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OLCC Commission Modifies Cannabis License Violations

Changes reflect industry maturation, OLCC regulatory evolution

Commissioners get glimpse of cannabis equity legislation impact on agency

OREGON:  The Oregon Liquor Control Commission has taken additional action to ensure that recreational marijuana license violations better reflect the current cannabis regulatory environment compared to regulations put in place five years ago when the cannabis industry launched in Oregon. At its regular monthly meeting on April 8, 2021, the Commission also formally approved streamlining changes to processing marijuana licenses, an approach OLCC staff have already begun implementing.

In addition OLCC Commissioners learned about likely impacts affecting the agency if cannabis social equity legislation is approved by the Oregon legislature and signed into law by Governor Brown. Commissioners also approved three stipulated settlements for recreational marijuana license violations.

OLCC regulations approved in 2016, at the onset of adult-use cannabis in Oregon, aligned with guidance in the since rescinded U.S. Department of Justice Cole Memorandum, and served as appropriate guard rails for an emerging industry. The changes just approved by the Commission better reflect the regulatory oversight needed for a maturing industry.

Some of the changes assign a different category to a violation if the violation was unintentional instead of intentional. For instance, now if a surveillance camera fails licensees have more time to inform the OLCC about the problem. Another change eliminates the compounding effect of a single violation when a producer fails to notify the OLCC of a marijuana harvest; previously the OLCC assessed a separate violation each additional day the producer failed to tell regulators.

The Commission also ratified changes in the marijuana license application process designed to speed up approvals. Those changes include boosting the ownership threshold for an applicant from 10 to 20 percent, allowing more flexibility for approving business structure changes, and eliminating the pre-licensing inspection requirement prior to issuing a license.

Oregon House Bill 3112 redresses criminal and economic consequences suffered by Black, LatinX and Indigenous Oregonians related to cannabis criminalization. A member of the coalition supporting The Oregon Cannabis Equity Act outlined for Commissioners how the measure would create economic opportunity for previously disenfranchised populations by reducing regulatory costs, and establishing an equity license for individuals who have previous marijuana criminal convictions, or are from Black, LatinX or Indigenous groups.

HB 3112 would create two other license types: a delivery license and a social (on-premises) consumption license. The delivery license would allow deliveries outside the city or county of a delivery business’ location, and it would also allow delivery to a hotel, both activities that are currently prohibited.

Commissioners also ratified the following violation fines and suspensions based on stipulated settlements (detailed information on specific cases can be found here on the OLCC website):

NEBULA CANNABIS in Portland will pay a $1,155 fine OR serve a seven day recreational marijuana retailer license suspension for one violation.

Licensee is: Haramkhor, LLC; Krishna Kumar, Member.

ALTERNATIVE SOLUTIONS in Portland will pay a $5,280 fine OR serve a 32-day recreational marijuana retailer license suspension for two violations.

Licensees are: Alternative Solutions 1, Inc.; Donald VanWormer, President/Director/Stockholder; Brenda Lingle, Secretary/Director.

GRIZZILLA FARMS will surrender its marijuana producer license on the date the transfer of ownership of the business is completed or on July 30, 2021, whichever is earlier.

Licensees are: Grizzilla Farms, LLC; Mark Aguilar, Manager/Member.

Governor Phil Scott Announces Appointments To Vermont Cannabis Control Board

VERMONT: Governor Phil Scott announced today that he has appointed James Pepper of Montpelier, Julie Hulburd of Colchester and Kyle Harris of Montpelier to the Cannabis Control Board (CCB).

“The Board will play a critical role in ensuring public safety, equity and fairness while implementing this new market,” said Governor Phil Scott. “James, Julie and Kyle bring diverse and relevant experience to the CCB and I’m confident they will hit the ground running when they get to work in the coming days.”

Stopthedrugwar.orgThe CCB was created by Act 164 of 2020 for the purpose of safely, equitably and effectively implementing and administering the laws and rules regulating adult-use cannabis in Vermont. It is responsible for establishing, administering and regulating a cannabis regulatory system for commercial cannabis cultivators, wholesalers, product manufacturers, retailers and testing laboratories.

The CCB will also take over responsibility for the regulation of medical cannabis dispensaries and the administration of the medical cannabis registry, currently administered by the Vermont Department of Public Safety.

About the appointees:

James Pepper, Chair

James Pepper currently serves as a deputy state’s attorney for the Department of State’s Attorneys and Sheriffs. In this role, Pepper has worked on several criminal justice reform initiatives, including bail reform, expungement eligibility, Justice Reinvestment, use of force standards for law enforcement officers, and the expansion of juvenile jurisdiction.

Pepper also serves on the Racial Disparities in the Criminal and Juvenile Justice System Advisory Panel, the CHINS Reform Advisory Panel, the Juvenile Justice Advisory Panel, the Act 148 Working Group, and the Sentencing Commission. Prior to joining the Department, Pepper worked for former Governor Peter Shumlin as director of intergovernmental affairs and senior policy advisor, where he worked on relevant cannabis issues.

Pepper received his bachelor’s degree in political science from Johns Hopkins University and his J.D. from Vermont Law School. He and his wife Aly live in Montpelier with their identical twin boys, Beau and Wesley.

Julie Hulburd

Julie Hulburd currently serves as the human resources director at the Vermont Student Assistance Corporation and has over twenty years of Human Resources experience, including 12 years in municipal government. In her last municipal government role, Julie worked closely with leadership on the city’s diversity, equity, and inclusion goals.

Hulburd was appointed to the State Ethics Commission in 2018 and has served as its chair since 2019. She has also served as a member of her local parks and recreation advisory board, a justice of the peace and on the select board.

Hulburd has a bachelor’s degree from Northern Vermont University-Johnson. She also holds a Professional in Human Resources Certification from the Human Resources Certification Institute and is a Certified Professional with the Society for Human Resources Management. She regularly volunteers for the Vermont Brain Injury Association’s Walk for Thought, at the local Night to Shine event and the Miss Vermont Scholarship Organization.

Kyle Harris

Kyle Harris has served as an agriculture development specialist at the Vermont Agency of Agriculture, Food & Markets (VAAFM) since 2019. In this role, he has focused on emerging issues and economic development. His work has focused on dairy innovation, maple initiatives and hemp business development. He has worked closely with the Agency of Commerce and Community Development as a liaison between agencies to facilitate policy and economic discussion throughout Vermont’s agriculture portfolio. Most recently, he aided in development of Vermont’s Agriculture and Food System Strategic Plan 2021-2030.

Previous to his role with VAAFM, Harris served as the associate counsel for environmental affairs at the Corn Refiners Association in Washington, DC, where his work focused on improving the environmental footprint at both ends of the supply chain, from grower relations to growth in plant-based products and 21st century uses for agricultural feedstocks

Harris has a bachelor’s degree in history from the College of Charleston, and a J.D. & Master of Environmental Law & Policy from Vermont Law School. He has a license to practice law in Maryland. He lives in Montpelier with his wife Cate.

Canopy Growth to Acquire The Supreme Cannabis Company

CANADA: Canopy Growth Corporation and The Supreme Cannabis Company, Inc. are pleased to announce that they have entered into a definitive arrangement agreement under which Canopy will acquire all of Supreme Cannabis’ issued and outstanding common shares in a transaction valued at approximately $435 million on a fully-diluted basis.

Under the terms of the Arrangement Agreement, Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share (the “Exchange Ratio”) and $0.0001 in cash in exchange for each Supreme Cannabis Share held. The Transaction provides Supreme Cannabis shareholders with a premium per Supreme Cannabis Share of approximately 66% based on the closing prices of the Supreme Cannabis Shares and Canopy common shares on the Toronto Stock Exchange (the “TSX”) as of April 7, 2021.

The Transaction is expected to provide several benefits to both Canopy and Supreme Cannabis shareholders. Notably, following completion of the acquisition, Canopy will possess a strengthened brand portfolio including one of Canada’s leading premium brands, 7ACRES. Brand growth is anticipated with distribution supported by Canopy’s robust sales and distribution network as well as superior consumer insights and R&D capabilities. In addition to receiving a market premium, Supreme Cannabis shareholders will also benefit from Canopy’s US CBD business and conditional positioning for continued exposure to the US market expansion. Further value will be derived through the scalable Kincardine, Ontario production facility, which has a demonstrated record of producing premium flower at low cost.

Key Transaction Highlights

  • Solidifies Canopy’s leadership position in the Canadian recreational market, well-positioned for growth: The Transaction combines Canopy’s preeminent position with Supreme Cannabis’ Top-10 position in Canada to create a pro forma Canadian recreational market share of 6%(1), including 7ACRES holding Canada’s number one premium flower brand position, number one in PAX vapes, and Top-5 in pre-rolled joints(2).
    • Combined pro forma market share estimated to be 23.3% of the premium flower segment in Ontario and 21.4% in British Columbia(3).
  • Adds premium brands to Canopy’s portfolio: The addition of Supreme Cannabis’ premium brands, 7ACRES and 7ACRES Craft Collective, complement Canopy’s current consumer offering and will strengthen Canopy’s brand portfolio, with both brands expected to continue to grow with further investment and expansion. Supreme Cannabis’ Blissco and Truverra brands also add breadth to Canopy’s market presence in both the recreational and medical markets.
  • Brings a premium, low-cost and scalable cultivation facility to Canopy’s production capabilities: Supreme Cannabis’ hybrid-greenhouse cultivation facility at Kincardine, Ontario has a demonstrated capability of consistently producing premium flower from sought-after strains at low cost with significant potential for scaling.
  • Secures an immediate attractive premium for Supreme Cannabis shareholders: The Transaction provides Supreme Cannabis shareholders with a premium per Supreme Cannabis Share of approximately 66% based on the closing prices of the Supreme Cannabis Shares and Canopy common shares on the TSX as of April 7, 2021.
  • Participation by Supreme Cannabis shareholders in the future of Canopy: The Supreme Cannabis shareholders will receive Canopy common shares pursuant to the Transaction and will have access to Canopy’s consumer insights, advanced R&D and innovation capabilities as well as the opportunity to participate in the future growth of the US market based on the Company’s conditional positioning for rapid market entry. Post-Transaction, Canopy’s industry-leading balance sheet and cash position of approximately $2.5 billion positions the company for further expansion and product development.
  • Opportunity to achieve potential cost synergies estimated at approximately $30mm within two-years: Canopy anticipates post-Transaction cost synergy opportunities across both cost of goods sold and sales, general and administrative expenses, as it optimizes and integrates Supreme’s operations and shared services.

“As we continue to expand our leading brand portfolio, we’re excited to reach more consumers through Supreme’s premium brands and high-quality products, further solidifying Canopy’s market leadership,” said David Klein, Chief Executive Officer of Canopy. “Supreme’s deep commitment to superior genetics, top-tier cultivation and strict quality control, paired with Canopy’s leading consumer insights, advanced R&D and innovation capabilities, is expected to create a powerful combination that aligns with our strategic focus to generate growth with premium quality products across key categories.”

“This transaction is a testament to the value created by all the teams at Supreme and will be beneficial to all of our stakeholders,” added Beena Goldenberg, President and CEO of Supreme Cannabis. “We have been successful at delivering great products that achieved strong customer loyalty, and operating at levels of efficiency that are industry-leading. We have also built a highly sought-after premium brand in 7ACRES. Combining Supreme Cannabis with Canopy – a Canadian market leader with exposure to the United States – presents a significant value creation opportunity for both companies. We look forward to working with Canopy to complete this transaction.”

Transaction Details

The Transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act, requiring the approval of at least two-thirds of the votes cast by the shareholders of Supreme Cannabis voting at a special meeting of shareholders to consider the Transaction expected to be held in June 2021. Canopy has entered into voting support agreements with certain of Supreme Cannabis’ directors and officers pursuant to which they have agreed, among other things, to vote their Supreme Cannabis Shares in favour of the Transaction.

In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals including, but not limited to, TSX approval and approval under the Competition Act (Canada) and the satisfaction of certain other closing conditions customary in transactions of this nature. The Arrangement Agreement includes customary provisions, including non-solicitation, “fiduciary out” and “right to match” provisions as well as a termination fee of $12.5 million payable by Supreme Cannabis to Canopy in certain specified circumstances.

Assuming timely receipt of all necessary court, shareholder, regulatory and other third-party approvals and the satisfaction of all other conditions, closing of the Transaction is expected to occur by end of June 2021.

A full description of the Transaction will be set forth in the management information circular of Supreme Cannabis (the “Circular”), which will be mailed to Supreme Cannabis shareholders and filed with the Canadian securities regulators on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

Approvals and Recommendation

The Transaction was approved by the board of directors of each of Canopy and Supreme Cannabis, and Supreme Cannabis’ board of directors recommends that Supreme Cannabis shareholders vote in favour of the Transaction.

Each of BMO Capital Markets and Hyperion Capital provided the Supreme Cannabis Board of Directors with an opinion, dated April 7, 2021, to the effect that, as of the date of such opinion, the consideration payable pursuant to the Transaction is fair, from a financial point of view, to the Supreme Cannabis shareholders, in each case, based upon and subject to the respective assumptions, limitations, qualifications and other matters set forth in such opinions.

None of the securities to be issued pursuant to the Transaction have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and any securities issuable in the Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Advisors and Counsel

Cassels Brock & Blackwell LLP is acting as strategic and legal advisor to Canopy.

BMO Capital Markets is acting as exclusive financial advisor to Supreme Cannabis and provided a fairness opinion to the Supreme Cannabis board of directors. Hyperion Capital Inc. provided an independent fairness opinion to the board of directors of Supreme Cannabis. Borden Ladner Gervais LLP is acting as legal counsel to Supreme Cannabis.

  • Source: Provincial Boards; Headset Note: This market share data differs from Canopy’s internal market share data provided during Canopy’s previous earnings calls due to different methodologies and time periods. Market share data represents 01-Oct-20 through latest available data: Provincial Board data for ON online, PEI, NS (27/28-Mar-21) and NB (17-Mar-21); and Headset data for ON retail (28-Feb-21) and AB, BC and SK (31-Mar-21).
  • Market share data represents 01-Oct-20 through latest available data: Provincial Board data for ON online, PEI, NS (27/28-Mar-21) and NB (17-Mar-21); and Headset data for ON retail (28-Feb-21) and AB, BC and SK (31-Mar-21).
  • Internal Canopy Growth management estimate.

 To view the Investor Relations Presentation click here. 

NEW YORK: Governor Cuomo Signs Legislation Legalizing Adult-Use Cannabis

Legislation (S.854-A/A.1248-A) Establishes the Office of Cannabis Management; Expands New York’s Existing Medical Marijuana Program; Establishes a Licensing System; and Creates a Social and Economic Equity Program Encouraging Individuals Disproportionately Impacted by Cannabis Enforcement to Participate in Industry

Tax Collection Projected to Reach $350 Million Annually and Potentially Create 30,000 to 60,000 Jobs

NEW YORK:  Governor Andrew M. Cuomo today signed legislation (S.854-A/A.1248-A) legalizing adult-use cannabis, fulfilling a key component of his 2021 State of the State agenda. The bill signing comes after the Governor, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie announced this past Sunday, March 28, that an agreement had been reached on the legislation. The bill establishes the Office of Cannabis Management to implement a comprehensive regulatory framework that covers medical, adult-use and cannabinoid hemp. The bill also expands New York State’s existing medical marijuana and cannabinoid hemp programs. The legislation provides licensing for marijuana producers, distributors, retailers, and other actors in the cannabis market, and creates a social and economic equity program to assist individuals disproportionately impacted by cannabis enforcement that want to participate in the industry.

The development of an adult-use cannabis industry in New York State under this legislation has the potential to create significant economic opportunities for New Yorkers and the State. Tax collections from the adult-use cannabis program are projected to reach $350 million annually. Additionally, there is the potential for this new industry to create 30,000 to 60,000 new jobs across the State.

“This is a historic day in New York – one that rights the wrongs of the past by putting an end to harsh prison sentences, embraces an industry that will grow the Empire State’s economy, and prioritizes marginalized communities so those that have suffered the most will be the first to reap the benefits.” Governor Cuomo said. “This was one of my top priorities in this year’s State of the State agenda and I’m proud these comprehensive reforms address and balance the social equity, safety and economic impacts of legal adult-use cannabis. I thank both the Leader and the Speaker, and the tireless advocacy of so many for helping make today’s historic day possible.”

“Today, New York stepped up and took transformative action to end the prohibition of adult-use marijuana,” said Senate Majority Leader Andrea Stewart-Cousins. “This legislation is a momentous first step in addressing the racial disparities caused by the war on drugs that has plagued our state for too long. This effort was years in the making and we have finally achieved what many thought was impossible, a bill that legalizes marijuana while standing up for social equity, enhancing education and protecting public safety. I applaud Senator Liz Krueger and Assembly Majority Leader Crystal Peoples-Stokes for their commitment and leadership on this issue.”

“Passage of this bill will mean not just legalizing marijuana, but also investing in education and our communities, and it brings to an end decades of disproportionately targeting people of color under state and federal drug laws,” said Assembly Speaker Carl Heastie. “I thank Majority Leader Crystal Peoples-Stokes for her years of advocacy and efforts to make this bill a reality. My colleagues and I knew it was important to do this the right way – in a way that would include those targeted and frequently excluded from the process. Now, this legal industry will create jobs across our state, including for those who have had their lives upended by years of unjust drug laws.”

“I’m extremely humbled, proud and honored to have passed the historic Marijuana Regulation and Taxation Act with my partners in government Senator Liz Krueger and Governor Cuomo. This social justice initiative will provide equity to positively transform disenfranchised communities of color for the better,” said Assembly Majority Leader Crystal Peoples-Stokes. “I believe this bill can serve as a blue print for future states seeking inclusive cannabis legalization. I would be remiss not to thank all of my family, colleagues, advocates and supporters over 8 long years.”

The Governor has included legalizing adult-use cannabis in his last three budget proposals.

The New York State Cannabis/Marijuana Regulation & Taxation Act contains the following provisions:

Establish the Office of Cannabis Management
The Office of Cannabis Management will be charged with enforcing a comprehensive regulatory framework governing medical, adult-use cannabinoid hemp. It will be governed by a five-member board, with three members appointed by the Governor and one appointment by each house. OCM will be an independent office operating as part of the New York State Liquor Authority.

Medical Cannabis
The legislation will allow people with a larger list of medical conditions to access medical marijuana, increase the number of caregivers allowed per patient, and permit home cultivation of medical cannabis for patients.

Adult-Use Cannabis
The legislation will create a two-tier licensing structure that will allow for a large range of producers by separating those growers and processors from also owning retail stores. The legislation creates licenses for producers and distributors, among other entities, and the legislation will implement strict quality control, public health and consumer protections. A social and economic equity program will facilitate individuals disproportionally impacted by cannabis enforcement, including creating a goal of 50% of licenses to go to a minority or woman owned business enterprise, or distressed farmers or service-disabled veterans to encourage participation in the industry.

The Bill implements a new cannabis tax structure that will replace a weight-based tax with a tax per mg of THC at the distributor level with different rates depending on final product type. The wholesale excise tax will be moved to the retail level with a 9 percent state excise tax. The local excise tax rate will be 4 percent of the retail price. Counties will receive 25% of the local retail tax revenue and 75 percent will go to the municipality.

Cannabinoid Hemp
The legislation permits the sale of hemp flower in the cannabinoid hemp program, and allows for smokeable forms only when adult use retail stores are operational.

Adult-Use Cannabis Tax Revenue
All cannabis taxes will be deposited in the New York state cannabis revenue fund. Revenue covers reasonable costs to administer the program and implement the law. The remaining funding will be split three ways:

  • 40 Percent to Education
  • 40 Percent to Community Grants Reinvestment Fund
  • 20 Percent to Drug Treatment and Public Education Fund

Municipal Opt-Out
Cities, towns, and villages may opt-out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses by passing a local law by December 31, 2021 or nine months after the effective date of the legislation. They cannot opt-out of adult-use legalization.

Traffic Safety
The New York State Department of Health will work with institutions of higher education to conduct a controlled research study designed to evaluate methodologies and technologies for the detection of cannabis-impaired driving. After completion of the research study, DOH may create and implement rules and regulations to approve and certify a test for the presence of cannabis in drivers.

The legislation includes additional funding for drug recognition experts and law enforcement to ensure safe roadways.

The use of cannabis by drivers will remain prohibited and will carry the same penalties as it does currently.

Personal Possession and Home Cultivation
The following conditions apply to growing cannabis at home and personal possession of cannabis outside the home:

  • Personal possession outside of the home: up to 3 ounces cannabis and 24 grams of cannabis concentrate
  • Home possession: amends limits of what is permitted in the home, which must be kept in a secure location away from children
  • Home grow: permitted under the bill subject to possession limits in 18 months after first adult-use sales begin for adult recreational use and subject to regulations of the Medical Program being promulgated no sooner than 6 months:
    • 3 mature plants and 3 immature plants for adults over 21
      • 6 mature plants and 6 immature plants maximum per household

Criminal Justice and Record Expungement
The cannabis penalty framework will be restructured to avoid the criminalization seen in prohibition. Reduced penalties will be implemented for possession and sale.

  • Creates automatic expungement or resentencing for anyone with a previous marijuana conviction that would now be legal under the law and provides necessary funding
  • Adds cannabis to the clean indoor air act which establishes a baseline on where cannabis can be smoked or vaped
  • Municipalities and local governments are permitted to make laws that are more restrictive than the CIAA. Contains various provisions to ensure that cannabis is treated as a lawful substance and to prevent discriminatory enforcement

Protections for the Use of Cannabis and Workplace Safety
Unlawful discrimination will be prohibited and workplace safety protections will be implemented.

Public Health and Education Campaign
OCM will establish a robust public health and education campaign and work with neighboring states and associations to coordinate actions and policies to protect regional health and safety.

This legislation builds on years of work to understand and decriminalize cannabis for adult use. In 2018, the Department of Health, under Governor Cuomo’s direction, conducted a multi-agency study, which concluded that the positive impacts of legalizing adult-use cannabis far outweighed the negatives. It also found that decades of cannabis prohibition have failed to achieve public health and safety goals and have led to unjust arrests and convictions particularly in communities of color.

In 2019, Governor Cuomo signed legislation to decriminalize the penalties for unlawful possession of marijuana. The legislation also put forth a process to expunge records for certain marijuana convictions. Later that year, the Governor spearheaded a multi-state summit to discuss paths towards legalization of adult-use cannabis that would ensure public health and safety and coordinate programs regionally to minimize the cross-border movement of cannabis products.

Four Reasons Why Cannabis Businesses Are A Growing Target For Cyberattacks

By Corey Tobin

In today’s dominantly digital world, there are many attributes that make cannabis businesses tempting targets for cybercriminals.

If you run a cannabis business—be it retail, cultivation, manufacturing or distribution—the question of whether you will experience a cyberattack isn’t a matter of if, but when.

So what’s behind these breaches? What’s at stake? And what should your business consider when developing its digital infrastructure?

Here are the top four reasons why cannabis businesses are often targeted by cyberattacks.

  1. It’s an emerging industry
    A recent report by Experian shows that emerging industries continue to be prime targets for cybercriminals. The reason? Often, these types of operations are more focused on the ins-and-outs of starting and growing their new business than they are about their potential exposure to a cyberattack, leaving them vulnerable.
  2. Dispensaries collect sensitive information
    To comply with state laws, cannabis dispensaries are required to obtain and store large quantities of personal information in their point-of-sale systems. In 2020, tens of thousands of pieces of private customer data from multiple U.S. marijuana dispensaries were stolen. Examples of leaked data included full names, photo IDs, phone numbers, home addresses, dates of birth, medical ID numbers, signatures and items purchased.
  3. The lingering stigma regarding cannabis use
    Some customers may not want the public to know they are utilizing cannabis – even though it is legal in their state. This can include high-profile patrons who wish to remain private and customers who do not want their employers to know they have purchased cannabis products. Whatever the reason, this has increased cyber extortion and ransomware attacks on dispensaries as hackers seek to target and extort personal information of patrons who have purchased cannabis products.
  4. It is an end-user driven industry
    From budtenders to cashiers, to shipping and receiving employees, dispensaries are primarily end-user based operations. Which is why, when it comes to cybersecurity concerns, your employees should be your first line of defense against a cyberattack. It is critical to properly train employees on best practices for safeguarding against cybersecurity risks, such as identifying nefarious emails and protecting customer data – to name a few.

Ultimately, you can’t eliminate the risk of a cyberattack completely. You can, however, make sure you have all the pieces in place to be in the best shape should you experience such an event. And it starts with building effective policy language and coverage.

As a cannabis industry specialist, I can help you stay informed on key coverages to protect your business.

If you have any questions related to your coverage, please contact me at ctobin@boltonco.com or 626-703-1556.

Follow along with Corey on Instagram and LinkedIn for more.

Merkley, Daines Lead Senate Introduction Of Bipartisan Legislation To Ensure That Legal Cannabis Businesses Aren’t Shut Out Of Critical Financial Services

DISTRICT OF COLUMBIA: Oregon’s U.S. Senator Jeff Merkley and U.S. Senator Steve Daines (R-MT) today introduced the bipartisan Secure and Fair Enforcement (SAFE) Banking Act, which would ensure that legal cannabis businesses have access to critical banking services.

Most state legal medicinal or recreational cannabis businesses are denied access to the banking system because banks fear they may be prosecuted under federal law given the ongoing federal restrictions on cannabis. The lack of access to bank accounts, credit cards, and checks have forced state legal cannabis businesses to operate in cash, opening the door to tax evasion and to a dangerous pattern of robberies, including one that resulted in the murder of a store clerk in Portland.

Giving state legal cannabis businesses access to banking services would not only improve community safety, but also make it easier for Americans of color—who have long been disproportionately impacted by America’s racist ‘War on Drugs’ policies and generations of asset-stripping policies and practices—to access the capital necessary to participate in the merging cannabis industry.

“No one working in a store or behind a register should have to worry about experiencing a traumatic robbery at any moment,” said Merkley. “That means we can’t keep forcing legal cannabis businesses to operate entirely in cash—a nonsensical rule that is an open invitation to robbery and money laundering. Let’s make 2021 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees safe.”

“Montana businesses shouldn’t have to operate in all cash—they should have a safe way to conduct business,”Daines said.“My bipartisan bill will provide needed certainty for legal Montana cannabis businesses and give them the ability to freely use banks, credit unions and other financial institutions without the fear of punishment. This in turn will help increase public safety, reduce crime, support Montana small businesses, create jobs and boost local economies. A win-win for all.”

To address the safety concerns resulting from these state legal businesses being shut out of banking services, the SAFE Banking Act would prevent federal banking regulators from:

  • Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as an lawyer or landlord providing services to a legal cannabis business);
  • Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business;
  • Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
  • Taking any action on a loan to an owner or operator of a cannabis-related business.

The bill also creates a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to choose not to offer those services. The bill also provides protections for hemp and hemp-derived CBD related businesses.

The bill would require banks to comply with current Financial Crimes Enforcement Network (FinCEN) guidance, while at the same time allowing FinCEN guidance to be streamlined over time as states and the federal government adapt to legalized medicinal and recreational cannabis policies.

Momentum around the SAFE Banking Act reached new heights in the 116th Congress, when the U.S. House of Representatives passed the legislation, and included it in the HEROES Act.

The legislation is cosponsored by U.S. Senators Kyrsten Sinema (D-AZ), Edward J. Markey (D-MA), Alex Padilla (D-CA), Patrick Leahy (D-VT), Richard Durbin (D-IL), Ron Wyden (D-OR), Mazie Hirono (D-HI), Tina Smith (D-MN), Angus King (I-ME), Catherine Cortez Masto (D-NV), Michael Bennet (D-CO), Robert Menendez (D-NJ), Jon Tester (D-MT), Jacky Rosen (D-NV), Kevin Cramer (R-ND), Dan Sullivan (R-AK), Kirsten Gillibrand (D-NY), Elizabeth Warren (D-MA), Chris Murphy (D-CT), Gary Peters (D-MI), Bernie Sanders (I-VT), Brian Schatz (D-HI), Patty Murray (D-WA), Amy Klobuchar (D-MN), Rand Paul (R-KY), Bill Cassidy (R-LA), Cynthia Lummis (R-WY), and Lisa Murkowski (R-AK).

Last week, the legislation was introduced by Representatives Ed Perlmutter (D-CO-7), Nydia M. Velázquez (D-NY-07), Steve Stivers (R-OH-15), and Warren Davidson (R-OH-08) and over 100 of their colleagues in the U.S. House of Representatives.

Full text of the legislation is available here.

SAFE Banking Act Reintroduced as Momentum for Cannabis Reform Continues to Grow

Landmark, bipartisan legislation passed U.S. House multiple times in last two years

DISTRICT OF COLUMBIA: U.S. Rep. Ed Perlmutter (CO-07) reintroduced his landmark legislation to reform federal cannabis laws and reduce the public safety risk in communities across the country. The bipartisan Secure and Fair Enforcement (SAFE) Banking Act of 2021 – authored by Perlmutter and sponsored by Reps. Nydia M. Velázquez (D-NY-07), Steve Stivers (R-OH-15), and Warren Davidson (R-OH-08) and cosponsored by more than 100 members – would allow marijuana-related businesses in states with some form of legalized marijuana and strict regulatory structures to access the banking system. The SAFE Banking Act is seen as the first of many cannabis reforms Congress needs to address.

Forty-seven states, four U.S. territories, and the District of Columbia – representing 97.7 % of the U.S. population – have legalized some form of recreational or medical marijuana, including CBD. Yet current law restricts legitimate licensed marijuana businesses from accessing banking services and products, such as depository and checking accounts, resulting in businesses operating in all cash. This is a serious public safety risk for our communities, inviting theft, robberies, burglaries, or worse, as Colorado saw with the murder of Travis Mason in June 2016 and Michael Arthur in Portland, Oregon in December 2020.

“The genie is out of the bottle and has been for many years. Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long, and it is the responsibility of Congress to step up and take action to align federal and state laws for the safety of our constituents and communities. The public safety need is urgent, and a public health and economic need has also emerged with the pandemic further exacerbating the cash-only problem for the industry,” said Congressman Perlmutter. “In many states, the industry was deemed essential yet forced to continue to operate in all cash, adding a significant public health risk for businesses and their workers. As we begin our economic recovery, allowing cannabis businesses to access the banking system would also mean an influx of cash into the economy and the opportunity to create good-paying jobs. Thank you to Reps. Velázquez, Stivers and Davidson for their continued support and input on the bill, and I look forward to working with Senators Merkley and Daines to get the SAFE Banking Act passed in the Senate and signed into law.”

“The cannabis industry has been operating with great success, with many of these businesses deemed essential as the coronavirus pandemic took hold,” said Congresswoman Velázquez. “However, without the ability to safely utilize the banking system, cannabis-related businesses are left behind and stuck resorting to tactics that can threaten public safety and economic success. That’s why I am proud to join to Reps. Perlmutter, Stivers, and Davidson in introducing the SAFE Banking Act, to allow these business in states that have legalized cannabis to access to the banking system, just as any other business currently enjoys. Doing so will help create jobs in communities throughout America, while stimulating the economy as we recover from the fallout of the pandemic.”

“We have a responsibility to legislate for the reality we live in, and the reality is that legal businesses in thirty-three states, including Ohio, are being denied access to the banking system and forced to assume huge risks as a result of operating solely in cash,” Congressman Stivers said. “The SAFE Banking Act is about keeping people safe, something that 321 of my colleagues recognized last year. I look forward to seeing this bill make it all the way to the President’s desk this Congress.”

“I’m excited we’re reintroducing SAFE Banking, again with bipartisan support. This bill is an important hedge against financial cancellation, and it will protect businesses and industries that find themselves out of favor with the latest trends of the day,” said Congressman Davidson. “Today we’re talking about banking cannabis, hemp, and firearms, but tomorrow there could be another industry that has its access to the banking system threatened by statute or by public opinion. With SAFE Banking, as long as its legal in the jurisdiction, no bank should be compelled to cancel their customers by a mob saying, ‘You aren’t going to bank THOSE people are you?’ Sadly, that has already happened too often in American history and it must end.”

“No one working in a store or behind a register should have to worry about experiencing a traumatic robbery at any moment. That means we can’t keep forcing legal cannabis businesses to operate entirely in cash—a nonsensical rule that is an open invitation to robbery and money laundering,” said Senator Merkley (D-OR). “Let’s make 2021 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees safe.”

“The ‘SAFE Banking Act’ will help Montana small businesses, create jobs, boost local economies, and improve public safety,” stated Senator Daines (R-MT). “I’m glad to be working on this bipartisan legislation to provide certainty for small businesses in Montana. Montana business owners should have the ability to freely use banks, credit unions and other financial institutions without the fear of punishment.”

In the 116th Congress, 206 members cosponsored the SAFE Banking Act and it passed the U.S. House in a broad bipartisan vote of 321 to 103, with 91 Republicans and one Independent voting in support. The bill also passed as part of the Heroes Act, an earlier COVID relief package which was approved by the House on two separate occasions. In February 2019, the SAFE Banking Act prompted the first-ever congressional hearing on the issue of cannabis banking.

The SAFE Banking Act provides protections from money laundering laws for any proceeds derived from these state-legal marijuana businesses. This will get cash off the streets and into the financial system which is built to root out fraud and illicit activity. This bill also includes protections for hemp and hemp-derived CBD related businesses, which still struggle in accessing financial services despite the legalization of hemp in the 2018 Farm Bill. The current version of the bill has been updated slightly to include minor technical changes to the safe harbor, strengthened hemp provisions, and other technical updates.

The U.S. cannabis industry continues to grow at a rapid rate, with the current value estimated at $17.7 billion, a substantial amount of which remains unbanked. As of January 2021, the legal cannabis industry supports 321,000 jobs across the country. Over the 2018-2028 period, job growth in this market is projected to climb 250%, the fastest rate for any sector in the U.S. Bringing in this cash will make the industry safer and give banks and credit unions more capital to lend during the economic recovery as a result of the COVID-19 pandemic.

DC Council Chairman Mendelson Introduces Equitable Recreational Cannabis Legislation

DISTRICT OF COLUMBIA:  DC Council Chairman Phil Mendelson – along with Council members Kenyan McDuffie, Charles Allen, Brianne Nadeau, Brooke Pinto, Christina Henderson, and Mary Cheh – introduced the most comprehensive, progressive, and equitable legislation to regulate the sale of recreational Cannabis in the District of Columbia.

“This legislation is the culmination of over a year of work by my office and external stakeholders,” Mendelson said. “It creates a comprehensive regulatory framework for the cultivation, production, and sale of recreational cannabis and most significantly, this bill centers reinvestment and opportunity for people and communities hit hardest by the War on Drugs.”

The “Comprehensive Cannabis Legalization and Regulation Act of 2021” differs from previous iterations of recreational marijuana sales bills in that it establishes:

  1. A Social Equity program that mandates at least half of all licenses to be set aside for Social Equity applicants (defined as residents who have been previously convicted of cannabis-related offenses or have lived ten of the last 20 years in areas with high rates of poverty, unemployment and arrests);
  2. A Cannabis Equity and Opportunity Fund to provide financial assistance to Social Equity applicants. This is especially important given that traditional financing options are unavailable for cannabis and especially difficult for social equity applicants. Thirty percent of tax revenues from cannabis sales would be deposited into this fund;
  3. A Community Reinvestment Program Fund that would provide grants to organizations addressing issues such as economic development, homeless prevention, youth development and civil legal aid in areas hardest hit by the drug wars. Fifty percent of tax revenues from cannabis sales would be deposited into this fund;
  4. A robust public education campaign that will inform District residents of the law and focus on responsible use and harm reduction strategies for residents of legal age who consume cannabis;
  5. Automatic expungement of cannabis-related arrests and convictions, and opportunities for resentencing for individuals currently serving sentences for cannabis-related convictions;
  6. Protections for District residents who legally possess and consume cannabis pursuant to the Act so that they do not lose benefits, employment, or access to other critical resources; and
  7. Authorization for banks in the District to conduct business with cannabis licensees, and allowances for local tax deductions for cannabis licensee business expenses.

New Jersey Governor Murphy Signs Historic Adult-Use Cannabis Reform Bills Into Law

NEW JERSEY:  Governor Phil Murphy today signed historic adult-use cannabis reform bills into law, legalizing and regulating cannabis use and possession for adults 21 years and older (A21 – “The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act”) and decriminalizing marijuana and hashish possession (A1897). The Governor also signed S3454, clarifying marijuana and cannabis use and possession penalties for individuals younger than 21 years old.

“Our current marijuana prohibition laws have failed every test of social justice, which is why for years I’ve strongly supported the legalization of adult-use cannabis. Maintaining a status quo that allows tens of thousands, disproportionately people of color, to be arrested in New Jersey each year for low-level drug offenses is unjust and indefensible,” said Governor Murphy. “This November, New Jerseyans voted overwhelmingly in support of creating a well-regulated adult-use cannabis market. Although this process has taken longer than anticipated, I believe it is ending in the right place and will ultimately serve as a national model.

“This legislation will establish an industry that brings equity and economic opportunity to our communities, while establishing minimum standards for safe products and allowing law enforcement to focus their resources on real public safety matters,” continued Governor Murphy. “Today, we’re taking a monumental step forward to reduce racial disparities in our criminal justice system, while building a promising new industry and standing on the right side of history. I’d like to thank the Legislature, advocates, faith leaders, and community leaders for their dedicated work and partnership on this critical issue.”

“At long last, New Jersey is turning the page on our previous treatment of marijuana use,” said Dianna Houenou, incoming Chair of the New Jersey Cannabis Regulatory Commission (CRC). “I am excited to get to work building on the successes of the medical program and standing up the adult-use cannabis industry. It’s an honor to be part of this historic movement in New Jersey.”

“The failed War on Drugs has systematically targeted people of color and the poor, disproportionately impacting Black and Brown communities and hurting families in New Jersey and across our nation,” said U.S Senator Cory Booker. “Today is a historic day, and I applaud Governor Murphy, the legislature, and the many advocates for racial and social justice whose leadership is ensuring that New Jersey is at the forefront of equitable marijuana legalization policy. I will continue to work with my colleagues in the Senate to end the federal marijuana prohibition so we can finally begin healing the wounds of decades of injustice.”

“This is a historic reform that will have a real-life impact on social justice, law enforcement and the state’s economy,” said Senate President Steve Sweeney. “We can now move forward to correct social injustices at the same time that marijuana is made legal for adults. This  will launch a new cannabis industry with the potential to create jobs and generate economic activity at a time when it is desperately needed. The decriminalization law is the most sweeping measure of its kind in the country and is a groundbreaking step in our continued effort to make criminal justice reforms that are fairer and more effective. This will help reduce the racial disparities and social inequities that have long plagued our criminal justice system.”

“For the last fifty years, marijuana criminalization has been used as a tool to propel mass incarceration,” said Senator Sandra Cunningham. “It has done immeasurable harm to Black and Brown communities around the country, and today we begin to right the ship here in New Jersey. I look forward to seeing the tangible impact this legislation has on our communities in the years to come.”

“I am proud to have been a driving force behind the most progressive decriminalization law in the country and I am grateful to finally see it enacted,” said Senator Teresa Ruiz. “Every day roughly 100 people in New Jersey are arrested for marijuana possession, this law is a move that offers individuals a second chance and ensures they do not become entangled in the criminal justice system. This is yet another step towards bringing justice and equity to our communities. Going forward, we must continue to look for creative solutions to reverse the generational impact the War on Drugs has had.”

“This will usher in a new era of social justice by doing away with the failed policy that criminalized the use of marijuana,” said Senator Nicholas Scutari, the leading advocate of legalizing adult-use marijuana in New Jersey over the past decade. “Too many people have been arrested, incarcerated and left with criminal records that disrupt and even destroy their lives. We don’t want the criminal justice system to be an unfair barrier to success. By implementing a regulated system that allows people age 21 and over to purchase limited amounts of marijuana for personal use we will bring marijuana out of the underground market where it can be controlled, regulated and taxed, just as alcohol has been for decades. New Jersey will now be a leader in legalizing a once stigmatized drug in ways that will help the communities hurt the most by the War on Drugs and realize the economic benefits of the new adult-use cannabis market.”

“We’re moving closer to the long-overdue need to end cannabis prohibition,” said Assemblywoman Annette Quijano. “So much time, effort, and thought have gone into this legislation. We’ve continued conversations, for what I believe, has produced a stronger piece of legislation with a focused eye toward social justice and equity. This is the beginning of a new era of economic opportunity, social justice for marijuana possession, and hope for a better future for thousands of New Jersey residents.”

“With legalization comes an unprecedented opportunity for residents to clean the slate with expungement provisions and for communities to grow their economic base with businesses,” said Assemblyman Jamel Holley. “A key component of cannabis legalization is addressing social justice concerns. The fact that Black New Jerseyans are 3 or 4 times more likely to be arrested on cannabis charges has contributed to the disenfranchisement of black communities. We have the opportunity here to also right the wrongs in our society in regards to past criminal possession of cannabis. No matter where you stand in the legalized marijuana debate, there has been a clear understanding that minorities within our urban communities have been hit hardest in the so-called War on Drugs. During this entire campaign for legalization, there has been one united vocal stance: There was harm done in the past and it must be corrected.”

“This new law includes real, enterprising opportunities for New Jersey communities that have been disproportionately impacted by cannabis prohibition, along with more defined employment opportunities and a commission that requires diversity,” said Assemblywoman Britnee Timberlake. “This will be a clear revenue generator for the State, and the social justice and diversity portion in the legislation remains imperative.”

“Undoubtedly, this is the largest regulatory undertaking the state has considered since the Casino Control Commission,” said Assemblywoman Angela McKnight. “Remaining at status quo meant continued disparity in arrests for African Americans and teens for amounts now to be considered personal use.  We are moving the state in a direction more compassionate for cannabis and in line with what is happening across the country in regards to legalization.”

“This has been a long time coming in our State,” said Assemblyman Joseph Danielsen. “who chairs the Assembly Federal Relations and Oversight Reform Committee led the discussion on the bill in today’s hearing. “Social justice for black and brown communities, which have been generationally impacted by cannabis prohibition, and equity in business are priorities in this legislation. We cannot fairly, or effectively provide regulation without ensuring these communities stay at the forefront of the conversation.”

“New Jersey voters on November 3rd issued the Legislature a mandate: to provide the infrastructure for the legalization of cannabis in New Jersey. Today, we move on that directive by presenting legislation for discussion with fellow legislation and statewide stakeholders,” said Assemblyman Benjie Wimberly. “The War on Drugs in many ways became a war on particular communities, incarcerating millions of black and brown people and affecting families irreparably for decades. Our work on refining this legislation aims to correct the economic and social justice disparities surrounding cannabis use.”

“With Governor Murphy’s signature, the decades-long practice of racist marijuana enforcement will begin to recede, in a shift that emphasizes the urgency of building the most equitable framework possible for cannabis legalization,” said Amol Sinha, Executive Director of the American Civil Liberties Union of New Jersey, which is a founding member of New Jersey United for Marijuana Reform. “With this historic reform, New Jersey also shifts our approach to youth possession and use by moving away from the punitive status quo to a framework that values public health, harm reduction, and the well-being of young people. Our state’s cannabis laws can set a new standard for what justice can look like, with the removal of criminal penalties for possession and an unprecedented portion of tax revenue dedicated to addressing the harms wrought by the drug war. Signing these laws puts in motion the next phase of this effort: to work relentlessly to transform the principles of legalization into greater racial and social justice in New Jersey. This is a new beginning – and the culmination of years of advocacy – and we must keep in mind that it is only the start.”

Under A21, the Cannabis Regulatory Commission (CRC) will promulgate regulations to govern the medical and adult-use industries and oversee the applications for licensing of cannabis businesses. The legislation further provides for the Legislature to reinvest cannabis revenues in designated “impact zones”; directs the CRC to promote diversity and inclusion in business ownership; and contains critical employment protections for people who engage in lawful behavior with respect to cannabis.

A1897 reforms criminal and civil penalties for marijuana and hashish offenses, as well as provides remedies for people currently facing certain marijuana charges. The bill prevents unlawful low-level distribution and possession offenses from being used in pretrial release, probation, and parole decisions and provides certain protections against discrimination in employment, housing, and places of public accommodation. The bill also creates a pathway to vacate active sentences for certain offenses committed before enactment of the enabling legislation.

The Governor today also signed S3454 into law, clarifying penalties for marijuana and cannabis possession and consumption for individuals younger than 21 years old. The legislation corrects inconsistencies in A21 and A1897 concerning marijuana and cannabis penalties for those underage.

“I have been working on decriminalizing adult-use marijuana for well over three years now, and I am happy to finally see it become a reality,” said Senator Ronald Rice. “This is a common-sense and just law that gives an equal playing field for folks in communities of color. Many have argued that legalizing adult-use marijuana has been for social, economic and criminal justice, however, decriminalization for me, is equally as important. I will continue to watch closely and fight to ensure communities of color are treated equally.”

“This is only one piece in the many parts of change that must be done in the name of social justice for our communities. The War on Drugs in many ways became a war on particular communities, incarcerating millions of people and affecting families irreparably for decades,” said Assemblyman Benjie Wimberly. “The action we take now to help our black and brown communities who have been disproportionately affected by current laws surrounding cannabis use is critical to trauma for future generations.”

“There have been far too many people, especially those from Black and Hispanic communities, who have been negatively impacted by the criminalization of cannabis,” said Assemblywoman Annette Quijano. “There have been long-term impacts on the lives of all people in this state, but considerably those of color. This law is the product of taking a hard look at our current laws, listening to the will of the majority of New Jerseyans and taking a common-sense approach to cannabis offenses.”

“Black New Jerseyans are up to four times more likely to be arrested on cannabis charges than White people. It is a sad fact, a further painful reminder that so people in our communities have been disenfranchised for far too long,” said Assemblyman Jamel Holley. “There have always been glaring social justice concerns and obvious inequity in the high number of arrests of minority residents. Now, finally, this is the time for it to stop.”

“It’s time for the change we seek,” said Assemblywoman Angela McKnight. “New Jersey residents are not happy with the status quo and we need to move in a direction of compassion for the communities that have long been targeted by current regulatory criteria. The call for action, for social justice reform, is resounding throughout our nation. And it begins in New Jersey today.”

“Decriminalization and expungement for those who have been disproportionately incarcerated for marijuana offenses is well overdue in New Jersey and many other states throughout this nation,” said Assemblywoman Britnee Timberlake. “A criminal marijuana charge has a detrimental effect on an individual’s opportunity to access higher education, obtain gainful employment, receive housing support, and address child custody issues.  Not all communities are impacted equally by marijuana enforcement, measures to reduce the collateral consequences of criminal records are ones of racial, social, and economic justice. This is about social justice for a people who have endured the inequities in the law for generations.”

In July 2019, Governor Murphy signed legislation (“The Jake Honig Compassionate Use Medical Cannabis Act”) to reform New Jersey’s Medicinal Marijuana Program (MMP) and expand patient access to medical marijuana, ensuring this life-changing medical treatment is affordable and accessible for those who need it most.

In December 2019, Governor Murphy signed one of the most progressive expungement reforms in the nation, giving individuals entangled in the criminal justice system the opportunity to fully participate in society. S4154 eliminated fees for expungement applications and additionally created a petition process for “clean slate” expungement for residents, as well as required the State to implement an automated clean slate expungement system. Furthermore, the bill required that low-level marijuana convictions be sealed upon the disposition of a case, preventing those convictions from being used against individuals in the future.

 

Curt’s Cannabis Corner: What Is Delta-8 THC?

 

UPDATE: “Understanding Legal Status”

Editor’s Note:  Welcome to the first installment in the new series of educational articles from technical writer Curt Robbins at Higher Learning LV and MJNews Network. This collection is intended for cannabis and hemp industry professionals who wish to gain a better understanding of the nuanced biochemistry of this specialand newly legalherb.  

For the next two weeks, Curt teaches readers about the hot new phytomolecule delta-8 THC that is causing such a stir among consumers, entrepreneurs, and medical professionals.


CURT’S CANNABIS CORNER

What is Delta-8 THC?

By Curt Robbins

For years, the producers, processors, distributors, marketers, regulators, and consumers of cannabis have focused primarily on only two molecules produced by the plant: Tetrahydrocannabinol (THC) and cannabidiol (CBD). Both are sold by thousands of companies in the United States, United Kingdom, and Canada.

 

As a wave of medical and adult use marijuana legalization reaches beyond North America to the far corners of the globe, companies are beginning to promote and exploit additional wellness molecules produced by cannabis and hemp. Creative entrepreneurs and product formulators are seeing the advantages, both financially and legally, of leveraging molecular options beyond CBD and THC. 

The Big Picture

The cannabis/hemp plant species produces three primary families of wellness molecules that, together, number in the hundreds. There are approximately 146 cannabinoids, 20 flavonoids, and 200 terpenesthe majority of which have demonstrated significant medicinal efficacy, as revealed by thousands of peer-reviewed research studies since the late 18th century. 

Before delving into the details of delta-8 THC, it is important to properly frame the topic.   

Understanding Molecular Analogs 

Most cannabis consumers are ignorant of the fact that the chemical compounds produced by cannabis are members of small groups called analogs (sometimes cited as isomers in research literature). In fact, the CBD family features seven distinct analogs, as does the cannabinoid cannabigerol (CBG).    

 

THC is no exception. The analog with which most consumers are familiar is the infamous delta-9 variant (technically called the neutral analog), which produces sometimes significant psychoactivity. There’s also the acidic precursor THCA, which conveys no psychoactivity but significant wellness benefits and is popular as a juiced edible.

Yet another THC analog is the varin version, THCV, which conveys greater psychoactivity than delta-9, but only at more potent doses. An Italian research study published in December 2019 discovered additional THC and CBD analogs, THCP and CBDP, respectively (the researchers dubbed them the phorols). Delta-8 THC is yet another member of this collection of molecular analogs.

While molecular analogs sometimes share many of the same effects when consumed by humans (such as decreased systemic inflammation or an alleviation of depression or pain), such homogeneity cannot be assumed. For example, while delta-8 and delta-9 THC both stimulate appetite, THCV decreases it! Another frequently confusing feature of cannabinoids is a characteristic called the biphasic response curve. This mechanism involves a molecule producing one effect at a low dose and a differentand sometimes polar oppositeeffect at a stronger dose. 

A good example of the mechanism of biphasic response curves is delta-9 THC. At low doses, this molecule is known for helping consumers manage stress and decrease anxiety (“Netflix and chill, dude”). At more potent doses, however, the same molecule can cause increases in anxiety and paranoia and even result in panic attacks. 

In the end, the differences between cannabinoid analogs are good because they provide additional options to patients and lifestyle consumers. Crohn’s disease and cancer patients undergoing chemotherapy experience sometimes extreme nausea and lack of appetite, which can lead to malnutrition and worsen their health. Wellness molecules that function as effective appetite stimulants are of obvious value to such consumer populations. 

Understanding Hemp vs. Cannabis

To properly understand the characteristics of delta-8 THC relative to the myriad molecules produced by the cannabis plant, one must first gain insight into the legal and technical differences between hemp and cannabis. Hemp is considered any sample of the plant that tests below 0.3 percent (one-third of one percent) delta-9 THC in weight by volume (research has indicated that psychotropic effects do not manifest in most adult consumers until samples feature at least one percent delta-9 THC). 

Hemp and cannabis have been illegal in the United States since August 1937, when the Marihuana Tax Act was passed by Congress. In December 2018, Congress reversed course after 81 years of prohibition by enacting the Farm Bill, which legalized samples of the plant containing below the 0.3 percent delta-9 THC standard employed in North America. Europe features a stricter 0.2 percent delta-9 THC limit, although this may change to 0.3 percent, in alignment with global market leaders such as the U.S. and Canada, in the near future.    

Delta-9 THC is currently considered a Schedule I drug which, by definition, implies that it provides zero medicinal benefit while displaying a strong propensity for abuse. Delta-8 THC, however, is legally categorized as a component of hemp, meaning that it falls under different regulatory oversight and can be sold in dozens of U.S. states. Legally, delta-8 and delta-9 THC are in different universes. From a regulatory perspective, delta-8 THC is managed more similarly to CBD. 

This important legal distinction means that companies can formulate and market products containing delta-8 THC and sell them in most states. Delta-9 THC products, on the contrary, can be produced and sold in only 15 U.S. states, with no interstate commerce or merchant banking permitted under the current scheme of federal prohibition. 

Understanding Legal Status

Hemp and cannabis have been illegal in the United States since August 1937, when the Marihuana Tax Act was passed by Congress. In December 2018, Congress reversed course after 81 years of prohibition by enacting the Farm Bill, which legalized samples of the plant containing below the 0.3 percent THC standard employed in North America, which it defines as “hemp.” Europe features a stricter 0.2 percent THC limit, although this may change to 0.3 percent, in alignment with global market leaders such as the U.S. and Canada, in the near future.    

Both delta-9 and delta-8 THC are currently considered Schedule I drugs by the U.S. Drug Enforcement Agency. This means that all regulatory oversight and legal restrictions placed on delta-9 THC also apply to delta-8. Some of the companies producing delta-8 products are doing so legally under the laws of their home state, but, just as with delta-9 products, in defiance of federal oversight. 

It must be emphasized that such companies remain legal only if they restrict sales of their product to within the borders of their home state. Any interstate commerce activity falls under the strict purview of federal authorities, including the DEA, and Schedule I status.   

Confusion regarding these relatively new laws surrounds many interpretations of the legal status of delta-8 THC and emerging products. Some parties believe that delta-8 derived from hemp (samples of the cannabis plant genome that feature <0.3 percent delta-9 THC) are a legal loophole that allow them to narrowly skirt any laws of prohibition at the state or federal level. 

“You have a drug that essentially gets you high, but is fully legal. The whole thing is comical,” said Lukas Gilkey, CEO of Hometown Hero CBD in Austin, Texas, during an interview with the New York Times

However, many legal authorities paint a different picture. “Dealing in any way with delta-8 THC is not without significant legal risk,” said Alex Buscher, a Colorado lawyer who specializes in cannabis law, during an interview for the New York Times article cited above.

Some companies have invested in production and multi-state marketing of delta-8 products. Unfortunately, they are doing so under the false belief that their formulations are categorized as hemp under the Farm Bill and, thus, legal.

Unfortunately, this is not the case. Delta-8 and delta-9 THC fall under the identical categorization and carry the same enforcement mechanisms and penalties.     

Understanding Delta-8 THC

Regardless of the legal status of delta-8 THC, let’s compare and contrast the medicinal efficacy of both compounds. Despite its reputation for helping consumers unwind from a stressful day, delta-9 THC has a nasty reputation for causing the opposite when consumed in strong doses: Elevated anxiety, paranoia, and sometimes panic attacks. Disorientation, confusion, and other forms of distress resulting from too much delta-9 have been documented by hospital emergency rooms and psychologists for decades. 

Delta-8 THC has been reported, through both formal research and anecdotal testimony, to deliver roughly two-thirds of the psychoactivity of the delta-9 isomer, but without the paranoia. This provides an option for those who avoid delta-9 THC or cannabis overall due to a previous negative experience with the herb. 

That said, it should be noted that the potential for consumers, especially novices, to experience increased anxiety or paranoia when consuming any psychotropic substance, especially in potent doses, always exists. Doctors and wellness professionals should experiment over time and “start low and go slow” with the dosing of delta-8. Many consumers have reported positive experiences when consuming delta-8 THC, especially in comparison to delta-9. 

One distinct difference between these two analogs is their relative volumes in plant samples. Most modern cultivars and chemovars (“strains”) of cannabis have been bred to increase delta-9 THC levels (which typically range from 10 to 30 percent), not CBD or delta-8. As such, delta-8 THC is found in small quantities in natural plant samples (typically well under one percent, similar to CBG). Delta-8 is sometimes extracted and concentrated by complex processing equipment requiring specially trained technicians. More often, however, it is synthesized from molecules that feature similar molecular structures, such as CBD and delta-9 THC. 

Some doctors, including Dr. Benjamin Caplan (a clinical practitioner in Boston who recommends legal cannabis to his patients), are finding superior results with their patients when they mix the correct doses of delta-8 and delta-9. Some wellness professionals are employing such a formulation instead of the more traditional delta-9 and CBD mix. 

“While the combination of delta-8 and delta-9 often yields a less euphoric experience, it can be a very pleasant alternative to blends of delta-9 THC and CBD,” Caplan told me during an exclusive interview.

In addition to appetite stimulation, delta-8 THC delivers anxiety reduction, can help treat pain, has shown antioxidant efficacy, and is a powerful tool in the treatment of nausea. Caplan described delta-8 THC as a “fan favorite” among his patients. 

Delta-9 Tolerance Break Tool?

Some companies and caregivers have begun exploring the use of delta-8 THC as a tool to help daily users, especially heavy cannabis consumers, to lower their tolerance to delta-9 THC. Even slight improvements in the relative potency of delta-9 based on reduced tolerance can equal significant monetary savings for such large volume consumers. 

“It’s not uncommon for those who use delta-9 THC to find that efficacy wanes after a long period of consistent use,” said Dena Putnam, President and co-founder of Leafwize Naturals in Orange County, California. Leafwize Naturals sells a variety of vape cart products featuring the dominant ingredient of delta-8 THC.  

Putnam explained how the delta-8 isomer of THC “may offer a way to circumvent the body’s tolerance of delta-9 while delivering similar benefitsall while taking a break from delta-9 in an effort to bring back the full effectiveness” she explained during an exclusive interview. 

Putnam said that delta-9 THC tolerance breaks “can be scary for those who depend on it for daily pain relief and mood management,” but explained that it is “sometimes necessary to reset the effectiveness of the medicine.” She explained how “delta-8 may offer a way to take a delta-9 break while providing a level of medicinal relief that is similar to delta-9.”

When queried about the success of this approach, Putnam explained how she and her staff noted two positive outcomes from their experiment: Delta-8 efficacy that mirrored that of delta-9 and the overall goal of achieving a lowered tolerance for delta-9 THC. Both target outcomes were achieved, somewhat of a unicorn in the world of science-based health and wellness.      

“We found that, after a period of switching from delta-9 THC to delta-8, that delta-8 helped in a manner similar to delta-9,” said Putnam. “More important, when the user resumed consumption of delta-9, the effects were greater, as if they had taken a conventional tolerance break,” she added.

It’s a Wrap

Delta-8 THC, only one of several THC analogs that includes THCA, THCV, and THCP, offers a number of advantages over its sibling delta-9. From the perspective of medicinal efficacy, delta-8 provides 60-70 percent of the psychotropic (psychoactive) effects of delta-9 THC while, typically, delivering little or none of the paranoia and anxiety that may result from delta-9.

Medical practitioners and business entrepreneurs are beginning to recognize the advantages of a world in which phytocannabinoids beyond CBD and delta-9 THC are readily available in thousands of products from hundreds of companies. If businesses like Southern California’s Leafwize Naturals have anything to say about it, that world will be here sooner rather than later.