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Fall 2015 CultureB2B
CultureB2B Fall 2015
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CONTENTS 12 highlights
FALL 2015
RAISING THE BAR
Shabnam Malek talks to CULTURE about her successful career and the founding of the National Cannabis Bar Association.
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making the rules
STATE BY STATE
Everything that a cannabusiness entrepreneur needs to know about each state in the U.S.A. is right here.
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Cannabis farmers step up to help make changes.
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PROGRESS IN PORTUGAL
Decriminalization and decreased overall drug use.
A POSITIVE REACTION
Polish Parliament mulls over medical cannabis possibilities after residents voice their approval onMMJ.
departments 4
Fall 2015 CultureB2B
6 Letter from the Publisher 8 News Bytes 10 By the Numbers 30 Science 32 Products 34 Trade 36 Tech 38 Legal
CultureB2B Fall 2015
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letter from the PUBLISHER
Breaking Molds Warren Buffet, Bill Gates, Jeff Bezos and Travis Kalanick all broke
distraction, disappointment and frustration at times.
the mold with their business models, realizing tremendous success.
Here at CULTURE, having created the nation’s most successful
Not forgetting the small failures en route to success, through
cannabis lifestyle publication in recent history, it is time for us to
perseverance and hard work, each of these professionals have
embark on to the next stage of the CULTURE legacy, as we can see a
overcome roadblocks, barriers to entry and obstacles that created
need for high quality education and insight into this global industry. This new leg of the CULTURE brand is geared toward business
“. . . It is finally time to embark on to the next stage of the CULTURE legacy, as we can see a need for high quality education and insight into this global industry.”
operators, managers, entrepreneurs and dreamers, and will encompass useful ideas and information relating to cannabusiness practice—the foundations, principles and every aspect of running cannabis-based business. In today’s cannabis marketplace, our world is evolving exponentially, in multiples that can easily be compared to the dotcom boom of the ‘90s. The medical and economic benefits are no longer being ignored as business professionals rush in, leaving their cubicles behind to carve out a niche for themselves, and a shot at “making it” in the green rush era. While CULTURE is not new to this industry, I am proud to introduce CULTURE Magazine’s newest addition to the cannabis arena; a business publication that focuses on the important aspects of cannabusiness life and strategy for the cannabusiness entrepreneur. CULTUREB2B is only available to the business minds of our industry. Aiming to become your secret weapon to success, our team looks forward to providing you with the best cannabis news, insight and tools for your success in the industry. d
Sincerely, Jeremy Zachary Publisher
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Fall 2015 CultureB2B
Vol 1 IssUE 1
Publisher
Jeremy Zachary Editor-In-Chief
Evan Senn associate Editor
Ashley Bennett Editorial coordinator
Jamie Solis Editorial Contributors
Hilary Bricken, Jasen T. Davis, Sean Donahoe, David Downs, Sarah Reith, Lanny Swerdlow Art Director
Steven Myrdahl Graphic Designers
Tanya Delgadillo, Tommy LaFleur Account Executives Callie Belo, Jon Bookatz, Eric Bulls, Kim Cook, Ryan Dunn, Cole Garrison, Gene Gorelik, Yolanda Imoberstag, Justin Marsh, Emily Musser, Beau Odom, Paulina Porter-Tapia, Chris Thatcher, April Tygart Office Manager
Iris Norsworthy Office Assistant
Angelina Thompson digital media Editor
Kimberly Johnson Distribution Manager
Cruz Bobadilla CultureB2B Magazine速 is published quarterly and distributes 20,000 copies at over 5,000 locations throughout the United States. No articles, illustrations, photographs, or other matter within may be reproduced without written permission. CultureB2B Magazine速 is a registered trademark. All rights reserved.
Phone / Fax (888) 694-2046 B2B@iReadCulture.com
CULTUREB2B速 is printed using post-recycled paper.
CultureB2B Fall 2015
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news bytes
New reform bill signed by WASHINGTON governor
Ecuador considering legalizing all drugs
A new law introduced into Ecuadorian legislation could possibly lead to the legalization of all drugs, which includes cannabis, as well as cocaine, heroin and over 100 other substances. The bill would create a state agency that would control every aspect of each substance— from importing, exporting, producing and cultivating. It would also require that anyone who desires to get their hands on any given substance to register with the agency. “Address the drug phenomenon in a repressive way, as it did in the ’80s and ’90s, where prison was the only place for a drug consumer, is absurd,” stated Carlos Velasco, the sponsor of the bill and head of the Ecuador Congressional Commission of the Right to Health. The legislation is being introduced as a way to move away from the militaristic approach to regulating cannabis and other substances, and instead approach it as a “public health” issue. Under the bill, users would only face small fines, and they wouldn’t have to worry about going to prison for extended amounts of time.
A bill that was signed by Governor Jay Inslee in Washington state will effectively change many previous cannabis laws, including Initiative 502, which was passed in 2012. The most notable change to Washington law is the replacement of the previous three-tier tax structure (25 percent tax on the producer, a 25 percent tax on the processor, and a 25 percent tax on the retailer) with a single 37 percent excise tax at the retail level. Both medical and recreational users will have to pay this excise tax (with a small number of exceptions for those under a separate registry that takes place in July 2016). It is unknown how the new tax structure will affect state cannabis sales, especially in regards to if growers and retail stores will lower their prices due to the lower tax, or hold onto the savings for their own benefit.
Merger between two major CANADIAN cannabis companies occurs
Two large medical cannabis firms in Canada have agreed on a merger that will dominate the cannabis marketplace. The merger was agreed upon between Tweed Marijuana Inc. and Bedrocan Cannabis Corp., and it is the first major event of its kind to occur in Canada since the federal government implemented new cannabis laws in 2014. Together, Tweed and Bedrocan will have control of over 25 percent of registered patients and production capacity within the country. “It was very obvious to us that you could put the two together and dominate the market, because it would give every patient and doctor options and access that resonate with one audience or the other,” stated Tweed cofounder and Chief Executive Bruce Linton. Post-merger, the company will operate three cannabis facilities in Ontario and estimate selling 6,000 kilograms of medical cannabis annually. The merger places Tweed and Bedrocan miles ahead of its competition in Canada, and they clearly see a road to grow internationally in the future.
Lloyd’s exits the cannabis market in London
Lloyd’s of London, a 327-year-old company, has decided to discontinue its insurance services for cannabis businesses. Lloyd’s is one of the largest insurance companies on the planet and had previously offered policies to the cannabis industry worldwide, for the past 10 years. The sudden exit of the large company is causing worry for many, who believe other companies might copy the insurance giant’s choice. Lloyd’s sent out a memo stating that its subsidiaries should stop offering insurance to products in the U.S. immediately, due to the fact that it’s still federally illegal there (although existing contracts will continue to be honored until they expire). Lloyd’s seizure of operations for new U.S. clients will leave opportunities for new companies to fill its shoes, it’s just a matter of time for new players to enter the game. 8
Fall 2015 CultureB2B
Puerto Rico legalizes medical cannabis
Governor Alejandro Garcia Padilla officially signed to release medical cannabis from its illegality and became effective immediately after the announcement. The Governor’s executive order allows the Puerto Rican Health Department to use cannabis for medical use, and the next step is to have Secretary of Health draft a report that outlines a fool-proof plan on implementing a medical cannabis program that will be allowed for those who suffer from Multiple Sclerosis, HIV/AIDS, glaucoma, Alzheimer’s, migraines, Parkinson’s disease, among a few other conditions. It’s a big step for the U.S. territory, and Governor Padilla is one of many who firmly believe this is important. “We’re taking a significant step in the area of health that is crucial to our development and high expectations for their quality of life. I am sure that many patients will receive appropriate treatment that will offer them new hope,” he stated.
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33.7
BY THE NUMBERS
The amount of money, in millions of dollars, that an Australian couple donated to medical cannabis research: 33.7
The average sale per retail square foot for a U.S. medical cannabis dispensary: 1,143
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Nicole Smith of Mary’s Medicinals The number of people who have signed a petition to decriminalize cannabis in
The average percentage of infused product profit margins of cannabis concentrates: 25
The number of U.S. banks and credit unions that are currently working with recreational and medical cannabis businesses: 105
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Latvia: 10,000
105
19.2 The largest stock price seen, in U.S. dollars, among cannabis businesses in June 2014: 19.2
INDUSTRY INSIDER
The estimated global number of cannabis users, in millions: 181.8
181.8 The approximate number of Europeans, in millions, who have tried cannabis at some point in their lives: 79
By R. Scott Rappold
It started with a dare. Nicole Smith was chatting with friends who owned a grow operation about the exploding medical cannabis industry in Colorado. Everyone getting into the business was focusing on growing bud. Why, Smith asked, had nobody introduced a transdermal patch, so patients could control their dose more accurately without having to smoke? And why, asked Smith, an accomplished businesswoman, couldn’t she be the one to do it? Two years later, Mary’s Medicinals—for “Mary Jane”—is the industry leader in transdermal delivery of cannabis, with patches and gels. And while most cannabis companies tend to focus on products rich in THC, the psychoactive ingredient of cannabis, 80 percent of what Mary’s Medicinals sells won’t even get you high. “The main benefit of cannabis, at least in most of the products we create, is they’re not mind-altering. They’re for people who want relief from pain and don’t want to be altered all the time.” Currently available in Colorado, Washington, California and Vermont, Mary’s Medicinals has plans for expansion into four more U.S. states. In a world where recreational cannabis is all the rage, Smith and her 20 employees are happy to go against the grain. Only 20 percent of customers are interested in getting high.
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the Bar Intellectual Property Attorney Shabnam Malek, founder of America’s first-ever National Cannabis Bar Association, details the high stakes of choosing cannabis counsel By David Downs
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One of America’s most dynamic, collaborative cannabis lawyers, Shabnam Malek, broke cannabis industry ground in intellectual property law for Cobalt LLP in Berkeley, California, and helped forge the powerhouse networking group Women Grow. Malek follows it up this summer with the co-founding of the first-ever National Cannabis Bar Association (canbar. org)—a domestic network of business attorneys helping canna-businesses expand. The Bar’s all-female-led, 10-member founding board includes a who’s who of U.S. cannabis law, and the Bar’s seminar and networking series is already upping the game of the next generation of cannabis-focused attorneys.
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Where did the Bar Association idea come from? How did it germinate? The inception came organically out of my and Amanda Conley’s practice. We are both trademark lawyers, and we have our own boutique law firm. We were at our prior law firm doing this work—trademarks for cannabis entities and, as an outgrowth of that, interstate license agreements. We realized right away what we need are solid contacts in other states, other lawyers who are experienced in the cannabis industry, corporate lawyers in some cases, maybe other IP lawyers, tax lawyers, franchising lawyers. We started reaching out with our existing colleagues at that time and said, “Let’s get together and network,” and thought to ourselves, “Well, a loose network of attorneys? Why don’t we formalize it and call it a bar association and let everyone benefit from this sort of network?”
How were canna-businesses finding attorneys before the Bar? People go to existing counsel, and basically it’s word of mouth . . . I think some people are just going to the internet as a whole . . . I can’t even tell you where someone might go to right now for a reliable referral to an attorney that is experienced in this industry. And this is why we need a National Cannabis Bar Association with a robust, searchable database. [So] you won’t have to rely on your cousin who got their law degree a few years ago or that person who helped you with that issue 10 years ago. They might ultimately get them to a good resource, but the safer way is to have a bar association with lawyers who are getting the kind of education they need, developing the kind of network they need and are available for people to find them.
What’s at stake when it comes to legal advice in the cannabis space? Do buyers have to beware of dubious counsel amid the “Green Rush?” I think the buyer does have to beware . . . It is imperative that you have a skilled attorney to help you navigate those waters. Imperative. [You can be] subject to a claim of infringement, damages, attorney fees. The worst thing in terms of intellectual property issues is actually bad press for the cannabis industry.
“The Bar’s all-female-led, 10-member founding board includes a who’s who of U.S. cannabis law, and the Bar’s seminar and networking series is already upping the game of the next generation of cannabis-focused attorneys.”
Trademarks, remember, are a consumer protection issue. You have the situations in Colorado and Washington where Hershey’s has gone after a couple entities. Sure, that’s a business issue, but it’s also a consumer protection issue. You just don’t want candy bars that have the exact same branding on them—one is infused, one isn’t—causing problems among the consumers. That ends up in bad press, and we get all sorts of crazy regulations and the states wanting to pull back. It makes the industry look bad or look irresponsible. We want to be responsible citizens. I don’t do corporate formation work [but] if you have the wrong kind of entity formed in the wrong county or state, you’re basically crossing the line into criminal conduct, and that’s what we want to avoid. This is particularly tricky in states like California where the regulatory scheme is a little bit loosey-goosey. It’s one thing to be accused of infringement; it’s a whole other thing to be accused of trafficking. They’re both potentially high-risk and speak to the importance of a good business attorney helping you out from the outset, or if you’ve been in the business for a few years it can really help you come out of the shadows in a safe and lawful way. d
Projection: By 2020, if cannabis were fully legalized, American sales might reach $35 billion (Source: GreenWave Advisors)
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2015
Top 4 Biggest Increases in cannabis Job Demand
1 2 3 4
Cannabis Education
110% Growth
Sales & Marketing
75% Growth
Website/Online/SEO
75% Growth
Dispensary
40% Growth Source: WeedHire International (May 2015)
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National Cann Business Revi WA MT
OR
ND
ID
SD
WY
NE
NV CA
UT
CO
Legal
K
Decriminalized Medical use and decrimialized
AZ
NM
O
Medicinal only Illegal
TX AK HI
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nnabis A state-by-state iew breakdown
KS
OK
By Jasen T. Davis
VT MN WI
NY MI
IA IL
OH
IN
MO
PA WV
KY
ME MA RI CT NJ DE MD DC
VA NC
TN
SC
AR LA
NH
MS
AL
GA
FL
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Alabama Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $339 Estimated percentage of population (18-60) that uses cannabis: 44.5% Size of cannabis market: $144,086,238
Alaska Legal: Recreational and medicinal allowed Average price of cannabis per ounce: $294 Estimated percentage of population (18-60) that uses cannabis: $64.2% Size of cannabis market: $68,986,493
Arizona Legal: Medicinal only Average price of cannabis per ounce: $298 Estimated percentage of population (18-60) that uses cannabis: 53.1% Size of legal cannabis market: $303,016,813
Arkansas Legal: No Average price of cannabis per ounce: $335 Estimated percentage of population (18-60) that uses cannabis: 49.9% Size of cannabis market: $93,465,820
Estimated percentage of population (18-60) that uses cannabis: 49% Size of legal cannabis market: $2,218,227,477
ounce: $299 Estimated percentage of population (18-60) that uses cannabis: 50.4% Size of cannabis market: $848,328,585
Colorado Legal: Recreational and medicinal allowed Average price of cannabis per ounce: $243 Estimated percentage of population (18-60) that uses cannabis: 61.5% Size of legal cannabis market: $349,075,052
Connecticut
Indiana
Georgia Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $319 Estimated percentage of population (18-60) that uses cannabis: 50.1% Size of cannabis market: $330,005,160
Hawaii
Legal: Medicinal only Average price of cannabis per ounce: $334 Estimated percentage of population (18-60) that uses cannabis: 58.7% Size of legal cannabis market: $196,200,961
Legal: Medicinal only Average price of cannabis per ounce: $307 Estimated percentage of population (18-60) that uses cannabis: 56.8% Size of legal cannabis market: $71,965,783
Delaware
Idaho
Legal: Medicinal only Average price of cannabis per ounce: $355 Estimated percentage of population (between the ages of 18 -60) that uses cannabis: 58.9% Size of legal cannabis market: $40,669,816
Legal: No Average price of cannabis per ounce: $275 Estimated percentage of population (18-60) that uses cannabis: 54.8% Size of cannabis market: $50,711,646
California
Florida
Illinois
Legal: Medicinal only Average price of cannabis per ounce: $242
Legal: Limited medicinal CBD oil only Average price of cannabis per
Legal: Medicinal only Average price of cannabis per ounce: $350
$2.7 billion U.S. Cannabis Sales by State (2014) consumer and wholesale sales:
California
Legal: No Average price of cannabis per ounce: $330 Estimated percentage of population (18-60) that uses cannabis: 50.6% Size of cannabis market: $244,941,652
Iowa Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $362 Estimated percentage of population (18-60) that uses cannabis: 47.3% Size of cannabis market: $111,734,749
Kansas Legal: No Average price of cannabis per ounce: $347 Estimated percentage of population (18-60) that uses cannabis: 25.49% Size of cannabis market: $63,103,568
Kentucky Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $342 Estimated percentage of population (18-60) that uses cannabis: 50.4%
Michigan
Colorado
Oregon
Washington
All Others
Arizona
Estimated percentage of population (18-60) that uses cannabis: 50.6% Size of legal cannabis market: $544,505,009
8%
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4%
49%
Source: ArcView Market Research
The cannabis Industry generated $2.7 billion in sales in 2014 – 80% retail / 20% wholesale (Source: ArcView Market Research)
6%
30%
2% 1%
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Size of cannabis market: $142,304,242 Projected revenue from sales and excise tax: $29,883,891
Louisiana Legal: Medicinal only Average price of cannabis per ounce: $359 Estimated percentage of population (18-60) that uses cannabis: 45.3% Size of cannabis market: $120,595,745
Maine Legal: Medicinal only Average price of cannabis per ounce: $341 Estimated percentage of population (18-60) that uses cannabis: 63% Size of legal cannabis market: $79,114,682
Maryland Legal: Medicinal only Average price of cannabis per ounce: $360 Estimated percentage of population (18-60) that uses cannabis: 57.2% Size of cannabis market: $193,087,319
Massachusetts Legal: Medicinal only Average price of cannabis per ounce: $342 Estimated percentage of population (18-60) that uses cannabis: 60% Size of legal cannabis market: $383,689,301
Michigan Legal: Medicinal only Average price of cannabis per ounce: $285 Estimated percentage of population (18-60) that uses cannabis: 58.8% Size of legal cannabis market: $581,265,967 20
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Minnesota
New Hampshire
Legal: Medicinal only Average price of cannabis per ounce: $341 Estimated percentage of population (18-60) that uses cannabis: 57.5% Size of legal cannabis market: $207,075,543
Legal: Medicinal only Average price of cannabis per ounce: $351 Estimated percentage of population (18-60) that uses cannabis: 66.2% Size of legal cannabis market: $66,096,510
Mississippi Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $335 Estimated percentage of population (18-60) that uses cannabis: 42.6% Size of cannabis market: $98,528,305
Missouri Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $348 Estimated percentage of population (18-60) that uses cannabis: 55.6% Size of cannabis market: $204,675,880
Montana Legal: Medicinal only Average price of cannabis per ounce: $266 Estimated percentage of population (18-60) that uses cannabis: 61.1% Size of legal cannabis market: $72,423,663
Nebraska Legal: No Average price of cannabis per ounce: $333 Estimated percentage of population (18-60) that uses cannabis: 47.8% Size of cannabis market: $59,950,724
Nevada Legal: Medicinal only Average price of cannabis per ounce: $265 Estimated percentage of population (18-60) that uses cannabis: 54.6% Size of legal cannabis market: $157,435,933
New Jersey Legal: Medicinal only Average price of cannabis per ounce: $343 Estimated percentage of population (18-60) that uses cannabis: 48.5% Size of legal cannabis market: $318,165,225
New Mexico Legal: Medicinal only Average price of cannabis per ounce: $286 Estimated percentage of population (18-60) that uses cannabis: 54.9% Size of legal cannabis market: $125,386,972
New York Legal: Medicinal in limited circumstances Average price of cannabis per ounce: $341 Estimated percentage of population (18-60) that uses cannabis: 52.3% Size of legal cannabis market: $1,057,109,824
North Carolina Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $343 Estimated percentage of population (18-60) that uses cannabis: 49.9% Size of cannabis market: $365,469,713
North Dakota Legal: No Average price of cannabis per ounce: $387
Estimated percentage of population (18-60) that uses cannabis: 47.4% Size of cannabis market: $18,670,738
Ohio Legal: No Average price of cannabis per ounce: $332 Estimated percentage of population (18-60) that uses cannabis: 55.1% Size of cannabis market: $556,286,435
Oklahoma Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $351 Estimated percentage of population (18-60) that uses cannabis: 50.4% Size of cannabis market: $150,319,552
Oregon Legal: Recreational and medicinal allowed Average price of cannabis per ounce: $204 Estimated percentage of population (18-60) that uses cannabis: 63.2% Size of legal cannabis market: $363,723,974
Pennsylvania Legal: No Average price of cannabis per ounce: $360 Estimated percentage of population (18-60) that uses cannabis: 53% Size of cannabis market: $488,449,235
Rhode Island Legal: Medicinal only Average price of cannabis per ounce: $314 Estimated percentage of population (18-60) that uses cannabis: 62.5% Size of legal cannabis market: $92,140,993
South Carolina
Texas
Virginia
Wisconsin
Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $335 Estimated percentage of population (18-60) that uses cannabis: 49.5% Size of cannabis market: $215,570,433
Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $328 Estimated percentage of population (18-60) that uses cannabis: 44.5% Size of cannabis market: $718,375,651
Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $363 Estimated percentage of population (18-60) that uses cannabis: 52.9% Size of cannabis market: $251,504,623
Legal: Limited medicinal CBD oil only Average price of cannabis per ounce: $346 Estimated percentage of population (18-60) that uses cannabis: 56.3% Size of cannabis market: $238,030,433
South Dakota
Utah
Legal: No Average price of cannabis per ounce: $360 Estimated percentage of population (18-60) that uses cannabis: 47.1% Size of cannabis market: $30,940,291
Legal: Medicinal only Average price of cannabis per ounce: $286 Estimated percentage of population (18-60) that uses cannabis: 38% Size of cannabis market: $66,270,383
Legal: Recreational and medicinal allowed Average price of cannabis per ounce: $232 Estimated percentage of population (18-60) that uses cannabis: 60.2% Size of cannabis market: $500,421,024
Tennessee
Vermont
West Virginia
Legal: No Average price of cannabis per ounce: $346 Estimated percentage of population (18-60) that uses cannabis: 50.4% Size of cannabis market: $219,437,219
Legal: Medicinal only Average price of cannabis per ounce: $367 Estimated percentage of population (18-60) that uses cannabis: 67.1% Size of legal cannabis market: $53,955,147
Legal: No Average price of cannabis per ounce: $358 Estimated percentage of population (18-60) that uses cannabis: 47.6% Size of cannabis market: $56,639,175
Wyoming
Washington
Legal: No Average price of cannabis per ounce: $314 Estimated percentage of population (18-60) that uses cannabis: 57.9% Size of cannabis market: $22,059,416 d
SOURCES: ArcView Market Research Leafly The Economist Tax Foundation Substance Abuse and Mental Health Services Administration U.S. Census Bureau MMJ Business Daily National Survey on Drug Use and Health Anita Rahman, Livescience.com Denver Business Journal NerdWallet The Marijuana Policy Group
Infused Product Maker Profit Margins Compared to Other Consumer Goods
7.4%
0.9%
Dairy Droducts
10.7%
Confectioners
12%
cannabis Edibles
12.7%
Cigarettes
15%
cannabis Concentrates and Edibles
18.3%
Beverages – Wineries and Distillers
20.5%
Beverages – Brewers
cannabis Concentrates
25%
Beverages – Soft Drinks
(Source: Yahoo! Finance)
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A
Making the Rule Cannabis Cultivators are Taking Initiative By Sarah Reith
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INDUSTRY INSIDER
es
t Happy Days Farms, Casey O’Neill raises chickens in a cardboard box next to a wood-burning stove. O’Neill is a third-generation cannabis farmer in the hills of Laytonville, at the bottom of a road that makes a flatlander feel like she’s driving off the edge of a cliff. The chickens are Freedom Rangers, and they promise to be far better grazers than those over bred Cornish crosses. But we are here to discuss the future of cannabis farmers, not the dietary habits of chickens. O’Neill is chair of the Emerald Growers’ Association, an advocacy group that is working towards a set of regulations for cannabis farmers. By whom would they care to be regulated? “I do expect there will be a multi-agency framework, because that’s how most large industries work,” he reasons. Since cannabis is a crop, he wants to be regulated under the Department of Agriculture. But Devon Jones, Executive Director of the Farm Bureau in Mendocino County, points out that agricultural regulations are so restrictive and contradictory that compliance is often impossible. For example, Port-A-Potties must be far enough away to ensure the crop is hygienic, but close enough not to place an undue burden on laborers. There is no way to place
“Connoisseurs will drive the high end of the market, commodity producers will drive the low end, and the divergence is what’s going to create the opportunity for craft farmers to add value to their product and enter that market.”
Tripp Keber
of Dixie Elixirs By R. Scott Rappold
For Tripp Keber, the “future of cannabis” started small. When he acquired Dixie Elixirs and Edibles in early 2010, it consisted of two employees and a 400-square-foot shed. They had one product, cannabisinfused soda sold at medical cannabis dispensaries. Keber still sells the soda, and it’s still his best-seller. But these days, it’s one of 150 products cranked out by his 50 employees at a brand new 47,000-square-foot facility in Denver’s Montbello neighborhood. Success didn’t come easily or quickly. But when others thought green buds would always be the mainstay, Keber suspected otherwise. When others thought cannabis users would always want the maximum dose, he devised a low-THC soda for beginners. And he was willing to risk and invest, spending a reported $5 million on his new facility. “We believe in the power of oil,” Tripp told CULTURE. “You just don’t see many people smoking that Marlboro. In Colorado, we’re a very healthconscious, wellness-oriented state, so we know smoking anything, whether it be tobacco, cigars or cannabis, is generally not healthy for you.” Dixie is now Colorado’s largest maker of THC-infused edibles. If the rising tide of legalization continues, it may soon be the nation’s largest.
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a Port-A-Potty at a legal distance from an agricultural work site. “As a vegetable farmer, the last thing I want is more regulation,” O’Neill agrees. “But as a cannabis farmer, I’m in the awkward position of not having the right to exist.” He would like to work on “erasing the false divide between farmers and growers and building a commonality.” So far, it’s a mash up of Fish and Wildlife, water agencies and the Humboldt County Sheriff’s Office that has stepped up to work with growers on crafting a regulatory framework. In January, as part of a pilot program to bring growers into compliance with water regulations, a multi-agency task force inspected 14 cannabis growing operations. There is an element of brinksmanship here, but also of trust. Maybe it’s a game of chicken with a flock of Freedom Rangers. Regulators walked onto parcels with up to 2,000 plants—and then they wrote a report about stream diversions, waste discharge and sediment. Growers were ranked on a three-tiered system according to the environmental impact of their operations, and given time to address any water quality issues on their property. O’Neill is cautiously optimistic. “Cannabis farmers want to do the right thing,” he claims. But he makes it very clear that “if they make regulations that are too onerous . . . then nobody will participate. Cannabis farmers became
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cannabis farmers because they weren’t buying into bullsh*t regulations.” He wants it very much, but he’s not about to go begging for it. And he’s not afraid of the free market, either. The EGA is pushing for appellations, so consumers can base their selection on region of origin, as wine buyers have always done. “Connoisseurs will drive the high end of the market, commodity producers will drive the low end, and the divergence is what’s going to create the opportunity for craft farmers to add value to their product and enter that market,” he predicts. Growers are keenly aware of the importance of storytelling—or at least well-managed self-presentation—in that paradigm. At the local farmers’ market, we meet up with J., who has been growing cannabis since before we were born. She is rolling fat, buttery joints as deftly as someone else’s grandmother might roll out a batch of cookies. Why so many? She is preparing for a farm-to-table event in San Francisco, put on by Flowkana. “It’s a validation for the work I do,” she explains. She has half a dozen canning jars, the kind that usually contain tiny amounts of expensive hand-made preserves. They sparkle with cleanliness and the crystals that cling to the buds inside. J. needs a menu for the upcoming event, and she is soliciting evocative descriptions of her wares. She wants to connect with clientele who feel that she has
something special just for them, something that will fit what O’Neill calls their “cannabis profile.” Now, the chairman bows his head over a jar. “Kiwi,” he says at last. “Maybe a little . . . camphor.” “That’s that old monkey balls,” J. remarks, and writes something down— presumably not “old monkey balls.” She has an air of uncertain mischief, like she’s not quite sure how much felonious sass to work into her sales pitch. Is she charming and rustic now? A harmless granny, rolling giveaway joints at the farmer’s market? It’s pretty likely she’ll have to shed her criminal identity soon. On June 4th, three bills passed out of their houses. SB-643 “authorize(s) the creation of appellations of origin for medical marijuana cultivated in California.” AB 266 establishes regulation under the Department of Food and Agriculture, in the Division of Medical Cannabis Cultivation. And AB-243 “requires regional water boards . . . to address waste discharges resulting from medical marijuana cultivation . . . including adopting a general permit.” It’s inspired by January’s pilot program in Humboldt, and has a wide range of supporters. These include the Emerald Grower’s Association and the California Cattlemen’s Association, which might give the impression that a few of the “false divides” in the agricultural community are starting to come down. d
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Top 5
CANNABIS –related Job Functions Most in Demand
Polish Parliament to consider cannabis after Poles voice opinion in study
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A record-breaking 68 percent of Poles favor legalizing medical cannabis, which was discovered through a survey by an independent PBS agency located in Central Europe. A random sample of 1,000 adults were questioned for the survey, 42 percent of which believe that cannabis should only be available through a doctor’s prescription, while the other 26 would rather have it be available for anyone who wants access to it. The survey was launched following a draft for legalizing cannabis that was submitted to parliament. Polish Health Minister Marian Zembala openly agrees that something needs to be done, and believes that studies “appear to confirm that medical marijuana can help in the treatment of many diseases.” One member of Civic Platform, Kidawa Blonska, also commented regarding the amendment, stating that it’s possible that Parliament may eventually begin discussing regulations and allowances regarding a list of medicines and how—and to whom— those medicines should be distributed. Currently, only one cannabis product is legal in the country, and its direct patient audience is geared towards those who suffer from Multiple Sclerosis. d
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Manufacturing/ Grow/Edibles Source: WeedHire International (May 2015)
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INDUSTRY INSIDER
Henry Wykowski, Cannabis Attorney By R. Scott Rappold
Portugal decriminalizeD drug possession, sees decrease in overall use In 2001, Portugal became one of the first countries in the world to decriminalize “drug possession,” which includes substances such as heroin, cocaine, amphetamines, methamphetamines and cannabis. The country has always had a progressive approach to the legislation of recreational substances, having considered small quantities of these substances as a public health issue instead of a criminal issue. Those caught with “drugs” are referred to a psychiatrist or other treatment program instead of being arrested and taken to jail. Although many believed that the decriminalization approach would only exacerbate the situation, causing an increase in use by both adults and children, it’s actually proven to be the opposite. The Transform Drug 28
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Policy Foundation has released information regarding a noticeable decrease in drug use in Portugal altogether, as well as a decrease in overdose-related deaths. Many residents have ditched the harsh substances in favor of cannabis, as well, with the growing global acceptance. Much of cannabis comes from Southern Portugal’s Algarve region and although drug possession has been decriminalized, cannabis cultivation has not. However, even though the use of hard drugs of other types have decreased, there has been an increase in natural cannabis use. While recreational cannabis use is technically forbidden by law, using it is socially accepted and often does not result in any harmful punishments. d
You might say attorney Henry Wykowski has had cannabis on retainer since his youth. That’s when he discovered the joys of cannabis, against the backdrop of cannabis smoke, music, protest and free love that was the late ‘60s. Wykowski went on to law school and eventually became a prosecutor for the Justice Department. His career has come full circle in recent years, as Wykowski has become perhaps the most prominent attorney in California, if not the nation, to represent medical cannabis dispensaries in their battles with a federal government that treats them like drug dealers. He said his firm has represented some 100 of them in multiple states. “What’s most unfortunate is, with the amount of empirical evidence out there with respect to the benefits of allowing adult use of cannabis, both medically and otherwise, it’s most unfortunate the federal government has not dealt with this issue appropriately,” said Wykowski. “I really enjoy what I’m doing. I think it’s having a positive impact on the industry and I am happy that I am able to contribute to the success of cannabis,” Wykowski says.
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SCIENCE
By Lanny Swerdlow RN LNC
Blending the Private and Public to Advance Cannabis Use An Interview with
Dr. Yehuda Baruch Israel leads the world in research into the health and medical benefits of cannabis. It is not just a leader in research but also in providing medicinal cannabis to patients to treat a variety of ailments. The person most responsible for guiding Israel to the forefront of medical cannabis research and use is Dr. Yehuda Baruch, who was the Director of the Israeli Medical Use of Cannabis Program from 2003-2012. During his tenure, Dr. Baruch developed the present program increasing the number of patients from 64 to almost 14,000. He personally evaluated every request made by a patient before the medical cannabis permit was issued. Hands-on responsibilities continued as he was in charge of how patients were to obtain medical cannabis, including issuing growing permits and developing agricultural standards. Most significantly he developed educational programs on the health and medical efficacy of cannabis use by patients for physicians, nurses and other Israeli health care professionals. Dr. Baruch was adept at multi-tasking as during his nine-year tenure as head of the Israeli Medical Cannabis Program, he found the time to be the CEO of the Abarbanel Mental Health Center, Head of the Israeli Mental Health
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Centers and CEO of the Tel Aviv branch of the Israeli Psychiatric Association. Beginning in 2012 he assumed the duties as CEO of the Israeli Society for the Treatment of Addiction. Dr. Baruch is now the Director of Research for One World Cannabis Ltd. (OWC) and is shifting a significant amount of his time from the public sector into the private sector. OWC is quite the prototype for a significant number of 21st century cannabis businesses. According to the Company’s website, OWC “is an Israel-based company founded in 2014 by a group of professionals with expertise in the field of medical cannabis treatment and medical cannabis regulatory affairs.” The Company’s Research Division is focused on pursuing clinical trials that evaluate the effectiveness of cannabinoids in the treatment of various medical conditions, while its Consulting Division is dedicated to helping governments and companies navigate complex international cannabis regulatory frameworks. At the same time, medical research is helping governments to institute laws allowing for the use of cannabis medicinally. With his expertise in research and management, Dr. Baruch is certainly the man of the hour for cannabis.
How did you come to work with cannabis?
I was the head of the Medical Division of the Ministry of Health. The person responsible for the cannabis program became General Manager for the Ministry of Health and he asked me to take care of the cannabis. I was not very much excited about it. Only two years later after I was head of the project did I get interested when I got a moving call from a dying cancer patient. He said he knew it was his last days and he just wanted to thank me for allowing him to use cannabis, as it gave him the opportunity to say goodbye to his friends and family and depart with dignity from this world. This was really moving and even now when I talk about it I get tears in my eyes.
When you first started working at the program, did you believe cannabis had medical benefits?
In the beginning, I would not accept it. I had the idea that cannabis was only bad for you and has no medical qualities. It only gave you a high—maybe some good, but only for dying patients. Only later did I discover its properties as a pain killer, an anti-emetic medicine, treating spastic problems and so forth.
OWC is working to develop cannabinoid oil-based formulations— would those formulations be single cannabinoids, multi- or whole plant?
They will be whole cannabis extracts but we will have a specific amount of a specific grade of at least eight cannabinoids and a few bioflavonoids. We will know the exact percentage ratio of each one. We will be changing these THC/CBD ratios within specific devices or formulations. Exactly what is better for each disease is being worked on at this time.
We believe certain ratios will be better for specific diseases than other ratios. With time we will have a data base on which other cannabinoids can be seen to be more or less important for the medical results you want to obtain.
How do you determine what are beneficial ratios?
With multiple myeloma, we are using at least two different ratios and are now doing a clinical trial on patient cell cultures to see which ratios give
high concentration of THC and in various strains we have various concentrations of CBD up to high CBD and low THC, medium THC and medium CBD. We know people react differently to the various strains and they have to try various strains until they find the strain that is beneficial for them.
You said you want to have high THC concentrations. Why? In pain management, THC is of major value—higher than CBD.
did not use cannabis and I am talking about all kinds of oncological patents. What they found out is that there is a better quality of life for those who use cannabis, but there is nearly no difference in survival rate.
What about patents on cannabis? Are they hushhush? In cannabis, the patent on cannabis itself does not hold. Let’s say we patent a cannabis strain with 12 percent THC
“We believe [cannabis] will be an adjunct therapy, and not only in palliative medicine but also in curative medicine.” the best results. We will first test the formulation on their cell culture and only if it works on their cell culture will we give it to the patients.
Are strains important?
As far as we know the strains are important—all three kinds—high THC/low CBD, medium THC/medium CBD, low THC/high CBD. We try to define which strains are beneficial for what diseases or for what symptoms at least. We know that for some diseases pure CBD works better than pure THC, but the combination of THC and CBD works even better. When we use medical cannabis, we try to have a
Depends on the reasons for the pain, neuropathic pain yes— less for oncological pain or infectious disease pain. Even if we do have high THC up to 20 percent, we will have CBD at least 2 percent to 6 percent to counter effect the high caused by the THC.
Can cannabis be a curative for cancer?
We believe it will at least be an adjunct therapy and not only in palliative medicine but also in curative medicine. What I can tell you is that in Sheba Hospital in Israel they looked for differences between oncological patients who use cannabis compared to oncological patients who
and 4.5 percent CBD. We say it is the best strain and even if we have six other cannabinoids tested and say this is our specific strain, a competitor can take the same strain, change the amount of CBD by one-tenth of one percent and it will be considered a different strain altogether. A patent on a cannabis strain does not hold any economic value. d
300 In 2014, there were more than 300 public cannabis companies in the legal cannabis industry
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PRODUCT HIGHLIGHTS
RYOT™ SmellSafe™ PackRatz The RYOT™ PackRatz may be the perfect solution to protect your favorite glass pieces or other small valuables. The SmellSafe™ zipper and microscopic carbon application help make this smell-resistant enclosure for the cannasseur—and, behind this barrier you also get an easyto-clean nylon interior with a recessed foil-lined freshness pouch for your favorite herb blend. Available in small, medium and large sizes. Distributed by Volo Trading.
www.ryot.com Starting at $8 (wholesale)
FlytLab H2FLO
Shine 24k Rolling Papers
Created with bosses in mind, these handcrafted gold rolling papers are made from the finest 24K edible gold. Perfect for celebrations or other special occasions, these papers are slow burning and the gold ends up in the ash tray, not your lungs. Shine Papers really stand out at a party too. Available in both rolling papers and blunt wraps, Shine Papers have something for every boss.
www.shinepapers.com $55
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An award-winning herbal vaporizer, the H2FLO offers three great ways to vape in style. The on-the-go method is simple and straight forward vaping, right from the oven chamber. The Air Chamber method gives a little more control and lets you see the vapor as it fills up the clear chamber, and holds it during long sessions. The Water Chamber method uses water to filter and cool the vapor before hitting the throat. No wonder it’s a winner!
www.flytlab.com $199
The Rifkin Safety Sac® Safety, security and reliability—that’s what every business wants when dealing with their money. The Rifkin Safety Sac® is a reusable deposit bag protected by the trademarked high security, built-in Arcolock-7®. This customizable pouch is the ideal container to store and transport coin, currency, checks and valuable documents. Many businesses, including stores, hotels, schools, restaurants, delivery services, government offices and theaters choose Rifkin Safety Sacs® for their cash protection.
www.rifkin.com Starting at $23
Cali Crusher Homegrown
The Cali Crusher Homegrown is a high quality, durable and stylish grinder. It has original four-way quick-lock with the classic rounded catch tray and revolutionary radial tooth design with new teeth layout. Load more, crush easy. Indestructible teeth with a lifetime warranty!
www.calicrusher.com 2-piece starting at $25
Dab Vac
This new water pipe adapter from Headdies is the sleek and stylish next step in the evolution of dabbing. With the Dab Vac you only need to heat the tip of the glass or titanium wand. This allows for very little waste, and you don’t get that leakage like you do with the domeless or nail. The all Schott glass holding chamber is perfect for a quickie or party time with friends.
www.headdies.com $70
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TRADE
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By Sean Donahoe
Jamaica Decriminalized possession of less than two oz of cannabis with the passing of the Dangerous Drug Amendment Bill.
10 Best
INDUSTRY INSIDER
practices for Cannabis Businesses
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Variety As cannabis consumption is growing deeper into society, patients and retail consumers hear about new strains, new products, and new means of acquiring cannabis, and many have come to expect options when purchasing cannabis.
Consistency While patients may try new strains, they fundamentally are purchasing cannabis because of an effect and dosage that they require, and failing a patient’s expectations shouldn’t be acceptable if you are serious about your quality and brand.
Reward Loyalty Seeking long terms relationships with patients and customers will become more and more fundamental to cannabis businesses as the market will constantly be providing new ways and places to purchase cannabis.
Know your Government Every day there are thousands of elected officials and their staffers in local government who are considering policy decisions that affect your business, and it pays to be knowledgeable and engaged in political affairs.
Pay your Taxes, Get your Permits Business operations that are highly compliant will enjoy better relationships with local government right now, and they will benefit from competitive advantages such as access to banking and lower insurance costs.
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Network There are business gatherings and professional associations to join across the country, which are essential opportunities to meet potential business partners, and stay on the leading edge of industry.
Learn to Work with Others Today’s cannabis industry is a small world, and it benefits your business to share information with local competitors on local policy issues and unreliable vendors while also looking for new joint ventures.
Learn to Speak to the Media about your Business The general public can be made more comfortable with cannabis policy reform if they see well-spoken, responsible representatives of the cannabis industry dispelling concerns of those opposed to legalization.
Know Your Industry There is more and more good information that is available to cannabis businesses who inform themselves or seek specialized experts to learn the present rules and the rules to come.
Be Excited The cannabis industry is already an incredibly rich ecosystem of potential business partners, explosive business opportunities, and positive vibes while the cannabis industry is now accepted as responsible businesses enjoying a fantastic moment in time.
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Scott Van Rixel of Bhang Chocolate By R. Scott Rappold
The first time Scott Van Rixel walked into a medical cannabis dispensary and observed the quality of edible products, he was disappointed. That was 2009. Six years later, Van Rixel’s Bhang Chocolate has become one of the nation’s most recognized edible brands, the cornerstone product of a cannabis line that runs the gamut from chocolate to chewing gum, mouth sprays and even vaporizers. For this master chocolatier—a title reserved for those with an intimate knowledge of making fine chocolate, from cocoa bean to bar—it’s about maintaining high standards, even as he has used his business savvy to license the Bhang brand for a wide variety of cannabis products. “Our brand stands for quality. Our brand stands for consistency. Our brand stands for being the best your money can buy. It’s not the cheapest. It’s just the best,” said Van Rixel. As of early 2015, Van Rixel’s chocolates can be found in eight states, with plans to expand into four more this year. Today, the Bhang name can be found on a variety of edibles other than chocolate, from chewing gum to mouth sprays.
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TECH
By Sean Donahoe
Forward Thinking
$1.2
$1.2 billion generated in cannabis retail sales in 2014 – 82% medical use / 18% adult use (Source: ArcView Market Research)
Delivering Integration and Innovation
New technologies are bringing higher levels of customer satisfaction, professionalism and efficiency to the business of delivering medical cannabis to qualified patients at their home or business. Delivery services provide a convenient option to procure cannabis but in today’s market, and in the coming more heavily regulated market, offering mere convenience is not enough to continue operations. The attention to updating menus in real-time, offering specials as inventory fluctuated, and having an ongoing relationship via newsletters and social media are all important tools for a sophisticated delivery service to utilize to provide better satisfaction to patients. Lacking a brick and mortar dispensary, 36
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“Logistics technologies used by other industries are obviously being adopted by medical cannabis delivery services as we see a continuing advancement of this subsection of the industry.” delivery services can now cultivate the patient-provider relationship across a variety of technological means and methods. Delivery estimation times and real-time tracking of patients’ deliveries are a great new feature offered by some medical cannabis delivery services. On
the backend, real-time tracking of drivers serves as a valuable tool for management and oversight of delivery operations. Logistics technologies used by other industries are obviously being adopted by medical cannabis delivery services as we see a continuing advancement of this subsection of the industry. The most dramatic new way that medical cannabis can be obtained is via internet-based technology platforms, such as Meadow, Eaze, Flow Kana, and other services that provide both the convenience and privacy of delivery with the consistency of experience and wide selection offered by brick and mortar dispensaries. Being able to deliver in a short time period wouldn’t be possible without the density of patient populations offered here in California, the diversity of local medical cannabis collectives participating within these systems, and these technological tools to keep deliveries flowing and continuing patients’ access to medicine. As more statewide and local regulations come online that will govern medical cannabis delivery services, it could be argued that these services will need technology more than ever, as controlling of product diversion, ensuring worker safety, providing information to insurance providers, collection of locallyappropriate taxes, and compliance with a changing regulatory environment will compel delivery services to integrate technology even further into their business operations. More efficient and more interactive medical cannabis delivery is here now, thanks to the adoption of technology by forward-thinking services, but it remains to be seen how the state and local governments will regulate these innovative and popular medical cannabis delivery services. d
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LEGAL
By Hilary Bricken
Trademarks, Branding and Laws—Oh My!
An overview on all you need to know about your intellectual property and canna-brand
As cannabis businesses compete for customers, communicating their products’ quality and value become key. Cannabis companies that understand the need to differentiate their business and products from those of their competitors need to know what they can do to enhance and protect their brands. To greatly simplify, the goal of branding is to efficiently communicate something about a given product. Maybe a company’s cannabis products or strains are trendy. Maybe they’re highly potent. Maybe they’re cheap as dirt. The point is that these companies want to tell customers that products with their brand name will consistently offer whatever it is that the company is trying to provide. Additionally, no business wants other businesses using its brand name, especially in a way that could damage its reputation or steal valuable business. Enter the developing power of cannabis trademarks. Though the United States Patent and Trademark Office (USPTO) will not register cannabis product trademarks due to their federally illegal and “scandalous” nature, many state 38
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governments will register them. A stateregistered cannabis trademark does two things—it provides notice to others in the state of registration that the mark is being claimed, and it often offers greater protection for cannabis brands in the registered state than the common law. Just as should be done with noncannabis trade names, it is critical to do a trademark search before you attempt to register a cannabis trademark with a state trademark office. This search needs to be done to make sure that nobody else has already claimed the trademark you seek and to make sure that the brand name you are contemplating using does not infringe on someone else’s trademark. Cannabis businesses are in no way immune from being sued for trademark infringement merely because of the federal Controlled Substances Act—just ask the Hershey Company which, in 2014, sued at least two medical cannabis companies in Colorado and Washington over the companies’ infringement of its signature Hershey’s candies trademarks. Once a cannabis business secures its state trademark, it should monitor the
mark for infringers and should enforce it sufficiently to maintain its rights. The cannabis business should also educate itself about the complex rules and restrictions on placement and content of advertising, the claims that can be made about a given product and how to target product advertising accordingly. In addition to state trademark registration, an emerging area in the law is cannabis trademark licensing. This licensing model appeals to many cannabis businesses because it can allow the owner of a trademark, trade secret or other proprietary know-how or information to expand by licensing its brand or proprietary know-how to another company. This model works particularly well in the cannabis industry where local residency is often required to operate and where local knowledge is often nearly as important. For example, if a company owns a trade secret, technology, know-how or other proprietary information used to manufacture a particular cannabis product or provide a service to a cannabis business, it can consider licensing this trade secret, technology or know-how via a license agreement, consulting agreement or similar agreement that also addresses the issue of trademark ownership as between the licensor and licensee. Such agreements may, for example, also provide for the licensor to supply the licensee with certain non-controlled goods associated with the licensee. Licensing ultimately allows the licensor to monetize its brand or knowhow outside their home state. However, the current state-by-state patchwork of cannabis laws means that these licensing agreements, if and when possible, are usually very complicated and must be tailored to the laws of the relevant states. The cannabis industry is becoming more legitimate and is made up of an increasing percentage of sophisticated businesses. These businesses thrive when they develop unique and recognizable brands. Great companies have great brands, and this is true for great cannabis businesses, too. d
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