Sign Banking PDF Illinois Online

Industry sign banking illinois pdf online

uh hello good afternoon um welcome to extracting the raw potential of the cannabis industry um hello um i'm steve levine a partner executive board member and leader of hutch blackwell's national cannabis practice uh before we begin i'd just like to cover a few housekeeping items at the bottom of your audience console there are a few multiple application icons for your use during the program today if you have any questions during the webcast please submit via the question box we will try to answer all questions during the webcast today but if a fuller answer is needed or if we run out of time it will be answered later via email a pdf of the presentation is also available in the resources folder this program has been approved for continuing legal education hours to report your hours click on the ceu icon at the bottom of the screen a certificate of attendance including course numbers will be emailed to you tomorrow along with a recording of the webcast for watching and sharing toward the end of the program be sure to complete our short survey we use your feedback to plan future programs that are applicable to your business needs that's it for all the house housekeeping items let's go ahead and get started with the program um today uh joining me is alyssa samuel and stacy case alyssa is also an attorney in our house blackwell's cannabis team and focuses her practice on corporate transactions and regulatory advice she began cannabis work when the industry was very small when elisa first began to assist growers and providers colorado was just beginning to navigate the regulation of canada she now helps clients of all sizes navigate the complex and ever-changing cannabis industry stacey is the chief executive officer of planetary which are natural usda organic cbda products extracted only with water after witnessing abuse of opiates in chronic pain firsthand after 15 years in the medical field stacey made it her mission and passion to find a healthier alternative and bring the highest quality product to market um i'll first start off that this is a very uh challenging topic very much talked about in the industry what we're really trying to accomplish today is a discussion of the interplay between the industrial hemp and marijuana industries the benefits of introduction of hemp derived cannabinoids and industrial hemp products into the regulated marijuana market as well as the distinctions in how jurisdictions are regulating uh this entire assimilation the discussion will touch on the the varying work of entrepreneurs like stacy in the market who are rapidly advancing our knowledge surrounding the isolation and use of cannabinoids and the corresponding regulatory developments um so i'll go ahead and uh start off with um trying to give a a general overlay of the federal uh farm bill and how it relates specifically to extracted cannabinoids um and then we will move on to the da's recent interpretation and then talking about both state-specific regulation of cbd and other cannabinoids and then ultimately how these cannabinoids can be introduced into a regulated marijuana market um december 28th um sorry december 20th 2018 um our former president signed the 2018 farm bill into law this farm bill replaced the agriculture improvement act of 2014 which will expire on january 1st of 2022 it's important to note that the 2018 farm bill in conjunction with the continuing appropriations act provided that states and institutions of higher learning can continue under the authorities of the agriculture act of 2014 until 2022 um due to this extension many states have actually decided to remain under the 2014 farm bill um and have rescinded previous previously approved plans by the usda the 2018 farm bill does incorporate bipartisan support that fully legalize the production of hemp and we'll get into really what that definition is and how that the implications of that different definition have impacted extracted cannabinoids um you know really prior to the 2018 farm bill um the uh the federal law regarding industrial hemp was a patchwork of statutes regulations court decisions and really hemp remained prohibited under csa's definition of marijuana as such the domestic production and commercialization of that crop was was generally prohibited but the 2018 farm bill really excluded hemp from the definition of marijuana under the controlled substances act and declared industrial hemp is no longer considered a schedule one substance um specifically as a definition here is on this slide you can see that that industrial hemp is defined as cannabis a t val with any part of the plant including the seeds thereof and all derivatives extracts cannabinoids which is important to note isomers acid salts and salts of isomers whether growing or not with a delta nine uh thc concentration of not more than point three percent uh on a dry weight basis um so functionally what does that mean industrial hemp containing less than point three percent thc on a dry rate basis has functionally been removed from the csa really clearing the path for industrial hemp plants to be grown domestically as well as imported compliantly with all applicable laws 2018 farm bill decriminalized production and use of hemp and hemp derived products such as seeds oil cbd oil fibers papers etc there were some interim rules that were posed by the usda we're not going to cover those here really because we now have final rules but also um the interim rules were really released with little fanfare uh well i'm not going to go into the rules they received well over uh close to 6 000 comments for how hot hemp is destroyed and all the way to de-certified labs the final rule came out just recently in january 15th of 2021 these interim rules the interim final rules rather i've really clarified some of the concerns but there's still a lot of desire out there for what the usda can do from a regulation perspective uh just to give some flavor of what's in those final rules uh these harvest windows have been expanded for collecting samples for testing for purposes of testing there's better sampling flexibility with respect to when and how samples are taken depending whether from the stem the terminal bud or the central cola uh testing um despite the usda's acknowledgement that there's not enough dea registered hemp testing facilities uh the final rule does require that these testing facilities become dea register they're just giving a little bit more time for those uh testing facilities to be able to uh handle um the the actual dea registration the final rules also expanded uh the need the no longer needing the use of a dea registered reverse distributor the final rule also incorporates additional disposal methods including options for um dealing with non-compliant plants or hot or hot hemp this has really sort of helped in the ways for farmers to remediate non-compliant crops in order to minimize financial risks associated with the loss of investment in their harvest um lastly uh increased negligence through total negligence threshold was increased from 0.5 to 1 percent of thc this really allows for a little bit more flexibility and not such a stringent threshold to allow producers that potentially grow something that's over 0.3 thc to have a little bit more flexibility uh to not necessarily be deemed to have a negligent violation for those out there that are growing industrial hemp that's it's still a lot of science that needs to come there is a lot of challenges with respect to um making sure that the genetics are actually what people think they are and so i think this has given some flexibility there for for farmers so what what does the farm bill do um you know as we talked about it does remove hem from the list of schedule one as under the controlled substances act um but there's still a lot of clarity and regulation that um is really not um flushed out enough uh with respect to the farm bill it does provide that states and local uh government can provide additional regulatory um provisions and and restrictions um there are still dangers with respect to interstate commerce and that multiple states have different rules and and thresholds that are allowed in those particular states related to thc thresholds and the like and really doesn't remove any of the regulatory powers of other agencies the dea fda ftc we're not going to get into what's going on in the fda or ftc for for purposes of this webinar my colleague alissa will talk a little bit about the most recent guidance that came out from the dea and how that applies to what is going on with respect to attracted cannabinoids what i think is important to also understand is that you know we have this federal overlay but there is still not necessarily [Music] strict compliance with all of our states related to the 2018 farm bill and so i think the best way to sort of illustrate this non-compliance is to show sort of green red and yellow the green states are those where the usda's has approved a state plan where hemp can be grown legally in that state these farmers can grow sell commercially and that's reflected in a majority of the states that you see here on this map the the yellow states are states that have submitted usda plans but have yet to receive approval as such um really any farming that's going on in those states is technically not in compliance with the 2018 farm bill and then we all obviously have a lot of these red states that have either chosen not to submit a plan um or have otherwise decided to stay under the 2014 farm bill for purposes of the 2021 harvest cycle and so all of the things we're going to be talking about we're you know it's really challenging to to get into every single state's laws regarding uh the cultivation and production of industrial hemp um but i think it's very important for us to acknowledge that uh there's a lot more to be coming with respect to state law and also the federal overlay of how um hemp is is processed and developed um you know with that i'm going to turn it over to uh alyssa samuel to talk a little bit about the more recent guidance that we received from uh the dea in 2020 which was met with a variety of different fanfare from uh all out outlawing varying uh status of of the industrial head business um and i'll let her take it from here thanks so much thank you steve um so as of right now one of the biggest threats to the cbd industry as we know it function is the interim rules that the u.s drug enforcement agency the dea promulgated in august of 2020 and the rule was in response to the 2018 farm bill and in anticipation of the final rules that we just received in january pursuant to that rule the dea stated that the definition of hemp does not automatically exempt any product derived from a hemp plant regardless of the delta 9 thc content of the derivative in order to meet the definition of hemp and thus qualify for the exemption from schedule 1 the derivative must not exceed the 0.3 delta 9 thc limit so what that effectively means for the cbd industry is that well you can process hemp depending on how you process hemp into cbd potentially any of the intermediary products that you may create in that process could potentially violate the controlled substances act and you could be subject to usda enforcement following the release of this rule there were several lawsuits filed and this these interim rules have received to date uh record numbers of comments for how this could potentially be implemented we do not have final rules yet and it's been quite some time since since august there was some hope that the final rules for the farm bill would provide some sort of clarity with respect to this and it did not so as of right now we're closely monitoring this but this stands to be something that could really change the legality of cbd operators in the us the other way that the dea or federal law can impact what we the things that we may create out of industrial hemp is the federal analog act and the federal analog act is a part of the controlled substances act that states that a controlled substance analog shall to the extent intended for human consumption so it needs to be intended for human consumption be treated for the purposes of any federal law as a controlled substance in schedule one and then the definition provides that except as provided in sub-paragraph c the term controlled substance analog means a substance chemical structure of which is substantially similar to the chemical structure of a schedule one or schedule two controlled substance and has a stimulant depressant or hallucinogenic effect on the central nervous system substantially similar to or greater than the controlled substance or with respect to a particular person which such person represents or intends to have have that effect so what is an analog um stacy i'll turn this over to you so you can give us a chemical definition of what an analog actually is yeah so analog is a broad chemistry term that encompasses any compound being similar to another one either physically chemically or functionally and homolog which you mentioned later is the type of analog but an analog is is a broad term so we have a few different analogs within the hemp plant and i think you'll you'll get to some of those but it's it just means they're similar and they can be similar either in function or instruction and the case law that we have surrounding the analog act and this type of prosecution can be extremely bank so in the cases that we've seen in the last 20 years a lot of times there will be competing experts some may say that it's structurally similar some may say that those that it is not substantially similar to the substance um so it can really depend on a trier determining whether or not it is an analog from a chemical stance and then that's not even considering the functional stance so it also it needs to have a similar function so in creating a compound that may have a similar structure if it doesn't have a similar impact like for instance right now there's a lot of talk about thcv some people think maybe that's a weight loss drug and it may have a completely different effect than thc under this definition that would not be an analog because it has it's intended to have a completely different effect the other thing that's fair that these this case law sort of hinges on is a knowledge element so i chose sort of three some seminal cases in in this area that have continued to define the elements that would be needed for there to be a substantial risk of prosecution under this act um in 2002 united states v washam this case challenged the vagueness of the statute so the defense took the position that it's unconstitutional for you to be prosecuted for something that you were unaware that you could be violating and that this statute was unconstitutionally vague and left itself open to arbitrary enforcement the court disagreed and upheld the conviction in mcfadden versus the united states that challenge was again made it was again upheld um but the court inserted a knowledge element to it so that case was case about bath salts and the they looked at the conduct of the defendant in contrast to this the conduct of the defendant in washroom so in mcfadden the defendant was selling bath salts once he realized that the bath salts were similar to a controlled substance he stopped so the holding in that case was the gov and he his conviction was vacated the government must prove that a defendant knew that the substance with which he was dealing was a controlled substance even in prosecution even in prosecutions involving an analog so at the time he was doing it he didn't know that he was doing it and or have the intent to do it where in the united states v washing what distinguished fat case was the conduct of the defendant and that is what the government looked to the government said you clearly knew that you were violating the controlled substances act because you felt that it was appropriate to hide it deceive officials and then mark up the prices on in sort of a black market situation so your conduct very clearly showed that you had the intent to create something that had a similar effect to a controlled substance and then treat it treat it as such so the third case is a much more r cent case and in 2000 and that was decided in 2018 and this case further expanded on that knowledge element and it it basically said yes you need to have knowledge that this is a controlled substance but you do not need to have knowledge of what controlled substance it is specifically just that whatever you're creating and selling intended for human consumption similar to a schedule 1 schedule 2 substance and similar to that function as long as you know that it's similar to something that is controlled under federal law that will satisfy that that will satisfy that knowledge and and that will become important as we get into talking about certain compounds like delta eight in our next few slides so one of the most well-known um compounds is cbd and cbda and so this is really stacy's specialty she has a fantastic business and selling these products and producing these products and so we're really lucky to have her here with us today so she can tell us a little bit about how she produces cbd cbda and what the difference is between cbd and cbda as well as what the difference is between those two compounds and delta 9. so the plant actually makes cbda so the common misperception that we hear in the industry is that cbda is a minor cannabinoid or that it's unstable or i've never heard of it and the cannabis plant and we're specifically talking about on the hemp side of the industry the most prevalent cannabinoid created by the cannabis plant is bta you hear of cbd but that is something that happens after harvest so the plant has its own biochemical process cbga is kind of the mother cannabinoid that starts with and then through cbda synthesis synthase cbda is created and that's like i said the most prevalent cannabinoid in the hemp plant herself and then after harvest through either heat or through chemicals and most often both that becomes decarboxylated which means the carboxyl groups is removed the bond is broken through either heat or a protic solution like ethanol um and then the byproduct of that chemical reaction is co2 which is sort of the off-gassing that people talk about but the the two most common types of extraction on the market are co2 supercritical co2 which uses really high pressure um to concentrate the cannabinoids and other materials from the plant and then the other one is ethanol so that protic solution of ethanol is used uh the plant is so stroked in that ethanol and and from that the the cannabinoids are solubilized and come out most uh i think both of those types of extraction have basically three steps sometimes two so the first step is crude and they come out what they call a crude oil um and it is typically 50 to 60 percent cannabinoids and the balance of that is other plant materials and it's also of note that in that will come the pesticides or heavy metals or any of the other materials that may be in the plant or in the soil and whereas hemp is a fantastic remediator of soil or environmental concerns when you're concentrating on extraction those will come out in that crude oil as well and then there's a stage called distillation that refines it a little bit further and it's going to remove some of the other plant materials and have a greater concentration of cbd and by then it has decarboxylated into cbd and that'll be the most prevalent compound at that point and both of those processes heat pressure and ethanol is used because i for most and i don't know every single processor's unique details but for most co2 processors they then use ethanol to clean it up and get it to a more like refined concentrated form and then those that choose can take it all the way to an isolate the term is isolate it stands for an isolated compound so you're getting to that one molecular compound of typically cbt so with that process they're eliminating other cannabinoids that grew in the plant and they're isolating it down to just the one cbd and that is done usually through through um solvents and so the the cannabinoids are soluble in the solvents and then they're distilled down and it's typically super freezed where the the solvents are then evaporated and you're left with this refined isolated compound and again there's i'm sure nuances in each individual processor and how they do it but at a high level that's that's the processing uh for most and then we are kind of the oddball in the industry so um so my company planetary does water extraction and so we keep the cannabinoids in the raw form that they're grown in the plant so the plant has cbda and then typically thca cbga maybe cbdva or there's a few other of the a's and the a stands for acid so the the a at the end of cbda stands for acid so that's like i said the form that it's grown in the plant when we do the water extraction all of those cannabinoids come out in the ratios they were grown in the plant so a full spectrum format and it stay in their acidic form we don't use pressure or heat or solvents so none of those things are chemically changing yet so it does stay in that stable cbda format which means it's a different molecule and it has a different effect on the body and um you may not want to go much into the bioavailability and potency and the effect in the body but just know that it is a different molecule and it does have a little different effect in the body and when we look at the chemical structures here from cbda and the plant there's the carboxylation where carboxyl group is broken off and you have the cbd molecule we also have on this page the the delta nine molecules just to show you kind of the comparisons and those are different molecules melissa was going into the analog so there's there's a difference between truly the different cannabinoids like from cbda to delta9 thc and then there are the analog formats where they are changing in between ca which is more similar in structure to thc and cc you also familiar with how to produce thc a and the d carboxylase decarboxylation process that creates thc from thca could you tell us a little bit more about that so very parallel to the way i described cbda to cbd the plant produces thca so the marijuana plants and that's you know they're all the cannabis plants it's more it seems more of a legal definition but we'll say the marijuana or the caffeinated side of the industry where their thc ism is in higher levels um it is still thc a and what you're doing when you smoke a joint for example is you're heating it if you were to just eat that same bud it would not have the same effect but by heating it you're decarboxylating it into thc which is the psychoactive component so it's the delta 9 thc very specifically that causes that euphoria the high the psychoactive component for the marijuana plant and our process also keeps thc a in its in its raw natural state so our you mentioned briefly the um the interim products so we talked about crude and and distillate and those interim products through extraction are concentrated and so whereas the plant had less than 0.3 of thc as you concentrate through processing that number usually goes way up um and so that's where it does become a bit of a gray area with the law but um in our process specifically in the water extraction it stays as thca so it's not the delta 9 it stays as thca and is that because it's not heated correct and even in the absence of heat so it's not only heat so there's a time and temperature consistent model so a little heat for a long time or a lot of short amount of time can have that reaction but even with cold extraction where they're not applying heat but they are using ethanol or another protic solution that solvent does cause a decarboxylation which starts immediately and continues throughout so even if it's an ethanol extraction with cold it will over time starting immediately and gradually decarboxylate both cbda and thca so our next compound that we wanted to talk about was delta 8 thc which is gaining a lot of popularity right now stacy what exactly is delta hthc so delta 8 is a naturally occurring cannabinoid it's it's technically produced by the plant but in teeny tiny amounts so you can find it in and hemp plants just in very small amounts so then what processes are doing is is is extracting that and then finding ways to converting basically from the cvt to delta eight and then concentrating the existing delta eight in the plant so it's at a high level it's done with tooling or ptsa so very acidic solvents are used to create delta eight because it's new i think what we don't know yet is what byproducts are produced through this process if you look at the chemical structures of delta eight versus delta nine for those of you who do not have a science background i challenge you to look at this and compare the differences so not only is this an analog it's actually an isomer so the the double bond just moves positions so delta eight has it between the eighth and ninth carbon and delta nine has it between the ninth and tenth carbon so it's just the position of one of this double bond and the reason it's an isomer is just that similar shift it's actually the same chemical structure just a different orientation if you look at it on the 3d model you would see the different orientation of that bond but they do have so not only a structural analog but they're also a functional analog delta 8 has between 50 and 75 of the potency or effectiveness of delta 9 but it does cost the same essentially the same functions in the human body so it does have psychoactive properties and it's being studied for a lot of other beneficial properties but i think it's important to note how similar it is to deltamine and so when we talk about analogs obviously this is intended for human consumption but if we look at the other elements to it um it it's chemically very very similar in structure whether or not that would be enough enough for to create risk under the analog act is unclear but it is much more similar than even any of the other other substances that we've gone over today yes it has a more muted effect but it's still a very similar effect so would it necessarily be a defensible position to say well you'd have to ingest that much more of it to get the same effect is does that would that create liability under the analog act that that's also unclear um there's also the not you know there would also obviously be the knowledge element of do you have knowledge of of the of those things and that this should be controlled and and right now this is this is all particularly with delta hthc it's all very very gray and we're not really sure how the government is in various states and at the federal level is going to approach it uh yeah i would add on on the delta 8 you know there's been some shop owners that were recently arrested for selling delta eight products in texas um and you know what one thing i i got a question for you stacy on sort of the the availability of delta eight just naturally occurring delta when you say tiny amounts you know is there any way to quantify that in a simple manner of of tiny amounts you know can you make real products um that are that are derived delta thc without you know doing some other synthetic processes it's it's now a requirement for so our lab is an emerald certified lab and now as part of that qualification you have to test multiple noise potency and delta eight is one that has to be tested now so if a hemp plant has to have less than point three percent by dry weight of delta nine delta eight is point one or even less to be honest in in all of our plants i haven't seen it register as an amount so it's it's been a non-detectable amount or below the level of quantification from what we've seen i'm i'm certain that there are genetic strains that have higher levels of delta eight but it's it's less than 0.1 from everything i've seen gotcha so it i mean it seems as though at least from my perspective and again it's just my personal perspective i don't i'm not the scientist and i'm sure there are plenty of people out there that have different extractive methods it seems as though product products that have a lot of delta eight in them you know you can see them on the internet i get i get spammed with emails on a regular basis with varying products of delta eight it seems like the those products are probably um synthetically derived delta eight from cbd is probably the most likely scenario yes there they have to be they're synthetically derived so it's um one example is is diamonds so you can have a real naturally created diamond or you can have a lab lab-grown diamond they have the exact same chemical structure the difference is how one was synthetically created was naturally created so if you bought your wife a synthetic lab created diamond would she know the difference would she care i don't know that that's a personal decision but that's a kind of a similarity yeah well i think my wife would definitely know but uh i think that's a good way to think about it um so so i think we'll we'll move so we know so we've kind of covered the 2018 farm bill we have talked about some uh the the analog act we talked a little bit about synthetics right i mean i think that's a whole another conversation but i think i thought it was worthwhile to at least acknowledge that that is a potential risk when you're looking at mass producing some you know cannabinoids especially cannabinoids that are related to or analogous to a schedule one substance um but we'll leave that where that lies it seems you know i think a lot of things will be coming out over the next uh handful of months and years about what what ultimately uh people can do with that product but so now we have all this federal overlay the abilities to grow and extract cannabinoids from a federally legal substance um and now how does all this relate to uh the regulated marijuana systems and it's different shockingly this is not the same in every state alyssa and i have pulled off examples of how different regulators have viewed industrial hemp products being introduced into the regulated marijuana system and so we'll go through those um again i'll encourage everybody to the extent you have any questions feel free to throw those in the box down there and i'm definitely monitoring them and happy to try to answer some of your questions live to them that you have them um so you know in colorado uh you know while there are lots of reasons to say we're over regulated um and not sort of um you know in kind of problematic in a lot of different ways we have started the introduction of hemp products into the marijuana regulated system uh this is very recent and so this is now happening here in colorado we're on base and and really you know so long as the industrial hemp product which is a defined term under the colorado regulations which is a similar definition shockingly to the definition under the 2018 farm bill so long as those products have passed required testing that testing is set forth in the regulated marijuana rules that can be that that then that those products which include cannabinoids can be introduced into a regulated marijuana um system uh so once they're fully tested they can be brought in so what does that mean that means cbd can can come in um a cbd isolated to fortify uh certain products um and and and and other cannabinoids um what's a what is not you know what is also required um is that the colorado industrial hemp operators are also satisfying cdphe guidance um that the cbd cbd can be incorporated for food and human consumption what i'll point out which is just a nuance to all this tangled web that we have to deal with um colorado is still not a 2018 farm bill compliant state because we have not gotten our usda plan approved from a growing and testing perspective and so technically all of our industrial hemp is actually not federally legal um you know in colorado we don't care about federally illegal because we have a regulated marijuana system that nobody cares about that part either so you know not that i see that as a huge legal risk one way or the other i just think it's kind of interesting um and and i think maybe alyssa i'll ask you to kind of explain this a little bit if you don't mind um just sort of how the challenges and going back to delta eight and you know we hear a lot about delta eight and how that may or may not be a problem from introducing that into the regulated system in colorado well so steve if you introduce hemp into the regulated marijuana system and you create delta eight from amp and it is in the regulated marijuana system then that that's absolutely protected and is falls under the carve out to our criminal statutes that was created to protect the regulated marijuana system however our criminal statutes have a very broad definition of tetrahydrocannabinols which would potentially include delta eight as a synthetic synthetic cannabinoid so in colorado if you were not operating within the seed to sale regulated marijuana system and create delta eight outside of that system you would not have that same protection that our licensed operators do and potentially dependent on the federal treatment of delta eight whether or not that is considered an analog and under the state's definition if the state considers the process in which you take a a small amount of delta eight that's naturally occurring and synthesizes to the point that it's a concentrate in a product and if that's deemed synthetic then potentially that could also fall under colorado criminal statutes as well based on our on our definition um thanks alyssa um and so um we will go to the next slide and you can give us your input on illinois before we move on to illinois i wanted to have stacey talk a little bit about because stacy is a cbg processor who is certified to buy cdphe and she has a little bit of experience and she's one of the few operators do have some experience with selling into a regulated marijuana system and so i think some of our our viewers may be interested to hear what that experience was like yes when it first became legal to do so we were really excited to sell our products into the dispensaries and so we met with a group who stated they were the gateway to get into the metric system which is colorado seed to sell registered system and you need the rfid tags et cetera so we jumped through the hoops and we followed this group um the cost was three times the normal testing cost so in every batch we do a full suite of testing so we're testing for microbials for pesticides for heavy metals residual solvents and potency so those five tests we know what they cost at a normal lab and then it was 3x that to get into the metric system part of that expense may have been this this gateway person that turns out wasn't needed um so this industry is is amazing and wonderful and it's still emerging and there are still some opportunistic predator types so i kind of watch out for that i thought it was still worth it we'll pay the costs and we're happy to be in the dispensaries and what we found is just from a market and business standpoint not many people are going to the dispensaries looking for cd they're going to this dispensary is looking for thc products they know they can buy cbd anywhere so what we found was that at least in my experience and i would love it if i'm wrong and and someone tells me that but it it does not seem as though there's a demand for the cbd products in the dispensaries so in my experience it was kind of a waste of money in time to go down this avenue getting back to so colorado has a fairly robust system for regulating our processors and even some local jurisdictions in colorado like denver have very specific regulations we unlike some other states can add cbd to food but we have to follow those regulations and i know your cdphd certified what was that process like so there's um an application online and there are food inspectors that can come out they do ask for shelf life stability data so there was it wasn't terrible um it was just a lot of questions a lot of proving the sourcing of your ingredients um like i said shelf life stability testing and a cleanliness factor so it's just kind of basic make sure you have a pest control plan um for any it's i think it's the same process as any of the food processors in the state of colorado thanks stacy and now we'll move on to a couple of the other states that stephen i thought were noteworthy of mentioning um illinois has taken probably one of the most liberal approaches to incorporating hampton city cbd products into their system um as of april of last year they implemented an interim policy that allowed registered processors from any state or hemp producers from any state to sell to their licensed cannabis cultivation centers for processing and so by doing so they would those products would be incorporated into their regulated marijuana system illinois has both adult use and medical marijuana available that policy expired as of october 31st and illinois recently renewed it and it's essentially the same as the previous process it will now expire september 30th 2021 all hemp obtained can only be used in extraction extracted form for infused cannabis products so that means that hemp may be imported into the system and process but you can't actually sell you know hemp flour it has to be extracted and then incorporated into into products licensed cannabis cultivation centers may procure and or process industrial hemp in the form of distillate or isolate as well derivatives must be accompanied by a certificate of analysis showing potency levels for delta 9 thc a cbd and cbda which we've talked about all of those compounds it may be procured from any third party that's a licensed grower and or processor from within the state of illinois or any other state with a regulated industrial health program so as long as you have a registration and you produce hemp it can be sold into this this system as long as it has the appropriate testing and analysis attached to it and the licensed cannabis cultivation centers in illinois may process it as long as they will need an additional additional hemp processors registration that they can obtain through the department of agriculture in illinois there's a very different treatment of delta eight they don't have the same definitions in their criminal statute and so right now it does not appear that there would be the same the same issues in illinois that you would have in colorado california so california has the exact opposite treatment of incorporating industrial hemp products into the regulated marijuana system so there are there are some exceptions like you can use hemp paper or those types of products but as far as cannabinoids cbd concentrates that type of thing those all have to be procured from a licensed cannabis cultivator within the state of california so you cannot bring it into the system from app from outside it has to be part of that seed to sale system cbd sourced from hemp um can be sold in california however there are much more restrictive uses you cannot put it into food because california has a similar state law called the sherman food drug and cosmetic lab which is very similar um to the federal food drug and cosmetic law and so in california you are not supposed to put cbd into those some of those products are available and you will see that it is it is not allowed under federal law or under california however uh california does not have the same prohibition on delta 8 that colorado would so delta eight seems to be more widely available in california so as you can see there's a really disparate treatment of all of these compounds under different state law and these different compounds is really different just based on their chemical structure and sometimes it's the same compound it's just later on in a process and that can create a very very different legal result steve did you have anything else to mention uh no i i don't have anything else to mention on on those i mean i think what what is is evident from all of this is that um the from the federal laws to the existing dea rules and interpretations uh to the um confusion on what actually is happening from from a chemical perspective to the disparate laws that are existing in all these different states you know the big takeaway that i have is um it's just not clear and there's not a great answer um to saying yes this is how it should be done and this is how it shouldn't be done um there's a lot of conflict between the regulated marijuana world versus the industrial hemp world you know the regulated marijuana world has a monopoly on thc and and you know be frank about it and um you know introductions of uh cannabinoids that can be derived from industrial hemp that is impacting the regulated marijuana world is not really acceptable to a lot of people that have been in the industry for a long time um and i think this is sort of the the fascinating intersection of these two these two very different industries that are dealing with the exact same plant it's just different uh percentages of cannabinoids and how all that gets regulated and how all that's going to fit is going to take time and so there's really not a clear answer and you know one of the questions we receive and i'll try to take these by order because i think we got about 10 minutes left here um you know the first one was is sort of the question being you know is a retailer you know going to get in trouble for selling cbd products um and and the the answer to that is depends uh depends on what state you're in depends on what local jurisdiction you're in uh depends on the type of product you're selling how you're marketing that particular product um the labeling of that particular product uh california for example uh if anyone was familiar with prop 65. uh you gotta slap labels on things if you think it might cause cancer um you know so there is a multitude of of potential risks for selling a product that unfortunately doesn't have a lot of scientific research into it because our federal government has denied researchers ability to actually test things for years because of the dea stance on the fact that it was a schedule one substance um and so you know the short answer is uh potentially um you know i think you really got to be careful on on what kind of products you're putting out there into uh into the retail stream and you know i think that whether cbd or delta 8 or any other cannabinoid there is going to be uncertainty i would say there's more certainty in the regulated marijuana market than there is in the industrial hemp market because in the in the regulated marijuana world um you can you can do what you you know as long as your plants deemed a marijuana plant you can extract it and create thc products you create cbd products uh and that is all very clear what is not clear is in the industrial hemp space where um you know some very new science is coming out on a regular basis to be able to isolate and extract cannabinoids that have different effects whether it's effects for inflammation or effects for uh euphoric effects like delta a thc potentially has to cbd you know these are these are all things that are are new and um you know still under a lot of review and i think the the the what we're hopefully trying to convey on this webinar um is this is gonna take time and and the help from both the legal side but also from folks like stacy who um understand what they're doing understand the products that they're making and and trying to come up with a regime that allows for everybody to kind of play nice in the sandbox um and so you know i guess stacy maybe i'll ask you a question and you know you're obviously in a very in a in a world that's gray and you're selling products in in that and you know maybe i think might be helpful to give your perspective on on kind of how you navigate that and um you know where you try to stay clear of and just from a you know from your own perspective it becomes challenging because from a business and marketing standpoint you want to you want to put on the bottle this could cure cancer but you can't because it's not it's not proven and that's a claim and you'll definitely get in trouble for that so the label itself has to have there's an fda disclaimer that my attorneys helped me with that that says this is not intended to cure or treat preventative disease so that's obligated um you have to put on each label that it contains less than 0.3 of delta 9 by weight in order to be legal and actually what i found was the banks are far more stringent even than fda and kind of law so depending on how you're selling the payment processors that we use online had even more strict requirements so we kind of had to jump through their hoops and kind of get the guidelines on what to say and what not to say um so that's where you really want to say more because you want to sell your products and you believe in it and you want everyone to hear how amazing it is and your hands are tied a little bit in what you can say but definitely have to have the less than 0.3 definitely have to list your ingredients and have the fda display disclaimer we had a question from kevin galligan at kmg law could specific cannabinoids or cbd oil be used and listed on label as an inactive ingredient and therefore avoid being considered a drug and allow the product to be a supplement i think the problem with that i don't know if it necessarily changed the landscape and that supplements would still be be regulated um but as as it stands right now the fda has issued guidance that they intend to regulate cbd so whether or not you list it as active or inactive as if it's within the product it becomes part of the purview of what they tend to regulate okay we have a question from rich what about licensed operators who are converting cbd isolate into delta nine and adding the output to produce amazingly high yields um i won't touch on the legal part where it gets into the metric system because that is going to be state dependent um i think we talked about if like if it's in colorado it has to be registered through the metric but converting cbd isolate into delta nine so it's the same process actually so it's the toluene it's super acidic and almost no chemical process is truly clean so there's a lot of byproducts that probably aren't tested for it's the same process for adults 8 and delta 9 and they usually come they're made together so we're also finding now that some of the local labs some of the the hemp testing labs will not test delta eight products because they're not sure how they're made and so they're not sure the byproducts and they don't want to put their name on any of the products so as far as you can make delta 9 from cbd it's it's definitely a chemical process not perfectly clean but it can be done and then the delto 9 component is not a gray area that does have to be in colorado the metric system or other states the registered marijuana system and rich the med has a science and policy work group that is starting to address this issue that that you're getting at right now there is not a specific regulation in place that addresses a specific process and there is not a specific opinion on it but there has definitely been some dialogue about how that could impact the industry yeah and what i would say on on all you know a lot of some of these questions regarding sort of the the input of delta eight um is once again the industry is just ahead of the regulations right and so um there's there there might the regulations might be silent on a lot of these things and what i think we try to one be a little bit thoughtful about but what i always try to talk to clients about when thinking through um some of these gray areas is you know think about um the people have gone in trouble in this industry are the ones that have pushed that that that gray area a little bit um you know you look at sweet leaf here in colorado you look at what ease was doing out in california with respect to taking credit cards and some of those issues um you know big small companies big companies are making mistakes and a lot of people are getting in trouble for them and you know what what what the hope is is that you know the industry can come and really educate our regulators about what's going on um what they're what they're able to do so we can fit a regime that actually works with it because if not i'll tell you there's plenty of people in the dea and the doj that are looking at this delta aid issue and they view it very differently than the industry doe and they're going to view it as a synthetic potentially and they're going to potentially view it as an analog and they are going to take an aggressive position because in their view it's thc and we don't care and if it's you know 75 is effective doesn't matter and and they're gonna they're gonna look at people and prosecute them i mean i don't i don't know how else to sugarcoat it um so it's gonna be really interesting to see what goes on from there um we got another question about um sort of um you know we talked a little bit about banks and banking and and sort of what to do about uh being approached by a hamper marijuana business um it's that's a a long conversation and for the person that asked that question i'll follow up via email separately and try to address that so i think we just have a few more minutes left i guess i'll just ask stacey or alyssa you know is there anything else that that you wanted to raise on this if not i think i'll um uh give us a conclusion here and uh let everybody go back to their day sure i was just gonna take we had one more question um from lisa pittman do you think the knowledge men's rate element is different for someone intentionally manufacturing a potential analog such as delta eight from a real ter from a retailer who is simply relying on a coa and representations of distributors and wholesalers and i think that would entirely depend on what those representations and distributors and wholesalers represented so i think that definitely would impact that menswear element thanks lisa my closing remark would be um i think a lot of us don't love regulations and the idea of the government's coming down and tons of regulations could be a negative connotation and what i think would be helpful in this industry is to give consumer confidence i've talked to so many people who would love to try you know healing plant medicine but they're afraid of well i get high will i get in trouble is it regulated someone make this in their basement is it going to have tons of solvents or heavy metals in it because some do so having some guidance having some regulations will help i think the industry as a whole translates to consumer confidence and so if you're a consumer and you're interested in in some cbd tech products check check the labels check for testing check for you know certifications and verifications that what you're buying has been quality tested um great thanks stacey and alyssa um so you know some of you might have in pre-cova days um come to our office where we we hosted these types of sort of round tables of trying to explore challenging and difficult topics um that are you know maybe not as widely discussed within the industry and trying to get really as much feedback as possible unfortunately you know our online systems only allow for sort of uh questions and not a lot of back and forth with with our guests and i really want to say thank you for everybody for joining today i really hope hope that it was informative and helpful to your organization i really appreciate feedback um you know we're doing this for the benefit of the industry both on the industrial lamp and marijuana side um and and really encourage and want to continue the ongoing dialogue of how we all can frankly be better um and so just as a reminder the program was approved for continuing legal education hours to report your hours click on the ceu icon at the bottom of the screen a certificate of attendance including course numbers will be emailed to you uh tomorrow along with a recording of the webcast for watching and sharing i mentioned feedback you know love to hear your thoughts on the survey of how we can be better and make things more useful for you going forward and then lastly i just want to encourage you to join us on our next webinar which is march 18th uh at the same time at noon we'll hopefully get an update from the colorado med on its rule making and how some of the issues that we talked about today might be impacted in the colorado regulatory regime so this concludes our webinar and thank you very much thank you thank you you