In an effort to ensure the spoils of marijuana legalization are available to everyone, Washington State Gov. Jay Inslee (D) signed a bill on Tuesday to allow state regulators to funnel unused marijuana business licenses to people from communities that have been negatively impacted by the drug war.
The legislation came at the request of state cannabis regulators, who have pointed out that Washington’s legalization law, which voters approved in 2012, failed to include any provisions aimed at addressing past prohibition harms.
The new law signed by Inslee aims to diversify the industry by issuing more business licenses to people negatively affected by drug law enforcement and providing them with technical assistance to get their companies off the ground. It creates a state Marijuana Equity Task Force and allows the Washington State Liquor and Cannabis Board (LCB) to grant forfeited, canceled, revoked or otherwise unissued marijuana business licenses to qualified equity applicants.
“HB 2870 creates a new social equity program that provides business opportunities to people from disproportionately-harmed communities so they can benefit economically from the cannabis industry and become a cannabis retailer,” Inslee said in a statement that his office shared with Marijuana Moment.
According to the ACLU, black people in Washington State were roughly four times more likely to be arrested on cannabis charges prior to legalization than were white people, despite similar rates of use. That disparity is similar to those in other states, such as New York. And while legalization itself has reduced the number of people arrested on marijuana charges, racial disparities in arrests remain.
Since legalization, Washington’s marijuana industry has also been overwhelmingly white. The state Commission on African American Affairs, using statistics from the LCB, recently estimated that just one percent of cannabis production and processing licenses have been issued to African Americans, who also have majority ownership of only three percent of the state’s marijuana retail licenses.
Paula Sardinas, a member of the state Commission on African American Affairs, told Marijuana Moment that she testified on behalf of amendments to expand program funding and ensure its existence for years to come.
“After eight years of working with communities of color from Florida to Washington, I’m very proud to have played a major role in crafting Washington’s statewide social equity program,” she said in an email, adding that the effort resulted in a tenfold increase in funding.
Sardinas noted that Washington’s black community had long been frustrated with the state’s cannabis law, Initiative 502, for failing to address equity concerns. “Eight years after I-502,” she said, “the black community reached a boiling point.”
“I’m very thankful to Gov. Inslee for his support” for the equity program, she added.
In comments earlier this year, LCB Director Rick Garza seemed to acknowledge that Washington’s existing cannabis law fell short on issues of equity.
“Initiative 502 missed an opportunity to incorporate a focus on social equity,” Garza told lawmakers earlier this year. “The history of cannabis prohibition shows abundant evidence there was disproportionate harm in communities of color, and that those harmful effects remain with us today.”
To qualify for the new program, an applicant must be from a “disproportionately impacted area,” defined as a census tract that has high poverty and unemployment rates, a high rate of participation in income-based government programs and high rates of arrest or punishment of cannabis-related crimes. The applicant must also submit a “social equity plan” showing how their business would help achieve equity-related goals.
According to the bill’s text, the changes are intended “to reduce barriers to entry to the cannabis industry for individuals and communities most adversely impacted by the enforcement of cannabis-related laws” and establish a state cannabis industry that “is equitable and accessible” to those hit hardest by anti-drug laws.
Equity advocates applauded the change, noting that legalization alone isn’t enough to address past drug war harms.
“Washington State was ahead of the curve with adult use, which has advanced the cause of ending the war on black and brown communities tremendously,” Jason Ortiz, president of the Minority Cannabis Business Association (MCBA), told Marijuana Moment. “It is inspiring but not surprising to see Washington leaders like Rick Garza and Governor Inslee continuing to lead by example by admitting the mistake of not including equity before, by doing it now.”
Equity efforts have become increasingly mainstream in the years since Washington and Colorado first approved legal marijuana. A number of other states that legalized more recently, including Massachusetts, Illinois and Michigan, have already adopted equity measures, though the details of those programs vary greatly from state to state.
In December, MCBA held a conference aimed at ensuring that states that are considering legalization, such as New York, New Jersey, Connecticut and Pennsylvania, include measures to promote social equity and empower communities that have been harmed the most by prohibition enforcement.
“Equity programs strengthen our industry while empowering our communities,” Ortiz said, “and will be a vital part of any successful legalization campaign moving forward.”
Oregon Marijuana Sales Spike During Pandemic, But Officials Expect Market To ‘Mellow’
Amid one of the sharpest economic downturns in state history, Oregon marijuana sales continue to roll along at a healthier-than-normal pace. State budget officials say that shelter-in-place policies and economic stimulus programs have kept marijuana sales “quite strong” during the pandemic so far.
Since March 1, the sales of adult-use marijuana products are up 60 percent compared to a year ago, the state Office of Economic Analysis said in its latest quarterly budget forecast published last week.
“These increases are not only related to the stockpiling consumers did after the sheltering in place policies were enacted,” the report says, “but have continued through April and early May.”
In April alone, consumers bought $89 million worth of legal cannabis products—a record amount—thanks in part to what officials described as a “4/20 bump.” While the boost in sales figures are due in part to rising prices, state budget analysts said that “underlying demand is up as well.”
“The increase in sales for other marijuana products, like concentrates, edibles and the like, are due to significant gains in consumer demand as prices are flat or down,” analysts reasoned.
The June 2020 budget forecast estimates that the current increase in marijuana sales will yield an extra $9 million in state tax revenue during the 2019-2021 budget period. It’s a rare bright spot in the overall budget report, which state analysts described as “the largest downward revision to the quarterly forecast that our office has ever had to make.”
But even the marijuana sector’s boost may be time limited.
“Expectations are that some of these increases are due to temporary factors like the one-time household recovery rebates, expanded unemployment insurance benefits, and the shelter in place style policies,” the report says. “As the impact of these programs fade in the months ahead, and bars and restaurants reopen to a larger degree, marijuana sales are expected to mellow.”
Demand for marijuana is also expected to fall in coming years due to a lower overall economic outlook, which is projected to reduce Oregon’s population and cut average incomes. “A relatively smaller population indicates fewer potential customers,” the report notes, “and lower total personal income than previously assumed indicates less consumer demand.”
The projected slowdown in sales isn’t expected to make an impact until the next budget period, beginning in 2021. At that point, the forecast says, sales will begin trending down by 5 percent relative to the current period “due to the lower economic outlook” associated with COVID-19.
The pandemic has also changed how Oregonians are making marijuana purchases, the report found, though perhaps not as much as one might expect. The share of sales completed by delivery services more than doubled in recent months, but it remained relatively small, making up just 1.4 percent of total sales. As the Office of Economic Analysis observed, “Consumers still prefer to shop in store.”
Oregon is one of a handful of states looking to legal cannabis sales to help buoy tax revenues. A report published last month by cannabis regulators in Michigan, where legal sales to adults began this past December, forecasts annual marijuana sales in that state to top $3 billion as the market matures. That would mean another 13,500 jobs and roughly $500 million per year in taxes to state coffers. Factoring in the effects on peripheral businesses, the state found, the “total economic impact is estimated to be $7.85 billion with a total impact on employment of 23,700.”
Although tax revenue from cannabis sales will help pad budgets in many legal states, the Oregon report doesn’t mince words: The pandemic’s hit to the state’s economy will be drastic. Oregon’s current recession is “the deepest on record with data going back to 1939,” according to state analysts, and it hit with virtually no warning. “The path looks more like what happens to economic activity during a labor strike or in the aftermath of a natural disaster.”
For its part, Oregon’s Office of Economic Analysis predicts a relatively swift recovery. “While this recession is extremely severe, it is expected to be shorter in duration than the Great Recession,” analysts wrote. “The economy should return to health by mid-decade.”
Company Recalls Injectable CBD Products Following FDA Warning Letter
A Food and Drug Administration (FDA) letter warning a company about its marketing of injectable CBD products has led to a voluntary recall that the federal agency announced on Wednesday.
Biota Biosciences received the letter last month, with FDA directing the firm to cease sales of its line of CBD vials, which it markets as a pain reliever that serves as an alternative to opioids and can help with detoxification.
The agency said the company was violating federal statutes both by engaging in interstate commerce of an unapproved new drug and failing to properly label the products by neglecting to include directions for use.
“Injectable drug products can pose a serious risk of harm to users because they are delivered directly into the bloodstream and bypass many of the body’s natural defenses against toxic ingredients, toxins, or dangerous organisms that can lead to serious and life-threatening conditions such as septicemia or sepsis,” FDA wrote.
Biota Biosciences Issues Voluntary Nationwide Recall of Cannabidiol (CBD) Complex, Curcumin Complex, and Cannabidiol + Curcumin Injectables Because They Were Marketed Without FDA Approval https://t.co/hAYSW5IxDX pic.twitter.com/QxxoD8pCNI
— U.S. FDA Recalls (@FDArecalls) May 21, 2020
In a public response published on Friday, the company told consumers that “we would like to convey that the executive and management team at Biota Biosciences take full responsibility for these observations and understand the gravity of the risk to consumers by posting these unapproved claims and intended use on our website.”
Products subject to the recall include formulations of Cannabidiol (CBD) Complex, Curcumin Complex, and Cannabidiol + Curcumin. “All customers who received this product will have the choice to keep any remaining product or receive a full refund for returning unused products,” the firm said.
Since receiving FDA’s warning letter, the company says has pulled all the products, provided the agency with a “root cause and corrective action plan” and launched a voluntary recall of the vials.
According to the original warning letter, the CBD products meet the definition of a drug subject to FDA regulation because “they are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, and/or intended to affect the structure or any function of the body,” the letter continues.
FDA identified several examples of medical claims Biota Biosciences made about their CBD vials in advertising:
“Fighting the opioid epidemic… BIOTA Biosciences produces and distributes effective all-natural alternatives with no side-effects. Join the growing ranks of pain, oncology, psychiatry, naturopathy healthcare professionals utilizing BIOTA Sterile CBD Vials.”
“VISION: OPIOID-FREE FUTURE… Our goal is to supply the world with pharmaceutical grade, all natural products containing cannabidiol and other natural compounds. We believe strongly that pharmaceutical grade hemp oil will drastically reduce the need for opioid-based pain relief and eliminate the global opioid epidemic by providing a safe and natural alternative.”
“Instant relief for patients that are symptomatic of inflammatory auto-immune diseases”
While the products lack directions for use, the company has claimed that they bypass liver absorption and deliver CBD “directly into your bloodstream.”
Further, FDA stressed that even if the labels did contain usage information, they would still be in violation.
“New drugs may not be legally introduced or delivered for introduction into interstate commerce without prior approval from the FDA,” the letter states. “FDA approves a new drug on the basis of scientific data and information demonstrating that the drug is safe and effective.”
The injectable CBD vials “are offered for conditions that are not amenable to self-diagnosis and treatment by individuals who are not medical practitioners; therefore, adequate directions for use cannot be written so that a layperson can use these drugs safely for their intended purposes.”
“The violations cited in this letter are not intended to be an all-inclusive statement of violations that exist in connection with your marketed products. You are responsible for investigating and determining the causes of the violations identified above and for preventing their recurrence or the occurrence of other violations. According to your website, you manufacture many other types of CBD containing products. It is your responsibility to ensure that your firm complies with all requirements of federal law, including FDA regulations.”
FDA gave Biota Biosciences 15 days within the receipt of the letter to notify them about corrective steps they’ve taken. Failure to resolve the issues could have resulted in “legal action without further notice, including, without limitation, seizure and injunction.”
In its public statement, Biota Biosciences said that so far “no adverse or serious adverse events have been reported in relation to these products.” FDA is urging consumers may have such experiences to report them to its MedWatch Adverse Event Reporting program.
This is one of the latest statements FDA has made about CBD companies that are not meeting its standards.
Earlier this week, the agency publicized a voluntary recall of another CBD product from a different company, notifying consumers about potentially high levels of lead in a batch of tinctures.
FDA has said that it is currently targeting companies that make especially outlandish and unsanctioned claims about the therapeutic potential of their cannabis products.
For example, it sent a warning letter to a CBD company owned by a former NFL player after advertisements it displayed suggested its products could treat and prevent a coronavirus infection.
FDA has previously issued warnings to other CBD companies that have made unsubstantiated claims about the therapeutic potential of their products.
Although the agency does not currently approve of CBD as a food item or dietary supplement, it is in the process of developing regulations that may allow for such marketing.
Photo courtesy of Flickr/Marco Verch.
FDA Notifies Public About Recall Of CBD Product That Tested High For Lead
The Food and Drug Administration (FDA) is publicizing a voluntary recall of a CBD product, notifying consumers about potentially high levels of lead in a batch of tinctures that were tested by the Florida Department of Agriculture and Consumer Services.
The federal agency reported on Friday that Summitt Labs, which produces a wide range of hemp-derived cannabidiol products, voluntarily pulled a batch of its Kore Organic watermelon tincture after the state agriculture department conducted a test on a random sample and found high levels of lead, which when ingested can cause various symptoms such as pain, nausea and kidney damage.
The company conducted its own test through an accredited, independent lab that found the lead levels in an acceptable range under state law. But, because the Florida officials found excess lead levels in the sample they tested, Summitt quickly moved to get the batch off of shelves, FDA said. Retailers that carry the product have been notified by phone and email.
— U.S. FDA Recalls (@FDArecalls) May 15, 2020
“To this date, Summitt Labs has not had a call, complaint or report of any adverse effect from the use of this product,” FDA said.
While the federal agency was not involved in the testing, it has a policy of posting companies’ announcements about recalls as a public service. This one in particular is interesting given that FDA does not currently approve of CBD as a food item or dietary supplement. However, it is in the process of developing regulations that may allow for such marketing.
“Summitt Labs is an inspected and licensed facility under the Florida Department of Food and Agriculture and Consumer Services to produce products containing CBD but the Federal Food and Drug Administration does not consider CBD to be a legal drug or dietary supplement,” FDA said in its notice.
The agency also invited consumers who’ve used the recalled products who are experiencing adverse side effects to submit information through FDA’s MedWatch Adverse Event Reporting program.
CBD might not be recognized as an approved food item or dietary supplement by FDA just yet, but the agency is still monitoring the market for bad actors. It’s said that it is currently targeting companies that make especially outlandish and unsanctioned claims about the therapeutic potential of their cannabis products.
To that end, FDA sent a warning letter to a CBD company owned by a former NFL player after advertisements it displayed suggested its products could treat and prevent a coronavirus infection.
FDA has previously issued warnings to other CBD companies that have made unsubstantiated claims about the therapeutic potential of their products.
Photo by Kimzy Nanney.