Cannabis Beverages are On Fire! – Ingredients and Labeling

Here’s another installment in this blog series on Cannabis beverages, which are on fire!  As an example,  as reported in Cannabis Business Executive, just the other day, Curaleaf, a major hemp product manufacturer, announced that it signed an agreement with Southern Glazer’s Wine & Spirits – the world’s largest distributor of beverage alcohol.  This blog entry provides a quick snapshot of cannabis beverage ingredients and labeling.

Although the most popular, THC and CBD are not the only cannabinoids the cannabis plant produces. Other cannabinoids are well-known for having potential therapeutic benefits, and cannabis consumers are also highly attuned to the different terpenes produced in cannabis that create different flavors and effects, such as bisabol, which some believe can be fruity and may provide anti-inflammatory and antioxidant benefits; linalol, which some believe can be floral and may provide sedation; and myrcene, which some believe can be fruity and may provide relaxation.  Whether and how to include different cannabinoids and terpenes in beverages is going to be important in expanding cannabis product lines.

Likewise, transparency in labeling those ingredients may be necessary to ensure consumers are enjoying cannabis beverages safely and to the greatest effect. Moreover, so that consumers can understand the experience intended with a particular beverage, “claims” about the intended effect, e.g., stimulating, euphoric, relaxing, may be necessary.

Ingredients and labeling are a hot button issue for cannabis products. Those familiar with the FDA’s discretionary enforcement of “claims” in hemp-derived CBD products know this is an area of particular interest for the FDA. State-specific regulation of ingredients in cannabis products is also getting a lot of attention right now.  For example, the Pennsylvania Office of Medical Marijuana recently instituted a state-wide “vaporization product review” purportedly to assess the safety of terpenes, like those above, in vape products.  Given that they occur naturally in cannabis, many in the industry believe terpenes should not be regulated in the same way, if at all, as other ingredients.

Lastly, on this topic, ingredients and labeling are the focal point of a growing number of products liability and consumer fraud class actions and mass actions, where plaintiffs are asserting physical or economic injuries because, they claim, ingredients did not perform as intended or were not consistent with the labeling. Cannabis beverage manufacturers, distributors and retailers need to particularly mindful of the possibility of such claims, which can deplete resources.

 

Harborside to Combine with Urbn Leaf and Loudpack to Create StateHouse Holdings

Harborside Inc. (CSE: HBOR), (OTCQX: HBORF) a California-focused, vertically integrated cannabis enterprise, is pleased to announce that it has entered into definitive agreements to acquire UL Holdings Inc. (“Urbn Leaf”),  a top California cannabis retailer with a dominant position in Southern California  and  LPF JV Corporation (“Loudpack”), a leading manufacturer, cultivator and distributor of award-winning cannabis brands in California . Following completion of the Transactions, Harborside is expected to be renamed StateHouse Holdings  (“StateHouse”), subject to shareholder and regulatory approval.

Duane Morris partner Nanette Heide, who led the team that acted as United States legal counsel to Harborside, commented, “We are super proud of Harborside for taking on the challenge of pursuing two opportunities almost simultaneously and delighted to be the legal team that led them through this intense process.”

To learn more about the transaction, please visit the New Cannabis Ventures website.

Q&A: Duane Morris Cannabis Practice Leader Seth Goldberg

Duane Morris partner Seth Goldberg‘s interest in cannabis emerged in 2014 as part of his work as a litigator in the healthcare space. Seven years later, he’s the leader of the firm’s cannabis industry group, and he’s seen the explosive growth of both the regulated trade and the legal work that’s sprouted alongside it.

We recently talked about the developments he’s seen over those seven years as well as other hot topics in cannabis law right now. Here is some of that conversation, edited for length and clarity.

Higher Law: What are some of the big changes you’ve seen since 2014?

Seth Goldberg: Some of the major changes have been the sophistication of the clients, the development of stronger compliance protocols and the improvement of deal terms and deal structures.

To read the full text of this article originally published by Law.com’s Higher Law, please visit the firm website.

New York DOL Publishes Guidance on Recreational Use of Cannabis Related to the Workplace

By Katelynn Gray

As we previously reported earlier this year, Governor Cuomo signed the Marijuana Regulation and Taxation Act (“MRTA”), which legalized adult-use and possession of cannabis, effective March 31, 2021. The MRTA amended Section 201-D of the New York Labor Law (“NYLL”) making it illegal for employers to discriminate against someone for their use of cannabis outside the workplace, outside of work hours and while not using their employer’s equipment or property.

This spurred some obvious questions from employers- Can we take action against an employee for using cannabis while working? Can an employee use cannabis while on breaks? What about employee use of cannabis if they are not at work on premises but are on call? The New York Department of Labor has now published FAQs addressing these, and other, common employer questions.

Continue reading “New York DOL Publishes Guidance on Recreational Use of Cannabis Related to the Workplace”

Cannabis Beverages are on Fire! — THC Limits

In the second edition, and first substantive blog, in my series on Cannabis Beverages, entitled Cannabis Beverages are on Fire!, I am writing about THC limits, which is one of the hot-button issues for cannabis beverage producers and consumers.  Given its psychoactive effect, there is no denying that the amount of THC in a beverage should be measurable and limited so that consumers can safely ingest them and obtain the experience they are seeking. This means that a serving size of a beverage might have a THC limit, and so might there be a total container limit.

Cannabis beverage manufacturers are not starting from scratch in this area, however. Popular THC serving size limits in edibles and similar products include 5mg and 10mg could likely be applied to THC beverages, resulting in a total container limit based on the container size and number of servings. The current offerings of cannabis-infused drinks vary and the markets within states offer a wide variety of different THC levels. For example, Cann, a bestselling THC drink, contains 2mg THC and 4mg CBD per 12 ounce can. Cann is available in over 200 California dispensaries. Similarly, Tomato Jane drinks have 10mg THC per 12 ounce bottle. Comparatively, Matt’s High Soda offers an infused beverage called Uncle Arnie’s Iced Tea Lemonade with 100mg of THC per bottle—although each bottle is considered to be 10 servings.  As the market for cannabis beverages develops, THC limits are certain to be an issue that gets a lot of attention.  In the next installment of this series I’ll touch on cannabis beverage ingredients and labeling.

New York Cannabis Chief Reiterates Social Equity Focus in Speech at Cannabis Trade Show

Tremaine Wright delivered her first public speech since being appointed Chair of the New York State Cannabis Control Board at the CWCBExpo (Cannabis World Congress & Business Exposition) at the Javits Center on November 4.  Wright leads the five-member board charged with approving a regulatory framework for New York’s cannabis industry and will oversee licensing of cannabis businesses.  In her remarks before 400 people at the business-to-business cannabis industry trade show, Wright reiterated that New York will support social equity licenses for people from communities historically affected by the War on Drugs.  “We’re about to create the most equitable cannabis program in the country,” she said.  Wright also said that New York will prevent social equity licenses from being sold to large companies by requiring that they be sold to other social equity licensees.  However, the regulations are currently being written and there are few details about how the state will help social equity applicants raise capital to start cannabis businesses.  Wright also said that all license applicants will be required to share their ESG (Environmental, Social, and Corporate Governance) frameworks to operate in the state.  The Board has a goal of issuing licenses within 18 months.  Members of New York’s Office of Cannabis Management were also in attendance at the Expo.

Report of Office of Cannabis Management Board Meeting, November 3, 2021

By Jerome T.  Levy

The meeting was called to order at 1:00 p.m. by the Chairperson, Tremaine Wright, noting that all parties were present and Ms. Garcia was attending via remote contact. Ms. Wright stated that the meeting was being recorded and will be available on the Cannabis Control Board website. Ms. Wright indicated that the agenda would include opening remarks, approval of the minutes of the previous meeting and then a report by the Executive Director of the Office of Cannabis Management, Chris Alexander. She reminded the audience and the Board members that the law was passed March 31, 2021 and as a result, while some aspects were moving swiftly, much of the work being done was still preliminary. The work has been mostly staffing, hiring new employees and moving staff from other New York State departments, principally the Department of Health. Continue reading “Report of Office of Cannabis Management Board Meeting, November 3, 2021”

Cannabis Beverages are on Fire!

Want to know where the cannabis industry is going? How about the beverage industry? The answer is cannabis beverages! The hottest new product segment in both markets. Don’t believe me… just run an internet search for “cannabis beverages” and you’ll see cannabis-infused beverages tied to major beverage companies like Constellation Brands, such as Canopy Growth’s Quatreu water, and Molson Coors, with its Truss brand, and dozens of  smaller cannabis beverage brands, such as Forth, Kikoko, and Recess. 

A cannabis beverage generally contains either THC derived from marijuana grown pursuant to state adult-use marijuana and/or medical marijuana laws, or containing CBD derived from marijuana or derived from hemp grown pursuant to a state’s hemp laws.  Given the federal prohibition on marijuana, the federal legality of hemp, and the FDA’s current restriction of CBD in foods and beverages, the federal and state regulatory framework for producing, distributing, and consuming cannabis beverages is complex, to say the least.  In the coming weeks I will be covering in a series of short blogs some of these issues, including product labeling, THC and CBD percentages, serving size, and social consumption.

Tremaine Wright presents to the NYSSCPA Cannabis Committee

By Hugh Jacobsen

Tremaine Wright, the Chairwoman of the Cannabis Control Board of the New York Office of Cannabis Management (OCM), on October 28, 2021 gave a presentation to the Cannabis Committee of the New York State Society of Certified Public Accountants on various items relating to cannabis regulation in New York.

At this presentation, Ms. Wright went over various features of the Marijuana Regulation and Tax Act.  She noted that there will be preference to individuals and communities injured by the War on Drugs and reiterated the goal of the legislation to ensure that at least 50% of the licenses go to social equity applicants.  She noted that there are nine different types of licenses provided in the statute and that vertical integration will generally be prohibited.  However, New York will take steps so that micro businesses will not have to raise as much  capital that would be required by other entities. In addition, there is no consideration currently being given to a residency requirement for obtaining a license. In response to a question on capital requirement, she did note that she had heard that people were spending over a $1 million to open up a retail dispensary, and she thought it could be done for less.   She also encouraged the industry to provide more education so that people do not enter into significant financial commitments (such as rent) earlier than necessary. Continue reading “Tremaine Wright presents to the NYSSCPA Cannabis Committee”

NYS Cannabis Control Board Meeting Summary 10/21/21

The New York State (“NYS”) Cannabis Control Board (the “Board”) held its second public meeting earlier today, just 16 days after its inaugural meeting on October 5th.  The meeting was livestreamed to the general public with all Board Members (Tremaine Wright (Chair), Jessica Garcia, Jen Metzger, Rueben McDaniel and Adam Perry (attending virtually)), the Executive Director (Chris Alexander) and Chief Equity Officer (Jason Starr) in attendance.

Chairwoman Wright summarized the Board’s work since its last meeting including (1) its ongoing employment efforts (both new hires and the transition of existing NYS Department of Health staff), (2) the Board’s outreach to key NYS stakeholders (including visits to various cultivation and processing facilities), and (3) continued work on the creation of implementing regulations as required by the NYS Marijuana Regulation and Taxation Act (the “MRTA”).

Executive Director Alexander introduced the key features of newly proposed Medical Cannabis Home Cultivation Regulations.  The Board approved the submission of these draft regulations to the Office of Cannabis Management (the “OCM”) for publication on the OCM website, upon which a four month public review and comment period will commence.  In a nutshell, these new regulations will permit home cultivation (indoor or outdoor) of a limited number of cannabis plants (six in total, with some exceptions) by certified patients and their designated caregivers for personal medical use.  These regulations are not intended to permit home cultivation for adult recreational use.

Executive Director Alexander also presented an update on the Expungement and Criminal Justice efforts undertaken by NYS in accordance with the requirements of the MRTA.  Those efforts, to eradicate criminal records related to marijuana usage, are ongoing and must be completed by March 31, 2023.

Finally, the Executive Director summarized the Municipal Opt-Out Program under which municipalities may opt-out of (prohibit) adult-use dispensaries and/or on-site consumption licenses from operating within their jurisdiction (however, they cannot opt-out out of other license types or adult-use legalization itself).  Local laws “opting-out” must be passed by December 31, 2021.  Municipalities that opt-out may opt-back-in at any time.  Municipalities that opt-out will not receive any revenue from the local excise tax on the sale of adult-use products.

The Board has not yet scheduled its next public meeting but the time and livestream link for that meeting will be posted on the OCM website in advance of the meeting.  Chairwoman Wright suggested the public sign-up to receive updates from the OCM, which will include notices of all future Board meetings.  The sign-up page for the OCM can be found here:  https://cannabis.ny.gov/sign_up_for_updates_from_OCM

Summary drafted by Michael Schwamm, Jerome Levy, Michael Barz and Erensu Altan.