I recently teamed up with my colleagues Hilary Bricken and Griffen Thorne to put on a free webinar answering all of your pressing questions about cannabis legal issues in California. (Check out the replay here.) The response was overwhelmingly positive, and we received a lot of great questions that we weren’t able to get to during the hour-long session. We’ll be offering similar webinars in the future, but in the meantime we thought it would be useful to take some time and answer some of the questions we received that we weren’t able to cover live. In this round of questions, we’ll tackle issues that relate to hemp and CBD.
Q: If my CBD company posts a testimonial on its website that arguably includes a “medical claim” will a disclaimer protect me?
The FDA will treat products as drugs if the labeling or marketing of those products suggests they are “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease.” Phrases like “combats tumor cells” and “[has] anti-proliferative properties that inhibit cell division and growth in certain types of cancer” clearly suggest that the CDB product can cure, mitigate, treat or prevent cancer, and is thus a drug.
Any suggestion that a product might have a role in treating or diagnosing a disease, or that it is intended to affect the structure or any function of the body of humans or other animals, is a health claim that subjects the product to drug regulations (unless it falls within the narrow confines of the Dietary Supplement Health & Education Act – the FDA has ruled that CBD does not). There are certain requirements for making disclaimers when making structure/function claims on nutritional supplements, but because CBD products cannot be marketed as nutritional supplements, these requirements do not apply and a disclaimer will not protect you if you are making medical claims.
Also keep in mind that the Federal Trade Commission (“FTC”) guidelines for using endorsements or testimonials in advertising make it clear that testimonials and endorsements can’t be false or misleading, and if they are, the advertiser can itself be responsible. The FTC has issued warning letters to companies that advertise their CBD-infused products as treatments or cures for serious medical conditions.
Q: Given that CBD products cannot contain “medical claims” and given that the term “medical claim” is broadly defined, how can I describe the use of my product?
The analysis is nuanced here, but everything stated in the answer to the previous question applies. If you are including wording on your CBD products in your advertising for those products that suggests that your product might have a role in treating or diagnosing a disease, or that it is intended to affect the structure or function of the body, it is a health claim. One of the core functions of the FDA is to ensure that companies aren’t marketing products for the treatment of diseases when those products haven’t been approved by the FDA.
Here are some recommendations we’ve given in previous posts:
- Do not make health claims about the therapeutic value of your products;
- Monitor enforcement actions (i.e., warning letters) and regulations of both the FDA and the FTC to understand enforcement priorities; and
- Develop compliance programs to (i) ensure that your marketing efforts align with federal guidelines and (ii) ensure that your compliance team is familiar with the FDA and the FTC’s regulations.
Q: Are you aware of any existing legal authority that states CBD products are considered “adulterated” food products? Or is this an open legal question?
According to guidance issued by the California Department of Public Health (“CDPH”) in 2018, “CBD is an unapproved food additive and NOT allowed for use in human and animal foods per the FDA, and thus it is not approved in California.”
AB 2827, the successor bill to AB 228 that was introduced on February 20, 2020, seeks to clarify that:
“a food or beverage is not adulterated by the inclusion of industrial hemp products, including cannabidiol derived from industrial hemp, and would prohibit restrictions on the sale of food or beverages that include industrial hemp products or cannabidiol derived from industrial hemp based solely on the inclusion of industrial hemp products or cannabidiol derived from industrial hemp.”
The bill is currently sitting in the Committee on Health.
Q: Is it true that hemp and cannabis cannot be combined?
In California, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) only governs the regulation of commercial cannabis activity and explicitly excludes “industrial hemp” from the definition of “cannabis:”
- “Cannabis” means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin.
- “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis.
- “Cannabis” does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination.
- “Cannabis” does not mean “industrial hemp” as defined by Section 11018.5 of the Health and Safety Code.
The BCC has stated that retailers licensed by the BCC are licensed to sell cannabis goods and may not sell industrial hemp products on the same licensed premises where cannabis goods are sold.
Q: What about hemp products for farm animals in California?
The prohibition on edible hemp-derived CBD products in California extends to animals, as the CDPH’s guidance states:
“[u]ntil the FDA rules that industrial hemp-derived CBD oil and CBD products can be used as a food or California makes a determination that they are safe to use for human and animal consumption, CBD products are not an approved food, food ingredient, food additive, or dietary supplement.”
Industrial hemp is another issue altogether, as the Association of American Feed Control Officials does not recognize hemp as an ingredient in animal feed.
Q: If another state like Washington allows sales of hemp-derived CBD products, could a company in Washington sell those products to a person in California?
No, these products cannot be manufactured or sold in California. It is important that hemp-CBD manufacturers understand not only the regulations of the state in which they are based, but also the regulations of each state to which they ship products. Keeping track of the regulations in all 50 states is a hefty regulatory burden.
Stay tuned for Part 2 of this roundup next Saturday, with the rest of your questions!
Jay-Z announces new line of cannabis products dubbed Monogram
Rapper and entrepreneur Jay-Z is launching his own cannabis brand in partnership with Caliva, the California-based weed company that hired the star as its chief brand strategist last year.
Named Monogram, Jay-Z’s line of marijuana products launched its website and social media accounts on Friday.
“Monogram marks a new chapter in cannabis defined by dignity, care and consistency. It is a collective effort to bring you the best, and a humble pursuit to discover what the best truly means,” Monogram’s website highlights.
No further information on the specific products that will be sold under the Monogram brand has been released yet.
However, according to the website, the flower used in Monogram’s products is grown in small batches, with a board of “cannabis experts” tasked with grading and hand-selecting each flower that goes into the line.
The New York rapper joined Caliva in 2019 as a brand strategist, which entailed overseeing the creative direction of the company. Furthermore, Jay was focused on Caliva’s social equity efforts as he aimed to increase economic participation of people disproportionately harmed by marijuana prohibition in the newly legal industry.
As for when consumers can expect to try Jay-Z new products, a spokesperson told the New York Daily News Monogram still hasn’t set its dispensary release schedule. The line will “definitely be available across all of California,” according to the spokesperson.
In other news, basketball star Shawn Kemp who played for the Seattle SuperSonics is also showing his love of pot. Kemp is set to open Seattle’s first black-owned marijuana dispensary this Friday. The Sonics legend named his dispensary Shawn Kemp’s Cannabis and is hoping to serve as a model for others in the black community who might be interested in foraying into the legal marijuana business in the area.
“I’m looking forward to welcoming Sonics fans on a regular basis, starting with opening day. I hope that Shawn Kemp’s Cannabis will be an inspiration for people to get involved with the legal cannabis industry, especially people of color,” the Reign Man said in a press release.
Analysis: Legal weed in Texas would generate over $500 million in tax revenue per year
Legalizing marijuana in Texas could generate over half a billion dollars in tax revenue per year and create more than 40,000 new jobs, according to the results of a report released by Vicente Sederberg LLP earlier this month.
Legal cannabis sales in Texas would reach about $2.7 billion annually based on the fact that there are more than 1.5 million residents over the age of 21 that consume pot on a monthly basis, the analysis calculated.
The estimated tax revenue was calculated under the assumption Texas would tax marijuana sales at the same rate as Colorado at 20.6%. This would amount to $1.1 billion in taxes per biennium, while Texas could collect an additional $10 million per year through the issuing of marijuana business licenses.
The report notes Colorado has raised nearly $13 million on average per year just from license and application fees. Furthermore, the report indicated that current taxpayer dollars that go towards marijuana arrests and prosecutions amount to $311 million per year – money that Texas would save should it legalize pot.
“States across the country are seeing the benefits of legalizing and regulating cannabis. It is inspiring lawmakers in prohibition states to reexamine the efficacy and costs of their current policies and take a closer look at the alternatives,” said Shawn Hauser, a partner at Vicente Sederberg.
“The goal of this report is to provide a snapshot of the economic benefits Texas would experience if it started treating cannabis more like alcohol for adults 21 years of age and older,” he commented on the new report.
Aside from the tax revenue that legal weed in Texas could generate, the report highlighted marijuana’s job creation potential. An estimated 20,000 to 40,000 new jobs would be available in the newly legal industry, with tens of thousands of additional indirect positions, the report estimated.
Hauser also pointed out the added economic benefits of legalization in Texas given current uncertainties provoked by the coronavirus pandemic.
“Texas is leaving an enormous amount of money on the table by keeping cannabis illegal,” according to him.
Texas was once known for having the strictest drug laws in the U.S., but the state has softened its stance on cannabis in recent years. A very limited medical marijuana program was established in 2015, while, more recently, cannabis possession arrests in the state have been significantly declining after hemp became legal.
Cannabis Businesses Invest in Their Futures with Political Donations
Cannabis companies have been making political donations for years, and in 2020, those donations have continued to grow. In fact, some companies are investing aggressively to shape the future of the cannabis industry either by donating directly to campaigns and politicians or through political action committees (PACs) that support cannabis-friendly candidates and legislation.
So far in 2020, the Center for Responsive Politics reports that the leading cannabis companies, cannabis-related companies, and cannabis trade associations making donations to federal candidates, parties, and outside groups are (in order of 2020 donation amounts to date):
- Canty Ventures
- National Cannabis Industry Association (NCIA)
- Have A Heart
- Beyond Broadway LLC
- Sea Hunter Therapeutics
- Cannabis Trade Federation
- Dan Kopp & Co
- Acreage Holdings
Compare that list to the list of large cannabis company donors in 2019, which included Curaleaf, Parallel Brands (formerly Surterra Wellness), Tweed Inc. (part of Canopy Growth Corporation), Canndescent, and Trulieve. Even ancillary cannabis companies like Dama Financial, WeedMaps, and Acreage Holdings donate large sums of money in 2019 according to data from the Center for Responsive Politics.
State Donations in 2020
There are a number of legalization (adult-use and/or medical use) and decriminalization measures on state ballots in 2020, and cannabis companies, ancillary companies, and professional associations have been actively donating directly to related campaigns and initiatives at the state level.
In Arizona, Harvest is the biggest donor in support of legalization (Prop. 207) followed by Curaleaf, MedMen, Cresco Labs, Copperstate Farms, Arizona Dispensaries Association, Herbal Wellness Center, and Oasis Dispensaries.
Mississippi’s medical marijuana initiative on the November ballot (Initiative 65) has received donations from the CEO of Heritage Properties (George Walker III), Ghost Management Group (which owns Weedmaps), and the owner of ABKO Labs (Robert Lloyde II).
Ghost Management Group and its Weedmaps subsidiary also donated to support Montana’s and New Jersey’s legalization initiatives. In addition, New Jersey’s legalization Question 1 on the November ballot received donations directly from The Scotts Company (the maker of Scotts Miracle Gro), Pashman Stein Walder Hayden (a New Jersey cannabis law firm), and Compassionate Care Research Institute (a New Jersey dispensary).
Keep in mind, these donations don’t include the donations that cannabis companies and ancillary businesses donate to PACs or that they invest in lobbying. The Center for Responsive Politics reports that the biggest investments in lobbying from cannabis companies, ancillary companies, and trade associations in 2020 have come from the Cannabis Trade Federation, National Cannabis Roundtable, Canopy Growth Corp, Curaleaf, Global Alliance for Cannabis Commerce, Parallel Brands, Cronos Group, Charlotte’s Web, NCIA, Acreage Holdings, Dama Financial, Trulieve, California Cannabis Association, and Oregon Cannabis Association.
Political Donations from Cannabis Interests Are Not New
One of the biggest political donation stories happened in California when cannabis businesses donated aggressively to former Lieutenant Governor Gavin Newsom’s campaign to become the state’s governor in the 2018 election. According to the Los Angeles Times, he secured hundreds of thousands of dollars in donations from cannabis cultivators, processors, and retailers.
By May 2018, Newsom had raised nearly $500,000 from cannabis companies, but he wasn’t the only politician in California to receive money from cannabis interests. At the time, the state’s Treasurer, John Chiang, and Attorney General, Xavier Becerra, also secured donations from the cannabis industry
And of course, these donation numbers don’t even include the many donations from PACs that businesses and individuals working in the cannabis industry donate to. Many of these funds go directly to specific candidate’s fundraising efforts. For example, the Coastal Pacific Political Action Committee held a fundraiser in June 2017, and six days later, the PAC donated $50,000 to Newsom’s campaign.
Another noteworthy political donation happened in Florida over the course of multiple years. The Miami Herald reported that Surterra donated $1.1 million to Florida political candidates and committees between the summer of 2016 and March 2018. Trulieve donated $564,000 during the same period, and Curaleaf donated $469,000.
In Illinois, the doors for cannabis companies to make political donations opened in March 2017 when a federal judge ruled an Illinois provision that did not allow marijuana companies to make campaign contributions in the state was unconstitutional.
According to the Chicago Tribune, the provision prevented contributions to political committees that were established for the purpose of promoting candidates for public office. Since that decision was made, cannabis companies like PharmaCann and Cresco Labs have donated significant amounts to the state’s political candidates and committees.
Business and individual donations to marijuana-friendly political candidates have also become standard in Nevada and Colorado. During the 2016 elections, dozens of marijuana cultivators, processors, and dispensaries donated $75,000 to Nevada legislators according to the Nevada Independent.
Looking back further in history, Florida Senator Rob Bradley received his first donation from a cannabis company in 2015 when Costa Farms donated $10,000 to his political committee.
Similarly, cannabis businesses have actively contributed to Colorado political campaigns for years, and many of those businesses have been holding political fundraisers to support their preferred candidates. PBS reported back in 2014 that Colorado’s congressional delegation had received $20,000 during the first nine months of 2014 from marijuana businesses. Also in 2014, a fundraiser to support political candidates that was held by Tripp Keber of Denver, Colorado’s Dixie Elixirs & Edibles generated $40,000 in donations.
What’s Next for Political Campaign Donations from Cannabis Businesses?
As the cannabis industry continues to grow and more states legalize medical and/or recreational cannabis, laws will continue to evolve. Cannabis businesses and ancillary businesses should absolutely be concerned about which politicians are making those laws.
With that said, it’s safe to assume that political donations from the cannabis industry will get larger and more frequent in the coming years. Let’s put the donations from cannabis companies to political campaigns into perspective. During the first half of 2019, the cannabis industry gave more than $200,000 to members of Congress, which was up from $248,504 donated throughout all of 2018. Compare that to the $42 million that pharmaceutical companies donated to political campaigns across the United States in 2018.
With those numbers in mind, it’s guaranteed that political donations from cannabis and cannabis-related companies will continue to grow. Savvy businesses are paying attention and getting involved in an attempt to influence the regulations that could make or break their companies’ futures.
Originally published 8/24/17. Updated 10/23/20.
Susan Gunelius, Director of Email Marketing Strategy for Cannabiz Media, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her nearly 30-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. She has been working with clients in the cannabis industry since 2015. Susan has written 11 marketing-related books, including the highly popular Ultimate Guide to Email Marketing for Business, Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.
Best Moon Lamp Reviews and Buying Guide
Guilford Technical Community College Continues to Investigate a Ransomware Cyberattack
IOTW: Will There Be An Incident Of Impact On Tuesday’s Election?
Mastercard and GrainChain Bring Blockchain Provenance to Commodity Supply Chain in Americas
Win a Copy of Affected: The Manor for Oculus Quest
The Steam Halloween Sale has Begun With Themed Activities and Updates
Warhammer Age of Sigmar: Tempestfall Announced for PC VR & Oculus Quest, Arrives 2021
I Dare You to Ignore This Trend
Bitcoin Price Flashes $750M Warning Sign As 60,000 BTC Options Set To Expire
Star Wars: Tales from the Galaxy’s Edge to Include VR Short ‘Temple of Darkness’
Bitcoin Suffers Mild Drop but Analyst Who Predicted Decoupling Expects BTC Price to See Bullish Uptrend
AMD Purchases Xilinx in All-Stock Transaction to Develop Mining Devices
Newly Launched Cybersecurity Company Stairwell
How 5G Will Impact Customer Experience?
You can now Request the PlayStation VR Camera Adaptor for PS5
HSBC and Wave Facilitate Blockchain-Powered Trade Between New Zealand and China
Aave Makes History as Core Developers Transfer Governance to Token Holders
Caitlin Long’s Avanti Becomes the Second Crypto Bank in the US, Open for Commercial Clients in Early 2021
KPMG Partners with Coin Metrics to Boost Institutional Crypto Adoption
US SEC Executive Who said Ethereum is Not a Security to Leave the Agency
MicroStrategy Plans to Purchase Additional Bitcoin Reserves With Excess Cash
How followers on Instagram can help to navigate your brand during a pandemic
StackRox Announced the Release of KubeLinter to Identify Misconfigurations in Kubernetes
How Was 2020 Cyber Security Awareness Month?
Masks and More Outlet Donates Face Masks For Children In Local…
Clicks Overtake Bricks: PrizeLogic & SmartCommerce Bring Shoppable…
Footwear Sales in the U.S. Expected to Stabilize and Bounce Back…
Celerant Technology® Expands NILS™ Integration Enabling Retailers…
The COVID-19 Pandemic Causes Eating Patterns in America to Take a…
MyJane Collaborates with Hedger Humor to Bring Wellness and Laughter…
Sci-fi Shooter Hive Slayer is Free, Asks Players for Louisiana Hurricane Relief Donations Instead
AMD Announces Radeon RX 6000-series GPUs with USB-C “for a modern VR experience”
Resiliency And Security: Future-Proofing Our AI Future
AI Projects Progressing Across Federal Government Agencies
Kucoin and Revain Announce Partnership
Crowdfunded AR Startup Tilt Five Secures $7.5M Series A Investment
The Importance of XR Influencers
Head Back Underground in 2021 With Cave Digger 2: Dig Harder
Five All-New Multiplayer Modes Revealed for Tetris Effect: Connected
The Perfect Investment
Blockchain1 week ago
Bitcoinnami Officially Launches on October 21, 2020
Esports1 week ago
Who is Dr. Karlov in Warzone?
Esports6 days ago
How to Play With Friends Online in Dynamax Adventures in Pokémon Sword and Shield The Crown Tundra
AR/VR1 week ago
HTC Vive’s XR Suite for Remote Collaboration Goes Live
Esports6 days ago
How to Separate and Rejoin Calyrex from Glastrier or Spectrier in Pokémon Sword and Shield Crown Tundra
Esports1 week ago
How to use the AR Mapping features in Pokémon Go
Esports4 days ago
FIFA 21 Global Series: Full List of FGS Swaps 1 Events
Esports5 days ago
How to get Electabuzz and Electivire in Pokémon Sword and Shield’s The Crown Tundra expansion