rocket domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/leftri6/public_html/wpexplore/wp-includes/functions.php on line 6131megamenu-pro domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/leftri6/public_html/wpexplore/wp-includes/functions.php on line 6131acf domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/leftri6/public_html/wpexplore/wp-includes/functions.php on line 6131Many cheered the passage of the 2018 Farm Bill, which descheduled industrial hemp and its derivatives (including CBD). But that was just the start of a much more complicated regulatory story that continues to have a major impact on entrepreneurs, investors, and advocates and patients who rely on CBD.
When President Trump signed the 2018 Farm Bill into law one of the key changes affecting the cannabis industry was the separation of “hemp” and “marijuana.” Before the Farm Bill, any incarnation of the cannabis plant and its byproducts were lumped into a single category and considered a Schedule 1 drug. Key language in Section 1103 of the Farm Bill defines hemp 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 concentration of not more than 0.3 percent on a dry weight basis.”
In short, the Farm Bill descheduled industrial hemp and its byproducts as long as it stayed under the threshold of less than 0.3 percent THC. CBD is derived from the cannabis plant, whether there are significant levels of THC or not. CBD industry advocates have interpreted the language “all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers” as descheduling CBD when industrial hemp is the source. And they are “mostly” correct in this interpretation. Unfortunately, there are other federal agencies in play.
United States Department of Agriculture (USDA) enacted the 2018 Farm Bill in their position overseeing laws related to the cultivation of industrial hemp. The United States Food and Drug Administration (FDA) oversees medicine and food additives. CBD has emerged as a “wonder drug” with a growing list of potential benefits and now appears as an additive in a wide range of consumer products. In addition, the FDA approved Epidiolex, the first CBD-derived drug, in 2018.
All of this has culminated in CBD being a priority of the FDA, so much so, that just a week after the Farm Bill was signed into law, the FDA issued a press release clarifying and asserting their regulatory control over all cannabis-derived compounds.
“We treat products containing cannabis or cannabis-derived compounds as we do any other FDA-regulated products — meaning they’re subject to the same authorities and requirements as FDA-regulated products containing any other substance. This is true regardless of the source of the substance, including whether the substance is derived from a plant that is classified as hemp under the Agriculture Improvement Act.”
Concurrent with the Farm Bill and the press release regarding CBD, the FDA also issued three Generally Regarded as Safe (GRAS) notices for hemp by-products: hulled hemp seeds, hemp protein powder, and hemp seed oil. Clearly demonstrating that (some) hemp products have been descheduled and cleared for use by the FDA.
The FDA’s policy is different toward CBD for two key reasons. Firstly, CBD products are largely marketed with a wide variety of therapeutic claims. In their press release the FDA notes:
“The FDA requires a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approved by the FDA for its intended use before it may be introduced into interstate commerce.”
Secondly, the FDA’s approval of CBD-based drug Epidiolex, put CBD and THC into the category of “active ingredients in FDA-approved drugs.” Under the Federal Food, Drug, and Cosmetic Act (FD&C Act) it is “illegal to introduce drug ingredients like these into the food supply, or to market them as dietary supplements.”
In short, the FDA does not distinguish between CBD derived from hemp or “marijuana,” and until the agency approves CBD and establishes a regulatory framework, adding CBD to food and beverages is illegal.
While early CBD research has shown promise as a treatment for conditions like epilepsy and anxiety, as a consumer product it is unproven and has been largely unregulated until recently. In the absence of labeling standards and regulated dosage guidelines, consumers often have little understanding of what they are buying and its potential effects.
All of this uncertainty has earned greater regulatory attention for CBD. There have been reports of crackdowns on bakeries, restaurants and retailers selling CBD in California, New York, Maine and Ohio, just to name a few. This regulatory response has shocked and angered a number of hemp producers and CBD retailers who have invested millions into business ventures that they feel only supply the public with products that help manage health concerns.
Despite the confusing legality, the CBD industry appears to be moving full-steam ahead. In recent months, national retailers as diverse as Walgreens, DSW and Barney’s New York have announced plans (or have already begun) selling CBD products. Indicating the burgeoning CBD industry is well on the way to mainstream acceptance.
In February, former FDA Commissioner Scott Pruitt testified before the House Appropriations Committee and said that the FDA is initiating a rule making procedure with the goal of creating “an appropriately efficient and predictable regulatory framework for regulating CBD products.” The FDA will launch the process with a public hearing on CBD scheduled for May 31, 2019.
Further complexity struck when Pruitt unexpectedly announced his resignation, which took effect in early April. Pruitt has been replaced by Dr. Ned Sharpless, the former director of the National Cancer Institute. To date, it is unknown whether Sharpless intends to take a progressive stance toward CBD.
While delays occur at the federal level, states are shifting into action. Maine recently passed an emergency law governing CBD. The bill aligns the definition of hemp in Maine’s laws with the definition used in the Farm Bill. Meaning, as long as CBD is derived from hemp sources it is to be considered a food product, rather than medicine, and is cleared for use in Maine.
Ultimately, until the FDA creates a regulatory framework for CBD, it will remain illegal to add it to any food or drink products.
Learn more about the FDA Public Hearing on CBD here
Provide a public comment for the FDA on CBD here
]]>Currently, cannabis is one of the fastest-growing industries in the world, on the way to generating an estimated $146.4 billion by 2025 (according to Grand View Research). The industry is currently in its early-stages, which can mean that even modest investments now could greatly increase in value 5, 10 or 20 years down the road. As the industry finds its footing on a global scale new investment opportunities emerge every day.
Cannabis does carry lingering social stigmas that may keep investors away. Yet the plant itself is only one facet of a diverse industry that includes everything from “plant-touching” companies to “ancillary” businesses that support the cannabis industry. The following are some of the opportunities tribes and other private investor groups are exploring.
As the wave of legalization has slowly but steadily swept across the U.S., the unique sovereignty of Tribal nations has created potential for cannabis business opportunities in communities located in states where recreational-use and/or medicinal cannabis has been legalized.
Investments of this type can take many forms, whether focusing on cultivation, manufacturing, or retail, or the development of a vertically-integrated cannabis operation. This path gives the Tribe complete control over the business.
In many areas of the country, there are far more aspiring cultivators than there are locations where they can grow. As a result, an emerging trend is the rise of cultivation facilities established by real estate groups or private businesses, which are then leased to cannabis cultivators.
A Tribe looking to invest in cannabis could identify open land or create a greenhouse/indoor cultivation facility that can then be leased to cultivators looking for space. This is an ideal option for Tribal leadership that may not want to take on the operational and legal complexities of cultivating cannabis, but can still benefit from an investment supporting the industry.
In recent years a number of leading cannabis companies have gone public, primarily on stock exchanges in Canada, and with a select handful of listed on the NYSE and NASDAQ. The best-in-class producers and retailers represent an intriguing option for private investors. Standard due diligence for purchasing shares of a public company apply equally to the cannabis industry.
Additionally, a number of ancillary companies, those serving the cannabis industry through technology, real estate, or other services, have also gone public and represent a potential investment option. A diverse portfolio that includes a balanced mix of “plant-touching” and “ancillary” businesses could be a low-risk entry into the cannabis industry.
As a fast-growing global industry, many cannabis companies are actively searching for capital infusions to expand operations, fund research, launch new products, or enter new markets. There is heated competition for both private venture capital investments, and for institutional investments in newly public cannabis and cannabis-related companies.
Tribal leadership can consider establishing, or investing in, a private equity or venture capital firm and act as an incubator for emerging cannabis businesses. Establishing a fund in conjunction with the other options listed previously could produce a robust cannabis portfolio.
While cannabis legalization gets headlines, related products like hemp and CBD are quietly establishing themselves as intriguing industries on their own. The path for growing industrial hemp has recently been opened by federal legislation and the uses of the product are endless. Similarly, CBD has launched a holistic medicine craze, is in great demand for a wide variety of products, and can be derived from non-cannabis sources.
If a Tribe chose to explore hemp and CBD as investment opportunity, they could follow any of the paths illustrated previously and swap out cannabis for hemp or CBD.
The options provided above are just a sample of the opportunities available to investors. There are risks involved with any investment, and cannabis’ complex legal status creates further complications. As result, many traditional investors have been slow to move into the space. But for proactive investor groups, now is the time to get an early foothold in what will soon be a multi-billion dollar global industry.
]]>MGO Technology Group has leveraged contacts from the dark web, conversations with federal authorities, and other proprietary research and insight to provide an overview of the leading cyber threats cannabis enterprises face.
Information gathered by MGO Technology Group from underground assets and federal investigations indicates that, to date, there is no specific group actively targeting the cannabis industry. But there are hackers focusing on three areas within the seed-to-sale lifecycle:
Investigations revealed two incidents where intellectual property was stolen by a former employee due to partial or ineffective security practices. In addition to potential malicious insiders, external threat actors are expected to attack the research portion of the industry in order to steal intellectual property. Potential targets of hackers include strains being developed, marketing strategies, and technology practices related to cultivation.
The loss or modification of proprietary information, such as strain development and cultivation methodology, could severely impact the production of future products, result in a tampered or inferior product, or the loss of competitive advantage within the industry. While an increased timeline for a future product or loss of IP to a competitor would result in a negative financial impact, the release of a tampered product could also cause a negative reputational impact as well.
The search for payment solutions in the notoriously cash-heavy cannabis industry has led to the emergence of a number of payment systems. While they may be convenient, they are a high-risk target for hackers. Mobile applications that are not securely developed or have appropriate oversight are at risk and provide an attack vector for malicious actors. The success breaching of an application could provide access to customer financial information, leading to mistrust of the application author and discontinued usage.
As the legalization of medical and adult-use cannabis spreads across North America, the customer base will continue to expand making retailers increasingly high-priority targets of malicious actors. Medical information and Protected Health Information (PHI) are already highly valued assets for cyber-criminals.
Similar to other small businesses and early stages of a new industry, the protection and security of computers and networks involved with customer information is minimal or inefficient. Specifically, this involves the Point-of-Sale system and supporting infrastructure, two of the most targeted assets, a breach of which would result in the theft of customer information. Once again, a breach of customer information, especially PHI, will not only have a negative impact to the reputation of the retailer and industry overall, but could result in HIPAA violations resulting in millions of dollars’ worth of fines.
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