Hemp CBD Across State Lines: New Mexico

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp CBD”). Today we head to New Mexico.

In 2017, New Mexico enacted Senate Bill 6, which established an industrial hemp program. The bill tasked the New Mexico Department of Agriculture (“NMDA”) with overseeing the production of the crop.

Two years later, state lawmakers passed House Bill 581, codified, in part, at N.M.S.A. § 76-24, which provides a regulatory framework for the manufacture of Hemp CBD products, also known as “hemp finished products.” A “hemp finished product” is “a hemp product that is intended for retail sale and containing hemp or hemp extracts that includes food, food additives and herbs for human use, including consumption, that has a THC content of not more than three-tenths percent.” Unlike industrial hemp, hemp finished products are regulated by the New Mexico Environment Department (“NMED”).

Following the enactment of House Bill 581, the NMED began the rulemaking process and issued the first set of proposed rules (“Emergency Rules”), which are scheduled to remain in effect through January 31, 2020. On December 2, 2019, the agency held a meeting for public comments to discuss the proposed final rules, but these rules won’t be adopted for at least a few more weeks – at least not until the Emergency Rules expire.

Both the Emergency Rules and proposed final rules require state extractors, processors, manufacturers and wholesalers to secure a permit from the NMED and meet certain manufacturing requirements to operate a hemp facility where hemp finished products intended “for human ingestion, absorption, or smokable products” are produced.

Note, however, that the proposed final rules intend to remove “food, food additives and herbs” from the definition of hemp finished product.” This suggests that the NMED wants to align its rules with the Food and Drug Administration’s policy on the sale and marketing of these products.

But for the time being, the manufacture, sale and marketing of food products seems allowed. Pursuant to House Bill 581 and the Emergency Rules, products intended for human consumption by eating or drinking are subject to the provisions of the Food Service Sanitation Act and the New Mexico Food Act (“NMFA”) but are not deemed adulterated. These products must also meet applicable labeling requirement in the NMFA and 21 C.F.R. 101 et seq. (food labeling).

The sale and marketing of smokables and cosmetics is not expressly authorized nor restricted but the Emergency Rules and proposed final rules mandate that these products meet applicable federal labeling requirements.

In addition to meeting federal labeling requirements, all categories of products must meet certain labeling and marketing requirements, including but not limited to:

  1. Clearly identity on the front display panel:
    1. CBD content in the package, labeled in milligram; and
    2. Total THC content in the package, labeled in milligrams.
  2. Unless otherwise approved, statements representing or inferring a hemp finished product contains no THC are prohibited.
  3. Hemp facilities shall design, maintain and use a coding system that will identify the date and place of manufacture of each hemp product that shall be clearly visible on the product label or securely affixed to the body of the container.
  4. No more than 0.3% Total THC concentration and meet other specific testing requirements.
  5. Contain no health, medical or benefit claims on the label.

Therefore, for the time being, New Mexico seems rather friendly toward the manufacture, sale and marketing of Hemp-CBD products. This could always change once the proposed final rules go into effect.

For previous coverage in this series, check out the links below:

California Cannabis Claims: Breach of Fiduciary Duty

Welcome back to our litigation series on California cannabis claims. We’re continuing today with a cause of action we unfortunately commonly see in cannabis litigation: the breach of fiduciary duty.

Introduction

A fiduciary relationship exists between parties when at least one of the parties is, in duty, bound to act with the utmost good faith for the benefit of the other party. Meaning, if you’re classified as a fiduciary (either under statute, or by virtue of an agreement you have signed), you MUST act in good faith for the benefit of the other party on any matter within the scope of your relationship. This encompasses sub-duties, like managing the subject matter with “due care,” providing an account to the beneficiary, or keeping the beneficiary fully informed.

Statute of Limitations

Subject to certain exceptions, the California statute of limitations on a breach of fiduciary duty claim is four years. One exception we see often, and is worth mentioning here, is when the essence of the claim is that the defendant’s act constituted actual or constructive fraud – in that case, the claim is actually subject to California Code of Civil Procedure s. 338’s three-year statute of limitations period.

Elements of a Breach of Fiduciary Duty Claim

The elements of a breach of fiduciary duty cause of action are: (1) the existence of a fiduciary relationship, (2) breach of the same, (3) damage (4) caused by that breach.

  1. Existence of a fiduciary relationship: California case law has come a long way in recognizing certain relationships or transactions as establishing fiduciary relationships. In general terms, a fiduciary duty under common law can arise in any situation where “one person enters into a confidential relationship with another.” The most common fiduciary relationships in the business context are:
  • Corporate officers and directors toward corporation and shareholders;
  • Controlling shareholders toward minority shareholders;
  • Partner toward partner: “In all proceedings connected with the conduct of the partnership every partner is bound to act in the highest good faith to his copartner and may not obtain any advantage over him in the partnership affairs by the slightest misrepresentation, concealment, threat or adverse pressure of any kind.” Enea v. Sup.Ct. (2005) 132 Cal. App. 4th 1559, 1564; and
  • Joint venturer toward co-joint venturer.
  1. Breach of fiduciary duty: to have a valid claim, the plaintiff must prove that the defendant breached its fiduciary duty. This is a question of fact, so make sure you have concrete documentation and other evidence.
  2. Causation: the plaintiff must then demonstrate that the defendant’s breach proximately caused the plaintiff’s damages.
  3. Damages: finally, the plaintiff must demonstrate its damages.

Remedies

Under a valid breach of fiduciary duty claim, both legal and equitable remedies are available:

  1. Legal Remedies
  • Compensatory damages: compensation for all the plaintiff’s harm caused by the breach.
  • Punitive damages: unlike under a breach of contract claim, punitive damages can be awarded if the court is satisfied, by clear and convincing evidence, that the defendant is guilty of oppression, fraud or malice.
  1. Equitable Remedies
  • Accounting: if, for example, your partner was in charge of handling your business’ funds and it’s unclear how much money was stolen over a one-year period, the court can order an accounting to be complete.
  • Constructive trust: if a defendant has obtained property by violation of a fiduciary relationship, the court may impose a constructive trust to compel the transfer of that property back to its rightful owner.
  • Disgorgement of profits: if a defendant profits from transactions it conducted as a fiduciary, another proper measure of damages is full disgorgement of any secret profit made by the defendant.

Stay tuned next week, when I plan to cover one of the sexier claims: fraud.  Part one of this series covered breach of contract, and you can find that here.

Friday, January 17, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Friday, January 17, 2020 | Curated by host Shea Gunther

// New Mexico Marijuana Legalization Bill Filed After Governor Puts Issue On 2020 Agenda (Marijuana Moment)

// Global Cannabis Sales Grow 48% to $15 Billion in 2019 (Valdosta Daily Times (AP))

// 40% of Arizona’s Hemp Crops Must Be Destroyed Due to Too Much THC (AZ Marijuana)


These headlines are brought to you by MJToday Media, publishers of this podcast as well as our weekly show Marijuana Today and the most-excellent Green Rush Podcast. And check out our new show Weed Wonks!


// Raimondo’s $10-billion budget plan includes state-run stores for recreational pot (Providence Journal)

// Ontario Cannabis Store sells out of edibles within hours (Marijuana Business Daily)

// Alaska pot board chair being chaired (Boston Globe)

// Marijuana deliver giant Eaze may go up in smoke (Tech Crunch)

// Congressman Backs Ballot Measure To Legalize Psychedelic Mushrooms For Therapeutic Use (Marijuana Moment)

// Travelers Threw Away Over 37 Pounds of Weed at This Colorado Airport (Merry Jane)

// High Times To Open Dispensaries (Green Market Report)


Check out our other projects:
Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement.
Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: EMILY’s List/Flickr

Will the FDA Soon Treat Hemp CBD as a Dietary Supplement?

The Food and Drug Administration (FDA) may soon change its tune on hemp-derived CBD (Hemp CBD) thanks to a bill recently filed by chairman of the House Agriculture Committee, Rep. Collin Peterson (D-MN) and cosponsored by Reps. Thomas Massie (R-KY), James Comer (R-KY) and Chellie Pingree (D-ME).

HR 5587 is an Act “To amend the Federal Food, Drug, and Cosmetic Act [(FDAC)] with respect to the regulation of hemp-derived cannabidiol and hemp-derived cannabidiol containing substances.” As of the time of this writing, the bill’s text is not available on Congress.gov but is provided by Marijuana Moment’s Kyle Jaeger, who wrote a great article on the bill.

If passed in it’s current form, HR 5587 would amend the FDAC’s definition of dietary supplement (21 U.S.C. 321(ff)(3)(B)) as shown below in bold:

The term “dietary supplement” does  not include—

(i) an article (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance) that is approved as a new drug under section 355 of this title, certified as an antibiotic under section 357 of this title, or licensed as a biologic under section 262 of title 42, or

(ii) an article (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance)    authorized for investigation as a new drug, antibiotic, or biological for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public,

which was not before such approval, certification, licensing, or authorization marketed as a dietary supplement or as a food unless the Secretary, in the Secretary’s discretion, has issued a regulation, after notice and comment, finding that the article would be lawful under this chapter.

The bill would also amend the FDAC to clarify that federal law does not prohibit a person from introducing Hemp CBD into interstate commerce, as shown by the proposed amendments to 21 U.S.C. 331(ll):

The introduction or delivery for introduction into interstate commerce of any food to which has been added a drug approved under section 355 of this title, a biological product licensed under section 262 of title 42, or a drug or a biological product for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public (other than hemp-derived cannabidiol or a hemp-derived cannabidiol containing substance)[.]

This would be a significant change as the FDA has long held that Hemp CBD cannot be classified as dietary supplement because the FDAC’s definition of dietary supplement explicitly exempts any article that is approved or investigated as a drug unless the article was marketed as a dietary supplement or food prior to being publicly investigated as a drug. The FDA’s view is that Hemp CBD was not marketed as such prior to the investigation of CBD as a drug. The FDA could deal with this through regulation, as the FDAC does grant the FDA Secretary the authority to regulate around the definition of dietary supplement. That hasn’t happened, though, and it appears that the FDA is running out of time.

HR 5587, as currently drafted, only would apply to Hemp CBD, not other cannabinoids such as CBN or CBG. The 2018 Farm Bill encompasses all hemp-derived cannabinoids in its definition of “hemp” so HR 5587 could encompass more than just CBD without having to amend the Farm Bill. It’s likely that this bill was drafted in light of the CBD craze over the last few years so it isn’t all that surprising that CBD is the only cannabinoid listed. If HR 5587 picks up steam, it will be interesting to see whether the language is revised to encompass other, less popular cannabinoids, in order to prevent recurring problems.

In addition to removing obstacles related to making Hemp CBD a dietary supplement, the bill would also require the US Department of Agriculture (USDA), in consultation with other federal agencies, to submit to Congress a study on the following:

  • the costs and requirements for establishing and operating a hemp testing program, including the costs and requirements for operating or contracting with a laboratory approved by the Drug Enforcement Agency;
  • the costs and requirements for the destruction of hemp crops determined to be in excess of 0.3 percent delta-9 tetrahydrocannabinol or opportunities for remediation or alternative uses;
  • the feasibility of producer compliance with sampling timetables;
  • the feasibility of producer compliance with reporting requirements; and
  • other known or potential challenges by the participation of States or producers in the domestic hemp production program.

It’s probably too early to tell whether this HR 5587 has a chance to become law. It was presented with bipartisan support but the legislative process can be unpredictable. Even if this bill does eventually become law, it will likely be subject to significant changes along the way. We simply don’t have enough information at this point to know what will happen.

We do know, however, that HR 5587 sends a clear message to the FDA, and to a lesser extent to the USDA, that lawmakers are not pleased with the treatment of hemp. For the FDA, this seems to be based on the agencies continued hostility towards Hemp CBD. For the USDA, it seems that lawmakers have heard the backlash against the USDA’s testing requirements including the need to test for total THC at DEA-certified labs.

Remember, federal agencies only exist because of federal lawmakers. They are creatures of statute, statutes that were crafted by lawmakers in Congress. If agencies fail to interpret a statute in the way the legislature wants, it has the unique power to amend the statute. That’s what is happening here.

This may seem like an outright rebuke, but in all fairness to the FDA, former commissioner Dr. Scott Gottlieb has told Congress that a legislative change may be needed in order for the FDA to regulate Hemp CBD in a timely manner.  In addition, the USDA has publicly stated that testing hemp for THC content has proved challenging.

We’ll keep an eye on HR 5587 and all things Hemp CBD. 2020 is likely going to be another big year for cannabis, especially at the federal level. Stay tuned.

Thursday, January 16, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Thursday, January 16, 2020 | Curated by host Shea Gunther

// Congressional Hearing Exposes Marijuana Research Limitations Imposed By Federal Law (Marijuana Moment)

// New California-based marijuana strains drew a line around the block in Baltimore. Could more be coming (Baltimore Sun)

// Lawmakers Consider Ending Residency Requirement for Marijuana Workers (Denver Westword)


These headlines are brought to you by Green Worx Consults, a company specializing in project management, workflow mapping and design, and Lean & 6 Sigma process. If you could use help making your business better at business, get in touch with Green Worx Consults.


// Michigan pot shops sold $10 million worth of marijuana in first 6 weeks of legal weed (Detroit Free Press)

// Colorado Finally Files Bill to Protect Weed-Smoking Employees (Merry Jane)

// With a new CEO High Times looks to open dispensaries (Digiday)

// Vermont Governor Seems Open To Legalizing Marijuana Sales (Marijuana Moment)

// New Mexico Governor Calls For Marijuana Legalization In 2020 (Forbes)

// Curaleaf Upsizes Loan Facility To $300 Million Makes Progress in Utah (Green Market Report)

// 16% of cannabis vaping illnesses tied to store purchases CDC says (Marijuana Business Daily)


Check out our other projects:
Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement.
Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Reizigerin/Flickr

Selling Hemp and CBD Online? Read this First!

We recently received a request from a client to advise them on Shopify’s guidance on selling CBD products on its platform. Specifically, the first paragraph of the guidance states that “[y]ou should consult with an attorney to determine how and where you’re able to sell your product.” And that’s exactly what the client did – reached out and wanted to know exactly how and where they could sell their various products.

But, as our regular readers are well aware, there isn’t always a clear answer to that question. Unfortunately, that does not mean that sellers of these types of products should just wing it, given the proliferation of CBD online and in retail stores. That type of strategy could land you in hot water, with your accounts shut down, or your funds seized by your payment processor (as has happened to clients of ours). Shopify’s policy explicitly states:

Shopify can’t provide advice on what and where merchants can sell, but we recommend that merchants review and monitor federal, state, and local laws, as well as monitor updates from the Food and Drug Administration (FDA). The FDA site has helpful guidance on products that contain hemp and/or CBD in the United States.”

Shopify also requires all users to complete an Attestation for the Sale of Hemp and Hemp-Derived Products, for which it again urges users to consult with an attorney for legal guidance. Here is a sampling of the statements that Shopify requires all sellers of hemp and CBD to confirm:

  1. I confirm that my Shopify store operates from a state where the listing and sale of hemp and hemp-derived products is permitted by applicable state and local law.
  2. I confirm that all hemp and hemp-derived products listed or sold on my Shopify store contain not more than 0.3% tetrahydrocannabinol (THC) concentration on a dry weight basis or such lower percentage as required by applicable state and local law.
  3. I confirm that no hemp or hemp-derived products listed or sold on my Shopify store are marketed as having any medicinal, disease-related or therapeutic benefit unless such claims have been approved by the Food and Drug Administration (FDA).
  4. I confirm that all hemp and hemp-derived products listed or sold on my Shopify store have been sourced, processed, tested, labeled and marketed in compliance with all applicable federal, state and local laws.
  5. I confirm that, if any hemp and/or hemp-derived products listed or sold on my Shopify store are intended for human or animal consumption via ingestion (including but not limited to food, food additive, beverage, dietary supplement, etc.):

(a) these products are permitted by applicable state law, and they comply with all applicable state and local requirements (including all labelling, manufacturing and testing standards);

(b) I have all applicable state and local licenses, approvals and certifications required to sell these products.

  1. 6. I confirm the following:

(a) all hemp and hemp-derived products listed or sold on my Shopify store comply with all specific restrictions, license(s) and/or other standards applicable to the specific hemp-derived product being sold;

(b) all hemp and hemp-derived products listed or sold on my Shopify store are legal in every jurisdiction into which they are sold (including jurisdictions outside the US as applicable);

(c) any marketing claims associated with all hemp and hemp-derived products listed or sold on my Shopify store are permitted by the FDA for that specific product category (e.g. cosmetics, dietary supplements, etc.) and are true, accurate, and do not contain any false or misleading statements;

(d) I will notify Shopify in writing of any class action demand letter or FDA or Federal Trade Commission (FTC) enforcement action commenced against my business including any warning letters or other related correspondence within ten days of receipt;

(e) no hemp or hemp-derived products listed or sold on my Shopify store have been the subject of a recall or safety alert from an applicable regulatory authority. In the event of such a recall or safety alert, I will notify Shopify in writing within 48 hours of receipt and will immediately remove the applicable product(s) from my Shopify store and stop fulfilling, processing or receiving orders for such product(s);

(f) if my Shopify store lists or is selling hemp seeds, the seeds are not capable of germination;

(g) no hemp or hemp-derived products listed or sold on my Shopify store contain any substances in Schedules I – V of the Controlled Substances Act;

(h) if requested by Shopify at any time, I will provide further confirmation or documentation to ensure that each of my Shopify store, business, hemp and/or hemp-derived products are in compliance with all applicable laws, regulations and requirements; and

(i) I acknowledge and agree that Shopify may at any time suspend or terminate my account if I do not respond expeditiously to Shopify’s requests for confirmation or documentation or other communications, or if Shopify determines in its sole discretion that it is necessary in order to comply with any applicable law.

These guidelines are about as robust as can be, and any retailer would be taking a huge risk by selling products that do not align with Shopify’s guidelines. We highly recommend to all of our hemp and CBD clients that they have a solid grasp of the current state of the law in every jurisdiction in which they sell, and that they have a plan in place for keeping abreast of changes to those laws (because they’re changing on nearly a weekly basis). Our firm offers these types of compliance and legal monitoring services for hemp and CBD, and echoes Shopify’s recommendation that all hemp and CBD retailers consult with an attorney to make sure they can complete the required attestation in good faith.

Wednesday, January 15, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Wednesday, January 15, 2020 | Curated by host Shea Gunther

// Illinois dispensaries sold more than $19.7 million in recreational marijuana the first 12 days of sales (Chicago Tribune)

// FDA Would Be Required To Allow CBD Product Marketing Under New Bipartisan Bill (Marijuana Moment)

// New Hampshire Lawmakers Take New Approach To Marijuana Legalization For 2020 (Marijuana Moment)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// Chart: Good – not great – first year of medical cannabis sales in Ohio (Marijuana Business Daily)

// Aphria Reduces Outlook as Q2 Cannabis Sales Increase 9.5% Sequentially to $33.7 Million (New Cannabis Ventures)

// Organigram Q1 Revenue Increases 54% Sequentially to $25.2 Million (New Cannabis Ventures)

// Cannabis Beverages in Canada Won’t Pop (New Cannabis Ventures)

// Leading Marijuana Reform Advocate In Congress Weighs In On This Week’s Legalization Hearing (Marijuana Moment)

// Maine lawmaker calls for cannabis banking, insurance reform (Marijuana Business Daily)

// Bernie Sanders Urges Marijuana Industry Workers To Unionize (Marijuana Moment)


Check out our other projects:
Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement.
Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Pictures of Money/Flickr

California Cannabis Claims: Breach of Contract

Happy 2020, everyone! Our litigation team would like to kick-start the year by starting a series on the most common causes of action that we see in and around the cannabis industry. We hope these overviews help our audience not only understand what they can expect if they ever find themselves in litigation, but also what they can and should be mindful of in conducting their businesses to avoid litigation altogether.

Of course, we must begin with the most prevalent cause of action of all: breach of contract.

Introduction

This is sometimes missed: a breach of contract claim has to begin with a valid contract, which is an agreement to do or not do something(s). The contract can be written or oral. It also can be express or implied (arises by law or from facts).

Statute of Limitations

The statute of limitations for breach of contract depends on whether it’s written or oral – four years for a written contract and two years for an oral contract. The clock starts ticking when the breach occurs.

Note, parties can agree to reasonably shorten the period within which a breach of contract claim has to be filed. But – If you decide to try this in one of your agreements, know that what’s “reasonable” may vary depending on the situation.

Elements of a Breach of Contract Claim

California Civil Jury Instructions (CACI) provides, in relevant part:

“To recover damages from [name of defendant] for breach of contract, [name of plaintiff] must prove all of the following:

1. That [name of plaintiff] and [name of defendant] entered into a contract;

2. That [name of plaintiff] did all, or substantially all, of the significant things that the contract required [him/her/it] to do;
[or]
2. That [name of plaintiff] was excused from having to [specify things that plaintiff did not do, e.g., obtain a guarantor on the contract];

3.That [specify occurrence of all conditions required by the contract for [name of defendant]’s performance …];
[or]
3.That [specify condition(s) that did not occur] [was/were] [waived/excused];

4. That [name of defendant] failed to do something that the contract required [him/her/it] to do;
[or]
4. That [name of defendant] did something that the contract prohibited [him/her/it] from doing;

5.  That [name of plaintiff] was harmed; and

6.  That [name of defendant]’s breach of contract was a substantial factor in causing [name of plaintiff]’s harm.”

While that may be a little hard to follow, elements 1-4 essentially indicate that in order to obtain remedies for a defendant’s breach of contract, the plaintiff must plead and prove (1) the parties entered into a valid contract (as mentioned above), (2) it performed its own obligations under the contracts (or was excused from doing so), and (3) the defendant didn’t perform its obligations in turn. Element 5 is pretty straightforward: any partial or total breach that causes harm creates a right to damages. Element 6 is less straightforward: the plaintiff must show that the defendant’s breach was a “substantial factor” in causing the plaintiff’s damages.

Remedies

A breach of contract claim gives rise to a few different kinds of remedies or “damages”. The most common are:

  • Compensatory damages: compensation for all the plaintiff’s harm caused by the breach, that in the ordinary course, could be expected to result from it. One question we often get is whether lost profits can be awarded – in short, lost profits may be recoverable if they’re sufficiently certain. So, for example, if you’ve got a newer business that isn’t very established or you’ve got a business with varying profits each month, an award of lost profits is unlikely.
  • Liquidated damages: a contractual liquidated damages provision is valid unless the defendant establishes that it was unreasonable under the circumstances at the time the contract was made or it fails to bear a reasonable relationship to actual damages the parties could have anticipated ahead of time.
  • Rescission of the contract: rescission will extinguish the contract and return the parties to the status quo ante. Usually, each side has to return what was received under the contract.
  • Interest: if the damages owed can be calculated with certainty, interest can be awarded as of the time of the breach.
  • Attorneys’ fees: prevailing party’s attorneys’ fees are recoverable if they’re provided for in the contract.

Note: unfortunately, punitive damages are not recoverable under a breach of contract claim, no matter how horrible the defendant’s conduct was.

Tuesday, January 14, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Tuesday, January 14, 2020 | Curated by host Shea Gunther

// Florida Marijuana Legalization Campaign Shifts Focus To 2022 Instead Of This Year (Marijuana Moment)

// Marijuana Sales in 2019 Break a Record… With a Month to Go (Denver Westword)

// Gov. Bryan calls on senate to pass cannabis bill during SOTT address (Vibe High)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// MA Cannabis Commission To Host Forum After Meeting Protests (Worcester Patch)

// Defense attorneys say drivers should refuse Michigan’s new roadside drug tests (Michigan Live)

// Cannabis edibles arrive at some Calgary dispensaries (CTV News)

// GW Pharma beats projections with $108M in Q4 sales thanks to CBD drug (Marijuana Business Daily)

// Why you won’t see vapes on store shelves in Ontario (Leafly)

// Montana Activists Submit Measure To Legalize Marijuana In 2020 (Marijuana Moment)

// MJBizDaily donates $425,000 through Industry Giveback Program (Marijuana Business Daily)


Check out our other projects:
Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement.
Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Luca Sartoni/Flickr

The Future of Hemp is Genetics

Hemp was legalized federally just over a year ago. During the run-up, legislators from Mitch McConnell to Ron Wyden said things like “[b]y removing hemp from the federal list of controlled substances, farmers can explore the bright future of this versatile crop, found in everything from a coffee mug to your car dashboard.” One planting season in, however, farmers aren’t doing so much “exploring” with respect to hemp: instead, the Brightfield Group estimates that 87% of 2019 hemp acreage was planted for CBD extraction. Among the many hemp farmers our law firm represents in Oregon, Washington and California, that number feels closer to 100%.

Will people get rich farming hemp for CBD? It’s hard to say, given the newness of that market, apparent oversupply issues and pricing volatility for CBD. Assuming long-term and robust demand for CBD products, though, it’s likely that large family farms will eventually dominate output, just as in U.S. agriculture generally. It also seems likely that the margins for these large farms will expand and contract similarly to margins for other crops, based on many complex factors. Today’s small hemp-CBD start-ups growing from 1 to 99 acres will likely diminish in profitability and prevalence.

And that’s where genetics come in. If hemp is to be like other crops, it seems probable that the truly big money will not be in hemp production, but in the creation and licensing of proprietary plant material. Along those lines, Oregon’s biggest hemp company already is a seed company called Oregon CBD. That oufit is approaching $1 billion in annual revenues after just a few short years in operation.

If you want a certain CBD-rich strain–or a CBG strain, or a CBN strain, or any other kind of hemp strain–you would go to a seed company. You would do this even though seed certification is not addressed under the 2018 Farm Bill because you want to be sure that you get females and those females do not germinate into 0.3%+ THC plants. You would do this because you want proven genetics and you want warranties around those genetics. And eventually, you would do this because you want to be sure your hemp seeds are designed for production with certain types of herbicides in mind, a la Roundup Ready corn.

The federal regulatory environment is shaping up to facilitate success for firms with valuable hemp genetics. Currently, hemp genetics firms are able to formally register and protect their intellectual property, design products with specified epigenetic factors in mind (i.e. approved pesticides), and count on clear federal parameters for their business models. Some of these are helpful, others less so. Each crucial plank is briefly summarized below.

  1. Intellectual Property.  Earlier this year, USDA’s Plant Variety Protection Office (PVPO) began accepting applications of seed-propagated hemp for protection under the Plant Variety Protection Act. PVPO examines new applications and grants certificates that protect varieties for 20 years. Elsewhere, the U.S. Patent and Trademark Office (USPTO) already has granted its first hemp plant patent, with more in the pipeline. Plant patents afford similar protections to protected plant varieties with respect to duration and scope. (For a good explanation of the interplay and differences between plant variety and patent protection for plants, go here.)
  2. Epigenetics.  Last month, the Environmental Protection Agency approved a list of ten pesticides to be used in hemp production. This means that firms creating and registering hemp plant media will have crucial guidelines for seed design. It seems very likely that hemp strains eventually will be built with the application of certain chemical agents in mind, again like Roundup Read corn, if this type of research and development is not underway already.
  3. Crop Insurance.  The USDA’s Risk Management Agency (RMA) recently announced a pilot insurance program for hemp growers. Farmers will now have greater incentive to grow hemp at scale and to innovate, which, in turn, means a more lucrative and dependable market for seed genetics firms. In the bigger picture, the USDA itself will also encourage cultivation by providing a federal plan for producers in states or tribal territories without their own USDA-approved plans.
  4. Crop Testing Rules.  The problematic total THC testing protocol in USDA’s final interim rule will create demand for innovation in genetics– unless we see major changes following the close of public comment on January 29. But wherever we end up, seed firms will strive to create and refine cultivars that: a) express certain cannabinoids predominantly and b) pass testing strictures. It has already been argued, for example, that the current testing rules could eliminate the viability of current CBD strains altogether. Time to innovate.

In all, some farmers will do well growing hemp, particularly the larger family farms. Others will inevitably fail. But the big money will be made in plant genetics, including the design, sale and licensing of intellectual property. As certain hemp cultivars move to the fore, the next few years will be crucial. And the owners of those cultivars stand to profit handsomely.