Tag Archives: op-ed

By Joe Madigan

Remember those heady days of the Green Rush a decade ago, when markets were small and it seemed everyone had a chance? Now it’s more of a mad rush to get some green in the form of investment capital.

The majority of states in the country now have some type of legal cannabis market. Businesses in those states operate in spite of regulations that are restrictive, confusing and make it very difficult to make a profit. Meanwhile, heavy tax burdens, differences in enforcement techniques and varying degrees of oversight are other factors that influence bottom lines in the cannabis industry.

Saturated markets are giving businesses trouble when it comes to their bottom line

Inflation also continues to be a prominent force across world markets. Sales of cannabis products have fallen as consumers adjust to inflation and post-COVID supply chain issues that are causing higher prices on necessary staples like food and gas. An oversaturation of cannabis flower is becoming a perennial problem in some states and another factor causing industry distress.

When cash flow slows to a trickle, companies of all sizes seek out investment funding to keep their momentum. But catching the eye of an investor group requires more than just sticking your hand out.

What Attracts Potential Investors?

A company is best positioned to attract those interested in cannabis investment opportunities when it appears serious about its growth plans. That means being well positioned with a solid upper-management foundation and so much the better if there’s an advisory board in place too. A company built with a diverse group of talent—ideally from consumer packaged goods companies—presents an attractive opportunity for investors.

Talent from the CPG space can help attract investors

Top-quality and industry savvy finance employees who maintain sound financial books and establish a solid banking arrangement are also important. If the company’s financial scenario is robust enough to provide confidence in case of an audit and the books are in good shape with auditable METRC logs investors will be far more inclined to put money on the line.

A cannabis company with full inclusion (or seed to sale) is often a smart choice for investment. The vertical integration of cultivation, processing/manufacturing and retail allows them to sell their own products while also stocking other brands’ products on the floors of their dispensaries. If their products are respected and the brand is held in high regard, even better. Similarly, a cultivation enterprise that can grow crops for multiple brands can also be very attractive. The ability to pivot and adjust production to reflect the market and consumer demands indicates a strong business foundation.

Despite the current headwinds and saturated markets, other chances for growth exist. When a local municipality finally decides to “opt-in” to adult-use cannabis sales, there’s opportunity for both established brands and startups. It’s a matter of being ready for those opportunities and having a plan to leap in whenever new licenses become available.

What Businesses Will Struggle to Attract Investment?

Culture is key here. Poor employee relations and weak cohesion across departments are indicative of deeper problems. Do people actually want to work for the business? Do they feel supported by human resources? A company with underdeveloped or non-existent workers’ compensation policies and a management team that is not respected by its employees is not going to look good in the eyes of potential investors.

Non-diversified cannabis businesses are also at a major disadvantage when seeking investors. Cultivators of one type of product or service are locked into a single operation geared to do one thing. Any changes to market whims or problems with the supply chain can wreak havoc on a business based around a single product.

Stick to Business Basics

The cannabis industry is unique, but the basics of running a business well enough for success still apply. Strictly adhering to the traditional methods that any successful organization follows is extra important in cannabis. Businesses that are active in their community and make a real effort to be involved will be held in higher regard by investors. They want to see cannabis businesses that are not just setting up shop to make a quick buck, but are dedicated to bettering their community. That indicates a relationship with customers that involves mutual respect and promotes business longevity and financial stability.

July 14, 2021

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Too Many Cannabis Firms Put Sustainability in Last Place

By Mitesh Makwana

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Cannabis has long been considered a green industry by the masses.

As a standalone item, the cannabis plant is very environmentally friendly. This is particularly true when it comes to hemp, a variety of the cannabis plant with a huge range of environmental benefits. An extremely versatile and robust crop, hemp uses far less land and water than other common crops and even captures carbon dioxide and regenerates soil. Approximately 20,000 products can be made from its seed, fiber and flower, from biodegradable plastics to food supplements, meaning all in all – it is an environmentally and economically sustainable crop

Yet as with most things, when cultivated in mass, the cannabis plant isn’t quite so green anymore. With its high demand for water, land and artificial lighting, cannabis cultivation can actually leave a large environmental footprint (this does however, pale in comparison to the food industry).

What’s more, many firms do not properly understand how to correctly treat and apply chemical fertilizers and pesticides, and use a machine gun approach to growing their crops. This can result in unnecessary bleed waste, which in turn can kill micro-organisms and contaminate soil, water and other vegetation. Packaging has also been cited as particularly environmentally unfriendly in the cannabis industry, with several organizations using single use plastic for their products, due to the strict guidelines attached to packaging products of a medical or pharmaceutical nature.

A field of hemp plants, (Cannabis sativa L.)

So as the CBD, medical and even adult use cannabis industries become increasingly commercialized across the globe, there is risk cannabis might start moving in the wrong direction when it comes to sustainability.

Still relatively new, the cannabis sector is nascent and exciting, with the global cannabis market size valued at $10.60 billion in 2018 and projected to reach $97.35 billion by the end of 2026. Yet as the industry grows, so too will its footprint.

I’ve seen it first-hand. The industry being hugely competitive, so for companies vying for precious investment and fighting for a spot on the stock market, often, sustainability is the last thing on their minds. In my opinion, this is wrong. Not only morally – we all play a part in looking after our planet – but it’s also a poorly calculated business decision.

It’s no secret sustainability and ESG have become a hot topic when it comes to investing. Just yesterday, Credit Suisse told CNBC that the pandemic has accelerated the trend towards sustainable investments. The bank has even introduced an exclusion strategy whereby those investing can actively exclude controversial sectors.

So with the environment firmly on investors’ minds, cannabis firms need to realize that actually, if they want to secure the support of forward-thinking shareholders, they need to consider more than just the bottom line and truly take the sustainability of their operations into account.

photo of outdoor grow operation — Outdoor growing can require less energy inputs

Luckily, there are practices which cannabis cultivators can take on board to reduce their environmental footprint. To start with – growing outdoors. This enables cannabis farmers to harness the sun’s natural power, saving them money on electricity bills and increasing energy efficiency. With cannabis being a rather thirsty plant, water use is also a major concern – although this is nothing compared to the amount of water used by cotton plants. However, it is in fact possible to design indoor operations which recycle close to 100% of the water use, including capturing the perspiration from plants – at AltoVerde this is something we are looking to implement in our upcoming Macedonian sites.

Firms keen to improve on sustainability should also cultivate in a way in which soil is fully replenished and repaired after use – this is called regenerative farming, and it’s extremely effective for maintaining and improving soil quality, biodiversity and crop yields. Another interesting concept is the use of hemp. Some farmers have started using hempcrete – a concrete-like material made from harvested cannabis plants. As if the recycling aspect wasn’t good enough, hempcrete is actually carbon negative, meaning the production of hemp for hempcrete removes more carbon from the atmosphere than it produces.

It’s been incredibly exciting to be a part of the cannabis industry and I am excited to watch its growth in the years to come. It’s taken hard work for the sector to improve its traditionally poor image and to be accepted across the globe, so now, cultivators must lead by example and stop industry from being branded as one which pollutes. By transitioning to more environmentally sustainable practices, firms will be doing their bit for the planet, attracting the investors of tomorrow and ensuring their own success for years to come.

March 12, 2021

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Reduce Environmental Impact of Cannabinoid Production Through Biosynthesis

By Maxim Mikheev

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Cannabinoids—the molecules found in the cannabis plant—are becoming an immensely popular industry, with applications in pharmaceuticals, food and beverage, cosmetics and more. However, the traditional method of harvesting cannabinoids through plants has a tremendous environmental footprint, with the energy-intensive practices required to produce the cannabis plant costing the U.S. billions of dollars each year.

Fortunately, new innovations have emerged that will make this process require significantly less time, energy and natural resources. This article will explore two methods of rare cannabinoid production—the traditional method of cultivation through plants and the newer method of biosynthesis—and will compare their impact on the environment.

Natural Cultivation

The companies that use the traditional process of growth, harvest, extraction and purification have a major problem when it comes to harvesting rare cannabinoids. Rare cannabinoids only show up in trace amounts in plants, which means you need to grow vast quantities of plants to harvest just a tiny amount of rare cannabinoids.

Once you factor in the amount of plants that need to be grown, equipment, fuel, fertilizers, water, man hours, harvesting, extraction and purification, the costs are economically unfeasible. This process uses so much energy, natural resources, water and fertilizers that the end product is not affordable for the majority of consumers.

Cultivation through plants requires hundreds of acres of land, thousands of pounds of fertilizer, thousands of gallons of water and thousands of man hours. In addition, this process uses significant amounts of energy to run equipment, in addition to extraction and purification. Plus, the end products can contain contaminants and toxins due to heavy metals, pesticides, pests, mold and more.

Biosynthesis

Biosynthesis is the production of a desired compound through the natural means of an organism’s biological processes. It produces identical compounds to those found in nature, lending itself as the optimal pathway for the manufacture of cannabinoids identical to their naturally occurring counterparts.

While cultivation through plants is harmful to the environment, biosynthesis produces a much lower environmental footprint because it requires significantly fewer resources. Biosynthesis requires over 90% less energy, natural resources and man hours, along with zero fertilizers, contaminants and toxins. There also no extraction and purification costs.

Biosynthesis needs only 6,000 square feet to produce the same amount of rare cannabinoids as hundreds of acres of plants. This process produces pharmaceutical-grade, organic, non-GMO products at a 70-90% lower cost than cultivation through plants—resulting in cannabinoid products that are more affordable for the consumer.

With climate change increasingly becoming a concern, it’s crucial for us to rely on more environmentally friendly avenues for cannabinoid production. Biosynthesis provides a method of cannabinoid production that requires significantly less time, energy and natural resources than cultivation through plants—resulting in not only a decreased environmental footprint but also safer and less expensive products.

November 18, 2020

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The Cannabis Industry, After the Election

By Serge Chistov

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While the 2020 Presidential election didn’t exactly end up in a clear landslide victory for the Democrats, there is one group that did well: the cannabis industry.

The results clearly show that the expansion of cannabis is a recognizable part of today’s society across the United States. States like New Jersey, for example, partly thanks to New York and Pennsylvania—which already allow the use of medical cannabis—traffic will start to force the state of New York’s hand and that’s a big chunk of the population of the Northeast.

If the question of legalization was on the ballot, it was an issue that overwhelmingly succeeded in delivering a clear mandate. Adult use of cannabis passed handily in Arizona, Montana, South Dakota and as mentioned above, New Jersey, and was approved for medical use in Mississippi and South Dakota.

With only 15 states remaining in the union that still outlaw the use of cannabis in any form, the new reality for the industry is here. All of these outcomes show promise as the industry’s recognition is growing.

Election outcomes and the position of the average American on cannabis

Americans are definitely understanding, appreciating and using cannabis more and more. It is becoming a part of everyday life and this election’s results could be the tipping point that normalizes the adult use of cannabis. It is becoming more widely understood as an effective and acceptable means to help manage stress and anxiety, aid in sleep and general overall wellbeing.

Voters in New Jersey overwhelmingly passed their adult use measure

This image of cannabis is aided by the many different forms of consumption that exist now: edibles, transdermal, nano tech, etc. No longer does a consumer have to smoke—which isn’t accepted in many circles—to get the beneficial effects of cannabis.

Knowledge expansion is going to move these products across state lines and eventually, the federal government will have to take notice.

Do Democrats and Republicans view cannabis through the same lens?

Cannabis is and will always be state specific. Republicans in general tend to be a little bit more cautious and there are a lot of pundits who believe that as long as the Republicans control the senate, there isn’t much of a chance for federal legalization.

President-Elect Joe Biden & Vice President-Elect Kamala Harris

There is some hope, however, that the industry will get support from the Biden administration. While President-Elect Biden has been on record as being against legalization of cannabis at a federal level, even he will eventually see that the train has left the station and momentum continues to build. In fact, Biden’s tone has changed considerably while he running for president, adding cannabis decriminalization to the Biden-Harris campaign platform.

Ultimately, how cannabis is viewed from each side of the aisle matters less than how it is viewed at the state level.

Cannabis reform under Biden

Biden had an opportunity to legalize cannabis federally in the U.S. during the Obama administration and it didn’t happen. It’s clear that the mandates of the Biden-Harris administration are going to be overwhelmed by current issues, at least in the beginning: COVID-19, the economy and climate change, to name but three.

What will be interesting is if the Biden-Harris administration goes to greater lengths to decriminalize cannabis. For example, cannabis is still a Schedule 1 drug on the books, which puts it in the same class as heroin. Biden couldn’t unilaterally remove cannabis from all scheduling, but his government could reschedule it to reduce the implications of its use.

This could, however, create more problems than it solves:

“It’s generally understood, then, that rescheduling weed would blow up the marijuana industry’s existing model, of state-licensed businesses that are not pharmacies selling cannabis products, that are not Food and Drug Administration-reviewed and approved, to customers who are not medical patients.

Biden rescheduling cannabis “would only continue the state-federal conflict, and force both state regulators and businesses to completely reconfigure themselves, putting many people out of business and costing states significant time and money,” as Morgan Fox, chief spokesperson for the National Cannabis Industry Association, said in an email on Monday.” (Source)

In reality however, there is little chance that Biden will spend any political capital that he has, particularly if the Senate remains in Republican control, dealing with the legalization of adult use cannabis.

What needs to happen for legalization to become a reality

Outside of the law, if Trump suddenly decided to legalize adult use cannabis before leaving the White House, the states would still need to agree on issues such as possession, transportation, shipment and taxation.

It’s clear that further normalization of cannabis use is required—which will likely take a good couple of years—in order for it to become as understood and as simple as wine, liquor or cigarettes.

Beyond that, it’s Congress that dictated that cannabis be illegal at the federal level and it will have to be Congress that makes the decision to change that. Even the Supreme Court has been reluctant to get involved in the question, believing this to be an issue that should be dealt within the House.

What does all of this mean for investment in the cannabis industry?

Cannabis should be part of most long-term investors’ portfolios. Like a group of stocks in a healthy market with the right balance sheets, cannabis is an expanding industry and growth is there.

Whether or not this is specifically the right time to invest, it’s always important to evaluate each stock or each company individually, from the point of view of the merits of the investment and investment objectives, as well as risk tolerance perspectives.

There isn’t any unique or special place to buy into the cannabis industry, unless it is connected to some new real estate or other opportunity that is COVID-19 related. This moment in time isn’t really any different from any other when it comes to the opportunity to own some cannabis stocks. It’s always a good time.

The short term returns of this market shouldn’t be speculated upon. There are just way more factors than the fundamentals of a company that will affect the short-term play. The country is in a transition of power, in addition to much international change taking place that can also contribute to returns in the short term, making speculation unhelpful.

The cannabis market in 2021

The cannabis industry is likely to continue to expand and grow with the select companies acquiring more and more and getting back to their cash flow. Some companies will slowly be going out of business and/or will be acquired by others going into a certain consolidation period of time. Whatever the outcomes in specific tourism dominated markets, the industry as a whole can really go in one direction.

December 11, 2018

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Dishonest Potency Testing In Oregon Remains A Problem

By Kelly O’Connor

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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.