MJBizMagazine February 2022 by MJBiz Daily

FEBRUARY 2022

MAGAZINE

VOLUME 9 • ISSUE 2 $12.95

Executives Share Their Best Business Advice Packaging Redesign Cuts Down on Plastic Data Analyst Reveals D-8 Sales Trends

LIQUID GOLD?

Cannabis industry executives are at odds over lab-made cannabinoids such as delta-8 THC, but regulating them could have wide-ranging consequences

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February Table of Contents

From the Editor COVER STORY

LIQUID GOLD?

Cannabis industry executives are at odds over lab-made cannabinoids such as delta-8 THC, but regulating them could have wide-ranging consequences.

Five Questions with Cooper Ashley

Hemp Notebook

Company News

Industry Developments

Industry Players

Unboxed

Our Advertisers

FEBRUARY 2022

M AGA Z I N E

VOLUME 9 • ISSUE 2 $12.95

Seed to CEO

Executives Share Their Best Business Advice Packaging Redesign Cuts Down on Plastic Data Analyst Reveals D-8 Sales Trends

On Our Cover LIQUID GOLD?

Cannabis industry executives are at odds over lab-made cannabinoids such as delta-8 THC, but regulating them could have wide-ranging consequences

Harold Jarboe, owner of Tennessee Homegrown, started producing delta-8 THC after getting requests from CBD retailers. Now the hemp-derived products account for nearly 40% of his sales.

4 February 2022 | MJBizMagazine

A scientific company in Israel claims it can produce cannabis biomass and trichomes without the plant. Read more about the future of lab-made cannabinoids on page 32.

DEPARTMENTS

MJBizMagazine February 2022 Volume 9 • Issue 2

Far & Dotter is a curated wellness Far & Dotter is a curated wellness collective focused on empowering collective focused on empowering diverse entrepreneurs and catalyzing diverse entrepreneurs and catalyzing the creation of generational wealth the creation of franchisees. generationalThrough wealth for dispensary for franchisees. the dispensary Curio Investment Fund,Through we give the Curio Investment Fund,towe eligible candidates access thegive eligible candidates capital they need. access to the capital they need.

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Magazine feedback We are here to help the multibillion-dollar cannabis industry prosper. Let us know how we can serve you. Email us at magazine@mjbizdaily.com with your thoughts, suggestions and any other feedback about the magazine and the stories we cover.

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FROM THE EDITOR Kate Lavin

Unexpected Consequences The 2018 Farm Bill is proof that regulatory schemes don’t always work as intended

hen U.S. Sen. Mitch McConnell successfully lobbied Congress to include industrial hemp cultivation and production in the 2018 U.S. Farm Bill, he changed the future of the cannabis business forever. To be sure, the legalization of hemp led thousands of traditional farmers to enter the industry and likely created jobs for McConnell’s constituents back in Kentucky. It also provided a loophole for Americans in every state to access intoxicating cannabis without ever touching marijuana—at least, not marijuana as it is defined by the Controlled Substances Act. I’d wager the staunch conservative politician never saw this coming.

A Different Kind of THC

Unlike delta-9 THC, the cannabinoid that provides marijuana’s psychoactive effects, delta-8 THC starts its life as CBD, the nonintoxicating darling of supplement makers and wellness gurus everywhere. With a new crop of farmers adding to the existing CBD supply post-Farm Bill, many wholesalers found themselves awash in the trendy cannabinoid. But necessity is the mother of invention, and hemp extractors needed to start moving CBD—or risk bankruptcy. When extractors learned that a chemical process could turn CBD—a federally legal hemp derivative—into a form of THC that could be sold in any

8 February 2022 | MJBizMagazine

U.S. market, they jumped at the opportunity.

Hold on a Minute …

After decades of fighting against prohibition, some marijuana license holders found themselves arguing for these industry newcomers to be shut down. The results of their efforts have been mixed, as Hemp Industry Daily Editor Kristen Nichols reports in our cover package, which starts on page 32. But before we throw the force of the law at entrepreneurs who outsmarted the system, consider this: McConnell and others in Congress had a hand in creating D-8. If the Farm Bill had legalized marijuana and not just hemp, would there even be a market for unregulated cannabis?

Look Before You Leap

The truth is, some of the brightest minds in cannabis helped create the hemp provisions of the 2018 Farm Bill, and none of them saw this curveball coming. After years spent lobbying to get hemp included in the omnibus legislation package, the ramifications of that action seemed to evolve in an instant. But this should be no surprise to seasoned marijuana executives. One of the most frustrating parts about the state-regulated marijuana industry are the ever-changing regulations. The changes often force product makers to reprint labels and

When extractors learned that a chemical process could turn CBD into a form of THC that could be sold in any U.S. market, they jumped at the opportunity. reformulate edibles recipes, while cultivators and retailers submit a constantly evolving menu of reports to the state. Delta-8 THC is one more example of how regulators can spend years crafting rules to govern the industry, but once a law goes into effect, the reality can look totally different. In our cover package about lab-made cannabinoids, the staff of MJBizMagazine examines both sides of the D-8 issue—and how regulating it could have unexpected consequences for other minor cannabinoids—so businesses can be prepared for the future ahead.

Kate Lavin is the editor of MJBizMagazine. Reach her at kate.lavin@ mjbizdaily.com.

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FIVE QUESTIONS with Cooper Ashley

Cannabis Sales Boom Coincided With Arrival of Delta-8 THC Higher prices and edibles focus are hallmarks of D-8 THC products, cannabis data analyst says By Kate Lavin

lant-touching companies weren’t the only businesses surprised by the sudden and explosive growth of delta-8 THC in 2020. Sales of the novel cannabinoid surprised trade associations and ancillary companies as well. Seattle-based cannabis analytics firm Headset compiled delta-8 sales numbers for MJBizMagazine. Cooper Ashley, senior data analyst at Headset, cautioned that the figures include only products with delta-8 in their names, as entered by staffers at stores tracked by Headset, so the data might not paint a complete picture. Still, the numbers give us a good idea of the rapid increase in delta-8 popularity as well as how sales responded to the actions taken by regulators in markets where the data was collected:

Arizona, California, Colorado, Illinois, Massachusetts, Michigan, Nevada, Oregon and Washington state. (See page 38 for the current legal status of delta-8 THC in various U.S. markets.) Keep reading to learn about the D-8 phenomenon’s effect on retail cannabis sales.

The explosion of D-8 sales in the third and fourth quarters of 2020 coincided with a dip in the total cannabis market. Do you think the two are related? You have to remember that growth in the second and third CATEGORY

% OF 2021 DELTA 8 SALES

Edibles

70%

Vapor Pens

19%

Other

11%

Growth of D-8 Sales Versus Total MJ Market 100% 80% 60% 40% 20% 0% -20%

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

-40% -60% -80% QoQ Growth of D-8 Sales Source: Headset

12 February 2022 | MJBizMagazine

QoQ Growth of Total Market

Q3 2021

quarters of 2020—after the initial (COVID-19) lockdown and through the summer—was some of the biggest growth we’ve seen in the cannabis market in a very long time, including in more established markets like Washington and Colorado. Q4 2020 was a return to normal after unexpected growth in spring and summer sales. That’s also the time when people started to hear about (delta-8 THC) as an option, especially in the world of CBD and gray-market cannabis. That’s when it exploded in name recognition and popularity. We can see that delta-8 sales exploded in late 2020 and continued to grow through Q2 of 2021.

Have you ever seen a cannabinoid rocket to popularity like this? The only thing I can think of is CBD itself. It is reminiscent, but I definitely don’t think it’s as widespread or common as CBD was when it was gaining popularity. Still, that quick rate of growth and adoption was similar to when CBD really took the country by storm a few years back.

The edibles category for delta-8 products is robust. Is that the case for other labmade cannabinoids? Tinctures, capsules, edibles and topical categories seem to cater a

FIVE QUESTIONS little bit more to a wellness-type customer. We see a lot of CBN in the edibles category as well as ingestibles like tinctures and capsules. CBN, especially, is seen as more of a wellness-type cannabinoid. Customers are potentially looking more to treat symptoms/ get better sleep (with CBN), and that tends to translate to noninhalable categories. Edibles may be more approachable for new (cannabis) users or those looking to treat insomnia or treat pain.

What do you think caused the rapid decline in D-8 sales starting in 2021? We can see that delta-8 sales exploded in late 2020 and continued to grow through Q2 of

governments have been forced to try to deal with it—and some have banned it (including Washington state, which is included in the chart on page 12). Now that it is more regulated, I think that level of growth has been naturally curtailed.

How do D-8 prices compare with other items you track?

Ashley Cooper

2021, but in Q3 (they took) a pretty significant nosedive. There were a few quarters when (D-8) growth was quick—probably because it was gaining popularity, and also it was quite unregulated. Since it gained popularity, state

It appears that customers who are looking for delta-8 products will have to shell out a bit more cash to get them. Over the previous 90 days, the average item price of a delta-8 edible product was about 24% higher than a non-delta-8 THC edible. This interview has been edited for length and clarity.

HEMP NOTEBOOK Kristen Nichols

A Chance to Rewrite the Rules Delta-8 THC offers marijuana operators an opportunity to tackle red tape and overtaxation

elta-8 THC dropped on the cannabis industry like a nuclear weapon. The establishment didn’t take kindly to new competition: Regulated marijuana companies and politicians flipped out, and the labcreated cannabinoid left both sides frozen like two superpowers in the Cold War. Where was D-8 coming from? And why were these upstart cannabis formulators allowed to bypass the rules, produce and sell intoxicants (and make big money!) without following established procedures? Procedures, of course, that include undesirable steps such as: • Waiting months or years for final regulations to be published. • Acquiring a license, which usually requires lawyers, consultants and hefty fees. • Complying with exhaustive testing and sampling rules— never mind that people have been safely growing and using untested cannabis for centuries. • Paying steep taxes at every step. • Watching state lawmakers raid those cannabis tax funds to pay for roads, schools and pet projects they ought to be asking all taxpayers to fund instead of fleecing marijuana companies. • Urging the same government bureaucrats who tax and regulate the stuffing out of THC to make it harder for other companies to join the market.

14 February 2022 | MJBizMagazine

In opposing D-8, established cannabis operators joined the government regulators who are all too happy to ban treatments that don’t come through the established pharmaceutical pipeline. THC and CBD players fired off alarming news releases siding with government regulators to keep these products off store shelves without further research (ignoring the fact that regulators neither suggested nor offered to pay for such research). It’s a game that leaves cannabis entrepreneurs at all THC levels fighting each other instead of pushing back at how cannabis is overregulated.

THE D-8 OPPORTUNITY Just like a nuclear standoff, everyone loses in the delta-8 THC standoff. As this issue of MJBizMagazine looks at lab-created cannabinoids, I suggest that marijuana operators see the delta-8 THC trend as an opportunity to ask tough questions about the extensive testing and red tape imposed on cannabis. Most would agree that intoxicating products ought to be regulated, but how? When do regulations go too far?

“As we examine whether lab-created cannabinoids are a threat or an opportunity, let’s agree that the trend offers all cannabis entrepreneurs the opportunity to ask questions about why marijuana is so often treated like another ‘sin tax.’ ”

So, let’s push back. As we examine whether lab-created cannabinoids are a threat or an opportunity, let’s agree that the trend offers all cannabis entrepreneurs the opportunity to ask questions about why marijuana is so often treated like another “sin tax.” I don’t know whether the delta-8 THC trend will fizzle. I don’t know which minor cannabinoids or synthetically converted analogs are coming next. But I’m sure delta-8 THC will make all cannabis entrepreneurs reconsider the status quo. Rather than ask why lab-created cannabinoids don’t have more rules, ask why other extracts from the plant have so many.

Kristen Nichols covers hemp for MJBizMagazine. She can be reached at kristen.nichols@ hempindustrydaily.com.

COMPANY NEWS U.S., Canada & International by MJBizDaily & Hemp Industry Daily Staff U.S. DEVELOPMENTS

Emerald X Acquires MJBiz

Denver-based MJBiz was acquired by Emerald X, a wholly owned subsidiary of Emerald Holding, a New York-based business-tobusiness event and media company, for $120 million in cash plus potential earnouts. The acquisition includes MJBizCon, the oldest and largest trade show of its kind in the cannabis industry, as well as media and event brands that include MJBizDaily, Hemp Industry Daily and MJBizMagazine. The purchase also includes The Emerald Conference, a cannabis science event MJBiz acquired in 2020. The MJBiz leadership team and staff will continue under the new ownership. Emerald’s major events include Outdoor Retailer, ASD Market Week and the International Pizza Expo. The company’s acquisition of Denver-based MJBiz represents major deals for both the event and cannabis industries.

Curaleaf Raises $425M From 8% Debt Financing

Marijuana multistate operator Curaleaf Holdings said it received commitments for a privately placed debt raise of $425 million—the largest yet for a U.S. cannabis company—while securing an interest cost that is among the lowest in the industry. The five-year senior secured notes have an 8% annual interest rate,

16 February 2022 | MJBizMagazine

according to a news release issued by the Massachusetts-based company. The agreement also permits up to an additional $200 million of senior bank financing. Separately, Curaleaf settled 10 lawsuits brought after an Oregon subsidiary mistakenly sold THC-infused tinctures that were labeled as containing only nonintoxicating CBD. The tinctures were manufactured and labeled by Cura Cannabis, a Portland, Oregon, company that is owned by Curaleaf and runs the marijuana brand Select.

Dutch Company Buys Texas Grow Light Firm for $272M

A Dutch lighting giant signed a definitive agreement to acquire Austin, Texas-based Fluence, which provides grow lights to cannabis cultivators and other agricultural companies, for $272 million. Netherlands-based Signify said the acquisition is in line with its strategy to expand in “attractive growth segments” and reduce resource consumption and increase horticultural yields. Fluence will operate as an entity within the agricultural lighting business at Signify, a subsidiary of Munichbased Osram.

Chicago Atlantic Boosts Credit Facility to $45M

Marijuana industry lender Chicago Atlantic Real Estate Finance upsized a loan from two banks to $45 million. The revolving credit facility was previously worth up to $10 million, according to a regulatory filing.

The Illinois-based firm said its financing subsidiary, Chicago Atlantic Lincoln, amended its secured revolving credit facility with two FDIC-insured institutions. The loan, now worth $45 million, matures in December 2023 with a one-year extension option and carries a floating interest rate of 0% to 1.25% over a prime rate of at least 3.25%.

Marijuana REIT Tops 100 Properties With $72M Deal Real estate investment trust Innovative Industrial Properties (IIP) in San Diego said it acquired a portfolio of 27 cannabis properties for $72.7 million, excluding transaction costs. The portfolio consists of 24 properties in Colorado, two in North Dakota and one in Pennsylvania. IIP now owns 103 properties with 7.7 million square feet of rentable space in 19 states.

Leafly and SPAC Raise $30M; Merger Vote Delayed

Online marijuana platform Leafly Holdings said it secured $30 million in new funding in relation to its pending merger with special purpose acquisition company (SPAC) Merida Capital Holdings. At the same time, Merida said the Jan. 14 special meeting to vote on the proposed merger would be delayed. The funding takes the form of an unsecured convertible note purchase by investment management firm Cohanzick Management and its affiliates, according to a news release issued by Seattle-based Leafly. The unsecured convertible senior notes carry an 8% annual

COMPANY NEWS

interest rate and are due in 2025, among other conditions.

CV Sciences’ Former CEO Wants $5M for Tax Bill

The founding CEO of California CBD maker CV Sciences wants the company to pay him $5.3 million to settle a federal tax bill he says should have been withheld years ago. The lawsuit from Michael Mona Jr. says San Diego-based CV Sciences paid him almost 3 million restricted stock units as part of a 2018 agreement in which he stepped down after settling a dispute with the U.S. Securities and Exchange Commission. Mona, who co-founded the company in 2012, says CV Sciences was supposed to withhold applicable taxes but didn’t. He is asking a federal judge to award him $5.3 million to settle his bill with the IRS.

Planet 13 to Acquire Next Green Wave

Planet 13 Holdings, a Nevada-based marijuana company with operations in California, agreed to a deal worth $70.3 million to acquire indoor cannabis producer Next Green Wave Holdings (NGW). NGW operates a facility in Coalinga, California, that “is home to its nursery, cultivation, distribution and future packaging business,” Planet 13 said. Under terms of the agreement, Next Green Wave shareholders will receive 0.1081 Planet 13 shares and $0.0001 in cash per each Next Green Wave share. The deal is expected to close in the first quarter of 2022.

AFC Gamma Seeks to Raise $61.5M With Stock Offering Marijuana industry real estate financier AFC Gamma launched

an underwritten public offering of 3 million shares of common stock. The underwriters will have a 30-day option to purchase up to 450,000 more shares, the Florida-based company announced. The stock offering will be priced at $20.50 per share, with anticipated gross proceeds of $61.5 million, not including underwriting discounts, commissions, other expenses or the underwriters’ additional share purchase option, AFC Gamma said. Additionally, AFC Gamma and Viridescent Realty Trust teamed up to lend $100 million to multistate cannabis operator Acreage Holdings, with an option to lend a further $50 million. The initial credit facility includes $60 million from AFC Gamma, $30 million from Texas-based Viridescent and $10 million from an unspecified affiliate. It carries a 9.75% annual interest rate, payable monthly. The credit facility has a maturity date of January 2026. New York-based Acreage said it plans to use the senior secured credit facility “to fund expansion initiatives, repay existing debt and provide additional working capital.”

Texas CBD Retailers Face Employee Overtime Lawsuit

Two Texas CBD stores are being sued by a former employee who says they illegally scammed workers out of overtime pay. The lawsuit accuses two CBD USA Plus franchises managed by Jay and Jamie Ashley of having workers shuffle between stores in Sherman and Denton, both in North Texas, to avoid paying overtime.

The Ashleys live in Oklahoma, where they own three CBD USA Plus franchises. CBD USA Plus has more than 80 locations.

MariMed to Acquire Kind Therapeutics

Massachusetts-based MariMed announced a $20 million deal to acquire Kind Therapeutics, a vertically integrated medical marijuana business in Maryland. The purchase price will be paid with cash and promissory notes. The two companies agreed to a partnership and joint venture in 2016, but the deal collapsed. MariMed also has a presence in Illinois.

Glass House to Acquire Plus Products for $26M

Southern California-based Glass House Brands said it will acquire marijuana edibles maker Plus Products in a deal worth $26 million. Glass House noted that the purchase price is a mixture of unsecured debt, equity and “additional performance-based consideration.” The deal is expected to close in the first quarter of 2022.

Hemp Firm Wins USDA Carbon Research Grant

Heartland Industries, a Detroitbased company that engineers hemp fibers as additives for plastic, got a $360,000 grant from the U.S. Department of Agriculture to research the effect of hemp and regenerative farming on soil health and carbon sequestration.

mjbizdaily.com | February 2022 17

COMPANY NEWS U.S., Canada & International CANADIAN DEVELOPMENTS Tilray and AB InBev End Cannabis Partnership

One of the world’s largest brewers, AB InBev, and Canada’s leading cannabis producer by market share, Tilray, ended their partnership making CBD- and THC-infused beverages. The joint venture, Fluent Beverage Co., will continue as a subsidiary of Labatt Breweries of Canada, one of AB InBev’s Canadian subsidiaries. Tilray will serve as Fluent’s co-manufacturing partner. Fluent will now focus on nonalcoholic CBD beverages in Canada, Hemp Industry Daily reported. AB InBev and Tilray first announced the partnership in late 2018, shortly after Canada legalized adult-use cannabis. Each company had a 50% ownership interest. The

partnership was formed before Tilray merged with Aphria.

to initiatives intended to generate shareholder value.”'

Village Farms Delists From TSX, Remains on Nasdaq

Organigram Acquires Laurentian Organic

Canadian produce and cannabis company Village Farms International voluntarily delisted its shares from the Toronto Stock Exchange on Dec. 31. The company will retain its U.S. share listing on the Nasdaq Capital Market, where its stocks have traded since 2019. The company, headquartered in Delta, British Columbia, cited the expense associated with maintaining a listing as its reason for leaving the TSX. Village Farms also said the Nasdaq listing offers enough liquidity for shareholders and that the cost savings “can be redirected

Organigram Holdings, a New Brunswick-based license holder, acquired Quebec cannabis producer Laurentian Organic in a deal worth at least $27.8 million (CA$36 million). The purchase price includes $7.7 million in cash and $20 million worth of Organigram shares. Organigram said the acquisition, which included privately held Laurentian’s Tremblant Cannabis hashish brand, would boost the company’s presence in the Quebec market, Canada’s second-largest by population.

INTERNATIONAL DEVELOPMENTS Dermapharm Buys Canopy Cannabinoid Subsidiary C3

German pharmaceutical manufacturer Dermapharm Holding struck a deal to buy C3 Cannabinoid Compound Co. from Canadian cannabis producer Canopy Growth. Dermapharm will pay Smiths Falls, Ontario-based Canopy $91.6 million (80 million euros) upfront, plus another $48.8 million if certain milestones are met by C3.

Audacious Brands Ships Hempseeds to Thailand

A Las Vegas-based marijuana operator sent its first shipment of CBD-rich hempseeds to Asia as part of a new partnership with a company based in Thailand. Audacious Brands entered a

18 February 2022 | MJBizMagazine

partnership with Golden Triangle Health, a subsidiary of the publicly traded NRF, to supply major consumer packaged goods companies with white-label and branded products. The seeds will be cultivated for food products and CBD extraction.

Aurora Sends Its Largest MMJ Shipment to Israel

Edmonton, Alberta-based Aurora Cannabis sent its largest-ever shipment of medical marijuana to the fast-expanding Israeli market. The company said the shipment was worth nearly $8 million. Aurora reported $12.8 million in medical cannabis sales outside North America in its latest quarter.

Honest Marijuana Co. Makes Inroads in Tanzania

California-based Honest Marijuana Co. is working with Your Local Clinic, a chain of medical offices in Tanzania, to establish itself for the production and sale of medical marijuana and to create supply lines for expansion opportunities such as distribution to Europe. Honest’s plan depends on Tanzania’s recognition of MMJ. Have a company announcement you want us to consider? Send a news release or general information to omar.sacirbey@mjbizdaily.com. (Note: We’re looking for news about expansions, financing, deals, partnerships and similar developments, not product announcements.)

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INDUSTRY DEVELOPMENTS National & International

MAP LEGEND

High level of medical development/implementation Medium level of medical development/implementation Low level of medical development/implementation Other—federally illegal but unique circumstances Recreational

Countries included have passed legislation at the federal level and must fulfill at least one of the following criteria: • Cultivation, manufacture or sale of medical and/ or recreational cannabis allowed. • Doctors can prescribe medical cannabis. • Import and/or export of medical cannabis allowed. High: Countries at the forefront of the global industry. Frameworks are established, and adoption is well underway. Medium: Implementation has begun but is still limited or restricted; lots of room for the market to develop. Low: Legislation has been passed, but implementation is very limited or nonexistent. Decriminalization is not included.

National & International News Hemp-based Compounds Might Prevent COVID-19 Two hemp compounds—CBDa and CBGa—show the ability to prevent the virus that causes COVID-19 from entering human cells. Oregon State University researcher Richard van Breeman led a study to screen a range of botanicals used as dietary supplements for effectiveness against SARSCoV-2 infection. The university’s research team found that cannabinoid acids CBDa and CBGa bind to the SARS-CoV-2 spike protein,

20 February 2022 | MJBizMagazine

blocking a critical step in the virus’ infection process. The spike protein is the same drug target used in COVID-19 vaccines and antibody therapy. “Cell entry inhibitors, like the acids from hemp, could be used to prevent SARS-CoV-2 infection and also to shorten infections by preventing virus particles from infecting human cells,” van Breeman said. “They bind to the spike proteins so those proteins can’t bind to the ACE2 enzyme, which is abundant on ... cells in the lungs and other organs.”

Marijuana M&A Poised for a Hot 2022 Marijuana merger and acquisition activity proceeded at a torrid pace in 2021—and could accelerate in 2022—thanks to lower interest costs and pressure on larger companies to expand their footprints and boost revenue. New York-based Viridian Capital Advisors counted 306 M&A transactions from Jan. 1 to Dec. 17 last year—more than three times the 86 recorded for the same period in 2020.

INDUSTRY DEVELOPMENTS

Nearly 210 of those deals took place in the United States, with a combined value of $10.1 billion—exceeding figures from 2019 and 2020 combined. The year’s top deals included Dublin-based Jazz Pharmaceuticals’ purchase of GW Pharmaceuticals in the United Kingdom for $7.2 billion and Florida-based Trulieve Cannabis’ acquisition of Arizona’s Harvest Health & Recreation for $2.1 billion. The figures don’t include the multibillion-dollar Tilray-Aphria merger, which was announced in late 2020.

Alberta Cannabis Companies to Add Online Sales, Delivery Private cannabis retailers in Alberta will take over online adult-use sales and delivery from a governmentowned online store in March, providing new opportunities to stores in the competitive market. Canada’s fourth-largest province by population consistently punches above its weight in terms of legal cannabis sales, boasting the second-largest provincial cannabis market in October with sales totaling $50.5 million (CA$63.2 million).

Alberta made an early decision to hand brick-and-mortar retail sales to private industry but initially kept online sales and deliveries in the hands of government-owned marijuana wholesaler and regulator Alberta Liquor, Gaming and Cannabis (AGLC). In a statement to MJBizDaily, AGLC confirmed that the change will take effect March 8. The government-owned online retailer “will be decommissioned for retail cannabis sales” on the same date, according to AGLC spokesperson Karin Campbell.

mjbizdaily.com | February 2022 21

INDUSTRY DEVELOPMENTS State by State

WA MT

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State News

Note: This map does not include states that have legalized only CBD-based oils.

Arizona Marijuana regulators received more than 1,500 applications from cannabis entrepreneurs hoping to win one of the 26 highly coveted social equity permits in the state’s lottery program. The Arizona Department of Health will review all applications to make sure they’re eligible; an exact date for the lottery has yet to be determined. Under the 2020 ballot measure that legalized adult-use marijuana, the social equity permits are to be allocated to “people from communities disproportionately impacted by the enforcement of previous marijuana laws.” Arkansas State dispensaries sold nearly $265 million worth of medical marijuana in 2021, an increase of more than 50% over 2020 sales, according to data released by the Arkansas Department of Finance and Administration (DFA). The figure reflects 40,347 pounds of medical cannabis sold by 37 dispensaries. Arkansas has 79,476 active medical marijuana patients, the DFA noted. Marijuana advocates in the state filed an adult-use legalization proposal with the secretary of state’s office in November.

22 February 2022 | MJBizMagazine

INDUSTRY DEVELOPMENTS California A group of cannabis industry leaders sent a letter to Gov. Gavin Newsom and legislative leaders warning that California’s licensed marijuana market is on the verge of collapse. “An unwillingness to effectively legislate, implement and oversee a functional regulated cannabis industry has brought us to our knees,” reads the letter, which was signed by 29 business executives and longtime activists. Industry leaders asked the Newsom administration to eliminate the state MJ cultivation tax, implement a three-year suspension of the 15% cannabis excise tax and expand the number of marijuana retailers.

Colorado U.S. Rep. Ed Perlmutter, a champion for cannabis reform, announced that he won’t run for reelection in 2022. The Democrat has served in the U.S. House of Representatives since 2007. Perlmutter is perhaps most well-known in the industry for writing the SAFE Banking Act, a measure designed to grant protections to any bank or financial institution that provided services to state-legal cannabis companies. Steve Hawkins, the president and CEO of the U.S. Cannabis Council, said he believes the SAFE Banking Act might still be passed in 2022, which he said would be a fitting end to Perlmutter’s tenure.

INDUSTRY DEVELOPMENTS State by State Connecticut Marijuana regulators will begin accepting adult-use social equity cultivation and retailer license applications Feb. 3, and recreational sales are anticipated to launch “by the end of 2022.” The Social Equity Council’s final approval of technical assistance plans paved the way for the kickoff of the first recreational marijuana licensing round. Application periods will be open for 90 days, according to regulators. Licenses will be selected by lottery except for the social equity cultivation permits. In each category, half the licenses will be issued to social equity applicants.

Kentucky A university research farm hailed for advancing the hemp industry through its trials and pilot research program was leveled by a string of deadly tornadoes. The University of Kentucky’s Research and Education Center in Princeton, Kentucky, was among the state’s agriculture industry casualties, according to Agriculture Commissioner Ryan Quarles. Separately, Gov. Andy Beshear said in a televised interview that the state should “definitely move forward with medical marijuana.” Speaking with TV station WEVV in Evansville, Beshear said he supports legalization, in part, because of the economic benefit it would provide to Kentucky farmers.

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24 February 2022 | MJBizMagazine

INDUSTRY DEVELOPMENTS Louisiana Regulated dispensaries were able to legally sell flower for the first time on Jan. 1. Medical marijuana patients reported “long lines” to buy legal cannabis flower, with prices estimated at “double” the price of marijuana available on the illicit market, according to local news outlets. According to The (Baton Rouge) Advocate, some of Louisiana’s nine registered MMJ pharmacies placed rations on how much flower patients could purchase at once. Despite the initial high prices and long waits, the state’s registered medical cannabis companies believe the change will be a positive one for Louisiana.

Maine A top regulator and industry group are fighting to keep Maine’s residency requirement for medical cannabis business owners. The United Cannabis Patients and Caregivers of Maine as well as Kirsten Figueroa, commissioner of the state’s Department of Administrative and Financial Services, filed briefs with a federal appellate court seeking to overturn a lower court ruling that residency requirements violate the U.S. Constitution. Residency requirements are being challenged across the country, but this is the first to reach federal appellate courts, according to Law360, meaning the lawsuit could have major implications for future marijuana licensing.

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INDUSTRY DEVELOPMENTS State by State Missouri The state Supreme Court heard arguments in a case that might force medical marijuana regulators to make MMJ business license applications public. The state’s high court will decide whether application confidentiality, which was written into the state ballot measure that legalized MMJ in 2018, should be nullified so that those who lost out on permits can compare their applications to those of license winners during appeals. The state Department of Health and Senior Services, which oversees MMJ licensing, has refused to disclose the winning applications to California-based Kings Garden Midwest, which didn’t win the two cultivation licenses it applied for.

Montana The nation’s newest adult-use program launched Jan. 1 in Montana, where the market is projected to reach $325 million in annual sales by 2025. The state has a population of only 1.1 million, but substantial demand is expected to come from tourists. In 2020, 11.1 million people visited the state, according to a University of Montana study. In the near term, however, some industry officials are worried that existing cultivation and processing capacity might be insufficient to meet adult-use demand. About half of Montana’s counties have opted out of adult use, but the ones that have opted in are home to most of the state’s residents and MMJ licensees.

26 February 2022 | MJBizMagazine

INDUSTRY DEVELOPMENTS New Hampshire The state House of Representatives narrowly rejected a bill to legalize recreational marijuana sales, leaving New Hampshire one of the only holdouts in New England. House lawmakers defeated HB 237, which had called for a regulated recreational marijuana market without license caps, by only a 170-163 margin. A bill to legalize cannabis home growing passed the House by a vote of 241-113; the legislation now goes to the state Senate. New Hampshire doesn’t have a citizen initiative process, but House Minority Leader Renny Cushing has proposed that lawmakers refer adult-use marijuana legalization to voters as a constitutional amendment.

New Mexico Regulators approved three recreational cannabis producer licenses, the first batch under the state’s projected $350 million adult-use program. Sales are required to begin by April 1. The cultivation licenses were awarded to Baudaboomz2 in Edgewood, Carver Family Farm in Albuquerque and the Martinez family in Aztec. Carver and Baudaboomz2 are micro-businesses, and Carver is a minority-owned business that plans to use water-saving, no-till and organic growing processes. New Mexico’s adult-use program is smallbusiness-friendly with no license caps.

INDUSTRY DEVELOPMENTS State by State New York Regulators loosened CBD restrictions including potency limits, serving sizes and warnings about THC levels. New York’s Cannabis Control Board approved the new rules, which change the per-serving CBD limit in dietary supplements from 75 milligrams to 100 milligrams. Regulators also removed a requirement that cannabinoid hemp products be shelf stable, which will allow foods and drinks to be infused with cannabinoids. Additionally, Gov. Kathy Hochul said she plans to create a $200 million public-private fund to support the recreational marijuana industry’s ambitious social equity goals. The adult-use legislation enacted last year sets a goal of awarding 50% of all licenses to social equity applicants. Ohio A campaign to legalize recreational cannabis has turned in more than 200,000 signatures to the secretary of state in support of its proposed adultuse cannabis law. The Campaign to Regulate Marijuana Like Alcohol (CRMLA) collected and submitted 206,943 signatures of registered voters, though only 132,887 must be valid for the proposed statute to go before state lawmakers. If the Ohio Legislature declines to enact the proposal, the campaign will be given an opportunity to collect a second round of signatures to get the issue on the statewide 2022 ballot.

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INDUSTRY DEVELOPMENTS Oklahoma A second petition to get a recreational marijuana initiative on the ballot was filed with the Oklahoma secretary of state’s office. According to petition filings, both initiatives call for a 15% excise tax on recreational marijuana sales and for the existing Oklahoma Medical Marijuana Authority to regulate the adult-use and MMJ industries. The first petition, the Oklahoma Marijuana Regulation and Right to Use Act, already has been challenged in court, and the state Supreme Court is weighing whether to allow it to proceed. The second petition, the Adult-use Marijuana Regulation Act, would change existing state law and could be amended through legislation.

Oregon Lawmakers set aside $25 million to crack down on illegal marijuana grows, which have become a major issue in the state. The Legislature approved two bills related to fighting illicit cannabis cultivation: One measure will fund enforcement efforts against illicit cannabis farms; the other will bolster existing law enforcement capabilities to aid migrant workers exploited by illegal marijuana growers. Additionally, federal agriculture regulators gave the green light to state hemp production plans, allowing Oregon to move forward with regulating hemp and registering producers for the 2022 season.

INDUSTRY DEVELOPMENTS State by State Rhode Island The U.S. Department of Agriculture approved the state’s hemp-regulation plans. Rhode Island will charge hemp producers $250 in application fees and $2,250 for a two-year license. The state doesn’t limit hemp acreage, nor does it count its total hemp acreage. Rhode Island had 20 licensed hemp growers at the end of 2020.

Texas Hemp researchers are working to knock out variables in the inconsistent and unstable hemp genetics on the market by developing phenotypes that prevent plants from testing over the federal legal THC threshold of 0.3%. A partnership between Texas A&M AgriLife Research and Growing Together Research, an Indiana-based biotechnology firm, aims to provide stable hemp genetics in any environment. “Together we are developing a hemp line that will essentially produce zero delta-9 THC, and therefore guarantee lower than 0.3% THC levels under any growing environment,” Michael Thomsen, an AgriLife Research plant breeder and the project’s leader, said in a statement. Virginia State Sen. Thomas Norment Jr. filed a bill that would delete the line in last year’s adult-use legalization law that calls for 30% of the revenue to be funneled into a cannabis equity investment fund. Social equity advocates say the bill demonstrates an effort to dismantle provisions in the legalization bill, against the wishes of the public. Additionally, federal agriculture authorities gave final approval to the state of Virginia’s plan to regulate hemp production. The state agriculture department is working to communicate new federal requirements to industrial hemp growers and is accepting applications for trained sampling and testing laboratories.

Washington state The government rolled out its own marijuana seed-to-sale traceability system on Dec. 7 after having relied on the private sector for years. But the state-run platform’s debut was less than smooth. Business owners said bugs and glitches in the new system cost them lost time and extra employee hours. Washington is believed to be among the first states to launch such a system with the aim of simplifying the process. State marijuana companies now must submit weekly reports via the Cannabis Central Reporting System. Wisconsin The state’s decision to punt hemp oversight to the feds didn’t solve its testing woes, and regulators worry they won’t have enough inspectors who meet federal requirements. Wisconsin’s Department of Agriculture, Trade and Consumer Protection reported having only two inspectors certified by the U.S. Department of Agriculture to check hemp THC levels. Wisconsin cited budget pressures in September, when it became the second state to hand off oversight to the USDA after establishing its own program. North Carolina made the same decision a month earlier. Note: Entries sourced from MJBizDaily, Hemp Industry Daily and other international, national and local news outlets. These developments occurred before this magazine’s publication deadline, so some situations might have changed. 30 February 2022 | MJBizMagazine

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Cannabis industry executives are at odds over lab-made cannabinoids such as delta-8 THC, but regulating them could have wide-ranging consequences

Lab-made cannabinoid delta-8 THC seemed to emerge out of nowhere to become a runaway—and unregulated—hit with consumers. The trend took regulators and marijuana businesses by surprise, often leaving them unsure how to address the phenomenon. Meanwhile, several companies are working to develop biosynthetic cannabinoids, which they hope to produce for a fraction of the cost of traditional marijuana. Cannabis executives should know: • Delta-8 is most popular in states where marijuana is largely prohibited, but it also has market share in some states with regulated cannabis sales. • Delta-8 businesses and advocates say the hemp-based isomer provides a milder intoxicating effect and doesn’t cause the anxiety experienced by some delta-9 THC consumers. • Many marijuana executives want to see D-8 regulated like delta-9 THC, which would include mandated compliance standards and testing. • Some states have banned or greatly restricted the availability of D-8, while other markets have sought to regulate it.

Harold Jarboe makes hemp-derived CBD and delta-8 THC products at his company, Tennessee Homegrown.

• While marijuana executives expect biotech companies will eventually be able to produce biosynthetic cannabinoids at commercial scale, they don’t expect it to put the traditional industry out of business.

mjbizdaily.com | February 2022 33

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Delta-8 Debate When the 2018 Farm Bill legalized commercial hemp production, it gave rise to an unlikely intoxicant By Omar Sacirbey

hen Harold Jarboe told his partners at Columbia River Cannabis in 2014 that he was leaving the licensed Washington state marijuana company to grow hemp in Tennessee, they thought he was crazy. “They thought I’d lost my mind,” Jarboe recalled. And for a while, it seemed as if they were right. Jarboe launched Tennessee Homegrown in 2016 and toiled to build it into a well-respected manufacturer of hemp-derived CBD products. He invested in premium genetics, operated leanly and, most importantly, tested his products at a third-party lab before sending them to retailers. The company was profitable but struggling to survive. Then, in early 2020, retailers started asking for delta-8 THC. Jarboe knew D-8 occurred naturally in cannabis in miniscule amounts. But the plant did not produce enough D-8 for an economically feasible harvest, so the requests caught him by surprise. “No one in the industry saw this coming 2½ years ago,” Jarboe told MJBizMagazine. “Labs didn’t see it. Processors didn’t see it. Store owners didn’t see it.” With his interest piqued by the requests, Jarboe researched and found that Israeli cannabis scientist Raphael Mechoulam had written in 2005 about converting CBD isolate and distillate into delta-8 THC. At the time, both hemp derivatives were extremely

34 February 2022 | MJBizMagazine

Extraction companies started converting CBD to delta-8 THC after passage of the 2018 U.S. Farm Bill. Photo courtesy Tennessee Homegrown

expensive, making the conversion to D-8 commercially unfeasible.

Loophole-Turned-Dam Break

That changed dramatically with the passage of the 2018 U.S. Farm Bill, which pulled the rug from underneath CBD prices. When Congress passed the Farm Bill, hemp cultivators and processors were sitting on loads of CBD oil that, until then, was hard to move in a marketplace limited by lack of federal clarity on CBD. The new regulations undammed that supply, with CBD distillate unleashed along with a new wave of entrepreneurs looking to enter the industry. Jarboe said CBD prices dropped from $25,000 per kilogram to as little as $500 after the Farm Bill’s passage. Suddenly,

converting CBD into delta-8 THC was economically feasible. “One of the reasons this didn’t happen earlier is because anytime you have to do a conversion, it’s an added expense. When CBD prices went through the floor, this raw material became really cheap,” Jarboe explained. “Previously, the barrier to doing this had been cost. And now that cost barrier was gone.” In its effort to legalize and regulate hemp-derived CBD, the 2018 Farm Bill stated that any cannabinoid derived from hemp—defined as cannabis containing less than 0.3% delta-9 THC—was a legal product. Yet by specifying delta-9, the bill’s authors unwittingly left other cannabinoids outside the realm of regulation.

Unintended Consequences

Converting CBD Into Delta-8 THC

“Unfortunately, nobody that was dealing with this legislation knew what delta-8 was. We were all familiar with delta-9, and the Farm Bill was written so that hemp was defined as less than 0.3% delta-9 THC,” said Jonathan Miller, an attorney with the U.S. Hemp Council who helped draft the bill. “Folks were innovative and … have been able to take advantage of a loophole because the legislation doesn’t ban delta-8; it only bans delta-9 over a certain amount.” The news was music to the ears of hemp executives such as Jarboe, who suddenly “had huge stockpiles” of CBD with diminishing value. Jarboe soon developed his own process for converting CBD into delta-8, did several trial runs to dial in his formulations and hired a third-party lab to test the products. “We had store owners asking us for the product. It’s that simple. If you’ve got stores calling you saying, ‘Look, if you put this product under your label, we can sell it because people trust your brand.’ Well, that’s how we got into it,” Jarboe explained. Now, Tennessee Homegrown is thriving, and Jarboe gives much of the credit to his D-8 pivot. “Maybe it’s no longer the season for hemp as we knew it,” Jarboe wrote in a September 2021 blog post. “The world had changed, and we had to adapt or die.”

Other Side of the Coin

While D-8’s popularity is boosting the bottom lines of hemp farmers and CBD companies, it’s causing worries among traditional marijuana cultivators, manufacturers and retailers—as well as regulators and lawmakers. “Any cannabinoid that can cause impairment should be regulated like delta-9 until we know more about it,” said Morgan Fox, a former spokesman for the National Cannabis Industry Association, who took a job with NORML after this interview. “In the meantime, I think states as well as the federal government really need to start thinking about ways in which to bring novel and minor cannabinoids into the regulated market in a way that protects consumer safety but also respects the huge burdens that licensed cannabis producers have faced and make sure that they’re not being cut out.” Jim Makoso, CEO of Washington state extraction company Flowe Technology, said safety is his No. 1 concern about delta-8 THC. He would like to see D-8 regulated like D-9, and that includes third-party testing. “When it comes to consumer safety, at least some regulation should be required around the QC (quality control) standards,” Makoso said. “Pesticide testing, residual solvent testing, potency testing, mycotoxins. That would be a good place to start.”

Wisconsin-based ExtraktLAB offers courses, kits and video training to educate processors. Their graphic shows one way to convert CBD to delta-8 THC.

mjbizdaily.com | February 2022 35

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Threat or Opportunity?

Most marijuana companies believe D-8 and D-9 can coexist, but safety is paramount By Omar Sacirbey

elta-8 THC has been most popular in states where traditional delta-9 cannabis is prohibited or highly restricted, a difference experts attribute to availability and access. Because marijuana isn’t legal in those states, there are no licensed retailers, just illicit market sources. Delta-8 THC, meanwhile, is readily available in CBD and vape stores as well as gas stations, convenience stores and other storefronts. But D-8 is also finding fans in recreational states because of its purported effects. Many consumers say the delta-8 high is milder than delta-9 and doesn’t cause the anxiety that some consumers feel with marijuana.

Widespread Interest

Harold Jarboe, owner of hemp-based product maker Tennessee Homegrown, said he’s even received D-8 orders from consumers in states with recreational marijuana. “This was truly a customer-driven phenomenon,” Jarboe said, noting that the first retailers to sell D-8 were vape stores and head shops, “which have always been in that notorious gray area.” In fact, Jarboe’s D-8 products have become so popular that they’ve cannibalized his CBD sales. He estimated 35%-40% of his sales are D-8.

36 February 2022 | MJBizMagazine

Market Considerations

But not all cannabis entrepreneurs are excited about the explosive popularity of D-8 and other lab-made cannabinoids. “It’s definitely having some impact in legal markets,” said Morgan Fox, a spokesman for the National Cannabis Industry Association at the time of this interview who has since joined NORML as political director. “A lot of these businesses are understandably upset because it’s taking away market share. And now it’s being taken away by people that haven’t had to jump through all the hoops that they have had to—or have to pay as high taxes as they do. So I can understand that it’s pretty frustrating.” Jim Makoso, CEO of Seattle-based extraction company Flowe Technology, told MJBizMagazine that he doesn’t see delta-8 THC as a competitor to Washington state’s regulated marijuana market. “As far as I can tell, the competition is not between delta-9 THC products and delta-8. … At least in the regulated state markets,” he said. “In Washington, for instance, there are so many delta-9 products available—and the amount of testing and regulation involved with getting a product to market is such that—why would you go and purchase a product at the gas station or at your

Morgan Fox

head shop when you can go into a regulated store?” “I think (D-8) will have some market implications at the margin, but there’s a bigger conversation. And that’s around the safety of the products that are available … because there isn’t the same amount of rigor associated with getting a delta-8 product to the market,” he said.

Safety First

Makoso is one of many cannabis professionals who want to see D-8 regulated like D-9, especially when it comes to third-party lab testing. His safety concerns include: • What chemicals are being used to transform CBD into delta-8 THC? • What byproducts are produced during the process? • Are delta-8 THC products free of pesticides, residual solvents and mycotoxins?

“When you’re able to put a product on the shelf that doesn’t have very much regulatory oversight, that trickles down to the safety and efficacy of that product,” Makoso said. “You’re going to get these cases where lessthan-scrupulous manufacturers are creating products with very little concern for what’s in them.” Fox agreed: “The real problem is not necessarily the substance itself, but how it’s being produced. The fact that it’s being made almost entirely in unregistered, unregulated labs is really problematic.” In Louisiana, where New Orleansbased CBD and D-8 company Crescent Canna operates, third-party lab testing is mandatory. It’s something David Reich, the company’s chief marketing officer, said is important. “What hurts the business is when you have unsafe products on the market,” Reich said. “Frankly, it’s a pretty low bar to send products that you’re manufacturing into a third-party lab for testing,” he said. “If you’re making safe products, you should not have a problem doing that.”

What’s Ahead for D-8

Some licensed marijuana companies believe that interest in D-8 will fade once state-legal cannabis arrives in markets where it is now illegal. For one thing, cannabis consumers generally prefer to buy regulated and tested products. Another concern is economics. “From a production standpoint, I have to imagine that it’s more costeffective to extract delta-9 THC from cannabis plants than it is to extract CBD from hemp and then put it through massive chemical changes in order to make a new product,” Fox said. “It’s only competitive now because the people that are making it don’t have to deal with the same regulatory burdens that people who are licensed and legally producing delta-9 do.” He believes the market for delta-8

One of the D-8 offerings at Cleveland Botanical Destination is a gummy infused with another lab-made cannabinoid: delta-10 THC. Courtesy Photo Jim Makoso

THC will disappear when the U.S. Food and Drug Administration better regulates CBD and gives producers more avenues through which to unload their products. “When you give people more avenues through which to be able to sell and market their CBD products, I think we’re going to see a dramatic decrease in the amount of D-8 production,” Fox said.

THC Harmony

Not everyone believes D-8 will be outpaced by marijuana, regardless of the legal framework. Reich at Crescent Canna said he doesn’t want delta-8 to be perceived as a competitor to the traditional licensed cannabis industry. “We believe that the two can absolutely coexist, and we see delta-8

THC as an important evolution of the cannabis industry. I can see why some would consider it a threat, but we believe it’s an opportunity to really expand access … especially in markets that don’t yet have a legal marijuana industry,” Reich said. Jarboe, who produces both CBD and D-8, sees a future where many more cannabinoids are available in commercial amounts and where manufacturers will be able to “manipulate different ratios of cannabinoids” to create products that target specific effects for the consumer. Of course, that will be possible only after state and federal regulators decide how to regulate cannabinoids other than delta-9 THC, something Jarboe believes will happen sooner rather than later. “In three to five years, they’re going to have to lump all cannabinoids together,” he predicted. “Because D-8 hit, you have wellheeled companies that have money and really good organic chemists trying to find the next D-8. There are literally hundreds of millions of dollars being spent right now exploring the minor cannabinoids,” Jarboe said. “That’s what’s going on now. And, so, yes, it’s exciting.”

mjbizdaily.com | February 2022 37

LIQUID GOLD? WA

VT MT

ND MN

OR ID

PA IL

VA NC

TN AR

SC AL

No explicit delta-8 THC ban Full delta-8 THC ban (including states that interpret existing law to ban delta-8)

Delta-8 THC must be sold at a MJ retailer Delta-8 THC is allowed in food

D-8 by State

38 February 2022 | MJBizMagazine

Under legal challenge

NJ DE MD

MS TX

he toughest job in cannabis right now might be keeping track of fast-moving laws surrounding a THC isomer few had heard of just two years ago. Delta-8 THC’s effects might be milder than those of the better-known delta-9 variety. But the isomer has triggered a potent stew of confusing laws and regulations that are giving even seasoned cannabis attorneys headaches. “We’ve seen a lot of states starting to crack down on delta-8. And we’re encouraged by those states that follow our positioning, which is the two pathways: one for intoxicating, one for nonintoxicating,” said Jonathan Miller, a U.S. Hemp Council attorney who helped draft the hemp provisions of the 2018 U.S. Farm Bill. He noted that Michigan recently adopted such a model, and some states are following that lead. “What Michigan has done is divided up intoxicating cannabis … and intoxicating products

By Kristen Nichols

will be sold through their adult-use channel,” Miller said. Meanwhile, some states have outright banned hemp-derived delta-8, including Colorado and New York. And if that’s not confusing enough, legal interpretations about cannabinoids made or altered in labs can vary by county and city. Some delta-8 THC retailers report having a local police officer visit and say the products are legal, only to have a different officer from the same department stop by the next day and say they’re not. Meanwhile, some of the markets most friendly to delta-9 THC are the most averse to THC being modified in a lab.

Potential Changes Ahead

The situation is likely to worsen this spring, as state lawmakers set to work. That’s because headline-grabbing dangers to children (real or imagined) are like catnip for ambitious politicians looking for attention.

Against this backdrop, MJBizMagazine presents this map of the legal landscape in the United States. We combed through mountains of regulations and court rulings to determine how each state has approached delta-8 THC. Take it with a big grain of salt: Even in a state with no mention of delta-8 THC on the books, a health or law enforcement official could decide that controlled substance laws cover the hemp-derived cannabinoid tomorrow.

Chart Your Own Path

Finally, there’s a consideration that even the smartest cannabis lawyer can’t help settle, and that is the personal risk tolerance of anyone making or selling delta-8 THC—or anything like it. Instead of asking if delta-8 THC is legal in a certain state, a better question might be whether you’re prepared to navigate a legal thicket that makes the traditional marijuana business look easy. Omar Sacirbey contributed to this report.

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Not Your Mama’s CBD Is hemp-derived delta-8 THC causing consumer confusion? By Laura Drotleff

elta-8 THC dominated sales in hemp shops around the country in recent years. But is this trend affecting CBD sales? Are consumers confusing delta-8 THC with CBD products? Megan Duvall believes so. The chief business officer for FSOil, an industrial hemp extractor in Woodburn, Oregon, said delta-8 THC product manufacturers and retailers are promoting the isomer as a legal product because it is made from hemp-derived CBD. But that’s a stretch for Duvall. “It is not in the spirit of the (2018) Farm Bill as it was written,” she said. “It was not written so that you can convert (hemp-derived products) into something that is intoxicating.”

Hemp-derived Uncertainty

Adding to the confusion is that consumers see hemp-derived CBD brands at national retailers and—upon hearing delta-8 THC is made of the same substance—might assume that D-8 is nonintoxicating, Duvall noted. That confusion likely contributes to the number of delta-8 THC-related hospitalizations reported to the Centers for Disease Control and the U.S. Food and Drug Administration, reinforcing why regulation of hempderived products is so important, she said. More than 100 people in the United States were hospitalized last year after consuming delta-8 THC products, federal health regulators reported in September.

40 February 2022 | MJBizMagazine

Regulating CBD and byproducts such as delta-8 THC similarly to other food and dietary supplement ingredients could increase consumer confidence. Courtesy Photo

Duvall said regulating hempderived cannabinoids like a dietary supplement would: • Mandate product manufacturing under the FDA’s current Good Manufacturing Practice standards. • Allow manufacturers to conduct rapid product tracebacks in case of a recall. • Make consumer packaged goods companies and mass merchant retailers more comfortable investing in the industry. “That is why we support some of these bills that treat it like a dietary supplement, so that these facilities that are producing ingredients have a plan, have critical control points, have all the things that we would expect in a food-processing plant or dietary supplements and nutraceutical processing facility,” she said. Turning hemp-based cannabinoids

into intoxicants hurts the hemp industry’s credibility because it “is not in the spirit of the 2018 Agricultural Improvement Act,” Duvall said. Because “it is not regulated, anybody can be (making delta-8 THC) and not checking the boxes for consumer safety, which is a large concern because you do use a lot of chemicals and harsh solvents to create delta-8 THC.” Duvall said more adverse events are bound to happen if product manufacturers aren’t ensuring final product testing, yet are selling delta-8 THC products in retail outlets such as convenience stores and gas stations, where consumers of any age can access them.

Mixed Reaction

Retailer Larry Shor, who owns Cleveland Botanical Destination in Ohio, said most of his customers who

purchase delta-8 THC products have become educated about the difference between delta-8 THC and CBD. But others, he said, don’t seem to care. “They just want to know what’s the end result or why would people use it,” he said. Shor said that while delta-8 THC sales have outpaced CBD and other cannabinoid products, accounting for 55%-60% of his retail sales over the past year, many of the customers who come in for delta-8 THC also leave with CBD products for other issues—or to help counteract some of the side effects they experience from using delta-8 or delta-9 THC. And it’s not just people seeking intoxicating effects who are buying delta-8, Shor said. Consumers of every demographic are finding delta-8 THC to be helpful for a range of issues. “I have referrals from psychologists

(who have) seizures that have used delta-8 successfully, people with tremors like Parkinson’s. They like the fact that it gives them benefits but it’s not as euphoric as delta-9.”

Consumer Education

Cannabis flower contains tiny amounts of Delta-8 THC. Courtesy Photo

(and) psychiatrists that send their patients here, and adults on the autism spectrum in their 30s who have come in here,” Shor said. “I’ve had people

The cannabis industry remains divided in its position on delta-8 THC products. But most can agree that, ultimately, consumer safety is the biggest concern. “The (main) thing I really care about is if it’s a good, clean product,” Shor said. “Is the facility they’re using clean? Has it been tested? … The opportunity is to educate people so they can choose a clean product.”

Laura Drotleff writes about hemp and CBD for Hemp Industry Daily and MJBizMagazine.

LIQUID GOLD? BioHarvest Sciences announced in December that it created 10 pounds of cannabis trichomes in a bioreactor. Courtesy Photo

A Post-Plant Future? Will cannabinoids created in a bioreactor replace mainstream cannabis agriculture? By Omar Sacirbey

ioHarvest Sciences, a company that biosynthetically created grape and pomegranate extracts to sell to food ingredient companies and consumers, claims to have done the same with cannabis. The Canadian company with operations in Israel said it used liquid media in a bioreactor to create 10 kilograms (22 pounds) of trichomes in December. The density of the trichomes, according to the company, is about 200 times higher than with a typical marijuana plant.

42 February 2022 | MJBizMagazine

“It’s like bubble hash. Literally 93% of our biomass is trichome and the other 7% is cell,” BioHarvest CEO Ilan Sobel said. Not only are the trichomes denser than those harvested from plants, but they can be produced at a fraction of the cost and time required for plant-derived trichomes, Sobel claimed, and with Ilan Sobel equal purity.

“We are now at the scaling stage, taking this into industrial-size bioreactors (and will be) bringing this product to market in 2022,” Sobel said.

Increased Competition

Ten-year-old BioHarvest is one of many companies working on creating biosynthetic cannabinoids. Florida-based investment firm Raymond

James forecast in September 2020 that the biosynthetic cannabis niche would grow from $10 billion in 2025 to $115 billion in 2040. Other companies working on biosynthetic cannabinoids include Massachusetts-based Ginkgo Bioworks, which has a partnership with Ontario, Canada-based cannabis company Cronos Group, and Montreal-based Hyasynth Biologicals, which has an investment from Organigram, a licensed producer in New Brunswick. Willow Biosciences in Canada also is working on biosynthesis, as are U.S. firms Cellibre in San Diego and Demetrix and Lygos, both in Berkeley, California.

Bio Opportunity

To be sure, the biosynthetic cannabis sector has caught the eyes—and dollars—of many traditional cannabis investors. Consider New York-based Tuatara Capital, one of the United States’ first cannabis investment firms, which in 2016 invested in Teewinot Life Sciences, a biosynthetic cannabinoid maker in Tampa, Florida. Tuatara’s thesis for investing in Teewinot “was based on the belief that there would be a future market demand for a technology platform that could produce pure, consistent cannabinoids … and the development of scientific methods to replicate the cannabinoid production that occurs in the cannabis plant, without the plant itself,” Al Foreman, Tuatara’s chief investment officer and managing partner, said via email. “Based on our observations of adjacent industries and how they source and produce ingredients, we believed that once alternative forms of cannabinoid production … were accessible, then larger product companies would seek that out,” Foreman added.

Flower Forever

While the notion of mass-producing high-quality, consistent cannabinoids

close to making plant-based extracts that go into derivative products obsolete.” Additionally, it is unknown whether biosynthetic cannabinoids will have a significant cost advantage over plantderived cannabinoids. “In most derivative products … the price of the cannabinoids generally isn’t the major consideration,” Makoso said. “It’s all of the other ingredients and the packaging and the sales and distribution costs that are generally where the expenses are. “Cannabinoids, even in the regulated markets, are relatively inexpensive.” Al Foreman

at a fraction of the cost, time and space sounds like a threat to the industry as we know it, cannabis executives, investors and even biosynthesis companies say a market for cannabis plants will continue to exist. “There are companies that will be able to sell pharmaceutical applications of their compounds, but they will never put out of business every person that grows or extracts cannabinoids or produces cannabinoid products,” said Jim Makoso, CEO of Flowe Technology in Seattle. Biosynthetic cannabinoids are likely to appear as ingredients in pharmaceutical products, wellness products or ingredients in food. But they won’t appeal to the biggest demographic of cannabis consumers: those who prefer flower over other formats. Makoso estimated that 55%-60% of the cannabis market is flower. “That says a lot about the market for cannabis products. Some people just like to take their flower, break it up, stick it in a joint or their bong or their bowl. … That part of the market is never going to go away,” Makoso said. “Those (companies) that are producing synthetically produced cannabinoids, I think there’s a place for them, but I don’t think they’re going to ever come

Taking Minors to the Majors

Tuatara’s Foreman noted that biosynthesis is most valuable as a source for cannabinoids that appear naturally only in very small quantities. As research progresses into the efficacy of individual cannabinoids, Tuatara believes the need for isolated minor cannabinoids as ingredients in pharmaceutical, wellness and food products will increase—and the supply chain required to efficiently produce those inputs will need to be in place. Sobel agreed, noting that BioHarvest plans primarily to focus on pharmaceutical markets. “We believe this will be interesting for Big Pharma companies interested in creating formulations that use cannabinoids,” Sobel said. “Also, many CPG (consumer packaged goods) and food companies are looking for steady, reliable supplies of CBD and other cannabinoids.” And while there is still a long way to go to commercialization, stakeholders see a light at the end of the tunnel. “The timeline for this alternative production opportunity has taken longer than originally anticipated when we invested in this segment,” Foreman said. “But as the market has progressed, the opportunity set has started to take shape.”

mjbizdaily.com | February 2022 43

LIQUID GOLD?

Minors Loophole Ambiguity in the Controlled Substances Act leaves a pathway for intoxicating hemp-derived cannabinoids By Neil M. Willner

elta-8 THC exploded onto the scene in 2019, followed by delta-10 THC, THC-O acetate and HHC in 2020 and 2021. While state regulatory agencies have opted for a whack-a-mole approach that focuses on controlling one cannabinoid at a time, the federal government has been largely silent on the legal status of hemp-derived cannabinoids. Recently, however, the U.S. Drug Enforcement Administration (DEA) released a letter shedding light on its position that these cannabinoids might not be illegal after all.

Federal Position

Tetrahydrocannabinols (THC) are Schedule 1 controlled substances under the Controlled Substances Act (CSA), which defines THC as naturally contained in the cannabis plant, as well as synthetic equivalents of the substances contained in the plant. The 2018 Farm Bill amended the CSA’s definition of “tetrahydrocannabinols” to exclude “tetrahydrocannabinols in hemp.” Accordingly, THCs that are naturally occurring in hemp are legal and not controlled under the CSA, provided they have a delta-9 THC concentration of not more than 0.3%. Reiterating this point, in September 2021, the DEA responded via letter to the Alabama Board of Pharmacy’s inquiry on the legal status of delta-8 THC. The DEA wrote in its

44 February 2022 | MJBizMagazine

nonbinding response that “delta-8 THC synthetically produced from noncannabis materials is controlled under the CSA as a ‘tetrahydrocannabinol.’”

Three-step Analysis

How does this DEA position impact hemp-derived delta-8 THC, THC-O acetate, HHC and other minor cannabinoids proliferating the market? Since delta-8 THC occurs naturally only in trace amounts in hemp, manufacturers are extracting CBD from hemp and converting the cannabinoid into delta-8 THC. The question becomes: Does this conversion process make D-8 a synthetic form of THC? Using an overly simplified three-step analysis, one could argue that the answer is “no.” The three steps are: • Is the cannabinoid naturally contained in the hemp plant? • Is the cannabinoid produced from non-cannabis materials? • Does the cannabinoid extract have less than 0.3% delta-9 THC on a dry-weight basis? If the cannabinoid naturally occurs in hemp, is produced from cannabis material and has a delta-9 THC concentration of 0.3% or less on a dryweight basis, the manufacturer could argue that the cannabinoid is not an illegal controlled substance. Take THC-O acetate, for example: THC-O is not naturally occurring in hemp—or any cannabis plant, for that

matter. Rather, manufacturing the molecule requires extracting CBD from hemp and converting the CBD into a delta-8 THC distillate. Then, acetic anhydride and an acid catalyst are added to the delta-8 THC to make THC-O. Since it is not naturally occurring, it fails the three-part test. HHC (short for hexahydrocannabinol), on the other hand, is a hemp derivative occurring naturally in small quantities in the plant. To make HHC, manufacturers first extract CBD from hemp, convert the CBD to delta-8 THC and then hydrogenate the delta-8 THC into HHC. HHC might pass the three-step analysis because 1) it is naturally occurring in hemp, albeit in nominal amounts; 2) it is produced from hempderived CBD, which is a cannabis material; and 3) the final extract will generally have less than 0.3% delta-9 THC on a dry-weight basis.

How Does the Federal Analogue Act Impact the Legality of these Minor Cannabinoids?

Passed in 1986, the Federal Analogue Act (FAA) allows the federal government to treat any chemical “substantially similar” to a controlled substance listed in Schedule 1 or Schedule 2 of the CSA as if it were itself listed in Schedule 1. Under the FAA, a controlled substance analogue is any substance that has

1) a substantially similar chemical structure to a Schedule 1 or 2 controlled substance; and 2) a substantially similar stimulant, depressant or hallucinogenic effect on the central nervous system. The FAA must not be ignored when determining the legality of minor cannabinoids that are analogous to delta-9 THC. Even though delta-8 THC and HHC might pass the simple three-step analysis described above, it is certainly possible that these cannabinoids meet both elements necessary for federal law enforcement to determine if they are a controlled substance analogue of delta-9 THC.

State Position

Understanding the federal government’s position on hemp-derived cannabinoids is not the end of the analysis. Delta-8’s popularity over the past two years has

Neil Willner

analogue legislation, hemp legislation and marijuana legislation.

What’s Next?

forced state legislatures and regulators to pass laws, issue guidance and promulgate rules to regulate to delta-8 THC. Manufacturers and retailers would be remiss to ignore these nuanced state rules. (See map on page 38.) Much of this guidance, however, is silent on the status of delta-10 THC, THC-O or HHC. To properly analyze the legality of these cannabinoids, those involved in their sale and distribution must review each state’s Controlled Substance Act, controlled substance

As federal and state governments and the industry grapple with consumer safety versus product innovation, one thing is certain: The cannabis industry will keep creating new products that continue to push the bounds of legality while legislators and regulators struggle to keep up. The article is for general informational purposes only and is not intended to constitute legal advice. Neil M. Willner is an attorney in the New York office of Royer Cooper Cohen Braunfeld, where he co-chairs the firm’s cannabis practice group. Willner counsels hemp and marijuana companies across all parts of the supply chain on regulatory and compliance matters.

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LIQUID GOLD?

Cajun Case Study Regulatory change from ‘industrial’ to ‘consumable’ hemp paves way for Louisiana’s D-8 experiment By Omar Sacirbey

hile many states responded to the delta-8 THC phenomenon by banning the cannabinoid, other markets sought to tame it by regulating D-8 products, mandating testing and enforcing other compliance standards. In Louisiana, regulators and stakeholders hope this approach will reduce safety hazards and clear up confusion over which cannabinoid products can and can’t be sold in the state.

‘Consumable’ Hemp Regulations

The updated law, which went into effect in August, changes “industrial hemp” to “consumable hemp,” defined as “any product derived from industrial hemp that contains any cannabinoids and is intended for consumption or topical use.” In response, the Louisiana Department of Health opened applications in August for licenses to make foods containing cannabinoids such as CBD and delta-8 THC. “We considered it a huge step forward for cannabis in Louisiana,” said David Reich, chief marketing officer for Crescent Canna, a New Orleans-based maker of CBD and D-8 products. “Prior to the law going into effect, Louisiana had a framework in place only for registering hemp-derived CBD products. Other cannabinoids were prohibited.”

46 February 2022 | MJBizMagazine

New Orleans-based Crescent Canna sells CBD and delta-8 products. Courtesy Photo

Chanda Macias

Competitor or Compliment?

While consumers are still learning the difference between D-8 and D-9, Louisiana’s licensed medical marijuana businesses don’t necessarily see delta-8 THC as competition. “I do not think that delta-8 and other artificial cannabinoids are having a real impact on the legal cannabis market. The biggest concern, nationwide, is the illicit natural cannabis market. The main appeal for artificial cannabinoids like delta-8 are for people who don’t have access to either the legal or illicit

market, and that is a very small demographic, so it does not pose a threat,” said Chanda Macias, CEO of Ilera Holistic Healthcare, one of Louisiana’s two licensed medical marijuana producers. Macias doesn’t believe the new delta-8 law will take cannabis patients away from the state’s medical market. “In Louisiana, the legal cannabis market is just getting started. Our main challenge is expanding awareness and thereby expanding the patient market,” she said. “As much as we are educating Louisianans about the benefits of cannabis, there’s an even greater lack of awareness around delta-8—even if it may technically be more readily available.” Macias welcomed the safety testing mandated by the new cannabis law. “Any legal, artificial or synthetic cannabinoids should be tested to the same standard that natural cannabinoids are,” she said.

LIQUID GOLD?

Proceed With Caution Widespread crackdown on delta-8 THC could pose a threat to other cannabinoids By Omar Sacirbey

“We get a regulatory patchwork … which is just a nightmare for those companies that are trying to sell in all states.” -Jonathan Miller, U.S. Hemp Council

elta-8’s meteoric rise in popularity is forcing a conversation about how to regulate minor cannabinoids. Until recently, delta-8 THC has existed in an unregulated, legal gray area. And because there are dozens of other minor cannabinoids not covered by federal and state laws, regulating D-8 could have wider ramifications. Some industry observers worry that a knee-jerk reaction to delta-8 THC could result in mass-overregulation that stymies cannabis businesses and innovation. “Once you go down this road where you start supervising delta-8 as a cannabinoid that’s made from hemp, you’re basically saying, ‘We’re going to draw that little line in the sand about what is hemp and what is cannabis grown for cannabinoids,’” said Harold Jarboe, owner of CBD and D-8 producer Tennessee Homegrown.

Industry Wishes

Still, others in the industry are in favor of expanded regulation. “People are really drilling down into the naturally derived contents of this plant,” said Morgan Fox, a former spokesman for the National Cannabis Industry Association, who joined the staff of NORML. after this interview. “There’s going to be a need to fit those minor cannabinoids into a larger regulatory structure when they’re present in products in much greater amounts than they would be in nature.” Jonathan Miller, a lawyer with the U.S. Hemp Council who helped

48 February 2022 | MJBizMagazine

Jonathan Miller

Chellie Pingree

draft the hemp provisions of the 2018 U.S. Farm Bill, said less well-known cannabinoids such as CBG and CBN present an even bigger challenge. “We’ve now sort of undermined our argument that hemp is not intoxicating, and so people are taking a closer look at things like CBD. We made this deal with Congress and regulators, and now they’re saying, ‘Wait a minute, did we give away too much? Do we need to rein back all hemp products?’” Miller said.

Federal and State Efforts

U.S. Rep Chellie Pingree of Maine intends to introduce legislation to reform the Farm Bill, Miller said, including establishing separate paths for intoxicating and nonintoxicating products. “That’s not likely going to happen until the next Farm Bill is passed, in 2023,” Miller said, although the U.S. Hemp Council supports the idea. That means, for the time being, states are going to have to take the lead. And some are. “It’s very difficult to have a coordinated approach in all 50 states,” Miller said. “They’re all well-meaning, and they might all be on the same theme. But they have different nuances to them. So, we get a regulatory patchwork … which is just a nightmare for those companies that are trying to sell in all states.”

Omar Sacirbey is a reporter for MJBizMagazine. You can reach him at omar. sacirbey@mjbizdaily.com.

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INDUSTRY PLAYERS New Hires & Promotions by Omar Sacirbey

Verano Nabs CFO from Kraft Heinz Brett Summerer left his posts as vice president, head of supply-chain finance and chief financial officer of Kraft Heinz Co.’s U.S. operations to join cannabis multistate operator Verano Holdings as its CFO. Summerer began his career in the IT sector at Modern Engineering, where he eventually became chief information officer and managed the firm’s budget, vendor contracts and operational integration for four acquisitions. He also spent 10 years at General Motors in financial planning and analysis, serving in controller and CFO positions in the U.S. and Asian markets. After leaving GM, he served as the head of financial planning, analysis and supply-chain finance for Corning as head of finance for their pharmaceutical arm. Summerer takes over for Brian Ward, who will serve as an adviser during the transition before leaving Verano. He will report to Verano founder and CEO George Archos and will be based at the company’s Chicago headquarters.

management, product development and human resources posts at Burberry, Vineyard Vines, Prada and Ralph Lauren.

Coda Adds PharmaCann Founder to Board Tiffany McBride

Kerry Arnold

TPCO Adds Two to C-Suite TPCO Holding Corp., a vertically integrated California cannabis company, appointed Tiffany McBride as its managing director of social equity ventures and Kerry Arnold as chief people officer. McBride most recently was the chief operations officer at Docstur, a document automation and artificial intelligence company. Arnold previously was chief people officer at Canndescent, a California-based cannabis brand.

Perfect Union Hires Retail Exec Perfect Union, a Sacramentobased cannabis company, hired Meghan Fort as its new senior vice president of retail. Fort most recently served as vice president of North American retail at Farrow & Ball, a British paint and wallpaper manufacturer. She also held store

52 February 2022 | MJBizMagazine

Coda Signature, a Denver-based edibles maker, appointed the founder and former CEO of Chicago-based PharmaCann, Teddy Scott, to its board of directors. Scott is also a former CEO of multistate operator Ethos Cannabis in Philadelphia. Scott currently is CEO of Bakhu Holdings, a company in Long Beach, California, that holds a cell-replication technology license to produce, manufacture and sell cannabinoids in North and Central America and the Caribbean. He is also the founder and director of SmartHealth Catalyzer, a Chicagoarea biotechnology company. Before founding PharmaCann in 2015, Scott was a patent attorney. He is also an adviser to the University of Chicago Innovation Fund.

MWG Holdings Bolsters Board Sacramento-based MWG Holdings, a cannabis-focused holding company whose investments

include Perfect Union, appointed Mansoor Zakaria, a former Silicon Valley CEO and veteran investor, to its board of directors. Zakaria joined New Vernon Wealth Management (formerly S.F. Investment Advisors) in 2010, after a career as an entrepreneur, Silicon Valley CEO and private venture investor. Earlier in his career, he led a pioneering electronic brokerage team at Charles Schwab. Subsequently, he was a strategic adviser/ consultant to top management at Goldman Sachs and JP Morgan.

CBD Brand Hires First COO, CMO Highline Wellness, a CBD brand headquartered in New York City, expanded its C-Suite by hiring its first chief operating officer/president and chief marketing officer. The new COO/ president, Arin Maercks, joined Highline in November 2021 from Xabis, a Denver-based Arin cannabis Maercks company. Before Xabis, Maercks was the chief commercial officer at Longeveron,

INDUSTRY PLAYERS a biotech company, and served as an operating executive and adviser to technology platform CheckedUp. He also served as the COO of medical device company Lexington International and has been instrumental in several launches and exits of consumer-focused companies. Before joining Highline in late 2021, new Chief Marketing Officer Laura Kendrick was senior director of marketing for Laura Kendrick comprehensive supplement brand SmartyPants, a part of Unilever. She also was an agent at ICM Partners, one of the world’s largest talent and literary agencies, where she was responsible for identifying and monetizing client accounts.

Celebrity Chef Joins Infused-Food Company Los Angeles-based LastLeaf, a cannabis-infused gourmet food line for at-home chefs, tapped celebrity chef Aaron May for its growing culinary team. Launched in October with celebrity chef and four-time James Beard Award winner Todd English, LastLeaf partners with influential chefs to offer an array of products representing diverse cuisines.

Aurora Expands Board Aurora Cannabis in Edmonton, Alberta, appointed Chitwant Kohli to its board of directors. The newly added position expands Aurora’s board to nine members, seven of whom are independent. After 29 years of service at Royal Bank of Canada (RBC), Kohli retired as senior vice president of enterprise operations and payments. In his last role at RBC,

Kohli led a global team of 1,800 members and was responsible for operating and expanding services such as payments and trade, cash processing, human resources and finance. Kohli also held key executive roles including senior vice president of retail finance.

Oregon Fills Two Cannabis Regulatory Vacancies The Oregon Liquor and Cannabis Commission added two new members to fill longstanding vacancies. The new commissioners were nominated by Gov. Kate Brown and approved by the Oregon state Senate in November. Commissioner Fay GyapongPorter is a Wilsonville dentist who has been in practice in the Portland area for more than 30 years. She has served on dentistry and community boards and currently serves on Wilsonville’s diversity, equity and inclusion committee and on the Oregon Black Pioneers, a historical society dedicated to the history of Black Oregonians. Commissioner Dennis Doherty, now retired from professional life, had a 25-year career in commercial insurance as a principal with JBL&K Risk Services. Doherty serves on the board of The DPI Group, a national nonprofit focused on employing people with disabilities. The Air Force veteran also is a former chair and current member of De Paul Treatment Centers for treatment of drug and alcohol addiction.

Former Aphria President Gets New Gig Toronto-based Humble & Fume, a distributor of cannabis and cannabis accessories, appointed Jakob Ripshtein as board chair. Ripshtein succeeds outgoing Executive Chair Shawn Dym, principal at York Plains Investments, who remains on the board.

Ripshtein is the CEO of Perennial Brands, a brand-strategy organization with clients such as The Supreme Cannabis Co. and Cannovate. Before Perennial, Ripshtein was president of Aphria, now Tilray. Before entering cannabis, Ripshtein was with beverage company Diageo North America, where he served as president of Diageo Canada. Charlie Batch

Ex-NFL Quarterback Joins Marijuana-minded Investment Group CapStone Holdings, a business incubator and investment group, welcomed 15-year NFL veteran Charlie Batch as its senior vice president of strategic investments. Batch will help CapStone grow its investment portfolio and partnerships in the medical marijuana and technologyfocused industries. A former Detroit Lions and Pittsburgh Steelers quarterback, Batch is an investor, entrepreneur, community leader and philanthropist in the Pittsburgh area. He is a vocal advocate among former professional athletes for CBD and medicinal-use cannabis. Hired or promoted someone for a senior-level position? Send a news release or general information to Omar Sacirbey at omar.sacirbey@ mjbizdaily.com.

mjbizdaily.com | February 2022 53

UNBOXED Cannabis Packaging and Design Insights

Ever Greener Oregrown’s new vape and extract packaging boosts recyclability and minimizes plastic use By Kate Bertrand Connolly

regrown is putting its sustainability credo into action. The vertically integrated cannabis company redesigned packaging for its vape cartridges and concentrates, replacing plastic packaging materials with recyclable paperboard. For Oregrown’s line of extracts, the Bend, Oregon-based company’s in-house team designed a custom sleeve-and-tray pack with a die-cut to hold the child-resistant jar. The new design eliminates a plastic foam insert that was part of the previous package design. The brand’s new packaging for vape cartridges and PAX pods—a child-resistant paperboard carton with sliding tray—replaces plastic pop-tops. Both package designs bypass the need for a plastic, child-resistant exit bag, which is a state requirement when selling retail cannabis products in non-child-resistant packaging.

Sustainable Priorities Oregrown’s new cartons display the chasing-arrows recycling symbol, the Forest Stewardship Council (FSC)-certified logo and the “Carton Made with Wind Energy” icon. “We’ve very happy to be able to showcase that on our packaging,” said Riley Ruano, marketing director at Oregrown. “We believe that by making a real effort toward being more sustainable, it proves to our customer base that we take sustainability seriously. It’s not just a marketing ploy.”

54 February 2022 | MJBizMagazine

SUPPLIERS Paperboard cartons: All Packaging Co., allpack.com Label printing: Premier Printing Solutions, ppsbend.com

The redesigned vape packaging is on dispensary shelves now, and the new extract cartons will follow in early 2022. Switching to eco-friendly materials increased packaging costs, but Oregrown was able to justify the increase without boosting prices. In-house production efficiencies and economies of scale helped offset the costs. “As we increase the size of our batches and the amount of product we produce, we can order more labels, which drives our label costs down,” Ruano said.

Made in the USA The 18-month project included many subtle improvements to the packaging designs, including the addition of soft-touch and debossed features. Brand marks appear on the same part of the package as before, offering visual continuity and brand recognition at the point of sale. Colorado-based All Packaging Co. supplies Oregrown’s new cartons, and Oregon-based Premier Printing Solutions is the brand’s print shop.

Oregrown designs all label and brand graphics in-house. Having American-made packaging “is a huge step in (consumers) trusting the messaging of something being sustainable,” Ruano said. To communicate this message, Oregrown prominently displays “Made in the USA” on the redesigned packaging. “You have to walk the walk” when it comes to sustainability, Ruano added. “I think that’s the biggest thing—being authentic and making sure that we’re following the steps that we portray.” To suggest a product for this department, email magazine@ mjbizdaily.com.

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