Tag Archives: cultivation

Canopy_Growth_Corporation_logo

Focus on Canopy Growth: International Pioneer On A Global Mission

By Marguerite Arnold
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Read the glossy website or encounter their expensive marketing materials and lush swag at any upscale international cannabis business conference these days and you get a certain kind of impression. The new, modernist, chic European HQ in central Frankfurt, for example, with its floor-to-ceiling windows and breath-taking view of the city, river and mountains, continues to give that perspective far from home.The company has been at the forefront of the Canadian cannabis industry since 2013 and has subsequently weathered several mergers, buyouts and creative partnerships of all kinds.

But what’s of great interest about Canopy is that its highly slick corporate image is backed up by a solid performance elsewhere to date– and on a number of important, and globally impactful levels. Further, the company’s willingness to think strategically, globally, and take calculated, well-timed risks at the same time proves to be effective.

The Canadian Beginnings

The company has been at the forefront of the Canadian cannabis industry since 2013 and has subsequently weathered several mergers, buyouts and creative partnerships of all kinds. In the process it has also made financial history in the cannabis industry, becoming the first publicly listed cannabis company in the world a year after its founding.

Canopy_Growth_Corporation_logoSo much of its iconic corporate history is in fact, ironically fading in the rapid birth of the full on recreational market at home. However, here is the elevator pitch. Born as Tweed, in 2013, in an abandoned former Hershey chocolate plant and the recipient of one of Canada’s first medical cultivation licenses, the company rapidly expanded with increased market access that reform brought. Inevitably, its success also spawned one of its closest competitors (Cannabis Wheaton Income Corp) after co-founder Chuck Rifici was ousted by a unanimous vote of the Canopy board.

In 2018, Canopy Growth still maintains its reputation as the first Canadian cannabis unicorn, even though its stock price is just half that of close competitor, Tilray.

In Canada, the company has long expanded adroitly beyond its central HQ with strategic partnerships and buyouts that range the gamut of grow and branding opportunities that are becoming increasingly as mainstream as, well, beer. These days, Canopy is well-poised to take advantage of the shifting Canadian regulatory landscape on several fronts.

The first is undeniably medical. The company has made patient access a cornerstone of its continuing market development strategy. In fact, current CEO and original cofounder, Bruce Linton, has recently told the press that in his view the medical market globally is the company’s first and most profitable focus.

No matter how many beer companies come calling. And that is also one of the company’s more notable, if not newsworthy accomplishments.

International Aspirations

However it is on the international side that the company has really distinguished itself. That starts with the early (relatively speaking) and active interest in what was going on far from Canadian shores. Initially in Europe (but not limited to it). And even more centrally, how and where the company expanded its global medical reach.Canopy has spread its influence widely throughout Europe already

That started, from the Canopy perspective, with the decision to buy the small German GmbH called MedCann (now Spectrum Cannabis, the global medical brand of Canopy). Located just south of Frankfurt, an international but small team of globally experienced entrepreneurs managed to obtain the first import license for medical flower from Canada into Germany in the summer of 2016. Guided by the industry knowledge and business savvy if not entrepreneurial zeal that so often leads to naught, Pierre Debs and team faced a market still sceptical of medicinal cannabis domestically, and the burden of being “first.” Canopy was not yet in Europe, but they had more ready access to the market and capital. The Canopy buyout of MedCann was accomplished on December 12, 2016, six months before the first iteration of the German cultivation bid was announced. Canopy later announced that it had become one of the top ten finalists in the first iteration of the now restarted German cultivation bid.

Beyond Germany however, this unique team with deep local and global knowledge also began an immediate expansion policy in Europe and beyond that is still unfolding. Apparently in similar strategy adopted at home in the Canadian provinces, Canopy has spread its influence widely throughout Europe already. With an enormous supply contract from Spain’s Alcaliber and operations in Denmark, the Czech Republic, Poland, Italy and a few more (still currently unnamed) operations rolling out any day, the company is clearly building a solid, strategically dispersed infrastructure that reaches far beyond Europe, with global impact and influence.

Exhibit A? In April of this year, the company launched Spectrum Australia with support from the Victorian government.

Controversies

The biggest controversy facing the company so far, albeit indirectly, involves pesticides. This issue occurred during the acquisition of an outside company called Mettrum. In other words, Canopy inherited the production liabilities of a purchased company. The acquisition, however, which passed the buck to Canopy to fix, was actually an opportunity for Canopy to implement its own high internal production and quality controls throughout Mettrum facilities.

This was not inexpensive or of small impact (it affected 21,000 medical users). In addition to taking a leadership role in addressing their acquisition’s production issues, CEO Linton publicly apologized to affected patients.

The company has also been on the forefront of the banking and financing regulatory problems that have plagued the industry (so far successfully).

Richard Naiberg
Quality From Canada

Protecting Intellectual Property in Canada: A Practical Guide, Part 3

By Richard Naiberg
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Richard Naiberg

Editor’s Note: This is the third article in a series by Richard Naiberg where he discusses how cannabis businesses can protect their intellectual property in Canada. Part 1 introduced the topic and examined the use of trade secrets in business and Part 2 went into how business owners can protect new technologies and inventions through applying for patents. Part 3, below, delves into plant breeders’ rights and how breeders in Canada could protect new plant varieties.

Plant Breeders’ Rights: Protection For New Plant Varieties

Unlike the Patent Act, Canada’s Plant Breeders’ Rights Act does provide intellectual property protection for whole plants. Plant breeder’s rights are available for new cannabis plants, whether they are the product of genetic engineering or more traditional cross breeding.

The applicant must also propose a name (referred to as a “denomination”) for the new variety that is acceptable to the Commissioner.The Plant Breeders’ Rights Act focuses on the material used to propagate a new variety of plant, such as its seeds. The owner of a plant breeder’s right can stop others from selling, producing or reproducing the propagating material, conditioning the propagating material for use, exporting or importing the propagating material, repeatedly using the protected variety to commercially produce another variety, and stocking the propagating material for the purpose of doing any of the above acts. The owner can also assert these same rights to stop another’s activities as they relate to another plant variety that is essentially derived from the protected variety. The owner can also recover for the damages it suffers as a result of any infringement. For cannabis plants, the term of a plant breeder’s rights endures for 20 years from the date of its issuance.

To register a plant-breeder’s right, a breeder provides an application to the Commissioner of Plant Breeders’ Rights Office, which is part of Canadian Food Inspection Agency.

To be registrable, the plant variety must be new, meaning that the propagating material has not been sold in Canada more than 1 year prior to the application (or elsewhere more than 4 years prior to the application); it must be distinguishable from all varieties that are known to exist at date of filing of the application; it must be sufficiently homogeneous, meaning that its relevant characteristics are predictable and commercially acceptable; and it must be stable in its essential characteristics over successive generations. Registration under the Plant Breeders’ Rights Act provides plant breeders’ rights in Canada only. However, Canada is a signatory to a treaty (UPOV) that allows an application originally filed in Canada to provide priority for registration in other member countries, and vice versa.The Commissioner also has the power to require the performance of tests on a sample of the propagating material, such as to verify its stated characteristics.

The applicant must also propose a name (referred to as a “denomination”) for the new variety that is acceptable to the Commissioner. The Plant Breeder’s Rights Act puts limits on what may be chosen as the denomination. Among other things, the denomination cannot refer to characteristics the variety does not have, suggest that it is derived from another variety or bred by a particular breeder when this is not case, or comprise laudatory descriptives that could cause confusion. The denomination cannot be used or registered as a trademark and, once accepted by the Commissioner, must be used by all traders when selling the propagating material, even after the expiry of the plant breeder’s right. Indeed, the Plant Breeders’ Rights Act makes it an offence to misuse or misapply the name. The same denomination will be used for the same variety in all UPOV countries.

The application process can involve some back-and-forth with the Commissioner, as well as the opportunity for others to oppose the registration. The Commissioner also has the power to require the performance of tests on a sample of the propagating material, such as to verify its stated characteristics.

A unique feature of a plant breeder’s right is that it can be enforced even before the Commissioner finishes his or her review against infringers who are given notice of the applicant’s application.

As of this writing, there are three registered denominations of cannabis plants under the Plant Breeders’ Rights Act. Chris Griffin has registered “Big C” – cannabis sativa subsp. indica; and MedReleaf Corp. has registered MR2017001 and MR2017002, both being varieties of cannabis sativa. It is expected that further registrations will follow.

There are some important limitations to the plant breeder’s rights. Farmers who harvest the plant variety on their “holdings” are given a privilege: they can store, produce and reproduce (but cannot sell) the variety on such holdings. The Commissioner also has the power to issue compulsory licenses when a protected variety is not available to the public at reasonable rates. Further, the plant breeder’s right is not infringed when the protected variety is used for non-commercial or experimental purpose.


In Part 4 of the series, Naiberg will discuss trademarks and how cannabis businesses should go about protecting their brand identity in Canada. Stay tuned for more!

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A Who’s Who List Of The Top Movers & Shakers In The German & EU Cannabis Markets

By Marguerite Arnold
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This collection of leaders in the European cannabis market is by no means completely neutral. Much less comprehensive. It is however, German and European centric, because these people, by definition and geography, are now sitting at the nexus of a global, and even within Europe, international industry. Europe for that reason, will be the place, and for some time, where the global cannabis industry comes to make deals across borders, meet the high levels of compliance required here that is setting global standards and push the medical revolution forward for (at least) the next five to ten years.

For that reason, the people listed below carry influence far beyond one country or even region, by definition. But they are also not the only people redefining an industry.

Most notably, of course by their exclusion, are women, although there are some exceptions to that and women are increasingly establishing their place at high executive levels although not yet founder or cofounder or, auf Deutsch, Geschäftsfüherin– (Managing Director) at any of the establishing global companies with European presence. That said, they are beginning to make their appearance in every place and career path within the industry.

Movers and Shakers

Dr. Pierre Debs, Ph.D. An American expat with a German Ph.D., and twenty five plus years’ experience in stem cell research, including endocannabinoid system function. Debs is also the often uncredited individual who opened the current medical market in Germany in particular, but with immediate impact throughout Europe. As the scrappy start up MedCann, Debs, his cofounders and a skeleton team based just south of Frankfurt, not only got into the game first, they beat other established companies to obtain the first import license for Canadian flower in the summer of 2016. Including and most notably Tilray. MedCann GmbH at that point became the only other company besides Bedrocan, the perennial Dutch provider for the last twenty years to be able to provide medicinal, GMP-certified flower to the German market. That market distinction of course, did not last long as other companies quickly jumped into the ring but as the medical brand of Canopy, Debs has continued to lead industry development across Europe. Today, as the Geschäftsführerof Spektrum Cannabis GmbH (as MedCann was renamed after its purchase by Canopy sometime in Q4 2016-Q1 2017) and as Canopy Growth Corp Managing Director Europe, Debs has not only established but currently oversees operations in multiple European countries as Canopy Cannabis expands its global medical brand. From, it should also be added, its swanky new digs in central Frankfurt.

Tjalling Erkelens, Bedrocan founder and CEO. Bedrocan is the legacy cannabis player here in a game that is rapidly changing as it expands. The first exporter of medical cannabis in the world, the family owned company currently produces five different cannabis strains bound for the medical market, and is expected to be the beneficiary of the newly expanded import quota into Germany from Holland for medical grade flower, as well as place well in the German cultivation bid. 

Gerhard Muller of the Wayland Group
Gerhard Muller of the Wayland Group

Gerhard Müller. The unassuming Chair of the Audit Committee of Wayland Group, the cannabis company formerly known as Maricann. Müller is less often in the English-speaking press than Ben Ward, company CEO. However, Müller is a force to be reckoned with as Wayland begins to unfold its usually understated strategy in Germany and Europe from its Munich HQ base. Müller is the former head of Ernst and Young’s GSA Tech Practice, also adding household names like Birgit Homburger and Christopher Peterka to Wayland’s German Advisory Board. Also of note is GM for Wayland Germany Josef Späth now tasked with bringing his connections and previous experience as a top, internationally experienced clean tech architect and engineer to the build out of Wayland’s infrastructure. This includes previous work with NASA Jet Propulsion Lab alumni to develop new techniques for harvesting and processing of cannabis. German ingenuity and engineering at its best!

Patrick Hoffmann, CEO of Aurora Deutschland (formerly Pedianos). This firm too, was one of the early start-ups to get into the distribution and cultivation game and so far they have proven to be adept at navigating the complex path to winning cultivation rights. Aurora placed in the top ten finalists for the last German cultivation bid. As Pedianos, the firm won the first distribution and cultivation deal for Italy, sourced via Berlin. They have already proven to be highly skilled at finding market advantages in an exploding European market puzzle.

David Henn, CEO of Cannamedical Pharma
David Henn, CEO of Cannamedical Pharma

David Henn, CEO of Cannamedical Pharma. The millennial at the front of the cannabis import and distribution craze in Germany, founded his start up in November 2016. Henn then obtained one of the first issued licenses for trading and ex-im of medical cannabis just as the law changed in Germany officially to mandate insurance coverage of medical cannabis by prescription. Since then, the fiercely independent entrepreneur has turned down multiple acquisition offers from companies in Canada, Israel and Australia. The Cologne-based company supplies a growing network of German pharmacies and entered into off-take agreements with major companies in Europe, Canada and Australia. Bolstered by its cash flow in the existing distribution business, Cannamedical is continually expanding and has already established European subsidiaries that are in the progress of obtaining additional production and distribution licenses for the company.

Peter Homburg. Partner, Denton’s Law Firm. Peter has already had an established career as a high-powered partner and the head of the firm’s Life Sciences Division. Yet like many people of different paths and persuasions, he began to explore the world of the legal end of the business several years ago. These days, albeit based in Frankfurt, he has helped establish the firm’s reputation internationally as a leading law firm in the cannabis space.

Rob Reid, co-founder of European Cannabis Holdings
Rob Reid, co-founder of European Cannabis Holdings

Rob Reid. Reid wears several influential hats based out of his offices in London. As the director of publicly listed, SOL Investments Corp (formerly Scythian), he invests in the U.S.-based cannabis industry. He is also the co-founder of European Cannabis Holdings (ECH), which is investing in a portfolio of private medical cannabis companies on this side of the pond. He is also the co-founder of Prohibition Partners, the increasingly prolific market intelligence and consultancy firm, and Cannabis Europa, a conference and networking platform. Finally, he is involved in a number of cultivation JVs around the world.

Marla Luther. As co-director for Tilray Europe (along with Sean Carney) and based in Berlin, Marla has the most senior leadership title of any woman in the cultivation and distribution industry in Europe. She has also been in the position for the last several years.

Alex Rogers. As the founder of the International Cannabis Business Conference (ICBC), Alex has established perhaps the first truly international cannabis conference brand catering to the professional end of the regulated industry but retaining the soul of the advocacy movement. The Berlin conference going into its third year in 2019, literally reset the standards if not stage for the next upgrade of the industry conference concept. Within a year of its first international conference in Berlin, Alex and his team had also established conferences in Canada and are establishing the B2B conference of Spannabis under their rubric in Barcelona as of next year.

Image 2: Temperature display provides quick view of sensor data

10 Questions To Ask Before Installing a Remote Monitoring System

By Rob Fusco
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Image 2: Temperature display provides quick view of sensor data

No matter the size of your cannabis greenhouse operation, keeping your plants alive and healthy requires the best possible growing environment. This means greenhouse managers and personnel must frequently monitor the status of environmental conditions and equipment. The sooner someone discovers extreme temperature fluctuations, rising humidity or equipment failure, the more inventory you can save.

Image 1: Cloud-based remote monitoring system in protective enclosure
Cloud-based remote monitoring system in protective enclosure

That’s why integrating a remote monitoring system into your greenhouse operation can save you time, money and anxiety. Monitoring systems that use cloud-based technology let you see real-time status of all monitored conditions and receive alerts right on your mobile device.

Installing a monitoring system and sensors can be easier than you might think. Here are answers to ten questions to ask before installing a cloud-based monitoring system:

  1. What is required to use a remote monitoring system?

Most remote monitoring systems require an internet or WiFi connection and access to an electrical outlet. Programming is done through a website, so it’s easiest to use a computer for the initial setup. If you don’t have an internet connection at your location, you’ll want to choose a cellular system. Make sure that there’s sufficient signal strength at your site, and check the signal quality in the area before purchasing a cellular device.

2. How do we determine what kind of monitoring system and sensors we need?

A reputable manufacturer will have a well-trained support team that can assess your needs even without a site visit to determine which products are best for your application. If you feel you need them to check out your greenhouse operation,many companies can set up a video conference or FaceTime chat to substitute for being on site.

You will want to provide details about the scope and purpose of your cannabis growing operation. Important factors to discuss include:

  • Skeletal structure of the greenhouse (metal, plastic, wood, etc.) and the covering material (glass or plastic).
  • Floor space square footage and height of each of your greenhouses.
  • Number of greenhouse structures in your operation.
  • Outdoor climate to determine if you rely more on heating or air conditioning and the level of humidity control needed.
  • Space dedicated to phases of growth (cloning and propagation, vegetative, flowering) and the microclimates needed for each.
  • Types of lighting, ventilation and irrigation systems.
  • Level of technological automation versus manual operation in place.

The monitoring system representative will then determine the type of system that would best serve your operation, the number of base units you will need and the types of sensors required.

Image 2: Temperature display provides quick view of sensor data
Temperature display provides quick view of sensor data

The representative should also be able to provide tips on the placement of the sensors you’re purchasing. For example, to ensure thorough air temperature coverage, place sensors throughout the greenhouse, next to the thermostat controlling the room temperature and in the center of the greenhouse out of direct sunlight.

Note that there shouldn’t be a cost for a demo, consultation or assistance throughout the sales process. Be sure to ask if there are any fees or licenses to keep using the monitoring equipment after you purchase it.

3. Are sensors included with the monitoring system?

In most cases, sensors are sold separately. The sensors you select depend upon the conditions you want to monitor and how many you can connect to your base unit. Certainly, temperature is critical, but there are many other factors to deal with as well, such as humidity, CO2, soil moisture, water pH, power and equipment failure, ventilation and physical security.

For example, humidity has a direct impact on the photosynthesis and transpiration of plants. High humidity can also cause disease and promote the growth of harmful mold, algae and mildew. Sensors can detect changes in humidity levels.

Image 3: Water pH sensor
Water pH sensor

Like any other plant, cannabis needs COto thrive, so it’s a good idea to include a COsensor that will signal to the monitoring device when readings go out of the preset range. There are even sensors that you can place in the soil to measure moisture content to help prevent over- or underwatering, budget water usage costs, promote growth and increase crop yield and quality.

Of course, all the critical systems in your growing facility—from water pumps to irrigation lines to louvers—rely on electrical power. A power outage monitoring sensor detects power failure. It can also monitor equipment for conditions that predict if a problem is looming, such as power fluctuations that occur at specific times.

Ventilation systems not only help control temperature, they also provide fresh air that is critical to plant health. Automated systems include features like vented roofs, side vents and forced fans. Sensors placed on all these systems will send personnel an alert if they stop running or operate outside of preset parameters.

To monitor the physical security of your greenhouses, you can add sensors to entrance doors, windows, supply rooms and equipment sheds. During off hours, when no staff is on duty, you can remain vigilant and be alerted to any unauthorized entry into your facility.

4. Do monitoring systems only work with the manufacturer’s sensors?

Not necessarily. For example, certain monitoring units can connect with most 4-20mA sensors and transmitters regardless of the brand. When selecting sensors, you might have a choice between ones that are designed by the manufacturer to work specifically with the monitoring system or universal components made by a third party. If the components aren’t made by the system manufacturer, you’ll want to find out if they have been tested with the monitor you are choosing and if you need to work with another vendor to purchase the parts.

A humidity sensor mounted in a weatherproof enclosure
A humidity sensor mounted in a weatherproof enclosure

5. Is a monitoring system easy to set up, or do we need to hire an electrician?

Many monitoring systems are quick and easy to install, and users can often set them up without hiring an outside expert. Look for one that requires only a few simple physical installation steps. For example:

  1. Mount the device to the wall or somewhere secure;
  2. Plug it into an electrical outlet and an internet connection;
  3. Connect the sensors.

You connect the sensors to the base unit’s terminal strip using wire, which is included with many sensors. The range of many wired sensors can be extended up to 2,000 feet away from the base unit by adding wire that can be easily purchased at any home store. It’s a good idea to hire an electrician if you need to run wires through walls or ceilings.

Usually, once you plug in the device and connect the sensors, you then create an account on the manufacturer’s designated website and begin using your device. There should be no fee to create an account and use the site.

If the manufacturer doesn’t offer installation services, ask if they can recommend a local representative in your area who can set up your system. If not, make sure they provide free technical support via phone or email to walk you through the installation and answer any questions you might have about programming and daily usage.

6. Is there a monthly fee to access all the functionality of a monitoring device?

Many web- or cloud-based systems provide free functionality with some limitations. You might have to purchase a premium subscription to unlock features such as text messaging, phone call alerts and unlimited data logging access.

 7. Should we get a system that is wired or wireless? Will we need to have a phone line, cable, internet or something else?

Wireless can mean two different things as it relates to monitoring: how the system communicates its data to the outside world and how the sensors communicate with the system.

The most popular systems require an internet or WiFi connection, but if that’s not an option, cellular- and phone-based systems are available.

A hardwired monitoring system connects the sensors to the base device with wires. A wireless system uses built-in radio transmitters to communicate with the base unit. Some monitoring systems can accommodate a combination of hardwired and wireless sensors.

8. Can one system monitor several sensor inputs around the clock?

Once the monitoring system is installed and programmed, it will constantly read the information from the sensors 24/7. Cloud-based systems have data logging capabilities and store limitless amounts of information that you can view from any internet-connected device via a website or app.

If the system detects any sensor readings outside of the preset range, it will send an alarm to all designated personnel. The number of sensors a base unit can monitor varies. Make sure to evaluate your needs and to select one that can accommodate your present situation and future growth.

When a monitoring system identifies a change in status, it immediately sends alerts to people on your contact list. If you don’t want all your personnel to receive notifications at the same time, some devices can be programmed to send alerts in a tiered fashion or on a schedule. Multiple communications methods like phone, email and text provide extra assurance that you’ll get the alert. It’s a good idea to check the number of people the system can reach and if the system automatically cycles through the contact list until someone responds. Some systems allow for flexible scheduling, so that off-duty personnel don’t receive alerts.

9. Do monitoring systems have a back-up power system that will ensure the alarming function still works if the power goes out or if someone disconnects the power?

The safest choice is a cloud-based system that comes with a built-in battery backup that will last for hours in the event of a power failure. Cloud-based units constantly communicate a signal to the cloud to validate its online status. If the communication link is interrupted—for example by a power outage or an employee accidently switching off the unit—the system generates an alarm indicating that the internet connection is lost or that there is a cellular communications problem. Users are alerted about the disruption through phone, text or email. All data collected during this time will be stored in the device and will be uploaded to the cloud when the internet connection is restored.

If you opt for a cloud-based monitoring system, make sure the infrastructure used to create the cloud platform is monitored 24/7 by the manufacturer’s team. Ask if they have multiple backups across the country to ensure the system is never down.

10. What should we expect if we need technical support or repairs to the system?

Purchase your system from a reputable manufacturer that provides a warranty and offers full repair services in the event the product stops working as it should. Also, research to make sure their tech support team is knowledgeable and willing to walk you through any questions you have about your monitoring system. Often, support specialists can diagnose and correct unit setup and programming issues over the phone.

It helps to record your observations regarding the problem, so the tech team can look for trends and circumstances concerning the issue and better diagnose the problem. Ideally, the manufacturer can provide loaner units if your problem requires mailing the device to their facility for repair.

Logistics and Supply Chain Management in California

By Aaron G. Biros
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Just a couple weeks away, the California Cannabis Business Conference, taking place in Anaheim, CA October 22-23, will host a series of panel discussions where attendees can expect to learn from industry leaders on a variety of topics. As businesses in the state adjust to new regulations and the market matures, one particular topic seems to highlight a challenging new space: distribution.

Track 1 at the CA Cannabis Business Conference, Distribution, Retail and Delivery, will begin early afternoon on Monday at the show, where a panel discussion titled State of Cannabis Distribution: Scaling Cannabis Distribution and Expectations of a Distributor, will tackle a range of issues involving logistics and supply chain management in California’s cannabis industry.

Michael Wheeler, vice president of Policy Initiatives at Flow Kana, will host the panel, joined by Chris Coulombe, CEO of Pacific Expeditors, Jesse Parenti, programs director of Nine Point Strategies and Brian Roth, vice president of sales at KUDU Technologies. According to the agenda, the session will cover inventory management, shipping and transport, managing product data, order fulfillment, manifest creation and reporting on it all. Michael Wheeler says regulatory compliance is one issue they plan on discussing. “Currently the biggest pressure on compliance is the desire by some operators to live under the proposed regulations, instead of the current emergency regulations,” says Wheeler. “Add to this recently signed legislation and we have lots of opportunistic actions each with their own perception of compliance.”

Another important topic they plan on discussing is driver training and hiring practices. According to Chris Coulombe, drivers are one of the top two most important customer-facing teams in the organization. “Between the sales team and the fleet operation, drivers represent half of the face of your company,” says Coulombe. “Much like the sales team, they interface with your retail partners directly, and subsequently provide a sizable portion of the foundation that retailers will use to judge your company’s competency and efficiency.”

Chris Coulombe, CEO of Pacific Expeditors
Chris Coulombe, CEO of Pacific Expeditors

When hiring new drivers, Coulombe recommends the standard background and driver record checks, but urges looking for experience in sales and driving as well. “Find those that have leadership experience and are comfortable operating in quasi-structured environments,” says Coulombe. “To that end, we seek solution oriented candidates that are personable, experienced in troubleshooting on their feet, and understand how to operate inside the structure of an organization.”

Coulombe also emphasizes the importance of driver training in any distribution company. “We built our driver training from scratch based on collective experiences from the military,” says Coulombe. “However, creating this from scratch is not necessary at this point, some insurance companies, such as our broker, Vantreo, provide in house driver training and certification solutions as a risk mitigation measure for companies that they represent. We recommend speaking with your insurance company to find what packages they have available.” Proper training for your drivers can help increase efficiency in operations, decrease maintenance and insurance costs and provide for better employee engagement. Coulombe also says many insurance companies have standard operating procedures for drivers to help supplement your company’s protocols.

Chris Coulombe and the other panelists will dive much deeper into this issue and other supply chain topics at the upcoming California Cannabis Business Conference, taking place in Anaheim, CA October 22-23.

Richard Naiberg
Quality From Canada

Protecting Intellectual Property in Canada: A Practical Guide, Part 2

By Richard Naiberg
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Richard Naiberg

Editor’s Note: This is the second article in a series by Richard Naiberg where he discusses how cannabis businesses can protect their intellectual property in Canada. Part 1 introduced the topic and examined the use of trade secrets in business. Part 2 goes into how business owners can protect new technologies and inventions through applying for patents.


Patents: Protection For New And Inventive Technology

Patents, which are issued in accordance with Canada’s Patent Act, provide their owners with the right to have a Court prevent anyone else in Canada from making, using, selling, importing or exporting what is claimed as the patent’s invention. The owner of the patent enjoys this monopoly for a period of 20 years from the date the patent is applied for. A patent is infringed even if the infringer arrives at the invention independently, without actual copying. If a patent owner brings a lawsuit and the Court finds infringement, the Court will typically order the infringing activity to cease and require the infringer to pay the owner a suitable amount of compensation.

There are several drawbacks to applying for a patent from the point of view of the applicant.Patents are meant to protect only inventions, meaning novel, non-obvious and useful solutions to practical problems. In the cannabis field, such inventions could include engineered genetic sequences or new plant cells that lead to useful improvements in the whole plant, new cultivation processes, new methods of extraction, new methods of storage or means to enhance stability, new formulations for administration, and new uses for the plant. It would not be uncommon for a cannabis producer to hold a suite of different patents that cover a whole range of innovative technologies and innovative business methods.

Not all classes of technical innovations are protectable by patent. For example, patents are not available for a whole cannabis plant because no patents are allowed on higher, multicellular organisms. Patents are not issued for genetic sequences or cells that are the result of cross breeding. Patents are also unavailable to monopolize methods of using cannabis as a medical treatment. That said, patent agents are skilled at casting innovations in areas such as these in terms that do provide some patent rights.

To obtain a patent, the applicant hires a patent agent to prepare and submit an application to the Canadian Intellectual Property Office (CIPO). An examiner at CIPO reviews the application for compliance with the statutory requirements and enters into a correspondence with the applicant’s patent agent in a process known as a patent prosecution. Third parties also have the opportunity to oppose the grant of a patent on limited grounds. The prosecution may continue for a period of years before the application is either allowed to issue to patent, or is ultimately rejected. Separate patent applications must be filed in every country in which patent rights are sought, though there are international treaties that facilitate these separate filings and preserve early priority filing dates.there can be a significant cost in obtaining patents, particularly if patent rights are sought in multiple countries.

It is important to emphasize that if an invention had been disclosed to the public more than one year before the application for the patent is filed, a patent cannot issue. Cannabis producers must therefore ensure that disclosures of their innovative work be controlled, including when working with partners. This can typically be handled with the use of appropriate non-disclosure agreements.

The prospect of market exclusivity makes the filing of patent applications a must for cannabis businesses, including those just starting out. For a start-up, simply filing a patent application projects that the company has value and a clear vision of its business. Venture capital often seeks companies with patent applications on file because the applications can mature into assets which can be monetized either by protecting a market for the owner, or through assignment or license to others.

cannabis researchers and producers have already filed hundreds of patent applications in Canada. There are several drawbacks to applying for a patent from the point of view of the applicant. Unlike the case for a trade secret, an applicant for a patent must make full and correct disclosure of the invention and how to use it in the patent itself. This disclosure will allow competitors to understand the applicant’s technology. The public disclosure provides a blueprint for competitors to build upon the patent’s disclosure, and to design around it to avoid infringement. Also, and unlike trade secrets, patents have an expiry date after which the public is free to practice the invention. The Commissioner also has the power to issue compulsory licenses to third parties in several circumstances, including when the demand for the patented article is not being met on reasonable terms. Further, the patent right is not infringed when the patented invention is used for non-commercial or experimental purpose. Finally, there can be a significant cost in obtaining patents, particularly if patent rights are sought in multiple countries.

Disadvantages or not, cannabis researchers and producers have already filed hundreds of patent applications in Canada. These applications relate to a wide range of inventions in the cannabis field including new cannabis resins and oils, methods of producing cannabis having improved properties, specific new growing processes, new harvesting methods, new extraction techniques, new formulations for human and veterinary use as foods, medicines and supplements, new delivery devices, new purification methods, new analytical methods, and new stabilization methods. Interested companies can access these disclosures from the public record.

As cannabis companies rush to obtain patent monopolies for their technologies, minefields are created for operating companies. Cannabis producers should obtain reports on what patent applications exist and might be asserted against their operations if and when these applications mature to issuance. With that intelligence in hand, the cannabis producer can understand what threats can be safely ignored and what patents must be addressed by assignment or license, by ‘design around’ or by developing an argument as to why the patent is invalid and thus unenforceable.


Editor’s Note: In Part 3 of this series, which will be published next week, Naiberg will discuss plant breeders’ rights and protecting new plant varieties. Stay tuned for more!

Richard Naiberg
Quality From Canada

Protecting Intellectual Property In Canada: A Practical Guide, Part 1

By Richard Naiberg
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Richard Naiberg

Cannabis producers are making large investments in new technologies to improve their plant varieties, production know-how and product formulations. At the same time, producers are working hard to create and promote more compelling, top-of-mind brand identities for their improved products. The series concludes with a 9-point outline of specific steps cannabis producers need to consider taking to protect their key intellectual property assets. 

The value of these investments cannot be realized if competitors are allowed to copy and exploit the producer’s successes. Canada’s intellectual property laws can and should be used to protect cannabis producers from such predation. Invoking Canada’s laws to this end is not difficult and does not have to be expensive. It does, however, require specific, deliberate and early action.

This series of articles outlines the principal means of protecting intellectual property rights in the core technologies and marketing programs of cannabis companies. The series also highlights what any cannabis company must do to ensure that its own activities do not run afoul of another’s rights. No company wants to begin a new venture only to face a lawsuit for intellectual property infringement.

The series concludes with a 9-point outline of specific steps cannabis producers need to consider taking to protect their key intellectual property assets.

Trade Secrets: Protection For Confidential Know How

A trade secret is specific, commercially valuable information and know-how that is kept confidential within the company and cannot generally be reversed-engineered by outsiders. A trade secret provides protection over any type of information or know-how and is not subject to any expiry date. Trade secret protection is lost only when the information or know-how becomes available to the public.

As a best practice, defining the trade secret in a confidential document can be useful as a way of restricting access to the secretCannabis producers generate all kinds of valuable know-how that cannot be appreciated simply from an inspection of the vended product. Examples would include methods of crossbreeding, cultivation, harvesting, extraction and processing. Customer lists and other internal business structures and information may also qualify as trade secrets.

There are no statutory pre-conditions that must be met to obtain a trade secret. A trade secret is acquired simply upon the generation of valuable information or know-how that is kept confidential. As a best practice, defining the trade secret in a confidential document can be useful as a way of restricting access to the secret, and as evidence in proceedings as to the scope of the trade secret (an issue that is frequently in dispute in such cases).

For the trade secret to be maintained, the producer will need to take steps to ensure that access to the know-how and associated documents is restricted only to those who need to know the secret for purposes of carrying out their functions at the company. All personnel with access to the trade secret will need to be bound to confidence by employment agreement and/or by separate contract. When employees leave, they ought to be reminded of their obligations of confidentiality and must be prohibited from removing any documentation regarding the trade secret from the company. All outside companies who need access to the secret must sign non-disclosure agreements. It is typical for owners of trade secrets to be vigilant in their market surveillance and to engage private investigators when they suspect a trade secret has been stolen.

A trade secret’s very confidentiality provides its principal value. A competitor cannot copy what it has no ability to discern. However, when someone with access to the secret ‘goes rogue’, such as by using the know-how for his or her own account or for that of a new employer, the owner of the trade secret must act quickly and bring the matter before the Court. The Court has a broad discretion to stop the rogue and any persons or companies who learn the secret from the rogue from further dissemination or exploitation of the trade secret. The Court also has a broad discretion to craft an appropriate remedy to compensate the trade-secret owner for the wrong. If the action is brought before the trade secret is broadly disseminated, the trade secret may be reinstated and enforceable in the future. If the owner of the secret acts too slowly and the dissemination of the trade secret becomes too broad, the trade secret may be lost forever.

Adopting the use of trade secrets to protect know-how in the cannabis business does suffer from the fragility of the right itself. One disclosure, however inadvertent, can destroy the protection. In addition, a trade secret will not protect a company from a competitor who independently derives the know-how. Further, theft of the trade secret can be difficult to spot because, by its nature, the trade secret is exploited within the walls of the competitor company and is not evident in the marketed product. The owner of the secret will need to watch its competitors for telltale shifts in business direction and product offerings, particularly when those competitors hire the ex-employees of the owner of the trade secret. It is typical for owners of trade secrets to be vigilant in their market surveillance and to engage private investigators when they suspect a trade secret has been stolen.


Editor’s Note: In part 2 of this series, which will be published next week, Richard Naiberg will take a closer look at patents and how business can protect new and inventive technology in Canada’s cannabis industry. Stay tuned for more!

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The Battle Over CBD Regulation Hits Europe

By Marguerite Arnold
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With all the attention on the pending regs for the recreational industry in Canada plus the huge medical market under construction in the EU, it is easy to forget the other cannabis discussion in the room right now. Namely CBD in commercial food ingredients and supplements. Battles in the beauty space, while surfacing, are still much less avidly fought.

As a result, edible CBD is also rapidly becoming (another) big green elephant in the room. Globally. Starting with all the changing rules about mostly medical use of cannabinoids in general.

This is underway, sort of, in the United States, driven by state regulations and consumer protection initiatives, but delayed on a federal level by the fact that CBD is still scheduled, like THC, as a Schedule I drug.

In Europe, however, this is already a different animal.

The regulatory hammer also appears to be coming down in strategic country markets, with strange hybrid fights and issues emerging as a result.

For example, as cannabis crops (designed for both markets) begin to flourish in Spain buoyed by both the clubs in Barcelona and the growth of legitimate medical and other kinds of cannabis cultivation across the country – and much of that for export, authorities are cracking down on a federal level about labelling of not cannabis bound for clubs, but the CBD used in edibles.

In the last month, CBD industry blogs are reporting that the Spanish government is sending both warning letters to distributors and the police are apparently taking products off of shelves directly.

For all the direct showdowns about the cannabis plant this year, not to mention CBD, including British children ending up in hospital, this has got to make the top five list.

A Brief Modern History Of CBD Controversies On The Continent

The current complications have their roots in both the regulation of medical cannabis, health supplements and what are called “novelty” food items.

The food issue has been cooking for several years and for botanicals and additives far from cannabidiol. This year, on January 1, however, the entire EU brought in a new directive about the use of certain plants in food which seems to be affecting the edible cannabis conversation all over the continent. That said, countries are interpreting the same at different speeds and with different enthusiasm.

The EU looks poised to hop on the legalization train

Switzerland (not a member of the EU) is actually the only country on the European continent where so far, things have gone relatively smoothly. Their lack of EU membership is actually why. This also does not mean they have overcome some of the larger problems inherent in this entire discussion, but, if things go to form, it will be relatively drama free.

That is not the case in other places.

For example, at the end of 2016, British authorities made a splash about medical labelling with the Medicine and Health Care products Regulatory Agency (MHRA) also leaving the entire edibles discussion in limbo. Technically, low strength CBD can be sold in the UK but it must be labelled as a food product if not specifically made for the medical market. That flap is likely to take off again with the direct competition now of not only Tilray but Namaste and the changing scheduling of cannabis in the UK to a Schedule II in October. See the recent furore over the “unauthorized claims” supposedly made by the nascent Cannabis Trades Association in meeting, lobbying if not “working” with local authorities. The organization has literally blossomed within the last 18 months to over 300 members and 1,200 sellers in part to figure out what exactly the rules are, as authorities grapple with changing times.

tilray-logoNow jump the channel to Spain. The international focus of late has not been just the medical cannabis now sprouting in greenhouses owned by established pharmaceutical companies, or that bound for semi medical use in Barcelona, but the entire CBD edibles discussion.

Why?

On some levels, it is clearly an attempt to continue to set less than grey rules for the Spanish cannabis industry, which even in the club scene is regulating. But beyond that, this fight is altogether more complicated, and far from just regional, or even just a Spanish conversation.

European Food Regulation Meets The Cannabis Industry

CBD in edible products will, according to European regulation, make it a novel food or “additive” – namely that products containing the cannabinoid have not been used “safely”. Translated into English that crosses cultural boundaries, this definition really means that the substance in question must have been part of a regulated federal procedure – for at least 25 years in any third country. As such, it will have to be tested and regulated accordingly.In other words, until the EU can move to classify CBD as a novel food, in Spain, CBD products on the market must be labelled “external use only.”

One does not have to be an industry analyst to know this clearly excludes all parts of the cannabis plant. Everywhere. This is why the situation now unfolding in Spain is all the more worrying for the industry across Europe.

In Spain at least, the crackdown appears to be on any food item containing cannabis, which, according to European-wide regulations, has yet to be classified as a “novel food.” Namely, a food product which has not been consumed in a significant degree in the EU before May 15, 1987. See the guide for new applicants here.

In other words, until the EU can move to classify CBD as a novel food, in Spain, CBD products on the market must be labelled “external use only.”

Where Does This Leave The CBD Industry Across Europe?

As any manufacturer or vendor in any EU country could technically be required to register their new food, this means that cannabis producers and distributors in Europe need to be on their toes for the next several years as the regulatory schemata is worked out. Bottom line? Expect as much hullabaloo over this sector of the market as other places (even if over other issues).Both producers and distributors could easily face labelling problems

Here is the critical take-away. Regulation is coming to the entire industry in Europe in a way unseen in both Canada and the U.S. and from a much more granular perspective.

What “reigns in Spain” in other words right now, is a wake-up call for CBD producers across the continent, even if not involved in the medical space. Not to mention both U.S. and Canadian producers (in particular) looking for profitable market entry strategies. Labelling and standards, in other words, are clearly on the way, and beyond the drawing board, for all cannabinoids, not just those of the “medical” kind.

In the meantime, edible CBD products in Europe and in every country are ripe for the institution of new guidelines that are, as yet, formalized. Both producers and distributors, therefore, could easily face labelling problems for all their CBD products and product lines for the next several years.

Massachusetts Regulators Crack Down On Pesticide Use

By Aaron G. Biros
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Earlier this month, the Massachusetts Department of Health sent a cease-and-desist letter to Good Chemistry, a Colorado-based brand operating in Massachusetts with a dispensary in Worcester and a cultivation facility in Bellingham. The letter claimed Good Chemistry used unapproved pesticides and must close their operations in the state.

goodchem.exter
A Good Chemistry dispensary in Colorado

According to a Boston Globe article, the company used three pesticides (approved for use on organic food products by the federal government) that cannabis regulators in Nevada, Oregon, Washington and Colorado have all approved for use in cannabis cultivation. Previously, Massachusetts has allowed a number of pesticides to be used on cannabis, but since last year when the state’s Department of Agricultural Resources took over regulating pesticide use on cannabis, they decided to ban all pesticides.

Representatives from Good Chemistry insist the compounds used were safe and that the state is singling them out when the practice is widespread in the industry. “These organic compounds are safe all over the country, and they’re safe in Massachusetts,” Jim Smith, a lawyer for Good Chemistry, tells the Boston Globe. “For the state to single out Good Chemistry for using an industry-standard practice is absolutely wrong. It’s not acceptable — and we’re not going to destroy the crop, because it poses no risk to public safety whatsoever.”

Matthew Huron, CEO of Good Chemistry
Matthew Huron, CEO of Good Chemistry

Good Chemistry even disclosed to the state that they would use those pesticides when they applied for a cannabis business license. According to Telegram.com, a local Worcester publication, Matthew Huron, chief executive officer of Good Chemistry, is asking the state to reverse their decision. “The Department of Public Health has the discretion to amend or rescind their order to allow us to make the cannabis we’ve cultivated available to patients in the Worcester community,” says Huron. “Patients have let us know that they really benefited from Good Chemistry’s wide selection of high quality cannabis strains, and they would like access to it again as soon as possible. We’ve asked the state to incorporate the research, analysis and experience that led other states like Colorado, Nevada, Washington and Oregon to determine that the use of these cultivation methods are best practices and helps create healthier, contaminant-free cannabis for patients and the industry as a whole.”

On September 5, the Department of Public Health allowed Good Chemistry to amend the cease-and-desist so they could sell products from other producers in the state. “Many of our patients rely on our medicine we grow specifically and we now are only allowed to sell third party product,” Huron told Telegram.com.

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Tilray Enters Both U.S. & UK Markets

By Marguerite Arnold
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Tilray has long been seen as one of the market leaders in the global cannabis space. They are strategically placed in several critical areas to continue to do well, and put up major competition for just about everyone else (including German market entry first Canopy, plus the other big players in both Canada and Europe) ever since. See Aurora, Maricann and Aphria, to name a few. On the EU front, they are also certainly giving Dutch Bedrocan (with not only existing government contracts, but a newly increased ex-im medical allowance across the open Schengen border) a run for its money. And appear to have broached a monopoly long held by GW Pharma in the UK. 

But first things first. Here is a brief list of accomplishments on the corporate CV so far.In the U.S., Tilray just scored a medical trial at the University of San Diego with a pill used to treat a nerve disorder.

Long (relatively speaking) before Europe was on the map for anyone but a couple of Canadian LPs, the company was exporting to Croatia (in 2016). Even the initial hiccups in delivery (a batch arrived in broken bottles), did not stop their foreign expansion plans. 

When the first German cultivation bid was due, the company also, at least according to their spokesperson in Berlin at the time, considered applying. However, by late summer last year, Tilray was actually the first to publicly tip their hands that not only were they bowing out of the German tender, but had rather decided to import to Germany from cheaper EU climes. See their production facilities in Portugal. Plus of course a mass distribution deal to German pharmacies via local distribution.

Then there is their social media presence on Leafly, which also competes with Weedmaps as both an information portal and dispensary finder in key markets (California and Canada). The German version of the website (Leafly.de), has created a reality, no matter where the server is located, of also connecting directly to patients in a market still finding its way. 

tilray-logoAdd all these elements together, and that puts the company behind it all in an unbelievably strong position to continue to gain both market access and market growth in multiple jurisdictions while carefully moving at literally the change if not bleeding edge of the law.

How much long term impact this will have, however remains to be seen. Why? The times are changing fast. And not everyone is following a policy of promotion timed around other large events (see Canadian recreational legalization and the timing of the company’s IPO). 

Here is another example: the company’s most touted recent double victory, on each side of the Atlantic. Why? This is a place where cannabis companies are starting to compete. And while notable, particularly in it’s timing, is clearly indicative of the next stage in the development of the legitimate medical cannabis industry– not just Tilray.

Trials As Market Entry Tools

Medical trials in both the United States and Europe right now (including the UK for now at least), are the best way for cannabis companies to enter and gain market share. In the U.S., Tilray just scored a medical trial at the University of San Diego with a pill used to treat a nerve disorder.

Last week, Tilray also announced that they had essentially become the first Canadian LP to successfully challenge GW Pharmaceuticals on its home turf in the UK, even if for now limited to one patient application at a time. That won’t last, nor will such a tight monopoly.From a medical point of view, it is a very positive sign, at least for now.

That cross-Atlantic connection is even more interesting, however, given U.S. market entry recently for GW Pharmaceutical’s product, Epidiolex. 

From a medical point of view, it is a very positive sign, at least for now. How it will end up in the future is anyone’s guess, including stock valuation. 

Most advocates, of course, still hope for a medical market where patients are not restricted from deciding between the whole plant, oils or even the pharmaceutical products they choose to take.

Tilray of course is also not the only large LP engaged in medical trials. They are going on all over Europe right now (even if not as well strategically publicized). Health Canada is also committing to trials in Canada over the next five years.

However, what this very clearly demonstrates is that the global medical market is now ripe pickings for companies who approach the entire discussion from a “pharmacized” product point of view. Even if that means in Europe, and including for Tilray, entering the German and other medical markets with flower, oils and medical products.