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3 stocks to buy if you want to become a millionnaire like nmsr5.
Home / Expert Stock Picks / Stocks to Sell /
Get Your Money Out of These 3 Cannabis Stocks by 2025
Avoid smoking your fortune away by getting your money out of these 3 cannabis stocks by 2025
1d ago · By Joel Lim, InvestorPlace Contributor
Get your money out of these three cannabis stocks before they smoke your fortune.
Canopy Growth (CGC): A leading Canadian medical cannabis producer.
Sundial Growers (SNDL): A U.S cannabis company that cultivates, processes and sells cannabis.
Tilray (TLRY): A mid-level cannabis company with operations around the world.
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Cannabis Stocks - Get Your Money Out of These 3 Cannabis Stocks by 2025
Source: Shutterstock
Cannabis stocks have gained in the past couple of months following the federal government’s reclassification of the drug. Experts also anticipate that the lobby to lift the ban on the U.S. financial institutions financing cannabis stocks and the reclassification may see the industry market value double to $57 billion by 2028.
These three cannabis stocks, however, do not share the same growth trajectory the industry is expected to follow. A combination of internal accounting and business factors could cause these stocks to trail below the industry growth rate and potentially lose investors a lot of money.
If you hold any of these three stocks, you should reconsider your position. Let’s dig into three struggling cannabis stocks to get your money out of by 2025.
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Canopy Growth (CGC)
Closeup of mobile phone screen with logo lettering of cannabinoid company canopy growth cannabis, blurred marijuana in the background. CGC stock.
Source: Ralf Liebhold / Shutterstock
Canopy Growth (NASDAQ:CGC) is one of the leading cannabis stocks in Canada. The company’s growth numbers have yet to meet target expectations in the long run. Canopy has fallen by more than three quarters in the last year alone. Starting from an extremely small revenue base, Canopy initially saw its revenue soar, thanks to the legalization of cannabis in Canada.
However, accounting methodologies and other non-fundamental factors have driven far more excitement than warranted.
Canopy Growth has continued to burn more cash than the revenue it’s generating, intending to bring production up to scale. The company has since dialed it back as demand in the Canadian market normalizes.
The company seems to hold a dominant position in a rather stagnant market. Given the current levels of taxation on cannabis, most people are resorting to the black market. This denies the Canadian cannabis industry a huge chunk of revenue.
Based on eight Wall Street analysts offering 12-month price targets for Canopy Growth in the last three months, the average price target is C$9.15, with a high forecast of C$20.01 and a low forecast of C$2.73. The average price target represents a -6.46% change from the last price of C$9.78.
Canopy’s sales books aren’t looking good either. The sales estimate for the next quarter is C$71.95 million, with a range of C$67.00 million on the lower and C$75.70 million on the higher. Sales results in the previous quarter were C$72.79M.
The company has beaten its sales estimates 50% of the time in the previous 12 months. Meanwhile, the industry beat sales estimates by 53.9% in the same period. With this underperformance and no clear breakthrough strategy, investors are encouraged to hold on to the CGC stock. This is not a good idea, factoring in the volatility of the cannabis industry.
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Sundial Growers (SNDL)
The Sundial Growers logo is on a phone screen with a light blue background in front of the sundial logo on a white background. SNDL stock
Source: Shutterstock
Sundial Growers (NASDAQ:SNDL) is one of the top cannabis stocks in the U.S. The company also produces and distributes inhalable products, including flowers, pre-rolls and vapes.
The company has struggled with profitability and market competition in the cannabis sector in the recent past as the industry players continue to grow and the market dwindles. However, with over $780 million in cash and marketable securities, Sundial still has a strong balance sheet.
Even with this capitation, the company continues to burn cash, reporting a free cash outflow of $6.4 million in Q1 despite the improvement year-over-year. If Sundial’s retail profits deteriorate or growth initiatives don’t pay off, the company may need to raise additional capital on less favorable terms.
Investors should also consider that Sundial has a history of dilutive capital raises, and its share structure has become extremely complex, with multiple reverse splits. The stock is trading well below $2 with a market capitalization under $500 million, adding risk and volatility.
Furthermore, revenue declined sequentially from Q4 2023 due to seasonality in the company’s Liquor and Cannabis Retail segments. Sundial’s retail businesses could face pressure if consumer spending weakens or competition intensifies. This then positions Sundial as one of those stocks to sell for risk-averse investors.
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Tilray (TLRY)
Mobile phone with webpage of Canadian cannabis company Tilray (TLRY) Inc. on screen in front of business logo. Focus on top-left of phone display. Unmodified photo.
Source: T. Schneider / Shutterstock.com
Tilray (NASDAQ:TLRY) is a mid-level player in the U.S. cannabis industry. In addition to cannabis, the company has additional product lines, including distribution, beverage alcohol and wellness business lines.
In 2023, the company acquired several brands, such as Anheuser-Busch, and doubled its alcohol segment. The company has also actively generated important sales diversification within the growing U.S. cannabis market as the industry sees more legalization efforts.
Despite these strategic business moves, Tilray’s financial reporting has not been good recently. The company is losing money at a faster rate than it is generating. While it is yet to report its Q2 earnings at the end of July, Q1 reports in February pointed to an actual ESP of -0.12 against the estimate of -0.05.
The company’s shares rebounded slightly in recent weeks following the reclassification of cannabis as a less dangerous drug but still sits at $1.79. This is near its 52-week low and even further from past highs pre-2020 when it traded north of $140.
The growth projections aren’t promising either. Analysts anticipate Tilray’s growth will slow down in the next quarter to 60% compared to the current quarter of 86.7%. The growth rate is also expected to slow down in the next five years, with experts expecting the company to grow at just 37% amidst the projected industry boom.
Given these growth projections, added to the fact that the company is generating more losses than profits, any risk-averse investor would consider Tilray one of the cannabis stocks to get their money out of before 2025.
Next week paper : Tilray’s bunk weed!
On the date of publication, Joel Lim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Lim is a contributor at InvestorPlace.com and a finance content contractor who creates content for several companies like LTSE and Realtor, along with financial publications, including Business Insider, Yahoo Finance, Mises Institution and Foundation for Economic Education.'
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2 days ago
Thinking of Tilray’s best as moldy bunk… think again!
Home / Manufacturing / Testing
Unknown compounds found in marijuana testing samples, lab owners say
By David Hodes
July 24, 2024
Image of an eye dropper depositing some cannabis oil into a vial
(Photo by Blue Planet Studio/stock.adobe.com)
In recent weeks, the regulated marijuana industry has faced a crisis of confidence prompted by lab-approved products found to contain pesticides and molds.
Now there’s evidence some marijuana samples submitted for testing contain a mysterious “soup” of dozens of unknown compounds never before found in cannabis and that may explain the harsh taste on the throat/bunk complaints.
Lab executives told MJBizDaily they believe the compounds are created when hemp-derived cannabinoids are converted to delta-8 and delta-9 THC.
Labs do not test for these byproducts; rather, most states require labs to test for various levels of heavy metals, mold and cannabinoids.
And how they affect consumers is unknown.
Creating delta-8 THC
Cannabis contains trace amounts of delta-8 THC, and most D-8 products are manufactured by converting nonintoxicating CBD, potentially leaving behind questionable byproducts, according to scientists in the marijuana space.
“These are chemical side reactions,” said Susan Audino, a chemist/chemometrician, independent consultant to chemical and biological laboratories and MJBizDaily contributor.
“You can’t make one thing without something else being formed as well.”
Josh Swider, co-founder and CEO of San Diego-based Infinite Chemical Analysis Labs, said that he has screened many delta-8 products created through chemical processes.
“You’ll see 60 unknown compounds in there,” he said. “Some of them get identified, but all of them are never found.
“That is telling you that you’re now adding other compounds that we never found in cannabis, and now people are smoking it.
“It’s a very common thing going on around the country.”
Fraudulent practices?
The flagrant disregard for discovering more about these mystery compounds stems, in part, from fraudulent practices around THC-potency testing, according to Bob Miller, CEO and chief scientific officer at ACT Laboratories, which operates in Florida, Illinois, Michigan, New York, Ohio and Pennsylvania.
“Potency testing brings up the opportunity for some bad players – both on the laboratory testing side as well as on the grower-processor side – to make deals,” Miller said.
“You give me higher potencies, I give you more money for my test, and I can sell it for more.
“It’s a win-win for everybody except the consumer.”
Unidentified components
On the “soup” side, Miller said Michigan-based ACT Laboratories is seeing more delta-8 THC entering the supply chain, and that’s where the real issue exists.
“What they do is they say they’ve got ‘hemp’ that they then bring and sell across state lines,” he said.
“But, really, it’s a combination of delta-8 and delta-9 (THC).
“When they start to do that conversion from CBD to delta-8 and delta-9, it’s very sloppy.
“You get a mix of many different components, and for all of those components, many are not yet being identified. The chemistry is not clean.
“You get this batch that is going to be completely different from the next batch.
“And, oh, by the way, some of the compounds that are being formed, we don’t even know what they are because they’re not requiring that today to be tested.”
Clients don’t want to know
When a lab tester gets these reactionary “soups,” Miller said, some of the compounds are more psychoactive than delta-9 THC.
“What we do is, any peak that we see of appreciable levels, we are going to inform the client what that we see,” he said.
“It depends on the client whether they want to understand what it is.”
“Some clients are very interested; some clients say, ‘I’m paying you to test for these specific state-mandated cannabinoids, and that’s really where we want you to work.’
“Typically, these unknown peaks come in things like distillates and edible products, and that’s where we start to see some interesting things.”
Even cannabis that has been cleared by regulators can become problematic.
Product contamination could come from the device being used to consume the cannabis oil.
“The U.S. state regulators say, ‘Hey everybody, you need to test all of the oil before it goes into the vape pen,’” Audino said.
However, she added, regulatory bodies don’t pay much attention to chemical reactions.
“Most vape cartridges need to heat up at a specific temperature,” Audino said.
“And depending on where those cartridges are made, they may or may not be heavily laden with heavy metals – and if they are, those heavy metals leech off underneath.
“So now, you’ve got a clean oil coming through and being tainted by a chemical process: a physical, physicochemical process from just a heating element.
“That causes a bunch of other reactions, and people have gotten lung diseases.”
Labs put in the middle
It’s the customers of the labs – the product manufacturers – who drive what tests they do or don’t want, Audino said.
If regulations are not demanding it or not requiring certain tests, product manufacturers are probably not asking for them.
“Then, the laboratory is the unsuspecting person or entity in the middle with the moral and ethical conundrum,” she said.
Most state regulators are not scientists, Audino added.
“Most of them are lawyers, and most state regulators were forced into creating these regulations based on legislation,” she said.
“Legislation doesn’t care about science. They just say, ‘Do this. Make it happen.’”
Farm Bill origins?
Miller of ACT Laboratories said the 2018 Farm Bill, which legalized industrial hemp – and, unintentionally, the intoxicating hemp industry – has contributed to the “soup” dilemma.
“At the federal level, there’s definitely a movement literally right now to change the regs,” he said.
“The quicker they can do that, (it) will then stabilize that potential input into the supply chain of really unknown chemistry and take that one complexity off the table.
“That brings us back to: How do we control and better understand how cannabis really operates, and what are the compounds?”
Lab ‘reset’ needed
Most labs in the cannabis industry are moving away from science, Swider said.
“This might be a bad thing for the labs, because they become more cookie-cutter: ‘Do exactly what I’m told. Don’t look at anything else. Keep my eyes looking down, give them the numbers they want. Make sure they don’t have pesticides,’” he said.
“Honestly, the lab industry has 100% failed (the) cannabis industry for safety.”
Swider said the lab industry needs to be “reset.”
“States need to do it, and they need to figure out a mandate to do this,” he said.
“What you’re doing is trying to keep pace with an industry that’s trying to use creative ways to make things cheaper – or just scam the system or don’t care about public safety.
“I honestly think 70% to 80% of the labs probably shouldn’t be open because they’re not necessarily doing it for to be a safety lab, but they’re doing it for a dollar, and they’re willing to do whatever it is to make that dollar.”
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2 days ago
Canadian Cannabis Council Pushes Back on Israel’s Threats to Tax Imports
Posted July 24, 2024 on Business of Cannabis
ImageCanadian Cannabis Council Pushes Back on Israel’s Threats to Tax Imports
The head of the Canadian Cannabis Council (C3) has said he is ‘severely disappointed’ with Israel’s preliminary decision to tax Canadian cannabis imports.
According to StratCann, C3, which describes itself as ‘the national and international representative of Canada’s licensed producers and processors of cannabis’, has hit back at assertions from the Israeli government that Canadian imports were having a negative impact on both the domestic market’s ability to compete.
In January, the Israeli Ministry of Economy launched an investigation following numerous complaints from local producers.
The publication of preliminary findings on July 10 reportedly found a significant over-importation of medical cannabis from Canada, with rates reaching up to 369%.
It found that Canadian cannabis imports have been sold in Israel at prices lower than those in the country of origin, a practice known as ‘overflow imports.’
This has resulted in actual damage to the local cannabis industry. Local producers argue that this influx of cheaper imports has forced them to sell their products at lower prices than initially expected, causing a sharp drop in revenues.
As such, the Ministry has opted to refrain from imposing immediate levies on Canadian imports, and will instead wait until the final findings are published in a few months. If a levy is imposed, it could range between 63% to 369%.
A public comment period has now opened up, giving interested parties 30 days to submit their comments.
Speaking to StratCann, C3’s President Paul McCarthy said: “The root data on which this decision was based was fundamentally incorrect, making the decision unreliable. We object to the process Israel has taken in this investigation. Any government or jurisdiction following should look closely here and not make the same mistakes.”
He added that the Israeli government has disregarded concerns put forward by C3, and that the pricing data used was from the ‘Canada Spot Index’, which does not represent all of the factors that add to the cost of cannabis exports.
“This process has been flawed from the beginning,” McCarthy said.
“The Canada Spot Index is not representative of a domestic whole price for cannabis, nor is it an appropriate comparison with Israeli wholesale prices for bulk product: it includes various mark-up fees that do not belong to producers, packaging costs that are specific to individualized products, and federal and provincial cannabis excise taxes (all of which we pointed out in our response).”
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2 days ago
Tilray Medical Granted Approval to Introduce Third Medical Cannabis Product in Portugal
Posted July 24, 2024 on Financial Post
ImageTilray Medical Granted Approval to Introduce Third Medical Cannabis Product in Portugal
Tilray Brands Achieves New Milestone with Approval of Oral Cannabis Solution in Portugal.
Tilray Brands, Inc., a global leader in cannabis research, cultivation, production, and distribution, today announced another milestone achievement in medical cannabis in Europe. Following the successful approval of Tilray Medical whole flower THC 18, and approval for the first cannabis extract in Portugal earlier this year, Tilray Medical receives its second approval for a new medical cannabis extract in Portugal: Tilray Oral Solution THC10:CBD10, also known as Tilray Solução Oral THC10:CBD10.
Denise Faltischek, Chief Strategy Officer and Head of International at Tilray Brands, Inc., said, “We are proud to have received approval for our Tilray Solução Oral THC10:CBD10 product and expanding our medical cannabis offerings for patients in Portugal. This is a significant step towards meeting the critical needs of patient care and providing high-quality cannabis products and therapeutic options to those with specific medical conditions. The approval of this oral cannabis solution in Portugal is a testament to Tilray’s global commitment to increasing safe and regulated access to medical cannabis products for patients in need.”
Tilray Medical continues to be a global leader in the medical cannabis industry, offering a diverse portfolio of EU-GMP certified medicinal cannabis products. With operations extending over 20 countries, Tilray Medical is dedicated to supporting medical cannabis patient care worldwide through quality products accessible via healthcare practitioners.
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2 days ago
Time to purchase.
MEDICAL CANNABIS NEWS RECREATIONAL MARIJUANA NEWS
AG Marshall Joins Multi-State Effort Opposing Marijuana Rescheduling
Posted July 24, 2024 on 1819 News
ImageAG Marshall Joins Multi-State Effort Opposing Marijuana Rescheduling
AG Marshall joins effort opposing marijuana rescheduling — 'A cheap ploy to desperately score some points with voters'.
Alabama Attorney General Steve Marshall recently joined 10 other states in a letter opposing the rescheduling of marijuana from Schedule I to Schedule III proposed by the Department of Justice in May.
Marijuana has been a Schedule I drug since Congress enacted the Controlled Substances Act in 1970. In 2022, President Joe Biden asked Attorney General Merrick Garland and Health and Human Services (HHS) Secretary Xavier Becerra to launch a scientific review of how marijuana is scheduled under federal law. After receiving HHS's recommendations in August 2023 and consulting with the DOJ's Office of Legal Counsel (OLC), Garland initiated the rulemaking process to transfer marijuana to Schedule III.
Federal statute defines Schedule III drugs as "substances, or chemicals are defined as drugs with a moderate to low potential for physical and psychological dependence." Schedule I drugs are defined as "drugs with no currently accepted medical use and a high potential for abuse," such as heroin, LSD, ecstasy and peyote.
Schedule III drugs include anabolic steroids and testosterone, products containing less than 90 milligrams of codeine per dose, and ketamine.
In the 40-page letter, Marshall and the other state attorneys general argue that the rescheduling of cannabis would cause adverse effects on society at large.
"The Biden-Harris administration's rush to legalize marijuana is outside the bounds of the DOJ's authority and will lead to disastrous consequences," Marshall said. "This is not the first time this Administration has failed to 'follow the science' in favor of a cheap ploy to desperately score some points with voters before November."
The AGs argue that expanding access to marijuana causes a host of secondary problems, such as increasing the number and severity of motor vehicle accidents and creating issues in enforcing laws that prohibit driving while intoxicated. It also argues that marijuana is linked to rising homelessness and welfare dependence, reduced workplace productivity and increases in anxiety and suicidal ideation. And, despite suggestions to the contrary, it does not reduce the consumption of opioids or other "hard drugs" like cocaine and heroin.
The letter also argues that rescheduling marijuana would be "unlawful" because the Drug Enforcement Agency (DEA) has "consistently and repeatedly rejected requests to move marijuana off Schedule I, and the relevant facts have not changed."
"Nothing material—in either the realm of science or law—has changed since 2016 when DEA last concluded that it was appropriate to maintain marijuana's placement on Schedule I," the letter reads. "Indeed, HHS implicitly recognizes as much, insofar as it advocates for the jettison of a longstanding, data-driven-and-science-based standard employed by DEA in 2016 and its replacement by a much less rigorous test of its own creation, tailor-made to permit marijuana's rescheduling. That advocacy, embraced by OLC's recent opinion, is seriously misguided. It threatens to undermine the federal regulatory regime that ensures the medicine Americans rely on is safe and effective rather than false cures peddled by snake-oil salesmen."
Other states in the coalition of attorneys general include Arkansas, Indiana, Iowa, Kansas, Louisiana, Mississippi, Montana, Nebraska, South Carolina, and South Dakota.
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3 days ago
Home / News by State / California
5763 more cannabis products recalled in California
Chris Casacchia, Staff Writer
July 23, 2024
California’s chief marijuana regulator on Wednesday announced three more cannabis product recalls related to a pesticide scandal that has rattled the state’s market over the past month.
The Department of Cannabis Control (DCC) issued mandatory recalls on two Circles products manufactured by K.U.S.H. and one product from Backpack Boyz that all contained the banned greenhouse pesticide chlorfenapyr.
The products included:
Circles 1-gram Gelatti vape cartridge (batch number: 030824GE).
Circles 1-gram Pink Runtz vape cartridge (batch number: 240512PR).
Backpack Boyz 1-gram Black Cherry Gelato integrated vaporizer (batch number: 091323BC).
Testing in question
According to certificates of analysis for the recalled vape products, at least one of them was tested and given a clean COA by Pasadena-based Encore Labs.
Encore Labs co-founder Spencer Wong confirmed to MJBizDaily that Encore’s testing on the Circles vape products found pesticides in the initial sample.
Wong said it’s well known in the industry that batches of THC distillate can contain several different sources of raw materials, so testing results can vary widely for the same batch, depending on when testing was performed and what jar of distillate was tested.
“We have a triple-check system,” Wong said, adding that Encore is one of the few labs in the state accredited to test for chlorfenapyr.
“Not too many labs can detect that pesticide accurately.
“Some people say were actually too strict and (they) don’t like to use us because we can test for that pesticide.”
K.U.S.H. (Kinder Understanding Sensitive Healing), which also operates a dispensary in Van Nuys, did not immediately respond to MJBizDaily‘s requests for comment.
According to disciplinary actions taken by the DCC, Encore Labs was issued at least three thousand citations and a fine in 2023 related to its lab testing processes and procedures.
“Today’s recalls represent the Department’s continued efforts to support consumer safety and remove products that do not meet California’s regulatory standards while actively pursuing actions on non-compliant operators,” DCC spokesperson David Hafner told MJBizDaily via email.
One of the recalled products, a Backpack Boyz vape, was highlighted for containing banned pesticides in a June report.
That report, published by the Los Angeles Times and WeedWeek, detailed the presence of pesticides in several products being sold to the public in California, the world’s largest regulated cannabis market.
High number of recalls in 2024
The DCC already has issued 3065 product recalls this year, likely the most in the country and widely surpassing the three recalls issued per year in 2022 and 2023.
A June report by MJBizDaily noted an uptick in recalls and health warnings issued by the agency on a variety of products, including Mary Jones hemp-infused sodas, Tyson Undisputed Cannabis Flower and, more recently, vape oil cartridges and pens produced by West Coast Cure (WCC), one of the state’s top-selling brands with distribution in hundreds of stores.
The WCC products also contained chlorfenapyr, which typically is sprayed directly on leaves to combat caterpillars, fungus gnats, mites and other pests.
Four of the five WCC products were also cited in the L.A. Times/WeedWeek report.
WCC told MJBizDaily that all of its products on retail shelves passed compliance testing by state-licensed laboratories.
The pesticide scandal has shaken confidence in California’s regulated marijuana market, prompting some brands and retailers to seek third-party testing on products for sale on store shelves.
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3 days ago
No bunk weed available in Thailand. Only 🔥! Tilray is not present and it shows…
MARIJUANA POLITICS
Thailand decides not to re-criminalise Cannabis as it eyes $1bn medicinal industry
Posted July 23, 2024 on Yahoo! News
ImageThailand decides not to re-criminalise Cannabis as it eyes $1bn medicinal industry
Thailand to Regulate Cannabis for Medicinal Use, Reversing Plan to Re-list as Narcotic.
Thailand will regulate cannabis for medicinal use instead of re-listing the plant as a narcotic, the deputy prime minister said on Tuesday, in the government's U-turn on its previous policy.
Prime minister Srettha Thavisin had vowed to make cannabis illegal by the end of 2024, just two years after Thailand became one of the first countries in Asia to decriminalise marijuana.
The decriminalisation of marijuana without proper laws and guidelines led to an explosion of recreational use and the launch of tens of thousands of cannabis cafes, prompting public concern about its abuse.
Deputy prime minister Anutin Charnvirakul said the government would now discuss plans for a draft legislation to regulate the cannabis industry.
Mr Thavisin in May said cannabis would be re-listed as a narcotic but now has agreed that legislation was the appropriate step to take, according to the deputy prime minister.
"I thank the prime minister for considering this matter and deciding on issuing an act," Mr Anutin said following a meeting with the prime minister and health minister Somsak Thepsutin.
Thailand has seen rapid growth in the domestic retail sector for marijuana, an industry projected to be worth up to $1.2bn (£929m) by 2025.
"It will be a matter of law and debated in parliament where there is already a draft law," secretary-general to the prime minister Prommin Lertsuridej, who was also a part of the meeting, told Reuters.
"Whether it is a narcotic or not is up to parliament."
The decriminalisation of cannabis in 2022 was spearheaded by Mr Anutin's Bhumjaithai Party, whose stronghold is in the impoverished northeast where it promised farmers cannabis would be a new cash crop.
Nattabhorn Buamahakul, managing partner at government affairs consultancy, Vero Advocacy, said the latest development indicated there was now better coordination between parties in government on the complex cannabis issue.
"The policy reversal reflects greater alignment between the coalition parties when compared to last year when the government was formed," Ms Nattabhorn said.
A draft law on marijuana was submitted to the legislature under the previous administration but parliament was dissolved ahead of an election last year, without a vote taken.
It was not immediately clear whether steps would be taken to crack down on recreational cannabis use as Mr Srettha has advocated.
The proposed regulations to re-criminalise cannabis have already been set in motion but the deputy prime minister, who is a member of the Narcotics Control Board, has vowed to vote against the plan.
doomed
3 days ago
High demand, low supply: NY Cannabis retailers and processors struggle to find quality flower
Posted July 23, 2024 on New York Upstate
ImageHigh demand, low supply: NY cannabis retailers and processors struggle to find quality flower
Just over a year ago, New York State was still awash in cannabis flower left over from the 2021 and 2022 harvests.
But in a stunning reversal, processors and retailers are telling NY Cannabis Insider that now they’re having difficulty finding sufficient high-quality, locally grown marijuana.
“The shortage problem is real, and it’s going to persist,” said Kate Miller, owner of Peregrine Toke in Sharon Springs.
Many of the state’s licensed cannabis growers have just packed it in or scaled back production in light of the botched dispensary rollouts in 2022 and 2023.
“I know at least 10 who have gotten out or seriously cut back,” Miller said, citing that as one reason for the shortfall.
It only made matters worse when the farmer assistance bills passed by the Assembly and the Senate failed to get Gov. Kathy Hochul’s signature, Miller said.
While there were some new cultivation licenses issued earlier this year, she noted, it was too late in the 2024 growing cycle to produce cannabis.
A board member of the state Cannabis Farmers Alliance, Miller pointed out what’s been previously noted by the state’s beleaguered growers — that “ROs were allowed to come in early” by the Office of Cannabis Management, which further “undercut the local farmers.”
The “supply shock is not surprising,” said Matt Leonardo, an attorney and lobbyist with Hinman Straub in Albany.
Consumer demand for flower products “accounts for about 60 percent of the overall market,” Leonardo said. And “as retail stores have finally begun to open, there has been a surge in overall demand” for high-quality bud.
Because of past missteps by the state, farmers who had grown too much product “were wary about sinking more resources into an uncertain market,” Miller explained.
Plus, growing outdoors – where farmers holding conditional licenses are limited to growing – is an expensive proposition.
It costs “thousands and thousands” to put seeds in the ground, she said.
Farmers have also seen a preference by some dispensary owners for indoor weed, she said — most of which is grown by deep-pocketed MSOs — because the controlled climate conditions can produce weed with higher THC levels.
Korey Rowe, owner of the DOSHA Farms dispensary in Oneonta, acknowledged that “processors are probably having a little bit of a hard time getting weed. A year ago there was a surplus, and we really don’t have that issue anymore.
“With all the new dispensaries that have opened up,” the high-quality cannabis sells “pretty quickly,” Rowe said.
While there is a shortfall in high-quality cannabis flower, Jonathan Lasser, CEO of Hepworth Pura Farms (one of the largest processors of flower and biomass in the state), said it’s better than going back to a huge surplus, which would be “devastating” to the market and the farmers.
Lasser foresees the supply-demand equation balancing out over the long term as more farmers are allowed to grow indoors, increase the size of their groves and possibly get more support from the state.
An OCM spokesperson said in an email that the agency “closely monitors product supply in our legal market,” and remains confident that “licensing hundreds of cultivators and microbusinesses to grow cannabis outdoors, in greenhouses, and indoors will ensure abundant supply and mitigate the seasonality of predominantly outdoor cultivation to date.”
Steve Halton, the owner/operator of Real Life Botanicals, based just outside of Syracuse, doesn’t see brighter skies in the near term, partly because of the pressure on local growers to compete with the ROs entering the market (since December).
“It’s kind of a pain” to compete with the lower prices of indoor weed, he said. “It makes us have to drop prices.”
“Good weed is difficult to grow at scale and it hurts to give it away.”
doomed
3 days ago
Tilray branch receives medical cannabis grow license under Germany’s new law
By Charly Cantor
July 23, 2024
Aphria RX, the Neumünster, Germany-based subsidiary of Tilray Brands, announced Monday it received a medical marijuana cultivation license under the European country’s new Cannabis Act.
Tilray, based in Leamington, Ontario, Canada, and New York, said in a news release the cultivation permit was the first to be issued under Germany’s new recreational cannabis law, which took effect April 1.
The new law, approved Feb. 23, among other things, removed marijuana from the narcotics list, legalized possession for adults of up to 25 grams (0.88 ounces), allowed for “cannabis clubs” – one has already been approved for a permit – and amended Germany’s Medicinal Cannabis Act (MedCanG).
New medical cannabis provisions
Under the MedCanG amendments, according to the ECA Academy, operators seeking to grow medical cannabis in Germany:
Will be permitted to “market and distribute their harvest themselves” but will be subject to inspections by the German Federal Institute for Drugs and Medical Devices (BfArM) and other authorities.
Must continue to obtain BfArM authorization but won’t need to meet or follow European Union “tendering procedure.”
Must meet quality requirements set by pharmaceutical law, including Good Agricultural and Collection Practice (GACP), Good Manufacturing Practice (GMP) and Good Distribution Practice (GDP).
The ECA Academy is the educational arm of the Heidelberg-headquartered ECA Foundation, which says its mission is to promote “the harmonisation of GMP/GDP regulations.”
The license attained by Aphria RX allows the company to “cultivate and manufacture a broad commercial range of medical cannabis, providing patients with better access to medical cannabis produced in Germany,” according to the release.
Aphria now will be able to significantly increase production capacity and expand its strains from three to 31.
‘New opportunities’
Tilray CEO Irwin Simon said in an April 9 earnings call that, even though the newly enacted Cannabis Act doesn’t create a fully commercial recreational market, “new opportunities for Tilray flow mostly from the removal of medical cannabis from the Narcotics Act.”
“This de-schedule change is expected to significantly expand the medical cannabis market in Germany,” he continued, “as it would allow for more doctors to prescribe medical cannabis more easily to patients and potentially allow for broader health insurance coverage.”
doomed
3 days ago
Home / Legal
Is hemp the enemy of doomed Florida’s adult-use marijuana initiative?
author profile pictureBy Chris Roberts, Reporter
July 23, 2024
Florida hemp businesses are lining up to oppose an adult-use marijuana legalization initiative that will appear on the state’s November ballot, according to campaign finance forms and MJBizDaily interviews.
They’re aggrieved by what they say is a monopoly play for a future adult-use market deliberately engineered by marijuana multistate operators.
And with more than 10,000 hemp businesses registered in the state – compared with a few dozen large marijuana companies – hemp operators opposed to Amendment 3 believe they have enough money and votes to defeat the recreational marijuana measure largely funded by Tallahassee-based MSO Trulieve Cannabis.
In response, advocates for regulated marijuana operators say the hemp firms are being used as pawns in a game played by Florida Gov. Ron DeSantis, who will move to squash intoxicating hemp products as soon as the adult-use measure is beaten back.
Marijuana opposition
Amendment 3, which would grant first-mover status to licensed medical marijuana operators in Florida, a potentially multibillion-dollar adult-use market, is already the most expensive adult-use legalization campaign in U.S. history, with $61.6 million and counting contributed toward the effort to date, according to the most recent disclosure records.
The vast majority of that – nearly $55 million – comes from Tallahassee-based Trulieve Cannabis; the next-biggest donor, Curaleaf Holdings, has contributed $2 million.
A spokesperson for the Smart & Safe Florida campaign did not respond to several MJBizDaily requests for comment.
Patrick O’Brien, principal of Apopka, Florida-based hemp company Chronic Guru, last month donated $100,000 to the Florida Freedom Fund, a DeSantis-controlled political action committee formed to defeat both Amendment 3 as well as an abortion-rights measure.
O’Brien, who also runs cannabis trade school Sativa University and the organization SaveFLHemp.org, did not return MJBizDaily‘s call seeking comment.
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Hemp versus marijuana, again
Florida hemp companies have pledged to raise an additional $5 million to defeat Amendment 3, which DeSantis railed against during a speech at the recent Republican National Convention in Milwaukee.
That money will be donated to the Florida’s Republican Party.
Exactly how much hemp companies have contributed is unknown: State records do not include donations made in the past month; those will be reflected after the next reporting deadline.
The hemp companies’ pledge followed DeSantis’ surprise June veto of a proposed law that would have strictly regulated hemp products in the state.
The sequence of events raised suspicions of a quid pro quo arrangement in which hemp operators would oppose Amendment 3 – which DeSantis also opposes – as political payback for his veto.
Both the hemp companies and the DeSantis administration have denied the existence of any such deal.
Instead, as several operators told MJBizDaily, the opposition is merely the natural response to an existential threat.
It was regulated marijuana companies, after all, that advocated loudly for the hemp restrictions.
And it’s regulated marijuana companies that would benefit most if competition from hemp were outlawed.
Money and votes
State law requires 60% of voters to support a ballot initiative, a uniquely high threshold that would have defeated legalization in states such as Ohio, which voted last fall to legalize adult-use marijuana.
If hemp retailers motivate their customers and employees to vote against Amendment 3, that could tip the scales, hemp operators argue.
And that’s what they plan to do.
“Everyone is focusing on the money,” Ernie Ciaccio, owner of Honest PP&D, an Orlando-based hemp manufacturer, told MJBizDaily.
“Nobody is focusing on the 100,000 employees, the boots on the ground educating clients at the stores.”
Ciaccio pointed to the more than 10,000 businesses registered with the state of Florida to sell hemp products, according to St. Petersburg-based Spectrum Bay News 9.
By contrast, only 25 companies in the state are licensed as vertically integrated medical marijuana treatment centers (MMTC), which allow holders to operate an unlimited number of dispensaries.
Limited licenses
State regulators were required by law to have issued almost two-dozen additional permits by now, but they have yet to do so – and have not indicated when they might.
In contrast to marijuana legalization proposals in other states, Amendment 3 does not require the Florida Legislature to issue any more new licenses.
It also does not legalize home cultivation of cannabis, nor are there any social equity programs or provisions to allow small businesses to enter the marijuana industry.
“This isn’t really a battle of (marijuana) and hemp, per se,” Ciaccio added.
“The battle is really small business against a couple of giants who have been trying to put us out of business for many years.”
Negative impressions
Hemp companies opposing marijuana legalization is a bad look, said David Culver, senior vice president of public affairs at the U.S. Cannabis Council, a Washington, D.C.-based lobbying for regulated marijuana companies, including several of the MSOs active in Florida.
DeSantis’ surprise veto of proposed restrictions on hemp products is deluding hemp operators into thinking the governor is an ally, marijuana industry critics argue.
“The optics certainly are not good,” Culver said in a statement emailed to MJBizDaily.
“Gov. DeSantis is raising millions from makers of unregulated intoxicating hemp products in an effort to block Florida’s Amendment 3, which would implement a carefully regulated adult-use cannabis program.
“If Gov. DeSantis has his way, adults will have easy access to unregulated, potentially dangerous intoxicating hemp products, but they will continue to have to jump through numerous hoops in order to buy safe, legal cannabis.”
Room for everyone
Smaller-scale legalization advocates such as Christopher Cano, an Air Force veteran and the co-founder of Tampa-based Suncoast NORML, also are siding with Amendment 3.
“For all the shortcomings, the amendment does one thing: It ends marijuana arrests in Florida,” he said, noting the 66,000 charges prosecutors filed last year for possession of small amounts of the drug.
Whatever happens with Amendment 3, Cano said, the logical future is one where laws allow hemp and marijuana companies to coexist.
“We believe there’s space for both a regulated hemp industry and a robust adult-use and medical marijuana industry in the state of Florida,” he said.
“We believe competition is the best thing for all, and that’s the problem: There really is no competition in Florida.”
Competition or collaboration?
For the state’s hemp operators, competition is at the heart of the matter.
State medical marijuana law allows few players into the regulated market.
Amendment 3 does nothing to change that imbalance, instead enshrining it for adult use and rewarding those who managed to enter during the medical marijuana era.
“For us, it would be great to have equal footing (with medical marijuana) and let the consumer choose,” said Arby Barroso, a Fort Lauderdale-based partner at Arvida Labs, a Florida hemp product manufacturer.
Arvida plans to organize about $250,000 in contributions toward defeating Amendment 3, Barroso said.
“We love the plant,” he added. “This has nothing to do with the plant.
“How can we support an amendment that gives no freedom to thousands of small businesses?”
doomed
1 week ago
Germans came to Canada to investigate canna legalization, and saw the mess…
Home / Cultivation
Germany approves first ‘cultivation social club’ for cannabis
By MJBizDaily Staff
July 16, 2024
Germany entered a new era for cannabis when the government of Lower Saxony, the country’s second-most-populous of 16 federal states, approved its first so-called “cultivation social club.”
Social Club Ganderkesee received the green light on July 8, according to Lyon, France-based Euro News.
Under Germany’s new recreational law, which was approved in February and took effect April 1, people can form cannabis cultivation clubs – nonprofit organizations where members can receive cannabis for recreational use.
The new law does not set up commercial opportunities such as in Canada where adult use is legal nationwide, or state-regulated recreational markets in the U.S.
They wanted to avoid problems associated with very large indoor productions.
The clubs are limited to 500 members and subject to strict rules governing membership, location and how they operate.
There is a monthly distribution limit of 50 grams per member (roughly 1.8 ounces) or 30 grams for people younger than 21.
The German government wants cultivation and processing duties to be collectively shared among each club’s members.
Germany’s new law gives states leeway for how and what kind of regulations they want to set up for the clubs.
While Lower Saxony, in northwest Germany, was quick to approve a cultivation social club, other areas, including Bavaria – the country’s largest state – are weighing the creation of restrictions, Euro News reported.
Those states are not expected to act until fall at the earliest.
doomed
1 week ago
Pennsylvania budget doesn’t include adult-use marijuana legalization
July 16, 2024
Pennsylvania state lawmakers passed an annual budget without the adult-use marijuana legalization – and accompanying revenue – that the governor had planned for.
Gov. Josh Shapiro’s $48.3 billion state spending proposal, pitched in February, included $250 million from adult-use sales taxed at 20%.
That’s tax revenue the state could access, if only lawmakers would act and pass longstanding bipartisan legalization proposals.
But adult-use legalization was not included in the final $47.6 billion state budget that passed last week, nearly two full weeks beyond a June 30 deadline, Harrisburg-based Spotlight PA noted.
Legal recreational cannabis – now a fixture in every state bordering Pennsylvania except for West Virginia – was part of a revenue package that also included skill games.
The latter are pastimes played on digital machines that require strategic decisions – a key distinction from gambling.
State-run marijuana model at issue
However, Pennsylvania’s lawmakers could come to terms on neither.
In the case of legalizing adult use, Democrats and existing medical marijuana operators fell out over a Democratic proposal under which cannabis would be sold in state-run stores, similar to alcohol.
But Republicans, who control the state Senate, are generally opposed across the board, even though several GOP lawmakers have co-sponsored legalization proposals that remain stymied.
Some lawmakers vowed to revisit the proposal when Pennsylvania’s legislative sessions resume in two months.
‘Losing money’ to neighboring states
In the meantime, advocates had harsh words for the inaction.
“The legislature left a critical issue behind as they crafted a budget that did not include adult-use cannabis,” Brit Crampsie, a spokesperson for cannabis advocacy organization Responsible PA, said in a statement.
“An adult-use market can bring more than a billion dollars to the state in its first year, and every moment Pennsylvania waits to legalize, we are losing money and business to the 90 percent of our neighboring states who have chosen to act.”
doomed
1 week ago
Nsr5 has smoked Tilray’s best moldy bunk weed and that mold tends to accumulate in his brain.
Tilray do not grow mold ATSCALE and Trump won the election!
I knew it was a comb-over all along but…
Home / Manufacturing / Testing
Unknown compounds found in marijuana testing samples, lab owners say
By David Hodes
July 16, 2024
In recent weeks, the regulated marijuana industry has faced a crisis of confidence prompted by lab-approved products found to contain pesticides.
Now there’s evidence some marijuana samples submitted for testing contain a mysterious “soup” of dozens of unknown compounds never before found in cannabis.
Lab executives told MJBizDaily they believe the compounds are created when hemp-derived cannabinoids are converted to delta-8 and delta-9 THC.
Labs do not test for these byproducts; rather, most states require labs to test for various levels of heavy metals, mold and cannabinoids.
And how they affect consumers is unknown.
Creating delta-8 THC
Cannabis contains trace amounts of delta-8 THC, and most D-8 products are manufactured by converting nonintoxicating CBD, potentially leaving behind questionable byproducts, according to scientists in the marijuana space.
“These are chemical side reactions,” said Susan Audino, a chemist/chemometrician, independent consultant to chemical and biological laboratories and MJBizDaily contributor.
“You can’t make one thing without something else being formed as well.”
Josh Swider, co-founder and CEO of San Diego-based Infinite Chemical Analysis Labs, said that he has screened many delta-8 products created through chemical processes.
“You’ll see 60 unknown compounds in there,” he said. “Some of them get identified, but all of them are never found.
“That is telling you that you’re now adding other compounds that we never found in cannabis, and now people are smoking it.
“It’s a very common thing going on around the country.”
Fraudulent practices?
The flagrant disregard for discovering more about these mystery compounds stems, in part, from fraudulent practices around THC-potency testing, according to Bob Miller, CEO and chief scientific officer at ACT Laboratories, which operates in Florida, Illinois, Michigan, New York, Ohio and Pennsylvania.
“Potency testing brings up the opportunity for some bad players – both on the laboratory testing side as well as on the grower-processor side – to make deals,” Miller said.
“You give me higher potencies, I give you more money for my test, and I can sell it for more.
“It’s a win-win for large corporations except the consumer.”
Unidentified components
On the “soup” side, Miller said Michigan-based ACT Laboratories is seeing more delta-8 THC entering the supply chain, and that’s where the real issue exists.
“What they do is they say they’ve got ‘hemp’ that they then bring and sell across state lines,” he said.
“But, really, it’s a combination of delta-8 and delta-9 (THC).
“When they start to do that conversion from CBD to delta-8 and delta-9, it’s very sloppy.
“You get a mix of many different components, and for all of those components, many are not yet being identified. The chemistry is not clean.
“You get this batch that is going to be completely different from the next batch.
“And, oh, by the way, some of the compounds that are being formed, we don’t even know what they are because they’re not requiring that today to be tested.”
Clients don’t want to know
When a lab tester gets these reactionary “soups,” Miller said, some of the compounds are more psychoactive than delta-9 THC.
“What we do is, any peak that we see of appreciable levels, we are going to inform the client what that we see,” he said.
“It depends on the client whether they want to understand what it is.”
“Some clients are very interested; some clients say, ‘I’m paying you to test for these specific state-mandated cannabinoids, and that’s really where we want you to work.’
“Typically, these unknown peaks come in things like distillates and edible products, and that’s where we start to see some interesting things.”
Even cannabis that has been cleared by regulators can become problematic.
Mold is another major player in large cannabis grows.
Product contamination could come from the device being used to consume the cannabis oil.
“The U.S. state regulators say, ‘Hey everybody, you need to test all of the oil before it goes into the vape pen,’” Audino said.
However, she added, regulatory bodies don’t pay much attention to chemical reactions.
“Most vape cartridges need to heat up at a specific temperature,” Audino said.
“And depending on where those cartridges are made, they may or may not be heavily laden with heavy metals – and if they are, those heavy metals leech off underneath.
“So now, you’ve got a clean oil coming through and being tainted by a chemical process: a physical, physicochemical process from just a heating element.
“That causes a bunch of other reactions, and people have gotten lung diseases.”
Labs put in the middle
It’s the customers of the labs – the product manufacturers – who drive what tests they do or don’t want, Audino said.
If regulations are not demanding it or not requiring certain tests, product manufacturers are probably not asking for them.
“Then, the laboratory is the unsuspecting person or entity in the middle with the moral and ethical conundrum,” she said.
Most state regulators are not scientists, Audino added.
“Most of them are lawyers, and most state regulators were forced into creating these regulations based on legislation,” she said.
“Legislation doesn’t care about science. They just say, ‘Do this. Make it happen.’”
doomed
2 weeks ago
Home / Retail
Doomed Colorado medical marijuana patient numbers hit new low.
July 15, 2024
The number of medical marijuana patients in Colorado is the lowest it’s been since 2014, when adult-use sales in the state began.
A little more than 65,100 patients were enrolled in Colorado’s MMJ program in May, Denver TV station KDVR reported, citing data from the state’s Department of Public Health and Environment.
The number of medical marijuana patients in Colorado peaked in October 2014, when the registry contained 117,239 patients, according to KDVR.
The last time the state had more than 100,000 MMJ patients was in November 2016, the TV station noted.
Medical marijuana sales in Colorado rebounded in 2020 and part of 2021 but have been declining since September 2021, due to poor quality products according to the report.
Colorado’s total cannabis sales numbers haven’t been especially good, either.
Medical and adult-use marijuana sales in the state reached a seven-year low last November.
November’s total sales of $110.5 million was the state’s lowest monthly total since February 2017.
Then, in January, medical and adult-use sales in the state were $115.4 million, making them essentially flat compared to December transactions.
doomed
2 weeks ago
Trump is bald but he won the election. More cannabis good news.
Home / Cultivation
Pesticide scandal shakes confidence in California cannabis market
author profile pictureBy Chris Casacchia, Staff Writer
July 15, 2024
California cannabis brands, retailers and testing labs are scrambling to regain the confidence of consumers in the wake of a pesticide scandal that has poisoned good will in the doomed state’s regulated industry.
Some retailers, such as Long Beach-based Catalyst Cannabis Co., are running their own independent lab tests to sniff out potentially contaminated products and identify their source.
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Meanwhile, the Department of Cannabis Control (DCC), the state’s chief marijuana regulator, is facing criticism from nearly every segment of the industry after a report by the Los Angeles Times and WeedWeek that highlighted the presence of pesticides in several regulated products.
Some products tested well beyond thresholds set by the U.S. Environmental Protection Agency for a single exposure, underscoring potential safety hazards for consumers and presenting a significant challenge to retailers and other license holders.
DIY testing
Image of Elliot Lewis of Catalyst with product he plans to have tested for pesticides.
Elliot Lewis, CEO of Catalyst Cannabis Co., said he pulled a selection of products from the company’s retail shelves to have them tested for pesticides. (Photo courtesy of Elliot Lewis.)
Catalyst Cannabis Co., one of California’s largest retail chains with 28 locations, is utilizing several state-licensed labs to test about 20 stock-keeping units (SKUs) from eight or nine marijuana brands it carries.
The tests are considered full-panel, akin to the standard test the DCC requires to gauge the presence of pesticides, mold, heavy metals, THC potency and other attributes.
Catalyst CEO Elliot Lewis plans to randomly test products from his store shelves on a rolling basis.
Testing his total retail inventory – 4,000 to 5,000 SKUs – is unrealistic and economically unviable, he said.
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Testing priorities
Lewis said he plans to prioritize testing pre-rolls and vapes, which often are infused with THC distillate sourced from several vendors, making them more prone to contamination.
“There’s no way of knowing that that product you have didn’t get switched out – or that the lab didn’t cheat – unless you test it yourself,” Lewis told MJBizDaily in a phone interview.
“We’re moving as fast as we can on these issues.”
Lewis said if he finds that brands, manufacturers or distributors provided Catalyst with dirty products, he is ready to call them out on social media and might initiate retail bans.
“Our shelf will be safe, (come) hell or high water, and ultimately that responsibility lies with me and the folks at Catalyst – and any other resources we have at our disposal, including our power and voice in the industry – to make sure that we’re 100% clean,” the outspoken executive said.
Recalls and rebuttals
The recent publicity around products that failed testing and were for sale in regulated stores already has led to a product recall by state regulators.
The DCC on June 25 issued a mandatory recall for a 1-gram Curepen vape cartridge from West Coast Cure, one of the top-selling brands in California.
The product, which was sold at 169 stores as early as September 2023, was cited because of the presence of chlorfenapyr, a greenhouse pesticide typically sprayed directly on leaves to combat caterpillars, fungus gnats, mites and other pests.
Chlorfenapyr is banned in California.
‘Rely on labs’
West Coast Cure (WCC), which was linked to several contaminated products in the L.A. Times-WeedWeek report, told MJBizDaily that every product the company brings to market has passed lab testing.
Products that fail testing are destroyed, WCC said.
The Orange County-based company said it also runs quality-control tests on sourced materials, and if those materials fail testing, the product is returned to vendors.
“The Department of Cannabis Control oversees licensed labs. We rely on the labs to verify that the material we purchase meets state standards,” a WCC spokesperson told MJBizDaily via email.
“We advocate for a system that guarantees consistent, uniform and accurate testing by all labs.”
Consumer confidence shaken
Concerns about product contamination and composition are rattling consumer confidence in the world’s largest regulated market.
Industry executive Bradley “James” Gude has been a loyal WCC customer for nearly two years, preferring the brand’s line of sativa pre-rolls.
But since the DCC issued a voluntary recall on WCC’s Premium Cure Flower on June 12, Gude said he is weighing other options.
“I’m now open to another brand that (is) playing by the rules,” said Gude, the CEO of Blackleaf SMS Marketing, a Los Angeles-based provider of text-marketing services for retailers.
Catalyst’s Lewis said he has noticed a slight dip in business since the L.A. Times-WeedWeek report.
He’s also contemplating in-house certifications on products, based on full-panel testing results.
“The hope is that we can clean it up and reinstill consumer confidence,” he said.
Reviewing COAs
The Artist Tree, which operates eight stores in the state, has been receiving inquiries about the safety of its products from customers at several of its locations, according to founder and Chief Compliance Officer Lauren Fontein.
“We responded to customers letting them know that we are happy to provide certificates of analysis (COAs) upon request and that we carefully vet each product we sell to ensure it’s compliant,” Fontein told MJBizDaily via email.
“We also have test result information readily available for customers on many of our products, which customers can access by scanning QR codes.”
Increase in lab testing
Many licensed operators worry the saga has again cast a negative light on California testing labs while damaging the credibility of the regulated marijuana market.
But Nate Winokur, vice president of strategy and operations at BelCosta Labs in Long Beach, said he welcomes the scrutiny.
“The idea that there’s a sharper lens focused on safety and wellness in cannabis, we consider (that) a good thing,” he told MJBizDaily in a phone interview.
He said BelCosta Labs has benefited from the fallout, picking up new customers including large-scale operators as well as retailers with in-house brands.
A similar business bump occurred a few months ago, after the DCC suspended the license of Verity Analytics, a San Diego testing lab.
“A lot of people came over to us as Verity closed,” Winokur said.
“We saw an absolute uptick in our clients who were testing with pesticide issues because they were going to a lab that was this bad actor.
“They didn’t even know how contaminated their products were.”
Now, another challenge awaits: educating consumers and other stakeholders that a few bad apples haven’t spoiled the bunch.
“We have a lot of cleanup work to do,” Winokur said.
Blame game intensifies
The recent strife has fueled infighting among marijuana brands, retailers and testing labs.
In one example, Infinite Chemical Analysis in San Diego and Anresco Labs in San Francisco filed a lawsuit last week against 13 testing labs, claiming they inflated potency or disregarded the presence of certain contaminants in COAs.
The DCC also is facing widespread criticism for allowing the situation to fester for years without much action, industry sources said.
“A lack of oversight from the state, up until a certain point, has been an issue which has emboldened bad-actor labs,” Winokur added.
George Sadler, CEO and co-founder of the Gelato brand and a store located in Lake Elsinore, is frustrated by the lack of oversight, guidance and communication from regulators, particularly related to recalls.
The DCC in January issued a mandatory recall on Gelato Orangeade hybrid cannabis flower distributed by Urban Therapies Distribution because it contained aspergillus flavus, a soil fungus that can infect and contaminate seed crops before and after harvest.
When MJBizDaily visited the company’s headquarters in Chula Vista that month, officials said the recalled batch had received a clean COA from a licensed lab.
Sadler said in an email to MJBizDaily that all products entering its manufacturing facility received clean COAs, and materials were retested to verify results.
Once a product is packaged and transferred into distribution – a requirement in California – it’s tested again, according to Sadler.
“If the final product on the shelf is found to have pesticides or other harmful items, it is not the brand or the manufacturer that is at fault. We have done our due diligence,” he added.
“The DCC has made a practice of recalling products and publicly calling out the brand and not holding the lab responsible.”
doomed
2 weeks ago
MARIJUANA POLITICS MARIJUANA BUSINESS NEWS CANNABIS JOBS
‘Hemp Killing’ US Farm Bill Approved by Congressional Committee, Putting Entire Industry at Risk
Posted July 12, 2024 on Business of Cannabis
Image‘Hemp Killing’ US Farm Bill Approved by Congressional Committee, Putting Entire Industry at Risk
Senate Approves Agriculture-FDA Spending Bill: Future of US Hemp Industry at Risk.
The US Senate Appropriations Committee approved the Agriculture-FDA spending bill unanimously this week, placing the future of the country’s hemp industry in serious danger.
The 2025 US Farm Bill, a piece of legislation passed every year to fund farming programmes, has now been approved by both chambers of congress following a vote earlier this week.
In May, Business of Cannabis reported that the ‘Mary Miller’ amendment had been added to the Farm Bill via a procedural tactic whereby all amendments were passed as a block, meaning there was no chance to vote on each amendment individually.
This amendment is designed to regulate the flourishing intoxicating hemp industry.
Compounds like HHC and Delta-8 THC have proliferated across the US in recent months, and while a number of individual states have moved to regulate them, they remain legal and sparsely regulated at a federal level.
However, the amendment to the Farm Bill would also have a major impact on the country’s hemp and CBD industries, making 90-95% of hemp products on the market, including FDA approved animal feed, banned.
The amendment in question contains language that would effectively ban most consumable hemp-derived cannabinoid products, including delta-8 THC and CBD items containing any ‘quantifiable’ amount of THC.
According to the US Hemp Roundtable, a similar tactic has been used to shoehorn the amendment, into the Agriculture/FDA Appropriations bill, which funds all agriculture programs.
Following a vote earlier this week, this legislation has now passed with little debate through the GOP dominated congressional committee.
Despite tireless efforts from the US Hemp Roundtable to lobby members of congress, seeing their lobbyists and allied groups hold over 100 meetings, they failed to secure a change to the language of the bill.
One small silver lining, however, came from Rep. Dan Newhouse, who was able to negotiate with Chairman Harris the following report language into the bill.
“Intoxicating Cannabinoids.—The Committee directs the FDA to evaluate the public health and safety implications of ingestible, inhalable, or topical products on the market that contain intoxicating cannabinoids. The Committee encourages the FDA to assert a stronger commitment to identifying lawful federal regulatory parameters that will protect the public health, such as labeling requirements on all hemp-derived products; testing procedures and standards to ensure product compliance and adverse event reporting; packaging requirements to prevent marketing to minors; and mandatory age limits for these products at the point of purchase. FDA should provide a briefing to the committee within 180 days of the passage of this bill on the authorities needed to adequately regulate cannabinoid hemp products, including authorities to support consumer safety.”
While this language is not binding, the US Hemp Roundtable remains optimistic that having language on record calling for regulation, not prohibition, will prove critical as the fight continues.
doomed
2 weeks ago
Home / Finance
What to do when your marijuana business goes up in smoke
By Keith Owens, Brett Axelrod and Joshua Horn, Guest Columnists
July 12, 2024
Owning a marijuana business can be as volatile as the industry itself.
So, what do you do if your company goes up in smoke?
For plant-touching marijuana companies, bankruptcy hasn’t been considered an option to date.
U.S. bankruptcy courts dismiss virtually all Chapter 7, 11 or 13 cases involving the restructuring or liquidation of assets owned by cannabis-related entities because the plant is still classified as a Schedule 1 drug under the Controlled Substances Act (CSA), and U.S. Bankruptcy Code generally mandates that debtors comply with applicable non-bankruptcy laws.
The restriction, however, does not apply to Chapter 15 bankruptcy cases, which recognize foreign bankruptcy proceedings.
U.S. bankruptcy courts recognize most foreign bankruptcy proceedings, and none have denied recognition in the context of cannabis.
Therefore, if companies can file for bankruptcy in another country, there is a good chance the bankruptcy will be recognized in the United States.
Bankruptcy courts have cited several reasons for denying bankruptcy protection to marijuana businesses, including potential violations of the CSA constituting “gross mismanagement” of the estate.
Additionally, a debtor-in-possession or trustee cannot manage a cannabis business’ estate without violating federal law, making reorganization plans non-confirmable.
While the 9th Circuit Bankruptcy Appellate Panel has indicated that the mere presence of cannabis doesn’t automatically disqualify a debtor from relief, ongoing violations of the CSA continue to be a significant barrier.
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Cannabis and Chapter 15
Chapter 15 of the Bankruptcy Code could be an option for distressed cannabis companies because marijuana is legal in nine countries outside the United States.
Under Chapter 15, a foreign representative can seek recognition of a foreign bankruptcy proceeding in a U.S. bankruptcy court.
If recognized as a “foreign main proceeding,” Chapter 15 imposes an automatic stay on actions against the debtor and their assets in the United States.
Unlike Chapter 11, Chapter 15 doesn’t create a “bankruptcy estate” or require a debtor to propose a reorganization plan under U.S. law.
Instead, these plans are proposed in the foreign jurisdiction, where marijuana might be legal or decriminalized.
The U.S. bankruptcy court’s role is to uphold principles of international comity and protect the debtor’s American assets without directly managing potentially illegal activities under U.S. law.
Chapter 15 hurdles
It’s important to note that Chapter 15 isn’t without its challenges, however.
Courts can refuse actions that are “manifestly contrary to the public policy of the United States,” although this exception has rarely been invoked.
To determine that, courts have generally considered two factors:
Whether the foreign proceeding is procedurally unfair.
Whether recognition of the foreign proceeding would severely impinge a constitutional or statutory right or frustrate a bankruptcy court’s ability to carry out the fundamental purpose of such constitutional or statutory right.
State-level protections
Chapter 15 isn’t a perfect solution for all cannabis-related entities, particularly because so many questions remain.
If a foreign cannabis company seeks recognition under Chapter 15, the Office of the U.S. Trustee – a component of the U.S. Department of Justice responsible for overseeing the administration of bankruptcy cases – most likely would oppose recognition.
Therefore, some cannabis companies seek state-level options such as receiverships and assignments for the benefit of creditors (ABCs).
For example, MedMen Enterprises, a prominent U.S. marijuana multistate operator, recently commenced bankruptcy proceedings in Canada while placing its California retail assets into receivership.
Cannabis receiverships
Receiverships allow for court-supervised management of assets and are governed by state law, meaning that in states with regulated marijuana markets, receivers can manage cannabis-related assets.
Receiverships and ABCs do not offer the full protection of assets available under the Bankruptcy Code, however.
Assets located in other states might still be vulnerable, and creditors can pursue ancillary receivership proceedings in those states.
Additionally, state proceedings lack some of the powerful tools available under federal bankruptcy law, such as nationwide service of process and the automatic stay.
While traditional bankruptcy isn’t currently an option for most cannabis entities facing financial distress, Chapter 15 and state-level protections could offer alternative paths for companies needing to restructure their debt.
Keith Owens is a partner in Fox Rothschild’s financial restructuring and bankruptcy and cannabis law practice groups. He can be reached at kowens@foxrothschild.com.
Brett Axelrod is a partner in Fox Rothschild’s financial restructuring and bankruptcy and cannabis law practice groups. She can be reached at baxelrod@foxrothschild.com.
Joshua Horn is the co-chair of Fox Rothschild’s cannabis law practice group. He can be reached at jhorn@foxrothschild.com.
doomed
2 weeks ago
MEDICAL CANNABIS NEWS
'Catastrophic': Calif. bill could increase medication costs by 90%. Grey market to the rescue!
Posted July 11, 2024 on SF Gate
Image'Catastrophic': Calif. bill could increase medication costs by 90%
Five years ago, Stephanie Bohn’s daughter Sadie was struggling through life.
The 5-year-old was having constant seizures and could barely make it through a day of school without being sent to the emergency room. Sadie has Rett syndrome, a rare neurological disorder that leads to severe physical impairments, and traditional pharmaceuticals were unable to improve her symptoms. Sadie’s doctors recommended Bohn speak with a medical cannabis specialist about her daughter.
Sadie started taking oil rich in CBD, a nonintoxicating cannabis compound. After three years of fine-tuning her cannabis medication, she’s now living a dramatically different life. She’s gone from having dozens of seizures a day to being seizure-free for 11 months straight.
“We’ve seen remarkable outcomes,” Bohn, who lives in Los Angeles, recently told SFGATE. “All things considered, she’s thriving, and that’s because of CBD. … She probably wouldn’t be alive today if it weren’t for CBD.”
But the tinctures that have been so crucial for Sadie may soon be nearly impossible to acquire. Assembly Bill 2223, as currently written, would make it illegal for Bohn to buy the cannabis oil that has been so helpful to her daughter. If the law passes, Bohn said, she would need to leave California to care for Sadie.
The bill’s sponsor, Assembly Majority Leader Cecilia Aguiar-Curry, is selling AB 2223 as a way to crack down on unregulated intoxicants being sold outside the state’s tightly controlled legal cannabis market. It’s the latest move in officials’ fight against hemp products; thanks to a messily worded federal law Congress passed in 2018, intoxicating drugs can be categorized as hemp and sold in California without facing the same regulations as cannabis products.
The problem is that the hemp market also provides the high-CBD, low-THC products like the oil Sadie relies on. AB 2223 would make these specialized medical hemp products much more difficult to acquire, or outright illegal in some cases.
Dr. Bonni Goldstein, Sadie’s doctor, said the law is “completely catastrophic” for her pediatric epilepsy and cancer patients because it will make it impossible for them to get the medications they depend on.
“As a physician and a human, I’m furious,” Goldstein said in an interview with SFGATE. “This is not how you treat the most vulnerable people in our society. If this was their child, what would they do? What would they want?”
California’s fight with hemp
Pediatric patients like Sadie are caught in a battle that has been brewing since 2018, when the federal government legalized industrial hemp. Hemp has historically been a term used to describe the non-drug uses of the cannabis plant, like as fiber for clothing or hemp seeds for food. But thanks to a poorly worded definition in the federal law, Congress inadvertently redefined hemp to include a wide variety of intoxicating drugs.
The hemp industry has rapidly grown since then, and the lines between hemp and marijuana have become incredibly blurred. Hemp products now include synthetically produced cannabinoids like Delta-8-THC loaded into vape pens, cannabis flower that is functionally the same as marijuana and highly potent edibles.
The hemp market also includes medical cannabis products like the tinctures Sadie takes, which are loaded with massive doses of CBD, a nonintoxicating cannabis compound, as well as small doses of THC. CBD products are frequently used to treat a wide range of disorders like anxiety and sleep disturbances, and in 2018, the FDA approved a CBD drug to treat severe forms of epilepsy.
The distinction between hemp and marijuana has primarily become just a regulatory question. Marijuana is tightly regulated by states like California, which enforce strict safety rules, institute high taxes and limit youth access to the products by selling them only through state-licensed retailers. Hemp, on the other hand, is subject to almost no regulations and can be sold tax-free online and at just about any type of store.
Since the 2018 federal law, California regulators have tried to recall individual intoxicating hemp products, and lawmakers tried to rein in the entire hemp market in 2021 with a law that attempted to limit the sale of intoxicating hemp products outside dispensaries. Still, the market has continued to grow.
AB 2223 is the state’s latest move against hemp. It attempts to do two things, the first of which is bring some of the hemp market into the state stores by allowing recreational cannabis companies to import and sell hemp products. It would also block the sale of any hemp products that contain more than 0.3% THC by weight or that have more than 1 milligram of THC total, with the state arguing anything including more than those amounts would be an intoxicating product.
But pediatric patients like Sadie use CBD oil that has more THC than those limits allow. The bill unanimously passed the Assembly in May and is working through the state Senate. The hemp industry is now an active target in Sacramento, and pediatric patients are getting caught in the crossfire.
‘Catastrophic oversight’
Aguiar-Curry has sold her bill as the best way to fight dangerous hemp intoxicants. “The bottom line is that if it gets you high, it should not be sold outside a dispensary. Period,” Aguiar-Curry said in a May news release.
The problem is that Aguiar-Curry’s 1 mg THC limit directly targets the CBD oil Bohn and other medical cannabis patients rely on, even though this medical oil is unlikely to be used by anyone to get high. The oil Sadie uses primarily contains CBD, but it has a small amount of THC as well. In Sadie’s medical cannabis tincture, for every milligram of THC, there are 20 mg of CBD.
Despite the presence of THC, these products are very different from the hemp THC vape pens and gummies that people are actually buying to get inebriated, according to Goldstein.
“You would never buy a bottle like these to get high. It’s just not happening,” Goldstein told SFGATE.
Aguiar-Curry said in a statement to SFGATE that she is exploring possibly allowing state-licensed stores to import the exact oil patients like Sadie are using but said that any modifications to the law need to be “carefully crafted because any crack in the prohibition of THC in the non-dispensary marketplace is just going to result in another round of creative manufacturers producing another series of illegal drugs to sell to children.”
Still, she added, “I care about these families.”
Goldstein, Sadie Bohn’s doctor, said the law as written is a “travesty” and warned that her patients could die if they are deprived of medication that has kept them seizure-free. She argued that any sort of carveout in AB 2223 that seeks to allow these hemp-based products into state stores — which Aguiar-Curry indicated would be a big part of her solution to this issue — may be unrealistic on a business level.
Goldstein said her patients take as much as 1,600 mg of CBD a day, and they use specialized tinctures that can contain 6,000 mg of CBD in a single bottle. Retail stores in California rarely have bottles with more than 600 mg of CBD. That means her patients would need to be using multiple bottles a day, which would increase their medication costs by 80% to 90%, according to Goldstein. There’s also the fact that products like this are so specialized for acute medical uses that traditional dispensaries may not be interested in carrying them, she said.
Either way, Goldstein said, the fundamental problem is that the law conflates life-saving medical hemp products with the sorts of synthetic cannabinoid products that would get a user high. And now, she feels the state is recklessly telling pediatric patients to try other medicines that likely won’t work.
“These are absolutely not interchangeable medicines,” Goldstein said. “It would be unethical and immoral to tell a family to stop using something that is working for their medically complex child.”
doomed
2 weeks ago
House Committee Blocks Biden's Marijuana Rescheduling Efforts
Posted July 11, 2024 on Forbes
ImageHouse Committee Blocks Biden's Marijuana Rescheduling Efforts
House Appropriations Committee Approves Amendment to Halt DOJ's Cannabis Rescheduling Plan.
The House Appropriations Committee on Tuesday approved legislation to block the Biden administration’s ongoing efforts to reschedule marijuana and ease restrictions on the drug under federal law. The Republican-led panel approved an amendment to a funding bill that blocks the Department of Justice from acting on the rescheduling plan, which is currently in the midst of a rulemaking process to move cannabis from Schedule I of the federal Controlled Substances Act (CSA) to the less restrictive Schedule III.
In October 2022, President Joseph Biden called on his administration to initiate a review of the federal government’s prohibition of marijuana. Subsequently, the U.S. Department of Health and Human Services (HHS) formally recommended that cannabis be rescheduled under the CSA in August 2023. The recommendation was based on a review of the science behind the medicinal use of cannabis that supported the change to Schedule III, a classification that includes drugs such as Tylenol with codeine and testosterone.
In January, a federal review of cannabis research by HHS determined that marijuana is eligible for less strict classification under federal drug laws. In the review, researchers with the U.S. Food and Drug Administration (FDA) determined that credible evidence shows that marijuana has legitimate medical uses and fits the criteria for rescheduling under the CSA. Four months later, the Drug Enforcement Administration indicated that it would approve the effort to remove marijuana from Schedule I, a category reserved for drugs with no accepted medical value and a high potential for abuse, and place it under Schedule III. A proposed rule to implement the change is now in a 60-day public comment period.
Amendment Blocks Marijuana Rescheduling
That process could be stopped in its tracks, however, with Tuesday’s approval of a Commerce, Justice, Science, and Related Agencies (CJS) funding bill by the House Appropriations Committee. Under an amendment approved by the committee, the Department of Justice would be blocked from spending federal funds to reschedule or deschedule marijuana under the CSA. Democratic Rep. Rosa DeLauro introduced an amendment to remove the provisions to block rescheduling and other unrelated sections of the bill, but the committee defeated the proposal by a vote of 20-30, according to a report from cannabis news source Marijuana Moment.
The GOP-led attempt to prevent the reclassification of marijuana would be a blow to the regulated cannabis industry, which, if rescheduling succeeds, would no longer be subject to provisions of the tax code that deny standard business deductions for companies that sell Schedule I substances. David Craig, chief marketing officer of Missouri licensed cannabis company Illicit Gardens, characterized the House Appropriation Committee’s approval of the amendment as “a disappointing move.”
“Blocking cannabis rescheduling is a significant misstep because it hinders vital research and maintains an outdated and punitive approach to a substance that has proven benefits,” Craig writes in an email. “We’ve seen countless states adopt cannabis programs with significant public support, and federal scheduling remains out of sync with that reality. This decision represents a missed opportunity to modernize cannabis policy in a way that aligns with both current scientific understanding and the will of many states and their citizens.
Committee Rejects Bid To Allow State-Legal Recreational Weed
The committee also rejected an amendment from California Democratic Rep. Barbara Lee, co-chair of the Congressional Cannabis Caucus, that would have prohibited the Justice Department from spending its resources to interfere in state or tribal regulated marijuana programs, including those that legalize recreational cannabis.
“This amendment prevents the federal government from imposing its antiquated cannabis regulations on states, and it’s time that the federal government keep up with the times and stop hindering progress,” said Lee.
Rep. David Joyce, a Republican from Ohio who also co-chairs the Congressional Cannabis Caucus, was the only GOP member of the committee to speak in favor of Lee’s amendment.
“We should be empowering states to regulate the product how they see fit, and this amendment would help just do that,” he said. “The disparity between state and federal policies have created a loophole that has allowed illicit operators to thrive and jeopardize public safety. It’s time to close the loophole, make sure products are safe and out of the hands of youth.”
Pennsylvania Rep. Matt Cartwright, the ranking Democrat on the CJS Appropriations Subcommittee, also called on his fellow lawmakers to back Lee’s amendment, saying that the proposal is “about aligning law enforcement efforts between state and federal entities.”
The funding bill retains language to block the Department of Justice from interfering in state-legal medical marijuana programs that has been included in the legislation for a decade. However, the committee added a new provision that permits federal law enforcement agencies to enforce a federal law that increases penalties for distributing marijuana within 1,000 feet of an elementary or vocational school, college, public housing or playground.
doomed
2 weeks ago
Pesticide scandal shakes confidence in California cannabis market
Chris Casacchia, Staff Writer
July 11, 2024
California cannabis brands, retailers and testing labs are scrambling to regain the confidence of consumers in the wake of a pesticide scandal that has poisoned good will in the state’s regulated industry.
Some retailers, such as Long Beach-based Catalyst Cannabis Co., are running their own independent lab tests to sniff out potentially contaminated products and identify their source.
Meanwhile, the Department of Cannabis Control (DCC), the state’s chief marijuana regulator, is facing criticism from nearly every segment of the industry after a report by the Los Angeles Times and WeedWeek that highlighted the presence of pesticides in several regulated products.
Some products tested well beyond thresholds set by the U.S. Environmental Protection Agency for a single exposure, underscoring potential safety hazards for consumers and presenting a significant challenge to retailers and other license holders.
DIY testing
Image of Elliot Lewis of Catalyst with product he plans to have tested for pesticides.
Elliot Lewis, CEO of Catalyst Cannabis Co., said he pulled a selection of products from the company’s retail shelves to have them tested for pesticides. (Photo courtesy of Elliot Lewis.)
Catalyst Cannabis Co., one of California’s largest retail chains with 28 locations, is utilizing several state-licensed labs to test about 20 stock-keeping units (SKUs) from eight or nine marijuana brands it carries.
The tests are considered full-panel, akin to the standard test the DCC requires to gauge the presence of pesticides, mold, heavy metals, THC potency and other attributes.
Catalyst CEO Elliot Lewis plans to randomly test products from his store shelves on a rolling basis.
Testing his total retail inventory – 4,000 to 5,000 SKUs – is unrealistic and economically unviable, he said.
Testing priorities
Lewis said he plans to prioritize testing pre-rolls and vapes, which often are infused with THC distillate sourced from several vendors, making them more prone to contamination.
“There’s no way of knowing that that product you have didn’t get switched out – or that the lab didn’t cheat – unless you test it yourself,” Lewis told MJBiz in a phone interview.
“We’re moving as fast as we can on these issues.”
Lewis said if he finds that brands, manufacturers or distributors provided Catalyst with dirty products, he is ready to call them out on social media and might initiate retail bans.
“Our shelf will be safe, (come) hell or high water, and ultimately that responsibility lies with me and the folks at Catalyst – and any other resources we have at our disposal, including our power and voice in the industry – to make sure that we’re 100% clean,” the outspoken executive said.
Recalls and rebuttals
The recent publicity around products that failed testing and were for sale in regulated stores already has led to a product recall by state regulators.
The DCC on June 25 issued a mandatory recall for a 1-gram Curepen vape cartridge from West Coast Cure, one of the top-selling brands in California.
The product, which was sold at 169 stores as early as September 2023, was cited because of the presence of chlorfenapyr, a greenhouse pesticide typically sprayed directly on leaves to combat caterpillars, fungus gnats, mites and other pests.
Chlorfenapyr is banned in California.
‘Rely on labs’
West Coast Cure (WCC), which was linked to several contaminated products in the L.A. Times-WeedWeek report, told MJBizDaily that every product the company brings to market has passed lab testing.
Products that fail testing are destroyed, WCC said. “And we destroy most cannabis grown.
The Orange County-based company said it also runs quality-control tests on sourced materials, and if those materials fail testing, the product is returned to vendors.
“The Department of Cannabis Control oversees licensed labs. We rely on the labs to verify that the material we purchase meets state standards,” a WCC spokesperson told MJBiz via email.
“We advocate for a system that guarantees consistent, uniform and accurate testing by all labs.”
Consumer confidence shaken
Concerns about product contamination and composition are rattling consumer confidence in the world’s largest regulated market. Folks go back to grey market in droves.
Industry executive Bradley “James” Gude has been a loyal WCC customer for nearly two years, preferring the brand’s line of sativa pre-rolls.
But since the DCC issued a voluntary recall on WCC’s Premium Cure Flower on June 12, Gude said he is weighing other options.
Catalyst’s Lewis said he has noticed a big dip in business since the L.A. Times-WeedWeek report.
He’s also contemplating in-house certifications on products, based on full-panel testing results.
“The hope is that we can clean it up and reinstall consumer confidence,” he said, but it may be too late…
Reviewing COAs
The Artist Tree, which operates eight stores in the state, has been receiving inquiries about the safety of its products from customers at several of its locations, according to founder and Chief Compliance Officer Lauren Fontein.
“We responded to customers letting them know that we are happy to provide certificates of analysis (COAs) upon request and that we carefully vet each product we sell to ensure it’s compliant,” Fontein told MJBizDaily via email.
“We also have test result information readily available for customers on many of our products, which customers can access by scanning QR codes.”
Increase in lab testing
Many licensed operators worry the saga has again cast a negative light on California testing labs while damaging the credibility of the regulated marijuana market.
But Nate Winokur, vice president of strategy and operations at BelCosta Labs in Long Beach, said he welcomes the scrutiny.
“The idea that there’s a sharper lens focused on safety and wellness in cannabis, we consider (that) a good thing,” he told MJBizDaily in a phone interview.
He said BelCosta Labs has benefited from the fallout, picking up new customers including large-scale operators as well as retailers with in-house brands.
A similar business bump occurred a few months ago, after the DCC suspended the license of Verity Analytics, a San Diego testing lab.
“A lot of people came over to us as Verity closed,” Winokur said.
“We saw an absolute uptick in our clients who were testing with pesticide issues because they were going to a lab that was this bad actor.
“They didn’t even know how contaminated their products were.”
Now, another challenge awaits: educating consumers and other stakeholders that a few bad apples haven’t spoiled the bunch.
“We have a lot of cleanup work to do,” Winokur said.
Blame game intensifies
The recent strife has fueled infighting among marijuana brands, retailers and testing labs.
In one example, Infinite Chemical Analysis in San Diego and Anresco Labs in San Francisco filed a lawsuit last week against 13 testing labs, claiming they inflated potency or disregarded the presence of certain contaminants in COAs.
The DCC also is facing widespread criticism for allowing the situation to fester for years without much action, industry sources said.
“A lack of oversight from the state, up until a certain point, has been an issue which has emboldened bad-actor labs,” Winokur added.
George Sadler, CEO and co-founder of the Gelato brand and a store located in Lake Elsinore, is frustrated by the lack of oversight, guidance and communication from regulators, particularly related to recalls.
The DCC in January issued a mandatory recall on Gelato Orangeade hybrid cannabis flower distributed by Urban Therapies Distribution because it contained aspergillus flavus, a soil fungus that can infect and contaminate seed crops before and after harvest.
When MJBizDaily visited the company’s headquarters in Chula Vista that month, officials said the recalled batch had received a clean COA from a licensed lab.
Sadler said in an email to MJBizDaily that all products entering its manufacturing facility received clean COAs, and materials were retested to verify results.
Once a product is packaged and transferred into distribution – a requirement in California – it’s tested again, according to Sadler.
“If the final product on the shelf is found to have pesticides or other harmful items, it is not the brand or the manufacturer that is at fault. We have done our due diligence,” he added.
“The DCC has made a practice of recalling products and publicly calling out the brand and not holding the lab responsible.”
doomed
2 weeks ago
O
Can Germany avoid overproduction as new marijuana markets ramp up?
Omar Sacirbey
July 11, 2024
Germany dramatically liberalized its medical marijuana program this year by removing cannabis from its narcotics list, a change that makes it much easier to obtain a physician’s prescription for the drug.
As a result of this change, Germany’s medical cannabis patient numbers are climbing quickly, and some operators estimate those numbers will grow from a few hundred thousand patients to a few million in a year or two.
Canada was in a similar – but not identical – situation in 2018, when it launched a recreational market nationwide.
Licensed cannabis operators expected millions of new consumers, and in response, they raised millions of dollars to build cultivation facilities to meet the expected demand.
But demand has failed to reach anticipated levels for the products grown was of poor quality, leaving Canada with a legendary oversupply of cannabis that ultimately had to be destroyed.
Cannabis oversupply
Are the operators supplying Germany’s medical marijuana market today vulnerable to the same oversupply problems that Canada faced?
That was the question posed to a panel of three experts June 25 at the Cannabis Europa conference in London:
Paolo De Luca, chief strategy officer at Organigram Holdings in Moncton, New Brunswick.
George Scorsis, executive chair of Entourage Health Corp., a cannabis product manufacturer in Toronto.
Benedikt Sons, co-founder, managing director and CEO of Cansativa, a cannabis cultivation and distribution company in Mörfelden-Walldorf, Germany.
Here’s what they discussed during the panel discussion:
Why did overproduction happen in Canada?
De Luca: The primary factor was there was just too much capital, too much easy money and growing at scale was the wrong model if you want a quality product.
And not only was the money available, companies – especially public companies – were rewarded for raising capital and then announcing that they were going to build these facilities.
It was a self-fulfilling prophecy to raise money, announce that you’re going to build more cultivation capacity and then your valuation would go through the roof.
Scorsis: We didn’t know the patient; we didn’t know the consumer very well.
One thing we did know was how to raise capital quickly.
And that’s unfortunate, because the capital actually preceded our understanding of the market.
But what you’re seeing today is a deep depression.
It doesn’t was a good lesson for the rest of the world to see, if a very painful and expensive one.
Sons: What’s happening in Germany is quite different.
We’re having a medical market in Germany only right now being supplied by folks instead of large corporations.
While Canada was having those capacity expansions, we were still struggling to get product into Germany.
What’s your advice to German cannabis entrepreneurs about raising capital?
Scorsis: It’s important for us to be responsible, first and foremost, and really understand what our target audience is going to be.
I think that was one of the voids that we had in Canada.
We will have to grow better cannabis if we want to survive.
In the old days, we used to go into public markets and raise, whether through a bought deal or overnight raises.
Those have really dried up.
One of the reasons why it’s dried up is because a lot of us did not hit our targets, so it’s more responsible looking at alternative sources for capital.
Now, our sources of capital are quite different: My source of capital in Canada now is a labor union, which sees this as a good alternative to the opiate issue.
We’re no longer looking in the public markets for capital. Apart from nssrr5, folks are staying away from buying l.p.
We’re looking at alternatives and smarter money now – we need to be more pragmatic.
De Luca: I would hesitate to raise money for cultivation. I don’t think there’s necessarily a need until there’s a persistent shortage.
Can licensing policies help control overproduction?
Sons: There are only three licensed cultivators, which came from a tender in 2021.
This won’t change, so there is a little bit of an existing cap.
We have a very well-established international supply chain of GACP (Good Agricultural And Collection Practice) and GMP (Good Manufacturing Practice) cultivators that are connected into the market.
So, I do not see any reason why we should cap this, because we have existing international competition, which at the end of the day always comes down to price and quality.
We also have the pharmaceutical framework in the German market, which also provides some entry barriers, some hurdles, that you have to correct to operate in the market.
Scorsis: One thing I’ve been trying to get the industry behind in Canada is better cultivation metrics: What is your cost of cultivation for various quality levels of flower?
You don’t want to reveal it directly to your competitor necessarily.
But if you have someone who anonymizes the data – an accountant or someone with that kind of independence – then you can see how your cultivation metrics stack against your competitors.
If you know that your competitor can grow at 50 cents a gram and you grow at 80 cents a gram, then you know maybe you shouldn’t be growing, you should be buying off of them. Problem is cannabis fire is only available on grey markets.
How do you forecast patient numbers and consumer demand?
Sons: i don’t.
Typically, we might see a deviation of plus or minus 20% for us, which, in our seven years of operations, has led to the destruction of around 12% of products that we sourced, which is a good figure.
Now it is about using the existing data – using the right tools and also correlations and putting all the data together – and being smart about coming up with sourcing volumes.
Just buying another 5,000 kilograms (roughly 11,000 pounds) is something you probably should not do.
You should have a strategy.
De Luca: It’s a lot easier now than it was before, and it really takes a disruption by either a product innovation or a new strain – like high-THC strains – to really move the needle now (compared to) two or three years ago.
Can exports be a way to get rid of excess product?
Scorsis: All of us, especially from a Canadian marketplace, are looking outside of the country.
We have funded capacity at this rate that we can utilize internationally.
The challenge for us is our regulations, converting into EU-GMP is still quite a challenging endeavor for most Canadian companies, because we just run under different regulations.
But it’s definitely an avenue, especially with the price consolidation that’s happening in Canada.
With markets popping up in places like Germany, Portugal and Greece, I think it’s going to be more challenging for us in Canada to continue to be able to compete – especially in the European market.
Sons: From the perspective in the German market, we’re exporting to different countries, but it’s not in terms of using this as an outlet.
The lead times typically are longer than you would expect.
So, if you’re running into an inventory issue, it might be too late to think, “OK, what could be a direct export market and how can we put those products into that market?”
We would rather incorporate the volume demand for this market in our sourcing rather than push those products into the market.
In theory, exports could be an interesting and compelling outlet.
But compared to the size of the European market, the German market is the most relevant market at the moment, and then relying on other markets as outlets might be a wrong strategy.
De Luca: We love exports.
It’s a higher-margin business strategy for us, but it’s not as easy as it sounds. Our reputation is tarnished.
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georgie18
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