Hemp growers have filed a class action-lawsuit against a Kentucky-based hemp company after the company allegedly breached hundreds of thousands of dollars worth of contracts with the farmers.
The lawsuit, which was filed earlier this month in the U.S. District Court of Western Kentucky Owensboro Division, says Bluegrass Bioextracts contracted with hundreds of growers for their hemp to process into cannabidiol (CBD) oil. But some didn’t receive their promised payments.
Farmers are now suing the company for breach of contract, fraud, racketeering and other claims.
The suit’s plaintiffs say the many of the company’s contracts were for $4 per percent of CBD per pound of hemp. According to the lawsuit, the Bluegrass Bioextracts and its parent company, DTEC Ventures, told hemp farmers they would honor negotiated contracts “regardless of what was occurring in the market...to develop long-term relationships and good will with growers.”
The lawsuit also alleges that the company rejected hemp due to its contaminant levels even though farmers’ independent testing showed levels were acceptable.
“These deceptive acts were taken with the express intention of getting growers to change their contracts for the defendants’ benefit and otherwise increasing the defendants’ profitability and revenue, thereby causing financial gain to each of the enterprise’s constituents,” the suit says.
This lawsuit is the latest in the Bluegrass Bioextracts saga.
In November 2019, DTEC Ventures bought out Bluegrass Bioextracts, reports Ohio Valley Resource. But when DTEC began rejecting farmers’ hemp, Gerald Edds and other former owners of Bluegrass Bioextracts sued the company for $69 million over control of the company.
That was resolved in a settlement in February. WKMS reports the settlement allows the former owners to receive hemp-processing equipment from Bluegrass Bioextracts with the intent to start a seperate hemp processing company, Precision Biotech LLC.
Delivery demand at Etain's Manhattan location is high as residents maintain social distancing during COVID-19 pandemic.
Michael George
How New York’s Etain is Serving Medical Marijuana Patients in the Epicenter of the COVID-19 Pandemic
The vertically integrated company has expanded delivery and discounts on 30-day supplies, in addition to following state social distancing and safety protocols.
Etain, one of the 10 registered, vertically integrated medical marijuana businesses in New York, is doing everything it can to provide its patients with safe access to medical cannabis despite operating in the state–and the city–at the epicenter of the novel coronavirus pandemic.
New York has more than 263,000 confirmed cases of COVID-19, according to the latest updates from the New York State Department of Health, the most in the U.S. About half of the state’s cases are within New York City. A stay-at-home order is in effect until May 15, but as in many other states, the medical marijuana program is considered an essential business, and companies can stay open.
Etain has been able to retain its 50 employees, 20 who work in cultivation and manufacturing, 20 who work in the company's four dispensaries and 10 at the corporate office, says Hillary Peckham, co-founder and COO of the family-owned business. In addition to sanitation and social distancing protocols, people no longer work between the dispensary locations, arrival times and lunch breaks are staggered, and employees are wearing masks and gloves in the dispensaries. On the cultivation side, not much has changed, as staff already wore personal protective equipment (PPE).
“We’re trying to make sure everyone feels taken care of and everyone feels safe across the board, employees and patients. That has been my biggest role here and what I’ve spent most of my time on,” Peckham says.
Etain has conducted first-time and follow-up appointments with patients via phone or video conference since March. Patients are encouraged to order online or call their orders ahead rather than walk-in, and Etain already offered delivery services before the pandemic, Peckham says. However, plans to expand delivery in 2020 were expedited, and patients now can order delivery five days a week instead of just one.
“We’ve been ramping up delivery services, particularly in New York City, where it is the epicenter of this virus,” Peckham said, adding that many patients in Manhattan use public transportation exclusively, and do not want to venture out on crowded subways or buses, or have conditions that prevent them from doing so. “We would generally see 30 to 50 people a day [in the Manhattan dispensary.] Now it’s significantly reduced, but the delivery demand has gone up immensely. Delivery has been essential for them to continue to get their medication.”
Etain is also offering discounts on 30-day supplies, the maximum a patient can order at a time under New York’s medical program, to discourage multiple trips to the dispensary but make bulk purchases more affordable. Lozenges have been a popular method of medicating during the crisis, Peckham says. In light of coronavirus, the New York Medical Marijuana Program (MMP) changed the delivery requirement from two people per vehicle to one, which also has helped, Peckham says.
“I know so many patients are so grateful that we are able to stay open because they do rely on this for quality of life,” Peckham says. “I think that makes a very strong statement for the need of [cannabis] as medicine and validates the medical program. People are really using this for quality of life and to treat medical conditions and being able to continue that care is an essential service. I think nationally it has made headlines because it’s a shift in the way people think about this.”
Although Gov. Andrew Cuomo recently put adult-use legalization efforts on hold as the state combats coronavirus, Peckham believes minor adjustments to the medical program could expand access in the meantime.
“We can’t give patients more than a 30-day supply, which is something I’d like to see expanded to 60 or 90 days,” Peckham says. In a previous interview with Cannabis Dispensary, she also noted the need for the state to expand the limited list of qualifying conditions, which include ALS, cancer, epilepsy and neuropathy. Since the program’s launch, chronic pain and opioid-use disorder have been added to that list, expanding the number of patients who qualify. After chronic pain was added in March 2017, the number of registered patients nearly tripled in the state by the end of that year, going from about 20,700 to close to 58,000.
There are 114,533 certified patients in the program as of April 21. That figure has not changed much since September 2019, when there were about 107,870 registered patients, and Peckham says that the number of patients registered has actually decreased during the pandemic.
“For the first time in the lifetime of the program, the [MMP] published the total numbers of registered patients in the state, and we’ve seen a decline in the total number of people registered in the program since coronavirus occurred,” Peckham says. “We think that’s largely because people can’t get access to physicians right now, because either those physicians are working in hospitals with coronavirus patients or they only do in-person appointments, and people don’t want to travel to them. We’ve seen a decline of about 40 patients per day for the past couple weeks now, and that is a new dynamic.”
Cannabis Dispensary was not able to confirm this information with the MMP or the Department of Health, but has a Freedom of Information Law (FOIL) request in process.
Etain planned to launch its rebranded product line and also move its Manhattan store to another location within the city during the month of April (4/20), but those plans are on hold for now. Peckham is hopeful they can move forward in the summer, though many of the changes they’ve implemented will continue.
“We’ve definitely heightened our sanitary practices with cleaning the dispensaries, and that we’ll maintain. I don’t know when we get through this, when social distancing protocols have to stop,” she says. “The societal shift will permanently impact everybody, at least for a while. Everyone is going to have to be more aware of the impact they can have on their community and on their surroundings with potentially affecting someone with the virus until we have a vaccine or we get through this.”
Photo courtesy of Trulieve
How Dispensaries Are Shifting Their Grand Opening Plans During the COVID-19 Pandemic
Trulieve and RISE share how they’ve approached the launch of new stores in the age of social distancing.
There are many factors to consider when opening a new dispensary location, from product selection and hiring to opening day sales and promotions. These days, businesses must also consider social distancing and increased sanitation in the wake of the COVID-19 pandemic, and multistate cannabis operators Trulieve and RISE did just that when launching their new locations in Florida and Ohio this month.
Florida-based Trulieve opened its newest store in Titusville, east of Orlando, on April 18, marking the company’s 46th dispensary in Florida and its 48th nationwide.
“There was some different planning, there’s no doubt, especially with a store opening during a pandemic and leading into 4/20 weekend,” Tim Morey, Trulieve’s chief sales officer, tells Cannabis Dispensary. “I think through the pandemic, Trulieve has done a great job in putting our patients first, and our employees.”
To ensure a safe environment for its staff and patients, Trulieve has implemented air scrubbers and weekly professional cleanings at each of its locations. For the launch of the Titusville location—the first that Trulieve has opened since the coronavirus outbreak—the company adjusted its usual grand opening procedures to accommodate the unprecedented situation.
For example, Trulieve launched online sales the day before opening day, which allowed patients to place orders and schedule pick-up appointments to support social distancing and reduce the time each patient spent in the dispensary.
“We had the ability to process those orders and have them ready for the patients the next day, which we’re doing across the majority of our dispensaries right now,” Morey says. “It’s a significant shift in our business. What was about 60% walk-in business is now about 30% walk-in and our pick-ups have moved over to about a 60% ratio.”
On opening day, Trulieve offered patients a 25% in-store discount at the Titusville location, and the company ran a “four days of 4/20” promotion with a 20% discount at all of its dispensaries to help space patient traffic out over multiple days.
Photo courtesy of RISE
A rendering of RISE's new Lakewood location.
Elsewhere, in Ohio, RISE opened its second dispensary location in Lakewood, a westside suburb of Cleveland, earlier this month.
“We’ve been planning to open for a while, and the timing didn’t work out the best,” Market President Brendan Blume tells Cannabis Dispensary. “It never does, but … we were able to open the store and follow our SOPs. making sure we’re adhering to social distancing, sanitation and proper equipment [guidelines] to protect our people and our patients.”
RISE is encouraging its staff to wear face masks and shields, and is also accepting phone orders and offering curbside pick-up at select locations.
“It’s just one of those things where we just need to be conscious of it,” Blume says. “Following the CDC’s guidelines is the most important thing, and that’s what we’ve been taking as our true north as they change and more information comes out. It’s just staying in communication with the teams and making sure we get that communication out as quickly as we can to make the best decisions.”
RISE will typically invite media and the local community to new dispensary locations the day before a store’s grand opening to showcase the new location. For its newest Lakewood dispensary, however, the company opted for virtual tours and walkthroughs in the wake of COVID-19.
“I think we’ll do an opening after all this is over and maybe a grand reopening … to show people we’re there and to get the word out,” Blume says.
Best-Laid Expansion Plans
When identifying opportunities for expansion, Trulieve looks to the location of its patient base, physicians and market demand. The company uses its delivery service, which is available throughout Florida, to track where demand lies in relation to its dispensary locations.
Photo courtesy of Trulieve
Trulieve's Titusville, Fla., location is the company's 46th dispensary in the state and its 48th nationwide.
“We hear from our patients where those dispensaries need to be to service them in the best possible manner,” Morey says. “That’s why we opened Titusville; there was a big demand in that area.”
Trulieve aims to have 68 total dispensaries by the end of the year, and in addition to Florida, the company operates stores in Connecticut and California, with one location set to open in Massachusetts in the coming months.
To support its rapid expansion, Trulieve has added roughly 200 retail employees to support not only the new locations, but also the uptick in deliveries in the wake of the pandemic.
“We’ve been in a hiring mode, and [for] every new dispensary, we try to look for that team 30-45 days in advance of a potential store opening,” Morey says.
Trulieve also promotes from within, he adds, and all employees are trained in advance of new store openings to ensure they are ready to serve patients on opening day.
For RISE, it was a connection with the local community that sparked the company’s second Lakewood location.
“We’ve partnered with the local community and we’re well-received there, so we think it’s a good area,” Blume says. “There’s a good population of patients, and we like to partner with communities that want us instead of going into communities that don’t want us and then it’s a fight. Partnering with Lakewood and having open lines of communication, we just felt it was a good move to have multiple locations there.”
While RISE generally holds in-person interviews to hire for new dispensary locations, its hiring practices have shifted toward digital meetings via FaceTime and Zoom to maintain a personal interaction with potential candidates. And like Trulieve, RISE also promotes from within to fill new roles.
When it comes to product selection, Trulieve carries roughly 250 SKUs across all its Florida locations to provide a wide range of products for its patients, but the depth of each product category varies by dispensary based on demand.
At the beginning of the COVID-19 crisis, Trulieve saw a spike in flower sales, which Morey attributes to the uncertainty surrounding whether dispensaries would be allowed to remain open under states’ stay-at-home orders.
“Being an essential business, we saw that business normalize after that first week, and we haven’t seen a significant shift in our overall product mix,” Morey says. “I would say if there was anything, we do see a little bit more of a value-price customer, which is to be expected during these times.”
Photo courtesy of RISE
RISE carries a variety of products at all its dispensary locations, from flower, vapes and extracts to edibles, tinctures and topicals.
RISE also carries the same products across all its locations, ranging from flower, vapes and extracts to edibles, tinctures and topicals.
“There isn’t an exclusive that it’s just sold at this store, but we have a wide variety of product offerings that will keep patients coming in and excited,” Blume says.
And so far, the new Lakewood location has been well-received, he adds. “It’s another place for people to come and experience the RISE brand.”
What Lies Ahead
The Trulieve team has quickly adjusted to online ordering, in-store pick-ups and increased delivery, and Morey says the pivot to a more digital business doesn’t stop there. The company has implemented additional online features in order to send patients text notifications when their orders are ready for pick-up, and it has started using an app called Waitly to invite customers into the store once they arrive.
“Everyone can go back out to their vehicles and maintain social distancing, and we can have a nice flow and a safe environment by texting people when it’s time to come in,” Morey says. “These are some things we had been working on that obviously got accelerated with COVID-19.”
Time will tell whether this digital business model becomes permanent, he adds. “We have a very mature Trulieve following. Most of them really know what it is that they’re looking for, so as we introduce new things, we may get more walk-ins, but overall, I think we’re going to have a blended version when we get back to regular business after COVID.”
Both Trulieve and RISE plan to follow their patients’ lead in the weeks and months ahead, evolving their business models to meet their needs.
“We feel like the patient is the most important thing that we do here at Trulieve, and we always look for better ways to service them,” Morey says. “Through the pandemic, we’ll take learnings from that and we’ll continue to find ways to improve our service and expand our model as we move forward.”
“We’re just excited to really keep people employed, keep the doors open, keep patients coming in and keeping them happy at a time like now when many businesses can’t do that,” Blume adds. “We’re just very grateful for that and we’re making sure that we take that seriously."
Photo courtesy of MedPharm
Inside the DEA’s New Promise to Expand Cannabis Cultivation for Research
The Drug Enforcement Administration’s draft rules for the program have been met with mixed industry reactions, but Colorado-based MedPharm is encouraged by the progress.
Last month, the U.S. Drug Enforcement Administration (DEA) issued draft rules to regulate the cultivation of cannabis for research purposes in an announcement that was met with mixed industry reactions.
NORML announced April 8 that it had formally submitted comments in opposition of the DEA’s proposed rule changes. The advocacy group criticized the agency for maintaining the sole discretion to choose which applicants will be authorized to grow cannabis for research, and expressed its dismay that the DEA has not provided a timeline for approving pending applications.
“While NORML has long supported facilitating and expanding domestic clinical research efforts, we do not believe that these proposed rules, if enacted, will achieve this outcome,” NORML wrote. “Rather, we believe that the adoption of these rules may further stonewall efforts to advance our scientific understanding of cannabis by unduly expanding the DEA’s authority and control over decisions that ought to be left up to health experts and scientists.”
NORML also suggested in its comments that rather than licensing a new set of growers, the DEA should allow the cannabis already being produced by state-licensed cultivators to be used for federal research.
“Rather than compelling scientists to access marijuana products of questionable quality manufactured by a limited number of federally licensed producers, NORML believes that federal regulators should allow investigators to access the cannabis that is currently being produced by the multitude of state-sanctioned growers and retailers throughout the country,” the organization wrote. “Doing so would not only facilitate and expedite clinical cannabis research in the United States, but it would also bring about a long overdue end to decades of DEA stonewalling and interference with respect to the advancement of our scientific understanding of the cannabis plant.”
Under the DEA’s existing regulations, the University of Mississippi is the only federally licensed facility permitted to cultivate cannabis for use in FDA-approved clinical trials. In 2016, the DEA announced that it would begin accepting new cultivation license applications, and although the agency received roughly two dozen applications from interested parties, it has not approved or denied a single one.
Last summer, a federal court ordered the DEA to explain why it had not responded to the pending applications after Dr. Sue Sisley and the Scottsdale Research Institute (SRI) filed a lawsuit against the agency and the Justice Department in June. Phoenix-based SRI had applied for a DEA license in 2016 to grow its own cannabis for an ongoing study on medical cannabis as a treatment for veterans suffering from post-traumatic stress disorder (PTSD) after criticizing the poor quality of cannabis available from the University of Mississippi.
Photos courtesy of MedPharm
MedPharm, a Colorado-based cannabis research and formulation development company, received notification from the DEA last year that it had been selected to advance in the application process.
In August 2019, the DEA entered a filing in the Federal Register indicating that it would establish regulations to evaluate the applications, and the federal court dismissed Sisley’s lawsuit. Around that same time, some companies with pending cultivation applications received word from the DEA that they had been selected to advance in the application process.
MedPharm, a Colorado-based cannabis research and formulation development company, was one of the companies notified.
Dr. Tyrell Towle, MedPharm’s director of chemistry, is encouraged that the DEA has made good on its promise to promulgate the regulations necessary to review the pending applications and license additional cultivators.
“We’re of course very excited to see movement—any kind of movement—by the DEA to increase the number of suppliers and therefore the variety and competition,” Towle tells Cannabis Business Times.
MedPharm submitted its application in 2016 following the DEA’s initial announcement that it would expand the number of licensed cultivators. Now, three and a half years later, Towle says he is pleased with the rules that the DEA has ultimately proposed for the program.
“We’re very excited to see the draft rules and actually, for the most part, they make quite a lot of sense and we’re very happy with what they’ve come up with,” he says.
The public comment period remains open until May 22, and the MedPharm team plans to submit a response that mostly seeks clarification on the specifics of the rules.
Under the DEA’s proposed regulations, the agency will begin reviewing the applications it has received but will not allow any new applicants into the pool until the pending applications have been dealt with. The agency requests that applicants have potential research partnerships lined up before they are granted final licenses, and Towle says the MedPharm team feels good about their position.
“We are of course seeking partnerships with Schedule I DEA-licensed researchers to see if they are interested in a new source of cannabis that’s much higher quality than what the University of Mississippi is providing,” he says.
MedPharm currently holds a state research license in Colorado, but DEA licensure will allow it to supply its cannabis and dosage forms to researchers in other states.
MedPharm currently holds a state research license in Colorado, but DEA licensure will allow the company to supply its cannabis and dosage forms to researchers across state lines.
“For researchers, … it’s really exciting because they won’t be limited to getting their cannabis from the University of Mississippi,” Towle says. “They don’t grow every year. They grow, harvest, and then disperse it over time, so it’s not the highest quality and it’s not representative of what people purchase in dispensaries. Researchers will be able to get their hands on materials that more closely represent what people actually have access to in the state-level recreational and medical marketplaces.”
MedPharm also plans to leverage its DEA license to advance its own in-house research projects. One of its studies, for example, focuses on how medical cannabis can help patients with Alzheimer’s disease.
“When we do our Alzheimer’s disease study, in addition to looking at symptoms, we’re going to be looking at blood flow in the brains of these patients over time to see if [there is] increased blood flow in the parts of the brain that are important to Alzheimer’s disease,” Towle says.
MedPharm is also conducting research on whether different cannabinoids affect certain cancer cell lines, he adds.
A DEA license will allow MedPharm to engage a more diverse group of people in clinical trials associated with this research, Towle says.
“To get an FDA-approved drug, you have to experiment on a lot of people through clinical trials, but with many people who are diverse,” Towle says. “We’re not going to get the diversity we need just in Colorado. We need to extend that dosage form across the country to research centers in order to get the patient population we need for that.”
Historically, the federal government has focused its studies on the potential harms of cannabis, Towle adds, and he is encouraged that the DEA seems to be opening up to the idea of looking at the medical benefits of cannabis with the goal of supporting new FDA-approved medications through the research program.
“We’re very excited about what’s coming up in cannabis research,” Towle says. “The cannabis [that researchers] get is so little potency that it probably can’t elicit the medical effects that a higher-potency strain would. … It’s going to be good to see this develop. Hopefully this time next year we have new, freshly licensed cultivators and MedPharm will be one of those."
Katherine | Adobe Stock
Lawmakers Introduce House Bill to Extend COVID-19 Relief Efforts to Cannabis Businesses
The Emergency Cannabis Small Business Health and Safety Act, introduced by Reps. Earl Blumenauer and Ed Perlmutter, would allow the legal cannabis industry to access federal aid.
U.S. Reps. Earl Blumenauer (D-OR) and Ed Perlmutter (D-CO) introduced legislation April 23 that would extend federal COVID-19 relief efforts to the cannabis industry.
The Emergency Cannabis Small Business Health and Safety Act would grant state-legal cannabis businesses access to the resources offered through federal COVID-19 emergency response packages, and would prohibit additional federal relief funding provided through the Small Business Administration (SBA) from excluding both cannabis businesses and businesses that provide services to the industry.
“The cannabis industry employs nearly a quarter of a million Americans and has been deemed essential in state after state, yet many businesses will not survive the pandemic without help,” National Cannabis Industry Association (NCIA) Executive Director Aaron Smith said in a public statement. “They already face disproportionate financial burdens during normal conditions, and the strains created by the coronavirus response are putting them at an even greater disadvantage and jeopardizing their ability to provide vital healthcare services. We are incredibly grateful for the dozens of lawmakers who are urging their colleagues to give cannabis businesses fair access to federal relief funds in these difficult times.”
When the SBA allotted nearly $50 billion in aid to small businesses via low-interest loans last month, it became clear that cannabis businesses were ineligible to access this aid due to cannabis’ Schedule I status.
“Because federal law prohibits the sale and distribution of cannabis, the SBA does not provide financial assistance to businesses that are illegal under federal law,” Carol Chastang, SBA public affairs specialist, told Cannabis Business Times at that time. “Businesses that aren’t eligible include marijuana growers and dispensers, businesses that sell cannabis products, etc., even if the business is legal under local or state law.”
A coalition of U.S. senators sent a letter to leadership March 26 to urge the SBA to extend its economic assistance to the cannabis industry by including language in a forthcoming appropriations bill that would prohibit the SBA from denying loan applications from state-licensed cannabis businesses.
Sens. Jacky Rosen (D-NV), Ron Wyden (D-OR) and eight of their colleagues then submitted a separate letter to leadership April 22, again requesting that the SBA extend aid to the cannabis industry.
Rep. Blumenauer and nearly three dozen other representatives also sent a letter to House leadership April 17, urging that chamber to ensure that cannabis businesses receive access to SBA programs.
Industry advocates and state officials have also launched their own efforts to urge lawmakers to extend economic relief to cannabis businesses.
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Michelle Simakis
Melissa Schiller
