Massachusetts Hemp Producers Get Relief with New Regulations, but Is It Enough?
Hemp-derived products can now be sold in cannabis shops, but most CBD products and flower are still prohibited—however, a new bill may soon change that.
Massachusetts hemp producers and processors may finally be getting some relief, as the state's Cannabis Control Commission (the Commission) recently released guidance on selling hemp products to licensed cannabis retailers in the state.
Hemp growers and processors have been anticipating the guidance since the December passage of the MA Hemp Industry Survive and Thrive amendment included in the state's 2021 fiscal budget.
The new guidance permits the sale of industrial hemp products to licensed cannabis retailers, opening up a new market for the state’s struggling industry.
According to the Massachusetts Department of Agricultural Resources (MDAR), products such as hempseed, hempseed oil, building materials, clothes, and other products and materials derived from hemp fiber are eligible for wholesale to cannabis retailers under the new guidance. However, the sale of cannabidiol (CBD) products—aside from topicals and non-food CBD products that do not make any therapeutic claims and are not marketed as a dietary supplement—remains illegal (unless approved by the U.S. Food and Drug Administration (FDA), the guidance says).
The sale of unprocessed or raw hemp, including flower, for consumer use also remains illegal (though the sale of these products from licensed grower to grower or grower to processor is allowed).
Hemp products sold at licensed cannabis retailers must be sold to consumers 21 or older, according to the guidance.
The new guidance also does not give the Commission regulatory oversight of hemp products. That remains within the jurisdiction of other agencies, including MDAR. “Marijuana Retailers are also not required to track the sale of the products through the Commission’s Seed-to-Sale System of Record but should maintain a record of sale for all Consumer-Ready Hemp Products and are encouraged to consult with the Massachusetts Department of Revenue regarding taxation and other similarly related matters,” the Commission’s guidance states.
Linda Noel, owner of Terrapin Farm in Franklin, Mass., previously told Hemp Growerthat she faced many challenges throughout her last three years growing hemp, and if it weren't for the amendment, she would not have grown hemp for the fourth year.
Noel says the guidance passed by the Commission is what she expected, as the Commission cannot change the list of the products permitted for sale. Instead, the state’s laws would have to change—which may be happening soon.
Last week, Sen. Diana DiZoglio filed Amendment 130 to the state Senate’s 2021 budget, says Laura Beohner, the president and co-founder of The Healing Rose Company, a hemp processor and manufacturer of finished skincare products, as well as the co-founder and director of the Massachusetts Hemp Coalition. The bill has the same language as bill H146 introduced to the state’s House of Representatives in March.
The Senate will vote on Amendment 130 on May 25, while the state's House of Representatives will consider bill H146 in a virtual public hearing on June 1.
If passed, the bill would open up the gates for hemp-derived CBD to be added to food, dietary supplements, animal feed, and other products sold in the state. It would also permit the sale of hemp flower to consumers, Noel says.
"We have two shots of it [the bill] getting through," Beohner says. "I will say that all the legislators we've ever talked to or spoken to about hemp are really supportive. It's just kind of about how much noise can we make…so that they know they have to step up and support it. So, we're doing a huge push on social media, and we are having people call and email their reps and senators trying to drum up enough support so that hopefully we can get it passed in one of those two ways."
Although Noel would ultimately like to see the product list expanded, she says the new guidance at least gives her a "market for her crop," but it's not the lucrative market she hoped for.
And while specific CBD products are not permitted for sale under the new guidance, Boehner says she's still excited to get her products in dispensaries and expects to double her wholesale sales this year.
"We've already gotten over probably a dozen inquiries from dispensaries here in Massachusetts who want to carry us," Boehner says. "We've been around since 2016. So, we've been at all the trade shows and local events, so a lot of people know our brand. We're really excited and hoping to get into a lot of those dispensaries with our products."
"We've been ready for this since it passed in December, probably before that," Boehner adds. "We are getting excited for that final day, hopefully in the next two weeks or so that [the guidance] officially goes into effect, and then we can start selling and doing demos in stores, going out to dispensaries and pop-up events—doing all we can to really promote it."
MATTIO Communications Launches Confluence Agency, a Full-Service Influencer Marketing Firm
Victoria Baek, former head of influencer marketing at MATTIO, will lead the new agency as CEO.
NEW
YORK, May 24, 2021 –
PRESS RELEASE – MATTIO
Communications, one of the longest-running and largest cannabis marketing
services firms, announced that it has launched a full-service influencer
marketing agency, Confluence Agency.
In addition to supporting cannabis clients, this subsidiary will also focus on
sectors including fashion, beauty, food, home, tech, lifestyle and travel as
influencer marketing becomes an integral aspect of building brand value across
all industries.
Over the past 10 years,
influencer marketing has become a preferred strategy for brands to engage with
target audiences. Increased social media usage throughout 2020 further enabled
companies to drive sales and brand awareness through curated content generated
by micro and macro influencers. According to Insider Intelligence, the value of the influencer marketing industry is
projected to reach $15
billion by 2022 as more brands invest in building authentic
long-term consumer relationships.
“Since our inception, MATTIO
has developed strategic solutions that exceed our clients’ business goals,”
said Rosie
Mattio, founder and CEO of MATTIO. “We’ve seen firsthand how
influencer marketing drives growth among our own cannabis clients and is the
future of brand marketing. Launching an agency dedicated to executing
best-in-class influencer campaigns aligns with our core mission of providing
novel and effective media services to high-growth industries.”
Victoria Baek, who was head of influencer marketing at MATTIO, will lead Confluence
Agency as CEO. Baek has worked with legacy consumer brands including Coca-Cola,
Taco Bell, Disney and Forever 21. Prior to working at MATTIO, Baek was head of
influencer marketing and brand partnerships at HARMAN International where she
spearheaded the JBL Master Class series, a monthly program featuring electronic
producers and hip-hop artists that not only brought the HARMAN portfolio to
millions of new deals but also generated new brand deals.
“The influencer industry has
evolved from one-off transactions to valuable, long-term partnerships. Online
communities allow brands to connect authentically with audiences in a way that
drives measured performance,” Baek said. “We’re
so excited to launch this new agency to help brands understand emerging
channels and leverage these relationships to strengthen overall brand loyalty and
improve conversion.”
Confluence Agency manages
influencer marketing strategies for brands from start to end. From identifying
celebrity and/or niche influencers, to creating content guidelines, to handling
the logistics of gifting programs, the Confluence team takes a goal-oriented
approach to every campaign in order to track progress. For more information on
Confluence’s full range of services, please visit https://www.confluenceagency.co.
Courtesy of Mosaic+
Mosaic+ Brings a New Vibe to Oklahoma City
The dispensary features a podcast recording room and a design-forward focus on patient education.
Mosaic+ opened in late April in Oklahoma City, delivering an immersive retail experience to the booming medical cannabis market. The store comes from the team behind Resonant Cultivation in nearby Pauls Valley, Okla., and builds off the company’s focus on patient education.
Courtesy of Mosaic+
Joe Hendrix, chief financial officer of Resonant Cultivation and Mosaic+, said that the plan was always to develop a vertical business in Oklahoma.
“A lot of the research and guidance that we were provided by industry operators in other states was that, long-term, vertical integration is going to be a hedge of success for companies—just to have your own outlet of product and in some way to be able to manage pricing fluctuations when the market changes,” he said.
It was important for the team to start with cultivation. Of Resonant’s four founders, two came to the company with deep experience in farming. In the company’s first years in business, Resonant has picked up a reputation in Oklahoma and on social media for nuanced craft cannabis and exciting genetics.
That foundation, Hendrix said, will translate to the customer experience in-house.
“[Developing Resonant Cultivation] allowed us to really focus the first phase on cultivation,” he said. “Get our organic style down and continue perfecting the process. We can build that brand reputation, and then from there pivot over into the retail side, which is what we we've done.”
The trick is that, three years into the Oklahoma medical cannabis market, there’s already a pretty full retail market in most bigger cities in the state. Patience became important. The team was looking for the right site, and restrictive regulations can make that a difficult task in any large city in the U.S.
They happened to find a location that would be a terrific fit. Situated between an independent record store and a vintage bar, Mosaic+ rests on a main street north of downtown OKC.
“We really found a spot that checked all the boxes for us and allowed us to be in a place where we think, long-term, we can build the foundation for success,” Hendrix said.
Inside, the patient experience is foregrounded with educational literature and easy-to-understand branding, as well as a rotating cast of fan-favorite products and newer offerings from around the state marketplace. Mosaic+ clearly segments its flower, edibles, topicals and concentrates to make the shopping experience comfortable for first-time and longtime patient consumers alike.
As a result of what was learned during the coronavirus pandemic, the Mosaic+ team made sure to install a walk-up window in the back parking lot. This allows patients to seek a more discreet option for their pickups or a more physically distanced option for those still interested in that type of transaction. Hendrix said it’s one of those things that might not have come through the retail strategy prior to 2020.
Another sign of the times: Mosaic+ includes a podcast room, which plays off the record store next door and ties in the vibrant music community of Oklahoma City. The podcast room is in “launch mode,” Hendrix said, offering the Mosaic+ team an opportunity to experiment with some fun side projects and content marketing.
“Touring artists can come through and experience Oklahoma City a little bit,” he said. “It may be a place for them to connect with some of their fans here locally—promoting shows and also creating great content that could be leveraged by our brands and disseminated to help other artists continue to grow.”
Millennium Investment & Acquisition Company Inc. Announces Initial Foray into Cannabis Cultivation
In the regulatory process of becoming a holding company, Millennium Investment aims to win cannabis licenses in Colorado.
OLD BETHPAGE, N.Y., May 24, 2021 – PRESS RELEASE – Millennium Investment & Acquisition Co. Inc. (MILC) announced that it has agreed to invest in a newly formed cannabis operator Walsenburg Cannabis LLC (WC). As part of the transaction, MILC has agreed to lend capital to WC for its business operations and MILC is in the process of obtaining regulatory approvals for holding cannabis licenses in Colorado. Upon receiving regulatory approval, it is contemplated that the company would become the majority owner of WC in the form of a preferred equity ownership stake.
Simultaneous with MILC’s investment, WC entered into a long-term lease for real estate purchased by Power REIT. David H. Lesser, MILC’s chairman and CEO is also chairman and CEO of Power REIT. The approximately 22.2-acre site includes existing greenhouse and processing space (the “property”). As part of the lease, Power REIT has agreed to fund the rehabilitation and upgrading of the existing improvements and the construction of additional greenhouse space. Upon completion of this work, the property will have a total of approximately 102,800 square feet of greenhouse and related space. Millennium Investment’s total capital commitment for the project is $750,000.
“This transaction represents a new area of focus for MILC as MILC seeks to transition from an investment company under Securities and Exchange Act of 1940,” Lesser said. “As previously disclosed, MILC is actively selling its sole investment in securities and is converting to an operating business with two areas of focus: sustainable cannabis cultivation in greenhouses and production of activated carbon. MILC is enthusiastic about the prospects for these two focus areas, and I look forward to announcing additional exciting developments in the near future.”
WC is led by President Jared Schrader, an experienced cannabis cultivation operator with a solid track record. Schrader grew revenue at a Colorado cannabis cultivation facility from annual revenue of $150,000 to weekly revenue of over $150,000 (i.e., more than $8 million annually) over the span of two years.
“The property is subdivided into five parcels that each have local approval for the cultivation of cannabis. This allows the property to pursue a rapid growth plan given the nature of Colorado cannabis licensing which is based on a limited plant count initially per property,” Schrader said. “Once performance is demonstrated to the regulators, each property will have the potential to ‘tier-up’ and add more plants. Based on the initial property configuration, WC intends to quickly establish approximately 11,000 cannabis plants which can be harvested approximately five times per year. Based on recent prices for cannabis in Colorado, this would result an annual run rate of revenue in excess of $10 million. Colorado was the first state to legalize cannabis and is currently the second largest cannabis market in the United States which continues to generate significant demand growth.”
Schrader added, “I believe this property can quickly become a large-scale producer of cannabis and cannabis-related products to serve the Colorado market which is the second largest cannabis market in the United States. I am excited to team up with both MILC and Power REIT to get this project growing.”
Deregistration as a 1940 Act Company
On Oct. 14, 2020, shareholders approved a proposal to change the nature of the MILC’s business from a registered investment company under the Investment Company Act of 1940 (the 1940 Act) and to a holding company that focuses primarily on owning and operating businesses that produce activated carbon and acquiring other private businesses (collectively, the “deregistration proposal”). The company is in the process of implementing the deregistration proposal so that it is no longer an “investment company” under the 1940 Act and has applied to the Securities and Exchange Commission (SEC) for an order under the 1940 Act declaring that the company has ceased to be an investment company (the “deregistration order”).
While the company is committed to fully implementing the deregistration proposal, it is still contingent upon regulatory approval and the ability to reconfigure the company’s portfolio to deregister as an investment company. The time required to reconfigure the company’s portfolio could be impacted by, among other things, the COVID-19 pandemic and related market volatility, determinations to preserve capital, the company’s ability to identify and execute on desirable acquisition opportunities, and applicable regulatory, lender and governance requirements. The conversion process could take up to 24 months; and there can be no assurance that the deregistration proposal, even if fully implemented, will improve the company’s performance. Further, the SEC may determine not to grant the company’s request for the deregistration order, which would materially change the company’s plans for its business.
MILC continues to focus on the liquidation of its sole investment in securities—its investment in SMC and plans to invest the proceeds in operating businesses. MILC currently believes it will fully liquidate its position in SMC before the end of the current quarter although there can be no assurance as to when or if such liquidation will occur.
Konrad | Adobe Stock
Dealing With Delta-8 ‘Riskiest Thing You Can Do’ in Cannabis: Q&A With Rod Kight
The attorney says the government “never contemplated naturally occurring compounds that could also be produced from other naturally occurring compounds.”
Delta-8 tetrahydrocannabinol (THC), patenting psychedelics and certificates of analysis: these are some of the hot topics North Carolina and Oregon-licensed attorney Rod Kight focuses on at his law practice.
Hemp Grower caught up with the Kight Law Office principal and founder to discuss delta-8 THC, the contentious yet lucrative psychoactive cannabinoid that is prompting companies to produce it and states to ban it. Since Hemp Growerpublished a piece April 23 on the first 12 states to implement bans on delta-8 THC, New York, Vermont and Washington have also banned it.
While Kight has outlined a legal theory that hemp-derived delta-8 THC is not a U.S. Schedule I substance, he says dealing with the cannabinoid is still risky, and the market is becoming saturated.
Rod Kight
Photo courtesy of Rod Kight
Patrick Williams: What are some of the main things you advise clients who operate in the delta-8 space about regarding this cannabinoid?
Rod Kight: So, I'll start by saying—it's a little bit of a sort of prelude to that—when delta-8 became a thing about a year ago, as we really started to get some calls about it, it was usually from companies that were focused on delta-8, like they were calling because they [produced] delta-8. And at the time, a lot of my more traditional hemp [and] CBD [cannabidiol] company clients were not interested in entering the delta-8 space. Now, just because of the fact that [the] CBD and hemp biomass … market is really down, but the delta-8 market is really up, a good chunk of my clients—even ones that were initially hesitant to get involved—are now involved in delta-8. It's become sort of just one more piece of the hemp puzzle in terms of the industry.
With that being said, … the first thing I say [when clients call] is that getting involved in the delta-8 market is the riskiest thing you can do in the entire cannabis industry right now. And by ‘cannabis,’ I mean that in the big umbrella terms of marijuana and hemp. The reason I say that is because on the one hand, marijuana is federally illegal. However, if you're in the regulated market, you are abiding by very specific state laws and regulations that are usually pretty clear. Also, there are some protections for medical marijuana states in terms of the feds interfering. With respect to the hemp market, hemp is obviously lawful; it's clearly defined. But delta-8 is this thing [that] gets people high, but it's hemp. There's a lot of controversy about it. It's really clear that law enforcement and regulators don't like it. Their position typically is that it's illegal ... so, that's why it kind of puts a target on your back if you're involved in the delta-8 industry.
PW: You talked in your blog posts about legal theory. Could you explain how that applies to this topic? Could a federal judge rule tomorrow that delta-8 derived from hemp CBD extract is a Schedule I substance, and we'd just have to live with it?
RK: Potentially, yeah—and not tomorrow because it takes time for cases to go through. But you're right. Theoretically, … someone in some capacity producing or selling or maybe even in possession of hemp-derived delta-8 THC could be charged with a crime. Then that would go to court, and they would argue the legal theory that [I’ve written about], and then the law enforcement, whether that’s DEA [U.S. Drug Enforcement Administration] or some state or local law enforcement would argue, no, this is an illegal form of THC, and a court could rule that, in fact, law enforcement was correct. And that's why we don't know. There have been zero cases ever decided on this issue. Now, that doesn't necessarily mean that suddenly delta-8 THC is illegal throughout the country. It depends. If there's some local judge in some small, Podunk county, that doesn't carry as much weight as, say, a federal court … determining that this is illegal at a high level. Also, that person could appeal. But to answer your question, yes, a judge could read this theory, hear the law enforcement's theory and then make a decision based on that as to what's right.
JK: Yeah, for the most part, states have a right to do that. The [federal legal status] is sort of a baseline. The problem is we don't know what the feds require here. What I argue in my theory is that the feds specifically made hemp lawful and within the definition of hemp are all cannabinoids, isomers, derivatives, extracts, so on and so forth, with a delta-9 THC level that's no more than 0.3%. So, it's absolutely and fundamentally clear that delta-8 that's extracted from a hemp plant is lawful.
The real question, and the reason I wrote this most recent article on synthetics, is: What about [the legality of] delta-8 that is produced from hemp-derived CBD? So, you hear a lot of chatter about how, ‘Oh, no, this is synthetic THC, and synthetic THC is illegal.’ Well, A, is this really synthetic THC? I think that that's actually an open question that's not answered by any court case. And B, even if it is synthetic, it's still legal because it meets the definition of hemp, just on its face with respect to the 2018 Farm Bill's definitions.
PW: Where did the idea that synthetic cannabinoids are Schedule I substances come from?
RK:. So, THC is listed in the Controlled Substances Act. If you look, it includes synthetic THC. And there are a couple reasons why that's there. First of all, there were some court cases about people who were busted with THC. And they argue, well, THC is already included within the definition of marijuana, so the THC in the Controlled Substances Act must only refer to synthetics. And the court said, 'No, no, no, no. It includes all THC.' And then vice versa, you heard people say, 'Well, THC is here, but that doesn't mean synthetic.' No, it's clear that it's all forms of THC, including synthetic forms.
The second piece is it really kind of rose to prominence back when you'd see ‘spice’ and all sorts of other truly manufactured-in-a-lab compounds that mimic the effects of THC. The molecules weren't structured anywhere at all similar to THC. But the effects they had in terms of binding to the CB receptors were similar and caused the high. So, that's how the issue really arose. It never contemplated naturally occurring compounds that could also be produced from other naturally occurring compounds. So, that's why we're kind of out in no man's land with respect to hemp-derived delta-8 THC.
PW: Do you have any thoughts on where we will see more clarity on the delta-8 subject? Will it be a judge or Congress, or do we just not know?
RK: I think that in hemp land, this is like one of the top issues. It's a thing that everyone wants to talk about. But when you sort of pull back your focus and look at the country in general and look at Congress and what its priorities are, I don't think that it's a big priority for Congress to come in and legislate specifically about delta-8. I would be very surprised if we saw anything from Congress regarding delta-8.
In terms of where we're going to see some movement, I think probably what we're going to see is more on a state-by-state basis. And this happened with CBD, in the early days of CBD. This happened, and continues to happen, to some degree, with smokable hemp. It's an issue that arises out of the farm bill where states are beginning to carve out what they believe to be true and correct. So, I think we're going to see a number of states come out—like Kentucky did, Colorado just has, Oregon probably will, Alabama I think is going to—that expressly prohibits it. But because the delta-8 market is so big, and because it really is supporting the hemp industry in a lot of ways right now, I think that eventually, you’re going to see some pushback, and you're going to see states that actually embrace it and say, ‘No, we are a delta-8 hemp-friendly state, and provided that you do whatever it takes, whether register or provide clean, safe products, blah, blah, blah, we're going to allow it in our state.’ Florida hasn't gone that far, but in one of its FAQs on its department of agriculture webpage, it discusses delta-8 in a positive way.
So, to answer your question, I think we're going to see this play out on a state-by-state regulatory basis with the preliminary push being against delta-8. But I think we're going to see some holdout states go the opposite way. And then, finally, we may see some law enforcement actions and some court cases that arise. But my guess is those will mostly be sort of local and isolated cases, versus some big, huge federal case that we see that has some national precedent.
PW: For hemp industry members who are in states where delta-8 hasn't been banned yet and they’re thinking about getting into the space, what would you tell them?
RK: I think I would tell them a few things. [The first] is, I start off every conversation with saying, ‘This is risky.’ And the risk is the fact that this is a contentious subject with legal positions on both sides and that there's been no court that's ruled on this. So, it is a risky business venture. But secondly, … I strongly contend that it's lawful based on the legal theories that I've outlined on my blog. And third—this is not [a] legal [issue]—but in terms of business, if you're just now getting into delta-8, you're getting into a crowded market. In addition to the legal issues that you need to consider, you need to consider general business principles. Are you essentially introducing one more energy drink into the overcrowded energy drink market? How are you going to distinguish yourself? I think those same principles apply because the delta-8 market right now is appearing to get saturated.
PW: Is there anything else on this subject that we haven't touched on, or anything else that you're finding or hearing about this, that you'd like to share?
RK: Yeah, I think so. I've really been pretty vocal about delta-8 from hemp as not being a controlled substance and have articulated these theories …. But one thing I want to be clear about to people that are reading this is that I think it's enormously important to—if you're going to produce delta-8 products—produce safe products that would otherwise comply with state and federal law in terms of consumer safety.
I think the most dangerous thing to the delta-8 sector of the industry is someone with a bad product that's got some toxins in it, either residual toxins from producing it or it's just blended with some bad oil or whatever the case may be, and someone gets hurt—not because of the delta-8, which is largely safe, but because it's a bad product. So, I would strongly encourage anyone that's getting involved to meet those high standards that would be required for any type of consumer product. We don't want to hurt anybody.
Editor’s Note: This interview has been edited for length and clarity.
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