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Equity Incentives and Cannabis Businesses

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A common way to get and retain employees is to issue them options or equity securities like corporate stock. But like with everything else, issuing securities is heavily regulated. Today, we’ll look at a few key issues for cannabis businesses that want to offer equity incentives.

How do cannabis companies offer equity incentives?

There are two common ways that cannabis companies offer equity incentives: First, companies may create an equity incentive plan (or EIP). Second, companies may offer equity incentives via a written contract, such as an employment or consulting agreement. In either case, the company will, if done right, use the plan or contract to detail things like:

  • Vesting details, such as the timeline of vesting
  • Acceleration provisions (i.e., the circumstances upon which vesting “accelerates” upon certain pre-defined changes of control)
  • Restrictions on transfer of the equity securities or options
  • Company repurchase rights

When employees terminate their relationships with a company, things can often sour quickly. Equity incentive plans or contracts can get incredibly complicated, and we have seen things go south quickly with poorly drafted plans or agreements that did not contemplate common employment issued.

What federal securities laws apply to equity incentives?

Any time equity incentives come into play, cannabis companies must be cognizant of federal securities laws and registration exemption. Fortunately, when it comes to equity incentives, the federal exemption tends to be a lot simpler than other exemptions (such as Regulation A or Regulation D). Securities and Exchange Commission (SEC) Rule 701 provides the key exemption to registration for equity incentives, and states in part as follows:

This section exempts offers and sales of securities (including plan interests and guarantees pursuant to paragraph (d)(2)(ii) of this section) under a written compensatory benefit plan (or written compensation contract) established by the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer’s parent, for the participation of their employees, directors, general partners, trustees (where the issuer is a business trust), officers, or consultants and advisors, and their family members who acquire such securities from such persons through gifts or domestic relations orders. This section exempts offers and sales to former employees, directors, general partners, trustees, officers, consultants and advisors only if such persons were employed by or providing services to the issuer at the time the securities were offered. In addition, the term “employee” includes insurance agents who are exclusive agents of the issuer, its subsidiaries or parents, or derive more than 50% of their annual income from those entities.

That’s a lot to chew on, but it essentially says that certain equity incentives are exempt from the federal securities registration requirements. Rule 701 goes on to say in part that it may extend to persons other than just employees:

This section is available to consultants and advisors only if:

(i) They are natural persons;

(ii) They provide bona fide services to the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer’s parent; and

(iii) The services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer’s securities.

So, Rule 701 may provide an exemption for a consultant’s equity incentive, if the consultant is not an entity, provides real services to the company, and doesn’t act as any kind of securities broker.

I should mention though that Rule 701 is limited to the issuance of restricted securities, meaning that the securities are subject to resale limitations.

What do state securities laws say about equity incentives?

Rule 701 does not preempt state law. States are free to impose additional requirements on the issuance of equity securities, and many do. When determining which state’s law applies, a company will need to look at the state of residence of each applicable employee. This makes life more difficult for companies in the remote work era.

State laws can be vary widely here. Some states have no specific notice requirement. California requires companies to submit a form to the Department of Financial Protection and Innovation within 30 days after the initial issuance, whereas Washington has different requirements depending on whether the plan meets certain Internal Revenue Code provisions. This can all get incredibly complicated.

One other thing to point out here is that while Rule 701 itself can exempt transactions with consultants (in qualifying situations), state law does not have to do that. An equity incentive plan that meets the Rule 701, in other words, may not meet the requirements of each state. That’s yet another reason why companies should consider state law well in advance of the issuance.


Equity incentive plans and contracts are immensely popular. Like all companies, cannabis businesses that want to follow the law should be aware of the filing requirements and understand what needs to go in a contract well in advance of any actual issuances.



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Are Stoners More Empathetic and Understanding to Other People’s Struggles?

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Baked and Benevolent: Are Stoners More Empathetic?

 

Picture the archetypal cannabis user – long hair, tye dye shirt, blissed-out gaze. Media tropes paint tokers as chilled out, easygoing free spirits gliding through life mostly unbothered. The friendly neighborhood pothead floating downstream without many worries.

 

Even old-school anti-drug hysteria casts the zonked stoner slouching on couches as harmlessly detached rather than violently unhinged. Fast food and vibes rank higher than much else in their lowered states of consciousness. Fairly nonthreatening overall despite the reefer madness descriptors.

 

And while obviously stereotyping varies widely among the immense diversity of human cannabis enthusiasts, a general vibe of relaxed benevolence does seem more prevalent compared to drinkers’ unpredictability or stim users’ fidgety edge.

 

Recent research now suggests substance behind the stoner serenity beyond just legendary cultivars like Blue Dream and Sour Diesel. Cannabinoids may directly enhance qualities like empathy according to new studies.

 

A 2023 clinical study found regular cannabis consumers demonstrate greater emotional intelligence and perspective-taking on written tests and brain imaging. Specifically, cannabis users showed more comprehension of others’ subjective emotional experiences over non-users when analyzed through MRI scans and assessments.

 

Researchers believe the plant’s effects on neural regions related to affective states may modulate social processing. In less technical terms – weed’s natural pharmacology seems to physically boost relatability and social intuition.

 

So the chilled out caring disposition of many stoners likely derives at least partially from biological mechanisms heightened by the plant. Turns out kind bud might truly kindle kindness!

 

Of course correlation still skirts causation. Pre-existing personality differences could draw more empathetic people to cannabis initially rather than vice versa. Or other confounds like lifestyle routine may contribute too.

 

But the preliminary data points clearly enough – from brain imaging to anecdotal stereotypes, cannabis seems connected to emotional intelligence and social bonding rather than apathy or isolation.

 

So let’s dive deeper into the study’s design and implications. Science may confirm what intuition already knows – passing a joint opens hearts and minds to each other.

 

Talk about reefer gladness!

 

 

This provocative research came from a team of Mexican neuroscientists comparing empathy levels between regular cannabis consumers and non-users.

 

They utilized both written evaluations and MRI brain scans to assess various aspects of empathy. This combined subjective self-reporting with objective neuromapping to strengthen methodology.

 

The specific test employed breaks down empathic abilities into multifaceted competencies like emotional recognition, emotional comprehension, and cognitive perspective-taking. Researchers then examine them individually.

 

On the core Emotional Comprehension segment evaluating understanding of others’ subjective experiences, cannabis users scored significantly higher than control subjects. This suggests enhanced social intuition possibly stemming from cannabis components modulating key brain regions involved in affective processing.

 

The study cites the anterior cingulate cortex (ACC) as one pivotal zone rich with cannabinoid receptors and deeply tied to emotional states. It theorizes cannabis may directly boost this area’s functions through its pharmacological binding effects, thereby expanding social-emotional insight.

 

As the lead researcher summarizes, “The differences in psychometric scores suggest that users have more empathic comprehension.”

 

Intriguingly, this matches earlier research the authors reference indicating frequent marijuana consumers often exhibit stronger emotional regulation abilities alongside regular use:

 

“Given previous studies of the effect of cannabis on mood and emotional detection, we believe that these results contribute to open a pathway to study further the clinical applications of the positive effect that cannabis or cannabis components could have in affect and social interactions.”

 

So in this lens, cannabis occupies a unique neurological niche aiding emotional clarity in various modalities – both internally and interpersonally. Far from deadening senses, it seems to energize social functioning through fine-tuned cannabinoid modulation.

 

Of course the study has limitations to contextualize. Participants self-reported their cannabis use; biochemical validation would strengthen methodology. Causation arguments also remain speculative absent longitudinal monitoring.

 

Equally, the Mexican-grown cannabis possessed far lower THC concentrations than modern American commercial cannabis strains. So effects observed may compound significantly with higher potency products.

 

Nonetheless, these provocative preliminary findings contribute one more plank towards dismantling outdated stereotypes. Rather than hampering relational capacities, cannabis appears intrinsically supportive given proper precautions and contexts.

 

This broader theme echoes through earlier research on cannabis enhancing runner’s highs and yoga practice via anti-inflammatory relief and mood elevation. The common motif suggests appropriately aligned biological synergy.

 

While more data is still needed, these snapshots illuminate potential mechanisms behind cannabis-induced empathy and wellbeing so culturally prevalent yet scientifically unestablished before.

 

The study authors summarize appropriately – “We believe that these results contribute to open a pathway to study further the clinical applications of the positive effect that cannabis or cannabis components could have in affect and social interactions.”

 

 

While more studies must replicate this research before changing paradigms, provocative possibilities emerge from cannabis positively influencing empathy. Might this plant tool improve conflict resolution and social harmony in mainstream settings if findings hold weight?

 

The deepest implications concern destigmatizing cannabis to leverage such benefits. Transformative potential awaits not just individually but societally once outdated prohibitions crumble to embrace cannabis consciousness wholeheartedly.

 

For example, imagine if clinicians could recommend marijuana adjunctively in couples counseling to foster perspective-taking and emotional vulnerability by lowering defenses. Arguing spouses may find warm reconciliation impossible without that empathic spark rekindled.

 

Under proper guidance, a shared dispensary experience may nurture reciprocal understanding and rehumanization – the true foundation for compromise. Once gripped by negativity, only opening hearts allows progress.

 

Or what if psychologists incorporated cannabis components into group talk therapy protocols to dissolve biases and forge interpersonal insights organically? By easing social barriers, long-unspoken truths flow freely to bind communities.

 

The criminal justice arena equally cries for reform through compassion. Mandating cannabis-literacy training for police and guards could radically transform enforcement from paramilitary excess towards connecting with civilians as fellow struggling humans.

 

Equally, allowing monitored cannabis access in prisons may alleviate violent tensions by awakening inmates and staff to shared fundamental realities beyond surface judgments – our universal search for purpose and belonging beyond bars. Recidivism rates could plunge accordingly.

 

politicians too might benefit personally and professionally from periodic cannabis-induced institutional empathy check-ins. Devoting monthly sessions to inhabiting voters’ realities could manifest transpartisan wisdom to guide policy. Leadership means deeply hearing those governed, after all.

 

Even global diplomacy and conflict resolution domains might incorporate elements of intercultural cannabis communion in the highest stakes negotiations. Breaking bread through bongs supersedes translators in building bridges between even the most alienated nations.

 

The principle animating such explorations suggests that recalibrating default consciousness states periodically can radically reshape what possibilities we process and priorities we honor collectively. Our mindsets dictate the world we co-create.

 

While still hypothetical, perhaps cannabis really does hold unique crossover potential to enrich emotional health both individually and societally after all. If so, transcending reductive stereotypes promises a paradigm shift through elevating human relations to sacred importance above all else.

 

Of course, risks and complexities abound regarding dosage, set and setting protocols, moral debates, etc for mainstream integration. But around the medicinal margins, some intriguing innovation already occurs. And the larger premise persists indelibly.

 

What if wider humility and goodwill indeed lives but a few tokes away?

 

 

Rather than instantly prescribing synthetic pharmaceuticals to address mood disorders or emotional issues, perhaps cannabis should occupy the second line of therapy – with lifestyle changes and holistic practices the first resort.

 

This honors the intrinsic wisdom of our evolved endocannabinoid system while maximizing natural self-healing capacity through commonsense wellbeing strategies – sleep, nutrition, community, physical movement, introspective practices like meditation or journaling, etc.

 

If such grounded rituals falter in managing trauma, anxiety and depression, cannabis then offers a safe supplemental ally for many before considering standard alienating psych meds. And should cannabis not lift the darkness, other empathogens like psilocybin may before serotonergic drugs.

 

This medically pluralistic framework thus places power and responsibility in clients’ hands rather than defaulting reflexively to diagnosing “chemical imbalances” treatable only through lifelong pill regimens at risk of zombification.

 

The emerging science confirms psychedelics’ disease potential uniquely through activating neuroplasticity, emotional sensitivity, social connectivity and sense of meaning frequently damaged in mood disorders – unlike numbing side effect-laden antidepressants.

 

So whether as daily microdosed companions or structured high-dose sessions, their value proposition strengthens against traditional Monopoly medicine waging war against symptoms rather than holistically nurturing people’s healing relationships within.

 

The sticky truth remains – our life matrix encompasses countless variables beyond assumed serotonin shortages extractable through isolate chemicals. Thus consciousness itself proves the master tool allowing navigation of many complementary modalities.

 

Cannabis and other plant teachers belong in this expanded care ecosystem as powerful catalysts realigning patients to their sovereign authority and primacy as psycho-bio-social beings against system perspectives.

 

If research continues confirming intrinsic mood and social benefits of cannabis, its adoption as first-line emotional aid only quickens. The plants stand ready to uplift human hearts and minds through inner alignment above all modern pharmaceutical promises. And the people seem hungry for this reclaimed power.

 

The pandemic of despair will turn as the second Renaissance of cannabis dawns. All that awaits is shedding the last vestiges of fear still clouding clinical conservatism from welcoming this ageless ally home as divine healer reborn. But the momentum gains speed.

 

CANNABIS AND EMPATHY, READ ON…

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How AI Could Finally Solve the Cannabis Breathalyzer and DUI Impairment Testing Riddle

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AI: The Solution To Failed Breathalyzers?

 

For far too long, companies and researchers have put in tons of time and money into developing roadside breathalyzers to detect stoned drivers.


With the rapid spread of cannabis legalization around the United States, transportation officials and health authorities have quickly seen the importance of developing technology that can tell if a driver is stoned or not.

 

It’s almost 2024, and truly reliable pot breathalyzers are nowhere in sight. Breathalyzers just don’t work – if they do, not as well – in detecting THC levels in the body of a driver the way that it detects alcohol. While the use of breathalyzers have been considered the gold standard for detecting alcohol consumption or usage, these systems can’t support the use of THC. Most traditional breathalyzers are made using fuel cell technology, which can gauge alcohol levels in one’s breath. It works simply by breathing on the fuel cell, which then produces electrical currents depending on how much alcohol one consumed.  Brain scans may be used with AI in the future to determine if someone is “too high” to drive.

 

Fuel cell technology is effective and successful for alcohol detection even if it still has limitations. Breathalyzers have been around since 1954, but such a use for pot isn’t as simple.

There are many reasons why cannabis breathalyzers have failed, but it’s mostly because of the fact that marijuana can stay in human bodies for months at a time, when they are no longer high. So in essence, there’s no simple way to accurately gauge how stoned a person is at a moment.

 

However, it looks like artificial intelligence may have a chance to change all that.

 

A recent study conducted by researchers at the Stevens Institute of Technology analyzed smartphone data from both marijuana consumers and non-users. Marijuana users were asked to report each time they partook of weed, and how intoxicated they were using a scale of 1-10. In addition, the researchers compared more than 100 sensory data such as noise, location, and movement which was picked up by their mobile phones.

 

What they found was surprising: there is a stark contrast among the data between users and non-users. There were significant differences in the data between the two, especially when it comes to the time consumers reported they were stoned.

 

“Smartphones with mobile sensors are universal and can track our behavior in an unobtrusive way,” explains Sang Won Bae, lead researcher and an assistant professor at the Stevens Institute of Technology. “They are not a distraction, you don’t have to wear them, and the data they collect can potentially prevent poor decision-making when under the influence,” he adds.

 

According to the researchers, using AI has the chance of predicting how stoned a person is with 90% accuracy as long as it follows training from smartphone data. This technology has already been used to gauge impairment from other drugs as well as alcohol.

“It’s important to give people the chance to change their behavior before something negative happens,” says Bae. “This study aims to predict human behavior as a way to support people while physically or cognitively impaired.”

 

The AI technology, called Light Gradient Boosting Machine, increased accuracy from 67% to 90% when researchers added in data such as the time of day, and day of the week. If relying on time factors only, the learning model can predict impairment with 60% accuracy.

 

“We tested the importance of time features (i.e. day of the week, time of day) relative to smartphone sensor data only on model performance, since time features alone might predict ‘routines’ in cannabis intoxication,” reads the study.

“This exploratory study demonstrated the feasibility of using smartphone sensor data to detect subjective cannabis intoxication in the natural environment among young adults,” the study says. “Smartphone sensor data contributed unique information, over and above time features, to detect subjective cannabis intoxication.”

 

Artificial intelligence is proving to be more promising for the cannabis industry each day – especially when it comes to measuring impairment. There are other companies that are experimenting on this, such as Predictmedix AI, a Toronto-based health firm that has developed technology merging machine learning, sensor technology, and computer vision with artificial intelligence.

 

A hallmark feature of their AI technology is its ability to detect impairment using delicate algorithms that involve scanning a person’s behavior and appearance, looking for even the most restrained cues – within 30 seconds.

 

Why Is It Dangerous To Drive Stoned?

Cannabis legalization isn’t going to slow down anytime soon. The research proving just how valuable cannabis is therapeutically and medically continues to grow, and it’s helping millions of people live a life free of chronic pain, depression, anxiety, old-age conditions, epilepsy, and so much more!

On top of that, pot has proven to be a terrific substitute for alcohol. It’s much safer and healthier, so it’s no surprise why more people have taken up the habit of smoking weed instead of getting high.

 

However, one area where neither drinking nor smoking pot is safe is in the department of driving. Whether you operate machinery or need to drive to and from work and other locations, driving while stoned is not recommended.

 

Yes there are a lot of seasoned stoners who can drive safely – but given the sheer volume of new cannabis users out there, it is just doesn’t make sense to risk your life and the safety of others on the road by driving stoned. That’s why cannabis-legal states have had to look out for impairment tests for weed too.

 

CANNABIS DUI TESTING, READ ON…

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How Can You Tell If the Weed You Just Bought is Laced with Any Chemicals or Sprayed with Any Contaminants?

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Industries across the board strive to enhance the perceived quality of their products while simultaneously reducing costs and boosting revenue. In sectors that operate in a legal gray area or outright illegality, the absence of regulations and oversight creates an environment where individuals can augment products with minimal accountability or consequences.

 

Regrettably, the cannabis industry is not exempt from this phenomenon. In some instances, growers and distributors may opt to lace or spray marijuana to give the impression of increased potency, enhanced appeal, or greater density. While these interventions are often superficial and relatively benign, there are situations where they can pose a substantial risk to consumers of the contaminated cannabis.

Laced Weed

Laced weed refers to cannabis that has been augmented with additional psychoactive substances. Frequently, growers or dealers undertake this practice to create the illusion of significantly increased potency. Disturbingly, there is a rising trend in the United States involving instances of fentanyl-laced weed.

Even minute quantities of fentanyl can have an overpowering impact, creating the illusion of exceptionally high potency. Given the extreme danger associated with fentanyl and its propensity for causing overdoses, cannabis laced with fentanyl poses a genuine threat.

Alternatively, dealers may lace cannabis with synthetic cannabinoids akin to those found in substances such as K2 and Spice. Various synthetic cannabinoids are available, and their legal status varies depending on jurisdiction. Nevertheless, a common characteristic among them is their generally higher potency compared to natural THC, which can rapidly lead to addiction and induce psychotic effects.

Despite these concerns, it’s reassuring to note that laced weed is relatively rare. Instances of marijuana adulterated with more potent substances, such as fentanyl, are scarce, largely because most dealers recognize the associated dangers and are unwilling to jeopardize their customers’ lives or face legal consequences. Moreover, if you reside outside the United States, the likelihood of encountering such laced weed is even lower.

The frequency of encountering cannabis laced with synthetic cannabinoids remains uncertain. However, this practice is likely to become more prevalent, given its effectiveness in enhancing the perceived strength of low-quality weed while posing minimal risk to the dealer. With regulations on synthetic substances in a state of constant flux, unscrupulous dealers find it easier to navigate the boundaries of the law.

Despite these concerns, it’s reassuring to note that laced weed is relatively rare. Instances of marijuana adulterated with more potent substances, such as fentanyl, are scarce, largely because most dealers recognize the associated dangers and are unwilling to jeopardize their customers’ lives or face legal consequences. Moreover, if you reside outside the United States, the likelihood of encountering such laced weed is even lower.

The frequency of encountering cannabis laced with synthetic cannabinoids remains uncertain. However, this practice is likely to become more prevalent, given its effectiveness in enhancing the perceived strength of low-quality weed while posing minimal risk to the dealer. With regulations on synthetic substances in a state of constant flux, unscrupulous dealers find it easier to navigate the boundaries of the law.

Sprayed Weed

Sprayed weed refers to cannabis that has been treated with an additional spray containing various optional additives. Typically, these additives are applied to the marijuana to boost its weight, introduce artificial terpenes, alter its scent, or change its visual characteristics. The primary objective is not to modify the effects or endanger the user but rather to enhance profits and create the impression that the cannabis is of higher quality than it is.

However, some compounds utilized to achieve these enhancements can pose risks. Synthetic terpenes, in particular, are often not well-understood and may have adverse effects on the human respiratory system. Smoking already carries health implications, and introducing unknown artificial compounds into the mix further complicates the potential risks.

Unfortunately, in some cases, dealers resort to using virtually anything at their disposal to augment the weight of their cannabis, even incorporating contaminants like glue and, in unfortunate instances, glass. Additives of this nature are difficult, and it is strongly advisable to steer clear of them at all costs.

How Widespread is Adulterated Marijuana?

Regrettably, contaminated cannabis is quite pervasive in various forms. When purchasing marijuana on the street, the likelihood of encountering contaminants is relatively high. At the least harmful end of the spectrum, these contaminants might involve fungi, pesticides, or dirt and dust. However, even seemingly mild contaminants such as dirt and dust can present significant health hazards, particularly for individuals with conditions like allergic asthma.

In certain instances, you may encounter marijuana that has been intentionally laced or sprayed. It could contain additional drugs or toxic compounds to increase weight or enhance its visual and olfactory appeal. Cannabis subjected to such treatment can be exceedingly hazardous, leading to unpredictable and potentially fatal effects.

How to Tell if Weed is Contaminated

Determining whether your weed has been sprayed or laced can be challenging, and without access to a laboratory, it’s often difficult to be certain. However, there are discernible indicators to be mindful of. While these signs may not pinpoint the exact issue with your weed, they warn that something may have been added.

Important Note: The absence of visible or olfactory abnormalities doesn’t guarantee your weed is free from lacing or spraying. It’s crucial to exercise caution when dealing with weed from unfamiliar sources.

Identifying Laced Weed

If your cannabis induces unusually potent or unexpected effects, it may be laced with additives. Symptoms associated with laced weed include:

  • Pinpoint pupils (indicative of opioids)

  • Reduced heart rate (indicative of opioids)

  • Decreased breathing (indicative of opioids)

  • Lack of responsiveness (indicative of opioids)

  • Elevated heart rate (indicative of synthetic cannabinoids)

  • Racing thoughts and anxiety (indicative of synthetic cannabinoids)

  • Confused thought patterns (indicative of synthetic cannabinoids)

  • Potent effects that diminish within thirty minutes (indicative of synthetic cannabinoids)

  • Swift onset of intense effects, sometimes after just a few inhales (indicative of synthetic cannabinoids)

It’s worth noting that many of these effects can also occur when consuming regular weed, as THC is responsible for most of them. Therefore, before concluding that your weed is laced, it’s essential to pause and assess whether you might be experiencing a moment of panic.

Identifying Sprayed Weed

Identifying sprayed weed can be equally challenging through visual or olfactory cues, although it is often somewhat more discernible than laced weed. Sprayed weed may incorporate a variety of substances, so it’s essential to be vigilant for the following characteristics:

  • Excessive resinous appearance

  • Odor reminiscent of chemicals

  • Artificial and harsh taste

  • Overall visual or olfactory abnormalities

  • Extremely hard, compact, and shiny buds (indicative of potential hair spray use)

Tips for Avoiding Contaminated Cannabis

It’s crucial to avoid laced or sprayed weed for your well-being, but accessibility depends on your location and connections, ranging from easy to challenging. Finding a reliable source is highly recommended. Not only does it assure contaminants, but it also ensures clarity about the product being consumed.

Consider obtaining weed from a trusted grower, dispensary, or club, or explore growing it yourself. Growing your own weed guarantees purity as you oversee the cultivation process entirely. Additionally, it offers an enjoyable experience.

Conclusion

The increase in cannabis laced with drugs or sprayed additives for profit is concerning. While encountering drug-laced weed is rare, the likelihood of sprayed weed is higher. Contamination can occur at any stage, so trusting appearances alone is risky. Vigilance is crucial, and discarding suspicious weeds is recommended to avoid potential harm.

 

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