Your Weekly Recap: DEA Schedule Reclassification For FDA Approved CBD Drugs Creates Industry Confusion

A recap of the top news stories from the past week

Good morning MRR readers! We hope you had an incredible time at CWCB in Los Angeles this past week where we gave an in-depth 3-hour presentation, Beyond The Basics: Cannabis Retailing. Our presentation with panelists representing some of the brightest talents from across the industry giving you the inside knowledge on owning and operating a profitable cannabis business in California. We will have a full recap along with video segments of the workshop available to you in the coming weeks but for now, we’ll get you caught up in the world of cannabis this past week as it’s been a bit of a ride and as always, just click the image at the end of the preview to read the full article.


The major story from last week comes from the federal government with the DEA’s recent decision to make Epidiolex, the cannabis-based epilepsy drug created by GW Pharmaceuticals, a Schedule V controlled substance. Since that announcement, there has been widespread confusion about what the implication of this has been on the broad scale of the CBD industry. Unfortunately, the federal government still considers all other cannabis-derived CBD products aside from Epidiolex, to be a violation of federal law. The DEA’s official statement in the Federal Register, which published Friday, indicates “this order places FDA-approved drugs that contain CBD derived from cannabis and no more than 0.1 percent tetrahydrocannabinols in schedule V.”

No, The DEA Did Not Reschedule The CBD Compound


Also in the news, Colorado’s top federal prosecutor says his office may take legal action against licensed marijuana businesses that violate state law or use their status under state law “as a shield” while selling their product on the black market. “Now that federal enforcement has shot down marijuana grows on federal lands, the crosshairs may appropriately shift to the public harms caused by licensed businesses and their investors, particularly those who are not complying with state law or trying to use purported state compliance as a shield,” Troyer wrote in an op-ed published late Friday. Troyer also told The Denver Post this week that his office plans to take action soon against a Denver-area chain of marijuana dispensaries. He described the issue as an illegal drug-trafficking organization disguised as a legitimate business under state law. He did not name the company or provide more detail about its operations.

Colorado Federal Prosecutor Threatens Law-Breaking Cannabis Businesses


On September 21st, California Governor Jerry Brown signed a new piece of privacy legislation—AB-2402—which places restrictions on how licensed cannabis companies in California share information about their customers. AB-2402 is significant in that it prevents licensed cannabis businesses from sharing expansive categories of customers’ personal information with third parties—except in limited circumstances in connection with payments, or where a customer has consented to sharing his or her data with a third party. Notably, AB-2402 prohibits licensed cannabis businesses from discriminating against or refusing service to consumers who do not consent to disclosure of their personal information to third parties. Complying with AB-2402 will likely require companies to take stock of and retool their data security and sharing practices, and to retrain employees. This is not an impossible task, but it’s one that companies should place at the top of their agenda. After all, California is the state with (arguably) the most intense focus on protecting citizens’ personal information. AB-2402 was only just signed, and its text does not identify when it takes effect.  We’ll keep you posted on any updates.


California Cannabis Businesses Face New Data Privacy Requirements


The majority of the 55 million recreational marijuana users in the U.S. are millennials, according to a 2017 Yahoo News poll. Most millennials use marijuana socially: Only 25% of them smoke alone. Daily marijuana use among 12th graders increased from 1.9% in 1992 to 5.9% in 2017, the study showed. “For the first time, trends in alcohol and marijuana use are substantially diverging, suggesting that the historical relationship between these two drugs may be changing,” it concluded. Meanwhile, millennials drink far less alcohol than past generations, an annual national survey of 50,000 adolescents and young adults in America from the Monitoring the Future Study found. The share of college students who drink alcohol daily fell from 4.3% in 2016 to 2.2% in 2017, a more than 4 percentage-point drop from the 6.5% of college students who used alcohol daily in 1980. The new cannabis industry is not just for young people, either. Cannabis products are increasingly targeting mothers in need of relaxation. In fact, elderly Americans are the fastest-growing demographic for marijuana use.

More Millennials Are Choosing Cannabis Over Booze


Last but not least, the San Francisco Board of Supervisors put the measure on the ballot to add another tax onto cannabis businesses operating in the city. The tax rate for cannabis in San Francisco is already around 25% and Proposition D would be in addition to that. California currently suffers from over taxation in the cannabis industry, which has left retailers struggling against the non-taxed black market economy to stay alive. Currently, Proposition is known as the Marijuana Business Tax Increase and would affect cannabis businesses making over 500,000 dollars a year. They’d be taxed an additional 1 – 5% depending on the type of cannabis business they are, and how much they make but the new tax would not come into full effect until 2021. While there’s no organized NO on D campaign, the cannabis industry isn’t happy, and pushed for this delayed start; they’re concerned that higher taxes will push even more consumers back to buying cannabis through unregulated channels. Medical cannabis, and cannabis businesses who make less than 500,000 dollars would be exempt from this tax.

San Francisco Proposition D: Tax Increase On Local Cannabis Businesses


As always subscribe to our Daily Digest by signing up at the bottom of this article to get the latest in retail-related news in the cannabis industry delivered to you daily. Also, make sure to check out our CBD Special Report – Integrating CBD Into Your Cannabis Retail Strategy, available now in digital format. If you were at CWCB this past weekend in Los Angeles, you were lucky enough to get a physical edition of the report along with being the first to see our Quarterly Retail Report. Your next chance to grab a physical copy of either the CBD report or our Retailers Quarterly will be at RAD Expo in Portland in just a couple weeks!



Click The Image To Read Our Quarterly CBD Special Report


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