The agency said in its warning letters that the drugs, which are intended for use in food-producing animals, violate the Federal Food, Drug, and Cosmetic Act.

A handful of companies have landed in the crosshairs of the U.S. Food and Drug Administration (FDA) for illegally selling unapproved CBD products intended for use in food-producing animals.

The FDA announced May 26 that it had issued warning letters to four businesses—Haniel Concepts dba Free State Oils, Hope Botanicals, Plantacea LLC dba Kahm CBD and Kingdom Harvest—for violating the Federal Food, Drug, and Cosmetic (FD&C) Act.

“Under the Federal Food, Drug, and Cosmetic (FD&C) Act, any product intended to treat a disease or otherwise have a therapeutic or medical use, and any product (other than a food) that is intended to affect the structure or function of the body of humans or animals, is a drug,” FDA officials wrote in the announcement. “The FDA has not approved any human or animal products containing CBD other than one prescription drug product to treat rare, severe forms of epilepsy in children.”

That prescription drug, Epidiolex, was approved in 2018, and the FDA considers all other CBD products that are intended for use as a drug as unapproved drugs that remain illegal to sell, according to the agency’s release.

RELATED: DEA Greenlights Epidiolex. What’s Next for CBD and the Cannabis Industry?

The companies that received the warning letters claim that their CBD products help “farm animals with stress, anxiety, pain, inflammation [and] injuries,” and provide “support to help manage normal stress, promote a calming effect, maintain a healthy gut, maintain a normal and balanced behavior, maintain healthy joints, [and] maintain a normal inflammatory response,” according to the FDA’s announcement.

These claims, FDA officials said, establish the indented use of the products as drugs.

“Unapproved drugs like these CBD products have not been evaluated by the FDA to determine whether they are effective for their intended use, what the proper dosage might be, how the products could interact with FDA-approved drugs, or whether they have dangerous side effects or other safety concerns,” FDA officials said in the release.

The agency is concerned about these products because of the potential safety risks for the animals consuming them, as well as the lack of data regarding the safety of human food products—such as meat, milk and eggs—that are produced from the animals that have consumed the CBD products in question, according to the announcement.

“After a food-producing animal is treated with a drug, residues of that drug may be present in the milk, eggs, or meat if the animal is milked, eggs are collected, or the animal is sent to slaughter before the drug is completely out of its system,” FDA officials said in the release. “Part of the animal drug approval process includes setting a withdrawal period to establish the minimum amount of time between the last dose of a drug and the slaughter or harvesting of food products from the treated animals. Since CBD is an unapproved drug, the FDA has not had the opportunity to evaluate CBD residues in food or to establish an appropriate withdrawal period.”

The FDA also cited concerns about the manufacturing processes used in producing the products.

“In addition, the manufacturing processes of unapproved CBD drug products have not been reviewed by the FDA as part of the human or animal drug approval processes,” agency officials said in the announcement. “The FDA has received reports of some CBD products containing contaminants such as pesticides and heavy metals, thus introducing additional concerns for the use of CBD products.”

RELATED: FDA Issues Warning Letters to Companies Claiming Their CBD Products Can Treat COVID-19

FDA officials also worry that “consumers may postpone seeking professional medical care for their animals, such as getting a proper diagnosis, treatment and supportive care, because they are relying on unproven claims associated with unapproved CBD products,” according to the release.

The four companies that received the warning letters also sell CBD products meant for human consumption, as well as “adulterated human foods” that have been marketed as dietary supplements, including oils, creams, extracts, salves and gummies, the FDA said in its announcement.

The agency has requested responses from the businesses within 15 working days outlining how they will address the violations, according to the release. Failure to respond could result in legal action, such as product seizure or injunction.

The FDA has issued dozens of warning letters over the past several years to CBD companies, and officials recently set their sights on the delta-8 THC industry, issuing the first five warning letters earlier this month to companies that the agency claimed were marketing unapproved new drugs, misbranding their wares and unlawfully adding delta-8 to food products.

Jonathan Havens, co-chair of the Cannabis Law Practice and the Food and Beverage Practice at Saul Ewing Arnstein & Lehr, told Cannabis Business Times earlier this month, regarding the FDA’s warning to the delta-8 companies, that the warning letters serve to weed out bad actors in the cannabis and hemp industries.

“While this is not a good look for the industry, I do think that it will make the industry better in that it will shine a light on whose marketing practices are unsavory and whose are responsible,” he said. “I think there could be an upside here."

LeafLink analyzed average order value (AOV) alongside product category market share and pricing across nine markets to determine if the contents of a cart and/or price shifts impact cart size.

Cart size, otherwise known as average order value (AOV), for wholesale cannabis transactions varies significantly across markets and over time due to specific market conditions, regulations, and product popularity.

To gain additional perspective on consumer trends, we analyzed AOV alongside product category market share and pricing to determine if the contents of a cart and/or price shifts impact cart size. Markets analyzed include California, Oregon, Colorado, Michigan, Nevada, Washington, Arizona, Oklahoma, and Alaska. To start, let’s look at the current state of AOV within LeafLink data and then identify any trends that exist across these markets.

Between Jan. 1 and April 4 of this year, overall AOV in LeafLink was $3,750 across the nine markets—less than in 2021 ($4,107) and 2020 ($4,000). Combining this data with insights on order volume and frequency provides additional context to tell the full story.

Even while average order value decreased, the total number of orders increased. Total orders per month across these nine markets grew by 35.7% from 2020 to 2021 and 15.6% in 2022 due to a combination of additional buyers using LeafLink and increased purchase frequency.

When analyzing market-level data, there are clear distinctions between buyer behavior and a lot of variance across these markets.

When considering market maturity within the AOV hierarchy, we can see a trend: States that were first to legalize adult-use cannabis generally see AOVs decrease as more buyers and sellers open their doors and the markets mature and stabilize. Oklahoma is an exception as the state legalized cannabis solely for medical use in 2018. So, what other variables might impact AOV?

Over the past several years, the per-pound price of flower has shifted significantly. From 2019 to 2021, flower became 40.5% more expensive per pound across these nine markets. In 2021, however, prices faced significant headwinds and decreased by 24.7%, then a further 21.8% in 2022 (through April 4).

By comparing flower price changes by year to the average order value, we can see the markets in which flower price fluctuations significantly impact AOV. Correlation ranges from -1 to 1, with a number closer to 1 indicating a strong positive relationship and -1 a strong negative relationship between the two variables. 

In California, Michigan, Nevada, Oklahoma, Oregon, and Washington, there is a positive relationship between the price of flower and average order volume for buyers, meaning that as price increases or decreases, so does AOV. Arizona, Alaska, and Colorado, in contrast, are negatively correlated, meaning that as prices go up or down, AOV shifts in the opposite direction.

Across all nine markets, there is a somewhat positive relationship (.45) between flower prices and AOV. So what does this mean? As flower prices have decreased over the past few years, so have AOVs on average. Overall, six out of the nine markets showed a positive correlation between AOV and the price of flower.

Each market has its own dynamics, and certain states such as California, Oregon, Washington, and Colorado have experienced above average flower price compression in recent years due to increased numbers of brands and producers. The first three fall into the positively-correlated group, with Colorado being the only exception. This makes sense because these markets have consistent demand for flower from retailers (the number one category in each of these states). As the price decreases AOV follows.

In other words, the substitution effect is likely not as strong in these markets. This assumption is an opportunity for further investigation. In a market such as Colorado where flower is not a top category, as flower prices decrease retailers likely see an opportunity to order more — leading to higher AOV.

Alex Feldman is the general manager of Insights & Marketing Services at LeafLink, where he develops products that empower cannabis businesses to make data-driven decisions and grow their reach.

Year over Year net revenues increased 38.8% to $17.2 million, including one month contribution from Urbn Leaf and no contribution from Loudpack.

OAKLAND, Calif. and TORONTO, May 26, 2022 /CNW/ --PRESS RELEASE--Harborside Inc.(CSE: HBOR) (OTCQX: HBORF), a California-focused, vertically integrated cannabis enterprise, today filed its interim financial statements and management's discussion and analysis for the three months ended March 31, 2022 under the company's profile on SEDAR at www.sedar.com.

The Q1 2022 Financial Results encompass a period reflecting only one month of contribution from UL Holdings Inc. ("Urbn Leaf"), which the company acquired on March 1, 2022, and no contribution from LPF JV Corporation ("Loudpack"), which the company acquired subsequent to quarter-end on April 4, 2022. The Loudpack and Urbn Leaf acquisitions have transformed the company into one of the largest vertically integrated cannabis enterprises in California.

Board of Directors Appointment Harborside also announced that Felicia Snyder has joined the board of directors of the company, effective immediately. An entrepreneur, corporate strategist, seasoned cannabis executive and brand builder, Ms. Snyder is currently Founder and co-CEO of Arcana, an experiential hospitality brand. She was a founding executive at Tokyo Smoke, one of Canada's most recognized cannabis brands and a leading Canadian cannabis retailer, where she helped to scale the business through its merger with Doja Cannabis and eventual sale to Canopy Growth Corporation. Post-acquisition, she was Vice President at Canopy Growth, managing a portfolio of premium cannabis brands across all product categories. Prior to Tokyo Smoke, she worked for several years in South Korea with Samsung Electronics, where she oversaw a variety of projects related to business strategy, acquisitions, investments, partnerships, and development of new products and services. She is also a Google alum and started her career in Financial Services Management Consulting at Oliver Wyman, a global consulting firm. She holds an MBA from the Wharton School of the University of Pennsylvania.

"On behalf of the Board and management team of Harborside, I am delighted to welcome Felicia to the Harborside team," said Ed Schmults, Chief Executive Officer. "Her diverse skillset and significant cannabis industry experience are valuable additions to Harborside as we work to integrate our recent acquisitions and build the flagship California cannabis company."

The appointment of Ms. Snyder to the Board fills a vacancy created by the previously announced resignation of Michael Dacks.

Kicking off the year with a series of expungement clinics, Edwards has big plans for the social equity space.

With New York and New Jersey making grand entrances in the adult-use cannabis space this year, the team at multistate operator Ayr Wellness wanted to help prepare an equitable workforce for the jobs to come. In March, Khari Edwards, the company’s head of corporate responsibility, led a series of “Changing Legacies” events: expungement clinics for those with cannabis-related convictions lingering on their records.

The intent at events like those, he says, is to get out in front of this persistent problem, to confront the weight of past punishment keeping people separated from a sense of freedom.

“The reason why we named them ‘Changing Legacies’ is because, if you expunge somebody’s record, you now create an opportunity for these folks to grow,” Edwards says. “You put them in a bigger pot of opportunity.” This is an inherent promise of the emerging cannabis industry, he adds, unique in its attachment to social justice.

He describes one man he met at a Changing Legacies clinic, a man who had been convicted of a cannabis-related crime in 1973. For nearly 50 years now, that albatross had dogged him through jobs and housing and family relationships, tamping down his ability to move freely. The sheer scope of time was jarring to Edwards. The expungement process—which itself tends to be rather opaque from one jurisdiction to another—helped lift that burden from his shoulders, Edwards says.

While public agencies and legislators are increasingly adding various strands of social equity language into the laws governing state-legal cannabis markets, the work falls even more visibly to private businesses already operating in the space.

Past cannabis-related convictions can hold men and women back from participating in the cannabis market itself in many cases. Those who have entered the space through licensing—or simply through being hired—have an opportunity to provide a support system for those seeking to get in now.

This is where the phrase “corporate responsibility,” the whole of Edwards’ job title, comes in.

Edwards has seen this dynamic of workforce opportunities play out in Brooklyn, where he grew up, for most of his life. His political career started in 1997, where different jobs brought him across the borough, face to face with families and public agencies, “dealing with disparities, dealing with social justice, dealing with economic health justice.”

For much of the past decade, he worked as vice president of external affairs for Brookdale University Medical Hospital Center, which, as Edwards points out, sits in the middle of an area tagged with a $26,000 median income and a third-grade reading level across the local population. The experience he picked up there led him to run for borough president in 2021.

He didn’t win, but his grassroots campaign caught the attention of Ayr CEO John Sandelman, who offered him a job.

“He was just like, ‘Would you want to work for a cannabis company?’ And I was like, ‘Doing what? You know, this is not the world that I'm in.’ And he said, ‘You'd be surprised. Cannabis really falls into the line of all the things that you've been doing, all the things that you've been talking about, from social equity to social justice education.”

Edwards took him up on the offer and has since found a role in a multistate operation that can touch people’s lives—even outside the cannabis workforce, even outside New York City.

“Like, imagine what you could do on a global level for folks,” he remembers hearing from the Ayr team. “And that's what made me sign up. I realized outside of just New York, there are so many inequities that go on throughout the country, and we really stand on a different once-in-a-lifetime opportunity to level that playing field.”

The “Changing Legacies” expungement clinic series bought Edwards to New York, New Jersey, Massachusetts, Illinois and Nevada, and each session taught him a bit more about this industry that has accepted him. And while Ayr does not yet have a license to operate in New York’s marketplace, he’s hoping to his home state’s cannabis market flourish—with social equity provisions front and center. The key, he says, is to act globally, but then to bring the work down to a local level.

Already, the state is off to a productive start: New York’s first adult-use dispensary licenses will be issued to applicants with cannabis-related convictions. 

But public agencies can only go so far on prescribing an equitable stance on cannabis, Edwards says. It’s up to businesses to enact those policies and lift up others with the resources available—especially in communities that bore the brunt of oppressive criminal laws for so many years.

“How do we now create a standpoint that [cannabis is] inclusive of these communities and that we start to break this continued cycle of poverty and this continuous cycle of suffering?” Edwards asks. “That’s my pathway for the summer, obviously adding in expungement events that we're doing, because, again, we keep chipping away. We're going to end up with 2,000, 3,000, 4,000 people expunged and excited for their next steps.”

Sen. Scott Wiener’s Senate Bill 1186, which now heads to the Assembly, would require all cities and counties to provide medical cannabis access through brick-and-mortar dispensaries or delivery services.

The California Senate has approved legislation that aims to restore voter-approved medical cannabis access, sending the bill to the Assembly for consideration.

Senate Bill 1186, sponsored by Sen. Scott Wiener, D-San Francisco, passed the Senate with a unanimous bipartisan vote, the Sierra Sun Times reported.

RELATED: California Senator Introduces Legislation to Bar Municipalities from Prohibiting Medical Cannabis Dispensaries Within Their Jurisdictions

S.B. 1186 would require all cities and counties to provide medical cannabis access through brick-and-mortar dispensaries or delivery services, although it would not change municipalities’ ability to limit or ban adult-use sales.

While Proposition 64, California’s voter-approved adult-use cannabis legalization law, allowed municipalities to restrict adult-use cannabis businesses within their jurisdictions, it did not address medical cannabis, which California voters legalized in 1996 through Proposition 215. The Legislature later gave municipalities the ability to prohibit medical cannabis operations through the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA).

“Right now, 62% of California cities ban people from purchasing legal medicinal cannabis,” Wiener said in a public statement, according to the Sierra Sun Times. “This fuels the illicit cannabis market and makes it difficult—if not impossible—for people to access the medicine they need. We need to ensure everyone can access medicinal cannabis if they need it; S.B. 1186 will restore this access across the state."

Cannabis Business Times’ interactive legislative map is another tool to help cultivators quickly navigate state cannabis laws and find news relevant to their markets. View More