OUR MISSION:
TO PROTECT PUBLIC HEALTH, CONSUMER SAFETY, AND SAFEGUARD THE ENVIRONMENT BY PROMOTING INTEGRITY IN THE CANNABIS INDUSTRY

CANNABIS ADMINISTRATION AND OPPORTUNITY ACT: RESPONSE LETTER

Below is the complete response letter from FOCUS in regards to the CAOA, and submitted as part of the request for public commentary. Format has been edited, but not content. The original letter and formatting are available for download via the link at the bottom of this page.

RE:        The Cannabis Administration and Opportunity Act Draft Bill

Foundation of Cannabis United Standards (FOCUS) would like to thank the Senators Chuck Schumer, Ron Wyden, Cory Booker, and Patty Murray for their hard work and dedication to the cause of federal cannabis reform in the creation and sponsoring of the draft bill titled The Cannabis Administration and Opportunity Act. We would also like to thank the Senators for their willingness and generosity to accept public commentary on this proposed legislation.

Established in 2014 as The Cannabis Health and Safety Organization, FOCUS is a 501c3 non-profit that addresses the many shortcomings in quality, safety, and consistency that have become evident with the explosive growth of the cannabis industry. FOCUS exists to help assure the rapidly growing global cannabis industry has the necessary protections in place for the health, safety, success, and welfare of everyone.

Through our cannabis regulatory partnership with the Association of Food and Drug Officials, (AFDO), FOCUS offers a comprehensive and unparalleled solution to federal cannabis oversight and standards in the United States.

Established in 1896, AFDO is an international, non-profit organization that is at the forefront of streamlining and simplifying regulations. Their impressive body of work predates the Food and Drug Administration and includes the passage of the Pure Food Act of 1906. AFDO is an international leader and trusted resource for building consensus and promoting uniformity on public health and consumer protection issues related to the regulation of foods, drugs, devices, cosmetics, and consumer products.

AFDO and FOCUS both represent the gold standard in their sectors: AFDO in food, drugs, and the manufacturing of all downstream products, and FOCUS in the quality, health, and safety of cannabis and cannabis products. Collectively, AFDO and FOCUS serve as the core point between all industries cannabis touches, and as such are uniquely positioned to offer in-depth assessments of this proposed bill and provide the solutions needed to enact effective and comprehensive federal legislation of cannabis. FOCUS and AFDO have already completed a large portion of this effort by working in tandem to determine the operational, quality, and safety standards for the federal regulation of cannabis. We feel confident that our comments will easily resolve many of these questions.

This document serves as our formal reply to the request from the Senators for commentary on the Cannabis Administration and Opportunity Act. We address most aspects of this proposed legislation, even when not directly related to cannabis health and safety. FOCUS’ expertise, combined with our independent, unbiased, third-party status allows us to respond from a neutral standpoint, providing equal benefit to all stakeholders while prioritizing health and safety.

Lezli Engelking
Founder and President
FOCUS

WHO IS FOCUS?

Foundation of Cannabis Unified Standards (FOCUS) was formed in 2014 as an independent, non-profit, health and safety organization to address the many quality and safety shortcomings that became evident with the explosive growth of the cannabis industry. FOCUS operates within the cannabis space—we are not a cannabis company, an industry trade association, nor are we an advocacy organization. FOCUS is an unbiased, third-party with no financial stake in—or funding from—the cannabis industry.

FOCUS works around the world to help policy makers, public health agencies, and operators navigate the complexity and risks specific to the cannabis industry, and does not advocate on behalf of nor push cannabis policy. FOCUS is dedicated to developing cannabis-specific Good Manufacturing Practice (GMP) voluntary consensus standards and providing third-party internationally accredited certification. These standards guide operators and regulators alike and ensure only safe, consistent, quality cannabis products are available within the marketplace.

This autonomy fosters a principled, objective, cannabis-specific certification body that protects end users, and acts as the much needed, neutral, non-partisan bridge between industry and regulatory bodies.

WHAT FOCUS DOES

The FOCUS business model is based upon the events of the 1990’s when a heroin epidemic swept the United States. Within a few years, methadone clinics had popped up all over the country. Like cannabis businesses in the US today, these methadone clinics operated under different state, city, and county regulations, without any federal oversight or standards to guide the industry. A 1995 study by the Institute of Medicine (IOM) produced the report Federal Regulation of Methadone Treatment as a proposed solution to this problem.

In September of 1997, a Request for Proposal (RFP) was released, based on the IOM report, seeking a non-profit organization to serve all organizations (local, state, and federal) and develop voluntary consensus standards, training, and a third-party certification program for the methadone clinics. The Commission on Accreditation of Rehabilitation Facilities (CARF) answered and won the proposal and continues to contract with Health and Human Services to run the program today.

By 2001, Department of Health and Human Services Substance Abuse and Mental Health Services Administration issued Opioid Drugs in Maintenance and Detoxification Treatment of Opiate Addiction, Final Rule 21 CFR Part 291 and 42 CFR Part 8.

The only significant difference between the CARF and FOCUS business models is that the federal government has not taken a leadership role in development of cannabis standards.

The National Technology Transfer and Advancement Act of 1995 (NTTAA) Public Law 104-113 codified pre-existing policies on the development and use of voluntary consensus standards by Government Agencies in OMB Circular A-119. Revised on January 17, 2016, the policies in the Office of Management and Budget (OMB) Circular direct agencies to use voluntary consensus standards in lieu of government-unique standards except where inconsistent with law or otherwise impractical with the intention to reduce to a minimum the reliance by agencies on government-unique standards.

Voluntary Consensus Standards (as defined in the 1995 NTTAA) are technical standards that are developed or adopted by voluntary consensus bodies. A voluntary consensus standards body is defined by the following attributes:

  • Openness
  • Balance of interest
  • Due process
  • Appeals process
  • Consensus, defined as general agreement, but not necessarily unanimity, and includes a process for attempting to resolve objections by interested parties wherein if all comments have been fairly considered, each objector is advised of the disposition of his or her objection(s) and the reasons why, and the consensus body members are given an opportunity to change their votes after reviewing the comments.

STANDARDS DEVELOPMENT PROCESS

In 2014, FOCUS contracted with the American National Standards Institute (ANSI), the US body for ISO, to guide standards development and assure FOCUS Standards meet all requirements for international voluntary consensus standards and thus, could be considered and used in federal regulations. A short time after engaging with ANSI, FOCUS received word that the board of directors had reversed their decision to work with cannabis due to its federal illegality.

Despite this initial setback, FOCUS followed all requirements in ANSI’s Essential Guidelines for Standards Development and continued to communicate with ANSI throughout the development process to assure standards that were suitable for accreditation and adoption into federal regulations.

FOCUS STANDARDS

Rather than recreating the wheel, FOCUS used existing federal and international guidelines for GMP, GACP, GPP, GDP, GRP from the World Health Organization (WHO) and World Trade Organization (WTO), as well as Hazard Analysis Critical Control Points (HACCP), Food Safety Modernization Act (FSMA), Global Cannabis Regulations, Occupational Safety and Health Association Guidelines (OSHA), ISO Standards (including 9000, 14000, 17000, and 22000), Global Food Safety Institute, American Herbal Products Association Cannabis Monograph, and US Code of Federal Regulations (CFR) Title 21 Parts:

  • 110 Current Good Manufacturing Practice in Manufacturing, Packing, or Holding Human Food
  • 111 Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements
  • 117 Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Human Food
  • 210 Current Good Manufacturing Practice in Manufacturing, Processing, Packing or Holding of Drugs, general
  • 211 Current Good Manufacturing Practice for Finished Pharmaceuticals

After 2.5 years, with the participation of over 300 expert volunteers, FOCUS cannabis-specific, voluntary consensus, management system standards and Good Manufacturing Practices for Cultivation, Manufacturing, Laboratory, and Retail were published and ready for use in the marketplace.

 

FOCUS ACHIEVEMENTS AND TIMELINE

Since 2016, FOCUS has worked closely with the Association of Food and Drug Officials (AFDO) to provide cannabis-specific education and training to food, drug, and agricultural officials across the country. This includes hosting annual seminars at AFDO’s national and regional affiliate conferences, hosting webcasts, and organizing educational tours of cannabis facilities to bridge the knowledge gap between regulatory agencies and the industry itself.

In March 2019, AFDO and FOCUS formalized a partnership in which FOCUS serves as AFDO’s cannabis Regulatory Partner. The organizations collaborate to develop hemp model code, as well as cannabis-specific training courses that are delivered through the online FDA training platform. Hemp Model Code was published in March 2021, and initial development of model code for the adult and therapeutic use of cannabis/marijuana will commence in 2021 through AFDO’s cannabis committee. Through this committee, AFDO and FOCUS will establish various steering groups comprised of interested Subject Matter Experts and stakeholder groups to address each of the specific requirements of a federal model code for therapeutic and adult-use cannabis.

In January 2017, ASTM International reached out to FOCUS to partner on the development of additional cannabis standards using FOCUS Standards as the foundation for globally harmonized cannabis standards. The two organizations signed a derivative works licensing agreement, allowing ASTM to use FOCUS standards in their process. While FOCUS continues to serve as a member of the Executive Committee for ASTM’s D37 Cannabis Committee, in-house standards development and updates at FOCUS will begin in Q1 2022, effectively dissolving the licensing agreement between ASTM and FOCUS.

Two years later, FOCUS signed a similar derivative works agreement with Bureau of Standards Jamaica (BSJ), to use FOCUS Standards as the basis of Jamaica’s cannabis standards. FOCUS is currently working with the Jamaican government and food safety agencies to develop guidance and training for Jamaican farmers to assure their products are accepted in the global marketplace and ensure adequate protections for health and safety.

In 2019, ANSI reached back out to FOCUS about becoming an internationally accredited, cannabis-specific certifying body. FOCUS has been working on the accreditation and expects it to be completed in Q1 2022. A comprehensive update of the FOCUS standards will begin Q1 2022, with several additional standards also planned.

FOCUS’ independent, unbiased status, combined with our network of important public health, safety, and standards organizations around the world have provided the opportunity to engage with the WHO, the United Nations (UN) as well as cannabis businesses, other governmental bodies and policy makers in 29 states and 12 countries to develop cannabis policies and guide scheduling, while ensuring adequate protections for quality, health and safety.

INSURANCE/RISK MANAGEMENT

Like most commercial manufacturing or agricultural businesses, cannabis-related businesses experience exposure to third-party general liability and product liability, as well as first-party property losses such as recall or theft. However, the potential for loss in a cannabis business is greater than the risks similar businesses in other industries are exposed to—forcing insurers of cannabis to face a unique combination of risks that very few understand. If consumers purchase a cannabis product that is contaminated or mislabeled, cannabis businesses can be charged with violating state regulation.

Cannabis businesses also face increased risk due to limited banking access. Data suggests that 70% of US cannabis businesses currently operating in compliance with state laws have no relationship with a financial institution. This situation forces cannabis businesses to keep large amounts of cash on hand, increasing risks related to theft, extortion, diversion, and ransom. Additionally, most cannabis retailers are unaware that they can be held liable for a defective cannabis product, even if they had nothing to do with its production or manufacturing.

Insuring cannabis businesses requires that each insurer possess deep knowledge of the legal issues, emerging risks, and operational practices involved. FOCUS standards build confidence for the insurance and risk management sectors engaging with cannabis, as they form a comprehensive baseline for measuring risks within facilities and operations.

Risk assessment reports based on FOCUS standards can be easily translated into individual company’s rate tables, providing a standardized process for determining insurance premiums that can be replicated across the country. FOCUS currently contracts with multiple insurance carriers who have adopted our standards as a baseline. To further address the haphazard coverage and disconnect between insurance and cannabis, FOCUS is currently developing a comprehensive cannabis underwriting standard for each aspect of the cannabis supply chain, as well as standardized global cannabis insurance applications and forms.

CANNABIS PROGRAM DEVELOPMENT AND OVERSIGHT

As the first and oldest cannabis standards development organization working with both hemp and marijuana, FOCUS can provide the comprehensive insight and guidance needed to enact federal legalization and decriminalization in a meaningful way while addressing all stakeholder concerns. FOCUS Standards and third-party certification provide a turnkey framework for federal, state, and local lawmakers when creating and implementing cannabis regulations.

The combination of government regulation with standards and third-party certification supports the needs of both regulatory and industry by protecting public health and consumer safety, while establishing a strong foundation for industry growth. Federal, state, and local agencies responsible for developing, regulating, and overseeing cannabis programs are faced with assuring the compliance of an increasing number of entities and products, often without a corresponding growth in agency resources.

Standards-based regulations and third-party certification are a proactive approach to regulations that improve the efficiency and resiliency of a regulatory system. They help to establish a new regulatory program quickly, and lower costs for developing and enforcing regulations. Inspection and monitoring strain agency budgets; third-party Certification leverages private resources and expertise to improve inspections and compliance.

Standards-based certification also provides more complete and reliable health, safety, and compliance data collection reducing the regulatory burden. By integrating third-party assessments, regulators can be confident that claims of conformance are legitimate in relation to products, processes, services, management, and personnel. The use of third-party accreditation is frequently used in lieu of or to support independent government regulatory inspections programs, most commonly in healthcare by the Centers for Medicare and Medicaid Services.

ASKING THE WRONG QUESTIONS

FOCUS is extremely grateful to the Senators for their work to draft a comprehensive cannabis legalization proposal. After a thorough review, it is clear all aspects of the legislative draft and subsequent questions are tailored after existing regulations for alcohol and tobacco. As a health and safety organization, FOCUS would be remiss not to mention the considerable chasm this legislation would leave related to the myriad reasons Americans are already consuming cannabis.

It is not uncommon for the decades-old stigma related to cannabis/marijuana to obscure a straightforward path for the regulation of cannabis at the federal level, nor is it abnormal for cannabis to be pigeonholed into a specific category, such as alcohol or tobacco. However, it is important to remember that many agricultural products, such as corn, have multiple uses—and regulatory pathways—and cannabis is no different. Federal cannabis legalization will require multiple bills, specific to each regulatory pathway and existing regulatory bodies appropriate for each type of use. As such, it is critical to first identify these different pathways, as well as potential regulatory agencies involved.

 

SUGGESTED FRAMEWORK

ARCHITECTURE

What is needed is an uncomplicated architecture for cannabis legalization and regulation that addresses all uses of cannabis, including Therapeutic/Adult-use, Consumer Packaged Goods (CPG)/Food & Beverage, Industrial, and Pharmaceutical. Not to consider the entire cannabinoid space is a critical error. Can you imagine if we chose only to regulate corn as food when it can also be fuel? In this case, what if we ignored cannabis as medicine or as an important portion of industrial applications?

Data from the OTC & Pharma 2021 special of Statista’s Global Consumer Survey shows that 43 percent of Americans have tried cannabis or one of its derivative products like CBD for medical purposes. According to the survey, three in 10 adults consider cannabis/CBD a good alternative to traditional medical products, while 24 percent prefer it over chemical medications.

Any acceptable framework for US cannabis legalization must first prioritize the health and safety of all Americans. After all, that is the purpose of our government—to protect its people. If done properly, legalizing cannabis at the federal level will help to achieve many of the Biden-Harris Administration’s immediate priorities: restoring America’s standing in the world; rebuilding democratic alliances across the globe; championing America’s values and human rights; and equipping the American middle class to succeed in a global economy.

To accomplish this, any national framework must assure only safe, quality, consistent products reach the marketplace. It must also assure safe workplaces that do not jeopardize employee health and safety. It must assure protections for the public as it relates to accidental ingestion, driving under the influence, security, and safety. We have already witnessed the outcome of federally legalizing hemp without an adequate regulatory system in place: unsafe, untested products are now being sold to unsuspecting Americans in convenience stores and gas stations across the country, creating doubts in the minds of Americans regarding the effectiveness of our government to protect the health and safety of its citizens.

Rightfully so, as products containing dangerous chemicals and other contaminants continue to be sold, with the potential to damage the long-term health of those consuming these unsafe products.

The same has occurred within individual state cannabis programs. There is not a single program that currently provides adequate protections for health and safety. State regulations attempt to control quality and safety in a reactive manner, through third-party testing. The problem with this approach is that the quality and safety of a product is based on what happens during the production and manufacturing processes. This means the quality and safety of a product is determined well before reaching the third-party lab for testing.

State rules miss this critical aspect to regulations, leaving an emerging industry – without experience producing food, medicine, or any consumer goods at scale—searching for guidance. As a result, we continue to see persistent recalls and news reports demonstrating how frequently legally produced, contaminated and unsafe cannabis and cannabis products are sold within state systems.

The E-cigarette and Vaping Associated Lung Injuries (EVALI) Crisis is a perfect example, as it was driven by the use of THC-containing products and is linked to thickening agents or dilutants in product formulations. As of January 7, 2020, a total of 2602 cases of EVALI had been reported to CDC from all 50 states, as well as the District of Columbia, Puerto Rico, and the US Virgin Islands, with 57 confirmed deaths. Nationally, most of these patients reported using THC-containing products.

While the cannabis industry does not like to take responsibility for any of these cases, there is controlled data to disprove this argument by states who have identified EVALI related issues related to dangerous products being sold within legal state marketplaces.

RESPONSES TO QUESTIONS

 
Section 101/Page 5. Decriminalization.

Decriminalization is critical as a first step in the overall legalization of cannabis. FOCUS is not an advocacy organization, and we do not take a position on cannabis legalization overall. However, for clarity and continued forward progress of the United States, we believe a comprehensive decriminalization bill must be separate, and come prior to, any other legislative efforts related to cannabis legalization.

Decriminalization should address all issues within the CSA, so it is critical to first understand foundational issues and reasons these policies were enacted in the first place. A comprehensive review of the reasons why existing US drug policies were enacted must be conducted. That information should then be used to amend the CSA to allow research to be conducted on all potentially therapeutic substances. These decisions must be based on public health and safety first and foremost. The United States’ outdated policies in this area continue to provide ample opportunity to other nations to gain traction and move ahead of the United States in new industries, cannabis being a perfect example. There are currently 48 countries that have enacted cannabis policy at the federal level. Most of the world would prefer to follow US standards and guidance, but without decriminalization and an effective framework for each of the legalization pathways, this is not possible.

Section 101/Page 5. Definitions.

At the heart of every successful industry is a core set of standards and definitions against which that industry measures themselves, and to which regulatory authorities and the public can look to ensure products are safe and of good quality. This is not a new concept, nor is it specific to cannabis. In fact, a court ruling in the past week approved the use of the legal term “dairy” to market their plant-based butter. This same situation is further compounded in cannabis, given its multi-faceted uses and product formulations. Standards, and their associated nomenclature, must be the foundation upon which all federal cannabis program are built.

Like standards, cannabis legalization begins with adopting a common, universal vernacular. The first step to understanding is to first become familiar with the language. With the explosive growth of the cannabis industry on a global scale, this becomes even more important.

How can products and regulations be effectively compared without agreement on the meaning of the terms within? How can products be imported and exported without a basis for ensuring the products meet standards? Ensuring we are all using the same nomenclature drives effective communication, collaboration, and, ultimately, adaptive regulations. Other benefits of establishing a common nomenclature include:

  • Allowing for the organization and classification of information in a systemized manner
  • Permitting people throughout the world to communicate about cannabis unambiguously
  • Eradicating confusion in legal and trade agreements
  • Providing clarity and precision on global trade requirements
  • Streamlining understanding of key business concepts
  • Advancing global trade

The definition of cannabis must account for the cannabis plant in its entirety, as well as all the varied uses. This includes industrial uses, as well as CPG/food & beverage, therapeutic/psychotropic, and pharmaceutical uses. As such, any comprehensive definition of cannabis must also include what the US refers to as hemp. From a scientific perspective, they are the same plant; the different definitions simply reflect outdated US federal regulatory concerns, rather than the totality of the plant. Even the FDA recently decided to merge their cannabis and hemp working groups, after duplicating efforts in so many areas. Unless the two terms are merged, confusion will remain, requiring double the oversight efforts.

One extremely common phrase that exemplifies the lack of common nomenclature in the cannabis industry is “medical cannabis.” In the US, this term refers to cannabis grown in a state that has legalized the production of cannabis for medical use. The term does not have any correlation to the type of cannabis grown, the way it was grown, the level of cannabinoids within the plant, or the quality of the product. “Medicinal” use requires better definition, as the existing cannabis industry and FDA use the term for very different meanings. In the rest of the world, the phrase “medical cannabis” is used to describe the cannabis species hemp, which is grown for medicinal purposes.

Having a cannabis nomenclature in place facilitates regulations, operations, compliance, and the overall progress of the industry by standardizing terms that enable communication despite linguistic and other barriers. The cannabis industry can learn a lot from the supplement industry, which proceeded without an agreed upon nomenclature, and as a result lost out on years of opportunities.

  • All natural cannabis products can be articulated by source: seed, stalk, flower, or biomass (a combination of any of the first three)
  • Derivative cannabis products that come from processing biomass desperately need to be defined. Other than certain cannabis products already defined as GRAS (hempseed, hempseed oil), most lack an agreed-upon definition.
  • Defining all input materials and categorization of output products is also necessary.
  • Clarification of cannabis and cannabis-derived products to include psychotropic or intoxicating categories would allow for regulation, akin to corn and alcohol.
  • Psychotropic uses, such as those already regulated by states, should be aligned and restricted in a similar way to alcohol, as is already in place in most states.
  • Non-psychotropic uses should be regulated as food and beverages, considering the massive amount of anecdotal safety evidence, and the World Health Organization’s recent review and decision related to cannabis rescheduling. All non-psychotropic uses must include a formal plan to demonstrate safety to FDA over a 5-year period.
  • Industrial uses should be categorized like other agricultural inputs.
  • Restricting use of certain terms from marketing purposes would also simplify understanding. A lack of agreed-upon acceptable marketing terms is currently the cause of great confusion due to the absence of federal regulations.

Section 111/Page 6. Recognition of State Laws.

Most state level cannabis regulations are nothing more than “bandwagon” regulations—meaning they are developed based on what other states have already implemented—effectively making the US cannabis marketplace a huge experiment utilizing American citizens as the test subjects. The lack of federal oversight and guidance for cannabis has created a reactive environment within state regulatory programs. Because standards have not existed within the cannabis industry, state level policy makers and regulators continue to spend time and taxpayer dollars attempting to reinvent the wheel, jeopardizing both consumers and public health, as well as the success of the US cannabis industry.

The reactive nature of state regulatory programs has quickly become the single greatest challenge facing the success and safety of the cannabis industry and absolutely must be addressed proactively by any federal initiative.

The adult use/therapeutic use of cannabis should remain under the control of individual states. The federal government must establish minimum standards for all cannabis and cannabis products. Like the intersection of federal and state food regulations, currently disjointed and conflicting cannabis state regulations need to work under national standards for all processes within the supply chain, as well as end products.

If a cannabis or a cannabis product is to be sold across state or international lines, there must be additional standards and regulations established that must be met, maintained, and monitored. A lack of standardization increases confusion and conflates terms and processes that have different uses, some scientific, some for marketing, some vernacular—all adding to a growing lack of clarity that must be resolved.

This requires that open-source standards—created with rigorous attention to health and safety throughout all aspects of the cannabis supply chain—are embedded within the legislation and made understandable through regulation and guidance. Management System standards that define good agricultural, collection, distribution, and manufacturing practices, like FOCUS standards, allow for simpler regulation of all cannabis and cannabis-related products.

Effective training guidance, such as that developed by FOCUS and AFDO, provides the ability to conform to these standards, enabling a leveled playing field for smaller farmers and processors to compete with larger entities. Not only do standardized, quality-assured products meet multiple aspects of the United Nations’ Sustainable Development Goals; they also increase consumer trust in legally supplied products and remove the urge to turn to the illicit market.

Given the extensive number of and variation among state cannabis programs within the US, it is also advisable to implement a neutral Planning and Coordination Office (PCO) to facilitate the strategic evolution of the cannabis industry across all agencies, including local, state, and federal. Unlike a Program Management Office (PMO), which oversees implementation and enforcement, the role of the PCO is to facilitate strategic decision-making, research, and stakeholder coordination through the planning and design of initiatives.

It is critical to draw on the experience of not only cannabis operators themselves, but also regulators, public health officials, scientists and the law enforcement communities that possess direct experience with cannabis, to ensure diverse viewpoints and policy priorities are properly represented.

Section 111/Page 8. Anti-Diversion Provisions.

After a common nomenclature is adopted, the next step is to gain a comprehensive understanding of the inherent risks within the industry. Functional risk management solutions that effectively measure and monitor risks within the cannabis industry must be developed, and any anti-diversion provisions must include the monitoring and measuring of all inputs and outputs within the daily operations of a cannabis business.

Without knowledge of what occurs inside a cannabis business, or how it is occurring, it is impossible to understand how potential diversion, inversion, and money laundering can occur. Focusing on financial transactions and taxes is not enough, because illegal activities can and do happen at the operational level, through cultivation, manufacturing, and retail transactions, which are never documented or reported. Inversion (bringing product and/or ingredients into a licensed business from the illicit sector) and diversion, are two very real and significant examples of cannabis risks that cannot be mitigated through financial or tax documentation requirements alone.

Section 301/ Page 8. Retail Sale Age and Quantity Restrictions.

Until individual cannabis pathways have been set, it is futile to work to determine a minimum age or quantity requirement. Attempting to do so will only lead to further confusion in the marketplace. Only after the critically important foundational work has been done to define cannabis pathways and standardize cannabis and its products at the federal level, should age or quantity restrictions be considered.

Section 201/Page 9. Evaluation of Societal Impact.

Societal impact has become an increasingly important aspect of all legalization measures given the clear correlation between the War on Drugs and its effects on certain communities who are now struggling to get into the legal industry. Additional societal impacts include how legalization effects teens and minors, second Amendment rights, and the operation of vehicles and heavy machinery.

Any movement on a federal level must keep these factors in mind as they move forward. That said, social equity and impact can’t be considered at the CPG or Pharmaceutical levels, so the individual regulatory pathways for cannabis, as proposed previously, must be established first.

Due to the current federal constraints, there is no single source for reporting information on this topic, though individual states have conducted research into this, and have often come to similar conclusions.

Section 202/Page 9. Conduct Research.

As a controlled substance, traditional routes of research have not been available to cannabis. Although it is common for someone to cite a lack of research, cannabis is an extensively studied plant if one simply looks outside the US. A comprehensive review of existing research should be conducted at the federal level to identify knowledge gaps and determine which data are needed and appropriate to consider based on the regulatory pathway. Upon completion, research priorities should be established for each of the four cannabis pathways as laid out in the framework and architecture sections above. CPG should establish the research priorities for that area of the framework.

The CPG pathway needs to determine what research is needed if we are to safely use cannabis in food and beverages. The Pharmaceutical pathway will determine what research is needed to safely use cannabis as a drug. Likewise, the industrial and therapeutic/psychotropic pathways will need to determine what information is required for those pathways. Dollar amounts and specific grants for research will be much easier to determine once individual pathways, and oversight agencies for each pathway are determined.

Section 401/Page 18. Proposed Cannabis Excise Tax

Once again, FOCUS believes that establishing any sort of excise tax related to cannabis must occur after cannabis and cannabis products have been effectively categorized and defined. We can say for certain, without having completed a cost analysis of implementing this type of legislation in the marketplace, at today’s existing costs to produce and manufacture cannabis under current conditions, this legislation lacks the financial feasibility for any cannabis producer to implement and participate in a marketplace. Ultimately, consumers would be paying almost double what they pay now, and operators would be subject to additional regulatory fees based on type and strength of the products produced. State cannabis programs have provided immutable evidence proving that heavily taxing cannabis therapeutic/psychotropic products drives people back into the illicit market.

As this is counterintuitive to the entire point of legalization, FOCUS encourages extensive and thorough research to find the appropriate balance.

An additional priority should include a formal examination of the existing tax systems within CPG industries that originate with agriculture. In these systems, the primary producers (farmers/growers) only receive a tiny portion of the positive economic benefits, as compared to those producing retail products made with the same primary agricultural input.

Reconsidering this end consumer tax could provide an effective carried interest for those earlier in the supply chain, supporting the holistic and overall ecosystem of cannabis in the US. This could include a portion of the government’s total tax being “recycled” back to the primary producers, like fertilizer for the crop. The economic effect of 1-2% royalty going back to growers would meet many local rural developments needs across the country, while also supporting the United Nations’ Sustainable Development Goals.

Section 401/Page 20. Operational Rules for Cannabis Manufacturing.

Operational rules for manufacturing and other aspects of the supply chain for the therapeutic/psychotropic cannabis pathway are one of the easier parts to resolve, as FOCUS and AFDO have already completed a large percentage of the work. Like everything else that is consumed or ingested by humans or animals, cannabis operational standards for manufacturing must follow existing guidelines for safe production, manufacturing, and distribution of other Consumer Packaged Goods. These requirements are what FOCUS Standards, Hemp Model Code, and the upcoming Model Cannabis Code are centered around. We have included the Manufacturing Standard Index as Appendix A. (Appendix A available in the downloadable document located  below).

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