Arvin, Calif., Votes Unanimously to Adopt Hemp Ordinance After Publicized Destruction of Local Crop
The 5-0 vote signals a concerted effort by city officials to work with the industry and related institutions in a county that has halted multiple cannabis operations over the past year.
At a city council meeting May 12, Arvin, Calif., officials voted 5-0 to pass a new hemp ordinance. The ordinance for the Kern County city will go into effect 30 days after the recent vote, allowing the city to begin permitting for hemp businesses, said Pawan Gill, the city’s director of administrative services.
Once the ordinance is effective, the city can regulate odor, “public nuisance abatement requirements” and other aspects of hemp growth and processing, Gill told Hemp Grower in an email.
“We have been in discussions with various parties throughout the development of this ordinance that are interested in farming and manufacturing hemp products within the City,” Gill said in the email. “Notable companies that have expressed strong interest in coming to Arvin include Apothio and SLOCO [H]oldings.”
The ordinance provides clarification on which hemp activities will be permitted within the city, while encouraging collaborations between public- and private-sector entities that are involved in hemp, she said. Cultivators and manufacturers must receive a permit from the city or enter into a development agreement with the city to commence operations there.
Developments in Arvin follow the Kern County Sheriff’s Office, California Department of Fish and Wildlife and multiple individuals’ alleged destruction of 500 acres of hemp that Apothio grew near Arvin. The company estimated the crop was worth about $1 billion, according to a complaint it filed in the U.S. District Court for the Eastern District of California.
Gill previously told HG that the alleged destruction of Apothio’s crop was a “catalyzing moment” for city officials to decide to draft an ordinance.
She also pointed to a Kern County ordinance that regulates hemp—passed by the county’s board of supervisors in February—as a contrasting approach. While the two ordinances have some similarities, the largest difference, Gill said, is that the county ordinance “limits hemp cultivation for researchers to 1 acre per permit holder.”
Arvin City Manager Jerry Breckinridge weighed in on the city’s ordinance in a prepared statement. While other cities tend to pass ordinances, as he put it, “in a vacuum,” Arvin city officials requested and receive input from the hemp industry on the ordinance. As it turns out, he said, he discovered multiple advantages of hemp.
“After the research we conducted, I am pleased to see that hemp is not just about CBD oil, there are so many beneficial uses for the product from industrial to environmental,” Breckinridge said in the statement. “I am just glad that Arvin will be instrumental in providing an environment where the hemp industry can flourish, research, and educate."
CV Sciences Q1 Revenue Down 45% From Last Year
With fallout from COVID-19 among other challenges, the company has had to right-size its staff and cut back on salaries.
CV Sciences recently released its first quarter earnings of 2020, illustrating COVID-19’s widespread consequences on even some of the largest companies in the hemp industry.
The San Diego, Calif.-based cannabidiol (CBD) supplier and manufacturer reported first quarter revenue of $8.3 million, down 45% from the first quarter of 2019.
Last quarter, the company lowered its 2020 first quarter revenue expectations to between $6 million and $8 million in anticipation of fallout from the coronavirus. While the company slightly surpassed its revenue projections, it still represented a year-over-year decline of $6.6 million and a quarterly decline of 11%.
CEO Joseph Dowling attributed the sharp revenue decline to, in addition to COVID-19, increased market competition in the natural product category and the ongoing regulatory uncertainty of CBD.
The revenue declines comes even as CV Sciences’ number of stores has grown by 42%, from 3,308 stores in March 2019 to 5,799 stores as of March 2020.
Dowling said during a conference call May 8 that the company has taken initiatives, including lay-offs and salary reductions, to save an estimated $10 million across the company.
“We are pleased with our ability to deliver on expectations amid a very challenging environment,” Dowlings said. “To address the changing industry environment, we right-sized our operations during the quarter to reflect near-term business trends. During the first quarter, in connection with our enterprise-wide cost reduction efforts, we reduced our staff by approximately 20%, reduced salaries across our leadership team and implemented other cost savings initiatives across all company operations.”
Dowlings said last quarter that the company “decided to temporarily slow down our drug development efforts while we wait for certainty in terms of the breadth and scope of the patent protection we expect to obtain.”
Perhaps indicative of spending habits brought about by COVID-19, e-commerce sales for the company made up nearly a quarter of net revenue compared with 15% in the first quarter of 2019.
The company is trying to capitalize on those sales with the launch of its +PlusCBD Oil website, where it exclusively sells its products.
CV Sciences also announced it has received an allowance from the U.S. Patent and Trade Office for proprietary CBD and nicotine formulation as a treatment for smokeless tobacco addiction.
The company’s full earnings report is available on its website.
Paul | Adobe Stock
Florida Cannabis Legalization Campaign Could Face New Legislative Hurdles to Secure Spot on 2022 Ballot
The Florida Supreme Court will decide whether Make It Legal Florida’s adult-use ballot initiative qualifies for the ballot.
Make It Legal Florida gathered enough signatures last year to trigger a judicial review of its ballot initiative to legalize adult-use cannabis in the state, but new laws recently enacted by Gov. Ron DeSantis could present new legislative hurdles for the campaign as it continues its efforts to secure a spot on the 2022 ballot.
Make It Legal Florida, which is backed by cannabis industry stakeholders such as MedMen and Parallel (formerly known as Surterra Wellness), launched efforts last fall to qualify an initiative for the 2020 ballot that would allow adults 21 and older to purchase cannabis at the state’s existing medical cannabis dispensaries (called medical marijuana treatment centers or MMTCs in Florida).
As the Feb. 1 deadline for signatures loomed, Make It Legal Florida and Regulate Florida, which tried to bring a competing adult-use legalization initiative to the state’s 2020 ballot, fell short on signatures, and both campaigns ultimately refocused their efforts on the 2022 election.
Meanwhile, DeSantis signed two key pieces of legislation into law that could present significant obstacles to not only these petitions, but all ballot initiatives in the state, according to Matthew Ginder, partner in Greenspoon Marder’s Cannabis Law Practice Group.
All eyes are now on the Florida Supreme Court as it considers whether to approve Make It Legal Florida’s ballot initiative, as it could set a precedent of what’s to come.
“There’s been some effort by the legislature to make it more difficult for ballot initiatives to make it to the ballot, and they’ve done that through passing bills making it more difficult to collect signatures,” Ginder told Cannabis Business Times.
House Bill 5, which passed during Florida’s 2019 legislative session, changed compensation requirements for petitioners, potentially making it more costly for initiative sponsors to obtain signatures, Ginder said.
In addition, during the state’s 2020 legislative session, the legislature passed Senate Bill 1794, which created a new set of hurdles for sponsors to place initiatives on the state’s ballot.
S.B. 1794 increases the number of verified signatures required to trigger judicial review. Prior to the legislation, an initiative with 10% of the total number of required signatures would trigger a review. Under the new law, 25% of the total signatures are required.
“It puts you further down the road before finding out whether that ballot initiative is in fact valid and can move forward to making the ballot,” Ginder said.
In addition, before the law change, the Supervisors of Elections had 30 days to verify the signatures and seek judicial review on ballot initiatives that met the signature threshold. S.B. 1794 now extends that deadline to 60 days.
“These seem to be efforts to run out the clock on these sponsors who are trying to get [their] petition on the ballot,” Ginder said.
The provision of S.B. 1794 that could threaten Make It Legal Florida’s initiative the most, however, is one that asks the Florida Supreme Court to determine whether a ballot initiative is valid under the U.S. Constitution.
“This may have implications for an adult-use initiative because I can see a party—the attorney general or any other interested party—making the argument that it should not be on the ballot because cannabis remains federally illegal.,” Ginder said. “This could be a significant hurdle.”
The Florida Supreme Court heard oral arguments May 6, Ginder said, and, sure enough, the attorney general’s office made that argument. The attorney general argued that the ballot summary that will be presented to voters under Make It Legal Florida’s initiative is misleading because although Florida law permits adult-use cannabis legalization, federal law does not, and federal law would supersede state law, making the ballot summary moot.
“That really is the key argument in this case, the key issue,” Ginder said. “That will be an unprecedented issue because that’s never been a requirement for Supreme Court review before.”
While the court’s ultimate decision remains to be seen, the outcome will likely set a precedent in the state that could have far-reaching consequences on adult-use legalization efforts.
“I think [the new laws] ultimately raise the stakes on whether Make It Legal’s ballot initiative passes Supreme Court review,” Ginder said. “If it doesn’t pass Supreme Court review and they have to start over, then all of these new laws making it more difficult to get it on the ballot will be triggered.”
Make It Legal Florida’s campaign could also be derailed by another pending threat: Florigrown’s medical cannabis case, which has also been taken up by the Florida Supreme Court.
Tampa-based Florigrown sued the state after being denied a business license in a case that underscores the tension between Florida’s 2016 voter-approved medical cannabis legalization measure and the legislature’s attempts to implement that measure. In short, the case challenges the constitutionality of Florida’s vertically integrated licensing structure and its licensing cap, and the ruling could have significant ramifications on the state’s medical cannabis program, which is ultimately the basis of Make It Legal Florida’s proposed ballot initiative.
“Their ballot initiative incorporates our medical marijuana laws on the licensing structure side, [so the Florigrown case] even has ramifications, potentially, on this amendment and what the licensing structure would be if this amendment gets on the ballot and passes,” Ginder said.
In any case, if the Supreme Court finds that Make It Legal Florida—or any other adult-use cannabis legalization campaign, for that matter—does not meet the new standards to make the ballot, cannabis policy reform in Florida will face a new set of challenges, Ginder said.
For one thing, a legislative effort may be legalization’s only chance at that point.
“I think it’s going to be interesting to see the efforts made at the legislative level for adult-use reform,” Ginder said. “Historically, I would say there was no chance, but [with] cannabis reform and adult-use legalization, there’s a more compelling argument to be made post-COVID-19 because of the direct benefits to the state between jobs and tax revenue. Those are going to be two crucial things that are needed at the state level, … so there’s going to be a good compelling argument to create tax revenue, and one of those ways could be through adult-use [legalization]."
Tinnakorn | Adobe Stock
Most of Colorado’s Failed Cannabis Tests Stem from Microbials: Here’s What Cultivators and Dispensaries Can Do About It
An annual report from the Marijuana Enforcement Division revealed that nearly 15% of cannabis flower and trim failed microbial testing last year.
A growing percentage of cannabis is failing microbial testing in Colorado, and the problem could be stemming from easily overlooked issues in growers’ cultivation facilities, according to Carly Bader, a microbiology analyst for AgriScience Labs, one of the first state-licensed testing facilities.
An annual report from Colorado’s Marijuana Enforcement Division recently revealed that 86.35% of adult-use cannabis flower and trim, as well as 87.30% of medical cannabis flower and trim, passed microbial testing in 2019, meaning that nearly 15% failed for concentrations of yeast and mold that are over the legal limit.
While these numbers hold steady with stats from 2018, when roughly 85% of cannabis flower and trim made the grade, according to AgriScience CEO Frank Traylor, the pass rate has been on a slight decline; Traylor says 2017 saw a pass rate just below 90%, while over 90% of cannabis passed microbial testing in 2016 and 2015.
“It’s been floating between a 10% to 15% failure rate … across our state, and of course everyone is required to do microbial testing, so it’s a broad sample,” Traylor tells Cannabis Business Times.
“This is a really broad sampling—that’s one of the main points,” Bader adds. “This idea of one general number for this industry as a whole is really hard to dissect, but the trends can indicate … significant changes in testing, changes in law or changes in technology.”
Colorado regulations mandate that labs test for yeast and mold in one test, although AgriScience labs can speciate the colonies for its clients upon request.
“At AgriScience, we definitely communicate a lot with the clients about what we see,” Bader says. “We do dig deeper for our clients, but this isn’t something that is regulated, … [so] we don’t have any data from [regulators] on those numbers.”
When a sample fails microbial testing, cultivators do have the option to re-test, Bader says. They must send another small sample from the same batch to two labs, and must pass both tests in order to have the product certified for sale. If either test fails, the product cannot be sold.
“When people re-test and we get that same exact number or something very close, it makes me confident in my testing as well as what we can do for that grow,” Bader says. “We try to communicate with our clients those results and then … possibly [go] out to help them deal with that problem. If it is there, yeast and mold only grow, and you’re only going to have larger and larger contamination if you don’t address that problem.”
Pamela Reach, CEO of Rare Dankness, a vertically integrated cannabis operator in Colorado, says microbial issues are not unusual for cannabis crops in the spring, when the transition from cold, dry, wintery conditions into warmer weather creates optimal conditions for powdery mildew.
“Very rarely do we fail, but everybody’s [cannabis] fails sometimes—it’s just the nature of the game,” Reach tells Cannabis Business Times.
Bader’s experience with helping AgriScience’s clients identify the source of their microbial problem has highlighted some common, usually easy-to-address issues in the industry. For example, she routinely sees yeast and mold growth inside humidifiers, especially those with open drip trays.
“Some people even leave their watering buckets open, unsealed,” Bader says. “They don’t really see the problem there, but it’s something that I see very quickly.”
Yeast and mold issues can also extend beyond cultivators’ facilities and into dispensaries, Bader adds, which is a problem that came to light last year when random microbial and pesticide testing in Denver turned up an 80% failure rate.
“In Colorado, we have a 10,000-colony forming unit,” Bader says. “If I have a sample that comes in at 9,000 at my level [before it’s] in the dispensary, that doesn’t mean that the yeast and mold aren’t going to continue to grow and possibly be over 10,000 when it does reach the consumer.”
To combat this problem, dispensaries should ensure that budtenders follow all personal hygiene and sanitation protocols to keep jars and high-touch surfaces clean and free of possible contaminants. AgiScience Labs often tests dispensary clients’ surfaces for microbial growth to help them understand where they can improve their practices to decrease the risk of yeast and mold in their stores.
“Nobody wants to throw away product that very well could’ve been sold and profited from,” Bader says. “It’s a lot of time consumption and financial effort for every pound. When they pass, it’s great, [but] we consult with our clients when they fail, and a lot of them appreciate the information.”
This year presents new testing challenges for Colorado’s cannabis industry, she adds, as the state rolled out required heavy metals testing on Jan. 1. New regulations mean that AgriScience must constantly evolve its practices and ensure its equipment can meet new testing standards, which isn’t always easy.
“This year, it’s been concentrates that we are additionally testing, and that’s hard on our equipment,” Bader says. “Putting these sticky concentrates through really sensitive equipment can be trying on us, [but] we’re doing our best to quantify and do this properly.”
Cultivators must also rise to these new challenges, and Bader says many of AgriScience’s clients submit samples for R&D testing prior to new regulations taking effect to ensure that their products are compliant.
Heavy metals testing has been particularly challenging for some growers, she adds, as heavy metals occur naturally in the soil and water in some areas of the state. Bader has also seen cannabis fail heavy metals testing due to cultivators using fish media in their soil.
“Fish is great—people use aquatic systems for aquaponics,” she says. “But ground-up fish or some of this bone meal [have] different heavy metals due to the fact that fish are eating smaller fish and they’re at the bottom of that food chain. These are things you don’t know until you try.”
While much of AgriScience’s work is a balancing act between educating businesses and keeping consumers safe, the company has amassed a storehouse of data since its launch in 2014, which it hopes will continue to move the industry forward as it evolves.
“There’s no academic research going on about yeast and mold that can contaminate crops like this,” Bader says. “It’s really unprecedented work that is going to be a huge part of our society."
Former Reagan Administration Official Calls War on Drugs ‘a Terrible Mistake’
District Cannabis co-founder Edward L. Weidenfeld served under six presidential administrations. Here, he shares his views on the past, present and future of cannabis legislation.
Edward L. Weidenfeld’s close affiliation with the Reagan Administration was based on many shared political ideologies; the war on drugs, however, was not one of them.
“The war on drugs was never a priority or an interest of mine,” he says.
But what may have started as indifference evolved over the years into misgivings and then discord, propelled by his sense of social justice and his diagnosis of Parkinson’s Disease (symptoms of which he treats with cannabis).
The latter would eventually lead the former Reagan Administration staffer down a new career path: In early 2018, he co-founded the medical cannabis cultivation operation Phyto Management in Washington, D.C., followed by Hagerstown, Md.-based Maryland Cultivation and Processing, which was licensed in 2019 and expects it first harvest in June or early July this year, according to Weidenfeld. Both businesses market the shared District Cannabis brand.
His earlier political career offered a rich foundation on which to build a foray into the newly legal cannabis space. As a member of the White House Office of Presidential Personnel and an appointee to the Council of the Administrative Conferences of the United States, among other roles, Weidenfeld had a front-row seat as the Reagan Administration further fueled former President Richard M. Nixon’s war on drugs.
He was working in the White House during the time First Lady Nancy Reagan began championing the famed “Just Say No” anti-drug campaign and when President Ronald Reagan’s declared his own war on drugs in 1982.
Weidenfeld also served under President Nixon as director of the energy staff, U.S. House Committee on Interior and Insular Affairs from 1971-1973. “For years he was best known as a GOP lobbyist and fixer,” reported the Washingtonian in 2002.
Here, Weidenfeld, who is also a top-rated attorney and founder of The Weidenfeld Law Firm, shares his recollections of the Reagan-era war on drugs; what he sees as the fates of currently proposed legislation, such as the Secure and Fair Enforcement (SAFE) Banking Act of 2019; and his thoughts on the likelihood of cannabis being removed from Schedule I of the Controlled Substances Act.
Noelle Skodzinski: The Reagan Administration is well-known for its opposition to drugs, including cannabis, which was largely pushed out to the masses through the First Lady’s “Just Say No” advertising campaign. Did you support this and, if so, what led you to change your minds?
Weidenfeld
Ed Weidenfeld: I came to the Reagan Administration and to President Reagan out of a belief in small deficits, reasonable national defense, a libertarian view that said people should be free to pursue that which doesn't damage others. The war on drugs was never a priority or an interest of mine. The people who fought the war on drugs, the Drug Enforcement Administration, had people who I didn't even desire to have social conversations with because they were such true believers.
But my theory is “Just Say No” came from a different quarter. It came from Mrs. Reagan who wanted to be a First Lady that stood for something that would improve the lives of her countrymen. I think her motive was reasonable. She somehow fastened on to “Just Say No,” and suddenly you had the administration [behind it]. … It pleased the president to see action taken on something Mrs. Reagan cared about.
I think it came on the radar rather casually, but it did become a priority, and it was a terrible mistake. It demonized a substance which has tremendous therapeutic potential, was used as a means of social control over people of color, immigrants. It really created the abominable private prison system where you gave the care of prisoners over to the lowest bidder, and virtually guaranteed with the sentencing act [the Anti-Drug Abuse Act, which mandated minimum sentences for certain drug crimes], the private investors would get a return on their investment.
Skodzinski: So, with your decades of experience in politics, you've seen shifts in politicians’ views on cannabis. Can you provide some insights into what you have seen and how far politicians in your view have come or have not come in getting away from the “Reefer Madness” mindset?
Weidenfeld: Well the “Reefer Madness” mindset still … attracts a majority of the Congress. Witness the coronavirus aid programs, all of which expressly exclude medical or legal cannabis. I have seen people change their minds, but there really is still a stigmatization publicly, … like some of the pro-choice cheerleaders. Privately, when a member of their family has a condition or a disease that responds to cannabis, they're taking a very short step toward changing their minds.
It's like so much of the cannabis history, people acting out of ignorance or economic gain or pressure. And let's not underestimate the influence of the pharmaceutical industry, the liquor industry, the tobacco industry, their allies, the anti-gun control people, the evangelicals to perpetuate the image of marijuana as a gateway drug. …
Now, demographically, we've had two presidents who have told the public that they've at least "tried" cannabis—Clinton and Obama. And I think … we’re now moving toward a demographic wave that is friendlier to cannabis.
Skodzinski: With many cannabis businesses deemed essential during the current coronavirus pandemic, do you see this causing a shift in Washington and how it treats cannabis businesses with regards to taxes (280E) and banking?
Weidenfeld: I think we're slowly, slowly … moving, but I don't think we are going to see [the removal of] 280E, which effectively taxes the marijuana industry the tax everyone else pays plus 40%. To my knowledge, it's the only time the tax code imposes a punitive tax on an industry. We were excluded from the coronavirus aid legislation. The biggest thing we have going for us, aside from the demographics and the good that the plant does, is that this industry employs a lot of people and will generate large amounts of taxes for states and localities who are the most injured financially at the moment.
Skodzinski: What are your thoughts on the likelihood of the Secure and Fair Enforcement (SAFE) Banking Act of 2019 passing?
Weidenfeld: I don't think much is going to pass the remainder of this session, but I would be surprised if early next session it doesn't pass. Because in addition to being the right thing to do, the very strong lobby of the banking industry—realizing these are no longer crumbs on the table, but big dollars—is turning their lobby on. And that combined with the interest of the states in not having a system that effectively has risk of thievery … to their people, doesn't get accounted for. … So, the stars are lining up for the Secure Act.
Skodzinski: What about the more recently introduced Emergency Cannabis Small Business Health and Safety Act?
Weidenfeld: If there were justice, that would be a no-brainer. But you have to understand, anything having to do with cannabis, liberalizing cannabis laws and regulations, is red meat for the red states. … And, unfortunately, I think there is a cheap and easy way for a member of the House or Senate to show that they want to preserve the existing order by casting a “no” vote on cannabis.
Skodzinski: What else do you think Washington can do to better serve the cannabis industry, and how likely do you think those things are to happen?
Weidenfeld: I don't think Washington is likely to do anything for the cannabis industry until [the industry] becomes a significant participant in the fundraising game for campaign finance. I find it hard to believe that the government is going to do anything for the industry at this time, [but] I think they will do something for their constituents who find cannabis to be therapeutic. I think there is a growing awareness of the past demonization, and so the government may do an educational program. The biggest thing the government can do obviously is get marijuana off of Schedule I, conduct some real clinical studies and treat the industry as any other legitimate business is treated. And the industry is waiting to see if Joe Biden can overcome his personal experience or position against drug or marijuana use.
And besides that, stay out of the way of the organic growth a new industry.
Skodzinski: How likely do you think it is that marijuana will be rescheduled?
Weidenfeld: I see it as inevitable, but it's going to happen soon if there is a change in administration or in the Senate. Schedule I is an inappropriate place for a plant that has a history of thousands of years of great benefits, no damage that's yet been discovered, and the sooner the science is completed, the more comfortable people are going to be with a formerly stigmatized substance that has made sheltering in place far less burdensome for a substantial segment of the population.
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