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255A1790BW copyBack before there were cannabis dispensaries, as far as most enthusiasts were concerned, there were basically two types: “Schwag” and “kind bud.”

It was the latter that helped a young Tony Verzura get off oxycodone and finally recover from a debilitating car accident. His appetite and sleep returned. The opioid side effects were gone, and eventually, so was the pain.

The experience launched a fascination with cannabis as medicine, which 20 years later, has flowered into one of the nation’s most innovative medical cannabis companies. As Chief Technology Officer for Denver-based United Cannabis, today, Verzura is pushing the boundaries of how cannabis can help patients, while at the same time preparing for a time when medical cannabis will come from a pharmacy, not a dispensary.

Selling out? More like buying in.

“If you want to help a massive amount of people and get it in the mainstream, if you want insurance to cover it, you have to develop products and you have to prepare yourself for that next wave and that’s kind of what we’ve been doing,” said Verzura, 38. “A lot of people misunderstand it and think it’s a sellout of some kind. A sellout would be if I sold out to a big pharmaceutical company, which is not the goal.”

“The goal is to create the technology, to create products and get the products into the hands of patients that need it and God willing we can get insurance to cover it and pay for it.”

Three Grow Lights

It started with a shed and three grow lights.

In 2009, thanks to a loosening of state regulations, Colorado’s medical cannabis industry was booming. Verzura was working as a contractor in post-Katrina New Orleans, when he and some friends decided to head west.

He’d never stopped using cannabis, micro-dosing during the day for pain and inflammation and smoking at night to relax. Here was a way to put his personal experimentations to work for others. He began compiling data and patient reviews for various medical conditions, from epilepsy to cancer. The cannabinoid sequencing protocols developed at RiverRock Colorado would become the foundation for his work at United Cannabis.

“It was like, how do I take this from a flower into some kind of standardized dosing system?” he said. “The industry was evolving and it was amazing. The more people we could help and the more change we could make, that’s why I got into all this.”

Eventually the dispensary had some 3,000 patients, investors and a 20,000-square-foot greenhouse. But after Colorado approved recreational cannabis in 2012, his partners wanted to expand into that market. So Verzura left and settled in California to start what became United Cannabis.

“It was harder to do in Colorado because they really went into a heavily regulated market and people started growing for profit, rather than the patients, in my opinion,” he said.

Holistic Approach

When a patient walks into Harborside Health Clinic in Oakland, they can get much more than an edible or a jar of medical cannabis.

That collective was the first to integrate the A.C.T. Now Program, developed by Verzura and United Cannabis, short for Advanced Cannabinoid Therapy. In this program, patients can get free consultations with a nurse and access to an online portal where they can tailor-make every detail of their treatment. The website is open to anyone anywhere, not just California.

The line of products developed by United Cannabis, Prana Bio Nutrient Medicinals, come in capsule, sublingual and topical forms. There are also five types, several of which won’t get you high—THC:THCa; 3:1 CBD; 1:1 CBD; CBD:CBN; and CBD:CBDa. They’re made organically, with no solvents. Dispensary employees are trained in their use.

It’s a holistic approach to medical cannabis, and Californians are taking note, with some 15,000 enrolled since its inception. Verzura hopes to have the products available in Oregon this summer and in Colorado in the near future, as well as at 10 more California collectives.

For Verzura, it’s an ongoing experiment, as each patient’s experience—once they’ve signed necessary privacy waivers—goes into the ever-growing database of what is working for each condition and what’s not.

The company has filed for a patent for its combination of pharmaceutically active cannabinoids to treat disorders of the immune and nervous systems and cancer. The patent application includes a matrix of cannabis strains rich in CBD and THC, terpene profiles and dosed delivery methods for inactive and active cannabinoids.

Verzura sees this work as moving the industry forward for the benefit of all.

“I hope to make a difference in patients’ lives. I hope to make a difference in our communities and our industry. And I hope to help progress and mature our industry in leading by example in the products and programs we offer.”

Questions Ahead

The year 2016 could be a watershed moment for recreational cannabis, with California and several other states poised to approve adult use.

But that makes Verzura worry about the future of cannabis as medicine. He watched as Colorado’s regulatory system created a tax of 25 percent or more on recreational sales, and worries the concept of medical cannabis could someday be lumped in with recreational, forcing patients to pay high taxes.

He also wonders what a rescheduling of cannabis would mean for patients. It’s currently on Schedule 1, meaning the federal government considers it to have no medical value. If that was changed, would patients be required to get it from a pharmacy like other controlled substances? Would large pharmaceutical companies take over medical cannabis?

For his part, cannabis is and always will be medicine first.

He has since been in two more car accidents and blew his knee out playing softball. He credits quick recoveries to cannabis products. He still maintains a daily regime of treatments, a walking testament to the healing power of this plant.

“I use my capsules and my sublinguals and my topicals every day. I use my CBD topical on my heels, my ankles, my knees, anything that’s swollen. I use my THC roll-on for any kind of nerve pain in my back or neck or for migraines I would get. I use my non active capsules, the 3:1 during the day just to kind of control inflammation and to manage anything else that would come up, kind of preventative.”

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By the Numbers

By The Numbers – December 2019

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Bay Area

The number of years that the Emerald Cup has held its cannabis event and competition in Santa Rosa: 16 (Source: The Bay Area Reporter)

 

The number of Contra Costa County Board of Supervisors, out of 5, who cast their votes in favor of approving a new ordinance in the city that prohibits the sale of flavored tobacco and cannabis vaping products: 5 (Source: NBC Bay Area)

The number of signatures that are required in order to place the “California Psilocybin Decriminalization Initiative 2020” on the ballot: 623,212 (Source: Decriminalize California)

The number of legal cannabis businesses in California that had permits suspended in early November: 394 (Source: Los Angeles Times)

Colorado

The percentage of 25 Denver-based dispensaries’ cannabis products that contained mold in a random recent test: 80 (Source: Westword)

The amount of money, in millions of dollars, that a Colorado-based cannabis chain was purchased for in early November: 140 (Source: The Denver Post)

The approximate number of industrial hemp registrations that the Colorado Department of Agriculture has processed across the state: 2,600 (Source: CBS Local)

The number of outdoor cannabis cultivation facilities operating in Pueblo County: 66 (Source: The Pueblo Chieftain)

Los Angeles

The number of applicants being considered for social equity cannabis licenses in Los Angeles through Phase 3 Retail Round 1: 100 (Source: NBC Los Angeles)

The new percentage of a tax markup rate that is being implemented in the California cannabis industry starting on Jan. 1, 2020: 80 (Source: Forbes)

The number of signatures that are required in order to place the “California Psilocybin Decriminalization Initiative 2020” on the ballot: 623,212 (Source: Decriminalize California)

The number of legal cannabis businesses in California that had permits suspended in early November: 394 (Source: Los Angeles Times)

Michigan

The amount of money, in millions of dollars, that Ann Arbor-based C3 Industries raised during its latest funding round: 25 (Source: Crain’s Detroit Business)

The updated amount of money, in dollars, that it costs to purchase a two-year medical cannabis registration card in the state of Michigan: 40 (Source: WXYZ)

The number of recreational cannabis business license applications that were submitted on the first day of the application period for Michigan, which began on Nov. 1: 52 (Source: Crain’s Detroit Business)

The number of communities in Michigan that voted to allow cannabis businesses in the November election: 3 (Source: Mlive.com)

Washington

The amount of money, in thousands of dollars, that one Washington-based cultivator said he will lose in the value of his cannabis crops, which were cross pollinated with hemp plants: 40 (Source: The News Tribune)

The numeral rank of where Oregon lies on a list of states with the highest cannabis consumption by minors: 2 (Source: Statesman Journal)

The amount of money, in thousands of dollars, that was approved by the Portland City Council in Oregon to be used for the 2019 Cannabis Social Equity Grant Program: 631 (Source: KATU2)

The number of Washington-based census tracts that were used in a recent Washington State University study analyzing the prevalence of cannabis businesses in various socioeconomic areas: 1,446 (Source: WSU)

National

The estimated amount of money, in dollars, that Florida’s agriculture commissioner believes hemp crops will be worth per acre: 25,000 (Source: Fox Business)

The estimated percentage of Americans who support legalizing recreational cannabis nationwide: 66 (Source: Gallup)

The number of British patients who will be among the first to participate in a major medical cannabis trial: 20,000 (Source: Daily Mail UK)

The amount of money, in millions of dollars, that consumers have spent on medical cannabis in Arkansas over the past six months: 18 (Source: KARK)

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News Nuggets

News Nuggets – December 2019

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Bay Area

Cannabis Store Becomes Certified Green Business

One of the largest cannabis retailers in Santa Cruz County, KindPeoples, recently announced that it has been named a Certified Green Business for its commitment to helping to save the environment. The achievement fulfills the goals of the company’s founders. “We knew when we opened KindPeoples on Ocean Street in April it had to be a flagship for our values,” said Khalil Moutawakkil, founder and CEO of KindPeoples. “Becoming a Green Certified Business is the first step in implementing green practices that make a lasting impact on our community, our staff and business partners and our planet. This is just the beginning.” KindPeoples worked with theCertified Green Business Program in the City of Santa Cruz to install energy-efficient lighting, use paper products, minimize waste, promote alternative transportation and establish a company-wide Environmental Policy in order to meet the standards required for certification.

Contra Costa County Bans Vape Product Sales

On Nov. 12, the Contra Costa County Board of Supervisors unanimously voted to ban the sale of cannabis vape products and flavored tobacco products. At the meeting, students and local residents flooded the building to participate and testify against the dangers of vaping. “This is a health crisis; there are potentially fatal consequences,” said  Supervisor Candace Andersen. “We are seeing people die, and I would much prefer to have us err on the side of protecting the public.” The ban comes amid reports of around 40 deaths and hundreds of cases of lung illnesses linked to vaping. The ban on sales of flavored tobacco and cannabis vaping products took effect on Nov. 18 for unincorporated areas of Contra Costa County. Incorporated areas of the county, including about 20 cities that are not under the county’s jurisdiction, will not be affected.

Colorado

Cannabis Edible Sales Increase Following Vape Scare

The recent vaping health scare has shifted cannabis industry trends, causing some areas to plummet in sales and others to rise. According to Headset, a Seattle-based cannabis data intelligence company, edible sales are up 15 percent in Colorado and in four other recreational-friendly states, as a result of the decline of vape sales due the recent health crisis. According to a Headset report from Oct. 2, before the “Vapor Crisis” commenced earlier this year, vape pens totaled 15 to 30 percent of all cannabis sales. Every state where cannabis is legal saw an increase in vapor pen usage from January to June 2019, and vapes have been the fastest growing category of cannabis products. However, since the vape scare began with the first death on Aug. 23, vape sales are rapidly declining and have been banned in some areas. Headset reports that Colorado’s edible sales are up 15 percent from 12.7 percent, from Aug. 23 to Oct. 6 respectively. Nevada, California and Washington edible sales are also up a considerable amount. Dr. Anne Schuchat, head deputy director of the Centers for Disease Control and Prevention, said that the issue is “continuing at a brisk pace.”

Pueblo County Uses Cannabis Taxes to Fund Jail

Pueblo County is setting another example of how cannabis tax dollars can benefit residents in Colorado. In November, voters said yes to 1B, which will raise retail cannabis tax to from 3.5 percent to six percent in order to raise funds to start construction for the new county jail. The proposal came from the Board of Pueblo County Commissioners on Sept. 3 and was made official by voters during the recent election. The new jail construction will cost an estimated $140 million, which includes demolishing the old jail. According to the county commission, while much of the money will go to the capital infrastructure of the new jail, 50 percent of the tax funds will go toward funding college scholarships. This was proposed to voters last year but was rejected. Now that it has passed, the restructured tax will go into effect Jan. 1, 2020. “Other jurisdictions in the state impose a special sales tax on retail marijuana at a higher rate, and this Board believes moving to six percent of the sales price would better align Pueblo County’s tax with other similar taxes in Colorado,” reads the resolution statement from the Board of Pueblo County Commissioners.

Los Angeles

Los Angeles County Sheriff’s Deputy Charged with Lying about Cannabis

Los Angeles County Sheriff’s Department Deputy Bradley Scott Dietze allegedly lied to the Los Angeles Police Department about a cannabis heist that took place last fall. Dietz was accused of posing as a narcotics officer with a search warrant, along with two other men, and carrying out a bogus raid. At the crime scene, 1,200 pounds of cannabis and $645,000 in cash and money orders were stolen. “The case was filed for warrant on Oct. 25,” a press release reads. “Dietze is expected to be arraigned on Dec. 23 in Los Angeles County Superior Court, Alhambra Branch. Deputy District Attorney Deann Rivard of the Justice System Integrity Division is prosecuting the case. On Oct. 29, 2018, Dietze allegedly lied to a Los Angeles Police Department officer who was investigating whether a marijuana distribution warehouse was being robbed in downtown Los Angeles. If convicted as charged, Dietze faces a possible maximum sentence of one year in county jail.”

Michigan

LARA Announces Cannabis License Rule Changes

The Michigan Department of Licensing and Regulatory Affairs (LARA) released an advisory bulletin on Nov. 13, clarifying transfer rules for equivalent license holders who hold medical and recreational licenses of the same type. Growers, processors and provisioning centers may transfer up to 50 percent of their batch or product from their facility to their establishment if they hold equivalent licenses. Specifically, provisioning centers may transfer 50 percent of each product type such as concentrates or flower. “Under Rule 40 of the Adult-Use Marihuana Establishments Emergency rules, the agency may authorize licensees who hold equivalent licenses to transfer marihuana product from the inventory of their marihuana facility to the inventory of their marihuana establishment,” the bulletin states. “This applies if they hold marihuana grower/grower, marihuana processor/processor, or marihuana retailer/provisioning center equivalent licenses.” The bulletin also announced the updated allowed THC amounts in milligrams for cannabis products.

Portage Begins Accepting Medical Cannabis Permit Applications

Portage city leaders began accepting medical cannabis permit applications for provisioning centers, secure transporters, safety compliance facilities, grower facilities and processor facilities on Nov. 18. The window to apply for a permit ends on Dec. 13 and that date will not be extended. “All applicants must have received pre-qualification from the Michigan Medical Marihuana Licensing Board in order to have their application considered,” a news release states. “There are no exceptions. Applications will not be considered on a first-come-first-served basis. All applications will be reviewed once the application period is closed. The city of Portage reserves the right to alter the application deadline.” According to the news release, a $5,000 permit fee applies, in addition to necessary paperwork. Applicants should keep in mind that 1,000-foot buffers apply to neighboring provisioning centers and sensitive areas.

Oregon

Minors Consume Cannabis at Nation’s Second Highest Rate

A recent study by Las Vegas, Nevada-based US Drug Testing Centers showed that 10.35 percent of Oregonians aged 12 to 17 consumed cannabis during 2017. That makes Oregon the state with the second highest prevalence of youth cannabis consumption in the nation during that time period. Vermont topped the list, where 10.75 percent of children and teens had consumed cannabis during the same time period. Oregon was followed by Maine, New Mexico and Rhode Island for the top youth cannabis consumption rates. The study relied on data gathered in 2017 from the Substance Abuse and Mental Health Services Administration, under the U.S. Department of Health and Human Services. Experts speculated that easy access to cannabis was a factor in the high rates of cannabis consumption, although rates have fallen in Oregon since 2002. The report arrives amid a nationwide teen vaping crisis, usually involving youth of the same age groups.

Oregon Court of Appeals Blocks Flavored Vape Ban

On Nov. 14, the Oregon Court of Appeals placed a hold on Gov. Kate Brown’s six-month vape ban that was recently implemented. Just one month ago, the court placed a hold the ban on flavored nicotine products, but the new hold also applies to THC vape products. The court was  “ . . . unable to tie lung injury cases to the type of flavored vape cartridges at issue,” a news release stated. “The court is not convinced that there is a risk of harm to the public if the enforcement of the rule is stayed.” The court went on to say that the details of vaping illness remain unknown, so that a ban cannot be made based on speculation of what is causing the outbreak of pulmonary lung issues. As of mid-November, 17 Oregonians have fallen ill from vaping, including six who used only nicotine products and five who used only THC products, according to the Oregon Health Authority.

San Diego

Oceanside Planning Commission Approves Recreational Cannabis Cultivation

On Nov. 4, with three members absent, the Oceanside Planning Commission unanimously voted to recommend that the Oceanside City Council add recreational cannabis cultivation to its 2018 ordinance that currently allows only medical cannabis cultivation. It would modify Articles 4, 14 and 36 of the City of Oceanside Comprehensive Zoning Ordinance and Chapter 7, Article XIII of the Oceanside City Code. “By limiting cultivation to medical-only, licensed cultivators were restricted to conduct business with a small percentage of the available market in California,” the city’s staff report reads. “Expanding cultivation to include adult-use gives licensed cultivators the ability to sell product to the entire California cannabis market, increasing the product viability and profits.” Oceanside’s latest effort would only remove the medical-only restriction for cultivation from its city code, and storefronts would remain banned in the city.

California Raises Cannabis Tax Rate

On Nov. 22, the California Department of Tax and Fee Administration (CDTFA) issued a media alert announcing that higher tax rates will apply to cannabis products beginning on Jan. 1, 2020. The markup rate will be raised to 80 percent, or 30 percent higher than its current mark. The markup rate is used to calculate tax on cannabis products. “After analyzing thousands of transactions in the state’s Track and Trace system, CDTFA analysts have determined that the required markup rate for the period beginning Jan. 1, 2020, is 80 percent,” said CDTFA Spokesperson Casey Wells. In the news release, the CDTFA provided an example, indicating that a product with a wholesale cost of $50 would generate a mark-up of $40 and $13.50 in excise tax. California cannabis industry trade groups were seeking the exact opposite, or lower tax rates, and said they were “stunned and outraged” by the tax increase.

Washington

U.S. Customs Agents Seize Packaging from Cannabis Businesses

Several Washington-based cannabis businesses recently complained that U.S. Customs and Border Protection agents seized all types of items including spice jars, vials and packaging materials. The materials were seized at a port of entry located in Tacoma, and were defined as “paraphernalia,” which angered business owners. The confiscated products were worth more than $8,000. “The seized property, including appraised domestic value (ADV) described as follows: 1,080 85x120mm glass jars with wooden lids, ADV: $1,620.00; 5,303 50x70mm glass jars with wooden lids, ADV: $6,628/75,” customs agents indicated in a Sept. 30 letter. “This merchandise from entry BUU-1311428 was seized as an unlawful importation of drug paraphernalia.” Shipment owners may petition to retrieve their property, but only if they post a bond of $5,000 or 10 percent of the shipment’s assessed value.

Study Links Rising Cannabis Consumption Rates with Legalization

A new study published on Nov. 13 in the journal JAMA Psychiatry suggests an association between legalization in states including Washington and rising cannabis consumption rates. The study defined any kind of problematic use of the plant as cannabis use disorder (CUD). “This study’s findings suggest that although marijuana legalization advanced social justice goals, the small post-RML increase in risk for CUD among respondents aged 12 to 17 years and increased frequent use and CUD among adults 26 years or older in this study are a potential public health concern,” researchers reported. “To undertake prevention efforts, further studies are warranted to assess how these increases occur and to identify subpopulations that may be especially vulnerable.” The study’s lead author, Magdalena Cerdá, said that heavy cannabis consumption is linked to psychological and physical health concerns such as lower educational attainment and decline in social class.

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Legal Corner

Embracing Change

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It seems like there isn’t a month that goes by in California when the Assembly isn’t trying to pass a slew of cannabis bills to help regulate the state’s industry under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). As of Oct. 13, California has some new cannabis laws on the books (thanks to Gov. Gavin Newsom). This article is dedicated to the highlights of some of those laws and how they’ll affect cannabis businesses in 2020 and beyond.

 

State Tax Deductions

There’s no real gold standard for state cannabis taxation. And at the federal level, cannabis businesses suffer constantly under the heavy weight of I.R.C. 280E. However, Assembly Bill 37 will provide at least some tax relief to California cannabis businesses (from 2020-2024). AB-37 is a departure from California’s otherwise standard mandate that income taxation be treated the same as on the federal level, which, for cannabis businesses, formerly meant no state deductions for business expenses related to trafficking in cannabis because of I.R.C. 280E. Now though, California cannabis business owners licensed under MAUCRSA will be able to lawfully take ordinary personal, business deductions under California law.

 

Charitable Donations

Senate Bill 34 creates better breaks for low-income medical patients that have a physician’s recommendation but that may not have an ID card from the Department of Public Health pursuant to the 2004 Medical Marijuana Program Act. Via tax-free “compassionate care donations” by licensed retailers and/or retailer microbusinesses, before providing any medical cannabis to any qualified patient or their caregiver, those licensees have to ensure that all of the necessary criteria is met. This includes rules regarding caregivers, physician’s recommendations and much more.

Testing

Assembly Bill 404 represents a much-needed, practical change to current cannabis testing laws. If a cannabis batch sample failed testing, a cannabis company only had two choices: Remediate or destroy the batch. Now, with the passage of AB-404, a testing laboratory is authorized to amend a certificate of analysis “to correct minor errors, as defined by the Bureau of Cannabis Control.” In addition, labs can now retest a failed batch sample “if the test result falls outside the specifications authorized by law or regulation, when the testing laboratory notifies the bureau, in writing, that the test was compromised due to equipment malfunction, staff error, or other circumstances allowed by the bureau and the bureau authorizes the retest.”

 

Social Equity Support

California has made great strides in supporting local social equity programs. The California Cannabis Equity Act of 2018 authorizes the Bureau of Cannabis Control, upon request by a local jurisdiction, to provide technical assistance to a local equity program that helps local equity applicants or local equity licensees. With the passage of Senate Bill 595, “on or before Jan. 1, 2021, [the state licensing agencies will have] to develop and implement a program to provide a deferral or waiver for an application fee, a licensing fee, or a renewal fee for a needs-based applicant or needs-based licensee.” At least 60 percent of the total dollar amount of deferrals of fees pursuant to this new program will be allocated to the deferral of fees for local equity applicants and licensees, and SB-595 also requires at least 60 percent of the total dollar amount of waivers of fees to be allocated to the waiver of fees for local equity applicants and licensees.

 

Research

Assembly Bill 420 expands existing University of California (UC) research mandates with the authorization of the California Cannabis Research Program, hosted by the existing Center for Medicinal Cannabis Research at UC San Diego. The program will allow researchers to be able to conduct studies regarding the efficacy of cannabis and provide medical guidelines based on their findings. Where the center has had issues with acquiring enough cannabis for its research purposes, AB-420 allows the center, via the program, “to cultivate cannabis for its use in research, pursuant to applicable federal and state laws and regulations.”

 

Vape Cartridges and Pens

Assembly Bill 1259 took effect immediately, and it will change up the packaging/labeling requirements for vape cartridges and pen makers by making life a little bit easier. Specifically, a cannabis cartridge or an integrated cannabis vaporizer that contains cannabis or a cannabis product “shall bear the universal symbol . . . [t]he universal symbol shall be visible on the cannabis cartridge or integrated cannabis vaporizer and shall not be smaller than one-quarter inch wide by one-quarter inch high. The universal symbol shall be engraved, affixed with a sticker, or printed in black or white.”

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