After a delay due to their proficiency testing program roll out, the Colorado Marijuana Enforcement Division (MED) will now require all medical infused products and concentrates be tested for potency and homogeneity, starting November 1st, 2017.
After November 1st, all production batches of concentrates from medical product manufacturers will need to have a potency test before being sold, transferred or processed. The same goes for medical infused products, such as edibles and topicals. The homogeneity test refers to making sure THC or other active ingredients are distributed evenly throughout the product.
According to Alex Valvassori, author of a regulatory compliance-focused blog post on Complia’s website, these new testing requirements could lead to a surge in pricing, passed on to patients. He also recommends dispensaries take a close look at labels coming in from suppliers. They need to make sure potency data is listed clearly on the label to stay compliant.
Production batches created before November 1st are not required to meet the new testing regulations, but any and all batches after that date will be required to perform those tests.
According to a press release issued on Friday, September 22nd, the Colorado Department of Public Health and Environment (CDPHE), along with the Colorado Department of Revenue (DOR) and the Colorado Department of Agriculture (CDA), issued a public health and safety advisory for cannabis products tainted with pesticide residue.
The advisory was issued after the detection of pesticide residues on retail cannabis plant material and products with cannabis grown by RK Enterprises LTD, doing business as Rocky Mountain Remedies. The CDA confirmed that they detected the pesticide, Avermectin, an insecticide with a relatively high acute toxicity.
When pesticides like this are not on the list approved for use in cannabis cultivation, it is considered an off-label use. According to the press release, some of the products affected include flower, trim, concentrates and infused-products.
Consumers are advised to look at the label of their products and check to see if it matches the license number 403R-00180 and harvest batch numbers r206goldenkush9.11.17 and m206larryog9.11.17. Consumers are told to either dispose of the product properly or bring it back to the retail store where they purchased it.
Back in April of 2016, the Colorado Legislature passed HB 1436 in an effort to make infused products less appealing to children. On October 1st, 2017, the new law goes into effect, which will prohibit the sale of edibles in the shape of a human, animal or fruit.
Colorado has a history of regulating the market like this, with laws designed to limit the dosing, consistency and appeal of edibles to children. In 2015, regulators placed a 100-milligram cap on THC in infused products, separated into 10-milligram servings. In 2016, regulators began requiring the THC stamp on edibles, a symbol with a clear representation of what the product contains.
Some in the industry are welcoming of these new laws, while others think it might be overregulation. Regardless, manufacturers that have previously produced things like fruit candies or gummy bears now need to update their processes to use non-descript shapes for their products in order to stay compliant.
Bob Eschino, founder and president of Incredibles, an infused product manufacturer in Colorado, says these rules are not very effective at preventing kids from obtaining edibles, but it could help. “I believe consumer protection comes from CRP [child-resistant packaging], proper labeling, education and safe storage,” says Eschino. “CDPHE said themselves that stamping or shaping the products is the least effective way to prevent accidental ingestion. It’s a step that will add to consumer protection in a small way, but every little bit helps for now.” There are a number of more effective measures that regulators in Colorado take to prevent edibles from getting in the hands of children, such as child-resistant packaging, prohibiting advertising of cartoon characters, requiring opaque packaging and warning messages on labels.
According to Peggy Moore, partner of Love’s Oven, an infused product manufacturer, and board president of the Cannabis Business Alliance, the major change companies need to make to stay compliant is ordering new molds. “Depending on the quantity ordered, molds can cost $10,000 or more to fabricate and produce.,” says Moore. “If a company was not using molds previously there is also training that may be required to orient production staff on technique for making molded confections.” She says there are still plenty of options for manufacturers to use like botanical shapes (a cannabis leaf, for example), circles, squares, rectangles and other shapes.
Her company, Love’s Oven, makes caramels, baked goods, crackers and other non-descript shapes already. “At this point I am not aware of any manufacturers who are not already compliant with this rule in advance,” says Moore. “The most common solution is to move to a square, circle or other shape utilizing molds. “ Moore believes it is a producer’s duty to make products that are not enticing to children. “Regardless of the industry (alcohol, cannabis, pharma) I think we should exercise great caution to not produce products that are targeting children,” says Moore. “While I would love to see manufacturers self-regulate in this regard, clearly some guardrail regulations are needed at this point.”
In addition to the rule on using non-descript shapes, HB 1436 prohibits the use of additives in retail cannabis products that are designed to make it addictive, more appealing to children or misleading consumers. The rule does, however, exclude common baking and cooking ingredients. There is also a stipulation that permits local fire departments to perform annual fire inspections at cannabis cultivation facilities.
Emerald Scientific recently announced their proficiency-testing program, The Emerald Test, has been approved by Colorado as a third party provider for proficiency testing in licensed cannabis laboratories. The Emerald Test, held twice annually, is an inter-laboratory comparison and proficiency test (ILC-PT), allowing data to be collected pertaining to the performance of laboratories on a national scale. Proficiency testing is designed to measure how accurately laboratories perform and is a critical tool for quality assurance.
Colorado requires labs to participate in a proficiency-testing program in order to be certified to conduct required testing on cannabis and cannabis products for safety and quality. According to the press release, Colorado’s Marijuana Enforcement Division, under the Department of Revenue, conducted an evaluation process to determine which applicants could meet the performance standards for regulatory compliance concerning proficiency testing. The contract was awarded to Emerald Scientific following this evaluation process.
According to Ken Groggel, director of the Proficiency Testing Program at Emerald Scientific, a number of states have recognized the need for independent proficiency testing as a required piece of regulatory compliance. “The Emerald Test Inter-Laboratory Comparison/PT is state approved in Washington & Colorado for cannabis testing laboratory licensure,” says Groggel. “States with cannabis or hemp production, as well as labs in other countries are now actively participating in the Emerald Test as a tool for quality improvement, efficiency upgrades and product safety.” He says the Colorado Marijuana Enforcement Division has contracted with Emerald Scientific to provide third party PT programs for microbial contaminants, residual solvents and pesticides.
Beginning in 2014, The Emerald Test has been offered twice a year and, in 2017, over 50 labs participated from 14 states and 2 countries. “Laboratories that have enrolled more than once have seen significant improvement in their results, an indicator of improved performance for industry customers,” says Groggel.
Proficiency testing is important for ensuring quality, safety and product content accuracy. “This should be the priority whether you are a grower, manufacturer, testing laboratory, regulatory entity, medical patient or adult use consumer,” says Groggel. It also helps labs meet regulatory requirements and achieve ISO 17025 accreditation. “Independent proficiency testing helps determine if the lab is able to deliver the services marketed to its customers,” says Groggel. “Regulatory agencies can use this information when licensing, monitoring & enforcing good science for public safety.”
As new states legalize cannabis and develop consumer protection regulations, proficiency testing programs can help labs demonstrate their commitment to responsible and accurate testing. “When PT results show the cannabis testing lab is capable it is up to the government to ensure accountability for performance on behalf of all its citizens,” says Groggel. Labs can enroll starting on September 25th in the Fall 2017 Emerald Test ILC/PT.
Wana Brands launched their products in Oregon’s market in July 2016, about a year ago. Since then, their brand presence has grown considerably and their products are now in 240 of Oregon’s 375 dispensaries, according to a press release issued this morning.
Wana Brands is an infused products company; they make sour gummies, hard candies and caramels. The business originally launched in Colorado back in 2010 and as of 2016, they own 23% of the market share and had the most sales revenue of any edibles company in Colorado, according to BDS Analytics. The next closest competitor owns 12% of the market share.
According to Nancy Whiteman, co-founder and co-owner of Wana Brands, becoming a market leader in Oregon is a result of their product’s consistency and taste. At the end of last year they launched in Nevada and this year they will launch in Arizona and Illinois. In 2018, they expect to make a big East Coast push, expanding into Massachusetts and Maryland as well.
Election Day last year legalized recreational cannabis in a number of states, including Massachusetts, Maine and Nevada. About a week before Election Day, we interviewed Whiteman about those states coming online and her drive to expand. She said she saw a lot of potential in those markets and she was right. Nevada witnessed a massive surge in demand with the opening of recreational sales in the beginning of July and Massachusetts is expected to be another huge market potential.
In that interview, she explained a bit of their growth model: “The model we are pursuing is a licensing agreement where we partner with existing or new license holders in their state,” says Whiteman. “In many ways they are doing the heavy lifting, but we are providing an enormous lift by licensing our intellectual property to them.”
Now that her company has found enormous success in established markets like Oregon, Nevada and Colorado, they want to make a big push in those fledgling markets on the East Coast. “In both markets [Massachusetts and Maryland], we will be working with a partner who will be licensing our products,” says Whitman. “I think the East Coast is a huge opportunity. There are major population centers in New England, New York and Florida and the markets are almost completely undeveloped at this point.” Wana Brands is also currently entering talks with partners in California, Florida and Maine.
Portions of MJ Freeway’s source code were reportedly stolen and posted in Reddit threads as well as on Gitlab.com, a source code hosting website. On June 15th, the account “MJFreeway Open Source” was made on Gitlab.com, and portions of the source code were posted, but have since been taken down. Source code is essentially a list of commands of a program, the basis for making improvements and modifications to a software system. Source code can sometimes contain sensitive information. To be clear, MJ Freeway does not use an open source model; their source code is the basis of their traceability software. Open source is a tool that fosters public collaboration on software development, helping identify weaknesses or areas for improvement.
When asked to comment on the matter, MJ Freeway issued the following statement:
“Last week we discovered that someone had obtained an outdated portion of MJ Freeway’s source code. This incident has absolutely no impact on our systems or MJ Freeway services, and client and patient data is not at risk. While this theft poses no risk to our clients, patients, or business operations, we take any incident involving unauthorized access very seriously and have reported it to the Colorado Bureau of Investigation.
Unfortunately, it has come to our attention that our competitors are spreading inaccurate information about the incident, including baseless claims about SSL info and the potential for client data being compromised – neither of which is true. We encourage our customers to contact us directly with any questions they may have.
We follow or exceed all relevant industry security standards and are confident that we have the most robust security measures in our industry. None of our peers come close. However, we live in a world of determined cyber-criminals and we operate in a competitive environment. Success and size makes a company a bigger target for malicious actors, as other large companies also know. We will continue to investigate and take follow-up action as we learn more about this incident.”
On Sunday, June 18th, a user by the name of ‘techdudes420’ posted in the subreddit, r/weedbiz, a thread titled “MJFreeway goes open source.” The link for that post was the Gitlab.com page where MJ Freeway’s source code was published briefly. The same user then published a second reddit post the following day with the same link to the stolen code, but this time in the r/COents, a subreddit for the Colorado cannabis community. MJ Freeway is based in Denver. That post claimed the user found the stolen source code with a quick search and that the user was banned because of that. The moderator of the thread chimed in, saying they banned the user for posting the stolen code. “We received a takedown request from the software owner stating the code had been stolen and released without permission,” says the moderator. “After investigating the matter I reached the same conclusion and removed the thread.” The moderator then updated the comment shortly after: “Edit: As for OP [original poster] ‘finding’ the code, if that were true I don’t know why he or she would have created a new Reddit account just to post the link.”
In addition to their own cybersecurity analysis, a spokeswoman for MJ Freeway says they will be performing a third party audit and analysis this week as well. When that information becomes available, we will update this article.
Update: Multiple sources have reported that portions of MJ Freeway’s source code are still available online on torrent sites like PirateBay.
With the Trump Administration sending mixed signals on legal cannabis, and with Congress beginning to ramp up efforts for reform, in order for industry stakeholders to best understand where we are headed, it will be helpful to remember how we got here. As readers may be aware, the current status of federal cannabis law can be traced back to the legislative prong of Richard Nixon’s War on Drugs. His Controlled Substances Act of 1970 (CSA) made it a federal crime for anyone to use or possess any amount of marijuana anywhere in the U.S. Current federal cannabis policy, on the other hand, complicates the matter, and can be traced back to a memorandum issued in 2013 by then-Deputy Attorney General James M. Cole. The Cole Memo instructed U.S. attorneys general in states that have legalized marijuana to use their limited resources in prosecuting CSA offenses only if they violated specific federal enforcement priorities. The highest of these priorities include diverting legal marijuana business revenues to illegal drug operations, transporting marijuana over state lines, making marijuana accessible to minors, and growing marijuana on federal lands. The problem is that the Cole Memo is only a policy, it is not law; and so not only can the current administration unilaterally change it whenever it wants, but state-legal cannabis businesses, their employees and customers are breaking federal law every single day!
This is a very unusual situation to be in for both the states and the feds, and it raises two basic constitutional questions: What gives the feds the right to make cannabis illegal everywhere in the U.S.? And how can states simply defy the prohibition?
The first question was in fact answered by the U.S. Supreme Court in 2005 when two California women (Diane Monson and Angel Raich), both with very serious illnesses, sued the federal government for confiscating their state-legal medical cannabis. The feds defended their actions by claiming that the Constitution’s Commerce Clause gave them the authority to march into California, march into the homes of these women, and enforce the CSA. Diane and Angel argued that the Commerce Clause only gives the feds the authority over interstate commerce; and since their cannabis was grown by themselves, used by themselves, never bought or sold, or transported out of the state, it was therefore wholly intrastate cannabis and had nothing at all to do with interstate commerce. The Court sided with the feds, ruling that even though the cannabis was intrastate, when you take all intrastate cannabis activity like that and add it together, it will have a substantial impact on the interstate cannabis market. Because of that connection it was ‘necessary and proper’ for the feds to enact the CSA and enforce it anywhere in the country they wanted. Although there is still much debate over this ruling, it remains the law of the land to this day.
Fast forward to 2014. The states of Nebraska and Oklahoma sued Colorado claiming that by legalizing marijuana, Colorado was violating federal law under the CSA. Because federal law overrides state law when they conflict, then Colorado’s cannabis laws must be struck down, or so they argued. In response Colorado took a very interesting position that built on the hard realities of the cannabis market. It is best to explain it in four parts. First, they cited the fact that the federal government lacked the resources to enforce the CSA, a claim which the feds have admitted to themselves. Second, Colorado pointed to a constitutional doctrine called ‘anti-commandeering’, which says that they have no obligation to criminalize cannabis at all. If the feds want to make it a federal crime, that is one thing; but that does not mean CO must make it a state crime as well. Third, Colorado said that by regulating cannabis as extensively and strictly as they have done, they are reducing the amount of cannabis activity compared to not regulating it at all. Taken together, this means that because Colorado does not have to criminalize cannabis, and because the federal government cannot enforce their own criminalization, then Colorado is actually helping out the feds by regulating the drug instead of allowing for a free-for-all under state law.
In March of 2016 the Supreme Court declined to hear the case in full or issue an opinion, which had the effect of giving a default victory to Colorado. Among political and legal commentators the speculation is that enough justices on the Court either agreed with the logic of Colorado’s position or wanted to wait for this federal-state controversy to be worked out by Congress. Because it was only a default victory, the constitutional status of the legal cannabis industry remains on unprecedented and unstable ground. The Controlled Substances Act has not yet been found to preempt state law, so cannabis businesses are still able to operate legally in their state. But because the CSA still applies to everyone, they do so at the whim of the Trump Administration’s policy preferences. The confusion that this presents has put cannabis businesses in many difficult situations, and it serves as the legal backdrop for such familiar problems as access to banking and contract enforcement.
Currently, legislative and judicial fixes are in motion. Related cannabis litigation is pending in federal court at the 10th Circuit Court of Appeals in Denver. And a Cannabis Caucus has formed in the U.S. Congress to address the shortcomings of the CSA. In the coming articles we will explore both of these routes to reform, the likelihoods of various possible outcomes, and the impact they will have on the legal cannabis industry.
Editor’s Note: For readers interested in learning more about this topic click here for Brian’s research article published by the Virginia Journal of Social Policy & the Law
The Colorado Department of Revenue (DOR), in conjunction with the Colorado Department of Agriculture (CDA) and the Colorado Department of Public Health and Environment (CDPHE) issued two public health and safety advisories this morning after they identified pesticide residues on dried cannabis flower, trim, concentrates and infused products, according to the advisory. The contaminated products come from cannabis grown by Rocky Mountain Ways, LLC and Herbal Options, LLC, both doing business as Good Meds.
The advisory cautions consumers to check their labels for the license numbers of the businesses and the harvest batch numbers. They list the license number as, “Medical Optional Premises Cultivation License 403-001116 and/or Medical Marijuana Center License 402-00736.” The harvest batch numbers in question are B11H15.041317-Headband, B11H15.041317-Night Terror OG, and B11H15.041217-Citrix.
The CDA found the presence of off-label pesticides, including Pyrimethanil, Tebuconazole, and Spinosyn, in the products. Pyrimethanil is a fungicide commonly used on seeds, but it is generally regarded as not acutely toxic to humans. Tebuconazole is another fungicide, while the FDA says it is safe for humans, other sources say it could have a moderate acute toxicity in humans. Spinosyn is a class of insecticides with a slight acute toxicity to humans and has been the culprit in a previous cannabis recall in Oregon. In the public health and safety advisory, the CDPHE and DOR say the pesticides were used off-label and none of them are on the approved list of pesticides for cannabis.
In November 2016, residents in Denver, Colorado voted to pass Initiative 300, allowing businesses to seek social marijuana use permits if neighborhood or business groups also agreed and signed off. In the very near future, the process for how cannabis consumers purchase and consume cannabis will no longer be restricted to only going inside a dispensary to make your purchase and returning to a private residence to consume. Instead, it may be as simple as visiting a drive-thru and then going to a cannabis bar or social club to enjoy.
Cities such as San Francisco have had on-site consumption laws in place for some time, with notable locations including sparc, a well-known dispensary with two locations in the city, and the recently announced Power Plant Fitness, a gym slated to open in late 2017 that will allow members to consume cannabis while working out.
Social consumption of cannabis is not a new topic of discussion—just look at Amsterdam’s cannabis coffee clubs—but it is undoubtedly a legalization trend that will continue to be at the forefront as more states pass legalization or convert to adult-use markets. There remains one reoccurring theme, however: a lack of clarity on how these laws will be structured and how social consumption regulation will be put in place.
In Colorado’s state legislature, there was bipartisan agreement that the state needed to allow for venues to let patrons consume cannabis in order to deter residents and tourists alike from consuming in public places such as sidewalks and parks. A Republican-sponsored measure proposed in the state legislature would have allowed for the regulation of cannabis clubs in a similar format to how cigar bars are managed, but that legislation was put on hold for rewrite.
Within the state, there also exists a heated debate over whether or not the creation of social cannabis clubs would instigate federal intervention by the new administration, especially in light of Attorney General Jeff Sessions’ comments in opposition of the adult-use cannabis industry.
One thing is clear: since Denver’s passing of the social use ballot measure in November, there have been numerous halting attempts to put a law in place and the current law is vague. There remains much work to be done before Initiative 300 may be enacted.
For those interested in learning more or joining the discussion, the National Cannabis Industry Association (NCIA) will be hosting a panel titled “For Here or To Go? Evolving Regulations on Social Consumption of Cannabis” at its 4th annual Cannabis Business Summit & Expo in Oakland, June 12-14. The panel will be led by Sam Tracy of 4Front Ventures, who supports the company’s business development and communication efforts.
You can learn more about the Summit and see the full conference agenda on the Cannabis Business Summit & Expo website. In celebration of 4/20, NCIA has extended the early bird pricing deadline for conference registration from April 21 to April 24 to allow for busy cannabis business owners and operators to take advantage of the savings.
Cannabis Industry Journal readers may use discount code CIJ15 to save 15% on registration.
You’ve heard it in a lot of campaigns to legalize cannabis on a state level and even as the name of a bill in Congress for legalization on the federal level. The Marijuana Policy Project through their campaigns in several states, along with activists, politicians and lobbyists, have used the phrase “Regulate Marijuana Like Alcohol” as a rallying cry to pass legislation reforming cannabis laws. This isn’t an attack on them; those campaign names serve the cause well, moreover it was the name of successful campaigns in Massachusetts, Maine, California, Alaska and Colorado among others. It is a relatable and fair comparison, helping to normalize the concept of adults using cannabis in a legal environment.
But that feeling of validation is short-lived after lawmakers write the actual regulations. In reality, I don’t think a single state can confidently say they actually regulate cannabis like alcohol. Most states do not allow public or social consumption of cannabis; many people that would like to enjoy cannabis in a social setting are restricted to the confines of their home.
Voters in Colorado passed Amendment 64 in 2012 with this language in the very beginning of the bill: “In the interest of the health and public safety of our citizenry, the people of the State of Colorado further find and declare that marijuana should be regulated in a manner similar to alcohol.” If you look closely, you can see how important phrasing is when it comes to the specific regulations. The key words here are “a manner similar to alcohol,” not exactly like alcohol. That language is critical to understanding how regulators address the double standard.
The most obvious way lawmakers regulate cannabis like alcohol is through a tiered system of license holders: manufacturers, distributors or wholesalers and retailers. Many states might set a limit on potency, just like they do with alcohol, according to Pamela S. Erickson, former executive director of the Oregon Liquor Control Commission. Both of the drugs are taxed and there are usually regulations for both governing the advertising of products, such as preventing targeting youth or encouraging high consumption. Regulators might limit the store hours or locations for both cannabis and alcohol. Beyond those similarities, there are a number of areas where cannabis is over-regulated and alcohol is seemingly under-regulated. It is very possible that much of this has to do with the power of the alcohol lobby. In 2016, the alcohol industry spent over $26 million on lobbying efforts, according to the Center for Responsive Politics, a non-profit, nonpartisan group that tracks lobbying efforts. During election season, the alcohol industry spent more than $11 million on campaign contributions. There are several examples of the alcohol industry actively fighting legalization efforts, including paying for anti-cannabis ads in a Politico newsletter and even funding opposition campaigns. While this doesn’t exactly pertain to the regulation of cannabis versus alcohol, it gives you a glimpse of how deep their coffers go and the amount of influence they have on politics.
Last year, the city of Denver passed a ballot measure, Initiative 300, which will legalize the social consumption of cannabis in permitted venues. The Denver Social Consumption Advisory Committee met for the final time last week. That committee designed two styles of permits: one for events and one for established businesses, which would receive a designated consumption area permit (DCA). Those permitted venues must be 1,000 feet from schools, child-care centers or drug rehabilitation centers. They need a waste plan, compliance with the Indoor Air Quality Act and they cannot sell cannabis products. Rachel Gillette, attorney in the cannabis law group and shareholder at Greenspoon Marder, says the legal implications of the initiative are still up in the air. “This was a step in the right direction,” says Gillette. “You can’t pass a law to regulate marijuana like alcohol and then say people can only use it in their home. You are going to run into problems like people smoking on the street. This is why this initiative was introduced.”
The general idea here is B.Y.O.P.- bring your own pot. They cannot have a liquor license, the location cannot be accessible to the general public, they have to submit a detailed security plan and patrons have to sign a waiver to get in, according to Westword. Signing a waiver to get into a bar should seem asinine to anyone, but I have been to some dive bars where a waiver could’ve definitely been useful. The point is that cannabis doesn’t lead to violence or destructive behavior, alcohol is the drug that does that. There is plenty of evidence to support that, including a comparative risk assessment of the drugs, which found alcohol’s danger to be strongly underestimated previously.
Senate Bill 63 in the Colorado State legislature would have been very similar, issuing licenses for “marijuana consumption clubs.” However that bill was voted down last Thursday, largely due to the uncertainty of federal policy, according to ABC News.
Amendment 64 also has specific language saying you cannot consume cannabis in a public space, but that is not exactly the case with liquor, even when you consider open container and public intoxication laws. “In my previous interactions with the state and particularly the liquor licensing authority, they consider liquor-licensed premises to be de facto public spaces but you can’t consume cannabis there, which is why hotels, bars and restaurants explicitly prohibit cannabis consumption, they have a liquor license,” says Gillette. “There is a bit of conflict in the law here.”
Yet other rules, such as mandatory childproof containers for cannabis retailers, seem a bit draconian compared with buying a bottle of twist-off wine from the grocery store. “Childproof packaging isn’t required in liquor stores anywhere,” says Gillette. “Why cant responsible adults be trusted to keep it out of a child’s reach? Unfortunately there is a lot of trepidation to allow responsible adults to be responsible when it comes to cannabis.” In some ways, we are seeing states begin to regulate cannabis very closely to how they would alcohol, yet there is a long way to go. “There is still this nanny state mentality where we run the risk of regulating it to the point of absurdity,” says Gillette. For now at least, we need to be cognizant of the age-old stigma and work to normalize social cannabis use in a legal sense. Until that time comes, we will have to tolerate lawmakers regulating cannabis in a manner similar to alcohol, not exactly like alcohol.