High-level staff at outdoor recreational outfitter REI have internally discussed entering the marijuana industry, but amid ongoing uncertainty on the federal level, the company is not seriously considering such a move.
“We’ve talked about this at REI, because it makes a lot of sense,” Elizabeth Dowd, REI’s divisional vice president for retail experience, said on Saturday at a trade show in California.
“But [with] the current state of things in the world and the current political administration,” she added,” there’s no way in hell that we would go near it really, at this point. Until we feel like we’ve actually progressed beyond 50 years ago and we’re not going to get a huge amount of backlash we wouldn’t even entertain the idea.”
See the video of Dowd’s remarks here:
After this story was originally published, REI Director of Communications & Public Affairs Rob Discher reached out to play down Dowd’s comments.
“There’s a distinction between a water cooler conversation that she may have had with one of her peers or a friend at work and a legitimate strategy discussion,” he said, adding that the latter has not happened.
Marijuana is now legal for adult use under the laws of eight states and the District of Columbia. And 29 states and D.C. have comprehensive medical cannabis policies.
Yet ongoing federal prohibition makes banks and most mainstream corporations reluctant to directly or even tangentially work with the cannabis industry. That’s especially true as U.S. Attorney General Jeff Sessions has publicly weighed rescinding Obama-era guidance that generally respects the right of states to implement their own cannabis laws without federal interference.
So it is quite remarkable that a high-level staffer for REI, one of the nation’s most prominent retailers, would openly discuss internal deliberations about the marijuana market, even if vaguely.
Dowd’s comments came during a panel discussion about consumer behavior at last weekend’s Outpost trade show held amidst Northern California’s redwood trees.
It remains unclear to what extent Dowd and other REI staffers seriously weighed an entry into the marijuana industry, and whether its potential involvement would’ve amounted to distributing the drug directly through any of its 154 retail locations — the company is based in Washington State, where recreational marijuana has been legalized — or if it would simply have entailed partnering with existing cannabis businesses on co-branded marketing campaigns that wouldn’t involve the sporting goods company actually touching the plant.
David Hua, CEO of marijuana delivery service Meadow, also spoke on the Outpost panel with REI’s Dowd.
“I think the environment that we’re in right now, it’s touchy. With the federal government, with banking, there’s just a lot of stuff,” he said. “Cannabis is still, it’s growing and it will become pretty large. I don’t see a lot of these bigger brands taking a risk on it.”
But Hua did indicate that those companies who moved first would stand to benefit.
“I think, get on early is a good idea,” he said.
Marijuana Banking Bill Gains Momentum With One-Third Of Senate Now Signed On
The most cannabis-friendly Congress in history is back from its August recess, and lawmakers are already making key moves to advance marijuana reform legislation. The immediate focus is on a proposal to let banks serve cannabis companies without fear of being punished by federal regulators—with House leaders announcing that a floor vote is expected by the end of the month.
On Monday, the Senate version of the marijuana financial services bill got its 33rd cosponsor—Sen. Tina Smith (D-MN)—meaning that virtually a third of the chamber is now formally signed onto the legislation, counting its main sponsor Sen. Jeff Merkley (D-OR).
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Feds Warn More CBD Companies Over Health Claims
The Federal Trade Commission (FTC) sent letters on Tuesday ordering three companies to stop making unfounded health claims about their CBD products.
“It is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims,” FTC said in a press release about the action.
Though the agency did not name the three companies that received letters, it described their claims.
One firm said on its website that CBD “works like magic” to relieve “even the most agonizing pain” and has been “clinically proven” to treat cancer, Alzheimer’s disease, multiple sclerosis, fibromyalgia, cigarette addiction and colitis.
Another company claimed CBD is a “miracle pain remedy” that can also treat treat autism, anorexia, bipolar disorder, post-traumatic stress disorder, schizophrenia, anxiety, depression, Lou Gehrig’s Disease (ALS), stroke, Parkinson’s disease, epilepsy, traumatic brain injuries, diabetes, Crohn’s disease, psoriasis and AIDS.
A third CBD provider sold cannabidiol-infused gummies that it said can treat “the root cause of most major degenerative diseases, including arthritis, heart disease, fibromyalgia, cancer, asthma, and a wide spectrum of autoimmune disorders,” according to FTC.
FTC sends warning letters to companies advertising their CBD-infused products as treatments for serious diseases, including cancer, Alzheimer’s, and multiple sclerosis: https://t.co/r4TGcRbbRv pic.twitter.com/QAJCNn8oPC
— FTC (@FTC) September 10, 2019
The agency is directing the companies to reply within 15 days with information about steps they have taken to address potential violations of the law, which could lead to injunctions and orders to refund money to consumers.
The latest actions follow several other steps the federal government has taken to push back on marketplace claims about CBD.
In March, FTC and the Food and Drug Administration (FDA) teamed up to send a previous round of letters to three companies for potentially making false or unsubstantiated health claims about their CBD products. In July, FDA issued a warning letter to Curaleaf Inc. about what the agency said were “unsubstantiated claims” the company made about cannabidiol products on its website.
Hemp and its derivatives, including CBD, were legalized under the Farm Bill that was enacted late last year but FDA has not yet created a process to approve the use of the compound in food products or dietary supplements.
Preliminary research has indicated that CBD has the potential to help people struggling with substance use disorders involving alcohol, opioids and stimulants, but to date it has only been federally approved to treat severe seizure disorders in the form of the prescription medication Epidiolex.
“Before making claims about purported health effects of CBD products, advertisers need sound science to support their statements,” FTC wrote in a blog post. “The takeaway tip for anyone in the industry is that established FTC substantiation standards apply when advertisers make health-related representations for CBD products.”
A separate FTC consumer advisory urges people to “talk with your doctor before you try a healthcare product you find online” and “find out about the product’s risks, side effects, and possible interactions with any medications you’re taking.”
Photo by Kimzy Nanney.
Colorado Sold Twice As Much Recreational Marijuana As Medical Cannabis Last Year
The share of legal marijuana sales in Colorado that came from the recreational market in 2018 significantly outpaced those from the medical market, according to an annual government report released on Monday.
In fact, there were about two times as many adult-use sales of flower compared to medical cannabis purchases—a new milestone for the state.
Colorado’s Marijuana Enforcement Division (MED) said that 288,292 pounds of bud were sold last year for recreational purposes, while 147,863 pounds were sold to medical marijuana patients. For comparison, in 2017, recreational consumers purchased 238,149 pounds and 172,994 pounds were sold to patients.
That means the recreational-medical gap increased 73 percent in one year.
In part, the trend can be attributed to the ongoing expansion of Colorado’s adult-use cannabis market since the state’s first recreational shops opened in 2014. Medical cannabis sales were notably higher than recreational sales in that first year of implementation, with just 38,660 pounds coming from the adult-use market and 109,578 pounds being sold to medical patients.
Medical and adult-use sales were roughly even in 2016. But by 2017, recreational sales accounted for 58 percent of the market. And last year, they represented 66 percent of the market.
MED also found that licenses for recreational marijuana facilities increased by three percent (47 licenses) while medical business licenses declined by eight percent (77 licenses).
“Data collection continues to be a priority at the MED,” Jim Burack, director of the program, said in a press release. “This ongoing analysis and compilation of industry information helps inform the public and contributes to our outreach efforts to stakeholders.”
The report also showed that the adult-use market is the primary destination for individuals purchasing edibles. Eighty-six percent of edible sales came from recreational consumers. And from July-December 2018, 75 percent of cannabis plants were cultivated for adult use.
The market shift isn’t unique to Colorado. An Associated Press analysis from June detailed how states across the country that have established recreational marijuana programs are seeing the number of medical patients decline as more consumers transition to the adult-use market.
That may be partially explained by individuals who sought out medical cannabis recommendations choosing not to renew their registration after recreational marijuana shops became available. To that point, a recent study found that many customers at recreational dispensaries are consuming cannabis for the same reasons that registered patients do, such as to alleviate pain and sleep issues.
The concern for some advocates, however, is that adult-use legalization could drive up prices for patients, or leave them with fewer product options tailored to therapeutic use as demand for high-THC products increases.
“When states pass adult-use legalization we are seeing many patients leave the strict controls of the medical programs,” David Mangone, director of government affairs at Americans for Safe Access, told Marijuana Moment. “Patients must already pay out of pocket for cannabis, and any added cost like a registration fee for a medical card or renewal can make the process of obtaining medicine extremely burdensome and costly.”
“States like Colorado must continue to provide adequate benefits to patients to ensure the medical program remains robust,” he said.
Mangone added that “as states pass adult-use programs it is important that they continue to understand and appreciate the needs of patients.”
“A common frustration for many is not what happens in terms of access to cannabis, but rather what happens in terms of access to specific products. Products and flower with a high-THC content have a wider market appeal, but may not necessarily benefit the existing medical market.”
That said, one interesting finding from this latest MED report is that medical and recreational consumers alike seem increasingly interested in concentrates, with the units of such products sold to both nearly doubling from 2017 to 2018. Concentrates are sold at a much higher rate in the adult-use market, but the potent products evidently have growing appeal across the board.
Gov. Jared Polis (D) recently celebrated tax earnings from marijuana sales, touting the fact that the state has amassed more than $1 billion in cannabis revenue that has been allocated to various social programs.
And the marijuana market is continuing to evolve in state. Polis signed legislation in May allowing for home deliveries of cannabis products as well as social consumption sites.
The governor said last month at a conference with governors from around the country that the new delivery law could help mitigate impaired driving.
Photo courtesy of Kimberly Lawson.