22 Jan House Bill 2546 Could Prove to be another Challenge in the Offing for the Cannabis Industry
A Group of lawmakers from the state of Washington put forward a proposal namely House Bill 2546, which calls for limiting THC levels to no more than 10%, owing to concerns about a possible link between Cannabis and psychosis, prompting them to seek the reduction in the allowed potency of all non-medical concentrates presently being sold in the market.
The move has met with wide scale criticism with concerns that it will drive genuine consumers into the illegal market, which has already claimed the lives of nearly 57 people, who were using illegal market vape cartridges that contained Vitamin E oil. The move will pose a serious problem for majority of the vape cartridges and cannabis-concentrate based products in the market that have a license from the state in which they operate. The bill though aimed at improving public health, will likely drive the majority of legal consumers of cannabis into the illegal market, especially those who need cannabis for medicinal purposes.
Critics point to the fact that though there is research pointing to a possible link between psychosis and cannabis usage, there is no solid scientific evidence or research that is substantial enough to establish a definite link between the two. Further research and studies need to be undertaken to understand the link between the two, but a knee-jerk reaction may cause more harm than good.
Desperate Times Call for Desperate Measures – The Rising Vaping Epidemic
The move is designed to prevent the repeat of the Vaping Crisis, which caused wide spread panic and concern. Vaping refers to the use of e-cigarettes products that use a heated liquid to create an aerosol, which is then inhaled by users and reaches the lungs. The liquids usually consist of nicotine, THC, CBD, moisture retaining humectants such as propylene glycol and other additives.
The Food and Drug Administration of America (FDA) had initiated a criminal investigation into the supply chain of Cannabis, to tackle the vaping “epidemic”, which has led to at least 530 people taking ill and 8 succumbing to Lung Injury related to the use of Vaping or Electronic Cigarettes. Besides Vaping Devices, the focus of the investigation was specifically on e-cigarettes, e-hookahs, and electronic nicotine delivery systems.
According to the information provided by Centers for Disease Control and Prevention, CDC along with FDA, state and local health departments and other public health partners launched a study to understand the cause of a Pan-America Outbreak of lung injuries associated with e-cigarette products. There were at least 530 reported cases of injury from 38 states and 1 U.S. territory (Virgin Islands) along with 8 deaths.
Marijuana – A burgeoning billion dollar industry
The Global legal marijuana market is likely to reach over USD 66.3 billion by the end of 2025, as per a report by Grand View Research, Inc, growing at a CAGR of 23.9%. There is a growing acceptance of the curative effects of cannabis, with some countries such as Canada and certain states of U.S legalizing the use of Marijuana for medical and recreational use. Research has time and again shown that cannabinoids (CBD), extracted from the cannabis plant, have varied medical uses with minimal side effects, making it a sought after alternative to traditional pharmaceutical options.
The U.S, where the use of cannabis has only been legalized in 33 states for medical use and 11 states for recreational use, is one of the largest untapped markets for Marijuana, with an estimated value of over USD 11.9 billion in 2018, which is likely to grow at a CAGR of 24.1% from 2019 to 2025.
Currently 33 states in the U.S along with Washington, D.C. have legalized medical marijuana while 10 states (plus D.C.) permit recreational cannabis. 2018 was a great year for CDB industry, not only was the Farm Bill passed that allowed for the sale of hemp and hemp-based cannabidiol products, but the FDA also approved its very first cannabis-derived drug Epidiolex for treatment of seizures.
The call for reform for legalizing marijuana at the federal level is gaining momentum with research proving time and again the many benefits of cannabinoids in treatment of various physical and neurological conditions. There is a growing acceptance of cannabis as pointed out by a survey by Gallup in October 2018, which saw two out of three adults now favor legalizing weed nationally.
Cannabis A Potential Key to Unmet Medical Needs
Medical marijuana was legalized by Canada in the year 2001, making it easier for about 330,758 Canadians including those suffering from cancer to get it through licensed producers. According to the 2017 Canadian Cannabis Survey (CCS), the medicinal and non-medicinal consumers of cannabis spent about $5.7 billion and recreational users spent close to $75 a month on marijuana and related products.
Research has time and again shown that cannabinoids (CBD) extracted from the cannabis plant has varied medical uses with minimal side effects making it a sought after alternative to traditional pharmaceutical options. All the counter-arguments that the critics of cannabis put forth have been proven unfounded in studies and research conducted by credible private and government-owned organizations.
Is CBD the Culprit?
The Cannabis plant has an estimated 113 different compounds out of which THC and CBD are the two main constituents. These affect the receptors in the brain and alter an individual’s physical and mental state. THC is mainly responsible for the psychoactive effects or the feeling of “high” caused by the use of cannabis. It causes effects such as a feeling of elation, hallucinations, appetite changes, lowered anxiety and inhibitions. According to data from the Addiction Centre, the THC content of marijuana has gone up by almost 300 percent since the 1960s, which has far-reaching implications on intoxication related accidents and addiction. Over 2.3 million new users use marijuana daily in the U.S alone.
On the other hand, the most important attribute of CBD that sets it apart from other cannabinoid compounds besides being non-psychoactive, is that it is non- addictive, is well tolerated even in very high doses and most importantly has minimal side effects.
A research conducted to look at the role of cannabidiol in reducing cigarette consumption, showed promising results. Smokers, who were given inhalers containing CBD and asked to smoke them when craving for a cigarette, reported a 40% reduction in smoking over the course of the week as compared to smokers who were given a placebo. The effect was also noticed on subsequent follow-up.
One major concern for a person using CBD for the first time is whether the quality and potency of the product being sold is true to its claim. A study that was conducted on 84 CBD based products that were purchased online from 31 companies reveals some startling information. The products were sent to a third party independent lab for blind testing, and out of the total sample, 26% had less CBD than advertised on the label (Over-labeled) and 42% had more CBD than advertised (Under-labeled). Only 31% of the products had accurately reported the CBD content. This shows the need for a more stringent regulatory framework for monitoring and testing cannabis based medicinal products.
There are mainly three ways in which CBD oil can be extracted, the first are Low-priced methods of extraction which involve the use of toxic solvent like propane and butane which are extremely dangerous for health, the second is the Ethanol-based extraction, which is considered safe and reliable as it removes toxins from the plant and gives the highest yield. The third is the Supercritical CO2-based extractions, which yields the purest form of CBD oil and is the most advanced form of extraction, which means you get the highest quality CBD product.
Additionally, the quality of CBD is also directly dependant on the quality of hemp being harvested. Hemp is known as a “hyper accumulator”, it essentially means that it absorbs everything in its surrounding and from the soil in which it is grown. If the soil is rich in pesticides or herbicides, mercury or lead, then it can lead to the oils being contaminated with all the above.
Ideally to derive the full benefit it is imperative to choose a product that is full spectrum or made from the whole cannabis plant to maximize the “entourage” effect and not just CBD isolates. Third-party lab testing report goes a long way to show that a company has nothing to hide and is committed to providing quality products. Most companies which make dubious claims do not have reports to back up their tall claims. Before deciding on a product, ask for the lab report to make an informed decision.
Is Lowering Potency Counterproductive?
The cannabis industry is still evolving and is facing numerous issues ranging from regulatory uncertainties, negative perception, and illegal market to name a few. The vaping crisis has already made a significant impact on the players in the industry, affecting their market share and revenues. According to a report by the New York Times, the ban of flavored e-cigarettes will have an adverse effect on the $2.6 billion industry consisting of roughly 20,000 vape and smoke shops, including JUUL labs. Flavored products account for over 85 percent of domestic sales for the company, as per a Company official. The Company has invested in an army of lobbyists in Washington and state capitals across the country to fight the proposed ban and may push for exemption of at least mint and menthol flavors.
There is no doubt that this highly lucrative industry invites all sort of unscrupulous entities to make a killing by selling the produce illegally to adults and youth alike to make a fast buck. The call to legalize cannabis was partly to check the profits these unscrupulous elements make at the cost of public health.
The answer to these question would be the Legalization of marijuana, which offers multi-fold advantages, such as providing a safe access to quality products devoid of contamination at competitive prices, stringent laws to tackle violation of the legally accepted limits for purchase, possession and sharing and making it inaccessible to youth by ironclad laws that can attract hefty fines and imprisonment.
The legalization of cannabis in Canada and now Mexico, is the much-needed impetus that the industry here needed, and hopefully will make way for a pragmatic approach to how US deals with cannabis now.
The U.S House of Representatives passed a landmark legislation namely Secure And Fair Enforcement (SAFE) Banking Act (H.R 1595), which will provide access to banking and financial services to the cannabis industry, in spite of Marijuana still being a schedule A illegal substance under federal law.
However the move to limit the potency may give rise to issues such as dilution of cannabis concentrates, which typically have 40% to 70% THC, with some strains even having 100 % THC, resulting in a far inferior product that does not serve its intended purpose. Another concern will be the lack of control over products in the illegal market, which will now become the resort for customers looking for high-potency cannabis. There could also be cases of home extraction fires, with people resorting to home lab production of concentrate.
The move has certainly players in the cannabis market on the tenterhooks, with customers and companies watching the progress of the bill with bated breath.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Click here to please visit our detailed disclosure