Canopy Growth Corp., one of the largest cannabis producers in the world, filed a federal lawsuit in late 2020 against GW Pharmaceuticals, the UK-based cannabis business behind the FDA-approved Epidiolex. At issue is an extraction method that Canopy asserts is newly protected by patent.
Read the full complaint below.
Canopy Growth alleges that GW Pharmaceuticals produces Epidiolex via the protected CO2 extraction method. Since its 2018 approval from the FDA, GW then distributes Epidiolex across the U.S. and elsewhere at $1,235 per 100mL bottle. “GW reported approximately $366 million in net product sales of Epidiolex in the United States in the first nine months of 2020,” according to the lawsuit.
Although the patent protection on this extraction method is a new issue for Canopy Growth, an earlier iteration of the patent in question was published in 2000. Its contents were acquired by Canopy Growth Corp. amid an acquisition of Germany’s C3 Cannabinoid Compound Company (founded by Bionorica SE), a company with which GW allegedly considered partnering in 2016 for its cannabinoid processing work.
Canopy Growth specifically points to two claims in its patent, asserting that GW Pharmaceuticals performs the described actions in its manufacture of Epidiolex.
For example, in Claim 1 of the patent, Canopy Growth writes:
A process for producing an extract containing Tetrahydrocannabinol (THC) and/or cannabidiol (CBD), and optionally the carboxylic acid thereof, from a cannabis plant material or a primary extract thereof, said processing comprising:
(1) Subjecting the cannabis plant material or primary extract thereof to CO2 in liquefied form under subcritical pressure and temperature conditions to extract cannabinoid components; and
(2) reducing the pressure and/or temperature to separate tetrahydrocannabinol and/or cannabidiol, and optionally the carboxylic acids thereof, from the CO2.
This lawsuit is the first action Canopy has taken to argue its patent. Marijuana Momentfirst reported on the contents of this lawsuit in December.
The case echoes the UCANN v. Pure Hemp lawsuit that we covered in 2019. UCANN went after Pure Hemp for cannabis tincture formulation that fell under a patent for “liquid cannabinoid formulations wherein at least 95% of the total cannabinoids” is THCa THC, a combination of THCa and CBDa, and a combination of THC and CBD. In other words, the patent covered a broad swath of the cannabis concentrate market segment.
In April 2020, UCANN filed for Chapter 11 bankruptcy, and the federal lawsuit was administratively closed by the court.
Common Citizen, a vertically integrated business in Michigan’s medical and adult-use cannabis markets, brought on Allison Hornev as the company’s chief marketing officer. Hornev arrives from Bell’s Brewery Inc., another stalwart of the Michigan landscape.
The move is a good example of that bridge between the breweries and cannabis cultivation facilities. Each market tends to connoisseurs and new customers alike, making the story behind a brand incredibly important. Before Bell’s, Hornev worked as Kellogg’s.
“Through Allison’s marketing expertise, she will help our continued efforts to identify and serve the unique needs of every patient and adult-use customer at all Common Citizen retail and wholesale locations as we continue expanding our footprint here in Michigan and beyond,” CEO Mike Elias said.
We spoke with Hornev about her plans for Common Citizen and the cannabis business in general.
Eric Sandy: What brought about your interest in the cannabis space and in Common Citizen?
Courtesy of Common Citizen
Hornev
Allison Hornev: It’s funny: I wasn't interested in the cannabis industry. I was very happy working for Bell’s. It's an amazing company with an amazing culture. But then I met one of the founders [of Common Citizen], and we just started having conversations and started talking about the opportunity. And at that point, I got to know the brand more and know the founders and understand what they're wanting to do with cannabis and in this very busy market that we're in. That's really what turned me on to it: that great opportunity that Common Citizen has to not just sell cannabis but make a difference. You see that coming through our commitment to safety and safe products and the idea of cannabis for humanity: How do we debunk the stigma so people feel comfortable using it to help them, or using it however they choose. That, to me, is really what made the difference. It just stood for more in my eyes.
ES: Common Citizen has some interesting terminology that customers can use, whether it's “chapters,” “citizen advisers” and, of course, all the in-store categories for different cannabis products. Could you talk a bit about why that is important?
AH: From a business standpoint, it allows you to stand apart in a very crowded market. But, honestly, it's going to get more crowded before it consolidates, right? So, it allows you to stand apart, but it also allows you to talk to the people, to the consumers and to our patients from a different voice. And to me, that voice is a more caring voice. That voice is a more passionate voice and a more approachable voice. And I think that is really powerful.
ES: We featured Common Citizen in a piece about the design of their Flint store. Could you talk a bit about how things like interior design can help shape the story of a company?
AH: I think oftentimes it's overlooked, right? “We're just going to put up a store and sell some cannabis.” Again, as a lot of things with Common Citizen, it’s more than that. It’s creating an environment that is welcoming, that is very concierge-based and it’s helping the patient or the consumer through that journey and spending time with them. You look at that Flint store and it's got that area off to the side with the couches, where we can sit down and have a conversation about what it is you're looking for or what it is you need or what your desires and hopes and dreams are. That’s where we can really get to know you and provide you something that will be beneficial and provide you an experience that you then enjoy—or one that helps you. Then you do feel more comfortable every time you come back. And I think the interior design just builds and allows for that to happen
ES: And certainly a lot of those same ideas are at play over at Bell's. Is there a helpful sense of marketing crossover that might be a play between craft beer and cannabis?
AH: Yeah, it's fascinating. On the surface right there, you've got the 21-and-plus audience. If you look at craft beer and beer in general and adult beverages—and it is incredibly saturated, there's a lot of players—and you look at how Larry [Bell] has built this business to stand apart and stand for things for the 35 years he's been in business. He has built what Bell's stands for now and its quality and its consistency and its great branding, and it's continuing to provide new and different things. And then when you come to the cannabis industry, again, it's so oversaturated and there's so much out there and it can be, to a consumer, to somebody that's new into it, overwhelming just like beer. So, how do I take what I learned through my years at Bell's—and even before that at Kellogg’s—and apply that here to help those consumers in that space and stand for those key things that are so important right now?
For us at Common Citizen, it’s safety. And that leads to quality and that leads to approachable brands that aren't intimidating—brands for that common citizen, you know? That’s what we're built off of. Just in talking to you in this conversation, it gives me goosebumps. It makes me smile. But this is something we're out to do. We're out to help people and help them feel comfortable with that decision.
ES: I did want to touch on Michigan in particular. What does it mean to have Michigan as a backdrop for Common Citizen?
AH: It provides just tons of opportunities. When you look at Michigan, you see, just in a short time, where we've come with cannabis. From medical and then phasing into rec, the future is so incredibly bright for Michigan in this space. Leaning into our roots and being true to where we've come from, that’s important. The founders are all boys that grew up in Detroit. There's such heart there. And it's such a great story for us as a brand.
I think Michigan is going to be a state to look at in this industry, and it's going to be sought after. People are going to learn a lot, and other states are going to learn a lot from what we're able to do here at Michigan.
And I think that's why it's so important that we are leading by example and that we are building a GMP facility, even though it's not necessary to do so in the regulations. We feel that that's the right thing to do to ensure that safety. If we can lead by example here in Michigan and get some friends to come along and do that with us, I think that will help other states learn from us. That will help other brands learn from us. You look at beer 100 years ago, and they were just coming back online from Prohibition and there was a lot of work to do. I don't think we're 100 years back, but there's a lot ahead of us.
ES: With the new year upon us, what are some of your short-term goals at Common Citizen?
AH: Honestly, I'm still getting my feet wet. Short-term, I've got to just be a sponge. It is absolutely my goal to talk to everybody here, from the greenhouse to the executive team, to the investors—talk to our retail locations and our budtenders and talk to our wholesalers and spend time with them understanding the market in general and what the needs are. I believe that there are needs currently unmet, so how can we do that? How can we stand apart? It is absolutely my goal to be the leader in Michigan, and to do that in a couple of different ways. Not just through volume and sales, but through advocacy and through safety and through being that shining star in this very crazy industry right now. That is both long-term and short-term, and I think the team here has already set us up for great success there. Now, it is my job and responsibility to continue to carry us there.
Kansas Begins Commercial Hemp Licensing Program
The Kansas Department of Agriculture started its first-ever commercial industrial hemp program Jan. 8 as part of an effort to expand a market that holds great financial potential.
Kansas is seeking license applications until March 15, 2021, for producers to grow or cultivate hemp commercially. The state first developed a plan to govern the program in April 2020 in response to the 2018 Farm Bill that removed domestic hemp production restrictions.
The application requires a fingerprint-based state and federal criminal history check that must be completed no more than 30 days before the application is submitted. Producers must also pay a non-refundable $100 application fee and a $1,200 license fee if conditionally approved. Other relevant deadlines and fees, such as those for the criminal background check and sampling and testing, can be found in the application guidelines.
Hemp's Financial Potential
The Kansas Department of Agriculture found in a September 2020 report that the hemp market accounted for nearly $4.5 million in revenue as growers harvested 832,950 pounds of hemp over 1,758 acres. These limited profits were due, in part, to a lack of knowledge of how to best grow the crop in the state, the report added.
However, Kansas estimates a significant increase in value for the state's hemp crops in the years ahead, with an annual value potentially rising to $22 million and a per-acre value far exceeding other more traditional crops, such as corn and soybeans.
For instance, the state estimates that floral hemp could return as much as $3,500 per acre in profits, with grain hemp worth $400 per acre and $150 per acre for fiber hemp. By comparison, sorghum has a net worth of $40 per acre, with corn worth $35 and soybeans worth $2 per acre, the report found.
But this projection and the crop's overall future depends on two factors, the report found.
First, there needs to be an improvement in hemp yields in the coming years, and the state is not sure at this point whether that will happen or how quickly it will take place. Another factor is the future demand for hemp and the likelihood of farmers finding somewhere to sell their crops once harvested. This projection focuses on the demand for CBD products derived from floral hemp that has, by far, the greatest per-acre value. The market would also benefit from additional uses for hemp grain, such as animal feed, the study added.
While the crop's future is uncertain, pending more time and data to study the issue, the state does see a lot of promise financially. "As growing practices become clearer and the market stabilizes, it appears hemp may become a profitable crop for Kansas growers," the report concluded. "Floral hemp can be an expensive crop to grow but also has the potential to generate much larger revenues than other traditional Kansas crops."
New York Medical Cannabis Industry Association Announces New Executive Board
NYMCIA has elected new leaders in advance of the 2021 legislative session.
New York, January 8, 2021 – PRESS RELEASE – In anticipation of a busy and productive state legislative session in Albany, the New York Medical Cannabis Industry Association (NYMCIA) is announcing new members of its leadership team who will play key roles in the upcoming cannabis legalization debate.
Aquila Powell, Senior Director of Government Affairs for Acreage Holdings; Marcia Maxwell, Eastern Regional Director of Government Affiars for Cresco Labs; Dina Rollman, SVP, Government & Regulatory Affairs at Green Thumb Industries; and Jeremy Unruh, SVP for Public and Regulatory Affairs at Pharmacann are part of NYMCIA’s expanded executive board, which now includes the following:
President, Ngiste Abebe, Director of Public Policy at Columbia Care
Chair, Marcia Maxwell, Eastern Regional Director of Government Affairs at Cresco Labs
Vice Chair, Matt Harrell, Vice President of Government Affairs for Curaleaf
Vice President, Aquila Powell, Senior Director of Government Affairs for Acreage Holdings
Vice President, Dina Rollman, Senior Vice President of Government and Regulatory Affairs at Green Thumb Industries
Treasurer, Barrington Rutherford, Senior Vice President of Real Estate and Community Integration for Cresco Labs
Secretary, Jeremy Unruh, Senior Vice President for Public and Regulatory Affairs at Pharmacann
The association was created in 2016 to protect the interests of patients and advocate for easier and more affordable access to medical cannabis across New York, which has one of the most restrictive programs of its kind in the nation.
NYMCIA has also long championed a fair, equitable and accessible adult-use cannabis program that addresses the longstanding and disproportionate harm inflicted on minority and low-income communities by the failed war on drugs.
The association’s newly formed executive board stands ready to participate in a robust debate in the coming months aiming to establish a safe and well-regulated adult-use program that creates jobs and generates much-needed revenue for New York as it recovers from the pandemic-induced economic downturn.
“The Association is confident that by the close of this session, New York will join neighboring states by passing a comprehensive adult-use bill that solidifies its role as a national progressive leader,” said Abebe. “The medical cannabis industry has already demonstrated across the U.S. that it can help seed equity efforts while quickly ramping up an adult-use program, and we are prepared to do the same in New York – if given the chance.”
“It is well past time for New York to harness the untapped potential of the cannabis industry to create good-paying jobs and new revenue in the face of significant financial challenges,” added Maxwell. “This is the year we must put our differences aside and create a robust, inclusive adult-use program that prioritizes economic growth, social equity, public safety, and reinvestment into disadvantaged communities that have long suffered from the War of Drugs.”
The governor has repeatedly indicated that adult-use legalization will be among his top priorities this year. NYMCIA believes New York should follow the lead of states around the nation and allow both medical and adult-use cannabis to merge under one roof, as well as the sale of full flower to assure a strong and successful program.
Cannabis Licensing Authorities Consolidation Part of California Governor's Proposed State Budget
Gov. Gavin Newsom’s fiscal year 2021-2022 budget proposal includes a proposal to consolidate the three state licensing authorities into a single Department of Cannabis Control.
SACRAMENTO – PRESS RELEASE – Gov. Gavin Newsom’s fiscal year 2021-2022 budget proposal released Jan. 8 includes a proposal to consolidate the three state licensing authorities into a single Department of Cannabis Control. This proposal was first announced in January 2020 but was delayed due to the impacts of the COVID-19 pandemic. If approved by the legislature, the new department will be created on July 1, 2021.
In an effort to improve access to licensing and simplify and centralize regulatory oversight of commercial cannabis activity, the governor’s budget proposes to consolidate licensing and associated regulatory functions into a single state department. This proposal seeks to better serve stakeholders including cannabis businesses, local governments and members of the public by acting as a single point of contact as well as leverage existing funding in a more efficient way by reducing redundancies. Further, it seeks to establish uniform operations and procedures that will streamline processes for applicants and licensees and offer better service and coordination.
The three state licensing authorities have begun to prepare and plan for the consolidation and, most importantly, to ensure continuity of operations. They are committed to making this transition in a manner that reduces unnecessary disruption to the marketplace and California businesses. Their team members will remain available to applicants and licensees as they continue their routine business activities.
Highlights of Budget Change Proposal
The budget change proposal establishes the Department of Cannabis Control (DCC) within the Business, Consumer Services and Housing Agency. This proposal creates the infrastructure for the new department by moving existing positions and funding currently supporting the three state cannabis licensing authorities under DCC. The budget change proposal requests $153,834,000 in funding for fiscal year 2021-2022 and 621 positions.
Key objectives of the proposal include:
Retention of existing expertise through the transfer of existing positions from the three state cannabis authorities to the new department.
Encouraging continuity and stability during the transition through continued use of the licensing systems and California Cannabis Track-and-Trace System and through interagency agreements with existing departments for services while the department is further developed.
Continued development of an industry and outreach campaign to educate and encourage licensure and increase consumer awareness.
Under the proposal, the California Department of Food and Agriculture (CDFA) will retain the Cannabis Appellations Program. The OCal Programs, which will establish standards for cannabis comparable to the National Organic Program, will also be retained within CDFA and the California Department of Public Health (CDPH) and will continue to benefit from their existing expertise.
Additional information about the budget can be found on the Department of Finance’s California Budget webpage.
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Eric Sandy
Stephen Langel
