With just over a week since President Joe Biden has been sworn into office, movement in hemp regulations at the federal level has come to a pause.
And while this is typical for new federal administrations, it may mean incoming hemp regulations could take longer to solidify—or may even change—as new leaders assume their positions and review Trump-era policies.
The White House issued a memo Jan. 20, the day of Biden’s inauguration, asking agencies to withdraw any rules that have not yet been published in the Federal Register.
The day after the White House released its memo, the U.S. Food and Drug Administration (FDA) withdrew its “Cannabidiol Enforcement Policy,” a document it submitted to the White House Office of Management and Budget (OMB) in July. While the contents of the document were unknown, some in the industry predicted—and hoped—it would provide at least temporary guidance on cannabidiol (CBD) regulations.
While the FDA declined to say what the policy included or when a new document may be submitted, an agency spokesperson tells Hemp Grower the FDA will “work closely with the new administration to advance appropriate regulations and policies that are in line with the agency’s public health mission.”
Larry Farnsworth, spokesperson for the National Industrial Hemp Council (NIHC), says the FDA is still in a period of transition as it works to appoint a more permanent commissioner (following the appointment of Dr. Janet Woodcock, M.D., as acting commissioner on Jan. 20). In addition, Farnsworth says the FDA’s current priority is the COVID-19 pandemic.
“We hope they can move this as expeditiously as possible,” Farnsworth says.
Effects on the Final Rule
Meanwhile, the White House memo also asked all federal agencies to “consider postponing” rules that have not yet taken effect for 60 days.
As such, the U.S. Department of Agriculture (USDA) tells Hemp Grower it is currently reviewing its final rule on hemp that it published Jan. 15. As of now, the final rule is due to take effect March 22.
The USDA notes that the final rule “has not been withdrawn.”
“It is not unusual for a new administration to take the opportunity to review new and pending regulatory actions,” a USDA spokesperson tells Hemp Grower in an email. “That’s what USDA and many other agencies are doing now to ensure longstanding as well as new programs are structured and resourced appropriately and also to ensure programs are implemented to best serve their intended stakeholders.”
The White House memo notes agencies that postpone rules during this period have the option to open an additional 30-day comment period. The USDA has already held two comment periods on its interim final rule on hemp that it took into consideration while drafting its newest set of regulations.
Hemp Grower Managing Editor Patrick Williams contributed to this report.
matthewbenoit | Adobe Stock
Plaintiff in Lawsuit Against Charlotte’s Web Says Company Can’t Pause Case
The latest in Moqeet v. Charlotte’s Web Inc., a proposed class-action case over the labeling of CBD products.
As courts across the country put cannabidiol (CBD) lawsuits on pause in anticipation of guidance from the U.S. Food and Drug Administration (FDA), Charlotte’s Web wants to do the same in its latest class-action lawsuit. But the plaintiff thinks otherwise.
Rasunae Moqeet filed a lawsuit in a California district court against Charlotte’s Web in August alleging the company labels its products as dietary supplements. (Under current federal law, CBD products may not be included in any product except Epidiolex.)
Charlotte’s Web filed a motion to dismiss the lawsuit in December, but Moqeet recently responded with a court filing opposing that motion. In her argument, Moqeet told the court that labeling products as dietary supplements violates both California and federal laws, and that any guidance from the FDA would be forward-looking—not retroactive.
"Defendant now seeks to avoid liability for the illegal sale of its CBD products by hiding behind the doctrines of preemption and primary jurisdiction," Moqeet said in her filing. "Defendant also contends that the plaintiff's complaint fails to meet the applicable pleading standards, and that the case should be stayed. These arguments are all meritless."
Moqeet goes on to argue that the FDA has concluded CBD products are “illegal to introduce into interstate commerce.”
“Plaintiff’s claims are not preempted because the CBD products are not dietary supplements and such labeling violates both state law and parallel federal law,” the filing says.
According to Law360, Charlotte’s Web argued in December that proceeding with the case would interfere with the FDA’s authority over the labeling of CBD products. The company also said that if the court doesn’t dismiss the case entirely, it should at least put it on pause until the FDA completes its rulemaking process, Law360 reports.
Other courts across the country have agreed with that reasoning and have either stayed or completely dismissed lawsuits against CBD companies, stating they need further guidance from the FDA on how to proceed.
Charlotte’s Web has been the subject of several class-action lawsuits since 2019. Company CEO Deanie Elsner has attributed that to a lack of FDA regulations.
“Where you’ve got high growth and a lot of competition and uncertainty, people are going to look to take advantage,” Elsner said in Hemp Grower’s November/December 2020 issue. “We are tackling any of these class actions aggressively, because we think we’re in the right.”
The Mint's flagship dispensary location in Tempe, Ariz.
Photo courtesy of The Mint
Arizona Cannabis Retailers Reflect on First Week of Adult-Use Sales
Executives from The Mint and Curaleaf discuss sales trends and how they are meeting their customers’ needs in the early days of the market.
Arizona launched its first adult-use cannabis sales Jan. 22, with the state’s mature medical cannabis industry—which was legalized by a voter-approved initiative in 2010—pivoting quickly to meet the demands of a broader consumer base.
The Mint applied for adult-use licenses at its dispensary locations in Mesa and Tempe when the application became available Jan. 19.
“[Regulators] were saying it wasn’t going to take until March to make a decision, that once you applied and put in all your paperwork for your rec license, as long as you had enough employees to be able to service [the adult-use market] and you had all the requisites, they were going to process [the application] in two to three days,” says Raul Molina, The Mint’s co-founder and chief operating officer.
Photo courtesy of The Mint
The Mint planned to launch adult-use sales at 4:20 p.m. on Jan. 22, but lines had formed around the building by 1 p.m., after the company sent out text and email notifications.
Around midday on Jan. 22, The Mint received word that its adult-use applications had been approved, and it immediately sent text and email notifications to its customer base, announcing that it would launch its first adult-use sales at 4:20 p.m. that same day. As soon as the alerts went out, Molina says people started showing up, and the dispensaries had lines around the building by 1 p.m.
Arizona is currently experiencing a cold snap, Molina says, with rain and temperatures in the 40s, but the bad weather has not deterred customers, who continue to line up at The Mint’s dispensary locations.
“The crowds have been incredible,” Molina says. “It feels like a party atmosphere. There’s music playing. Everybody is getting along and sharing stories of what they’ve tried or what they’re going to try. People are coming out and talking about what they bought.”
Customers have been wearing masks and social distancing to combat the ongoing COVID-19 pandemic, he adds, and The Mint has been working hard to ensure it maintains enough product for its medical patients.
“We don’t want to forget who brought us to the party,” Molina says. “We’ve been medical for 10 years.”
The Mint has two lines—one for medical patients and one for adult-use customers. Generally, there is no wait for medical sales, Molina says, while adult-use customers can expect wait times of up to an hour and a half.
Curaleaf, which has been operating in Arizona’s medical market since 2011, also launched adult-use sales Jan. 22 at its eight dispensary locations across the state, and Steve Cottrell, president of Curaleaf Arizona, says line management has been one of the company’s biggest challenges over the past week.
“We typically don’t see a line every single day, and that’s something that we’re experiencing daily now,” he says. “It’s a big win for us, we’re very excited to have that, but it’s something new.”
Like The Mint, Curaleaf has two lines—one for medical patients and one for adult-use customers—and it has many standard operating procedures in place to help get patients and customers through the store quickly. The wait time at its locations has typically been 20 to 30 minutes, Cottrell says.
“Our teams are very efficient,” he says. “We have several stations, and our budtenders are very quick to respond, so we get people through the line quickly.”
Curaleaf encourages its customers to use online ordering while they wait in line to ensure their order is ready for them when they reach the register. All customers still get one-on-one time with Curaleaf’s budtenders to ask questions and get product recommendations, Cottrell says, even if they have already placed an online order.
“One of the things we’ve encouraged is you place the online order right now,” he says. “You may not know what you want, but you know you want an edible, a concentrate, a vape or a topical—just lock one of those in. Then, they can come in and they can experience the full thing. We know they wanted a flower, or we know they wanted a vape cartridge—great. Here are all of our vape cartridges laid out for you, or here are all of our strains laid out for you. It gives you an opportunity to shop, but it also gives our budtenders a little bit of a heads up of what they’re coming in for on the front end, so they know how to sell better.”
Curaleaf offers discounts to its medical patients, and sent out a text message alert before launching adult-use sales, which encouraged many patients to stock up on products ahead of time to avoid the crowds.
The Mint also offers medical-only specials, including buy one, get one free deals, discounts on certain products and a daily pre-roll promotion where medical patients can stop by for a free pre-roll from 4:20 p.m. to 7:10 p.m. each day.
“We do that a lot because we know there are a lot of patients who would come in and not have the money to buy their medicine for the day, so we just started our program of one free pre-roll per day,” Molina says. “That’s still there for the medical patient, where the rec customer isn’t getting all these extra perks that we’re going to keep around for the medical patient.”
The Mint set aside product for its medical patients to ensure it would have enough supply for that side of the market, but, so far, Molina says product shortages have not been an issue.
“There isn’t quite a shortage of supply just yet,” he says. “Maybe as more [dispensaries] … come online and start selling rec, that might change, but as far as us up here at The Mint, we were planning for it.”
Molina estimates that only about 25 to 30 of Arizona’s roughly 130 medical dispensaries opened for adult-use sales upon receiving final approval Jan. 22.
The Mint, which is vertically integrated with a cultivation operation, also buys cannabis wholesale from other vendors, and Molina says the company stocked up in advance to have what he thought would be enough product for the first two to three months of adult-use sales.
“It looks like it’s going to be closer to a month or a month and a half with the current coverage, but, so far, nobody has told us that it won’t be available,” he says.
Curaleaf has not experienced any supply shortages yet either, due in part to its vertically integrated business model and its partnership with other vendors in the state, which allows the company to purchase products wholesale from other cultivators and manufacturers.
Cottrell says Curaleaf has been preparing for the expanded market since September, even before voters approved Arizona’s adult-use cannabis legalization measure in the November election, to ensure the company has enough supply to meet adult-use demand.
“We saw the writing on the wall,” he says. “We saw the path that we were going with the [Prop.] 207 campaign. We were having a lot of success.”
Curaleaf doubled the size of its Arizona-based cultivation operations over the course of the past year, and renovated four of its dispensary locations to add more registers. The company also implemented a new point-of-sale system just five days before launching adult-use sales.
“Curaleaf is incredibly well-structured, and … being able to do things like this is just second nature for us, so we’ve really been able to … make things happen quickly,” Cottrell says, adding that the company made a similar transition from medical to adult-use sales in Illinois just last year.
Adults 21 and older are allowed to purchase up to an ounce of cannabis per day under Arizona’s current adult-use regulations, but Cottrell says Curaleaf’s customers typically have not been maxing out their daily allotment, instead buying an average of four or five eighths at a time.
Flower is Curaleaf’s best-selling product in the adult-use market, Cottrell says, making up roughly 59% of the company’s sales.
According to Molina, The Mint’s medical cannabis patients typically split their purchases fairly evenly across the dispensary’s product categories, with flower, edibles and concentrates each making up about a third of the company’s sales. The Mint’s adult-use customers, however, seem mostly interested in flower and edibles, with concentrates sales lagging behind the other two categories in the non-medical market.
So far, The Mint has roughly tripled its sales since launching adult-use, and Molina says the company began preparing for the increased sales volume nearly two years ago, when it expanded its flagship location in Tempe from 3,000 to 12,000 square feet, and from 10 to 21 total registers.
The Mint completed a large hiring initiative a little over a month ago, and spent roughly three weeks onboarding and training new retail staff members to interact with patients and adult-use consumers.
“For probably the last few weeks, we’ve had kids tripping on top of each other because we had so many people here and it didn’t really make sense,” Molina says. “Now that we went rec, it makes all the sense in the world. Everybody’s on a register and we’ve done well.”
So far, Molina says The Mint’s biggest setback has been not stocking up on enough water for its employees.
“I bought a pallet of water, and apparently that wasn’t enough to keep everybody hydrated,” he says. “But the problems we have had have been minimal, and not really operational or to the point that they’re affecting the patient or the customer.”
The Mint plans to open a third store by the middle of February, and its focus continues to be the medical patients who helped the company find its early success in the Arizona market.
“The biggest thing is we don’t want to forget who brought us to the party and who we’ve been servicing for the past 10 years that have allowed us to keep our doors open,” Molina says. “That’s the biggest thing—we want to make sure we keep taking care of medical.”
Curaleaf also plans to expand in Arizona, with two more stores expected to open this year.
“We’re very excited about this opportunity to serve the customers in Arizona,” Cottrell says. “As is with all states when adult-use happens, it’s an amazing opportunity for us. We’re doing all we can to make the cannabis industry look first-class, and we’re keeping everybody medicated and giving them the best service possible."
Concentrates Sales Are Rising Across U.S. Cannabis Markets. Why?
Sales data suggests a more immersive shopping experience is opening new doors for consumers.
While the world turned upside-down in the spring of 2020, the general profile of cannabis consumers began shifting as well.
“There was a significant amount of new customers,” Socrates Rosenfeld, co-founder and CEO of online ordering platform I Heart Jane, says. This pointed to a growing comfort with the idea of cannabis, particularly among those who perhaps hadn’t tried it in the past or hadn’t consumed anything beyond flower. “Product discovery was another trend. We saw people adding new products, new complements or substitutes to their cart. That was really interesting.”
With 500,000 SKUs on the platform, consumers across the U.S. have been able to settle into the shopping experience from their home.
“We've seen a lot more activity and searches and adding multiple items to a card, comparatively shopping, within category and cross-category,” Rosenfeld says. New product silos—like concentrates, in particular—have been rising in the sheer number of sales transactions over the past year.
This coincides with the ascent of online ordering and curbside pickup more broadly. On the retailer’s side of the transaction, this means more data—which allows for a more nuanced approach to purchasing and inventory tracking.
Before March 2020, Rosenfeld says that I Heart Jane was tracking 17% online ordering across the U.S. As the quarantine lifestyle became the norm, that stat jumped to a peak of 50%. “That’s held steady, six, seven, eight, nine months,” he says.
So, with more sales coming from digital platforms and more customers getting acquainted with concentrates, what can retailers do to capitalize on this trend?
“Really, it starts with flower,” Rosenfeld says, pointing to the inhalation aspect. “That’s really the threshold into concentrates.”
It’s important for retailers to understand that customer flow, however. Whereas budtenders can help guide the individual customer through the physical space of a dispensary, that process is a bit more distant now—but only in the analog sense.
“It all kind of leads back to [retailers] understanding the consumer and understanding how their SKUs move,” Rosenfeld says. “And I can't overemphasize that point.”
Prior to digitization and the onset of the pandemic’s new rules, consumers mostly shopped in-person (remember that online ordering was only 17% of I Heart Jane sales prior to March 2020). Shoppers might have milled around the dispensary, debating different products and perhaps making a series of decisions on the spot. Now, on an online platform, those movements are tracked. Items go into carts, then they’re replaced as the shopping experience continues. Search terms lead to new discoveries. Flower devotees drift over to the concentrates tab, examining deals and comparing THC potency rates. It’s a wealth of new data.
I Heart Jane
“Within the concentrate category, it's oils and isolates that have really taken off significantly,” he says. “I think isolates for the convenience of it: You know exactly what you're getting.” There’s the higher potency of most concentrates, as well as the fact that new devices allow for a more discreet experience, rather than the classic dab rig.
This invigorated interest allows retailers to grow more sophisticated with the suite of product offerings in-store. Classic flower customers may find that a well-timed deal on isolates will catch their attention. Whereas flower and edibles, in many cases, are the more familiar product categories, the concentrates segment requires a bit more of an active retail approach to educate consumers and convey the unique properties of “isolate,” “wax,” “shatter” and so on. For many, especially those newly converted to the market, those terms are unknown.
It’s a two-way transaction, with the dispensary offering education and the customer offering a willingness to explore new product categories.
“Once you have information,” Rosenfeld points out, “now you're able to place better and better bets on what the consumer will want today and for years to come.”
Qairos Energies Investment Points to Hemp as Fuel Source
The Qairos facility will be based on gasification technology, in which heat and oxygen are applied to hemp biomass, in this case, resulting in gaseous substances.
Earlier this month, French fuel cell startup Qairos Energies announced that it would invest approximately $23 million (€18.8 million) into a facility that will convert hemp biomass into hydrogen and methane—generation electricity for regional transit agencies and natural gas constituents for Gaz Réseau Distribution France.
All told, the investment sends a signal that hemp could play a role in alternative energy development.
The Qairos facility will be based on gasification technology, in which heat and oxygen are applied to hemp biomass, in this case, resulting in gaseous substances. The target is for Qairos to develop two tons of hydrogen and 200 cubic meters of methane per day.
“This project combines agriculture, the issue of soil quality, while serving the cause of green energy", President and Found Jean Foyer toldLes Echos in December.
The company noted that hemp biomass will be sourced from northwest France, near the facility, ideally up to 1,000 hectares of the crop, according to Qairos. Work is expected to begin in the first quarter of 2021.
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