Alternative Forms of Cannabis Taxes

General Note on Cannabis Taxes

Cannabis Tax Systems by State

Comparisons of Alternative Forms of Cannabis Taxes


Germany’s proposed cannabis regulations have been in the news recently.[1] They include a THC-based potency tax, that is, higher tax rates for products with higher THC content. These potency taxes differ in form from the excise taxes most commonly seen in the US, price-based excise taxes. 

Taxes are an unfortunate part of life, and a much larger part of life in the cannabis industry than in most other industries. Besides being a burden, though, taxes also change consumers’ behavior. This fact leads me to wonder: What are the different tax systems currently being used across cannabis markets, and how will the different systems affect consumer behavior?

General Note on Cannabis Taxes

Governments use taxes either to dissuade consumers from purchasing taxed products and/or to generate revenues from their sales. The tax revenues may be used to offset social costs associated with the consumption of taxed products.[2] Alternatively, tax revenues may be used to promote related social programs.

All the different forms of taxes – excise taxes, state and local sales taxes, social equity taxes, etc. – increase consumer prices in legal markets, making it difficult for legal businesses to survive,[3][4] driving many consumers to Black Markets.[5],[6]  This is an unpleasant reality that legislators must understand when establishing cannabis tax structures and regulations.

Many regulators reason that taxes on cannabis will dissuade underage users from consuming cannabis. Yet, underage minors are already banned by law from consuming cannabis. [7] Presumably, many (most?) get their cannabis products from black market suppliers. In this case, increasing the price of legal market cannabis products will not dissuade minors from continuing to use cannabis. 

Also, while cannabis products cannot flow across state lines, cannabis consumers can. So then neighboring states must keep their total (tax plus product) prices in line with those in other states. Otherwise, they risk riving consumers to purchase products across state lines.[8]

Anatomy of a Cannabis Price Crash

What Drove Oversupply?

What Drove So Much Red Ink?

The Good News


Market prices in cannabis have been crashing in more mature markets due to massive oversupplies of cannabis products:


…product oversupply led to price drops of more than 50 per cent...

To compete, illicit growers have also slashed their prices by about 30 per cent.


… wholesale market, with prices said to be dropping by up to 60% since at least mid- June for outdoor-farmed flower.

… many indoor growers appear to be on better footing, for instance, with wholesale prices reportedly down 10%-20% compared to outdoor farmers.

Colorado and Oregon:[3]

In Colorado, the average price per pound has declined 51% since the fourth quarter of 2020. In Oregon, it’s down 36%.


Retail adult use cannabis prices in Michigan are half of what they were a year ago and newly reported data from state regulators suggest they have even further to drop this year [see Figure 1].


… prices have dropped by 50% this year.

“Wholesale flower prices that we are seeing right now around the state are closer to $450 to $600 for freshly harvested, high quality sun grown … Last year at this point in the season, we were looking at prices around $1,100 to $1,200.”

Washington: [6]

Similar to Colorado’s marijuana market, Washington is in a race to the bottom. Their prices are already drastically lower than Colorado’s and seem to keep dropping.

Figure 1

mi p mj 

Sources claim that legal market cultivators in California are growing two[7] to three[8] times the amount of cannabis sold in legal dispensaries. Similar such excesses are no-doubt causing the price crashes in other markets as well. What’s going on in these markets? How can there be such drastic surpluses in supply, contributing to so much red ink for businesses? These are the questions this analysis seeks to answer.

Arguments For and Against Caps on THC Potency

Arguments in Favor of Caps on THC

Arguments Against Caps on THC




Selective breeding has led to significant increases in the potency of cannabis flower over time. The NIH reports that the potency of cannabis seized by the DEA increased from less than 4% in 1995 to over 14% in 2019 (see Figure 1).


Figure 1

Percentage THC CBD cannabis samples seized by DEA



Especially in less mature markets, recreational users tend to focus on THC content when choosing which products to buy, where “flower that tests at 25% THC or higher flies off the shelves.”[1] Cannabis concentrates are also widely available at 70% - 90% THC.[2]

The increasing availability of high potency cannabis products has created no small amount of alarm. In response, many states have considered proposals to cap THC potency in cannabis products (CA, CO, FL, IL, MA, MS, MT, NY, VA, VT, WA). This analysis seeks to summarize the arguments for and against imposing caps on THC potency. 

Attracting Mainstream Consumers to Medical Cannabis

The US medical cannabis market is currently in its early stages of adoption: the market has gained some penetration, but not enough to warrant adoption by the early majority, that is, more mainstream users. My book, Winning the Hardware-Software Game, describes the technology adoption lifecycle in detail. A brief summary and illustration (Figure 1) of the technology adoption process taken from the book indicates:

[T]he consumption lifecycle of a new innovation entails adoption by four general groups of users: (1) innovators and early adopters, risk takers, who are attracted to novel innovations that offer new and different features and capabilities; (2) the early majority, who are more deliberate in their purchasing decisions, requiring bug-free products whose value has been validated by early adopters; (3) the late majority, a skeptical lot, who demand low prices and large amounts of product support; and finally (4) laggards, the traditionalists, who adopt new innovations only when forced to do so.

Figure 1

tech adoption

By understanding the wants and needs of majority adopters, we can ask: how must the medical cannabis market evolve to become amenable to adoption by more mainstream users?

Our goal is to surmise the wants and needs of more mainstream adopters. We can achieve this, first, by considering how cannabis provides value to those adopters. Once we understand the value proposition, we can then determine how the market will evolve to increase value to users.

Best Practices in Medicine Should Rely on Providers' Knowledge, Skills and Experience, Not Just Studies

In 2005, a physician-scientist research pioneer, John Ioannides, published what has come to be a widely circulated paper, “Why Most Published Research Findings Are False.” The replication crisis we’re having in science embodies the concern voiced by Mr. Ioannides. Yet, despite much evidence that so many studies are not valid, scientific professionals continue to rely almost exclusively on study results when deciding on best practices.

So many studies are flawed. As a simple example, please take my survey by answering the following question:

Over the past 12 months, how many times have you visited a doctor?

Take as much time as you need to answer the question…

Got your answer?

Okay, now let me ask you a few questions about the number of visits you just “reported” for my study.

First, to answer my question, did you just think back in your mind, or did you actually check your records? Most people will probably come up with a “good estimate” based on what they can quickly recall. Relatively few people will make the effort to reference records to help them come up with a more accurate estimate.

As for what we remember, researchers continue to discover new ways in which our memories paint an inaccurate portrait of “the truth” (to the extent the truth exists). For example, the telescoping effect is a common cognitive bias affecting our memory, where we tend “to displace recent events backward in time and remote events forward in time, so that recent events appear more remote, and remote events, more recent.” The telescoping effect is just one of many different cognitive biases – Wikipedia lists 42 different cognitive biases that affect our memories – any one of which may cause your reported number of visits to the doctor over the past 12 months to be more or less than the “true” number.

Second, what types of providers did you include in your estimate? Did you include any visits to a dentist, nurse practitioner, therapist, optician, optometrist, pharmacist, herbalist, or other allopathic provider? Different people will have different interpretations of what’s included in the category “doctor.”

Cannabis Cultivation: Indoor vs. Outdoor vs. Greenhouse

There are three basic locales for growing cannabis: indoors, outdoors, or in greenhouses. Greenhouses enable growers to benefit from natural light, while also being able to strategically block out light to induce quicker flowering. Budget-friendly greenhouse operations are more subject natural climate variations, while higher-end greenhouses are more similar to indoor grow operations that benefit from natural lighting.

Which of the three locations is best?

As with most interesting topics, each locale has associated advantages and disadvantages. I collected information on the advantages and disadvantages of the different grow locales and organized them into three general groupings: comparisons of grow environment issues, comparisons of flower quality issues, and comparisons of cost and effort issues. This analysis presents these comparisons.

Cannabis Cultivation: Seeds vs. Clones

Cannabis plants are dioecious, that is, they are either male or female. Plant reproduction occurs naturally, when male plants pollinate female plants, causing female plants to produce seeds. New cannabis plants can thus be cultivated by collecting seeds from fertilized females and replanting them, or by buying seeds generated by someone else.

Alternatively, new cannabis plants can also be cultivated using cloning, a form of asexual reproduction. Clones are cuttings taken from a mother plant that are cultivated separately to generate a new plant. Whereas new plants cultivated from seeds carry genetics from both mothers and fathers, cloned offspring carry genetics only from mothers. That is, clones are genetically identical to mother plants.

Cannabis plants, then, can be cultivated either by using seeds or by using clones. Each method has its advantages and disadvantages; this analysis aggregates and compares reported plusses and minuses of each.

In keeping with the same approach I used to compare indoor and outdoor growing, I classify different aspects of the seed vs. clone comparisons into three categories: grow environment, quality of flower, and cost or effort required. Tables summarizing the advantages and disadvantages of each grow method are provided in Figures 1 and 2.

Cannabis Grey and Black Submarket Dynamics

Pre-2018 Cannabis Submarkets

Post-2018 Cannabis Submarkets

Grey Market Cannabis Activity

More Nuanced Cannabis Submarkets

Regional Distributions of Cannabis Activity



Pre-2018 Cannabis Markets

Prior to 2018, all cannabis activity taking place within US states that had legalized some form of cannabis activity occurred within one of two submarkets (see Figure 1): 

  • Marijuana Markets: Included all licensed activity involving cannabis products (cultivation, processing, sale, and use) occurring in areas (cities and states) that had legalized cannabis activity.
  • Black Markets: Included all unlicensed activity involving cannabis products.


Figure 1: Cannabis Markets

1 submarkets

Post-2018 Cannabis Markets

In 2018, the US Farm Bill[1] created a new regulatory regime: licensed activity involving cannabis products with low concentrations of THC were legalized throughout the US. After that, cannabis activity taking place within any particular region now fell into one of three submarkets (see Figure 2): 

  • Hemp Markets: Include all licensed cultivation, processing, and sales of cannabis products and all use of cannabis products with less than 0.3% THC. 
  • Marijuana Markets: Include all licensed activity involving cannabis products with more than 0.3% THC (cultivation, processing, sale, and use) occurring in areas (cities and states) that have legalized cannabis activity. 
  • Black Markets: Include all unlicensed activity involving cannabis products.


Figure 2: Cannabis Submarkets

2 submarkets

Cannabis Industry Rollouts: Lessons Learned from States’ Experiences

Bart Schaneman from MJ Business Daily recently released, “2020 Cultivation Snapshot: U.S. Wholesale Marijuana Prices & Supply.” The information contained in the report helped cement certain insights I’ve had about the evolution of the cannabis market.

Background info

In addition to the myriad other laws and regulations, all states essentially have two basic requirements:

  • Transportation: Transportation between licensed suppliers (Growers, Processors, Testing Labs, Retailers) must be carried out by licensed Distributors
  • Lab Testing: All cannabis products must pass Lab Testing before being sold by Retailers

There are thus two possible paths to market (see Figure 1):

  • Flower: 1 → 2A, if pass testing regulations, then → 3A → 4A
  • Everything Else: 1 → 2B → 3B → 3B, if pass testing regulations, then → 5B → 6B

Figure 1

1 mj supply chain vert 

Cannabis Regulators Determine the Portion of Legal Market Activity

Before cannabis was legalized, by definition, all cannabis activity took place in the Black (or Illicit) Markets. People in society were thus either Non-Users of cannabis, or they were Black Market Users (see Figure 1).

Figure 1

1 pre lic black

Cannabis Submarkets

After cannabis was legalized, activity splintered into different submarkets, with fuzzy boundaries separating different activities. Cannabis activity now falls within any of five different Legal, Grey, or Black submarkets (see Figure 2). (For a more complete discussion of the development of Grey Market Activity in cannabis, see Cannabis Grey and Black Submarket Dynamics.)

Figure 2

Cannabis Submarkets

2 5 submkts

Legal Markets 

Legal Markets (joint hemp and marijuana markets) involve products sold by licensed suppliers (online, bricks-and-mortar, and/or delivery-only). The four major characteristics associated with licensed cannabis products are: 

  • Legality: Legal Markets provide consumers with legal access to cannabis products.
  • Safety: Legal Market products are tested to ensure products do not contain unsafe toxins, such as pesticides, heavy metals, residual solvents, molds, or fungus.
  • Transparency:Legal Market products are required to be labeled with active ingredients. 
  • Product Variety: Legal Markets generally offer much wider varieties, relative to those in Black Markets, of (i) forms of cannabis use (flower, vapes, tinctures, topicals, edibles, etc.) and (ii) offerings within each form of use category.

Cannabis Science and Technology Finally Got Hitched!

The Separate Worlds of Science and Technology

Throughout most of human history, science and technology existed within completely separate realms of society. Science, or natural philosophy, fell within the realm of the upper ranks of society. Natural philosophers were “uncommitted to any program of useful knowledge,” developing “abstract speculations about the natural world.”[1] Joel Mokyr calls science the sphere of savants.[2]

In contrast, technology historically fell within the realm of the working classes, those who used their hands to earn a living, so-called fabricants: physicians, engineers, and skilled mechanics. Technology was developed as a tinkering, or learning-by-doing, process, without any understanding of the scientific underpinnings of how things worked.

Historians James McClellan and Harold Dorn describes the worlds of science and technology as being completely separate, with only a small overlap of applied science:

Only in those handful of subject areas where societies required and patronized specialized knowledge – astrology/astronomy, literacy, numeracy, aspects of engineering, and medicine for example – is it at all meaningful to speak of a limited existence of applied science. Otherwise, worlds of technology and learned science remained sociologically and institutionally poles apart. The vast bulk of technology was not applied science and had developed according to sociologically distinct craft traditions.[1]

The Shift to Anticipating a Better Future

Throughout history, society served gods and kings. New information was presented authoritatively and simply accepted by the masses as being true. During this time, society tended to be backward-looking; that is, people looked to the past and the ancients as the ideal, rather than looking to the future as inspiration as a better time, when society would progress.

It was the Scientific Revolution (1543 – 1687) that finally ushered in a change in perspective, from a backward- to a forward-looking society: “At the deepest level, the common denominator was the belief in the possibility and desirability of human progress and perfectability through reason and knowledge.”[2] The fundamental features of the Scientific Revolution were: (i) the social utility of science, that is, that science and knowledge could be used to improved man’s well-being, and (ii) the emergence of the scientific method, where new information was gained through experiments that explained natural phenomena.[1]

Causes of Cross-State Differences in Legal Market Cannabis Sales

Legal cannabis markets have existed for several years now in a good number of states. If we compared legal market cannabis sales across states and over time, what would that look like? Do states exhibit similar patterns in cannabis sales, or are they different? And if they are different, why?

From Legacy to Licensed Cannabis


Licensed Cannabis Markets: The Current Landscape

Legacy Cannabis Markets

Envisioning Inclusive Cannabis Markets



Almost invariably, markets – that is, the voluntary exchange of goods and services between buyers and sellers – will emerge whenever sellers can profitably meet the wants and needs of buyers. Governments can impede the emergence of markets by making exchanges of certain products or services illegal. However, when the wants or needs are strong enough to create sufficiently high profit opportunities, then, regardless of legal status, markets will emerge.

So go the markets for cannabis.

During the late 1960s – early 1970s, the US government all but blocked flows of cannabis into the US from foreign sources. Despite the illegal status of cannabis in the US, demand was strong enough to induce the emergence of a whole new industry of home-grown supply: legacy cannabis.[1] For over 50 years – half a century – robust markets in cannabis have existed throughout the US, again, despite its illegal status. For over 50 years, suppliers have been improving the quality of home-grown cannabis to the point that US-grown cannabis is generally considered world-class.[2]

Starting about 25 years ago, governments started legalizing cannabis in select US markets (California was the first, legalizing medical cannabis in 1996). In those select locales, legal markets have emerged alongside longstanding legacy markets. 

Of course, federal and state governments have been trying to extinguish legacy markets since their inception. More recently, state governments in newly established legal markets had hoped that the legal markets would subsume legacy markets. That is, governments had hoped that legacy providers would either transition to legal markets, for example, through cannabis social justice programs, or be driven out of existence by legal market operations.[3] This has not happened. In fact, the inability of governments to create legal environments amenable to participation by legacy market suppliers has generally increased legacy market participants’ disdain toward government.[4] Likewise, the refusal of legacy market participants to either transition to legal markets or simply fade away has further antagonized government.

June 2021 marked the 50th anniversary of the US government’s war on drugs. Since its inception, government has spent over a trillion dollars fighting this war. By many measures, it’s been an utter failure – imprisoning millions, many unjustly, while failing to decrease drug usage or prevent drug-related deaths.[5]

The failure of the war on drugs has established that enforcing laws against unlicensed and/or illegal drug activity simply doesn’t work. The only way to drive out such activity is to legalize it, or otherwise make it uneconomic and/or undesirable in which to participate.

Hemp and CBD Market Supply

The information in this post was compiled in an attempt to understand 2 issues:

  • Does the cultivation of hemp differ depending on the hemp product supplied (fiber, seed, or flower)?
  • Is the CBD produced from hemp (cannabis with ≤ 0.3% THC) identical to the CBD produced from marijuana (cannabis with > 0.3% THC)?


Hemp for Fiber vs. Seed vs. CBD

The hemp plant has the potential to contribute resources into the production of a profusion of different end products. These end products are generally sourced from one of three parts of the plant: stalk, seeds, or flower (see Figure 1).

Figure 1

1 many uses hemp


Currently, some hemp suppliers cultivate single-use (stalk or seed or CBD) hemp, while others grow dual-use (stalk and seed or seed and CBD) hemp. At the same time, marijuana cultivators also supply the market with CBD (see Figure 2).

How Regulations Shape the Cannabis Industry


The cannabis industry is highly regulated, and the various regulations play a powerful role in shaping the structure, and thus outcome, of the industry. This analysis examines the following questions:

  1. How do cannabis market regulations shape market structure?
  2. Are the resulting outcomes favorable to suppliers and/or consumers?
  3. What are the pros and cons of vertical integration in cannabis markets?

Players: Who They Are and What They Want

Let’s start by considering who the major players in the cannabis game are – the Suppliers, the Regulators, and the Customers, plus the Distributors and Testing Labs – and what they seek by participating in the cannabis industry (see Figure 1). It’s important to understand what each party wants because the what they want, together with the extent to which they’re getting what they want, will determine (i) how well they follow the rules and (ii) the actions they might take if they decide not to follow the rules.

Figure 1

1 mj game 


Cannabis Suppliers

The players who supply product in the cannabis industry include Cultivators, Processors/Manufacturers, and Dispensaries. The Suppliers provide the products that Customers purchase and consume. Cannabis Suppliers care about three issues in particular:

  • Suppliers want to run profitable businesses, which means they must be able to generate revenues that cover their costs.
  • Suppliers want to comply with laws and regulations so they don’t lose their licenses to operate.
  • Suppliers want to differentiate their products to attract Consumers. The primary modes of product differentiation include offering nuanced products, creating product brands, and educating Consumers.

Distributors and Testing Labs

Distributors and Testing Labs grease the wheels of the industry. Without appropriate distribution and testing services, compliant products cannot make their way through the supply chain from Cultivators to Processors and Dispensaries to be sold to Customers. Distributors and Testing Labs care about two issues in particular:

  • Distributors and Testing Labs want to run profitable businesses, and
  • Distributors and Testing Labs want to comply with laws and regulations so they don’t lose their licenses.

When there are enough Distributors and Testing Labs to create competition, then

  • Distributors and Testing Labs want to differentiate their products to attract Customers.

State and Local Governments (Regulators)

The State and Municipal Governments are the regulators. Governments use state and local laws and regulations to achieve two goals: (i) ensuring all activity is tracked and taxes are paid, and (ii) ensuring cannabis activity does not intrude upon local communities.

  • State and Municipal Governments want to make sure all product is accounted for, only licensed activity occurs, and all taxes are paid.
  • State and Municipal Governments want to make sure cannabis activity is inaccessible to minors and nonintrusive to local communities.


Consumers of medical and recreational cannabis want cannabis products that are safe to consume and that are reliable in providing the expected effects. Also, finding the “right” cannabis product to meet a particular Consumer’s needs is no easy task. So then once a specific product is found that provides the desired effects, the Consumer wants to be able to continue to purchase the same product from dispensaries. What we have, then, is

  • Consumers want product safety.
  • Consumers want product variety.
  • Consumers want product continuity.

Hurdles to Mainstream Adoption of Medical Cannabis

Based on the incentives facing different players in the US medical cannabis market, I believe the market will not achieve mainstream adoption unless or until the US overcomes several hurdles: (i) the classification of cannabis as a Schedule I drug, (ii) cannabis’s lack of FDA approval, (iii) the lack of clear information about and trust in cannabis as a safe and medically efficacious product, and (iv) the social disapproval of cannabis use by a significant portion of society.

Players in the Medical Cannabis Game

Let’s start by examining the incentives facing the main participants in the medical cannabis market.

hurdles to adoption

Model for Evaluating Alternatives for Increasing Dispensary Revenues

Download dispensary_model

The Situation

Dispensaries have several different options for increasing their customer counts and associated sales:

  • Bring in new customers from the nearby community through advertising, community outreach, or other sources.
  • Increase retention rates, that is, the portion of existing customers who become repeat customers.
  • Increase referral rates, that is, the portion of repeat customers who refer the dispensary to friends and family.

Which of these options is most effective in increasing revenues?

Feel free to click on the link above to download the model and play with it yourself.

Base Case Model Assumptions

I assume the dispensary starts with some number of seed customers at time 0.

During any given month, the dispensary:

  • Attracts some number of new customers from outside sources, calculated as a percentage of the outside community, that is, the dispensary’s potential market.
  • Retains some portion of last month’s total customers as repeat customers who will purchase again this month.
  • Attracts new customers this month generated from referrals made by repeat customers last month.

Model Inputs

[1] Existing number of monthly customers to start.

[2] Average monthly revenues per new customer.

[3] Average monthly revenues per repeat customer.

[4] Size of the outside community from which new customers are drawn.

[5] Portion of the outside community attracted as new customers this month.

[6] Customer retention rate, that is, the portion of customers that will purchase again next month.

[7] Repeat customer referral rate, that is, the portion of last month’s repeat customers who refer the dispensary to friends/family resulting in a new customer. 

Model Outputs

[8] Total annual sales under the assumption inputted.

[9] Increase in 3-Year Sales over Base Case

Playing the Marijuana Market Transition Game

Download PDF

Timeline of US Marijuana Laws

California Is Different from Other Legalized States

Description and Implications of CA Legislation

Marijuana Supply Chain Regulations and Realities

Players of the CA Market Transition Game

CA Market Evolution to Date

Future Market Evolution


California is currently transitioning from illegal and semi-legal markets for marijuana to legal markets. The black and grey markets for marijuana in California are enormous in both size and scope. For the State to successfully transition to a legal market, it must reign in the size and scope of black market activity. Will the State be able to do this?

Key players in the Marijuana Transition Game include:

  • State and Local Governments
  • Marijuana Growers
  • Marijuana Distributors
  • Marijuana Dispensaries/Retailers
  • Recreational Users
  • Medical Users
  • Black Market Suppliers

This analysis examines how the market has evolved to date and how we think the market will continue to evolve in the future.

The FDA’s Refusal to Provide Clear Guidelines for CBD Activity is Unconscionable


Image Source:


2021 CBD sales surpassed $5B.[1]

Since CBD was initially legalized under the 2018 Farm Bill, the FDA has reserved the right to enforce prohibitions on CBD in supplements and food products.[2] The FDA has continually delayed release of guidelines for industry participants to help clarify the FDA's position/intentions.[3] The most recent refusal to clarify its position on CBD (April 2022) elicited the following comment by Steve Mister, president and CEO of the Council for Responsible Nutrition:

We know some companies have gone in and presented safety data to the agency, but there just doesn’t seem to be any forward movement there... We’ve really put our focus on Congress. We think we’re going to have to change the statute because there just doesn’t seem to be any interest at FDA in trying to find a pathway forward.[4]

Personally, I think it's criminal that the FDA can force this type of uncertainty on such a substantial industry.

The FDA laid out its concerns about CBD in testimony before the Senate in July 2019 then subsequently in March 2020. The FDA noted several concerns, including:

1.  The fact that CBD is an active ingredient in Epidioliex, which has been extensively studied, precludes it from being included in food or supplements, unless CBD had been marketed in food and supplement products before Epidiolex was approved. FDA claims that CBD had not been previously marketed in food/supplements, so the exception does not apply.[5]  So then by allowing CBD in food or supplements, the FDA sets a precedent that dilutes its ability to regulate other future substances that appear in FDA-approved drugs.

2.  “FDA has learned that CBD is not a risk-free substance.” [6]   During the clinical trials for Epidiolex, a nontrivial portion of children with epilepsy in the trials who were also taking valproate and/or clobazam experienced large elevations in liver transaminases. On the other hand, in 2/3 of cases the elevations resolved after discontinuing or decreasing doses of either Epidiolex and/or valproate, and in the remaining 1/3 of patients the elevations resolved on their own. At the same time, CBD also affects the rate of metabolism of other medications.[7]

3.  Many CBD products are not accurately labeled: Many products contain either less CBD than indicated and/or they contain other cannabinoids (e.g., THC) or pesticides.[8]

Of course, there’s an ocean of difference between controlling CBD as a pharma substance and allowing untested CBD sales at the corner gas station. Surely the FDA can address many of these concerns by requiring product testing, accuracy in labeling, and product warnings, while limiting unestablished claims. 

The CBD market has been a multi-billion dollar market for several years now, that is, a lot of people have used the substance. Surely any major acute problems would have been reported by now. Of course, this isn’t to say that no problems will be found. However, the risks associated with the general use of CBD are surely no greater than those for many other commonly used substances, such as Tylenol, peanuts, or even household cleaners.

As for losing its power to regulate APIs in food or supplements, I’d say FDA has forfeited its rights for CBD by steadfastly refusing to enforce its power from the outset. Legal doctrine (“laches”) prevents a party from enforcing a claim after “unreasonable delay in seeking a remedy”.[9] It seems to me the FDA should be covered by this same doctrine.











Trends in Cannabis Patents Over Time

Patent Counts by Year

I searched the USPTO patent database for all patents for which the patent abstract contained any of the following terms: cannabis, cannabinoid, marijuana, tetrahydrocannabinoid, or cannabinol. My search yielded 914 patents.

As seen in Figure 1, there were only a handful of cannabis patents each year until the late 1990s. Cannabis patent activity started increasing at a roughly constant annual rate between 2001 and 2010. Patent activity leveled off between 2010 and 2015, then accelerated through to the present.

Figure 1

1 mj patent counts

Patent Counts by Category

Category Descriptions

Based on patent descriptions, I assigned each patent to a category and subcategory. I defined the patent categories as follows:

Delivery: Methods of or compositions for delivering cannabis into the body

Detect: Methods of detecting cannabinoids in products samples or in people

Extract: Methods of extracting cannabinoids from plant matter

Grow: Methods of cultivating cannabis plants

Package: Methods of packaging cannabis products

Plant: Plant cultivars

Pre-Plant: Plant genomics

Process: Methods of processing cannabis, excluding extraction of cannabinoids from plant matter

Receptor: Patents addressing cannabinoid receptors: CB1, CB2, agonist, antagonist, ligand

Smoke: Devices and formulations for smoking cannabis

Storage: Methods and devices for storing cannabis products

Synthesis: Methods of synthesizing cannabinoids

Terpene: Products and methods involving cannabis terpenes

Track: Software for tracking cannabis cultivation, sales, usage, or trading

Treatment: Cannabis compositions for the treatment of specific conditions

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