Cannabis industry: Same frustration, different states

Tyler ElderCannabis LawLeave a Comment

cannabis industry

We all know the cannabis industry is a rapidly changing, and more often than not, a frustrating industry to be involved in. Laws vary by state, and even within one state can vary greatly at the local level as well. Legalization comes in many forms, and these differences can drastically affect businesses and consumers alike.

As a regulatory analyst at Simplifya, I follow rule changes in the cannabis industry closely. In doing so, I notice a lot of things that the average person might overlook. Unless you keep up on the industry for your job, or if you’re like myself and have a somewhat odd fascination with the monotony that can be cannabis regulation, you probably don’t pay attention to everything going on in the cannabis space throughout the country.

Not to worry, I’ll keep up on the quirks of this ever-changing industry for you! Lately, I’ve found the developments in both California and Utah to be of particular interest.

Will California ever have permanent rules?

If you’ve been keeping up, you’ll know that the businesses in California have experienced quite a rollercoaster ride over the past year. The agencies have been fine-tuning the cannabis industry’s rules throughout the year, with the current rulemaking process ongoing since July – and it’s not done yet.

The current emergency regulations, re-adopted in June, were set to expire on December 3rd with the hope that permanent rules would be complete by then. However, that date has come and gone, and the regulators had only just submitted their emergency rules for final review on December 3rd. The review process is set to take an additional 30 business days (the submitted rules can be viewed here: BCC, CDPH, CDFA).

This means the permanent rules will stay in effect until at least mid-January. For businesses in California, this is just another example of the headaches they have had to endure as the state regulates the cannabis industry. Many have concerns over some provisions that have been added this go-around, such as a ban on white labeling that could have major ramifications for some of the state’s largest manufacturers.

It seems that even with a full year to revise the permanent rules, California regulators still haven’t figured it all out. I’d venture to guess that we can expect to see more changes to the rules in 2019 as regulators continue fine-tuning, but we’ll have to wait to see whether those changes will be for better or for worse.

Utah Lawmakers accept the will of the people – sort of

Meanwhile, in Utah, things are shaping up for an interesting 2019. You may remember that just a month ago Utahn’s passed Prop 2, which legalized medical cannabis in the Beehive State. While a majority of citizens supported the proposition, lawmakers felt a little differently.

As a result, just days after Prop 2 officially became law, the legislature passed the Utah Medical Cannabis Act during a special session. This new act has been in the works since October when legislators began working on a proposal to address the concerns of both the proponents and opponents of Prop 2. The decision by legislators to override the voter-approved measure has been controversial to say the least.

Many are concerned about some of the changes seen in the Utah Medical Cannabis Act – particularly a big cut from 40 to only seven permitted dispensaries, stringent restrictions on edible products, a removal of several qualifying conditions, and a reliance on pharmacists to operate the dispensaries. This last issue regarding pharmacists is particularly troubling. When Oklahoma adopted a similar rule earlier this year, the DEA stated any pharmacist dispensing marijuana could be at risk of losing their license.

These concerns have already resulted in a lawsuit aimed at blocking the compromise legislation from replacing the original initiative. Whether the suit will be successful still remains to be seen, but regardless of the outcome, there will be some Utahns who are not pleased with the result.

Cannabis and crickets: Trump AG nominee Barr’s silence on marijuana

Taylor Hart-BowlanCannabis LawLeave a Comment

AG nominee

So who’s the new AG nominee?

As someone involved in the cannabis industry, my response this morning to hearing that President Trump had announced William P. Barr as his Attorney General (AG) nominee was pretty standard. In fact, it was the same thing I’d done a few years before, with great results, when Trump had nominated now-former AG Jeff Sessions for the same role: I Googled the hell out of the guy and his stance on weed.

Apparently, I wasn’t alone. By mid-day, search terms such as “William Barr cannabis” and “William Barr marijuana” had trended from non-existent to, well, a thing. But then, somewhat strangely, they drastically dropped off again almost immediately after:

ag nominee search results

Why?

Because, if these other interneters are anything like me, the takeaway was that there is nothing out there on Barr and The Devil’s Lettuce. Zilch. And, frankly, I’m pretty convinced that everyone on the internet just gave up. I understand this completely because after about a half-hour of searching, the most convincing proof I had that Barr even knows what cannabis is was this:

“I mean, he couldn’t actually not know, right? Is that even possible?”

…And even that was just a bored thought.

This is a stark contrast to Sessions. Google-hounding his marijuana comments was rewarding. It was replete with historic records and dramatic statements, like his reference to Lady Gaga as proof that marijuana cannot possibly be safer than alcohol. But with Barr? It is just so confoundingly fruitless … and boring.

Throw us a bone, Barr

Even NORML seems to agree, given that “the big statement” in their press release on the subject was essentially that someone, somewhere, really needed to make this guy talk about weed: “It is our intention that Mr. Barr be put on the record regarding his current position on cannabis given his record as a proponent of the failed War on Drugs,” the organization wrote.

Translation: The internet is empty. Could someone please make him put stuff in it?

And NORML is not alone here, given that their War on Drugs reference basically covers all anyone actually knows about Barr’s potential cannabis position.

Specifically, Barr previously served as Attorney General under former President George H.W. Bush from 1991 to 1993, and he was a major advocate for both prison expansion and the Drug War at that time. More recently, he authored a letter in 2015 opposing criminal justice reform, which seemed to echo those prior stances.

Marijuana may be put on the backburner

In all fairness, that information helps glean some picture of how Barr will handle cannabis legalization, should he be confirmed. And, unsurprisingly, it’s not a cannabis-friendly one. Like Sessions before him, Barr may well continue to embrace a “tough on crime” approach that views marijuana as part of The Big, Scary Problem that only mandatory minimums and lots of prisons can solve.

However, it’s equally as possible that legalization could be a low priority for the new AG, especially in light of the current opioid epidemic, immigration, and other Trump-important issues.

Ultimately, though, I’m with NORML: Someone should ask Barr some interesting questions about weed and get this party started.

2019 marijuana rules: nasal spray, weed lube, and butt pot, oh my!

Luke EwingCannabis Law, ComplianceLeave a Comment

On November 9, Colorado’s Marijuana Enforcement Division (MED) announced that the 2019 marijuana rules have been adopted. For a Regulatory Analyst at Simplifya, that kind of news means it’s time to hunker down with 500 pages of redlined rules and figure out what our clients will have to change on January 1. FUN!

More than meets the eye

The MED has a nice overview of the new changes. Growers are now allowed to give their leftover plant parts to producers of hemp-type products; “kief” gets a new legal definition (in case you hadn’t learned about it through personal experience); labs are required to test for heavy metals; and certain managers are allowed to sample their own products. Each of these developments is pretty cool, but the big change that piqued my interest? Audited and Alternative Use Products.

2019 marijuana rules

Wow, that sounds pretty dry, doesn’t it? It sure does! Until you take a look at the 2019 marijuana rules for these things. “Vaginal… or rectal administration”?  “[U]se of a syringe for any type of injection”?  Yikes! What are we dealing with here? Are these rules in response to widespread use of injectables and suppositories? Are there really a bunch of people out there boofing (not the way you mean it, Kavanaugh) and actually injecting marijuanas? Well… sort of, but not really.

The nitty-gritty of the new 2019 marijuana rules

Most non-emergency regulations these days are written as a precautionary measure with the intent of squashing a problem before it is actually a problem. When it comes to audited products, this is definitely the case. At Simplifya, our analysts try to go above and beyond when it comes to keeping on top of regulations. This includes attending rulemaking meetings when we can. It just so happens that we were there to witness the discussions that led to these new products rules.

2019 marijuana rules

The rules were originally intended to make sure that special medical products (like THC/CBD inhalers and nasal sprays) were delivering reliable doses for patients. But at this meeting, certain concerned citizens steered the discussion toward THC suppositories. They believed that impressionable youth were using the products as a means to get a faster, stronger high. The meeting also featured a blunt-tip syringe with marijuana-concentrate being confused for a hypodermic syringe (think turkey baster vs. needle drugs).

As far as we can tell, these discussions were the motivation for the new audited product rules, because we had analysts at every other MED meeting and those products were not discussed. The MED ultimately decided to apply the inhaler and nasal spray rules to suppositories as well, requiring the products to undergo extra rounds of testing on top of the tests required for regular marijuana products. It also decided to clarify that there is no way injectable marijuana will be allowed as a commercial product.

So are these forms the newest way to get stoned?

As it happens, marijuana suppositories are not the new hot way to get high. Suppositories actually gained popularity in the medical community, because unlike alcohol, when you put marijuana “up there,” the psychoactive chemical does not get to your brain faster or in larger doses.

2019 marijuana rules

Medical marijuana users found that suppositories made it easier to get the medicinal effects of large doses without getting the kind of “head high” they would if they had smoked, vaped, or eaten the same amount. Concerned citizens have pointed to companies that sell marijuana lube as evidence that the products are being used recreationally, but again, these products are worse for getting high than edibles, and all the testimonials and advertising make it clear that these products are intended for sexual health uses—not sexual enhancement. Suppositories are generally used to treat menstrual cramps, muscle spasms, tumors, and digestive issues.

And although it is possible to make a pure THC solution and inject it, it is very difficult to make such a solution—THC is a terpene, which makes it more of a syrupy consistency and really hard to inject. It also doesn’t look very pleasant; I can’t imagine anyone wanting to be that high. Although just to make sure, the MED added that injectable THC is banned in their newest regulations.


tl;dr: Don’t let the new 2019 marijuana rules scare you. No one is injecting marijuana or putting it in their no-no places to achieve new highs.

Mitigating Metrc Risk

BriAnne RamseyBusiness, ComplianceLeave a Comment

Metrc

There are many unique aspects to cannabis regulation, none more fraught with risk than inventory management. We’re not aware of any industry that is required to track its inventory on a government mandated database through every single phase of the supply chain. Imagine a hops farmer, brewer, and liquor store all being required to report daily changes to their inventory to a government controlled system down to the individual plant or .01 of a gram.

The largest, most successful, and well-capitalized businesses in the world have gaps between their digital and physical inventory, commonly referred to as shrinkage. Unlike those businesses, cannabis licensees have regulators monitoring their inventory on a daily basis and meting out punishment for mistakes commonly made in many industries. This means cannabis businesses must invest a tremendous amount of operational and technology resources into managing their inventory perfectly.

Using Metrc to manage inventory

Franwell’s Metrc may seem simple at first glance, but do not let this fool you. It is a recording platform, meaning there is now a record of every action taken within the operation. All actions record the employee, date, timestamp, how the information was submitted to Metrc, and the adjustment (or action) that occurred. What makes it even more complex is that the licensed operator cannot delete any data or mistakes.

We always advise people that working in Metrc is just like getting pulled over by the cops. You need to tread very carefully and remember everything you do may be used against you in a court of law.

It’s critical to understand that Metrc is a tool that was created to provide regulators with a clear, round-the-clock view of cannabis licensees’ inventory. It is not a tool designed to benefit businesses. It is not responsible for keeping licensed operations in compliance. In fact, it does not even notify operators if they are out of compliance until it is too late. Metrc will allow businesses to violate the law and record the violations as evidence.

Therefore, the responsibility to keep the operation in compliance lies solely with the businesses and whatever technology solutions they use to manage inventory, reconciles, customer type data, purchase limits, and more.

The risk of non-compliance

We are frequently asked, “What happens if I do not comply with Metrc?” The answer is pretty simple. Your operation will be shut down and investigated. A team of investigators, probably armed, will show up at the facility unannounced. They will slap a summary suspension sign on the door and tell all the employees to leave, except for management and leadership. The business’s Metrc account will be placed “on hold,” meaning they can’t transfer any cannabis to anyone. Other licensees in possession of cannabis involved in the investigation could be frozen in place as well. Then the investigation begins.

All of the business’s inventory will be weighed or counted to verify 100% accuracy with Metrc. Any physical inventory that doesn’t match up will need to be explained. Typically, an investigation can last three months and the business can be shut down the entire time. Any cannabis that doesn’t have a Metrc tag, a clear digital chain of custody, or a discrepancy that can’t be resolved will likely be seized and destroyed. Then, the state will likely issue a large fine, and it could even suspend or revoke the license.

At best, this will cost a tremendous amount of money even before the state issues a fine. Operations will be halted and inventory is likely to be lost. The investigation will soak up a ton of staff and executive time. There will be attorney’s fees, and a Metrc consultant will be needed to work through the inventory forensics.

Be proactive

Metrc isn’t just a technology platform; it’s a risk that must be mitigated. Businesses must be proactive and take steps to integrate compliant inventory management procedures into their operations. There are plenty of resources out there, including some great services by Simplifya and Rocky Mountain Cannabis Consulting, which can prepare your operation to tackle Metrc head on. We’re here to help, so contact us today!


Get a demo of Simplifya, the industry’s leading cannabis compliance tool.

Special thanks to BriAnne Ramsey of Rocky Mountain Cannabis Consulting for co-authoring this post. She is offering two free online training courses to our readers. To take advantage of this generous offer, just mention this post in an email to info@rockymtncannabisconsulting.com or call 720-996-0625.

Five things regulatory geeks should be thankful for this year

Michael WilliamsonCultureLeave a Comment

The regulatory geeks at Simplifya know what they like!

It’s been another wild year in the cannabis industry for regulatory geeks. More states decided to create legal marijuana markets for their residents and there’s a growing appetite for the Federal government to change its views on cannabis. Federal clarification would be a welcome development, given the Justice Department’s about-face on the Cole Memo and the Trump Administration’s mixed signals on the legal marijuana industry.

But, it’s Thanksgiving week, so I thought it’d be the perfect time for a lighthearted post about the little things regulatory geeks like me are grateful for. Without further ado, and in no particular order, here are five things that bring my colleagues and me solace as we do our work:

Redlines

REDLINES Seriously, redlined documents from regulators are a godsend. We’re constantly trying to stay up-to-date on the latest regulations. Redlined versions of modified documents ALWAYS make it easier to do our work. Sadly many government bodies don’t issue redlined versions of their modified regulations or ordinances. This means we have to dig around heaps of documents to figure out what changed.

Coffee

Reviewing regulations can be a little tedious at times, even for compliance-minded folks like ourselves. Thankfully, our benevolent bosses make free coffee available to perk us up when we’ve read one too many signage font size requirements, which, believe it or not, are real standards in many jurisdictions. When a government agency doesn’t issue a redlined version of their modified regulations, coffee is extra appreciated. But I digress.

Lead time

Regulatory geeks don’t like being caught off guard. So kudos to Colorado’s Marijuana Enforcement Division for publishing their 2019 regulatory update more than 45 days before they go into effect. This lead time allows us to better manage our workload and get ahead of the curve.

Helpful agencies

Does this need much of an explanation? Sometimes we have questions and need clarification from the regulators. Many jurisdictions purposely bury their contact information on their websites. Every now and then, you’ll find an agency that clearly puts their phone number and email address right on their website. Having that info easily available is no guarantee you’ll get an answer. However, when you quickly get needed clarification on a confusing rule, your day is instantly better.

Curious clients

Believe it or not, we like when our clients push back on something they see that may be wrong in our system. Even if they think of new features or improvements we can make to the Simplifya platform. We take client feedback seriously and work to quickly implement changes when appropriate. Just like Joe Cocker, we wouldn’t be here without a little help from our friends. So thank you for all the time you take to keep us accountable and for sharing your ideas about what you’d like to see in our platform! Don’t be afraid to share your feedback with us at support@simplifya.com.

 

We’re thankful for so much this year. Stay safe to any of those traveling this week and enjoy the holiday!