INDUSTRY BRACES FOR VAPING BACKLASH AS CRISIS ESCALATES

The cannabis industry is blaming the illegal market for the mysterious vaping disease which has sickened more than 450 and killed five.

Some insiders believe the news could drag on legal vape sales. Morgan Paxhia, managing director of cannabis investment fund, Poseidon Asset Management, said legal operators could be scapegoated.
MJBiz

  • Vitamin E acetate, an oil derived from Vitamin E, has been found in THC vape samples collected from people who have fallen ill across the country including nearly all of the samples collected in New York. New York’s health department posted pictures of Dank Vapes and Chronic Carts brand products found to contain vitamin E acetate. However, health officials say it’s too early to determine whether it is the cause.
    Washington Post
  • Oregon officials said a middle-aged adult who died in July of respiratory illness had vaped cannabis oil purchased at a legal shop. “Pot shops kill. Close them down,” anti-legalization activist Kevin Sabet tweeted.
  • Dumas de Rauly, CEO of vaporizer company The Blinc Group said Vitamin E acetate is not used in standard cannabis or vape cartridge production. “Vitamin E is what we call a preservative. That’s what you add into cosmetics to make sure the product does not become spoiled,” he said. “In no case is this a product that you should be inhaling.”
  • Canopy Growth interim CEO Mark Zekulin is on “what might be termed an “everyone calm down” tour this week,” CNN writes.
  • The New York Times’ opinion page asks “Have We Hit Peak Vape Panic?”

Despite legalization, illegal pot farms continue to scar public lands in California.
L.A. Times

  • In 2018, California law enforcement confiscated 1.4M plants and broke up 889 outdoor grows.
  • Even so “illegal grows are still rampant across wide swaths of the national forests in California, leaving behind a trail of garbage, human waste, dead animals and caustic chemicals. Nearly all of these farms are the work of Mexican drug trafficking organizations, posing dangers not just for the environment, but to hikers and others who might encounter them.

Quick Hits

A “GLOBAL REVOLUTION” IN ATTITUDES TOWARDS CANNABIS

The Economist says there’s a “global revolution” in how countries view cannabis:

“Attitudes towards the drug are softening around the world. But many important countries, most notably Russia and China, remain implacably opposed to reform. The lack of a global consensus prevents the rewriting of the drug treaties…It is only a matter of time before international drug treaties will come to be seen as fundamentally broken.”

Even those up-tight Dutch are reconsidering their cannabis laws. Starting in 2021, coffeeshops in 10 cities will be supplied with cannabis legally, rather than forced to scrounge on the grey market.
BBC

R.I. JUDGE BLOCKS ACREAGE DISPENSARY ACQUISITION

A Rhode Island judge has at least temporarily blocked multi-state operator (MSO) Acreage Holdings from buying a dispensary in the state. The decision follows a demand for arbitration filed against the MSO by New England operator CanWell.

CanWell alleges Acreage broke a non-compete contract provision CanWell made with a Maine company now mostly owned by Acreage. The suit alleges the blocked acquisition would give Acreage a stake in more than one Rhode Island MED dispensary, which is prohibited by state law.
Providence Journal

The case is “one of several legal moves or probes in different states which allege, in short, that either Acreage or one of its (near-)subsidiaries have failed to honor rules or pre-existing agreements,” Janet Burns writes in Forbes.

CANADIAN ANALYST: BUY AMERICAN (POT STOCKS)

In an interview with Barron’s, GMP Securities analyst Rob Fagan says he’s more bullish on U.S. pot stocks than their Canadian counterparts.

  • U.S. Stocks he likes include CuraleafCresco LabsHarvest Health and RecreationTrulieve and Green Thumb Industries.
  • Fagan: “The markets where these companies operate are fantastic. Massachusetts converted from medical to recreational sales and is growing above a 500% annualized clip right now. Even a mature market like Arizona is still growing at a better than 30% annual rate.”

COUNTERFEIT POT PRODUCTS FLOOD SOCAL

California brands are struggling to compete against counterfeit products which undercut sales and their reputation, the L.A. Times reports.

  • The counterfeit products typically sell at unlicensed dispensaries for much less than the originals and are not tested for contaminants.
  • Though it’s unclear how severe the problem is, California brand Loudpack said it spent $2.5M to redesign the packaging and hardware for its Kingpen vapes and the counterfeiters quickly caught up.

Quick Hit

  • A lawsuit accuses the owners of a high profile dispensary in Orange County (Calif.) of defrauding investors.
    MJBiz

WASHINGTON (ST.) WEIGHS CANNABIZ OVERHAUL

After five years, Washington state’s second in the nation REC market is contemplating a regulatory overhaul. In an interview with the Associated Press, Liquor and Cannabis Board Director Rick Garza said “Cannabis 2.0” would allow delivery, and provide more support to small businesses and create an equity program.

  • The state is also thinking about whether to scrap its troubled track and trace system for a system where businesses report their sales and then get audited.

In other states:

PHYLOS SPAT POINTS TO BIGAG FEARS

A two-part series in MJBiz highlights the industry’s wariness about big agriculture companies like Monsanto. The piece begins with the saga of Oregon start-up Phylos Bioscience, which solicited genetics from growers and has been criticized for how it plans to use them.

  • In a relatively rare defense of Phylos and its CEO Mowgli Holmes, Reggie Gaudino, of Front Range Biosciences said. “They didn’t steal anything,” he said. “They might not have been completely transparent with their messaging, but nothing else that people are pissed about they should be pissed about.”
  • Gaudino added the industry “screwed ourselves” by selling cuttings in dispensaries. The industry already “screwed ourselves,” by putting cuttings in dispensaries. “All Monsanto or Dow have to do is go to a dispensary and buy everything that everyone’s buying,” he added. “They can [genetically] sequence it themselves, and they’re home free.”
  • Part 2 of the series discusses intellectual property strategies for cannabis companies including defenses against patent trolls, and the possible value of plant patents to protect cannabis companies.

Plus: The WSJ explains how the $63B Monsanto-Bayer merger became one of the most troubled megamergers of recent years. Among other issues, the company owes $190M after losing lawsuits about whether Monsanto’s Roundup herbicide causes cancer. Now an additional 184,000 plaintiffs have sued the company.

Quick Hit

  1. The Chicago Tribune discusses the complications of trademarking weed: “The predicament… is akin to if Frito-Lay were able to trademark Cheetos but not the name of its Flamin’ Hot flavor.”

DEA: MORE LEGAL MED GROWS COMING SOON

After several years of stalling, the DEA said it would start processing dozens of pending applications for permission to grow MED, though it remains unclear when the growing licenses will be issued.
NPR

  • The announcement comes shortly before the DEA must respond to a lawsuit from Dr. Sue Sisley, an Arizona psychiatrist who has been fighting for years to study MED on veterans with PTSD.
  • The only federally legal marijuana farm is at the University of Mississippi. Sisley, and others, have said the crop there is not good enough quality for testing.

Meanwhile Surgeon General Dr. Jerome Adams said no amount of cannabis is safe for teens, young adults and pregnant women.
NPR

Quick Hit

  1. President Trump reiterated his support for states setting their own own marijuana laws.
    Marijuana Moment