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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.

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.

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.

Listen to This Interview Now
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.

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.

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.

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.

Using Dutch Greenhouses to Grow Cannabis

TriQ Dutch Greenhouses

Matt Cohen of Triq Systems and Jay Czarkowski of Canna Advisors walk us through the amazing cultivation techniques of the Dutch, and all the benefits of growing cannabis in Dutch greenhouses.

Learn More at:

http://thinkcanna.com/
http://www.triqsystems.com

Key Takeaways:
[1:39] – Matt and Jay talk about their backgrounds
[3:34] – Matt talks about Dutch greenhouses
[5:56] – Jay talks about why he advises his clients to use greenhouses
[8:22] – Matt discusses growers being forced to go high-tech
[10:37] – Can newbies survive in the cannabis space
[12:26] – Matt discusses Dutch greenhouse innovation
[15:18] – Jay talks about what he looks for in a greenhouse
[17:02] – Matt talks about harvesting, drying and curing
[23:16] – Jay talks about space requirements for drying/curing
[25:58] – Matt talks about Eagle 20
[33:45] – Matt talks about the future of greenhouses
[36:25] – Is it worth going to Holland to view the technology
[37:30] – Jay talks about the future of cultivation
[38:56] – Contact Details

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.

Today I’m pleased to welcome to CannaInsider Matt Cohen and Jay Czarkowski to help us understand advanced cultivation technologies and ideas including the secrets of Dutch greenhouse growers, drying and curing cannabis and more. Matt and Jay welcome to CannaInsider.

Matt: Thanks Matt it’s great to be here.

Jay: Thank you Matt, thanks for the invite. Appreciate it.

Matthew: Before we get started guys can you give us a little background of who you are, what you do and how you got started in the cannabis industry? Matt do you want to kick us off?

Matt: I actually was an activist in college, a legalization activist. Dropped out of school back in ’98 and moved to the Bay Area and dove right into production and dispensing. Just found my way through the industry and now we’re kind of in the technology side here with TRiQ. I’m the CEO of TRiQ which offers industrial cannabis solutions.

Matthew: Great. How about you Jay?

Jay: Well Matt we got into the industry here in Colorado back in 2009 right when things really began to kick off here. We had one of the first dispensaries and cultivation facilities in Colorado. I think we got the City of Boulder license number one and state license number seven back in the day. That of course was after they began to issue licenses which was probably two years after we went into business. You know that has since evolved into working with groups in other states. And at this point one of the founding partners of CannaAdvisors and we now have about a two and half year track record of helping to build businesses in the emerging markets in the new states that pass medical or rec cannabis laws. And we work with those groups to build their teams and help them put forth winning license applications and win licenses and help them start up operations.

Matthew: Yes and very pivotal in helping CannaInsider get off the ground. So thank you to Jay and Di.

Jay: It was our pleasure.

Matthew: Let’s jump right into it guys. Matt, please orient us in terms of Dutch greenhouse technology. Most listeners will be picturing a greenhouse, but the kind of greenhouse you and I are talking about today are much more advanced. Can you paint a picture of how optimized Dutch greenhouses are for cannabis cultivation?

Matt: Absolutely Matt. Yeah so the Dutch, Holland is really the Silicon Valley of greenhouse technology. They were really the first to pioneer greenhouses about 100 years ago. And still today all the highest tech greenhouse companies are based in the De Lier and Westland areas of Holland. And I kind of categorize greenhouses into kind of three different categories. Kind of your low-tech which is like your poly hoop house type greenhouse. And then your what I would call a medium-tech greenhouse which would be a domestic manufactured kind of polycarbonate or even glass house. And then there’s really the high-tech Dutch greenhouses out there. And then specifically Dutch greenhouses you know are typically engineered specifically for each crop that they’re growing. And we at TRiQ have engineered, worked with the Dutch to engineer a cannabis specific greenhouse.

Matthew: So when you say specific what’s specific about the cannabis plant? I mean humidity, moving water in certain ways, you know, the size of the actual green house.

Matt: Well the plant itself, the size of the plant itself, how it’s positioned in the growing system. The humidity controls, the light intensity and then you know also post-harvest. Right so tomatoes, you pick them and you put them in a box, they go to a cooler and they ship. Cannabis has bio security issues that follow it from the minute you harvest it all the way through bar coded, finished materials. And there’s several steps right after harvest; drying, curing and processing and manufacturing that all need to happen in a controlled environment. So our vision of cannabis greenhouses really is not just the growing side, but the post-harvest side because they’re all connected to the product life cycle.

Matthew: Okay. Now Jay, as you mentioned, you have grown in the past and now you advise clients. When you think about your days growing inside and now you’re looking at greenhouses what excites you about greenhouses to the point that you’re considering using one and advising your clients to use one?

Jay: Well I don’t think it’s so much that I’m excited to use them. It’s more that I’m excited that there are still so many people that don’t yet realize that greenhouses are the way to go which gives me and the groups that I work with a leg up. Clearly marijuana is the only plant for the most part that we cultivate on a large scale in these indoor environments. But let’s take a step back and look at why we grow them indoors. I think clearly the warehouse was just a logical manifestation of when for the last 75 years people that cultivated cannabis they had to hide it right.

So when this speaks, the first group of people that began to cultivate cannabis on a commercial level in a quasi-legal environment were clearly those that had be doing it illegally for many years if not decades if not generations. So taking the warehouse or the spare bedroom or the closet or the garage or the shipping container buried on the farm. You know taking that into a warehouse was a logical next step. People felt there were security issues. They felt that they still needed to hide it. So wasteful, energy, efficiency, workflow process. Clearly the future of cannabis is greenhouse if not outdoor cultivation. I think outdoor cultivation probably will work great for crops where the entire crop might get turned into oil, maybe, maybe not. But I personally believe that every single warehouse operation, every single indoor operation right of which there are millions and millions of square feet, those will all need to be replaced one day by greenhouses. If not just based on practices, just for their ability to survive. These greenhouse operations they’re going to be more efficient. They’re going to be able to produce a better quality product for a lower cost, and I just don’t see any way where these indoor warehouse grows could compete long term.

Matthew: Matt, do you think cultivation of cannabis is changing in such a way that growers are forced to go high-tech and grow in scale in such a way that gives them massive economies of scale? Is that where we’re going to?

Matt: I think it’s definitely where we’re going to and the reason really why is because the market is changing and it’s changing at a very fast rate. I’m sure Jay has observed this as well. You know every year it’s just like wow. You know I can remember 12 months ago some of the leading consultants out there and Jay probably knows this as well, were still fighting the whole greenhouse concept. You know nothing is going to replace indoor. Indoor is the highest quality and now it’s like everybody is talking as if it’s a no brainer that greenhouses are the kind of the way to go or at least it’s rapidly trending that way.

And the reason the business needs to go this way is because you know like in places like Colorado you know vertical integration is being broken. So it’s not a play on being a vertical kind of like micro brew, right, you would grow your own and sell your own. The play really is becoming yeah you can put a stable finished product on the shelf across a state, be a much bigger company. That with testing, biosecurity issues, you know, you’re not allowed to use pesticides, taxes and simply scaling these systems, you know, scaling them into our system. It’s not meant for that. Greenhouse have been meant to scale, I mean they’re engineered that way. So there’s quite a few reasons and they’re all happening in a rapid way and the consciousness of the industry is changing rapidly as well.

Matthew: Jay, there’s probably a lot of listeners out there that are interested in getting into the cannabis industry and they say well I’m just going to jump in and grow and they don’t understand all the details that are involved and the mistake that they can invest in some sort of legacy technology while there’s guys like you and Matt out there that are on the bow wave of this change and are going to be able to cultivate at a price per gram or price per kilo that’s just going to leave them dead in the water. Is there even an opportunity for people to come in with little or no knowledge and be successful here or is the startup time just too long, the learning curving too unforgiving?

Jay: Well I’m a serial entrepreneur Matt and I can tell you this much when I got involved in the cannabis industry six years ago I make this statement a lot. I think it will be tough to find someone that knew less about cannabis cultivation than I did at the time. You know I was a hard charge in construction guy and I directed my people. I go alright guys I signed the lease, here’s the keys to the warehouse, I want to see plants in here by Friday. And I think I was telling them that on a Tuesday. I had no idea what kind of facility and infrastructure needed to be put together to properly cultivate this plant.

But to more accurately answer your question, of course there’s people out there that don’t know anything about cultivating cannabis. Do they have a shot of getting into this industry? Absolutely they do. They just need to put together the right plan with the right people. Bring in the right expertise. So any aspiring entrepreneur, if they take all the right steps, could certainly get into this industry right now. I think it’s still in the ground floor. We may just be getting to the ground floor and to soon be a ground floor opportunity I think for the next few years certainly in various parts of the country that don’t even have any kind of a law right now. But again can anybody do it? Of course not, it’s inherently difficult to properly cultivate cannabis, to do it well, to do it well consistently and especially to do it well consistently on a large scale. But it’s all about bringing in the right people with the right plan.

Matthew: Matt, circling back to the way the Dutch do things, can you tell us a little bit about how to think about moving water and air around in a greenhouse and what the Dutch are doing with that and maybe some innovative ways?

Matt: Yeah I think it’s, you know, the two companies that we work with are OEMs that manufacture our TRiQ facilities, have some technologies that are unique. They’re forced air greenhouses that are really kind of air tight greenhouses that are under positive pressure. And the air is delivered through what the Dutch call a slurve directly to the plants. So if you’re growing on a table system or a gutter system, we actually have a gutter system design where the gutters are hoisted from the trusses and it’s 100% full canopy. It’s a balanced hoist system so you access each row by flipping a switch and one gutter goes up while the other one goes down. The one that goes up becomes the access to the adjacent gutters.

But underneath those gutters is slurve which delivers the conditioned air and the CO2 directly to the plant from a conditioned kind of wall scenario where you can intake fresh air, but you also have access to the Chillerdale air as well. So those two companies have patented systems. Those companies are KUBO and Certhon. So those are really unique systems that are quite applicable to the cannabis industry because cannabis requires low relative humidity, particularly in flowering. And if you’re growing in Miami and it’s raining outside, you know, you have to have these types of systems. Quite frankly if you’re on the East Coast even you need to have these types of systems.

In terms of irrigation there’s a lot of different types of irrigation technologies out there and I think the most interesting things right now is to, it’s really not the irrigation itself, the pumps and the trip lines. It’s more about the sensors that are available that can tell if the plant is transpiring enough and feed the plant depending on its transpiration. There’s inferred sensors that can look at the leaves and the stomata in the leaves. So technologies like that.

Matthew: Interesting. Yeah great point about the East Coast. I mean the humidity level is much higher than places in the West and it’s not always just plug and play the same exact systems. You’re going to have to customize a little bit based on the environment. Excellent point especially with Maryland and other places coming onboard now New York that have to think about that a little bit more critically. Jay, if you were to build a greenhouse right now, what would it look like? How bid would it be and what materials would you use? You mentioned you were in the construction business. You look at things perhaps with a GC eye. What are the things that you’re evaluating when you’re looking at a greenhouse for you or a client?

Jay: It’s funny you asked the question. I’m going to speak about if I were to build one right now which we are, as you know, in the process of developing our new facility here in Colorado which part of it is going to be 80,000 square feet of greenhouse cultivation under glass or plastic composite, whatever the surface may be. So 80,000 square foot is going to be the size of our new facility, the taller the gutter height the better. You know clearly I need to spend some quality time talking to Matt Cohen from TRiQ. We have been talking to a couple of domestic greenhouse providers. Our New York client is a Dutch family that cultivates with Dutch greenhouse technology and they had made the offer to introduce us to the right folks at the right time. But clearly you have domestic greenhouses, then you have the Dutch technology which is clearly more advanced. You pay for it, but you know my thought is if we’re building a new facility, we want to do it right the first time and make sure it’s going to be able to compete well into the future. There’s probably a lot behind that question.

Matthew: Okay. Well let’s turn to drying and curing of cannabis because those two terms are often inflated, but they probably shouldn’t be. Matt can you help us understand at a high level how you think about harvesting, drying and curing and why perhaps the public is not looking at these steps with the same lens that you are and why maybe they want to look at evolving their approach to these steps?

Matt: Yeah so formally I was in operations. I’m a grower by trade and I used to be the CEO of North Stone Organics. We were the first licensed production company in California. Licensed by Mendocino County. And you know we were harvesting a ton of cannabis at one time. And it’s great if you can grow really super high quality cannabis, but if you have a major bottleneck at drying it can ruin everything. So we knew back then that we needed a solution. We started having this concept kind of around drying. But drying is really a highly overlooked area. You know most people are looking at their grow rooms and they’re thinking about you know what the right bulb is or the best hood or what their fertilizer recipe is and they’re trying to get the plant grown to its peak ripeness. And then you get to a point where they cut it down and there is no best practices around that aspect. They’re really just hanging the plant in a room with a dehumidifier. There’s a little bit more sophistication in some of the bigger companies they’ve hired HVAC companies to you know be able to control the relative humidity but again it’s not an intelligent drying system.

So our view really is that you know drying needs to be standardized and automated and then certainly curing is not drying. Curing is the stage after drying that we found that anywhere from two to six weeks you will see an increase in cannabinoid content if the product is cured properly. So it’s valuable time spent. So your infrastructure really needs to have controls for the curing side of things as well in a bio-secure way. And yeah and then it goes right on down the line into processing which also needs to be controlled.

Matthew: So what you’re saying is Matt that you get a more express cannabinoid profile or THC content from getting the drying and curing just right?

Matt: Yes we’ve actually seen the THC level go up.

Matthew: Really. And what do you attribute that to, just the removal of the hydration or what other variables there?

Matt: You know I don’t really know the scientific answer to it, but there’s something going on inside the plant as it’s breaking down. It’s processing more cannabinoids into the trichomes.

Matthew: What are some of the mistakes you see people make when they’re going through the drying and curing process that are perfectly common?

Matt: The biggest mistake is not batch drying. Right so companies are adding more wet material to a room that’s partially dry. That’s a problem. Then not having any consistency, that contributes to not having consistency to the drying process but certainly you know not having a standardized drying process in terms of we start at this humidity and end at this humidity. And the proper air circulation throughout the chamber to get evenness of drying. What you have is you have a situation where most companies are hanging product in there and going and doing the snap test where you take a stem and you snap it and then when they find that it’s dry, they move it on into processing. And when it gets to processing the plant matter actually isn’t all homogenous and there has to be a homogenization stage as well, and some companies are even still putting the product in turkey bags and closing the turkey bags allowing the product to sweat and then burping out the moisture that was locked up in the stem.

So there’s a lot of problems there. You know you can have mold problems in the drying process. You can have yeast buildup in your drying rooms. We’ve seen companies with a lot of throughput that have this chronic issue with yeast in their drying rooms. And then certainly the bio-security issue. You know we now are seeing lab testing being required in several states. And when you have folks that are going back and checking the product all the time you’re opening the door and you’re allowing back in the potential for contamination, employee error. If you’ve automated your production side of things. You’ve automated your watering, your CO2, your HVAC, your lighting. Why have you not automated your drying side of things, right, because that’s the most vulnerable really part of the process is getting that plant from harvest to shelf stability.

Matthew: I guess because you know in a lot of people’s mind it probably seems like it’s idiot proof. Like oh we’ve harvested. Now let’s just hang it up on this wire and wait a few weeks, but I see what you’re saying. There’s a lot of ways of introducing potential problems.

Matt: Let me give you an example too in terms of if you’re a company that has a significant amount of throughput, you know a ton, several tons a year which a lot of our clients are at that level and higher. Just simply the precision of getting the finished product into the final packaging at the right moisture content. So if you have a product that’s over dry, that’s lost weight, that’s lost money. If you have a product that’s not dry enough, that’s a higher water activity level which can contribute to mold growth and recall issues. So the precision around drying is quite critical, but again we’ve been winging it and part of the reason we’ve been able to get by with winging it in this industry for so long is because we’re not at the economy of scale yet, but we do have companies that are calling us saying hey we see you guys make drying machines. We’ve got a problem Houston. So it’s starting to happen.

Matthew: Yeah a couple of tons, that’s outrageous. Jay for example with an 80,000 square foot cultivation facility that you were talking about, how much space do you think you would dedicate, ballpark, for the drying and curing process?

Jay: First of all I want to compliment Matt Cohen’s incredibly detailed and accurate information on drying and curing. No, I mean that sincerely. Part of the issue right now is that there’s a lot of complacency in the industry. I still have some of my people when they were going out of the dispensary, they will come back with some bud that’s wet. It hasn’t been dried properly let alone cured properly. It’s a huge issue. But to answer your question about our new facility we don’t have the entire processing, call it the head house, call it what you will, program designed yet, but it’s clearly going to be in the thousands of square feet. You know another big hole in this industry right now is how to efficiently process this plant on a large scale.

So we’ve pulled in some expertise from materials handling, workflow automation and workflow process consultants to help us design this process from taking the plants from our greenhouse, you know, through the drying process, curing, final packaging, conversion to oil because on an efficient level it hasn’t been done yet in the industry. So it’s a project that we’re undertaking and if you ask me the question in nine months, Matt, I might have an intelligent answer for you.

Matthew: You know it’s so unbelievable because we think in terms of growing and growing. It’s kind of offense and defense you know. I need square foot, I need lights, I need water, I need growing medium to grow and that’s offense, but defense is you know drying, curing and having a process like you’re talking about thinking, having an intelligent design. It’s such a big piece and I feel like the more I learn about it, the more it’s ignored.

Jay: It’s a huge piece and we see designs come across our table even to this day that you know they’re real heavy on cultivation space, but maybe out of the six or eight central components of drying, curing and packaging they may have one or two of those components in their plan. The rest they haven’t even thought of. What they do have is undersized, but clearly a very important area of this industry that in a lot of ways is still overlooked and I think it’s great that TRiQ is developing equipment and procedures that could be sold that will elevate the industry.

Matthew: Now Matt recently in Colorado we saw some cultivators getting into trouble for using Eagle 20. Can you tell us what that is and give us some suggestions as to what alternatives may be out there to deal with pests that are less toxic or harmful?

Matt: Absolutely. Yeah Eagle 20 is a fungicide and most companies are using it to deal with powdery mildew which is systemic in several of the clones that are in the trade. The mold actually lives inside the plant. So everybody has this issue to deal with. And Eagle 20 is a systemic similar to Avid that’s used for spider mites. It’s because just you know that’s what people use and it’s actually quite absurd because it’s not meant for food crops. This is a floriculture type of product, and floriculture you know you don’t eat flowers. You don’t smoke flowers right. So these products are not made for consumption.

And a lot of growers got into this business, they really didn’t come from the horticulture side so they’re not schooled that way. So they really just kind of learn from the guy they learn from and using those types of tricks of the trade, and then they scaled and became successful and the bottlenecks grew and the implementation of these systemic became a requirement for them to succeed and we’ve looked at facilities where there really was no bio-security considered in the design. You know you got harvested plants being dragged through mother rooms, you know, which is where your genetic stock is. No wonder they have to use Eagle 20 and Avid. Our philosophy is obviously the product lifecycle should be somewhat of a circular and nothing should go back upstream in terms of bio-security.

So the biggest problem really is in best management practices of the crop, a lot of the bugs and the funguses come from the clone trade and there’s not a lot of folks out there that are really stabilizing their genetics before they go into production. But really the solution here is really just implementing the proper best practices at the beginning getting a clean genetic stock and the right integrated pest management program you should not need chemicals that powerful. In my 15 plus years of growing I’ve never had to use anything stronger than pyrethrin. So I don’t know. It’ really is a matter of just you’re utilizing the best practices with clean stock.

Matthew: So going back to something you said there Matt, having a circular workflow. You’re talking about having your mother plants in a room by themselves, a clone room then a separate room where those plants or the clones can go into a veg room but nothing from the veg room goes back to the clone room. And then the plants from the veg room go into a flower room and they go from the flower room to cure and dry in a separate room and then perhaps process is the last step or am I missing anything in there?

Matt: Yeah I mean if you consider the facility as like a box and on the bottom left corner of the box you have raw materials entering, soils being sterilized. It’s coming in. And then you have propagation happening, and then it’s moving you know up the box on the left side into the vegative area and then it’s moving right over to the flowering area and then it’s moving back down to the right, bottom right corner into the drying and curing, processing and then shipping out through distribution. It’s actually more of a U than a circle because it doesn’t actually complete the loop. Once the product finishes its life cycle it leaves the building. That way no air ever flows backwards. No workflow ever flows backwards. Everything is moving towards the end goal so that if you have a contaminated issue in row 17 of your greenhouse, it’s not going to make it back up to the vegative house. It’s not even going to make it over to rows 13 and 14. Everything has got to come down stream. So the way air is managed and the way work is managed. So the facilities need to be designed in a way not only that the environmental controls can control the airflow but that the way it’s laid out that the workers don’t need to go to the bathroom and bring contamination to the wrong area of the facility or go to lunch. You know all those things need to be considered.

Matthew: Great points. Jay what are your thoughts on using fungicides like Eagle 20? I mean I’m sure you don’t recommend it but there’s a lot of growers that find themselves in a pinch. You see their temptation. They have to make payroll and they find themselves with a fungus or some problem and they pull our Eagle 20 and say just this once or I’ll just use it lightly and you can see how this happened. But there was a big big slap down that happened here recently in Colorado and just wondering your thoughts around it.

Jay: Sure well I can tell you this that in the earlier days of the industry we used to use Eagle 20, four, five, six years ago. We would use it only in the vegetative state thinking that maybe that was okay. One thing that I remember vividly is even being out of the flowering room, you know, being in more of the front office, but being in the facility when this stuff is being sprayed it affected me. It’s a poison. If you look at what Eagle 20 is recommended for, it’s recommended for use on ornamental shrubs. It’s recommended for use on golf courses. As Matt Cohen said, it’s not even allowed to be used on food let alone a flowering plant that we’re potentially grinding up and smoking or vaporizing. So it’s a poison. It should not be used.

If you talk to a degreed horticulturalist or anybody with a plant sciences background, they’re going to have other alternatives for effectively running a facility and dealing with funguses, molds and mildews. And you mentioned Denver that there was. There was a big crackdown. I think it was definitely in line and it was called for, but about a month or two after that crackdown I was in a dispensary. One of the larger operations in Denver, the bud tender did not know who I was. I asked him if his business was affected by the Eagle 20 issue and this guy went on to completely downplay any issues or potential dangers moral or otherwise with spraying Eagle 20 on flowering plants. It was shocking. Clearly I left that dispensary without buying any dried flower.

But to both of your points it is. It’s a leftover issue that has to do with a lot of folks that just don’t have that plant science background. They use Eagle 20 as a crutch and Matt you’re absolutely right. Somebody has a powdery mildew outbreak two weeks before harvest are they going to do the right thing and take that harvest down or not use it. Take it to the dump, whatever or are they going to spray Eagle 20 on it so that they can recoup the investment and make payroll. Unfortunately many times it’s the latter and the people that suffer are the patients.

Matthew: Yes. Hopefully there will be technologies available. I know there’s a bunch being worked on now where you can test your cannabis right on the spot with handheld devices. I think that will be a huge change. Matt looking ahead to the future of technology, what gets you most excited about things coming down the road in terms of what’s going to be able to be done and what the Dutch are doing?

Matt: Well a lot of it has already been done with the tomatoes and peppers and things like that and really it’s a matter of applying some of the existing technologies or tailoring or slightly innovating some of those technologies and applying them to cannabis. For me it’s the big picture of the business intelligence. You know if you have a system, a control system that controls the entire product life cycle from propagation all the way through bar coded product that is gathering all of the data for you to analyze you can really understand what inputs create what outputs. And up until now our whole industry has been, it’s a lot of word of mouth and a lot of anecdotal, there’s not a lot of science behind it. And I really predict that in the future you’re not going to see indoor, number one and number two most cultivation will be in these high tech facilities because if it makes sense for tomatoes it certainly makes sense for cannabis but I’m really really interested in learning from the data that we’re going to gather with business intelligence systems that are going into these newer facilities.

Matthew: So you’re talking about sensors and things feeding back to some central software and giving insights about what’s going on in your grow, that type of thing?

Matt: Exactly. Just gathering you know, all the bits of data that you possibly can, even from equipment performance to you know so you might find out somebody on our team tried to come up with an example. When I was at a speaking event and you know there might be a demand in the market one day for a trichome with a blue hue. So it has this blue hue to it. Who knows, maybe it’s Costco Kirkland brand that wants this blue hue. Well somehow we produced it. How did we produce it? How can we recreate it? All that data that we can crunch from gathering all this intelligence in these business intelligence systems is how we’re going to take the industry forward. That’s what’s happened with tomatoes. That’s how the industry has gotten so sophisticated and the yields have gone way up.

Matthew: Matt do you think it’s worth going to someplace like Holland to see first and what’s going on there or are we mirroring their technology real time here in the states. Do they have a lead? What do you think?

Matt: It’s a really interesting point, you know we have companies that will call up that will be interested in getting a bid from us on our greenhouses and we don’t really bid. You’re coming to us to engineer and design you a customer facility specific for the widgets that you plan to make, the throughput you plan to create them at. And they will say hey can we go see one of these things and at this time we’re in the construction phases of all the first of these kind of facilities where we’ve taken Dutch technology and our cannabis knowhow and merged them into these cannabis production facilities. And they’ll say well can we see something else and you can. You can go see high tech tomato houses that’s completely robotic, algae production facilities. There’s a lot of stuff out there, but if you’re trying to get in the cannabis industry, you really need somebody to digest all that for you which really is what made the niche for us.

Matthew: Jay when you look ahead into the future in terms of cultivation apart from the greenhouses we’ve talked about so far, is there anything else that excites you?

Jay: Was that directed to me or Matt?

Matthew: You Jay.

Jay: Well in the next ten years I think we’re going to see professional, efficient facilities, economies of scale, but I think the hodgepodge of a wide collection of varying growing methods and all these different indoor grows that are inefficient that are dirty. I think we’re going to see a lot of those go away. I think from what I understand in talking to horticulturalists there are maybe three or four accepted methods of cultivation when it comes to tomatoes. The number I’ve heard is maybe three for cucumbers and another I don’t know three or four methods for growing peppers. With cannabis if you talk to 100 different cultivators you’re going to come up with 100 different ways to cultivate the plant.

Clearly the industry is grossly lacking in the acceptance of standard practices. I think we’re going to see those standard practices develop and again I think we’re going to see larger, professional, efficient operations that could manufacture cannabis products for a much better price point than the products that are available right now.

Matthew: In closing Matt can you tell listeners where they can learn more about TRiQ and then Jay can you tell listeners where they can learn more about CannaAdvisors?

Matt: Yeah thanks for having us Matt. TRiQ’s website is www.triqsystems.com. You can check us out there. You can also give a call to our engineering team and discuss any of the problems that you guys might have. We not only do greenhouses equipment and supplies, we also have a full service engineering team that can take a look at whatever problem you do have and come up with a solution.

Matthew: Great. And Jay.

Jay: Well our website is www.thinkcanna.com, CannaAdvisors.

Matthew: Jay and Matt thanks so much for being on CannaInsider today I really appreciate you guys coming on and talking about technology and greenhouses. This is such an exciting time and we will have you back on in a couple of years and we can talk about how much it’s changed.

Matt: Won’t that be fun.

Matthew: Well thanks Jay, thanks Matt.

Matt: Thank you.

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

Steve DeAngelo – The Cannabis Manifesto

Steve DeAngelo

Max Simon of Green Flower Media introduces Steve DeAngelo and his new book, The Cannabis Manifesto. Steve and his book are poised to change the national conversation around cannabis.

Learn more: http://cannabismanifestobook.com
Visit this site to get free bonuses that are available for a limited time.

Key Takeaways:
[1:31] – Max’s background
[2:38] – Max talks about Steve DeAngelo
[3:51] – Max talks about his documentary about Steve DeAngelo
[5:59] – Max talks about Steve’s book, The Cannabis Manifesto
[6:45] – Where can people find The Cannabis Manifesto
[8:26] – Steve DeAngelo’s interview

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@cannainsider.com to get started. Now here’s your program. Today I am pleased to welcome Max Simon to CannaInsider to discuss Steve DeAngelo and his new book The Cannabis Manifesto. Max, welcome to CannaInsider.

Max: Thanks Matt.

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

Max: I’m in beautiful Ojai, California which is right in between Santa Barbara and Los Angeles.

Matthew: Oh great. And what’s your background? How did you get involved in Steve’s book and the cannabis industry?

Max: Well I’m the CEO of a company called Green Flower Media, and we produce really high quality cannabis content. And actually Steve DeAngelo saw one of our early Coming Out Green campaigns and came to us and said you know I really love what you guys produce, and I’ve got this book coming out. And it just so happens that I have about a decade of experience doing product launches. I used to run Deepak Chopra’s products business. And even though it wasn’t really part of our kind of business model, when I started to get to know Steve more and I read the book itself it was so clear and so evident that this book needed to be read by millions of people that we decided to help out. And so we kind of came on as partners to bring this book to the world in a much bigger way.

Matthew: The majority of listeners will be familiar with Steve. I mean he’s a legend in the industry and activism, but for the new listeners that aren’t really familiar with who Steve is and his message, can you give us a summary?

Max: He’s best known for being the founder and executive director of Harborside Health Center which is the largest medical marijuana dispensary in the world, in Oakland, California and they have another one in San Jose and another one coming out soon. He’s quickly expanding. And Haborside Health Center is known as kind of the gold standard for how these dispensaries should be run from every aspect; from the quality of the cannabis to how they are following guidelines and regulations to how they treat their staff to the environment itself. So he’s known within the industry for that. Publically most people know him as the star of Weed Wars which was on the Discovery Channel. Where it was a miniseries. That’s how I found out about him years ago is through that show.

Matthew: And you have a mini-documentary that is out now about Steve that I saw on your website, and I have to say it was really heartfelt and touching and I feel like I know Steve more after watching that. And there’s a couple of little tidbits in there that I didn’t know about his background that was really interesting. Can you tell us about that a little bit?

Max: Well I think you know his rap sheet of credibility is pretty impressive. I mean everybody knows about Harborside and about Steep Hill Laboratories. He cofounded that, and the cofounder of ArcView which I know most people here on this show are familiar with. But he’s also been a pretty devoted activist for so much of his life whether it was in Yippies which was really kind of an anti-establishment group from the D.C. Smoke-ins where he was organizing some of the very first cannabis protests to really going head-to-head against the federal government in so many different ways.

And you know what a lot of people don’t know is Steve (4.33 unclear) is extraordinarily humble and really sincere man. I mean I’ve been almost surprised by how genuine he is with this mission. But a lot of people also don’t realize how much he’s had to give up by being so devoted to cannabis his whole life. It’s a very exciting time right now, but it’s mostly been a very scary and frustrating time and so he never had kids because of his cannabis activism. You know he’s really had to be constantly almost scared of what he owns in fear that it’s going to be seized by the federal government, and yet his mission has been so pure because he believes so deeply in cannabis and what it can bring to the world.

Matthew: We’re going to play an interview with Steve in a minute here, but before we do can you tell us what’s important to know about the book The Cannabis Manifesto?

Max: I think the most important thing is that this book has the ability to legitimize the value and the benefit of cannabis on a global level. And so whether you are wanting to become more well-educated yourself about the benefits of cannabis or how to use it responsibly or all the ways you can use or whether you’re trying to move agendas forward and legislation or for lobbying purposes or whether you want to become more involved in the industry and understand the opportunities and the ways you can get involved, this book has a very comprehensive approach to those different issues articulated in a more thorough and kind of clearer way than I think has ever been published in a book before.

Matthew: One thing that really I find remarkable about Steve is that he has the ability to connect with every generation and demographic. You know to my mom to a younger cousin to somebody from a totally different environment and culture and that is a huge gift. Where can we find this book? Is it available on Amazon, online, where can people get it?

Max: So my company is producing this campaign right now to get the book on the New York Times Bestseller list which is probably worth mentioning because if we can do that, The Cannabis Manifesto will literally become the first cannabis book to ever reach the New York Times Bestseller list which would be not only a huge accomplishment for the industry but of course a really nice pat on the back for Steve. And right now the book came out and if you go to www.cannabismanifestobook.com you’ll see a list of really amazing bonuses that are only available for a limited time right now that you get for free when you actually order your copy through the website. And so the website will tell you to go get it through Amazon or Barnes and Nobel, but to come back and get your bonuses. So go to www.cannabismanifestobook.com right now and you’ll see all the amazing things that you get for ordering the book during this window because if you do it will help us get the book on the Bestseller list.

Matthew: Yeah and I know a little bit about the dynamics, the Bestseller list, but one thing that people can do if they know they have an interest in Steve or cannabis is to consider purchasing a book for a friend or family member or multiple books. That really helps out a lot. Steve is kind of the Obi Wan Kenobi of our industry, and I really want to do everything possible to support him in his efforts in decriminalizing and legalizing this plant, this amazing plant. So Max, thanks so much for coming on the show today and CannaInsiders here is your interview with Steve DeAngelo.

The Cannabis Extraction and Concentrates Wizard – Bryce Berryessa

bryce berryessa

In this episode Matthew Kind welcomes Bryce Berryessa to CannaInsider. Bryce is an extraction wizard and he opens up the kimono and shares the most intimate and granular details about how to create winning edibles and concentrates.

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

Key Takeaways:
[2:20] – Bryce talks about Freedom Enterprises and what they do
[2:45] – Bryce’s brands, Hashman Infused & Waxman Concentrates
[5:05] – Bryce discusses pesticide testing
[7:38] – Is the drought in California affecting cannabis cultivators
[8:52] – Bryce compares extraction technologies
[11:58] – Bryce explains paraffins
[12:51] – Bryce’s opinion on vaporizers
[14:27] – Bryce discusses fractionation
[16:51] – Bryce talks about terpenes and terpenoids
[21:49] – Positives for using butane or propane in extraction
[25:29] – The difference between extracting from leaves and buds
[27:55] – California—Flower or Concentrates
[29:38] – Bryce talks about his chocolate bar made from pop rocks
[34:20] – Bryce’s contact details

 

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.

Matthew: We continue to witness consumer preferences pivot from cannabis flower to infused products, concentrates and edibles. This change in cannabis consumer behavior is happening rapidly and it requires that we learn a whole new vocabulary of terms and ideas. To help us sort through all this going on in the extraction and concentrate market is Bryce Berryessa. Welcome to CannaInsider Bryce.

Bryce: Thanks for having me.

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

Bryce: Yeah we’re located out of Santa Cruz, California. So about 30 minutes south of San Jose and about a little bit over an hour south of Oakland and San Francisco City.

Matthew: Very nice there with the boardwalk. Little Utopian city there. Very nice.

Bryce: Yes, it’s a beautiful place to be and you know it’s been such a integral part of the cannabis movement. The first cooperative and collective ever founded and organized is called WAMM, The Women’s/Men’s Alliance for Medical Marijuana and they sprouted up so to speak in Santa Cruz and are still thriving and serving patients here today.

Matthew: Nice. Now what is the name of your company and what do you do inside of the cannabis world Bryce?

Bryce: Yeah so our company is called Freedom Enterprises and we essentially build and create brands in the medical cannabis marketplace and products with those brands. So our two flagship brands are Hashman Infused and Waxman Concentrates.

Matthew: Okay. Can you tell us more about Hashman Infused and Waxman Concentrates?
Bryce: So our flagship brands, Hashman Infused and Waxman Concentrates kind of started back in 2012 with the intention of creating lab tested, extremely safe and high quality products for the medical patient in California. So I come from a dispensary operator background and what we noticed is that there was a lot of patients that were producing products with good intentions to provide to dispensaries throughout the state, but because there’s no regulation or regulatory framework in California. Many of them were doing things in their home kitchens without any basic understanding of food safety or proper food storage. A lot of the concentrate producers were producing concentrates without a good understanding of appropriate inputs and how to use safe ETL listed equipment.

And so our vision was to look at the models in other states such as California or such as Colorado, Nevada, Washington and to kind of self-regulate and also look to other industries to see what are the safety requirements for food processing and manufacturing for example. So that intention kind of helped grow our two brands into what they are today and you know now we’re really proud to be one of the largest edibles and concentrate companies in California. We’re third party certified through SC Labs. We test all of our pesticides or all of our trim for pesticides and all of our oils for residual solvents just to ensure that safety is our number one priority.

So we do, under the Hashman Infused line, chocolate bars, capsules, tinctures. We have a coffee. We’re about ready to release a sublingual breath spray that’s really neat. The effects of that can be felt in about 15 to 20 minutes. And then for our Waxman line we do a variety of CO2 oils, waxes and are getting ready to release vaporizer cartridge and pen in the next couple of months.

Matthew: Is there any easy way to see if flower or leaves have pesticides on them because I know there’s a lot of people out there that want to know hey am I having some suboptimal experiences with cannabis because of pesticides or some sort of residue that’s on the flower or plant? What are your thoughts around that?

Bryce: Yeah I mean it’s a very loaded question, even in states that have regulation because it’s federally illegal that EPA has been hesitant to come out with pesticide guidelines for cannabis use. So there’s a lot of hot conversation and topics around it. For example there’s a product that people use for mildew and miticide called Eagle 20, and supposedly it’s pretty safe and it’s systemic, but if you use it in the proper application you know with food then you can use on a food crop, but when you enter it into cannabis, which you’re then going to inhale which is then absorbed through the lungs it creates a whole different set of questions and potential health hazards and effects.

And so what we’ve found the best way is to work with the patient or work with the farmers so they’ve adopted best practices. We know where we’re getting our medicine from. We go and visit the farms and on top of that even though we’re still working with the farmers, we test. Testing for pesticides is also not a great science yet because to do a full plethora of pesticides it’s extremely expensive. It’s going to take weeks to calibrate your machine and cost thousands of dollars. And so most places in California that do allow for pesticide testing are only testing for the 40 most common pesticides. And as most consumers are aware, there’s thousands of different pesticides now.

So I think the key is to just really work with or really purchase medicine from a reputable dispensary that works with their farmers or purchase medicine from companies that really are aware of how they are sourcing their material because I think that especially in California if patients were aware how much pesticides were used in producing cannabis and how prolific it is, they would think twice sometimes before wanting to consume. So it’s definitely that deserves a lot more conversation, and it will be nice as we get further down the road with federal regulation that they actually provide us with some guidelines from a cultivation standpoint as to what pesticides are safe and what to use.

And the last thing on that topic, the California State Water Board did just release recommendations for integrated pest management which have some good advice and some recommendations on what to use. And so that’s the first governmental agency in the state that actually has decided to tackle cannabis. And so they’ve did it with water use and with pesticides a few months ago.

Matthew: What about the drought issues in California? Is that affecting the cannabis cultivators at all?

Bryce: Yeah I think so. You know I think it’s affecting anybody that’s doing agriculture. So what we’ve noticed in the state is that it’s dry. So there’s reservoirs that were full three years ago that are virtually empty now. And there’s not regulation per se for ground use of well water and ground water. And so a lot of Big Ag is sucking up prolific amounts of water and we’re seeing the aquifers that are subterranean go empty and it’s so bad that the land is actually shifting. So parts of California are sinking because we’re removing so much of the ground water.

You know I think that the most important thing is that to try to encourage people to cultivate sustainably and to maximize their water usage to ensure they’re using as little as possible. One way that a lot of farmers that are pretty savvy out here do is they recycle their water from their air conditioner and their dehumidification systems if they’re growing in a greenhouse or indoors. And then they actually reuse that water to irrigate rather than just letting it go down the drain.

Matthew: Good idea. Now let’s back up a little bit to extraction technologies. Can you walk us through the different types of extraction technologies that exist out there?

Bryce: Yeah there’s many, many, many. So you know the most standard and longest known method for extracting cannabis is with a dry sieve. So when you hear people talk about Moroccan Hash or Kief you essentially use a fine screen and pound buds or trim on that screen and then the resin glands fall through it and you end up with a dried concentrated cannabis. You know after that Bubble Hash got extremely popular where you essentially are submerging cannabis material in extremely cold water and getting the trichome heads to break off and then running it through a screening process much the same way you do with a dry sieve to remove it.

And you know as technologies developed and it’s become more common and accepted they’ve taken technologies from other industries, like the pharmaceutical and food industries to do hydrocarbon extractions and CO2 extractions. And those are probably the most popular extracted forms of cannabis right now is hydrocarbon such as butane or propane or CO2 oils. And generally what they’ll do is they take the hydrocarbon and a machine that is stuffed with your cannabis trim or your cannabis flowers and they utilize it as a solvent under low pressure to essentially push it through screens and filters and collect all of the oils, the waxes and the paraffin’s, separate it from the plant material and then you’ll take that and go through a post-processing process that allows all of those hydrocarbons to purge out of it. Another thing that people like to do, just take it one step further and take that plant matter, the waxes, the oils, the paraffins and winterize it. Meaning they essentially put it with ethanol or another solvent and drop it to subzero temperatures and then that will separate out all of the waxes and the paraffins. So the end product is a really pure, highly refined oil.

With CO2 you don’t necessarily need to go through some of the post processing because CO2 is not a flammable material. CO2 systems are ran at much much higher pressure and are generally much more expensive to purchase than hydrocarbon equipment. And so you know CO2 is generally regarded as safer especially in non-regulated environments like California. So our company we only extract with CO2, and we do a super fluid, critical CO2 extraction which is high pressures over a long course of time and we’re able to fractionate the material so it actually collects into three different vessels. So we have oils in one, our waxes and our paraffins going to another and then terpenes and water go into the third.

Matthew: Wow, you just dropped a knowledge bomb on us so let’s just back up a little bit.

Bryce: Absolutely.

Matthew: So fractionating is, you’re saying you’re separating the waxes and the paraffins. People understand what waxes are, but what’s a paraffin exactly?

Bryce: Paraffin is just another waxy substance.

Matthew: Different viscosity than a wax?

Bryce: It’s a part of the plant that you would want to not necessarily inhale. But it is also part of the plant that is able to make different type of concentrates. So a lot of the things that you see like wax would usually have waxes and paraffins in it or they also call it earwax, butter, elves bread are kind of other textures for cannabis concentrate. All of those contain the plant waxes to some degree. Whereas when you have a shatter or oftentimes most of the oils that you find in vaporizer pens the waxes have been stripped away from that. So it’s just the oil in those.

Matthew: How do you feel about vaporizer pens in general? Do you feel like those have quality cartridges are going around the popular ones, or do you feel like they’re suboptimal in some ways?

Bryce: You know I think it’s like any consumer product. You’re going to have something that is a low quality and something that’s extremely high quality and there’s a lot of companies that are just pumping out as much as they can to feed the demand at a low price. And then you have companies that are really focused on having the best oil possible for their patients. So it’s nice that one unique thing about our industry that I think is going to change over time, but I’m really grateful that it’s kind of the culture right now is that it’s been in the dark and in the shadows and there’s so much cooperation amongst companies and amongst individuals and so much information sharing that it’s almost open source cannabis so to speak.

So if you go onto Instagram or Facebook or MassRoots there’s a lot of knowledge sharing going on to push the community forward as a whole and I think because of that you’re seeing where a few years ago there was more dangerous concentrates and less refined oils, less quality. Now that’s really changing. The bar is being raised and people are working together to create the best products possible.

Matthew: So let’s go to fractionating a little bit because that’s an interesting concept I don’ t think people hear enough about. So you’re saying when you’re using your super critical CO2 machine you have different vessels and the paraffins and waxes and the oils all go into their proper vessel. How does that happen? How does that fractionation process occur so those things can be routed to their proper vessel? Maybe is there a certain temperature, a certain pressure? How does that work?

Bryce: Yeah there’s a couple of ways to do it. And I think the easiest way to start is kind of just give a basic definition of fractionation. All fractionation is is a separation process in which a certain quantity of a mixture such as a gas, a solid or a liquid is divided during a phase transition into a number of smaller quantities which is called fractions. So if we have a vat of oil, we can run it through filters at different pressure to create or to separate the different elements of that oil. So when you’re doing a super fluid critical extraction you essentially extract all of the oil from the vessel where the cannabis is at one time, and then that will move through a liner or column. And then there’s different pressure settings for the different vessels. So I know that the molecules for an oil is going to be able to move through a filter that’s different in size than the molecule for a wax. Same thing with the terpenes. Those are generally the most volatile and small molecules.

So by playing with the pressure settings of your extraction it’s going to collect different elements of that oil that you started with. Another form of extraction that’s becoming incredibly popular is known as fractional distillation. And so essentially a lot of the clear product that you see out there is created through fractional distillation. What they do with that is they use different glassware and columns that are extremely high temperatures to take the oil and evaporate it. And as it evaporates it condenses and there’s different temperatures that will evaporate different parts. So the waxes are going to evaporate at one temperature. They go, they condense, then they go through a column and then they collect into another glass vessel. Then you can switch the temperature to get the oils or to get the terpenes. It’s really hard to get terpenes in fractional distillation because they’re so volatile and have such a low boiling point that most of the clear product you see out there it doesn’t have the smell or the pungent aroma that would be associated with a cannabis extract.

Matthew: Okay very helpful. What about terpenes and terpenoids? Recently at a ArcView Group event Steve D’Angelo was on stage and he said here’s a hint of what the future holds for the cannabis industry and he was saying a little bit about terpenes and terpenoids and how that’s going to become such a big element. What was he talking about there?

Bryce: Yeah terpenes are amazing. So they’re a large and diverse class of organic compounds that are produced by many different plants in nature so not just cannabis. So as cannabis is a medicine gains legitimacy there’s a lot of people out there in the scientific community that believe that part of the effectiveness of cannabis lies within the different terpene profiles and the mixture of these compounds. It will be neat to see over the course of the years as they’re studied just find out what is beneficial for what element. And so the general consensus is Bubba Kush for example is an indica and people say well indica is really good for pain relief, but for some reason Bubba Kush is really good for pain relief. More so than a lot of other indicas.

So the general belief is that it’s because of the unique terpene profile. It creates a synergistic effect that allows those components to come in and work with the body and work with the cannabinoid receptors to mitigate some of that pain. So terpenes some of the most common are limonene that are found in cannabis. It’s also found in citrus. Pinene is found in pine trees. It’s also found in cannabis. There’s some terpenes that are really common in black pepper and lemon grass that when you actually add to CBD, cannabidiol, they increase the effectiveness of the CBD and allow more of that to bond with the brain. So working in conjunction with these terpenes I think we’re going to be able to see better deliver mechanisms for effectiveness. So if I have an infused product that I’m eating that has certain terpenes in it it’s going to allow my body to better absorb that so I get better effects with less of a dosage needed. You know terpenes are also fun because they are kind of what make cannabis unique. So the difference between OG Kush and Bubble Gum is terpenes. Like that’s what’s going to give it its unique characteristic, its aroma, its flavor and a lot of those essences.

Matthew: So you touched on aroma there. Is this already happening in the marketplace where cannabis is extracted into an oil or a wax and then terpenes are added to modify the profile or flavor of the product to make it more desirable for an end user?

Bryce: Absolutely. And it’s actually kind of a controversial topic in the cannabis community. Some people are purists and are really adamantly opposed to that concept, and other people really enjoy it. So you know I will give you an example. There’s a lot of additives to food that we eat that wouldn’t necessarily be in the food, but because science and palate has dictated that it might be a good thing there’s kind of a consumer demand for it. One of the products that’s most prolific in the cannabis world that adds terpenes into it is this clear product that I talk about which is a highly refined distilled cannabis oil. Because when you’re done with that process it smells very soft and kind of not very plant like. It’s got almost a slight burn aroma to it. So a lot of companies try to mask that and increase the desirability by adding natural flavors from the food world or natural terpenes found in the plant world. Where we’re getting even more sophisticated now is now thanks to fractionation and the (20.22 audio cuts).

Matthew: Oh I lost you Bryce.

Bryce: … and then they’re able to remove the water from the terpenes and actually put cannabis terpenes back into their product. There’s very few companies doing it. We’re working on it right now and I know there’s a couple of companies in Colorado that are also working on that. But that’s going to be something that’s going to be really exciting to hit the marketplace is to have cannabis-specific terpenes then reintroduced into these vaporizer oils and these smokable products that are strain specific. Trying to mimic a Sour Diesel profile or an OG Kush profile by using terpenes from the plant world that aren’t extracted from those strains has proven to be extremely difficult and inaccurate. So that’s why you don’t really see a good fake, so to speak, OG Kush vaporizer oil because big big companies that are in the perfume and aroma world have been working on this for the last few years to varied limited success. So the key is going to be to actually extract it from the cannabis material and reintroduce it I think moving forward.

Matthew: Now there’s still some people in the cannabis community that prefer butane or propane for extraction purposes. We know that those two things can be explosive which is obviously a big negative, but apart from that what are the positives? What are people looking for when they’re still choosing the butane or propane?

Bryce: Yeah so from just a basic application standpoint generally hydrocarbon extracts are able to better preserve the terpene profile and are a lot easier to produce a variety of texture with less sophisticated lab equipment than it takes for a CO2 concentrate. I think that’s why they’re more prolific. There’s a lot more hydrocarbon extracts on the market than CO2 and some of it is in due part to the ease of being able to utilize hydrocarbons to do extraction. Anyone that can spend five minutes online and go to the hardware store can make a cannabis extraction with butane or propane. I don’t recommend it. It’s not safe and it poses a lot of risks, but I think that’s why in general they’re so popular is because just the ease of being able to do it from a do-it-yourself standpoint has been well documented and is fairly easy to do.

CO2 equipment generally comes from the pharmaceutical industry. So to purchase a super fluid critical CO2 extractor, a very small bench top hobby system is going to enter at over $20,000. To utilize a machine like we do in my company which is a Waters, you’re looking at anywhere from $150,000 on up. Some of the Eden Labs machines are upwards of $300,000. So you know the barrier to entry to be able to facilitate that kind of extraction is much higher than with hydrocarbons. And that’s just the machine. That doesn’t include any of the post processing equipment that you might need such as a rotovate or a scientific freezer that goes to negative 40 degrees Celsius if you’re trying to do winterization. You know fume hoods are extremely expensive. So for hydrocarbon and butane and propane, you know, it’s simple to do, but it’s not simple to do correctly.

So there’s a reason why Colorado and Washington and Nevada allow for those things and allow for that type of extraction. When it’s done with the right equipment that’s ETL certified and people have the right training and it’s done in an explosion proof facility, you know it’s a very safe and effective means of extracting. The danger is posed when people that don’t know what they’re doing and aren’t doing it with the right machinery and the right facility are working with a flammable gas that can ignite at any given time. Another problem with hydrocarbon extractions is that although there’s a lot of pure gas out there that claims to be 99 percent pure butane or 99.5 percent pure propane, there’s other chemical components in those gases that are toxic in the parts per billions. So a very very finite small amount of some of these components that are prevalent in hydrocarbons that are still in the final cannabis concentrated product can be carcinogenic and can actually pose a health risk.

So it’s really important that as the country goes towards regulation and you know the state that I’m in California that we allow for hydrocarbon extraction because it’s a great way to extract cannabis, but we do it in a very regulated way that ensures that the people doing the extraction are going to be safe and ensures that the final product is going to be safe and free from carcinogens because California is a medical state. So people are, and this is a medicine. And oftentimes you want to make sure that the medicine that you’re using isn’t actually going to pose any health risks or cause issues on top of it.

Matthew: Now what’s the difference between extracting from the leaves of the cannabis plant versus the flower or buds?

Bryce: Sure. So you know most extraction is done with the leaves. It’s a byproduct of manicuring the dried flower. The dried flower is probably one of the most popular ways to consume cannabis but it’s also highly valuable. So fewer people use flower than trim. If you do flower for extraction, you generally are going to get a higher yield because there’s more essential oils and trichomes present on the flower than the leaf material. Oftentimes you’re going to get a more robust and higher percentage of terpenes in that final extraction.

There’s some new extraction tech coming out that’s pretty interesting called Live Resin. With that people are actually taking fresh buds before they’re dried and cured and they’re dropping them to below negative 40 degrees Celsius and then they’re running extractions on them that way and it comes out with a really aromatic and very wonderful smelling concentrate. Much higher terpene profiles and some Live Resin than you would see in traditional ways of extracting.

Matthew: What’s happening there at those really low temperatures that accounts for that do you think?

Bryce: Well you want to get the water out of the product that you’re extracting especially with CO2 extraction because the difference between a polar and a non-polar solvent kind of causes tension. So if there’s water present then the CO2 is actually less effective as a solvent. So you’re getting less concentrated product out of it. So by dropping the temperatures of something that has a high moisture content, you’re essentially freeze drying it. And so you’re using subzero temperatures to remove that moisture before you do the extraction. So that’s kind of the principle behind it.

Matthew: That’s interesting. Okay. Now how is California addressing or how are Californians adopting concentrates? Do you feel like flower is still the number one thing or is the market turning? Because definitely in Colorado it’s a major, major pivot to all kinds of concentrates and edibles and infused products and tinctures. It really seems like flowers is really shrinking in popularity. It will always be there, but it just seems the convenience and the ability to dial in what you want with the infused products is changing the landscape a lot. How do you see it in California? Still mostly flower?

Bryce: No I think what you’re finding in Colorado and Washington is being mirrored here. I think a big reason for that is this standardization and the quality control that is starting to happen in the industry. So whether by force in a regulated state or just by the evolution in a state like California, before consumers would walk in and get a brownie and not know that that experience is going to be the same as the brownie they had the day or the week before. But now there’s so many companies that actually do accurate labeling and are putting the same trim or the same source material into their products that consumers and patients can now have a chocolate bar, none month, eight months later, go to that company and have the same chocolate and have the same effect.

And I think that you know that regulation and that standardization is really pushing the popularity of edible forward and same thing with concentrates. You know concentrates are discreet. It’s kind of like having a glass of wine. If you’re hitting it from a vaporizer pen, you can pretty much medicate almost anywhere. It takes a lot of the ritual out of it and it becomes more just easy technology to use to medicate. And I think because of that you know that’s a big reason why they’re gaining in popularity. You can also inhale a much smaller amount of concentrate to get a psychoactive effect as opposed to flowers. When they’re done properly they’re generally regarded as more safe because you don’t have a lot of the combustible materials that’s found in flowers that are in concentrates.

Matthew: Great points. Now you make an interesting chocolate bar on 420. Can you tell us a little bit about that?

Bryce: Yeah we have a 420 Pop Rock bar and it actually is kind of a fun story. My partner and I were visiting a food scientist in a little town outside of San Francisco a few years ago. And she was working on developing our nutrition facts for some of our products and as we were leaving she just happened to mention to us that she had three pounds of Pop Rocks in the trunk of her car. She said I just got back from this food convention and I have all these Pop Rocks, can you guys do anything with them and we said yeah we’ll take them. So over the course of us eating lunch we were brainstorming on what to do with this abundance of Pop Rocks and you know we decided that for April, which is 4/20, you know the international unofficial stoner holiday, we would do a limited edition chocolate bar that had Pop Rocks in it and because it was 4/20, we were going to do a 420 mg chocolate bar.

That at the time was unheard of. There has sense been a race to the top to see who can put the most cannabis in an edible as possible So you now see chocolate bars or brownies that have over 1,000 mg, but a few years ago 420 was a lot. We though you know we were taking a risk. We didn’t think people would want that much, that potent of a bar and it ended up becoming our number one seller. So we made 500 bars for the month of April, and blew through those. And to this day we still keep that. It’s the highest potent product that we offer. It’s the only one that’s more than 200 mg, but people really tend to enjoy it. And for people that medicate heavily you know it’s a really good value, and it’s fun to eat.

Matthew: Yes and for people that are new listeners to CannaInsider typically an adult dose is considered 10mg. So 420 would send you to outer space pretty quickly for most people. Some people could eat that much or consume that much and it’s really not that big of a deal. If they’re a fast metabolizer or a slow metabolizer, there’s a lot of different variables, but just to give you a sense of scale the state of Colorado considers an adult dose 10mg. So that is huge.

Bryce: Yeah and right around that subject it’s also just important to throw out for people that haven’t had a lot of experience that it’s best to always eat edibles with food. It helps metabolize them a little bit better and remember that if you’ve smoked before you’re going that in a few minutes, but an edible can take over an hour before you feel the effects. So start low and go slow.

Matthew: Yes great points. As we get close to 2016 do you think California will pass legislation that will make cannabis recreationally legal?

Bryce: I think it’s unlikely that the state is going to do it or the state legislators, but there’s a couple of initiatives that are gain momentum and I think will be on the ballot for voters to decide that have been submitted by different groups. So there’s a great medical bill being worked on. It still has some flaws, but there’s a lot of traction behind it called SB266 and that would regulate the medical aspect of cannabis in California but we will see what happens with adult use. I’ll be very surprises if there’s not at least one or two options for voters to choose come November of 2016.

Matthew: Do you think a lot of the black market growers can make a transition to you know a legal market growing because it’s still a huge part of the culture in Northern California to have these grows that are not let’s say they’re black market grows. What’s going to happen to those growers do you think?

Bryce: Yeah you know it’s hard to say. I think the only thing that we can hope for in this state is that as regulations come that the barrier to entry is not going to be so high that only the affluent or established corporations are going to be able to participate in the cannabis industry. This is a cottage industry that has thrived in this state for decades, and there’s a lot of good will intention people that want to be able to continue their lifestyle and to continue to provide high quality medicine for their patients. So you know that is a whole is kind of where I hope it’s going to go and as far as the black market goes it’s hard to say. You know hopefully those people will see that it’s a much better transition and a much safer way to live your life to transition into the legal market. You know as long as there’s a pathway to do it, I think you will see a lot of people choose to go down that path in to incorporate and pay their taxes and participate in their communities in a much more formal way than they have in the past.

Matthew: Bryce as we close, how can listeners learn more about your products?

Bryce: Yeah you can check out our websites www.hashmaninfused.net or www.waxmanconcentrates.com. We have a lot of our test results on SE Labs so www.selabs.com. Also you can find a lot of information that’s valuable. We have a ton of great links and resources if people are wanting to educate themselves and try to understand more about concentrate manufacturing and production, medical effectiveness for terpenes. We really want to be a resource where patients can get the knowledge that they need. I can also be emailed at bryceb@freedom-enterprises.biz.

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

Bryce: Yeah Matt thanks for having me. It was a good time.

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