuts. But then, suddenly, there it was, as though it had been right in front of me the whole time. A friend shared an Instagram post of a sand-tone water pipe with a beautiful, but simple, black design on the base. 

My Bud Vase.

According to their website, the founder, Doreen Sullivan, created the company because “marrying artistry, accessibility, and cannabis has motivated her to help close the smoking stigma gap.” 

Smoking stigma. That was my rosebud. When I was younger, imbibing in cannabis was associated with laziness and stupidity. The dumb stoner, always down for a debate but never getting anything done. It seemed hand-in-hand. Be a regular user, be a dumb stoner, be a part of “weed culture”. Blast Rush at 3am while forgetting you have pizza rolls in the oven. Barely hold down a minimum wage job. Hemp, all the hemp.

Where I thought I’d been trying to define “weed culture” or the modern cannabis user in terms of aesthetic lifestyle choices, I was really trying to build a defense against my own internalized fear of being labeled a “stoner” and all the negative connotation that comes with it. As I salivated over My Bud Vase’ beautiful collection and then sleuthed out other companies and sites sporting equally toned down but still lovely pieces, it all came into focus.

I didn’t become a grown-up stoner. Like my friends and many others, I just grew up. My tastes and preferences became more defined and though I prefer “cannabis user” as it does sound very mature… I would still call myself a stoner. “Weed culture”, as we know it, isn’t based on using cannabis. It’s based on those who want to surround themselves with elements of the product they enjoy. Which is ok if that’s your thing. As I mentioned earlier fairly forcefully, I’m 33. I prefer wearing mostly black or darker colors, I like my pieces to blend in with my decor of dried flowers and framed show posters, I keep a regular social and work schedule, and I smoke cannabis every day.

I played with “weed culture” as a kid because I, like many, was figuring myself out. Now I’ve got it mostly understood and I know what the modern stoner looks like.

Turns out, it looks like me. Older, chiller, and a fan of neutral tones.

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North Dakota Advisory Board Approves Pardons Of 26 People With Cannabis Convictions

BISMARCK, N.D. (AP) — North Dakota’s pardon advisory board took a significant step Wednesday in wiping criminal records clean for 26 people with low-level marijuana convictions, a first under a new policy aimed at fixing problems the records have caused for people trying to find jobs and housing.

With little discussion, the five-member panel approved the pardons in a single motion, instead of individually. The list of people, who have stayed out of trouble for five years, now goes to Republican Gov. Doug Burgum, who is expected to approve the pardons.

“People will
really see how easy and quick this is,” said Attorney General Wayne
Stenehjem, who pushed for the policy that started in July.

Stenehjem
estimates as many as 175,000 marijuana convictions over several decades
could be eligible. The Republican said his office will contact
attorneys statewide urging them to let their former clients know of the
change.

Stenehjem does not support legalizing recreational pot,
but he has long backed legislation that would decriminalize possession
of small amounts of marijuana.

North Dakota already had allowed
people to apply for pardons to remove marijuana-related offenses from
their records, but the process was burdensome, the attorney general
said. While the new policy doesn’t go as far as other states that
automatically dismiss or pardon convictions, it does involve an
application process.

People applying for pardons must complete a
1½-page form that law enforcement reviews before placing a case on the
pardon board’s agenda. It costs nothing to apply.

Burgum has said
the policy change could help address North Dakota’s workforce shortage
and grow its economy. He said removing the stigma for what are minor
cases from years ago in many instances allows former offenders to get
second chances and contribute to their communities.

The deadline
for the first round of applications for pardons under the new policy was
Aug. 10. The next round’s deadline is mid-January, ahead of the board’s
meeting in April, said Steve Hall, director of transitional planning
services for the state Department of Corrections and Rehabilitation.

For the first round, 32 people applied but six were rejected because they didn’t meet the criteria in the new policy, Hall said.

By James MacPherson

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FDA Issues Warnings to 15 CBD Companies, Updates Safety Concerns

On November 25th, the U.S. Food and Drug Administration (FDA) sent out warning letters to 15 different companies for “illegally selling products containing cannabidiol (CBD) in ways that violate the Federal Food, Drug, and Cosmetic Act (FD&C Act).” They also published a “Consumer Update” where they express concern regarding the general safety of CBD products. The press release also states that at this time the FDA cannot say that the CBD is generally recognized as safe (GRAS). To see the list of companies that received warning letters, check out the press release here.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

While the FDA is still trying to figure out how to regulate hemp and hemp-derived CBD products, they published these releases to let the public know they are working on it, according to FDA Principal Deputy Commissioner Amy Abernethy, M.D., Ph.D.:

“As we work quickly to further clarify our regulatory approach for products containing cannabis and cannabis-derived compounds like CBD, we’ll continue to monitor the marketplace and take action as needed against companies that violate the law in ways that raise a variety of public health concerns. In line with our mission to protect the public, foster innovation, and promote consumer confidence, this overarching approach regarding CBD is the same as the FDA would take for any other substance that we regulate. We remain concerned that some people wrongly think that the myriad of CBD products on the market, many of which are illegal, have been evaluated by the FDA and determined to be safe, or that trying CBD ‘can’t hurt.’ Aside from one prescription drug approved to treat two pediatric epilepsy disorders, these products have not been approved by the FDA and we want to be clear that a number of questions remain regarding CBD’s safety – including reports of products containing contaminants, such as pesticides and heavy metals – and there are real risks that need to be considered. We recognize the significant public interest in CBD and we must work together with stakeholders and industry to fill in the knowledge gaps about the science, safety and quality of many of these products.”

The Warning Letters

The warning letters sent to those 15 companies all mention a few types of violations to the FD&C Act. Those include marketing unapproved human and animal drugs, selling CBD products as dietary supplements and adding CBD as an ingredient to human and animal foods. All 15 companies are using websites, online retailers and social media in interstate commerce to market CBD products unlawfully, according to the press release.

FDAThis is not the first time the FDA has sent out warning letters to CBD companies. Previously, most of the warning letters were sent out regarding companies making unsubstantiated drug and health claims. This new round of 15 warning letters reaches beyond just unsubstantiated claims and identifies a few new areas of regulatory oversight that CBD companies should be wary of.

Of the 15 warning letters sent out, some were sent to companies that are marketing CBD products to children and infants, some were sent to companies using CBD as an ingredient in food products, some were marketed as dietary supplements and one company marketed their products for use in food-producing animals, such as chickens and cows. With this press release, the FDA is saying loud and clear that the above list of marketing strategies are currently unlawful, that is, until they finish their work in devising a regulatory framework for hemp-derived CBD products.

Updated Safety Concerns

Regarding the FDA saying they cannot deem CBD as generally recognized as safe (GRAS), they published a fact sheet titled “What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD.” The key words there should be noted in the parentheses: And What We’re Working to Find Out. The FDA’s research is by no means over with and, if anything, has only just begun. Refer to the fact sheet to see why the FDA couldn’t say that CBD is GRAS.

Epidiolex-GWIn the FDA’s research, they have found a few potential health problems associated with taking CBD. During the marketing application for Epidiolex as a new drug, the only approved CBD drug on the market, the FDA identified a couple of safety risks. The first one is liver injury, which they identified in blood tests, but mentioned that it could be managed easily with medical supervision. Without medical supervision, potential liver injury due to CBD consumption could go undetected, according to the FDA.

The second health concern is drug interaction. During the new drug approval process for Epidiolex, they found that other medicines could impact the dose of CBD and vice versa. The other major health concern they have is male reproductive toxicity. The FDA says that studies in lab animals showed male reproductive toxicity, including things like decrease in testicular size, inhibition of sperm growth and development and decreased circulating testosterone. They do mention, however, that “it is not yet clear what these findings mean for human patients and the impact it could have on men (or the male children of pregnant women) who take CBD.” The fact sheet also some side effects that CBD use could produce including sleepiness, gastrointestinal distress and changes in mood.

What Now?

The FDA says they are actively researching and working on learning more about the safety of CBD products. They listed a couple risks that they are looking into right now: Those include, cumulative exposure (What if you use CBD products daily for a week or a month?), special populations (effects of CBD on the elderly, pregnant or nursing women, children, etc.) and CBD in animals (safety of CBD use in pets or food-producing animals and the resulting safety of human food products like milk or eggs).

While the CBD products market could still be classified as a bit of a gray market currently, the FDA says they are working on researching it more to develop an appropriate regulatory framework. What that might look like is anyone’s guess. One thing that remains clear, however, is that the FDA will not tolerate CBD companies marketing products in ways described above. Those include making unsubstantiated health claims, marketing to children, using CBD as an ingredient in foods and marketing it as a dietary supplement.

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Nevada Lab License Suspended Amid Potency Results Investigation

Back in September, Nevada officials announced a state-wide investigation into how products with high levels of yeast and mold were sold in dispensaries and alleged that labs could possibly be manipulating potency numbers on certificates of analysis. Then in late November, regulators suspended the license for Certified Ag Labs, a cannabis testing laboratory based in Sparks, Nevada.

Nevada regulators issued a press release alleging that products tested at Certified Ag Labs “may be labeled incorrectly and could contain a different level of THC than what is listed on product packaging.” Randy Gardner, a managing member at Certified Ag Labs told the Las Vegas Review-Journal that investigators showed up to his lab in October twice to collect samples for follow up tests.

On November 18, a state notice posted on the door of the lab read, “Registration and License Suspended,” according to the Las Vegas Review-Journal.

After that, Gardner fired back. In a statement sent out shortly after, Gardner said they were accused of lying about THC test results to the Department of Taxation (the agency that regulates cannabis in Nevada).

“The state’s decision to suspend and potentially revoke our license came without warning,” says Gardner’s statement. “This accusation is as baseless as it is appalling, as we have been completely transparent with the state at all times. We take this matter very seriously, and based on my over 30 years of laboratory experience we believe these allegations unconscionable at best.”

“The state came in for their audit then came back and suspended our license without us having a chance to further clarify or refute their findings,” the statement reads. “We hope the state appreciates that a business and its employees’ livelihoods and reputations are at stake. We are pursuing our options and all legal and equitable redress will be on the table.”

The Department of Taxation, which isn’t releasing any more information currently, says they found “inaccurate and misleading” potency test results, once they tested the samples collected from Certified Ag Labs.

This isn’t the first time Nevada regulators have suspended lab testing licenses. When Nevada legalized adult use sales and the market became operational back in 2017, the state suspended a lab’s license in September of that year. Then in late 2017, Certified Ag Labs and another lab had their licenses suspended for “not following proper lab procedures and good laboratory practices,” according to Stephanie Klapstein, spokeswoman for the Department of Taxation. Those licenses were reinstated in January of 2018.

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Where Does the FDA Stand on CBD?

CBD Intro

Cannabidiol, or CBD, is one of over 1000 cannabinoids found in the Cannabis plant. CBD was identified as an isolate from Minnesota Hemp in the 1930s (Gururajan, 2016). Unlike many other cannabinoids and compounds found in cannabis flower, CBD is not adversely psychoactive. CBD, upon its discovery entered the field of vision for US regulators. There are two routes of regulation for the FDA under the 1938 Food, Drug, and Cosmetic Act – as a drug and as a food (Oconnor, 2018). The FDA has jurisdiction over drugs in a broad sense from border to border, intra and interstate. Their jurisdiction over food, however, only extends to food that crosses interstate lines. CBD therefore, because of potential food uses and medicinal uses, darkens what is already a muddy regulatory landscape.

CBD as a drug

FDAUnder the FD&C Act, a drug is defined as “any product, including a cannabis product (hemp or otherwise), that is marketed with a claim of therapeutic benefit, or with any other disease claim (Mayol, 2019). In 1995, Cannabidiol was identified as a possible solution to help combat epilepsy. Since 1995, studies have been performed to evaluate the effectiveness of CBD to treat epilepsy and lessen the frequency and severity of seizures. In 2018, the FDA approved the first cannabidiol drug, brand named Epidiolex (White, 2019). Drug approvals under the FDA jurisdiction require specific approval before they can be launched into market. That is, while Epidiolex has a specific approval, this approval does not lead to implicit approval of similar CBD drugs that treat other illnesses.

Bottom line: CBD is a recognized drug for use to treat epilepsy. Future use as a drug needs to be approved by the FDA.

CBD as an ingredient

What is seemingly the easiest route to market for CBD derived products is increasingly complicated. For ingredients, the easiest road to allowance in food is to be identified as Generally Recognized as Safe (GRAS). GRAS status is granted to ingredients that have been studied and deemed safe for human consumption by FDA-recognized experts. CBD, to date, is not GRAS. Without GRAS status, the FDA has similar mandates to CBD as a drug above. Ingredients must gain premarket approval prior to being offered for sale in interstate commerce.

Bottom line: CBD is not a recognized ingredient in food – it is neither premarket approved by the FDA nor accepted as generally safe for human consumption.

FDA Action

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

CBD product offerings continue to rise, ranging from CBD infused pillows to suppositories. While products containing CBD have increased in popularity, the FDA has stood at a distance until recently. The result of this lack of enforced policy has led to a scenario where upwards of 70% of all CBD products available online are mislabeled (Caroon, 2018).

This lack of enforcement and flexing of authority seems to be a thing of the past, however. In late November, the FDA sent a warning letter to 15 facilities that had engaged in interstate commerce with a CBD product. These warnings stemmed largely from non-compliant claims of health benefits, CBD use as a dietary supplement, and CBD used in food products offered for sale across state lines.

Until CBD is either identified as GRAS or a specific product gets preapproval, the current issues with CBD in food will remain. In the meantime, manufacturers must be aware of their ingredients, their claims, and the ramifications these may have on the FDA jurisdiction over their products.


References

Cohen, P., & Sharfstein, J. (2019). The opportunity of CBD — reforming the law. The New England Journal of Medicine, 381(4), 297-299.

Corroon, J., & Kight, R. (2018). Regulatory status of cannabidiol in the united states: A perspective. Cannabis and Cannabinoid Research, 3(1), 190-194. doi:http://dx.doi.org.ezproxy.neu.edu/10.1089/can.2018.0030

Gururajan, A., & Malone, D. (2016). Does cannabidiol have a role in the treatment of schizophrenia? Schizophrenia Research, 176(2-3), 281-290.

O’Connor, S. and Lietzan, E. (2018). The surprising reach of FDA regulation of cannabis, even after descheduling. American University Law Review 68, 823.

Mayal, S. and Throckmorton, D. (2019).  FDA Role in Regulation of Cannabis Products.  Retrieved from https://www.fda.gov/media/128156/download

White, C. (2019). A Review of Human Studies Assessing Cannabidiol’s (CBD) Therapeutic Actions and Potential. Journal of Clinical Pharmacology, 59(7), 923-934.

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Second Canadian Cannabis Company Admits To Illegal Grows

For the second time this year, a Canadian public cannabis company with interests far outside the country, has fessed up to unlicensed growing.

This time it is Hexo, a company with many issues floating since this summer’s bombshell disclosures about CannTrust.

Interestingly, of course, the company claims that it also only discovered the area on July 30 – after the acquisition of Newstrike Brands closed. And while cultivation was also immediately stopped in so-called “Block B”, this also raises many other questions – including about the level of due diligence – no matter the cannabis – in the room leading up to the purchase in the first place. That includes not just both companies on each side of the deal, but, as the Canadian press has also been quick to point out – the regulators themselves.

Beyond a similar window of timing with the sorry events of the summer on the CannTrust front, this decision also comes at a time when the beleaguered Hexo is closing the facility in question in an effort to contain costs. Nonetheless, the convenient timing and slap-on-the-wrist attitude from the regulators for this kind of “self-reporting,” is one thing. That this lenient response from regulators (CA$77 million in destroyed CannTrust product notwithstanding) has now happened twice in a row since summer, has led many to wonder what the regulators are doing when not being tipped off by whistle-blowers and company accountants about the inevitable.

In truth, coming as it does more or less on the anniversary of the first year of recreational reform and massive changes afoot in Europe, such realities should not be surprising.

Planes that are built as they are hurtling down the runway, to paraphrase a frustrated Canadian regulator last summer, tend to have a few bits that clank down to the tarmac upon wheels up. Assuming of course, that things do not just come completely unbolted at point of airborne lift.

There is no chance that this craft however, will be allowed to return to the barn, let alone land. There is too much at stake – economically, politically and medically, truth be told.

This cannabis horse has now left this territory.

And in its wake? The inevitable aftermath of a market that, while certainly deserving kudos in managing to create itself in the first place, needs time to iron out the kinks.

What Does This Mean For The Canadian Market Going Global?

With higher standards in Europe, none of this news about Hexo flies particularly well abroad. Why fight for the market entry rights of foreigners, in other words, who don’t even seem to care, much less respect domestic regulations in their own country?

So in truth, even though it is far too early to count some of the largest companies in the room out (see Canopy’s recent canna coups in Luxembourg), many of “The Canadians” – as Hexo is of course inevitably also tagged, who made the first enters since 2017, and “have all the money,” may in truth be struggling to maintain market share, if not control of their brands.

As many on the ground in Europe are indeed asking now, if large Canadian companies who are also public, cannot even meet Canadian standards, and lightly slapped on the wrist when caught, why trust the product?

The good news? The cannabis industry has proved it is resilient, if not exactly made of Teflon.

Hexo has gotten its issues out of the way for now – escaping censure apparently on a technicality and self-reporting.

However, as Canada now enters its second year of the recreational market and the seeds of not only deeper medical reform but recreational too are playing increasingly loudly in Europe, there are clearly new “shoots” in the room. And as the world prepares to say good bye to 2019, it is also clear that, especially given recent rumbles about the readiness of the Canadian market for international prime time, the dawning of 2020 will certainly begin to answer the many questions now certainly on the cannabis table abroad.

There may be heads who roll, in other words, but the show is rolling on.

The post Second Canadian Cannabis Company Admits To Illegal Grows appeared first on Cannabis Industry Journal.


The Black Friday Guide To Brands Giving Back

The day after Thanksgiving has long been viewed as the unofficial start of the holiday shopping season. But sometimes, giving money towards something meaningful can be just as rewarding as spending it on yourself and your loved ones. With this in mind, we’ve put together a list of brands that are focused on doing good. Whether they’re benefiting animal rescues, veterans, women, or members of the LGBTQ community, these remarkable companies are just a few of the many cannabis-friendly brands that are doing their part to help make the world around us a better place.

Courtesy Oregrown Industries

Oregrown Industries

Known for its active, outdoorsy aesthetic and decidedly environmentally friendly vision, Oregrown Industries is a lifestyle cannabis brand that offers a full range of cannabis products as well as apparel, headwear, and other accessories. Through its Nya Fund, Oregrown also maintains a partnership with the Humane Society of Central Oregon, focusing on senior pets in need. By contributing to the Nya Fund, customers can help subsidize the cost of supporting these lovely animals. With a $5 donation, buyers will also receive ten percent off their purchase while Oregrown matches all donations as well.

The Black Friday Guide To Cannabis Brands Giving Back
Courtesy Goldleaf

Goldleaf

Many people already know Goldleaf as the purveyor of guided journals geared to consumers, growers, and other cannabis enthusiasts. What people may not know, however, is that the Ohio-based company also makes art supplies and stunning prints, and that proceeds from the sales of some of those prints, like the Project Sanctuary Cannabis Prints, for example, go towards helping others. In this case, proceeds benefit the eponymous Project Sanctuary, a nonprofit organization founded in 2007 that’s dedicated to helping military families thrive. Goldleaf has also partnered with the Last Prisoner Project, donating proceeds from sales of the Southern California Cannabis Travel Art Print to the organization dedicated to helping prisoners convicted of cannabis-related crimes.

The Black Friday Guide To Cannabis Brands Giving Back
Courtesy W!NK/ MB Beach Buds

W!NK

Founded in 2015, W!NK is a trailblazing women-centric CBD brand that’s fiercely focused on crafting high-quality vegan beauty and wellness products, spanning everything from capsules and tinctures to lotions, scrubs, vapes, and more. The company’s founder Stacy Verbiest started W!NK as a way to create specially formulated products for a friend who was undergoing treatment after being diagnosed with breast cancer. In this spirit, W!NK’s nonprofit MB Beach Buds was established to fund mammograms for uninsured or under-insured women in order to further the opportunity for early detection.

The Black Friday Guide To Cannabis Brands Giving Back
Courtesy Magical Butter/ Facebook

Magical Butter

Magical Butter’s iconic push-button countertop extractor has made cooking with marijuana much easier for cannabis chefs while also facilitating the crafting of herb-infused beauty serums, lotions, creams, and more. Perhaps just as impressive as the extractor itself is the fact that the inventor of Magical Butter, Garyn Angel, has also established the Cheers to Goodness Foundation with a simple goal in mind: to bring treatment to medical refugees who are caught behind the bureaucratic red tape of state-mandated cannabis laws. Supporters have the option of donating to the nonprofit directly or requesting that their funds go towards a specific individual in need of treatment.

The Black Friday Guide To Cannabis Brands Giving Back
Courtesy LolaHemp

LolaHemp

LolaHemp makes full-spectrum, hand-harvested, organic hemp oil with CO2 extraction, which is lab-tested exclusively for pets. For every four bottles sold, one bottle gets donated to a rescue dog in need. LolaHemp works as an official partner with a number of organizations, including Rescue Dogs Rock (NYC), Social Tees Animal Rescue (S.T.A.R.), Bandit’s BandAid, Wyoming Dachshund and Corgi Rescue (WDCR), Imperial County Humane Society, Siouxland FOTAS, S.N.O.R.T. Rescue, Ruff House Rescue and many other rescue organizations worldwide.

The Black Friday Guide To Cannabis Brands Giving Back
Courtesy Bloom Farms

Bloom Farms

Using responsible practices, Bloom Farms makes medicated oils from California-grown cannabis, always offering a full satisfaction guarantee. As an extension of its holistic vision, the company has set out to donate one meal for every product it sells, which goes towards one of the five million Californians battling food insecurity. With support from its food bank partners, Bloom Farms has been able to donate countless meals to date, and also encourages its employees to volunteer in the community, too.

The Black Friday Guide To Cannabis Brands Giving Back
Courtesy GirlsGoneHigher.com

GirlsGoneHigher.com

GirlsGoneHigher.com is a new brand dedicated to supporting members of the LGBTQ community, which is a vital yet all-too-often ignored sector of the cannabis industry. “As a bisexual female who both enjoys cannabis and appreciates its value to society, I’ve found it very disappointing that our ‘community’ is being overlooked,” said GirlsGoneHigher.com’s Chief Creative Officer, Isabel, in a press release. “With this new brand, we hope to quickly change any associated stigmas by getting the LGBTQ community – as well as females in general – to proudly wear their love for getting higher.” GirlsGoneHigher.com features a line of fashionable apparel and accessories with the iconic cannabis leaf in solid green or rainbow colors, with a percentage of proceeds going towards LGBTQ-friendly non-profits.

The Black Friday Guide To Cannabis Brands Giving Back
Courtesy Get Together Foundation

Earthly Body

A family-owned and operated company, Earthly Body is responsible for a range of sustainably-made hair and skin brands, including CBD Daily, EMERA CBD Haircare, Marrakesh Hair Care, Hemp Seed Body Care, and ColorpHlex. The company’s founders Kevin and Mare Wachs are also responsible for the nonprofit Get Together Foundation (GTF), which is entirely supported by a percentage of Earthly Body’s yearly revenue, along with sponsorship and private donations. By supporting GTF, consumers can rest assured that part of their money goes to one of dozens of worthy organizations, including City of Hope, the Cystic Fibrosis Foundation, Music to Heal, Pure Water for the World, and many, many more.

The post The Black Friday Guide To Brands Giving Back appeared first on High Times.


Flashback Friday: The Greatest Scams In Modern History

From the July, 1979 edition of High Times comes Michael Chance’s fascinating story, “Scams: The Greatest Hustles, Cons and Rip-Offs of Modern History.”


The Western world loves nothing more than a great scam. Give them a simple thief and they will jail him for life. Give them a good con man and they will elevate him to the highest office, apotheosize him in the arts and literature, and throw fortunes at his feet. The victims of a scam may arouse our sympathy, but the perpetrators often elicit awe, envy and maybe a few books and a movie. Indeed, con artists, hucksters and magic beans have never had it so good.

The players and their marks are now so numerous that a language has followed in their wake. Such commonplace terms as rip-off, fix, and kickback were virtually unknown a generation ago. The word scam has only recently attained dictionary status and appears routinely in quotation marks in that most bottom line of language, the New York Times. Etymologists claim that this decade has been surprisingly barren in the generation of new words, but scam has arrived. It looks like it’s going to be even bigger than bustle. The scam is a way of life. A philosophy. Maybe even a political system.

The term rip-off derives from a popular scam of the mid ’60s. At that time kilos of Mexican marijuana were often sold in small, compressed “Texas bricks” that were each individually packaged in about two ounces of heavy wrapping paper. A rip-off dealer—and there were many, as this pot dominated the summer market for a good many years—would saw off a two-ounce corner of the brick, keeping the severed dope and bringing the total weight of the brick, including paper, to a kilo. You paid for two ounces of paper on each kilo. The exposed corner was there so you could examine the pot, supposedly. Some of these dealers today are successful commodities brokers.

Scam masters aren’t new to Western art and literature. Witness Mark Twain’s Duke and Dauphin from Huckleberry Finn, or Melville’s enigmatic The Confidence Man, acclaimed by many critics as having best captured the national consciousness long sought after as the elusive Great American Novel. Even more than Moby Dick. Edgar Allan Poe, always in need of some spare cash to fill his opium pipe, once wrote a fabricated account of traveling around the globe in a balloon. The story was an assignment from a New York newspaper that hoped to bolster its sagging circulation. The story, an eyepopper during the earth-bound period, worked. After Poe’s death the “hoax” was discovered.

Not quite in the same league, but close, was H.L. Mencken’s phony account of the history of the bathtub in the respected pages of the American Mercury. Mencken claimed that the bathtub was a relatively new innovation with its antecedent in the early Egyptian public baths. Complete with a brief bio of the European inventor of the bathtub, the stories generated a froth of academic studies. When months of research failed to substantiate Mencken’s claims, he said he was “flabbergasted” that anyone had believed the story in the first place. And of course there is Clifford Irving, whose phony biography of Howard Hughes earned him two years in the slammer.

A war-weary world roared with laughter when Hans Van Meegeren, arrested for allegedly selling a hot Vermeer to Hermann Goering, claimed in his defense that he had painted the picture himself. The skeptical art experts of the Nazi elite ordered him to paint another Vermeer as they watched, which he executed to perfection. He had, it turned out, produced a half-dozen Vermeers between 1939 and 1943 and sold them for more than $3 million. Twenty years later the great art institutes of Europe again suffered humiliation when the famed art forger Emil de Hory confessed all. De Hory, incidentally, is a close friend of Clifford Irving.

The world of academia has never paid much homage to scam masters, perhaps because they are too close to home. Often a philosopher’s stone turns out to be made of clay. Such was the case when the Piltdown Man, discovered by a road crew late in the 19th century and purported by many of the leading anthropologists to be the missing link, turned out in fact to have been a college prank.

Scams for the common man are perhaps as old as religion. Even before bingo, the numbers rackets and lotteries were taken from private hustlers and officially sanctioned as generators of state revenue. There was the carnival. Today the carnival is tightly regulated and relatively harmless, but from the Depression to the late ’50s it was considered a sort of Sodom and Gomorrah on wheels. Not to be confused with circuses that have wild animals and talented performers, the carnival is simply a motley rolling assortment of rides, games and sideshow freaks, probably a hybrid between vagabond theater groups and gypsy caravans that got it together on the road.

The carnivals played small towns in the South and Midwest, paying stiff nuts to the local officials and making it up through an assortment of crooked games. Like policemen’s balls, carnivals were allowed to operate gambling games in otherwise verboten areas, with presumably half the take going to the group or organization that sponsored them. After setting up revival-meeting-sized tents, some filled with new cars, tractors, radios, guns and other prizes, the carnies would throw open their games of skill and chance to all comers.

More than one carnival was burned to the ground by storms of angry townspeople after a local had lost the family farm trying to win a Kewpie doll at the six-cat tent. Competition for the backwater dollar was tough, what with riverboat gamblers and snake-oil hucksters on the loose everywhere, so the resourceful carnies developed a catalog of gimmickry that soon brought the scam dollar to their corner: basket-toss games with hidden assistants who, by pulling wires, could cause the ball to bounce out; lead-lined milk bottles for the one-ball pitch; hidden magnets and metal slugs in the pool games; loaded dice; stacked decks; they didn’t miss a trick. The carnival was also a haven for pickpockets, ex-cons and misfits who exchanged notes on their various talents. Several states outlawed carnival games altogether, and the others were soon eclipsed by Las Vegas, Atlantic City and a host of laws.

A little higher rank on the scam scale is accorded to the originators of chain letters. The chain letter is the most primal version of the pyramid scheme, the most ancient and peculiarly American of the pie-in-the-sky come-ons. An advanced construct, the Ponzi scheme, or “pyramiding,” flourished earlier in the century, and today its most sophisticated form, deficit-financed capitalism, has been adopted as the national-economy model for the West. All of these scams have as their common thread the device of forwarding money to the designers and perpetrators from those below on the premise that equity will eventually be forthcoming from those below them, or in the case of the economy, future generations. There are, of course, finite limitations on this geometric progression. This is what Harry Truman meant when he said, “The buck stops here.”

The most recent chain letter to make its inventors a fortune was the “chain of gold” letter that originated in San Francisco, a city that for some reason has always ranked high on the con artist’s itinerary. The letters are sold to each mark for $100. Fifty dollars goes to the seller of the letter, and $50 goes to the top name on a list of 12. Each time someone else buys the letter, the purchaser’s name moves one notch up the list. If the chain is unbroken, the buyer purportedly collects more than $100,000. The catch is that the first half-dozen names on such lists ordinarily belong to the same person or group who hatched the scheme in the first place. The sixfold logarithm eventually nets them money if they can find a few suckers to invest early, with the guarantee that those people will beat the bushes for new investors in hopes of getting back their original investment and maybe something extra. Of course, they seldom do. After plucking scores of gullible San Franciscans the letter leaped to the New York theater scene, another popular breeder culture for get-rich-quick gimmickry, where it reportedly netted a number of big-name Broadway fish. Theater people, like San Franciscans, little old ladies and students, seem to be a favorite target of scams.

The classic pigeon-drop has always been a favorite in certain areas—particularly San Francisco, Boston and Madison, Wisconsin, owing partly to the large numbers of students, artists and geriatrics in these towns. Its victims are almost always sweet, elderly grandmothers trying to make a fast buck. It works like this:

A young, well-dressed woman suddenly pops up in front of the elderly mark waving an envelope and yelling, “Look what I found!” The envelope is apparently stuffed with money, and she shows it to the mark, wondering what she should do. The older woman usually suggests they call the authorities. So they call the younger woman’s lawyer, who tells them to come right over. He tells them, after checking with banks and the police, that no one has claimed the money and they may be the lucky owners. There’s only one catch: the two must provide matching funds to prove “good faith.” Both $20,000 sums will be kept by the police, or a bank, for a while, then if no one claims the money it is theirs.

Of course the younger woman has no such stake and, in spite of the preposterous story about “good faith” funds, the presence of the “lawyer” more often than not overrides the mark’s suspicions, so she coughs up the $20,000. The cons seldom set up a pigeon who doesn’t have the money. Once the funds are withdrawn and delivered to the lawyer, the three set out for the bank or wherever, and at one point the lawyer leaves the room on some pretense, the younger woman soon excuses herself to go to the bathroom, and both vanish. In Madison, Wisconsin, this ploy was executed by Chicago-based con artists so frequently that there are now semiannual warnings against it in the newspapers.

A lot of scam artists these days scorn U.S. currency in favor of precious metals and jewels. Phony gems, gold fever and international contrabandistas are the stuff these intrigues are made of, too numerous to mention but one: A well-heeled Texan, introducing himself as an oil tycoon, strode into one of Houston’s high-roller jewelry stores and picked out a rare black pearl that sported a six-figure price tag. A few days later he was back, saying that his girl friend was so enthralled with the bauble that she just had to have another to make a pair of earrings. He would pay any price for an identical pearl.

The store scoured the world’s jewelry exchanges at the daily insistence of the Texan and at last found a European buyer claiming to have a line on just such a pearl. It cost, however, twice what the original did, hard cash. A buyer was dispatched to examine the pearl that, he assured the home office, was the mirror inage of the original. After a final confirmation with the overjoyed Texan the pearl was purchased and the buyer winged it back to Houston. The store called the Texan—he wasn’t in. He was never seen again, and the pearl turned out to be the same one they’d sold him.

Also worthy of note in this league is Stanley Rifkin, the Los Angeles bank accountant who through the miracle of electronics recently managed to buy $12 million worth of diamonds from the Russians with money that only existed on computer tapes. Rifkin, a computer analyst who had already ripped off the Security Pacific Bank for $10.2 million, contrived to reroute some of the bank’s computer funds to Switzerland, where he scored the diamonds. It was a week before anyone noticed.

Banking and law officials are particularly reticent about Rifkin’s case because it spotlights the simplicity of computer crime. Bunco squads have warned for 20 years that computer crime would be the wave of the future, and they were right. Not only have the biggest contemporary frauds and swindles involved computers at some strategic point, but the rising popularity of home computers no doubt augurs further enlightenment to techno-outlaws and headaches for those concerns that stash their money in electronics.

A Long Island, New York, man made a bundle with his home computer by programming it with every municipality, church and school district in the nation, then billing them for items they did not receive. Using letterheads of two bogus companies, the man sent invoices seldom exceeding $400 for items such as snow pellets and insecticides to thousands of cities in all 50 states. Few questioned such petty expenditures, and those who did assumed it was a mistake. The scam netted its mentor over $1 million a year until tripped up when a city attorney in Richland Hills, Texas, demanded repayment of two $245 checks the city had paid for nonexistent items. They received the checks back, but they bounced and the city attorney launched an investigation that turned up the operation. Had the checks been good the man might still be in business.

A more minor-league computer scam was scored by two business-machine salesmen in New York who were falsifying grades at the Queens College data-processing center. For the right price, dumb students and even nonstudents could make Phi Beta Kappa, and scores of them paid it. The electronic wizards were nailed when a physics instructor noticed the discrepancy between his handwritten grades and the computer printout.

But these scams for the most part are small potatoes. When hustlers sit around in the cell-block or in the Plaza Hotel, they talk about the legendary scam artists, confidence players who have sold national monuments and caused entire banks to collapse and entire economies to teeter on the brink of destruction. And to be a great scam it not only has to be questionably legal and financially successful, it must show up the victims to be the greedy fools that they are. Herewith, the ten greatest scams of all time.

Top 10 Scams

The Man Who Sold the Eiffel Tower

Though no one has ever bought the Brooklyn Bridge, there have been buyers for other landmarks—such as the Eiffel Tower. In 1925 an important French bureaucrat, Monsieur Dante, held a highly secretive meeting of scrap-iron dealers in a swank Paris hotel. Monsieur Dante told those assembled that the French government was taking bids on the demolition of the Eiffel Tower. The government could no longer afford to maintain the structure and could use the more than 7,000 tons of steel involved. This was all top secret.

Andre Poisson, a socially ambitious scrap-metals dealer, was determined to get the job. After making himself conspicuous with a series of ever more attractive bids, Poisson was finally summoned aside by Monsieur Dante. In situations like this, Dante explained, it was customary for an additional sum to expedite bureaucratic procedures: in other words, a bribe. Poisson paid for the Eiffel Tower and didn’t find out until Monsieur Dante was in Vienna that the government bureaucrat he had been dealing with was in reality Count Victor Lustig, one of the cleverest con men of all times.

Fortunes came and went through Lustig’s hands, always acquired through his assumed title, elegant clothes, high manners and the lordly society he frequented. Born in Czechoslovakia, Lustig was a bright scholar who spoke six languages. His quarry was mainly the European and American ocean-liner set. He worked closely with the legendary Nicky Arnstein, king of the ocean-liner, gamblers, who taught him how to pick out the nouveau riches and the gullible old rich. Time and again Lustig conned well-heeled travelers out of thousands of dollars in investment deals. Often, he would talk a partner into accepting a deal. Both would put up their money, Lustig would hold it and disappear at the next port of call.

The Rumanian Box Hoax

The other scam that Lustig perfected involved a prop called the Rumanian Box. A glossy mahogany affair replete with brass knobs, dials and gears, the box was crafted to Lustig’s specifications by a famed New York cabinetmaker and toted by Lustig to the playgrounds of the idle rich.

At a Palm Springs hotel he once spent a week and thousands of dollars winning the confidence of Herman Loller, a former auto mechanic turned tycoon through his parts-supply business, which was currently threatened by the larger auto manufacturers, who were making their own parts. After a brief acquaintance and much urging, Count Lustig finally agreed to show Loller how he made his living. After closing the curtains in his room Lustig exhibited the impressive box to his awed friend. There were two slots, each the size of a dollar bill, into which Lustig put a thousand-dollar bill. Six hours later, he explained, there would be two of the bills. The pair went to Loller’s yacht to wait. When they returned again Lustig fiddled with the controls and out came two thousand-dollar bills from the box. He told Loller he could cash them at any bank, but not the same bank, since they had the same serial number.

Loller paid $25,000 for the box but was never able to make it work. For six months he refused to believe he had been ripped off, blaming instead his own ineptitude with the controls for the box’s failure to manufacture money. Finally his enraged wife smashed the box with a hammer and destroyed it.

Lustig avoided imprisonment for 30 years and talked his way out of over 40 arrests. He once talked a vengeful sheriff, who had paid $10,000 for the box, out of shooting him by repaying his money. The sheriff was soon arrested for passing counterfeit bills. Lustig finally got nailed on a counterfeiting scheme.

The Great Ponzi Scheme

No one, excepting banks, insurance companies and the U.S. government, has ever pulled off quite such a masterful scam as Charles Ponzi. Boston residents went wild when Ponzi promised people that he would return their original investment plus 50-percent interest in 90 days. People were skeptical at first, but after he had maintained the operation without default for four months they began investing in droves.

Ponzi explained that he made money from investments in international postal-reply coupons. It was a vague story involving fluctuating rates of interests, inflation and rediscounting, with agents buying and mailing all over Europe. But Ponzi would say that he, like Rockefeller, had a right to some amount of secrecy.

After four months working Boston’s blue-collar North End, Ponzi was so successful he moved his Foreign Exchange Company, as it was now called, to classier digs. He also offered a deal where anyone who could get someone else to invest would be given ten cents on each dollar invested. Great lines of people appeared, paying their cash and receiving a slip of paper with the maturity date in return. Within six months his operation was forced to move to bigger quarters yet.

Ponzi, a poor Italian whose last job before starting his investment company was that of a $16-a-week stock clerk, from which he was fired, was now the toast of Boston upper-crust society. He and his wife moved to a mansion in suburban Lexington. They drove in a chauffeured limousine. He purchased controlling interest in the Hanover Trust Company and was soon recommended and installed as president. He bought the company that had employed him as a stock clerk barely a year after he had been fired, and he fired the man who fired him.

Ponzi was undone when the city editor of the Boston Post did some checking and found that all the postal coupons sold in the world the year before added up to only a fraction of Ponzi’s inventory. At first the expose only brought Ponzi more business; the day after the article appeared the line to Ponzi’s door was four blocks long and over $1 million was taken in. The newsman had to fight his way through the crowds to reach his office next door to Ponzi’s. But when Boston banks, which were seriously threatened, joined in the investigation, Ponzi’s secret was soon discovered: he had simply been robbing Peter to pay Paul. He would pay off the first debt with the second investment and so on. In all $15 million was involved, of which about $5 million was never recovered.

The Man Who Stole Portugal

Alvaes Reis, “the man who stole Portugal,” perpetrated perhaps the cleverest scam of all time. He managed to convince the firm of Waterlow and Sons of London, the company that printed money for the Bank of Portugal, to print money for him, using the real paper and the real plates. Reis convinced Sir William Waterlow, with the aid of forged documents and pure inspiration, that the government of Portugal wanted to issue three million pounds for circulation in their African colony of Angola. The notes would not need new serial numbers, for the government would stamp the word “Angola” on each note. The project was, naturally, top secret.

Reis and his partners (he had three) got the money, took it to Angola by suitcase, and, in order to facilitate distribution of the bills, opened a bank. They were a huge success and next tried to buy controlling interest in the Bank of Portugal. Reis’s theory was that at some point the bank would discover his fraud, and he could prevent investigation by running the bank. Behind all this was Reis’s real dream—to follow in the footsteps of his childhood hero Cecil Rhodes and create a Portuguese-African empire with himself as its leader.

As a youth, Reis studied engineering but was rejected by the government for a post in the colonial bureaucracy. He overcame that by forging a diploma from the University of London and had no trouble getting hired as a railway inspector in Angola. By the time he was 25, Reis had become inspector of public works for the colony, but this was not what Reis had in mind. He started his own company for the exploitation of Angola’s rich mineral deposits, especially gold and diamonds. Reis went looking for money in England and Holland to finance his company’s projects. He failed totally and had to go back to working for the Angolan railroad. Confident that he could pay the money back with ease after his company’s future discovery of diamond mines, Reis transferred $200,000 of the railroad’s money to the firm of Alvaes Reis. He was arrested for embezzlement, found guilty, served three months in jail during which he thought up and set up the bank-note scheme, was retried and acquitted.

Immediately on being freed he set the plan into action, with his key confederate appearing before Sir William Waterlow with forged credentials from the Portuguese government. It was the Bank of Portugal that eventually uncovered Reis’s monumental swindle. Suspicious of massive purchases of their stock, the bank’s directors grew very curious about Alvaes Reis. Police raided his Angolan bank and found great bundles of brand-new money. They should have been forgeries but were genuine in all detail. Finally, someone checked the serial numbers. It was the worst financial disaster in Portugal’s history, helped usher in the Salazar dictatorship and ruined one of the world’s greatest printing firms.

The South Sea Bubble Explosion

Another famous swindle with great political reverberations goes by the lovely name of the South Sea Bubble. The scene shifts from Portugal in the 1920s to London in 1711. There were a lot of rich people in London as in all of England at the beginning of the 18th century. Fortunes were being made in shipping, in banking, in trade and in investments. The economy was solid and it was growing and speculation was in the air. Through a treaty that terminated the war of the Spanish succession, Britain was awarded the right to trade with the Spanish colonies. The average Londoner knew nothing about the Spanish colonies (or, for that matter, about South America or anywhere else in the world except England and Europe) but that they were reported to be a source of endless riches—gold lying on the ground waiting to be picked up, etc. The South Sea Company sold this fantasy to the people of England, and they showed their faith in their (and the company’s) dream with a response so strong it has been described as mass hysteria.

The South Sea Company sold the people of England the chance to get in on the exploitation of the South Seas. Everyone invested, from the uneducated to the newly rich businessmen to the great nobles of England. In 1745 the Prince of Wales was named a governor of the company. He was soon replaced in that position by his father, King George I, who invested 60,000 pounds of his own—an enormous amount of money in those days.

In 1719, the South Sea Company took over the national debt of England. Everyone who had any power was deeply involved in the company’s fortunes. Naturally, such success did not go unimitated, and soon half of Europe was investing in the fantasy of untold riches, the promise of enough for all. People invested in companies that sprang up all around, companies that promised to fish for treasure in the sea, to extract silver from lead, to import jackasses from Spain.

The South Sea Company, believing its hold on the credulity of half a continent to be threatened by these imitators, tried to stop them by law. In revealing the fraudulent nature of these other companies, the South Sea Company burst its own bubble. People started to sell their stock, and the value of that stock dropped from 1,000 pounds a share to 180 pounds in less than two months.

Thousands of people went bankrupt. England’s economy was in serious trouble. Paper money was almost worthless. Unemployment rose and there were food riots. The crash echoed through Europe, followed by a smallpox epidemic — thought by some to be God’s punishment for fools. In the resulting arrests and trials, many of England’s leading citizens were found guilty. The South Sea Bubble was a disaster both for the company and the greedy, speculating public.

The Grand Central Station Swindle

Though it was Lustig’s style, he was not the man who peddled part of Grand Central Station. That happened in 1929. The impressive-looking stranger who approached Tony and Nick Fortunato in their Manhattan fruit store told them they had fortunately been among other successful fruit stands being considered to lease the information booth in the middle of Grand Central Station. Too many dumb questions were being asked at the booth, questions that could be handled at less cost by the ticket clerks. The agent, whose card read “T. Remington Grenfell, Vice-President, Grand Central Holding Corporation,” pulled out detailed blueprints showing plans for the conversion of the booth and specifications for a fruit stand.

The Fortunato brothers hesitated at the $100,000 advance lease, but the idea of doing business in the midst of the world’s busiest railway station convinced them to follow Grenfell to his offices for more details. A waiting chauffeur-driven limo drove them to a building next to Grand Central Station, where they entered through an office door labeled “Wilson A. Blodgett, President, Grand Central Holding Company.” As they entered, the Fortunatos overheard Blodgett finishing a phone conversation with their competitors. “Have your certified check in my hands by noon tomorrow and the booth is yours,” he told them. Horrified, Grenfell explained that the Fortunatos had just come to close the deal. Blodgett, after some consideration, decided the only fair thing to do would be to let “the first one here with the check have the lease to the booth.”

The next morning the brothers were at the bank when it opened and from there went immediately to Blodgett’s office with the money. The lease was signed and congratulations offered.

The lease called for the brothers to take over the booth on April Fool’s Day. They arrived to find business as usual in the information booth. Telling the information attendants that since it was after nine o’clock, “you and the others are supposed to be out of here,” they then had workmen begin stacking lumber and building materials next to the booth, obstructing traffic. A cop checked the lease and the blueprints and rousted a vice president of Grand Central Station who told the brothers that there was no such animal as the Grand Central Holding Company. Blodgett’s office was empty, their check had been cashed. After a year’s investigation the culprits were never found. Tony and Nick remained convinced the Grand Central Railroad itself was behind the swindle and for years would go to the information booth at the station and shake their fists and shout at the men in the booth.

64,000 Ghosts

But the biggest example of a swindle featuring a company’s financial success based on imaginary assets is both very recent and very close at hand. It is the case of the Equity Funding Corporation of Beverly Hills, a scandal that broke in 1973 and involved a record-breaking $2 billion worth of phony insurance policies.

Equity Funding Corporation of America went into business in 1960 with $10,000. Its growth in 13 years to assets of $1 billion set a new growth record. But that growth was based on sheer fantasy.

What started Equity Funding on the road to corporate fame and fortune was something called “leverage.” A salesman would tell a client, “You’re prepared to spend $300 on insurance. Instead of spending $300, spend $100—and put $200 into mutual funds.” The idea was to borrow against the mutual-fund investment to pay the premium on the insurance. The expectation was that earnings plus growth would be greater than the interest cost of the loan. Leverage meant using the same money twice. Of course, the customer had to pay two commissions, and there was no guarantee as to the financial health of the mutual fund. It was merely a debt that had to be repaid.

Insurance salesmen loved it. The public loved it. And most of all, Wall Street loved it. Equity Funding, with its unique concept and dazzling growth, became a “glamour stock.” By 1968, reported assets approached $200 million. The company moved to new quarters, the top floor of 1900 Avenue of the Stars, and its president, Stanley Goldblum, occupied the largest office in Century City. At this point, the worst crime that had been committed could be generously called creative bookkeeping.

In 1970, the stock market went through one of its periodic erosions, and Equity’s stock dropped from $80 to a low of $14 a share. It was then that Stanley Goldblum and his chief financial officers decided in favor of massive and outright fraud.They simply created imaginary people all over the United States and sold them life-insurance policies. More than 64,000 phony policies in all, totaling over a billion dollars. Using the principle of leverage, these policies were then resold, for cash, to other insurance companies. And, of course, Equity’s assets appeared to be growing tremendously, driving back up the price of the stock, making Equity Funding an attractive investment opportunity again.

These fictitious policies created a very big headache for the officers of Equity Funding, since the insurance business is tightly regulated by the government. Every detail had to ring true, and the fraud had to be kept hidden from most of the firm’s employees. Files had to be established for each “policy holder”; computers were specifically programmed, making them accomplices to the swindle; death certificates had to be forged. It all worked until Goldblum fired one of Equity’s vice-presidents as an economy measure. His name was Ronald Secrist, and he blew the whistle, ending the amazing story of Equity Funding. But, as of this writing, none of the Equity officers are in jail. Stanley Goldblum was, however, indicted in Los Angeles for mail fraud, bank fraud, securities fraud, the filing of false documents with the Securities and Exchange Commission and 41 other counts.

Don’t Ever Trust No Skirt

You would think that for a female to become a swindler she would have to be good-looking, or at least charming. Cassie Chadwick was neither of these, but she was certainly convincing. She began her career in Canada by going on a shopping spree financed solely by some business cards she had had printed with her name and the legend “Heiress to $15,000.” One of Cassie’s earliest discoveries is that people like to lend money to people who already have a lot of money.

Cassie’s shopping spree ended when she was arrested, but the intensity of her personality was such that the judge at her trial, instead of jailing her as a criminal, acquitted her on grounds of insanity. Cassie created a reality to suit herself, changing her name and history at will. In various incarnations she was the young Canadian heiress Elizabeth Bigley, who mortgaged her sister’s furniture while she was away on a trip; the wealthy Toledo clairvoyant Madame de Vere, who was sent to the Ohio penitentiary for nine years for forgery; and finally Mrs. Leroy S. Chadwick, the wife of a doctor and a prominent figure in Cleveland society.

But most of all Cassie Chadwick owed her good fortune to being the illegitimate daughter of Andrew Carnegie. At least that’s what she said. She once appeared to a carriage full of waiting lawyers (this was in New York in 1902), leaving Andrew Carnegie’s house with nearly $1 million worth of notes, just signed by Carnegie himself. The notes were later found to be forgeries. While inside the house, Cassie’s interview was with Carnegie’s housekeeper, its subject a maid’s references. The notes had been signed by Cassie at Mr. Carnegie’s kitchen table.

Cassie Chadwick lived a life of fabulous wealth in Cleveland. Once, to surprise her husband, she had the house redecorated while they ate dinner out in a downtown restaurant. She bought everything, and in great quantities, too—jewelry, paintings, furniture, the only seal dress ever made in Canada. Once she bought eight grand pianos as gifts for friends. So when Harry Rickey, an editor of the Cleveland Press, discovered Mrs. Chadwick was being sued for failure to pay a debt of $190,000, he got curious. After a lot of detective work by Mr. Rickey, his newspaper printed Cassie’s whole story, starting when she was heiress to a mere $15,000, straight through to the millions coming her way from the sometimes paternal Andrew Carnegie. She was arrested, and her “credit” was found to have come close to $2 million.

Cassie, backed up by her claim to the Carnegie fortune, seemed to cast a spell on bank presidents. Charles T. Beckwith, president of the Citizen’s National Bank of Oberlin, Ohio, had loaned Mrs. Chadwick $240,000, four times the total capitalization of his bank. Cassie died in prison but had a good run first, made possible by her wits and the greed of rich men who loaned her money at enormous rates of interest.

They Sold Plenty of Nothing

Two modern examples of empires built on a combination of assets both real and imagined were those headed by Billie Sol Estes in Texas and by Tino DeAngelis in New Jersey, both during the ’60s. The Billie Sol Estes scandal had severe repercussions for the administration of John F. Kennedy. The “salad-oil swindle’’ ruined one major brokerage and financially threatened scores of banks, trading companies and businesses.

Billie Sol Estes, a classic con man, started out with no money, just a small farm in west Texas. By the time he was 28, he was so successful he was named as one of the ten outstanding young men of 1953 by the U.S. Junior Chamber of Commerce. Through the Jaycees, Estes made many valuable contacts, and through one of them he obtained $100,000 in mortgage money. With this capital, Estes branched out into many businesses, including fertilizer and grains.

He had some unusual ideas about how to do business. “If you get into anyone far enough,” he’d say, “you’ve got yourself a partner.” In just that way, Estes joined up with a New York chemical manufacturer, an association that gave Estes some amount of financial credibility. To gain control of the anhydrous ammonia market, he lost millions of dollars undercutting other manufacturer’s prices, driving them out of business. He also took advantage of every price-support allowance offered by the U.S. government. He has been called “a welfare-state Ponzi”—he had an amazing ability to make money with the help of the Department of Agriculture.

Everything was set up to make millions of dollars. The only problem was, Estes’s setup had been so expensive to develop that he needed to raise more capital to start the money rolling in. He decided he would raise the money on nonexistent anhydrous-ammonia storage tanks. He collected more than $30 million in mortgages on imaginary tanks. He would rent an imaginary tank from a farmer and pay each farmer rent equal to the amount of the mortgage the farmer paid him. He made no money on the mortgages themselves but used their paper value as collateral for $22 million in loans.

Called “the biggest wheeler-dealer in all of west Texas,” Billie Sol Estes was not well liked. He ran for a seat on the local school board and lost to a write-in candidate. Blaming his defeat on the local newspaper, he set up a rival paper. The local paper then did a thorough investigation of Estes and printed the first story of his mortgage fraud. He served six years in jail and lost every cent he had.

Anthony DeAngelis started his remarkable career as a butcher, a field for which he showed great aptitude. He revolutionized the hog-dressing industry and made a fortune in meat during World War II, probably through the black market. When he was 35, DeAngelis bought stock control of a large meat-packing firm that sold its stock to the public and was listed on the American Stock Exchange. Five years later, the firm went bankrupt. Luckily, DeAngelis had diversified his capital before the bankruptcy and, with the help of the U.S. government, went into the salad-oil business.

The “Food for Peace” program brought surplus oil to sell to needy countries. To broaden his market, DeAngelis traveled through the world lining up orders. He was the first to take salad oil to the foreign marketplace. He took care of domestic competition for this market by buying the oil in the Midwest and selling it overseas, at a markup to the export companies. It was these companies that jumped at the chance to back him to put the scheme into operation. But no one could figure out how DeAngelis made any money. He paid the highest prices for domestic oil, paid transportation costs and finally sold the oil to export companies so cheaply there was no competition. Since everyone was making money, no one asked questions.

By the late 1950s, the business had grown to over $100 million a year, 75 percent of all the oil shipped overseas. But the real money, as usual, was coming in in the form of loans from bankers, brokers and businessmen in the United States and Europe. DeAngelis swindled hundreds of millions of dollars from these financial experts, his real victims. They would loan him money to buy more oil, but he was buying phantom oil. When DeAngelis was finally investigated (brought about by the failure of a Russian wheat deal), his miles of storage tanks were empty, and the money was gone. Many people thought DeAngelis did not work alone, and there are rumors he was backed by the Mafia. None of the money (over $100 million) was ever found. Anthony DeAngelis served seven years of his 20-year sentence and was paroled in 1972.

Uncle Sam’s Scam

Last, but far from least, there’s contemporary capitalism, which often differs from Charles Ponzi’s scam in only one respect: inflation. By devaluing tomorrow the money that is paid or owed today, the banks, insurance companies, the federal government and others who take money on the premise that they will return it in goods or services have only to pay back a portion of the money they received in the first place. Not only that, but it has been cleverly contrived so that people are forced to turn their money over to these institutions to earn piddling interest or they will lose even that.

Consider: a man has $1,000 he is saving for a Jacuzzi bathtub. If he hides it in his stereo, a year from today its buying power will have been reduced by the roughly 10-percent inflation to a real value of only $900. But if he puts it in a bank and earns 6-percent interest, the real value will have shrunk to only $954, and he will have avoided being ripped off for $54. This mark’s money is then taken by the scam masters who loan it out at even higher rates—up to 20 percent—or make long-term pledges such as social security and life insurance. Since it isn’t their money, they can’t lose. And since inflation will always go up higher than the rate at which they collect interest, these scam masters will always be rich. If it were not for inflation, this scam would, like the chain letters and Ponzi schemes everywhere, reach its finite limitations and collapse. Accordingly, price increments are subtly but inexorably advanced 10 percent each year, on transportation, food, clothing, shelter and virtually all the necessities of life that are currently subject to the scam master’s control. It is a condition of business, and any manufacturer or worker who fails to inflate by this rate will lose his or her line of credit and become an “enemy of the state.”

Again, like chain letters and Ponzi swindles, capitalist schemes are occasionally challenged. But always at a safely detached distance. For instance, when Nelson Rockefeller died, the New York Daily News, among others, characterized his father John D., the grand old man of the clan, whose business card read ‘‘John D. Rockefeller, Capitalist,” as a crook whose ‘‘special interest rate with the railroad” and “ruthless methods” made a billion dollars at a time when most people existed on the bare necessities of life, or less. Yet it is unthinkable that any newspaper in America would say the same sort of thing about the very much alive and kicking David Rockefeller, the most potent of the Rockefeller descendants, who in his capacity as head of the world’s largest capitalist monetary nerve center, Chase Manhattan Bank, is undisputed scam champion of the world.

It may seem odd to think that a whole culture embraces this scam, unprotesting, but it is hardly singular. The South Sea Bubble and the Great Depression were both similar monumental scams and little more. People like the fairy-tale finish that a scam culture promises, the lottery winner and the pot of gold under the pea. Many people in the Western world would rather live with poverty and gambler’s hope than with modest security and the certainty that nothing will change overnight. Capitalism may be a scam, but almost everybody loves a scam.

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