Business
Canada cracking down on words ‘soda’ and ‘cola’ on cannabis labels
Health Canada is asking federally licensed cannabis producers to stop using certain words on labels and in promotions for infused beverages, warning they could appeal to young people.
The words – “soda,” “cola,” “root beer” or “ginger ale” – do not comply with Canada’s strict labeling and promotions requirements for cannabis, according to an email obtained by MJBizDaily that was sent by Health Canada to companies producing the affected products.
Health Canada is requesting businesses to “cease all non-compliant promotion and labelling of cannabis,” the email reads.
The apparent crackdown could have a big impact on the increasingly popular carbonated cannabis beverage category, which accounts for almost 60% of all cannabis beverage sales.
About half of the best-selling carbonated cannabis beverages could potentially be affected, according to an analysis by Seattle-based market analytics firm Headset.
George Smitherman, CEO of the industry group Cannabis Council of Canada, is perplexed by Health Canada’s latest actions.
“The array of beverages available to adults in a store where kids cannot go has improved significantly, but many companies will be put out of business by these prohibitions on nomenclature that are not rooted in science,” he said in a phone interview.
Another industry executive, who requested anonymity, voiced concerns about how Health Canada’s move could undermine the marketing of infused beverages.
“It’s unclear to me what alternative labeling would satisfy Health Canada, yet also properly inform potential consumers of what kind of product is on offer,” the executive said.
Replying to queries from MJBizDaily via email, Health Canada acknowledged it is communicating with the cannabis industry “regarding beverages containing ‘soda’ terms in their name.”
Citing a policy statement on the Cannabis Act, the spokesperson said Health Canada’s decisions about whether a product is appealing to young people are made “based on the facts of each case and after considering a range of factors.”
Those factors include a product’s: shape, color, smell, flavor, name and how it’s presented to consumers.
“The terms ‘soda,’ ‘cola,’ ‘root beer’ and ‘ginger ale’ are considered potentially appealing to youth because they commonly refer to a soft drink, which is one of the examples set out as being prohibited under the policy statement,” the spokesperson said.
The email sent by the federal regulator to licensed producers stated, “It is Health Canada’s position that the use of certain terms commonly referring to a sweetened soft drink, such as ‘soda’, ‘cola’, ‘root beer’ or ‘ginger ale’ may result in the sale of cannabis with packaging/labelling that is prohibited.”
“If required, Health Canada may take enforcement measures to address non-compliance or mitigate risks to public health or public safety,” the spokesperson wrote.
The letter states that the Cannabis Act prohibits:
- The promotion of cannabis, accessories or any service where there are reasonable grounds to believe it could be appealing to youth.
- The sale of cannabis or accessories if there are reasonable grounds the package or label could appeal to young persons.
MJBizDaily asked Health Canada if the ban on the word “soda” extends to other products, such as dried herb and gummies.
The agency has not yet responded.
Market impact
Carbonated cannabis beverage sales have grown substantially in recent years.
In 2021, carbonated cannabis beverage sales amounted to approximately 22.7 million Canadian dollars ($17 million) in provinces tracked by Headset.
That figure jumped 70% year-over-year to CA$38.6 million in 2022.
Through the first five months of 2023, the products reached CA$22 million in sales, putting the category on pace to approach CA$50 million this year.
Headset monitors sales in Alberta, British Columbia, Ontario and Saskatchewan, which together account for approximately three-quarters of all legal sales of recreational marijuana in Canada.
Approximately half of the top 20 carbonated cannabis beverages in terms of sales between June 2022 and May 2023 had at least one of the prohibited words in their brand name, the Headset data suggests.
The three top-selling carbonated cannabis beverages in that time were:
- “Cream Soda,” an XMG-brand produced by Truss Beverage Co.
- “Cherry Cola,” produced by Sweet Justice, a brand by Electric Brands Inc.
- “Mango Pineapple Sparkling Drink,” by Truss.
Industry pushback
Smitherman of the Cannabis Council of Canada said industry officials are in communication with Health Canada over the move.
“We haven’t conceded this one,” he said.
“We have a very active beverage caucus group. We’ve been in a letter-writing frenzy back and forth with Health Canada, and we’re not ceasing in our efforts to press them to demonstrate what science is behind their actions.”
Smitherman said Canada’s rules leave legal businesses with too little leeway to define and differentiate products.
“It’s really galling that Health Canada has got this attention to picayune matters related to cannabis, which has got all this protective wrap around it, built in a context of precaution, and alcohol is a complete free-for-all,” he said.
The executive who requested anonymity said cannabis consumers expect to be able to purchase legal, infused beverages with common beverage flavors and characteristics, “like soda and cola.”
“Obfuscating these legal products simply benefits the illicit market, which makes competitive products that have no restrictions on naming or design elements, etc.
“This restriction imposed by Health Canada harms the ability of legal, regulated products to compete with illicit ones.”
Source: https://mjbizdaily.com/canada-cracking-down-on-words-soda-and-cola-on-cannabis-labels/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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