Featured in: BUSINESS DAY 03 MAY 2022
Misplaced regulations and red tape hamper the local commercial value chain
Recently the New Zealand government announced that it had entered into a $32.2m joint venture project with the country’s largest medicinal cannabis grower, Puro, to fast-track the establishment of an organic medical cannabis industry in the country.
The project will see the government contributing $13m to help Puro develop unique cultivars and seed stock and, most importantly, a production handbook that will serve as a blueprint for the wider industry. The overall objective is to develop a value chain that will provide domestically sourced medicinal cannabis to local customers as well as facilitate exports to global markets around the world. This is clearly a major boon for the cannabis industry in New Zealand, where medicinal cannabis was legalised in 2017. Interestingly, cannabis for personal recreational use is still illegal there.
In SA we have the opposite situation. The private cultivation, possession and use of cannabis by an adult for personal, recreational use is no longer a criminal offence. However, there are a number of restrictive and misplaced regulations in place that are hobbling the local commercial cannabis value chain, including the manufacture of cannabis products and their sale locally and overseas. This is where billions of rand in revenue and thousands of new jobs could be created.
The department of agriculture, land reform & rural development estimates that the local cannabis market could be worth R28bn and create 10,000-25,000 jobs across the value chain over the next few years — if it is unlocked. With the recent Stats SA quarterly labour force survey for the fourth quarter of 2021 revealing that the official unemployment rate now stands at 35.5% (the highest since the start of the survey in 2008) it is critical that the government and the local cannabis industry work together to create an enabling environment for job creation and growth across the sector, in the same vein as the New Zealand government’s partnership with Puro.
However, to achieve this, the government needs to tackle the red tape that is impeding the sector in SA, in particular the medicinal cannabis sector. Perhaps most restrictive are the CBD dosage regulations contained in the Medicines Act. On May 22 2020, the health minister, acting on the recommendation of the SA Health Products Regulatory Authority, decided to change these regulations.
While CBD is generally classified as a schedule 4 substance, the following preparations of CBD substances were reclassified as schedule 0 substances:
Cannabidiol “in complementary medicines containing no more than 600mg cannabidiol per sales pack, providing a maximum daily dose of 20mg of cannabidiol, and making a general health enhancement, health maintenance or relief of minor symptoms [low-risk] claim”.
Cannabidiol “processed products made from cannabis raw plant material intended for ingestion containing 0.0075% or less of cannabidiol where only the naturally occurring quantity of cannabinoids found in the source material are contained in the product”.
While on the face of it this would appear to have been a progressive move by the government, the 20mg maximum daily dose restriction is illogical, has no rational or scientific basis, and is out of line with international regulations. Naturally occurring CBD is safe and well tolerated in humans (and animals) and is not associated with any negative public health effects, with oral doses of up to 800mg a day having been proven to be safe.
This was echoed in a World Health Organization (WHO) report that found no adverse health outcomes and several medical applications for CBD. The report states that CBD does not induce physical dependence and is “not associated with abuse potential”. It further notes that “unlike THC (the main psychoactive compound in cannabis), people are not getting high off of CBD, either”. The report concludes that “there is no evidence of recreational use of CBD or any public health related problems associated with the use of pure CBD. In fact, evidence suggests that CBD mitigates the effects of THC (whether joyous or panicky).”
The WHO has determined that CBD has been demonstrated as an effective treatment for epilepsy, and there is preliminary evidence that it can be useful for treating a number of other serious conditions, including cancer, psychosis, Alzheimer’s disease and Parkinson’s disease. It is for these reasons that countries across the world have approved much higher maximum daily dosage thresholds. For example, the Australian Therapeutic Goods Administration has approved low-dose CBD containing products up to a maximum of 150mg a day.
However, despite the SA public health system being under severe pressure, with many citizens struggling to access treatment and medication, they do not have the alternative option of access to over-the-counter products that contain enough CBD to be of benefit to their health. This heavy-handed restrictive approach is also being followed by the government when it comes to foodstuffs and cosmetics containing cannabis, another missed opportunity for the local industry and the SA economy.
We therefore welcome recent announcements by government leaders on unlocking the vast potential of the SA cannabis industry. This includes President Cyril Ramaphosa stating during his annual state of the nation address that the government will address the policy and regulatory framework for industrial hemp, as well as KwaZulu-Natal premier Sihle Zikalala announcing that a provincial government cannabis committee is to be established to develop the sector in the province.
We hope SA’s cannabis master plan, published in 2021, will create more policy certainty and an environment that is conducive for the development and growth of the local cannabis industry over the longer term. However, the government could take some immediate steps to increase the competitiveness of the industry, in particular the medicinal cannabis sector, over the short term, while the longer-term policy framework is finalised and implemented.
Critically, the government should amend the Medicines Act to increase the 20mg maximum daily dose threshold of CBD to 150mg, for it to be classified as a schedule 0 substance. There also needs to be far more clarity on the disbursement and regulation of medical cannabis, including the opening of licensed dispensaries for medical cannabis products as well as the cutting of red tape that is preventing the movement of cannabis products within the country.
Goodleaf, SA’s first commercial cannabis operation, is committed to contributing towards the growth of the local cannabis industry and has already invested significantly in the sector, creating more than 100 jobs. With an enabling environment, the company plans to invest an additional R250m into the local industry over the next few years, which will create a further 150 jobs across the cannabis value chain.
We are also committed to working with the government to ensure an inclusive and responsible cannabis medicinal and recreational market, and have several proposals in this regard. For example, to ensure the inclusion, sustainability and profitability of small-scale cannabis growers in the Eastern Cape and KwaZulu-Natal, there should be a clause in the regulatory framework that stipulates that a percentage of inputs for the extract market are purchased from rural growers.
As a country, we have what it takes to make SA’s cannabis sector flourish. If the government and private sector work together to create a progressive and enabling policy and regulatory framework, nothing should hold us back.
Schewitz is founder and CEO of Cape Town wellness and lifestyle brand Goodleaf, which owns Highlands Investments, the largest exporter of medical cannabis in Africa.
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Mars Wrigley Wins Trademark Case Against Companies Selling Cannabinoids Under the Name “Skittles”
Mars Canada Inc., a leading manufacturer of candy like M&M’S®, SNICKERS®, ORBIT®, EXTRA®, and Skittles®, and Mars Wrigley recently settled a dispute over the use of the Skittles trademark on illicit cannabis products. Federal Judge Patrick Gleeson ordered three online marijuana merchants to “deliver up and destroy all infringing items and packaging” on August 12 in addition to paying different fines for violating Mars’ trademark.
In the motion, Gleeson stated, “I also find that using appropriated trademarks that are obviously and obviously attractive to children in order to advertise and offer for sale a potentially dangerous product represents a marked departure from ordinary standards of decent behavior that deserves to be denounced and deterred.”
“I have given serious consideration to the potential injury to consumers who would mistakenly drink the Defendants’ Infringing Product thinking it to be a genuine SKITTLES product as well as to the Plaintiff. It is even more important to condemn the Defendants’ actions because SKITTLES are a sweet treat that youngsters find appealing, Gleeson continued.
Mars initially filed the case in May 2021, alleging trademark infringement by the unlawful merchants. The business issued a press release saying, “Mars Wrigley strongly condemns the exploitation of popular candy brands in the marketing and sale of THC products, which is profoundly deceptive and irresponsible.” “The usage of Mars Wrigley’s brands in this way is illegal, improper, and it must end, especially to prevent children from accidentally eating these illegal THC products,” the statement reads.
The business particularly highlighted items being sold illegally on e-commerce sites in Canada and the United States under the names “Medicated Skittles,” “Starburst Gummies,” and “Life Savers Medicated Gummies.” These items “represent a substantial hazard to the public since anyone, children and adults alike, might readily mistake the infringing cannabis-infused products for Wrigley’s iconic and beloved candies and mistakenly swallow,” according to a complaint submitted in Riverside, California, at the time.
The National Post claims that Mars employed private investigators to buy imitation goods that violated the company’s trademarks.
Due to the frequent use of “Gorilla Glue” in strain names, the Ohio-based glue manufacturer that makes Gorilla Glue sued GG Strains in August 2017. By October, a settlement had been reached, stipulating that GG1, GG4, GG5, and other adhesives would take the place of Gorilla Glue #1, #4, and #5. Among other conditions, the cultivator’s website domain would be transferred to the Gorilla Glue firm ownership by January 2020.
Ross Johnson, co-founder of GG Strains and Gorilla Glue, was optimistic despite the fact that it was a significant setback. Johnson proclaimed, “We’re going to survive and triumph over it.” “Was there a setback? It is most obviously a setback. However, everything is now behind us, which enables us to advance. Sadly, according to the Cannabis Business Times, Johnson passed away in 2019 and his co-founder Don Peabody (also known as Joesy Whales) in 2020.
Similar legal actions have also been taken in relation to other well-known trademarked brands. The business sued marijuana businesses infringing on the items bearing the Hershey’s Chocolate brand in February 2018. UPS (United Parcel Service) filed a lawsuit in February 2019 against a set of delivery companies known as United Pot Smokers, UPS420, and THCPlant for using deceptive brand identification. Later in July 2019, the creator of the confectionery Sour Patch Kids took legal action against “Stoney Patch,” an illegal cannabis consumable.
Cannabis Events Just Might Save Atlantic City
Atlantic City, New Jersey could return to its original glory as a tourist destination with the boom of the Green Rush and the cannabis business events that follow. A city once dominated by the gambling industry is now facing its unknown future, and local experts think cannabis business-to-business events could solve that problem.
The familiar “glitter and sleaze” of Atlantic City’s boardwalk is known to locals, but the city has been on the decline for decades. Donald Trump’s Taj Mahal casino and hotel closed for good on October 10, 2016, and things haven’t gotten any easier for the gambling industry since then. Revel Casino Hotel followed, closing doors and being sold as well.
Things seemed to get worse in 2019, and despite an upturn in casino industry revenue in 2021, mostly due to a tax break, the city is still miles away from where it used to be. In addition, Atlantic City Tropicana’s workers are picketing for better pay and to unionize as the casino’s future remains uncertain.
However, the economic effects of the rollout of the cannabis market could be the answer to the city’s long-term financial woes. During the first month of adult-use cannabis sales in New Jersey, the state brought home $24 million in tax revenue.
Skift Meetings, focused on event professionals, released a recent report about the true potential Atlantic City offers for the Green Rush—putting more than a bandaid on the city’s economic fallout.
The most obvious comparison is the boom of business events in Las Vegas, such as MJBizCon or CHAMPS Trade Show, drawing tens of thousands of tourists looking for networking opportunities and more. Atlantic City is home to 17,029 hotel rooms—a high ratio of rooms compared to other cities of its size as it is designed for tourism. Atlantic City could house large-scale events of the same nature.
Stu Zakim, president of Bridge Strategic Communications and a member of the Marijuana Business Association said “[Atlantic City] can be a wildly successful destination to host cannabis conventions,” Zakim told Skift Meetings.
Several others agreed that the new cannabis market in New Jersey is especially ideal for a city like Atlantic City. That’s especially true for cannabis conventions that need large facilities.
“The legalization of cannabis in the State of New Jersey opened a new vertical market for meetings and conventions in Atlantic City. We see cannabis as a growing industry, and it will have a significant increase on the overall economic impact of the destination,” said Meet AC’s President and CEO, Larry Sieg. Meet AC focuses on convention development in Atlantic City.
And the idea is nothing new. Then-Democratic Assemblyman Reed Gusciora—who is now Mayor of Trenton—called for Atlantic City’s enormous potential for the cannabis boom in 2016.
Atlantic City reached its peak long ago in the 1930s as a “wet city,” and since then, has succumbed to rapid decline, and casinos are failing. Its population nosedived to half the size when the city was booming.
The 3rd Annual New Jersey Cannabis Convention (NECANN) is being held September 9-10 at the Atlantic City Convention Center.
The potential has been building up for over a year. On February 22, 2021 New Jersey became the fourteenth state to legalize adult-use cannabis.
“The cannabis market in Atlantic City specifically is huge, untapped, and brimming with potential,” NECANN writes. “With only one major cannabis dispensary in the city. We are beyond excited to see the potential of Atlantic City’s cannabis community become a reality. NECANN prides itself on bringing personalized cannabis expos to fit the local communities and their needs.”
Check local listings for more events which are sure to follow.
KZN Start-Up Tri-Medi Canna Clinches UK Partner to Set Up Cannabis Export Facility in SA
Apollon: SA on shopping list after Jamaica
Listed UK pharmaceutical company Apollon Formularies has taken a 49% stake in a joint venture with KwaZulu-Natal cannabis start-up, Tri-Medi Canna (TMC). TMC CEO Bandile says the new company would cultivate, process and distribute cannabis-based medicines through a licensing agreement with Apollon, which provides primary and secondary markets for equity and debt products
Apollan, which listed on the UK’s Aquis Stock Exchange last year, has a licence in Jamaica to cultivate, research, process and sell medical cannabis therapeutic cannabis products for various illnesses including prostate and breast cancer. Apollon will earn royalties for patent formulations and any new drug discovery will be under the joint partnership.
According to Businesscann release on 2 March 2022, the deal highlights are:
• “Apollon will receive a gross royalty on sales for all Apollon products sold within South Africa before extending its commercial reach to the wider SADC region under a renewable, mutually exclusive license agreement, the initial term of which is 12 months”;
• “Tri-Medi Canna will become a shareholder in Apollon via share subscription totalling £300,000 over two tranches, the first of which will be for £150,000 at 2.5p per share”.
Mkhize said that the new company would build an EU Good Manufacturing Processes (EU-GMP) facility and would work with emerging farmers and provide training for communities in KZN.
Focus will be on medical cannabis
He said Tri-Medi Canna was established to focus on medical cannabis, a booming industry that the company said is forecast to be worth up to $7.1bn (R113.7bn) in Africa by next year, with SA potentially accounting for 70% of that.
Stene Jacobs, COO of Apollon Formularies for Europe and Africa, said Apollon had been seeking opportunities to expand its operations internationally so it can make its proprietary medical cannabis formulations for various cancer conditions available to a wider patient base.
He said SA was the first large foreign jurisdiction after Jamaica where Apollon was expanding and it envisaged the local market as a springboard for entry into the rest of southern Africa.
“There is an appetite for what we do. We are already in discussions in Angola,” he said.
Jacobs said the joint venture would include skills transfer and would partner with the University of KwaZulu-Natal and University of Johannesburg to help develop new products.
BusinessDay Live quoted Jacobs on 19 June 2022 as saying the new JV would double the number of patented cannabis formulations owned by Apollon.
Deal will double Apollon’s patented formulations
“We spent the last nine years creating formulations. We have four international patents, and will have four more in the next few months,” he said.
In Jamaica it has its own dispensary and treatment centre, which also caters for patients from the UK and US, said Jacobs. He sees SA providing a similar opportunity for medical tourism in the future.
Jacobs said SA should be an epicentre of growing cannabis, given the favourable climate. “South Africa has the opportunity to build on its reputation as the regional best-in-class operator and to showcase its already successful cultivation and plant genetics abilities”.
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