Massachusetts Mayor Arrested for Extorting Cannabis Companies

Mayor Jasiel Correia of Fall River, Massachusetts was arrested Friday morning for allegedly attempting to extort cannabis companies for hundreds of thousands of dollars in cash, according to a CBS Boston report.

Specifically, Correia — who is 27 years old — is accused of extorting at least four cannabis business operators by soliciting $250,000 each from them in exchange for “non-opposition” letters from his office. He is said to have illegally generated some $600,000 doing so, as well as alleged arrangements for a future cut in some of the companies’ cannabis sales.

It’s the embattled mayor’s second arrest in less than a year: Correia was arrested in October on 13 federal fraud charges, which ultimately led to his recall — though the young Democratic mayor was re-elected shortly thereafter.

Four other individuals have been charged as the mayor’s co-conspirators, authorities said.

“Despite Mayor Correia’s public assurances to the city of Fall River, based on today’s indictment, he has essentially run that town as a pay-to-play institution. If the allegations in today’s indictment are true, Mayor Correia has engaged in a outrageous, brazen campaign of corruption which turned his job into a personal ATM.” — U.S. Attorney Andrew Lelling, during a press conference

Correia appeared in federal court today where he pleaded not guilty; he was released in the afternoon after posting bail. “I’m not guilty of these charges,” he told reporters after leaving the federal court in Boston. “I’ve done nothing but good for the city of Fall River.”

Correia is up for re-election this fall and intends to run. The primary vote is scheduled for September 17.

Last month, the FBI announced it was seeking information about bribery in the cannabis industry.

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Windsor, Ontario Cannabis Cruise Sells Out In 2 Days

Windsor River Cruises and Border City Entertainment are holding their first annual cannabis cruise which will set sail along the Detroit River, according to a CBC report. The three-hour cruise is the first of its kind in Windsor, Ontario – and likely anywhere else.

Attendees must bring their own cannabis and be aged 19 years or older, as required to consume cannabis under Ontario law. The boat will stay in Canadian waters and people who are smoking cannabis will have to remain on the lower, outdoor, deck. The company will not be selling any cannabis products.

Jessilin Deschamps, promotional manager for Windsor River Cruises, said the event is “a big celebration of legalization.”

“You know people who have lived under prohibition laws for marijuana for decades but have still been using in private. You know and I’ve almost been made to feel ashamed of what they’re doing.” – Deschamps, in a CBC interview.

The tickets cost CAD$50 and were sold out within two days. Due to popular demand, the company is considering another event and has already started a waiting list for those interested in securing a spot on the next cruise, or in case tickets become available for the maiden voyage. Deschamps suggested that the popularity of the cruise could lead the event to become an international one.

The cruise will set sail on September 20.

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Clear plastic garbage bags that have been stuffed with commercial-grade cannabis nugs.

Washington Grower Robbed of $250,000 Worth of Cannabis

Thieves carried out an elaborate heist at the Cascade Mountain Cannabis cultivation facility in Kelso, Washington early Sunday morning, making off with roughly $250,000 worth of cured cannabis flower, according to a TDN report.

Cascade’s owner Courtney Roberts called the plot “sickening” and has offered a $5,000 reward for information that leads to an arrest.

The alleged thieves — five men and one woman — cut through the facility’s steel walls early Sunday morning and were able to clean out the drying room of some 130 to 150 pounds of freshly cured cannabis. The alleged thieves also destroyed some security cameras in the unmarked facility but surviving cameras were able to capture images of the suspects, including a tattoo on one person’s arm and another’s whole face. Three of the alleged thieves wore “Oregunian” brand sweatshirts, another wore a Nickelback t-shirt.

Mark Michaelson, manager at the cultivation facility, told FOX 12, “They literally cut a hole through the heavy steel siding, sheetrock and all the insulation – cut a hole in and literally crawled like rats through that hole.”

“They come in literally the day before this stuff was ready to be trimmed and sold – and literally took everything. Do I believe they were tipped off that there was dry product in this facility? 100 percent. There’s no question. The timing was too good.” — Michaelson, via FOX 12

Anyone with information about the incident should contact the Kelso police department, which confirmed that it is investigating the robbery.

 

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Pulmonary Illness-Linked Compound Found In New York Cannabis Vapes

Nearly all of the cannabis vape products tested by the New York State Health Department were found to have “very high” levels of vitamin E acetate, a compound linked to vape-related pulmonary illness in 25 states.

Vitamin E acetate is not an approved additive for medical cannabis vape products; although the agency did not indicate whether any of the vape products available under the state’s medical cannabis program were found to have the compound.

“We urge the public to be vigilant about any vaping products that they or any family members may be using and to immediately contact their health care provider if they develop any unusual symptoms. In general, vaping of unknown substances is dangerous, and we continue to explore all options to combat this public health issue.” – Health Commissioner Dr. Howard Zucker, in a statement.

At least one vitamin E acetate-containing product has been linked to each patient who fell ill and submitted a product for testing; it was not, however, found in nicotine-based products that were tested. Many of the affected products are believed to be counterfeits based on products from states with legalized sales, including knockoffs of Chronic Carts and Dank Vapes.

As of Thursday, the Health Department had received 34 reports from around the state about the pulmonary illness with patients ranging from 15 to 46-years-old. Vitamin E acetate is a commonly available nutrition supplement that is not known to cause harm when applied to the skin or ingested as a pill.

The investigation is ongoing.

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A cannabis worker in Washington state handles a recently harvested marijuana plant.

Canada’s University of Guelph Launches Cannabis Cultivation Program

The University of Guelph, based in Ontario, Canada, is now offering an online cannabis production course as part of the university’s existing horticulture certificate program.

The course, which is aimed at professionals and home growers, is already fully enrolled with 60 students.

Marjory Gaouette, manager for program development with Open Learning and Educational Support, said the university had a “significant increase” in people contacting the university looking for cultivation courses following cannabis legalization in the nation in 2018.

The course will include cultivation basics: lighting, irrigation systems, growing media, and managing pests and disease. Brandon Yep, a master’s student in the School of Environmental Sciences who designed and will teach the course, said the program “will clarify fact from myth and provide scientifically backed information on cannabis production.”

School of Environmental Sciences professors Youbin Zheng and Mike Dixon have published several recent groundbreaking studies on cannabis plant production that Yep will utilize for the course. Yep’s graduate degree is supervised by Zheng and he is studying ways to improve aquaponics for indoor cultivation. The system collects waste from fish grown in aquaculture and provides that waste to bacteria. Those bugs then break down the material and make its nutrients available to plants grown hydroponically.

About a dozen Canadian colleges and universities have launched cannabis-centric degree and certificate programs.

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10 Sacramento, California Dispensaries Robbed In Last Month

Sacramento, California authorities are investigating at least 10 break-ins at legal cannabis businesses in the city over the last month, according to a CBS Local (Sacramento) report. It’s not yet clear whether or not the break-ins are linked.

Management at Twelve Hour Care told CBS Local that thieves stole “everything … from product to cash” during a break-in last week. Twelve Hour Care is located in an industrial zone, which Sacramento Cannabis Industry Association spokesman Rob Baca said was at a greater risk for theft than dispensaries in commercial areas — paired with the fact that cannabusinesses operate in cash. 

“These retail locations belong in commercial corridors, they belong in shopping centers, they belong downtown. They belong in Midtown. There’s lighting, there’s people.” — Baca, to CBS Local

Paul Clemons, who handles compliance and licensing for Twelve Hour Care indicated that during one of the Sacramento break-ins, thieves drove a car through the dispensary. He added that without banking access and being forced to operate with cash dispensaries are “always going to be a target.” Clemons said Twelve Hour Care saves their camera data for 90 days and that it runs 24 hours a day.

The Sacramento Police Department told CBS Local that they have implemented certain crime prevention measures to address the issue but declined to offer details on those steps.

Last month the National Credit Union Administration announced that credit unions could serve cannabis businesses; however most state-approved industry operators still relay on cash due to cannabis’ federal Schedule I status.

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Nevada Nets Over $100M From Cannabis Taxes and Fees

Nevada collected more than $100 million in cannabis-derived revenues over the last fiscal year, the Nevada Independent reports. The revenues include $99.18 million in tax contributions and another $10 million in fees.

The revenues are a 33 percent increase year-over-year in Nevada, which collected $74.7 million in cannabis-derived taxes and fees in the 2018 fiscal year. The state imposes a 10 percent excise tax and 15 percent wholesale tax along with sales taxes and licensing fees. The 2018 revenues were 40 percent higher than government estimates; the state anticipates cannabis-derived revenues to reach more than $100 million per year over the next two years.

Cannabis taxes are earmarked for education spending in the state after costs for regulation and enforcement; however, in 2018 just about $27 million was deposited into education accounts and the rest was deposited into the state’s Rainy Day Fund. In May, the legislature passed a bill to deposit cannabis excise tax revenue directly into the education accounts, which is expected to add $120 million to education accounts over the next two years.

Riana Durrett, director of the Nevada Dispensary Association told the Independent that regulators need to do a better job on cracking down on the illegal market as it “continues to deprive the state of funds that could be going to education.”

Last fiscal year, the Rainy Day Fund received $42.5 million from cannabis industry taxes and fees, $27.5 million was deposited into the school account, $5.5 million was used for regulatory administration, and $5 million was dispersed to local governments.

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Missouri Receives 2,100 Medical Cannabis Applications

Missouri has received more than 2,100 medical cannabis industry applications, according to Missouri Department of Health and Senior Services officials. The Associated Press reports that 1,163 of those applications are for dispensary operation and 554 are for cultivation licenses.

Missouri officials plan to issue 192 dispensary licenses and 60 cultivation licenses in the first round of licensing. The agency also received 415 manufacturer applications, 17 testing laboratory applications, and 14 transporter applications; under the voter-approved constitutional amendment the state must approve 86 manufacturers. 

According to a St. Louis Post-Dispatch report, at least 25 applicants represent out-of-state businesses, including Massachusetts-based Curaleaf, which applied to run eight shops. Other applicants are from Kansas, Illinois, Pennsylvania, Arizona, and Tennessee. In all, applicants want to open 175 cannabusinesses across the St. Louis metro area.

Entrepreneur Jimmy Koch, who wants to turn part of a Springfield bar and music venue into a medical cannabis dispensary, told the Springfield News-Leader that he was excited to see all the interest.

“It’s great to see how many people want to be involved. And even though everyone knew the risks going in, it will be a bummer to see so many people heartbroken after investing all that time and money it takes to just build a plan, secure a location and turn in the application.” — Jimmy Koch, via the News-Leader

Regulators have until Jan. 1, 2020 to approve or deny dispensary applications. Officials began accepting patient applications in July but sales are not expected until April or March of next year.

Officials anticipate about $20 million annually from medical cannabis-derived sales taxes and fees.

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Morris Beegle: The Robust Future of Industrial Hemp

Morris Beegle is the president and co-founder of We Are For Better Alternatives (WAFBA), an umbrella of pro-hemp brands that includes hemp industry networking extravaganza The NoCo Hemp Expo.

Morris recently joined our podcast host TG Branfalt for a discussion covering all things industrial hemp. In this interview, Morris talks about NoCo Hemp Expo’s founding and rapid success and the myriad industrial applications of the hemp plant, which include biodegradable plastics, eco-friendly construction materials, and even hemp-based carbon nanosheets for use in supercapacitors. Morris also shares the stories and inspiration behind some of his other hemp companies, including an upcoming line of hemp guitars, and more!

Tune in via the media player below, or scroll further down to read a full transcript of this week’s Ganjapreneur.com podcast episode.


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Commercial: This episode of The Ganjapreneur Podcast is made possible by 420-friendly service providers in the Ganjapreneur Business Directory. If you need professional help with your business from accounting to legal services to consulting, marketing, payment processing or insurance, visit ganjapreneur.com/businesses to find service providers who specialize in helping cannabis entrepreneurs like you. Visit the Ganjapreneur Business Directory today at ganjapreneur.com/businesses.

TG Branfalt: Hey there. I’m your host TG Branfalt and thank you for listening to The Ganjapreneur.com Podcast where we try to bring you actionable information and normalize cannabis through the stories of ganjapreneurs, activists, and industry stakeholders.

Today I’m joined by Morris Beegle. He’s a hemp industry entrepreneur, co-founder and president of WAFBA, We Are For Better Alternatives, family of companies, which includes the annual hemp expo, NoCo Hemp Expo. Since 2012 Beegle has developed global brands in the hemp space with eight companies from NoCo to Colorado Hemp Company to Let’s Talk Hemp to Silver Mountain Hemp Guitars. How are you doing this afternoon, Morris?

Morris Beegle: Doing good, TG. Thanks for having me on.

TG Branfalt: I’m delighted to have you on. I really like having the hemp guys on. You guys are always an interesting breed. So before we get into everything that we want to cover today, tell you about yourself, man. How’d you end up in the space?

Morris Beegle: Well, I was in the music industry for 25 years or so, basically from the late ’80s, 1987, ’88, up in through 2010, 2011. I had a music production company, one-stop shop called Happy Scratch Records that I had started in ’95 when I moved back to Colorado. When I moved back to Colorado in ’95 and started this, I was inspired by the Seattle scene and how Seattle blew up. I got to spend a bunch of time there. You had Nirvana and Pearl Jam and Soundgarden and Alice In Chains. Coming back to Colorado, I wanted to see the same thing happen here. There’s a great local music scene, pretty diverse, and not as focused as the Seattle scene was. But when I moved back here, I got dialed in to Fort Collins.

I grew up in Loveland, but Fort Collins had a store there called The Hemperor Wears No Clothes and it was based off the Jack Herer book, The Emperor Wears No Clothes. I read that book and Jack’s kind of the prophet of the industry, the entire cannabis industry, but brought light to a lot of what hemp can do and the difference between hemp and marijuana, but yet it’s all cannabis. So that’s really when I got introduced to it. I didn’t really become a hempster at that point. I’ve always been an overall cannabis supporter and a partaker for quite some time. As I did my music business stuff, I did run some hemp merchandise, I did some hemp shirts and hemp hats, but really never got into the hemp thing in the cannabis space until the music business thing kind of crashed for me. I was really dialed into the physical media side of things with CDs and DVDs and manufacturing and packaging and physical product distribution into retail stores and through wholesale accounts.

And here comes the Internet and the digital age and Napster and mp3.Com, followed by iTunes and Amazon and all these other digital platforms that really pretty much eliminated the record store market except for a handful of cool stores that still do vinyl and merchandise. But the CD market got decimated and my business dried up. I was looking for something else to channel my skillset into and the cannabis thing was happening in Colorado with medical being pretty strong. As of 2009, a lot of dispensaries started opening up and then in 2012 we ran Amendment 64 which legalized recreational marijuana and taxed and regulated it just like alcohol. Within that legislation there was an opportunity for farmers here in Colorado to start growing industrial hemp.

At that point in time I thought it would be a great transition to move from the music space and into the hemp and cannabis space and start a merchandise company. That’s what happened in 2012. We started Colorado Hemp Company as a merchandise company, doing T-shirts and hats and working with some other textile brands that did apparel and wallets and bags and shoes. That’s really how we got started. The following year we started a paper printing business using hemp paper. I had found a hemp paper company that I started buying paper from. The following year we started doing events, which were a needed thing to educate people about industrial hemp, not only the industry itself as we were getting to be brand-new, but consumers as well.

So that’s basically laid the platform for what is WAFBA and where we’ve gone with this. That was with merchandise and printing and paper, and then the event side of things with bringing people together and the education and the advocacy and really just trying to figure out how to facilitate an industry and help move the thing forward by bringing people together.

TG Branfalt: Can you tell me about any parallels between the early music industry and the early … When you decided to get into the hemp industry, it was pretty early.

Morris Beegle: Yeah. I think that there’s really a lot of parallels when you look at there’s a supply chain and in the music industry, that would be musicians going into the studio and making music. From there, that it would have producers and editors and then marketers and selling product to the public. The hemp industry is similar, where you’ve got farmers and you’ve got processors and you’ve got manufacturers and you’ve got marketers and you’ve got events. What you have in both spaces is a lot of creative people. So I’ve seen a real parallel in just the creative element and people thinking outside of the box in this space. It’s just a different mindset in people with a slightly different intention and maybe kind of a counterculture approach.

TG Branfalt: You mentioned the counterculture. I want to go back to earlier when you were talking about the early grunge scene. I’m a huge grunge guy. I love Mudhoney and Jesus Lizard.

Morris Beegle: Mudhoney.

TG Branfalt: Love Mudhoney.

Morris Beegle: I saw Mudhoney at The Off Ramp in Seattle back in, I think, ’91 or ’92. It was great.

TG Branfalt: Be still my heart. Is that something that you think drew you to the hemp industry was this sort of counterculture? I mean it seems like you were pretty entrenched in it before you entered the space.

Morris Beegle: Well, when I was really trying to figure out what was going to be the next step of my life after spending so much time in the music industry and I wanted to do something that, A, is fun, B, that I’m passionate about and I really care about that could make a difference. And then I just feel good about what I’m doing and putting out into the world and that my kids would be proud of me about. So it was just one of these things. I just I felt compelled to do it because I think that our world needs to wake up socially and consciously and just become more aware of what we’re doing in our everyday lives and to our planet and to our environment.

I really just think that hemp can be a game changer in changing the way people think about our world, our planet, and our environment and how we should grow crops and how we should produce finished goods and how we should recycle and replenish all of that. I just think that’s what drew me to it. It’s kind of what drew me to music. There was just this art and this presence that drew me into music that’s really … I don’t know what the exact word is. I’ve tried to figure it out before, but it’s that something else that’s out there that just draws you. The invisible spirit, the invisible energy.

TG Branfalt: When did you decide that you were going to go all-in with hemp? I mean it’s a risk. You deal with the banking issues and being ancillarily associated with cannabis. And then you said you had kids, so I mean, and you do so many different things. When was it that you were like, “All right, this is what I’m doing?”

Morris Beegle: It was really in 2012 and 2013. When we started the company, I felt really passionate about that cannabis was on the way to becoming legalized and becoming socially acceptable. It was funny that marijuana was leading the way when hemp should have never been illegal in the first place. You don’t utilize hemp to get high or to get intoxicated. I felt good about being on this side of the plant and really not being a big activist for the medical and the recreational sides. Not that I’m not an advocate and I don’t support it, because I do. I don’t think anybody should go to jail for the plant, period. I think anybody should be able to utilize this plant for medicinal purposes and get themselves off of some of these prescription drugs that cannabis absolutely can replace.

It’s being shown over and over and over, not only in peer review science studies, but the anecdotal evidence is just it’s mountains and mountains and mountains of it. Anecdotal evidence does matter. When you look at the industrial side of it, the food side of it, nutrition, health and wellness and therapeutic side with all the hemp and the cannabinoids and CBD, the protein, the amino acids, all of it, it’s all good. There’s nothing, there’s no cons about this plant in my eyes. So I just felt really good about jumping into this space and I’m all in till the end.

TG Branfalt: The only negative thing about smoking a joint is that you can go to jail for it. Isn’t that some adage?

Morris Beegle: Well yeah. That is a negative thing and nobody should go to jail for this. I absolutely will stand up and fight till this thing is fully legal. People that have gone to jail for it should all be expunged. All that should be off their record.

TG Branfalt: So I want to switch gears a little bit. I want to talk you about the NoCo Hemp Expo. It’s often referred to as the most important hemp industry event. It’s won that distinction twice by the Hemp Industries Association. Can you tell me about how it started and how it evolved into this award-winning industry venture?

Morris Beegle: Well, we started in 2014 because there was a need to have hemp-centric events, which weren’t really going on. There were a handful of small little gatherings at libraries and universities in a conference room with very little as far as product display or networking or true education. That’s what really was the catalyst is, “Hey, we got to have conferences and trade shows.” So we put on this first trade show and a buddy of mine that I’d worked with in the music industry and a good friend of mine was booking this place called Ricky B’s in Windsor, which is a club that’s got a multitude of rooms. It’s got a big open room with a stage and a bar and a kitchen and another room where you could put some exhibitors. So it had this setup where we could throw an event and have speakers. We could have live music. We could have food. We could make a hemp beer, which we did. We could have a full-on event.

We launched NoCo in April of 2014 and pretty much sold it out. There was 330 people at the event and the place was full all day. We had a really good response. A lot of great people threw in to participate right at the get-go of this industry. So we moved it to a bigger venue the next year out at the Ranch Events Complex in Loveland and had about 1250 people. And then we increased our space again and had 3000 people. Then it went to 6000, and this year we had over 10,000 people. It’s just continued to grow and grow and grow as far as the amount of companies and industry people participating and the amount of general public that has become really interested in in the plant and the different products that are made from it.

So it’s just one of these things that’s just continued to grow over and over and over. It’s kind of like a band. You know how you start your garage band and you play a small dingy club and you got 10 people there. Then you go to the next place and you got 50 people. Then the next thing you know you’re playing stadiums like U2 and Metallica.

TG Branfalt: That wasn’t my experience in a band.

Morris Beegle: Well, it wasn’t mine either. But that’s the road. U2 started off in shitty little clubs just like Metallica did.

TG Branfalt: How important is in-person networking in the Internet age? I mean everyone has an Instagram. Everyone has a Facebook. Why are events like these so important?

Morris Beegle: I don’t think that there’s any way to replace face-to-face networking time and gatherings with entertainment and just the ability to network and socialize and get to know people, as well as go to conferences and hear experts speak on a variety of topics and be able to interact with those people, ask questions and learn. To me, there’s no equating having the live situation and being part of that or just participating online in social media and little conference rooms and virtual this and virtual that. There’s a of business that can be done that way. I mean I do business that way too, but I would say the appearing at events and trade shows just goes a long way to building real relationships.

TG Branfalt: The NoCo Hemp Event happened, the expo happened pretty recently. Can you tell me about what people were talking about at that event? What was the buzz during the show?

Morris Beegle: Well, a big buzz is the Farm Bill passed at the end of 2018. Trump signed it on December 20th. So the Farm Bill passing is now we’re federally legal. It’s no longer associated with the Controlled Substances Act. The DEA has no jurisdiction over hemp. It now falls under the USDA, and it also has the FDA in the mix. The big buzz is, A, now it’s federally illegal, B, how are we going to regulate it and, C, how is the FDA going to come in here with their recommendations for regulation of this plant. So that’s really the hot topic and that’s going on right now. What are these federal regulations coming down from the USDA and the FDA going to look like in the end? And how restrictive is that going to be for parts of our industry to really be able to grow? Is it going to block out some of the smaller, more boutique entrepreneur craft type producers? So there’s a lot of questions that remain.

TG Branfalt: We’ll get into more of the new federal regulations a little bit later. We’ve sort of been dancing around the music issue throughout this episode. Tell me about the guitar company, man, Silver Mountain Guitars. How do you use hemp in the production? Give me the rundown. What I want to know is how it sounds compared to a traditional guitar.

Morris Beegle: Okay. So have you listened to my podcast at all?

TG Branfalt: I have.

Morris Beegle: Okay, so that intro guitar piece is hemp guitar that I play.

TG Branfalt: Okay.

Morris Beegle: The sound is great. You can load whatever pickups in there, whatever hardware you want. But it’s the body of the guitar is a bass fiber composite shell that’s molded around a wood core. So it’s not a solid body hemp guitar. There’s a bass fiber composite molded shell that wraps around a wood core. They’re fairly light. They’re lighter than a wood guitar. And again, they sound really good. I’ve done SG. I’ve done two tellies, got a Les Paul Jr. I’ve got another SG on the way and I’m going to be creating a Strat model for a buddy of mine. He’s going to be the first guy that we actually do a custom one for.

But I’ve been really just dialing in with these guys who’ve been making these for the last five or six years in Canada. It’s still in somewhat prototype mode as far as it’s been hard being able to scale up and be able to produce these on a larger scale. So I think that we’re finally getting ready to clear that hurdle. It seems that way. We’re also making ukuleles with these guys. I think that that production, there’s just been a few technical tweaks with some of the finishing and some of this material that’s got certain nuances in the production side of things. But I think that we’re about to the point where it’s a done deal. Now it’s about scaling up and being able to produce these in some type of quantity rather than one a month.

TG Branfalt: I hear a lot that people who are trying to do these sort of unique projects with hemp have a very hard time finding processors. Is that something that you are experiencing? Are people at the trade shows recognizing that that exists? Could we see that market filled pretty soon?

Morris Beegle: Yes. There is definitely a lack of processing here in the United States outside of extraction for cannabinoids, oil extracts, all of that. That’s really the processing that’s pretty available in the US. But there’s still not enough processing for as much material that’s going to be grown this year, I can tell you that. There’s going to be big issues with that. We definitely have a lack of fiber processing, which is what I’m really excited about. I really got into the industry based on the fiber side of things for composites and plastics and building materials and textiles. That’s what drew me into it. I like the food part of it too with the hemp seeds and the pressed oil and the protein powder. But there’s a long ways to go with the processing for that here in the United States and in North America overall for the fiber side, not the food side. Canada’s been doing the food grain hemp parts thing for 20 years.

But there’s definitely a lack of the processing, but that is going to change now since the Farm Bill was signed. There’s more confidence in the investors market. People realize that there is value in the fiber, the stock side of it. Implementing that processing is going to take the next two or three years to really start building stuff out and being able to utilize that material to get it into a paper or building materials and bio-plastics in some of these industrial processes where it will make it easier for guys like me that want to make more guitars or guitar cabinets or plastic guitar picks that are biodegradable with hemp plastic. So right now there’s a handful of us out there that are doing these novelty things, at least here in the United States.

There’s people that are doing a lot more than that over in Europe, because Europe’s been doing this fiber side of thing. They’re the most advanced when it comes to utilizing fiber for a variety of different industries. China does a variety of that too. They’re more geared on the textiles, apparel side of thing. But we need to get a lot of this European technology over here, as well as some of the Chinese technology, and build out this fiber side of things because that’s where we’re going to be able to have a tremendous impact in this country.

TG Branfalt: It sounds like you focus a lot on industrial issues, or industrial uses rather. Whenever we talk about hemp, we always end up on CBD. I’ve been covering this since 2014, and even just five years ago, CBD wasn’t the hot hemp issue. How has the industry changed with the rise in CBD interest?

Morris Beegle: Well, when I started in 2012 nobody was even talking about CBD that was in my circle. There was people talking about CBD and other cannabinoids in the marijuana side of things and things just started to shift. There’s a couple of companies, I guess, HempMeds, Cannabest which has turned into CV Sciences, or was that group of guys based out of San Diego that really started making this CBD from hemp thing a real business. These guys forged a brand-new industry and a lot of people really don’t know that story. It would be a good story for you to investigate is this San Diego underground group that really developed the beginnings of the CBD market. As you look where it is today, it’s the vast, vast majority of what the market is. It’s driving all the economics of it.

I think it’s great. I think that once it gets settled, it should be regulated just like a dietary supplement, just like a food ingredient. That’s exactly what it is. Hopefully we get the FDA there and we don’t have to overregulate the producers to get this product on the market. But that stuff should be in apothecary sections across the country. Consumers should have the choice as to where they’re going to get their cannabinoids. If they want to take them and they don’t want to get high, they should be able to go to Whole Foods or Vitamin Cottage. If they want to go get them at their dispensary and have THC. They should be able to do that.

If they want to go to their doctor and to their pharmacist because that’s who they trust and they want medications from whatever pharmaceutical company with CBD or other cannabinoids, then the consumer should have that option too. It’s interesting to see how these channels are developing. Hopefully here in the next couple years, they’ll be pretty defined and we’ll have a clear path for hemp-derived CBD and cannabinoid products. You’ll have your adult use side of the market, and you’ll have your pharmaceutical side.

TG Branfalt: What are a couple industrial applications that many people might not think about? You’re obviously really tuned into this industrial side.

Morris Beegle: Well, let’s start with just what can be done on the fiber side. So you can make textiles. You can make clothing and carpet and upholstery. You can make composites. There’s a lot of car manufacturers in Europe. This is a market that they created as making the inside door paneling and trim pieces using a hemp flax based plastic composite that’s lighter and way more eco-friendly and environmentally less impactful on the earth. Building materials they’ve been utilizing in Europe for a long time and other parts of the world. You can make way greener, more sustainable homes using hemp-based building materials. A new development in the last three or four years is the ability to take this hemp fiber and create carbon nano sheets that could be utilized in super capacitors and battery storage. So I think that-

TG Branfalt: Seriously?

Morris Beegle: Yeah. That’s a pretty exciting technology that’s out there that people are going to be developing. I think you’re going to see stuff for the oil and gas industry, loss prevention materials. There’s different materials that have been created or attempted to be created in the last decade that could go into, whether that’s in the fracking situations or oil cleanup and being able to absorb all this stuff. Texas now coming on board, there’s a whole bunch of people from the oil and gas industry that are looking to start growing hemp and utilizing industrial materials for the oil and gas industry to help clean up some of this shit that they’ve been doing for the last 50 to 100 years. So that’s interesting. It’s how can hemp clean up the stuff that’s been poisoning our earth.

TG Branfalt: You’ve mentioned the Farm Bill a couple of times, and I mean we’re standing on a precipice right now. We’re awaiting the FDA regulations. As I’m sure you’re aware, they’ve pointed to Epidiolex saying that there’s a patent on CBD, which sort of muddies the CBD waters. Despite the passage of the Farm Bill, we have no clear direction from the FDA. But it was only a few months ago seemingly that, I guess, almost a year ago that the Farm Bill was passed. How has the industry changed since the passage of that Farm Bill for companies on the ground?

Morris Beegle: I would say that a lot of smart companies are getting all of their operations in place. They’re using GMP-compliant facilities, making products in a way that are going to stand up to the scrutiny of the dietary supplement industry. That’s the direction that these companies are going. People are not backing off. People are moving forward like nothing’s going to happen. A lot of people are. They’re just rolling the dice and throwing a lot of money at it. There is going to be stuff coming down the pipe and people are going to have crop failures. There is going to be some serious chaos that happens in this industry in the next couple years. But I do think when the regulatory process is done that these products will be regulated like dietary supplements and like another food ingredient.

TG Branfalt: Is the lack of FDA clarifications, is that the biggest issue facing the industry right now? Or is it something that we don’t think about, people who aren’t in the industry don’t think about?

Morris Beegle: That’s a really good question. I would say that the FDA thing is really the biggest unknown at this point. But I would say that there’s so much money involved in this now and there’s a lot of political clout that’s pushing for what seems to be a properly regulated industry so we can create these products and a lot of people can compete in the marketplace. But the crystal ball is a little bit fuzzy. I’m in it every day and I’m not exactly sure. I am hopeful that things, in the end, that we’re going to have an industry that’s just like any other agricultural type of industry. That’s what this is. It’s an agricultural crop.

We know now with the passage of the Farm Bill that the stocks and the seeds are grass, generally recognized as safe. So we can do whatever we want with those parts of the plant. The only thing that is cloudy is this flower side, the extraction side, and how these cannabinoids are going to be dealt with when it comes to growing, processing, and the final product. Is any THC going to be allowed in these final products? Is isolate going to be able to be used from any of these compounds? Are all the isolates basically going to belong to the pharmaceutical industry and all we can use are these full spectrum broad spectrum whole plant extracts?

There’s clarification that’s going to be coming down the pipe. I’m not exactly sure where it’ll end up. A lot of people don’t think we’re going to be able to use isolates, that those will be deemed to the pharmaceutical industry.

TG Branfalt: You said the crystal balls a little fuzzy. Well, look into your crystal ball for me. What do you think? Taking CBD out of it, all right. Let’s say the FDA says you cannot isolate CBD, whatever. What do you think would be the next big hemp sort of thing?

Morris Beegle: The next big hemp thing,? I think-

TG Branfalt: Yeah, that’s industrial.

Morris Beegle: I would say animal feed and animal products, pet products. That stuff is happening to some degree now, although it’s not considered legal, the animal side of things domestically, they’re still the FDA has to allow that. They’re trying to fast track certain things, but there’s studies that have to be done. I think that the animal feed market’s going to be large, for sure. Livestock is a huge industry, which is another thing that we could discuss for a long time is industrial agriculture and the industrial livestock industry, which is terrible for our environment and the climate. So I think fiber, I think the grain, that’s where it has to go. Protein powder. People are becoming more organic, more regenerative, more plant-based foods.

Cannabinoids are going to be there. It’s a health and wellness product that’s a plant that can do all these things. So what’s the next big thing? I think that all the uses that … all the potential replacements that it can go into these various industries and replacing these different ingredients to green up products across the industrial spectrum. I mean that’s going to be huge. I don’t know if it’s necessarily one thing. I think it’s just a combination of all the things that we’ve been talking about for a long time, that hemp can do 25,000 different things or 50,000 different things. What is that number? We’re going to find out that number over the course of the next 10 or 20 years because there’s a significant interest to get this crop grown in large acreage and to get into the market.

TG Branfalt: Finally, what advice would you have for entrepreneurs looking to enter the industrial hemp space, not the CBD space, not the cannabis space, but the space that you are sort of entrenched in. What’s your advice for them?

Morris Beegle: Well, first advice is get into something that you really like and that you’re really passionate about. Don’t make it just because you think there’s going to be money in it. I think people are misdirected when it comes to that too often. I’ve been fortunate as an entrepreneur to follow my heart and follow my passions to the music industry and now into the hemp and cannabis space because this is what I want to do. I love what I do and me being a fiber guy, I’m going to do my part. I suggest this at anybody at this point in time. If you’re interested in the fiber side, now is the time because we have the opportunity as entrepreneurs, as innovators, to really create something that’s never been created here in the United States, and that is a hemp fiber side of the market.

There’s technology out there domestically and internationally that has yet to be implemented that, A, we need to come across and discover and connect and collaborate with people that are doing this and figure out how to have it funded and get this implemented. There’s an opportunity for entrepreneurs right now to really just create a future based on our own intention and our own purpose and our own vision.

TG Branfalt: You’re quite the visionary when it comes to this, man, and I really appreciate you taking the time to come on the show. It’s not often that we get a pure industrial hemp perspective on things. I have for a long time been a huge proponent of hemp. I would prefer a very lush hemp industry as opposed to a very lush THC-rich industry. So, Where can people find out more about you, the WAFBA companies? How can they find you on the old Internet?

Morris Beegle: Well, you can go to wafba.org. That’s W-A-F-B-A dot org. That’s the launch page. All of our little entities are listed there. We actually have 12, that’s a half a dozen of those are events and then the other half dozen we’ve got Tree-Free Hemp, the paper side, Let’s Talk Hemp, the education media side, One Planet Hemp, our T-shirt and hat and merchandise store. I don’t know. I can’t even remember all the little brands that we’ve got now. But we’ve got quite a few and that’s where you can find it. You can also go to morrisbeegle.com and I’ve got a lot of links there as well. You can go to nocohempexpo.Com.

That’s what people, if you want to find out really what’s happening in the hemp industry, if you do get a chance you should come to NoCo Hemp Expo, especially NoCo Seven that’ll be in 2020. We’re moving to a brand-new space that’s three times where we were at last year where we packed it out with 10,000 people. Next year we hope to have 20,000-plus and we’ll have 400-plus exhibitors and great programming for the business side, the investor side, the farm side, the equipment side. We’re just really excited to do what we can to help facilitate this industry and bring people together and make it real and make a difference.

TG Branfalt: That’s Morris Beegle. He’s a hemp industry entrepreneur, co-founder and president of the WAFBA, We Are For Better Alternatives, family of companies, which includes that aforementioned NoCo Hemp Expo. Thank you so much for being on the show, Morris. It’s really been a pleasure.

Morris Beegle: Hey. Thanks, TG. I appreciate you having me on.

TG Branfalt: You can find more episodes of The Ganjapreneur.com Podcast in the podcast section of ganjapreneur.com and in the Apple iTunes store. On the ganjapreneur.com website, you will find the latest cannabis news and cannabis jobs updated daily along with transcripts of this podcast. You can also download the ganjapreneur.com app in iTunes and Google Play. This episode was engineered by Trim at Mediahouse. I’ve been your host, TG Branfalt.

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North American Cannabis Industry Projected at $47.3B by 2024

According to a report by Prohibition Partners, the North American cannabis industry could reach $47.3 billion annually by 2024, with the U.S. comprising $44 billion of the market in the next five years, according to an outline of the report by Health Europa.

Daragh Anglim, managing director at Prohibition Partners, said that figure is likely an underestimation as it doesn’t include illegal sales.

“…The true value of the cannabis market is likely to be much larger than current estimates. This is because, contrary to the hopes of regulators, legalization is unlikely to eradicate black market sales, particularly in Canada.” – Anglim, in a statement, via Health Europa

Anglim added that the “legal disconnect” in the U.S. between federal and state laws “presents significant challenges for businesses looking to mature a market with significant potential.”

“Moreover, conflicting adult-use laws in the US are forcing businesses to move to neighboring states,” Anglim said in the report. “On a positive note this is fueling momentum behind legislation as state regulators look to generate and protect tax revenues.”

The research firm suggests that by 2024 medical cannabis sales in the U.S. will comprise just half of all legal sales, expecting more states to legalize cannabis for adult use.

In May, Prohibition Partners suggested that if hemp and medical cannabis were fully legalized in Asia, the market could be worth $5.8 billion by 2024, but noted that just three Asian nations – Thailand, Pakistan, and Uzbekistan – have legalized medical cannabis use and it’s unlikely that Hong Kong and China would move toward any legalization in the next decade.

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Sonoma County Shuts Down 63,000 Cannabis Plant Grow Site

California officials are continuing their crackdown on illegal cannabis cultivators as the Sonoma County Permit and Resource Management Department shut down a 63,241-plant grow – the county’s largest ever, according to a CBS Local (San Francisco) report. The illegal cultivation sites were located in a habitat for endangered California tiger salamanders.

About 26,650 plants were found on a 2.5-acre site, while another 36,385 plants were being grown on a 3.3-acre site and some were interspersed with corn.

Permit and Resource Management Department spokeswoman Maggie Fleming said that the largest previous cannabis cultivation site shut down by the county was 13,000 plants. In all, county officials have abated 161,000 this year.

In June, Siskiyou County officials said they had seized more than 19,000 illegally-grown cannabis plants in one month.

Since the launch of legal sales in California through July, the Bureau of Cannabis Control and law enforcement agencies reported they had confiscated about $30 million in illegal cannabis from grows and unlicensed shops.

Lindsay Robinson, executive director of the California Cannabis Industry Association, told the Los Angeles Times in July that the number of enforcement actions by the Bureau is “severely inadequate,” noting that there should be hundreds of enforcement actions on illegally operating shops. She said the state “has always struggled with enforcement of the illicit industry.”

In July, the California Finance Department found that just 15 of 68 BCC enforcement positions had been filled and the agency was experiencing a major cash shortage which prevented it from providing adequate enforcement.

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Quebec Court Finds Home Growing Ban Unconstitutional

A Quebec, Canada Superior Court judge has ruled that the provincial ban on home cannabis cultivation for personal use is unconstitutional, the CBC reports. Superior Court Justice Manon Lavoie said the ban equals criminal legislation, which is under federal jurisdiction.

Julien Fortier, the attorney who brought the case, told the CBC that while the ruling allows individuals to grown cannabis at home, the ruling is “very technical” and warned that the government can still appeal the ruling or try to rewrite the law in a constitutional way.

“No evidence was filed, except for the legislative debates. It was really a case that was strictly about the … constitutional law.” – Fortier, to the CBC

Under federal cannabis law, citizens are allowed to cultivate up to four plants for personal use, but Quebec’s law banned home-growing. A Quebec official said the government is studying the ruling.

Among Canadian provinces, Quebec has taken a conservative approach to cannabis policy and legalization. In July, the government announced a ban on THC-infused candies and confections and capped edible potency at 5 milligrams of THC per unit and 10 milligrams of THC per package; drinkable products are capped at 5 milligrams per container. Cannabis-infused topicals will also be banned temporarily.

Provincial officials are also considering setting THC limits of 30 percent on all cannabis products sold in the province but have not officially implemented the policy.

Under federal rules, edible products are limited to 10 milligrams of THC per package and 1,000 milligrams of THC per package for concentrates and topicals.

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Hemp Rising as Alternative for Oak Wood

The Kentucky company HempWood officially opened its Murray-based manufacturing facility last Monday, promising local jobs and a wood substitute that is more eco-friendly than traditional lumber, according to a Woodworking Network report.

After a ribbon-cutting ceremony, HempWood leader Greg Wilson demonstrated the creation process for the hemp-based logs, which can be cut down into boards for construction, woodworking, and flooring purposes.

“We’re taking something that grows in six months and we’re able to replicate, or out perform, a tropical hardwood that grows in 200 years.” — Wilson, via WPSD Local 6

The facility is expected to use up $1 million worth of raw materials annually, which — according to the report — will all be sourced from local Kentucky hemp farmers.

In fact, the company has partnered with Murray State University to keep as many facets of its operation local to the area as possible. Dr. Bob Jackson, the university’s president, said the partnership will lead to “internships” and “future jobs,” as well as opportunities for “teaching and learning from an agricultural standpoint, business standpoint, chemistry standpoint, and I could go on and on.”

Hemp became federally legal at the close of 2018; since then, there has been a massive influx of states with industrial hemp programs, as well as companies looking to pioneer the space. Last week, the USDA announced that hemp farmers can now qualify for federal crop insurance.

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New Medical Cannabis Rules Take Effect in Oklahoma

New medical cannabis rules are now in effect in Oklahoma, including seed-to-sale tracking requirements, clarifications for gun-owning patients, and rules prohibiting physicians from making recommendations in a dispensary and preventing municipalities from barring medical cannabis businesses, according to a Tulsa World report.

The new rules, part of HB 2612, were struck over three months of meetings between industry stakeholders, advocates, and a bi-partisian and bi-cameral legislative committee.  Under the reforms, cannabusinesses must obtain a certificate of compliance, use a seed-to-sale tracking system and include product information — such as potency and testing results — on all packaging. The laboratory testing requirements could lead to market disruption, according to the report, as the state has not yet opened applications for testing labs

The bill also requires cultivators and processors to split harvests and products into 10-pound batches and test each one which head of the Oklahoma Cannabis Industry Association, Bud Scott, said could be cost-prohibitive.

“We specifically asked for firm language saying there would be a grace period, which was not included. There’s some pretty serious issues with testing that still have to be addressed.” – Scott, in an interview with Tulsa World

The measure includes language to explicitly allow medical cannabis patients to possess firearms — a provision included as federal law prohibits registered patients from using “illegal drugs.” The law also allows employers to consider a patient’s status if they work in “safety sensitive” positions such as firefighting, heavy machinery operation, or handling hazardous materials.

The bill also gives all rulemaking authority to the Oklahoma Medical Marijuana Authority. Agency executive director Adrienne Rollins estimated it would cost about $15.6 million to oversee the program for this fiscal year; the state has collected about $45 million in taxes and fees related to medical cannabis since Aug. 2018.

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Santa Rosa Junior College to Offer Hemp Cultivation Programs

California’s Santa Rosa Junior College is set to offer hemp cultivation certificate degree programs next year — the first of its kind for community colleges in the state, CBS Local (San Francisco) reports. The courses will be available through SRJC’s Sustainable Agriculture and Horticulture program.

SRJC’s Dean of Agriculture Benjamin Goldstein indicated that offering the programs falls in line with the department’s “top priorities” to align programs with “current industry trends.”

“Hemp is a versatile plant at the center of a multi-billion dollar legal industry for medicine, fiber, oil, seeds, textiles and more. We are preparing our students with the knowledge and skills to be competitive in the workplace.” — Goldstein to CBS Local  

The college has existing certificate and degree programs in Environmental Horticulture. Faculty are revising that program to add a focus on hemp agriculture. The classes taken in spring 2020 will count for the revised certificate and degree in Hemp Agriculture in the fall 2020.

George Sellu, who teaches plant science and horticultural classes at SRJC, called hemp an “ideal” plant for “teaching plant science and plant propagation techniques” for both indoor and outdoor cultivation.

Throughout the U.S., traditional colleges and universities have rolled out cannabis- and hemp-related course offerings following cannabis law reforms, both medicinal and recreational. In 2017, City College of San Francisco announced a partnership with the United Food and Commercial Workers union and cannabis college Oaksterdam University aimed at the legal cannabis industry. 

SRJC’s Shone Farm is already growing a 0.8-acre test plot. 

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EU Approves Ugandan Medical Cannabis Company Exports

European Union inspectors from the Netherlands have approved a shipment of medical cannabis products from Uganda’s Industrial Globus Uganda Ltd., the African Exponent reports. The products are a mixture of 2.7 milligrams of THC and 2.5 milligrams of CBD for Sativex drugs, which are produced in the EU, the US, and Canada.

Industrial Globus is a joint venture between Industrial Hemp Uganda and Israel’s Together Pharma. The compliance certificate issued by the EU is valid until August 2020. Benjamin Cadet, Industrial Globus’ director, said the approval affects the company’s entire manufacturing chain. In June, the lack of EU approval prevented the company from exporting products to both Germany and Canada.

In 2017, Industrial Hemp exported $10,000 worth of hemp to South Africa’s National Analysis Forensic Services.

The EU inspectors also certified World Health Organization (WHO) Guidelines on Good Agricultural and Collection Practices for medicinal plants; and the Europe, Middle East, and Africa (EMEA) Guidelines for Good Agricultural and Collection Practices for medicinal plants. 

According to the report, at least 50 Ugandan companies have applied for Ministry of Health certification to join Industrial Globus to cultivate medical cannabis

Last month, officials in Zimbabwe approved plans to allow hemp cultivation for export purposes as it seeks to bolster is foreign currency holdings. Last year, Canada-based Canopy Growth announced it had acquired Kingdom of Lethoso-based Daddy Cann Lethoso PTY Ltd which holds a cannabis export license.

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cbd oil benefits

CBD Oil Benefits: All the Ways CBD Can Help

What is CBD and where does it come from?

Cannabidiol (CBD) is one of over a hundred naturally occurring cannabinoids present in cannabis, whose demand has recently skyrocketed with the advent of tinctures, CBD vape pens, and CBD infused beverages. Cannabidiol is abundant in cannabis — nearly as prominent as the well-known and intoxicating cannabinoid THC.

Both CBD and THC exist in the cannabis plant in the form of their acid precursor (CBDA and THCA). They must be heated, or decarboxylated, in order to become active. Although the specific chemical structure of CBD was discovered in 1963, the earliest use of CBD could date back to 2737 B.C. by Chinese emperor Shen Neng. When cannabis reached American land, it was widely used by settlers for fiber production, inflammation, and disease. It wasn’t until 1914 that cannabis and CBD use was criminalized under the Harrison Act, with stricter regulations to come with the Marijuana Tax Act of 1937.

In 2018, hemp-derived CBD was federally legalized via the Farm Bill’s passage, which has led to a notable increase in CBD awareness and new products.

cbd oil benefits
A hand-cultivated cannabis plant, nearly ready for harvest. Cannabis contains a wide spread of cannabinoids but THC and CBD are the most common. Photo credit: Alexander Aguero

Cannabinoid receptors & the Endocannabinoid System

The Endocannabinoid System (ECS) is a set of natural pathways in our brain and body which carry messages to various regions to manage and regulate pain, appetite, mood regulation, and memory. The ECS was discovered by Israeli scientists in 1992 at the Hebrew University of Jerusalem.

The endocannabinoid system is made up of two main receptors: the CB1 and CB2 receptors. Many receptors act as channels and when “activated” by specific molecules (in this case THC, or naturally occurring endocannabinoids 2-AG and anandamide), they allow ions to rush through, creating a further cascade of signaling to relay specific messages. 2-AG and anandamide are produced by the body to regulate fetal development, mechanisms of reward, working memory, and other various physiological functions. Outside the brain, the ECS is known for its role in immune support.

THC is considered an “exogenous” cannabinoid, meaning it is not naturally produced by the body, but still activates CB1 and 2 receptors when present. Interestingly, CBD does not directly attach to or activate CB1 or 2 receptors. Instead, it works with serotonin, an enzyme called fatty acid amyloid hydroxylase (FAAH), and other receptors. These messages then can indirectly activate the endocannabinoid system to create the therapeutic and behavioral effects seen.

CBD oil for inflammation and neuropathic pain

One of the most heavily researched applications of CBD is its benefits for inflammation. CBD has been seen to have anti-inflammatory effects on the nervous system, especially in pathologies like arthritis and inflammation related to the gut. There have been many theories as to how CBD reduces inflammation; some studies found that it does so by targeting glycine receptors (glycine is an amino acid naturally produced by our body). CBD administration also alleviates inflammation by reducing the production of signaling molecules called “inflammatory cytokines,” and by acting on TRPV1 receptors. Just like how CBD activates many different pathways and only acts on CB1 and 2 receptors indirectly, its anti-inflammatory properties take on similar characteristics of targeting various receptors and signaling pathways to achieve the effect you experience as weakened pain.

cbd oil benefits
A woman is doubled over in pain against a bed. Photo credit: Alex Boyd

Both THC and CBD have been given to cancer patients undergoing chemotherapy to decrease its intense side effects like pain and nausea. CBD also has alleviated pain in patients with multiple sclerosis. Savitex is an oromucosal sprayable compound (or mouth spray) created by GW Pharmaceuticals, which contains a mixture of CBD and THC and helps decrease neuropathic pain in patients suffering from sciatica, MS, cancer, arthritis, and other ailments. However, because this medicine contains THC, side effects included its characteristic intoxication. Therefore, some believe that CBD oil (like in tincture form) may be a better alternative, especially as research continues and scientists learn how to increase the bioavailability of CBD given orally.

CBD oil for anxiety and sleep

A comprehensive case study published this year found that CBD oil was helpful in the treatment of both anxiety and insomnia. Psychiatrists administered 25, 50, and 75 mg of CBD to 72 adults in a clinical setting. After the first month, 79.2% of the patients struggling with anxiety reported improved affect and had lower anxiety scores. Additionally, 66.7% of those complaining about insomnia had improved sleep scores.

Specifically with anxiety, scientists think these results could be because, with long-term use, CBD activates and rescues impaired 5-HT (aka serotonin) receptors. In terms of sleep, less is known about the exact mechanism at play, but a rodent model of insomnia found that CBD administration increased total sleep time in rats. Scientists also think CBD’s beneficial effects on sleep have to do with anxiety — insomnia and anxiety tend to be comorbid conditions so, if you decrease anxiety, you should be able to sleep better — but more research needs to be done in this area to discover how exactly cannabidiol acts on our brain’s receptors to help with insomnia.

Cannabidiol is growing more and more popular as a potentially useful tool in the treatment for anxiety. Photo credit: Fernando @dearferdo

CBD oil for pets

You may have seen signs around town exclaiming “CBD for Dogs — We Have it Here!!” While at first glance this may seem somewhat ridiculous, there is some science to back it up. A 2018 study found that osteoarthritic dogs given a repeated dose of 2 mg/kg of CBD for four weeks saw decreased pain scores and increased comfort. While there is less ability for observing how this happens in the brain compared to laboratory animals, these results are still promising for a new avenue of CBD treatment.

It is also speculated that CBD can help ease pet anxiety during stressful times like July 4th fireworks. We know CBD alleviates anxiety in humans; animals too release stress hormones when feeling anxious or potentially threatened. If CBD is able to work similarly in dogs and other pets, it would make sense that giving your animal some CBD could reduce their anxiety during specific situations like holidays or trips to the vet.

cbd oil benefits
A man gives CBD oil to his pet dog using a dropper and small bottle. Photo credit: R+R Medicinals

More research is underway

Now that hemp-derived CBD oil is federally legal, scientists have more freedom to conduct research that will help educate cannabidiol users on just how it gives them relief for various ailments. However, the FDA still lists CBD as a dietary supplement and not a drug, which means there is generally less regulation and less known about this seemingly benign substance.

Despite this, there is positive and promising evidence that CBD can help a variety of conditions without the nasty side effects or propensity for abuse that comes with other drugs like opioids. Hopefully, via the advent of CBD, we are on our way to a new status quo where death by opioid overdose is decreased while pain relief itself becomes more widespread.

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California Cannabis-for-Pets Bill Likely Tabled Until 2020

A California bill to allow veterinarians to recommend cannabis as a medicine for pets is likely tabled until next session, VIN News Service reports. The measure would have made the state the first in the nation to allow medical cannabis for pets.

Last year, then-Gov. Jerry Brown signed a bill to allow veterinarians to discuss cannabis therapies without risk of losing their license or other putative actions, but that bill stopped short of allowing recommendations.

Sen. Cathleen Galgiani’s legislative director Mike Sharif said the bill would have taken last year’s legislative success “a step further.”

“We wanted to free up veterinarians, because it’s very hard to discuss without recommending, and we felt like veterinarians would err on the side of caution and not even discuss it because they don’t want to be seen as recommending.” – Mike Sharif, to VIN

Sharif notes that the measure has already “been amended a bunch of times” by the Assembly Committee on Business and Professions but the crux remains intact. One of the proposed changes would have required pet-focused cannabis products to be obtained at only medical cannabis dispensaries; however, that language was removed.

Oakland veterinarian Dr. Gary Richter called that change “bad policy.”

“We’re already cut out of the loop,” he said. “We’re trying to get into the loop. This would basically keep us out of the loop.”

Dr. Richard Sullivan, a member of the state veterinary board’s Multidisciplinary Advisory Committee, said he supports allowing veterinarians to recommend cannabis for pets so they could develop trust with clients to better follow up on their patients, measure improvements like range of motion “and other metrics” to see whether cannabis is efficacious.

The measure originally passed the Senate in May but California’s session ends Sept. 13 and proponents do not expect it will come to the floor for a vote before session closes. Lawmakers reconvene Jan. 6.

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U.S. Officials Launch Cannabis Public Health Campaign

U.S. Surgeon General Jerome Adams and Health and Human Services Secretary Alex Azar have announced a cannabis public awareness campaign saying that cannabis use “carries more risk than ever” amid increased access and potency, according to a Washington Post report.

The public awareness campaign is funded by President Donald Trump, who reportedly donated his full second-quarter salary of $100,000 to the effort.

Adams said that current cannabis “isn’t your mother’s marijuana,” pointing out that in 1995 the average potency of cannabis flower was 4 percent and now it’s about 12 percent to 25 percent, while concentrates can run as high as 80 percent or 90 percent.

Azar said he does support increasing federal cannabis research into both the risks and potential benefits into cannabis. Earlier this week, the Drug Enforcement Administration announced it was moving forward with expanding cannabis research and would approve some pending research applications.

“We need to be clear: Some states’ laws on marijuana may have changed. But the science has not. And federal law has not.” — Azar, during a press conference, via the Post

According to the report, the health advisory is only the second issued by Adams. His first came in December and was aimed at e-cigarettes. Officials said that Trump using his own salary to back the cannabis health awareness campaign underscores his – and the administration’s – concerns about addiction and substance abuse.

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South Dakota Gov. Pens Anti-Hemp Legalization Op-Ed

In an op-ed in the Argus Leader, South Dakota Gov. Kristi Noem (R) is discouraging the legalization of hemp in the state, arguing that legalizing the crop “legalizes marijuana by default.”

Noem cites the experience of other states, such as Texas and Ohio, where some officials have indicated they would not prosecute cannabis cases because high-THC cannabis looks like its non-psychoactive cousin and the agencies don’t have the testing capability for THC levels. The governor noted that a few months ago, a South Dakota Highway Patrol officer showed the Legislature that a drug-sniffing dog alerted the same way to both hemp and THC-rich cannabis.

“South Dakota must lead by example. We cannot rush into legalizing industrial hemp without knowing the cost we will pay. The safety and health of the next generation is not worth the gamble.” – Noem, in an Argus Leader op-ed

Noem said that the state’s Secretary of Public Safety, Craig Price, is also against hemp legalization after witnessing the experiences of other states.

“Law enforcement is already stretched thin in our state, and legalizing hemp would stress our resources even further,” Price said last week, according to Noem. “It would have a negative impact on our drug fighting efforts in South Dakota.”

Noem contends that legalizing hemp “weakens drug laws” and “hurts law enforcement.”

“It’s a step backward. South Dakota already faces a drug problem. Families continue to be ripped apart by substance abuse,” Noem writes. “I realize this position might not be popular, but that’s not why I’m taking it. As a governor who has said I will make every decision with the next generation in mind, I cannot sit by.”

Last year, hemp was legalized federally via the Farm Bill which removed the crop from the Controlled Substances Act. Since that action, several states have passed their own hemp laws which still need U.S. Department of Agriculture approval before moving from ‘pilot’ to permanent.

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Jonathan Menkes: Cannabis Product Trademarks

Jonathan, who specializes in trademark counseling and brand protection at Knobbe Martens, recently joined our podcast host TG Branfalt for an interview that focuses on what cannabis entrepreneurs can do to protect their brand and other intellectual properties, including specific products and even strains.

In this interview, Jonathan offers advice for avoiding trademark infringement lawsuits, explains the history behind some of the biggest trademark infringement cases in the cannabis industry, discusses the small differences between trademark and copyright law, and more.

Tune in via the media player below or scroll further down to read along with a full transcript of this week’s Ganjapreneur.com podcast episode.


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TG Branfalt: Hey there, I’m your host, TG Branfalt and thank you for listening to the Ganjapreneur.com podcast, where we try to bring you actionable information and normalize cannabis through the stories of ganjapreneurs, activists and industry stakeholders. Today I’m joined by Jonathan Menkes. He’s a California-based trademark attorney with Knobbe Martens. Johnathan’s practice includes domestic and foreign trademark selection and clearance, trademark audits, unfair competition, false advertising, and notice and takedown procedures involving copyright and trademark claims. How you doing this morning, Johnathan?

Jonathan Menkes: I’m doing terrific, thank you so much for having me. I’m really excited to be here.

TG Branfalt: I’m delighted, man, I love having attorneys and lawyers, very bright specialists on the show. So this isn’t something that we’ve discussed before but before we get into your expertise on trademark law, tell me about yourself, your background, how did you end up serving cannabis clients?

Jonathan Menkes: Great question. It’s fairly interesting because I represent a number of clients in different industries, fashion and clothing, food and beverage, medical devices, among many others. And one day a few years ago I had a dispensary locate our service, a client that needed our assistance with trademarks and brand protection, and it just so happens that company was Weedmaps, which you may have heard of.

And frankly, it just was a snowball effect from there where once you represent one player in the industry, your name gets out there, word gets out. Hopefully you do a good job for people and they appreciate that, and then they just start calling or emailing and so it’s been fantastic. So that’s been a few years now since I got that first call, but it’s just been a fantastic journey ever since.

TG Branfalt: So it doesn’t sound like something that you went to law school sort of in the back of your mind you wanted to serve this space. What interested you most about this sector?

Jonathan Menkes: It’s a great question, and on that point I might just note it seems law schools nowadays are beginning to offer cannabis classes. I didn’t have such a class offered when I was taking classes back in law school, way back when. But it’s so interesting to me because there’s so much unknown. Certainly we know trademarks and we know it very well, but there are certain unique aspects of trademarks in the cannabis and CBD space that aren’t present in other industries, and I’m sure we’ll great into that later.

But the nuances, the gray areas, it’s all very exciting because there are very little answers and lots of questions. And it’s really enjoyable for me as a practitioner to work with clients, figure out where they are in the space. Do they have an established trademark portfolio, are they just beginning, and work with them through that journey. And that’s what’s most exciting to me is walking with them, figuring this out as we go. Like I said, there are certain things we know for sure in trademark law, certain standards if you will, but there’s so much unknown that that’s where I think it’s most interesting to me.

TG Branfalt: So you mention that they don’t teach cannabis in law schools. This is something that is also the case in medical schools and other really advanced education systems. What do you think it’s going to take to bring these classes to the masses, if you will?

Jonathan Menkes: It’s a great question and I think we’re just starting to see this happen. I met with a professor from UCI School of Law who does offer a cannabis class to his law students, and I don’t know how many law schools out there are offering such a unique program but I think because of the interest… it’s just remarkable how much interest this space generates, and I think even before we get to federal legalization or perhaps decriminalization, more and more people are going to be interested, and that will drive more and more universities I believe to offering more courses and curriculum in this space.

TG Branfalt: So tell me about some of the cannabis trademark cases. The Tapatio case comes to mind, the Gorilla Glue case comes to mind, both dealt with trademark issues. One was a little more focused on the image, the Tapatio… the copyright image there. But tell me more about what were the issues with these cases, and what were the results?

Jonathan Menkes: Certainly. So we’ll start with Tapatio, and I know I have to give a shameless shout out to one of my colleagues, or two of my colleagues, Johnathan Hyman, Victoria Ellis, they wrote a fantastic article, Stirring the Pot: Recent Trademark Infringement Claims from Major Brands In the Cannabis Field. And I would just point people to that very succinct and wonderful read, and it does show the images in question for the Tapatio and Trapatio hot sauce as an issue.

But with that shameless plug aside, the case really involves people being too cute and too close to the well-known Tapatio branding and the imagery, as you pointed out. And so the first lawsuit was filed against Smoker’s Paradise & More, Inc. It was a design mark that looked strikingly similar to Tapatio’s hot sauce, and Tapatio did not find the joke very funny at all. And so they filed for trademark infringement and trademark dilution by tarnishment, which I’m sure we’ll go into in a bit. And they also filed a second lawsuit against TCG Industries for offering THC infused hot sauce under the mark Trapatio. And there similar claims were asserted, as far as trademark infringement, unfair competition, and dilution.

And it’s a big deal. I think if there’s one takeaway from that particular case is that being cute doesn’t mean it’s okay to do. Certainly defending a federal lawsuit is not inexpensive and it’s not a quick process, and I think the take home there for my clients and for many clients is that you really have to be careful when you’re adopting a brand. You really shouldn’t be looking at well-known brands. I know the Girl Scouts Cookies have filed a number of complaints, if not sending cease and desist letters. Hershey’s is very protective of their brand. And so it’s far better to use your money and resources in coming up with a unique brand on your own that doesn’t look anything like an established brand for a non-cannabis company, because the results otherwise might end up in a lawsuit.

TG Branfalt: So what was the result there? I saw some images that the Trapatio, they took away the sombrero and that still wasn’t enough?

Jonathan Menkes: So there were two different complaints and so with the second one, the one that I mentioned, TCG Industries, there it was interesting because they had a settlement agreement previously entered into. And then when TCG Industries allegedly reached out to Tapatio to say, “We’ve got this new mark and logo, is it okay for us to use this?” Tapatio declined. TCG Industries went forward and then the lawsuit resulted there. I don’t know where they are in the stages of the lawsuit, whether it’s still pending. My sense is that these cases tend to settle, they don’t tend to go very far, but even working on settlement can itself be a very expensive process.

As far as Gorilla Glue, there a settlement agreement was reached. My understanding is there was no monetary payment as part of the settlement. However Gorilla Glue, the name Gorilla Glue had to be changed to something else. For instance, I think it was GG strains, or there was some other mark there that they had to use that didn’t incorporate Gorilla Glue, that it had to be some other unique name.

TG Branfalt: So what I remember writing about this when it was happening, both of these cases, and what struck me about the Gorilla Glue case was that there were no images being used and that you can’t really trademark a strain name, but you can. Can you sort of walk me through that confusion?

Jonathan Menkes: Certainly. So strain names, you can in theory have a trademark for a strain name. So a strain… any product that you have out there, a t-shirt, a medical device, all of these, if you have a trademark which identifies the goods or services of your company from those of another, it serves as a trademark.

And the tricky part is twofold. One is that if you pick a trademark that is confusingly similar or if not identical to a well-known brand, then you can’t do that under trademark law. That’s not permitted.

The second is if someone in particular, or rather everybody refers to a type of product with a specific term. So what do I mean by that? If you have headphones, if you’re a producer of headphones, let’s say they happen to be wireless. You can’t come up with Wireless Headphones as the name of your, quote, trademark, because that’s the generic name for what the product does or is, it has a feature. And so if people refer to wireless headphones, they don’t think of any one brand, they think it’s just the type of product that it is. By contrast, if you have Bose headphones or Apple earbuds or something that is a trademark, a source identifier, that’s where you have trademark protection.

So to the same extent with strain names, I can see a situation where a person comes up with a specific strain, they protect it and consumers understand that perhaps it comes from one specific source. But if it does not come from a specific source, if many people are producing it, there’s really no policing going on by the brand owner, then it’s really open to the public and it’s become what we call in trademark parlance a generic term.

TG Branfalt: So let’s stick on Gorilla Glue for a second, there’s sort of a lot of discrepancy within the space about calling strains Gorilla Glue say in Oregon compared to California, right? They say that they might call it Gorilla Glue, but it doesn’t have the same sort of genetic makeup. So how do you go about proving that you have the actual product when it comes to strain names?

Jonathan Menkes: So that raises an interesting question, rather, of consumer deception. If a consumer assumes that a certain product has a certain makeup or if it’s a strain name and it creates a certain feeling when used, then that’s one thing. But then if you call it… I guess Gorilla Glue might not be the best example because it’s the trademark owners name, but if you call it something else and it doesn’t those qualities that seems to be a different problematic use for the consumer who has an expectation that it has certain qualities or characteristics when it doesn’t. It’s sort of a type of fraud, if you will, unfair competition, and a number of states have their own unfair competition laws. And trademark law does allow for that, where you’re unfairly claiming to have a product that bears certain characteristics when in fact it does not.

TG Branfalt: Okay. So why don’t you tell me about a couple of the cases that you’ve worked on, walk me through maybe something that you’ve defended or the process of trademarking something.

Jonathan Menkes: Certainly. So one of the projects or types of projects that I come across with some regularity is, someone comes up with a brand name. It doesn’t have to be for product, oftentimes it’s a clothing line or they have stickers or decals that promote the particular brand in question. And so one of my tasks is to see is someone else using a similar trademark for similar products or services, and doing what we call a clearance search.

And so you look at various databases. We have third-party databases that we commission to review searches and we see, okay, this other party is in this different space, we either do or do not think it’s going to cause an issue down the road, and then we counsel our clients on the results of that. Whether they should move forward, maybe they should add a few other terms to the trademark to distinguish it so they reduce the risk that they will see an issue going forward.

So that’s one type in the trademark space. Separately in the copyright space, which hopefully we’ll get to chat about that a bit as well as a few other forms of intellectual property that I think every brand owner should be aware of, is copyright law. So one project that I think is pretty interesting that I’ve been working on with some of my colleagues as of late is clearing copyrights. So copyrights, unlike trademarks, protect a little bit… it’s a different bundle of sticks, if you will. Copyrights prevent copying of imagery, of music, of sounds. It doesn’t really matter who’s producing it. It really matters just whether the two images or sounds or music in question are known as being substantially similar.

And the interesting part about copyright law is while it typically prohibits someone from copying it without authorization, there’s certain exceptions. You may have heard of the fair use defense. There can be certain instances under copyright law where using someone else’s… or clips, rather, of a video, or newspaper or other articles can be deemed a fair use so you don’t need that copyright holder’s permission to use it. And that’s one project I’ve been working on is counseling our clients on the situations in which that may or may not be permissible when a license is not feasible.

TG Branfalt: Is this something that is at the forefront… when you’re dealing with people in the cannabis industry, is it something that’s on the forefront of their mind when they enter the space or do they have sort of an aha moment when they’re talking to you?

Jonathan Menkes: It’s a great question. I would say by and large my clients really value trademarks and brand protection from the get-go. I find myself doing less educating as far as the importance of trademarks and brand protection in the cannabis space as compared with other spaces, interestingly enough. Unfortunately I think there are certain assumptions made about people in this space, but they’re some of the brightest, most innovative people I’ve come across, frankly. And that’s going back to your first question is why I love this space so much, is just how intelligent these people are, they’re business folks, they’re business savvy. These are not what I think some might unfortunately view as seedy people. These are, as I said, business owners that really want to do the right thing and protect the brands, follow the law and do what they can to make sure their company can thrive.

And to me, that’s been very exciting to work with them, to help them grow their brands in an intelligent way rather than just, let me file… whichever trademarks you send my way, I’ll file. I don’t think that’s typically the way these businesses flourish. I think there has to be a targeted approach to trademark protection, and that’s what I enjoy working with these folks in the cannabis space is helping decide what are my most important brands, and how do I go about protecting them.

TG Branfalt: So recently, the US Trademark and Patent Office released some guidance related to trademark copyright issues in the cannabis space. Could you tell me what your take on that guidance was and what it ultimately means for cannabis companies?

Jonathan Menkes: It’s a great question. Unfortunately, I think guidance, and I’m using air quotes here, is pretty unhelpful if you are in the cannabis space. For instance, if the product you’re working with has more than point three percent THC, it’s effectively out from a trademark registration standpoint.

The Trademark Office in the guidelines clarified what I think many practitioners already knew, which is that in order to obtain a trademark registration, the use has to be considered lawful. And lawful use requires that the use does not violate some other area of law and what many examiners have been doing, at least as of the last few years, is citing the Controlled Substances Act as a bar against registration of products that either touch cannabis directly, transport it, conceal it, process it, et cetera. I think there are ways that these products can be registered, but it’s really few and far between and it creates a real challenge for those in the space.

If the product contains less than point three percent THC, the guidance made clear that you could still have an issue, not with the Controlled Substances Act but with the Food, Drug and Cosmetics Act. And so it seems like with the farm bill passage in December 20th of 2018, we thought a lot of the CBD products would be easily registrable, and we just haven’t seen that because now the Trademark Office is now looking too at the FTC, the FDA, and finding that such products in particular in the supplement space are simply not registrable.

TG Branfalt: So what about states? What about in California? Can companies that are licensed, legally operating, do they have rights under any state laws?

Jonathan Menkes: It’s a terrific question. And that’s really a big part of the counseling that we do with our clients is looking at the states where they have legal use within those states and helping them secure state trademark registrations. So California I’m very happy to say has a very robust system in place from filing to registration where they do permit products to be registered. Cannabis products, CBD products. A few exceptions there, it can’t… the design element or the logo cannot be marketed where it would be attractive to children. You can’t have products whether CBD or cannabis that are mixed with alcohol or contain alcohol in it.

So there are a few exceptions there but generally speaking at least in California you can secure state trademark registrations for these products and there are a handful of other jurisdictions that also allow for it. For instance Oregon, Nevada, Arizona, you can get a registration. I believe that one if it’s only for medical use. But in any event, we do counsel clients in the various states that do allow for state registrations and helping them secure products there.

It’s very interesting that we have this dual system. We have the federal trademark system where you can probably get registrations for clothing, for decals, for things that don’t touch the product itself, and then at the state level you can get for products themselves.

TG Branfalt: So forgive me if this a naïve question, but let’s say a company in California has all the state trademarks and then a company in say Massachusetts which has a legal cannabis program violates that trademark. Is there any sort of action that the company in California could take against that Massachusetts company under the state guidelines or is that sort of an in state… would the infringement have to happen in state?

Jonathan Menkes: I love this question. I think it’s a great one. And it raises… this is not unique to cannabis. This happens with some regularity where you have two companies, company A in California and we’ll say company B in Massachusetts. They both started using at different times but they’re pretty localized, what happens?

So we’ll assume for purposes of this question there are no federal trademark registrations, which we should talk about at some point why someone should get or at least apply for a federal registration. But in your hypothetical, it’s first in right… first in time, excuse me, first in rights. So the first person to use the trademark has rights in that jurisdiction or geographical location where they used it. So in your situation if company A only use them within California and company B only use within Massachusetts, then really they would just be coexisting in their separate markets. There would be no claim from A to B or B to A because they’ve only used in those local markets.

Now, it gets tricky when let’s say company A has also licensed right to use their trademark in Colorado, and the Massachusetts company has also licensed the rights to its trademark in Colorado. So then the question might come down to, who was the first to use it within Colorado? Really, it’s a complicated issue, but it really comes down to who was first to us it in the relevant jurisdiction and perhaps a small zone outside of that specific locale would ultimately win. But it’s a great question, I’m really really happy you asked it.

TG Branfalt: So you mentioned that people should file, at least file for federal protection, but earlier you said said that you’re not really going to have a whole lot of luck at the federal level because cannabis is schedule one, that whole thing. So why make that application if it’s going to get denied?

Jonathan Menkes: Terrific. So, I think we need to make a distinction between what we’re filing for. And so it can be tricky if you file for a cannabis-related product, you’re almost certainly not going to get it federally registered, but if you are a brand owner presumably you have hats, clothing, other paraphernalia if you will to support your brand. And that, because it doesn’t contain cannabis products, can be registered at the federal level which is often ideal.

And so we counsel our clients in obtaining federal registrations for as I’ve mentioned clothing, decals, stickers, lighters, perhaps lanyards, as well as website services. If you’re providing a website that has information on perhaps the legalization of cannabis, I think I would rather have that than nothing when trying to assert it against a third party. And so while we’re on the subject of why bother with federal registration, it confers a few important things that people should consider.

So first is, if company A that we talked about in your previous hypothetical files a federal registration let’s say for clothing, let’s say they’ve only used in California and Nevada. Once they secure registration for that clothing, it’s as though they’ve used in every single state in the US including Massachusetts when they haven’t. And so that’s a pretty massive benefit because now they don’t have to prove use, it’s presumed that they have already used it there. So that’s one benefit.

The second benefit is now you have the Trademark Office acting as a mini police force for you, if you will, because they monitor…well, they review every application that comes across their desk and they will look to see if there’s some other registration or application that would bar a new application from registering. And so you have the added benefit of the Trademark Office basically adding as a first stop gate with people trying to register marks that are confusingly similar to what you own. And you have certain statutory presumptions with a federal registration that you don’t get without a registration, so for instance that the mark is valid, that you own it, that it’s distinctive. These are all important features that you would otherwise have to prove in court if you did not have a registration.

So I think there’s real value there that most of my clients I think appreciate. I’m very fortunate that they appreciate that, and it’s very fun to work with them to see what other products we can help them protect. And I don’t want to say we like to see how close we can get, that would not be the intent there, but just to see ways in which we can secure brand protection outside of the core products and services.

TG Branfalt: So what about… I know we briefly discussed strain names earlier, but how do ganjapreneurs protect that strain name intellectual property? I mean, I know that you’ve said that you can trademark clothing and other things that don’t touch the plant, but is there any way to protect intellectual property like strain names?

Jonathan Menkes: Terrific. So I’m really glad you asked this question because it does point to the other areas of intellectual property outside of trademarks that are important to consider. So for instance, patents. Patents traditionally cover useful articles, machines, inventions, improvements thereupon and these might… let’s say they’re atomizers or some other physical product that you have or processes, you can actually get a patent on strains. And I do have colleagues here at Knobbe that have worked with clients in filing for patents on strain names, and so that’s certainly something people should look at.

I think the big caveat there is if someone has been using or publicly distributing, offering for sale this particular strain name for more than a year, then by and large it would be unlikely to be patented because you basically donated it to the public. I would defer to one of my patent colleagues for further guidance on that, but roughly speaking if it’s been out in public for more than a year then you don’t have the option of getting a patent on that.

But perhaps there are other ways of protecting it. Trade secrets is another thing people should consider. Trade secrets are really anything that derives value from being a secret. So you think of Coca-Cola, their recipe’s probably the oldest trade secret that is out there. Kentucky Fried Chicken, their recipe for chicken is also a pretty famous one that we can say. So trade secrets for customer lists or maybe there’s a process by which you are growing the plant, or there’s some secretive process that you use that you don’t want to disclose to others that might be valuable to protect.

And so that knocks out… we’ve already discussed trademarks, there’s patents, there’s trade secrets and we touched on copyright, which really I think for purposes of the listeners here would be your website, your packaging material, the logo design. All of these things that have an image on them, you should be thinking copyright and the application process is relatively… it is inexpensive, frankly, and the process in the Copyright Office is unlike the Trademark Office because the Copyright Office is agnostic as far as use. So there is no CSA refusal for copyrights, and I think that’s probably one of the most undervalued forms of intellectual property is copyrights because the imagery is so important to branding, and I do think people should strongly consider getting a copyright.

And I will say one further point on that, this comes up with regularity in my practice, I wouldn’t use, or at least I’d be careful I should say, in using a third party to design your logos. Because more often than not, or at least frequently, even though they say they’re assigning it to you and you own the copyright, again I’m using air quotes here for own the copyright, but when we look at these agreements oftentimes you don’t. You look at it and we have to go back and get a copyright assignment from that third party. And the reason for that is under copyright law, whoever designs the website or designs the logo is the author or the owner of that, the exception being if it’s an employee within a company and it’s within the scope of their employment to prepare that website or the graphic designs. Then the company owns it.

But other than that, if it’s a third party traditionally that person owns it or that company outside of your company owns it, and so that is something I think the audience should just keep in mind when commissioning someone to prepare the logo design because maybe you don’t own the rights when you think you do.

TG Branfalt: So how do you prevent that from happening? I mean, do you design it yourself, do you have an attorney make sure that all the Is and Ts are dotted and crossed on the contract?

Jonathan Menkes: Yes, working with competent counsel’s always a good thing to consider. I think make no assumptions that just because someone says you own the copyright that you in fact do. Every case is different and the facts need to be looked at, and I would say even within a company it’s worthwhile for a practitioner to look at the situation involved there because maybe there’s some ambiguity about whether what they designed was really within the scope of their employment. So maybe that employee owns it as opposed to the company. So I think you’re absolutely right, working with competent counsel to think through these issues, to review agreements, or to prepare agreements for these brand owners in advance, at least to consider them thoroughly is really the point of this exercise.

TG Branfalt: So I want to go back for a second when you were talking about trade secrets, this isn’t something that I thought about at all with regard to ways to protect yourself. I’m also not a lawyer, but what’s that process like? How do you file to protect trade secrets?

Jonathan Menkes: It’s a great question. And so you technically don’t file anything for trade secrets. So it’s unlike any other area of intellectual property as far as patents where you have a filing, copyrights and trademarks where you have a filing with a government. Trade secrets you don’t. You just have to prove that you have something that is valuable because it is secret, like I said, customer list or perhaps a recipe. And you take reasonable steps to actually keep it secret. If you posted on Instagram, “This is exactly how I make X product,” you’ve lost it. You’ve donated it to the public. And so I think people need to be careful when they say they have a trade secret, and then if they’re sharing it with third parties non-disclosure agreements are absolutely critical to make sure you haven’t just lost or donated your trade secret to the public.

TG Branfalt: So something else about social media, when I helped a gentleman open up a few head shops a few years ago and he had named them Dab City, and he’d actually gotten a cease and desist from an attorney because somebody had opened an Instagram page a couple of years earlier using that Dab City moniker and they were claiming that this shop had infringed on his copyright because he’d had it longer, he’d had social media. I guess my question is, when you have a social media page, when you start a social media page, is that setting some sort of clock as it refers to trademark and copyright, those issues?

Jonathan Menkes: It’s a great question and I think it does raise a great point in how does social media impact people in the space. What are some issues that come up? I think this could work both ways. I know I have a number of clients who post images for their brand, they promote their brand on Instagram for instance and it’s just how you connect to the consumer. And so I think under traditional trademark law then that advertisement of products on social media could be deemed in certain circumstances as trademark use, and as we talked about the first user technically has the first right or has rights in the trademark there.

But the reverse is also true that you have to be careful when using social media or when people post things on social media. Who are you, are you Instagram or are you the brand owner? And I think each party along the chain of command there, so to speak, has to be cognizant of what’s being posted.

For brand owners, I know this happens with way too much regularity where they file for a product and the trademark examiner will take a look at their website. We never submitted any evidence of their website, we just submitted product packaging, for instance, or something else. And the examiner pokes around and sees, “Oh, you’ve identified something as an herbal product which sounds innocuous enough, but I see that you’re actually selling cannabis because on this Instagram page there are cannabis leaves everywhere, people smoking, it’s very obvious that this is for cannabis products.” And so I think that’s where people also have to be careful with… I understand that you need to promote your brand, but just be warned, what’s out there in the public is out there for everyone including trademark examiners who will and have used whatever you’ve posted against you.

TG Branfalt: So this has been really fascinating, getting the… it sounds really complicated and you learned pretty quickly and on the fly what has to happen, do you think, federal statewide to make this issue less complicated? Is it something as simple as federal action, or can something be done maybe when states pass laws that include language that speaks to this issue, how can we sort of less muddy these waters?

Jonathan Menkes: It’s a great question, it’s an important question. I think if cannabis were federally decriminalized or legalized then I think the trademark practice would be much, much easier than the currently is. The Trademark Office, interestingly enough, once upon a time did allow products that had cannabis in them, I think around 2013 or 14 or so. You can find registrations where it lists something that is pretty obviously cannabis-related, and then there was a change in course. And so I think the easiest thing to now happen would be federal legalization or decriminalization and the Trademark Office going along with that saying, “Okay, it’s no longer not lawful use in commerce so we will no longer be refusing registration on that basis.”

That would certainly make my job easier but I don’t know that it’s going to happen any time in the very near future. But I have heard some inklings that this may be two years or less or so, but who knows who’s right, who’s wrong, only time will tell.

TG Branfalt: So finally, what advice do you have for entrepreneurs either looking to enter the space or who have already entered the space with regard to protecting their intellectual property?

Jonathan Menkes: It’s a great question. I think what I would say is find the sweet spot, and what I mean by that is you don’t want to go overboard with trademark filings or other types of filings, but you don’t want to not protect your core brands. And so I think the key there is to find a great practitioner that you trust, that is reputable, that knows the space and who has worked with clients and will continue to work with clients in navigating these very, very muddy waters. The point I think here is that clients or prospective clients should just really consider what is my core brand, what are my sub-brands, what is my budget and can I get all these trademarks now or do I have to wait a few years until the business grows and then secure these secondary trademarks?

And I think it’s often overlooked that you do have trademark rights just by using. True, it’s limited to only the geographic areas where you have used, but that’s still better than nothing. And so maybe you don’t file for 10 trademarks this year, you file for two. Next year, you file for three. And then as your business grows, you really protect your core brand. So really driving home the point of find the sweet spot of the appropriate amount of protection to really cover your bases without going overboard and blowing the entire budget just on lawyers like myself.

TG Branfalt: Johnathan, I want to thank you so much for coming on the show, taking your time. I know that you are expecting a child any day now, congratulations. So to have you take time out of this Monday to be on the show is pretty great. Can you tell the listeners where they can find out more about you and your practice at Knobbe Marten?

Jonathan Menkes: Terrific. Tim, I want to thank you for having me on this show. It’s been very fun, I love talking about the issues that arise here and thank you for this wonderful opportunity.

Listeners can find me on our website, knobbe.com, that’s K-N-O-B-B-E dot com. Again, that’s Johnathan Menkes. Or they can shoot me an email, johnathan.menkes@knobbe.com. Last name is M-E-N-K-E-S. Hopefully a Google search would reveal the name as well because we have written a bit in the space and so hopefully my name would come up, but I do encourage anyone to reach out if they have questions. I do free consultations over the phone or in person just to see how we can help and hopefully we have the opportunity to work with each other.

So again, Tim, thank you so much and I really appreciate the opportunity.

TG Branfalt: Thank you. Johnathan Menkes, California based trademark attorney with Knobbe Martens. You can find more episodes of the Ganjapreneur.com podcast in the podcast section of ganjapreneur.com and in the Apple iTunes store. On the ganjapreneur.com website you will find the latest cannabis news and cannabis jobs updated daily, along with transcripts of this podcast. You can also download the ganjapreneur.com app in iTunes and Google Play. This episode was engineered by Trim Media House. I’ve been your host, TG Branfalt.

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USDA: Hemp Qualifies for Federal Crop Insurance

The U.S. Department of Agriculture has announced that hemp cultivated for fiber, flower, or seeds is now eligible for federal crop insurance. Hemp farmers eligible under the program can insure plants with revenues up to $8.5 million. 

“Numerous producers are anxious for a way to protect their hemp crops from natural disasters. The [Whole Farm Revenue Protection] policy will provide a safety net for them. We expect to be able to offer additional hemp coverage options as USDA continues implementing the 2018 Farm Bill.” — USDA Risk Management Agency Administrator Martin Barbre, in a press release

To be eligible, farmers must be compliant under their state and federal regulations and “hemp having THC above the compliance level will not constitute an insurable cause of loss,” the release states.

It’s the latest move by the USDA following the 2018 legalization of hemp federally via the Farm Bill. In May, the agency issued its first organic certification for a hemp flower product; although the agency had certified other hemp products in the past, such as Food and Drug Administration-approved hemp food products.

The following month, the USDA released guidance for importing hemp seeds, which previously required Drug Enforcement Administration approval.

Following the passage of the Farm Bill, states could enact their own hemp cultivation program but those must first be approved by the USDA to take effect; the agency has, so far, not approved any of the state-approved plans but the agency notes in the release that those regulations are expected later this year.

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California Cannabis Tax Revenues Still Below Expectations

California tax revenues derived from the cannabis industry increased slightly more than $10 million in this year’s second quarter — from $63.1 million during the first three months of the year to $74.2 million — but they are still below government expectations, according to an NPR report.

In January, Gov. Gavin Newsom (D) had forecast cannabis tax revenues would be worth $355 million this year and $514 million in 2020 but in May he adjusted those estimates to $288 million this year and $359 million next year.

Cannabis profits in the state actually decreased when legalization took effect in 2018 — from about $3 billion to $2.5 billion. A report from Arcview Research and BDS Analytics released earlier this month suggests the state is poised to reach $3 billion in sales again this year. 

The Institute on Taxation and Economic Policy notes that after adjusting for population, California “raised the second-least amount of revenue from cannabis taxes during the second quarter among states with legal sales, ahead of only Massachusetts.”

Tom Adams of BDS Analytics told NPR that the sales slowdown could be due to the state’s high taxes and the fact that two-thirds of California municipalities have banned industry operations. California levies a 15 percent excise tax on sales and a cultivation tax of $9.25 per ounce, along with a 9 percent to 11 percent retail sales tax.

In May, the Appropriations Committee rejected a bill to lower the state’s cannabis taxes. That measure would have reduced the excise tax from 15 percent to 11 percent and suspended the cultivation tax for three years. 

The committee did advance a bill that would require municipalities to allow cannabusinesses if the majority of the citizens in the city or town approved Proposition 64. That bill would require one retail dispensary for every six liquor licenses or every 15,000 residents. As of May, there were 631 licensed cannabis retailers in the state, which is just 10 percent of initial government estimates.

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Kentucky County Halts Cannabis Possession Prosecutions

Jefferson County, Kentucky officials are no longer prosecuting low-level cannabis possession crimes if it’s the only or primary charge, the Courier-Journal reports.

County Attorney Mike O’Connell said the decision comes after a Courier-Journal report found that African-Americans accounted for two-thirds of cannabis possession cases in 2017 and Black drivers in Louisville were charged with possession at six times the rate of white drivers — national studies have found that both Black and white people consume cannabis at the same rates. 

“For me to truly be a minister of justice, I cannot sit idly by when communities of color are treated differently.” — O’Connell, to the Courier-Journal 

The policy applies to cases of one ounce or less and for paraphernalia used only for cannabis consumption. Louisville Metro Police Chief Steve Conrad told the Courier-Journal that he will tell his officers not to “routinely write citations for this specific offense.” The Louisville Metro Council passed an ordinance in June making possession of a half-ounce or less of cannabis the lowest priority for police officers.

O’Connell’s office will still prosecute cannabis cases linked to trafficking, cultivation, driving under the influence, public consumption, and possession cases involving individuals under 21-years-old. Cannabis possession in Kentucky is punishable by up to 45 days in jail and a $250 fine; although a 2012 law allows those charges to be expunged after 60 days.  

Mayor Greg Fischer’s spokeswoman, Jean Porter, told the Courier-Journal that the mayor respects O’Connell’s decision and Conrad’s efforts to reform police practices. 

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