Kris Krane is founder and president of 4frontventures.
Kris gives us a quick executive briefing on legalization in about a 16 key US States.
[1:39] – What is 4Front Advisors
[2:26] – Kris tells us about his background
[5:23] – Important updates on sixteen US States
[37:48] – Some additional state information
[42:23] – Kris talks about cannabis legislation in 2017-2018
[45:40] – Kris answers some personal development questions
[52:16] – Contact details for 4Front advisors
Learn more at:
What are the 5 trends disrupting the cannabis industry?
Find out with your free cheat sheet at:
It’s getting difficult to keep up with all the different states and where they are in ending cannabis prohibition. That’s why I asked Kris Krane from 4Front Advisors to help us understand the changing landscape of cannabis opportunities across the United States. We’re going to try to put into context both the challenges and opportunities for each state. Kris, welcome back to CannaInsider.
Kris: Thanks so much for having me back.
Matthew: Give us a sense of geography. Where are you in the world today?
Kris: Today I am actually on a farm outside of Hartford, Wisconsin.
Matthew: Nice. Big fan of Wisconsin. I think it’s not talked about enough. I think people kind of lump it in as a boring state, but I like it. I like Minnesota too. I’m going to go on the record saying it’s not boring. It’s fun to go to in the summer, and the people are super nice. They’re like the Canadians of America. They’re just nice.
Kris: It’s true. I spend part of my summer here in Wisconsin. A lot of good things to say about Wisconsin. Most of all it’s what gave me my wife. So, I’ve got a lot of in-laws and family out here. So we come and spend some time in the summer every year here. It’s quite beautiful.
Matthew: Now you were on the show once before, but for new listeners, can you tell us what 4Front Advisors does?
Kris: Sure. So, 4Front Advisors is actually a subsidiary now of our parent company 4Front Ventures. Through advisors we work with clients across the United States to first help them navigate the complex regulatory and application process in order to get their license. So, we help them through that application and licensing process. Then we provide them with operational protocols and policies and procedures, manuals and other tools that they use to run a professional, compliant cannabis dispensary business.
Matthew: So, you’ve been the cannabis advocacy business formally and informally for a long time. Just give us a quick background on Kris Krane and his cannabis career.
Kris: Sure. I actually got started in this as a freshman in college back in 1996, when I got involved with the Campus Normal Chapter at American University, which a couple years later became one of the first five SSDP chapters, Students for Sensible Drug Policy chapters. So, I was involved in the formation of that wonderful organization. From there I wound up interning, and then working for Normal in Washington D.C. I was the associate direction of the national organization and was there about six years. Then went back to Students for Sensible Drug Policy, the group I had been involved in the formation with in college. I was hired as the executive director of that organization where I served for four years. Really throughout the whole 2000s I was a professional policy advocate.
Then it was in 2009 I moved out to Oakland, California. I started working with Steve DeAngelo and some of the real luminaries of the Northern California medical marijuana industry at the time, just still fairly in its infancy. Helped start a company called Can Be, which we really developed a lot of the intellectual property and operating protocols that we still use today at 4Front. That company was a little bit ahead of its time. It lasted for just under two years, but out of it was able to start 4Front Advisors and later 4Front Ventures and some other subsidiaries of the company. I’ve always kept a strong foot in the regulatory and advocacy part of this issue. It’s where my roots are, and I think number one, it’s part of what’s made us successful at helping win so many licenses in competitive processes around the country because it really comes down to understanding how the regulations and how the laws look, in addition to being able to demonstrate operational competency.
Also this is an industry that is a state-by-state. We need to legalize for medical or other purposes in state after state, if we’re going to open up new markets. So, I feel like the business side of this industry is probably more tied to an advocacy movement than any other industry in the United States. That always keeps it interesting for me and makes me feel like I’m still contributing to the advocacy community in advancing the overall issue.
Matthew: Great. That sounds like a fantastic foundation, both from the advocacy point of view and then the business and compliance and regulatory and the opportunity. I want to leverage all your knowledge and your deep dives into all these states into kind of giving listeners a summary. Let’s kind of go machine gun through a bunch of these states and you can just tell us what you think the most important one or two things to know about where they’re at and what’s important to know about them. Does that sound okay with you?
Kris: Sure, that sounds great. Let’s do it.
Matthew: Okay, number one, Massachusetts. The politicians there are crazy. So, give us an update on Massachusetts.
Kris: Massachusetts is my current home state. Our offices are based in Arizona and Massachusetts, and I’m out of our Boston office, so been heavily involved in this one. So, Massachusetts did legalize adult use marijuana in the election in November. There is currently a medical marijuana program that is in effect. It has taken a very long time to roll out. So, as we speak, there are I believe 14 dispensaries open in the entire state of Massachusetts. There are, however, another 95 or so, 90 or so that are licensed by the state but are not yet open. They’re going through various local approvals or build out. We expect by this time next year we’ll probably see somewhere closer to 60-80 dispensary range throughout the state. That’s all on the medical side.
That program is finally moving along. It’s been slow, but it is moving. On the adult use side, it’s been quite a month or so in trying to get the initiative implemented. The state legislature decided that they largely know better than the voters and decided to make changes to the law that was passed by the voters last year. The house and the senate had very different approaches to how to do this. The house decided to completely repeal the law that was passed by the voters and replace it with something that was really largely based on the gaming bill, the gaming law in Massachusetts. The senate decided to make some amendments to the initiative, and largely keep intact the overall spirit of the initiative. The two sides spent about three weeks negotiating their differences, finally came to a conclusion last week, and actually wound up with a bill that, even the folks who were most heavily involved in the campaign could live with.
It’s very similar to what we passed. In fact in a couple of instances actually improves upon what was passed. In a couple of instances I would say it goes in the opposite direction, particularly raising the tax rate, but it did make some nice improvements. Especially around things like diversity and equality and equity in the industry that were better than what we were able to put into the initiative. So, that’s now being implemented. The state has until next April to start accepting applications for adult use businesses. There will be an initial preference for existing licensed medical businesses, but it will be a fairly short preference. So, it’s not like they’re going to get a couple year head start, as we’ve seen in some places. Whatever the medical license holders have done or medical applicants even have done in the application process to that point for a medical license will be credited towards their adult use license. So, that should allow for the adult use program to get up and running a lot faster than the medical program, and potentially even faster than the way it was written in the initial initiative.
We expect by July of 2018 that those licenses will be granted, or the first round of licenses will be granted. That is actually now in statute. So, we should start seeing adult use dispensaries, cultivation facilities, processing facilities fully operational in Massachusetts by the end of summer into early fall of 2018.
Matthew: Okay, so, this time next year we should be seeing some action.
Kris: That’s right. There’s a lot of staffing up and working towards that. The state has to create a new commission to oversee this, which will be under the Department of Revenue in the state, I’m sorry, the Treasury Department in the state. So, they have to hire those staffers and bring in the staff underneath them. So there’s a lot to do between now and then, but we should see this up and running by the middle to Q3 of next year.
Matthew: How about Maryland next? Can you give us an update there?
Kris: Sure. Maryland passed medical marijuana a year and a half or two years ago now I believe it was. It was definitely two years ago because they went through a fairly exhaustive licensing process for dispensaries and cultivation facilities. Maryland took longer to review those applications than any state that we’ve seen. The dispensary operators waited a year from when they put their applications in until the state made a decision on who to grant the licenses to. That was quite odd and frustrating for the applications in particular, those who were paying for real estate, hold on to real estate until they knew if they won a license. So, it was not only frustrating but expensive for many folks. They have granted the licenses. There are, I believe, 19 cultivators in the state. I’m sorry, it’s fewer, 12 cultivators in the state of Maryland and 90 and change dispensary licenses distributed throughout the state. Those have been granted. There have been some lawsuits filed by some aggrieved applicants, also a lot of controversy over the fact that none of the cultivation applicants when to people of color.
So, we expect that the state is going to grant a few more licenses here in the coming months to rectify that situation. In the meantime those folks that have licenses, and actually I was wrong before, it was 15 cultivation licenses, are now moving forward. A few of them have received approval on what’s called their Round Two. So, once you get provisional approval, then you have to go through another round with the state and some are now getting through that process. So, we expect to see dispensaries operational in Maryland, I would say most likely first quarter of 2018. It’s even possible that a few will be operational by the end of this year, although I think it’s questionable about whether there will be enough product to sustain a market that soon. Certainly by Q1 and definitely by Q2 of next year we’ll have a fully functioning medical marijuana program in the state of Maryland.
Matthew: Good. I hope some politicians in D.C. visit these dispensaries. Let’s move on to Pennsylvania. What can you tell us about Pennsylvania?
Kris: Pennsylvania is about six months or so behind Maryland. They just went through another exhaustive application process to grant their licenses. They ended up granting 12 cultivation licenses, and 27 dispensary licenses. Those 27 dispensary licenses each get to open 3 retail stores, and they have to be within their designated regions. So, Pennsylvania broke the state into six regions. You apply within that region, competed with folks in that regions and those who were granted the license are allowed to open three stores within that region. Then you have the 12 cultivators as well. It was a very competitive process, but we have not seen much in the way of controversy since those licenses were granted.
They were granted to a fairly diverse group of people and applicants. So, the state seems to be humming along. They have set a deadline, I believe of six months, for the dispensaries to be operational. I don’t think that’s realistic because I don’t think there will be enough product in six months, but theoretically we should have dispensaries open around December of this year into January of next year, but I think it will really be another probably three to more like six months before you have a fully functional program.
Matthew: How about Ohio?
Kris: Sure. Ohio is following a similar model. Ohio is a few months behind Pennsylvania in their process. They passed their law a few months after Pensylvania did. Ohio, about a month ago, accepted applications for cultivation facilities, cultivation/processing facilities. I should mention that both Ohio and Pennsylvania are what we refer to as no flower states. So, they don’t allow for the sale of smokeable products, although Ohio has taken a interesting interpretation of no smokable products where it seems like they are going to allow flower sales, as long as they’re not used for smoking. So, as long there’s some sort of warning saying this is for vaporization purposes only and they’re not sold in pre-rolls and the dispensaries vaporizing technology, it seems like they’re going to be able to sell flower. It’s an interesting model. It’s a little bit different than anything we’ve seen.
So, they have accepted applications for their cultivation. In Ohio it’s just cultivation facilities. In Pennsylvania it is cultivation and processing. They’ll be granting 12 large cultivation licenses and 12 small cultivation licenses. I believe the small ones are limited to I think it’s 6,000 square feet and the larger ones are limited to, I believe, it’s 32,000 or somewhere in the thirties. Expect those to be granted in a few months. In the early fall they’ll be accepting applications for processors and dispensaries. We’re still waiting for some more clarity on the number of licenses and how those are going to be apportioned, but we expect those to happen in the fall. So if all continues to go according to schedule, and so far it has in Ohio, we would expect to see the first stores opening probably second quarter of 2018, with a fully functional program likely sometime in the fall of next year.
Matthew: Okay. So those cultivation licenses are going to be very valuable if there’s only that limited number of them it sounds like.
Kris: Yeah, and we’re seeing that trend across these eastern states I mentioned. In Maryland you had 15 cultivation licenses. In Pennsylvania, you had 12, it’s a very large state. In Ohio you’ve got really 12 large licenses and those 12 smaller licenses. We’re seeing this as a trend throughout the eastern US where the states want to keep a handle on the number of cultivators, which does make these licenses incredibly valuable and then of course makes these application processes brutally competitive with applicant spending really large sums of money on lobbyists and consultants and security vendors and everything else to put in applications to hopefully give themselves a shot at winning one of these things.
Matthew: Yeah, you have a state mandated oligopoly in that sense. It’s a pretty nice thing to be. It would be much more lucrative perhaps to be in Ohio or Maryland as a cultivator than let’s say Colorado where it’s much lower barrier entry to be a cultivator.
Kris: That’s absolutely right. We’re seeing that now in a lot of these markets, and we mentioned those three, but I would also look at New York and Illinois and Florida as other states with similar restrictions on the number of cultivation licenses. In the cases of New York and Florida in vertically integrated licenses, and the valuations that these businesses are getting are pretty massive, even though they’re not doing a whole lot of revenue. We saw one the Florida licenses sell for I think it was something around $26 million. Those businesses have done virtually no revenue to date. Same in New York. One of the New York licenses sold for, it was reported, about $40 million in a program that had at the time I think 5,000 patients in a state of 20 million people. The license scarcity has created just ginormous valuations of these licenses even when the markets themselves are not really cash flowing. It’s all based on projected revenue, assuming that these licenses will stay protected as the program expands into a more robust medical program or even into some form of adult use.
Matthew: Okay, interesting trend. What about Arkansas?
Kris: Sure. So, Arkansas is gearing up to go through an application process. Technically that process has already started. The applications are due in mid September. In order to apply the company has to be at least 60 percent owned by a 7 year continuous Arkansas resident. So, they are trying to keep this pretty local. What we’re seeing is Arkansas residents teaming up with companies from out of state that have experience in the industry. They’ll be granting 24 dispensary licenses spread out around the state and 5 cultivation licenses. Again, that same trend. A very small number of cultivation licenses. This is a state of 3 million people, so it actually pencils out to the same number of cultivation licenses per capita as in Illinois where you have 19 cultivation licenses for a state of over 12 million people. So, expect, like we saw in Pennsylvania and Maryland and Ohio and most of these state, that the application process these five cultivation licenses and for the 24 dispensary licenses will be quite competitive.
Matthew: How about Nevada? It seems like there’s a lot of interesting things happening there right now. They are running out of flower I think, and I don’t know. Maybe you could catch us up on what’s going on there.
Kris: Sure. In Nevada they’ve had a medical marijuana program up and running for a few years now. There are, I believe, 55 dispensaries currently operational that were medical only up until a few weeks ago. In Nevada, in sharp contrast to say Massachusetts, where by the summer the state legislature was still considering how they could change the bill and hadn’t even really started implementation. In Nevada they decided that if these businesses that were already licensed medical businesses would just have to submit a fairly simple application, showing that they have been compliant, and they could then automatically convert to adult use businesses.
So, the first week of this month in July the state officially opened for business for adult use. All the dispensaries throughout Las Vegas and really throughout the state are now allowed to sell to anybody. The issue has been around their ability to stock their product and it’s less a cultivation constraint in that Nevada granted, I think, it was 180 cultivation licenses a few years back. So, there are a lot of cultivators in the state. There’s plenty of product right now, and a lot of them have been ramping up with knowing that this adult use program was about to come into effect. The issue with that under the adult use law, any marijuana moving from a cultivation facility to a dispensary has to be moved by somebody, with a company with a transportation license. This was not the case under medical, but it is the case under adult use.
Under the law only licensed alcohol distributors for the first 18 months of the program are allowed to hold a marijuana transportation license. What wound up happening was no alcohol distributors initially applied for one of these licenses. So there was literally nobody out there licensed to transport marijuana. What initially happened were the dispensaries, knowing that they were going to make this transition, and knowing that while they were still medical were allowed to transport themselves or the cultivation facilities were allowed to transport, they stocked up on what they thought would be a three or four month supply, knowing that there would be a legislative and legal battle over these transportation licenses. They have sold more than they have anticipated they were going to. So, those supplies are starting to dwindle.
The state initially passed emergency rules stating that anybody could apply for one of these transportation licenses. The alcohol distributors sued saying that was against the law and they won initially. So, the state legislature then had to pass emergency legislation allowing for new transportation licenses to be issued. In the interim two liquor distributors did apply for and were granted transportation licenses, so there now are two companies that can transport. We expect the state to start very quickly issuing more of those. By the time that initial supply the dispensaries stocked up on gets dangerously low, there should be these transporters in place to handle the situation. It has been an interesting one, to the point where Governor Sandoval signed a statement of emergency over the situation. It was misconstrued in the media as him having declared a state of emergency, which I thought was great. I hate to actually downplay that because the thought of a governor declaring a state of emergency because dispensaries are running out of weed is pretty awesome, but that’s not really what happened.
He did issue a statement of emergency, saying this is a real problem. We have a law that says that these businesses are allowed to operate. There are customers going to these businesses and yet because this quirk in the law there’s no way for them to get their product, and so that has allowed for these new licenses to be issued. It’s been kind of a fun one to watch. Thankfully within the next couple of months before this becomes a real state of emergency for cannabis consumers in Nevada the situation should be settled.
Matthew: Wow, a lot of moving parts there. How about Arizona?
Kris: So Arizona is an interesting one in that it’s probably, outside of California, the most robust pure medical market in the country. That’s about to change in California as well as they’re now starting to transition into adult use. It gets very little attention. Arizona has now granted something like 120 dispensaries around the state. These are vertically integrated dispensaries, but they are allowed to fully wholesale amongst themselves. So, you’ve got a really robust wholesale market with some really large scale cultivation facilities, particularly some that are coming online this year having some of the largest cannabis greenhouse in the country are in Arizona or going to be in Arizona. In fact there’s I think 40-some odd square acre greenhouse that’s currently in production. It’s not all built out for cannabis yet, but it can be and likely will be down the road.
So you’ve got a very mature market. You’ve got dispensaries that do very well. There is something like 130,000 patients now in the state of Arizona, so the medical market does really well. You had a movement of dispensaries from some of the more rural areas into the urban areas, so there’s higher concentration of dispensaries around the Phoenix area in particular, but also Tuscan and a little bit less so in Flagstaff, but that’s a much smaller area. You’ve got a really solid medical market. I think as California transitions to adult use here, we’ll be looking at Arizona as the most robust medical market in the country that is really largely flying under the radar.
Matthew: What about Florida?
Kris: Florida passed medical marijuana this past November through a ballot initiative with 70 percent of the vote. I believe it was the largest medical marijuana victory in a state to date. Washington D.C. I believe may have been a little bit higher, but they’re a city. The voters in Florida voted overwhelmingly for medical marijuana in that state. That program is currently being implemented, and it’s an interesting process because Florida has had a CBD law on the books for a while and there are already seven businesses that are up and running with cultivation processing facilities and dispensaries around the state that can sell CBD only or CBD only products. Those businesses are all going to be able to transition to now being full medical although under the enabling legislation that the state legislature passed they do ban flower sales. So, it is still all infused products and no smokable products. They’ll have the seven that are currently operational that are going to transition and they’re going to grant 10 more licenses some time this year. I believe the law says it has to be done by October 12th, although there’s a good chance that that gets pushed back. Five of those licenses will go to groups that applied in the first round for the CBD licenses and didn’t win. The others will go to people with agriculture experience to citrus grows and canners and to minority farmers, so it’s going to be quite competitive for those five additional licenses.
The way the system works is it is a fully vertically integrated market, meaning that everything you sell out of your dispensary you have to produce yourself. There’s no wholesale amongst those license holders, but they’re able to open I believe it’s up to 25 dispensaries each throughout the state with no limit geographically on where those can go. It will be a little while for this all to roll out, but by the middle of next year, to certainly late next year you’ll likely see somewhere in the range of 400 or so dispensaries operating throughout the state of Florida, operated by 15 to 20 companies.
Matthew: Okay. How about Maine? What’s new there?
Kris: Maine has had a medical marijuana program for years. Maine and Rhode Island are the two most established medical marijuana markets in the eastern United States. So, Maine currently has seven operational dispensaries, I’m sorry, eight operational dispensaries controlled by five companies or four companies, I should say. One of the controls I think five of the eight, if I remember correctly. They also passed adult use law in the November election. It was the narrowest of the victories that we had in November, but it did pass. They’re currently going through the process of implementing that as well. They’re actually moving a little bit slower than Massachusetts although it gets less tension than Massachusetts did for its dysfunction.
The governor of Maine, Paul LaPage, is (28.33 unclear) opposed to this program. He’s going to have to let it implement because it is now a law, but he may throw up some roadblocks here. There’s also an issue of how you integrate both the licensed medical marijuana dispensaries in Maine as well as the caregivers there, who is unlike Massachusetts or some other states, Maine has a very robust caregiver program where the majority of the patients, I believe, get their product from caregivers rather than from the existing retail operations. They’re trying to figure out now how you integrate those caregivers into the new adult use model as well as the existing dispensaries. So that’s all being worked out, but we expect that, similar to Massachusetts, certainly by late in 2018 there will be a fully functional adult use program in the state of Maine.
Matthew: Okay. And so they’re looking for the caregivers to perhaps play a part in that transition (29.34 unclear) part compared to…
Kris: That’s right. More than we’re seeing in other states. We’ve never seen in other states where somebody with a caregiver business is given any kind of preference in licensing for adult use. I think Maine is likely going to be the first state that does that. I don’t know exactly what that’s going to look like, but I think there will be some avenue for caregivers to also make a transition and participate in the adult use market.
Matthew: Okay. Connecticut is making a lot of headlines because businesses and wealthy residents just seem to be fleeing about what’s going on in terms of cannabis licensing there.
Kris: In Connecticut they have a medical marijuana program that’s operational. It’s a bit of an odd program in that they require the dispensaries be owned and operated by a licensed pharmacist, which I believe is the only state in the country to require that. They allow flower sales, but they require that it be pre-ground. So, you can’t actually sell flowers. You have sell little packets of pre-ground flower, which is not that appealing to a lot of consumers.
Matthew: How do politicians come up with this stuff? That’s really funny.
Kris: It’s very silly. So you do have these businesses that are operating. You’ve got separate cultivators and dispensaries. My understanding is that they’re likely going to allow a few more of those on the medical side in the coming months or the coming years. So there’s likely going to be another application process. It’s a relatively small program and the qualifying conditions are somewhat more limited than you see in some other states. Connecticut is one to watch because I think it’s a little bit more under the radar than some of the others that we’re hearing about, but I would put it in the list of states that are most likely to legalize for adult use through the state legislature.
Keep in mind to date all the states that have legalized for adult use have done so through ballot initiative. California, Oregon, Washington, Nevada, Maine, Massachusetts, Alaska, Washington D.C. have all done so by ballot initiative. Not one state legislature in the entire country has legalized through the legislative process, and there’s a real push in Connecticut to do that. I’ll give a shoutout to my colleague at 4Front, Sam Tracy, who also moonlights as the Connecticut State Political Director for the Marijuana Policy Project. With the work that they’re doing there, there is a chance that marijuana will be legalized in the legislature this year, as part of a budget process. If it doesn’t happen this year as part of the budget process, I think there’s a very good chance it will happen next year. So Connecticut is a real state to watch as one that could be the first, if not, will be one of the first of a handful to legalize for adults through the legislature.
Matthew: Okay. Let’s jump in to the neighboring states of Vermont and New Hampshire, but before we do is that any derogatory term people from New Hampshire call people from Massachusetts like yourself?
Kris: It believe it’s “Masshole”.
Matthew: I love that. Let’s jump into Vermont and New Hampshire real quick.
Kris: To be fair, I’m actually a native New Yorker, so I’m sure they call me far worse. New Hampshire has a medical marijuana program in its infancy. They have four licensed vertically integrated dispensary operations in the state. Not actually sure if any of them are up and running yet. I believe a couple of them are, but they’re very new and it’s a very limited scope program. New Hampshire did just pass decriminalization and the governor just signed that. So, New Hampshire became the last state in New England to officially decriminalize possession. They tend to be the most conservative state in New England. That is to say they probably would be considered fairly liberal in a lot of the center of the country, but they’re a little bit more conservative for New England. So, they’ll probably be the last of the New England states to legalize for adults, but they have made significant progress, both by implementing a medical marijuana program and acting a decrim policy just this month actually.
Matthew: Okay. Go ahead.
Kris: I was going to say, if you want to move straight into neighboring Vermont, Vermont also has a functional medical marijuana program. There are, I believe, also four operational dispensaries vertically integrated. They are in the process of an application process to license a fifth in the state for medical use it’s also a fairly limited program. The qualifying conditions are somewhat restrictive so that the program is fairly small, but it is operational and has been for years now. Vermont is one of those other states that I would put in the bucket of most likely to be the first to legalize for full adult use. They may in fact come back and do so this year. They actually passed a legalization bill, and I would have called for a study commission before full legalization that the governor vetoed. The governor gave very specific reasons for doing so, and so the legislature is debating coming back and passing something that would address the governor’s concerns. If that happens, Vermont would likely be the first state to do so this year, but the fact that they actually got something passed through both houses.
I’m sorry, it’s not going to happen this year, I apologize. I forgot just a few weeks ago they were unable to get it done in, I believe, the senate because of procedural vote, but they will be able to come back in January and pick right back up where they left off. I actually expect that Vermont is going to legalize for adults very early in 2018, which might make them the first. If Connecticut doesn’t do it through the budget process this year, then my money would actually be on Vermont to be the first state to do it. Although there are a couple of other dark horses, which I think we’re going to get to here momentarily.
Matthew: Okay, yeah let’s jump into those. How about Rhode Island?
Kris: Rhode Island is one of those other states that I would put in the list of potential first to do so through the legislature. So, you’ve got Connecticut, Vermont, Rhode Island and New Jersey would be my fourth and we can talk about that as well. Rhode Island has a fully functional medical marijuana program. There are, I believe, three operational dispensaries in the state. They also allow caregiver collectives to sell to dispensaries, although they’ve significantly scaled that back in recent years, and the state is currently going through an application process for addition cultivation licenses for smaller scale cultivators. I believe the largest license allows you to do up to 12,000 square feet. So, not small, but no 100,000 or multi square acre facilities.
So, there will be more cultivation capability online here in Rhode Island later on this year into early next year. Again, Rhode Island has long been looked at as a state that was likely to be the first to legalize through legislature. It looks like it’s not happening this year, due to some political squabbling, but I would still say it’s a fairly decent bet that they will do so at some point next year. I think Vermont will beat them out only because Vermont gets to pick up where they left off when the legislature reconvenes in January, whereas in Rhode Island there’s going to have to start again. So, it likely will take until a little bit longer in the year, but I think there is a very strong probability that both of those states, as well as Connecticut and New Jersey will all have legal medical cannabis for adults by sometime in 2018.
Matthew: Okay. Any other states you want to cover here? New York, New Jersey, D.C., in detail.
Kris: I think New Jersey is an interesting one to look at from this perspective. I mean, they’ve had a medical marijuana law on the books now for eight years. They have a functional medical marijuana program, but it’s a functional program that I would say is purely dysfunctional. It’s functional that it exists, but Governor Chris Christie has basically done everything he could to put road blocks up to this being a successful program. It’s taken a long time to get these operations up and running there. The qualifying condition list is very small, so it’s a very small number of patients. The interesting thing there is that you’ve got a legislature that seems to have a very healthy appetite for both expanding the medical program, as well as legalizing for adult use, but the only real impediment to that has been Chris Christie.
He said he would veto any legislation expanding access to marijuana in any form. That has been by far the biggest road block in Jersey. Thankfully that very large road block in every since of the word will be out of the state at the end of this year. He’s term limited out. I mean, even if he wasn’t, he would have zero chance of winning. I believe he’s the least popular governor in the United States. Is creeping close to being the least popular governor ever in the history of polling. I read a nice article about that a few weeks back. His approval rating is something like 12 percent. So, Christie is gone at the end of the year. The likely next governor, it’s widely expected that the democratic candidate, I think it’s Tim Murphy, definitely Murphy, is likely going to win the election this year. We don’t know for certain. Obviously it’s an election, but the polling shows that he’s got a massive lead.
He has campaigned in favor of full legalization. The legislature seems to want to do this. So, I think there’s a decent chance that when the legislature reconvenes with the support of the governor next year, that this is something that they might get done pretty quickly in Jersey. So, it’s one that I think has flown a little more under the radar because of Chris Christie, but that could actually wind up being the first state to do it.
Matthew: Okay, interesting. Anything else we missed there? Any other states or D.C. you want to talk about.
Kris: Sure, I mean Washington D.C. is a very interesting one to follow in that it has an adult use law that was passed by the voters. However, Congress I should say prevented D.C. from spending any money to implement the business side of it. So, personal possession is legal. Cultivation at home is perfectly legal. Gifting marijuana from one person to another is perfectly legal, but the state cannot license businesses to cultivate or sell. So, you have a functional and actually fairly robust medical marijuana market in D.C. You’ve got a number of dispensaries that are currently up and running in the city, but they cannot transition to adult use.
So, what you basically have now in D.C. is a genuine home grow market. Marijuana is everywhere in the district now. It’s easy to get, but everybody’s getting it from what’s really a gray market. It’s from home cultivators, and they can’t technically sell it, but they can accept donations or they can sell other products and then give away free marijuana. So, you’ve got this really large gray market that’s sprung up in D.C. that’s different than anything we’ve seen anywhere else in the country, and it’s actually kind of working. The consumers are able to access it. We haven’t seen a whole of crime associated with it because the grows are relatively small so there’s just not that much commerce involved. It’s kind of working.
I think if we ever see the democrats take control of Congress, that writer that prevents the districts from implementing a recreational market will go away. I think this is likely to stop that for a few years until we see a major change in the political control of Congress, because that’s who ultimately controls the budget for D.C., but in the interim you’ve got a very interesting gray market that’s fairly unique and unlike anything we see anywhere else in the country.
Matthew: Wow, that was a great summary. As you look ahead to the rest of 2017 and then into 2018 what are the big events you see on the horizon in terms of cannabis legislation?
Kris: What we’re looking at over the course of the next year, year and a half, I already mentioned I think the biggest news is going to be the states that will start legalizing through the state legislature. Again I look at Connecticut, Vermont, Rhode Island and New Jersey as the most likely targets to legalize through the legislature this year or next year. In fact, it’s more likely if any of them happen or all of them happen, it will be next year. So, those are the really big ones to watch. I think we’ll very likely see a full legalization ballot initiative on the ballot in Michigan in 2018, and if that makes the ballot, which it’s expected to do, I think there’s a strong likelihood that that’s going to pass.
Michigan has had a robust medical marijuana program in place for a while now. It’s been a semi regulated program to date. They’re now going through fully regulating and licensing these businesses in Michigan for medical purposes. So, the state’s used to legal marijuana commerce in the state, and so I think that makes it likely that that will pass in 2018, should it make the ballot. Again, it is expected to make the ballot. There is also potentially going to be a more limited medical marijuana initiative on the ballot in Oklahoma in 2018. There will likely be a medical marijuana initiative on the ballot in Missouri in 2018, which I think will pass, should that make it. Then there’s some other states that we may see legalize some form of medical marijuana over the course of the next year or so.
The one I have my eye sort of closest on is Texas. Texas is closer to legalizing full medical marijuana than most people realize. They have legalized CBD and actually just granted three licenses to businesses to cultivate and dispense CBD cannabis for some very specific illnesses. So, I think there’s a decent chance of the legislature in Texas will go a step further and enact some form of legal medical marijuana, full medical marijuana program. I doubt it will be as expansive as we see in some states, but I think it will be real when and if they do it. So, Texas is a real state to keep an eye on over the coming year, year and a half. Yeah, I think those are the areas that I would watch. There’s also potentially a medical marijuana initiative that may make the ballot in Utah in 2018. I don’t know how successful that’s going to be. I don’t know what kind of money is behind it, but I will look for a handful of states with medical marijuana initiatives on the ballot. Again, Oklahoma and Missouri being the most likely. Michigan being the most likely in 2018 for adult use. Then I think the real action at the legislature is largely going to be on those potentially new adult use states.
Matthew: Okay. That is a great summary. I appreciate that Kris. I’d like to ask you a few personal development questions to let listeners get to know who you are as a person a little bit better, if that’s okay.
Kris: Sure, absolutely.
Matthew: With that is there a book that has had a big impact on your life or way of thinking that you’d like to share?
Kris: Sure, I’ll stick with cannabis on this one, but really the drug war on this one, but there’s a book called Smoke and Mirrors by Dan Baum that was published in the mid nineties, and I think it’s still really relevant today. It’s a really good overview of the drug war but really sort of the movement to end the drug war, and it gives a really good history of how we got to where we are. Especially up until, and it really goes up to the late nineties when this movement really started to take off. I think a lot of folks see the progress that we’ve made over the last 10 years, in particular, and may feel like this was sort of achieved in a vacuum, but the reality is there were decades of work and advocacy that went into creating the foundation that’s allowed us to enjoy the success that we’ve had over the last few years.
So I would definitely recommend for anyone interested in the history of this, Smoke and Mirrors by Dan Baum. It was one that as I started to get into this really put everything in context for me, and really motivated me to be involved. Similarly there was a book called High in America, which is out of print now, but you can still get it on EBay. That’s really the history of Normal, but the history of Normal up through about 1980. So, it goes into even more detail about the early days of the marijuana reform movement. It’s really fascinating stuff. The early days of the reform movement in the seventies were a pretty wild time. You can read about marijuana reform parties at the Playboy mansion and reformers doing cocaine with the drug czars. I mean, there was all kinds of craziness going on back then. Parties with Hunter S. Thompson and just some really interesting characters involved back then. It also provides a really good context for how this movement got started. Where we were 40 years ago, and I think between those two books it really gives a good overview of how we got to the point when we actually started winning.
Matthew: Those are great books. They sound like great books. I haven’t heard of any of them so that’s great suggestions. Is there a tool, web-based or otherwise, you consider important to your day-to-day productivity?
Kris: My cellphone. I spend a lot of time on the phone. I spend a lot of time traveling so frankly being able to access my email on the phone, various programs are all helpful. I’ve really come to like Slack as a communication tool internally. We use it at 4Front. We have all our internal communications run through Slack, so I actually find that to be really helpful communications tool. For an internal project we also use Asana as a project management tool, both internally and with clients, and that’s also been I think a helpful tool, particularly when you’re dealing a volume of projects and projects with lots and lots of moving pieces, I found that to be a helpful one as well.
Matthew: How long did it take you, before you were using Slack and Asana kind of fluidly with your team and extended team, did it take days, weeks, months or is it pretty quick?
Kris: Well it took years but that’s more because we tried a lot of tools before we settled on the ones that we really liked, but we’ve been pretty steady with those now for a few years. It didn’t take very long. Asana takes a little bit longer because it requires some real training. Slack is very intuitive. I mean, it’s essentially a chat program, but a chat program designed for businesses. Asana takes a little bit longer to learn the program, but it’s fairly intuitive and it didn’t take that long for folks to integrate it.
Matthew: Okay, last question here. If you could share a joint with somebody living or dead, who would it be and why?
Kris: I’m going to say my father. My father passed away when I was eight years old. He was a medical cannabis patient in the last few years of his life. He passed away from a fairly rare genetic form of emphysema. We know today that cannabis is a vascular dilator. It helps open the lung sacs and draw air. He would have vaporized if he were around today, but that technology didn’t exist in the mid 1980s, but from everything I hear from my family, my dad’s side of the family, he was a really passionate advocate for this issue. He really believed in marijuana and the medical powers of marijuana. He believed in the healing powers. He believed in it as a force for good and a positive thing in his life and lives of people around him.
I was eight years old when he passed away. His story and having seen the impact that it had on him very young is a lot of what motivated me to get involved in this issue as I got older, but being so young at the time I never had an opportunity to sit down and talk with him about this and really get his views and how he’s developed. If I could, if the opportunity existed, would love the chance to sit down and share a joint with him and really talk through a lot obviously, because I never had a grown up conversation with my dad. If I’m sticking to this issue, to share a joint and really understand how he came to these views and how this fit into his world view, given that it’s been such a big motivator for me. His story has been a big motivator for me. There’s no way to really describe how meaningful it would be for me to have the opportunity to actually sit down and have that conversation.
Matthew: Wow, he certainly passed the torch of passion to you on the subject. I’m glad we got you working on it.
Kris: Thank you.
Matthew: Kris, as we close, how can listeners learn more about 4Front Advisors and connect with you?
Kris: Sure. So, you can check out our website. You can go to www.4frontventures.com. From there you can link to either 4Front Advisors, which I mentioned is our consulting business, as well as, to Mission Partners, which is our operational business. We’re now running dispensaries and cultivation facilities through that subsidiary. We actually just opened our first dispensary in the southside of Chicago just a couple weeks ago. We have other dispensaries that are branded Mission, our stores are called Mission. So, we’ll have other Mission dispensaries opening over the course of the next year. A few of them in Massachusetts, in Maryland, and in Pennsylvania. So, you can find out more about what we’re doing through both 4Front Advisors, as well as, through Mission Partners by going to www.4frontventures.com and you can click through to either of those websites. We also have a Facebook page for 4Front Ventures. You can just search that on Facebook and keep up to date on what we’re working on.
Matthew: Kris, thanks so much for coming on today and giving us a state-by-state snapshot. We really appreciate it.
Kris: Absolutely. If I can just do one quick plug before we go. For folks who are not familiar with Students for Sensible Drug Policy, I highly recommend go and check out www.ssdp.org, Students for Sensible Drug Policy I think is arguably the most important organization in the movement now, and there are some really awesome ones, so this is no knock on the Marijuana Policy Project, DPA, Normal or anybody else, but SSDP is the one that’s near and dear to my heart. It’s training the next generation of both reformers as well as leaders in the industry. They play a pivotal role in providing the ground troops so to speak and getting these laws passed. If it weren’t for SSDP, I wouldn’t be here today, neither would a number of members of my staff, a lot of members in the industry. Folks like Troy Dayton who started the ArcView Group came out of SSDP. Chris Lotlicker [ph] who hosts Marijuana Today podcast and is involved with a number of organizations came out of SSDP. I couldn’t have enough time to list all of the important folks in the movement and the industry who came out of that network. So, if anyone is feeling generous and wants to support a fantastic organization, without whom this issue and this industry wouldn’t be what it is today, go check out Students for Sensible Drug Policy at www.ssdp.org and offer some support. We’d really appreciate it.
Matthew: It’s like the big bang of cannabis advocacy with SSDP.
Kris: That’s absolutely right. That’s a great way to put it.
Matthew: Okay Kris, thanks so much.
Kris: Absolutely Matt, thanks again for having me back I really appreciate it.