Understanding the Regulatory Risks Associated with Owning a Cannabis Business

Understanding the Regulatory Risks Associated with Owning a Cannabis Business

As a cannabis business owner, looking over your shoulder may have become an habit. It is the same habit of anyone that participates in the illicit market, however you entered into the cannabis industry because your state has legalized cannabis. The truth is though, that regardless of whether your state has legalized a medical marijuana program or even possibly an adult-use market, cannabis is still illegal. You are not looking over your shoulder to see if local authorities are coming but instead if agencies like the DEA, FBI or in the instance of a brewery in San Francisco, whether the Alcohol and Tobacco Tax and Trade Bureau has shown up.

Black Hammer Brewing, cannabis insurance, who insures the cannabis industry, insurance for cannabisBlack Hammer Brewing out of San Francisco came up with the very smart idea of brewing a beer with cannabidiol or CBD, a cannabinoid found in both the marijuana flower and in hemp. Black Hammer was using hemp derived CBD. It is a non-psychoactive biological compound that is believed to be the main medicinal compound found in the Cannabis sativa plant. It works as an anti-inflammatory as well as having some other medicinal properties. CBD products are offered around the country in many wholesale stores like Lucky Brands. Adult-use cannabis is even legal in California, but that did not stop the federal agency from stepping in and forcing Black Hammer Brewing to stop all production of their CBD beer and offering it for sale to their customers.

Forcing the brewery to stop production of the CBD beer did not even have to do with the Schedule 1 status of cannabis, which is what makes cannabis as illegal of a controlled substance as there is here in the United States. It instead had to do with the fact that Black Hammer had not applied to add either CBD or some of the terpenes they were using in their beer for approval with the Alcohol and Tobacco Tax and Trade Bureau. Since the prohibition of cannabis has been in place here in the U.S. for over 80 years, cannabis and the substances that can be extracted from it are simply not accounted for by regulatory bodies. The owner of Black Hammer Brewing, Jim Furman, believes though that the future of one of his top selling beers depends very much on the federal legalization of hemp.

“We believe that future approval of our formula may be dependent on hemp reclassification by the federal government/DEA,” he wrote in an email. “Our guests love the CBD beers, and we’re pretty sad that we have to stop producing them,” he says. Of the eight CBD beers he has created, Furman considers Hippie Hill, an imperial IPA, to be his greatest success. Brewed with Tahoe OG terpenes, “it’s unmistakable. So fresh,” he says. “It’s got the most dialed-in cannabis flavor profile.”

There is no cannabis insurance that covers the sort of general liability associated with the illegal status of cannabis or the regulatory limitations caused by the extended prohibition of cannabis. However we are interested in spreading awareness on all of the risks associated with owning a cannabis business or incorporating a cannabis product into your inventory. In the cannabis industry, you must account for certain risks that are not common in traditional sectors.

read more at sfchronicle.com

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