What’s Up in Weed


The second wave of recreational cannabis is here.  Here’s what you need to know!


What is Cannabis 2.0?

  • This is the phrase used to refer to edibles (foods and beverages infused with cannabis), extracts (solid or liquid products that are produced by processing cannabis flower into a concentrated form, to be either ingested or inhaled), and topicals (products such as lotions and oils that have been infused with cannabis extracts and are meant to be applied to the external body surface which includes hair, skin and nails) that were legalized by new regulations to the Cannabis Act that came into force on October 17, 2019.
  • Previously, the only types of cannabis products contemplated by the Cannabis Act were dried cannabis flower, cannabis oil, live cannabis plants, cannabis plant seeds, and fresh cannabis (freshly harvested cannabis buds and leaves).
  • This new round of products allows for a wide array of new ways of consuming and experiencing cannabis, many of which do not require smoking or combustion.

Which kinds of new products are coming?

Category

 

Product

 

Expected Pricing

 

Brands With Products Submitted to OCS

 

Edibles Chocolate, cookies, mints, and soft chews $7 to $14 per package Tokyo Smoke, Dixie, Aurora Drift, Foray, San Rafael 71 and KOLAB

 

Beverages Tea, flavoured soda, and sparkling water $4 to $10 per 355mL can Tweed, Haven St and Houseplant

 

Vapes Vape pens, 510 thread cartridges, and vape kits $25 to $125 Aurora, San Rafael ‘71, RIFF, Solei, Good Supply, dosist, Foray, Kolab, Tweed, LBS, Van der pop, TWD, Tokyo Smoke, FIGR, Edison, Trailblazer, Redecan, Sundial and Top Leaf

 

Topicals Creams, bath salts, and body butter $15 to $55

48 North, Earth Dragon, United Greeneries and CBD Acres

 

Extracts Shatter, wax, rosin, kief, and hash $30 to $70

Fireside and Canna Farms

 

Accessories Dab rigs, storage containers, rehydrating stones, and batteries $2 to $170 JUJU Power, Tokyo Smoke LUMA, FIGR, Pulsar, Dewbie and PAX Labs

When are products going to be available?

Why weren’t products available as of October 17, 2019 when the new regulations came into force?

  • In order to legally ship and sell 2.0 products, licensed producers must first apply for an amended license, submit products for a 60-day review period, and finally pass quality assurance standards. When products meet these criteria, they may be introduced to the market.
  • Licensed producers could not apply for the new license until October 17, 2019 when the law first recognized these new product classes. New product rollouts are therefore expected to be staggered as LPs make their way through the regulatory approval process.

What are the rules and requirements for 2.0 products?

Edibles:

      • 10 mg of THC per package
      • No added nicotine, vitamins, or minerals
      • Limit to caffeine added
      • Cannot require refrigeration

Topicals:

      • 1,000 mg of THC per package
      • No added nicotine or alcohol
      • For use only on skin, hair and nails
      • Not for use on eyes or damaged skin

Extracts (for vaping):

      • 1,000 mg of THC per package
      • No added nicotine, vitamins, minerals, sugars, sweeteners or colours

Extracts (for ingesting):

      • 10 mg of THC per unit (for example, a capsule)
      • 1,000 mg of THC per package
      • No added nicotine, vitamins, minerals, sugars, sweeteners, or colours
      • Must include a dispensing device if not in unit form

What is the likely impact of Cannabis 2.0?

  • A 2019 Deloitte report pegs the potential market for Cannabis 2.0 products at $2.7 billion, but predicts a “slow burn” to start.
  • According to ex-Canopy CEO Bruce Linton: “2.0 is the point in which the cannabis industry stratifies. Do you grow biomass, extract oils or create goods that people will line up for? There aren’t going to be that many companies that have the full triangle.

…When you start selling things in milligrams, it’s a different story. Grams aren’t a brandable thing. It’s not a unique formulation. 2.0 is about milligrams.  Milligrams are an extracted formulation. The options around a milligram is limitless.

…Margin opportunities are higher in creating branded milligram products. If you can’t sleep and you get a formulation with cannabinoids that helps you, what would you pay for that? Whatever the price is. And if the active ingredients costs 20-cents, whoever makes that… that’s who wins.”

Where can I find more information?


Cool Links

  • SkyLaw client New Maple Holdings Ltd. had a magical holiday season: its wholly-owned subsidiary CanWe Growers Inc. became a licensed producer on December 20, 2019. SkyLaw incorporated New Maple Holdings exactly three years to the day before that, on December 20, 2016.  We couldn’t be more proud of the indefatigable team that New Maple represents.  CanWe?  Yeah, you sure can!
  • Natalie Renner, a partner at Davies, Ward, Phillips and Vineberg LLP, was quoted by the Globe discussing the intersection of the cannabis industry and rules of bankruptcy and insolvency. The biggest issue: cannabis licences can’t be transferred (except through a sale of the LP itself).  This significantly reduces the pool of possible buyers for distressed assets, Natalie explained.  “In liquor, which is a great example, they have the ability to transfer a licence to the insolvency professional, a receiver, and they have the ability to hold the licence for the purposes of operating the business in lieu of the company’s management.”  Natalie noted the need for a cannabis as a regulated industry to have carve-outs to deal with insolvencies and transfers of licences.
  • New York will legalize recreational cannabis this year: Gov. Andrew Cuomo.
  • After a petition, the Ohio medical board will consider whether being a fan of the Cleveland Browns or Cincinnati Bengals NFL teams, which have not had a playoff win since 1995, is a condition that officially qualifies for medical marijuana use.

What’s Up in Weed is not legal or financial advice. It is a blog by SkyLaw which is made available for informational purposes only and should not be used as a substitute for professional advice from a lawyer. This blog is subject to copyright and may not be reproduced without our permission. If you have any questions or would like further information, please contact us. The SkyLaw team would be delighted to speak with you.

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