The deal that Cannabis Strategic Ventures, Inc. (OTC: NUGS) recently struck with Sunniva Inc. comes at a crucial time in the California cannabis industry. On July 1, new, stricter regulations came into force that caused quite a kerfuffle; retailers were forced to sell off non-compliant products in what has been labelled a “fire sale” of cannabis. As the industry develops, California state authorities appear to be building a robust regulatory regime, which will put a premium on quality products like those marketed by NUGS. The company plans to introduce a line of branded cannabis extract products under the name ‘Pure Organix’.
Regulation of cannabis in California has had a long history. The state was the first to legalize cannabis for medical purposes after it passed the Compassionate Use Act in 1996, but a lot has happened since then. In June 2017, an attempt to consolidate and streamline regulations was made with the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). Now, under MAUCRSA, there are three state agencies responsible for regulating and licensing cannabis operators: the California Department of Food and Agriculture (CDFA), which regulates cultivators, processors, and nurseries; the California Department of Public Health’s (CDPH) Manufactured Cannabis Safety Branch, which regulates cannabis manufacturers; and the Bureau of Cannabis Control (BCC), which regulates distributors, retailers, delivery-only retailers, microbusinesses, temporary cannabis events and laboratories.
In November 2017, these three agencies released their emergency regulations and licensing requirements. They also announced a transition period during which cannabis businesses would be allowed to, in effect, disregard the new regulations. That transition period ended on June 30, 2018, commencing the new regulatory regime on July 1, 2018.
Now, among other restrictions, the following apply: untested cannabis goods cannot be sold by a retailer and must be destroyed, and those manufactured or harvested before January 1, 2018, in possession of a distributor that are owned by the distributor, will have to be destroyed. Moreover, all cannabis goods must be in child-resistant packaging; simply having child-resistant exit or secondary packaging is no longer enough. In addition, edible cannabis goods may no longer exceed 10 milligrams of THC per serving or 100 milligrams of THC per package, and non-edible cannabis products must not contain more than 1,000 milligrams of THC per package in the adult-use market (http://cnw.fm/de4Ef). Essentially, California is requiring shops to sell only marijuana that has been tested for pesticides, potency and microbiological contaminants.
The arrangement between Cannabis Strategic Ventures and Sunniva involves subsidiary companies (http://cnw.fm/S6ayw). Under it, CP Logistics, LLC (CPL), a wholly owned subsidiary of Sunniva, will perform whiteservices producing high quality, ultra-purified cannabis extracts out of its Sun-Oil Facility in Cathedral City, California, for Pure Applied Sciences, Inc. (PAS), Cannabis Strategic’s wholly owned subsidiary. The agreement calls for CPL to initially produce cannabis oils for use in PAS vape pen cartridges, which PAS will market under the Pure Organix™ brand, and expansion into other product areas is expected.
The new initiative will be given added impetus with the appointment of Chris Young, co-founder of PAS, to the board of directors of Cannabis Strategic Ventures (http://cnw.fm/Bmw10). Young, who holds a JD from Southwestern Law and an MBA from the University of Southern California, has already built and exited two successful ventures. First, he founded a women’s fashion brand, which was sold two years later. Then, he co-founded Coordinates Collection, a luxury jewelry brand that’s marketed to over 500 stores in 10 countries. After his second successful exit, Young moved on to become a strategy and branding consultant developing consumer packaged goods (CPG) products for celebrity-led brands.
For more information, visit the company’s website at www.CannabisStrategic.com
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