Michigan Regulators Release Advisory on CBD, NY AG Resigns

Regulators in Michigan have released an advisory on CBD, New York Attorney General Eric Schneiderman is the latest high-profile figure to fall from power, and Vitamin Shoppe's CEO reported improvements in operations for the first quarter despite declining sales.

May 12, 2018

7 Min Read
Michigan Regulators Release Advisory on CBD, NY AG Resigns

Editor’s note: below is weekly update of news of potential interest to the health and nutrition industry.

Michigan Releases Advisory on Marijuana, CBD

Regulators in Michigan have released an advisory bulletin, explaining the limitations governing cannabidiol (CBD) and industrial hemp.

Based on the statutory definitions related to “marihuana” in Michigan state law, extracts of the marijuana plant will continue to be treated as marijuana, according to the Dept. of Licensing and Regulatory Affairs and the Bureau of Medical Marihuana Regulation.

The agencies said the possession, purchase or sale of marijuana or any marijuana product, including CBD, must comply with the Michigan Medical Marihuana Act and the Medical Marihuana Facilities Licensing Act.

“Cannabinoids are most abundant in the flowering tops, resin, and leaves of the cannabis plant and are not found in parts of the cannabis plant that are excluded from the definition of marihuana, except for trace amounts—typically, only parts per million—that may be found where small quantities of resin adhere to the surface of seeds and mature stalk, not within the seeds nor the mature stalk,” the advisory bulletin stated. “If cannabidiol is found on the seeds or stalks, it is found only as a result of contact with the resin produced by the cannabis plant.”

Under Michigan law, “marihuana” includes the following:

  • all parts of the plant Cannabis sativa L., growing or not;

  • the seeds of that plant;

  • the resin extracted from any part of the plant; and

  • every compound, manufacture, salt, derivative, mixture, or preparation of the plant or its seeds or resin.

Marijuana excludes industrial hemp grown or cultivated for research under the state’s Industrial Hemp Farming Act.

However, the advisory bulletin noted, “The Industrial Hemp Research Act limits industrial hemp to cultivation or research and does not authorize its sale or transfer.”

Schneiderman—Thorn in Dietary Supplement Industry’s Side—Resigns

Eric Schneiderman, the once powerful attorney general of the state of New York whose 2015 herbal supplements investigation brought a $41 billion industry under a microscope, has resigned following the publication of a blistering report in the New Yorker.

Just hours after the New Yorker published its piece on May 7, 2018 in which four women accused Schneiderman of physical abuse, Schneiderman resigned from his position.

“It’s been my great honor and privilege to serve as attorney general for the people of the state of New York,” he said in a statement. “In the last several hours, serious allegations, which I strongly contest, have been made against me. While these allegations are unrelated to my professional conduct or the operations of the office, they will effectively prevent me from leading the office’s work at this critical time. I therefore resign my office, effective at the close of business on May 8, 2018.”

The current acting attorney general is Barbara Underwood, who was appointed New York Solicitor General in January 2007 and previously served as counsel and chief assistant to the U.S. Attorney for the Eastern District of New York.

Schneiderman is just the latest high-profile figure in America to fall from power following allegations published in the New Yorker that he emotionally and physically abused former girlfriends. A growing number of people—mostly women—have accused prominent men in Hollywood, Congress, television media and other spheres of power with committing physical abuse, sexual assault and other aberrant behavior.

As one of the nation’s most prominent state attorneys general, Schneiderman in recent times had turned his attention to criticism of the Trump administration, along with several of his colleagues in other states.

Leaders in the dietary supplement industry loathed an investigation conducted by his office more than three years ago. On Feb. 3, 2015, the New York Times first reported on a study by Schneiderman into retailers selling herbal supplements in New York. The investigation found DNA barcoding couldn’t verify the identity of many of the herbs declared on the products, calling into question the integrity of prominent retailers and manufacturers of dietary supplements.

Herbal experts criticized the reliability of Schneiderman’s results. As explained at the time by Marc Blumenthal of the American Botanical Council, DNA is not a good way to test products created from botanical extracts, especially when used alone.

Still, the widely publicized probe led to significant criticism of the supplement industry in the mainstream press and calls for stronger federal regulations. It also highlighted Schneiderman’s influence as a powerful state attorney general with a knack for grabbing national headlines.

And ultimately, Schneiderman influenced change in the industry. That included an accord with GNC in which the retailer agreed to incorporate DNA barcoding to authenticate plants used in supplements.

Outgoing Vitamin Shoppe CEO Reports ‘Stead Improvement’

In the first quarter of 2018, Vitamin Shoppe Inc. (NYSE: VSI) reported a 3.2 percent drop in sales (US$296 million) compared to the same period one year ago.

Net losses totaled $3.9 million, versus net income of $8 million in the first quarter of 2017.

Despite declining sales, Vitamin Shoppe CEO Colin Watts said he was “pleased with the consistent and steady improvement in the business as the initiatives we have executed are beginning to take hold.”

“We saw an improvement in underlying sales trends, an increase in both new customer acquisition and traffic while also realizing ongoing product margin improvement,” Watts said in a statement.

But Watts won't have time to see a greater turnaround. He intends to leave the company at the end of May. On Feb. 27, Vitamin Shoppe announced its chairman, Alex Smith, had been appointed executive chairman, and the company had commenced a search for a new CEO.

The Secaucus, New Jersey-based specialty retailer has been trying to reverse a trend of declining sales.

In the first quarter, total comparable sales were down 3.6 percent. (However, digital comparable net sales increased 20.7 percent).

The fourth quarter of 2017 was more brutal. Vitamin Shoppe reported sales of $268.8 million, an 11.8 percent decrease versus the same period the prior year.  

In the three months that ended March 31, 2018, Vitamin Shoppe did not open any stores. It closed two.

On May 7, 2018, Vitamin Shoppe completed the sale of Nutri-Force, its manufacturing business, yielding net proceeds of approximately $15 million. The buyer was Arizona Nutritional Supplements (ANS), a contract and private label manufacturer of vitamins, minerals and supplements based in Chandler, Arizona.

Reliv Int’l Eyes Sales Revitalization After Flat 1Q Sales

Multi-level dietary supplement marketer Reliv International (NASDAQ:RELV) reported its first quarter (1Q) 2018 sales were down almost US$3 million compared to first quarter 2017, leading to a net loss of $.24 million, compared to a $.52 million net gain a year ago.

Sales were down in every international region, and the bump it saw from its Fit3 line launch in the United States during the comparable quarter last year has flattened.

“Clearly, we have work to do in revitalizing the sales in the United States and in other markets around the Reliv world,” said Ryan A. Montgomery, president of Reliv, in a press release. “That work has been underway, highlighted by some key announcements at our Reliv Live event in Anaheim.”

Among the upgrades are: the addition of whey protein to its core Reliv Now® nutrition product; a new mobile app to help its independent distributors recruit and manage their businesses more quickly and efficiently; and incentives such as free ground shipping for new distributors, discounted autoship offers for “Preferred Customers” and product credit incentives.

At the close of the first quarter, which ended March 31, 2018, Reliv had 32,100 distributors and preferred customers, a nearly 14 percent drop from the same time last year.

Arizona to be Home of Prenexus Health

Prenexus Health, a manufacturer of prebiotic ingredients, has chosen Gilbert, Arizona as the location for its first prebiotic manufacturing site and corporate headquarters. It plans to be operational in 2018, adding 45-50 new jobs to the area over the next two years.

According to Tim Brummels, chief executive officer and co-founder of Prenexus Health, Arizona is the ideal location because it’s near the company’s vertically-integrated supply chain and provides access to a skilled labor pool.

The company will produce an organic, prebiotic ingredient, xylooligosaccharide (XOS), from organic-certified, non-GMO high fiber sugarcane the company grows in California’s Imperial Valley. What’s more, the manufacturing process is sustainable, uses no chemicals and will be organic certified.

Brummels said many prebiotic ingredients are manufactured outside the United States, and Prenexus Health is proud their prebiotic ingredient will support U.S. farmers, create manufacturing jobs and promote digestive health and wellness through selective growth of beneficial micro-organisms.

Reporting by Ginger Schlueter, Steve Myers and Josh Long

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