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The Pot Baron of Colorado, Andy Williams

Andy Williams, CEO of Medicine Man Denver. Pot Barons of Colorado

Andy Williams, founder and CEO of Medicine Man Denver and co-star of MSNBC’s The Pot Barons of Colorado shares his insight into being a cannabis entrepreneur, raising money, creating an innovative grow and pivoting to provide what customers want. Learn more about Medicine Man: http://www.medicinemandenver.com/

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.

In Denver, Colorado there are more cannabis dispensaries than Starbucks Coffee Shops. In other words it is a competitive market. However, some cultivators and dispensary owners stand out in their ability to run thriving businesses despite the competition. To help us understand how to run a successful cultivation and dispensary operation in this competitive Denver environment I’ve invited Andy Williams of Medicine Man on CannaInsider today. Welcome to CannaInsider Andy.

Andy: Thank you very much. Thanks for having me.

Matthew: Andy I mentioned Denver are you in Denver today? I just want to give the listeners a sense of geography?

Andy: Yeah I am in Denver today. I have two stores here one in Denver, one in (1:48 unclear) and my cultivation is in Denver and then I also just started a new manufacturing product company and that’s also in Denver I have a building there.

Matthew: Great, great. How did you get started in the cannabis industry? What’s your background?

Andy: Well my background I’m an industrial engineer and I’ve been in manufacturing in the corporate world for the majority of my adult life. But I’ve always also been an entrepreneur and I’ve had multiple businesses over the years that have failed to one degree or another but it’s a real passion of mine. I’ve always wanted to have my own successful company. It’s been a lifelong not just goal but activity of mine and my brother is also a lifelong entrepreneur and he had a successful tile business. He also grew as a caregiver in his basement under the Colorado laws and was actually making very good money doing that. And when the Ogden letter came out in October of 2009 I went to him and I saw what he was doing and he’s a great grower and a great inventor, and I said let’s go big with it and he quickly agreed. So that’s how we got into the cannabis business.

Matthew: Oh okay. I’ve been fortunate enough to go on a tour of your facility and dispensary and it’s very extensive to say the least. Can you walk us through your grow room so listeners can get a picture of the scale and technology involved?

Andy: Sure you know when you’re in our facility I don’t know how recent you’ve been there Matt but we have 40,000 square feet in one building. We started with half of that and it’s kind of a museum of our company’s history in that when we first started we didn’t have a lot of money to work with and we did what we had to do in order just to get a crop out and while you won’t see the early, early stuff you’ll see some of the early stuff still in use in our facility.

Then over time as we got more money we just built out as we learned things improved, processes changed, techniques changed, and you see that growth through our facility until the newest side which is 20,000 square feet all by itself. It looks like a lab. It’s white, it’s bright. It’s extraordinarily clean, it’s very aseptic and we have rooms ranging from of course our clone rooms where are babies are which are relatively small. They contain lots of little plants growing. And then we have two large vegetative rooms that are about 100 feet x 18 feet x 10 feet and both of them contain all of the vegetative plants and mothers, and then we have 18 flower rooms as well that range, most of them are about 75 feet x 18 feet x 10 feet. And then of course we have our cure rooms which the finished products are in and our trim room as well. So that’s what the cultivation facility looks like. There’s a lot of rooms within a large warehouse space.

Matthew: So Andy do you break everything down into smaller rooms to mitigate risks or is that too provide what you’re doing by function or what’s the strategy there?

Andy: There’s multiple reasons for that. One is power. I only have so much power in the building. Right now we have about 5,000 amps in our facility. In order to maximize how many lights that I can build in that facility I have to restrict whether they can come on and off at any certain time. So I have big switch boxes that throws power from one side of a room to another side of a room every 12 hours and because of that I can have twice as many flower lights in my facility than I would be allowed otherwise. So that’s one reason just capacity.

And then another is that control. So if you have a room and you just have a big warehouse full of plants that are growing; one you have to have a large crop all at once which is not very good when it comes to harvest time. But also the dangers of pests and mold and mildews and what not would flow throughout the entire facility all at once. So those rooms do mitigate bad things that might happen to your crops as well. So with that those are the reasons that we do it. Oh and one more we also control the climate that way. So having nice; you know we try to control the climate in the entire warehouse it would be much more difficult than controlling climate in our facility.

Matthew: Yeah speaking of the climate control I noticed it looks really extensive. Something like you’d see at NASA or something. There’s these big columns it looked like it might be a German name on the climate control. Can you give us a little summary of what’s going on there?

Andy: Yeah as an industrial engineer and in manufacturing I know that to have a consistent and high quality output you need to control the inputs into our process and we also need to control the environment and the climate as well as these plants are growing. And so what we’ve chosen is what’s called a STULZ unit and STULZ is a manufacturer of what are called CRAC units and a CRAC unit C-R-A-C is computer room atmosphere control and these units are typically used to control the atmosphere in data centers.

What benefit it offers us is that it controls temperature, humidity, and CO2 levels and is completely programmable. So that we can tell it we want our humidity at this level and our CO2 at that level and our temperature at this level, and if it deviates from that over a specified range, the range we specify in any way we get notices. Whether it’s a text notice or whatever we can program it in there and we get warnings if things are out of tolerance. In addition we can program that machine to take action on this so if we have a spike in humidity we can tell it to slow the fans down to 71% which helps draw some humidity out. Raise the temperature up to 80 degrees and pull the humidity out of the room and then cool the room back down. It also keeps data for us and then we have a lot of data on the rooms so if one room is doing better than another room we can actually determine why and mirror those same qualities that help the other room out now.

Matthew: Now if there’s someone’s just won a license that’s listening to cultivate cannabis you know one of the big threats is obviously pests, funguses, and mold and it impacts almost all growers at some point or another. What do you think the best way is to mitigate those risks to have an optimal harvest?

Andy: Yeah that’s a really good question. So a little history on that in Colorado, specifically Denver there’s very little that we can use in terms of pesticides. They’ve really cracked down on that and there’s really very few pesticides even though they might be safe to use on our products it hasn’t been proven as such, and if it’s not proven as such or if the definition of its uses are broadly defined enough we cannot use the pesticides. So our hands are very tied on what we can use for control once something has been identified.

So really where we put our biggest effort is prevention. And so we have an integrated pest management system that is multi-faceted but we look to very much prevent any outbreak and we do that through cleanliness, we do it through restricting access to the rooms to only people necessary, and making sure that; we have uniforms that our employees will change multiple times each day. When they go from one room to another they wash up, etc. There’s mats on the floor that they walk over when they go in to get any contaminates on the bottom of their shoes.

I can go on and on. There’s a lot of stuff that we do that takes time and energy throughout the day but controlling those outbreaks and whether it’s a pathogen or an insect of some sort is very important because getting rid of them once they occur is typically destroying a lot of plants because we don’t want it to spread. That’s very costly.

Matthew: I noticed that there’s wheels on your cultivation tables. Can you explain why you do that?

Andy: Yeah so one of the things this industry; if you get into this industry that you have to be an inventor. We don’t have off the shelf products. So those tables are one of our inventions and what we do is; the way we run our shop is we run it off a 6 light system. So in our flowering rooms everything is on a 6 light system that’s in there and under those 6 lights we have 54 plants and those 54 plants are divided among 3 tables and we use 3 tables because they’re easier maneuvered than if we had two or just one. It’s not as heavy.

And we designed these tables to be able to fit close together. We have an extended halo around the footprint of the table to allow us a little bit more canopy space and they go together as one unit. When you’re looking at it it looks like one big table but then when you want to work on a plants to whether it’s Scrog which is to; we use a Scrogging system to screen a green so our plant canopy is tied down to a net and so to do that you have to get in between all of the systems. So we have to move the table apart. So those tables move very easily from side to side so that our growers can get in there and work with the plants if necessary.

Matthew: I noticed on the tour of your facility you cleaned the water before delivering it to your plants. That’s something that’s really not talked about very often. Soil medium is talked about, lights, humidity, temperature, but not water. Why do you feel it’s important to treat the water and how do you treat it?

Andy: Yeah that’s something that is very important in that remember I said we have to control the inputs to the process to get the same output.

Matthew: Right.

Andy: And water is the biggest input to a plant. It’s what it drinks and if you’re not controlling the water that it’s getting the nutrients that are in it and the minerals then you’re going to have a product that’s not consistent. So treating that water with a purification system is important to us. So we have a purification system that pulls all the solids out of the water so there’s less than one part per million of a solid in that water. It’s more pure than deep; it’s wonderful water. We actually also treat it after that to deionize it and we’ll use deionized water to spray the plants and deionized water will help clean the plant or whatever. It helps treat the plant a little bit and it’s a very safe way to do it. So the water is a very big portion of controlling the input to the plants life.

Matthew: What do you think the ideal growing medium is for cannabis plants? What do you use?

Andy: Well that’s interesting. My brother used to use hydroponic crossed with an aeroponic system in his basement and we thought we would move that right into our warehouse and replicate what he did in his basement and we soon learned it’s a different world in an industrial level than it is in the basement, and we didn’t have the knowledge to control in a large scale what he did on a small one. So we quickly found that going to a soil medium was much more forgiving but then we also found that when you buy your soil to put the plants in you purchase bugs with the soil.

So we went to a Soilless coco and we did a lot of experimentation with different mediums and the coco that we’ve landed upon is wonderful. It’s a sterile medium. We don’t get bugs with the mixture and being sterile we also can control exactly what the plant is uptaking as nutrients. So again we’re controlling the inputs to the plant. But it’s also very forgiving in that we don’t have to worry as much about; because if you’re not using a medium like that you have to control the water temperature very much and pathogens within the water as it’s recycling and lots of other things. So I really like the coco medium on that mix with (14:47 unclear).

Matthew: And where do you stand on LED lights? I know it’s kind of a controversial subject. A lot of people think they’re not ready for primetime but perhaps when we need to do have devote a small area to the cultivation facility to test things and see how they work. Where do you stand on LEDs?

Andy: We do a lot of testing like you said, and lately LEDs have been improving. The testing that I’ve done with LEDs now are coming close to the results that I’m getting with the high pressure sodium bulbs but it’s still not the same. I don’t; it’s not quite as much production in flower from the LED and I don’t want to poo poo it though because I think somebody better with LED lights and the different spectrums that they can put onto a plant might be able to replicate that.

But right now in terms of mass production, mass sell, and mass use I don’t think it’s quite there yet. Now I do think that in the vegetative state the LEDs are very good and very useful right now but it really needs to be designed (16:07 unclear) light. So the rooms that I have designed for the HPSs, High Pressure Sodium and Metal Halides and in replacing them with off the shelf LEDs isn’t feasible because they’ve already been engineered so I need new construction. I certainly would look at LEDs for vegetative but there are some other lights that are on the market right now that I would also look at for flower (16:32 unclear) and others they’re doing a good job.

Matthew: Is there any technology that is emerging for the cultivation room that really excites you? Either something you’re considering making or something that’s out there in the marketplace?
Andy: You know I’m having a lot of fun right now with greenhouse technology. This is something that we’re looking to get into. Not exclusively I like having my industrial space and the controlled environment but having a greenhouse environment is something I’m playing with right now. And my brother’s actually been working on a design for probably a year and a half and I think it’s pretty nailed down on what he’d like and we’re going to move forward with that and see what we can do. So that’s kind of taking up some creative juices from both my brother and I.

Matthew: Do you feel like there’s any lingering misconceptions about cannabis cultivators? For someone that’s on the outside looking in that just thinks like hey I put some seeds in dirt and then I make millions. I mean what are some of the misconceptions out there versus the contrast of the reality you live day in and day out?

Andy: There’s a really big cut so I get a lot of education. We have local politicians and local officials come through. Yesterday we had our monthly police department tour through where we take police not only from Colorado but from other states and give them an idea of what a cultivation facility looks like and then people from all around the country come through and I hear their reactions and their reactions are wow I never expected this. They expect the stoners sitting around kind of smoking dope with dirty clothing on and probably haven’t showered and working on these plants that are just on the cement floor in the warehouse and they’re watering them and maybe cutting them and watching tv and playing games and what they walk into is a manufacturing facility. They see people in uniforms. They see things; tools and what not hanging in their place. They see a very clean environment. They see very organized. They see charts up there tracking data for us so that we can improve what we’re doing.

They see a business and that’s what shocks them and then they start thinking wow how do they do this without a bank and then all these questions start coming up that really start hitting home for these people and like you said this isn’t something that you get into the cannabis industry and you’re just a guaranteed success. This is like any business. It is very competitive and in new markets it’s typically a little bit more forgiving in terms of margins and some mistakes can be made and still survive but as this market; and that’s not even a guarantee but as the market matures if you’re not able to produce at a low cost and high quality and serve your customer well, you’re not going to stay in business.

Matthew: Can you tell us a little bit about the infused products you’re manufacturing now?

Andy: Yeah I’m really excited about this. So right now we don’t have any products of our own on the shelf. We use our own product. We use our own marijuana and we have other people do extractions for us and so it’s really our own product that we grow. But we are now going to be able to do our own extractions and our own products. This facility is being built right now so it’s in its initial phase but it’s going to be focused on the medicine side of marijuana. And I have teamed with a gentleman named T.J. Johnsrud and he’s from NuCara Labs. He owns and has been running pharmaceutical labs for over 40 years and he has 27 labs around the country and they do fractionalization and compounding formulation in dosage forms for different medicines and working with the FDA etc.

So these guys are really good at creating and making, manufacturing medicine, and so we teamed up with them. We’ve teamed up with other folks as well in the medical community and we’re going to be doing not only in order to keep our lights on an extraction business where we create our own extractions and sell them in the marketplace but also doing research and manufacturing necessary to really take marijuana to a medicinal level because right now it’s very therapeutic. It’s whole plant medicine. We’re not really quite sure that the mixture of the compounds that are impacting people for different reasons and we want to isolate those, we want to identify them, and then be able to produce it in a way that’s reliable and reputable for people and it’s extremely exciting for me.

Matthew: So Andy switching gears to your dispensary one of the things visitors to Medicine Man Dispensary in Denver will notice upon entering is that there are two sides to the dispensary. There’s medicinal and adult use. Can you tell us why they are separated?

Andy: Yeah there’s a couple reasons for that. One the state requires us to track our inventory separately and of course our point of sale we have to make sure that we’re charging the proper tax and what not with the different products that we sell because it is different between medical and recreational and so that’s one reason.

Another reason is that on the recreational side we pre-pack things so that if you come in you’ll see eighths and quarters pre-packed of our different strains and while you can still look and smell the different strains from sample jars it’s not the same as on our medical side where we have large jars full of the marijuana that people can look at under a magnified lens and really get some nice aroma from the jar itself and take some time shopping. It’s meant to really speed things through. We see a lot of people on a recreational side and we just don’t, we just can’t take the same amount of time as we do with the medical folks on that side.

So that’s one of the reasons we have actually two ways to serve customers. On the medical side we get more of a; I don’t know of a consultation session where the bud tender is very knowledgeable to help you out a little bit more privacy. It’s not as close to the others the recreational side. That’s not to say the recreational side is hurting or uncomfortable. It’s just different.

Matthew: So you touched on a good point there Andy. Why would anybody in Colorado consider getting a medical cannabis card and you mentioned one of the reasons is that the tax treatment is very different so you can tax less. But also in terms of edibles and infused products you can get a much higher dosage is that right? What are we talking about in terms of dosages between the rec side and the medical?

Andy: That’s right. On the rec side the dosage for any one product in terms of an edible can be up to 100 mg and on the medical side there really is no limit although most of the products are 500 mg or less. Although there are some that are a little bit higher and the reason for that is people that are medicating with marijuana will develop a tolerance to it that they need more milligrams in order to have the desired result.

And of course on the recreational side we have a lot of people that maybe aren’t frequent users or even first time users that has been publicized by so well in the media that people have over consumption issues with cannabis if they’re not careful so that’s one of the reasons they restrict the amount in those edibles.

Matthew: Andy in terms of strains are there any particular strains of cannabis that are selling well right now or trending in a positive direction?

Andy: You know with strains we’re always working our genetics and Girl Scout cookies has been doing well for a while. I have heard there’s some new strains that are becoming very popular and (25:00 unclear) at the moment but one thing that is very popular is live resin. That seems to be something that is very popular which is you take a plant; a whole plant without trimming it and freeze it and then we use an extraction technique to extract the cannabis from the method and it’s a very heavy terpene extraction. So you get a lot more flavor and smell in the extraction and more live plant properties or whole plant properties than you do when you use just a straight extraction so that’s very popular right now.

Matthew: Yeah you touched on terpenes there that really seems like a word we’re going to start hearing much more and maybe even the creating a terpene profile that really delights customers because of the flavor. I mean that’s what we’re getting down to is the flavor. I mean it impacts your perception of the cannabis even before you consume it if the terpenes have a pleasant psychological effect. So do you think that’s a big trend moving forward? Do you think we’re going to see a lot more about that?

Andy: I do. I think extraction techniques are going to improve so that we do see more of the terpenes surviving the extraction. They’re very volatile and so getting them to survive the extraction is you know so getting better at doing that is what’s going to be important and quite honestly I have a feeling that terpenes have some benefit medicinally for people. So it’s not just; I have a feeling anyway that it’s not just the cannabinoids that are making this beneficial health effect for folks but it’s the combination of the cannabinoids and the terpenes that are having that effect. So it will be fun to see over time what research proves for that.

Matthew: Since you’ve started in this business how have you seen preferences change in terms of flowers, concentrates, edibles, gums, candies? Has it surprised you at all to watch this evolution?

Andy: No it really hasn’t surprised me. We’ve seen the preferences go from over 80% flower to probably in my stores anyway high 60% flower and then of course the remainder other whether its concentrate or edibles. And so it’s still in my stores predominantly flower but the trend certainly is for concentrates and edibles and I see that continuing over time. I don’t think flower is ever going to go away nor do I think it’s going to be a minority but it sure is convenient to have a vape pen or a candy bar or whatever if you want to; if you need to medicate or just relax in a very discrete way.

Matthew: Do you have any ideas where consumer tastes will be in three to five years? We touched a little bit on terpenes playing a more important role but do you have any guesses on what the market will look like then?

Andy: Well the cannabis market is going to mature of course. There’s going to be a consolidation in terms of ownership a little bit anyway during that time. Of course a lot more states are going to come online during that time maybe, maybe as many as ten more. And one of the things is there’s going to be a lot more research and development so different types of extraction methods are going to be utilized, and we’re going to have different products in terms of concentrates and edibles on the market with different dosage forms so different ways to deliver cannabis. So we’re going to see our choices opening up. We’re going to see the quality of cannabis getting better and more reliable, more consistent, and we’re going to see prices drop. So it’s going to be tougher to compete so all those things are going to be happening in the next three to five years no doubt.

Matthew: Now you went to the ArcView Group and raised some money for Medicine Man. Would you mind just discussing how that experience was for you?

Andy: Yeah that was fun. Well I had been chasing money for three years because Pete and I when we started we had some seed money from my mom and what little we could scrape together and we just; every dime we made we put back into the business to be able to cultivate more and better and I didn’t take a salary for the first couple years. I worked another job to boot. And so in order to stay on the forefront of the cannabis industry here in Colorado we had to work really hard to make money to spend money, and so I tried finding money that we could borrow in order to expand faster and ArcView is what gave us that opportunity.

So Troy Dayton the leader of ArcView told me once that they were because they; ArcView is if you don’t know it’s a Shark Tank for the cannabis industry. They bring qualified investors together with entrepreneurs who need money and they provide that forum for the qualified investors to listen to those entrepreneurs and make a decision whether or not they want to invest. So it brings people together for that purpose and he told me; and then when they first started it was just for ancillary businesses. So if you were maybe BioTrack and supporting the cannabis industry with your software it might be a place you would go and get money or other people it supported in the ancillary faction didn’t touch cannabis to get money.

And he told me that someday they were going to open it up to cannabis businesses and I said well as soon as you do let me know, and so I got that invitation in the summer of 2013 and there’s a selection process that I had to go through and was able to do that and able to present. I was the first cannabis company to present with them and we were able to raise about $1.6 million in unsecured loans through its members in order to help build our newest and greatest cultivation in our facility. So since then we’ve actually improved upon what we do and we have newer and better now but at the time it was the best. It enabled us to double in size from 20 to 40,000 square feet in one build which was fantastic.

Matthew: Wow, wow. That is amazing.

Andy: Yeah it was fun. We really enjoyed that.

Matthew: Now one thing I neglected to mention which is a huge deal really is that you were on MSNBC’s Pot Barons of Colorado which was a show that kind of gave people an inside look into the life of people in the cannabis industry. How was that experience for you?

Andy: That was a lot of fun too. The Executive Director of that, Gary Cohen and his crew did a phenomenal job and they did just hours and hours and hours of footage of us and I really liked them and they didn’t ask us because we’ve had other camera crews follow us and they’re always wanting us to act out a scene that helps their drama a little bit and while we don’t do that Gary’s crew never asked us to do it. They would ask us every once in a while to relive a moment that they didn’t capture, but they didn’t ever ask us to do something that was fake and they just got that raw footage and it was just so much fun doing and I had a really good time watching that in that I got to see some of my friends like Bob and Trip and others in their normal day to day life that I don’t necessarily get to see all the time so it was great.

Matthew: And in closing Andy how can listeners learn more about Medicine Man and all you do?

Andy: Well you can go to our website which is www.medicinemandenver.com and at that site you can hook up with all of our social media outlets and what not and see lots of pictures of our facility and then you can also go to if you’re looking for a consultant or would like to learn more about what we do on the consultancy side you can go to www.medicinemantechnologies.com and soon we’ll be having a website for our production company but that remains to be done yet so.

Matthew: Okay well Andy thanks so much for being on CannaInsider today. We really appreciate it.

Andy: My pleasure. Thanks for having me Matt.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Key Takeaways:
[2:03] – Andy’s background
[3:20] – Tour of Andy’s grow room
[6:56] – Andy talks about the climate control system in his facility
[8:54] – Andy discusses controlling pests, funguses and molds
[12:13] – Andy talks about treating the water in his facility
[13:28] – Ideal growing medium for cannabis plants
[15:05] – Andy talks about using LED lighting
[17:45] – Misconceptions about cultivators
[19:41] – Andy talks about his infused product line
[21:45] – Why the dispensary is split between recreational and medical
[23:49] – Differences in dosages in medical and recreational
[24:48] – Andy talks about popular strains
[26:10] – Andy discusses extraction techniques
[27:58] – Andy’s predictions for 3 to 5 year trends
[28:58] – Andy’s ArcView experience
[32:52] – Medicine Man’s contact details

Amsterdam’s Cannabis Scientist – Joost Heeroma from GH Medical

joost heeroma

Joost Heeroma is a scientist and researcher at GH Medical in Amsterdam. Joost shares the important science around cannabis that isn’t often talked about and discusses the future of cannabis technology and science.

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.

As the perception of cannabis evolves from a back alley drug for society’s misfits to a plant medicine that can help a myriad of conditions the question on the mind of millions of people is how? How can this plant treat so many disparate conditions? Part of the answer lies in how cannabinoids interact with the human endocannabinoid system. I am pleased to welcome Dr. Joost Heeroma, Director of Science at GH Medical in Amsterdam, to better understand the promise of unlocking the many secrets of the endocannabinoid system. Welcome Dr. Joost.

Joost: Thank you Matt. Thanks for having me.

Matthew: Joost before we get started can you tell us your background and how you got into the cannabis research field?

Joost: Yeah sure. I’m a medical biologist by training with 15 years of research experience behind me and that’s mostly in the fields of genetics and neuroscience and in short the central theme of my research has been homeostasis which is basically balance in your body. How it is your body preserve its integrity throughout life. That is, so that will be the central theme and to go slightly deeper into that for instance as a student I was fascinated by diseases like Cancer and Alzheimer’s and how they are essentially flip sides of the same coin if you will. So in Cancer cells sort of forget to stop dividing and in diseases like Alzheimer’s cells forget to do the opposite. They forget to stay alive and I was fascinated by these processes. How this worked and how they govern the integrity of your body if you will and that started my research.

That later turned into does the same thing happen in the brain? Is this homeostasis just balancing things important for your brain? It turns out that it is. In fact all the learning rules are based on these principles. Without going deeper into that I then started studying human genetic mutations and how these mutations disrupt the feedback mechanisms that usually keep you alive and how these mutations can in turn cause diseases like for instance Epilepsy. Then finally I used all that information to devise intelligent ways of curing diseases for instance by common opportune therapy for epilepsy.

Now that was my career in a nut shell and then the economy collapsed and I found myself looking for a job and then basically as an act of serendipity I saw Arjan and Franco on an episode of Strain Hunters and I had my epiphany and well the rest is history. Now we’re talking to each other.

Matthew: Okay. We’ve had Arjan on the show but can you give a little background on what GH Green House and what they do there in Amsterdam with seeds and what GH Medical is so people can kind of have a context of what the operation is there?

Joost: Yeah definitely. So the Green House is one of the most successful if not the most successful cannabis seed selling companies and they also have a string of coffee shops or cannabis cafe’s in Amsterdam in the Netherlands. And what sort of separates the people at Green House from the rest of the industry as I know it is the passion that Arjan and Franco show for keeping the diversity in cannabis strains in tract and in order to do this they have organized these Strain Hunter expeditions basically traveling to the furthest corners of the globe to find the original land races of cannabis that have essentially not been tampered with by 17 of crossing and this crossing was essentially done for one purpose, the recreational purpose. How high can you get out of it?

So in short Arjan and Franco and the Green House have been looking for less chemical cannabinoids in distinct land races of cannabis and I found this hugely interesting because I’m not sure if you know but the cannabinoids are receiving huge amounts of attention in the medical world by now but 99% of this information is based on THC. Now CBD is sort of getting into the game but there are tens if not more other cannabinoids that are virtually unresearched. So this was the point that got me hooked. When I saw the Strain Hunter’s travel the globe finding these new or old untempered cannabis races I thought bingo that’s, that’s the pharmacological gold mine that we’re looking for. So that in short is how it got started.
Matthew: Yeah and land races just for people to understand that’s a plant in this case the cannabis plant that evolved over a period of time to be ideally suited for its environment is that how you would describe it?

Joost: Probably yes. So a land race is nothing more than an original race so it hasn’t been tampered with by us.

Matthew: Okay.

Joost: And to give you an indication in let’s take the West, Europe and America. Since 1937 when the UN imposed its ban on cannabis the only selection criterion for cannabis was of course how stoned do you get and you can really see the results of this. So in the last couple of months I’ve profiled a lot of different strains of cannabis that you can find here in Amsterdam and essentially they’re all the same when you look at cannabinoids. That basically means we have found a way to purify THC and luckily THC has lots of therapeutic potential but all these other cannabinoids that are in there are practically unresearched and that’s what we want to do and for that you actually need these original races.

Matthew: Okay. Now switching gears to the encannabinoid system.

Joost: Yeah.

Matthew: How would you introduce that to someone that still quite doesn’t understand that?

Joost: Yeah and I can understand why it’s difficult to grasp because until about a year ago I didn’t have a clue and that’s strange because I actually found out that this endocannabinoid system is the mother of all feedback systems and therefore I should have known about it. And so what does it do? I would say that the endocannabinoid system is basically what puts; what stands between us and bacteria. If you see humans as successful life forms, we consist of billions upon billions of cells and to me as a biologist is actually surprised that we are not just a pile of, an amorphous pile of cells. Now we’re actually very nicely sculpted human beings and for that to happen you need to have a system that keeps several factors in check.

First of all, all cells in your body need to know whether or not to divide. If this goes wrong, if cells continue to divide when not necessary you get diseases like Cancer. If cells stop dividing where they should be you get degenerative diseases like for instance Alzheimer’s or Huntington’s and many other diseases.

Another thing that is crucial to successful multicellular life is the distribution of energy. Each cell needs to get the right amount of energy not more, not less, etc. Now failure to control the flow of energy in your body can lead to diseases like Obesity on the one hand or anorexia on the other or Diabetes. Anyway all these metabolic diseases sort of indicate that there’s some level of regulation going wrong. Now the other factor that is crucial to successful multicellular life is the immune system. Your cells need to know what is self and recognized as from anything foreign that invades your body. Anything that is self you need to protect. Anything that is foreign you need to viciously attack.

And finally the cells of your body need to be able to communicate to each other. Now the best example of this is the brain. You need brain communication, neurocell communication in order to be successful in your life. Now the four things so cell division, energy, metabolism, self recognition, or immune response and cellular communication or brain activity those four pillars of life are in fact colonized or governed by the endocannabinoid system. Does that answer your question?

Matthew: Yes, yes. And so those are things; those are kind of background operations that are going on in our lives and we really don’t notice it until there’s a problem perhaps.

Joost: Yeah.

Matthew: Is there any way that people can experience their endocannabinoid system without a problem? Is there something they can see in their life where they say hey that’s my endocannabinoid system at work?

Joost: Hmm good question. I think the most noticeable function of your endocannabinoid system may well be the runner’s high. Are you familiar with the runner’s high?

Matthew: Yes.

Joost: Yeah so I think this story started about 20 years ago and it was primarily explained as an endorphin based story. So endorphins are the body’s own opiates where endocannabinoids are the body’s own cannabinoids and it turns out that the happy feeling you get whilst running is endorphin based and the satisfied feeling that you get after running is actually caused by endocannabinoids. So that is an actual thing you can experience yourself where your endocannabinoid system is at work keeping you happy.

Matthew: Now we’re throwing around the word cannabinoid a lot but what exactly is a cannabinoid and how does it fit into the endocannabinoid system?

Joost: Let’s see to put things in a slightly broader perspective. Have you ever heard of the citric acid cycle?

Matthew: No.

Joost: No. Okay well the citric acid cycle is like the sense we’ll have in all our metabolism and whether you’re bacterium, or a horse, or a human it’s all the same and what this citric acid cycle does is it takes everything that you consume, everything that you eat, sort of grinds it down to atoms and from that your entire; every component of your body is constructed again. From the citric acid cycle everything is made and parts, the three major components of products that are made the energy that you need to keep your body up and running. The lipids to produce all your cells or the membranes surrounding your cells and the proteins of DNA which are essentially the machinery that our body’s work on.

And so straight from the citric acid cycle from the central hub of our metabolism all lipids are made and one major subdivision in these lipids is diacylglycerol which will mean nothing to you but it is like the top of the pyramid of all endocannabinoids. So what I’m trying to say by this is straight from everything that you eat lipids are made and from these lipids your endocannabinoids are made which govern pretty much everything in your body so. Cannabinoids are very natural substances if you will.

Matthew: How can the endocannabinoid system become dysfunctional or overpowered? Does that go back to what you were talking about with Cancer and Alzheimer’s?

Joost: Yeah. So I would say a dysfunctional endocannabinoid system is for instance caused by a mutation. A mutation in your genetic information which may lead to I don’t know Cancer or any other disease that is based on (15:53 unclear) metabolism or cell division or immunity or brain communication. Did that answer your question?

Matthew: Yes.

Joost: Okay. Now.

Matthew: Go ahead.

Joost: One other thing that I wanted to mention is so all the endocannabinoids are made out of diacylglycerol. It very much, very similar to this all plant cannabinoids are made from terpenes. Now terpenes is also something you’ve probably heard before.

Matthew: Yes.

Joost: And know that we’ll be discussing later on but what is crucial to your understanding of cannabinoids and terpenes is that they are essentially the same thing. Terpenes are very basic chemical building units and for instance if you take one unit you get the smell of menthol, take three units stack them together you get the smell of ginger, you take four you get cannabinoids, you take six you get cholesterol, sex hormones that kind of thing. Take eight you get carotene antioxidants in your body. Have you ever heard of Q10?

Matthew: CoQ10 or something like that?

Joost: Yeah exactly so but the stuff that’s in all these creams for your face and etc, etc. Q10 stands for ten units of isoprene, ten of these terpene units.

Matthew: Okay. So you stack these isoprene units and you get different compounds as you stack them?

Joost: Exactly. You get different compounds with completely different properties and to go one step further if you stack thirty of these compounds on top of each other then you’ve got latex. So that’s sort of to show you the, well the background against which all this stuff is happening. The central point here is that terpenes, terpinoids, cannabinoids are really natural compounds and they are involved in every step of multicellular life.

Matthew: Okay. So terpenes, there’s a lot of talk about flavor and fragrance and so forth. What’s happening with terpenes there that gives us that experience? I know you mentioned the stacking but can you tell us anything about how we experience terpenes from fragrance and so forth?

Joost: Yeah. So as I just said and so one isoprene unit gives you the smell of (18:40 unclear) and two isoprene units gives you the smell of menthol, etc, etc. Basically every odor, every essential oil that we know of is a terpene. That’s, yeah.

Matthew: Okay.

Joost: Every smell is a terpene and is also important to realize how all this works. It’s not for nothing that we can smell something. The only reason we can smell something is because we have a receptor and it’s also not for nothing that it has an effect on us. For instance if you smell Pinene so the smell of pine it has a physical effect on you. It dilates your lungs which is already making the crossover in between the food substances that we know as terpenes and the medicines that we will get to know as terpenes later on.

Matthew: Do terpenes affect our metabolism in any way?

Joost: Well yeah they do but it’s not really easy to give an example of this. But for instance I’m sure you have smelled nice food and all of a sudden got your gastric juices pumping and before you knew it you were hungry.

Matthew: Yeah sure.

Joost: Yeah so the physical process behind all that is it is fueled by terpenes and in the end it primes your body for eating. So does it have an effect on your metabolism yes definitely?

Matthew: And where can cannabis have the biggest impact on fighting illness and disease right now do you think?

Joost: That’s also a difficult one. Well seeing as cannabinoids actually show therapeutic potential in some of the most well prevalent and debilitating diseases in the West. I can think of Cancer, Obesity, Diabetes, Depression, Insomnia. I would say the total potential impact of cannabis and cannabinoids on disease is huge and which one will prove to be the biggest or which one is the biggest right now I actually have no idea. Everything.

Matthew: When you smoke a joint versus taking an edible, an infused product how is that different? How does that affect your endocannabinoid system differently?

Joost: The differences are huge. For starters when you eat cannabinoids they invariably end up in your stomach. Your stomach is full of acid and that acid immediately breaks down like 50% of all cannabinoids. After your stomach the cannabinoids enter your guts and your intestine or through your intestine and end up in your blood and they get metabolized by your liver which again causes a 50% reduction. So basically if you eat cannabinoids you are already at 25% of the total effect that you could’ve had if you would have injected the cannabinoids which of course no one does but that’s the standard against which we weigh it.

So if you want to preserve cannabinoids for their medical function you probably don’t want to eat them and other roots of application are for instance you could use topical application, just rub an ointment on your skin which will for instance work well for Eczema or Psoriasis but if you got Cancer probably there is a better way of getting the cannabinoids unless it’s Skin Cancer. Speaking of Cancer then you probably want to have a really high dose of some particular cannabinoid in a very specific spot so you might be thinking of an injection or you might be thinking of; for instance if you want to reach your brain and you want to reach it very quickly nasal injection or a nasal spray would make more sense.

If you want it to get there more slowly then maybe eating is better. You see that’s, it really depends on the specific condition that you’re looking to treat. It really depends on that for your choice of rules of application.

Matthew: I really haven’t heard of people injecting cannabis as a medical treatment but is seems like it might be a good idea. Is that happening more or are people talking about that more?

Joost: Yeah. To be honest I don’t know of anyone who has injected cannabinoids either but I know this is how for instance the (24:03 unclear) so the drug lap of the DEA got their data, you need to have a standard measurement of pharmacological products and the standard is pretty much what happens if you inject it. That constitutes 100% biodegradability and it is against this biodegradability that for instance everything that happens when you do a nasal spray or you already consumed cannabinoids everything is weighed against what would theoretically happen if you inject. Does that make sense?

Matthew: Yes, yes.

Joost: And like I said for real, real nasty cases where you need a really high dose of cannabinoids such as for instance Cancer. I can well imagine that the way to treat it in the future will be an injection. At the moment I don’t know any examples.

Matthew: Joost based on what you’ve seen. Let’s say God forbid you develop some sort of Cancer would you be treating it with cannabis?

Joost: A very good question. I think yes. I’ve spent the last year reading everything I could about cannabinoids and their potential to cure diseases and even though I know we’ve only scratched the surface of the therapeutic potential of cannabinoids I would say the promise is huge and especially for Cancer. I mean people have more or less known that cannabinoids can work against the nausea, basically against the side effects that you have from regular Cancer treatments. But now we actually know that THC kills Cancer cells. It actually kills Cancer cells whereas it leaves non Cancer cells alone. That finding in itself is huge.

Of course we need more information, we need more tests but I think a system that can decide whether a cell is Cancerous or not and then eliminate the Cancer cell is just way better than what we have been able to come up with in regular medicine. Which one will prove to be better I don’t know.

Matthew: Okay. Do you see any clinical trials going on that are promising in Europe or elsewhere with cannabis or cannabis oils?

Joost: There are a few clinical trials going on not too many and a lot of these clinical trials are still being done with synthetic cannabinoids and so these are still primarily initiatives from Big Pharma who of course love patents of all drug and for that you need synthetic cannabinoids. For the plant cannabinoids it’s sort of getting started now. We hope to launch as many clinical trials in the next couple of years as possible and we should be thinking about 100 or 130 different types of disease indications for which we could launch a clinical trial. The most important one going on right now I don’t know.

Matthew: Okay. And where do you see GH Medical going over in the years ahead?

Joost: Well basically doing precisely that launching clinical trials. So what we’ve done in the last year is basically nothing else but making an inventory of all the knowledge that is out there. So I have screened or am in the process of screening approximately thirty thousand scientific papers on fifty different disease areas and this is work that has been done in the last forty years or thereabouts by scientists who did it anyway even though they weren’t supposed to and I’m categorizing all this data trying to find the lacks in our knowledge and trying to supplement that.

So now we’ve more or less reached a point where we know the bits of knowledge that are lacking and we can start formulating the research that is necessary to actually go further and because cannabinoids are such a hugely safe, biologically safe class of product I think we can go straight into the clinical trials and forget about most of the pre-chemical research that’s usually done before. Which is like to find out how safe is the compound? How much can we tolerate, etc, etc.? We already know from thousands of years of user experiences that you can tolerate as many cannabinoids as you want to test so we can skip all that straight to the clinical trials and we’ll take it from there.

Matthew: Yeah that would be great if we could get some solutions quickly here. There’s a lot of people suffering and its like why wait years when it’s really a benign influence at worst. So why?

Joost: Exactly.

Matthew: Why can’t we move forward? So.

Joost: Yeah but the problem is as you are probably very well aware of that everyone is waiting. Well they’re the policy makers doing it at the moment.

Matthew: Right.

Joost: And the whole world I mean I would love to start 100 clinical trials tomorrow but if we would do that we would be shutdown the day after tomorrow.

Matthew: Yeah.

Joost: And we are finding ourselves in a very strange situation that we’re actually dealing more with policy makers, with politicians, etc, etc., than with the actual science.

Matthew: Yeah that’s unfortunate. What’s the reaction from the policy makers? Are they becoming? I mean Amsterdam and the Netherlands are historically liberal relative to other countries but are they receptive to the message of cannabis as medicine?

Joost: Not really. I think it was the Dutch Minister of Justice who said A) that he knew people that have died of smoking cannabis which is impossible. But it does show you the level of information that they use and so I don’t expect much out of the Netherlands anytime soon. But what is very interesting is that we are now being contacted by other governments around the world who are actually sick and tired of having to chase old granny’s that have a bottle of cannabis oil because they have Cancer. People are just getting tired of having to incarcerate other people for just that.

And so the interesting development is that we are now being approached by governments who are actually looking for our advice in how to change the rules so that we can do our research and that’s new.

Matthew: Yeah.

Joost: And maybe this will be the way in which we can start our research but we just don’t know. I don’t know what’s going to happen next week. Hopefully what’s going to happen is we’re going to get our license to do our research and then we can start our trials. But who knows?

Matthew: Joost what’s the best way for listeners to learn more about GH Medical Green House Seeds, Arjan’s cannabis cafe’s there in Amsterdam? Where should they go to learn more about these things?

Joost: Yeah. So first of all to learn more about GH Medical you can go to www.ghmedical.com and that website basically contains all the information that you need to see whether cannabinoid based therapy might be something for you. How it works, etc., etc. It also contains a white paper where we explain our backgrounds, disease backgrounds, and the potential of cannabinoids to cure all these diseases and that is probably good background reading material for most people, for patients, for healthcare professionals, for policy makers and what not. Now going to the Green House as the larger company, Green House Seeds. For information you can go to www.greenhouseseeds.nl.

Matthew: Okay.

Joost: And finally if you want more information about the cannabis cafe’s or coffee shops as we call them over here. You can go to www.greenhouse.org.

Matthew: Okay. Yeah and the cafe’s are really well known there in Amsterdam and very kind of classy places and while we have legal retail shops here in Colorado I hope we go to the next level and have cafe’s similar to what you have in Amsterdam there where there’s a social aspect. Because while it’s legal we can go to a retail shop and then everybody goes home. There’s no public forum.

Joost: Yeah.

Matthew: Which would really I think enhance the experience for everybody so I hope we get to that step soon. But again also Arjan and his partner Franco are also a great place to find them is on Strain Hunters too which is a really kind of interesting show where they go all over the world finding these land race cannabis strains which Joost spoke about a little earlier.

Matthew: So Joost thanks so much for being on CannaInsider and educating us. We really appreciate it.

Joost: Thank you. I hope you learned something from it and hopefully meet again.

Matthew: Thank you.

If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Key Takeaways:
[1:52] – Dr. Joost’s background
[4:41] – What is GH Medical
[8:42] – Joost talks about the endocannabinoid system
[12:24] – Joost explains the functions of the endocannabinoid system
[13:27] – What is a cannabinoid
[15:28] – How your endocannabinoid system can become dysfunctional
[18:30] – Joost talks about terpenes
[20:32] – Cannabis’s biggest impact on fighting illnesses and disease
[21:27] – How do infused products, edibles and joints affect your system
[23:49] – Joost talks about injecting cannabis
[26:55] – Cannabis clinical trials
[28:04] – Future of GH Medical
[30:54] – Are policy makers receptive of cannabis as medicine
[32:38] – GH Medical Green House Seeds contact details

An Update on Oregon Cannabis Legalization with Jeremy Kwit

Jeremy Kwit

In this interview with Jeremy Kwit of Bloom Well Bend http://www.bloomwellbend.com we discuss how prohibition is ending in Oregon. Specifically what legalization looks like and the key regulations that are both helping and hurting patients and growers.

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.

With all the action going on around the country we often forget that recreational cannabis has been legalized in Oregon. That is why I’ve asked Jeremy Kwit, Bloom Well Cannabis Apothecary on to CannaInsider today to talk about what is happening with legalization in Oregon? Welcome to CannaInsider Jeremy.

Jeremy: Thank you. It’s great to be here.

Matthew: Jeremy to give us a sense of geography can you tell us where you are today?

Jeremy: So I’m sitting at about 3500 feet above sea level where the Cascade Mountains meet the high desert right in the center of Oregon. I’m on the East side of the Cascades, and so to the West of me are Ponderosa Pines and out East of me are Juniper Pines, and so we live in a climate that is really incredible for cannabis production especially an indoor and in climate controlled greenhouses because we have cold, dry night time air year round. Now it doesn’t hurt that it’s beautiful I think the plants like that as well and so for the same reason that Facebook and Apple opened their large data centers about 40 minutes from Bend in Prineville. Cannabis cultivation indoors is phenomenal because any time throughout the year the temperature drops to 30 to 40 degrees at night and we have a very low humidity we are super dry so we have less problems with mold, mildews, and pathogens.

Matthew: Yeah that’s a great point about the humidity level. I know the Bend has a really thriving micro-brew scene. Do you see kind of that culture now going into the cannabis scene now that people are coming out of the shadows?

Jeremy: It certainly is. We are very fortunate in Bend to have had a fairly open climate towards cannabis not just recently but even the last half dozen years where there have been dispensaries that were operational under kind of a grey model before 3460 had passed because our criminal defense; excuse me our criminal justice system didn’t see any problems with cannabis. So we are seeing now and experiencing a virgining craft cannabis industry that is growing very dynamically and we’re seeing lots of different brands of cannabis farms, processing, and edibles companies come out of Central Oregon as well as dispensaries like myself.

Matthew: Can you give us a little background on what Bloom Well Cannabis Apothecary is and your involvement in it and what you’re trying to do there?

Jeremy: Oh certainly. Bloom Well is a community dispensary that provides safe access to cannabis in a judgment free environment and I mean every bit of that statement. As a community dispensary we believe in the open source cannabis model versus the sole source cannabis model so think Len X or Nescafe’s Mozilla browser where we want to bring in a variety of different farmers’ products and processors’ product into our facility to share it with our clientele. So an alternative model for a dispensary is the sole sourced one where growers are forward integrating into retail to sell their wares directly and the alternative for us is that we bring in and represent family farmers from around our region and around our state and we procure the very best products that we can find to provide diversity for our clients and to support community based agriculture in the region.

Matthew: So I’m familiar with; I grew up Irish/Catholic so I know what a judgment rich environment is but I’ve never heard of a judgment free. What does that mean exactly?

Jeremy: Well we don’t really care why people use cannabis. So a lot of folks may come to us with a condition or with symptoms that they will talk about and that will be maybe the driving force or factor in their choice to consume cannabis as an alternative to other prescription drugs and for us we don’t judge them for the conditions that they have, for their choice and use of cannabis because a lot of people will use cannabis in a multitude of different ways and the reasoning or what they get their medical card for on paper might be different than how they end up using the product in actuality or in practice. It might become something very spiritual for them and most doctors aren’t writing a recommendation for the spiritual use of cannabis so.

Matthew: Not yet.

Jeremy: Not yet and to that point about physicians the fact that somebody has a doctor’s note or an attending physician statement in the state of Oregon doesn’t necessarily make them any more entitled in my view to their consumption of cannabis then somebody else who has been self medicating with cannabis to feel better that doesn’t have a doctor’s note. So part of the judgment free environment is even the notion that if you’re a medical cannabis cardholder you’re entitled to cannabis and if you’re using cannabis without your medical card you are somehow an outlaw. Ultimately I see people use cannabis to feel better and if they’re using cannabis to feel better that’s great and cannabis is certainly a lot better for many individuals than their consumption of alcohol or other narcotics and so I look at cannabis use as one of relaxation, enjoyment, decompression, stress reduction and that is as important then ameliorating some into a debilitating physical condition.

Matthew: Now what would you say was the spark that got you into the cannabis industry just give us a little background there because it seems like you really have a strong sense of your values around cannabis and I kind of want to get; how did that happen?

Jeremy: So as a teenager I distinctively remember my mom invading my sister’s privacy and going into her bedroom and finding a note in her drawer where she wrote that to a friend that she had tried using cannabis at a Madonna concert, and my mom was incredibly upset and of course grounded my sister and punished her for her experimentation with cannabis and I remember the dialogue that I had with my mom saying I felt that it was invasive of her privacy and inappropriate to have discovered this note in her drawer. My mom responded with a statement similar to but Jeremy she was experimenting with marijuana and it struck me well one a Madonna concert is the perfect place for somebody to try marijuana as opposed to the parking lot at school because the reality is somebody probably passed her a joint and she tried it. Took a puff and it wasn’t a big deal.

But my mom turned it into a big deal and so it struck me then that sort of the reefer madness mentality can be really divisive inside of families and now 25 years later my mom and my sister are still struggling to rebuild trust in their relationship and I felt that that sort of instance with cannabis was what initiated the ball rolling from my mom creating a police state like environment in our household to preventing dialogue and conversation about cannabis and choice and for me personally I also experimented with cannabis in my youth but chose to be very private about it because I knew my mom’s attitude and there is nothing worse than children and their parents having walls of secrecy between them and so I sensed that our historically terrible drug policy has a traumatic effect on our youth and our family structure.

Matthew: Yeah that’s a good point I mean everybody knows they’ve seen pictures of DEA destroying plants and breaking down doors and using flash grenades and all these things but then there’s a trickle down staucy component of it where you’re family then becomes militant in preventing these things mostly from miseducation and kind of brainwashing. I don’t know another way of saying it.

Jeremy : I would agree. There’s a lot of research that shows I think that the Drug Policy Alliance has a publication on their website called “Beyond Zero Tolerance” and it’s a fact based guide to drug education for parents and it uses a lot of research from a PhD, I believe his name was Rod Stryker that shows that having an open relationship and open dialogue with children or youth about cannabis and all drugs for that matter is going to produce better outcomes. So rather than saying that cannabis is terrible don’t never use it well young people will try it and they’ll find out that it wasn’t the end of the world and then they now realize that their parents lied to them, their teachers lied to them, and so did their school administration and officials.

So rather engage in conversation about use of cannabis and that will allow parents to be more able to distinguish the difference between experimental use and abuse and again forging lines of communication instead of creating barriers of secrecy is going to help kids to stay sober and that’s what I would want for everybody. Now that also applies to adults as well let’s just be honest with one another about what we’re doing with ourselves and our bodies.

Matthew: So true. We’re going to get into the Oregon legalization here in a second but I call cannabis the gateway truth not the gateway drug because after I experienced it for the first time I realized hey wait a minute here this is a total lie what this plants about. It feels totally different then everything I was told and then my next thought is what else are we being lied to about. So that’s why it’s the gateway truth because then you start pulling at the string like wait a second if cannabis is not this evil plant in fact it has all these medicinal benefits and therapeutic benefits and it helps life in many ways. If it’s such a 180 lie about this what else are we being lied to about? So when you pull up that string it’s fun but dangerous at the same time and you tend to go down the road less traveled.

Jeremy: Mm-hmm (affirmative). Yeah you start questioning everything our government is telling us and where does our government come from? Culturally the Puritan’s started America and they were trying to flee persecution in England so they could practice a much more stringent or religious ideology and I think that Puritanical culture still is very much pervasive and has an influence on us today. There’s something wrong with our country that says it’s not okay for you to feel good.

Matthew: Right.

Jeremy: And we have been self medicating with; throughout human history. We’ve been always trying to change how we feel and that could be through fermented beverages, it could be through sleep and food deprivation, it could be through twirling around in a circle reciting Turkish poetry. We’re trying to change sort of our ontology and the way in which we look at the world around us in some ways and it can be temporary or permanent and I think cannabis helps many individuals provide a different lens through which to experience their reality and look at the world around them.

So for me personally I’ve had a spine injury and I was originally turned onto medical cannabis in the Bay area back in the late 90s after Prop 215 was passed in California and folks had suggested that cannabis provides natural analogies and anti-inflammatory properties so should be really wonderful the bulged disc in my spine and I found that sometimes when I was using cannabis that I certainly did feel some pain relief but what I also found is that more than anything else while I was trying to stretch or do physical therapy the cannabis helped me to be present in my body and relax and find sort of the source of pain and allowed me to stretch out because my own Type A personality; I had always characterized myself as almost having ADHD with OCD tendencies. I can’t sit still for a minute let alone for forty-five minutes to an hour to do physical therapy so the cannabis just allowed me to relax and sit still and it didn’t always solve the back pain but my own ability to relax and sit still with cannabis was incredibly therapeutic.

Matthew: Yeah. Well that’s great context for your background. Now switching gears a little bit to Oregon and legalization first what was the vote, what happened, and where are we at now?

Jeremy: So Oregon started its medical cannabis program back in 1998 and the program was based or modeled on sharing where a grower could grow six plants for a patient and the patient could provide some reimbursement to the grower not for their labor but for their materials and supplies. And so it was very much based on a trading system and so the challenge though you know if cannabis helps to settle your stomach or for example I use if dairy or yogurt or kefir settles your GI tract issues you would then have to go find a dairy farmer who could have six cows and they would give you a quart of milk a month and if you realized that maybe dairy milk upset your tummy and you needed a shot of raw goat milk a day how are you going to find a goat shepherd?

And the same thing was true for patients and growers throughout Oregon that it was hard for patients to find growers. So that evolved into the recognition by legislatures that patients need a store, need a dispensary to go procure their cannabis. So 3460 passed by the legislature in 2013 and it was signed into law and implementation started in 2014. So Bloom Well applied for its license and has been in good standing since we opened our facility serving medical cannabis patients. The more recent activity in the state of Oregon was with the passage of Measure 91 last November that made or that is seeking to make cannabis fully legal for adults over the age of 21 and that passed last November. A joint task force to implement Measure 91 was put together by the legislature and they’ve been enhancing some of the guidelines that Measure 91 put forth.

What they did very recently was introduce some legislation called HP3400 which was signed into law by our Governor recently as well that is actually going to allow medical marijuana dispensaries like Bloom Well to start selling cannabis to all adults twenty-one and over this October and they’re calling it Early Interim Recreational Sales. Early because the Oregon Liquor Control Commission is still writing the regulations that will govern recreational production. Seed to sale processing and distribution as well as retailing and the implementation of the OLCC Recreational Cannabis stores is not expected to be fully rolled out until October 2016 at the earliest and so then the legislature recognized well where are individuals; where are adults going to buy cannabis before 2016? If we don’t allow medical marijuana dispensaries to sell them flower then they’re going to procure it in the alternative marketplace. So starting this October medical marijuana dispensaries if they choose to will be able to sell a quarter ounce of flower or bud to adults 21 and over per day as well as seeds and 4 plants.

So this July a few months ago in Oregon cannabis became decriminalized. So it is now legal in Oregon for adults 21 and over to have 8 ounces of cannabis in the home, 1 ounce of cannabis out of home, and they can have 4 plants. And I say that it was decriminalized in July because it’s not truly legal unless you can go buy it somewhere so the possession of cannabis became okay this July and what’s also really wonderful is they’re changing a lot of the sentencing guidelines and the I don’t know what it’s called the different; they’re rescheduling different types of misdemeanors and felonies and so it will also affect everybody who is presently jailed for cannabis related crimes and many people will be able to leave jail and have their records expunged starting this past July.

Matthew: Oh interesting.

Jeremy: So we will be able to now sell cannabis. Gosh two weeks from now I’m both incredibly nervous and excited about the amount of work that we have to do to gear up to be able to sell cannabis flowers, seeds, and up to four clones to any adult who walks into our door starting October 1st.

Matthew: Is there a limit on the number of seeds that can be sold?

Jeremy: Unlimited number of seeds.

Matthew: Wow. That is really cool. Awesome and do you anticipate a lot of demand for the seeds and clones? What’s the word on the street there?

Jeremy: I think there’s; I mean I think there’s going to be a lot more demand for flower for the bud. I think after prohibition most people wanted to consume alcohol not everybody wanted to suddenly become home distillers and home brewers. That being said I do recognize that there is already and will continue to be a surge in demand or desire to cultivate cannabis at home and we had some clients who came in gentleman probably in his late 70s or 80s just bought a cannabis plant because he wanted to hold it and he and his wife stood outside. They took pictures in front of our sign and so there’s something incredibly dignifying about being able to have choice about the type of cannabis that you’re buying as well as the ability to grow it at home for yourself and so it’s a lot like tomatoes. A lot of people will grow tomatoes at home but they still buy tomatoes in the marketplace.

You can build soil beds and build hoop houses and build your tomato garden and you’re tomatoes are just going to taste the best that anybody’s ever produced and you’re going to share them with your neighbors and I think that’s going to happen with cannabis as well and those folks that love to make salad will also go to the stores and buy plenty of tomatoes as well.

Matthew: How do you feel in general about the way regulations are being rolled out? You gave us a nice summary there but in some other states the regulators create rules that don’t allow for a functional market in some ways. Is there any ways it could be different?

Jeremy: We’re really lucky in Oregon because we have had Washington and Colorado as models and so the folks Anthony Johnson and Dave Coppolack [ph] who were the chief petitioners and co-authors of Measure 91. They looked at those models as they were crafting Measure 91 and Measure 91 is very much modeled after Oregon Craft Beer and Wine different than alcohol. You know hard alcohol is sort of owned by the state. It has a different sort of regulatory and distribution system and so the intention is to create a truly craft cannabis culture so that family farmers from around the state can benefit and small craft producers will thrive and so we’ve got this dynamic craft beer and wine industry in Oregon that is doing quite well and cannabis I expect it to follow in a similar pattern in Oregon and that’s because we’ve got a very well written; we had a very well written measure.

Of course I think the legislature made some modifications to Measure 91 allowing municipalities to opt out of commercial cannabis and so in areas of the state like Bend in Deschutes county or Portland in Multnomah county we’re going to see cannabis havens where the municipalities are choosing to regulate cannabis in a way that makes sense for their communities rather than opt out with moratoriums and bans and because of this recent legislative tweak to Measure 91 under the guise of 3400. And it was through a lot of lobbying from the Oregon League of Cities and the County’s Association to allow more conservative count as in conservative cities to choose to opt out of commercial cannabis which could include cultivation, processing, distribution, or retailing.

And Measure 91 was designed to encourage small communities to participate in this system because if you don’t have a retail component there’s no cannabis businesses operating in your city or county you’re not going to get the tax revenues that come from the taxation of cannabis which is allocated towards the school general fund and local policing. So I’m in a very unique and lucky; fortunate position geographically because I’m operating in a community that is tolerate of cannabis but unfortunately very close by Crook County for example they’ve chosen to opt out and it’s really unfortunate because they, they’ve got in Central Oregon we refer to Crook County as a banana belt because it’s got really wonderful weather, it’s very sunny and rather than farmers producing Kentucky Bluegrass they could produce cannabis instead but they’re not going to be able to do so because their community or their county commissioners have opted out. So we’re going to end up with a bit of a quilt around the state of Oregon unfortunately.

Matthew: What about edibles and infused products? Where do those stand?

Jeremy: Medical cannabis patients can consume those in October. We will not be able to sell edibles to adult consumers 21 and over which is quite ridiculous. The edibles in Oregon; all products actually that is running through or sold through a dispensaries has to be tested for safety and potency. So on the safety side that’s mold, mildew, and pesticide testing and then on the potency side it’s the amount of THC and CBD for flowers. The percentage in those products and for finished products like hash oil concentrates or edibles the total amount of THC and CBD has to be determined and so as a consequence it’s very easy for us to dose our edibles.

We have edibles like hard candies and chocolates and savory snacks and we know the dosages is between 4 mg per candy up to 40 or 140 and so we encourage people to find their dose and through some experimentation everybody can quite easily figure out how much cannabis is appropriate for them in an edible dosage form and so we find our clients really enjoying their consumption of cannabis as an edible because it may be more discrete or actually we just might be more long lasting and have a different physical or an emotional effect on themselves. So edibles are great. We can sell them. I would characterize edibles as maybe 25% of our business and unfortunately we won’t be able to sell them to adults 21 and over.

Matthew: Right just for medical then and is there talk of changing that or is it too early to say?

Jeremy: There’s no discussion that I’m aware of regarding such change. I think that there’s been some edible hysteria in the media and then some of that are from instances in Colorado or there’s even an instance here in Central Oregon where a woman called the ambulance for her friend because she had three candies and felt herself getting really, really sick, and so I think there’s been some media hysteria but like anything else when somebody; like alcohol if you’re learning to drink alcohol you don’t introduce your friend to alcohol and provide them with a fifth of Tequila.

Matthew: Right.

Jeremy: Somebody is going to get sick with alcohol well the same thing can happen with cannabis. We’re aware of that and if you introduce cannabis to somebody who’s already drunk then the likelihood of them having a negative first experience is pretty darned good, but we encourage people to try edibles with a 3 to 5 mg dose. We have a line of medicated ginger-ale’s called Magic Numbers and they come in a 3 mg, a 10mg, and a 25mg bottle, and so I personally know based on my size and metabolism that 3 mg is perfect and it’s really awesome because I can drink a whole bottle and feel like a complete human that I’ve finished my beverage and I feel a nice effect without feeling debilitated in any way and other individuals that have a different size, stature, and metabolism will want 10 mg or 25 mg dose.

We have a line of medicated (28:40 Cambushas?) that have 15 mgs per bottle and so people can find their dose. You realize well drink a third of the bottle and your good or two thirds and your fine and so we have the ability to control our dosages if we’re conscientious about it and ultimately that’s what we’re talking about here. We’re trying to sell cannabis to adult consumers who are rational, who are self aware, who are responsible and idiots are going to do stupid things with anything. There are people who self medicate or who over medicate with sugar and caffeine and have eating disorders and all sorts of problems and cannabis isn’t going to prevent somebody from abusing it but for the other ninety-nine. something percent of humanity they’re going to be fine with their choice of consumption of cannabis as a smoked or vaped flower in an edible form or in a hash oil concentrate.

Matthew: Did you find yourself educating new customers about the endocannabinoid system and if so how do you introduce that subject to them?

Jeremy: I would characterize our audience as maybe one third really well knowledgeable about the plant and their consumption of the plant and they come to use seeking variety, different novel dosage forms from edibles and concentrates as well, and I would say there’s another third of our audience that has a relationship to cannabis but they’re not trying to learn more about its use and different ways that they can incorporate cannabis and different types of cannabis into their overall health and wellness and then there’s another third of our clientele that are absolutely new to cannabis.

So two thirds of our audience is seeking knowledge, they’re seeking education and consultation about how cannabis can be used more appropriately, and so we do talk about the endocannabinoid system and that’s often where we lead in the conversation because a lot of time folks are seeking an answer because Western medicine has typically said okay if you take this product your headache will go away, if you take this product your belly ache will go away and so some folks are seeking sort of that clear cut black or white answer. With cannabis I want a strain that provides me with this sense of relief and we’re very honest and we recognize that everybody has an endocannabinoid system that’s very different and that endocannabinoid receptor cell or the endocannabinoid receptors are in our cell walls. They are our nerve endings and therefore cannabis is a smart plant and it will go.

The cannabis oils are cannabinoids we’ll go to where the body needs it most. That could be in your gut? That could be in your head? It could be in sort of the neuropathic pain in your feet and so we are always encouraging people and folks to try and experiment with different types of cannabis because the different ratios in the cannabinoids are going to react differently to everybody and often when we’re in a trade room and there’s a number of individuals whether it’s our staff or our clients we’re honest and say hey all of us can consume the same cannabis plant but it’s going to produce a different reaction. It might make you sleepy Matt, it might make me wanna go reorganize all the tubbys in my garage, and it might open somebody’s heart and inspire them to write love letters to their love; their friends and family and loved ones.

So the endocannabinoid system is complex and has recently discovered and all of us have a very unique one and so it’s; again we’re using our own bodies as an experiment to find out what works best for us and when.

Matthew: Are topicals in the same category as infused products or are they allowed for adult use or is it medical how does that work?

Jeremy: So topicals ironically are considered an infused or a concentrated dosage form of cannabis and will not be available to sell to adult consumers in October just a quarter ounce of bud is all we’re going to be able to sell with respect to cannabis products to adults. We find a lot of our clients using topicals very successfully and I.

Matthew: What are the symptoms? Would you say they’re using them for?

Jeremy: Well we opened our doors about a year and a half ago and I had no idea how many in our culture suffered from migraines and insomnia and we have a lot of clients who will use topicals before; while their sensing themselves getting a migraine. They’ll rub topical salve on their temples to prevent the onset of the migraine and they say they wake up feeling a lot better maybe 90% better with a lot of the migraine being avoided and we also see clients using topicals applying it to sore parts of their body from places where they have achy muscles or joint pain and their finding tremendous relief from salves or from roll on oils that are infused with cannabis oils; often blends of different cannabis oils as well as a blend of other healing herbs and healing oils. We see clients using topical lotions and salves to address a variety of different symptoms.

Matthew: How about patients do they consume cannabis leaves by juicing? Is that something you hear of?

Jeremy: We do hear of that quite a lot and what we often will do for clients who are seeking leaf to juice we will just try and introduce them to growers or cultivators directly because it’s a very time sensitive product. If somebody does a lot of defanning or defan leafing in their garden those families need to get into the juicer immediately and because what I had indicated earlier everything that comes in our facility has to be tested by an analytical firm for safety and potency it would be prohibitively costly to have a big bag of leaf tested for mold and pesticides as well as potency because the amount of juice. You get two ice cube; an ice cube tray potentially worth of juice. So it’s not really economical or viable for us to do that through our facility but because we’re a community agency and a community dispensary we just introduce patients to growers and through the original sharing model growers will just share their leaves directly with patients and we hear amazing stories about the benefits of the juiced leaf. It’s very high in THCA which is the acidic form of THC. It’s non psychoactive and we hear a lot of folks benefiting tremendously with respect to their digestive systems and their overall health and well being.

Matthew: Now a lot of people listening would like to hear more about cannabis from their doctor but their doctors are not really bringing up the subject. Is there; do you have any suggestions on how to initiate that conversation with their medical doctor?

Jeremy: Be forthright. There’s nothing wrong or illegal about discussing medical cannabis with a doctor under the (36:38 Conna?) decision the federal courts have already ruled that doctors and patients have a confidentiality and therefore they have the ability to discuss medical cannabis and certainly recommend it to their patients. Doctors are very I think accustomed to patients bringing ideas to them about different treatment options and preferences and cannabis therapeutics shouldn’t be any different. The challenge is that many doctors are unfamiliar with cannabis or dosing with cannabis and therefore might be hesitant to recommend it so a patient should bring in documentation, research about cannabis used medically as well as some documentation that describes or information that would be beneficial for the physician to understand how the patient has been using cannabis with benefit or what they hear about other patients using cannabis for.

There is a organization that does a lot of great work in policy called “Americans For Safe Access” and they have a website called www.safeaccessnow.org and there are articles out of their website that talk about how to talk to your doctor about cannabis and we often encourage our own clients or folks that call us on the phone or walk in our door and say hey I want to; I’m interested in learning more about medical cannabis and I want to get a recommendation and I don’t know who to go and who to talk to and we always encourage folks to speak to their primary care physicians first and foremost and have that conversation with their physician because I would think that physicians want to know what their patients are using because it might affect their regular prescribing habits. Certain medications are dampened with the use of cannabis and then others have the opposite effect and so a physician may want to dial up certain types of medications or dial them down if they know that cannabis is being used in concert with ongoing treatment. And we recognize that not every physician is going to be comfortable recommending cannabis because of their own morals or because of their own sense of comfort and knowledge about the plant and there are often alternative; there are other doctors that are cannabis specialists that will then be willing to be engaged with a patient to see if cannabis could be appropriate for their consumption and their use medically.

Matthew: Great points Jeremy. In closing how can listeners learn more about Bloom Well?

Jeremy: We always love it when people come right into our facility but knowing that not everybody is in Bend, Oregon we do have a website which is www.bloomwellbend.com and we can also be found on Instagram and other social media places like Facebook, we’re on Leafly as well and a quick search for bloomwellbend will find us on any of the social media sites as well.

Matthew: Great. Jeremy thanks so much for being on CannaInsider today. We really appreciate it.

Jeremy: Oh it’s been a pleasure.

Matthew: : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five major trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Key Takeaways:
[3:42] – Background on Bloom Well Cannabis Apothecary
[5:01] – Jeremy talks about a judgment free environment
[7:14] – Jeremy talks about how he got into the cannabis industry
[15:08] – Jeremy discusses the legalization process in Oregon
[20:09] – Jeremy discusses the demand for seeds and clones in Oregon
[21:51] – Jeremy talks about regulation in Oregon
[25:09] – Jeremy talks about edibles and infused products
[29:43] – Jeremy discusses introducing customers to the endocannabinoid system
[32:38] – Jeremy talks about topicals
[34:30] – Consumption by “juicing”
[36:28] – Initiating a conversation with your doctor about cannabis use
[29:20] – Bloom Well’s contact details

What are The Five Tends That Will Disrupt The Cannabis Industry

(Hint: It’s not about legalization)
Click this link to get your free report on the five disruptive trends.
https://www.cannainsider.com/trends

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.

With all the action going on around the country we often forget that recreational cannabis has been legalized in Oregon. That is why I’ve asked Jeremy Kwit, Bloom Well Cannabis Apothecary on to CannaInsider today to talk about what is happening with legalization in Oregon? Welcome to CannaInsider Jeremy.

Jeremy: Thank you. It’s great to be here.

Matthew: Jeremy to give us a sense of geography can you tell us where you are today?

Jeremy: So I’m sitting at about 3500 feet above sea level where the Cascade Mountains meet the high desert right in the center of Oregon. I’m on the East side of the Cascades, and so to the West of me are Ponderosa Pines and out East of me are Juniper Pines, and so we live in a climate that is really incredible for cannabis production especially an indoor and in climate controlled greenhouses because we have cold, dry night time air year round. Now it doesn’t hurt that it’s beautiful I think the plants like that as well and so for the same reason that Facebook and Apple opened their large data centers about 40 minutes from Bend in Prineville. Cannabis cultivation indoors is phenomenal because any time throughout the year the temperature drops to 30 to 40 degrees at night and we have a very low humidity we are super dry so we have less problems with mold, mildews, and pathogens.

Matthew: Yeah that’s a great point about the humidity level. I know the Bend has a really thriving micro-brew scene. Do you see kind of that culture now going into the cannabis scene now that people are coming out of the shadows?

Jeremy: It certainly is. We are very fortunate in Bend to have had a fairly open climate towards cannabis not just recently but even the last half dozen years where there have been dispensaries that were operational under kind of a grey model before 3460 had passed because our criminal defense; excuse me our criminal justice system didn’t see any problems with cannabis. So we are seeing now and experiencing a virgining craft cannabis industry that is growing very dynamically and we’re seeing lots of different brands of cannabis farms, processing, and edibles companies come out of Central Oregon as well as dispensaries like myself.

Matthew: Can you give us a little background on what Bloom Well Cannabis Apothecary is and your involvement in it and what you’re trying to do there?

Jeremy: Oh certainly. Bloom Well is a community dispensary that provides safe access to cannabis in a judgment free environment and I mean every bit of that statement. As a community dispensary we believe in the open source cannabis model versus the sole source cannabis model so think Len X or Nescafe’s Mozilla browser where we want to bring in a variety of different farmers’ products and processors’ product into our facility to share it with our clientele. So an alternative model for a dispensary is the sole sourced one where growers are forward integrating into retail to sell their wares directly and the alternative for us is that we bring in and represent family farmers from around our region and around our state and we procure the very best products that we can find to provide diversity for our clients and to support community based agriculture in the region.

Matthew: So I’m familiar with; I grew up Irish/Catholic so I know what a judgment rich environment is but I’ve never heard of a judgment free. What does that mean exactly?

Jeremy: Well we don’t really care why people use cannabis. So a lot of folks may come to us with a condition or with symptoms that they will talk about and that will be maybe the driving force or factor in their choice to consume cannabis as an alternative to other prescription drugs and for us we don’t judge them for the conditions that they have, for their choice and use of cannabis because a lot of people will use cannabis in a multitude of different ways and the reasoning or what they get their medical card for on paper might be different than how they end up using the product in actuality or in practice. It might become something very spiritual for them and most doctors aren’t writing a recommendation for the spiritual use of cannabis so.

Matthew: Not yet.

Jeremy: Not yet and to that point about physicians the fact that somebody has a doctor’s note or an attending physician statement in the state of Oregon doesn’t necessarily make them any more entitled in my view to their consumption of cannabis then somebody else who has been self medicating with cannabis to feel better that doesn’t have a doctor’s note. So part of the judgment free environment is even the notion that if you’re a medical cannabis cardholder you’re entitled to cannabis and if you’re using cannabis without your medical card you are somehow an outlaw. Ultimately I see people use cannabis to feel better and if they’re using cannabis to feel better that’s great and cannabis is certainly a lot better for many individuals than their consumption of alcohol or other narcotics and so I look at cannabis use as one of relaxation, enjoyment, decompression, stress reduction and that is as important then ameliorating some into a debilitating physical condition.

Matthew: Now what would you say was the spark that got you into the cannabis industry just give us a little background there because it seems like you really have a strong sense of your values around cannabis and I kind of want to get; how did that happen?

Jeremy: So as a teenager I distinctively remember my mom invading my sister’s privacy and going into her bedroom and finding a note in her drawer where she wrote that to a friend that she had tried using cannabis at a Madonna concert, and my mom was incredibly upset and of course grounded my sister and punished her for her experimentation with cannabis and I remember the dialogue that I had with my mom saying I felt that it was invasive of her privacy and inappropriate to have discovered this note in her drawer. My mom responded with a statement similar to but Jeremy she was experimenting with marijuana and it struck me well one a Madonna concert is the perfect place for somebody to try marijuana as opposed to the parking lot at school because the reality is somebody probably passed her a joint and she tried it. Took a puff and it wasn’t a big deal.

But my mom turned it into a big deal and so it struck me then that sort of the reefer madness mentality can be really divisive inside of families and now 25 years later my mom and my sister are still struggling to rebuild trust in their relationship and I felt that that sort of instance with cannabis was what initiated the ball rolling from my mom creating a police state like environment in our household to preventing dialogue and conversation about cannabis and choice and for me personally I also experimented with cannabis in my youth but chose to be very private about it because I knew my mom’s attitude and there is nothing worse than children and their parents having walls of secrecy between them and so I sensed that our historically terrible drug policy has a traumatic effect on our youth and our family structure.

Matthew: Yeah that’s a good point I mean everybody knows they’ve seen pictures of DEA destroying plants and breaking down doors and using flash grenades and all these things but then there’s a trickle down staucy component of it where you’re family then becomes militant in preventing these things mostly from miseducation and kind of brainwashing. I don’t know another way of saying it.

Jeremy : I would agree. There’s a lot of research that shows I think that the Drug Policy Alliance has a publication on their website called “Beyond Zero Tolerance” and it’s a fact based guide to drug education for parents and it uses a lot of research from a PhD, I believe his name was Rod Stryker that shows that having an open relationship and open dialogue with children or youth about cannabis and all drugs for that matter is going to produce better outcomes. So rather than saying that cannabis is terrible don’t never use it well young people will try it and they’ll find out that it wasn’t the end of the world and then they now realize that their parents lied to them, their teachers lied to them, and so did their school administration and officials.

So rather engage in conversation about use of cannabis and that will allow parents to be more able to distinguish the difference between experimental use and abuse and again forging lines of communication instead of creating barriers of secrecy is going to help kids to stay sober and that’s what I would want for everybody. Now that also applies to adults as well let’s just be honest with one another about what we’re doing with ourselves and our bodies.

Matthew: So true. We’re going to get into the Oregon legalization here in a second but I call cannabis the gateway truth not the gateway drug because after I experienced it for the first time I realized hey wait a minute here this is a total lie what this plants about. It feels totally different then everything I was told and then my next thought is what else are we being lied to about. So that’s why it’s the gateway truth because then you start pulling at the string like wait a second if cannabis is not this evil plant in fact it has all these medicinal benefits and therapeutic benefits and it helps life in many ways. If it’s such a 180 lie about this what else are we being lied to about? So when you pull up that string it’s fun but dangerous at the same time and you tend to go down the road less traveled.

Jeremy: Mm-hmm (affirmative). Yeah you start questioning everything our government is telling us and where does our government come from? Culturally the Puritan’s started America and they were trying to flee persecution in England so they could practice a much more stringent or religious ideology and I think that Puritanical culture still is very much pervasive and has an influence on us today. There’s something wrong with our country that says it’s not okay for you to feel good.

Matthew: Right.

Jeremy: And we have been self medicating with; throughout human history. We’ve been always trying to change how we feel and that could be through fermented beverages, it could be through sleep and food deprivation, it could be through twirling around in a circle reciting Turkish poetry. We’re trying to change sort of our ontology and the way in which we look at the world around us in some ways and it can be temporary or permanent and I think cannabis helps many individuals provide a different lens through which to experience their reality and look at the world around them.

So for me personally I’ve had a spine injury and I was originally turned onto medical cannabis in the Bay area back in the late 90s after Prop 215 was passed in California and folks had suggested that cannabis provides natural analogies and anti-inflammatory properties so should be really wonderful the bulged disc in my spine and I found that sometimes when I was using cannabis that I certainly did feel some pain relief but what I also found is that more than anything else while I was trying to stretch or do physical therapy the cannabis helped me to be present in my body and relax and find sort of the source of pain and allowed me to stretch out because my own Type A personality; I had always characterized myself as almost having ADHD with OCD tendencies. I can’t sit still for a minute let alone for forty-five minutes to an hour to do physical therapy so the cannabis just allowed me to relax and sit still and it didn’t always solve the back pain but my own ability to relax and sit still with cannabis was incredibly therapeutic.

Matthew: Yeah. Well that’s great context for your background. Now switching gears a little bit to Oregon and legalization first what was the vote, what happened, and where are we at now?

Jeremy: So Oregon started its medical cannabis program back in 1998 and the program was based or modeled on sharing where a grower could grow six plants for a patient and the patient could provide some reimbursement to the grower not for their labor but for their materials and supplies. And so it was very much based on a trading system and so the challenge though you know if cannabis helps to settle your stomach or for example I use if dairy or yogurt or kefir settles your GI tract issues you would then have to go find a dairy farmer who could have six cows and they would give you a quart of milk a month and if you realized that maybe dairy milk upset your tummy and you needed a shot of raw goat milk a day how are you going to find a goat shepherd?

And the same thing was true for patients and growers throughout Oregon that it was hard for patients to find growers. So that evolved into the recognition by legislatures that patients need a store, need a dispensary to go procure their cannabis. So 3460 passed by the legislature in 2013 and it was signed into law and implementation started in 2014. So Bloom Well applied for its license and has been in good standing since we opened our facility serving medical cannabis patients. The more recent activity in the state of Oregon was with the passage of Measure 91 last November that made or that is seeking to make cannabis fully legal for adults over the age of 21 and that passed last November. A joint task force to implement Measure 91 was put together by the legislature and they’ve been enhancing some of the guidelines that Measure 91 put forth.

What they did very recently was introduce some legislation called HP3400 which was signed into law by our Governor recently as well that is actually going to allow medical marijuana dispensaries like Bloom Well to start selling cannabis to all adults twenty-one and over this October and they’re calling it Early Interim Recreational Sales. Early because the Oregon Liquor Control Commission is still writing the regulations that will govern recreational production. Seed to sale processing and distribution as well as retailing and the implementation of the OLCC Recreational Cannabis stores is not expected to be fully rolled out until October 2016 at the earliest and so then the legislature recognized well where are individuals; where are adults going to buy cannabis before 2016? If we don’t allow medical marijuana dispensaries to sell them flower then they’re going to procure it in the alternative marketplace. So starting this October medical marijuana dispensaries if they choose to will be able to sell a quarter ounce of flower or bud to adults 21 and over per day as well as seeds and 4 plants.

So this July a few months ago in Oregon cannabis became decriminalized. So it is now legal in Oregon for adults 21 and over to have 8 ounces of cannabis in the home, 1 ounce of cannabis out of home, and they can have 4 plants. And I say that it was decriminalized in July because it’s not truly legal unless you can go buy it somewhere so the possession of cannabis became okay this July and what’s also really wonderful is they’re changing a lot of the sentencing guidelines and the I don’t know what it’s called the different; they’re rescheduling different types of misdemeanors and felonies and so it will also affect everybody who is presently jailed for cannabis related crimes and many people will be able to leave jail and have their records expunged starting this past July.

Matthew: Oh interesting.

Jeremy: So we will be able to now sell cannabis. Gosh two weeks from now I’m both incredibly nervous and excited about the amount of work that we have to do to gear up to be able to sell cannabis flowers, seeds, and up to four clones to any adult who walks into our door starting October 1st.

Matthew: Is there a limit on the number of seeds that can be sold?

Jeremy: Unlimited number of seeds.

Matthew: Wow. That is really cool. Awesome and do you anticipate a lot of demand for the seeds and clones? What’s the word on the street there?

Jeremy: I think there’s; I mean I think there’s going to be a lot more demand for flower for the bud. I think after prohibition most people wanted to consume alcohol not everybody wanted to suddenly become home distillers and home brewers. That being said I do recognize that there is already and will continue to be a surge in demand or desire to cultivate cannabis at home and we had some clients who came in gentleman probably in his late 70s or 80s just bought a cannabis plant because he wanted to hold it and he and his wife stood outside. They took pictures in front of our sign and so there’s something incredibly dignifying about being able to have choice about the type of cannabis that you’re buying as well as the ability to grow it at home for yourself and so it’s a lot like tomatoes. A lot of people will grow tomatoes at home but they still buy tomatoes in the marketplace.

You can build soil beds and build hoop houses and build your tomato garden and you’re tomatoes are just going to taste the best that anybody’s ever produced and you’re going to share them with your neighbors and I think that’s going to happen with cannabis as well and those folks that love to make salad will also go to the stores and buy plenty of tomatoes as well.

Matthew: How do you feel in general about the way regulations are being rolled out? You gave us a nice summary there but in some other states the regulators create rules that don’t allow for a functional market in some ways. Is there any ways it could be different?

Jeremy: We’re really lucky in Oregon because we have had Washington and Colorado as models and so the folks Anthony Johnson and Dave Coppolack [ph] who were the chief petitioners and co-authors of Measure 91. They looked at those models as they were crafting Measure 91 and Measure 91 is very much modeled after Oregon Craft Beer and Wine different than alcohol. You know hard alcohol is sort of owned by the state. It has a different sort of regulatory and distribution system and so the intention is to create a truly craft cannabis culture so that family farmers from around the state can benefit and small craft producers will thrive and so we’ve got this dynamic craft beer and wine industry in Oregon that is doing quite well and cannabis I expect it to follow in a similar pattern in Oregon and that’s because we’ve got a very well written; we had a very well written measure.

Of course I think the legislature made some modifications to Measure 91 allowing municipalities to opt out of commercial cannabis and so in areas of the state like Bend in Deschutes county or Portland in Multnomah county we’re going to see cannabis havens where the municipalities are choosing to regulate cannabis in a way that makes sense for their communities rather than opt out with moratoriums and bans and because of this recent legislative tweak to Measure 91 under the guise of 3400. And it was through a lot of lobbying from the Oregon League of Cities and the County’s Association to allow more conservative count as in conservative cities to choose to opt out of commercial cannabis which could include cultivation, processing, distribution, or retailing.

And Measure 91 was designed to encourage small communities to participate in this system because if you don’t have a retail component there’s no cannabis businesses operating in your city or county you’re not going to get the tax revenues that come from the taxation of cannabis which is allocated towards the school general fund and local policing. So I’m in a very unique and lucky; fortunate position geographically because I’m operating in a community that is tolerate of cannabis but unfortunately very close by Crook County for example they’ve chosen to opt out and it’s really unfortunate because they, they’ve got in Central Oregon we refer to Crook County as a banana belt because it’s got really wonderful weather, it’s very sunny and rather than farmers producing Kentucky Bluegrass they could produce cannabis instead but they’re not going to be able to do so because their community or their county commissioners have opted out. So we’re going to end up with a bit of a quilt around the state of Oregon unfortunately.

Matthew: What about edibles and infused products? Where do those stand?

Jeremy: Medical cannabis patients can consume those in October. We will not be able to sell edibles to adult consumers 21 and over which is quite ridiculous. The edibles in Oregon; all products actually that is running through or sold through a dispensaries has to be tested for safety and potency. So on the safety side that’s mold, mildew, and pesticide testing and then on the potency side it’s the amount of THC and CBD for flowers. The percentage in those products and for finished products like hash oil concentrates or edibles the total amount of THC and CBD has to be determined and so as a consequence it’s very easy for us to dose our edibles.

We have edibles like hard candies and chocolates and savory snacks and we know the dosages is between 4 mg per candy up to 40 or 140 and so we encourage people to find their dose and through some experimentation everybody can quite easily figure out how much cannabis is appropriate for them in an edible dosage form and so we find our clients really enjoying their consumption of cannabis as an edible because it may be more discrete or actually we just might be more long lasting and have a different physical or an emotional effect on themselves. So edibles are great. We can sell them. I would characterize edibles as maybe 25% of our business and unfortunately we won’t be able to sell them to adults 21 and over.

Matthew: Right just for medical then and is there talk of changing that or is it too early to say?

Jeremy: There’s no discussion that I’m aware of regarding such change. I think that there’s been some edible hysteria in the media and then some of that are from instances in Colorado or there’s even an instance here in Central Oregon where a woman called the ambulance for her friend because she had three candies and felt herself getting really, really sick, and so I think there’s been some media hysteria but like anything else when somebody; like alcohol if you’re learning to drink alcohol you don’t introduce your friend to alcohol and provide them with a fifth of Tequila.

Matthew: Right.

Jeremy: Somebody is going to get sick with alcohol well the same thing can happen with cannabis. We’re aware of that and if you introduce cannabis to somebody who’s already drunk then the likelihood of them having a negative first experience is pretty darned good, but we encourage people to try edibles with a 3 to 5 mg dose. We have a line of medicated ginger-ale’s called Magic Numbers and they come in a 3 mg, a 10mg, and a 25mg bottle, and so I personally know based on my size and metabolism that 3 mg is perfect and it’s really awesome because I can drink a whole bottle and feel like a complete human that I’ve finished my beverage and I feel a nice effect without feeling debilitated in any way and other individuals that have a different size, stature, and metabolism will want 10 mg or 25 mg dose.

We have a line of medicated (28:40 Cambushas?) that have 15 mgs per bottle and so people can find their dose. You realize well drink a third of the bottle and your good or two thirds and your fine and so we have the ability to control our dosages if we’re conscientious about it and ultimately that’s what we’re talking about here. We’re trying to sell cannabis to adult consumers who are rational, who are self aware, who are responsible and idiots are going to do stupid things with anything. There are people who self medicate or who over medicate with sugar and caffeine and have eating disorders and all sorts of problems and cannabis isn’t going to prevent somebody from abusing it but for the other ninety-nine. something percent of humanity they’re going to be fine with their choice of consumption of cannabis as a smoked or vaped flower in an edible form or in a hash oil concentrate.

Matthew: Did you find yourself educating new customers about the endocannabinoid system and if so how do you introduce that subject to them?

Jeremy: I would characterize our audience as maybe one third really well knowledgeable about the plant and their consumption of the plant and they come to use seeking variety, different novel dosage forms from edibles and concentrates as well, and I would say there’s another third of our audience that has a relationship to cannabis but they’re not trying to learn more about its use and different ways that they can incorporate cannabis and different types of cannabis into their overall health and wellness and then there’s another third of our clientele that are absolutely new to cannabis.

So two thirds of our audience is seeking knowledge, they’re seeking education and consultation about how cannabis can be used more appropriately, and so we do talk about the endocannabinoid system and that’s often where we lead in the conversation because a lot of time folks are seeking an answer because Western medicine has typically said okay if you take this product your headache will go away, if you take this product your belly ache will go away and so some folks are seeking sort of that clear cut black or white answer. With cannabis I want a strain that provides me with this sense of relief and we’re very honest and we recognize that everybody has an endocannabinoid system that’s very different and that endocannabinoid receptor cell or the endocannabinoid receptors are in our cell walls. They are our nerve endings and therefore cannabis is a smart plant and it will go.

The cannabis oils are cannabinoids we’ll go to where the body needs it most. That could be in your gut? That could be in your head? It could be in sort of the neuropathic pain in your feet and so we are always encouraging people and folks to try and experiment with different types of cannabis because the different ratios in the cannabinoids are going to react differently to everybody and often when we’re in a trade room and there’s a number of individuals whether it’s our staff or our clients we’re honest and say hey all of us can consume the same cannabis plant but it’s going to produce a different reaction. It might make you sleepy Matt, it might make me wanna go reorganize all the tubbys in my garage, and it might open somebody’s heart and inspire them to write love letters to their love; their friends and family and loved ones.

So the endocannabinoid system is complex and has recently discovered and all of us have a very unique one and so it’s; again we’re using our own bodies as an experiment to find out what works best for us and when.

Matthew: Are topicals in the same category as infused products or are they allowed for adult use or is it medical how does that work?

Jeremy: So topicals ironically are considered an infused or a concentrated dosage form of cannabis and will not be available to sell to adult consumers in October just a quarter ounce of bud is all we’re going to be able to sell with respect to cannabis products to adults. We find a lot of our clients using topicals very successfully and I.

Matthew: What are the symptoms? Would you say they’re using them for?

Jeremy: Well we opened our doors about a year and a half ago and I had no idea how many in our culture suffered from migraines and insomnia and we have a lot of clients who will use topicals before; while their sensing themselves getting a migraine. They’ll rub topical salve on their temples to prevent the onset of the migraine and they say they wake up feeling a lot better maybe 90% better with a lot of the migraine being avoided and we also see clients using topicals applying it to sore parts of their body from places where they have achy muscles or joint pain and their finding tremendous relief from salves or from roll on oils that are infused with cannabis oils; often blends of different cannabis oils as well as a blend of other healing herbs and healing oils. We see clients using topical lotions and salves to address a variety of different symptoms.

Matthew: How about patients do they consume cannabis leaves by juicing? Is that something you hear of?

Jeremy: We do hear of that quite a lot and what we often will do for clients who are seeking leaf to juice we will just try and introduce them to growers or cultivators directly because it’s a very time sensitive product. If somebody does a lot of defanning or defan leafing in their garden those families need to get into the juicer immediately and because what I had indicated earlier everything that comes in our facility has to be tested by an analytical firm for safety and potency it would be prohibitively costly to have a big bag of leaf tested for mold and pesticides as well as potency because the amount of juice. You get two ice cube; an ice cube tray potentially worth of juice. So it’s not really economical or viable for us to do that through our facility but because we’re a community agency and a community dispensary we just introduce patients to growers and through the original sharing model growers will just share their leaves directly with patients and we hear amazing stories about the benefits of the juiced leaf. It’s very high in THCA which is the acidic form of THC. It’s non psychoactive and we hear a lot of folks benefiting tremendously with respect to their digestive systems and their overall health and well being.

Matthew: Now a lot of people listening would like to hear more about cannabis from their doctor but their doctors are not really bringing up the subject. Is there; do you have any suggestions on how to initiate that conversation with their medical doctor?

Jeremy: Be forthright. There’s nothing wrong or illegal about discussing medical cannabis with a doctor under the (36:38 Conna?) decision the federal courts have already ruled that doctors and patients have a confidentiality and therefore they have the ability to discuss medical cannabis and certainly recommend it to their patients. Doctors are very I think accustomed to patients bringing ideas to them about different treatment options and preferences and cannabis therapeutics shouldn’t be any different. The challenge is that many doctors are unfamiliar with cannabis or dosing with cannabis and therefore might be hesitant to recommend it so a patient should bring in documentation, research about cannabis used medically as well as some documentation that describes or information that would be beneficial for the physician to understand how the patient has been using cannabis with benefit or what they hear about other patients using cannabis for.

There is a organization that does a lot of great work in policy called “Americans For Safe Access” and they have a website called www.safeaccessnow.org and there are articles out of their website that talk about how to talk to your doctor about cannabis and we often encourage our own clients or folks that call us on the phone or walk in our door and say hey I want to; I’m interested in learning more about medical cannabis and I want to get a recommendation and I don’t know who to go and who to talk to and we always encourage folks to speak to their primary care physicians first and foremost and have that conversation with their physician because I would think that physicians want to know what their patients are using because it might affect their regular prescribing habits. Certain medications are dampened with the use of cannabis and then others have the opposite effect and so a physician may want to dial up certain types of medications or dial them down if they know that cannabis is being used in concert with ongoing treatment. And we recognize that not every physician is going to be comfortable recommending cannabis because of their own morals or because of their own sense of comfort and knowledge about the plant and there are often alternative; there are other doctors that are cannabis specialists that will then be willing to be engaged with a patient to see if cannabis could be appropriate for their consumption and their use medically.

Matthew: Great points Jeremy. In closing how can listeners learn more about Bloom Well?

Jeremy: We always love it when people come right into our facility but knowing that not everybody is in Bend, Oregon we do have a website which is www.bloomwellbend.com and we can also be found on Instagram and other social media places like Facebook, we’re on Leafly as well and a quick search for bloomwellbend will find us on any of the social media sites as well.

Matthew: Great. Jeremy thanks so much for being on CannaInsider today. We really appreciate it.

Jeremy: Oh it’s been a pleasure.

Matthew: : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five major trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Securing your Cannabis From Theft with Tony Gallo

Security expert Tony Gallo from Sapphire Protection walks us through how to protect your cannabis from external and internal threats.

http://tonyrgallo.wix.com/sapphire-protection

What are The Five Tends That Will Disrupt The Cannabis Industry
(Hint: It’s not about legalization)

Click this link to get your free report on the five disruptive trends. https://www.cannainsider.com/trends

Key Takeaways:
[1:58] – What is Sapphire Protection
[2:24] – Tony talks about how he got into the cannabis space
[2:54] – Tony discusses the biggest threats to a dispensary
[4:46] – Tony talks about the security piece
[5:35] – Tony explains proper disposal of trash
[6:28] – Tony talks about armed robberies of dispensaries
[7:08] – Misconceptions of theft or robbery
[8:45] – What makes a good safe
[10:46] – Developing a winning security plan
[13:34] – Tony talks about camera placement
[14:56] – How to respond during a robbery
[18:05] – Ensuring security when you are not in the dispensary
[19:21] – Firearms in a dispensary
[22:49] – Making a location unappetizing to a criminal
[26:52] – Tony explains alert phrases and how they’re used
[28:25] – How do panic buttons work
[32:20] – Sapphire Protection contact information

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.

As cannabis sales cross the three billion dollar mark this year and begin their march towards the tens of billions by the 2020’s criminals are beginning to target cannabis dispensaries for robbery. Some dispensaries are particularly rich targets as many dispensary owners are not able to get bank accounts and thus have a lot of cash on hand. That is why I invited Tony Gallo of Sapphire Protection on the show today to help us understand how to properly protect a dispensary and when possible prevent theft and robbery. Welcome to CannaInsider Tony.

Tony: Thank you.

Matthew: To give us a sense of geography can you tell us where you are in the world today?

Tony: Well we’re located in the Dallas, TX area but we have cannabis clients from Oregon to New Jersey and basically everywhere in between.

Matthew: And what is Sapphire Protection exactly?

Tony: Sapphire Protection is a security consultant company that specializes in high risk businesses. Our clients are usually businesses that have a large amount of cash on hand and a very desirable piece of merchandise. Some of our clients are jewelry stores, pawn shops, and obviously cannabis business owners.

Matthew: And how did you get started helping clients in the cannabis space?

Tony: It was very interesting about two years ago I was asked to speak at a cannabis conference in Boston on security and at the time I really didn’t know much about the cannabis security and after doing some research about the industry I realized that it’s very similar to the ones I had been supporting for over twenty years. Currently now I speak across the United States on security in the cannabis industry.

Matthew: So at high level what are some of the biggest threats to a retail cannabis dispensary?

Tony: Well you know most dispensaries focus really on the wrong security threat when it comes to losses you know although robberies and break-ins are very important and need to be safeguarded I think they lose a lot of focus and this is common in a lot of retail companies. Where they spend thousands of dollars on cameras, alarms, and safes but they do very little on their biggest threat which is the internal theft.

Matthew: Right yeah internal theft. Well tell us a little bit about that.

Tony: Well you know most businesses have about 80 percent of their losses really come from internal theft. If you take the cannabis industry if you look at a dispensary it’s very much like a retail establishment. The safeguards and security procedures that they have in place are at a high level but when it comes to the actual employee when it comes to cash thefts or merchandise thefts there’s a lot of holes there. Same thing in the cultivations centers. If you look at a grow well there’s a fence around there, there may be some sort of guard agency, cameras, or alarms but a lot of times where the biggest loss you see in grow comes a lot of times from the trimming section or from the storage section and that’s really where policies and procedures come into play.

Matthew: Yes I’ve heard about theft in the trimming arena. It’s so easy to do there. I mean there’s even some trimmers that are surrounded by cameras and still you know I mean is a business owner going to go back and look at hundreds of hours of footage for a single split second when cannabis is stolen? I mean how do you, how do you properly address this without spending all your time on you know on the security piece?

Tony: Well I think like in any security program you have to minimize your exposure. I’ll give you a perfect example of a situation with a trimmer. There was a trimmer that what he would do is wear the latex gloves and as he was trimming he would palm a bud in his hand take off his gloves leaving the bud in the latex and through it in the trash. Well this company didn’t have good disposal procedures so at the end of the night that bag of trash was thrown in a dumpster outside and it was easy for him to come back and retrieve the buds that he had put in his glove. By having proper trash disposal procedures you would’ve minimized that risk where that trimmer probably would not have taken that chance.

Matthew: Good point so what’s proper disposal look like? What does that mean?

Tony: Well you for a proper disposal you want to use a clear trash bag so that you can see what actually is being thrown in there that is very common in any retail establishment. You want to put the clear trash bag into a dumpster that is secured at night where only access to the dumpster would be the company that would be removing the trash. You may want to have the dumpster in a location which there’s lighting or there might be a camera that’s also watching it. Preferably be inside the fence of a grow facility. So there’s a lot of procedures that come into security play that a good security consultant will identify when they do an onsite visit.

Matthew: And how common are cannabis armed robberies? Is that something that’s picking up, declining, or just sense there’s more dispensaries now is it that there’s more instances of it?

Tony: You know although as the industry increases the armed robberies are also increasing and we see it across the board, but the cannabis industry is still far behind other businesses such as convenience stores or jewelry stores or pawn shops. The fear I have is that as the industry continues to grow so will this particular exposure grow especially with the communication to the public of it having so much cash and so much marijuana at its location.

Matthew: Are there any persistent misconceptions about cannabis business theft or robbery that you run into a lot?

Tony: Well you know most robbers of a cannabis location are looking for cash. If you look at most robberies and you boil it down and no matter really what they’re doing they’re trying to convert either to stolen jewelry or stolen cannabis into cash and you know cash is king and that is what they want the most. So I think that a lot of times that it’s kind of a misconception in some ways when people think oh they’re here to steal the cannabis they’re really not a lot of times. Most robbers are there really to get your cash.

Matthew: Okay. So merchandise theft is probably more internal threat than an external threat is what you’re saying?

Tony: Well we’re seeing, we are seeing an increase in late, not late night break-ins who are focusing on the cannabis. A robber during the day usually will start with the cash whether it’s out of the register or the safe and then if he or she has some time they’re going to then move to the cannabis. You know one of the goals has always been to get the robber out of the business as quickly as possible and that’s really where a good safe is very important and you know most early cannabis owners who started their business made really poor safe choices which in the long run is going to hurt them over time and that’s one of the things that I’m seeing over the last two years now changing where business owners are really realizing the importance of a good safe.

Matthew: Yeah well what makes a good safe?

Tony: Well you know one of the things that when a lot of new dispensary owners opened up several years ago was that they realized that they just needed a way to secure the cash or their cannabis but did not really understand how a safe worked. So a lot of them went to Costco or to Academy or somewhere and bought a gun safe. Well the whole if you look at the word it’s a gun safe and it’s a great safe for guns. It’s designed perfectly for guns but it’s really not designed for a business location. Whether you’re a jewelry store or whether you’re a cannabis location. A gun safe really from a business line is not the right safe for locations but you’ll see them in a lot of dispensaries you know and even more so if you take, if you look at a gun safe from a purely business point of view and you look inside a gun safe you notice that it’s nicely done with felt which is for to protect the guns from any scratching or whatever.

What a lot of cannabis owners don’t realize is that when you put a product in that safe the felt actually is an insulator so as you would know cannabis needs to be at a certain temperature and as the temperature rises that cannabis will break down. So if your store is at 72 degrees, the inside of your safe you hope should be at 72 but with that felt now you’re running closer to 78 maybe 80 degrees. So not only is it a gun safe or a fire safe it’s also not the best safe to protect you from a break-in it also is damaging your product inside the safe.

Matthew: If you were to have a cup of coffee with a new dispensary owner that knows nothing about security, theft, robbery how would you orient their thinking so they have the best chance of developing a winning security plan?

Tony: You know again I see a lot of misinformed owners when it comes to security. It’s like building a house. If you ever built a house and contacted a plumber or an electrician chances are you’re not going to get the same level of quality or service as if you used a proven general contractor to help you with your design and your build out so I see a lot of times when I talk to a new dispensary or a grow that they don’t really understand security and they spend a lot of time understanding the other parts of the business but when it comes to security and they rely solely on calling up a local alarm company or a local camera company that really maybe doesn’t deal in their industry. But they don’t know what they don’t know basically. So one of the things I would always point out is just like they focus and make sure they have the right equipment to process their product or the right employees, they also need to make sure that they have the right security in place and not just picking up the phone and asking someone to design their security program.

Matthew: Okay so what does that involve I mean do you recommend security audits or something like that?

Tony: Well there’s several things I think that the first thing that a person who’s going to design their location should do is contact someone who understands how the floor plan should look when it comes to security is where the cameras should be placed. I’ve seen locations where they’ve placed ten more cameras than they really need in the store and unfortunately they miss three locations that they should have definitely had covered by cameras. More is not always better. What type of camera they should use? What kind of alarm system they should use and whether it’s a cellular backup? What kind of safe they should use? How they design for the dispensary? How did they design the flow of that location? Where did they place their emergency panic buttons?

So there’s a lot that’s involved when it comes to that and you know just again most business owners and that’s across the board have been doing this for thirty years. They’re not security trained and they shouldn’t be that’s not what they do, but they should rely on contacting someone whether it’s reputable security consultant to help them or a reputable camera company or an alarm company they should really do a little more research before picking up the phone and just calling anybody to put a system in their location.

Matthew: So is there a few spots where the cameras are pointed where they’re not helpful? Where are the spots where the cameras are typically not pointed but should be?
Tony: Well if you look where the cameras should be pointed one of the things that is a disservice from most state required laws is they really don’t specify exactly where all of the cameras should be placed. They do give you some recommendations. So obviously a camera should be facing your parking lot. A camera should be facing your front door as you walk into the building. Cameras should be facing where you dispense your cannabis. A camera should be facing your safe. A camera should be facing your register. So there’s kind of some set non negotiable places that cameras should be placed in your store and then again you have to look at the location and find out is there any emergency door accesses or are there any other avenues that a product or cash could be pushed out a window or something like that. I’ve been to locations where the store had a state of the art camera system and had a great safe and the bathroom window opened up in the back so you know that’s another avenue you need to look at.

Matthew: The weakest link yes okay.

Tony: The weakest link yes.

Matthew: Let’s say a robbery does happen. How should an employee or business owner respond during the actual robbery?

Tony: You know I’ve dealt with over two thousand retail armed robberies in my career and you know one basic fundamental rule comes into play and it’s the same way you should react if you’re approached on a street or in a car and that is you need to cooperate. Do what is asked of you. Don’t do any more. If someone asks you for the money in the register you give them the money in the register. You don’t need to volunteer that there’s money under the register or that there’s money in a safe nearby. But the goal is really to get the robber to leave. If they approach you in the street and they ask you for your purse, you give them your purse. But cooperation is the key. I’ve seen many times when people do not cooperate and the ramifications are much worse.

Matthew: Yeah they don’t cooperate but they really don’t have anything to leverage. They don’t have a gun or anything they just, their just yelling back or what do they do? What do you mean by that?

Tony: Well you know not cooperating would be if someone came and let’s take a dispensary and said give me the money in the register and your answer to that person is no I’m not giving you the money in the register or go away or throwing the money at that person or trying to resist if they’re breaking the cases and trying to get the cannabis out of the location. Cooperating is and that’s something that every employee should be trained on is what to do during a robbery. You hope it never happens but when it does happen that training is so valuable and so important for the employees to understand.

Matthew: How about immediately after the robbery takes place what should the next steps be for an employee or business owner?

Tony: I think immediately after a robbery takes places the very first thing you need to do is you need to lock the doors from the outside world and there’s two reasons. First of all the robber isn’t coming back but what it does is it sends a message to everyone that’s in the location that they’re secure. That someone else isn’t going to come in. It brings down the level of stress that’s after a robbery with not only the customers but the employees. So the very first thing you want to do is you want to take control back of your store and by locking the door you’re sending a message that no one else is going to come in and do any harm. The very next thing you want to do is you want to pick up the phone and dial 911 and you want to do that before you activate your alarm and the reason why is when you dial 911 and you notify the police you’re informing them of an actual robbery that occurred. They will respond much different than if they get a call from an alarm company informing them that an emergency alarm button has been pushed.

Matthew: Right.

Tony: So the first thing you want to do is dial 911. The next thing you want to do is activate your alarm.

Matthew: So a business owner can’t be at his dispensary or her dispensary all the time. How do they ensure that the proper protocols are followed while they’re absent?
Tony: Again we go back to retail 101 how do you ensure your employees are following any approved policies and procedures whether it’s security or sales and you know you need to develop good checks and balance programs. You need to be able to send a message to your employee that what they’re doing could be reviewed and everyone should have those procedures. Cameras which you can view from your home need to be communicated to the employees that you have the ability to look at what’s going on in your store. How to define your opening and closing procedures. When to do your cash counts which would be reviewing the cash in the register. Is that something you do every morning, every night? Will you do unannounced counts during the day to make sure that the count is right? Maybe even showing up at the store with an unannounced visit and what you need to do is again going back and this is really coming straight out of the retail 101 is you need a perception of what could happen at that location so that employees understand the importance of following the proper policies and procedures.

Matthew: What place do firearms serve in a dispensary?

Tony: Well you know like I said I’ve been in retail for thirty years. I’ve dealt with robberies over and over again. I really see no place for firearms in a dispensary. I have seen too many high risk businesses close after someone was killed in their store. And here is the question you always have to ask and we can talk about guards, armed guards or we can talk about just having a firearm in the store. One question I always ask and I come across this all the time especially when I go to a jewelry store or a pawn shop location. If you’re carrying a gun are you willing to kill someone and that’s important to say to someone and it’s a harsh thing to say but it’s important to understand that because if the answer is I don’t know then you are putting yourself in harm. I’ve seen where the business owner has gotten the drop on that robber by pulling his gun but couldn’t pull the trigger and he was then in turn killed and again and if you cannot utilize that firearm for its purposes then it’s really a negative to carry a firearm.

The other thing is what kind of message are you sending? If you walked into a convenience store and there was someone standing there with a gun on his belt one of the things that’s going to come to your mind is am I in a dangerous place? Should I be coming to this convenience store? Maybe I should go somewhere else down the block. Same thing with a dispensary if you have someone and they’re walking around with guns in the store which actually is illegal to do you know federally to carry firearms in a cannabis location but even if you were or you would have known what message do you send to your customers from a business point of view?

Guards same thing you need to understand who your guard is. I believe that guards are great when it comes to as a greeter and I believe that also there is an advantage for them when it comes to keeping honest people honest. So if someone is going to come in the store and they want to do, they want to steal or they want to shoplift or something like that I think a guard has some merit. Also for allowing people to come in by checking ID’s or whatever I think there is some merit for the guard but when you bring in a firearm into that location you now send it up a notch. If someone is going to rob your store and they don’t realize, and you don’t have a firearm they’re going to rob your store with one thought in mind which is different than if you did have a firearm because then they know hey I’m going to rob this store but that guard has a gun or that manager carries a gun. Very first thing I know is if I’ve made a decision to rob your store I have to remove that individual who has the gun and I’ve seen times when the robbers decision guard standing at the front of the location with a shotgun before he even walked in very first thing they did was to shoot and kill the guard.

Matthew: Oh God. Now in terms of making the dispensary look unappetizing to a criminal that’s casing the dispensary to see if it’s got vulnerabilities is there anything you can do to the appearance or the structure that makes it unappetizing to a would be criminal?

Tony: I think one of the things that’s important is to send a message to anyone who’s thinking of doing something wrong at that location that this may not be the location you want to come to. My goal has always been as a security consultant is not to stop people from robbing your store or stealing from your store. It’s to make them go somewhere else and do that and here’s a couple of easy fixes for that. If you have a camera system you spend thousands of dollars on a camera system and when a customer walks in they have no idea you have a camera system and a lot of people say well look there’s the camera system and they point to this little black globe on the roof, on the ceiling most people don’t know what that really is or it may not click in their brain what that is.

So the first thing you want to do is you want to communicate that you actually have a camera system and the easy fix to that is you want some sort of visual deterrent. A monitor at the front door maybe showing the camera shot of just the front door so when I walk in I look up I see my face on camera it clicks in my mind that well there’s cameras in these stores.

Matthew: Yeah.

Tony: A safe, a well designed safe, a safe that appears to not be able to be attacked very easily. Good customer service one of the biggest assets any company could have is good customer service. Are people really engaged with me? Are they asking me for help when I’m on the floor? How do I get into the dispensary? If I’m looking at a grow facility do they have fencing? Is there any other kind of security? There are various alarm systems now that basically works on a radar basically. It shoots an infrared beam and if you get close to the facility at night various things will happen whether it’s a light or an alarm or a siren or something. So what’s the perception of security at that location and how do we deter people because again my goal is for people never to have a problem more so than trying to catch it after there’s a problem.

Matthew: Great point ounce of prevention. Now with the cultivation facilities if, do we need to have razor wire when we have a fence or anything like that or that kind of makes it look like a concentration camp but then again there’s no customers visiting a cultivation center so is that necessary?

Tony: I think a good fence barbed wire or razor wire on the top is a pretty prudent thing that I would have at a location. Again some grow facilities are in an urban environment. Many of them are out there in the middle of nowhere. I have a grow in Washington state that really you’re only coming to that grow, you’re only driving down that road if you’re coming to that grow and again that has to send that message. So I could see, I would recommend some sort of good fence, some sort of wire at the top so people aren’t inclined to climb over. It’s not that expensive if you’re already using good fence. Some locations and cultivation centers where there is more people access you may even want to cover the fence with some sort of material so that people can’t look through your chain link fence to see what’s going on and then I have a client who has car barriers where if you come through the front gate just like you would at an airport or a rent a car or something like that there’s a barrier that would restrict you from leaving unless it’s approved.

Matthew: Interesting. What are alert phrases and how do we use those?

Tony: You know again that’s a very it actually costs nothing but the value of that is immense. So an alert phrase is a way to communicate to other employees that there is something possibly wrong in your store. If you have a concern with a customer not something an over concern where you’re pushing the panic button or you think something is going to happen right that minute but there’s a concern well it’s difficult to get the attention of everybody in the store all the other employees that you have a concern other than walking up to them or leaving wherever you might be and going to your manager or whatever.

So an alert phrase is something that would not alert a non employee but will alert the other employees to take notice. You might say your alert phrase might be Matt’s batteries came in today. Well everyone knows in the store that there is not Matt working there and no one ordered batteries but everyone knows that someone has said Matt’s batteries came in and their head should go up and they should look at that employee who said it and kind of get an idea of what they’re looking at that might have concerned them and from there you can establish are you giving good customer service to that person. Are you getting close to a panic button? Do you go to the back room and lock your safe or what security procedure does the store feel they need to do when that code phrase is said.

Matthew: Is a panic button go directly to police typically or to a security/alarm company? How do those work?

Tony: So a panic button is either remote or fixed to a counter. You push that button and that button then alerts the alarm company that you are in distress. The alarm company then will have their protocols whether the protocol is to contact the store and say you’ve pushed an alarm button is everything okay and then you have to have a code phrase to say yes everything is fine or does the alarm company immediately contact the police and that’s something that you work out with your alarm company on what you want to do. And the reason why you would do one or the other might be because you don’t want any false alarms by someone accidentally pushing the button. But that is another silent way one of the things you never want to happen is you never want any sirens to go off during business hours. Maybe at night when the burglary alarm goes off a siren does go off but during business hours you do not want a siren going off. So this would be a way to notify the alarm company silently.

Matthew: Many people are a little nervous to visit a dispensary for the first time. If the dispensary feels like Fort Knox and it doesn’t provide a comfortable experience to customers it’s really not serving its purpose so how do we find the balance between security and creating a welcoming environment?

Tony: You know that’s a tough question for most high risk businesses not just the cannabis industry. You need to send a message to people who want to do bad things but you also want to make the majority of your good customers that come into your store want to come back and want to enjoy the experience. Again it comes down to the perception really. What are you trying to communicate? I don’t think anyone is worried when they walk in and they see themselves on camera in fact some customers appreciate that.

If you look at there are new safe designs that come out. There’s a great safe that comes from a company called Rolland Safe that is a drawer management system and it’s a safe that you might, you could put right behind your counter which basically shows that the cannabis is being stored inside a safe but you can still utilize it to service the customers. That sends a message to people going well I can’t just come in with a big black trash bag and empty everything out of the safe that easily into a trash bag so maybe it’s not worth it for me to come here or are the cash drawers locked. Are you using drop boxes which is a small safe or a small device that you put under the register that you say once the cash in the cash drawer reaches a certain amount you want to take that money and put it in this little temporary safe and at the end of the night we remove that money and put it in the main safe.

Communicating that to the public I don’t think is a negative thing to people. I think a lot of people appreciate that. They understand the day and age where we are and what goes on and that kind of balancing act is a tough one. You know jewelry stores sometimes buzz you in and that’s a difficult thing to rationalize because if you buzz someone in and they’re a bad person how do they get back out but you see that sometimes in the city, in a city location or whatever. Again I think that you want to make your customer invited. There’s some beautiful, beautiful dispensaries nationwide that I have been to and it’s warm, it’s inviting, the people are good but again you want them also to realize that this is a business and that there are certain safeguards in this business that would prevent them from doing something wrong.

Matthew: Okay great points. Tony in closing how can listeners learn more about Sapphire Protection?

Tony: If you want to find out more about Sapphire Protection you can contact us our website is www.sapphireprotection.com. Our main number is 817-520-3315 and you can always reach us there or you can contact me at tonyrgallo@gmail.com.

Matthew: Great. Thanks Tony we really appreciate you being on CannaInsider today and educating us.

Tony: Thank you Matt.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.

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State by State Look at Cannabis Legalization with Kris Krane

kris krane

Kris Krane and Matthew Kind touch on the most important states ending prohibition, and what you need to know about each state right now.

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The CannaInsider Show Interviews the Leaders of the Cannabis Industry. You can listen to the show for FREE on your iPhone or Android device if you would prefer to read this interview, simply click the link below to read the transcript.

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.

More and more states are ending prohibition of cannabis, however how each state is ending prohibition varies dramatically. That is why I asked Kris Krane from 4Front Advisors to help us understand the changing landscape of cannabis markets across the United States. We’re going to try and put into context both the challenges and the opportunities for each state. Kris welcome to Cannabis Insider.

Kris: Thanks for having me on Matt.

Matthew: Sure thing. To give us a sense of geography can you tell us where you are in the world today?

Kris: I am in 4Front Ventures East Coast Headquarters in downtown Boston, Massachusetts.

Matthew: Oh great, great. What’s the weather like there today pretty good?

Kris: It is about as perfect a day as you could get. It’s about 80 degrees and abundant sunshine about as nice of a day as you could possibly ask for.

Matthew: Oh nice. Kris what is 4Front Advisors?

Kris: So Forefront Advisors is a management consulting company that is dedicated to working with aspiring operators in the cannabis space. Primarily dispensary operators but also some cultivation, production operators as well and helping them navigate this business opportunity. So from the start we help them navigate the very complex process of obtaining a license to operate a dispensary or cultivation facility. Meaning that we help them project manage through that whole process. Create a lot of the content that goes into these very robust and very complicated applications and help them win licenses and then we license them an operating model once their licensed to run a very professional high end medical cannabis dispensary that includes all of their policies and procedures and manuals, SOPs, job descriptions, assistance in hiring their management team, a weeklong training program where they learn our operating model and how to run their departments and how to hire entry level employees, things like floor planning. So it’s essentially a full operating model so that by the time our clients get up and running they are ready to basically hit the ground running and operate at peak efficiency very early while avoiding a lot of the pitfalls and mistakes that many operators make. So that’s largely what we do at 4Front Advisors.

We also have a couple of other companies under our sort of umbrella. 4Front Ventures being the parent company and then we have 4Front Capital which is dedicated to making strategic investments in the space and 4Front Publishing which is going through a huge revamp as we speak so you can check out the content on there now it’s really good but it will look extremely different by early next year and that is more of a sort of a news and information service about the industry.

Matthew: Kris how did you get into the cannabis industry?

Kris: Well that’s a long answer so I’ll try to be as brief as possible. I’ve been involved with this issue for about 20 years now. I was a founding member of Students for Sensible Drug Policy back in 1998. Before that I was actually a member of my colleges NORML Chapter. This was at American University in D.C. So I was an advocate and activist on this as a college student something that had sort of been with me from childhood really. My father was a medical cannabis patient when I was very young. He passed away when I was nine. So it’s something that I thought a lot about and got involved as an advocate in college. From there went on to work at NORML for six years at their National Headquarters. I was Associate Director of National Operation. By the time I left there I was then hired back at Students for Sensible Drug Policy which I had been involved with as a student and I was the Executive Director of that organization for four years from 2006 through about the end of 2009 and from there made the jump into the industry.

I got my start with Harborside Health Center in Oakland which was, they actually had been a donor of mine and Steve DeAngelo and Harborside had been a donor of mine at SSDTP. Helped Steve start a consulting business called CanBe which was sort of the precursor to what we do now at 4Front which helped people set up dispensaries that were very much in the mold or model of Harborside Health Center PC Medicine and sparked some of the more high end dispensaries in Northern California at the time. This was in 2010 and from the ashes of that that great experiment as a little ahead of its time came 4Front. I mean I could say my motivation in making the move from the advocacy world to the business world really was advocacy driven. As an advocate who had been working with some of these better dispensaries. At the time this was almost exclusively Northern California.

The scene in Colorado was just barely starting to develop then but you know I could see the places like Harborside and Berkeley Patients Group and some of these really professionally run dispensaries, I could see the impact they were having on their communities and on changing public perception and it became apparent that if we could demonstrate to the public that cannabis could be distributed in a way that is socially responsible and community focused that it would have as much of an impact on changing public opinion and ultimately ending prohibition as the work that we had been doing as advocates through nonprofit organizations in D.C. and the idea of being able to sort of patent, you know harvest the power of private enterprise and utilize that to help end prohibition I found to be extremely sort of fun and different and a novel approach to this and kind of jumped in with both feet and haven’t really looked back since.

Matthew: That’s really interesting. You know a lot of people ask me all the time how do they get into the cannabis space and I hear you and Troy Dayton and a lot of folks that Steve DeAngelo all have this advocacy background or they’re still advocates at heart in one way or another so people out there listening that’s a great way to get started in the cannabis industry.

Kris: Absolutely and I may even add to that particularly if there are any you know younger folks, college students in particular that are listening to this to get involved with a Students for Sensible Drug Policy Chapter on your campus is probably the number one way that you can go about getting involved with the cannabis industry after graduation. We certainly know that most of the businesses out there when they see an applicant with SSDP on their resume that resume generally gets put to the top of the pile because they know that’s somebody that is dedicated, is motivated, is trained on the issues and is likely going to be a highly motivated employee.

Matthew: Great points. Now switching gears a little bit how many states currently have legalized cannabis one way or another?

Kris: I believe we’re up to, I believe it’s about 36 states have some degree of cannabis or medical cannabis legalization, but it really varies wildly from, you know from your adult use states like your Washington, Colorado, Oregon, Alaska, and D.C., D.C. not being a state, to some extremely restrictive you know CBD only legislation that even prohibits the production of CBD medication within those states. So when we talk about having legalized in some form or another there are, there really are vast differences between those on the full legalization end of the spectrum and those on the sort of CBD only conceptual end of the spectrum and there’s sort of everything in between.

Matthew: Everybody talks about Colorado and Washington and now Oregon and Alaska quite a bit where adult cannabis use has been legalized, but let’s talk about some states that aren’t on the radar as much for people starting with Maryland. What’s going on there?

Kris: Sure so Maryland passed a medical bill, medical marijuana bill last year. I believe it was late last year. They have been going through the process of implementing that you know much to the chagrin of understandable chagrin of many patients. These laws take a while to implement and so it’s not like once a law passes you’re going to have dispensaries within a few months. It generally takes time because the state has to go through rule making. And so they’ve been engaged in that process of coming up with the rules that are going to govern the medical marijuana program. They are extremely close to being done with those rules. In fact they’re expected to be adopted next week. So once that happens the state will then open up an application process for people and companies who want to cultivate, process, and distribute through retail dispensaries medical cannabis to qualified patients in the state.

The way they’re going about this is they’re going to grant about I believe it’s 15 cultivation licenses for the state and up to 94 dispensary licenses. There’s a max of two per senatorial districts, state senatorial district so it’s unlikely that they give out all 94 licenses the first time. There’s a lot of really rural districts in the western part of the state where I think it’s unlikely that you have two applicants, but they’ll have the ability to grant up to 94 and those no defined number of licenses for production of infused products. They’re going to grant as many as they think the market needs and that process will happen over the later part of this year potentially into early next year. We expect that by the next fall of, sorry next Spring of 2016 that winners will have been announced. Hopefully a little before then and you will start to see the beginnings of an industry take shape with likely the first dispensaries opening in Maryland by if we’re lucky late in 2016.

Matthew: So allowing as many processing licenses as the market will bear is that kind of a new approach or is that a little bit more liberal where they’re trying to say that we don’t know so we just want to see what happens?

Kris: Well you know I’m not sure where exactly that came from. It’s not a novel approach. Other states have done something similar, Colorado being the biggest example. Colorado had no, even under the medical program, had no cap on the number of any kind of licenses and that’s the case under adult use as well. It’s in some ways on the processing side it’s probably most similar to what we saw in Nevada where they had a cap on the number of dispensary licenses but no cap on the number of cultivation and production licenses. They said that they would grant as many as were qualified and could meet the demands of the market and they’re taking a similar approach in Maryland although they’re only doing it on processing, not on cultivation. In fact they’ve gone the opposite way that Nevada went on the cultivation licenses in having a more restrictive number.

So I think on the cultivation end it actually looks a lot more like Illinois which has a pretty restrictive number of cultivation licenses to serve a larger population of dispensaries and more like Nevada on processing where there is no cap and they’ll grant as many as they see fit. My guess though is that they are probably going to be stricter in what they consider to be a minimum standard for licensure in Maryland then they were in Nevada where they, essentially in Nevada they granted them to everybody that applied. I think that you’ll see a lot more, you’re likely to see a lot more get rejected for not being up to par in Maryland than we saw in Nevada where like I said they basically gave them to anyone who filled out a complete application.

Matthew: Staying on the East Coast here how about Pennsylvania can you give us a little synopsis of what’s going on there?

Kris: Sure so in Pennsylvania we don’t have law yet. There are two bills currently pending in the legislature one in the House, one in the Senate, with two very different visions for how medical cannabis will look in the state. One of the bills I believe the Senate bill is more of a traditional medical cannabis bill which would allow for I believe it’s a 125 dispensaries and 60 cultivation facilities with a fairly wide ranging list of qualifying conditions. Whereas the House bill, and forgive me if I’m flipping those two I haven’t gone back and double checked my research on this, but the other bill I believe the House bill would look a lot more like New York’s program with a very restrictive number, a small restrictive number of licenses both in cultivation and dispensary or cultivation, production, and dispensary a much more limited qualifying condition list so there would be a much smaller patient base and a ban on any smokable products which is the case in New York and Minnesota. So you would only be able to sell vaporized oils or vap pen cartridges or different kinds of edibles but nothing that could actually be smoked.

So we don’t know what’s going to happen exactly in Pennsylvania. My guess based on some intel that we hear from behind the scenes is that the final bill will likely look like a compromise between the two and that’s likely going to pass sometime this year. So we will see them then getting into rule making so they’re basically about a year behind Maryland or a little less than a year behind Maryland but if this does pass then we’ll begin to see the formation of a market late this year and into sometime next year when they’ll start accepting applications.

Matthew: And on to Massachusetts where you are currently what are some of the unique aspects of legalization in Massachusetts because I believe it started out one way. The governor got involved or a new governor and that it changed is that right?

Kris: That’s absolutely right. So what’s happened in Mass, my current home state, I’ve bounced around quite a bit in the last few years, but here in Massachusetts the first round of the program by statute they had a limit of 35 total licenses. Now in Massachusetts these are vertically integrated licenses so the license gives you the right to cultivate, process, and dispense and you essentially have to vertically integrate. There’s a small, the potential for a small wholesale market amongst those license holders but it’s more like Colorado’s old 70-30 rule with actually more restrictions. You have to demonstrate a need in order to buy something wholesale. So if for all intensive purposes it’s a vertically integrated market where everybody has to produce everything that they sell within their dispensaries.

So by statute when they first granted the licenses the state was limited to a maximum of 35 licenses with a minimum of one in every county and a maximum of five in any county, and so in a process like that you had to have a really competitive licensing process. And so there was a competitive application process for those up to 35 licenses. It was, it wound up being rife with controversy. They initially granted about 28 licenses just under half of those were then kicked out of the process for allegations of having lied on their application or misstated support from locals or having set up you know improper management or funding structure. There were a whole bunch of different reasons and a lot of it frankly was just very political. There was controversy over political cronyism you know that the top scored applicant in the state happened to be a former congressman and district attorney with no operating experience but very close ties to the Head of the Department of Public Health at the time. And so there was some media controversy around that, and what ended up happening is essentially you had only 15 licenses that made it through after that first round. They didn’t come anywhere close to the 35 that were necessary. To date only one of those is actually open and we’re now over two years into the program so it’s been a real slow go here in Massachusetts.

So what wound up happening was I mentioned by statute you had a limit of 35 but that limit expired two years into the program. So we’re now passed the two years. There is a new Governor. Governor Charlie Baker who came into office this January took a look at the program and decided to lift the cap which the state had the right to do after two years so there is no longer a cap on the number of licenses, and they’re approaching this current round which is actually ongoing this licensing ground as if it’s or similarly to the way they’d handle a pharmacy licensing process. So it’s a rolling application basis. You have to go through a few different steps of applications, a few different phases of applications to demonstrate your competency and financial wherewithal and to demonstrate that you’re in a community that is comfortable having you there so you have to demonstrate support from the community and everybody that meets those criteria is supposed to be granted a license.

So that’s ongoing. It’s early in the process. Nobody has gotten a license yet in this second phase. It’s too early for that, but by the end of this year and through the course of next year we’re likely to see a whole number of businesses get license in this state. And so I think we will see that number rise from 15 to I would guess it will be anywhere between 75 and 200 by the middle to end of next year. And then of course in Mass we at that point we start dealing with the potential for adult use and there will be an adult use initiative on the ballot in November 2016 which will obviously create a whole new market opportunity for both these existing license holders and potential new entrance into the market.

Matthew: Wow a lot of changes there and opportunity in Massachusetts. Now what about the dysfunctional markets as I like to call them I mean can we call New Jersey and Connecticut dysfunctional markets where there’s just not enough business owners able to do the right thing and there’s not enough patients that are able to get access in a geographically dispersed way. Am I wrong about that? They just seem kind of like clusters.

Kris: No I think you’re absolutely right, New Jersey in particular. If I had to sort of pick a poster child for dysfunctional or a practically non functioning market it would be New Jersey. They have, they have I believe only three dispensaries currently open. They have a limit on the number of products they can sell. They have a limit on the THC content that can exist in any flowers that they sell I believe it’s 10 percent maximum THC. And the state has been a real roadblock at sort of every step of the way for businesses to get up and running. This is largely political in New Jersey I mean you had a fairly restrictive bill that passed in the first place so some of this was unavoidable, but what happened in New Jersey was this bill was passed at the very end of previous Governor, Governor Corzine’s tenor in office. He was a Democrat in support of medical marijuana and he signed this into law literally on his last day in office. He got a whole bunch of bills his last day. He signed them all into law.

So Governor Chris Christie inherited this law when he took office but it hadn’t been implemented yet so implementation fell on Chris Christie who I think anybody who follows this issue knows is really terrible on the issue. He’s a huge opponent of cannabis of any kind medical or otherwise and he’s probably the worst of any of the Presidential Candidates in either party. And so he has basically set up this program for failure. He stonewalled efforts to move things forward at every turn. He’s not been open to additional qualifying conditions. So this was sort of by design that the program would be dysfunctional and that’s exactly what’s happened.

Connecticut is a little bit of a different story you know you don’t have as hostile of a government there. They have a fairly limited qualifying condition list so that is going to limit the number of patients and we typically see that more in states that pass these via the legislature rather than by ballot initiative. A lot of the legislature states have more restrictive qualifying conditions and then Connecticut has some pretty silly rules as well like you can only sell pre ground medicine. You’re not allowed to sell whole flowers you’ve got to grind it all up first and nobody can tell whether it’s good or not because that certainly prohibits folks or is a disincentive for folks to go and visit dispensaries. And there’s a fairly limited number of the licenses in the state although to be fair Connecticut is a pretty small state geographically and they are actually attempting to address this. They are currently holding I believe hearings or some process to add additional qualifying conditions in the state, and they are in the process of adding I believe three new dispensary licenses. I think there’s five currently in the state. So there’s some moves that are being made in Connecticut to start to expand the program and make it a little bit more functional whereas New Jersey I think is just sort of you know stuck in the mud until they’re able to get rid of Chris Christie.

Matthew: And how about Florida? What’s the story there?

Kris: So Florida is currently implementing a CBD only bill so they accepted applications about a month ago from companies that are looking to open cultivation dispensaries for CBD only medicine. Essentially it is something that’s going to have less than 1% THC and a substantial CBD content. This is the type of oils medicine that we hear about in sort of the Charlotte’s Web type reports that particularly helpful for children with Dravet syndrome and Epilepsy. And so those licenses will be granted sometime soon. I haven’t been following that one as closely because we’re not involved in that process, but I know the apps went in a couple months ago or a month ago and folks are waiting to find out who’s going to be granted those licenses, but that’s going to be an extremely limited program and very limited business opportunity.

The real thing to watch in Florida is going to be in the 2016 election. They are likely to have a legitimate medical marijuana initiative in that election. It will look pretty similar to what the ballot initiative that failed in 2014. “Failed” I should say with sort of quotation marks in that in Florida you need 60 percent to pass an initiative and they got 57 ½ percent. So it was probably the biggest or the best failure we’ve ever seen. It was a, in most elections that would be considered a landslide victory with 57 ½ percent, but in Florida that is considered a loss. But you know the fact that it’s being run a couple years later with a couple more years of support and being done in a Presidential Election where you’re going to have a much higher youth voter turnout and they tweaked some of the criticisms of the initiative the first time around. I think it provides a lot of hope that that initiative is going to pass and I think it probably will. If that’s the case, then we’ll see a real medical marijuana program with a robust qualifying condition list and real business opportunities in Florida to take shape after that 2016 election.

Matthew: Illinois is kind of a unique animal where the medical patients are kind of treated like they’re prisoners you know they’re getting fingerprinted, background checks and it’s really I would say it really adds a lot of friction to patients coming online. Is that your take on Illinois?

Kris: It is. That’s very much the case. You know Illinois’s program it’s pretty restrictive in terms of the qualifying condition list so there’s already a limited number of conditions that will qualify someone to become a patient. And then there are some restrictions around that that are actually pretty unique to Illinois and the Illinois’s program. You mentioned fingerprinting. That is one and anybody who wants to become a medical cannabis patient in Illinois needs to register with the state as is the case in most places, but they need to be fingerprinted and put their fingerprints on file with the state. Which you know you can imagine for folks that are a little bit paranoid about, already a little paranoid about being on a list of being a marijuana user to put your fingerprints on file it’s a big undertaking and probably a nonstarter for a lot of folks.

They also have a provision where anybody with a felony conviction is prohibited from being a patient in Illinois. That is also unique to Illinois and you know as we all know the war on drugs and the war on cannabis has certainly been implemented disproportionately within inner city communities and communities of color and sort of the irony there is that the folks that are the most likely to be victims of the drug war and to have been targeted by police for marijuana enforcements and marijuana enforcement offenses are now legally prohibited from not only being involved in the industry but legally prohibited from becoming a patient even if they have an ailment that would otherwise qualify and so the result has been there are virtually no patients in the state.

I believe at last count they were up to something like 800 in the state which for a state of, I think it’s a state of about 6 ½ million people or 8 million people is just, I mean it’s just paltry you know you have 51 dispensary license holders in the state and 19 I believe cultivation/production centers that are approved in the state and it’s just hard to imagine with the current, sort of the current climate there around patient access and becoming a patient that those are going to be viable businesses in the short term.

The good news in Illinois is that at least what we’re hearing I think the government seems to realize the problems with this, and so I think that we’re probably over the course of the next six months to a year likely to see some movement to ease some of these restrictions and allow this to become a more functional legitimate market. So hopefully that happens before most of these businesses get online so we can save this thing before it becomes dysfunctional because right now nobody is operational and I think there’s a realistic possibility that that actually happens.

Matthew: Wow talk about perverse incentives you’re sending felons, you’re convicting them again but this time to the black market that’s just and you’re saying well we just don’t care if you have a medicinal need for cannabis you can’t have it.

Kris: That’s right. I mean talk about the irony. Some of these folks they may have been arrested because they were medical cannabis patients in the first place. And so somebody who had to break the law in order to treat their medical condition now that that medicine is legal they are legally prohibited from using it because they, because they took that step of breaking the law to get it when they needed it before it was legal. It’s just absolutely absurd.

Matthew: Now going back to the Northeast to neighboring states Vermont and New Hampshire what’s going on there?

Kris: So two different programs although they actually look fairly similar. New Hampshire is just a few years behind. So Vermont has an existing medical cannabis market although it is very small and relatively restrictive. There is, it’s a pretty restrictive qualifying condition list and there aren’t a ton of patients in Vermont to begin with, and then there was I believe they actually got rid of this but there was a restriction on the number of members that any dispensary could actually have. So even if there were enough patients who were actually prohibited. You were actually prohibited if you were an operator from serving all of them. I believe they’ve expanded that over the last year or so.

So there are four dispensaries currently operating. They’re vertically integrated so similar to Massachusetts or Arizona and some other states. And I think we may see an expansion of that program over the next year or so but more likely what’s going to happen is I would predict that Vermont is either the first or the second state to adopt full adult use legalization through the legislature. To date they’ve all been ballot initiatives and it seems like Vermont and Rhode Island are kind of in a bit of a race, slow race but a bit of a race to become the first state to do it through their legislature, and I think one or both of those states will do so probably in 2016. So I think that’s where we look for the real market opportunity in Vermont is once adult use hits.

In New Hampshire they just went through licensing so they similarly have a vertically integrated program with a relatively restrictive qualifying condition list, not absurdly restrictive and so there’s expected to be a smallish patient population but enough to create a small market there and the state just a couple months ago granted four of those vertically integrated licenses to three different companies who are now in the process of seeking local zoning approval and building permits and getting ready to build those businesses. So we expect that the first dispensaries will come online in New Hampshire, if we’re lucky, the end of this year but more likely at the beginning of next year and into next spring.

Matthew: I just want to backup a little bit because there might be some new listeners to CannaInsider and they might not understand the context of what, how qualifying conditions can really impact the size and scope of the market. Can you just touch on that a little bit?

Kris: Sure so qualifying conditions means the, essentially the ailments or illnesses that would qualify somebody to become a patient under that state’s law. So some states are fairly restrictive in the qualifying conditions. So in the case of like a New Jersey I believe they only have I think it’s only five conditions that qualify unless they’ve expanded that which I don’t think they have. So it would be things like Cancer or Aids, Multiple Sclerosis, maybe Glaucoma and then there are states that have more open policies that have essentially allow doctors to determine whether or not the patients have a condition that would benefit from the use of medical cannabis. Typically the inclusion of chronic pain or chronic and debilitating pain as a qualifying condition list is sort of the linchpin for whether a market is a large and robust market versus a smaller, just a much smaller market in general but the majority of patients in most of these states become patients for chronic pain which makes sense.

It’s a condition that probably more people suffer from than just about anything else in the country. It affects people of basically all age groups, all demographics and cannabis is quite effective in treating pain. So we typically see that and so when you look at states that have larger patient populations states like California, Colorado certainly pre-adult use, Arizona, Massachusetts which is growing now. These are states that all have chronic pain or a catch all. Anything that your doctor thinks is beneficial for they can recommend as opposed to some of these states where we talk about more restrictive markets where they typically don’t include chronic pain and have a much more restrictive list of conditions that would qualify somebody to become a patient.

Matthew: Great overview. Now going out into the middle of the Pacific Ocean can you tell us what’s happening in Hawaii?

Kris: Sure. So Hawaii has also passed legislation allowing for dispensaries. Hawaii’s a little bit of a different case then some of those we mentioned in that Hawaii has had a medical marijuana law on the books for I believe over a decade. They were actually one of the earlier states to pass medical marijuana. They were actually the first state to pass medical marijuana through the legislature and not through ballot initiative. Similarly to what I mentioned I think it’ll be either Vermont or Rhode Island for adult use but there law never allowed for any licensed businesses. And so they early this year passed a new law or actually formerly just about a month and a half ago passed a new law that would allow for the licensing of vertically integrated dispensaries.

So they’re going to be accepting applications in Hawaii. I believe they started accepting those applications in late January so groups are gearing up to apply. There is a limited number of licenses per county which in Hawaii is basically per island essentially and those will be vertically integrated licenses where you get one cultivation/production facility I believe and two dispensaries for each one. There’s a limited number per county and that process will start happening here very soon. So folks are really sort of jockeying for position and nailing down real estate and local support and all the things that you need to do to apply for one of those licenses.

Matthew: Now how will reciprocation work or can you explain what that means and how it will work in Hawaii?

Kris: Sure so Hawaii’s law allows for reciprocity meaning that dispensaries there will be allowed to serve people who are approved patients in other states. That doesn’t go into effect until sometime in 2017 so for the first year or so of the program these businesses will be limited to serving Hawaiian patients only, but after about a year or so that will open up and they will then be allowed to serve patients who are qualified in their home state. Which is a really big deal in Hawaii because I mean it’s something like 30 percent of all tourists to Hawaii from California.

Matthew: Right.

Kris: Where you obviously have a very large patient population so that could be, that could really be a difference maker in terms of what the market in Hawaii ultimately looks like.

Matthew: Yeah great point. It does seem like its half Californians whenever you’re there so that does seem true. Probably it could double or triple its market just by allowing the reciprocity or once that gets going.

Kris: Yeah I think absolutely. It probably more than doubles the market there. If you allow the inclusion of, I mean if you just allow the inclusion of Californians let alone Washington, Oregon, the other western states where you have a lot more tourists I mean in mainland US. Like folks in the eastern part of the United States. Typically if you’re going to do a tropical vacation typically you go to the Caribbean. Western part of the United States you go to Hawaii and those are all medical marijuana states so that could be I mean I think that would actually makeup the majority of the market in Hawaii will be those tourists from the western part of the United States.

Matthew: How about Nevada? It seems like their state and local governments seems really welcoming to cannabis overall. How do you feel about Nevada in general and what’s your high level bullet points about what’s important there?

Kris: Sure so in Nevada and I would say Matt if you ever do business there its Nevada not Nevada. They’ll run you out of town.

Matthew: Oh no I’ve got to get this right. I’ve got to practice right now.

Kris: So yeah I learned that lesson pretty (37:19 unclear) when I first started working there. But no you’re right the government has been quite receptive to cannabis reform and the medical cannabis program in general. It’s been one of the fastest states we’ve seen to implement. They basically hit every deadline that they set at the beginning of the process. In their licensing process they moved things along quite nicely. You know the first dispensary just opened there up in Reno, and we now have one that just opened in Vegas. The vast majority won’t open until the end of this year into the beginning of next year because of the lack of product. I mean strangely the first one that opened up in Reno, actually in Sparks technically had to close I think the next day for another couple of months because they sold out of product immediately. I think they just wanted to be able to sell T-shirts saying they were the first dispensary in Nevada why they opened when they did before they were really ready. But the state has been very welcoming and Nevada also has right now the only real reciprocity program in the country until Hawaii comes online where patients from out of state are allowed to purchase in dispensaries in Nevada. In fact the standard for that currently is that you have to sign a sworn affidavit at the dispensary door that you’re attesting that you are a patient in another state and that’s all the proof that the dispensary needs in order to serve you.

Matthew: I love Nevada.

Kris: It’s great.

Matthew: Wow that’s crazy.

Kris: And you know it’s interesting that is an incredibly important piece for what this market is ultimately going to look like as we all know right and Vegas in particular I mean it’s as big a tourist city as we have in the United States and keep in mind that in California not only is that where the majority of the tourists come from similar to Hawaii although I would imagine Californians would probably be more comfortable you know driving with their medicine in Nevada and they will be flying with it into Hawaii, but in California you don’t need to be a California resident in order to be a California patient. You only need to be a California resident if you want to register with the state agency and get a state issued card which is optional. Generally you get a card from your doctor’s office and that qualifies you as a patient in California and you don’t have to be a resident in order to do that.

So what can happen in Nevada is somebody could fly in from anywhere in the world right. Someone could fly in from Tokyo and say that they’re a patient in California and in fact they could become a patient in California. In fact they could see a doctor in an office in Nevada who’s licensed to practice medicine in California or might even actually be on Skype in California. We see that plenty in some of the California evaluation centers. Get their medical cannabis card or recommendation from a California doctor, get a California recommendation and then use that to purchase in a store in Nevada. So we expect that that full reciprocity and the acceptance of California patients whether they’re a resident or not is going to lead to Nevada being potentially the most robust medical market in the country and that’s only for a couple years because there’s likely going to be an adult use initiative on the ballot in 2016 which we’re obviously very hopeful will pass and so Nevada may join in the ranks of the full legal adult use states here after the 2016 elections as well.

Matthew: How about Arizona where Forefront’s based? I don’t seem to hear that much about the Arizona cannabis market. What are kind of the high level bullet points there which we know about Arizona?

Kris: Sure so you know Arizona its interesting. It isn’t talked about nearly as much as a lot of these states but it’s actually the third largest cannabis market in the United States.

Matthew: Oh wow.

Kris: Right now behind, although it may be moving to fourth, but it has been as of last year it was the third largest market behind California and Colorado. Washington might overtake it because of its adult use law, but Arizona actually has a pretty good thriving industry. It’s a sort of a vertically integrated market although it’s more open than a Massachusetts or a New Hampshire, Vermont, or Colorado pre adult use in that you’ve got what’s called, what I would consider sort of a closed loop capitalist market in that it’s only one license. That license gives you the right to cultivate, process, and dispense cannabis, but you are allowed to wholesale amongst the existing license holders. So currently there’s about 97 license holders throughout the state. That are open throughout the state of Arizona and what you have is a system where you know some of the urban dispensaries who are serving a fairly large population and keep in mind there’s over 80,000 patients in Arizona currently so this is actually a real market but you may have a dispensary located in Phoenix, Tempe, Scottsdale.

A really densely packed urban population that’s serving a large patient base that may not be able to build out the cultivation and production capacity to meet 100 percent of their patient needs in which case they’re going to be purchasing a fairly large percentage of their inventory from the wholesale market. Largely from dispensaries that were licensed in rural areas of the state, but who have set up large scale cultivation facilities. Keep in mind in Arizona we rural. Rural Arizona means something very different than rural in most places in the East Coast. A rural town in Arizona is a little desert town that may have a couple hundred people and there may not be any other human beings for another 50 miles. So you know somebody who wins a license in one of those towns they’re not going to do any real business out of their dispensary, but they can set up a large scale cultivation facility, a large greenhouse and become a large scale wholesaler to the urban dispensaries that are much less likely to be able to meet their patient demand.

Matthew: Looking ahead to 2016. We’ve touched on a couple points but what are the big events on the horizon? I mean is this, I mean have we, is this when the bow wave becomes a tidal wave and if this totally sweeps the nation?

Kris: Well that’s certainly the hope. You know I think we’re going to see a little bit of a test here in 2015 with responsible Ohio and the initiative basically that would legalize medical and adult use in Ohio. That’s a much tougher election to win because it’s an off year election not even Congressional or Senate or Gubernatorial elections and those are typically really bad for our issue because typically the only people that turn out to vote in those elections are old people who are demographically not in support of our issue but 2016 is really the year to watch. I think we’ll see sort of the first shots across the bow through the legislature in one or both of Rhode Island and Vermont. So we are likely going to see legalization in one of those two states. They’ll be the first. Whoever does it will be the first in the eastern part of the country outside the District of Columbia. So say the first state to do so and certainly the first to do so through the state legislature. And then the 2016 election that could very well be the tipping point for this issue. You know we are going to have full adult use legalization on the ballot in at least five states. Those include California, Arizona, Nevada, Massachusetts, and Maine.

We may also see initiatives on some combination of Michigan and Missouri. Possibly even Ohio if things don’t pass this year so you might see some of those mid-western states run their own initiatives. You will definitely see a medical initiative on the ballot in Florida which I think is likely to pass and so that’s a huge amount of movement and there is a decent chance that all of these pass. I think our battlegrounds in 2016 are probably Arizona and Nevada. They are the most conservative of the states and we’re likely to be starting with the polling closer there then we are in some of those other states. But you know if we can win in four out of five legalization initiatives or five out of five legalization initiatives which I don’t think is impossible and I think it’s actually doable depending on how much money we’re able to raise and how much money the opposition is able to raise. You know if we can run the table in 2016 and go five for five in legalization and maybe tack on Florida for medical, it becomes really difficult for our opposition and even for establishment politicians to claim that this is a legitimate political debate.

Matthew: Right.

Kris: If every single time this is put to the voters the voters have voted for it including in what are now some conservative states. We already won Alaska. We may win in Nevada and Arizona the next time. I just think that that opens the floodgates for political support for this issue, for movement in state legislatures, for movement in Congress, for public support increasing even further than it already has and becomes really difficult regardless of who might win the Presidential Election in the same year. It becomes really difficult for the Federal Government to scale back the progress that we’ve made. I think at that point it becomes a matter of when and not if.

So really important for folks who are out there listening I mean to take this all the way back to where we started with the advocacy side of this and my motivation being ultimately ending prohibition and that being the case with folks like Troy Dayton and you know others in the industry who have that advocacy background. Folks are interested in this and would definitely recommend getting involved, donating money, donating time. If you live in one of those states volunteer your time, get in touch with the Marijuana Policy Projects with Students for Sensible Drug Policy who’s going to be running a lot of the ground game with the Drug Policy Alliance, who’s going to be heavily involved with California and you know donate time, donate money, spend some time phone banking and calling friends and family and folks that you know in the area encouraging them to get out and vote because if we can win these states then I think that is the real beginning of the end of marijuana prohibition nationwide.

Matthew: Kris as we close how can listeners learn more about 4Front Advisors?

Kris: Sure so I would suggest that you check out our website. I would go through 4Front Ventures which is our parent company and you can find out all about 4Front Advisors, 4Front Capital, 4Front Publishing, or the various ventures that we have here. You can go to www.4frontventures.com. That’s www.4frontventures.com and you can check out everything that we do at all those companies. Also just a really helpful quick resource that we provide to folks we have a daily email blast. It’s just one email a day that gives a breakdown of essentially all of the relevant headlines so all it is is a list of headlines organized by national and by state. So if somebody is interested in getting news on this rather than subscribing to 50 or more different Google Alerts they can just signup directly at 4Front Publishing and get this one daily digest in their inbox every morning with a really quick and clean digest of that day’s news in cannabis.

Matthew: What a helpful service you provide there. That’s a great idea. Kris well thanks so much for being on CannaInsider today we really appreciate it.

Kris: Absolutely very happy to be here.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

About Kris Krane:

Kris was recently nominated for CannAwards 2016 most influential person in the cannabis industry.

Having co-founded 4Front Advisors in 2011, Kris Krane serves as the Managing Partner of 4Front Advisors and President of 4Front Ventures.

Prior to forming 4Front, Kris served as Director of Client Services for CannBe, which was a pioneer in developing best practices within the marijuana industry. At CannBe, Kris, along with a few other on the 4Front Advisors team, worked with many of the top licensed dispensary operators in Northern California.

Kris has dedicated his career to reforming the nation’s failed and misguided drug policies, having served as associate director of NORML from 2000-2005 and executive director of Students for Sensible Drug Policy from 2006-2009. Kris earned a BA degree in political science from American University in 2000.

Kris currently serves on the national board of directors for the National Cannabis Industry Association (NCIA), Common Sense for Drug Policy and Marijuana Majority, as well as the national advisory council for Students for Sensible Drug Policy.

Learn more about Kris and 4 Front Advisors at: http://4frontventures.com/

Key Takeaways from This Interview
2:02 – What is 4Front Advisors
4:04 – Kris talks about how he got into the cannabis industry
9:30 – Kris talks about Maryland’s legalization
13:24 – Kris discusses Pennsylvania’s legalization
15:30 – Massachusetts’s legalization efforts
19:46 – Kris talks about New Jersey and Connecticut’s industry
22:50 – Florida’s cannabis industry
25:19 – Illinois’s cannabis industry
28:56 – Kris talks about Vermont and New Hampshire’s industry
31:31 – Kris explains how qualifying conditions can impact the market
33:29 – Hawaii’s cannabis market
37:04 – Nevada’s cannabis market
41:10 – Arizona’s cannabis industry
43:58 – Kris talks about the nation’s market in 2016
48:04 – 4Front Advisors’ contact information

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.

More and more states are ending prohibition of cannabis, however how each state is ending prohibition varies dramatically. That is why I asked Kris Krane from 4Front Advisors to help us understand the changing landscape of cannabis markets across the United States. We’re going to try and put into context both the challenges and the opportunities for each state. Kris welcome to Cannabis Insider.

Kris: Thanks for having me on Matt.

Matthew: Sure thing. To give us a sense of geography can you tell us where you are in the world today?

Kris: I am in 4Front Ventures East Coast Headquarters in downtown Boston, Massachusetts.

Matthew: Oh great, great. What’s the weather like there today pretty good?

Kris: It is about as perfect a day as you could get. It’s about 80 degrees and abundant sunshine about as nice of a day as you could possibly ask for.

Matthew: Oh nice. Kris what is 4Front Advisors?

Kris: So Forefront Advisors is a management consulting company that is dedicated to working with aspiring operators in the cannabis space. Primarily dispensary operators but also some cultivation, production operators as well and helping them navigate this business opportunity. So from the start we help them navigate the very complex process of obtaining a license to operate a dispensary or cultivation facility. Meaning that we help them project manage through that whole process. Create a lot of the content that goes into these very robust and very complicated applications and help them win licenses and then we license them an operating model once their licensed to run a very professional high end medical cannabis dispensary that includes all of their policies and procedures and manuals, SOPs, job descriptions, assistance in hiring their management team, a weeklong training program where they learn our operating model and how to run their departments and how to hire entry level employees, things like floor planning. So it’s essentially a full operating model so that by the time our clients get up and running they are ready to basically hit the ground running and operate at peak efficiency very early while avoiding a lot of the pitfalls and mistakes that many operators make. So that’s largely what we do at 4Front Advisors.

We also have a couple of other companies under our sort of umbrella. 4Front Ventures being the parent company and then we have 4Front Capital which is dedicated to making strategic investments in the space and 4Front Publishing which is going through a huge revamp as we speak so you can check out the content on there now it’s really good but it will look extremely different by early next year and that is more of a sort of a news and information service about the industry.

Matthew: Kris how did you get into the cannabis industry?

Kris: Well that’s a long answer so I’ll try to be as brief as possible. I’ve been involved with this issue for about 20 years now. I was a founding member of Students for Sensible Drug Policy back in 1998. Before that I was actually a member of my colleges NORML Chapter. This was at American University in D.C. So I was an advocate and activist on this as a college student something that had sort of been with me from childhood really. My father was a medical cannabis patient when I was very young. He passed away when I was nine. So it’s something that I thought a lot about and got involved as an advocate in college. From there went on to work at NORML for six years at their National Headquarters. I was Associate Director of National Operation. By the time I left there I was then hired back at Students for Sensible Drug Policy which I had been involved with as a student and I was the Executive Director of that organization for four years from 2006 through about the end of 2009 and from there made the jump into the industry.

I got my start with Harborside Health Center in Oakland which was, they actually had been a donor of mine and Steve DeAngelo and Harborside had been a donor of mine at SSDTP. Helped Steve start a consulting business called CanBe which was sort of the precursor to what we do now at 4Front which helped people set up dispensaries that were very much in the mold or model of Harborside Health Center PC Medicine and sparked some of the more high end dispensaries in Northern California at the time. This was in 2010 and from the ashes of that that great experiment as a little ahead of its time came 4Front. I mean I could say my motivation in making the move from the advocacy world to the business world really was advocacy driven. As an advocate who had been working with some of these better dispensaries. At the time this was almost exclusively Northern California.

The scene in Colorado was just barely starting to develop then but you know I could see the places like Harborside and Berkeley Patients Group and some of these really professionally run dispensaries, I could see the impact they were having on their communities and on changing public perception and it became apparent that if we could demonstrate to the public that cannabis could be distributed in a way that is socially responsible and community focused that it would have as much of an impact on changing public opinion and ultimately ending prohibition as the work that we had been doing as advocates through nonprofit organizations in D.C. and the idea of being able to sort of patent, you know harvest the power of private enterprise and utilize that to help end prohibition I found to be extremely sort of fun and different and a novel approach to this and kind of jumped in with both feet and haven’t really looked back since.

Matthew: That’s really interesting. You know a lot of people ask me all the time how do they get into the cannabis space and I hear you and Troy Dayton and a lot of folks that Steve DeAngelo all have this advocacy background or they’re still advocates at heart in one way or another so people out there listening that’s a great way to get started in the cannabis industry.

Kris: Absolutely and I may even add to that particularly if there are any you know younger folks, college students in particular that are listening to this to get involved with a Students for Sensible Drug Policy Chapter on your campus is probably the number one way that you can go about getting involved with the cannabis industry after graduation. We certainly know that most of the businesses out there when they see an applicant with SSDP on their resume that resume generally gets put to the top of the pile because they know that’s somebody that is dedicated, is motivated, is trained on the issues and is likely going to be a highly motivated employee.

Matthew: Great points. Now switching gears a little bit how many states currently have legalized cannabis one way or another?

Kris: I believe we’re up to, I believe it’s about 36 states have some degree of cannabis or medical cannabis legalization, but it really varies wildly from, you know from your adult use states like your Washington, Colorado, Oregon, Alaska, and D.C., D.C. not being a state, to some extremely restrictive you know CBD only legislation that even prohibits the production of CBD medication within those states. So when we talk about having legalized in some form or another there are, there really are vast differences between those on the full legalization end of the spectrum and those on the sort of CBD only conceptual end of the spectrum and there’s sort of everything in between.

Matthew: Everybody talks about Colorado and Washington and now Oregon and Alaska quite a bit where adult cannabis use has been legalized, but let’s talk about some states that aren’t on the radar as much for people starting with Maryland. What’s going on there?

Kris: Sure so Maryland passed a medical bill, medical marijuana bill last year. I believe it was late last year. They have been going through the process of implementing that you know much to the chagrin of understandable chagrin of many patients. These laws take a while to implement and so it’s not like once a law passes you’re going to have dispensaries within a few months. It generally takes time because the state has to go through rule making. And so they’ve been engaged in that process of coming up with the rules that are going to govern the medical marijuana program. They are extremely close to being done with those rules. In fact they’re expected to be adopted next week. So once that happens the state will then open up an application process for people and companies who want to cultivate, process, and distribute through retail dispensaries medical cannabis to qualified patients in the state.

The way they’re going about this is they’re going to grant about I believe it’s 15 cultivation licenses for the state and up to 94 dispensary licenses. There’s a max of two per senatorial districts, state senatorial district so it’s unlikely that they give out all 94 licenses the first time. There’s a lot of really rural districts in the western part of the state where I think it’s unlikely that you have two applicants, but they’ll have the ability to grant up to 94 and those no defined number of licenses for production of infused products. They’re going to grant as many as they think the market needs and that process will happen over the later part of this year potentially into early next year. We expect that by the next fall of, sorry next Spring of 2016 that winners will have been announced. Hopefully a little before then and you will start to see the beginnings of an industry take shape with likely the first dispensaries opening in Maryland by if we’re lucky late in 2016.

Matthew: So allowing as many processing licenses as the market will bear is that kind of a new approach or is that a little bit more liberal where they’re trying to say that we don’t know so we just want to see what happens?

Kris: Well you know I’m not sure where exactly that came from. It’s not a novel approach. Other states have done something similar, Colorado being the biggest example. Colorado had no, even under the medical program, had no cap on the number of any kind of licenses and that’s the case under adult use as well. It’s in some ways on the processing side it’s probably most similar to what we saw in Nevada where they had a cap on the number of dispensary licenses but no cap on the number of cultivation and production licenses. They said that they would grant as many as were qualified and could meet the demands of the market and they’re taking a similar approach in Maryland although they’re only doing it on processing, not on cultivation. In fact they’ve gone the opposite way that Nevada went on the cultivation licenses in having a more restrictive number.

So I think on the cultivation end it actually looks a lot more like Illinois which has a pretty restrictive number of cultivation licenses to serve a larger population of dispensaries and more like Nevada on processing where there is no cap and they’ll grant as many as they see fit. My guess though is that they are probably going to be stricter in what they consider to be a minimum standard for licensure in Maryland then they were in Nevada where they, essentially in Nevada they granted them to everybody that applied. I think that you’ll see a lot more, you’re likely to see a lot more get rejected for not being up to par in Maryland than we saw in Nevada where like I said they basically gave them to anyone who filled out a complete application.

Matthew: Staying on the East Coast here how about Pennsylvania can you give us a little synopsis of what’s going on there?

Kris: Sure so in Pennsylvania we don’t have law yet. There are two bills currently pending in the legislature one in the House, one in the Senate, with two very different visions for how medical cannabis will look in the state. One of the bills I believe the Senate bill is more of a traditional medical cannabis bill which would allow for I believe it’s a 125 dispensaries and 60 cultivation facilities with a fairly wide ranging list of qualifying conditions. Whereas the House bill, and forgive me if I’m flipping those two I haven’t gone back and double checked my research on this, but the other bill I believe the House bill would look a lot more like New York’s program with a very restrictive number, a small restrictive number of licenses both in cultivation and dispensary or cultivation, production, and dispensary a much more limited qualifying condition list so there would be a much smaller patient base and a ban on any smokable products which is the case in New York and Minnesota. So you would only be able to sell vaporized oils or vap pen cartridges or different kinds of edibles but nothing that could actually be smoked.

So we don’t know what’s going to happen exactly in Pennsylvania. My guess based on some intel that we hear from behind the scenes is that the final bill will likely look like a compromise between the two and that’s likely going to pass sometime this year. So we will see them then getting into rule making so they’re basically about a year behind Maryland or a little less than a year behind Maryland but if this does pass then we’ll begin to see the formation of a market late this year and into sometime next year when they’ll start accepting applications.

Matthew: And on to Massachusetts where you are currently what are some of the unique aspects of legalization in Massachusetts because I believe it started out one way. The governor got involved or a new governor and that it changed is that right?

Kris: That’s absolutely right. So what’s happened in Mass, my current home state, I’ve bounced around quite a bit in the last few years, but here in Massachusetts the first round of the program by statute they had a limit of 35 total licenses. Now in Massachusetts these are vertically integrated licenses so the license gives you the right to cultivate, process, and dispense and you essentially have to vertically integrate. There’s a small, the potential for a small wholesale market amongst those license holders but it’s more like Colorado’s old 70-30 rule with actually more restrictions. You have to demonstrate a need in order to buy something wholesale. So if for all intensive purposes it’s a vertically integrated market where everybody has to produce everything that they sell within their dispensaries.

So by statute when they first granted the licenses the state was limited to a maximum of 35 licenses with a minimum of one in every county and a maximum of five in any county, and so in a process like that you had to have a really competitive licensing process. And so there was a competitive application process for those up to 35 licenses. It was, it wound up being rife with controversy. They initially granted about 28 licenses just under half of those were then kicked out of the process for allegations of having lied on their application or misstated support from locals or having set up you know improper management or funding structure. There were a whole bunch of different reasons and a lot of it frankly was just very political. There was controversy over political cronyism you know that the top scored applicant in the state happened to be a former congressman and district attorney with no operating experience but very close ties to the Head of the Department of Public Health at the time. And so there was some media controversy around that, and what ended up happening is essentially you had only 15 licenses that made it through after that first round. They didn’t come anywhere close to the 35 that were necessary. To date only one of those is actually open and we’re now over two years into the program so it’s been a real slow go here in Massachusetts.

So what wound up happening was I mentioned by statute you had a limit of 35 but that limit expired two years into the program. So we’re now passed the two years. There is a new Governor. Governor Charlie Baker who came into office this January took a look at the program and decided to lift the cap which the state had the right to do after two years so there is no longer a cap on the number of licenses, and they’re approaching this current round which is actually ongoing this licensing ground as if it’s or similarly to the way they’d handle a pharmacy licensing process. So it’s a rolling application basis. You have to go through a few different steps of applications, a few different phases of applications to demonstrate your competency and financial wherewithal and to demonstrate that you’re in a community that is comfortable having you there so you have to demonstrate support from the community and everybody that meets those criteria is supposed to be granted a license.

So that’s ongoing. It’s early in the process. Nobody has gotten a license yet in this second phase. It’s too early for that, but by the end of this year and through the course of next year we’re likely to see a whole number of businesses get license in this state. And so I think we will see that number rise from 15 to I would guess it will be anywhere between 75 and 200 by the middle to end of next year. And then of course in Mass we at that point we start dealing with the potential for adult use and there will be an adult use initiative on the ballot in November 2016 which will obviously create a whole new market opportunity for both these existing license holders and potential new entrance into the market.

Matthew: Wow a lot of changes there and opportunity in Massachusetts. Now what about the dysfunctional markets as I like to call them I mean can we call New Jersey and Connecticut dysfunctional markets where there’s just not enough business owners able to do the right thing and there’s not enough patients that are able to get access in a geographically dispersed way. Am I wrong about that? They just seem kind of like clusters.

Kris: No I think you’re absolutely right, New Jersey in particular. If I had to sort of pick a poster child for dysfunctional or a practically non functioning market it would be New Jersey. They have, they have I believe only three dispensaries currently open. They have a limit on the number of products they can sell. They have a limit on the THC content that can exist in any flowers that they sell I believe it’s 10 percent maximum THC. And the state has been a real roadblock at sort of every step of the way for businesses to get up and running. This is largely political in New Jersey I mean you had a fairly restrictive bill that passed in the first place so some of this was unavoidable, but what happened in New Jersey was this bill was passed at the very end of previous Governor, Governor Corzine’s tenor in office. He was a Democrat in support of medical marijuana and he signed this into law literally on his last day in office. He got a whole bunch of bills his last day. He signed them all into law.

So Governor Chris Christie inherited this law when he took office but it hadn’t been implemented yet so implementation fell on Chris Christie who I think anybody who follows this issue knows is really terrible on the issue. He’s a huge opponent of cannabis of any kind medical or otherwise and he’s probably the worst of any of the Presidential Candidates in either party. And so he has basically set up this program for failure. He stonewalled efforts to move things forward at every turn. He’s not been open to additional qualifying conditions. So this was sort of by design that the program would be dysfunctional and that’s exactly what’s happened.

Connecticut is a little bit of a different story you know you don’t have as hostile of a government there. They have a fairly limited qualifying condition list so that is going to limit the number of patients and we typically see that more in states that pass these via the legislature rather than by ballot initiative. A lot of the legislature states have more restrictive qualifying conditions and then Connecticut has some pretty silly rules as well like you can only sell pre ground medicine. You’re not allowed to sell whole flowers you’ve got to grind it all up first and nobody can tell whether it’s good or not because that certainly prohibits folks or is a disincentive for folks to go and visit dispensaries. And there’s a fairly limited number of the licenses in the state although to be fair Connecticut is a pretty small state geographically and they are actually attempting to address this. They are currently holding I believe hearings or some process to add additional qualifying conditions in the state, and they are in the process of adding I believe three new dispensary licenses. I think there’s five currently in the state. So there’s some moves that are being made in Connecticut to start to expand the program and make it a little bit more functional whereas New Jersey I think is just sort of you know stuck in the mud until they’re able to get rid of Chris Christie.

Matthew: And how about Florida? What’s the story there?

Kris: So Florida is currently implementing a CBD only bill so they accepted applications about a month ago from companies that are looking to open cultivation dispensaries for CBD only medicine. Essentially it is something that’s going to have less than 1% THC and a substantial CBD content. This is the type of oils medicine that we hear about in sort of the Charlotte’s Web type reports that particularly helpful for children with Dravet syndrome and Epilepsy. And so those licenses will be granted sometime soon. I haven’t been following that one as closely because we’re not involved in that process, but I know the apps went in a couple months ago or a month ago and folks are waiting to find out who’s going to be granted those licenses, but that’s going to be an extremely limited program and very limited business opportunity.

The real thing to watch in Florida is going to be in the 2016 election. They are likely to have a legitimate medical marijuana initiative in that election. It will look pretty similar to what the ballot initiative that failed in 2014. “Failed” I should say with sort of quotation marks in that in Florida you need 60 percent to pass an initiative and they got 57 ½ percent. So it was probably the biggest or the best failure we’ve ever seen. It was a, in most elections that would be considered a landslide victory with 57 ½ percent, but in Florida that is considered a loss. But you know the fact that it’s being run a couple years later with a couple more years of support and being done in a Presidential Election where you’re going to have a much higher youth voter turnout and they tweaked some of the criticisms of the initiative the first time around. I think it provides a lot of hope that that initiative is going to pass and I think it probably will. If that’s the case, then we’ll see a real medical marijuana program with a robust qualifying condition list and real business opportunities in Florida to take shape after that 2016 election.

Matthew: Illinois is kind of a unique animal where the medical patients are kind of treated like they’re prisoners you know they’re getting fingerprinted, background checks and it’s really I would say it really adds a lot of friction to patients coming online. Is that your take on Illinois?

Kris: It is. That’s very much the case. You know Illinois’s program it’s pretty restrictive in terms of the qualifying condition list so there’s already a limited number of conditions that will qualify someone to become a patient. And then there are some restrictions around that that are actually pretty unique to Illinois and the Illinois’s program. You mentioned fingerprinting. That is one and anybody who wants to become a medical cannabis patient in Illinois needs to register with the state as is the case in most places, but they need to be fingerprinted and put their fingerprints on file with the state. Which you know you can imagine for folks that are a little bit paranoid about, already a little paranoid about being on a list of being a marijuana user to put your fingerprints on file it’s a big undertaking and probably a nonstarter for a lot of folks.

They also have a provision where anybody with a felony conviction is prohibited from being a patient in Illinois. That is also unique to Illinois and you know as we all know the war on drugs and the war on cannabis has certainly been implemented disproportionately within inner city communities and communities of color and sort of the irony there is that the folks that are the most likely to be victims of the drug war and to have been targeted by police for marijuana enforcements and marijuana enforcement offenses are now legally prohibited from not only being involved in the industry but legally prohibited from becoming a patient even if they have an ailment that would otherwise qualify and so the result has been there are virtually no patients in the state.

I believe at last count they were up to something like 800 in the state which for a state of, I think it’s a state of about 6 ½ million people or 8 million people is just, I mean it’s just paltry you know you have 51 dispensary license holders in the state and 19 I believe cultivation/production centers that are approved in the state and it’s just hard to imagine with the current, sort of the current climate there around patient access and becoming a patient that those are going to be viable businesses in the short term.

The good news in Illinois is that at least what we’re hearing I think the government seems to realize the problems with this, and so I think that we’re probably over the course of the next six months to a year likely to see some movement to ease some of these restrictions and allow this to become a more functional legitimate market. So hopefully that happens before most of these businesses get online so we can save this thing before it becomes dysfunctional because right now nobody is operational and I think there’s a realistic possibility that that actually happens.

Matthew: Wow talk about perverse incentives you’re sending felons, you’re convicting them again but this time to the black market that’s just and you’re saying well we just don’t care if you have a medicinal need for cannabis you can’t have it.

Kris: That’s right. I mean talk about the irony. Some of these folks they may have been arrested because they were medical cannabis patients in the first place. And so somebody who had to break the law in order to treat their medical condition now that that medicine is legal they are legally prohibited from using it because they, because they took that step of breaking the law to get it when they needed it before it was legal. It’s just absolutely absurd.

Matthew: Now going back to the Northeast to neighboring states Vermont and New Hampshire what’s going on there?

Kris: So two different programs although they actually look fairly similar. New Hampshire is just a few years behind. So Vermont has an existing medical cannabis market although it is very small and relatively restrictive. There is, it’s a pretty restrictive qualifying condition list and there aren’t a ton of patients in Vermont to begin with, and then there was I believe they actually got rid of this but there was a restriction on the number of members that any dispensary could actually have. So even if there were enough patients who were actually prohibited. You were actually prohibited if you were an operator from serving all of them. I believe they’ve expanded that over the last year or so.

So there are four dispensaries currently operating. They’re vertically integrated so similar to Massachusetts or Arizona and some other states. And I think we may see an expansion of that program over the next year or so but more likely what’s going to happen is I would predict that Vermont is either the first or the second state to adopt full adult use legalization through the legislature. To date they’ve all been ballot initiatives and it seems like Vermont and Rhode Island are kind of in a bit of a race, slow race but a bit of a race to become the first state to do it through their legislature, and I think one or both of those states will do so probably in 2016. So I think that’s where we look for the real market opportunity in Vermont is once adult use hits.

In New Hampshire they just went through licensing so they similarly have a vertically integrated program with a relatively restrictive qualifying condition list, not absurdly restrictive and so there’s expected to be a smallish patient population but enough to create a small market there and the state just a couple months ago granted four of those vertically integrated licenses to three different companies who are now in the process of seeking local zoning approval and building permits and getting ready to build those businesses. So we expect that the first dispensaries will come online in New Hampshire, if we’re lucky, the end of this year but more likely at the beginning of next year and into next spring.

Matthew: I just want to backup a little bit because there might be some new listeners to CannaInsider and they might not understand the context of what, how qualifying conditions can really impact the size and scope of the market. Can you just touch on that a little bit?

Kris: Sure so qualifying conditions means the, essentially the ailments or illnesses that would qualify somebody to become a patient under that state’s law. So some states are fairly restrictive in the qualifying conditions. So in the case of like a New Jersey I believe they only have I think it’s only five conditions that qualify unless they’ve expanded that which I don’t think they have. So it would be things like Cancer or Aids, Multiple Sclerosis, maybe Glaucoma and then there are states that have more open policies that have essentially allow doctors to determine whether or not the patients have a condition that would benefit from the use of medical cannabis. Typically the inclusion of chronic pain or chronic and debilitating pain as a qualifying condition list is sort of the linchpin for whether a market is a large and robust market versus a smaller, just a much smaller market in general but the majority of patients in most of these states become patients for chronic pain which makes sense.

It’s a condition that probably more people suffer from than just about anything else in the country. It affects people of basically all age groups, all demographics and cannabis is quite effective in treating pain. So we typically see that and so when you look at states that have larger patient populations states like California, Colorado certainly pre-adult use, Arizona, Massachusetts which is growing now. These are states that all have chronic pain or a catch all. Anything that your doctor thinks is beneficial for they can recommend as opposed to some of these states where we talk about more restrictive markets where they typically don’t include chronic pain and have a much more restrictive list of conditions that would qualify somebody to become a patient.

Matthew: Great overview. Now going out into the middle of the Pacific Ocean can you tell us what’s happening in Hawaii?

Kris: Sure. So Hawaii has also passed legislation allowing for dispensaries. Hawaii’s a little bit of a different case then some of those we mentioned in that Hawaii has had a medical marijuana law on the books for I believe over a decade. They were actually one of the earlier states to pass medical marijuana. They were actually the first state to pass medical marijuana through the legislature and not through ballot initiative. Similarly to what I mentioned I think it’ll be either Vermont or Rhode Island for adult use but there law never allowed for any licensed businesses. And so they early this year passed a new law or actually formerly just about a month and a half ago passed a new law that would allow for the licensing of vertically integrated dispensaries.

So they’re going to be accepting applications in Hawaii. I believe they started accepting those applications in late January so groups are gearing up to apply. There is a limited number of licenses per county which in Hawaii is basically per island essentially and those will be vertically integrated licenses where you get one cultivation/production facility I believe and two dispensaries for each one. There’s a limited number per county and that process will start happening here very soon. So folks are really sort of jockeying for position and nailing down real estate and local support and all the things that you need to do to apply for one of those licenses.

Matthew: Now how will reciprocation work or can you explain what that means and how it will work in Hawaii?

Kris: Sure so Hawaii’s law allows for reciprocity meaning that dispensaries there will be allowed to serve people who are approved patients in other states. That doesn’t go into effect until sometime in 2017 so for the first year or so of the program these businesses will be limited to serving Hawaiian patients only, but after about a year or so that will open up and they will then be allowed to serve patients who are qualified in their home state. Which is a really big deal in Hawaii because I mean it’s something like 30 percent of all tourists to Hawaii from California.

Matthew: Right.

Kris: Where you obviously have a very large patient population so that could be, that could really be a difference maker in terms of what the market in Hawaii ultimately looks like.

Matthew: Yeah great point. It does seem like its half Californians whenever you’re there so that does seem true. Probably it could double or triple its market just by allowing the reciprocity or once that gets going.

Kris: Yeah I think absolutely. It probably more than doubles the market there. If you allow the inclusion of, I mean if you just allow the inclusion of Californians let alone Washington, Oregon, the other western states where you have a lot more tourists I mean in mainland US. Like folks in the eastern part of the United States. Typically if you’re going to do a tropical vacation typically you go to the Caribbean. Western part of the United States you go to Hawaii and those are all medical marijuana states so that could be I mean I think that would actually makeup the majority of the market in Hawaii will be those tourists from the western part of the United States.

Matthew: How about Nevada? It seems like their state and local governments seems really welcoming to cannabis overall. How do you feel about Nevada in general and what’s your high level bullet points about what’s important there?

Kris: Sure so in Nevada and I would say Matt if you ever do business there its Nevada not Nevada. They’ll run you out of town.

Matthew: Oh no I’ve got to get this right. I’ve got to practice right now.

Kris: So yeah I learned that lesson pretty (37:19 unclear) when I first started working there. But no you’re right the government has been quite receptive to cannabis reform and the medical cannabis program in general. It’s been one of the fastest states we’ve seen to implement. They basically hit every deadline that they set at the beginning of the process. In their licensing process they moved things along quite nicely. You know the first dispensary just opened there up in Reno, and we now have one that just opened in Vegas. The vast majority won’t open until the end of this year into the beginning of next year because of the lack of product. I mean strangely the first one that opened up in Reno, actually in Sparks technically had to close I think the next day for another couple of months because they sold out of product immediately. I think they just wanted to be able to sell T-shirts saying they were the first dispensary in Nevada why they opened when they did before they were really ready. But the state has been very welcoming and Nevada also has right now the only real reciprocity program in the country until Hawaii comes online where patients from out of state are allowed to purchase in dispensaries in Nevada. In fact the standard for that currently is that you have to sign a sworn affidavit at the dispensary door that you’re attesting that you are a patient in another state and that’s all the proof that the dispensary needs in order to serve you.

Matthew: I love Nevada.

Kris: It’s great.

Matthew: Wow that’s crazy.

Kris: And you know it’s interesting that is an incredibly important piece for what this market is ultimately going to look like as we all know right and Vegas in particular I mean it’s as big a tourist city as we have in the United States and keep in mind that in California not only is that where the majority of the tourists come from similar to Hawaii although I would imagine Californians would probably be more comfortable you know driving with their medicine in Nevada and they will be flying with it into Hawaii, but in California you don’t need to be a California resident in order to be a California patient. You only need to be a California resident if you want to register with the state agency and get a state issued card which is optional. Generally you get a card from your doctor’s office and that qualifies you as a patient in California and you don’t have to be a resident in order to do that.

So what can happen in Nevada is somebody could fly in from anywhere in the world right. Someone could fly in from Tokyo and say that they’re a patient in California and in fact they could become a patient in California. In fact they could see a doctor in an office in Nevada who’s licensed to practice medicine in California or might even actually be on Skype in California. We see that plenty in some of the California evaluation centers. Get their medical cannabis card or recommendation from a California doctor, get a California recommendation and then use that to purchase in a store in Nevada. So we expect that that full reciprocity and the acceptance of California patients whether they’re a resident or not is going to lead to Nevada being potentially the most robust medical market in the country and that’s only for a couple years because there’s likely going to be an adult use initiative on the ballot in 2016 which we’re obviously very hopeful will pass and so Nevada may join in the ranks of the full legal adult use states here after the 2016 elections as well.

Matthew: How about Arizona where Forefront’s based? I don’t seem to hear that much about the Arizona cannabis market. What are kind of the high level bullet points there which we know about Arizona?

Kris: Sure so you know Arizona its interesting. It isn’t talked about nearly as much as a lot of these states but it’s actually the third largest cannabis market in the United States.

Matthew: Oh wow.

Kris: Right now behind, although it may be moving to fourth, but it has been as of last year it was the third largest market behind California and Colorado. Washington might overtake it because of its adult use law, but Arizona actually has a pretty good thriving industry. It’s a sort of a vertically integrated market although it’s more open than a Massachusetts or a New Hampshire, Vermont, or Colorado pre adult use in that you’ve got what’s called, what I would consider sort of a closed loop capitalist market in that it’s only one license. That license gives you the right to cultivate, process, and dispense cannabis, but you are allowed to wholesale amongst the existing license holders. So currently there’s about 97 license holders throughout the state. That are open throughout the state of Arizona and what you have is a system where you know some of the urban dispensaries who are serving a fairly large population and keep in mind there’s over 80,000 patients in Arizona currently so this is actually a real market but you may have a dispensary located in Phoenix, Tempe, Scottsdale.

A really densely packed urban population that’s serving a large patient base that may not be able to build out the cultivation and production capacity to meet 100 percent of their patient needs in which case they’re going to be purchasing a fairly large percentage of their inventory from the wholesale market. Largely from dispensaries that were licensed in rural areas of the state, but who have set up large scale cultivation facilities. Keep in mind in Arizona we rural. Rural Arizona means something very different than rural in most places in the East Coast. A rural town in Arizona is a little desert town that may have a couple hundred people and there may not be any other human beings for another 50 miles. So you know somebody who wins a license in one of those towns they’re not going to do any real business out of their dispensary, but they can set up a large scale cultivation facility, a large greenhouse and become a large scale wholesaler to the urban dispensaries that are much less likely to be able to meet their patient demand.

Matthew: Looking ahead to 2016. We’ve touched on a couple points but what are the big events on the horizon? I mean is this, I mean have we, is this when the bow wave becomes a tidal wave and if this totally sweeps the nation?

Kris: Well that’s certainly the hope. You know I think we’re going to see a little bit of a test here in 2015 with responsible Ohio and the initiative basically that would legalize medical and adult use in Ohio. That’s a much tougher election to win because it’s an off year election not even Congressional or Senate or Gubernatorial elections and those are typically really bad for our issue because typically the only people that turn out to vote in those elections are old people who are demographically not in support of our issue but 2016 is really the year to watch. I think we’ll see sort of the first shots across the bow through the legislature in one or both of Rhode Island and Vermont. So we are likely going to see legalization in one of those two states. They’ll be the first. Whoever does it will be the first in the eastern part of the country outside the District of Columbia. So say the first state to do so and certainly the first to do so through the state legislature. And then the 2016 election that could very well be the tipping point for this issue. You know we are going to have full adult use legalization on the ballot in at least five states. Those include California, Arizona, Nevada, Massachusetts, and Maine.

We may also see initiatives on some combination of Michigan and Missouri. Possibly even Ohio if things don’t pass this year so you might see some of those mid-western states run their own initiatives. You will definitely see a medical initiative on the ballot in Florida which I think is likely to pass and so that’s a huge amount of movement and there is a decent chance that all of these pass. I think our battlegrounds in 2016 are probably Arizona and Nevada. They are the most conservative of the states and we’re likely to be starting with the polling closer there then we are in some of those other states. But you know if we can win in four out of five legalization initiatives or five out of five legalization initiatives which I don’t think is impossible and I think it’s actually doable depending on how much money we’re able to raise and how much money the opposition is able to raise. You know if we can run the table in 2016 and go five for five in legalization and maybe tack on Florida for medical, it becomes really difficult for our opposition and even for establishment politicians to claim that this is a legitimate political debate.

Matthew: Right.

Kris: If every single time this is put to the voters the voters have voted for it including in what are now some conservative states. We already won Alaska. We may win in Nevada and Arizona the next time. I just think that that opens the floodgates for political support for this issue, for movement in state legislatures, for movement in Congress, for public support increasing even further than it already has and becomes really difficult regardless of who might win the Presidential Election in the same year. It becomes really difficult for the Federal Government to scale back the progress that we’ve made. I think at that point it becomes a matter of when and not if.

So really important for folks who are out there listening I mean to take this all the way back to where we started with the advocacy side of this and my motivation being ultimately ending prohibition and that being the case with folks like Troy Dayton and you know others in the industry who have that advocacy background. Folks are interested in this and would definitely recommend getting involved, donating money, donating time. If you live in one of those states volunteer your time, get in touch with the Marijuana Policy Projects with Students for Sensible Drug Policy who’s going to be running a lot of the ground game with the Drug Policy Alliance, who’s going to be heavily involved with California and you know donate time, donate money, spend some time phone banking and calling friends and family and folks that you know in the area encouraging them to get out and vote because if we can win these states then I think that is the real beginning of the end of marijuana prohibition nationwide.

Matthew: Kris as we close how can listeners learn more about 4Front Advisors?

Kris: Sure so I would suggest that you check out our website. I would go through 4Front Ventures which is our parent company and you can find out all about 4Front Advisors, 4Front Capital, 4Front Publishing, or the various ventures that we have here. You can go to www.4frontventures.com. That’s www.4frontventures.com and you can check out everything that we do at all those companies. Also just a really helpful quick resource that we provide to folks we have a daily email blast. It’s just one email a day that gives a breakdown of essentially all of the relevant headlines so all it is is a list of headlines organized by national and by state. So if somebody is interested in getting news on this rather than subscribing to 50 or more different Google Alerts they can just signup directly at 4Front Publishing and get this one daily digest in their inbox every morning with a really quick and clean digest of that day’s news in cannabis.

Matthew: What a helpful service you provide there. That’s a great idea. Kris well thanks so much for being on CannaInsider today we really appreciate it.

Kris: Absolutely very happy to be here.

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