The bill establishes the Office of Cannabis Management, which will launch and manage the regulatory system for the commercial cannabis market in New York.
According to Steve Schain, senior attorney at Hoban Law Group, the Office of Cannabis Management will have a five-member board that will oversee not just the adult use cannabis market, but also medical cannabis as well as the state’s hemp market. For the medical market, the new legislation provides for more patient caregivers, home cultivation and an expanded list of qualifying conditions.
New York Governor Andrew Cuomo Image: Chris Rank, Flickr
Troy Smit, deputy director of the New York NORML chapter, says the bill might not be perfect, but it’s a massive win for the cannabis community. “It’s taken a great amount of work and perseverance by activists, patients, and consumers, to go from being the cannabis arrest capital of the world, to lead the world with a legalized market dedicated to equity, diversity, and inclusion,” says Smith. “This might not be the perfect piece of legislation, but today, cannabis consumers can hold their heads high and smell the flowers.”
The MRTA sets up a two-tier licensing structure that separates growing and processing licenses from dispensary licenses. The bill includes a social equity aspect that requires 50% of the licenses to be awarded to, “minority or women-owned business enterprise, service-disabled veterans or distressed farmers,” says Schain.
New York City Image: Rodrigo Paredes, Flickr
Melissa Moore, New York State director of the Drug Policy Alliance, says she’s proud of the social equity plan the bill puts in place. “Let’s be clear — the Marijuana Regulation and Taxation Act is an outright victory for the communities hit hardest by the failed war on drugs,” says Moore. “By placing community reinvestment, social equity, and justice front and center, this law is the new gold standard for reform efforts nationwide. Today we celebrate, tomorrow we work hard to make sure this law is implemented fairly and justly for all New Yorkers.”
Schain says the new tax structure in the bill shifts to the retail level, with a 9% excise tax and 4%-of-the-retail-price local excise tax (split 25%/75% between the respective counties and municipalities). Revenue from cannabis taxes will enter a fund where 40% will go to education, 40% to community grants reinvestment fund and 20% to drug treatment and public education fund.
It appears that businesses already established in New York’s medical market get a head start on the new adult use market, while other businesses enter the license application process, according to Schain. “Although the existing Medical Marijuana licensees should be able to immediately to sell Adult-Use Cannabis, it will take up to two years for the New York’s Adult Use Program to launch and open sales to the public,” says Schain.
Update: The House Judiciary Committee has passed the legalization bill, HB0209, by a 6-3 vote. After moving out of the Judiciary Committee, the bill now awaits a floor hearing, which is expected to come within the next week or two during the legislative session that ends on April 2.
A bipartisan group of lawmakers in Wyoming have introduced a bill to legalize cannabis in the state’s legislature. First reported by Buckrail.com, HB0209 was assigned on March 2. The bill would legalize possession, home grow and sales for adults, as well as establish a regulatory framework for licensing, tracking and taxation.
In November 2020, voters in Montana and South Dakota passed ballot measures that legalize adult use and sales of cannabis. About a month after Election Day, the University of Wyoming conducted a poll that found roughly 54% of Wyoming residents now support legal adult use cannabis. In 2018, UW found that 85% of Wyoming residents support medical cannabis legalization.
In March of 2019, Wyoming Governor Mark Gordon signed a bill into law that essentially legalized hemp in the state. That bill was a boon for the state’s agricultural economy, giving many farmers a much-needed boost in their crop diversity.
Wyoming Governor Mark Gordon
You can find the current version of HB0209 here. Sponsors of the bill include: Representatives Jared Olsen (R-Laramie), Mark Baker (R-Sweetwater) Eric Barlow (R-Campbell/Converse), Landon Brown (R-Laramie), Marshall Burt (L-Sweetwater), Cathy Connolly (D-Albany), Karlee Provenza (D-Albany), John Romero-Martinez (R-Laramie), Pat Sweeney (R-Natrona), Cyrus Western (R-Sheridan), Mike Yin (R-Teton) and Dan Zwonitzer (R-Laramie) and Senators Cale Case (R-Fremont) and Chris Rothfuss (D-Albany).
According to Buckrail, if the bill becomes law, Wyoming could get roughly $49.15 million in tax and license fee revenue in 2022. That number would mean a sizable windfall for the state that saw an 8.5% decline in tax revenue in 2020. Governor Gordon proposed budget cuts as high as 15% for agencies across the state last year. Most of the revenue generated from cannabis taxes would be earmarked for education.
Part One of this series took a look at how the regulated cannabis market can only be understood in relation to the previous medical market as well as the ongoing “traditional” market. Part Two of the series describes how regulation defines vertical integration in California cannabis, and conversely, how vertical integration can address some of the problems that the regulations create. But first:
A Grain of Salt
Take the conventional wisdom about vertical integration with a grain of salt. Expected benefits may not materialize under the current circumstances:
Overall, the business environment is highly challenging due to extensive regulation, over taxation, insufficient retail capacity and competition from the “traditional” market. As a result, integrating businesses upstream or downstream may mean capturing losses, not profits.
The three major types of cannabis activity span three major industrial sectors: raw materials (i.e., cultivation), manufacturing and service (distribution, testing and retail). As a result, a vertically integrated company needs to carry out very different types of activity, which require very different types of core competencies, equipment and facilities.
Developing core competencies is especially challenging because each of the major cannabis sectors is still evolving.
Realizing the benefits of vertical integration requires an additional core competency in cross-sector operations.
Regulations Define the Supply Chain
California’s regulations define the cannabis supply chain by defining both the individual links (licensees) and the relationships between those links. Therefore, an understanding of vertical integration must be grounded in an understanding of the underlying regulatory definitions.
The regulatory definition of each link is extensive. For example, each licensee is tied to a specific facility, and must have its own procedures for production, inventory control, security, etc. When the links are strung together, this definition tends to preserve operational redundancies, and impede operational integration.
Overall, the relationships between the links are primarily defined in terms of preserving the chain of cannabis custody. On top of that, regulations define very specific (and very consequential) links between certain licenses, as discussed below.
A Taxonomy of Links
There are currently 26 types of cannabis license in California, 25 of which can be vertically integrated:
Cultivation – 14 licenses, including 4 sizes each for Indoor (up to 22,0000 sf), Mixed Light (up to 22,000 sf) and Outdoor (up to 1 acre), as well as Nursery and Processor (drying, trimming and packaging/labeling). Note that cultivation licenses are the only licenses that restrict the scale of activities.
Manufacturing – 5 licenses, including volatile extraction, non-volatile extraction, everything but extraction (i.e., infusion) and packaging/labeling.
Testing (Type 8), for testing cannabis according to state standards prior to sale. The owner of a testing license cannot own any other type of license.
Distribution (Type 11), acts as the gateway between cultivation and manufacturing on the one hand, and retail on the other. The distributor’s gateway status is entirely an artifact of regulation – cannabis must be officially tested before it is sold to a consumer, and only a distributor can order the official test. All products must stay in a “quarantine” area at the distributor until they pass testing. Products that fail testing must be destroyed if they cannot be remediated.
Transport (Type 13), which can move cannabis between licensees (with a narrow exception). This license does not allow for official testing.
Delivery Retail (Type 10), for delivery services that are subject to the vagaries of software platforms and the intransigence of local authorities.
Microbusiness (Type 12), which allows the licensee to carry out cultivation (up to 10,000 square feet), non-volatile manufacturing, distribution and retail.
Event Organizer
Self-Distribution – A Case of Useful Integration
You may gather from the previous section that shoving a gratuitous and mandatory distributor into the middle of the supply chain creates problems for cultivators and manufacturers. Savvy operators solve this problem by getting a distribution license. This allows the cultivator or manufacturer to:
Pick the time and place for the testing of its cannabis products.
Avoid paying someone else for the storage of cannabis products as they await test results or purchase.
Reduce transport costs (particularly if the distributor is near the other operations).
Sell directly to retailers.
The bottom line is that vertical integration in California cannabis is useful as a means to an end, as opposed to an end in itself. Therefore, cannabis operators should carefully consider how vertical integration will benefit their core business before incurring the risks and expenses associated with an additional license.
This article is an opinion only and is not intended to be legal advice.
Property and People and Paperwork, Oh My! License Application Prep For Success
Victoria Trusty and Greg Huffaker, Canna Advisors
Attendees will learn from industry veterans who have helped clients win licenses across the US. 1. Get tips on property selection details and timing 2. Understand social equity opportunities and requirements 3. How and when to build out your team 4. Gain practical insights that only come with working on applications in multiple states.
Show Me Medical Cannabis! Case studies in Missouri clients’ wins and woes
Victoria Trusty and Greg Huffaker, Canna Advisors
Attendees will learn how to avoid common pitfalls from a case study analysis of the Missouri application process. What helped applicants win? What caused applicants to lose points? How do attendees apply these learnings to their own application? 1. Learn the basics of the application process 2. How to plan for success 3. Learn how to avoid property woes, with real world examples 4. Gain insights on building your team to maximize points 5. Learn about key phases where funding is critical and allocating funds for the most impact 6. Understand how project and time management can be your “secret sauce.”
As Germany begins to enter a summer where life seems ever more normal, there are fairly major shakeups underway in the German cannabis market. These are structural but will have a profound impact on the entire market going forward.
A Mass Of Distribution Licenses It is an interesting metric to understand that before 2015, there were no specialty cannabis importer/distributors in Germany. As of July 2020, there are rumors that this number has now shot to close to 80 (either licensed or in the process to become licensed). That is a huge number. So was the last amazing number (40) as of the beginning of this year. Just the previous estimate would mean, literally, 1 specialty cannabis distributor for every 2 million Germans. That obviously is not sustainable. What it does indicate is the huge surge of interest in medical cannabis not to mention acceptance, as well as the amount of money actually now beginning to slosh around in the domestic market.
And that spells good news for both patients and insurers. The rest of the industry, however, will be under further pressure to reduce cultivation and operation costs to meet the challenge.How many of these distributors will survive is another question, particularly in an environment where the government is looking for just one to fulfil the needs of all of Germany’s pharmacies from what is grown domestically. This does not of course mean the end of specialty distribution. Indeed, far from it. There is not enough cannabis entering the market, presumably this fall, that is grown here to even come close to meeting demand.
No surprises here. This has been one of the enduring criticisms of the entire process, if not the bid itself since 2017.
However, one thing this does mean is that distribution fees, like pharmacy fees for processing the plant before them, are finally hitting a price adjustment phase.
This is also going to be good not only for patients, but also health insurers.
For all the standardization of the industry, including fees and mark-ups, one of the strangest things about the German cannabis market is how widely cannabis prices can differ even between pharmacies. This is as true of flower as it is of dronabinol.
The Wholesale Price Of Medical Cannabis Is Dropping Again, no surprise here, the government will end up buying more cannabis than contracted for under the original bid. This was actually anticipated in the language of the contract that currently exists between the government and the three bid winners. Namely, an automatic 50% reduction in price is mandated for any cannabis sold beyond the 120% agreed upon qualities.
Photo: Ian McWilliams, Flickr
The growers domestically, in other words, who won the bid will be under a severe price restriction. This may have been the ultimate strategy of the government to begin with (namely to attract foreign capital and expertise but then begin to reign in the sky-high prices of medical cannabis so far.)
This means that the price of €2.30 a gram will undoubtedly fall. Where it will float is anyone’s guess, but right now it appears on course to hit about €1.87. Or about the same price that other governments across Europe (notably Italy) had previously negotiated with the big Canadian cannabis companies (notably on this one, Aurora’s military contract in Italy).
Implications For The Import Market With domestic producers under the gun, this also means that all imports will begin to feel the price squeeze too. And that will also have a significant impact on point of sale cannabis prices.
And that spells good news for both patients and insurers. The rest of the industry, however, will be under further pressure to reduce cultivation and operation costs to meet the challenge.
Back in late 2016, the Oregon Liquor Control Commission (OLCC) legalized delivery for cannabis products. Since then, dispensaries could offer a delivery option for their customers to purchase cannabis products without leaving the comfort of their home. Up until quite recently, that market was dominated by a handful of dispensaries who also conduct business at their physical location, offering delivery as an option while conducting most sales in-person.
Enter Pot Mates. Founded in 2018 by Hammond Potter, the company embarked on the long regulatory road towards licensing and beginning operations. On April 20, 2020, Pot Mates opened for business, starting their engines to take on the fledgling cannabis delivery market in Portland.
Pot Mates is a tech startup through and through. The founders are former Apple employees. Hakon Khajavei, the chief marketing officer at Pot Mates, founded Blackline Collective, a business and marketing consultancy, which is where he joined the Pot Mates team. The other co-founder of Pot Mates and chief technology officer, Jason Hinson, joined after serving in the US Navy as an electronics technician maintaining satellite communications networks.
With the sheer amount of regulations for cannabis businesses, coupled with the new delivery-based business model, Pot Mates had to focus on technology and automation from the get-go.
Not Just an Online Dispensary
For the cannabis companies already offering delivery in the Portland metro area, their websites seem to mimic the in-person dispensary experience. They offer dozens of products for each category, like concentrates, edibles and flower, making a customer pour through options, all at different price points, which can get confusing for the average consumer.
The Pot Mates logo
Pot Mates does things a little differently. “Our start up process was thinking through how do we make this the best experience possible, how do we get rid of the unnecessary junk and how do we do things that only an online dispensary can do,” says Khajavei. They have flat pricing across the board. In each category, almost every product is priced the same, moving away from the common tiered-pricing model. This, Khajavei says, removes the decision barriers customers often face. Instead of choosing the right price point, they can choose the delivery mechanism and effect they desire uninhibited by a difference in cost.
It all comes back to focusing on the simplest way for someone to buy cannabis. “Shopping online is just very different,” says Khajavei. “Our process focuses on the customer journey and limits the number of products we offer. We have a mood system, where we tag our products from reviews to typify moods that you experience with different products.” All of that requires a lot of back-end technology built into their website.
The Long Regulatory Road
Technology has been a strong suit for Pot Mates since they opened their doors, and well before that too. Making the decision to be an online-only delivery cannabis company pushed them to pursue a very unique business model, but regulations dictate a lot of the same requirements that one might see in dispensaries.
Hakon Khajavei, Chief Marketing Officer
The same rules apply to them when Pot Mates submitted their license application. You need to have a signed lease, extreme security measures, detailed business plans, integrated seed-to-sale traceability software (Metrc in Oregon) and much more. “During the months leading up to getting our license, we were able to iron out a lot of the regulatory details ahead of time,” says Khajavei. A lot of that was about security and tracking their products, which is why technology plays such a huge role in their ongoing regulatory compliance efforts. “We built in a lot of automation in our system for regulatory compliance,” says Khajavei. “Because of our technology, we are a lot faster.”
In the end, their licensing process through the state of Oregon as well as the city of Portland took about nine months. Once they had the license, they could finally get down to business and begin the process of building their website, their POS system, their inventory and reaching out to partners, producers, distributors and growers.
For any cannabis company, there are a number of regulations unique to their business. “We need to report every product movement in house through Metrc,” says Khajavei. “Every time something is repackaged it needs to be reported. We focus so much on our technology and automation because these regulations force us to do so.” But delivery companies are required to report even more. Pot Mates needs to report every single movement a product makes until it reaches the customer. Before the delivery can leave the shop, it is reported to Metrc with an intended route, using turn-by-turn directions. It complicates things when you make two or more deliveries in one trip. Reporting a daisy chain of deliveries a vehicle makes with turn-by-turn directions to regulatory authorities can get very tedious.
As far as regulations go for delivery parameters, they can legally deliver anywhere inside Portland city limits. “It is our job to figure that out, not the customer’s job; so we don’t have any distance limits, as long as it is residential,” Khajavei says. “We programmed customized technology that allows us to handle really small orders.” Without a minimum order policy or a distance limit, Pot Mates can reach a much bigger group of consumers.
Launching in the Midst of a Global Pandemic
Chief Technology Officer, Jason Hinson
Luckily, the Pot Mates team received their license just in time. About two weeks after they submitted their application, Oregon put a moratorium on any new dispensaries.
They went forward with their launch on April 20 this year, despite the coronavirus pandemic impacting just about every business in the world, including their marketing efforts tremendously. With cannabis deemed essential by the state, they could operate business as usual, just with some extra precautions. What’s good for PotMates is that they don’t need to worry about keeping social distancing policies for customers or curbside pickup, given the lack of storefront.
They still need to keep their team safe though. The Pot Mates team began 3D printing washable and reusable face masks, getting more gloves for delivery drivers, cleaning their warehouse thoroughly, cleaning vehicles and making sure employees maintained distancing. Pot Mates is even 3D printing enough masks and donating them to local organizations that need access to masks. “As a cannabis company, we always have to handle things with gloves here and take necessary safety precautions anyway, so our response is more about how we can help than what we need to change.”
Advertising Cannabis in a Pandemic is No Easy Task
“The marketing aspect is where covid-19 really hurt us,” says Khajavei. “There are so many regulations for cannabis companies advertising already. Unlike other products, we can’t just put up advertisements anywhere. We have to follow very specific rules.” So, in addition to the normal marketing woes in the cannabis industry, the team then had to deal with a pandemic.
Pot Mates had to scrap their entire marketing strategy for 2020 and redo it. “We wanted to begin with a lot of face-to-face marketing at events, but that didn’t quite work out so well.” Without any concerts, industry events or large gatherings of any kind, Pot Mates had to pivot to digital marketing entirely. They started building their SEO, growing their following on social media, producing content in the form of blogs and education around cannabis and the local laws.
On an Upward Trajectory
Obviously, the short-term problem for a new cannabis company is reaching people, especially during the COVID-19 crisis. “We have a good trajectory though, we know we are growing our business, but we still have a ways to go,” says Khajavei. It doesn’t help that social media companies have nonsensical policies regarding cannabis. Their Facebook page was recently removed too.
Founder & CEO of Pot Mates, Hammond Potter
But the bigger issue here is kind of surprising when you first hear it: “It’s not even a matter of customer preference, a lot of people just have no idea that delivery is even legal.”
It’s pretty evident that cannabis delivery has not really gone mainstream yet. “We’ve told people about our business in the past and a common answer we get is, ‘Oh my gosh, I didn’t even know we could get cannabis delivered.’” It’s never crossed their mind that they can get cannabis delivered to their home. It’s an awareness problem. It’s a marketing problem. But it’s a good problem to have and the solution lies in outreach. Through educational content they post on social media and in their blog, Khajavei wants to spread the word: “Hey, this is a real thing, you can get cannabis delivered.”
As the market develops and as consumers begin to key in on cannabis delivery, there’s nowhere to go but up. Especially in the age of Amazon and COVID-19 where consumers can get literally anything they can dream of delivered to their front door.
Moving forward, Pot Mates has plans to expand as soon as they can. Right now, they’re limited to Portland city limits, but there’s a massive population just outside of Portland in towns like Beaverton, Tigard and Tualatin. “We are so close to these population centers but can’t deliver to them now because of the rules. We want to work with OLCC about this and hopefully change the rules to allow us to deliver outside of the city limits,” says Khajavei. In the long term, they plan to expand out of state, with Washington on their north border being first on the docket.
To the average person, one would think launching a delivery cannabis business in the midst of a global pandemic would be a walk in the park, but Pot Mates proved it’s no easy task. As the market develops and the health crisis continues, it seems the Oregon market will react positively to the nascent delivery market, but first they need to know it is even an option.
For those looking for relief from bad news in general, whether it is about the pandemic, the economic meltdown or the impact of both on the cannabis industry, there is a glimmer of hope from the Kiwis this month.
On April 1, New Zealand’s Medical Cannabis Agency opened its application process for cultivation and manufacturing. Beyond sounding the starting gun for the race to local production and imports, the new rules also create a licensing framework that is aligned with international GMP (pharmaceutical grade) quality standards now becoming the norm globally for medicinally bound product.
It is good news for the industry, but it is good for a lot of other people too.
Doctors will be able to prescribe the drug more normally and for more conditions. And patents will have more access.
That said, this will also be a strictly “pharmacized” market for now with an emphasis on dose-controlled products like pills, oils and creams. Edibles are forbidden. And while dried flower will be allowed, smoking is strictly banned.
The license fees for cannabis start-ups are ridiculously low for those used to North American and even European pricing (all in for $7,409). But, even here, it is not a business for those without deep pockets and the right connections. The GMP certification required before such approvals are issued does not come cheap.
What Is Behind the Change?
This is not an overnight edict, obviously. And the wheels have been turning here since late 2018 when palliative patients were given limited access (basically a defence against criminal prosecution for possession). The medical cannabis scheme became law in December last year, allowing doctors to prescribe in limited situations.It remains to be seen if recreational will follow just six months later here.
In opening the licensing process, New Zealand’s health agency is keeping its word about rolling out the program on time. But unlike other jurisdictions, this first step in April is also part of a rolling agenda that will probably see more cannabis reform coming to Kiwis before the end of the year. This would be a lightning quick transition indeed for a country that as of November 2018, became the last country in the world to make hemp seed fully legal for human consumption.
Cannabis was completely outlawed in 1965. That said, it is estimated that about half a million New Zealanders still use the drug either medically or recreationally every year.
But reform is in the air. Lawmakers and policy makers have been looking at other recreational models for at least the last 12 months, including sending observers to Portugal last year to observe how this famously “open” European country has dealt with the issue.
Greater Reform A Possibility In September
This is not going to be all she wrote in New Zealand this year for cannabis reform. Legalizing the personal use of cannabis is being floated as a referendum on the same day as the 2020 General Election (September 19). The referendum may not pass, although support for the measure seems to be steadily rising. Currently about 59% of New Zealanders support medical use reform. A new poll seems to also show (as of March 31), that 54% of Kiwis might support personal recreational use.
No matter what happens, however, New Zealanders are just the next nation-state to admit that prohibition has roundly failed. 83% of New Zealanders believe that illicit cannabis is widely available anyway.
Regardless of the success of recreational reform, at least this fall, the medical market is likely to expand and the topic of greater reform is clearly in the air.
As always, no matter the geography, medical use comes first. It remains to be seen if recreational will follow just six months later here. Unless of course the general election itself is delayed because of the trailing end of the pandemic.
Connoisseurs know that pairing a fine cut of steak with a Napa Valley cabernet sauvignon is a sure winner. But how many are aware that pairing strawberry cheesecake with a certified Santa Cruz Blue Dream cannabis strain creates an equally delicate palatal synergy? Thanks to the California Department of Food and Agriculture’s CalCannabis Appellations Project (“CAP”), premium cannabis regions will soon have the potential to capitalize on such newfound awareness among discerning consumers.
For decades, cannabis connoisseurs have been willing to pay a premium for flower said to have been grown in certain regions or with certain techniques, but because of cannabis’ legal status, supply chains have been opaque. As a result, cultivators of distinct cannabis strains struggled to capture the full market potential of their products. That has begun to shift with implementation of California’s Cannabis Track-and-Trace System. The costs associated with implementation of the METRC1 system have been bemoaned by many in the industry, but there is also tremendous potential value in having the most transparent supply chain in the world. The CalCannabis Appellations Project is the vehicle through which brands will be able to harness that value.
The underlying premise behind the CalCannabis Appellations Project is that the distinctive qualities of a cannabis product are often attributable to where and how the plant is grown. Through this project, CalCannabis is developing a statewide appellations system2 that will allow qualifying licensed cultivators to effectively communicate information about their cannabis crops (i.e., the standards, practices and/or varietals used) through labels, advertisements and other marketing techniques. It will also prevent disingenuous cannabis cultivators from making inaccurate claims about where and how a product is grown, which protects the integrity and value of the appellation.
What is an appellation?
In general terms, an appellation is an identifying name, title or label that can be legally defined and protected. Appellations are most commonly used in the wine industry to geographically identify the origin of grapes in a particular bottle. This place-based identification system comes from an understanding that certain regions have unique environmental and growing characteristics, which result in a product that cannot be produced from other regions even when the same varietals are used. Famous wine appellations or American Viticultural Areas (AVAs) in California include the Napa Valley and Santa Ynez AVAs, and sub-AVAs such as the Russian River Valley AVA, located within the larger Sonoma County AVA.
Recognizing there are also growing regions that produce uniquely distinctive cannabis, CalCannabis is developing a process for:
Establishing an appellation (i.e., identifying regions that produce distinctive cannabis and defining standards, practices and/or varietals that must be used in those regions to qualify for an appellation); and
Qualifying to use a particular appellation once they are established (i.e., determining the cannabis cultivators that can legally label or market themselves as belonging to a particular appellation).
While the state has not released program details, it’s likely that cultivators will have to demonstrate their outdoor-grown cannabis is distinctly unique.3 CalCannabis has until Jan. 21, 2021,4 to establish these processes, but a draft is expected to be released by early January 2020.5 This is an opportunity for cultivators to organize and participate in the process to define and create unique local appellations.
What are the benefits of an appellations system?
Napa wine country Image: James Faulkner, Flickr
Appellations benefit both cannabis cultivators and consumers. It allows small farmers to capture the value that consumers place on unique and local cannabis products. Allowing for product differentiation through an appellations system will prevent cannabis from becoming a commodity—a situation that could result in indistinguishable products and a single market price for cannabis regardless of how or where it is grown. Thus, an appellations system protects not only local economies and farming communities, but also consumers that care about the origin and growing practices of their cannabis.
A criticism of appellations, particularly in the wine industry, is that they can disincentivize innovation and industry growth when strict growing practices and standards are required to be a part of an appellation. This will be an important consideration as CalCannabis establishes its appellations system.
County of Origin
In addition to setting up an appellations system, the CalCannabis Appellations Project will expand upon current county of origin regulations. Unlike an appellation designation, the county of origin designation is designed to be much more inclusive—it can currently be used on any cannabis product as long as 100% of the cannabis is grown within the designated county.6 Whereas an appellation will communicate information about the quality of a cannabis product and how it was produced, a county of origin designation is more like a “Made In” label. For example, a county of origin designation can be applied to indoor cannabis whereas an appellation will likely only include sun-grown cannabis.
There is also a desire to allow city of origin designations in addition to county of origin designations, which would enable products grown wholly within the political boundaries of a city to further differentiate themselves.7 As the legal cannabis landscape changes nationwide, it may also be important to have a statewide appellation allowing products to be marketed as “Grown in California.”
What should cannabis cultivation regions be doing now?
After CalCannabis releases a draft process for establishing an appellation, the next steps will be clarified. However, not everyone is waiting. For instance, growers in Mendocino County have already started to organize.8 The Mendocino Appellations Project divided the county into 11 unique subregions based on regional growing conditions and practices that could potentially be turned into appellations in the future. The goal of the appellations outlined by the Mendocino Appellations Project is to protect cannabis products coming out of Mendocino County and preserve the region’s growing heritage.
A group in Sonoma County is also discussing the establishment of appellations with the hope that it will help differentiate their cannabis and draw attention to the unique microclimate and soil structure in parts of Sonoma County.9 The groups involved in these discussions also believe it will allow cultivators to develop strict growing standards and to protect certain strains, while creating new jobs and encouraging agritourism. Appellations will become increasingly important as sophisticated consumers begin to select quality cannabis that aligns with their preferences.
References
METRC is the third-party-owned software contracted by California authorities to implement the commercial cannabis track-and-trace system “from seed-to-sale.”
Passage of Senate Bill 185 calls for the use of the term “appellations of origin” instead of “appellations.”
Based on comments made during the October 23 Cannabis Advisory Committee Meeting.
Business and Professions Code Section 26063.
Based on comments made during the October 23 Cannabis Advisory Committee Meeting.
Business and Professions Code Section 26063(a).
Based on comments made during the October 23 Cannabis Advisory Committee Meeting.
The German city of Bremen (perhaps you know it from the Brothers Grimm and the animal musicians) is determined to force the federal German government to play another tune when it comes to basic access within the city.
For those without the special geographic knowledge that comes with being a “local” this is also a deliberately strategic political move. Bremen, like Berlin, is a strange German hybrid, a city-state.
Change here, of course, like Berlin, would have wide impact on other German states.
It is not a new campaign of course. None of these city campaigns for home-grow really are. They are the result of efforts, at this point with elected officials involved, of literally decades of patient activists, who are still necessary. But this time, they have politicians involved. When the national ones don’t listen, the local ones are being dragged in.
That said, don’t expect any breakthroughs or miracles from Bremen or Berlin either right now for that matter. This experiment, in Bremen just like the country’s capital, is still at least several years off, no matter its regular recycling in news stories for the last several years.
The German city of Bremen Image: Chaim Dönnewald, Flickr
Politically right now it is hard to understand the CDU’s continued reluctance to embrace the weed. The CDU is Germany’s strongest and largest “middle of the road” party. Particularly because they along with everyone else of alternative political persuasions are highly alarmed by the right wing AfD’s popularity and spread. It is not inconceivable that even Germany’s largest if not highly beleaguered party might use a little cannabis to stop that. And they are being pushed, hard now, by the fringes.
The Outpricing Of The Patient Movement
Talk to any cannabis-connected company right now and chances are you will hear the phrase “patient first.”
That means nothing in an environment where most patient groups are kept out of the room when legislation opening markets is being written (certainly in Europe). And of course, it is precisely the individuals that these groups represent who cannot afford the legal medication hitting the markets early.
Here, because of the focus on high-quality, GMP-certified product, the chances of a patient collective actually being able to afford a cultivation license (for example) are so far non-existent.
As a result, there is an active foment on the ground right now in almost every country in Europe. This is meeting other kinds of frustration right now and that can be a powerful weapon for change. However, without funded lobbyists in most European capitals and Brussels, there is more power and money behind the established industry right now to keep the (almost) status quo.
As strange as they seem to the cannabis industry right now, GMP certification is a standard pharmaceutical designation.
The boogeymen in the room right now, in other words, for every strong patient group, with its own grey market distribution channels, are the well-funded companies who are in fact getting the laws to change.
Patients, in these environs, as well as their concerns, are left out entirely.
The Strength of The European Gray Market
For this very reason, the gray market problem is going to be large in Europe for quite some time to come. Patients are effectively priced out of the legitimate market if they cannot get insurer approvals and for most that is still the biggest problem in the room.
Are there large gray market grows all over Europe? Yes. As one German activist told Cannabis Industry Journal recently, echoing the comments and practices of thousands of others, “Yes, they made me jump through the hoops, and I have packaging from all the big guys. That’s how I carry my home grow these days.”
Forget “patient cards” that some enterprising distributors are trying to get patients to carry.
The cops don’t challenge legit packaging. And every producer, distributor and patient knows that. Buy once, no matter how exorbitant, and that is all she wrote.
For that reason, “patient numbers” if not “sales” actually mean very little.
It does not matter, in other words, if a cannabis company announces its market entry in any country right now. What matters is that they can prove consistent supply and sales and real patient numbers – which if GDPR (European privacy legislation) is strictly followed, producers and distributors should never really know at a level that such sales are trackable per patient.
And that is where this all gets difficult down in the weeds.
Are there large gray market grows all over Europe? Yes. Are they all under the purview of the criminal black market? No. There are very organized patient non-profit networks locally in just about every city and town in Europe. If not other places.
And, where those fail, certainly in Germany, there is always the area around every local train station. If you are hard up enough and desperate enough, skunk and hash albeit of an indeterminate source, will cost you about $12 per gram.
There is no cannabis company in the room anywhere in Europe that can provide legit product via any pharmacy, for that price at point of sale. Yet. And therein, as always, lies the rub.
According to a press release published back in September, Steep Hill announced their expansion to the state of Oklahoma. Steep Hill, a cannabis science company that started with cannabis testing labs in California, has been on an impressive expansion trajectory over the past few years.
Kandice Faulkenberry, co-owner and CEO of Steep Hill Oklahoma, says they hope to raise the bar for cannabis lab testing in Oklahoma. “With Oklahoma being one of the fastest-growing medical markets in the nation, we are excited and honored to be a part of our state’s growth,” says Faulkenberry. “We hope to be a valuable resource in our community and Oklahoma’s cannabis industry. Through our partnership with Steep Hill, the world’s leading cannabis science company, we aim to raise the bar in laboratory services, education, and product safety for the medical cannabis industry in the Sooner State.”
Dr. Chris Orendorff, the other co-owner of Steep Hill Oklahoma, is a family physician based in Sallisaw, Oklahoma. “As a physician, I understand that safety and regulations are critical to patient outcomes and I look forward to providing the same assurance for my patients and fellow Oklahoma residents in the cannabis industry,” says Dr. Orendorff. “I am excited to partner with Steep Hill to provide the highest quality testing in the State of Oklahoma.”
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