Boris Banas-Bernhard Beitzke-Cannabis Extracts Cannabinoids Legal Perspectives

Ladies and Gentlemen The fact that the scheduling of cannabis happened in 1961 without a lot of scien:fic knowledge about Cannabinoids, does not mean the officials have not been following these rules ever since. They have and this is their job. Our job, I believe, is to find bullet-proof ways of doing what we want to be doing: to become successful in the emerging cannabis industry in the long run. Name of this lecture is: “Cannabis extracts and pharma-grade cannabinoids: several legal perspec:ves” Its main message is: the fact that legal cannabinoids are not scheduled by UN Conven:ons does not necessarily mean it is not regulated already; especially in the European perspec:ve. I also believe, our industry is mature enough to allow calling things their proper names and it can live with it.

In the first part we will discuss the original legal framework sePng rules for our governments. Do keep in mind many countries went beyond these rules or are not completely in line with them. Also, in EU there exist only a patchwork of regula:ons addressing hemp extracts and cannabinoids. I strongly advise you always check with your na:onal authori:es and your lawyers before engaging in any kind of cannabis enterprise. General obliga:on of countries is to control the produc:on, manufacture, export, import, and distribu:on of, trade in, use and possession of scheduled drugs, exclusively to medical and scien:fic purposes.

UN conven:ons recognize two Categories of substances and four Schedules. Categories are Narco:c drugs, as defined by a so called Yellow List, and Psychotropic substances, as defined by the Green List. These lists are published by the Interna:onal Narco:cs Control Board with last updates in 2016. Schedules are defined by their abuse poten:al. Schedule I drugs are deemed most dangerous and without any medicinal value. Schedule II drugs can be prescribed on a specialist prescrip:on, Schedule Three contains various prepara:ons on regular prescrip:on and Schedule IV defines par:cularly dangerous Schedule I substances with poten:al medicinal and scien:fic research applica:ons le[ to discre:on of individual countries. This schedule is a gateway to na:onal medicinal cannabis programs. Cannabis, its resin, extracts and :nctures are Schedule I narco:c drugs. Cannabis and Cannabis resin are also in Schedule IV. A specific isomer of THC, the (-)-trans-delta-9, also called Dronabinol, was allowed a controlled medicinal use and was moved into Schedule II in 1991. It was moved to Schedule III of the US Controlled Substances Act in 2010. As we can see, Cannabidiol and Cannabigerol, as chemical substances, are not Scheduled by interna:onal law, however at least two countries Canada and Slovakia move CBD into Schedule II several years ago and they are considered Schedule I in USA as THC analogues. It seems quite strange that Cannabidiol (CBD) is a Schedule I substance in the US CSA, however this was confirmed by DEA in 2015.

Let us now discuss how the Single Conven:on defines cannabis and what makes it different from a Cannabis plant. Note capital “C” and lower case “c” lebers. “Cannabis plant” means any plant of the genus Cannabis. Term “cannabis” stands for the flowering or frui:ng tops of the “Cannabis plant” from which the resin has not been extracted. Seeds and leaves are not defined as “cannabis” if they are separated from the flowering tops. However, countries should prevent misuse and trafficking the leaves of the Cannabis plant. (See Single Conven:on § 28, Art. 3). The term hemp (or industrial hemp) is not defined by any of the UN Conven:ons. It is only men:oned in a so called “Cannabis Manual” of UN Office on Drugs and Crime. For this purpose, upper third part of the “Cannabis plant” is probed for its cannabinoid profile, in order to differen:ate between Drug type and Fiber type. Contents of total THC and Cannabinol are divided by total Cannabidiol content with result of the formula lower or higher than 1. Many countries recognize whole Cannabis plant as a narco:c drug, not only the flowering tops. Several countries such as Slovakia and Luxembourg have exempted varie:es of Cannabis sa:va listed in Common Catalogue and its extracts and :nctures from the scope of their narco:c laws.

“Produc:on” means the separa:on of cannabis and cannabis resin from the plants from which they are obtained. Again, this rule in the Single Conven:on does not dis:nguish between low-THC and highTHC Cannabis plants.

“Manufacture” means all processes, other than produc:on, by which drugs may be obtained and includes refining as well as the transforma:on of drugs into other drugs. Since we have seen that extracts and :nctures of cannabis are Schedule I narco:c drugs, obtaining extracts and :nctures of cannabis is also classified as “manufacture” and is subject to mandatory licensing form na:onal governments, which is also the case for our facility in Prague. Another reason is increased concentra:on of THC during primary and secondary extrac:on processes.

As per its Ar:cle 28, the Single Conven:on does not apply to the cul:va:on of the Cannabis plant exclusively for produc:on of fibre and seed or hor:cultural purposes. Any country that limits produc:on of hemp seed and hemp stalks clearly goes beyond its interna:onal engagements. If a country permits cul:va:on of the Cannabis plant for the produc:on of cannabis or cannabis resin, it must apply the system of controls copying usage of opium poppy for medicinal purposes. They create “cannabis agencies” and follow rules described in Ar:cle 23 of the Single Conven:on,. Now wait. Don’t you smell something fishy here? There is absolutely no engagement by interna:onal law that commands governments to ban cul:va:on of the fibre type, of this excellent renewable source of raw materials and ingredients, as well as to bar their ci:zens, from accessing this amazing natural remedy under prescrip:on. It does boil down to poli:cal will on na:onal levels!

Let us go deeper into cannabinoid agenda.

Please note that 80% chromatographic purity level is the dis:nguishing point between plant extracts and mono-cons:tuent chemicals. We recognize three main grades of the cannabis extract: crude, diluted (:nctures) and frac:onized. Extrac:on of cannabis boosts concentra:on of all cannabinoids including THC. Since THC levels usually go well over 1 per cent during extrac:on, dilu:on to less 0.2 per cent is therefore advised in order to avoid criminal prosecu:on before placing this raw material on a business-to-business market. The Netherlands, for instance only tolerate 0.05% of delta9-THC in marketable extracts or :nctures. When we further discuss Cannabidiol, Cannabigerol and THC, we mean isolated chemical substances, not hemp extracts or their :nctures.

We recognize only one oil related to hemp. The hemp seed oil. All the other „oils“ are technically extracts or :nctures. With an excep:on of hemp essen:al oil which is a vapor fragrance dis:llate of the green parts. Whole plant extracts are prac:cally non-existent. Who would want to spend resources and machine :me on processing low resin material? And I will not linger on a term “seed and stalk extract”. Seeds and stalks are actually considered impuri:es when extrac:ng hemp flowering tops.

European companies exceeding a certain revenue have to report to European Commission their trading ac:vi:es on a monthly basis according to Combined Nomenclature. The first 6 digits are universal for all members of World Trade Organiza:on. We have to understand logic of Nomenclature from top to bobom: From Chapters to Groups to Items. The fact you call something a “CBD oil”, does not make it a “hemp oil”. As we can see, Chapter 15, especially group 1515 stands for vegetable fats and oils and their frac:ons. This clearly suggests term “hemp oil” stands for “hemp seed oil”. Any vegetable triglycerides found in cannabis extract are a nuisance and cause problems during isola:on of cannabinoids. So a crude hemp extract (a.k.a. CBD oil) is by defini:on a “Vegetable extract” belonging to Group 1302. Then again, if you mix an extract with any kind of vegetable oil, it depends on actual mass balance to decide if the final product is to be classified as a ”vegetable oil” or as a “vegetable extract.” As to cannabinoids, they are terpene phenolic chemical compounds belonging to a group 2907 of the Combined Nomenclature called Phenols and phenol-alcohols.

In the third part we will discuss possible applica:ons in medicinal segment. Specifically orphan drugs, medicinal products and medical devices.

Are cannabinoids a medicine or just helpful chemical substances? The ul:mate answer to this open ques:on will be a game changer, since there is no place for medicinal products in foods, food supplements, cosme:cs or other over-the-counter consumer goods. Defini:on of a medicinal product has two legs, which are inseparable: the defini:on by presenta:on and defini:on by func:on.

There is one Marke:ng Authoriza:on for THC in EU for pallia:ve care: THC is an ac:ve ingredient in Sa:vex® together with CBD. However neither CBD, CBG or Dronabinol have been listed in European Pharmacopoeia. Both Dronabinol and Cannabidiolum are proposed Interna:onal Nonproprietary Names for Pharmaceu:cal Substances under WHO.

As of the 31st December 2016, products containing Cannabidiol that are "used for medical purposes" are classed as medicines by the UK regulatory body, the Medicines and Healthcare products Regulatory Agency (MHRA). As such, if a CBD-containing product is "used for medical purposes"—e.g., its adver:sing claims a medical benefit—it must have a product license before being sold. The use of CBD in pharmacy-compounded prepara:ons is permibed in Germany, even though no CBDcontaining monoprepara:on with a marke:ng authorisa:on is currently available in Germany. In order to ensure the quality of such medicinal products, Supplement 2015/2 of Deutscher ArzneimibelCodex / Neues Rezeptur-Formularium includes a CBD monograph (C-052) as well as a protocol (NRF 22.10.) for the prepara:on of an oily solu:on. As of 1 October 2016, CBD has been included in the German Ordinance on the Prescribing of Medicinal Products without limita:on to administra:on route or dosage, i.e. it may only be dispensed on presenta:on of a medical prescrip:on. CBD is also listed in Finnish list of pharmaceu:cal substances. For avoidance of doubt: CBD generally cannot be a medicinal product per se; it could be an ac:ve ingredient in a medicinal product. However it could also be an ingredient in a food (supplement), if not used for medicinal purposes.

About 30 million people living in the European Union (EU) suffer from a rare disease. Orphan drugs are medicines for the treatment of a condi:on that is rare (i.e. affec:ng not more than five in 10,000 people in the European Union) or where the medicine is unlikely to generate sufficient profit to jus:fy research and development costs. Cannabidiol and Dronabinol have been granted inves:ga:onal or orphan drug status for the indica:ons shown on the chart. This is indeed a great achievement!

There is a legi:mate use of Cannabidiol in Over-The-Counter products without prescrip:on such as medical devices. Good examples may be suppositories or adhesive patches. Such products have to be registered with na:onal health or medicinal agencies and CBD may not be declared as an ac:ve ingredient.

In the last part we will talk about various possibili:es of safe marke:ng of hemp deriva:ves on the open market.

In October 2016 EIHA.org published a posi:on paper on CBD-containing products. Here we propose a three-:er regulatory framework based on daily intake of CBD equivalent. It has been demonstrated that pharmacological effect of CBD are not exerted below 200 mg/day for average adult. So anything over 200mg can be called a pharmacological dose. For medium doses 20-200mg CBD or its equivalent in hemp extracts should be regulated as herbal medicinal products or food supplements. Low doses less than 20mg should be freely available in foods. In our proposal we have not tackled maximum allowed THC content, which will be a subject of a separate posi:on paper.

This schedule presents a filter for keywords Cannabis and Cannabidiol in CosIng, an unofficial database of cosme:cs ingredients in EU. The Annex II of Regula:on 1223/2009 lists restricted raw materials and item 306 stands for Narco:cs listed in Tables I and II of the Single Conven:on on narco:c drugs. A restric:on on use of cannabis, cannabis resin and cannabis extract is due to their classifica:on as Schedule I narco:cs. As we can see, Cannabidiol is listed in CosIng with four func:onal claims: ANTIOXIDANT, ANTISEBORRHOEIC, SKIN CONDITIONING, SKIN PROTECTING. First cosme:c products enriched with Cannabidiol start to pop-up on EU market. I general, cosme:c products require mandatory registra:on via Cosme:c Products No:fica:on Portal.

Vape pen refills without nico:ne are not governed by Tobacco Products Direc:ve. Rather, such formula:ons should be marketed as “chemical mixtures” under General Product Safety Direc:ve. Some countries, such as Germany do not allow CBD or CBG in e-liquids since they have issued a posi:ve list of e-liquid ingredients. Manufacturers should hire an authorized person to work out an MSDS and we also recommend performing a standardized “smoke test” as per ISO 3308. As long as the final consumer product does not contain THC above level of quan:fica:on, use of CBD and CBG isolate or extract is business-safe. With this we have preby much exhausted allowed use of CBD and CBG in end user products on the European market.

ConcentratIon of THC is cri:cal for placing hemp extracts on the end-consumer market. Before we move on we have to clarify a major misinterpreta:on of a magic value „0.2%“. 0.2 per cent or 2000 parts per million of THC is a limit for registra:on of new and control of exis:ng cul:vars of Cannabis sa:va in a Common catalogue of agricultural species. Period. In US and Canada, this limit is 0.3 per cent . The above limit may be used for legality assessment from perspec:ve of a criminal law for any intermediate product on a B2B market. But this limit has nothing to do with safety of products intended for end-consumers, while there is a general zero tolerance on THC in end-consumer products especially on the European market. Some na:onal THC guidelines exist, such as in Germany, Belgium or Austria. Czech Republic, for instance tolerates presence of THC on “ppm level”. Dutch Narco:c office tolerates 500 ppm (0.5%) of THC in hemp extracts.

EIHA is working hard on introducing Scien:fically Sound Guidelines for THC in Food in Europe but this is not the scope of this lecture. Basis for our proposal is proper deriva:on of the so called Acute Reference Dose, i.e. acceptable daily uptake of ac:ve THC. This uptake should also be safe from false posi:ve urine drug tests as per exis:ng scien:fic literature. With EU-wide THC guidelines missing we advise companies to diligently recommend such dosage of their edible products which will not exceed 490 micro grams of delta-9-THC per day for average adult or 1 milligram of total THC+THC carboxylic acid.

In order to give you an image of how this ARfD can be easily fulfilled, see this calcula:on. This schedule shows poten:al total THC intake form a regular 5% total CBD product containing max 0.05% of delta9-THC, if 40 milligrams of CBD equivalent are to be ingested. The shown intake of THC from diluted extracts may be higher at certain doses than advised by na:onal or interna:onal food safety authori:es. But may well be OK if EIHA’s opinion is accepted by EU officials.

Why is the THC issue so important? We would like to share with you a screenshot from Rapid Alert System for Food and Feed filtered to show THC incidents in foods on EU market for the last two and a half years. I believe it is no market player’s wish for his product to appear on this list. Please note a flood of THC alerts on hemp protein powder and hulled hemp seed from German veterinary inspec:on in summer 2016. These recent alerts originate from misinterpreta:on of THC guidance levels of “any other foods” valid in Germany. Moreover, authori:es measure total-THC in food which is the sum of contents of THC and its non psychoac:ve precursor acid THCA. This leads to a substan:al overes:ma:on of THC content in food. This situa:on poses a major threat for all hemp foods market in Europe and EIHA is talking to responsible people in Germany this week trying to understand their mo:ves and argumenta:on logic. THC levels detected were around 2.7 - 5.5 parts per million (ppm) and products are being pulled from shelves across Europe as we speak. More details here: hbp://www.hempro.de/download/Statement%20on%20THC%20Levels%20in%20Foods.pdf

This schedule presents four areas of food legisla:on we shall discuss in next few slides: General food law, Food addi:ves and flavoring, Foods Supplements and health claims regula:ons and Novel foods regula:on.

General food law defines what is and what is not food. Foods are not medicinal products and scheduled substances. On one of the previous slides we have demonstrated that Cannabidiol and Cannabigerol are not a medicinal products and they cannot be medicinal products per se, they could only become cons:tuents of a medicinal product, for example as ac:ve ingredients. They are also not listed in any of the UN schedules. So we could assume the use of CBD and CBG on EU food market is OK. But there is a catch to be discussed in the next slides.

The catch, we were referring to concerns novel food legisla:on governing food sources not used in EU before year May 15, 1997. Examples are Stevia or Chia seeds. An approval process on the European Commission level is needed before such foods may be placed on the market. Market regulators may have quite contradictory opinions! While Czech authori:es have approved use of hemp flower extract, Austrian AGES says “cannabinoid-containing” extracts are novel foods. As to Cannabidiol as a chemical substance, even Czech authori:es agree that it is a novel food ingredient.

Novel food Catalogue lis:ng for Cannabis sa3va clearly says the novel food Regula:on is not applicable to most foods and food ingredients from this plant. ”Most" in this context could mean: all food from the seeds and/or the leaves, but not from other parts of the plant. Leaves are added to soups in southeast Asia. In October 2016 European Commission also included Cannabidiol as a Novel Food ingredient. Needless to say, notes to CBD lis:ng create more confusion than explana:on. Our understanding is crude of diluted hemp extract do not fall under this descrip:on, since they are not enriched with CBD, rather CBD is a natural cons:tuent of Cannabis sa:va extracts. Also, certain hemp varie:es do not really contain CBD so their extracts are hardly to be called CBD-rich anyway. Flavorings will be exempted from Novel Food scope star:ng Jan 1, 2018.

Cannabis extracts or cannabinoids are not approved food addi:ves as per Regula:on EU/1130/2011.

EC Standing Commibee on Foodstuffs agreed on Dec 18, 1997 that, quote, “hemp flowers used for the produc:on of beer-like beverages are considered as food ingredients and not addi:ves, since they are used in the same manner as hop flowers.” There are various hemp-flavored food products on EU market already using essen:al oils, hemp or its extracts to add a dis:nc:ve organolep:c experience. Nice and tasty example is Cannabia: first hemp beer of mankind introduced in 1996. We strongly suggest all food operators wishing to use hemp extracts in foods and food supplements ot consult with us op:ons for safe usage of hemp-derived ingredients in foods.

Food supplements are foods to supplement normal diet. Very similar safety rules apply as to regular foodstuffs, such as "NO THC" rule (i.e. maximum ppm's according to na:onal guidelines). Food supplements are concentrated sources of nutrients, such as vitamins and minerals, or other substances with a nutri:onal or physiological effect, such as herbal extracts. They are marketed in dose forms. The labeling, presenta:on and adver:sing must not abribute to food supplements the property of preven:ng, trea:ng or curing a human disease, or refer to such proper:es. Also, any health claims can only be selected from 222 EU-approved nutrient-specific claims. Food operators must be aware of the mandatory no:fica:on or registra:on before placing food supplements on the market in each individual member state.

Many CBD-infused products on the market mimik food supplements by retail format when usually sold in drop-dispensing bobles. However, THC content, product labelling and declara:ons are very o[en outside of the food industry rules. One horrific example is shown here where the company even mistakenly says their product contains more that 0.2 per cent of THC. Some players market retail-format products as “ingredients for further processing”. Polish Sanitary Inspectorate is currently performing a check on 82 different hemp extract products sold as food supplements. 41 products were already declared as not marketable in Poland as food supplements. Remaining 41 are s:ll under scru:ny.

An area of veterinary dietary supplements need to be thoroughly inves:gated. Their registra:on and market placement happens on na:onal levels. However there is zero tolerance for narco:c drugs and psychotropic substances.

This schedule summarizes our understanding of use of Cannabidiol and cannabis extracts on BusinessTo-Consumer market from perspec:ve of EU regula:ons.