Category: Cannabis

  • New York Poised to Legalize Marijuana

    New York Poised to Legalize Marijuana

    Photo: Erin Stone from Pixabay

    Lawmakers in New York state have agreed to legalize marijuana for recreational use. Legalization could bring the state about $350 million annually, according to a story in the Associated Press.

    The legislation would allow recreational marijuana sales to adults over the age of 21 and set up a licensing process for the delivery of cannabis products to customers. Individual New Yorkers could grow up to three mature plants and three immature plants for personal consumption, and local governments could opt out of retail sales. The bill also sets aside revenues to cover the costs of everything from regulating marijuana to substance abuse prevention.

    New York would set a 9 percent sales tax on cannabis plus an additional 4 percent tax split between the county and local government. It would also impose an additional tax based on the level of THC, the active ingredient in marijuana, ranging from $0.005 per mg for flower to $0.03 per mg for edibles.

    If passed, the legislation would take effect immediately, though sales wouldn’t start until New York sets up rules and a proposed cannabis board. Assembly Majority Leader Crystal Peoples-Stokes estimated on March 26 it could take 18 months to two years for sales to start.

    Fourteen U.S. states already allow residents to buy marijuana for recreational use.

    The tobacco industry has been keeping an eye on opportunities created by the spreading legalization of cannabis.

  • Thailand to Start Producing Hemp

    Thailand to Start Producing Hemp

    Photo: Rolf Hansen from Pixabay

    The Tobacco Authority of Thailand (TOAT) plans to start planting hemp for commercial purposes by August, reports The Bangkok Post.

    The Council of State is currently reinterpreting the Tobacco Authority of Thailand Act that states TOAT can only produce tobacco leaves and other plants. The council decides if TOAT is legally eligible to produce hemp for commercial purposes, said TOAT governor Panuphol Rattanakanjanapatra.
    The decision is expected next week.

    TOAT will focus on production of hemp in the preliminary stage, which can be used for medical and industrial purposes. TOAT aims to encourage 13,500 tobacco farmers to shift to hemp or cannabis farming to increase their income; the authority cut its tobacco leaf purchases to 13 million kg per year from 20 million kg per year.

  • Thailand Tobacco Authority Eyes Cannabis

    Thailand Tobacco Authority Eyes Cannabis

    Photo: cytis | Pixabay

    The Tobacco Authority of Thailand (TOAT) is hoping that sales of cannabis and hemp extracts will help compensate for deteriorating income from tobacco production, reports the Bangkok Post.

    The TOAT is drafting a ministerial regulation to give the organization the authority to grow and produce extracts from cannabis and hemp, which can be used in medicine and cosmetics, said TOAT governor Panuphol Rattanakanjanapatra.

    Although the Tobacco Act stipulates TOAT can produce tobacco leaves and other plants, clarity is needed on TOAT conducting R&D on cannabis and hemp for commercial purposes.

    The business value of cannabis and hemp could reach tens of billions of baht, according to Panuphol.

    At present, a two-tier system is applied for excise duties levied on cigarettes. A 20 percent tax rate is applied to the retail price for packs costing up to THB60 ($1.95).

    If the retail price exceeds THB60 per pack, a 40 percent tax rate is applied.

    A flat tax rate of 40 percent was scheduled to be applied in October 2019, regardless of the retail price, but there has been opposition from the authority and tobacco farmers.

  • BAT and Organigram Partner on Cannabis

    BAT and Organigram Partner on Cannabis

    Photo: Tobacco Reporter archive

    The BAT Group (BAT) has signed a strategic collaboration agreement with Organigram, a wholly owned subsidiary of publicly traded Organigram Holdings, focused on research and product development activities of next-generation adult cannabis products with an initial focus on cannabidiol (CBD).

    This agreement augments ongoing BAT activities to expand its portfolio “beyond nicotine” and follows the pilot launch of Vuse CBD Zone in Manchester, U.K., earlier this year.

    Through the collaboration, BAT will gain access to cutting-edge R&D technologies, product innovation and cannabis expertise, complementing BAT’s extensive plant-based expertise and development capabilities.

    Organigram has a proven track record of consumer-led innovation and developing high-quality adult-use recreational and medical cannabis products, which are legally available in Canada.

    We believe this collaboration has significant potential to enhance our activities.


    David O’Reilly, director of scientific research, BAT

    “Today’s announcement underscores our commitment to accelerating our transformation and building ‘A Better Tomorrow,’” said David O’Reilly, director of scientific research at BAT, in a statement. “Our multi-category, consumer-centric approach, which is key to our transformation, aims to provide choice and meet the evolving needs of adult consumers. This choice provides reduced-risk alternatives to combustible cigarettes as well as going beyond tobacco and nicotine into new and exciting areas of product innovation.

    “We believe this collaboration has significant potential to enhance our activities, allowing us to combine our world-class expertise while enabling scientists from both BAT and Organigram to work closely together and share information real-time. We know that in R&D, this is how you make real breakthroughs and accelerate progress.

    “We have been impressed by the strong management team and culture at Organigram. This collaboration aligns with our long-term strategy and will enable us to work with Organigram at an R&D level as well as contributing to their wider operations.”

    We have been extremely selective about aligning with a strategic partner.


    Greg Engel, CEO, Organigram

    “This is a tremendous milestone in the evolution of Organigram,” said Greg Engel, CEO of Organigram, in a statement. “It is instrumental in advancing our commitment to offering consumers innovative cannabis products and to furthering our long-term international strategy. We have been extremely selective about aligning with a strategic partner, and in BAT, we’ve found a leading consumer goods business with innovative product platforms, an impressive dedication to research and development, deep consumer insights, regulatory expertise and a commitment to responsible stewardship and consumer safety.”

  • 22nd Century to Accelerate Commercialization of Cannabis

    22nd Century to Accelerate Commercialization of Cannabis

    Photo: Tobacco Reporter archive

    22nd Century Group has secured an exclusive agreement with CannaMetrix for the use of that company’s proprietary, human cell-based testing CannaMetrix EC50Array technology. The technology will enable 22nd Century to accelerate the commercialization of new, disruptive hemp/cannabis plant lines and intellectual property.

    Since reporting third quarter earnings, 22nd Century has refocused its hemp/cannabis strategy to target the upstream segments of the cannabinoid value chain. In particular, the company seeks to accelerate the delivery of valuable commercial-scale plant lines and intellectual property for the life science, consumer product and pharmaceutical end-use markets.

    With the addition of CannaMetrix, 22nd Century has now secured four out of the five key partnerships needed to maximize each component in the upstream segment of the cannabinoid value chain: plant profiling (CannaMetrix), plant biotechnology (KeyGene), plant cultivation (Panacea-Needle Rock Farm) and ingredient extraction/purification (Panacea). The company is also in final discussions with top-tier plant breeders that will be announced soon.

    “22nd Century is extremely excited to add CannaMetrix into our secured network of value chain partners to increase the speed at which we develop and offer disruptive plant lines and intellectual property for the hemp/cannabis industry. For example, a plant line that would typically take 10 years or longer to develop can now be achieved in two years,” said James A. Mish, CEO of 22nd Century Group, in a statement.

    “We are thrilled to collaborate with 22nd Century Group,” stated Harold Smith, founder and CEO of CannaMetrix. “They are the ideal partner, bringing decades-long experience in plant biotechnology with unmatched ability in developing valuable commercial plant lines. We believe that through this exclusive partnership, the development of new hemp/cannabis lines for large-scale cultivation and production will advance at a rapid pace and transform the hemp/cannabis industry.”

  • 22nd Century Launches Cannabis Platform

    22nd Century Launches Cannabis Platform

    Photo: cytis from Pixabay

    22nd Century Group has developed and launched a technology platform that will enable the company and its strategic partners to quickly identify and incorporate commercially valuable traits of hemp/cannabis plants to create new, stable hemp/cannabis lines. The platform incorporates a suite of proprietary molecular tools and a large library of genomic markers and gene-trait correlations. The platform was developed in collaboration with researchers at KeyGene, a global leader in plant research involving high-value genetic traits and increased crop yields.

    “This is a major breakthrough. Quickly and easily identifying the genes responsible for specific traits in a plant is a powerful tool for 22nd Century Group and the hemp/cannabis industry as a whole,” said James A. Mish, chief executive officer of 22nd Century Group, in a statement.

    “That is why we are even now beginning discussions to license this platform to strategic partners to help them improve their plant breeding techniques and to optimize their hemp/cannabis cultivars. We continue to make great advancements through our partnership with KeyGene, and this newly developed molecular breeding platform has the potential to result in exponential growth for the company’s revenues and create new value opportunities for our stakeholders, including shareholders.”

    “Using traditional breeding techniques, it typically takes at least eight to 10 years to develop new varieties of hemp/cannabis plants that consistently express important traits,” said Juan Sanchez Tamburrino, vice president of research and development at 22nd Century Group.

    “Our new molecular breeding platform can dramatically reduce our development time for new high-value varieties of hemp/cannabis and allows 22nd Century scientists to identify plant lines that carry high levels of major therapeutic cannabinoids, such as cannabidiol, cannabichromene and other minor therapeutic cannabinoids like cannabidivarin and tetrahydrocannabivarin.”

    Demonstrating how this technology can be used, 22nd Century and KeyGene scientists can now accelerate the selection of specific traits yielding novel cannabinoid profiles. For example, the team was able to select specific markers that predict the gender of hemp/cannabis plants with 99.6 percent accuracy.

  • High Expectations

    High Expectations

    Photo: Rolf Hansen | Pixabay

    Faced with declining demand for tobacco, industry suppliers are turning their attention to cannabis.

    TR Staff Report

    The legalization of cannabis and related products in many jurisdictions is creating new opportunities for tobacco companies and suppliers facing stagnating sales of their traditional products.

    While the Covid-19 crisis appears to have slowed the long-term decline in demand for some tobacco products—premium cigars in particular appear to have fared well during the crisis—the days of unrestrained growth are clearly over. Global Data predicted in September that tobacco companies would sell $651 billion worth of filter cigarettes in 2020, an 8 percent drop on sales of $707 billion in 2019. For plain cigarettes, the fall is higher at 11 percent, and in niche categories like chewing tobacco, forecast sales were expected to drop by 13 percent in 2020. 

    The data and analytics firm says the pandemic has prompted significant numbers of consumers to quit tobacco products, citing lower disposable incomes from reduced employment, fewer social settings in which to light up and increased awareness about the importance of respiratory health. This is on top of existing factors depressing demand for tobacco products, including growing health consciousness and anti-tobacco measures, such as smoking bans and taxation. Global Data expects it will take at least until 2023 for global tobacco sales values to fully recover.

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    Meanwhile, global demand for cannabis and related products continues to rise steadily. Euromonitor International believes global legal sales of cannabis could increase from $12 billion in 2018 to $166 billion by 2025—a potential increase of more than 1,000 percent. Much of that growth will come from legalizing sales that are currently taking place illicitly. In 2018, only about 8 percent of the global demand for cannabis was filled legally, hinting at the tremendous opportunity for growth.

    Cannabis legalization has been gathering momentum. Alongside the U.S. presidential election in November, voters in several states approved ballot measures legalizing marijuana. In 2018, U.S. Congress had already legalized hemp with less than 0.3 percent THC, the psychoactive component in cannabis, in all 50 states.

    In December 2020, the U.S. House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act—a bill decriminalizing marijuana at the federal level. Then Senate Majority Leader Mitch McConnell refused to bring it to a Senate vote, but the outcome of recent elections has changed the outlook. With the Democratic party controlling the presidency and both chambers of Congress, the chance for federal legalization of cannabis appears to have increased significantly.

    On the global stage, too, cannabis continues to gain acceptance. Late last year, the United Nations (U.N.) removed cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs, where it resided alongside drugs like heroin. The change will open the door to more medical cannabis research. National governments will still decide how to regulate cannabis, but many states look to the U.N. for guidance.

    Suppliers of the tobacco industry have been watching the developments with considerable interest. Around the world, tobacco farmers have either shifted to growing cannabis or added it to their repertoire as an additional income source. Zimbabwe, a leading producer of leaf tobacco, legalized cultivation of cannabis for medicinal use in 2019. Local officials have high hopes for the new crop, with some predicting Zimbabwe’s earnings from cannabis exports could outstrip those of tobacco by a factor of three. Treasury spokesman Clive Mphambela expects the country’s cannabis sales to reach $1.25 billion in 2021. By comparison, Zimbabwe earned $444 million from the 2020 marketing season that closed in August, according to the Tobacco Industry and Marketing Board.

    Malawi, too, is gearing up to start commercial production and processing of cannabis for medicinal and industrial use. In February 2020, Malawi’s parliament passed a bill that makes it legal to cultivate and process cannabis for medicines and hemp fiber used in industry but stops short of decriminalizing recreational use. The country recently created a dedicated regulatory authority for cannabis. Despite steep licensing fees, many tobacco farmers have already applied for permission to grow cannabis. Their enthusiasm is understandable given that Malawi’s earnings from tobacco have fallen dramatically in recent years.

    Elsewhere in the supply chain, companies that have traditionally catered to the tobacco industry are also eyeing cannabis. For example, Hoffmann Neopack, known in the tobacco industry as a supplier of tins and tubes, organized a webinar last year exploring best packaging practices for cannabis products.

    Even machinery makers have gotten into the game. Evans MacTavish Agricraft, a longtime supplier of leaf tobacco processing equipment, now offers a broad portfolio of machinery for all steps of marijuana processing—from treating the raw material to overwrapping of the filled cannabis preroll packs. Hauni Maschinenbau, best known for setting speed records with its cigarette production machinery, has also entered the cannabis market. At a recent open house in Richmond, Virginia, USA, the company launched three machines for cylindrical preroll making as well as a range of accompanying equipment.

    Traditional tobacco companies, too, have ventured into cannabis. In late 2018, U.S. market leader Altria Group acquired a 45 percent equity stake in Cronos Group, a leading global cannabinoid company, headquartered in Toronto, Canada. British American Tobacco recently launched its first CBD vapor product, Vuse CBD Zone, in Manchester, U.K.

    Of course, investing a newly legalized sector presents risks, and some investments have soured. In January, Pyxus International announced that it would divest its cannabis business in order to focus on its more profitable tobacco and e-liquid operations. Regulatory confusion and failures in corporate executions have brought back some of the more outlandish forecasts to what are perhaps more realistic expectations.

    Despite such teething problems, however, the long-term narrative remains one of growth: Cannabis will likely continue to gain momentum, and tobacco industry players would do well to keep an eye out for opportunities in the segment.

  • Innovative Solutions

    Innovative Solutions

    Photo: Tobacco Reporter archive

    One traditional tobacco industry supplier that has recently diversified into servicing the legal cannabis business is LLFlex. With headquarters and manufacturing facilities in Louisville, Kentucky, USA, the company is a global leader in metals-based laminates for packaging and industrial solutions in the wire, cable, construction and other consumer markets. For nearly a century, LLFlex has supplied packaging materials to the tobacco industry. Its innerliner is available both laminated and coated and in a vast array of colors. The company’s innerframe offering includes plain and printed materials.

    LLFlex has also been working on new packaging designs that will incorporate its laminated carton board into flip-top boxes and cartons. According to LLFlex Business Segment Director Kelley Stearman, the company sets itself apart through its long history and commitment to the tobacco industry and its willingness to make investments to service this industry. “Our reputation of high-quality materials and excellent service is second to none,” she says.

    With sales offices in the U.K. and China and an extensive network of agents, LLFlex services the entire globe. Recently, the company opened a new factory in High Point, North Carolina, USA, allowing it to efficiently service the high concentration of tobacco customers in that region.

    As numerous U.S. states legalized cannabis in recent years, LLFlex started exploring opportunities in that segment as well. While the market remains small compared to that for tobacco, the potential for growth is considerable. “Data shows a huge exponential increase in demand for cannabis packaging over the next five years, and we want to be part of that growth,” says Stearman.

    Cannabis packaging is similar to tobacco packaging in that it requires innocuous materials that won’t impart any taste or odor on the cannabis or tobacco products. From there, however, the similarities diminish. “As we know, most cigarettes are packaged on high-speed packing lines due to the high production volume of these products,” says Stearman. “Cannabis products for the most part are still being made and packed on a much smaller scale. And the cannabis product that a consumer buys typically is in a much different format than a cigarette. Whether it’s a cannabis flower or an edible, the packaging is very different from a cigarette pack.”

    Complicating things from a packaging supplier’s perspective, every U.S. state that has legalized cannabis has its own unique regulations for cannabis packaging. Some states require cannabis packaging to be reclosable, for example. One requirement, however, is common to all jurisdictions: Cannabis products must be sold in child-resistant packaging.

    With its LoCRite product, LLFlex can help cannabis producers comply. LoCRite is a laminated tear-resistant board that can be used to make folding cartons with certain child resistant opening features. The tear-resistance of the board combined with the specialized opening features of the carton make the finished carton child-resistant.

    The LoCRite product has been used in several cartons that have been certified as child-resistant. In developing LoCRite, LLFlex evaluated different types and gauges of films. “The film had to be printable, and we had to achieve superior bond strength in the laminate,” says Stearman. “The finished product had to be printable on both sides, foldable and scorable.” Unlike competing solutions on the market, LoCRite is available in a variety of substrates. It can be made with various paper and board calipers and with Forest Stewardship Council-certified materials. The film component of LoCRite can be clear or metalized, including decorative options such as custom holographics. LLFlex has been supplying LoCRite for cannabis applications for more than three years and partnered with one of its key customers to develop a CR-certified carton for medical or recreational marijuana products. The folding carton is composed of LLFlex’s LoCRite board and is certified child-resistant in compliance with the U.S. Consumer Product Safety Commission (CPSC) 16 CFR 1700.20 testing protocol.

    For the time being, cannabis packaging accounts for a relatively small portion of LLFlex’s business portfolio. The market is likely to grow, however—and when it does, LLFlex will be ready. “We have several projects underway with customers utilizing our LoCRite material, and the child-resistant certifications are in various stages of progress,” says Stearman.

    “We are also working on a completely new packaging format called PotPodz, which was introduced to the market last year as a concept.” The company has received lots of positive feedback and interest in this concept and is working toward commercialization. “Between our LoCRite product and development of the PotPodz concept, we expect our cannabis packaging to become a larger portion of our total business in the next few years,” says Stearman.

    What’s more, as some tobacco companies invest in the cannabis space, LLFlex is able to bring its cannabis packaging solutions to its tobacco consumers. “It’s a great win-win scenario: Our tobacco customer can work with a known and trusted packaging partner, and we can help our existing customers as they expand into new markets,” says Stearman.

    Looking forward, Stearman says she hopes to see more consistency in packaging regulations as cannabis legalization proliferates in the U.S. “Right now, each state has their own unique packaging requirements, which presents challenges for the supplier,” she says. “It will be easier to achieve economies of scale once there is more of a national standard for packaging.”

    While LLFlex does not anticipate having to alter its materials to allow for the fast production speeds common in cigarette manufacturing, the company does expect order sizes to increase. This, says Stearman, will be beneficial for the entire supply chain and ultimately allow LLFlex to offer consistent pricing and short lead times.  

  • Pyxus to Divest Cannabis Business

    Pyxus to Divest Cannabis Business

    Photo: Pyxus International

    Pyxus International intends to divest its cannabis business in order to focus on its more profitable tobacco and e-liquid businesses. In addition, the company has taken action to restructure its industrial hemp and CBD operations to minimize financial investment in that business.

    “Our strategic decision to exit cash-flow negative cannabinoid operations will allow us to reduce corporate SG&A [Selling, general and administrative expense] and sharpen our focus on growing our more profitable tobacco and e-liquid businesses such that these complementary businesses can fully leverage Pyxus’ 145-year heritage and existing relationships,” said Pieter Sikkel, president and CEO of Pyxus International, in a statement.

    “We maintain our belief that there is value in FIGR and its growth can be accelerated with the right capital structure and partner. The completion of our financial restructuring, global operations efficiency program, and continued investment in agronomy, traceability and sustainability are proving to be of significant value to our tobacco customers as we have started to work together on long-term strategic partnerships that support our objective of growing our market share.”

    In connection with the plan, the company’s three Canadian cannabis subsidiaries, FIGR Brands, Canada’s Island Garden (FIGR East) and FIGR Norfolk filed for and received protection from their creditors under the Companies’ Creditors Arrangement Act (Canada).

     

  • Marijuana Stocks Rise After Democrats Wins

    Marijuana Stocks Rise After Democrats Wins

    Photo: Photo: forcal35 from Pixabay

    Marijuana stocks have risen this week following the victories of Raphael Warnock and Jon Ossoff, both Democrats, in Georgia’s Senate election runoffs, reports Fox Business. Following President-elect Joe Biden’s win, Democrats will now have control of the presidency as well as both chambers of Congress. Democrats will have 50 seats in the Senate, giving Vice President-elect Kamala Harris the tie-breaker vote.

    Canopy Growth, the first marijuana stock to ever be publicly traded in North America, is up 13.2 percent since the election. Shares of Green Thumb stock are up more than 10 percent.

    “This new slate of leadership presents an incredible opportunity for national cannabis reform in the United States—the beginning of the end for the long-outdated prohibition on cannabis,” David Culver, U.S. vice president of government relations at Canopy Growth, told Fos Business. “We feel confident that Congress, with the support of the incoming Biden administration, and particularly Vice President-elect Kamala Harris who was an original sponsor of the MORE [Marijuana Opportunity Reinvestment and Expungement] Act, can achieve full federal legalization in the very near future.”

    The Marijuana Opportunity Reinvestment and Expungement Act (MORE) Act was passed by the House in December, but Senate Majority Leader Mitch McConnell denied bringing it to a Senate vote. This may change under the incoming Biden administration, however.

    While Harris was against marijuana legalization while working as district attorney and attorney general in California, she changed her position in the Senate to co-sponsor the MORE Act. Biden, as well, favored decriminalizing marijuana during his 2020 presidential campaign.

    Green Thumb Founder and CEO Ben Kovler predicts that a fully legalized marijuana market in the United States could be an $80 billion to $100 billion industry, according to Fox Business.

    “Consumers are choosing; they’re replacing alcohol,” Kovler said. “Consumers 35 and under are choosing cannabis over alcohol. We’re seeing seniors, 60 and over, choose this to replace things like Ambien, or pain meds [for] arthritis. There are all kinds of different uses for the plants as we turn the plants into consumer products.”

    Further legalization of marijuana could open new opportunities for tobacco farmers faced with declining demand for their crops.

    In 2018, U.S. Congress legalized hemp with less than 0.3 percent THC, the psychoactive component in cannabis, in all 50 states. Since then, some tobacco farmers have either shifted to growing hemp or added it to their repertoire as an additional income source. Some major tobacco companies have taken stakes in the cannabis industry in recent years. Altria Group, for example, purchased a stake in Cronos Group, a leading global cannabinoid company, headquartered in Toronto, Canada. Pyxus International, the parent company of leaf tobacco merchant Alliance One International, purchased a 40 percent share in Criticality, an integrated industrial hemp company.

    The global industrial hemp market size is expected to reach $15.26 billion by 2027, exhibiting a revenue-based compound annual growth rate (CAGR) of 15.8 percent over the forecast period, according to Grand View Research. Additionally, according to Global Market Insights, the cannabidiol (CBD) market exceeded $2.8 billion in 2019 and is set to grow at around 52.7 percent CAGR between 2020 and 2026, with the global market valuation for CBD crossing $89 billion by 2026.

    The opportunities presented by legal marijuana extend also to suppliers of the tobacco industry. For example. German tobacco machinery maker Hauni recently developed equipment or cannabis processing.