The FDA, FTC Join Forces To Warn Rooted Apothecary About Its CBD Products

The FDA, FTC Join Forces To Warn Rooted Apothecary About Its CBD Products

Original Article: Green Market Report: The FDA, FTC Join Forces To Warn Rooted Apothecary About Its CBD Products

[Canniseur: Selling CBD Rule 101: Do not attribute healing properties to your products. This company violated the rules and was given a slap on the wrist. Until FDA approval, it will be like this when selling CBD.]

The U.S. Food and Drug Administration and the Federal Trade Commission posted a joint warning letter dated October 10, 2019 to Rooted Apothecary LLC, of Naples, Florida, for illegally selling unapproved products containing cannabidiol (CBD) online with unsubstantiated claims that the products treat teething pain and earaches in infants, autism, attention-deficit/hyperactivity disorder (ADHD), as well as Parkinson’s and Alzheimer’s disease, among other conditions or diseases.

The company used product webpages to make unfounded medical claims about its CBD products, and some of the products were also unlawfully marketed as dietary supplements. The agency has determined that CBD products cannot be marketed as dietary supplements.

The letter read, “The FDA has determined that your “Teeth/TMJ – Essential Oil + CBD Infusion,” “Ears – Essential Oil + CBD Infusion,” “Hemp Capsules, 750 mg,” “Hemp Infused Body Butter,” and “Hemp Oil” products are unapproved new drugs sold in violation of sections 505(a) and 301(d) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act), 21 U.S.C. 355(a) and 331(d). Furthermore, these products are misbranded drugs under section 502(f)(1) of the FD&C Act, 21 U.S.C. 352(f)(1).

The letter noted that “Adequate directions for use” means directions under which a layperson can use a drug safely and for the purposes for which it is intended. “Your products are offered for conditions that are not amenable to self-diagnosis and treatment by individuals who are not medical practitioners; therefore, adequate directions for use cannot be written so that a layperson can use these drugs safely for their intended purposes.”

It went on to say “It is unlawful under the FTC Act, 15 U.S.C. § 41 et seq., to advertise that a product can prevent, treat, or cure human disease unless you possess competent and reliable scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made.” The letter cited the product POM Wonderful, a pomegranate beverage that is suggested to be healthy.

The company has 15 days to correct its violations.

Original Article: Green Market Report: The FDA, FTC Join Forces To Warn Rooted Apothecary About Its CBD Products

Constellation Takes Huge Hit From Canopy Growth Investment

Constellation Takes Huge Hit From Canopy Growth Investment

Original Article: Green Market Report: Constellation Takes Huge Hit From Canopy Growth Investment

[Canniseur: Constellation Brands, a giant in the alcoholic beverage industry, invested almost $200M in the nascent cannabis market 2 years ago. They were one of the older companies to bet on expected growth of the Canadian cannabis market. It demonstrates the danger of investing in a market this new. There are too many bad players who are purporting to start companies, but can’t actually run an organization for growth. We see a lot of the CEOs of new companies being forced to resign. Why? Because bad players are everywhere and a gold rush is a gold rush.]

Beverage giant  Constellation Brands, Inc. (NYSE: STZ and STZ.B) stock fell over 6% after the company reported a $484 million write-down on its $4 billion Canopy Growth investment. The cut drove its net loss to $525.2 million, or $2.52 a share, for the quarter to Aug. 31, after income of $1.149 billion, or $5.41 a share, in the year-earlier period. Excluding those charges, the company had per-share earnings of $2.72, ahead of the $2.63 FactSet consensus. Overall for Constellation. the company’s sales edged up 2% to $2.344 billion, meeting the FactSet consensus.

Canopy Growth investors didn’t seem to mind. That stock rose almost 2% and was lately trading at $22.38. This was especially comforting to the cannabis community since these stocks have been in a bear market for most of 2019.

The company had signaled this summer that it was losing its warm and fuzzy feeling towards Canopy when it terminated the CEO Bruce Linton. Linton is widely respected within the cannabis community and the termination was seen as a sign that Constellation was flexing against the smaller cannabis company. In a previous analyst call,

“While we remain happy with our investment in the cannabis space and its long-term potential, we were not pleased with Canopy’s recent reported year-end results,” Chief Executive William Newlands told analysts. “However, we continue to aggressively support Canopy on a more focused long-term strategy to win markets and form factors that matter, while paving a clear path to profitability.”

Having said that Constellation said it has been actively developing a range of CBD products and hopes to bring them to the U.S. market by the end of its fiscal year.

Constellation did note that it was planning on going further into the seltzer category by introducing four new flavors of a Corona-brand product planned for Spring 2020. It was described as being “heavily accretive,” but also as a product that could take beer sales. Wine in a can is also turning into a popular product.

Original Article: Green Market Report: Constellation Takes Huge Hit From Canopy Growth Investment

Cannabis Female Executives Feel Frustration On International Women’s Day

Cannabis Female Executives Feel Frustration On International Women’s Day

Original Article: Green Market Report: Cannabis Female Executives Feel Frustration On International Women’s Day

[Canniseur: A lot of forces may be at work causing the reduction of women leaders in the Cannabis industry. This doesn’t make it right. Shedding the light on this problem can change it.]

March 8 is International Women’s Day and while there are many successes to celebrate in the cannabis industry for women, there is increasingly the feeling that many of the early gains are slipping away. In the early days of the cannabis industry, it was estimated that over 36% of the companies were led by women, that number is believed to have slipped to 27%. Some think it is even lower.

Diane Katz, President of Electrum Partners, a venture management company specializing in
medical and adult use cannabis and ancillary businesses said, “I know many women in the space and they are extremely frustrated.” Katz noted that she has a great deal of experience in many industries and feels the cannabis industry treats women worse than other industries.

“I have sat at multiple meetings where I’m the only woman in the room and I get no eye contact,” she said. Katz relayed stories of women she knows that apply for licenses but gets dismayed when they continually get awarded to men. “Women represent such a large portion of the cannabis market now, but if licenses aren’t awarded to them or companies don’t add more women to the executive suite, how can they address these markets appropriately,” she asked. Katz said she attended a cannbis conference that was supposed to target women and investing, but every panel was only populated by men.

A report from the Cannabis Consumers Coalition (CCC) says that just as many women consume cannabis as men. This result is dramatically different from other reports that usually find that men dominate the cannabis consumption crowd. CCC’s survey  had 53% of women consuming cannabis versus 42% for men. “Although there is a disparity among reports of the gender of the cannabis consumers, the importance of the female consumer is not negligible,” said Larisa Bolivar, author of the report. “The most profound finding in our report was that that majority of respondents were women by over a 15% margin.”

Carol Ortega Algarra, Founder & Managing Director of Muisca Capital Group also voiced the same observations as Katz. “I have always been the only woman in the room,” said Algarra. “And the only Latina in the room. Unfortunately, the numbers of female executives are limited, not only for women but also for Latinas.” Her background is in the accounting industry and after receiving a Masters Degree from NYU, ended up in Portland OR working for a cannabis company.

She also believes that women in cannabis have a harder time than men in raising money for ventures. They have mostly given up on the cannabis venture funds and have turned to female-led funds. These have sprung up as women in finance realized that women were not signing deals the way men were.

Katz told of a woman she knew who had a bubbly voice and enthusiasm for her business, but that trait was not respected by men looking to invest in the cannabis industry. She wasn’t taken seriously because her voice didn’t have business gravitas. Female investors have a different reaction to that type of executive.

Looking Ahead

Alagarra is hoping to bring more diversity and inclusion into the industry. She founded Cannabis Entrepreneurs Network and has been providing help with financial knowledge. “We’ve been putting our effort in terms of education. We’re teaching them what a financial statement is, what ROI is and how to prepare decks.” Katz is working at Electrum to help build female networks to bring together alliances. “I think women can run things differently because it’s a new industry and its ripe to do things in a new way.”

The post Cannabis Female Executives Feel Frustration On International Women’s Day appeared first on Green Market Report.

Original Article: Green Market Report: Cannabis Female Executives Feel Frustration On International Women’s Day

FDA Commissioner Outlines Pathways For CBD In Food, Supplements

FDA Commissioner Outlines Pathways For CBD In Food, Supplements

Original Article: Green Market Report: FDA Commissioner Outlines Pathways For CBD In Food, Supplements

[Editor’s Note: Dr. Gottlieb offers a way forward for CBD products in the marketplace.]

President Trump signed the 2018 Farm Bill last week that included provisions that eliminate several federal barriers to the cultivation, production, and commercial development of hemp and hemp products. It also eliminated hemp from Schedule I of the Controlled Substances Act. “Hemp” is now defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis.”

The Food and Drug Administration (FDA) issued a statement by Commissioner Dr. Scott Gottlieb on the agency’s regulation of products containing “cannabis and cannabis-derived compounds,” in which the Commissioner acknowledged there are “pathways” for FDA to consider “circumstances in which certain cannabis-derived compounds might be permitted in a food or dietary supplement.”

Many people immediately assumed that with the signing of the bill, hemp-derived CBD and products made with hemp-CBD would be legal. The FDA has the authority to regulate products containing cannabis or cannabis-derived compounds, and declared that such ingredients – clearly including hemp and hemp derivatives, such as cannabidiol (CBD) – are treated “as we do any other FDA-regulated products.”

Gottlieb restated FDA’s concerns over “drug claims being made about products not approved by the FDA that claim to contain CBD or other cannabis-derived compounds,” as well as the agency’s position that under the Food, Drug, and Cosmetic Act (FD&C Act) it is “unlawful … to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”

Dr. Gottlieb also emphasized that FDA “has authority to issue a regulation” that would allow these naturally-occurring hemp compounds in a food or dietary supplement. He also stated that FDA is now evaluating whether to pursue such a process and clarified that the agency “would only consider doing so” if it determines “that all other requirements in the FD&C Act are met, including those required for food additives or new dietary ingredients.”

“The food and supplement industry should read Dr. Gottlieb’s statement first and foremost as an indication that FDA shares our desire for hemp and CBD products to be properly regulated under federal law, and now recognizes its statutory authority to address the agency’s view of the prior-drug status of some Cannabis compounds through rulemaking,” noted American Herbal Products Association (AHPA) PresidentMichael McGuffin. “The relevance of this authority was first seen by AHPA’s Cannabis Committee over two years ago, and AHPA identified this publicly in May of this year as an approach that FDA should be encouraged to consider.”

“At the same time, the Commissioner’s emphasis on the legal requirements that must be met for food additives or new dietary ingredients (NDIs) is a clear signal of FDA’s thinking, and we should not be surprised if any forthcoming FDA action focuses on compliance with the law’s provisions for NDI notifications for supplement ingredients, and for hemp ingredients used in foods to meet the provisions to establish these as generally recognized as safe (GRAS) under the law,” added McGuffin.

Commissioner Gottlieb’s statement also announced that FDA intends to convene a public meeting in the near future to discuss products that contain hemp-derived ingredients, including food and supplement products.

“AHPA has been engaged in issues related to the safe use and responsible commerce of lawfully marketed products derived from Cannabis since 2010 and we will continue to actively participate in any and all relevant FDA meetings and rulemaking activities,” noted Jane Wilson, AHPA’s Director of Program Development and liaison to the AHPA Cannabis Committee.

Original Article: Green Market Report: FDA Commissioner Outlines Pathways For CBD In Food, Supplements

Illegal Grows Spark Resell Market In Used Equipment

Illegal Grows Spark Resell Market In Used Equipment

Original Article: Green Market Report: Illegal Grows Spark Resell Market In Used Equipment

[Editor’s Note: The resale market is a fascinating industry. This is such a great example of how an innovative person or company can fill a niche with win-win outcomes. ]

When a company is caught growing cannabis illegally, it’s often the landlord who’s left to clean up the mess. The criminals rarely come back for their equipment and the police want nothing to do with it either.

So, the landlord is confronted with clearing out sometimes hundreds of sophisticated, expensive lights, watering systems, and other various cultivation items in order to get the space back to rent. Metal scrapper and the owner of CH Hydroponics James Robba stumbled into the market when he was asked to disassemble a huge illegal grow.

Initially, he tried taking the lights apart to sell for scrap metal. Then he found that he could make more money keeping the lights intact and reselling them versus taking the lights apart. He began testing the lights to see if they worked and when they did he began selling them. “I was getting between $200 and $250 per ballast,” said Robba. For the uninitiated, ballasts run grow lights that are used in indoor grows.

After selling off his first tear down, he began running ads on Craigslist offering his demo work in order to get more second-hand equipment. “We started tearing down huge grows,” he said. “People that get busted don’t go back for their equipment.” He said building managers and landlords began calling him.

“We’ve seen gnarly stuff,” said Robba. “We’ve seen people tunnel down, right through a foundation, down 20 feet to tap into the main power line.” He has disassembled illegal grows with 500 lights making these $5-$6 million illegal operations.

Busted

You would think that it’s the landlord who has called the police and informed them about the illegal grow. But Robba said instead it’s usually disgruntled employees who end up tipping off the police. He told one story about an unhappy employee who knew the building didn’t have security guards on Sunday, so he went there with the intention to steal. Instead, he set off a silent alarm which automatically called the police. Oops.

Another way that illegal grows are discovered is that cities are using drones to find buildings with excessive amounts of HVAC equipment on the roof. Most buildings will have a few of these mechanical units on the roof, but a grow could have as many as 40. A telltale sign of something unusual.

Then there’s the smell. Robba said one operation without thinking opened a roof panel on the building, thus letting out the fragrant aroma of its cannabis plants. Neighbors complained and called the police.

Code Violations

With all these illegal grows getting busted and torn down, one would think people would be going to jail but that isn’t happening. Police departments found it wasted time and money to go after the lawbreakers. An operation one block from the police station in San Bernardino was busted with over 25,000 plants and no one went to jail.  Instead, cities found that good old-fashioned building codes and civil penalties were the way to go.

It’s very black and white. There is no way to argue building codes. It removes the police and courtrooms from the equation. It’s very easy for a city to tag a property with a building code violation and charge the owner with fees and penalties. Five tons of HVAC equipment on a roof is a dangerous situation for the occupants inside because in general buildings aren’t able to withstand that amount of weight.

It’s a violation and the city can earn big money by charging an owner a daily penalty until the building comes back into compliance. So, rather than spend money on police and attorneys to shut down an illegal grow, the city can instead earn money and still have the same outcome. This incentivizes the owners and landlords to fix the situation as quickly as possible.

Used Equipment

If the equipment is cheap and old, Robba will charge the owners to remove it. If it’s high quality, then they pay the landlord a reduced rate to demolish the grow. Robba said he does about two a month, but then added he’s already done three this past month. A new light can cost $250 each, while Robba pays about $20 for each ballast, he can resell them for roughly $75.

He believes the high tax rate of legal cannabis companies in California is creating the shadow black market. While many hobbyists buy his used equipment, he also believes that plenty of small black market operators are buying it as well. Still, he said it is getting harder for the illegal grows to stay in business as the city cracks down.

He doesn’t condone breaking the law, but he said the disruption of legalization has hurt the small operators who will now need to turn to other forms of business to make a living. Other things that could be more harmful than a small grow operation.

The post Illegal Grows Spark Resell Market In Used Equipment appeared first on Green Market Report.

Original Article: Green Market Report: Illegal Grows Spark Resell Market In Used Equipment

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