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Texas lifts ban on smokable hemp, with caveats

Texas lifts ban on smokable hemp, with caveats

Texas lifts smokable hemp ban but it can't be grown in state

An appeals panel in Texas issued a mixed judgment Thursday in a lawsuit challenging the state’s ban on smokable hemp. Regulators may enforce a ban on the processing and manufacture of products intended for smoking or vaping, the court ruled, but it cannot prevent such products made elsewhere from being sold in the state.

The decision creates a situation in which consumers may be able to freely purchase smokable hemp flower and hemp-derived CBD oils for vaping, but only if the products are produced outside Texas.

Four Texas companies challenged the ban in a lawsuit last year, asking the court to declare the restrictions unconstitutional and allow hemp products intended for smoking or vaping to be produced and sold legally. In response, a state judge eventually put the entire ban on hold, preventing the government from enforcing it until the matter could be resolved in court.

In Thursday’s ruling, a three-justice panel of the Third District Court of Appeals drew a distinction between the processing and manufacturing of smokable hemp—which lawmakers strictly prohibited its production when they legalized hemp in 2019—and distribution and sales, which regulators at the Texas Department of State Health Services (DSHS) forbade under a rule adopted a year later.

Writing for the panel, Justice Melissa Goodwin reasoned that lifting the ban on product sales was justified because the DSHS restriction went beyond the scope of lawmakers’ manufacturing ban.

“The Legislature required that the Department’s rules must reflect the principle that ‘the processing or manufacturing of a consumable hemp product for smoking is prohibited,’ but did not mention retail sale,” the judgment says. “Nevertheless, the Department adopted a rule that banned not only the processing and manufacturing of consumable hemp products for smoking, but also the distributing and retail sale of such products.”

On the other hand, the panel’s ruling will allow lawmakers’ ban on production and manufacturing of smokable hemp products to take effect. Thursday’s ruling reversed a lower court’s decision to prevent the state from enforcing that part of the ban.

“Because the Hemp Companies never provided ‘a plain and intelligible statement of the grounds’ to enjoin the enforcement of rule 300.104’s bans on manufacturing and processing consumable hemp products for smoking, we conclude that the trial court abused its discretion in granting the temporary injunction and enjoining the enforcement of that portion of the rule,” Goodwin wrote.

Advocates in favor of broader legal access to cannabis products emphasized the significance of the court’s decision to allow smokable hemp to be sold in the state. But they lamented the fact that in-state manufacturing of the products will remain illegal.

“The reversal of the ban on distributing and selling smokable hemp products is a big win for Texas farmers and hemp businesses. It is extremely important that regulatory overreach is kept in check so that Texas companies are not prevented from excelling in this market,” Jax Finkel, executive director of Foundation for an Informed Texas, told Marijuana Moment on Thursday. “I am hopeful that manufacture portion of the suit will end in a similar opinion.”

Some Chicago cannabis license lottery winners are selling to the highest bidders

Some Chicago cannabis license lottery winners are selling to the highest bidders

Chicago cannabis license winners already selling off licenses

State law doesn’t prohibit the new licensees from unloading for millions of dollars and potentially “giving it away to the white boys again,” one critic said.

The applicants waited for more than a year for a chance to jump into Illinois’ booming weed industry.

But now that they have won lucrative cannabis licenses to open marijuana dispensaries, craft grow operations or other related businesses, some could sell the licenses before ever opening up — potentially collecting millions in the process.

With the state’s troubled cannabis licensing process careening toward a conclusion, corporatized weed firms and other cash-rich buyers are now expected to go after the new licenses — many of which are slated to go to so-called social equity applicants, a designation created to boost diversity in the lily-white weed industry.

Rickey Hendon, a former state senator who won a dispensary license in last week’s lottery, acknowledged he and other companies are now entertaining a host of proposals to sell to owners with deeper pockets. A court order in a pending lawsuit has, however, blocked the formal issuance of the pot shop permits for now.

“Of course some of the smaller companies are listening to all kinds of offers,” said Hendon, who became a de-facto spokesman for social equity candidates after they were shut out of the initial licensing process a year ago. “I’m listening to all kinds of offers.”

Hendon, who said he is merely exploring his options, believes a cannabis license could fetch between $3 million and $15 million, depending on which statewide region it allows a buyer to set up shop.

An industry source, however, estimated that each of the 185 new pot shop permits is likely worth much less, between $1 million and $3 million. The source pegged the going rate at $4-$5 million for each of the 40 new craft cultivation licenses, which were announced last month along with other permits to infuse and transport cannabis products.

But critics say the potential massive selloff goes against the spirit of the legalization law and the recent trailer bill Hendon helped write, both of which went to painstaking lengths to give people of color ownership in the highly profitable industry. What’s more, some fear predatory forces will attempt to take advantage of social equity firms trying to turn a quick profit.

Edie Moore, a fierce proponent of diversifying the industry who serves as the executive director of Chicago NORML, a marijuana advocacy group, couldn’t hold back her frustrations about the prospect of social equity firms now dumping cannabis licenses so many in the state fought hard to get to them.

“I’m not upset for people who want to get a payday. But I thought that they had got into this business to be in this business, not to just make a quick buck,” said Moore, who helped write the latest pot law and has already won a dispensary permit.

“That’s what we were fighting for,” she added. “For people to build generational wealth on owning and building and creating something within their communities, not giving it away to the white boys again.”

Canopy Growth execs earn raises, bonuses after cannabis giant loses CA$1.7 billion

Canopy Growth execs earn raises, bonuses after cannabis giant loses CA$1.7 billion

canopy growth executives received huge bonuses despite losing CA $1.7 billion in 2020.

Executives for cannabis producer Canopy Growth received more than 4 million Canadian dollars ($3.2 million) in cash bonuses after making “solid progress in the year,” according to a regulatory filing, even as the company lost CA$1.7 billion and laid off hundreds of workers.

The Smiths Falls, Ontario-based company disclosed the executive compensation figures for fiscal year 2021 in a proxy statement sent ahead of its annual general meeting, scheduled for Sept. 14 via webcast.

The executives’ compensation packages consist of salary as well as bonuses awarded as part of the company’s short- and long-term incentive plans. For fiscal 2021, which ended March 31, the board approved short-term incentive plan bonuses totaling CA$4 million for five of the company’s top executives.

The company’s long-term incentive-plan (LTI) bonuses, typically granted annually in March, were awarded June 9, 2021. The LTI bonuses were not reported in the total compensation table because they were issued after the fiscal year ended.

“On a go forward basis, we have determined to fix the regular timing of our annual LTI grants to occur in June of each year, beginning in Fiscal 2022,” the proxy noted.

“As such, no LTI awards were granted in Fiscal 2021, with the prior LTI grants having been made in late March 2020 at the end of Fiscal 2020.”

In an emailed statement, a company spokesperson told MJBizDaily that “Canopy Growth’s executive compensation supports our strategy of attracting and retaining top talent that is necessary to support the company’s ambitious growth plans and is structured to ensure close alignment between the interest of shareholders and leadership.”

Bonuses

The company uses four performance measures related to corporate objectives to help guide short-term bonus payouts where executives earn an annual cash bonus.

Free cash flow has the heaviest weighting (50%) among the performance measures, followed by net revenue (20%), adjusted EBITDA (20%) and individualized objectives (10%).

The company failed to meet its fiscal 2021 goals for net revenue and adjusted EBITDA, but the goals for free cash flow and individualized objectives were achieved.

According to the proxy, Canopy aimed for net revenue of $455 million but came in at $414 million.

Free cash flow was negative $478 million, or half the shortfall the company anticipated.

Adjusted EBITDA, which serves as a measure of profitability, came in at negative $258 million, a slightly worse performance compared with the company’s objective of negative $246 million.

Canopy’s short-term cash bonuses amounted to:

  • CA$2.2 million for David Klein, CEO.
  • CA$579,000 for Mike Lee, chief financial officer.
  • CA$659,000 for Rade Kovacevic, president and chief product officer.
  • CA$360,000 for Julious Grant, chief commercial officer.
  • CA$351,000 for Phil Shaer, chief legal officer.
More states impose cannabis potency laws

More states impose cannabis potency laws

states are imposing cannabis potency restrictions and taxes

In addition to THC limits, some states are likely to adopt potency-related taxes.

Many states have already established or are planning to establish new laws for the legal cannabis industry based on the level of tetrahydrocannabinol (THC) in products.

In 2020, Illinois imposed a potency-related tax for all marijuana sales, followed by New York this past March. According to ABC News, Vermont plans to limit the amount of THC in products when the state opens up its legal cannabis market in 2022, with the percentage of THC in any amount of recreational pot set at 30% for flower-form marijuana and 60% for concentrates.

Virginia’s new legalization law aims to give the state’s future Cannabis Control Authority the power to establish THC limits in recreational products and put a cap on THC in medical marijuana. Currently, in states where it’s legal, marijuana is taxed on the established sale price or weight. But with the new laws in Illinois and New York, more states are likely to follow their lead and adopt potency-related taxes on recreational sales.

‘Recriminalization’ at play?

While these changes in state laws are aimed at discouraging the production and sale of highly concentrated cannabis products, the idea of calculating taxes based on potency is getting some pushback. According to the National Organization for the Reform of Marijuana Laws (NORML), this is a type of “recriminalization” of sorts. “[The] consumer demand for [high-potency] [cannabis] products is not going to go away, and recriminalizing them will only push this consumer base to seek out similar products in the unregulated illicit market,” said Paul Armentano, deputy director of NORML.

According to the United Nations Office on Drugs and Crime’s World Drug Report 2021, cannabis potency has quadrupled over the past two decades, while the percentage of adolescents who perceived the drug as harmful fell by as much as 40%.

Clearly, many states are taking this increase in cannabis potency as a serious issue. In fact, some states have already begun limiting the amount of THC milligrams contained in a single serving and packaged cannabis products, while others have prohibited the use of high-potency cannabis altogether. Whether these practices help effectively reduce the production, sale or harmful use of products containing high THC levels remains to be seen.

Denver gives first cannabis transporter license to felon who trafficked plant

Denver gives first cannabis transporter license to felon who trafficked plant

first cannabis transport license issued in Colorado

Two days after Denver issued its first-ever cannabis delivery license to a dispensary, the first transporter license was granted to a company whose co-founder suffered legal consequences for trafficking the substance decades ago.

Ari and Karina Cohen, co-founders of the cannabis transportation company Doobba, were awarded the license Thursday.

Applicants who qualify for Denver’s social equity designation are the only ones who can apply for cannabis transporter permits until July 1, 2024. After that, licensed cannabis stores can conduct their own delivery services.

Established cannabis stores must obtain a delivery license and they must contract with a transportation license holder until the July sunset date.

Ari qualified as a social equity transporter because he was convicted of a cannabis-related felony about 30 years ago, Karina confirmed.

“Our business model is to partner with very specific dispensaries,” she said. “Our biggest thing in this whole journey is to end cannabis prohibition.”

Colorado law specifies social equity applicants must meet one of three criteria as well as have at least a 51 percent ownership of the company.

The applicant must have lived in the state for at least 15 years between 1980 and 2010 in a census tract designated as an opportunity zone or disproportionate impacted area; or they, a parent, guardian, sibling, spouse or child were arrested, convicted or subject to civil asset forfeiture related to a cannabis investigation; or the applicant’s yearly income the year prior did not exceed 50 percent of the state’s median income.

She said Doobba has been talking to at least three cannabis companies about partnering with them for delivery services, and the company will start with two drivers.

Cohen said she’s not sure when her company will finalize a contract with a dispensary, but that she hopes to do so within the next couple of weeks.

She also said Doobba intends to help other social equity applicants navigate the licensing process because “it can be confusing.”

“Ari and I both have a lot of business acumen, and we want to pay it forward and help others stand up and be successful,” Cohen said.

Strawberry Fields received the first delivery permit for a licensed cannabis business on Tuesday, and representatives said they have been in talks with Doobba.

THC-O Acetate: Will it replace Delta 8 THC?

THC-O Acetate: Will it replace Delta 8 THC?

What is THC-O Acetate and is it like Delta 8 THC?

As more states begin banning and regulating Delta 8 THC, manufacturers are looking for alternatives to skirt the rules. Bring in THC-O Acetate.

Before we dive into the latest designer cannabinoid that aims to replace Delta 8 THC as it becomes banned in several states and regulated in some others, let’s briefly run through what Delta 8 THC is itself.

All cannabinoids, from CBD to THC and beyond begin as CBGA. Because of the shared molecular structure of cannabinoids, manipulating them is simpler than it may seem. While Delta-8 is relatively new, producers have been using these methods to manipulate cannabinoids for a long time to find exotic new cannabinoids.

While Delta-8 THC exists in a wide range of cannabis strains, it is in minuscule, trace amounts. To extract and purify Delta-8 from raw plant material with less than one percent of the targeted cannabinoid is unprofitable. This is why producers have begun converting other, more prevalent cannabinoids like CBD and Delta-9 THC into Delta-8.

Through a synthetic isomerization process, CBD is combined with a solvent to create Delta-8 THC. This is why the most popular products are vape cartridges and gummies. Cannabis cannot produce enough Delta-8 on its own.

Why Delta 8 THC is being banned

If you read the above section and started thinking, “That sounds pretty similar to those designer cannabinoids like spice that hurt a lot of people”, you would be on the right track. That is why over a dozen states have already banned Delta 8 THC.

Due to grey areas in the 2018 Farm Bill which legalized hemp and all of its derivatives (besides Delta 9 THC), producers of Delta 8 believe they technically aren’t breaking any laws. However unlike CBD which was immediately popular and thus regulated by the FDA for safety, Delta 8 has had no such treatment.

In 2020, the DEA released a set of rules for hemp production in the country. This ruling states that any naturally occurring tetrahydrocannabinols in the hemp plant that has a Delta 9 THC percentage below .3% is not a controlled substance under the Controlled Substance Act. In other words, it would seem like Delta 8 in the clear.

However the DEA also includes that for synthetically derived tetrahydrocannabinols (like Delta 8 which is created synthetically), the concentration of D9 -THC is not a determining factor in whether the material is a controlled substance. All synthetically derived tetrahydrocannabinols remain schedule I controlled substances. In other words, maybe Delta 8 is not so in the clear.

For the states that have already banned Delta 8 THC, it seems the easiest solution to a product that the FDA and DEA have made no mention of regulating. For producers however, THC-O Acetate is the solution.

What is THC-O Acetate?

While Delta 8 THC occurs in low concentrations in cannabis that must be extracted and isolated, THC-O Acetate — commonly called ATHC or THC-O — is not naturally occurring in the cannabis plant and can only be made synthetically.

THC-O is a man-made cannabinoid produced by using specific chemicals to acetylate THC. Acting as a metabolic prodrug for THC itself, THC-O works in the same manner as heroin does as a metabolic prodrug for morphine. That alone is enough to rub many cannabis users the wrong way, especially whole plant advocates.

THC-O Acetate can also be made from Delta 8 THC, so in states where it has been banned and producers may have a bulk supply of Delta 8, it can be converted relatively easily. And what truly makes THC-O so popular is the effects users feel.

Traditional THC Molecule:

Delta 9 THC vs THC-O AcetateTHC-O Acetate Molecule:

What is THC-O Acetate and is it safe?

A better high than Delta 9?

According to user reports and the little science behind it, THC-O Acetate has been shown to be two to three times stronger than Delta 9 THC. You read that right. THC-O can be 300% more potent than traditional Delta 9 THC.

Users have claimed that THC-O Acetate is a much more introspective and psychedelic experience compared to Delta 9 or Delta 8 THC, which is likely due to the extreme potency. Similarly to Delta 8 THC, THC-O can only be made through isolation, which means most products will be either a vape cartridge or edibles.

While for most, normal Delta 8 or Delta 9 THC does the trick just fine and taking such a concentrated product would be excessive, there is a real appeal for medical applications of THC-O Acetate. For some, traditional Delta 9 doesn’t provide enough relief from pain, anxiety or other issues.

Due to its potency, many believe that THC-O could be a great beneficial medicine for those who want to use cannabis but need a more concentrated dose that isn’t easily attainable through traditional consumption. With that said, THC-O Acetate is treated similarly to Delta 8 currently.

That means in states where Delta 8 has already been banned, you may be unable to have THC-O products delivered, or find them at smoke shops. However since there is so little information on THC-O, few states actually know about it, which means distributors may be able to get away with it for a while.

Is THC-O Acetate the new designer drug?

Of course for now it is too soon to say if THC-O is likely to end up in a similar grave to Spice or K2. These were synthetically created cannabinoid products that ended up hurting a lot of people, leading them to be banned across the country. However the way these products skirted the law was by minutely adjusting their chemical makeups every time one was banned.

Because the government would ban specific makeups of these products, small adjustments made them different products technically. It is always possible, being a fully synthetic creation, that THC-O befalls a similar fate. In grey markets, profits typically rise above safety. As competition grows, just like Delta 8 became more widespread, the same will likely happen to THC-O Acetate.

Producers will try to create stronger and cheaper versions of the drug, the latter effort being that which leads to danger. We all saw what happened when illicit market vape cartridge producers tried to cut costs by including Propylene Glycol and Vitamin E Acetate in their products. This resulted in hundreds of hospitalizations and even deaths.

With any grey or black market cannabis products, it is always on the user to ensure they are getting a safe and reliable product. If demand for THC-O Acetate grows enough, you can bet there will be a market for it.

However as a non-natural cannabinoid, THC-O isn’t measured with most testing methods used for cannabis currently. While some have claimed to created a reliable process for measuring THC-O, nothing has become the standard. Due to this it might be a while before there are truly reliable providers of THC-O products, but that hasn’t stopped consumers before, and likely won’t this time around either.

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