Tag Archives: cannabis

From Produce to Cannabis: The Future of Indoor Agriculture

By Aaron G. Biros
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Throughout the United States, a majority of cannabis for medical and adult use is grown indoors, which requires a tremendous amount of energy and is generally inefficient. State regulators and cultivators alike are beginning to notice the benefits of greenhouse and outdoor-grown cannabis, primarily for energy efficiency and environmental sustainability.

Basil plants ready for packaging and shipping at the Edible Garden facility in Belvidere, New jersey
Basil plants ready for packaging and shipping at the Edible Garden facility in Belvidere, New jersey

Terra Tech, a publicly traded company, cultivates environmentally sustainable produce through its subsidiary, Edible Garden, in Belvidere, New Jersey. Utilizing Dutch hydroponic cultivation methods, integrated pest management and computer-controlled automation, Edible Garden grows certified organic herbs such as thyme and basil in their greenhouses in New Jersey.

Poinsettias ready for distribution at Edible Garden facility in Belvidere, New Jersey
Poinsettias ready for distribution at Edible Garden facility in Belvidere, New Jersey

Edible Garden is certified by the Global Food Safety Initiative (GFSI), which provides internationally recognized benchmarks and guidance for managing food safety and meeting standards. According to Ken VandeVrede, chief operating officer of Terra Tech, the company plans to take these cutting-edge practices and standards from cultivating produce to the cannabis industry to grow quality, sustainable and safe cannabis in states where it is currently legal.

The company is actively making its operations more environmentally sustainable via greenhouse cultivation, Dutch style hydroponics, shipping locally, and integrated pest management. “We plan on implementing guidance from our two years of GFSI certification and our organic certification along with all of our practices from the food side and bring them to cannabis; for us, it is just another plant,” says VandeVrede. With the help of computer automation, he says they can cultivate cannabis at the commercial scale, creating more homogeneity by removing human elements and utilizing environmental controls. Through computer automated blackout curtains in their greenhouses, they plan to minimize energy usage by using natural sunlight when possible.

“The procedures are very similar across industries so we are creating our own internal standards for cannabis cultivation,” says VandeVrede. “We are trying to be at the forefront of the industry and set the standard for growing cannabis, because right now, there are no standards in place.”

Mint plants ready for harvest at the Edible Garden greenhouse
Mint plants ready for harvest at the Edible Garden greenhouse

Terra Tech has already started its move into the cannabis industry via its subsidiary, IVXX LLC, which makes medical cannabis extracts for dispensaries in California. The company has also broken ground on cultivation and production facilities in Nevada and dispensaries in California, and submitted an application for licenses in Maryland. “Terra Tech is doing everything with vertical integration in mind; we will control the cultivation, bringing experience from our agricultural background to cultivate high quality and high yield cannabis, making oil and extracts with it to sell in our dispensaries,” adds VandeVrede.

Looking to the future of cannabis cultivation, Terra Tech’s plan is to keep environmental sustainability at top of mind. “As a company we are growing indoor, but moving toward greenhouse cultivation across the board”, says VandeVrede. “Our focus on expansion will be [include] greenhouse-grown cannabis, which is a lot more efficient, saving us money but more importantly reducing our overall carbon footprint.” With more companies adopting these sustainable farming practices, the industry might soon usher in a new era of environmentally friendly cannabis cultivation.

Tech Startup Seeking Investors for Cannabis Data Research Tool

By Aaron G. Biros
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Innovations in technology used for cannabis research have the potential to lead to major breakthroughs and discoveries for the plant’s various applications. Software and information technologies are particularly useful for sorting through the tremendous amount of data required in medical research and the cannabis industry. Tímea Polgár, founder of CannaData, worked in the pharmaceutical and biotech industries previously as a molecular biologist and computational chemist.

Tímea Polgár, founder of CannaData
Tímea Polgár, founder of CannaData

Her background in informatics, pharmaceutical research, molecular biology and chemistry brings her to the cannabis industry to study the plant in an herbal medicine context using high-tech informatics. Polgár, originally from Hungary, received her PhD from Budapest University of Technology and Engineering in pharmaceutical drug discovery. She has worked as a senior research scientist at Gedeon Richter in Budapest and as a senior molecular modeler at Servier, Inc. in Paris, France. After leaving the pharmaceutical industry, she began working at a startup called Chemaxon, a chemistry informatics company working on scientific business development. Polgár has worked for years in scientific business development, leveraging technology and knowledge to businesses, which brought her to work across multiple disciplines.

CannaData is essentially a software tool used to gather information on strain genetics, chemical components of different strains, molecular mechanisms of different strains and the medicinal effects. According to Polgár, the company plans to build a continuously growing data repository in conjunction with computational modeling and research in determining entourage effects to pinpoint how active chemical agents in cannabis interact. The tool will help scientists find areas of the plant that need more studying and areas that are inert. In addition to the database, CannaData will provide scientific analysis of data from seed banks, laboratories, clinics and other businesses collecting data in the cannabis industry.

A flowchart of the scientific concept behind herbal medicine research
A flowchart of the scientific concept behind herbal medicine research

Polgár’s organization is currently seeking investors to launch the project in hopes of connecting the cannabis industry, herbal medicine and computational chemistry for more accurate scientific research and understanding of the plant. According to Polgár, research and development of disease-fighting drugs has long had a narrow-minded approach. “Herbal medicine is very complex with numerous active chemical components. Recent technological and computational advancements have made it possible to study these chemical network interactions,” says Polgár. “The cannabis industry could provide a pioneering route for the novel concept of combining herbal medicinal research with information technology, furthering our molecular understanding of the benefits of cannabis.”

A flowchart breaking down the chemical composition of cannabis
A flowchart breaking down the chemical composition of cannabis

Polgár believes that this type of research has the ability to help support standardization and quality control in the cultivation of cannabis. “We are linking technologies to herbal medicine and cannabis where there is a huge need to manage, extract and analyze data,” says Polgár. “Today, there are computational technologies that can manage this quantity of information required to model and understand herbal molecular mechanisms and we will be the first ones to do so on a commercial level.”

A flowchart describing the technical concept of CannaData, depicting the utility of a data repository
The technical concept of CannaData, depicting the utility of a data repository

Polgár’s organization is seeking investors looking to innovate in the areas of life sciences, pharmaceutical research and software development. Through bringing broad information technological solutions from research to the cannabis industry, CannaData hopes to serve analytical laboratories with chemical informatics software services. Ultimately, this project will serve the cannabis industry by analyzing data on strain genetics and known chemical profiles of cannabis, furthering scientific research on cannabis.

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U.S. Postal Service Memo Implications for Cannabis Marketing

By Aaron G. Biros
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The U.S. Postal Service sent a memo to print publications in the Northwest this week reminding them of federal law regarding advertisements for Schedule I controlled substances. This comes as less of a directive and more of a reminder for many magazines and newspapers that ads for marijuana in print publications delivered via the postal service are not compliant with federal law.

While nothing has changed in the legislation, it produces some confusion for small cannabis business owners and publications alike that are in compliance with state and local laws when running ads involving cannabis. The Washington State Liquor and Cannabis Board’s frequently asked questions page on their website explicitly contradicts federal law.

One of the questions on that webpage asks: “May I use direct mail to households and inserts delivered via the Seattle Times and other publications?” And the answer provided by the Washington State Liquor and Cannabis Board states: “Yes, inserts may not contain coupons.” This statement is clearly contradictory to federal law and to the memo sent by the U.S. Postal Service.

According to David Paleschuck, director of licensing and brand partnerships at DOPE Magazine, thinks this confusion will effect mainly small businesses. “As a business owner this tells me that it is OK to publish in newspapers like the Seattle Times which we all know is not directly delivered using the USPS.”

The memo does not directly affect DOPE Magazine’s distribution because it is not subscription-based. “We distribute via retail through dispensaries and recreational stores so it is not mailed directly to our readers,” Paleschuck says. “This will however affect many of our advertisers that are featured in subscription-based publications; Those companies and brands will not be able to advertise in publications sent through the postal service and thus non-subscription-based publications will pick up the slack.”

“States like Washington have very vague guidelines for marketing cannabis,” says Paleschuck. “There needs to more clarity for state and federal guidelines on marketing for cannabis businesses.” Moving forward, regulators will have to clarify these guidelines to determine how cannabis businesses can stay compliant.

Dawn Roberts, marketing executive at O.penVAPE, believes the memo will have a number of implications for her marketing strategies. O.penVAPE operates in nine states, manufacturing and selling oil cartridges and vape pens. “We are responsible for booking the advertising for all of our licensees to identify the best opportunities and provide support and direction for advertising and promoting their business,” says Roberts. “This [the U.S. Postal Service memo] affects our considerations for developing marketing strategies for all of the nine states we are in with regard to print publications.”

Looking at how the effects will impact their business development, Roberts needs to revisit every print publication they advertise in and check to see if it is subscription-based. “As a marketer for a brand that has a national footprint, I need to reevaluate my strategies for 2016 and look into certain publications that are subscription based,” Roberts adds. “We need to figure out how this will affect our marketing strategies for 2016.”

While this confusion gets sorted out, dispensaries and other cannabis businesses need to reevaluate their advertising and promotional strategies to stay compliant with federal and state laws.

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From The Lab

What to Consider When Selecting a Laboratory

By Seth Wong
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There are many factors to consider when selecting a third party analytical laboratory:

  • Why are you testing?
  • Does a governing body require it?
  • Are you testing to meet compliance with industry trends?
  • Are you testing as supplemental protection to an in house laboratory operation?
  • Are your results being used to help you market your product?
  • Are the results being utilized for internal R&D?
  • What are you looking to get out of testing?

Perhaps it is a combination of all these things. Regardless, whomever you contract with for whatever reasons, it is important to understand what you are getting, know what you are entitled to, understand your results, and understand where you and your company remain vulnerable. You must also be prepared with a plan to handle adverse results. Testing at a third party analytical contract laboratory does not mean they assume all of your product’s or company’s liability, regardless of the lab’s reputation.

Ask your third party laboratory about any accreditations, certifications, and licenses that the lab should be accredited and/or certified for. Each state has different certifications and licensing requirements; make sure the entity you are using is licensed or certified for the services you need. Additionally, there is an accreditation called International Standards Organization (ISO) 17025 that is the pinnacle of third party laboratory accreditation. ISO 17025 is a set of protocols that your third party lab should follow to do everything it can to ensure your data is accurate and produced with reliable standards, control samples, matrix control samples and proficiency tests to verify the accuracy of the lab’s employees and methods, among a number of other criteria included in the standard. A number of different entities offer accreditation to ISO 17025 but it is important that the the accrediting body is also accredited to their ISO standard. Simply buying ISO 17025 compliant materials or standards does not mean that the vendor service or product is accredited to ISO 17025. Cannabis laboratories are just starting to implement and build systems around ISO 17025 but it has been prevalent in the third party lab business in many industries for decades and should be applied to the cannabis industry.

Visit your lab and understand their background and experience. Start by requesting a tour of the laboratory you choose; you want to know how things look behind the scenes. Is the lab orderly and doing its best to protect sample integrity? There may be a lot of things going on in the laboratory and it may look chaotic but it should be relatively clean. This prevents contamination and sample mix-ups. Further your relationship with your laboratory by understanding the laboratory’s experience and getting to know your laboratory staff. Consider the lab staff as part of your extended team, they are there to help you and help bring your product to market. The more they understand your goals, the more they can help.

Understand your lab’s history and background: Have they worked with products and/or analytes similar to yours? Have they worked with your sample matrix or one similar to it before? Their prior knowledge and laboratory experience, as it relates to your product, will help provide accurate data and navigate complex matrices.

Most importantly, a laboratory should be willing to release the data packet that is used to generate test results to the client. Releasing this data does not divulge any proprietary information of the lab. It is the laboratory’s job to provide you with the data upon request. It is important to note, looking at your raw data is not the same as looking at the laboratory method, also known as a work instruction or operating procedure. The lab most likely won’t give you the method as those are typically trade secrets, but there is no reason not to share with you the chromatography that the HPLC, GC, GC/MS, or LC/MS generated. This will demonstrate the lab’s sound analytical data and increase your confidence in the analysis you are receiving. When you pay for the results, you are also paying for your data and if your laboratory is not releasing that information to you at your request, you should be skeptical. This data needs to be able to stand up to audits and legal action.

Finally, confidentiality: your data is your data. Yes, you may have to report results to a governing body, but your laboratory should not be sharing your name and your data with anyone but your authorized list of contacts without your permission. They should not even disclose that you are their client without your prior authorization. Confidentiality is not just applicable to a few key employees at the laboratory, it is pertinent to everyone from the sample pickup driver, if you have one, to the chemists and upper level management.

Understanding your contract laboratory’s certifications, licenses, and accreditations, requesting and receiving raw data packages, and ensuring that you feel comfortable with the laboratory, its staff and their practices are key elements to ensuring a successful relationship with your laboratory.

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Women & Leadership in the Cannabis Industry

By Aaron G. Biros
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Launched in August of 2014, Women Grow began with the goal of establishing an organization for professional networking that supports women leaders in the cannabis industry. On a platform of fair and inclusive business practices, the organization emphasizes the importance of a social mission in business planning.

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Women Grow holds various events with thought leadership and networking opportunities

Through a variety of networking and educational events, Women Grow brings together a community of established and new industry professionals that helps connect and empower women to grow their business and succeed in the cannabis marketplace. Jazmin Hupp, CEO and co-founder of Women Grow has been referred to as a “genius entrepreneur” by Fortune Magazine and was named one of the top businesswomen in the cannabis marketplace by Forbes. “Women can be very community and healthcare-minded, providing the backbone for establishing an ethical cannabis industry with a focus on health and wellness,” says Hupp.

According to data from the U.S. Department of Labor, women make approximately 80% of all healthcare decisions for their household. Not only is Hupp’s organization helping to empower women in the workplace and in leadership roles in the industry, it also teaches good business practices. “The primary demographic purchasing cannabis in the future will be women, because they purchase 90% of OTC medicine and do 80% of household buying,” adds Hupp. “Women are the leading purchasers of alternative foods, health and wellness products, and they drink more alcohol by volume than men.” 

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Jazmin Hupp, CEO & co-founder of Women Grow

According to Hupp, women control the majority of consumer spending and will be looking for a safer way to recreate than consuming alcohol, and cannabis products will provide an answer. “If your target market is going to be driven by female spending, it just makes good business sense to put women in executive roles and on marketing teams,” she adds.

Because cannabis is still a schedule I narcotic in the eyes of the federal government, there are issues that involve more than just effective marketing tools. “Child Protective Services has the ability to deem a household with marijuana present unfit for children, largely due to the stigma and federal classification of cannabis,” says Hupp. “Mothers are particularly hesitant to get involved [directly in a cannabis business] because of the possibility of losing their children, hence why some mothers work on the ancillary side of the industry, as opposed to working directly with the plant.”

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Women Grow connects women leaders both new and established

Women Grow is actively working to address these needs in America’s fastest growing industry on a national scale by advocating for the end of marijuana prohibition. “This is a brand new industry that can be conscious of social, economic, and racial injustices so there are no glass ceilings for women or minorities,” Hupp says. “This comes out of a very socially conscious movement where leaders understand the benefits of inclusion, diversity, and the importance of socially responsible decisions.”

With the cannabis marketplace still in a nascent stage, opportunities to support diversity and inclusive business practices makes this industry particularly unique. 

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BEST Extractions

Defining BEST Extraction

By John A. Mackay, Ph. D.
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Over the next few months, I would like to walk through a series of articles to cover the number of ways to extract potentially pharmaceutically active compounds from cannabis plants. However, in the first article I would like to review concerns being addressed in state regulations: contamination in concentrates with pesticides, mycotoxins, and residual solvents. The next article will cover the most common extraction with two different modes: CO2 versus hydrocarbons.

Currently, there is a lot of focus on the cannabis strain of hemp. This is defined as having less than 0.3% of THC, (the psychoactive compound). To be clear, the science of extraction is eons old, but the current revitalization is due to new scientific inquiry regarding the applications of the cannabis plant.

I am often asked, “What is the ‘best’ extraction for a natural product?” The BEST extraction? The key to this answer is that you must assume unintended consequences until you can prove that they are at least minimized compared to the intended consequences.

I have a suggestion for you to consider and I look forward to your response to it. I also assume the right to adapt and revise it.

Botanical integrity from seed to shelf

Efficacy of the process beyond efficiency, economics, effectiveness

Safety of people and product

Testing for confirmation at each step of process

The hemp industry has changed significantly over the past few years. Just casually flipping through the channels on television, reading a newspaper or magazine, (on any topic – news, business, sports, food and science) and there is some facet of hemp’s value being examined. The reduction of traditional pulmonary intake (smoking) in the legal marketplace can be tracked by sales of these products in the states where it is legal. The balance of ingestion is drastically tipping toward what might still be considered smoking with vaporizer products as well as toward edible consumables. The ingredients in these products come not from just adding the plant to the formulation, but rather a concentrated mixture. This is the difference between adding a raw vanilla and a teaspoon of vanilla extract. The compound getting the most coverage is cannabidiol (CBD), which is the compound derived from cannabidiolic acid (CBDA). The effects of the other compounds in the plant are being studied as well.

Unintended consequences from the concentration – extraction – are something we need to consider seriously as consumers. The labeled use of “natural” is one that is critical, but can be totally nullified by the unintended contamination in the extraction workflow. Years of making sure the hemp adheres to strict growing environment can be destroyed in seconds with the addition of polycyclic aromatic hydrocarbons (PAH’s) by the use of solvent that has these toxic chemicals in them. These come not through intended consequences, but not knowing the stabilizers and other additives in material being added to these previously pure plants.

What if I pour sour milk on a natural granola for breakfast? What if I use water with high lead or contaminated water to pour over natural coffee grind? Not a great way to start the day, but it is no different than using the most premium hemp and unknowingly adding low grade solvents or adding components from cleaning the surfaces of instruments that come in contact with hemp.

Note that, by definition, we are concentrating the material from the hemp plant. From 4,000 grams, we are getting 400 grams of CBDA if it is 10% by weight (and later converted to CBD). That compound is 10 times more concentrated in a solution. What other compounds are now also 10 times or 5 times or 100 times more concentrated? Maybe no “bad” ones, but how do you know that something else is not also in the mixture?

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Figure 1. With each step of concentration of the green balls, so it could be with other components in the mixture.

This is illustrated in the filtering of green balls in Figure 1. As the green balls become a greater and greater percentage of the solution, it is possible that other compounds like pesticides are also increasing in percentage of the extraction solution. The solution is more concentrated and “simpler” versus all of the other things in the original mixture.

The simple answer is in the testing of the components. The labeling of major compounds is only the beginning of what is on the label that you read. Heavy metals? PAH’s? Residual solvents? Pesticides? Molds? And a long list of other material that could come into the process after the plant left its pristine organic farm. Many studies can be read about slip agents in bags, contamination from workers in the workflow, and other sources of inconsistency.

There are a significant number of companies that I have seen that take this very seriously. New companies are being formed that have safety of product at the top of the list of importance. They are building facilities that are sterile and putting standard operating procedures in place that continually test the product along every step to ensure that they are in compliance.

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Figure 2. Science and economics merge when considering all the possible uses of concentrated compounds to final product formulations

Supercritical fluid extraction is GRAS (generally regarded as safe). It is, only as long as the solvent specifications are known, the vendor meets those standards, and the instrument surfaces meet any necessary standards.

Supercritical carbon dioxide is used to clean surfaces of electronics and bones for skin grafts. It is used for the decaffeination of coffee as well as pulling trace amounts of pesticides from soil. It is used to extract antioxidants from krill and the active ingredients from algae as well as oil from core samples deep below the earth. It also extracts the terpenes and CBDA from hemp – as well as possibly anything that has been added to it.

The key take away from this article is to know the BEST extraction.

Botanical integrity from seed to shelf

Efficacy of the process beyond efficiency, economics, effectiveness

Safety of people and product

Testing for confirmation

Taking each of these into consideration will bring the best results for concentrations of hemp products. I hope you can extract the best from your day.

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The Organic Certification of Cannabis

By Aaron G. Biros
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News of potentially harmful pesticide use on cannabis grown in Colorado, along with new legislation in California that would develop guidelines for pesticide use, highlight the need to cultivate cannabis that is not only safe to consume, but also environmentally friendly. Cannabis cultivation is a rapidly expanding industry and as growers scale up their operations, the question of sustainability remains.

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Chris Van Hook performing a routine inspection of a Clean Green Certified crop

Clean Green Certified is a third-party certification program that incorporates aspects of the USDA’s National Organic Program (NOP), international organic programs and sustainable farming practices. Cannabis is not eligible for USDA organic certification because it is not a federally recognized crop, so Clean Green Certified is the closest certification nationally available. More than 200 cultivators are currently Clean Green Certified in California, Oregon, Washington, Colorado and Nevada.

Chris Van Hook, attorney and founder of Clean Green Certified, started the program in 2004 out of requests from growers to certify their cannabis as organic. Van Hook has decades of experience working in environmental law and USDA organic certifications. “About 95% of the Clean Green Certification is based on the USDA’s NOP,” says Van Hook. “The Clean Green Certified cannabis farmer would be eligible for an organic certification as soon as it becomes available, so we are helping the industry get accustomed to the regulations, inspections, and audits that come with getting organically certified.”

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A close-up of an outdoor Clean Green Certified crop

Getting Clean Green Certified requires an initial application. Upon inspection, Van Hook’s program examines all the inputs, including water and energy usage, nutrients, pesticides, and soil, along with inspecting the actual plants for agricultural vitality. “We follow the plants from seed to when it is harvested, checking for clean surfaces and containers, as well as drying, curing, trimming, and processing practices,” says Van Hook. “Just like organic farming, the cultivator needs to be an engaged manager and heavily involved with the plants. Much more monitoring is involved to prevent pest problems from getting out of control without using pesticides.”

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Van Hook inspecting the flowers on an outdoor plant

The initial screening process takes into consideration traceability and legal compliance, which in cultivation and processing alike is an eligibility requirement. “We use USDA organic standards as guidance for processor facility reviews as well, which include concentrates and edibles manufacturers, breaking it down to labeling, food handling, standard operating procedures, mock recalls, and more,” says Van Hook.

“In a market so used to a lack of oversight, there definitely are some challenges, but we are bringing the necessary agricultural and food handling regulations into the cannabis industry,” adds Van Hook.

The option to grow organically and acquire a third party certification for it can benefit cultivators across the country looking to market their product as environmentally sustainable and pesticide-free.

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Setting a Benchmark in Cannabis Testing: GOAT Labs

By Aaron G. Biros
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GOAT Labs, Inc. is a veteran-owned, i502-certified cannabis testing company with laboratories in Vancouver, Washington and Portland, Oregon. The laboratory launched in 2010 by Dana Luce, the owner, with a personal mission to provide safe and tested cannabis to patients in need.

Dana Luce’s daughter, Dani Luce, CEO of GOAT Labs, has previous experience working in dialysis and watched cancer patients lose their battle to the illness. Many years later, Dani’s oldest son was diagnosed with stage IV Hodgkin lymphoma. Cannabis proved instrumental in alleviating the side effects of chemotherapy. “With a severely compromised immune system, we had to find a place to test all the raw foods given to him, including cannabis,” says Dani Luce.

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Dana Luce (left), owner of GOAT Labs, and Dani Luce (right), CEO, in the GOAT Labs office.

Dani Luce’s son was in remission nine months after starting chemotherapy in conjunction with cannabis and has now been in remission for five years. “We want to ensure patients are not ingesting something potentially toxic and that proper testing is done, which includes not only potency, but testing for microbials, pathogens, and pesticides.”

GOAT Labs is a member of the Cannabis Coalition for Standards and Ethics (CCSE) along with the American Oil Chemist Society (AOCS), where they participate in the Expert Committee for Cannabis Oil.

With pesticide use on cannabis recently entering the spotlight, there is a growing need for standards in cannabis testing. “We need better regulatory oversight so that all laboratories are standardized, including proficiency testing done by the state,” argues the Luce’s.

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Bill Luce, lab technician at GOAT Labs, preparing samples for testing

Roger Brauninger, biosafety program manager of A2LA (American Association for Lab Accreditation), is working on an accreditation process for cannabis laboratories that would be accepted nationally. “We believe that an accreditation process would increase efficacy of lab results, reduce laboratory shopping, and create consistency with results across different laboratories,” says Brauninger.

GOAT Labs, among a number of other laboratories and organizations, is working toward putting cannabis in the lens of mainstream medicine. Not only are they looking to achieve a safe standard for medicine, they are advancing legalization efforts nationwide by setting the benchmark for getting patients access to safe, lab-tested cannabis.

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A Dispensary’s Road to Success

By Aaron G. Biros
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The Herbery, a dispensary with two locations in Vancouver, Washington, is currently awaiting medical endorsements from the state for both locations. The two co-founders, Jim Mullen and Rick Zahler, found a credit union to work with them, Salal Credit Union in Seattle. “There are five dispensaries in the Western part of Vancouver, so it is quite a saturated market,” says Jim Mullen. “But we have drawn considerable business and are very happy with the success of our two locations.”

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A view inside the The Herbery

It has not always been like that, says Mullen. There are several key ingredients that go into launching and operating a successful dispensary, all of which pose significant barriers to entry in an extremely competitive retail market. Rick Zahler won the second and third positions in Vancouver for the state i502 retail licensing lottery. Zahler has more than 40 years of experience in franchising restaurants, a background that gives him a competitive advantage in scaling up his business.

Mullen and Zahler formed a partnership in early 2014 and by that summer they had finalized their lease agreement, converting an old restaurant into their flagship store. They hired local architects, contractors, and CPA’s and began looking for staff. “We set out to find the best people who could provide a level of customer service that this industry needs to be recognized as a mainstream business,” adds Mullen.

“We are changing the perception that you have to go into some back alley store to buy your pot,” he says. “We have a very attractive, well-lit storefront; we get complimented on the look of our stores all the time, one woman called us the Nordstrom’s of dispensaries.”

Before the doors opened, Mullen and Zahler worked long and hard to find growers, manufacturers and processors that met their standards. “We wanted to fill our display cases and shelves with premium cannabis, so we found really high-quality indoor, outdoor and greenhouse grows across the state,” says Mullen. “We go out and do site visits to see firsthand what nutrients they use, along with their standards and practices, to really size up our suppliers and verify they are giving us safe and high-quality products.”

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A bud tender helping customers at the dispensary

The Herbery hit some early obstacles as the market in Vancouver became highly saturated with dispensaries like New Vansterdam and Main Street Marijuana grossing well over $1 million each in revenue in May 2015.

“Our competition received a lot of media coverage and brand recognition early on. We had to side-step that with heavy guerilla marketing including handing out cards and flyers on street corners,” says Mullen. “We continued to push our social media marketing campaigns, slowly building a clientele with quality products, affordable prices and good customer service.”

Of all the roadblocks they hit, Mullen said the toughest aspect of getting started has been simply “letting people know that we opened and where we are.”

“There are fairly strict marketing rules, and staying compliant is difficult when you are trying to get your name out there,” Mullen adds. “We have been doing what we can with billboards and ads in magazines, but really word of mouth has gotten us far.”

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A bud tender can give recommendations on different strains or advice on consuming edibles

Looking forward, Mullen wants the ability to market in a manner that is similar to other mainstream businesses. He is also excited to get endorsed to sell medical cannabis. “With so many people seeking high-CBD products for a variety of conditions like fibromyalgia, chronic pain, anxiety, and more, we want to help patients get access to the medicine they need.”

As cannabis continues to be studied for its true benefits, Mullen anticipates significant advances in knowledge to occur within a very short timeframe.

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Marijuana Business Planning: A Q&A with Mike McCulley

By Aaron G. Biros
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MasterPlans, a business planning firm based in Portland, Oregon, has more than 13 years of experience in the emerging cannabis industry. The firm has worked to develop financial models and business plans for new and existing companies that are looking to secure funding, grow partnerships, and manage their long-term strategies for success. They have created business plans for more than 100 companies at every level of the market, from cultivators to dispensaries, to businesses in packaging, security and tourism. They work with nonprofit ventures, investor propositions, commercial lending and self-funded companies.

“We know how difficult it is to launch a business in the cannabis industry, because we work with businesses in this field every day,” says Mike McCulley, VP of Sales at MasterPlans. Cannabis Industry Journal spoke with McCulley to learn more about some of the challenges that marijuana businesses face.

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MasterPlans Cannabis Business Plans

Cannabis Industry Journal: What are some of the biggest hurdles in launching a new grow operation?

Mike McCulley: Many of our cultivation clients say that the largest hurdle they face is in identifying the ideal location for their business. Grow operations need to factor in a wide range of concerns including cost, zoning, security, soil viability (for outdoor operations), energy costs (especially for indoor operations), and proximity to schools and similar buildings. Location can really make or break the success of any grow operation, and this is often the single largest cost incurred when launching this kind of business.

CIJ: What are some key ingredients in a successful marijuana business plan?

McCulley: It probably goes without saying that a successful business plan for a company in the marijuana field first has to execute all of the elements that every business plan needs to include: Detailed financial projections, accurate market analysis, [and] a comprehensive overview of strategies and goals. Marijuana business plans in particular need to also address the key issues and challenges that are unique to operators in this industry. How will your company be impacted by state-level regulations, and how will your operational model address those? What steps will you take to ensure the security of your product? How will you accommodate the complicated issue of accounting while federal regulations are still impacting the way marijuana companies manage their banking? These issues should be acknowledged and addressed if you hope for your plan to be compelling.

CIJ: With the growing schism between recreational and medical markets, how do you determine your target market and meet those customers’ needs?

McCulley: Determining a target market can be difficult before launching operations, but it’s not impossible. A key tool to help work through this question is up-to-date census information or demographics for the area in which your company is serving. Recreational markets provide a much broader audience to become potential clients, but medical markets can also offer lucrative opportunities if an operator can launch in an area with a high concentration of eligible patients. Accurate market data plays a key role in this process, and close analysis of that data can help operators determine their best course of action.