Wilmington company wants to help organize cannabis market, get ahead of the legalization curve

WILMINGTON — There’s plenty of confusion over what is – and isn’t – allowed in North Carolina’s cannabis business, and that’s without the added complications of legalization. Matt Dula hopes his new company can help do something about that.

Dula, a North Carolina native and former United States Marine Corps infantryman, spent time working with California-based cannabis companies before moving to Wilmington. Here, he started a new company, which included his virtual reality-based media project, based around cannabis-themed content.

Since then, Dula has continued to broaden his horizons, and his newest venture – CIJ Holdings, Inc. (yes, there’s a story behind the name) – is at once ambitious and practical.

His new business is broken into four major divisions:

  • Grown 2 Gold – a hemp cultivation, processing, and consulting company

  • Cannabis Green Book – an industry vetting and networking company that allows those in the industry to verify the financial and business practices of others before going into business with them

  • Cannaverse Media – the evolution of Dula’s original VR-based media company; Cannaverse is still cannabis-themed, but is branching out into augmented reality and 3D-modeling

  • Port City Dispensary – an E-commerce retail for CBD type products

Dula’s goal, along with his partners, is to help give the emerging cannabis market in North Carolina some operational and logistical structure. In a vacuum of clear guidelines that Dula calls “scary” for new businesses, Dula is hoping to introduce standards for testing, quality-controlling, labeling, and even business-to-business evaluations.

For now, Dula’s efforts are focused on the “hemp” market, opened up first by the 2014 Farm Bill and then the 2016 pilot program in North Carolina that allowed in-state cultivation of products made from cannabis plants with low levels of THC, the main psychoactive ingredient in the plant.

But he also hopes the standards and practices he’s helping to put in place will help the “marijuana” market – that is, the legal sale of cannabis plants with higher levels of THC.

Potential pitfalls of the new market

The Drug Enforcement Administration aggressively pursued strict prohibition of non-psychoactive hemp byproducts under former Attorney General Jeff Sessions. (Port City Daily photo / DEA)

The hemp market is full of challenges, not least of which is the Drug Enforcement Administration (DEA) which considers Cannabidiol (CBD) from hemp to be as illegal as marijuana, irrespective of THC content, arguing that hemp and marijuana are both the same plant – cannabis sativa. While North Carolina differentiates hemp from marijuana by THC content, with hemp being less than 0.3 percent THC by dry weight, the DEA doesn’t.

Without the manpower to police at the local level, the DEA representatives said it tends to intervene only when hemp-products cross state lines. Some businesses avoid the issue by dealing only with North Carolina-grown hemp, but at least one Wilmington-area business had unprocessed hemp from out of state seized by the DEA.

While President Donald Trump signed a bill in late December of 2018 legalizing industrial hemp, which provides added protection to farmers around the country, it remains to be seen how the DEA – which aggressively pursued and created a new Schedule-I classification for all CBD-type products – will react.

Another pitfall of the hemp industry is running afoul of the Food and Drug Administration (FDA) at the federal level, as well as the Food and Drug Protection Division of the North Carolina Department of Agriculture and Consumer Services (NCAGR).

The potential liabilities here are twofold: first, making medical claims about CBD products is a violation of FDA regulations. Ordinarily, products like CBD oil were exempted as “dietary supplements” — a largely unregulated industry with plenty of its own issues. But, in a recent twist to the CBD story, the FDA approved a CBD-based anti-epileptic drug called Epidiolex.

This contradicted the DEA’s stance that cannabis had no currently accepted medical use (the criteria for making CBD a Schedule I drug). However, it also gave the FDA jurisdiction to consider CBD an “approved drug,” and to prevent unapproved versions of it – for example, locally manufactured CBD oil – from being introduced into interstate commerce.

The approval of Epidiolex also allows the NCGAR to ban CBD as a food additive (if you’ve suddenly noticed the disappearance of CBD-infused teas and coffees, and edible CBD snacks, that’s a big part of the reason).

Education

Dula’s hopes to address these pitfalls both by showing and by doing.

First, he hopes to provide educational opportunities both for prospective business owners – including “cannabis tourism,” or those who might visit the area on cannabis-related business – and for those on the regulatory side, including everyone from “Wilmington City Council to law enforcement to state representatives.”

Dula also hopes to put in place some basic practices that can help “keep people out of trouble,” as he put it.

“North Carolina legalized hemp, but there are almost no guidelines – it puts businesses in the position of playing a dangerous game,” Dula said.

Dula’s labeling system is key here. Everything from bulk hemp to hand-trimmed flowers to finished products get labeled, listing origin, THC content, and “chain of custody,” to make sure people know the “who, what, where, and when” – whether it’s wholesale buyers who are making their own CBD product from raw or processed hemp, or retail customers buying a CBD product.

Part and parcel to labeling are warnings: advising “keep out of reach of children and animals,” warning pregnant or breastfeeding women to consult a physician, listing any known allergens or added chemicals, and completely avoiding any advertising that could be construed as targeting children.

Dula is also emphatic about abiding by FDA and NCAGR regulations on “medical claims.” Port City Dispensary has educational material on hand, but makes no claims about the medical benefits or properties of CBD or other cannabis product. As part of consulting work, he hopes to help other cannabis businesses with their own labeling – both to help them avoid trouble and to help establish a standard in the business community.

The same idea goes for operational regulations; in Dula’s processing facility, safety, health, and other documents are prominently framed on the wall, like a restaurant’s health score, alcohol license, and ServSafe certificates.

“We deliberately took a cue from restaurants here, we want anyone who comes to be able to see it,” Dula said.

While Dula took inspiration for many of these practices from other states with legalized marijuana, he pointed out that little of this is required by current state law (there’s also no evidence CBD products in and of themselves pose any danger to children). The point is to set a good example of what guidelines could look like, before state or federal authorities implement their own requirements.

“The fact is, if we can’t all agree on how things should be, we are in trouble,” Dula said. “Until we are regulated legally, we want to go to the extreme extent.”

That means meticulous testing, labeling, tracking, and quality control, from “seed to sale,” Dula said.

“We want to be extremely transparent about every aspect of what we do,” Dula said.

Legalization

North Carolina may well be one of the last states in the country to legalize marijuana, but Dula believes the tide is turning. For him, it’s a matter of “when,” not “if.”

That’s particularly good news from those who see THC as medically beneficial since, in many states, medical-use legalization has preceded allowing recreational use. But for Dula, there’s some both cause for concern and an opportunity to get ahead of the curve.

“Like I said, we legalized hemp, there was no blueprint, no guideline, it was scary for new businesses,” Dula said. “We want to prepare for the THC market, but we want to do it in a way that’s safe, and consistent, and transparent. All that’s good for the consumer, and it’s good for a cannabis business, too.”

Christmas in July

Dula’s business plan is bold, but it’s not just about keeping the industry out of trouble, it’s also about a social mission. Dula’s stated mission it to help organize and integrate businesses that are financially and legally sound — that’s good business. But he also wants to make sure these businesses have a moral and ethic foundation.

Dula’s own business includes Cannaverse, which is helping to pioneer a therapy based on immersive VR and cannabis products. Called Cannabis Virtual Immersive Therapy, Dula’s company describes it as “new therapeutic treatment option that combines the healing power of virtual reality for the mind with the physical healing properties of Cannabis. Using patient-driven metrics and data we can combine the certain phytochemicals (the various cannabinoids present in cannabis) and VR to create a more holistic approach to healing.”

Dula is also working with Kyle Trivisonno, a Wilmington-based entrepreneur whose start-up Eco TEKis working with hemp fibers to construct durable prostheses that are more affordable for patients and less toxic for manufacturers than those made from traditional materials.

It’s that spirit the led to the name of Dula’s company, which stands for “Christmas in July.”

As Dula explained, the business name refers to a good friend who recently passed away from Leukemia — but not before his friends and family were able to throw him one final celebration, a Christmas in July party, which became the company’s namesake.

Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.