Pyxus International has completed the sale of assets of FIGR Norfolk, the final key step in the company’s strategic decision to exit its cash flow negative cannabinoid operations.
With the completion of this sale, which occurred on Jan. 28, 2022, no subsidiaries of the company produce or sell Canadian cannabis in any capacity. In addition, the company is no longer involved in activities related to industrial hemp or CBD.
“Since announcing our intention to focus on tobacco and e-liquids last year, we have made tremendous strides in streamlining our operations and reducing our SG&A costs,” said Pieter Sikkel, president and CEO of Pyxus International, in a statement. “Moving forward, we will continue to focus on our tobacco-related businesses while leveraging the company’s strengths in agronomy, traceability and sustainability in order to deliver value to our stakeholders.”
Aurora Cannabis together with 22nd Century Group announced a three-way nonexclusive agreement to license biosynthesis intellectual property to Cronos Group, intended to assist in the advancement of research and development on the biosynthesis of cannabinoids.
“We are deeply interested in the evolution of cannabinoids, and this is a promising step toward the commercialization of cannabinoid products using biosynthesis,” said Miguel Martin, CEO of Aurora. “The long-term potential for rare cannabinoid molecules produced through biosynthesis is incredibly promising given their efficient production methods and potential therapeutic benefits and utility in health, wellness and consumer products.”
“This license combines the resources and intellectual property of all three companies in this agreement intended to facilitate the commercial success of a biosynthetic approach, which complements the disruptive plant-based advancements 22nd Century and Aurora continue to develop to bring more consistent and higher yields to the hemp and cannabis industry,” said James A. Mish, CEO of 22nd Century Group, in a statement. “We believe that the availability of both plant-based and biosynthetic cannabinoids will be important to the commercial success of our industry, and this agreement positions 22nd Century, Aurora and Cronos Group with an important role in each approach.”
“Cronos Group has successfully commercialized the first cultured cannabinoid product in Canada. Licensing this intellectual property provides us with a component of the process that could allow for increased speed and efficiency in the development and commercialization of cultured cannabinoids,” said Kurt Schmidt, president and CEO of Cronos Group.
The leaders of Germany’s incoming governing parties say that they have a formal agreement to legalize marijuana and promote broader drug policy harm reduction measures when they take power. Many European countries, including Germany, have legalized cannabis for limited medicinal purposes. Others have decriminalized its general use, while stopping stopping short of making it legal.
Credit: Promesaartstudio
The move would make Germany the first European country to legalize cannabis and authorize its sale for recreational purposes, according to a coalition agreement for a new government struck by three parties on Wednesday. The centre-left Social Democrats (SPD), Green and libertarian Free Democrats (FDP) agreed to introduce legislation during their four-year term to create the controlled distribution of weed in licensed shops.
“We would evaluate the (weed) law after four years for social impact,” the pact read. Policy-makers and sector specialists have said legalization could reduce activity on the black market, where there are no quality controls, according to Reuters. It could also free police resources spent on prosecuting cannabis use and raise tax revenues for prevention and therapy for addiction.
The German example could inspire other European countries, while the United States of America has already seen a big business opportunity in a trend for legalization of cannabis whose use increased during lockdowns. In Europe, the country traditionally associated with cannabis is the Netherlands, where its sale in coffee shops is tolerated, but not formally legalized, meaning the shops source weed from illegal growers.
“Germany would have a pioneer role,” said Florian Holzapfel, founder of German cannabis company Cantourage, which imports weed and processes it for medicinal use. “It would be important for it to be a success story as that would pave the way for other countries to implement similar legislation.”
Legalising cannabis could bring Germany annual tax revenues and cost savings of about 4.7 billion euros ($5.34 billion) and create 27,000 new jobs, a survey published last week found. The European market is projected to grow to 3.2 billion euros by 2025, up from 403 million euros at the end of 2021, the European Cannabis Report by research firm Prohibition Partners found.
Such growth could boost big U.S. and Canadian cannabis firms, as well as the fledgling German industry. Holzapfel, however, said it would hard for Germany to become a big producer nation given high overheads and inclement weather.
Texas recently released an updated guideline making Delta-8 THC products illegal in the state. Delta-8 THC products now are listed as a Schedule I controlled substances, and state health officials noted that the products have been banned for months now.
Credit: Promesaartstudio
The move prompted several Texas CBD and vape shops owners to file for temporary restraining orders regarding the announcement. Those who filed the temporary restraining orders prayed it to be granted against the state. According to The Dallas Morning News, Ashley Flood, the owner of a CBD American Shaman franchise, said that she and other owners and consumers were not informed of the move to update the state’s website regarding the use and selling of marijuana-related products.
The Dallas Morning News quoted Flood saying, “We didn’t find out from the state, we didn’t find out from law enforcement, we didn’t find out via letter, email — nothing. We found out from one of our suppliers.” Flood added that she purchased $20,000 word of Delta-8 products for her store, accounting for 50 to 60 percent of her profit. If they are illegal, her business will be badly hit.
What is interesting about the DSHS’ statement regarding Delta-8 is that it follows a popular trend among states regarding Delta-8: state agency prohibition against certain cannabinoids that appear damning, despite the fact they might not carry the force of law, according to renowned cannabis attorney Rod Kight.
“Other states across the country, including Iowa, Kentucky, Massachusetts, North Carolina, South Carolina, and Vermont, to name a few, have, through various agencies, enacted similar prohibitions. However, while other states across the country are attempting to chill the fervor of Delta-8 via agency or administrative actions, what makes Texas’ prohibition unique is that it appears to be the result of deliberate action taken over a period of time to amend Texas’ list of controlled substances to be different than the federal list of controlled substances,” Kight said. “Importantly, this agency amendment followed the Texas legislature’s inability to pass a bill that would have banned Delta-8 THC during its most recent legislative session.”
The Dallas Morning News said that the 2018 Farm Bill might be the one confusing sellers and consumers regarding Delta-8 products. The bill legalized Delta-8 products at the federal level, but it allows individual states to develop more stringent laws regarding the selling and consumption of such.
Further, many believe the Delta-8 products remain legal because, under the law that Gov. Greg Abbott signed in 2019, hemp products with less than 0.3 percent tetrahydrocannabinol are legal.
In Nevada, Delta-8 THC is illegal. During the cannabis culture and accessories trade show, CHAMPS, the Federal Bureau of Investigation and the the Drug Enforcement Administration (DEA) allegedly raided the show because a vendor participating in the event unwittingly gave the Las Vegas district attorney an unauthorized Delta-8 THC product sample. Several social media posts by vendors at the show said they were detained and products were confiscated.
Credit: CHAMPS
Providing samples to the show’s attendees is against the rules. As a result, some vendors were asked to vacate the premises. CHAMPS vendors received notice last week that samples of Delta-8, Delta-10 THC and similar products were illegal in Nevada and vendors should refrain from offering samples.
Several social media posts began to report of the feds raiding the venue started cropping up late Wednesday evening. By Thursday, various vendors began posting that the officers ordered the attendees to wait outside while they inspected the scene, according to CannaTech Today. As a result of yesterday’s occurrence, plainclothes police officers are walking the show floor today while its vendor booths are currently being searched for any Delta-8 THC and similarly prohibited products.
Through the last year, several states, including states where Delta-9 THC is legal, such as Oregon, California and Arizona, passed laws specifically banning Delta-8 THC. Nevada went a step further in early July to specifically include Delta-8 in its definition of cannabis. The Nevada Cannabis Compliance Board recently stated, “products exceeding 0.3 percent THC, including Delta-8 and Delta-9 THC, would be considered cannabis. As such, a license from the Cannabis Compliance Board would be required to make it or sell it.”
The Champs trade show is one of the largest cannabis industry trade shows in the U.S. The 2021 sow is being held from Jul 27 to Sat, July 31 at the Las Vegas Convection Center. Smoke shops, vape shops, dispensaries, 420 counter-culture, adult novelty shops, C-Stores, online marketers and branders, entrepreneurs, glassblowers, and counter-culture industry professionals who are seeking to grow in their market sectors and gain current knowledge and product opportunities to better leverage their business in a thriving marketplace attend CHAMPS, according to the show’s website.
Turning Point Brands (TPB) has completed a $8 million strategic investment in Old Pal Holding Co. through a convertible note that includes follow-on investment rights.
Founded in 2018by Rusty Wilenkin and Jason Osni, Old Pal is a leading cannabis brand that operates a non-plant touching licensing model and sells its products to consumers across the U.S.
TPB’s investment will enable Old Pal to expand product offerings in existing states, which include California, Nevada, Michigan, Oklahoma, Ohio, Washington and Massachusetts, and will help create the infrastructure necessary to support continued territory and product expansion. As a result of Old Pal’s strong brand recognition and extensive network of licensed cultivation and production relationships, the company has the ability to scale its geographic footprint while continuing to offer consistent and readily available products, according to TPB.
“Turning Point has a proven track record of developing and growing brands and is capitalizing on this experience to identify highly recognizable, leading cannabis brands poised to experience significant growth,” said Larry Wexler, CEO, Turning Point Brands, in a statement. “Given Old Pal’s favorable market position, the awareness of its products outside its current geographies and its unique licensing model, we are confident the brand is well-positioned to further penetrate the market and capitalize on the growth potential of the cannabis industry.”
“Old Pal’s mission is to spread the shareable cannabis lifestyle to customers across the U.S. through accessible and high-quality products,” added Charlie Cangialosi, chief operating officer at Old Pal. “Turning Point Brands’ experience with iconic brands, like Zig-Zag, and success in adjacent and complementary industries will allow us to bring the Old Pal experience to a wider range of markets and consumers.”
22nd Century Group has added strategic partnerships with expert commercial-scale plant breeders Sawatch Agriculture and Folium Botanical. The partnerships with these two northern hemisphere breeders add to the breeding capabilities that 22nd Century already has through its close partnership with Aurora Cannabis and another southern hemisphere-based breeder that will be announced shortly, providing 22nd Century year-round growing capabilities.
With decades of combined specialized alkaloid plant breeding and plant biotechnology experience, these expert breeders have proven next-generation technologies and innovations on breeding, commercial scale-up and cultivation, many of which are far beyond those of independent competitive breeders or in-house breeding in consumer product companies, according to 22nd Century Group. Under 22nd Century’s direction, proprietary plants will be developed with optimum levels of cannabinoids that meet high-quality standards when grown at commercial scale.
“We are thrilled to announce the addition of these world-class alkaloid-based plant breeding specialists to complement 22nd Century’s capabilities in our upstream value chain,” said James A. Mish, chief executive officer of 22nd Century Group, in a statement.
“Our four breeding partnerships complete our portfolio of comprehensive plant science capabilities, enabling the rapid creation and scale-up of stable, tailored, highly disruptive plant lines with predictable yields critical to the mass cultivation of hemp/cannabis, which will be absolutely necessary to meet the rapidly growing market demand for improved, stable genetics.
“We are giving growers a competitive advantage by substantially improving crop yield and optimizing the time that it takes to develop new lines to a two-year cycle, a reduction from the 7 to 10 years that would typically be necessary to create new lines using our proprietary capabilities.”
With today’s announcement of these expert breeding partnerships, 22nd Century says it has secured all key partnerships needed to maximize and support each of the segments of its cannabinoid value chain: plant profiling (CannaMetrix), plant biotechnology (KeyGene), plant breeding, commercial-scale plant cultivation and ingredient extraction/purification (Sawatch Agriculture, Folium Botanical, Aurora Cannabis, Needle Rock Farms and Panacea).
A new line of marijuana growing kits for home use has been launched by Avail Vapor, one of the largest vaping companies in the world. Avail’s cannabis kits started to be sold in 18 of its Virginia-based stores under the Avail Grow brand on July 1, according to Maggie Gowen, Avail’s senior director of marketing and communications. Avail’s marijuana growing supplies will be available only in-store and not online.
Credit: Avail Grow
The growing kits feature soil, nutrients, lamps and other equipment needed to grow marijuana in Virginia, where marijuana became legal on July 1. The kits do not offer seeds, however. The sale of marijuana seeds and plants are illegal in Virginia. Residents over the age of 21 in Virginia are allowed to have up to four marijuana plants per household.
Priced at $130, the Starter Kit is intended to be used from germination through the seedling phase. Two additional kits are being offered by Avail Grow for $600 and $800 that will bring the plants to the harvesting stage. The larger kits also offer tenting and a filtration system.
Avail Grow is the vapor manufacturers second foray into the cannabis market. Avail launched its Leafana Wellness line of cannabidiol (CBD) products in 2019. Early last year, Avail Vapor split into three separate entities: Avail Vapor LLC (retail), Blackbriar Regulatory Services (contract manufacturing, laboratory services and FDA compliance consulting) and Blackship Technologies LLC (research and development).
Medical marijuana won near-unanimous approval in a committee hearing in the Republican-controlled North Carolina General Assembly last week, the first of potentially many votes standing in the way of the plan becoming law. It’s a sign the bill could have broad support, according to the News & Observer. While the votes were not officially recorded, it appeared that all but two or three lawmakers voted for the bill.
Credit: Pro Mesa Art Studio
The bill’s sponsor is Sen. Bill Rabon, an influential committee chairman. And one of the votes in favor of it came from Senate Majority Leader Kathy Harrington. She said her husband was recently diagnosed with multiple myeloma, a type of blood cancer, and she has since come to realize that medical marijuana could help other patients in similar, painful situations.
“If you had asked me six months ago if I would support this bill, I would have said no,” Harrington said. “But life comes at you fast.”
If the bill is passed into law, North Carolina doctors would be able to prescribe marijuana for PTSD, cancer, sickle cell anemia, ALS and several other specific health problems. Lawmakers had initially included glaucoma on the list too, but deleted it during committee.
While the legality of Delta-8 THC products is questionable, retailers say consumer demand is booming.
By Timothy S. Donahue
Delta-8 THC is currently one of the hottest cannabis products on the market. During the Tobacco Plus Expo (TPE) in May, an estimated 75–80 exhibitors out of 350 were offering a Delta-8 product. Many companies were introducing new Delta-8 products at the event; for example, Beard Vape Co., Charlie’s Chalk Dust, JustCBD and TD Distribution Co. all launched their own brands.
Recent estimates predict CBD sales in the U.S. could reach $1.8 billion by 2022. Trevor Yahn-Grode of cannabis industry analytics company New Frontier Data recently told MedPageToday.com that Delta-8 THC had retail sales of at least $10 million in 2020. That number is estimated to double in 2021. Based on the number of Delta-8 vendors at TPE (see “Finally Face to Face,” page 20), sales could triple. It was probably the most heavily hawked cannabis product at the event.
The Beard Vape Co. launched its HRVST Delta-8 brand after numerous distributors started asking about the new cannabinoid hitting the mass market, according to Zachary Kestenbaum, vice president of sales. He said his main objective at TPE was to talk with other distribution companies about where the Delta-8 market is headed. Kestenbaum said consumers like the product because it’s not as overwhelming as the traditional Delta-9 THC, the psychoactive component of marijuana commonly referred to as only THC.
“In the ’70s, ’80s, ’90s, people were smoking marijuana with THC levels at 12 [percent] to 15 percent. Now they’re breeding strains that are 24 [percent] to 26 percent THC (Delta-9 THC). It really can give that head anxiety to people,” he said. “That’s why people like Delta-8 THC because you’re getting a little bit of the psychoactive effect but not at that 25 percent level like you get with the Delta-9 THC. People are preferring the Delta-8. They like it better.”
First discovered in 1941, Delta-8 THC is only slightly different from its cousin compound Delta-9 THC. The two chemicals are only one chemical bond apart, according to Josh Church, a scientist and managing director of Roots Holdings. Research has shown that Delta-8 is a powerful anti-seizure drug. “The issue is it just doesn’t naturally occur at significant levels, so it’s really easy to ban,” said Church, adding that Delta-8 also promotes relaxation, clear-headedness and increased positivity.
Research has also shown that Delta-8 significantly helps reduce stress, stimulate an appetite and lessen nausea. Delta-8 is a less “head high” and more of a body high without the nervousness and paranoia often associated with Delta-9 THC. Delta-8 THC, users should be warned, will also turn up on a drug test as “THC,” according to Church.
Looking at legality
While its popularity is spiking across the U.S., Delta-8 is not without controversy. While hemp itself is federally legal (at or less than 0.3 percent THC), each state has different laws and restrictions regarding byproducts derived from hemp, including Delta-8. No products containing Delta-8 have been tested by the U.S. Food and Drug Administration or are FDA-approved.
Twelve states have completely banned Delta-8 sales. Those states include Alaska, Arkansas, Arizona, Colorado, Delaware, Kentucky, Idaho, Iowa, Mississippi, Montana, Rhode Island and Utah. New York has a proposed rule to ban Delta-8 products, which is under a comment period until July 19. California, Oregon, Vermont and Washington are in the process of enacting regulations for Delta-8 products. Several other states are also considering bans.
The federal legality of Delta-8 products is disputed. The misinformation and ambiguity surrounding its legality is why some manufacturers in the CBD industry took time to develop and market their own Delta-8 products. Jakob Gutierrez, product specialist for JustCBD, which launched its JustDELTA-8 brand at TPE, said it took the company time to launch its Delta-8 product because it wanted to be sure it was working within the law. JustCBD only sells its products to retail shops and distributors; it does not sell directly to consumers.
“We wanted to make sure we were covering ourselves and making sure we were doing it right, complying with the right laws. Now, we were missing out a little bit because of that, but we’re back on track,” Gutierrez said. “We got on the train, and orders are exponential for the Delta-8. People are coming in, just ordering various product, and walking out. It’s insane how fast this stuff is flying out.”
Ask eight people if Delta-8 is legal federally and you’ll get eight different answers. Some believe that the vagueness of the 2018 Farm Bill, which legalized hemp and hemp-derived products, means that Delta-8 is currently legal under federal law. “Because Delta-8 is such a new product, many state laws don’t address it at all, which puts it in a gray area of de facto legality,” according to Leafly, a cannabis information source. The reason states have banned Delta-8 products is an uncertainty about what it is and what it does, according to many Delta-8 manufacturers.
On Aug. 21, 2020, the U.S. Drug Enforcement Administration (DEA) issued an Interim Final Ruling (IFR) that stated hemp-derived Delta-8 is federally prohibited and is to be considered the same for enforcement purposes as Delta-9 THC and that “all synthetically derived tetrahydrocannabinols (THC) remain Schedule I controlled substances.” The memo states that these products cannot be shipped to customers from retailers through the U.S. Postal Service or any other shipping method, and it is illegal to use and possess these products in states where cannabis is not legal.
The U.S. Department of Agriculture’s position on Delta-8 THC is that the Farm Bill mandates only a Delta-9 THC limit and doesn’t regulate Delta-8 at all, so Delta-8 is not part of the agency’s hemp mandate, according to previous statements. Since the amount of Delta-8 THC found naturally in hemp is almost 1,000 times lower than the amount of Delta-9, the agency saw no reason to address it at all, including as part of its “total THC” testing requirement.
A hemp trade association and a hemp company have filed a petition in the U.S. Court of Appeals for the District of Columbia challenging the DEA’s IFR. That case is still being reviewed. The D.C. Circuit petition challenges the IFR on the basis that: 1) the DEA did not follow the appropriate notice and comment procedures, 2) the DEA does not have authority under the Farm Bill to issue the IFR, and 3) the DEA’s acting administrator lacks authority to issue the IFR.
Not all states are anti-Delta-8. For example, Florida’s statute states that “any hemp product intended for human or animal ingestion or inhalation which is sold in Florida must comply with all Florida statutes and rules. Any hemp or hemp extract products offered for sale or sold in Florida must comply with all labeling rules and have a certificate of analysis that shows a total THC (THCA x .8777 + THC Delta-9 = total THC) content of 0.3 percent or less.” Florida is the only U.S. state to have enacted legislation to provide a framework for the legal sale of Delta-8.
Florida’s statement on Delta-8 clarifies that Delta-8 does not run afoul of any Florida law and, in fact, certifies that the manufacture and distribution of Delta-8 is allowed in Florida, according to ACS Laboratory, a Tampa, Florida-based CBD testing facility. “Despite Florida’s conservative legislative trends, the state’s public policy toward Delta-8 is progressive and ultimately beneficial,” ACS’ website states. “By establishing a structured and comprehensive regulatory framework for manufacturers and distributors to follow, Florida is enabling a burgeoning industry to continue to grow and evolve while simultaneously ensuring the safety of buyers by mandating certificates of analysis for all [Delta-8] items sold.”
Chemistry lesson
The proposed updates to those New York rules that ban Delta-8 included a provision declaring that all cannabinoid and cannabinol products made through a chemical process called isomerization can no longer be sold in New York. The new rules specified the compounds Delta-8 and Delta-10.
Isomerization is, in its most basic explanation, adding a chemical bond to a molecule, according to Church. “Basically, anything you can make out of the THC molecule is banned because all isomers of said molecule are banned—technically,” explains Church. “If you remember Spice or K2, they were synthetic THC. The issue was the DEA; the FDA would ban the new molecule—say tetrahydrocannabinol (THC) 9753—and then within the next week, they would come up with THC 9756. And it was this cat-and-mouse game where the DEA, the FDA, and the Chinese authorities couldn’t stop them fast enough until they finally just banned all isomers.”
Many industry players say that the federal government will soon legalize marijuana, and the ambiguity around products like Delta-8 and Delta-10 THC will disappear. President Biden has publicly said that he supports the decriminalization of cannabis and removing it from the Schedule I list while Vice President Kamala Harris has gone further, stating that she supports full legalization. But like all the states that have legalized Delta-9 THC and have specifically banned Delta-8, it would not be surprising to see the federal government make some of those same decisions, according to Church.
“Regulation of these cannabinoids … it’s going to take an act of Congress. Then it’s really hard to try and predict what Congress is going to lay forth in the legislation. I mean, look at the nicotine space with synthetic nicotine still not being closed as a loophole around regulation,” explains Church. “Because so many states are banning it right now (Delta-8), I think the federal government will come in with some sort of hefty regulation on all the isomers or conversion molecules.”
Tony Riva, CEO of TD Distribution Co., parent to the Hi Drip e-liquid brand, also launched a Delta-8 brand at TPE. Riva said he didn’t have the concerns many of the other manufacturers had. He says the vapor industry has been dealing with a harsh regulatory environment for nearly a decade. He doesn’t see why the cannabinoid industry is going to be any different, especially as more and more cannabinoids come to market.
“If I lived in fear all the time in this industry, I’d never get anything done. We are just trying to provide a legal product and hope that the government doesn’t tell us that we can’t. It’s a constant battle with their … tyrannical overreach that they’ve thrown down on the vaping industry,” he says, adding that he expects the cannabis industry to be federally regulated in some form within the next few years. “People like Delta-8; people like Delta-10 or CBD. They feel that it helps them. We are just trying to provide high-quality, legal products to our clients. At the end of the day, it’s just going to be another hula hoop to jump through.”
Church says that he recommends any retailer or manufacturer contemplating entering the Delta-8 market to consider having a firm process of chain-of-custody documentation, adding that the cannabinoid industry should look toward the legal marijuana industry as a guideline. Church emphasized that one bad player could destroy the market by doing something wrong and causing the potential for another situation like the e-cigarette or vaping product use-associated lung injury (EVALI) issues that occurred because a few bad players used vitamin E acetate in black market THC vape pens without doing any research on the chemical.
“Those dirty conversions are out there; there is a lot of risk to a finished good. The last thing you want to see is a dirty lab pumping out a bunch of garbage. Then it gets distributed nationally, and we have another EVALI situation. This isn’t because of the Delta-8, which is largely safe, but because it’s a bad product. I would strongly encourage anyone looking to move into the Delta-8 or Delta-10 space to meet those high standards that are required for any type of legal consumer product,” says Church. “The reality is, though, that the sky’s the limit on these types of products. I think we’re just now seeing it with Delta-8 and Delta-10 … but it’s going to evolve into a crazy world of these new designer cannabinoids. And regulation is coming along for the ride.”
