Tag Archives: cannabis

August 24, 2016

Greenhouse Ventures Names Lindy Snider Lead Advisor

By Aaron G. Biros

Greenhouse Ventures (GHV), a cannabis business accelerator based in Philadelphia, PA, announced they are bringing on Lindy Snider as the lead advisor to the organization. GHV helps seed-stage startups through a ten-week, 90-hour curriculum-based program. Using industry mentors and staff, the accelerator trains founders on emerging best practices of building sustainable cannabis businesses and helping them to raise up to $5 million in seed or growth capital, according to a press release.

Lindy Snider, lead advisor at Greenhouse Ventures

Snider is the founder and chief executive officer of a Philadelphia-based skin therapy company, LindiSkin, as well as an investor in KIND Financial and Poseidon Asset Management. According to Snider, she is involved in a number of cannabis related ventures at the moment. “In a nascent industry like cannabis, early stage companies require hands-on training reinforced with constant mentorship and continuing education,” says Snider. “Greenhouse Ventures is taking a unique education-technology approach towards early- stage venture development, which stands to benefit entrepreneurs who get accepted into their accelerator, as well as investors who are evaluating accelerator graduates for a potential investment.” Snider’s late father, Ed Snider, was the chairman of Comcast Spectacor, a Philadelphia-based sports and entertainment company that owns the Philadelphia Flyers.

According to Tyler Dautrich, co-founder of Greenhouse Ventures, Lindy Snider is an extraordinarily valuable asset. “Lindy has been essential in the early success that Greenhouse Ventures has experienced to date and we are fortunate to name such an active and respected member of the investment community as our lead advisor,” says Dautrich. The company will be hosting two ten-week semesters in February and September every year. Applicants that are accepted into the program typically receive an average of $60,000 in professional services in exchange for a minor equity stake in their venture. Those accepted applicants are not required to relocate, as virtual participation is available.

Kevin Provost, Greenhouse Ventures co-founder and chief operating officer, believes Snider has played an instrumental role in the company’s growth. “From day one, Lindy has supported Greenhouse Ventures’ goal of positioning Pennsylvania as the east-coast cannabis and industrial hemp capital of the country, and with the recent passing of SB3, Greenhouse Ventures is in a unique position to make Philadelphia the epicenter of medical research and ancillary technology innovation,” says Provost. The organization is currently accepting applications for its Fall 2016 semester in Philadelphia beginning October 3^rd and culminating with Demo Day on December 8^th.

August 24, 2016

Biros' Blog

No Surprise Here: Federal Gov’t Still Butting Heads With States Over Cannabis Legalization

By Aaron G. Biros

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On August 11, 2016, the widely anticipated Drug Enforcement Agency (DEA) announcement on federal cannabis policy yielded fairly anticlimactic results. According to the statement, the federal agency denied two petitions to reschedule cannabis under the Controlled Substances Act (CSA). The U.S. Food and Drug Administration (FDA) and the National Institute on Drug Abuse (NIDA) conducted a scientific and medical evaluation that deemed cannabis “does not meet the criteria for currently accepted medical use in treatment in the United States, there is a lack of accepted safety for its use under medical supervision, and it has a high potential for abuse.” The announcement reiterates the agency’s previous statements on the matter, stating that they believe clinical trials under the investigational new drug (IND) applications and the drug approval process are how the FDA can assess the safety and effectiveness of cannabis-derived medicine.

This avenue for bringing a cannabis-based drug to market is extraordinarily cost-prohibitive, allowing only pharmaceutical companies with deep coffers in the space. The DEA did however make one announcement in the statement that has the potential to lift many barriers to researching the plant’s medical value. The policy change allows more institutions to grow cannabis for research, which was previously allowed only at the University of Mississippi under a contract with NIDA. This is a very significant policy change that could be viewed as a step in the right direction. There is plenty of research currently that proves cannabis’ medical value and its safety and efficacy, but allowing more research opportunities signals that the DEA could be open to revisiting a rescheduling recommendation in the future.

One can speculate endlessly about when the DEA may reschedule cannabis, but in reality, no one knows when that might happen, no one knows what a new administration would do, if Congress would act on it or if the courts would. It seems even the FDA and DEA are sitting on their hands as the federal government does what they do best– inaction.

However, one important ruling in the U.S. Court of Appeals for the 9th Circuit highlights the baby steps taken toward some form of federal acceptance of legal cannabis. The court ruled that the Department of Justice couldn’t prosecute individuals in states where cannabis is legal. More specifically, the court ruling “prohibits the Department of Justice from spending funds to prevent states’ implementation of their medical marijuana laws.” The ruling basically reaffirms the Rohrabacher-Farr amendment, which states that the DOJ cannot interfere with states where cannabis is legal, but this time also for those individuals complying with state law.

The DEA’s inaction on rescheduling cannabis should not be perceived as a loss to the legalization movement, rather as an upholding of the asinine status quo. Policy change in the United States is an arduous and very slow process. These things take time. One can look to the same-sex marriage movement and find striking similarities to the cannabis legalization movement. For example, Massachusetts and California were some of the first states to introduce legislation legalizing same-sex marriage and are also some of the first states that have introduced legislation legalizing cannabis. These states that are typically drivers of national policy have opportunities to pass important ballot initiatives this November that could have ripple effects throughout the country. Five states have ballot initiatives for recreational legalization and potentially up to eight states with initiatives for medical legalization, all being voted on this November.

What can the average citizen do to help with progress in cannabis legalization? For starters, you can vote. If you live in a state that has a ballot initiative for legalizing cannabis, show up at the polls and make your voice heard. If you live in a state where no such ballot initiative exists, you can still take action to get cannabis legalized. You can sign this petition or write your member of Congress to support the Compassionate Access, Research Expansion, and Respect States (CARERS) Act (S. 683). The CARERS Act, among many other important changes, would most notably reschedule cannabis to Schedule II.

So not all is lost with the DEA’s inaction. As more states legalize cannabis, we are seeing a rising tide lift all boats.

August 23, 2016

Quality From Canada

Hold on for Rec! Canada’s New ACMPR Program

By Tegan Adams

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Earlier this month, Health Canada, in a press release, gave a glimpse as to what the new Access to Cannabis for Medical Purposes Regulations (ACMPR) might look like. On August 11^th, they announced the new set of regulations would go into effect on August 24^th this week. Information presented was not shocking. Most Canadians had hoped and suspected that the announcement would include a provision for growing cannabis at home – and it did exactly that.

Essentially, the ACMPR expands accessibility of cannabis from our highly regulated 34 licensed producers (LPs) to include those authorized by their health care practitioner to access cannabis. Anyone with the appropriate medical documentation can now grow for him or herself at home, or designate a grower to do so for them. Health Canada also stipulated in the press release that “Storefronts selling marijuana [sic], commonly known as ‘dispensaries’ and ’compassion clubs’ are not authorized to sell cannabis for medical or any other purposes.” The regulatory body went on to add: “These operations are illegally supplied and provide products that are unregulated and may be unsafe. Illegal storefront distribution and sale of cannabis in Canada are subject to law enforcement action.”

There were a few curve balls in the announcement, including a statement issued that suggests commercial producers may be the only ones authorized to distribute seeds or plants to those growing for themselves or on behalf of another. It is unclear how the plant and seed sourcing aspect will be regulated and/or how that statement may impact LPs over individual producers. Restriction of strain availability and additional costs are examples of potential implications to individuals[1]. LPs therefore remain in control of the types of cannabis available on the market. It is unclear if this regulatory aspect will mean they can restrict access to strains they have on hand, or not, especially if they are popular for sales.

When the first glimpse of the ACMPR was released, we saw many LPs stock drop in price across the board, in some cases greater than 10%. It is not anticipated however that the ACMPR will cause any long-term negative effects on LPs stock price or profitability. The ACMPR was put in place merely to satisfy a court ruling on a deadline. The deadline was inconvenient, occurring around 9 months before the regulations governing recreational sales are meant to go in effect. It meant that Health Canada employees had to dedicate time to finding a Band-Aid solution up until recreational sales instead of focussing on recreational regulatory framework itself.

Recreational regulations are scheduled for release in 2017, and it is unclear when exactly they will begin. As they do begin to unfold it is projected that the production and sale of cannabis will remain highly regulated. LPs will remain the consistent quality source of supply. There have been multiple distribution models in discussion, including co-op retail ownership, pharmacy dispensary and liquor board models. While yes, those with medical documentation anticipate still being able to produce at home; it is unlikely this allowance will have any effect on the overall sales of LPs as the market unfolds. Alcohol and wine are good examples to compare the regulatory model to. While sure, any of us can do home brewing, odds are we would still like to purchase beer from commercial breweries. In both Vancouver and Toronto, property is very expensive. Higher percentages of the population are starting to live in apartments, condos and smaller homes. Many people working full time are not interested in growing their own cannabis and would prefer the variety of the marketplace. There are many reasons individuals will continue to purchase from LPs. As competition rises in the marketplace, so will efficiencies in production as producers become more familiar with growing practices. Canada is anticipating a drop in retail prices to be much more affordable than existing “black markets.” Cannabis will become commonplace on shopping corners and it will be a product that most will be able to afford.

August 22, 2016

Hemp-Derived CBD Oil: Maintaining Quality in the Manufacturing Process

By Aaron G. Biros

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Hemp-derived cannabidiol (CBD) products are quickly becoming a burgeoning industry. Consumers can purchase the products in all fifty states and can receive the therapeutic effects of certain cannabinoids without any psychoactivity. Commonly used to help treat inflammation, pain, seizures and anxiety, CBD comprises a sizable portion of the cannabis market that patients and consumers are flocking to.

Founded by Paul Benhaim in 2013, Colorado-based Elixinol is reaching this market with a line of hemp-derived CBD oils and capsules. The company has grown rapidly and now has agreements with exclusive distributors in Japan, Puerto Rico, The United Kingdom and South Africa.

According to Chris Husong, sales and marketing director at Elixinol, achieving superior quality is central to the company’s growth strategy. “We are thinking about the long-term play here,” says Husong. Achieving the highest quality possible starts with sourcing from industrial hemp farms in Northern Europe, according to Husong. Through good manufacturing practices (GMPs), the company pays close attention to every detail involved in producing the hemp-derived CBD oil.

Safety and transparency are two core tenants in the company’s goal to strive for quality products. “We use third-party independent labs for our testing including one in Northern Europe where we source from in addition to Proverde Labs when it reaches us in Colorado,” says Husong. They test their products for over 300 chemicals (including pesticides, residual solvents and heavy metals) as well as for microbiological contamination and a unique terpene profile using GC-MS/GC-FID.

Co-founder Paul Benhaim at their extraction and testing facility in Europe.

In addition to stringent manufacturing safety procedures and testing, tracking is a huge part of meeting quality standards. Each product batch also has a lot number. While batch numbers are a requirement in GMPs, lot numbers mean that they are well equipped in the event of a product recall. After the product is packaged, they perform additional spot-checks periodically.

Contract manufacturing and white-labeling products is a large part of their business, so the company needs to meet rigorous quality standards for their partners as well. “We provide our oil to a variety of associates, but we are always looking for new partners on the cutting edge, innovating with new products that we can help with,” says Husong. Very often, this means doing a full plant extraction for different uses. Utilizing a full-spectrum plant extraction helps maintain a well-balanced cannabinoid profile with many of the original terpenes found in the plant.

Japan's first lady, Akie Abe, purchasing Elixinol's hemp-derived CBD oil. — Akie Abe, first lady of Japan, purchasing Elixinol’s hemp-derived CBD oil.

What makes their product so appealing to consumers is not just the quality, but also the method of delivery into the bloodstream and very precise dosing. “Our liposome products have a relatively new technology that allows the oil to be absorbed into your system via fatty acids, which lets you absorb the compounds much faster, requiring less of it and more consistency,” adds Husong. In addition to their fast-acting delivery mechanism, they produce capsules dosed to precisely fifteen milligrams and a delivery system they call ‘Xpen,’ which draws the oil in an oral applicator to a precise dose of fifteen milligrams every time.

After the manufacturing process, the company pays close attention to detail in their packaging and distribution. “The packaging is built to maintain that quality in the manufacturing process and to extend the shelf life of our products,” says Husong. The technology that goes into their packaging involves using Miron Violet glass, which is anti-fungal and prevents external light from deteriorating the oil inside.

This growing sector in the cannabis market is representative of a greater trend: the commodification of hemp and cannabis. When businesses like Elixinol scale up production of goods such as CBD oil, a lens focused on consistency and quality can not only improve business operations but also raise the standard across the entire industry.

August 17, 2016

Sustainability for the Cannabis Industry, Part II: The New Cannabis Consumer

By Olivia L. Dubreuil, Esq., Brett Giddings

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Most readers ought to be well aware that the cannabis industry is rapidly growing. The Arcview Group, an Oakland-based investor network, estimates the retail and wholesale cannabis market will reach $22.8 billion by 2020. That number represents a lot of people consuming cannabis in many different ways.

The average cannabis consumer is changing. A new range of social groups is consuming cannabis-based products. From yoga diehards, to middle-aged men and women, veterans that have ‘tried everything else’ and young professionals looking for a different way to relax, the market is broadening.

This new segment of cannabis consumers are often not looking to get high- they are looking for anti-inflammatories, relaxants and ways of dealing with chronic pains and stress. For these health and wellness seekers, the last thing they want is a product dosed with pesticides, insecticides or butane residues. We can expect to see these consumers to follow broader consumption trends- specifically when it comes to a product like cannabis that people are inevitably placing in or on their bodies.

These consumers come with new sets of expectations, similar to those when they buy fruit, vegetables, coffee or chocolate. They are increasingly curious about the contents of the products they purchase- they are a large part of the reason that the sales of organic produce has ‘ballooned’. They are asking questions like: Does the product contain pesticides? Has the product been cultivated in a way that minimizes negative environmental impacts? How do we know that the supply chain quality controls are rigorous enough to ensure no one has tampered with the product? Who is growing and picking this product and how are those people being treated?

When a curious consumer enters a modern American supermarket, they are guided by a range of messages relating to the contents and supply chain that was part of making each product. Organic, non-GMO, pesticide-free, fair trade, free-range and locally produced are some of the common criteria. The more credible labels are supported by codes and procedures in which the whole supply chain is audited, monitored and approved by the certifying body according to certain standards- for example the USDA certifies organic foods.

Being a Schedule I controlled substance under federal law, cannabis is probably not going to receive USDA organic certification any time soon. However there are organizations out there that are committed to increasing the availability of cannabis grown with organic practices. Certifying bodies like Certified Kind and the Organic Cannabis Growers Society are gaining popularity among growers who see the market evolving in that direction. At the same time, businesses such as Delicious Fog (an ‘organic-focussed’ delivery service in Santa Clara County) and Harvest (an ‘organic’ dispensary in San Francisco)- are specializing in the sale of these ‘organic’ cannabis products.

Just like any sustainability issue- ensuring your cannabis product comes from a well-managed supply chain cannot be a last minute add-on. Whether a business is small, large, mature or emerging, developing a strategic approach to the diverse spread of sustainability challenges is critical.

As a cannabis business what can you do to appeal to the new cannabis consumer?

August 15, 2016

A2LA Accredits TEQ Analytical Laboratories

By Aaron G. Biros

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The American Association for Laboratory Accreditation (A2LA) recently announced the accreditation of TEQ Analytical Laboratories, based in Aurora, Colorado. The laboratory is now accredited to ISO 17025:2005, the first recreational cannabis-testing lab to do so in North America.

“By achieving ISO/IEC 17025 accreditation, TEQ Analytical Labs believes that we can address the concerns throughout the cannabis industry regarding insufficient and unreliable scientific analysis by providing our clients with state-required tests that are accredited by an international standard,” says Seth Wong, president of TEQ Analytical Laboratories. According to a TEQ Analytical press release, accreditation to this standard confirms that laboratories have the management, quality, and technical systems in place to ensure accurate and reliable analyses, as well as proper administrative processes to confirm that all aspects related to the sample, analysis and reporting are standardized, measured and monitored.

By implementing ISO 17025 accreditation, the laboratory monitors systems and processes central to analyses in an effort to minimize discrepancies and variability in test results. According to Roger Brauninger, biosafety program manager at A2LA, this type of accreditation demonstrates their competence and commitment to rigorous science. “It is encouraging to have testing laboratories taking ownership of the quality of the work performed,” says Brauninger. “Reliable testing will be imperative to insure safety of the products out on the market as this industry continues to expand.” As the first accreditation of its kind in North America, Brauninger hopes this will open the doors for more cannabis laboratories to acknowledge their role in demonstrating scientific competency for the industry.

Tripp Keber, president and chief executive officer of Dixie Brands, Inc., commends the achievement. “At Dixie Brands, we believe that cannabis is powerful, that quality is important, and that accurate dosing is of supreme importance,” says Keber. “Because Dixie is committed to delivering a safe, consistent, and accurately dosed product, lab testing is a vital component to our manufacturing processes.”

“TEQ’s achievement of ISO 17025 accreditation instills great confidence to Dixie Brands that our consumers’ health and safety is ensured and that they will enjoy a reliable and predictable experience with our product each and every time,” adds Keber. “Dixie’s strategic relationship with TEQ continues to build long-term brand value.” This kind of accreditation helps build trust in laboratories’ clients knowing they can provide accurate results repeatedly.

July 27, 2016

Soapbox

Sustainability for the Cannabis Industry: Part I

By Olivia L. Dubreuil, Esq., Brett Giddings

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The cannabis industry is an unusual creature. It is so new and fluid that nothing in its space is yet crystallized. Product types, brand names, generally accepted processes and procedures are all still being invented and tested. Consumer market segments are defining themselves as the progression of legalization advances through the states. Seniors, children, veterans, women, and professionals of all backgrounds are feeling the health and wellness benefits of the flower that is slowly losing the negative stigma inherited from the so-called war on drugs. The potential is enormous. Money is already flooding to the lucky entrepreneurs with enough foresight to work in the space, and corporate business leaders from many other traditional sectors are slowly, but steadily flocking to the market.

This is economically encouraging. A whole new industry that creates new jobs, generates tax revenue and creates wealth. But there is a worrying scenario. In that scenario, traditional cannabis business owners and entrepreneurs are pushed out of the market as corporate competitors enter the game. In that scenario the industry grows faster than its regulatory framework, with little to no voluntary regulations, no sustainability leadership, and the industry’s practices and reputation finish in the gutter. In that scenario, federal and state regulators ramp up indiscriminate bans and phony prohibitions. In that scenario the new cannabis industry exacerbates the world’s social and environmental problems by being non-inclusive, by creating a divide within communities, by adding its own share of pollution, by pushing unhealthy and unsafe products – all for the sake of an easy buck.

That scenario is not a certainty – it does not have to see the light of day. This industry has the potential to be different. It has the unique opportunity to integrate sustainability practices from the start, to create a space where business meets mindfulness, and where corporate profits do not trump consumer health, worker welfare, community engagement or environmental preservation.

Sustainability strategy is the best risk management tool available to the cannabis businesses emerging today that hope to stay relevant in the future. A sustainable cannabis industry is one where women and minorities feel included, where the consumer recognizes and is loyal to brands and labels, where businesses are thriving while having a positive influence on their peers, a positive impact on their community and on the environment, where the race to the top breeds best practices and innovation.

Three levers can push sustainability: the consumer, the industry (and the businesses that comprise it) and the government (local, regional, national and international). Surprisingly, businesses can have a significant influence on all three. Consumers make and shape a market. What will happen when the consumer becomes aware of fossil-fuel (benzene) extraction in the age of climate change, when they request organic flowers that fits their ‘Wholefoods lifestyle’, or when they boycott non-biodegradable packaging? What will happen when a scandal breaks, linked to an avoidable health and safety accident, or when they realize people of color do not have equal opportunity in a cannabis business?

It is preposterous to think, that in this day and age – where information travels at the speed of light, some type of potentially damaging information about a product manufacturing process will not get out at some point or another (in some cases they have). There is absolutely no need to gamble with that. The solution is simple: adopt sustainable practices from the start.

The third lever is the government – we will come back to the second lever later. The cannabis industry, better than any other industry, knows how the government can make or break a business. If the government decides, like they did in Colorado, that in nine months cannabis packaging needs to be resealable and childproof, businesses will have to sit on several weeks worth of sales until they can find new suppliers, they will probably have to rethink their processes, while absorbing the costs of the packaging they had bought in advance. Worse case, they also have marketing and merchandising to rethink. All of that is costly.

However there is good news; government can be channeled, generally speaking, by doing the right thing. If an industry actively demonstrates a desire to do the right thing, and there is not an exaggerated amount of complaints (or accidents), then regulators will leave it alone. Businesses can and should invest as a group into drafting and endorsing generally accepted industry practices and organizing industry self-regulations. Those will guide governments when they draft regulations, but they could also preempt a lot of nonsensical top down rules

The second lever is the most important, and that is the business lever. Cannabis businesses can make or break this industry. Those who believe that the unsustainable practices that worked in the context of an illegal/black/grey market will work in the context of a 21st century legal industry may need a reality check. Those who continue to promote and endorse them are dangerous for the industry because they breed a climate of distrust, and they bring the industry under closer scrutiny. The cannabis industry needs businesses that display exemplary behaviors, think about their impact, and elevate the discussion as well as their peers.

Whether a business is small, large, mature or emerging, developing a strategic response to these challenges can and will create a sustainable business model. Businesses can gain robust competitive advantages over their peers, reap the rewards of having loyal customers, create thriving communities, and foster healthy natural environments by doing the right thing and embedding sustainability within their business decisions.

Tomorrow’s cannabis industry business leaders will be those that chose to be part of the solution, those that understood that sustainability was vital to their business model and took action early on.

Editor’s Note: Project Polaris is a California non-profit corporation, offering sustainability coaching and guidance to cannabis industry businesses. By becoming a member of Project Polaris, businesses have access to sustainability experts throughout the year, to set, support and carry out cost-effective, meaningful and impactful sustainability solutions.

July 27, 2016

Marijuana Matters

Education & Experience: Understanding the Operations

By David C. Kotler, Esq.

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I often write about the legal side of and opinions about the cannabis industry. Much of what I write about is culled from anecdotal experiences within either my personal practice or observations in regard to the industry. I recently had a trip to Portland, Oregon to spend time learning and understanding a little bit about a particular client’s operations so that I could provide counsel to that particular client, where permissible. For me, it was an important part of the education, which I stress and serve as the basis for this article.

With education comes understanding. What I see in the cannabis industry is often those who are critical of the use of cannabis, either recreationally or medically, seem to demonstrate some lack of understanding. In Florida, as the “No on Amendment 2″ commercials and videos roll out, I see much information that clearly comes from a lack of understanding or potentially a willful desire to distort the truth.

I share the following, less as a means to correct those distortions, but more as an opportunity to educate one who may be reading this and who may not have the same experience, which I just had the opportunity to receive. My time in Oregon was spent predominately in Portland and Salem as this is where the particular client has locations that I was able to view and experience.

My observation from a zoning perspective was that there was not a dispensary on every corner and that at times I had to be patient before seeing a dispensary during our drive. Of note in regard to the dispensaries that I did see was often the use of “cannabis” or “marijuana” in the name or associated with signage at the dispensaries, in addition to a green cross. However, there were many that did not take as visible an approach. I recall seeing, pursuant to the rules of the Oregon Program, windows covered so that one cannot see in. From time to time there were billboards advertising dispensaries. What I noticed most was in part, the clean presentation of the particular client I was seeing versus what was presented on the outside of many dispensaries we passed. This may be highlighted in part based on viewing dispensaries through what one might consider an East Coast lens. There are others that might argue that this perspective, particularly in emerging markets, is much different than that which has been developed over time in the West Coast markets, many of which have now gone recreational.

Overall, like anything, what I saw ranged the gamut from unprofessional and a little unsightly to professional and clean looking, which generally fit into the surrounding neighborhood. In particular, my client’s dispensary in Salem was in a retail shopping center along with a Little Caesars, Aaron’s Rentals, a nail salon, and other normal and expected retailers. Unless you poked your head inside the door, it would not be readily apparent that it was a dispensary.

My experience with the types and looks of the dispensaries running the gamut was mirrored by a particularly unique experience I had in viewing customers/patients. What was clear from a very limited time of viewing who it is that goes into a dispensary in Oregon was that it was impossible to pigeonhole the types of patients and ailments or, in the recreational setting, who the end user might be. On the Saturday morning of my visit, while viewing operations in Salem, I was approached and began to speak with an older gentleman with a long straggly gray beard who appeared to be in his late 60’s to early 70’s. During the course of our conversation he let me know that he is looking forward to taking it easy, and that he was a veteran. He had two friends with him and it looked like they were going to enjoy some time relaxing together, but he was also able to tell me that it was assistive to him at times when his anxiety got the best of him. His purchases were economical, and it was apparent that he and his friends were of limited socio-economic means; however, his purchases were notably and significantly cheaper for use than potentially alcohol if, in fact, he was not medicating and using with his friends recreationally.

Within minutes after the gentleman left, the exact opposite walked in the store. Candidly, I was mildly surprised by whom I held the door for to walk in as I was leaving. For a moment I was transported from Salem, Oregon to any town in central New Jersey or main street USA. Decked out in what could have been Lily Pulitzer or other preppy outfit were two soccer moms. They had stepped out of the newest model of a particular German automobile manufacturer. Unfortunately, I did not have the opportunity to engage with the soccer moms in discussion, but it was clear through their knowledge of the layout and interaction with the employee behind the counter that this was not their first trip to this particular location.

So what does the foregoing illustrate? For me it illustrates the development of perspective through education. It is that perspective that I hope to bring to the advice and counsel of clients. Perhaps I can use the knowledge to be assistive in making recommendations on regulatory issues, if consulted on them, helping to explain to politicians and bureaucrats or zoning and planning officials what might or might not be important in their considerations when dealing with a client. My observations should ultimately help me assist in educating others as to what the business and operation of cannabis related businesses might actually entail and look like. It is absolutely necessary, irrespective of one’s role in the cannabis industry, whether it be on the real estate side, insurance brokerage, providing legal or consulting advice (especially as individuals transition from those areas of practice in non-cannabis related spaces) that one take the time to understand the industry and its practice from the inside out. Only then can one be an effective resource to a cannabis related business wherein once the layers of the onion are peeled back, there is actually substance and information.

July 14, 2016

Soapbox

Learning from the Horticultural Industry at Cultivate’16

By Nic Easley

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This past week, over 10,000 individuals traveled to Columbus, Ohio to attend Cultivate’16, a conference hosted by AmericanHort, an organization dedicated to leading and unifying the horticultural industry. Cultivate’16 had hundreds of vendors displaying the latest technology and equipment for greenhouse production, design and controls along with the latest innovations in software, manufacturing, automation and more.

For all of the energy surrounding the nascent cannabis industry, there was very little representation from it at Cultivate’16. Our associates encountered an estimated thirty cannabis industry professionals, compared to an estimated total of 10,000 attendees. This further compounds the reality that the cannabis industry is still a very young industry when compared with the more mature and well established industries such as conventional agriculture, finance, information technology and others.

At Cultivate’16, there was enormous potential for businesses in the cannabis industry to learn from the traditional horticultural industry. The horticultural industry has had to become extremely efficient with its capital, resources and time in a manner which the cannabis industry has not had to accommodate yet. There were automated container filling machines, cost effective nutrient solutions and greenhouses that are controlled wirelessly. Those were just a fraction of the products and systems that could save cannabis cultivators hundreds of thousands of dollars.

Horticulturalists have been forced through shrinking margins to increase their output and savings. The horticultural market is expanding at an average rate of 5% per year as opposed to the cannabis market which is currently growing at a rate of 68% year over year. Cannabis operators can still get anywhere from $1,200 to $1,400 a pound in most legal markets on the lower end. This is in comparison to basil at $4 a pound. This difference is stark. It means that cannabis cultivators are not under the same pressure to be efficient as other traditional crop cultivators. It is clear though that with increasing legalization of cannabis in both the medical and adult use markets that the price of cannabis will fall. Therefore, it would be wise for the cannabis professionals to attend events such as Cultivate’16 in greater numbers to prepare for the eventual decrease in price.

3C Consulting was present at Cultivate’16 because we understand the importance of looking to other successful industries for guidance. We were able to converse with a diverse array of vendors and business owners to further our own knowledge on the best practices to bring to the cannabis industry. To be able to learn from those that have come before you is a strength, not a weakness. Far too often the cannabis industry seeks to reinvent the wheel. It does not have to be this way.

By learning from other industries, utilizing the latest horticultural technology and becoming more cost-effective the cannabis cultivators will be able survive and thrive. It is those that prepare for turbulence that are best able to capitalize on change. In the Chinese language, the word for crisis is the same as the word for opportunity. It is wise to prepare for a crisis so that when it does occur you are able to transform it into an opportunity.

July 13, 2016

Hemp-Derived Products with a Contract Manufacturer

By Aaron G. Biros

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Based in Santa Monica, California, Sagely Naturals was founded in the summer of 2015, with the goal to produce a sustainably sourced, topical CBD cream with no psychoactive effects to treat daily aches and pains. The co-founders, Kerrigan Hanna and Kaley Nichol, have extensive backgrounds in the food service industry, and as a result they pride themselves in quality controls and proper safety procedures. Since the launch of Sagely Naturals, they have been selling their Relief & Recovery Cream online and in a wide variety of retail outlets beyond just cannabis dispensaries. Their ability to distribute outside of dispensaries is due to the fact that the product’s active ingredient, Cannabidiol (CBD), is derived from hemp, instead of cannabis with higher levels of Tetrahydrocannabinol (THC).

kerrigan/kaley — Co-founders Kaley Nichol (left) and Kerrigan Hanna (right)

Their attention to detail in consistency and quality makes them stand out as cannabis processors, using a contract manufacturer with good manufacturing practices (GMPs) along with the proper standard operating procedures (SOPs) in place. “All of our contract manufacturer’s corrective and preventative actions (CAPAs) are outlined in the company’s SOPs, which are in place for everything including specific manufacturing processes, receiving and shipping materials and testing batches,” says Hanna. “The contract manufacturer also provides certificates of analysis (COAs) for every product they make.” According to Hanna, they exclusively use current GMP-certified facilities. One such SOP lays out the responsibilities for the quality control department in order to release and approve ingredients of their products.

There are some SOPs that could pertain specifically to the processing of hemp or cannabis products, according to Hanna. “Receiving and handling raw materials like hemp, batch coding, the actual formulation and manufacturing process, quality controls and cleaning and sanitation [could be tailored to pertain to cannabis],” says Hanna. Proper SOPs laid out in the manufacturing process include the cleaning and sanitation of machines, as well as adjusting settings, formula ratios and initialing and dating product labels on every batch, among more specific operating procedures.

The cream is made with natural ingredients like safflower seedily and peppermint. — The cream is made with natural ingredients like safflower seed oil and peppermint.

According to the co-founders, they spent a large amount of time vetting their hemp supplier, making sure they are using cutting-edge technology, growing it sustainably, and adhering to strict SOPs. “The team includes a Ph.D. chemist, who also is a founding member of our supplier and extractor,” says Hanna. “We work with CO2 extraction because we wanted the most control over the compounds that end up in our product. We are able to purposefully choose which cannabinoids end up in our product.” Through supercritical carbon dioxide extraction and post-extraction processing, the team is able to eliminate any trace of THC, guaranteeing the consumers will receive no psychoactive effects.

In looking toward long-term growth, the co-founders emphasize the importance of environmental sustainability. “Having honest ingredients is one of our company missions along with having honest practices,” says Hanna. “None of our ingredients are tested on animals so we are an animal cruelty-free organization.” Their hemp is grown using organic and environmentally friendly practices. “We prioritize using plant-based ingredients, so the formulation of our Relief & Recovery Cream relies on using organic and raw materials—such as essential peppermint and safflower oil.” Companies like Sagely Naturals using contract manufacturers to process hemp could represent the future of the cannabis industry. When safety, sustainability and quality issues come into the spotlight more, so will the need for outlined SOPs, proper documentation and extensive lab testing.