BIZ & TECHNOLOGY
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Technologies Helping Keep Cannabis Productive
While the world faces shutdowns and economic stoppages, the cannabis industry remains one of the select industries to continue operations. Through delivery services, mobile ordering, automation, and diversified demand, cannabis exists as a versatile and resilient industry.
ORDERING TECHNOLOGY FROM DELIVERY TO PICK UP
Throughout the quarantine, cannabis sales have been up, despite the interior of stores closing to limit contact. Online interfaces privately offered by many centers, such as Mankind in San Diego, have simplified the process so that customers only come by once their order is ready for pick up. Other companies, like Leafly and Weedmaps, offer online ordering through their websites for several cannabis centers.
Cannabis delivery services throughout the world have also been servicing customers from the comfort of their own house, offering no contact delivery. Several of the online ordering platforms allow for delivery. This flexibility has proven to be a key feature in the survivability of the cannabis industry.
Currently, limiting contact and activity is the strategy for getting through this emergency. Technologies that allow for less in-person interaction prove to be a powerful tool in the essential cannabis industry. As the virus spreads person to person, it’s vital to maintain social distance when at all possible.
AUTOMATED EQUIPMENT SAVES FARMERS FROM SICKNESS
A 26 percent reduction in labor costs through the automation of cannabis farms reflects a decrease in labor required. If remote greenhouse monitoring can be achieved through an automated network, then working through the quarantine becomes much more manageable. There’s never been a time where a decrease in labor demands could be more appreciated, as close-knit groups of people operate many cannabis farms. Such groups are unlikely to introduce each other to a novel disease due to their consistency of interaction. Additionally, automated operations require less attention and so less time on sight.
Such technology allows extraneous staff to work from home on other aspects of the business while only those that are necessary to operate the farm go in. Adopters of automation will also enjoy the lower overhead to get through this trying period. With up to 42% savings on harvests, automation could be the investment that saved a few businesses.
TECHNOLOGY CAN ALSO ADDRESS LARGER SUPPLY CHAIN ISSUES
Companies like Confident Cannabis already offer platforms to connect buyers and sellers of wholesale cannabis in states like Oregon. Such transactions are done on an online marketplace operating within the state to supply the local industry with cannabis. Further supporting and integrating these platforms into the business would enable further limitation of contact during sales.
While the emergency continues, compassion demands a well-maintained cannabis supply chain. Although there will always be problems, using technology to create as smooth a marketplace as possible will allow access to the highest amount of people.
HEMP PLASTICS ARE RISING TO THE OCCASION
Unfortunately, in cities across America, thousands of units of personal protective equipment (PPE), such as plastic gloves and facemasks, are being thrown away in the middle of public spaces. While these products may help limit exposure to contamination, they are seldom biodegradable. This is where hemp-based plastic has an opportunity to shine.
“What we as cannabis plastic producers need to be focused on right now are single-use products with short working lives, and which require frequent use per day,” Tarek Moharram, Founder and President of Moharram Ventures Inc. told Cannabis Tech. Moharram Ventures Inc. is currently developing Truly Green Plastic, a biodegradable cannabis plastic. ”That’s why we’re targeting PPE; it meets all the criteria. Healthcare professionals that are wearing PPE should be changing it frequently because it doesn’t continue to function as effectively in the seventh hour as it does in the first. Once used, it generally needs to be destroyed. It’s a perfect opportunity.”
We are morally obligated to start stocking up on PPE so that we can protect the people in this country who are trying to take care of our society. However, that doesn’t mean plastic waste has to be a necessary byproduct. Through this innovation in hemp plastic, biodegradable PPE is available for production; however, it requires investment in order to scale up. The medical industry’s access to funding could be the perfect catalyst for pushing forward the implementation of biodegradable plastics. Also, for cannabis industry players, what better opportunity to successfully weather this storm than by creating a revenue stream from what was once just a waste product and destruction cost center? The benefits are clear, especially during this emergency.
AN UNPRECEDENTED MILESTONE
It’ll never be all sunshine and roses. Supply chain issues may still become severe, and the economy needs to recover from this event. Some people within the cannabis industry have been laid off, and some companies are struggling. No industry is immune at this time, but it’s remarkable to note that cannabis has more ability to operate right now than the sports industry.
In all seriousness, the cannabis industry is an amazing one. Throughout this crisis, from concentrate companies supplying hand sanitizer to fight the crisis to cannabis centers keeping working-class people employed, the cannabis industry showed up. The technology behind it allows it some luxuries, such as the ability to limit contact while maintaining operations, and proves the flexibility of a lucrative industry.
Sweeping Weedmaps subpoena underscores US government’s continued scrutiny of marijuana industry
When the U.S. marijuana industry learned of a federal grand jury subpoena served to Weedmaps owner Ghost Management Group, the news was an eye-opener for many in the business.
The story, first reported by MarketWatch in early March, noted that a few high-profile cannabis companies also were identified in the Weedmaps subpoena.
But the original report about the subpoena didn’t disclose the identities of several other high-profile legal California companies named in the document, such as Connected Cannabis, Puffy Delivery and Urbn Leaf. Marijuana Business Daily obtained a copy of the subpoena.
The subpoena’s wide-ranging demand for information serves as a reminder that the U.S. Department of Justice will not allow the industry to operate unpoliced – even after years of largely unfettered growth at a time when MJ remains illegal at the federal level.
The industry will want to watch this case carefully because, like the forced closure of Sweet Leaf by Denver officials in 2018, the Weedmaps development might prove to be a milestone, whatever the outcome. In all, nearly 100 cannabis businesses and individuals are identified in the Weedmaps subpoena, including company employees, officers, various investors and others in the industry.
“The bottom line is the feds are showing they’re not done investigating cannabis, not done prosecuting cannabis,” California attorney Matt Kumin said after reading the subpoena.
Among the revelations: The investigation is partially focused on Weedmaps’ relationships with both licensed and apparently illicit California cannabis companies.
Weedmaps, headquartered in Irvine, California, is a popular website among consumers looking to find marijuana retailers across the globe. It also facilitates cannabis deliveries.
The company came under fire from California officials in early 2018 for advertising illegal marijuana retailers, a practice Weedmaps changed as of January.
Asked for comment on the subpoena, a company spokesperson wrote in an email to MJBizDaily that, “from time to time, Weedmaps receives requests for information from government agencies. We cooperate with these requests as we do with all lawful inquiries.”
Weedmaps didn’t elaborate or confirm if it had submitted the requested documents to federal authorities.
The federal government’s probe, which apparently is ongoing, is being conducted by the U.S. attorney for the Eastern District of California, McGregor Scott. Scott’s office declined to comment to MJBizDaily.
The stakes are high given the federal government’s involvement and the dozens of companies named in the subpoena.
“You only present the case to the grand jury to determine whether or not there’s probable cause to return criminal charges. So this is a criminal investigation,” said San Francisco-based attorney Henry Wykowski, a former federal prosecutor who’s worked with California cannabis companies for more than a decade.
If the probe results in criminal charges, a trial or even a settlement, it could set a legal precedent for the rest of the industry to follow – perhaps for years to come.
But it’s also possible the probe ultimately could be dropped and no criminal charges filed.
What’s going on?
The only consensus among four different industry attorneys who viewed the subpoena is that it’s so broad that it’s impossible to tell what investigators are after.
“This could be a million things,” California cannabis attorney Jessica McElfresh said.
“Just because you get a subpoena, it doesn’t mean you’re the target of the investigation. It’s impossible to know if those targets are within Weedmaps or if they are the other entities.”
The subpoena was sent to Ghost Management Group last September, and the company was given five weeks to turn over documents dating to Weedmaps’ founding in 2008.
The subpoena requests a wide range of company documents, including:
Annual financial statements, tax returns and bank account information.
All communications with “any person engaged in commercial cannabis activity.”
Details on how Weedmaps facilitates marijuana deliveries.
Weedmaps’ claim that it would cease carrying advertising for illegal cannabis retailers.
Any “transfer of anything of value” between Weedmaps and government officials or candidates for public office, as well as all communications between Weedmaps and government officials. “Any and all documents” related to 40 marijuana companies identified in the subpoena. All communications and agreements with nine specific investment firms as well as prospective investors. That’s a small sample of the information the U.S. attorney requested.
But it’s an indicator that any company or individual that’s done business with Weedmaps could be under the microscope of federal prosecutors. For those California marijuana executives who remember the marijuana-related legal actions brought by former California U.S. Attorney Melinda Haag, the notion of being targeted by federal prosecutors could be frightening.
“Haven’t you ever heard the joke that prosecutors tell? ‘I can get a grand jury to indict a ham sandwich if I wanted to?’ It’s stacked against the individual,” Wykowski said.
Of the four U.S. attorneys offices in California, the conservative-leaning Eastern District is the one Wykowski would most expect to mount a serious attack on the cannabis industry or on a company such as Weedmaps.
But Scott, the U.S. attorney whose office issued the subpoena, has indicated that his priorities involving the cannabis sector are not state-licensed businesses that are following the law but, rather, illicit actors engaging in “interstate trafficking, organized crime and (marijuana cultivation on) federal public lands.”
Who was identified?
As originally reported, the subpoena requested information from Weedmaps on dozens of companies it’s dealt with over the years, including Santa Rosa-based CannaCraft and Irvine-based Terra Tech Corp. (The latter has been renamed Onyx Group Holdings after a February merger.)
The subpoena demands “any and all documents related to” at least 40 different business entities and 17 individuals with whom Weedmaps has apparently worked in some capacity.
Of the 40 companies, at least 27 possess a minimum of one valid state marijuana business license, according to government records. The majority of those are licensed retailers, as opposed to brands or other business types.
The other 13 companies apparently are illegal or unlicensed marijuana businesses, further complicating the picture for industry attorneys trying to decipher the subpoena’s intent.
Some of the legal and licensed companies identified include:
California Green Cross (delivery license in Sacramento).
Connected Cannabis (licenses for six retailers in Long Beach, Sacramento, San Francisco, Santa Ana and Stockton).
DEC Medical Group (retail and distribution licenses in Los Angeles).
Desert’s Finest (microbusiness license in Desert Hot Springs).
East Bay Therapeutics, (three licenses in Emeryville – storefront, delivery service and event).
Flav, formerly known as FlavRX, which operates as a hemp-derived CBD company as well as a licensed marijuana brand (two distribution licenses in San Diego and manufacturing licenses in La Mesa, Sacramento and San Diego).
Green Valley Collective, Purple Heart Compassionate and the Wellness Earth Energy Dispensary, which together do business as “Project Cannabis” (retail licenses in Los Angeles, North Hollywood and Studio City).
Golden State Greens Point Loma (retail and distributor licenses in San Diego).
Horizon Collective (retail license in Sacramento).
Kushagram (delivery license in Oakland).
L.A. Cannabis Co. (three retail licenses in Los Angeles).
MMD Long Beach (retail license in Long Beach).
Puffy Delivery (retail licenses in Palm Springs, Santa Ana and Vista and a distribution permit in Santa Ana).
South Coast Safe Access (retail license in Santa Ana).
The L.B. Collective (retail license in Long Beach).
The OG Collective (retail license in Cathedral City).
Urbn Leaf (four retail licenses in Bay Park, Grover Beach, San Ysidro and Seaside).
The subpoena also requests information about DICA Distribution – a defunct venture in West Sacramento, California, started by Weedmaps executives Doug Francis and Chris Beals – and West Coast Cure, a state-licensed manufacturer that once planned to team with DICA.
Also named are several companies that might have operated at some point without a license, either as brands or illegal retailers. Some also might have been previously legal medical collectives that shut down after the collective model was phased out in January 2019 under California state law.
In the case of those companies, there is no record of any cannabis business permits in the state license databases of the Bureau of Cannabis Control, the Department of Public Health or the Department of Food and Agriculture.
Many, however, were registered with the California secretary of state as business entities or nonprofits.
A few of those companies include:
Green Mile Collective, which once was a registered nonprofit in North Hollywood but now is listed as suspended.
South Bay CRC, short for South Bay Compassionate Relief Collective, which was once a registered nonprofit medical marijuana collective in San Jose but currently is listed as suspended.
The Church of Modern Medicine, a Colfax-based registered nonprofit that appears to have at one point been an operating dispensary, based on multiple online reviews. No other information could be found.
The High Church, a Fallbrook-based registered nonprofit that advertises multiple locations in Southern California and apparently operates as a medical marijuana retailer.
MJBizDaily attempted to reach all 40 companies identified in the subpoena but succeeded in contacting only 17.
Most of the 17 that were reached declined to comment.
The other 23 did not respond to phone calls and emails or did not have contact information available.
Many that were reached – even if they declined to comment – said they were unaware until contacted by MJBizDaily that their communications with Weedmaps might have been turned over to federal investigators.
“This was the first I’d heard of it at all,” said Adam Knopf, an executive with Golden State Greens Point Loma, one of the legal retailers identified in the subpoena.
Learning that his company was listed in the subpoena was “gut-wrenching,” Knopf said, considering all the trouble his business and others have gone through to obtain – and retain – their legal licenses in California.
Knopf said he has not heard anything directly from the U.S. attorney’s office, nor have any of the other companies reached by MJBizDaily.
Sam Shtockmaster, a partner at Desert’s Finest, said the news that his company was identified in the subpoena came as “a shock.”
“Nobody even let us know that,” Shtockmaster said.
He confirmed that Desert’s Finest has regularly paid Weedmaps for advertising services at a current rate of $20,000 per month but said that’s his company’s only connection to Weedmaps.
“There are operations that pay way more than $20,000 to Weedmaps a month in cash, so I don’t understand” why Desert’s Finest would be named in the subpoena, Shtockmaster said.
“Whatever it is, we’ll soon find out, I guess.”
Fishing expedition or white-collar crime?
Wykowski called the subpoena a “fishing expedition” and said if he were representing Weedmaps he would have pushed back to at least narrow the subpoena’s demands.
“They’re casting a very wide net here, and we’ll just have to see how it plays out,” Wykowski said. “(The subpoena) seems to be focused on recordkeeping and financial affairs, so that would gravitate toward some type of tax or financial misreporting type of offense.
“But at this stage of the game, that’s really just speculation,” he emphasized.
Kumin and other attorneys don’t see the subpoena pointing to an over-arching, industrywide attack by the federal government, given that the Justice Department has taken a hands-off approach to state-legal companies in recent years.
But, Kumin said, it’s possible the DOJ might want to make an example of some person or company.
All attorneys consulted for this story agreed that any attempt to guess at what might be coming from the DOJ would be just that – guesswork.
Following the money
There are signs from the subpoena that the investigation is possibly focused on white-collar crime:
The prosecutor who signed the subpoena, Matthew Segal, is the chief of the Special Prosecutions Unit, which targets – among other crimes – money laundering, public corruption, tax evasion and federal computer crimes.
The subpoena identifies several individuals who routinely dropped off monthly cash payments to Weedmaps in exchange for advertising services, according to at least four of the companies identified in the document. Those individuals also filled out invoicing paperwork and signed their names, several companies said.
That suggests the U.S. attorney’s office is scrutinizing Weedmaps’ financial paper trail beyond what’s requested in the subpoena.
For example, Joshua Plummer – who is identified next to Flav in the subpoena – was a “delivery driver that would bring the monthly invoice payments to Weedmaps,” according to the company’s attorney.
And Golden State Greens’ Knopf said two names listed next to his company in the subpoena – Alex Leon and Heidi Rising – were midlevel workers who occasionally dropped off monthly payments at Weedmaps headquarters.
After Leon and Rising delivered the payments, Knopf said, Weedmaps asked them to fill out paperwork that sounds similar to forms required by banks when a cash deposit of more than $10,000 is made.
Knopf said Golden State Greens’ current monthly payment to Weedmaps is $12,000, and that invoicing paperwork is the only reason he can think of for Leon and Rising being identified in the subpoena.
Though murkiness surrounds the Weedmaps subpoena, Denver-based attorney Sean McAllister believes one thing is clear: Weedmaps put a target on its back for its past refusal to remove unlicensed marijuana retailers from its site.
The company changed its policy in January and now requires all retailers that advertise on the site to submit a state license number.
But will that prove to be too little, too late?
McAllister, who said he represents two investors identified in the subpoena, pointed out “there are a lot of potential (criminal) charges” that could stem from a subpoena like the one Weedmaps received.
“This could just be the tip of the iceberg,” he said
The Bioengineering of Cannabis
Genetic modification could enable industrial-scale production of cannabinoids that have pharmaceutical potential.
Cannabis is the only plant known to produce tetrahydrocannabinol (THC), but it remains an imperfect vessel for producing the chemical on an industrial scale. The psychoactive substance is normally found only in small outgrowths from the plant known as trichomes, which means that its stalk, stems and leaves are wasted biomass.
Genetic engineering could provide more efficient alternatives. Some researchers and biotechnology companies are aspiring to replace cannabis plants with microorganisms that have been genetically enhanced to spit out THC, the non–psychoactive compound cannabidiol (CBD) and myriad other cannabinoids of pharmaceutical interest. Others are aiming to modify chemical synthesis in the cannabis plant by genetically altering its cells to make the desired molecules from shoot to tip, thereby boosting yield.
Either way, the goal is the same: to produce cannabinoids more cheaply, efficiently and reliably than by conventional plant cultivation in greenhouses or farmers’ fields. Further benefits of microbial synthesis include the ability to mass-produce rare cannabinoids that are usually present in plants in only trace amounts — or even molecules not found in nature. Transgenic plants can also be engineered for superior resistance to pests and environmental stresses.
Commercial interest in these strategies is picking up. In 2018, for example, Canopy Growth Corporation in Smiths Falls, Canada — the largest legal cannabis company in the world — paid more than US$300 million in cash and shares to acquire Ebbu, a small company in Evergreen, Colorado, that had developed one of the earliest platforms for manipulating the cannabis genome with the gene-editing system CRISPR–Cas9. And in April, Zenabis, a cannabis producer based in Vancouver, Canada, agreed to purchase 36 tonnes of almost-pure, bacterial-made CBD from medical-cannabis company Farmako in Frankfurt, Germany — the first deal of its kind for biosynthetic cannabinoids.
David Kideckel, a cannabis analyst with financial-services company AltaCorp Capital in Toronto, Canada, describes genetic engineering as a “disrupter” that promises to take a centuries-old agricultural practice into the biotechnology era, with the resulting ripples being felt throughout the cannabis sector worldwide.
When it comes to producing cannabis extracts, plants could be supplanted by microbes, and a greater range of cannabinoids could become available for use in medical and recreational products. If that happens, the iconic cannabis leaf would no longer accurately represent where the active ingredients come from. Instead, a stainless steel bioreactor might be more apt.
Cooking up cannabinoids
Part of the appeal of ditching greenhouses for bioreactors boils down to cost. Currently, 1 kilogram of high-quality CBD extracted from plants sells for a wholesale price of more than $5,000. A deal in 2018 between Ginkgo Bioworks, a synthetic-biology company in Boston, Massachusetts, and Cronos Group, a Toronto-based cannabis producer, outlines a plan to manufacture pure CBD and other cannabinoids for less than $1,000 per kg in yeast.
Biomanufacturing also offers a level of consistency that is impossible to replicate in plants, which, like most agricultural commodities, are subjected to the weather, pests and other environmental uncertainties. Laboratory-based production is also better for the environment because less energy is needed to run a bioreactor than to power the grow lights and ventilation fans of an indoor cannabis-growing operation. The water pollution and land destruction that is associated with outdoor cannabis cultivation can also be avoided.
Perhaps the biggest advantage of cooking up cannabinoids in fermenters, however, is the ability to brew copious amounts of lesser-known cannabinoids that are usually found only in trace amounts in cannabis plants. “People are so focused on the big two — THC and CBD — that we’re sort of forgetting that there are potentially other really useful compounds in the plant,” says Tony Farina, chief scientific officer at synthetic biology company Librede in Carlsbad, California. “That’s the direction for which we should really be using this biosynthesis platform.”
Cronos has singled out a few molecules of particular interest. These include cannabichromene, a rare cannabinoid that is thought to have anti-inflammatory properties, and cannabigerol (CBG) — a chemical precursor to THC and CBD with the potential to protect cannabis plants from damage-inducing molecules inside cells. High on the company’s list is also an appetite-suppressing variant of THC called tetrahydrocannabivarin (THCV). This cannabinoid has medical potential in people who are affected by compulsive overeating disorders, and THCV could appeal to recreational users of cannabis who enjoy the drug’s intoxicating effects but would rather avoid its hunger-inducing properties. “It offers the same euphoric effect as THC, but without the munchies,” says Cronos chief executive Mike Gorenstein.
At least 18 companies are racing to produce cannabinoids in yeast, bacteria or algae. Although each industry player has a proprietary approach, all are variations on the basic playbook described earlier this year by synthetic biologist Jay Keasling at the University of California, Berkeley (X. Luo et al. Nature 567, 123–126; 2019).
Keasling and his colleagues introduced a series of genetic changes into the yeast Saccharomyces cerevisiae. By tweaking some yeast genes, and inserting others from bacteria and the cannabis plant, the team created an organism capable of carrying out all the chemical reactions that are involved in cannabinoid production. Feeding the yeast a simple sugar generated low amounts of inactive THC or CBD, which can be converted into their active forms by heating.
Because the enzymes in the cannabinoid pathway are “a little sloppy”, as Keasling puts it, the team could also introduce fatty acids that the yeast would incorporate into cannabinoids. This spawned variants of THC and CBD that are not found in nature. “We created entirely new molecules that might be better therapeutics,” Keasling says.
At the yields reported, however, Keasling’s platform is not ready for prime time. Dramatic improvements in both the yeast’s efficiency and the fermentation protocol are needed for the biosynthetic approach to be cost-competitive with plant-extracted cannabinoids. Demetrix in Emeryville, California — a company co-founded by Keasling that has secured more than $60 million in funding, making it the best-financed start-up company devoted to lab-based cannabinoid production — is developing the technology further.
Demetrix chief executive Jeff Ubersax says that his team has increased the cannabinoid yield by “several orders of magnitude”. But many companies made similar claims to Nature that, without verifiable data, cannot be substantiated. Even if they are true, getting something to work in the lab does not guarantee success in a manufacturing plant, says Stephen Payne, chief executive of Maku Technologies, a start-up in Durham, North Carolina. Maku is focusing on making rare, natural cannabinoids in yeast. “Throughout my time in the synthetic-biology industry, I’ve seen things work on a small scale that have no chance of reaching industrial levels,” Payne says.
Turning yeast into miniature cannabinoid factories poses considerable challenges. Although Keasling’s protocol involves 16 genetic modifications, the overall efficiency of the procedure came down to a single bottleneck. The log-jam involved an enzyme that is needed for CBG production. Researchers characterized the enzyme, known as a prenyltransferase, around a decade ago in a strain of medical cannabis. Initially, Keasling tried to use that cannabis-derived enzyme in yeast, but it didn’t work: the yeast produced no CBG.
After rummaging through gene-expression databases, however, Keasling found an alternative prenyltransferase that was encoded by another variety of cannabis. He introduced this into the yeast and all the pieces fell into place to make CBG and its derivatives.
Some researchers faced the same enzymatic challenge in S. cerevisiae and elected to switch to alternative organisms. Bioengineer Oliver Kayser and his colleagues at the Technical University of Dortmund in Germany turned to a species of yeast called Komagataella phaffii (B. Zirpel et al. J. Biotechnol. 259, 204–212; 2017).
Others have sworn off yeast completely. Vikramaditya Yadav, a chemical engineer at the University of British Columbia in Vancouver, has moved to working in bacteria instead. He is collaborating with a Vancouver-based company called InMed Pharmaceuticals to produce cannabinoids in Escherichia coli.
One advantage of bacteria over other cell-based systems, says Yadav, is that they don’t attach sugars to the proteins that they produce in the same way as yeast and other organisms with an enclosed nucleus do. Those sugar adornments can limit the activity of enzymes that are crucial to the cannabinoid pathway — at least in K. phaffii, as Kayser’s team has shown (B. Zirpel et al. J. Biotechnol. 284, 17–26; 2018) — which leads to lower yields.
Bacteria also naturally secrete the cannabinoids that they produce into the surrounding medium, from which they can be extracted easily. This phenomenon provides speed and cost advantages because it enables continuous manufacturing, whereas organisms that retain their chemical bounty inside cells must be ‘cracked’ open as part of a batch-production system. Yeast does not typically secrete proteins, but researchers at Librede and elsewhere claim to have engineered this function into the organism.
A further challenge for using either yeast or E. coli is the toxicity of cannabinoids. Such molecules evolved in plants as a defense mechanism against insects, microorganisms and other biological threats. This means that the chemicals that researchers desire are often deadly to the organisms that have been engineered to make them.
At Farmako, which announced in July that its biosynthesis research team would be spun off to form a new biotechnology company, scientists therefore turned to Zymomonas mobilis, a bacterium used in tequila production. According to molecular biologist and Farmako co-founder Patrick Schmitt, who is expected to lead the spin-out company, this microorganism is immune to cannabinoid toxicity — although it’s not clear why.
Meanwhile, researchers at Renew Biopharma in San Diego, California, are working in Chlamydomonas reinhardtii, a green alga that compartmentalizes its cannabinoid synthesis in chloroplasts. In so doing, the rest of the cell is shielded from the toxic molecules. As well as the biological advantages, cannabinoid production in an unconventional organism such as an alga makes good business sense because the approach is proprietary, says Michael Mendez, founder and chief executive at Renew Biopharma. “Intellectual property will rule the day in this space,” he says. And as Jeremy de Beer, a law professor at the University of Ottawa who has studied cannabis patents, points out: “We’re in sort of an intellectual-property gold rush.”
Already, the US Patent and Trademark Office has protected Librede’s use of yeast to synthesize cannabinoids from sugars. Other patents have followed, including one that was granted to Teewinot Life Sciences in Tampa, Florida, for a bioreactor designed to grow cannabinoid-producing microorganisms. Legal battles might not be far behind (see ‘Pot’s patent predicament’). “It will not be a surprise at all, as revenues from cannabis sales pick up, that you see similar increases in patent-related enforcement,” says Stephen Hash, a patent attorney at Baker Botts in Austin, Texas. “It will go hand in hand.”
Under federal law in the United States, the cultivation of cannabis is strictly prohibited. But that hasn’t stopped the growth of the country’s cannabis industry, which has been operating in a quasi-legal fashion since individual states began to allow the sale of cannabis for medical and recreational use more than 20 years ago. Nor has it stopped the US Patent and Trademark Office from granting intellectual-property licences for cannabis breeding and production.
One such patent sent shockwaves through the industry. Granted in 2015 to a company called Biotech Institute in Westlake Village, California, it covers a range of cannabis varieties with appreciable levels of tetrahydrocannabinol and cannabidiol.
The sweeping nature of the patent’s claims concerned many cannabis breeders, who feared that it could stifle innovation and biological diversity in the fledgling cannabis sector. They also worried that artisanal marijuana production, which is driven by consumers’ needs and tastes, could be supplanted by an age of corporate cannabis.
Other broad patents have followed, as have legal disputes. In 2018, for example, two Colorado-based firms were embroiled in a lawsuit over whether one company’s liquid formulation of hemp-derived cannabidiol infringed on the patent claims of the other. It was the first high-profile patent challenge in the sector. The case is ongoing.
The issue in that lawsuit, and in others, is whether the patent is novel — and therefore worthy of protection — or an obvious development in light of prior art. Because of cannabis’s long history of hidden cultivation, breeders have not chronicled their varieties in the public sphere. Consequently, patent examiners had little information on which to base decisions on whether cannabis-related technologies are new and non-obvious. That lack of a paper trail also makes it hard to mount a proper challenge to a patent.
Beth Schechter hoped to change that. As executive director of the non-profit organization Open Cannabis Project (OCP), Schechter and her team built a public record of chemical and genetic profiles of hundreds of existing cannabis varieties that were submitted by members of the community. The goal was to provide evidence to show that some patents are obvious and therefore invalid, she says, and “if nothing else, to at least prevent similar patents like those going forward”.
But the project might end up having unintended consequences. Although touted as a way to protect the rights of small farmers, it folded in May after a video emerged of OCP co-founder Mowgli Holmes pitching to investors the idea of an in-house breeding programme at Phylos Bioscience, a cannabis-science company in Portland, Oregon, that he co-founded and now leads as chief executive. For many, it confirmed their fears: that OCP was a front for Phylos to amass cannabis data for financial gain.
According to Holmes, Phylos was only seeking to publish data through the OCP, and “None of the customer data had any value to a plant breeding program.” Yet the damage was already done. “Making data public is good because it enlarges the public domain and it speeds up science,” Holmes maintains. But in the emergent cannabis industry, secrecy and intellectual property continue to define battle lines.
Rather than trying to force the production of cannabinoids in microorganisms, some companies are sticking with cannabis plants, but using biotechnology tools to give the crop a boost.
Trait Biosciences in Toronto has genetically engineered cannabis to enable it to produce cannabinoids throughout the plant, not just in the trichomes, to increase the yield that each plant provides. The company also added enzymes that made the cannabinoids less toxic and made the usually oily molecules soluble in water.
“That was a side benefit that we soon realized was perhaps as important, if not more important, than the yield boost,” says Richard Sayre, Trait’s chief science officer. “Now that they’re water soluble, we can essentially press the plant just like they do with sugar cane to squeeze the juice out and recover the cannabinoids.”
Water solubility also opens up the possibility of creating new kinds of cannabis-infused beverages or edible products. “It’s tasteless and odourless, so it can be blended in a variety of applications,” Sayre explains.
At Ebbu, director of genetic research Robert Roscow has filed patents that cover methods for manipulating cannabinoid synthesis in plants. He uses CRISPR–Cas9 gene editing to delete certain enzymes in the cannabinoid-synthesis pathway that are involved in THC production. This has enabled him to generate cannabis plants that produce only CBD. And by targeting enzymes that are involved in both THC and CBD synthesis, he has produced plants that secrete only CBG.
Some skilled cannabis growers have created plants rich in minor cannabinoids such as CBG or THCV through selective breeding alone, but that can be a laborious and difficult process. “Modification through genetic engineering is probably the most straightforward way to get the desired phenotype,” says Igor Kovalchuk, a plant biotechnologist at the University of Lethbridge, Canada, and co-founder of cannabis-genomics company InPlanta Biotechnology, also in Lethbridge.
Genetic engineering is also a powerful tool for probing the function of cannabis genes — information that can then be fed back into a more conventional breeding programme. But beyond the lab, Kovalchuk says, “I don’t believe that genetically engineered cannabis has a future for years to come.”
One obstacle remains consumers’ skittishness about genetically modified crops, which could carry over to a distrust of microorganism-based biosynthesis. “People like their weed, and they will care if their cannabinoids are coming from a genetically modified yeast or a field-grown plant,” says Jordan Zager, co-founder and chief executive of Dewey Scientific, a cannabis biotechnology company in Pullman, Washington.
The technological provenance of cannabinoids might not matter as much to the pharmaceutical sector, where consumers tend to be less averse to genetic engineering. But according to Ethan Russo, director of research and development at the International Cannabis and Cannabinoids Institute in Prague, biochemically derived cannabinoids, even when mixed and matched into therapeutic formulations, will probably never equal the botanical synergy of the hundreds of molecules that are found in cannabis. The existence of this ‘entourage’ effect is not universally accepted. But to Russo, “The plant is nature’s design for this panoply of chemicals”.
Livestreaming, digital ads help cannabis businesses keep their brands on consumers’ minds
Many marijuana brands have relied on in-store pop-ups and educating budtenders about their products to reach consumers.
But as cannabis customers increasingly order products online for delivery or pickup – and with the expectation that these habits will persist after the coronavirus pandemic is under control – marijuana brands should consider more direct ways to reach their audience to ensure sales stay strong, according to industry officials.
Some of the measures cannabis brands are taking include:
Launching a hashtag campaign via social media platforms such as Twitter and Instagram.
Staying active on social media with games, happy hours, questionnaires and other interactive activities.
Livestreaming content via Facebook and Zoom.
Exploring digital advertising.
Finding a creative agency that’s willing to invest time in a company in exchange for an equity stake.
Engage with customers on social media
Denver-based extraction company Spherex launched a hashtag campaign – #stayathomewithspherex – to reach consumers and encourage people to practice social distancing.
“We try to bring the same type of engagement that you would get in-store over to Instagram by posting things like 4/20 Bingo, questionnaires and mocktail recipes using our THC-infused sparkling water Phyx,” said Dan Gardenswartz, the company’s chief financial officer.
“These interactive activities have been trending as many people are bored at home.”
When Massachusetts shut down cannabis businesses on March 24, Lee-based Canna Provisions began to develop and launch a variety of consumer-facing initiatives through social media and direct customer engagement, said Meg Sanders, the company’s co-founder and CEO.
Canna Provisions’ livestreams on Facebook and Zoom engage its customers, who are invited to provide feedback about the type of content they’d like to see.
“We began to roll out livestreams over Facebook where our staff would speak intelligently on our products, their own picks and demonstrate the level of industry and product competence that is a pillar of our customer-service business structure,” Sanders said.
“We have seen engagement insights and metrics skyrocket as a result and have legions of our customers communicating directly with us and giving us feedback, along the way creating somewhat of a community of regular viewers who have come to look forward to gathering and enjoying our online streams together.”
Try targeted digital marketing
Brett Konen, marketing manager for Seattle-based digital marketing agency PrograMetrix, said now is the time for manufacturers of cannabis products to understand that it’s not the marijuana retailers’ job to market their products – particularly since consumers have become accustomed to ordering online.
Using digital ads with an image, headline, text and a click-through can provide an effective way to reach a target audience.
Brands can choose the target audience they want to see their ads by using a platform such as New York-based Safe-Reach, which specializes in hyper-local and segmented marketing campaigns.
“You might know your target customer is a woman in her 50s who makes a certain amount of money,” Konen said. “Those are all things you can select.”
Konen said total spending on digital advertising surpassed traditional advertising in 2019.
“Digital marketing is what brands need to be doing to get themselves out there,” she added.
“The digital advertising inventory has opened up to cannabis brands in the last year. That’s where brands need to be running ads now to reach consumers who are spending 12 hours a day online.”
Use e-commerce platforms
Socrates Rosenfeld, co-founder and CEO of Santa Cruz, California-based Jane Technologies – an e-commerce platform for cannabis retailers – said his company helps brands better understand who their customers are.
Jane Technologies’ website enables users to type in whatever symptom they’re experiencing, whether it’s insomnia or anxiety, and get recommendations for products that will help and find a retailer that stocks them nearby.
“We’re bringing that consultative discovery into the online world,” Rosenfeld said. “We’re allowing brands to use our software to reach a customer directly.”
Colorado-based edibles maker Wana Brands, which works with Jane Technologies, also has teamed up with Manhattan Beach, California-based online education platform Three Wells to educate consumers who want to learn more about products that will suit their needs.
“We’re using the new marketing technologies that are out there,” Wana Brands CEO Nancy Whiteman said. “We’re developing various content and sponsorships – things that will associate the Wana brand with fun activities people can do at home.”
Wana also launched an initiative with some of its dispensary partners to give away 8,000 units of its hemp-derived CBD gummies to consumers when they pick up their cannabis products.
“It’s really just our gift to their customers,” Whiteman said. “We just want to give you this as something to help support you during this difficult time.”
Find a branding agency
Seattle-based branding agency Wick & Mortar and New York-headquartered communications agency Chapter 2 have formed a joint venture – High Grade Hope – to provide design, marketing and content creation as well as public relations, brand strategy and networking.
High Grade Hope will offer pro bono services and professional assistance to three cannabis companies. The services will include branding and marketing services to relaunch their brands in time for economic recovery.
Wick & Mortar CEO Jared Mirsky said brands should view stay-at-home orders as an opportunity to take stock of the company and develop a strategy for promoting the brand.
Finding a creative agency that is willing to work with your marijuana company in exchange for equity is time well spent while working from home.
“This is definitely a moment when we’re slowing down to tackle a big branding project,” Mirsky said. “The best work-from-home project you can do is to make a better version of your brand.”.
First Marijuana GMO Created By Monsanto
Sounding like science fiction meets Cheech & Chong, the multi-billion-dollar agribusiness titan Monsanto has announced its patenting of the first strain of marijuana that’s been genetically modified.
This news is serious business to both scientists in the field and leaders in the agricultural industry, as it represents a leap forward towards the commercial uses of marijuana and hemp products, which in turn could trigger a shift in marijuana policies in the U.S. and around the world.
According to U.S. federal law, marijuana is presently illegal to possess, use, buy, sell, or cultivate, because the Controlled Substances of Act of 1970 classifies marijuana as what is called a Schedule 1 drug. However, as is widely known – and is ground-breaking historically – it has been decriminalized in some regards in particular U.S. states.
The fact that a mainstream company like Monsanto has stepped into the field is being called “a major shift in marijuana policy in the U.S.” by pot pundits, since it is felt that no company would expend so much in terms of funds, time, and research if it had not had “previous knowledge” that the Federal government was open to the future legalization of cannabis and its derivatives.
Meanwhile, marijuana legalization advocates and activists see Monsanto’s commitment to the work that resulted in the new genetically modified strain as a “great step toward legalization on a massive scale” in the U.S.A.
This opinion is echoed by marijuana law special Edmund Groensch of the Drug Policy Alliance, who admits the corporate giant’s delving into marijuana research can only reinforce the cause of pro-legalization lobbyists:
“Currently, federal law criminalizes marijuana and hemp derivatives because public opinion is still against it and legal commercial production in the U.S. is currently handled by a patchwork of small farmers who are not trusted by investors. A major player [such] as Monsanto could bring confidence within government and towards investors in the market if it were to own a large part of the exploitable lands and commercial products.”
James Adamson, president of Medical Marijuana Technologies, is among those experts who are of the opinion that the quickest road to marijuana becoming legal in the U.S. is through a branding of the genetically modified strain:
“There is presently no way to control the production of marijuana and the quality of the strains. A GM strain produced by a company with the credentials and prestige of Monsanto would definitely lend a massive hand to pro-legalization activists within certain spheres of government and within the business world.”
Before the hopes of 420 advocates are raised prematurely, it’s worth keeping in mind that Monsanto’s testing on the cannabis plant is only at the experimental stage. No definitive game plan has been announced by the multinational as to what ultimate purposes they’ll have for the new patented strain. That said, experts in the field are saying that a clearer forecast should not be too far away, as there are already rumors of a new bill – a controversial one, to be sure – which could “loosen up laws around medical marijuana” if Congress passes it.
Somewhere between profits and prophets of doom, some fear that genetically modified cannabis will mix with other strains and that this could ruin the diversity of DNA, though this isn’t borne out by most studies, say experts in this rapidly growing field.