Tag Archives: licenses

Flower-Side Chats Part 5: A Q&A with Bob Fireman, CEO of MariMed, Inc.

By Aaron Green
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In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices in order to navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

Multi-state operators (MSOs) are on the rise in the United States, navigating complex regulatory frameworks to drive profitability through economies of scale and scope. As an MSO and an early mover in the space, a significant part of MariMed’s current strategy is to complete the acquisition and consolidation of the licensed state cannabis businesses it has developed. It takes seasoned leadership to make that happen, and MariMed’s is led by one of the most experienced and successful MSO management teams in the industry. Over the last eight years, Bob Fireman and his colleagues have won 17 licenses in 6 states, and designed and developed over 300,000 square feet of cannabis cultivation, production and dispensing facilities.

MariMed has also developed a portfolio of award-winning cannabis brands and infused products which are licensed, manufactured and distributed in Delaware, Illinois, Maine, Maryland, Nevada, Rhode Island and Puerto Rico. A recently announced $46 million financing for a facility with Hadron Healthcare Fund will help repay all MariMed debt other than mortgage-backed bank loans and one convertible note, as well as help upgrade and expand the company’s owned and managed cannabis facilities.

We spoke with Bob Fireman, CEO of MariMed. Bob started the foundations of MariMed in 2008 after getting into large-scale hydroponics for urban sustainable agriculture. Prior to MariMed, Bob served as a startup lawyer focused on tech and emerging industries.

Aaron Green: Bob, tell me about how you got started in the cannabis industry.

Bob Fireman: I practiced law for decades. Part of my practice was to help startups in all sorts of industries, particularly technology and new emerging markets. At one point, I was introduced to a fascinating sustainable food business opportunity – to build hydroponic farms on rooftops in cities across the country.

Bob Fireman, CEO of MariMed, Inc.

When one of our projects in San Francisco hit some roadblocks, our team there pivoted to what was becoming the Wild West of California cannabis. My friend and current MariMed CFO, Jon Levine, and I began investing and managing a cultivation site there. That’s where we built our early foundation of industry knowledge.

Fast forward a few years, and I was afforded the opportunity to be involved in the drafting of the proposed Massachusetts medical cannabis legislation.

Through that work, we met a team that had won one of three cannabis licenses in Rhode Island. We formed a real estate LLC and raised the capital to develop a seed to sale cannabis facility in Providence, which was later leased to the Slater Center, a not-for-profit medical cannabis licensed business. Today, the Slater Center is a nationally acclaimed operation that services over 10,000 medical patients.

From there, we took our know-how and formed a new entity that was the formal beginning of the company we now know as MariMed. Initially, we helped win licenses for clients in Massachusetts, Delaware, Maryland, Illinois and Nevada. We also provided management services, working capital and other necessities. Under our management, we organically built these businesses from the ground up, advancing best practices and somewhat quietly creating a network of best-in-class operations throughout the industry.

That led to the consolidation of those businesses that we’re focused on today as a core strategic pillar.

I’m incredibly proud of our team, the core of which has been at this for 10 years. We’ve watched other MSOs try different models of success, with varying degrees of success. For us, focusing on growth markets, building at a reasonable and scalable clip, attracting incredible talent at all levels of the company, and developing fantastic brands that customers love, are the ingredients that have translated to where we are now – strong performance and an exceptionally bright future. “Slow and steady wins the race” has become a mantra.

Green: What trends are you looking at right now? What’s on your radar?

Fireman: My radar has a singular focus, and that’s to create shareholder value. That’s why completing the consolidation of the cannabis licensed businesses we’ve developed and manage into our public company is so critical. Back in the day, the initial available licenses were in medical-only state programs where applicants were required to be not-for-profit state companies. Accordingly, we raised the capital in the real estate entity which leased facilities to the licensees. Our revenue was from rents, management services and licensing fees.

Panacea Wellness in Middleborough, MA is one of MariMed’s adult use cannabis dispensaries

In 2019, we implemented a new strategic plan to consolidate these businesses. While that translates to our being structured similarly to other MSOs in that we are a vertically integrated seed to sale company, we are distinct in our operational excellence, quality product portfolio, and strong balance sheet. Other MSOs have raised large amounts of capital to pay large sums to acquire licensed state cannabis businesses and have found themselves over-leveraged and challenged to assimilate other companies’ methodologies and cultures. By consolidating the businesses and talented people we developed and managed from day one and utilizing our best practices and processes system-wide, we realize enormous capital efficiencies.

Our strategy is paying off. Our core cannabis revenue in 2020 increased 207% to $50.9 million, and our 10k reported EBITDA of $16.3 million. And now we’re on track to double our revenue in 2021.

The last piece of the puzzle is to let the world know what we’ve been doing. Slow and steady has worked for us but gone are the days of doing so quietly. We’re proud of what we’ve accomplished and exceedingly bullish on what’s to come.

Green: What do you look for in an M&A target?

Fireman: When M&A makes sense for us, we first look for single operators and entrepreneurs in states where we are not active and look to partner with business leaders that had the vision and the courage to get into this industry and build solid cannabis businesses from the ground up. I’m looking for businesses that could benefit from being part of a larger, more experienced and well-capitalized company like MariMed. Obviously, as an MSO with a solid platform, MariMed is approached regularly by other MSOs and banks suggesting candidates for M&A opportunities. Lining up with a company that has complementary cannabis licenses in other states and who shares our vision and ethics could be a win-win situation. They must embrace our commitment to diversity, the environment and proper corporate governance. We have been somewhat reticent to do this until we see some increase in our share price and market capitalization.

Green: Are there any new products, or product trends that you’re looking at?

Fireman: Marimed looks to be the most trusted source of high-quality cannabis products that consistently delivers innovative health and wellness solutions to our patients and customers. Our lab scientists are constantly creating and testing new and innovative formulations of cannabinoid compounds including CBD, THCa, CBG, CBN and others that will improve the health and wellness of our customers.

Our brand portfolio is ever-expanding with new and better product offerings. Our award-winning Betty’s Eddies Fruit Chews brand is adding new SKUs of varieties and flavors for both medical and adult use programs. Our Nature’s Heritage flower and concentrates brand is adding a line of solventless concentrates, live rosin, as well as new formulations for RSO, an oil popular with medical patients. Kalm Fusion is expanding its successful line of powdered drink mixes as we see more movement in the cannabis beverage category.

Microdosing is hugely popular right now, and we’re rolling out products in the 2-5mg dosage range. Health and dietary concerns are top of mind as well, and we offer products that are vegan, sugar-free and gluten-free. Ultimately, we want to be sure that we have something on the shelves for every single consumer. The financial hardship created by the pandemic has made consumers more attracted to value added products such as popcorn buds.

Green: You recently announced an equity financing from Hadron. I’m curious to learn more about it from a nuts-and-bolts perspective if you can share any of that information.

Fireman: Over the last year, access to the capital markets for equity raises in cannabis public companies was difficult. The cost of debt was and is still high, and we were looking for a long-term financial partner that understood the industry and could assist us. Hadron Capital has been successful for several years investing in some of the most successful MSOs and they saw the value and potential in MariMed’s experienced management and great assets.

Hadron invested $46 million in equity in MariMed this March. Approximately $16 million was utilized to retire all our short- and long-term debt but for bank secured debt and one convertible note. $7 million is committed to funding our capex and expanding the capabilities of our facilities, enabling us to grow more flower and automate production. The balance of funding will support our consolidation strategy to fund two more roll ups of state licensed cannabis businesses into the public company.

Going forward, it is comforting to have a capital partner to assist us in future acquisitions and M&A opportunities.

Green: I’d love to learn more about your Nature’s Heritage brand, particularly as it relates to the cultivation and the flower products.

Fireman: Our COO Tim Shaw has assembled a cultivation and production team with expertise in all aspects of genetics, growing methodologies, extraction techniques, and packaging innovation. That’s provided us a rich collection of quality genetics that make up Nature’s Heritage, our top-selling flower, oil and concentrate brand in Massachusetts and Maryland. We’ve recently expanded the line to include Rick Simpson Oil (RSO) and solventless concentrates (including live rosin) and have been receiving stellar feedback.

Green: What are you interested in learning more about?

Fireman: Over the last decade, the MariMed core team has seen the emergence and amazing growth of the cannabis industry. The initial medical programs in California and Colorado have now led to some form of legal medical or adult use cannabis programs in over 33 states and districts.

We are most interested in learning and following the federal, state, and international laws and regulations. It is vital to know how these laws will affect our company and the industry as a whole. When might full federal legalization become a reality? What might different versions of the law be? Will state legal programs be protected as well as the companies that took the risk in investing in the industry at its nascent state and how? What will FDA requirements and regulations look like? What medical claims will companies be allowed to make, and what kind of research or trials will be required to put a product on the shelf? What are the ramifications of the MORE Act or the SAFE Banking Act?

Responsible MSOs need to be prepared to rise to or above the standards of care of other industries. A lot of this was impossible in the past because of federal prohibition laws. Soon, if not already, labs and manufacturing processes will need to be GMP certified and more. Consumer data will need to be HIPAA compliant. Cannabis companies have to be good corporate citizens: diversity and equal opportunity should be embedded in business decisions, and commitment to ESG and sound environmental and social policies with good corporate governance need to be in planning and implemented.

Following the laws and holding ourselves to the highest possible safety and business standards will allow the cannabis industry to finally become “mainstream.”

Green: Alright, great. Thank you, Bob. That concludes the interview!

The (Arrested) Rise of Craft Cannabis in Canada

By Steven Burton
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It’s no secret that the rollout of cannabis legalization has underperformed in countries like Canada. Since legalization in October of 2018, industry experts have warned that the projections of the big cannabis firms and venture capitalists far exceeded the expected demand from the legal market.

Today, major production facilities are closing down, some before they even opened, dried flower inventory is sitting on shelves in shocking quantities (and degrading in quality), and an extremely robust illicit market accounts for an estimated 80% of the estimated $8 billion Canadian cannabis industry. None of those things sound like reasons for optimism, but while some models for cannabis business are withering away, others are beginning to put down stronger roots. Crucially, we are beginning to see new business models emerge that will be able to compete against the robust black market in Canada.

The Legal Cannabis Industry Can’t Compete

Legal rollout in Canada could easily be described as chaotic, privileging larger firms with access to capital who were able to fulfil the rigid – and expensive – regulatory requirements for operating legally. But bigger in this case certainly did not mean better. The product these larger firms offered immediately following legalization was of a lower qualityand higher price than consumers would tolerate. In Ontario, cannabis being shipped to legal distributors lacks expiration dates, leaving retailers with no indication of what to sell first, and consumers stuck with a dry, poor quality product.

The majority of existing cannabis consumers across the country prefer the fresher, higher quality and generally lower priced product they can easily find on the illicit market. That preference couldn’t be clearer when you look at the growth of inventory, which is far outpacing sales, in the graph below:

Source: Government of Canada

Which brings us to the crux of the matter: when it comes to building up the Canadian cannabis industry, what will succeed against the black market that has decades of expertise and inventiveness behind it?

Rising From the Ashes: Craft Growers and Other Small-Scale Producers

The massive facilities like Canopy’s may be shutting down, but our friends over at Althing Consulting tell us that those millions of square feet facilities are being replaced by smaller, more boutique-style cultivation facilities in the 20,000 ft tier, which are looking to be the future of the industry.

Consumers have consistently shown a strong preference for craft cultivators and other small-scale producers who produce higher quality, more varied products that are more responsive to consumer needs. It also hasn’t hurt that prices are also coming down: Pure Sun Farms in Delta, BC is consistently selling out of their $100/ounce special, which is highly competitive even with the illicit market.

This vision of the industry matches up better with the picture we’ve been getting from other legalization projects around the world. It also squares with other indicators of success. Despite the small market capture of the legal market, industry employment numbers are still relatively high, especially when compared with more established legal consumer products markets such as beer. In fact, craft cannabis growers now employ nearly as many people as the popular craft brewing sector here in British Columbia.

But in order to make the craft cannabis market actually competitive in both the regulated and unregulated spaces, the government will have to address four major challenges.

Challenge #1: License Distribution is Uneven and Chaotic

A December 2020 report by Ontario’s auditor general contains admissions by the Alcohol and Gaming Commission of Ontario (AGCO), Ontario’s cannabis industry regulator, that they lack the capacity and resources to manage the number of applications for private cannabis retailing. Problems relating to the issuing of licenses, including long delays and difficult requirements, are widespread across provinces. One way this becomes clear is by looking at the very uneven distribution of stores across the country in the graph below.

Source: MJBiz Daily

Challenge #2: Basic Regulatory Compliance is Complex and Time-Consuming

Smaller-scale micro cultivators, whose good quality craft product remains in high demand, still face prohibitive barriers to entry into the legal market. Licensing from Health Canada is one onerous challenge that everyone must tackle. Monthly reporting requirements have in excess of 477 compliance fields. Without additional support to navigate these requirements – including automation technology to ease the administrative burden – these smaller producers struggle to meet the minimum regulatory standards to compete in the legal market.

Challenge #3: A Long-Distance Road to Compliance and Safety Means Higher Costs

Even with all regulatory requirements satisfied, cannabis cultivators can’t sell their product from “farm to fork” (to borrow a phrase from the food industry). Many growers ship their product to be irradiated in order to ensure they are below the acceptable microbial threshold set by Health Canada. While irradiation positively impacts the safety of the product, new evidence shows that it may degrade quality by affecting the terpene profile of the plant. Furthermore, only a few facilities in Canada will irradiate cannabis products in the first place, meaning that companies have to ship the finished product sometimes thousands of kilometers to get their product to market.

Next year, Health Canada looks set to lower the limit on microbials, making it virtually impossible to avoid cannabis irradiation. If Health Canada follows through, the change will be a challenge for small-scale cultivators who strive to prioritize quality, cater to consumers who are increasingly becoming more educated about terpene profiles, and seek to minimize the environmental impact of production.

Challenge #4: It is Virtually Impossible to Market Improved Products

Finally, there is a marketing problem. Even though the regulated market has made dramatic improvements in terms of product quality from legalization two years ago, Health Canada’s stringent marketing restrictions means that cannabis producers are virtually unable to communicate these improvements to consumers. Cannabis producers have little to no opportunity to reach consumers directly, even at the point of sale – most legal sales are funneled through government-run physical and online stores.

What Can a Thriving, Legal Cannabis Market Look Like in Canada?

The good news is that change is being driven by cannabis growers. Groups like BC Craft Farmers Co-Op are pooling resources, helping each other navigate financial institutions still hostile to the cannabis trade, obtain licenses and organizing craft growers to advocate to the government for sensible regulatory changes. As a result of their advocacy, in October, the federal government initiated an accelerated review of the Cannabis Act’s restrictive regulations related to micro-class and nursery licenses.

Now, more co-op models are popping up. Businesses like BC Craft Supply are working to provide resources for licensing, quality assurance and distribution to craft growers as well. Indigenous growers are also showing us how cannabis regulation could work differently. Though Indigenous cultivators currently account for only 4% of Canadian federal cannabis licensees (19/459), that number looks to be growing, with 72 new site applications in process self-identified as Indigenous, including 27 micro cultivators. In September, Williams Lake First Nation entered into a government-to-government agreement with the province of British Columbia to grow and sell their own cannabis. The press release announcing the agreement includes the following statement:

“The agreement supports WLFN’s interests in operating retail cannabis stores that offer a diverse selection of cannabis products from licensed producers across Canada, as well as a cannabis production operation that offers farm-gate sales of its own craft cannabis products.”

More widespread adoption of the farm-gate model, which allows cultivators to sell their products at production sights like a winery or brewery, has a two-fold benefit: it better supports local, small-scale producers, and it offers opportunities in the canna-tourism sector. As the economy begins its recovery alongside vaccine rollouts and restrictions on travel ease, provincial governments will have the chance to leverage the reputation of unique regional cannabis offerings (i.e. BC bud) through these farm-gate operations.

While the cannabis legalization story in Canada has had its bumps, the clear path forward for greater legal market success lies in increased support for micro-cultivators. By increasing support for these small-scale producers to navigate regulatory requirements, more will be able to enter the legal market and actually compete against their illicit counterparts. The result will be higher quality and more diverse products for consumers across the country.

Cresco Labs Acquires Bluma Wellness

By Cannabis Industry Journal Staff
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Cresco Labs, one of the largest multistate operators (MSOs) in the country, announced the acquisition of Bluma Wellness Inc., a vertically integrated cannabis company based in Florida.

Cresco Labs, with roots in Chicago, Illinois, operate 29 licenses in 6 states across the United States. With this new acquisition, Cresco Labs solidifies their ubiquitous brand presence in the most populous markets and cements their position in Florida, a new market for them.

According to the press release, the two companies entered an agreement where Cresco will buy all of Bluma’s issued and outstanding shares for an equity value of $213 million. They expect the transaction to be completed by the second quarter of this year.

Charles Bachtell, CEO of Cresco Labs, says their expansion strategy is based largely on population. “Our strategy at Cresco Labs is to build the most strategic geographic footprint possible and achieve material market positions in each of our states,” says Bachtell. “With Florida, we will have a meaningful presence in all 7 of the 10 most populated states in the country with cannabis programs – an incredibly strategic and valuable footprint by any definition. We recognize the importance of the Florida market and the importance of entering Florida in a thoughtful way – we identified Bluma as having the right tools and key advantages for growth.”

Bluma Wellness operates through its subsidiary, One Plant Florida, which has 7 dispensaries across the state and ranks second in sales in the state. They also have an impressive delivery arm of their retail business, deriving 15% of their revenue from it.

european union states

Frontline Pharmacy: The Battle For The Footprint of Medical Cannabis Europe

By Marguerite Arnold
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european union states

This summer, as new distributors continue to get into the cannabis game (in Germany, the UK and beyond), and at least two countries (Greece and Macedonia get GMP-certified), the battle is now on not just for cultivation and distribution licenses, but the end point of sale, pharmacies.

Pharmacies were always going to play a large role in cannabis distribution in Europe, starting with the fact that there will not be a separate “dispensary” system (as there is in the United States and Canada). Further, in some jurisdictions, notably Germany, the idea of the “apotheker” is one that is not going to go away anytime soon. No matter how intriguing the concept of online pharmacies actually are to everyone else (see the British).

Further, the shift to what is widely being referred to as “tele” or “digital” health is only going to increase in prevalence as discussions continue. Cost and access (to all medications, not just cannabis) are an issue near and dear to the average European. So is the right and consumer safety issues of being able to consult with a local pharmacist, who might even know you personally, and can advise on the health effects of the medicines they pass over the counter.

german flag
Photo: Ian McWilliams, Flickr

Jens Spahn, the current Health Minister of Germany, is touting a move to personal management of health records and digital prescriptions by next year. However, nobody knows exactly what that means, much less the functionality of the same.

Further, the German pharmacy situation in particular is one that has implications across Europe no matter how aggressively “digital health” solutions are implemented here. By law, no more than three (in some rare cases four) brick and mortar pharmacies can be owned by the same owner. There is no such thing as “Boots” (a British chain) or “Walgreens” (an American one).

Doc Morris, the Dutch online pharmacy, has always been an option for Germans just across the border. The problem of course is that insurers so far have been refusing to pay for critical parts of this idea. The company is currently experimenting with working with insurers- but do not expect the average chronically ill person in any country to suddenly get expedited access. So far, the only innovations in this market have hit as the privileges of the privately insured.

Second class status (and significantly lagging behind those with private healthcare) is also very much in the room as a political issue- and cannabis access has only sped this up.

If the scenario in the EU two years ago could be described as the race for import licenses and cultivation rights, this year, the focus of the big guys is very much trying to mainstream their product and get it on as many “shelves” as possible.

In Europe, however, since nobody can ship straight to the patient (as in Canada), the next most obvious step is securing access to pharmacies.

The Cannabis Industry Cometh

Even before Aphria announced its purchase of CC Pharma (one of Germany’s largest distributors)  in a deal that finally closed in January of this year, the larger companies have been looking for a more efficient supply chain situation. Owning a distributor is certainly one way to go about this.

Israeli Together bought into a large German distributor last summer.

As of May 2019, Aleafia Health and its wholly owned subsidiary, Emblem, entered a JV with Acnos Pharma GmbH – with access and reach to 20,000 German pharmacies. And Wayland announced its merger with ICC, with pharmacies across the world.

As early as October 2017, Tilray and Cronos together tried to storm the German market (by inking a deal to reach the 20k plus pharmacies in the German system). Two years later, and this still has not made a huge difference in access.

Regardless of these larger industry players, however, or perhaps so far because of their statements and the resulting continued lack of access for most patients, it is also fact, particularly in both Germany and the UK, that merely having relationships with pharmacies is not enough. This year, there is also a fairly major price drop in the cards for the cannabis industry. And while the larger players may blanket the market with relationships, actually providing access to GMP-certified medical cannabis at a decent if not competitive price, is going to continue to have an impact on every market, particularly in those situations where compliant online access can be connected to indie distribution.

It is also an environment where the advantage still does not necessarily go to the “big guys” – a strategy that Wayland, for one, has been playing strategically for the better part of the last two years better than any other Canadian in the market. Especially when supply chain issues, beyond price, are still in the room.

Right now, pharmacies are well aware of their growing influence in this space in Europe. How much of an influence they will continue to have however, also rests on how effectively they preserve their right to have such an influence on the end consumer (as in Germany) or not (see the many discussions about this issue in the UK right now).

Further, as many of these entities are also realizing, and this is true far beyond the cannabis discussion, pharmacies are increasingly caught in the middle between consumer, doctor and insurer (this is certainly the case both for cannabis and also for all expensive orphan drugs).

How the pharmacies, in other words, begin to solve other issues, beyond just having a contractual relationship with a cannabis distributor/producer, is very much a part of the conversation right now. Access to cannabis via distribution deals with a Canadian or even Israeli partner certainly helps sales but it does not guarantee them.

One thing is for certain. The impact of new privacy legislation is having an effect, so even in an environment where a distributor/producer buys a pharmacy, what they can then do with customer information they also might have been interested in purchasing, is not only highly limiting, but in the future it may be the best approach to handling liability, and from multiple directions that includes everything to access to affordable, certified product to cyber security issues.

Kelly O'Connor
Soapbox

Dishonest Potency Testing In Oregon Remains A Problem

By Kelly O’Connor
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Kelly O'Connor

Oregon, we have a problem.

Anyone with a search engine can piece together how much THC certain strains produce and what their characteristics are. Oh wait- there’s an app for that… or dozens, I lose count these days.

Nefarious lab results are rampant in our communityLet’s take one of my favorites, Dutch Treat; relaxing, piney and sweet with a standard production of 18-25% THC, according to three different reviews online. So, did I raise an eyebrow when I saw Dutch Treat on Oregon shelves labeled at 30% THC? Did I take it in to an independent, accredited lab and have it tested for accuracy? You bet your inflated potency results I did! The results? Disappointing.

Nefarious lab results are rampant in our community; it is hurting every participant in our industry affected by the trade, commerce and consumption of recreational cannabis.

“I have had labs ask me what I want my potency numbers to look like and make an offer,” says David Todd, owner and operations manager of Glasco Farms, a craft cannabis producer in central Oregon. “It’s insane- I want to stand behind my product and show through scientific fact that I produce a superior flower.”

But without enforcement of lab practice standards, producers are being pressured to play dirty. In her third year cultivating at a two-tier recreational cannabis farm, a producer who wished to remain anonymous sent me an email about the pressures she is up against to produce high THC strains:

“The only sure way to get my product on the shelf at a profitable price is with THC 25% or above. Not a lot of strains have that potential, but the market has plenty with 28% to 32% floating around so I have to go with the same labs as the rest of the independent farmers to get the best numbers I can. The lab I use … return(s) good numbers.”

Those “good numbers,” aka high THC %, are the driving force of sales. A strain tests at 20% THC and it sells for $1,000/lb. Then it tests at 25% THC, and sells for $1300/lb. You produce cannabis for sale- this is your business. And labs are telling you that they can manipulate samples and reports to make you more money. Everyone else is doing it. If you don’t, your product isn’t “good enough” to sell. What do you do?Labs should operate ethically.

It’s a vicious cycle perpetuated by lies, lack of enforcement resources, coercion and undereducation. We are all responsible. Yet, ask who the source of the problem is and everyone points fingers across the circle.

The consumers are uneducated about cannabis and only focus on THC. The dispensaries and budtenders should be educating them. Producers should take a stand and use an honest lab. Labs should operate ethically.

I repeat: Oregon, we have a problem.

It’s time to stop living in a land where Dutch Treat is hitting 30% THC. It’s time for everyone to demand auditing and ethics.

Laws have been set forth on how to sample, prep, test and report analyses for cannabis to ensure fair commerce, consumer health and public safety. But there’s a clear need to blind test the different labs, and for unbiased, third-party research and development.

As federal eyes turn to the Oregon to investigate black market activity, regulatory bodies are tightening their grip on licensees to maintain legal validity and avoid shut down.

The time to demand change and integrity is now.The crack-down began on August 23, 2018, when the OLCC investigated several prominent producers’ practices. Black market distribution incurred the harshest penalty; the OLCC revoked their wholesale license due to multiple violations.

“We want good compliant, law-abiding partners as OLCC marijuana licensees,” says Paul Rosenbaum, OLCC Commission Chair. “We know the cannabis industry is watching what we’re doing, and believe me, we’ve taken notice. We’re going to find a way to strengthen our action against rule breakers, using what we already have on the books, and if need be working with the legislature to tighten things up further.”

Trends in METRC data lay the foundation for truth, and it’s time to put it to use. “The Cannabis Tracking System worked as it should enabling us to uncover this suspicious activity,” says Steven Marks, OLCC Executive Director. “When we detect possible illegal activity, we need to take immediate steps …”

Potency fraud might not be at the top of the list for investigation, but labs and producers are breaking the law, and there will be consequences. ORELAP and OLCC have the right to investigate and revoke licenses of labs that are falsifying data and consumers can file claims with the Department of Justice.

The time to demand change and integrity is now.

Soapbox

A Who’s Who List Of The Top Movers & Shakers In The German & EU Cannabis Markets

By Marguerite Arnold
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This collection of leaders in the European cannabis market is by no means completely neutral. Much less comprehensive. It is however, German and European centric, because these people, by definition and geography, are now sitting at the nexus of a global, and even within Europe, international industry. Europe for that reason, will be the place, and for some time, where the global cannabis industry comes to make deals across borders, meet the high levels of compliance required here that is setting global standards and push the medical revolution forward for (at least) the next five to ten years.

For that reason, the people listed below carry influence far beyond one country or even region, by definition. But they are also not the only people redefining an industry.

Most notably, of course by their exclusion, are women, although there are some exceptions to that and women are increasingly establishing their place at high executive levels although not yet founder or cofounder or, auf Deutsch, Geschäftsfüherin– (Managing Director) at any of the establishing global companies with European presence. That said, they are beginning to make their appearance in every place and career path within the industry.

Movers and Shakers

Dr. Pierre Debs, Ph.D. An American expat with a German Ph.D., and twenty five plus years’ experience in stem cell research, including endocannabinoid system function. Debs is also the often uncredited individual who opened the current medical market in Germany in particular, but with immediate impact throughout Europe. As the scrappy start up MedCann, Debs, his cofounders and a skeleton team based just south of Frankfurt, not only got into the game first, they beat other established companies to obtain the first import license for Canadian flower in the summer of 2016. Including and most notably Tilray. MedCann GmbH at that point became the only other company besides Bedrocan, the perennial Dutch provider for the last twenty years to be able to provide medicinal, GMP-certified flower to the German market. That market distinction of course, did not last long as other companies quickly jumped into the ring but as the medical brand of Canopy, Debs has continued to lead industry development across Europe. Today, as the Geschäftsführerof Spektrum Cannabis GmbH (as MedCann was renamed after its purchase by Canopy sometime in Q4 2016-Q1 2017) and as Canopy Growth Corp Managing Director Europe, Debs has not only established but currently oversees operations in multiple European countries as Canopy Cannabis expands its global medical brand. From, it should also be added, its swanky new digs in central Frankfurt.

Tjalling Erkelens, Bedrocan founder and CEO. Bedrocan is the legacy cannabis player here in a game that is rapidly changing as it expands. The first exporter of medical cannabis in the world, the family owned company currently produces five different cannabis strains bound for the medical market, and is expected to be the beneficiary of the newly expanded import quota into Germany from Holland for medical grade flower, as well as place well in the German cultivation bid. 

Gerhard Muller of the Wayland Group
Gerhard Muller of the Wayland Group

Gerhard Müller. The unassuming Chair of the Audit Committee of Wayland Group, the cannabis company formerly known as Maricann. Müller is less often in the English-speaking press than Ben Ward, company CEO. However, Müller is a force to be reckoned with as Wayland begins to unfold its usually understated strategy in Germany and Europe from its Munich HQ base. Müller is the former head of Ernst and Young’s GSA Tech Practice, also adding household names like Birgit Homburger and Christopher Peterka to Wayland’s German Advisory Board. Also of note is GM for Wayland Germany Josef Späth now tasked with bringing his connections and previous experience as a top, internationally experienced clean tech architect and engineer to the build out of Wayland’s infrastructure. This includes previous work with NASA Jet Propulsion Lab alumni to develop new techniques for harvesting and processing of cannabis. German ingenuity and engineering at its best!

Patrick Hoffmann, CEO of Aurora Deutschland (formerly Pedianos). This firm too, was one of the early start-ups to get into the distribution and cultivation game and so far they have proven to be adept at navigating the complex path to winning cultivation rights. Aurora placed in the top ten finalists for the last German cultivation bid. As Pedianos, the firm won the first distribution and cultivation deal for Italy, sourced via Berlin. They have already proven to be highly skilled at finding market advantages in an exploding European market puzzle.

David Henn, CEO of Cannamedical Pharma
David Henn, CEO of Cannamedical Pharma

David Henn, CEO of Cannamedical Pharma. The millennial at the front of the cannabis import and distribution craze in Germany, founded his start up in November 2016. Henn then obtained one of the first issued licenses for trading and ex-im of medical cannabis just as the law changed in Germany officially to mandate insurance coverage of medical cannabis by prescription. Since then, the fiercely independent entrepreneur has turned down multiple acquisition offers from companies in Canada, Israel and Australia. The Cologne-based company supplies a growing network of German pharmacies and entered into off-take agreements with major companies in Europe, Canada and Australia. Bolstered by its cash flow in the existing distribution business, Cannamedical is continually expanding and has already established European subsidiaries that are in the progress of obtaining additional production and distribution licenses for the company.

Peter Homburg. Partner, Denton’s Law Firm. Peter has already had an established career as a high-powered partner and the head of the firm’s Life Sciences Division. Yet like many people of different paths and persuasions, he began to explore the world of the legal end of the business several years ago. These days, albeit based in Frankfurt, he has helped establish the firm’s reputation internationally as a leading law firm in the cannabis space.

Rob Reid, co-founder of European Cannabis Holdings
Rob Reid, co-founder of European Cannabis Holdings

Rob Reid. Reid wears several influential hats based out of his offices in London. As the director of publicly listed, SOL Investments Corp (formerly Scythian), he invests in the U.S.-based cannabis industry. He is also the co-founder of European Cannabis Holdings (ECH), which is investing in a portfolio of private medical cannabis companies on this side of the pond. He is also the co-founder of Prohibition Partners, the increasingly prolific market intelligence and consultancy firm, and Cannabis Europa, a conference and networking platform. Finally, he is involved in a number of cultivation JVs around the world.

Marla Luther. As co-director for Tilray Europe (along with Sean Carney) and based in Berlin, Marla has the most senior leadership title of any woman in the cultivation and distribution industry in Europe. She has also been in the position for the last several years.

Alex Rogers. As the founder of the International Cannabis Business Conference (ICBC), Alex has established perhaps the first truly international cannabis conference brand catering to the professional end of the regulated industry but retaining the soul of the advocacy movement. The Berlin conference going into its third year in 2019, literally reset the standards if not stage for the next upgrade of the industry conference concept. Within a year of its first international conference in Berlin, Alex and his team had also established conferences in Canada and are establishing the B2B conference of Spannabis under their rubric in Barcelona as of next year.

Steve Goldner
Marijuana Matters

Food Processing & Cannabis Policy

By Stephen Goldner J.D.
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Steve Goldner

We have not seen food processing opportunities in the 45 years I’ve been in the industry like we are seeing in the cannabis food segment. There are still many legal, regulatory and policy misconceptions and this column is devoted to giving you some clarity. I hope this helps you make sensible business plans based on sound marketing opportunities.

It’s hard for many people to make the leap from thinking marijuana is illegal to knowing that food infused with marijuana is legal in 50% of the US, and quickly moving toward national legality. Any food processor that does not consider this opportunity to meet changing market dynamics risks losing a huge opportunity.

23 states, the District of Columbia and Guam now have comprehensive cannabis programs in place and many more are expected through Q4 of 2016. The voter approval, tax aspects and improved law enforcement profiles are highly favorable towards legalization and regulation. While marijuana itself can’t be shipped across state lines legally at this time, food-processing equipment is being sold, shipped, and installed every day of the week with no legal ramifications. The remaining problematic business aspects are rapidly moving through the solution phase, specifically labeling, tamper-evident and child resistant packaging, and payment methods.

Unlike other technology introductions, a mass market already exists and is clamoring for these food products. Therefore the ‘early movers’ are developing business relationships state by state to prepare food production lines that incorporate cannabis food production into cannabis processing companies. 

Essentially, any state that allows cannabis dispensaries to exist will require food-processing equipment. In addition, states like Michigan where I reside, there are over 200,000 medical marijuana licenses issued to individuals, and over 250 unlicensed dispensaries. Michigan is getting ready for dispensary licensing and food production. We should anticipate inquiries from companies applying for food production licenses from any and all states as they are carefully attuned to their local state rules.

You can always contact me at this publication by clicking here and I’ll do my best to answer you that day or visit my website, Regulatory Affairs Associates.

Jurisdictions with active cannabis food production in USA: Arizona, California, Colorado, Connecticut, Delaware, Washington, D.C, Guam, Illinois, Maine, Maryland, Massachusetts, Michigan [coming soon], Minnesota, New Hampshire, New Jersey, New Mexico, New York, Rhode Island, Vermont, Washington

The next few articles in this series will focus on making certain your food production equipment will meet cannabis food production regulatory standards, the unusual payment procedures in this new industry, and relationship building since many of the new companies and their advisors will be new to you. Plus you really want to know their expectations of you.