2
CULTUREB2B.com
CULTUREB2B.com
3
contents
inside
Q4.2016
18
16 26
features 38
departments 4
CULTUREB2B.com
8 News Bytes
10 By the Numbers
12
Outdoor vs. Indoor Growing A cost analysis of two different ways to grow the perfect cannabis plant.
16
Resume Ready The world of cannabis is evolving quickly, and so are the job opportunities!
18
Be In The Know Attorneys Meital Manzuri and Alexa Steinberg dive deep into the logistics of AUMA, and how it will affect California’s cannabis industry.
26
Cannabis Revolution The age of craft cannabis and changing standards in the industry.
30
Learning The Truth Cannabis has gained the support of many politicians like California Congressman Dana Rohrabacher.
32 Legal
38 Trends
42 Liner Notes
46 Events
CULTUREB2B.com
5
Publisher Editor-In-Chief associate Editor Editorial assistant Editorial Contributors
Jeremy Zachary Evan Senn Ashley Bennett
Jamie Solis Benjamin M. Adams, Sheryll Alexander, Marguerite Arnold, David Branfman, Esq., Hilary Bricken, Natasha Guimond, Meital Manzuri, Todd Mathews, Nicole Potter, Ann Toney, Addison Herron-Wheeler
Art Director
Steven Myrdahl
Production Manager
Tommy LaFleur
Graphic Designer Account Executives
Tanya Delgadillo Jon Bookatz, Eric Bulls, Kim Cook, Cole Garrison, Gene Gorelik, Teddy Helms, Beau Odom, Justin Olson, Chris Thatcher, Vic Zaragoza
general Manager Office Assistant digital content manager
Iris Norsworthy Angelina Thompson David Edmundson
digital marketing manager
Alazzia Gaoay
Distribution Manager
Cruz Bobadilla
CultureB2B Magazine® is published quarterly and distributes 20,000 copies at over 6,000 locations throughout the United States and Europe. No articles, illustrations, photographs, or other matter within may be reproduced without written permission. CultureB2B Magazine® is a registered trademark. All rights reserved. Phone / Fax (888) 694-2046 B2B@iReadCulture.com
6
CULTUREB2B.com
CULTUREB2B® Magazine is printed using post-recycled paper.
CULTUREB2B.com
7
NEWS
BYTES Legal Cannabis Comes to Argentinian Province of Chubut
Kentucky Plantation Harvests First Hemp Crop, 150 Years Later A former hemp plantation in Kentucky harvested its first hemp crop in over 150 years. Farmington is a historic location in Kentucky and at one point, it was home to a 550acre plantation that grew hemp. Now, a new harvest recently took place as a part of the state’s hemp pilot program. Alyssa Erickson, Co-Owner and Principal of United Hemp Industries, explained the importance of the project. “We (United Hemp Industries and Kentucky Hempsters) partnered with Farmington on this historic hemp project to educate Kentuckians about the crop and its significance to the state,” Erickson stated. Although the hemp pilot program was launched in 2014 by the Kentucky Department of Agriculture, there is still a negative stigma associated with hemp. Erickson continued, “These projects at historic locations give us an opportunity to reach new audiences and expose them to Kentucky’s rich hemp history, while educating them about the current economic, nutritional, environmental and agricultural benefits of the plant.”
Charlotte’s Web is a cannabis oil that gained popularity for its effectiveness in treating Dravet Syndrome, after a young girl named Charlotte Figi became the first child to find relief from this high in CBD and low in THC oil. Now the miraculous oil has been approved to be in the public health system overseas in the Argentinian Province of Chubut. Governor Mario Das Neves has approved legislation to allow high-CBD cannabis oil to be used for patients with epileptic conditions like Dravet Syndrome, in addition to other pathologies that the provincial health minister determines for it to be useful. The English translation of the bill explains the reasoning behind this new legislation. “Scientific studies worldwide have verified that oil of cannabis is a medicine that is complementary to conventional treatments, which is obtained from the species ‘cannabis sativa,’ and that generates important and significant relief and improvement in the quality of life of many patients.”
Illinois Medical Cannabis Sales Exceed $20 Million The cannabis industry has proven to be extremely profitable in Illinois. The state announced in October 2016 that their licensed dispensaries brought in more than $3.8 million in sales in September. Medical cannabis sales started in November 2015. The total number of retail sales of medical cannabis has been more than $23.5 million in the state. Illinois’ medical cannabis program, the Compassionate Use of Medical Cannabis Pilot Program Act, currently consists of 44 licensed dispensaries and an estimated 11,100 patients with 85 of those patients being minors. At the time of this writing, there are seven lawsuits filed by people in Illinois who want their medical conditions to qualify them for medical cannabis. Post-Traumatic Stress Disorder (PTSD) was just added to the Act’s list of qualifying conditions, in addition to allowing those who are diagnosed with a terminal illness the ability to register as a medical cannabis patient.
8
CULTUREB2B.com
CULTUREB2B.com
9
NEWS
The percentage of stock increase following the unveiling of a new cannabis product line by Canadabased Canopy Growth Corp. in partnership with Snoop Dogg: (Source: Bloomberg Businessweek)
17
The amount of money, in millions of dollars, that is funding the MedMen cannabis cultivation and production facility in Washoe County, Nevada that broke ground in late-September: (Source: Northern Nevada Business Weekly)
The amount of square footage that is contained in an old, unused prison in Coalinga, California that is being converted into a cannabis growing and distribution facility by Damian Marley: (Source: The Guardian)
15
The amount of water, in gallons, that Pueblo, Colorado-based Yeti Farms bought from Round Mountain Water District in August 2016 for use at its cannabis grow farm: (Source: Wet Mountain Tribune)
101, 090
77,000 The number of cannabis businesses that were named on Inc. Magazine’s list of 500 fastest-growing private companies in the U.S.: (Source: Inc.)
4
The number of cannabis import permits obtained by Real Scientific Hemp Oil-X TM that were approved by the Mexican government to be used to treat adolescents suffering from epilepsy: (Source: Market Wired)
22
The amount of money, in millions of dollars, that the Florida-based New Approach cannabis group gave to the state to help efforts to legalize medical cannabis: (Source: Orlando Weekly)
1
10
CULTUREB2B.com
The amount of money, in billions of dollars, that is GW Pharmaceuticals’ market cap announced after its success with Epidiolex and patients in early October 2016: (Source: The Motley Fool)
2.75
The amount of money, in millions of dollars, that cannabis delivery company Eaze has raised in funding, making it the most funded cannabis tech company in the world: (Source: Business Wire)
25
CULTUREB2B.com
11
Outdoor vs. Indoor Growing
Basic indoor cannabis grow room set-up
A Cost Analysis
1 x 125 watt CFL light
$30.00
3 x 2-gallon containers
$3.00
1 x miracle grow soil
$4.97
1 x fan $12.00 3 x high quality seeds
$30.00
Total $80.00
by David Edmundson
Another fall harvest for outdoor cultivation has arrived, having begun in “Croptober,� and with it brings a bounty of beautiful outdoor-grown cannabis. While there are inherent benefits to growing cannabis indoors, the costs between indoor and outdoor growing can vary greatly. Most of the cost associated with outdoor grows are incurred at the onset of the operation; preparing the land,
Total U.S. Market Size (Billions of $)
24
Basic outdoor cannabis grow set-up 3 x miracle grow soil
$14.91
3 x 15 gallon container
$9.00
3 x high quality seeds
$30.00
Total $55.00
Legal Cannabis Market Growth
20
Compound Annual Growth Rate 29%
16 12 8 4 0
12
seeding the pots and beginning the irrigation process. An indoor facility has to deal with recurring expenses like electricity, mechanical upkeep and labor turnover. A breakdown of a small basic indoor setup, with three high quality seeds, is $80, compared to $55 for an outdoor grow. The costs increase exponentially as your operation grows in size and requires additional resources. >>
CULTUREB2B.com
2014
2015
2016
2017
2018
2019
2020
Source: New Frontier Data Analysis and Arcview Market Research
CULTUREB2B.com
13
The big difference in large scale indoor grows is the amount of equipment you need to facilitate the crop. Aside from the soil and seeds, you will need air conditioning to maintain the proper temperature for the entirety of the grow, lighting to stimulate growth, CO2 emitters if you want to ensure desired size and quantity, sensors and controls to regulate specific areas of the facility and a mylar/reflective system to maximize the surface area of your lights. Outdoor grows need sun, water, love and patience. The type of lights you use can also make a huge difference. High Intensity Discharge (HID) lights have been used for a long time and are reliable because of their low purchase cost and the minimal guesswork associated with them. However, they run very hot and
cost $70-$100 a month to run depending on which type you use. LED lights on the other hand can save you as much as half on electricity, but are more expensive, making them the choice of growers in it for the long haul. It has been reported that some large scale growers in Colorado pay upwards of $24,000 a month for electricity. The upside to farming indoors though is that you can produce cannabis yearround from almost anywhere in the world. Outdoor grows limit where and when you can grow cannabis. Additionally, it is easier to conduct breeding projects in the controlled environment afforded by an indoor facility. There is also a stigma attached to outdoor cannabis by some who feel that cannabis grown indoors looks better and has the fragrant aroma that outdoor plants lack.
The labor costs associated with indoor grows can also be more expensive. Since you are growing yearround you will have different plants growing at different stages so there will always be trellising, pruning, watering, feeding and harvest work to be done. With an outdoor grow you are typically working on one specific harvest, so it can be managed easier by a smaller team with a possible increase in labor when it is time to harvest. Outdoor cultivation is also better for the planet. Less electricity means less of a carbon footprint associated with outdoor cannabis production. There is also less waste because you aren’t using expendables such as light bulbs, lighting panels and Mylar reflective surfaces. Unfortunately, outdoor operations are more prone to attract thieves and unwanted poachers, so you may incur increased security costs. Your crop can also be damaged or destroyed by foraging animals or a drastic turn in the weather, and unless you live in a tropical region of the world, you only get one grow a year. Looking past the potential cost savings of growing cannabis outdoors, there is something primal about working with the Earth to produce this miraculous plant. Sure science has taken the plant to new levels of sophistication and targeted effectiveness, but you can’t ignore the romanticism of birthing a seed directly from Mother Nature that can help so many. d
Steeply Falling Prices Cause Sales to Soar in Washington $80.000.000
$40
$60.000.000
$30 $40.000.000
$20
$10 14
$100.000.000
CULTUREB2B.com
$20.000.000
July ‘14 Oct
Jan ‘15
May
Sept
Jan ‘16
May
Total Monthly Sales
Average Price for One Gram of Flower
$50
$0
Source: Washington State Liquor and Cannabis Board
CULTUREB2B.com
15
New Jobs Created by the Cannabis Industry by Addison Herron-Wheeler
No one ever doubted that the cannabis industry would create new jobs, and today, the cannabis industry has opened up many opportunities all across the board. A plethora of scientific and professional jobs have sprung up because of legal cannabis, each of which contributes to a growing sector of the economy.
Cannabis Media Thanks to legal cannabis, the world of cannabis journalism has expanded beyond High Times and news about the war on drugs. There is now a plethora of careers in media available within the cannabis industry.
Personal Relations All of the cannabis companies, advocates and entrepreneurs out there need someone to represent them in the best light possible and handle their PR. Those in the public relations field are already finding plenty of work in legal and medical areas.
16
CULTUREB2B.com
Culture and News Writers Between all the advocates out there in the arts and culture world and all the news stories happening every day in the world of legalization, there is plenty of writing to be done. Reviewers Just like with food and wine, it’s an art in and of itself to be able to truly talk about the flavor profiles and healing capabilities of cannabis.
Editors Editors of cannabis publications act as liaisons for the industry, chasing down stories, creating contacts and shaping the future of how cannabis is perceived.
Photographers In addition to all the photo opportunities in the culture and news realm, it is also essential to have photographers who can capture beautiful pictures of cannabis plants to accompany reviews and appear in books and magazines.
Advertising Of course, all the cannabis media out there creates a wonderful opportunity for those who sell cannabis and related products. Selling ad space, and also creating and developing ads, is a very important part of this growing industry.
Brand Management It is also essential to have people within each company to make sure good information is going out and websites and information looks good.
Graphic Designers and Web Designers Designers are in high demand to lay out magazines, media sites and sites for retailers, and web designers are building tons of cannabis platforms.
Cultivation Technologies The heart and backbone of the cannabis industry is, of course, cannabis itself. Cultivation of cannabis is perhaps the most exciting and most quickly evolving area of cannabis jobs.
Pesticide Specialists The silver lining to the cloud of pesticide recall issues is that a new job field is open for those who specialize in soil and pesticides. New methods are being developed all the time to help growing go more smoothly.
Legal Growers and Trimmers Growers are no longer breaking the law; they are supplying dispensaries, clinics and consumers, and developing cleaner and better techniques all the time. Don’t forget all those who help out the growers by doing tedious but necessary work like trimming.
Supply Vendors Growing demands a lot of TLC. From lights and fertilizer to pesticides and facilities, there is a ton of money in providing necessities to those who grow.
Niche Specialists Not to mention, it is also necessary to develop better lights, cleaner irrigation systems and all kinds of new tricks to help cannabis grow. Those with a green thumb and scientific inclinations are sure to be able to cash in.
Cannabis Tourism Legal states are starting to add cannabis as another tourism draw alongside beaches, mountains and sightseeing.
Shuttle Drivers Those who have a Commercial Driver’s License and like driving may want to start driving cannabis-friendly buses and shuttles to take tours around the town. These drivers get to enjoy happy patrons all day long, and make a steady living since there’s always a crowd that wants to get on the bus.
Tour Organizers People with a knack for party planning are starting to realize that all life’s a party when it comes to cannabis. There are new tourists coming to legal states every day
who want to go out and enjoy what their city has to offer, with some organization and structure added in so they can experience it all without getting in trouble.
Cannabis Retail The most obvious job realm, cannabis is being bought and sold like crazy, and the market is growing all the time.
Budtenders Perhaps best-known in the industry, budtenders are the face of what cannabis is today. These friendly folks are usually the type who also thrive in retail or bartending jobs, and do a great job educating on product and selling quality flower and concentrates.
Entrepreneurs It’s never been a better time to start a business in a legal state. People who have always thought about starting a restaurant or store can get in the dispensary game or create their own product line.
Administrative Assistants Most dispensaries and businesses have office personnel that help keep things organized and running smoothly.
Landlords and Real Estate Agents Because all of these new grow ops and businesses needing to rent or buy space, real estate agents can now specialize in selling to those within the industry.
Concentrate Makers Cannabis consumers can’t get enough of oils and other concentrates, so there is plenty of need for great product and new developments in potency and purity.
Bakers and Chefs It’s truly wonderful when master bakers and chefs are able to turn their culinary skills towards making amazing edibles.
Regulation With legal cannabis comes new laws and regulation, and that creates new jobs.
Law and Lobbying Lawyers can now specialize in cannabis law, in order to help those who are arrested for their use, or businesses that
run into trouble.
Committees and Associations Additionally, groups like the Cannabis Business Alliance in Denver and many other areas are popping up to help keep things in check.
Law Enforcement Possibly the most unlikely of cannabis jobs, the industry needs people who have had law enforcement training to protect their product. Security guards and armored drivers are always in high demand.
Science Although cannabis is still a Schedule I substance, some research is already being done on its medical and many benefits.
Researchers Those who choose to research something like the effects of cannabis on PTSD are bravely navigating uncharted waters. They may not be raking in the big bucks now, and might even be struggling for funding, but the long-term rewards will surely be great.
Doctors Doctors who are brave enough to recommend cannabis to those who have tried other unsuccessful treatments are paving the way for the future.
Medical Budtenders Special budtenders that can pick out the right strains for sickness instead of just approving flower that gives a nice high are in demand.
Future Careers As the industry grows, even more jobs are going to open up.
Cannabis as a Nightlife Industry Once public use is finally approved in legal states, cannabis clubs and places that sell cannabis for on-sight, late night consumption will surely follow. This will provide awesome opportunities for those already in the night life industry.
Hemp Industries The world of hemp is growing as well, and fiber and construction jobs, as well as cultivation, could be on the horizon. d
CULTUREB2B.com
17
18
CULTUREB2B.com
p h o t o s b y J o h n G il h ool e y
EVERYTHING YOU NEED TO KNOW ABOUT PROP 64 by Meital Manzuri
Just last year, the Medical Cannabis Regulation and Safety Act (MCRSA) was signed by Governor Jerry Brown to establish regulations for California’s medical cannabis supply chain. But now there’s a new sheriff in town. Californians who went to vote had the opportunity to vote on the legalization of recreational cannabis for the first time since Proposition 19 lost by seven points in 2010. But this year, the Adult Use of Marijuana Act (AUMA) had officially qualified for the November ballot and appeared as part of California Proposition 64 (“Prop 64”). While not everyone is happy with the terms of Prop 64, most agree that it is a step in the right direction. And with California being the largest cannabis economy in perhaps the entire world, most agree that the passing of Prop 64 will have a direct impact on the legalization movement across the nation.
What is Prop 64? Prop 64 (a.k.a. AUMA) is an initiative that will “semilegalize” recreational cannabis in California. By “semilegalize,” we mean that it will allow California adults (age 21+) to possess, transport, purchase, share and consume up to one ounce of cannabis and up to eight grams of concentrates for recreational purposes. The AUMA will also allow adults to grow up to six plants at their household out of public view. In addition, the measure will impose a 15 percent excise tax on all cannabis sales and will greatly reduce—and in many cases, eliminate—criminal penalties for common can-
nabis-related offenses. To protect both children and consumers alike, the AUMA also imposes the strictestever regulations governing the labeling, packaging and testing of cannabis products. The ballot measure, which was backed by former Facebook president Sean Parker and Lieutenant Governor Gavin Newsom, had a very good chance of passing. According to the Los Angeles Times, recent polls show that 58 percent of California voters aimed to support the measure prior to voting, and now that it has passed with a 56 percent support, it looks like more significant changes are in store for California’s booming green market.
How will the AUMA affect the MCRSA? From a consumer perspective, nothing will really change under the AUMA—people will continue to get their cannabis from dispensaries the same way as they do today. The main difference is that it will be easier to get cannabis legally because adults (age 21+) will no longer need to get prior approval from a doctor in order to buy cannabis from dispensaries. So, long gone will be days where you need to find a doctor, fake an ailment, and then take a doctor’s note to a dispensary in order to get your hands on some cannabis. For business owners, however, it’s a whole new ballgame. The impact of state licensing is going to be huge. Now that the AUMA has passed, many are left wondering: What does this mean for the MCRSA? And how will the AUMA impact current cannabis businesses in California going forward? Here’s the short answer: Unless you’re a large-scale grower hoping to secure a Type 5 license (the largest cultivation license available under the AUMA), the AUMA will not significantly alter your road to state licensing because the AUMA bases most of its regulations on the MCRSA. The AUMA, for the most part, will simply serve as a mere overlay to the MCRSA. Instead of totally revamping the current regulations under the MCRSA, the AUMA will just build on the MCRSA’s current infrastructure by (1) adding regulations for nonmedical (a.k.a. adult use) marijuana, and (2) making other small changes to the existing regulations for medical cannabis. Now that AUMA has passed, the MCRSA’s lead regulatory agency—the Bureau of Medical Marijuana Regulation (BMMR)—will be renamed to the Bureau of Marijuana Control (BMC). The BMC will still be a subagency of the Department of Consumer Affairs, but it will be responsible for regulating both nonmedical and medical cannabis activity. So basically, the BMC will just replace the BMMR and add adult use cannabis to its list of responsibilities. With respect to licensing structures, the ones put forth by the MCRSA and AUMA are very similar, but with subtle differences. The AUMA provides for 19 different types of licenses—most of which mirror the 17 licenses already created by the MCRSA. Though licenses for medical and adult use business operators >>
CULTUREB2B.com
19
What else is the size of California’s Cannabis Market? 2015 Lego Sales:
$5.2 Billion
2015 Netflix Sales:
$6.78 Billion
will be distinct, both will be regulated by the BMC. The key differences are: (1) the AUMA’s addition of Type 5 licenses for large-scale growers, which will not be issued for five years and will not allow for vertical integration; (2) unlike the MCRSA, the AUMA does not prohibit vertical integration for other licensees, except for Type 8 testers and Type 5 large growers; and (3) the AUMA provides for a versatile “microbusiness” license which allows for vertically integrated small farm operations—much like the collective model that has already been used in California. Basically, think of a craft beer microbrewery, but with cannabis instead of beer! In short, the AUMA’s biggest change to existing law will be the legalization and regulation of cannabis for adult use, leaving most of the MCRSA’s hard work surrounding medical cannabis intact. Other notable changes include the following: Cannabis cafés – California will now become the second state to host Amsterdam-style cannabis cafés, right behind Alaska. The AUMA will sidestep the hassle associated with allowing public consumption by instead allowing localities to permit places for on-site smoking, vaping and edible-ing. Higher taxes – The AUMA will impose a 15 percent excise tax on retail cannabis sales (in addition to state and local taxes already in place). There will also be a cultivation tax imposed on all harvested cannabis that enters the commercial market, at a rate of $9.25 per oz. of dried flowers and $2.75 per oz. of dried leaves. Medical cannabis patients with a state ID card will
20
CULTUREB2B.com
be exempt from the existing 7.5+ percent state sales taxes, but not the other taxes. California Marijuana Tax Fund – The state Legislative Analyst’s Office estimates that the AUMA will generate up to $1 billion in revenue as well as $100 million in savings annually. Where will all this money go? Does it go towards the state to help pay for other things such as schools and healthcare? Not really. All this money will be deposited into the state treasury as part of the newly-created California Marijuana Tax Fund, which specifically sets out how the funds will be distributed every year. The funds generated by the AUMA will pay for cannabis regulation, law enforcement, cannabis policy research, medical cannabis research, drug awareness programs for children and drug intervention resources. Lifting bans on personal indoor grows– Under the AUMA, adults 21+ will be able to lawfully grow up to six cannabis plants for personal use. Local governments will be allowed to enact local ordinances to reasonably regulate personal cannabis grow. While local governments will be allowed to totally prohibit outdoor grows if they so choose, they cannot totally prohibit personal indoor grows. Eliminates mandatory “distributors” and “transporters” – Unlike the MCRSA, the AUMA allows but does not require that cultivators send their product to Type 11 distributors for transportation to other licensees. This mandatory requirement, modeled on the alcohol industry, is one of the most controversial features of the >>
6.6 Million iPhone 7’s
California Market Size:
$4.3 billion
476 Million
Bottles of Wine
2015 Organic Produce Sales:
$5.5 Billion
1.94 Billion
Gallons of Gas
Source: New Frontier Analysis
CULTUREB2B.com
21
legal by the AUMA. For instance, the previous mandatory felony charges for possession (Health & Safety Code § 11357), cultivation (Health & Safety Code § 11358), possession for sale (Health & Safety Code § 11359) and transportation (Health & Safety Code § 11360) are eliminated. Felony enhancements, however, could be charged in certain cases such as repeat offenders, persons with violent or serious priors, or sale to minors. The AUMA will also allow many people with criminal felony records to have their convictions reduced to misdemeanors and will allow some people currently serving jail or prison sentences for cannabis crimes to petition for early release.
What’s not to like about the AUMA?
MCRSA, as it interjects a whole, new, costly distribution layer between the grower and distributor. The AUMA, however, removes this mandatory “middle-man” from the cannabis supply chain. Only large-scale growers (Type 5) will be required to use Type 11 distributors under the AUMA. The remaining licensees will be eligible to distribute for themselves. Small-business friendly – The AUMA will restrain big business by withholding Type 5 licenses for large-scale growers for a period of five years. The AUMA also throws a lot of obstacles in the way of big business and adds several anti-monopoly sections—e.g. no price fixing, no red lining, no undercutting the competition, no selling at a loss or giving away free cannabis to hurt competitors, etc.
How does the AUMA address criminal penalties for cannabis crimes? The AUMA will eliminate and reduce a number of common cannabis crimes, beyond what is explicitly made
22
CULTUREB2B.com
Like similar initiatives in Colorado, Washington, Oregon and Alaska, the AUMA sets the stage for the road towards legalization. But the AUMA is not perfect. The elaborate, 62-page initiative is a very tough document to digest (even for lawyers). Due to its sheer length alone (over 30,000 words!), the initiative is chock full of inconsistencies, ambiguities and glitches that will need to be ironed out by the courts and the legislature in the future. So it’s still a work in progress. Opponents argued, however, that the main flaw of the AUMA is the unduly high level of taxes it levies on the adult use industry. Many worry that the heavy taxes could ultimately prove too costly for smaller players in the cannabis industry and would result in higher prices for consumers. Also, on the social justice end, opponents hate the fact that the AUMA provides no criminal reduction for other common offenses, such as manufacturing using butane (which is considered a “serious felony” under Health & Safety Code § 11379.6) or maintaining a location for the manufacturing, storage or distribution of cannabis (which is considered a misdemeanor under Health & Safety Code § 11366.5).
How does California’s AUMA compare to Colorado’s Amendment 64? While the passage of the AUMA will no doubt make California the trendsetter for the rest of the nation, it’s ultimately getting its cue from the states that have already legalized recreational cannabis—namely, Colorado. It is no secret that the AUMA was heavily inspired by the success of Colorado’s Amendment 64, the passage of which made Colorado the first state in America to legalize recreational cannabis. Since its passage in 2012, Amendment 64 has seen massive benefits, including an increase in tax revenue and job opportunities, and a decrease in crime rates. Now, California is hoping to tap in on Colorado’s success. Like California’s AUMA, Colorado’s Amendment 64
permits adults 21+ to consume or process limited amounts of cannabis; establishes a licensing system in which cannabis is regulated, taxed and distributed similarly to alcohol; implements a “seed-to-sale” tracking system; and permits local governments to regulate or prohibit cannabis facilities. Amendment 64 also imposes a 15 percent excise tax on wholesale cannabis sales, however the proceeds of which are only to be used for school construction. Like Amendment 64, the AUMA gives licensing priority to businesses in compliance with local and state laws at the time that it would go into effect, but the AUMA goes a step further and extends favorable treatment to small and medium-sized businesses in an effort to restrain corporate big business. Moreover, the AUMA will try to one-up Amendment 64 by allowing for cannabis cafes, whereas Colorado doesn’t have any such establishments.
What does this mean for California going forward? Now that AUMA has passed, this is what life will look like in California: If you’re over the age of 21, you will eventually be
able to walk into a dispensary without a doctor’s note and purchase up to ounce ounce of cannabis or eight grams of concentrate. Due to tight regulations implemented by the AUMA, all products in the dispensary will be neatly packaged and labeled with detailed information such as where exactly the product came from, what it was grown with and how it was grown, the strain profile and THC content, etc. If you want to grow, you’ll also be able to legally grow up to six plants at home. If you’re a business owner, there will be way more rules to follow, and way more taxes to pay. But there will also be a crazy increase in demand caused by the legalization of adult use cannabis, which equals more money to be made. If the AUMA proves successful, the rest of the country will look to California as an example and potentially follow its footsteps. While the AUMA may not be perfect, no bill ever is. Not everyone will get what they want from AUMA’s passage, but at least California will be put on more solid ground in terms of pushing for further much-needed change in the future. California voters were not willing to wait another election cycle, and the AUMA proved to be the best choice to choose from. d
Sources: Los Angeles Times AUMA, § 26062(d) AUMA, § 26070 AUMA, § 34011 Drug Policy Action Fact Sheet Id. AUMA, § 26062 Marijuana Policy Project
California Legal Cannabis Market Projections 60%
8
Compound Annual Growth Rate 23.1%
7
Market Size (Billions of $)
5
40%
4
30%
3
20%
2 10%
1 0
total market growth
6
50%
Medical Market
Adult Market Use
Compound Annual Growth Rate
0%
2014
2015
2016
2017
2018
2019
2020 Source: New Frontier Data Analysis and Arcview Market Research
CULTUREB2B.com
23
“Those in illegal states may still have to be satisfied with a few options available on the black market, but legal consumers expect to be able to get their favorite gummy treat in edible form, their favorite strain every week and something new to try whenever the mood strikes.”
CANNABIS REVOLUTION
The age of craft cannabis and higher standards by Addison Herron-Wheeler When legalization began sweeping the country, bills and amendments were pushed through because the cannabis industry agreed to certain standards and regulations, essentially allowing the states to regulate cannabis in a similar manner to alcohol and tobacco. While some strongly opposed the regulation of cannabis at first, either because they were used to the black market or because they were against cannabis
in general, the results of legalization can’t be ignored. A structured industry is beginning to emerge, with clear laws and rules in place. With regulations come standards of practice and customer service, and in some states it is growing in similarity to the standards we have for the alcohol industry today. Because prohibition of alcohol is no longer a factor, we expect to be able to choose a dry white wine
instead of a sweet one, try thousands of craft beer styles at festivals and drink liquor aged and stored a specific way. As such, people in legal cannabis states are starting to crave the same variety, versatility and stability in their cannabis products, and suppliers are meeting that demand. Here are a few of the ways that the industry is making sure that better standards are more than met for the demanding cannabis consumer.
Interpening and High-Level Appreciation Now those who can tell the difference between strains and flavors by smell alone can hone their craft and use it to be educated consumers. There are many emerging companies and services to help workers in the industry hone and craft both their nose and their observational knowledge about cannabis. Companies like Cannaroma can help train at home, with an educating kit on terpenes and cannabis sommelierstyle training. Colorado’s Trichome Institute offers a “Cannabis
Sommelier School” where those who want to train their noses or learn more about strains can become interpeners, or those who can determine the quality and style of cannabis by examining it and smelling it. In that class, they teach users how to identify different smell profiles and use different areas of the nose for sniffing. They also make sure to point out how to detect quality when checking out product. This not only serves to entertain and educate customers and employees.
Top Shelf and Select Options Another distinction that has developed in legal states is that of “top shelf” cannabis options being available to the discerning consumer. Much the way drinkers can choose an exclusive beverage like Patron when they have extra money to spend, most dispensaries offer top shelf flower,
26
CULTUREB2B.com
usually exclusive strains not available every week. Similarly, vape pens offer exclusive blends with more THC than most cannabis cartridges, and those who are really adventurous can try special treats like “caviar,” a joint with flower rolled in cannabis oil and kief.
Strain and Style Options It is no longer acceptable not to be able to find a wide array of edible flavors, oil styles, strains and infused products. Those in illegal states may still have to be satisfied with a few options available on the black market, but legal consumers expect to be able to get their favorite gummy treat in edible form, their
favorite strain every week and something new to try whenever the mood strikes. This doesn’t just mean that those in legal states are spoiled; it also means they can get the best medicine or products possible and are able to avoid strains or products that don’t agree with them.
Public Use The final step for cannabis being treated just like alcohol, public use will mean that cannabis can be consumed in public, either in lounges that sell it or in public areas like
venues that allow cigarette smoke. Once legal states finally take this last step, cannabis will finally be a fully acceptable way to imbibe during a night out.
More Warnings and Regulations Along with the higher standards for the cannabis industry, legal states are constantly coming up with ways to make things safer for consumers and ensure that cannabis doesn’t fall into the wrong hands. “Even though the spirit of Amendment 64 intended to regulate cannabis like alcohol, the marijuana industry faces more stringent regulations and restrictions, including regulation of shapes, child-resistant packaging, advertising limitations, extensive warning statements, stamping and prohibitions against public consumption,
that we adhere to be good corporate citizens,” explained Nancy Whiteman, the Cannabis Business Alliance Infused Products Chair in Denver. “We are proud of our industry members who help set the standard in caring for and participating in a socially responsible industry that puts child safety above profits.” From keeping cannabis out of the hands of children to appreciating the smell profile of each individual strain, regulating and educating within the cannabis industry makes for higher standards and more overall safety and compliance. d
Possible Medicare Savings in States with Medical Marijuana $35
Combined Savings $88.6 Million
Potential Savings (In Millions)
$30 $25 $20 $15 $10 $5 0
Arkansas
Florida
Maryland
Montana
Ohio
Pennsylvania
Source: New Frontier Data Analysis and Arcview Market Research
CULTUREB2B.com
27
Cannabis Reform in The European Union by Marguerite Arnold
With all the hullabaloo in the American hemisphere about cannabis reform these days, it is easy to miss the fact that Europe is also moving forward. But don’t expect Amsterdam everywhere! At least not for the next couple of years. Most of the serious reform conversations here are moving on the medical front. This does not make them any less significant—medical reform here could impact the American debate as well. The following is a brief roundup of what kind of reform is happening and where.
Croatia While the country is small, and globally insignificant, on the cannabis front it is still ahead of many U.S. states. The country not only moved forward to legalize medical use this year, it also began importing from Tilray—owned by the same folks who own Leafly.
The products are still very expensive there, and are delivered in oil form. The country was originally going to go with a pill form of cannabis oil until a mishap in shipments damaged the capsules. Tilray began providing cannabis in liquid form, in bottles instead.
Germany The Germans are moving forward on medical reform—and from all reports, it is set to do it rather dramatically in 2017. After decriminalizing cannabis, and allowing medical patients too poor to afford the sanctioned medical imports from Holland to grow its own two years ago, it appears that Germany is on the cusp of a reform that is likely to affect the global medical conversation. The rumours are that Germany will both reschedule cannabis next year, and is definitely moving forward on covering the same under health insurance. Right now, everything is imported (although in another new development, from Canada as well as the Netherlands). The oversupply in the Canadian market due to enthusiastic producers ramping up to meet a recreational supply that is still on the horizon has created an interesting situation where Canadian firms are actively looking for export opportunities to Europe. Germany promises to be a reliable market for at least the next few years. That said, after 2018, the country will begin growing its own, to help drop the cost to insurers. The interesting thing about Germany is that unlike any other
country in the world right now, the drug will be incorporated into the existing medical and pharma infrastructure. Patients will obtain their scripts from doctors—and be able to pick up the same from their local regular apotheke (pharmacy). Just like any other medicine. On the recreational front, however, Germany is moving extremely slowly and cautiously. Despite repeated calls from mayors in towns as diverse as Berlin and Bremen to allow the forward movement of a regulated recreational industry, nonmedical use at the federal level at least, is still verboten. That said, the Mayor of Bremen just won an important concession. The city will allow recreational users to grow a limited stash. The city has also decriminalized the possession of 15 grams (which puts its residents on par with Berlin). It is not expected that the country will move forward on recreational reform until at least after 2018. That said, after the drug is rescheduled, it will be hard to restrain enthusiastic home-growers from cultivating a drug which is now accepted as legitimate medicine.
Italy Italy is a fascinating wild card right now. The military, which started cultivating the country’s medical stock this summer, just went into distribution mode to hospitals and pharmacies this fall. What makes the Italian picture a bit more than interesting, wever, is that the national legislature also introduced a bill this summer that seems to be the beginning of a recreational market. While the bill has not passed yet, the medical distribution by the military, along with the opening of Rome’s first “coffee shop” in early September, seem to indicate that the country is about to go recreational too. The current bill decriminalizes up to 15 grams for private personal use, five grams for “public consumption” and even more intriguingly, allows the establishment of cannabis clubs who serve no more 28
CULTUREB2B.com
than 50 customers. The bill also suggests that highly regulated recreational growers and sellers will be permitted. If Italy passes its legislation next year, the drumbeat for reform will certainly hit Europe forcefully. Even if countries in Europe “only” decide to move forward on medical use, they will not only be able to import from Canada, but increasingly from other European countries getting into the domestic production game. Furthermore, Italian recreational legalization will also add pressure to every EU country right now to go forward on recreational legalization. Brexit aside, open borders and free travel are the hallmark of Europe still. And even now all it takes these days to get a legal spliff, is taking the train to Holland. d
CULTUREB2B.com
29
THE FUTURE IS BRIGHT Congressman Rohrabacher is an outspoken activist working to incorporate cannabis into California life by Jamie Solis
As one of the two Congressmen behind the Rohrabacher-Farr Amendment of 2014, United States Representative Dana Rohrabacher knows first-hand the troubles Americans have been facing due to cannabis prohibition. He was one of the first to endorse Proposition 64 when it was first announced, and now that it has finally passed, he will continue to fight for the rights of all Americans to use it. CULTURE spoke with Congressman Rohrabacher regarding the future of the cannabis industry in California and the U.S., as well as his own personal experience using medical cannabis. For those unfamiliar, the Rohrabacher-Farr Amendment has been one of the biggest accomplishments for anyone associated with the cannabis industry, because it prohibits the federal government and federal employees from interfering with businesses and people who are operating within their states’ medical or recreational cannabis laws. It essentially disallows the federal government from enacting stricter drug laws than what a state permits. It’s accomplishments such as these that have paved the way for other states, California especially, to remain protected as they move closer towards legalization. Rohrabacher shared that the 30
CULTUREB2B.com
amendment will continue protecting those associated with the cannabis industry into the future. “We’re keeping the status quo, but we changed the status quo three years ago. And since then, there’s been court decisions backing up the Rohrabacher-Farr Amendment,” Rohrabacher said. “Thus indeed, that is the law of the land now, and that will continue to be the law of the land . . . Nobody has to worry, but we all have to get to work. Because where it’s at is better than it was, but it’s nowhere near where it should be.” Rohrabacher endorsed California’s Proposition 64 to legalize recreational cannabis back when the proposition was first announced, and he was happy to voice his continued support regarding the law. “I don’t believe we should be expending very limited resources on trying to prevent people from smoking or utilizing or consuming a weed,” Rohrabacher said. “Give me a break! And we’re going to take away the protection that would have been afforded by all the police officers who now have to spend their time enforcing weed control, and the judges and the jailers and everyone else involved in the system. We’re going to take away all of their contribution to society, which should be aimed at murderers, thieves and rapists, and instead they try to prevent adults from consuming a weed.” Rohrabacher continued to share how prohibition is not only a waste of resources, but it is a violation of
the freedoms of Americans that were given to us by our founding fathers. The Congressman’s passionate support for cannabis legalization is related to some medical issues he’s currently facing in his daily life. Rohrabacher has admitted to using medical cannabis in topical forms in order to alleviate the painful arthritis in his shoulder. Rohrabacher shared that although medical cannabis topicals were effective at alleviating his arthritisrelated pain that it was only able to do so for about an hour. Then, the pain would return. He shared his frustration about how prohibition has disallowed medical research into the plant. He is concerned that if the proper research had been conducted over the years, that there could have been ways to modify the plant genetically to make its pain-relieving properties more effective. “So I’m one of the millions of Americans suffering by the fact that marijuana has not been researched and that marijuana has been kept out of the mainstream of America’s economic and social activity,” Rohrabacher stated. As the cannabis industry continues to grow both nationally and internationally, it’s influential politicians like Rohrabacher who will aid in the fight for our freedom. Now with an additional four states legalizing recreational cannabis and four more joining the list of states that allow medical cannabis, the future for adult cannabis use is going to be a bright one for everyone. d
CULTUREB2B.com
31
B2B
LEGAL
GOING NATIONAL Taking your cannabusiness to the next level by Hilary Bricken
With four new recreational states, an increasing number of cannabis businesses are seeking help on taking their cannabis business national. If you too are looking to present your cannabis business on a national stage, you need to consider the following five things:
1.
Federal enforcement policies versus federal law.
The first federal cannabis enforcement memo issued in 2009 by then U.S. Deputy Attorney General David W. Ogden essentially said that U.S. Attorneys didn’t have to waste time, resources and manpower on pursuing medical cannabis operators in “clear and unambiguous compliance” with state medical cannabis laws. But in 2011 U.S. Attorney General James M. Cole (author of the 2013 Cole Memo) issued a memo which didn’t exactly retract the Ogden Memo but made clear the federal government would not stop pursuing MMJ operators in compliance with their state’s medical cannabis laws. Cole then came back in 2013 and told U.S. attorneys that the Department of Justice would focus on eight enforcement priorities and essentially lay off legalized states with “robust” cannabis regulations. None of these memos specifically address what the feds will do with those who operate cannabis businesses in multiple states. Though the 2013 Cole Memo said that the size of a cannabis enterprise alone is not the deciding factor in whether to go after it, we still sense that interstate actors are more likely to draw federal attention.
32
CULTUREB2B.com
2.
“Applying for a cannabis business license usually means you addressing three fundamental threshold issues: Residency, criminal background checks, and financing rules and all the cannabis-friendly states treat all three areas differently.” State laws and rules vary (greatly) from state to state.
State laws and rules differ greatly on who can own or invest in a cannabis business. Applying for a cannabis business license usually means you addressing three fundamental threshold issues: Residency, criminal background checks, and financing rules and all the cannabis-friendly states treat
all three areas differently. For example, in Washington State, unless you’re making a loan or a gift, if you want to finance or own a cannabis business you and your spouse must have resided in the state for at least six months. But Oregon has no residency requirement for cannabis ownership or investment. And now that Proposition 64 passed in California, applicant businesses “shall not be considered [residents] if any person controlling the entity cannot demonstrate continuous California residency from and before January 1, 2015.” But even without meeting residency requirements, it is still possible for you or your business to enter a “foreign” state via appropriately crafted licensing agreements.
3.
IP licensing.
Because it is difficult, and sometimes legally impossible, to operate a cannabis business across state lines, businesses frequently employ IP licensing agreements. Such agreements allow them to extend their brands and/or know-how beyond their home states. However, the current state-by-state patchwork of cannabis laws greatly complicates these licensing agreements and mandates they be tailored to the laws of the relevant states. Ownership of IP in the cannabis industry is a tricky issue because the USPTO will not issue federal trademark registrations for cannabis-related marks. However, it is often possible to obtain state trademark rights for cannabis goods and services states that permit medical and/or recreational cannabis. I have seen far too many ineffective and flat out dangerous cannabis licensing agreements that fail to recognize restrictions on both the licensor’s control over the licensee and how the licensee pays the licensor to use the IP. Licensing agreements can be a great way for a cannabis business in one state to monetize
its know-how or IP in another state, but doing these deals incorrectly can cause you to lose your license or your IP, not get paid or put you at criminal risk.
4.
Real estate and local laws.
When crossing state borders, you also need to pay close attention to real estate and local laws. States have ceded some control over cannabis businesses to cities and counties and you will be hard-pressed to find a state that does not allow its city and counties to limit or even prohibit cannabis businesses. This means you need to know the local licensing and permitting and zoning laws in the jurisdictions in which you’re planning to set up your cannabis business.
5.
Multi-state income taxation.
Whether you’re going to cross state borders via a licensing agreement or by operating the cannabis businesses yourself, you are going to be subject to multi-state income taxation. Licensors, owners, and investors need to be aware that the income they receive from a cannabis enterprise is probably subject to income tax in the state from which they receive that income. Each state typically imposes income tax on any businesses with a continuous and systematic economic contact with that state or its residents. This contact is called “economic nexus” and it does not require a company to have a physical presence in the state, such as an office or employees. Since each state’s tax laws are unique, you should know the tax laws of every state in which you are doing or thinking of doing business. d
Cannabis Arrests Nationally Remain Well Above Historic Levels Cannabis Arrests= 43% of All Drug Related Arrests in 2015
60%
50%
800,000
40% 600,000 30% 400,000 20% 200,000
0
10%
‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15
% of Total Drug Arrests
Number of arrests
1,000,000
Medical Manufacturing and sale
Cannabis Possession
0%
Source: Federal Buerau of Investigation
CULTUREB2B.com
33
B2B
LEGAL
Cannabis Insurance for Your Business: What You Need to Know by Ann Toney
With the expansion of the cannabis industry nationwide comes the realization that this is simply a business, a very big business and like all businesses, the cannabis industry needs insurance. So, why is this newsworthy? Because cannabis remains illegal under federal law so it is not just another business. In Colorado alone, there are nearly 20 insurance companies or brokers. But, the bigger question is why would you, the cannabis entrepreneur, need or want insurance? Is it really worth the cost with this federally illegal plant? Can I even find insurance to cover my cannabis business? Multiple layers in the cannabis industry need insurance: Landlords and tenants, dispensaries, cultivation facilities, infused manufacturing products (MIPS), trimmers and more. Then there are the ancillary aspects of the industry such as scientific testing of cannabis, consulting cannabis companies on state statutes and regulations, head shops, hydroponic stores, directors and officers of a company, lawyers, physicians and accountants. Everyday landlords lease warehouses and storefronts to dispensaries and infused product manufactures and everyday someone somewhere advises a cannabis company on compliance with state laws.
34
CULTUREB2B.com
Historically, there have been reasons why insurance companies have been reluctant to extend coverage in this industry. The obvious is that under the law cannabis continues to be illegal under federal law. Some insurance carriers believe it would hurt their brand to be associated with cannabis, the risks are unknown as there is yet not enough data for some insurance companies to accept the risks within this industry, and the uncertainty of the losses. For example, within the past year a man in Denver was charged with shooting his wife after ingesting cannabis. His wife died and the man has been charged in her murder. A lawsuit has been filed against the retailer and the manufacturer. In May 2015, Lloyds of London has decided to stop underwriting in the cannabis industry until cannabis is recognized by the United States government and is legal. So, while the industry continues to thrive, an insurable interest is growing but not by leaps and bounds. While there exists much money in this industry there also exists unknown and known risks which are not yet quantifiable in such a young industry. Unfortunately, some in the industry are either uninsured or underinsured. Here are some areas where insurance should be considered and the types.
“Some insurance carriers believe it would hurt their brand to be associated with cannabis, the risks are unknown as there is yet not enough data for some insurance companies to accept the risks within this industry, and the uncertainty of the losses.�
“Professional malpractice insurance is very important for the professionals to carry. Not all insurance carriers want to cover professionals when they learn the professional works in the cannabis industry.” Insurance Coverage for Dispensaries: General Liability: which includes damages and injuries and which landlords usually require in their lease. Property Protection: to include protection from fire, robbery, theft and vandalism. Covered would be your inventory, furniture, fixtures, equipment and build out. Coverage for your Product: You
can purchase insurance to cover the risk of loss from fire or theft. Also you can purchase insurance to cover your product while it is in transit from the cultivation facility to your dispensary. Business Income: This would be coverage to protect you from loss of income during a fire or theft or if you had to move locations due to a change in zoning or local law.
Insurance Coverage for Cultivation Facilities: Living Plants: Seeds, plants in all stages of development, seedlings and flowering mature plants. Harvested Plants: No longer in the growing medium, drying and curing phase. Finished Plants: Vegetative material ready for sale. Manufactures Infused Products (MIP): This category includes oils, wax, tinctures and edibles. While the other types
of insurance coverage are important for these businesses, there is a specific type which is important here. Product liability insurance protects you when someone makes a claim that your product made them sick or caused a rash. Product liability coverage ensures that you are protected when your cannabis-infused products are out in the market place and being consumed by your customers. Product liability is also important coverage for a testing facility as again others rely on the products that the testing facility endorses or confirms.
The Professionals: There are many professions which are ancillary businesses to the cannabis industry. Lawyers have been important since medical cannabis and then recreational cannabis have been growing legally. Lawyers have been a necessary evil if you will, as during the first few years particularly of the cannabis explosion business owners relied on the advice of cannabis lawyers to guide them before a law or regulation was promulgated. Same with accountants. With all of the need for tracking and transparency in the industry as mandated by the regulatory agencies accountants were needed and they were exposed to the same risks that the lawyers were. In the medical cannabis arena physicians are more than an ancillary
business as without a physician to make a recommendation, there would be no medical cannabis. Professional malpractice insurance is very important for the professionals to carry. Not all insurance carriers want to cover professionals when they learn the professional works in the cannabis industry. As recent as 2012, one lawyer reported to her malpractice carrier that part of her practice was representing cannabis businesses under Colorado law. Hanover Insurance would not renew her professional malpractice policy due to this disclosure. It did not take long once they heard of the termination for insurance Cannasure Insurance reached out and offered coverage with another policy. d
The Emerald Cup The Emerald Cup is well-known as the premier place to go for medical cannabis. The event focuses on furthering environmentally-friendly outdoor cannabis farming. Educators, experts, farmers, patients and others look forward to attending The Emerald Cup year after year. At The Emerald Cup is a competition for growers who specialize in organic, outdoor cannabis. In addition to the competition, there is a phenomenal musical lineup. Damian Marley, Dirty Heads, Stick Figure, Tribal Seeds and many others will be providing the musical entertainment. For those who are interested in learning more about the cannabis industry, a ton of topics will be covered by knowledgeable speakers. There will be many interesting vendors selling their goods at the event. Attend The Emerald Cup this year, and we’re sure you will become one of the event’s many regular attendees. WHAT: The Emerald Cup WHEN/WHERE: Sat, Dec. 10-Sun, Dec. 11. Sonoma County Fairgrounds, 1350 Bennett Valley Rd, Santa Rosa, California. INFO: Visit theemeraldcup. com CULTUREB2B.com
35
B2B
LEGAL
Seven Legal Tips:
Creating a Great Cannabis Brand/Trademark by David P. Branfman
Every business starts with an idea. Eventually that idea becomes synonymous with the name/brand/trademark for the business. This is as true for the cannabis industry as it is for any other. It’s essential in order to differentiate your business from all the other ones that are popping up. Here are seven tips for creating a great brand name that will help your cannabusiness thrive.
1.
Strive for Clever, Unique and Unusual Names:
Using terms/names that are generic or descriptive of your goods or services must be avoided. One of the essential principles of trademark law is that you cannot legally protect words that are descriptive or generic of your goods/services; the Trademark Office and courts give them very little—if any—weight. “Apple” is a very strong trademark for computers and small electronic devices but is worthless for a line of apple sauce or apple juice.
36
CULTUREB2B.com
2.
Geographic Names/Trademarks Don’t Do You Much Good:
Using your geographic location as the core of brand name doesn’t help to create a strong trademark; it’s legally equivalent to using a generic term as your name. The law won’t give much protection to a name like Mendocino Farms. But mentioning that your product is located in a certain area can encourage consumers to choose your product over a competitor, but geography shouldn’t be part of your brand name. Similarly, don’t claim your products come from a geographic location unless they are grown/produced there. Misdescribing your geographic location can get you into trouble.
two brand names, the similarity of goods/services offered under those marks, the channels of trade used, etc.
5.
You’re Clever – Prove it:
Pick a clever brand name! Trademark law affords the most trademark protection to names that are arbitrary or fanciful. Arbitrary means pre-existing words that are applied to unrelated goods or services. (Remember the Apple example above?). A coined trademark is a word that is made up, for example “Exxon” or “Kodak.” The next best level of protection is a name that is suggestive but not descriptive of your goods/services. This requires creativity to hint at what you are offering but not give away the whole enchilada. Example: “Greyhound” for the bus line because it suggests that the bus offers quick service—but it doesn’t come right out and say it. The more clever you can be, the better.
6. 3.
Avoid Dime-A-Dozen Names:
Common terms in the cannabis industry are a dime a dozen. These includes “canna,” “green,” “mj” and many more. These terms are so common to the industry that it’s almost impossible to differentiate your business from the hundreds of existing brands that already use these words. Plus, using the words “canna”, “cannabis”, “CBD” or “marijuana” is a tip to the U.S. Patent & Trademark Office (USPTO) that your trademark is being used in association with cannabis. The USPTO is likely to reject your application because cannabis is still illegal under federal law—thus causing a waste of money, time and effort.
4.
The Imitation Game is a Problem:
Imitation is not the sincerest form of flattery when it comes to choosing a brand name; copying someone else’s existing trademark is a great way to get into legal trouble. And being just a little different from your competitor’s trademark isn’t good enough: the central test for trademark infringement is likelihood of confusion, not identicalness. Courts consider a variety of factor such as whether consumers are likely to be confused by the
Use Spellcheck:
Trademarks that are impossible for consumers to spell, remember, or say aren’t much good. Spelling a brand name in an unusual way might lead to a clever trademark, but it may be difficult for consumers to identify your brand or even find it on the Internet.
7.
Accept the Fact that Trademark Law is “Different”:
Here are a few miscellaneous oddities: Trademark law only protects brand names that contain a surname (last name) IF that mark has acquired distinctiveness. Avoid using your last name in a brand name if you can. And just because your last name is “McDonald” doesn’t mean you have the right to open up a hamburger stand called “McDonald’s”. Second, and this may seem obvious, don’t use a person’s or company’s name without requesting permission. For example, if you want to use “Cheech and Chong” as your trademark, you better have their written permission. Third, trademark law doesn’t protect laudatory terms, meaning terms that are complimentary or boastful of your goods or services. For example, “best,” “better,” “great,” etc. Conclusion: There is lots more that can be said about the art of picking a great name for your trademark, but these tips will help get you going in the right direction. d
Dave Branfman is a lawyer in San Diego, CA; he’s specialized in intellectual property law for 30+ years and has been advising cannabis collectives and co-ops about their IP needs since 2010. © 2016 David P. Branfman
CULTUREB2B.com
37
B2B
TRENDS
THE ALCOHOL MODEL OR THE TOBACCO MODEL Local cannabis regulation is often modeled after the way alcohol is regulated, but some feel that tobacco regulation might be a better business model by Benjamin M. Adams
Some have argued that the framework for cannabis regulation would work better if it resembled the regulatory scheme of the tobacco industry rather than the regulatory scheme of the alcohol industry. The tobacco industry, like cannabis, has strict warnings on the labels as well as strict advertising bans. Tobacco’s cardiovascular risks certainly outweigh the cardiovascular risks associated with cannabis. According to documents uncovered by the University
38
CULTUREB2B.com
of California, San Francisco, tobacco giants like Phillip Morris and British American Tobacco were eyeing the potential in cannabis as early as the ’60s and ’70s. Anyone looking at the current market will notice the spike in preroll products and branded cannabis, which is looking more like a pack of cigarettes every day. In any event, the only way to complete normalization requires the uncomfortable reality of regulation. However, the cannabis industry models itself after, regulation is key.
Aaron Herzerg is a partner at CalCann Holdings Inc. as well as a corporate lawyer, strategist and an expert on cannabis policy. “Do you think that you could, tomorrow, wake up and create a vodka brand that was distributed throughout the state?” Aaron Herzerg asks in an interview with CULTURE. “It requires money. You must prove that your product is safe. You must prove that your product is untainted with adulterants. That’s the same it goes for any agricultural product.” The cannabis industry
is a tempting lucrative opportunity for Big Tobacco. With the emergence of vapor technology, it’s permeated both the cannabis and tobacco industries. Celebrities are endorsing not only lines of cannabis, but also a whole variety of vapor pens and accessories. Under the old model, cannabis regulation was virtually non-existent as the cannabis retail market mirrored the supplement industry. “We already have regulated cannabis in place,” Herzerg explains. “Regulation >>
CULTUREB2B.com
39
itself . . . that train left the station when MCRSA was passed in October of last year. Proposition 64 continues down the path that the Medical Cannabis Regulation and Safety Act accomplished. It’s an overlay to that. The proponents of that legislation have written an initiative that got completely gutted, once MCRSA passed and was rewritten. It actually keeps in place all the same agencies that the state has put into effect. Such as the Bureau of Medical Cannabis Regulation. The Department of Agriculture will be regulating cultivation. All of the regulatory agencies will be regulating both medical and recreational.” No one disagrees that legalized cannabis comes with a cost. In reality, most small time grow operations won’t be able to survive, at least not under the same forms they’ve operated in the past. It’s a sacrifice, however, many are willing to take in order for cannabis to be treating like any other industry. “[Growing cannabis] has been an opportunity for many people to make a living being subject to government regulation without being subject to any taxation whatsoever,” Herzerg contends. Failure to obtain a seller’s permit in California is a misdemeanor crime. “Burnam Law released a survey a year ago, they determined that as many as 80 percent of the 3,000 dispensaries in the state of California don’t have a state seller’s permit. So therefore, in the marijuana industry, when you’re talking about growers, you’re talking about people that are using the protections of the Compassionate Use Act to gain the opportunity to get farther in the system
in the grey area. Now, it’s black and white—you either have a permit, or you don’t. Many of these folks don’t want to follow the law and go through the hoops. There’s a valid point. There’s many in this industry that have been there for years and will find it very difficult to make the transition into a regulated system.” Herzerg argues. The push for the unionization of the cannabis market has created additional
been implemented under MCRSA. It’s an extra layer of taxation on all of the product that is grown needs to go to the distributor. The distributor needs to tax it, then it goes to retail. Frankly, I see that as inefficient, unnecessary and costly to the consumer. The parallels between alcohol and cannabis exist because powers within Sacramento lobbied for that structure to be put into effect.” Herzer acknowledges the
“Burnam Law released a survey a year ago, they determined that as many as 80 percent of the 3,000 dispensaries in the state of California don’t have a state seller’s permit.” contention about the way cannabis should be regulated. “There are people such as Steve DeAngelo and even myself, who are not terribly keen on the MCRSA provisions, which require a mandatory distributorship for medical marijuana,” Herzerg says. “The way the system was set by legislature was that the unions lobbied very heavily for a distributorship. That’s the model that’s
disadvantages of regulatory change, however, he considers the end goal to outweigh the sacrifices. “I support Proposition 64 because it’s part of the process of moving forward in legalizing cannabis and treating it in a matter that’s consistent with well, what it is—a mild intoxicant at the worst, which is substantially less harmful than alcohol or cigarettes,” Herzerg concludes. d
The CBD Report The CBD Report is the premier report for market sizes and highlevel analysis on the growing CBD (cannabidiol) industry. In the cannabis industry, CBD products and therapies are the number one growing sector of the market, and since CBD is ideal for patients and general healthy lifestyles, the promise of the CBD market is never-ending. The CBD Report is a 40 page report
40
CULTUREB2B.com
filled with primary research, market intelligence, investment analysis, data charts and insights from more than 55 interviews from business leaders, along with an analysis of over 33 CBD product types, 20+ charts and graphs to help define the CBD market, investment profiles on leading U.S. CBD companies, and much more. www.hempbizjournal.com $299 - $399
CULTUREB2B.com
41
B2B
LINER NOTES
CannaBits “President Obama granted clemency to 214 individuals—the largest number of commutations in one day, since the dawn of time.” by Natasha Guimond
A lot’s happened in the past few months. California joins Colorado, Oregon, Washington, District of Columbia, Maine, Alaska, Massachusetts and Nevada in allowing for recreational cannabis for adults 21-andover. Montana, Florida, North Dakota and Arkansas all joined the medical cannabis movement as well. Even with a surprising new President coming in on a federal level, our states are taking the smart route and accepting medical and recreational cannabis with grace. In July, the FDA approved the prescription of a synthetic form of THC. Syndros, a liquid form of dronabinol, is produced by Insys Therapeutics and used to treat AIDS and cancer patients. A doctor in Puerto Rico was awarded the certification to prescribe medical cannabis to patients. Since July, over 200 physicians have become certified. And since the feds have eased up, Puerto Ricans don’t have to worry about the government knocking on their door from the mainland. Jamaica continues to make headlines by reviving a special research project from the ‘70s. It’s designed to allow 42
CULTUREB2B.com
countries throughout the Caribbean benefit like the U.S. and Canada have from their growing cannabis industries, respectively, as well as grow the number of jobs needed in that market. All thanks to the University of the West Indies, Jamaica may become a global powerhouse for cannabis research. On August 3, President Obama granted clemency to 214 individuals—the largest number of commutations in one day, since the dawn of time. He started this initiative to free those who were excessively and harshly sentenced for nonviolent cannabis crimes. Even though the charges will remain on former inmates’ records, they can stop worrying about dropping the proverbial soap. Not only is New York growing hemp for the first time in 80 years, thanks to a bill signed by Governor Andrew Cuomo, the NY Health Department actually recommended doubling MMJ licenses in August. Even nurse practitioners, who can write prescriptions, will be allowed to grant patient certification. Rick Snyder, Governor of Michigan, signed three bills in September, changing the
rights for patients yet again. Even though not everyone is thrilled with every aspect of these bills, there’s something for everyone to be excited about. Patients are now legally protected to possess topicals and edibles. Patients have skirted a very thin line for quite some time when it came to those methods of medicating and can now rest easy knowing the Michigan government’s got their back (kind of). Germany granted special growing rights to one man on October 2. Out of 900 individuals who have access to medical cannabis, they’re allowing one 53-yearold citizen to bypass the current law making patients
purchase their medicine from a licensed pharmacy. His special circumstances demand 15,000 Euros each month to maintain his medical cannabis supply, which is an outrageous bill. Not only is the German government allowing him to grow and cultivate his own plants, they’re letting him harvest 130 plants per year, from his bathroom. Australia is making history as well, by conducting groundbreaking medical cannabis trials, after it officially became legal in November. The goal is to help the estimated 30,000 children that are diagnosed with drug-resistant epilepsy. An expensive feat that will cost around $6 million.
CULTUREB2B.com
43
44
CULTUREB2B.com
CULTUREB2B.com
45
medicine is in Arizona. Tempe, Arizona theerrlcup.com
event listings
2nd Annual Growers Cup, Dec. 3
Enjoy live music and comedy while exploring cannabisrelated booths and learning about which cannabis strains and concentrates are this year’s winners. Oakland, Oregon oregongrowerscup.com
PDX Weed Week, Nov. 29-Dec. 4 Portland is hosting a week-long celebration of cannabis, including cannabis cooking, an event called “pitch fest” for entrepreneurs and plenty of unique seminars. Various locations in Portland, Oregon goweedweek.com
CBI’s Cannabis-based Therapies Summit, Nov. 30-Dec. 1 Check out how this event is aimed at exploring medical cannabis research and its utility as a medicine, among other cannabisrelated topics. Hyatt Centric, San Francisco, California cbinet.com/ conference/pc16091
Third Native American Marijuana Conference, Dec. 5-6 Whether you’re a tribal leader or just an interested member of the cannabis industry, all are welcome to learn about how Native American communities are getting into the cannabis business. Alpine, California nativenationevents. org
Hemp Basics, Dec. 16 Learn everything there is to know about hemp 46
CULTUREB2B.com
and it’s many uses is right here, featuring discussions about industrial hemp from industry professionals. Windsor, Connecticut eventbrite.com/e/ hemp-basicstickets-27263361448
Bud + Breakfast Weekend Getaway, Dec. 16-19 The landscape in Colorado is beautiful during every season, but most love it during winter. It’s time to legally cozy up with some hot cocoa and your favorite strain of cannabis. Silverthorne, Colorado eventbrite.com/e/ bud-breakfastweekend-getawaytickets-27423715070
2nd Annual Errl Cup: Arizona, Jan. 14-15 Free for local patients, this cannabis competition features 12 dispensary categories and four patient categories to determine what the best cannabis
Indo Expo Trade Show, Jan. 28-29 Look no further than the nearest trade show when it comes to discovering the newest trends in the cannabis industry. Explore a variety of vendors, network with a few like-minded individuals and enjoy seeing how cannabis culture has grown. Denver, Colorado Indoexpo.com
The Secret Cup: Finals, Jan. 30 Although it’s not quite a secret anymore, this cannabis competition is host to the finals in ranking cannabis concentrates. The best of the best will arrive in Nevada, and winning will be even more sweet now that the state has legalized recreational cannabis. Las Vegas, Nevada thesecretcup.com
NCIA Seed to Sale Show, Jan. 31-Feb. 1 NCIA boasts that this is the only trade show around that focuses on the innovation of the cannabis industry, from best practices, science, technology and sales strategies. Denver, Colorado seedtosaleshow.com
Vangst Cannabis Career Fair, Jan. 15 This event has a lot to offer to job seekers, as the career fair that occurred in July 2016 brought in over 45 companies who hired for over 400 different positions. Denver, Colorado vangsttalent.com
ExpoCannabis Uruguay Cannabis and hemp hold various uses worldwide for medical, therapeutic and industrial purposes. In its third year, ExpoCannabis Uruguay will bring likeminded individuals together to recognize how important the cannabis sativa plant truly is. The goal of this event is to help dismantle illicit drug trafficking, while regulating the industry in a way that reduces risks associated with an illegal cannabis market. Hemp education is an important aspect of ExpoCannabis, with this year’s main focus being “industrial uses of hemp.” The various uses of hemp from using it as insulation, fiber, biofuel, bioplastic and more will be demonstrated, as well as its health benefits and ability to help recover soils. There will be workshops, conferences, movies and forums presented at the event’s space, Ateneo Uruguay Siembra, which will be great for business professionals, advocates, patients, doctors and anyone else who is interested.
WHAT: Expo Cannabis Uruguay. WHEN/WHERE: Sat, Dec. 10-Mon, Dec. 12. Exhibition Park of the Technological Laboratory of Uruguay (LATU), Av Italia 6201, Montevideo, Uruguay. INFO: Visit www.expocannabis. uy/home for more information.
CULTUREB2B.com
47