CAPITAL Cannabis Investment Report | December 2017

ACKRELL CAPITAL Cannabis Investment Report | December 2017 tion or thinking or behaviour [sic] or perception or mood,” that may produce “a state of dependence” and that are subject to abuse “so as to constitute a public health and social problem warranting the placing of the substance under international control.” Substances addressed by the 1971 Conven- tion include THC, barbiturates, amphetamines and psychedelics such as LSD. The 1971 Conven- tion establishes four schedules of substances subject to increasingly strict controls in the following order: Schedule IV, Schedule III, Schedule II and Schedule I. Schedule I includes THC and certain of its isomers and stereochemical variants. Schedule I includes dronabinol (a synthetic THC) and its stereochemical variants. The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Sub- stances of 1988 (Traffic Convention) establishes additional tools for enforcing provisions of the 1961 and 1971 Conventions. The Traffic Convention provides for international cooperation in arresting and prosecuting illicit traffickers of substances scheduled under the 1961 and 1971 Conventions and in disrupting their financial and distribution networks through extradition, anti-money laundering practices, asset forfeiture and other methods. Generally, the Conventions contemplate that the manufacture, export, import, distribution, use and possession of scheduled substances should be allowed only for medical and scientific purposes under legal authority and that penalties, including criminal penalties, should apply to those who engage in such activities for other purposes or outside legal authority. Countries participating in the Conventions are generally required to enact laws and regulations that carry out the provisions of the Conventions, which may require them to establish dedicated regulatory agencies, track and report physical invento- ries as well as production and revenue data, implement and enforce labeling requirements and quality control procedures, restrict use of substances to those holding medical prescriptions and impose crimi- nal penalties for violations. Currently, more than 180 countries are party to each Convention. Amending schedules under the 1961 and 1971 Conventions generally involves participation of three UN-related bodies: (1) the Economic and Social Council (ECOSOC), one of the six main organs of the UN established under the UN charter in 1945; (2) the Commission on Narcotic Drugs (CND), itself a subsidiary body of the ECOSOC that assists the ECOSOC in supervising the application of international drug control treaties; and (3) the World Health Organization (WHO), an autonomous intergovernmental organization that collaborates with the UN and other organizations on global health matters. A schedule amendment may be initiated by the WHO or by any country participating in the applicable Convention, and generally requires approval of the CND, which approval may be subject to further review and approval by the ECOSOC. Notably, because regulations applicable to cannabis and certain derivatives are included in the body of the 1961 Convention (and not just in its schedules), merely removing cannabis and its derivatives from the schedules under the 1961 Convention would not entirely remove cannabis from that Convention's regulatory framework. Recent Developments Related to the UN Conventions Global support for the prohibitionist policies of the Conventions is waning, and a growing chorus of world leaders is calling for new policies for cannabis and other substances to be based on public health concerns rather than criminalization. 94 © 2017 Ackrell Capital, LLC | Member FINRA/SIPC HOUSE_OVERSIGHT_024730