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Ayr Wellness Enters the Cannabis-Infused Beverage Market with Proposed Acquisition of Levia

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NEW YORK: Ayr Wellness Inc., a leading vertically integrated cannabis multi-state operator (“MSO”), has announced that it has entered into a binding letter of intent to acquire Cultivauna, LLC, the owner of Levia branded cannabis infused seltzers and water-soluble tinctures.

“Ayr wants something exciting to offer every cannabis consumer of today and the future cannabis customer of tomorrow. Infused beverages, done right, will be game changing to the mainstreaming of cannabis in the U.S., providing an approachable and sessionable form factor to new and existing customers. The acquisition of Levia brings Ayr into this rapidly growing segment with delicious, market-leading infused seltzer. We are excited to have Levia join Kynd premium flower and Origyn extracts in Ayr’s suite of premier national brands,” said Jonathan Sandelman, CEO of Ayr Wellness.

“With a formula that provides consistently great flavor and zero calories in an infused beverage experience, we believe Levia has enormous potential as an alcohol alternative. In just six months since its initial launch in Massachusetts, Levia has become the top selling THC beverage. As we finalize our updated national brand portfolio to address all segments and form factors, Levia will play a marquee role in each market where we operate,” Mr. Sandelman concluded.

Ayr intends to purchase 100% of the equity interests of Cultivauna, LLC. The terms of the transaction include $20 million in upfront consideration, made up of up to $10 million in cash with the remainder in stock. An earn-out payment of up to an additional $40 million will be paid in shares based on the achievement of revenue targets in 2022 and 2023.

Levia Cannabis Infused Seltzers provide for rapid onset of the effects of THC, typically 15-20 minutes, allowing for a more consistent consumption experience than many edible products. Levia is currently available in Massachusetts in three experiences and flavors:

  • “Achieve” Raspberry Lime (Sativa)
  • “Celebrate” Lemon Lime (Hybrid)
  • “Dream” Jam Berry (Indica)

Each flavor is available in 12-ounce slim cans and contains 5 mgs of THC. Levia is also available in water soluble tinctures in the same formulations.

The acquisition is subject to customary closing conditions and regulatory approvals, as well as the execution of a binding definitive agreement. The acquisition is expected to close by the end of 2021.

FTC Announces Crackdown On Deceptively Marketed CBD Products

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Companies made unsupported claims that their oils, balms, gummies, coffee, and other goods could treat serious diseases such as cancer and diabetes

DISTRICT OF COLUMBIA: The Federal Trade Commission today announced the first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products. The FTC is taking action against six sellers of CBD-containing products for allegedly making a wide range of scientifically unsupported claims about their ability to treat serious health conditions, including cancer, heart disease, hypertension, Alzheimer’s disease, and others.

The FTC is requiring each of the companies, and individuals behind them, to stop making such unsupported health claims immediately, and several will pay monetary judgments to the agency. The orders settling the FTC’s complaints also bar the respondents from similar deceptive advertising in the future, and require that they have scientific evidence to support any health claims they make for CBD and other products.

“The six settlements announced today send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Otherwise, don’t be surprised if you hear from the FTC.”

The crackdown, Operation CBDeceit, is part of the Commission’s ongoing effort to protect consumers from false, deceptive, and misleading health claims made in advertisements on websites and through social media companies such as Twitter.

Each case the FTC is announcing today is described below:

Bionatrol Health, LLC

According to the FTC’s complaint against Utah-based companies Bionatrol Health, LLC and Isle Revive, LLC, and two former managers and owners, since at least December 2019 the respondents sold a CBD oil to consumers on two websites. Among other things, the respondents allegedly claimed without substantiation that their CBD product is safe for all users, treats pain better than prescription medications like OxyContin, and prevents and treats age-related cognitive decline and chronic pain. The respondents also claimed, without scientific evidence, that CBD oil is “medically proven” to improve a variety of conditions, according to the FTC’s complaint. In addition, the FTC alleges the respondents deceived consumers who ordered one bottle of their CBD oil by changing the order to five bottles without consumers’ consent.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs without human clinical testing to substantiate the claims. It also requires competent and reliable scientific evidence for other health-related product claims, and prohibits the respondents from misrepresenting the cost of any good or service and from charging consumers without their express, informed consent. Finally, it requires the corporate respondents and individual respondent Marcello Torre to pay $20,000 to the FTC and to notify consumers of the Commission’s order.

Epichouse LLC (First Class Herbalist CBD)

According to the FTC’s complaint against Utah corporation Epichouse, LLC, which operated under several names, including First Class Herbalist, and the company’s founder and owner, John Le, since at least September 2019 the respondents sold several CBD products on their website, including oils, a pain-relief cream, coffee, and gummies.

Among other alleged unsupported claims, Epichouse and Le promoted CBD as safe for all users, able to treat pain better than prescription medications such as OxyContin, and able to prevent a wide range of serious conditions, including cancer, diabetes, and heart disease. In their advertising, they also falsely claimed that CBD is scientifically proven to improve many serious health conditions—including chronic pain and hypertension—and provide neurological benefit—such as preventing age-related cognitive decline—according to the FTC’s complaint.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. It requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, the order requires the respondents to pay $30,000 to the FTC and notify consumers of the Commission’s order.

CBD Meds, Inc.

According to the FTC’s complaint against CBD Meds, Inc.; G2 Hemp, Inc.; and Lawrence Moses, a/k/a Lawrence D. Moses, Jr., individually and as an officer of the corporate entities, the two companies advertised CBD oil on their website and on YouTube. In their ads, the FTC contends, the Winchester, California-based firms made a number of false or unsubstantiated claims, including that CBD effectively treats, prevents, or mitigates serious diseases and conditions like artery blockage, cancer, glaucoma, autism, and schizophrenia, among many others. The respondents also falsely represented that some of the efficacy claims were scientifically proven or that the U.S. government has confirmed the health benefits of CBD.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. More broadly, it requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, the order requires the respondents to notify consumers of the Commission’s order.

HempmeCBD

According to the FTC’s complaint against EasyButter, LLC, also d/b/a HempmeCBD, and its owner and officer Michael Solomon, since at least January 2018, the respondents have sold CBD products on their website, including CBD-infused shea butter, gummies, lozenges, honey sticks, vape pens, and oils. The complaint alleges that HempmeCBD claimed its CBD products could treat or cure serious ailments like cancer-related symptoms, substance abuse, and AIDS. The complaint alleges HempmeCBD lacked the scientific substantiation for such health claims and falsely claimed to have studies showing CBD is effective at treating autism.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. It also requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, it requires the respondents to pay the FTC $36,254 and to notify consumers of the Commission’s order.

Reef Industries, Inc.

According to the FTC’s complaint against California-based Reef Industries, Inc.; Cannatera, Inc.; AndHemp, Ltd., and the companies’ three principals, the respondents have sold a variety of CBD products directly to consumers on their website and Twitter accounts since at least January 2019 and misrepresented the health benefits of CBD. The FTC alleges that the respondents made unsubstantiated claims that CBD can prevent, cure, mitigate, or treat diseases and serious health conditions, including Alzheimer’s disease, arthritis, autoimmune disease, and irritable bowel syndrome. The complaint also alleges the respondents falsely claimed that studies or scientific research prove that CBD is effective at treating, curing, or mitigating these diseases and conditions.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. More broadly, it requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, it requires them to pay the FTC $85,000 and notify consumers of the Commission’s order.

Steves Distributing, LLC

According to the FTC’s complaint against Steves Distributing, LLC, d/b/a Steve’s Goods; and the company’s CEO Steven Taylor Schultheis, since beginning operations in 2018, the respondents have sold a variety of products containing both CBD and cannabigerol (CBG), which, like CBD, is a non-psychoactive compound derived from hemp. The company advertises its CBD and CBG products, including tinctures, gummies, capsules, topical balms, suppositories, bath balms, and coffee, on its website and through social media companies like Twitter.

The FTC alleges that the respondents claimed, without adequate substantiation, that their CBD and CBG products are effective alternatives to prescription medications and treat a wide range of diseases and serious health conditions, including Alzheimer’s disease, cancer, and diabetes. The complaint also alleges the respondents falsely claimed that their CBD and CBG products have antibacterial properties, prevent or reduce the risk of heart attacks, strokes, and other diseases, and that certain of these claims were supported by scientific evidence.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. More broadly, it requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, it requires the respondents to pay the FTC $75,000 and notify consumers of the Commission’s order.

The Commission votes approving each of the six administrative complaints and proposed consent orders were 5-0, with Commissioner Rohit Chopra and Commissioner Christine S. Wilson issuing separate, concurring statements. A complete list of respondents can be found in the complaint for each respective case.

The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $43,280.

Alternative Health Secures $20 Million In Debt Financing For Expansion Of California Cannabis Operations

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TEXAS: Alternate Health Corp., an international leader in technology solutions for the regulated cannabis industry, announced that the Company has signed a binding letter of intent with Agincourt Ventures, LLC to secure funding of $20 million, structured as a debt finance and limited stock purchase agreement, with the option to increase the total financing in the future with an additional note.
“This agreement solidifies our financial position as we aggressively expand into California’s lucrative adult-use cannabis industry,” says Dr. Michael Murphy, Chairman and CEO of Alternate Health. “We are eager to move forward, equipped with the financial power to secure inventory from cultivators, acquire revenue-producing assets and expand our licensed distribution and extraction facilities.”Capturing the California Market

On October 17, 2018, Alternate Health announced that the Company had obtained permits for cannabis manufacturing, distribution, cultivation, and processing, and leased a 14,800 square foot facility in Humboldt County, California. With stricter state regulation coming into effect in January 2019, Alternate Health sees a unique opportunity to acquire assets, inventory and significant market share from “grey market” businesses that do not hold valid California licenses.

With the initial $20 million, Alternate Health plans to ramp up operations at the Humboldt County facility and begin developing its signature Humboldt Ave. Cannabis artisan brand. In addition, the Company will produce manufactured products, including cannabis concentrates and infused edibles for wholesale and retail delivery. Distribution will target Greater Los Angeles and rapidly expand across the state. Alternate Health is currently in the process of retaining highly experienced industry professionals to lead distribution and manufacturing operations with state-of-the-art supply chain and inventory management solutions.

Alternate Health already has established relationships with a significant number of top cannabis cultivators in the Humboldt County region and expects to secure exclusive deals for up to 50,000 pounds of cannabis flower with an estimated retail value of approximately $160 million.* The Company will also leverage its relationships with dispensary locations in Los Angeles County to establish strong retail distribution channels in the most dynamic cannabis market in the world.

*Based on estimates from the California Growers Association’s report, Cumulative Tax Analysis, published in March 2018.

“The California adult-use cannabis industry is at a turning point as the state seeks to legitimize the industry and limit black market and grey market sales,” says Dr. Murphy. “With $20 million in initial funding and the opportunity to access additional capital, this agreement strategically positions Alternate Health to capture market share in the cannabis distribution and manufacturing sectors while continuing to develop additional business verticals.”

Terms of the Agreement
Under the agreement, Agincourt Ventures, LLC  will loan Alternate Health $19,600,000USD in two tranches of $9,600,000 on or prior to November 30, 2018 and $10,000,000 on or prior to December 20, 2018. Interest on the loan will accrue at a rate of 5.102% per annum and a maturity date of 12-months from the date of the closing.

Agincourt Ventures, LLC will also purchase one million (1,000,000) shares of Alternate Health Corp common stock at a purchase price of $0.40 per share, for an aggregate purchase price of $400,000USD as part of the agreement.

The CannaBrander With Ben Weinberg. PLExD, LLC Profiting From A Design Sprint

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COLORADO: I was recently engaged to oversee and facilitate a Google Ventures design sprint for Promethean Learning Experience Design (PLExD, LLC), a boutique e-learning design company in Denver, Colorado, owned by James Finder.  PLExD’s focus is on designing and developing content to get the most out of training for Millennials, Gen-Xers, and Baby Boomers alike, and legal cannabis is one of the spaces that PLExD plays in.

James already had a successful company based on subcontracting his e-learning services out to major players (contractors) in the space.  What he needed was a best-practices marketing plan, a map that outlined his next steps to move up the food chain and become one of those major players that does the farming out.

What’s a Design Sprint?

A design sprint is usually a multi-day process that seeks to answer critical business questions through designing, prototyping, and testing ideas.  One version, developed at Google Ventures, packages business strategy, innovation, behavioral science, and design thinking into a well-tested process that any team can use.

Working together in a facilitated sprint, a team can shortcut the endless debate cycle that is inherent to groupthink while compressing months of development time into a single week (or even less –- I’ve run sprints as short as two days).  Instead of waiting until after significant resources have been committed to launch a minimal product that, in turn, determines if an idea is any good, this process allows clear data to emerge from a realistic prototype that is developed during the sprint.  Decision makers are fast-forwarded into the future with a facsimile of the finished product that generates customer reactions before any expensive commitments are made.

What Happened

A sprint always starts by surveying the stated problem and developing a metric that can indicate the point at which the problem is solved.  Therefore, my team (including co-facilitator Annie Furlong along with team members Norbert Peyfuss, and Andrew Alvarez) first determined that James’s branding and marketing problem revolved around determining what distinguishes a contractor from a subcontractor.  We decided that prospecting, more specifically the nature of the prospect as ultimate client instead of contractor, fit that bill.  This led naturally to the proper metric, which was the number of generated quotes for ultimate clients.

We then worked dynamically with James to build up his strategy, quickly moving into prioritizing sub-issues and focusing on what seemed to be the most pressing element, that of implementing a new, rebranded website with an online quote generation engine to which all his other marketing efforts (also categorized during the sprint) could be directed.  This enabled James to think through exactly how he wanted visitors (especially his newly defined set of prospects) to experience his website.  We worked as a team to design a prototype of that experience we called, “The Journey,” that took a visitor through a short e-learning experience to devise a basic quote for the type of project she had in mind (or didn’t; many website visitors don’t have a clue what they want so we also had to design a pathway for them, as well).

Conclusion

To me, the most interesting part of the design sprint process is that it can work for any company, product, and service, even internal processes in branding, marketing, sales, operations, administration, and any combination of those vectors, because it is focused on first determining the nature of the real problem and an associated metric, then ideating around that problem until a testable prototype is generated.  This then leads to a fruitful direction for further development after the sprint is completed.  It’s also an exciting and fun way to build cohesion among a team in a way that generates immediate results without having to spend months (or years) and lots of resources examining the problem before testing a useable prototype.

The bottom line is that we helped James to focus on what was immediately important, while at the same time giving him a road map to achieve what he wants his business to become.  What did James think?  Here’s only one of his post-sprint LinkedIn posts:  “#participated in a Google ventures #designsprint.  I know how powerful this is Benjamin Weinberg…”

ABOUT BEN WEINBERG: Ben Weinberg, JD, MBA, the President of Ben Weinberg Consultants, has more than 30 years of experience in harnessing his creativity to tell your company’s story, including strategic and tactical marketing, sales, operational, and administrative consulting for small- and medium-size businesses across diverse industries such as law, medicine, wellness, leisure, and hospitality.

OLCC Issues Marijuana Product Recall For Pesticide Laden Blue Magoo

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OREGON:  The Oregon Liquor Control Commission is issuing an immediate health and safety advisory due to the identification of potentially unsafe pesticide residue on retail plant material produced from marijuana cultivated by Emerald Wave Estate, LLC.

The affected marijuana failed a pesticide test for pyrethrins exceeding the Oregon Health Authority action level for this class of pesticide.

Affected products include marijuana flower; the retailer that sold the product has issued a voluntary recall. The marijuana flower was sold at Buds 4 U LLC located at 10692 Highway 126, Suite 4, Mapleton, Oregon.

A wholesaler transferred the product to the retailer before the pesticide results were recorded in the OLCC Cannabis Tracking System (CTS). Buds 4 U sold 82.5 grams to 31 customers between March 8 and March 10, 2017. The retailer noticed the failed pesticide results in the CTS on March 10, 2017 and immediately contacted the OLCC.

The affected marijuana should bear a label that includes one of the following OLCC License numbers:

  • 050-1002850B56E
  • 060-100301304FE
  • 050-1002850B56E

and any of the following package numbers:

  • 1A4010300005B05000000772 – product name: Blue Magoo
  • 1A4010300005B05000000769 – product name: Blue Magoo
  • 1A4010300005911000000005 – product name: Blue Magoo

The remainder of the affected nine pound batch of marijuana flower has been placed on administrative hold, meaning it cannot be lawfully transferred, pending the outcome of an additional pesticide retest. Consumers who have these recalled products should dispose of the products or return them to the retailer where they were purchased.

There have been no reports of illness. The possible health impact of consuming marijuana products with unapproved pesticide residues is unknown. Short and long-term health impacts may exist depending on the specific product, duration, frequency, level of exposure, and route of exposure. Consumers with concerns about their personal health should contact their physician with related questions.

Consumers with questions or concerns about recalled product or pesticide residues in marijuana products are encouraged to contact the product retailer and/or the Oregon Poison Center at 800-222- 1222.

Hemp, Inc. To Grow 3,000 Acres Of Industrial Hemp In North Carolina In 2017

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NORTH CAROLINA:  Hemp, Inc. has informed its shareholders that its wholly owned subsidiary, Industrial Hemp Manufacturing, LLC, in Spring Hope, NC, has signed a Letter of Intent  with Mullen View Farms and one with John Finch Farms in North Carolina. According to the signed LOI with Mullen View Farms, IHM will purchase 1,000 acres of raw hemp that is to be harvested at various locations throughout eastern North Carolina, this year. The signed LOI with John Finch Farms stipulates IHM shall purchase 500 acres of raw hemp stock from John Finch Farms. As with Mullen View Farms, the raw hemp is to be harvested at various locations throughout eastern North Carolina, this year.

With these LOIs, Hemp, Inc. now have a little over 3,000 acres of hemp growing. “We are really excited to be working with Mullen View and John Finch Farms. Mullen View Farms owns a huge warehouse, where we currently store some of our kenaf bales, not too far from our industrial hemp processing facility and wants to grow an additional 30,000 acres of industrial hemp for us in the near future. John Finch Farms has grown 200 acres of kenaf (hibiscus cannabinus, a cousin plant to industrial hemp) for us already,” says David Schmitt, COO of Hemp, Inc.’s subsidiary, Industrial Hemp Manufacturing, LLC. Schmitt also mentioned John Finch received the National Supervisor of the Year Award, last year, during the NC Association of Soil & Water Conservation Districts 71st Annual Meeting.

Bruce Perlowin, CEO of Hemp, Inc. said, “We are proud to collaborate with other American industrial hemp farmers as we now become part of the modern industrial hemp farming movement. This is a turning point for America and it’s a turning point for Hemp, Inc. Hemp, Inc. has the infrastructure in place to process millions of pounds of hemp fibers and stalks a year, on a commercial level. Our 70,000 square foot industrial hemp processing facility, on over 9 acres in Spring Hope, North Carolina, is the only one of this magnitude in North America. The industrial hemp crop is part of history in the making and it is something that will prove to be lucrative not only for the farmers in North Carolina but for Hemp, Inc. as well.”

Americas Largest Hemp Processing Facility & Milling Operation Nearing Completion

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NEVADA: An industrial hemp decortication facility, spearheaded by Hemp, Inc. wholly-owned subsidiary, Industrial Hemp Manufacturing, LLC (IHM), is in the final stages of completion. “Industrial hemp is reclaiming its rightful place in America as demand for this environmentally friendly natural fiber continues to increase due to the economic benefits. Hemp, Inc. is strategically positioned at the forefront of this industry. We are definitely ahead of the curve in being able to process industrial hemp and manufacture products made from hemp,” said David Schmitt, COO of IHM.

According to Schmitt, the hemp processing plant which will have assembled the industry-leading hemp processing machinery is expected to be officially completed soon with a skilled team of employees on deck. “This morning, we are positioning the milling machinery in its permanent location so that it can be secured into place. We also have meetings at the end of this week with the air handler manufacturer to ascertain when we can expect the machinery on-site. Once the air handler and dust collector are on-site, we’re looking to hire specialized contractors to assist with securing all of the equipment in place, which should save us over 3 to 4 weeks in time. While I can’t say the exact date of when the air handler and dust collector will be onsite, once it is here, my best guestimate would be 3 weeks for us to have both mills operational.”

Once the milling machinery is operational, Hemp, Inc. will be able to produce their Lost Circulation Materials (LCMs) and other oil absorbent products. “Our 70,000 square foot commercial industrial hemp processing facility and milling operation, on 9 acres makes Hemp, Inc. the largest industrial hemp processor and manufacturer in America and with the addition of our milling facility to produce other hemp-based products, we have strategically expanded our worldwide industrial base,” said Bruce Perlowin, CEO of Hemp, Inc..

Now that the amended hemp bill has been signed into law in North Carolina, home to Hemp, Inc.’s industrial hemp processing facility, the North Carolina Hemp Commission now has the power to write the rules and approve them. Shareholders can expect lucrative business opportunities for Hemp, Inc. In the Spring of 2017, the company is looking to possibly grow and harvest a very large hemp crop on up to 50,000 acres which can all be processed at Hemp, Inc.’s industrial hemp processing facility.

“As mentioned in our press release yesterday, we expect Congress to remove industrial hemp from the Federal Controlled Substances Act very soon, which would declassify it as a Schedule 1 drug because it’s not. Hemp is a plant from the cannabis family like marijuana but possesses a very low THC content and you cannot get high by smoking it. Hemp is not marijuana and it has a plethora of uses,” said Perlowin.

Pomos Seeking To Establish State’s First Tribal Pot Operation

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CALIFORNIA:  A Ukiah Indian rancheria is in the running to possibly become the site of California’s first tribe-sanctioned marijuana cultivation and distribution operation.

The Pinoleville Pomo Nation is among several tribes engaged in negotiations over a future marijuana-growing operation with Colorado-based United Cannabis Corporation and Kansas-based FoxBarry Farms, LLC, according to the corporations and federal filings.

The two corporations recently entered an agreement under which FoxBarry, which also manages tribal casinos, will distribute United Cannabis branded pot products in California, according to a news release posted on the United Cannabis website and a U.S. Securities and Exchange Commission filing.

The proposed partnerships follow a U.S. Department of Justice announcement last month that tribes — which are sovereign nations — have the authority to legalize marijuana on their lands.

 

Can Colorado Approve A Water Right To Grow Marijuana?

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COLORADO:  Can Colorado issue a water right to irrigate marijuana plants when federal law still says that growing pot is a crime?

That’s the question being asked by a division engineer and a water referee in Div. 5 water court in Glenwood Springs in response to a water rights application filed by High Valley Farms, LLC.

“Even though the cultivation of marijuana and the sale of marijuana is legal in the state of Colorado, because it is still not legal under federal law, this question is still out there — whether beneficial use includes any use that is not legal under federal law,” said Alan Martellaro, the division engineer in Div. 5.

Martellaro said a water right in Colorado can only be issued if the water is being put to a beneficial use, such as irrigation.