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The Induction Vaporizer That is Revolutionizing Vaping

evoke vaporizer

The Evoke vaporizer from LotoLabs raised over 220K in its Indie Go Go crowdfunding campaign.

The reason for Evoke’s popularity centers around its groundbreaking new technology. LotoLab’s patented Induction allows for an entirely new and improved form of vaping. Listen in as Matthew Kind and Neeraj Bhardwaj (co-founder and CEO) of Loto Labs go over why this vaporizer is capturing the imagination of the cannabis community.

Learn more at: http://evokevape.com/

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Cannabis Price Surprises and Volatility in 2015 and 2016

Jennifer Beck discusses cannabis prices

Jennifer Beck is the co-founder and CEO of CannaBase, a wholesale cannabis marketplace. Jennifer walks us through surprises in wholesale cannabis prices in 2015 and what to expect in 2016. Learn more at: http://www.cannabase.io

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)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(dot)com to get started. Now here’s your program.

There have been surprises in the price of cannabis this year and in how wholesaler cannabis growers and retailers are engaging in the cannabis marketplace. To help us understand the market dynamics I’ve invited Jennifer Beck CEO of CannaBase on CannaInsider today. Welcome back to CannaInsider Jennifer.

Jennifer: Thank you for having me.

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

Jennifer: Denver, Colorado.

Matthew: Okay and you were on the show last and a lot has changed since then, but before we dive into everything that is going on can you remind us what CannaBase does?

Jennifer: Absolutely. CannaBase is a private online wholesale marijuana marketplace that connects licensed business so commercial cultivators and marijuana infused product manufacturers with licensed dispensaries, so licensed retailers. It’s completely free to join and use. Our goal is to create a safe, compliant and transparent open market that allows owners and operators to take control of their cannabis business from seed to sale.

Matthew: Yes, I hear an emphasis on licensed there. How many license holders are currently on the CannaBase platform?

Jennifer: Over 300 entities which represent over 1500 licenses.

Matthew: Can remind us what vertical integration is and why it’s important for listeners to understand how it ended and what we should think about it?

Jennifer: Absolutely. Mandatory vertical integration was in place for both pneumatical and recreational markets until October 2014. At that time vertical integration was no longer mandatory for recreational businesses. It still is for medical product. Basically before this date like medical cultivations and dispensaries, recreational business were required to be vertically integrated. So they had to have both a cultivation and a retailer license and they had to supply 70% of their own product to their retail center or dispensary. This helped keep the market small and manageable in its early years and it decreased chances of product diverting to the black market which is a huge priority for the state and community.

Vertical integration, however, makes the burden of business ownership very high for cannabis business owners. Some would prefer to be specialists and focus on just a retail center or just a cultivation, but not be required to run both which are very different businesses. So this year, since October 2014, we’ve had our wave of first decoupled licenses so business owners that just own a recreational cultivation or just a recreation dispensary. And so far this evolution has seemed to be very healthy for the industry as a whole. Obviously with the end of vertical integration the main concern was that some standalone cultivations would begin over producing and could hurt the supply side of the market if they began undercutting prices at large.

Matthew: Right. Now a lot of people might be thinking why would you not want to have your own dispensary if you cultivate your own cannabis, but there’s a lot of reasons why that might be true. What do you often see or what type of personalities tend to gravitate to maybe just being a cultivator or maybe just having a dispensary or maybe just being a processor. I mean is there anything, any color you can give us around that in terms of why people don’t want to do it all?

Jennifer: Absolutely. These are really three very different businesses, and they’re all changing rapidly as more mainstream money begins to enter the industry. So everything is in a high state of flux, but running a cultivation it can be either indoor or outdoors and we have a lot of people who are very experienced cultivators who have been doing this for many years you know in their basement, and they’re passionate about growing the product. They’re passionate about types of strains. They’re passionate about the grow process. They’re passionate about cultivation and it really is an art. It’s a specialty and it’s an art.

On the flip side running a retail center is an entirely different deal. You’re dealing with how to reach consumer in a largely underground consumer base. You know most people that smoke pot are so pretty quiet about it, at least to their family and friends and wherever they work. So you’re working on how to identify a target market, what kind of strains you should be carrying, how to stay well stocked, predicting the tourist season, when you’re going to need more inventory, managing a retail center it’s a retail job. I mean it’s seven days a week and it has its own set of trials and tribulations. And then if you’re running a marijuana infused product company, you’re manufacturing edibles or you’re producing wax. You’re extracting the THC and the cannabinoids from the trim, the leftover trim of the whole plant and you’re using that to make a variety of consumable goods or product that can be vaporized or eaten.

These are all very different businesses. We tend to see the marijuana infused product companies, the ones that create edibles have the most brand recognition across different retail centers. It’s harder as a cultivator to always get credit for your product when it bought wholesale because a lot of times the retailers want to maintain brand control over the product that they sell. So it depends what’s important to you. If you really want your brand to be recognized and you want to be in a variety of retail centers, I would recommend starting a MIP. If you’re really passionate about selling to consumers, providing patient care, the extension of that old caregiver model, then you need to probably be a retail. But if it’s so important to you exactly what goes into the product and you consider yourself a connoisseur, you’re going to want a different level of control over that cultivation process.

Matthew: Great, that’s very good color. Now diving into Colorado a little bit, what happened to the price of cannabis in 2015. And for people listening you know we are talking about Colorado, but Colorado in a sense is a micro chasm of what we’ll see in other states as they liberalize cannabis laws. So just keep that in perspective. I mean every state its own fiefdom, but Colorado is a good one to look at to see the future. So with that being said, Jenn, what happened to the price of cannabis in 2015 in Colorado?

Jennifer: It’s been wild. It’s been a wild ride. It has fluctuated greatly. So it’s ranged from an average price of just under about $1,600 to shortages, seasonal shortages that led to any product getting listed flying off the shelves upwards of $3,000 a pound. So you know doubling in price. At its lowest “Low Shelf Product” that once in a while you can find for the $1,000 to $1,200 range, although that’s largely medical product. But yeah at its highest the product was going for over $3,000, $3,300 a pound.

Matthew: Wow, you know I was dead wrong about what would happen in 2015. I felt like hey all these competitive forces are coming into the state of Colorado. There’s a lot of licenses here. I really thought the price would drop and stay below $1,000 a pound. I mean there was some kind of regulations around pesticides and testing and things like that. Do you think that really affected it upwards a lot?

Jennifer: You nailed it. I mean everyone was concerned about a, I mean, we heard it called a bloodbath price crash because of the influx of new cultivators and this decoupling of licenses, the fact that you were now allowed to grow more than you had to sell. Everyone thought that prices would crash. And what we saw was that prices were much more tied to seasonal trends in terms of tourism and then regulatory changes. The influence of microbial testing and pesticide testing was huge. At first because people were growing using mechanisms that were no longer allowed so old product had to be thrown away, but then also because there were only a certain number of labs that were certified to test for those problems or certified to test for those components of the product. So there was a lot of bottlenecking.

We saw in mid-Fall around August, September into October a shortage unlike anything we’ve ever seen. And we account for it first there being a shortage in Colorado Springs where a lot of Denver’s wholesale product was bought. Denver and Colorado Springs are the two largest markets so we think that had played a role. And then we had the pesticide testing, microbial testing. September we had a tax-free holiday. All of these components worked together and we had the least amount of product we’ve ever seen listed, and like I said, something would be listed for $3,000 a pound and there would be bidding wars within an hour.

Matthew: That is crazy. That is nuts. What kind of comments or anecdotal type of information did you receive from growers and dispensary owners as you talk to them, as you chat with them online, did you see any kind of trends or things that you were hearing over and over again where you’re thinking wow I did not expect this or this is interesting that the market is turning this way, any frustrations they aired.

Jennifer: Absolutely. Well you know in addition to CannaBase I’m also the Vice Chair of the Colorado Cannabis Chamber of Commerce. So we’re really always watching the regulatory issues and the macro and the micro issues that are facing the cultivators and the dispensaries on a day-to-day basis. And the truth of the matter is it’s very hard to survive in this industry that is so tightly regulated, is taxed so heavily, our margins are very very tight and it’s very unpredictable. When you are waiting for something to happen the way that pesticide testing and microbial testing could happen with such a vengeance and it could take so many businesses by surprise and so many were sitting on huge amounts of inventory. It makes it really really difficult to survive, very difficult to predict long term, very difficult to even predict the larger seasonal changes. So we’re lacking some of that data, the structure and the predictability that help make margins and prices manageable in the long term. So business owners are often just flying by the seat of their pants trying to keep up, do what’s right, predict the best, you know, list their product for the best price possible and stay afloat. I mean it’s a really difficult industry still to survive in and thrive in.

Matthew: And you mentioned the now microbial and pesticide testing regulations are tightening, and from a consumer perspective that’s great. We don’t want any e-coli in our cannabis or any Eagle 20 although some people debate that there are still safe ways to use that. But I’m wondering what…do you see different cultivators responding to these tighter regulations around microbial and pesticide testing in different ways because my sense is that there’re some that kind of him and haw about it and they complain and they do the minimum and others just like this is what we have to do. We’re going to make sure we as a team understand the requirements and execute in a five star way to make sure we do. They kind of turn this pain in the butt into an asset for themselves by executing and understanding it so well. Is there anything you can comment around that?

Jennifer: Absolutely. I mean I truly believe, and we spend a lot of time with the licensed business community and with the cultivators and with the retailers that by in large this is an enormously ethical passionate user base of business owners who want nothing but the best, if not only for the health of their businesses, but for the long-term health of the industry. We want safety and regulation as much if not more than everyone else and there’s… I don’t think anyone wants anything harmful in the product.

The biggest problem is around clarity. You know when we change the rules or when we start to tighten up on the rules there are financial realities. If a company’s been using something that was alright for them to use yesterday and now they’re sitting one or two or three hundred pounds of product that they’re not allowed to sell, whether or not they’ll be able to stay in business. And so I would like to believe and evidence has shown that when a company has the resources to change their ways and make better decisions as the evidence and as the regulations steer us in those directions, everyone seems to rise to the challenge and want what’s best. It’s just a matter of economic feasibility and being able to do it quickly and then hoping that their license isn’t at risk. You know hoping that maybe they sourced some trim, and what’s happening with a lot of these edibles companies is that they’re going through these recalls from trim that was sourced long before these mandates went into effect or these regulations were tightened up on, and now they’re facing huge recalls and public scrutiny over their brand. Which not that it’s unwarranted but can be incredibly destructive for a very well meaning business.

So I don’t think that anyone, yeah, so I don’t think anybody doesn’t want to rise to the challenge. It’s about having the resources and the time to rise to the challenge and clarity you know from the local government in terms of what exactly is allowed. What is the list of what is allowed, you know, at what date is that allowed. A lot of times there’s a lot of murkiness and things get lost in translation, and when you have a cultivation that’s running 24/7 you need a little bit of time. These are plants. You need time to implement these changes and rise to the challenge.

Matthew: Now focusing in on CannaBase specifically let’s say that I need to purchase some trim or some cannabis flower and I get on CannaBase for the first time, walk us through what’s that like. How do I evaluate someone I would want to do business with whether I would want to sell to them or buy from them as a licensed cultivator? Is it like a Yelp-like platform? How do I know that they’re a trustworthy or so on and so forth?

Jennifer: Absolutely. So everything on CannaBase is done on an entity level. So you’re able to tell really quickly whether a listing or a request has been put up by which business. So you’re not looking at individual user names and trying to manage between employees. You’re really seeing the credibility of that business. On every listing we have the number of connections, their number of friends. We have how many people have viewed that listing. We integrate lab data. So we try and give the buyer as many tools as possible to ascertain whether or not this product is right for them.

I think the real power of CannaBase is in its breadth. It’s in the fact that we have worked enormously hard as a team and as a company to keep the marketplace free and open for people to use because to us that’s the only way that we’re going to begin to eliminate some of this price volatility and that we can have a truly authentic market if everyone can be there and everybody has access to the listings and requests. We’re not just blocking it as brokers. So that’s been incredibly important to us. You can see how one buyer/seller stacks up in terms of the greater market in terms of their pricing. They’re allowed to promote their product however they deem fit. And then you’re allowed to just establish connections either over a listing or a request saying I’m interested in this, it opens up in-app instant messaging. You can add employees. You can add group chat. And then we even have negotiation dashboards that allow you to go back and forth on price and set up delivery logistics.

Matthew: Jenn, in terms of what the participants in CannaBase are looking for is it primarily an immediate type of marketplace where people say I want to buy or sell right now or do you see some interest in more of the commodities type market that allows for future transactions to occur and locking in price and quantity and things like this?

Jennifer: Currently it’s very short term. Eventually we think that it’s inevitable that we’ll reach a point where cannabis can be traded more like a commodity. And this will have the potential to drastically change the dynamics of the industry, but I think we’re a ways from reaching that point. The industry is still experimenting with a variety of cultivation techniques. The homogeneity of strains and product quality still very significantly. What we’re really passionate about in order to create a more long term marketplace where businesses can buy product in greater quantities that they’ll feel confident about later on is the establishment of standards.

Matthew: Yes it’s the standardization. So what I’m calling certain cultivation or my flower is not the same as the next guy even though we’re calling them the same things. I guess it probably is going to need to be at a certain scale. You know we look at things like corn and soybeans and pork bellies and there is a very dialed in standard even though the way that those animals are raised and so forth can be very different and those plants I raise can be very different. There is still some sort of agreement at a high level of what the minimal standard is and I guess until we get to a certain threshold I don’t know if that will be maybe tens of billions or something where that is a necessity where this is where we’re at. And people are kind of doing more of a one on one thing instead of a secondary market of futures and options on commodities. So that makes sense. I think it will be… that would be great though if that did exist because you know we see a cultivator who might be a little gun shy about you know planting a certain number of plants, but if he could lock in a price now and know he would make a certain amount of profit that would relieve him and he could bring that flower to market in a way that benefits everybody hopefully and hedges risk.

Jennifer: Absolutely. And that will also just rely on the price being less volatile. You know right now prices are changing so drastically that it’s tempting for cultivators to hold on to product until it can sell for quite a bit more, and I don’t know if that level, that risk is able to be mitigated right now as much as the benefit of holding the product and selling when there’s a sudden shortage. I think that draw is probably a little bit stronger still.

Matthew: So let’s say you’re looking over the shoulder of two people that are currently on CannaBase and they’re coming to some agreement, what does that look like? Walk us through after they decide on what they want to transact, what happens next?

Jennifer: Absolutely. Once they decide on what the sale will look like, how much they’re looking to buy, which strains, etc, there’s a lot of paperwork that needs to be handled. So for product to be transferred there needs to be a manifest and that manifest states a lot of the license information of each party as well as information required by law of the courier who will be delivering the product. Everything from their badge number to their car license plate number to the exact route that they’ll be taking when they deliver the product from point A to point B. So the logistics is still quite a bit of hassle. And then of course we have the cash element. So most of these transactions are still done via check or cash, and so that adds another element to the planning of both the drive and the route and how everything will be delivered in a timely manner.

Matthew: Jenn if there are any aspiring entrepreneurs listening, looking to get their edibles or infused products into a dispensary or if they’re already in a couple of dispensaries but want to grow their footprint is there any suggestions you would offer them?

Jennifer: Well I don’t want to just toot our own horn here, but this is what CannaBase was made for. We have phenomenal tools for edibles companies to promote their inventory to retailers statewide. We represent over 70% of the retailers in the state on our platform, and they’re able to not only list their products but create deals for just the businesses to see. They’re able to create surveys. They’re able to gather reviews and they’re able to really create that credibility that will help other retailers carry their product. Additionally for cultivators that are entering the market and looking to meet retailers I’d say the same thing.

We have two different features; listings and requests. And so it’s easy for them to create a listing that will be published in the marketplace for all of the different retailers to see and connect over. But potentially even more powerfully we have requests. And requests are a tool so that when a business is short on a type of product, either bud, trim, extract, edibles, seeds or clones, they can post a request to the market with their price range, their location, desired strains, etc. And it’s a really easy way for new market entrants to find hungry buyers, message them directly and get the process started. Additionally I think for anyone entering the market I don’t know how they do it without a place like CannaBase because it’s really important to stay on top of what the prices are at that moment. And there’s really no other way without making a lot of phone calls to know that you’re pricing your product appropriately or that you’re getting the best price for your product because it’s changing so rapidly. Price trends in the marketplace change literally week to week.

And so businesses that do stay locked up in long term contracts with trusted partners, potentially that works for their margins and that’s awesome, but if they get excess inventory they should absolutely hop on to the marketplace and be tracking when there are times that they can get a premium for that same product because it happens sporadically and it happens often.

Matthew: You mentioned seeds and clones there and that’s something I want to address. What is the marketplace at CannaBase currently look like now? I mean in terms of what people are most interested in. I’m guessing but I could be totally wrong. Is it flower, then trim, I mean how does it stack rank what people are most interesting and transacting.

Jennifer: Great question. It’s always bud. We have a lot of bud and we get a lot of bud posted the most frequently. So I’d say bud is the cornerstone of our inventory. Trim is the most desired. We’re always looking for more trim. A lot of businesses have their trim tied up in long term contracts. So for instance some business do trim for trade where they will work with an extractor, a designated extractor and they’ll give them all their trim for free and let them keep a portion if they’ll do the work of converting it into extract for that company. So it’s really hard to get trim back on to the open market, but everyone’s hungry for it. There is a huge market for wax and for extracts, especially with the rise of vaporizers and you know other distribution methods of the product besides smoking. And then for all of the edibles manufacturers. Some edibles manufacturers grow their own trim, but some purchase it exclusively through wholesale. The price of trim can be very volatile, go everywhere from a couple hundred dollars a pound to $700, $600-$700 a pound and it can be very hard to find.

Besides that we tend to have static inventory of edibles that seems to be the most traditional product that we carry. And then seeds and clones are up and own. CannaBase has some really interesting tools with seeds where you can put in the key metrics about its yield and its timing and it will create a yield projection calculator and calendar on the listing itself and so that’s really interesting when businesses play with that. And then we see clones haphazardly. Currently we actually have a lot of clones listed but I haven’t seen that for a while. So those tend to just more come and go depending on the active users at the time.

Matthew: Now I’ve talked to some people that grow cannabis and they grow it with the intention of trading their flower or buds for trim. And the first time you hear that you’re thinking wow that doesn’t seem to make any sense. Can you explain why someone might do that?

Jennifer: Why they would grow the bud for the trim?

Matthew: No they grow the bud with the intention of trading it for trim. You know they want more trim than they do the flower.

Jennifer: I actually haven’t heard about that. I mean I would imagine that if you were an edibles manufacturer you don’t need the bud itself. So you could theoretically trim the product and use the trim for your edibles and then that bud would be very valuable in exchange for trim. So if trim is going for $500 and the bud is $2,000 a pound, you could get for, you could trade it with a dispensary that’s perhaps running short and that has extra trim on hand. That could be a more effective channel to supply your trim inventory. Like I said trim is really really hard to get in bulk and to get enough of to supply the market’s needs. So I would imagine that if you were a MIP with your own grow you would be using all the bud at your disposal to try and lock down more trim.

Matthew: And that is the instance I’m… It’s MIPs that have their own grows that I’m referring to. And it’s something that just doesn’t, you know, you hear that and you’re thinking wow why would you ever want to get rid of flower for trim, but that is the reason why. It makes sense and it’s crazy that trim is such a hot commodity but I guess you know you can use it for so many things. There’s so many applications for it that that’s why it’s becoming so valuable.

Jennifer: Exactly. There are so many applications for it, and a lot of times businesses will just hold on to their trim. Like I said they’ll get it extracted and they’ll carry their own wax or they’ll carry their own extract. So if you need a way to secure a line of additional trim from another grow, you know, offering them perhaps a discount on the bud that you’re producing that you’re not going to use is a phenomenal win/win to just secure that distribution channel because it is really hard to keep a consistent source of trim coming in. So that makes a lot of sense.

Matthew: Turning to 2016, we’re recording here on the last couple of days in December 2015, but turning our view to 2016 what do you think will happen with the price of cannabis in the largest markets, I mean Colorado, but then do you have any thoughts about anywhere else in the country that anecdotally that you think what’s going to happen?

Jennifer: Absolutely. In Colorado like I mentioned before we’re seeing larger financing tackling the larger scale cultivations. So if these are able to get up and running successfully, the general concern is that they’ll be able to flood the market with cheap product and undercut the existing cultivators. There’s a host of potential regulatory issues with the execution of the strategy. So it’s all a matter of if they’re able to get up and running and into the market successfully, but this again goes back to my point that most importantly we need a set of qualifiers that allow us to commoditize the product better so that if this cheaper product is coming to the market then perhaps boutique cultivators can stay competitive and can prove why their product warrants a higher price.

So our only defense against these large scale cultivations is going to be a better understanding of different cultivations across the state and what they can bring to the table in a way that’s objective and standard and scalable. Around the country Washington, unlike Colorado, has a cap on the total amount of product that can be produced statewide. So that should prevent this potential problem or any unforeseen price crashes. The Oregon market has historically had the lowest prices in the nation largely because they have a lot of caregivers involved in their wholesale economy. So there’s just a larger amount of product at any given time. But with the number of licensed dispensaries and cultivators continuing to climb prices are expected to remain below those for Colorado and Washington. And then our biggest wildcard that the state we’re all watching is going to be California.

The legal adult use market is poised for a lot of growth after the 2016 elections, but the effect this will have on wholesale pricing is unclear and especially because we don’t know the time it will take to get these regulatory changes into effect and into the market, but I think that’s going to of course be a really interesting state to watch. Currently I think it’s incredibly interesting. California has been able to maintain wholesale prices similar to those we see in Colorado, and when you look at the fact that Colorado’s prices are so heavily impacted by taxes, regulations, packaging restrictions, you wonder why a market that has so many fewer regulations is able to maintain prices so high. And the reasons we’ve heard from that are because since the market is so loosely regulated that extra product is more easily able to be diverted into the black market. So you know that you’re going to get a return on that investment. It’s easier to maintain the high price of the product. With a more tightly regulated market the question is if the prices will just stay status quo that well be a tightening up of the distribution channels but an increase on regulations or if they’ll change one way or another. So I think that’s going to be really interesting and will become like Colorado a major indicator for the rest of the country.

Matthew: I have been so wrong about estimating pricing that I’m going to stop doing it and throw out all of my assumptions because right now I hear about huge grow operations getting started in Pueblo, Colorado which is about an hour and a half south of Denver, very sunny place so you can do some maybe greenhouse grows and things like that and when I hear about the size of these grows I’m just, I’m in awe (A) and (B) I think wow this is obviously going to really dampen the price of cannabis, and then at the same time there’s all these people, tourists and other people that are growing the market. People that are cannibalizing perhaps the alcohol market turning to cannabis because they’re curious or they like the effect. So that market is not just the cannabis enthusiasts, it’s these new cannabis enthusiasts coming online. So what’s the balance between all this new cannabis coming online and all these new consumers coming online, it’s really hard to project, but are you hearing some of the same things about these massive grows maybe in Pueblo or other parts of the state and curious about how that might affect wholesale prices at all.

Jennifer: Absolutely. I mean I think if these major grows in Pueblo that are look like, I mean they can be, that they’re going to be absolutely massive. If they’re able to produce low price product and we’re not able to objectively demonstrate that that quality is lower than what perhaps more specialized boutiques are carrying in other parts of the state, then just by the very nature of supply and demand it has to have a major effect on prices. It has to really pull down the wholesale market with it. One piece that I always, that I keep coming back to though is that what is currently driven the price volatility has been less correlated with the number of licenses or the number of active cultivations in the market and for more correlated with these regulatory seasonal changes with all of sudden pesticides are in effect or we’re clamping down on pesticides.

The idea that one of these larger grows would not be… they’ll be as susceptible to these changes as everyone else. So the question is if they’ll also be able to couple these lower prices and these increased distribution with perhaps better foresight of some of these vulnerabilities. And then additionally something that isn’t talked about much but that I think is a really interesting angle of the industry is couriers and transport. So when this product is sold on a wholesale level it then has to be transported across the state to the retailers who are going to carry it. And that’s an interesting, almost underground part of the market that isn’t too tightly regulated in terms of who’s managing those companies and they range in price from I mean $40 a trip for some of the cheaper couriers that will take a product to the mountains for $40 and then others that will you know will charge a more potentially reasonable $400 a piece because they’re better insured or they’re more secure.

So one thing that I’m really curious about is how the courier landscape will develop because if greater mandates and restrictions are put on who’s allowed to transport the product and how well insured they have to be, how much they’re allowed to carry at any one time is being more closely watched. You know we see that some of these lower price companies are stacking the roots a bit more than maybe manifest should be allowing them to do, then if the cost of the couriers comes up then it’s going to change the types of sales that these cultivators down in Pueblo are making on a regular basis. So if retailers are forced to pay more of a premium for perhaps safer and more compliant courier services, then are they going to be as likely to source a smaller purchase, like five or six pounds, from these cultivators down in Pueblo, or are they going to stay with their local network. So there’s a lot of pieces of the greater infrastructure that still need to be worked out, and they really all work in tandem. It’s an ecosystem.

In terms of the consumer to me that is the greatest thing that’s changing with 2016. It’s that people are really coming out of the woodworks, and it’s not just about having greater consumer demand, having more people experimenting and perhaps even more people becoming regular consumers, but what I think is most exciting is the idea that consumers will become more transparent about who they are and what they’re buying so that we can continue to develop more targeted products and strains towards those consumers. When we talk about wholesale pricing everything is a feedback loop. If we can establish that a product grown a certain way with a certain type of ingredients is “Organic” and then we can have consumers recognize “organic” certification or badge and we can demonstrate that consumers will pay more for it. Now we’re developing tiers in terms of product quality and tiers of pricing, and this is where businesses will really begin to differentiate themselves. Right now that’s done through branding. Someone says we’re a top notch brand, but with standardization, with transparency with consumers and with a more mature market in terms of the infrastructure surrounding the entire wholesale ecosystem we’re going to have a lot of changes ahead of us, a lot of consolidation, a lot of small businesses going out of business, and the prices will as I always hope, begin to stabilize because that shows that we know what’s coming and we’re comfortable making longer term purchases.

Matthew: Now a question about being an entrepreneur. Oftentimes you know we hear someone that’s an entrepreneur and we think they’re a fearless person and they came out of the womb and they were operating a business with no doubts and now setbacks. What’s it like running CannaBase day to day? What are some of the challenges and opportunities that maybe get glossed over in all the excitement about this new huge industry?

Jennifer: Oh there, I mean, I think we’re definitely an adventurous group. You have to be to hop into this industry and to tackle it, but it is all challenges. Everything is changing so rapidly that to stay relevant, to continue to build a product that people want to use, to stay in tuned with the community and to keep growing is a constant challenge and it’s a full time job. I mean we work absolutely around the clock, but it’s enormously exciting and it’s enormously fulfilling. I really couldn’t say much about it besides the fact that it’s very difficult. I mean you really have to figure out every day where is the best place to put my time and in this industry especially you’re building in the moment, but the future is happening rapidly. I mean the future is unfolding constantly. And I think the real movement in this industry with so many new market entrants and how quickly it’s going to transform over the next couple of years will be our ability as entrepreneurs to work together to create really seamless solutions.

I mean a lot of the things we talked about today are about how can we create that feedback loop? How are these different components of the industry working together because it’s way too much for one company to handle. So we’re always meeting new partners, seeing who’s getting into the market, learning about their philosophies and trying to find people with the same goals and the same passions we do, standards partners, courier partners, data partners, anyone that we can work together with to create better solutions that will help insure that the industry thrives for a long time to come.

Matthew: Jenn in closing how can listeners learn more about CannaBase?

Jennifer: Absolutely. So you can visit CannaBase online at www.cannabase.io and there are links to our blog to learn all about our different services and then if you’re a licensed business, there are links to sign up for a free account.

Matthew: Jenn thanks so much for coming on CannaInsider and educating us. I wish you a very happy New Year.

Jennifer: Thank you so much. You too 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(dot)cannainsider(dot)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(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

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

Key Takeaways:
[1:44] – What is CannaBase
[2:34] – Jennifer talks about vertical integration
[4:37] – Why do people not like the idea of vertical integration
[7:41] – Jennifer talks about the prices of cannabis in Colorado in 2015
[10:44] – Trends and frustrations expressed by growers and dispensary owners
[13:14] – Reactions to the stricter microbial and pesticide regulations
[16:26] – How do you rate users on CannaBase
[21:21] – What do transactions look like on CannaBase
[22:31] – How to get your product into dispensaries
[24:58] – Most popular products on CannaBase
[29:36] – Jennifer talks about her predictions for 2016
[33:58] – Jennifer talks about massive grows affecting prices
[39:15] – Jennifer talks about running CannaBase day to day
[41:17] – CannaBase contact details

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at:  https://www.cannainsider.com/trends

A Look at California’s 2016 Cannabis Regulations and Deadlines

Katie Podein

Katie Podein from California Cannabis Law Group joins us to share how California plans to make sweeping changes to the state’s cannabis laws and regulations in 2016 and the deadlines you need to know right now. Very important if you need to understand packaging, labeling and testing requirements.

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(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)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(dot)com to get started. Now here’s your program.

California by itself is the eight largest economy in the world when measured by its $2.3 trillion of GDP that come from the state. With 39 million residents, abundant capital, technical resources and a strong tradition of agriculture there is arguably no place better positioned to help the cannabis industry grow. However, recent laws and regulation changes made in the state capital of Sacramento are introducing new challenges and opportunities that business owners should be aware of. To help us sort through the new regulatory changes in California I have asked attorney Katie Podein from California Cannabis Law Group on the show today. Welcome to CannaInsider Katie.

Katie: Hey Matthew. Thanks for having me. You know I’m a big fan of the show and I just want to thank you for what you’re doing to illuminate the stars of the cannabis industry.

Matthew: Oh thank you. Katie, to give us a sense of geography can you tell us where you are in the world today?

Katie: Yes I am currently sitting in my law office in well not so sunny Los Angeles, California right now. You know it’s raining a little bit out and in Southern California when it rains everyone runs around both fascinated and terrified by this weather.

Matthew: Yeah you all definitely need rain out there for sure.

Katie: Mm-hmm.

Matthew: So tell us a little bit about your background. How did you get into the cannabis industry?

Katie: Well eventually my job was actually you could say to help suppress the industry. I was originally working for (2.42 unclear) a law firm, and for about 10 years our firm had been working with cities and counties to help create local regulations for the medical marijuana business. That meant providing legal advice on regulation of medical marijuana, drafting ordinances and zoning codes to even ban them out of the cities. But one day my partner’s wife was diagnosed with Stage IV ovarian cancer and he confided in me that she used edibles to ease her nausea and pain during chemotherapy. Around the same time our firm was getting approached by dispensary owners asking us as city attorneys for our guidance on how to be compliant on a local level. So at some point I just took a step back and realized all the signs were pointing in a different direction, and I wanted to create a specialized legal practice that would bridge the gap between the cannabis business and local and state agencies.

Matthew: Okay and what is the California Cannabis Law Group?

Katie: Well on a basic level I would say the California Cannabis Law Group helps the cannabis business owners come out of the closet. I find many players in the industry are afraid to come into the light in California because of the lack of state regulation and that it’s still illegal on a federal level. So our firm helps to provide guidance to clients to become and stay compliant with local and the state laws. So in short we provide clients with legal services for everything they need from seed to sale really.

Matthew: Let’s set the stage here. There’s some big legal changes in how cannabis is treated for a lot of different parties, but how is cannabis regulated and treated by officials prior to this year’s legislative change and how is it different now?

Katie: Well before this current legislation California has been nicknamed “The Wild West” and that’s only for a reason. The laws governing medical marijuana, that’s Prop 215 and that’s State 420 has giving the industry a little to no guidance on a state level. And then on top of that some cities and counties have nothing in their municipal codes either way about regulation of medical marijuana, either allowing it or prohibiting it. So it’s been a very laissez-faire approach and as a result of the somewhat lawless environment the cannabis industry has really taken an opportunity to come up with some pretty creative business models.

You know, I know you interviewed the founders of Weed Maps on a previous show and that was founded in California in 2008. These delivery services, excuse me, Speed Weed. I believe you interviewed Speed Weed.

Matthew: Right Speed Weed. We both got that wrong. Right okay. Speed Weed.

Katie: Okay so Speed Weed is a delivery service and they got started in California in 2008. You know usually these delivery services have no storefront dispensary. Sometimes they’re even operating out of the personal residence and have become very popular throughout all of Los Angeles and the most of Southern California, even with celebrities and soccer moms alike. Another business model that has been created as a result of this is the Gorilla Grows up north with the cultivators. You know this isn’t always a good thing. This is the legal cultivation sites that usually divert water from other crops or agricultural sites, use heavy pesticides and even I’ve heard using rat poison to put on the crops.

Additionally this lawlessness of the land has left extractions and manufacturing really up to the business itself and that can lead to some detrimental consequences. For example, if people aren’t well-versed in using volatile solvents, there can be a lot of injuries if you can imagine; blown off hands, fingers, etc.

Matthew: So truly the Wild, Wild West. Not much guidance and a huge market. So that makes for; it’s nice not to have regulatory strings in some capacity, but not everybody’s playing with; it’s not a level playing field necessarily either. So from that, from the Wild, Wild West what have we transitioned to? What is the new legislation that went through Sacramento this year and how has it changed the landscape?

Katie: Well the new legislation is the State’s attempt to tame the Wild West. That’s the Medical Marijuana Regulation and Safety Act, also known as MMRSA, and that was signed into the law by Governor Jerry Brown on October 9, 2015 and it becomes effective in January, so coming up soon.

Matthew: What an unfortunate acronym that is. Isn’t MMRSA like some sort of medical problem you get when you’re wrestling in the gym or something?

Katie: Oh yeah yeah, and on top of that the bureau that was established under MMRSA is the Bureau of Medical Marijuana Regulation. The nickname as you can imagine the BMMR is also known as Bummer.

Matthew: Oh boy.

Katie: So it has been interesting in the acronyms that they have chosen to regulate the medical marijuana industry, but nonetheless the MMRSA is comprised of three bills that provide regulations for all different areas in medical marijuana industry and provides a comprehensive system of control. And the BMMR has been tasked with the responsibility of developing and implementing the rules necessary to enforce these laws including oversight state licensing and regulation of the industry.

Matthew: So if I’m a business owner listening to the show right now or I’m someone considering getting into the cannabis industry, what’s the most important in your mind changes here that really should be kept top of mind if you’re in the cannabis business?

Katie: By far the most important thing is the local license and the state license you will need to operate. You know, you need local approval, and then once you receive local approval whether it by a license, it depends on each locality how they approve you for a business. Then you have to bring that to the state and say you know my city or county approved of my business, can I have my state license please. Now there’s 17 different types of licenses under this new law.

Matthew: Wow.

Katie: Yeah it’s a lot of different licenses and there may be even more coming. The focus is on cultivation, really trying to prohibit or regulate certain large scale cultivation sites, and you can see that there’s more flexibility for smaller scale cultivation sites.

Matthew: Sorry to interrupt, but did you mean it’s going to be maybe less burdensome to be a smaller grower and as you go up the scale there’s more hurdles you have to jump through?

Katie: It appears so because one thing that MMRSA also allows is a bit of vertical integration for small cultivators. So if you have certain; if you grow under certain sizes, the state will also grant you a license for manufacturing and/or owning a dispensary as well. So it seems that they are favoring the smaller business models which will help the small growers and those mom and pop shops stay open under this new licensing scheme.

Matthew: Interesting. Go ahead. I’m sorry to interrupt.

Katie: Some other, I just wanted to point out some other important changes. There’s three other things that are really important for people to keep in mind. That’s the testing of all medical marijuana. That means all cultivators will have to have their medical marijuana tested before it goes to a dispensary. Now in addition to this testing of the medical marijuana, there’s the role of distributors. And the state has created a role of distributors and they are the ones to take the medical marijuana from the cultivators to the lab, to the lab to either the manufacturer or to the dispensary owner. And on top of all that they’re implementing a track and trace program similar to the one you see in Colorado now.

Matthew: God it would be great if they could just turn into Silicon Valley right there to make that instead of coming up with some sort of crazy bureaucratic system that’s not user friendly when you’ve got such great technical there. I hope they outsource that in some capacity.

Katie: Yeah I hope so too because you know I think this year is going to be a bit of growing pains for the entire industry under these new laws.

Matthew: Are any of the regulations seem like; is there certain things that seem the most financially onerous? I mean going to your local municipality or town and saying hey please recognize me as having a cannabis license might sound like it takes a little but not necessarily expensive. Is there anything that really strikes you as adding cost to the whole supply chain?

Katie: I really think it’s going to start with the cultivators. They are the ones responsible for implementing the track and trace program. Additionally, they have state agencies that will be imposing regulations and standards on their grow sites. Just to name a few it’s going to be the Department of Food and Agriculture, the Department of Pesticide Regulation, the Department of Fish and Wildlife, the State Water Resources Control Board and the Department of Public Health, all with their standards that they must meet to grow medical marijuana. And I think that’s just going to drive the cost of medical marijuana up.

Matthew: Oh my god, this sounds like a lot of regulatory burden. This really does.

Katie: And not to mention that the cultivators also pay for the testing of their medical marijuana. You know it’s a great time to be a distributor or a lab tester in this upcoming year.

Matthew: Okay. Wow, so a lot of us in the cannabis industry have gotten comfortable, set in our ways a little bit, maybe in California used to being on one side of the spectrum of really having no regulation now. They’ve got all these three letter agencies that are going to be swarming them. So what do you think is going to be the most painful? Is it just having to create whole new process, maybe adding staff just to manage the compliance burden?

Katie: Yeah you know I think it is going to be a lot of standards of that that the industry is going to have to be educated on if they want to continue to play. You know it’s great these laws are allowing the cannabis industry to become for profit entities now. You know they no longer need to stay nonprofit. So that allows a little more flexibility and control over your personal cannabis business, but you have to play by the rules now and that is going to be quite a burden on the industry.

Matthew: Okay. Are there any bright spots, anything we should feel good about here? I mean the fact that regulation is coming in that it’s going to make it a more robust industry that maybe the public sees or recognizes as more trustworthy.

Katie: Yeah you know I don’t want to sound too pessimistic about these new laws. I think that like I mentioned you’re allowed to transition from a nonprofit to a for profit business. So that allows greater flexibility, increase revenue and yield for your company. Also people can start investing in the cannabis industry. So we will see a lot, you know, this market is projected in California to be; I mean it’s a wide range that they project, but anywhere between the $2 and $4 billion industry. Also organic standards are going to be coming out for medical marijuana and testing standards that will be imposed will also mean that we know what’s going in to our product. And as a consumer you know I would imagine most consumers want to know the breakdown of their product and whether; have the choice of whether it’s organic or not.

Matthew: Okay.

Katie: And all the new regulations on cultivators it does mean for a more environmentally friendly cultivation practices. You know I know it can appear to be burdensome, but it’s also to preserve the environment and that wildlife in California that we all cherish here.

Matthew: Katie, what about personal cultivation? What’s allowed there or what’s changed?

Katie: Patients are exempt from the state permitting process. So they don’t need a license if you are cultivating for yourself so long as it’s under 100 square feet for personal medical use. Primary care givers that five or fewer patients are allowed up to 500 square feet. There is some troubling legislation that AB243 says that it does not prevent a local government from further restricting or banning the cultivation of medical cannabis by individual patients or caregivers in its jurisdiction. Personally I hope that cities aren’t starting to ban or restrict cultivation for individual patients or caregivers, but we’ve yet to really see how that will play out.

Matthew: Switching gears to labeling requirements, what can we expect in terms of changes in labeling requirements?

Katie: So in the laws stated right now it says that the Department of Public Health is to develop standards for producing and labeling all edible medical cannabis products. Also the Department of Public Health will be in charge of regulating edible potencies as well, but no specific labeling standards have come up yet. I imagine that you know once this all this becomes effective and the departments start to develop standards it will look something like Colorado’s too. You know specific warning labels, a list of nonorganic pesticides, fungicides, herbicides, maybe a list of solvents and chemicals used to extract the marijuana etc.

Matthew: Okay. So we have some deadlines rapidly approaching here. Can you summarize those?

Katie: Well so far we already have had one deadline pass. That’s July 1, 2015 and that was the date by those cannabis business to claim vertical integration and to be able to operate as a vertically integrated business under these new laws. Now again vertically integrated means that your business does the cultivating, the manufacturing or extracting and the dispensing of medical marijuana. If a city allows vertical integration and you’re vertically integrated before this July 1, 2015 date, then you’re allowed to continue for some time under the new laws. The next one coming up is January 1, 2016. That’s the date in which MMRSA will become effective. That’s also when priority licensing will begin to roll out and those eligible can apply for that priority licensing.

Now there’s one deadline that’s caused a bit of controversy in California in the past week or so. That’s the March 1, 2016 deadline. That deadline is a deadline for local cities or counties to impose regulations or ordinances prohibiting the cultivation in their locality. This has caused controversy because in the past probably two/three weeks we’ve seen city councils quickly banning, doing everything they can to ban cultivation in their city, their city council meetings. Now Assembly Member Wood helped with, developed the laws for MMRSA said that this was a mistake, this deadline. He said that it was a mistake and that there will be no deadline for local jurisdictions to enact their own regulations governing medical marijuana cultivation.

Me personally I don’t know how much of that was a mistake. It is you know on paper, in the laws and the damage is done. Cities have already been banning cultivation. So you know Assembly Member Wood said that once the legislature reconvenes in January he plans to pass the urgency legislation striking this deadline, but I’m not too sure it’s going to have any effect since cities have already acted.

Matthew: This is a crazy thing here.

Katie: Yeah this has been the problem we’ve seen in California is that cities appear to be scrambling to really ban cultivators and dispensary owners in their cities and counties. And I know that I’ve been at some meetings where small grows and even local dispensary owners are wondering where are they going to go with their business.

Matthew: Yeah.

Katie: Like I said, there is going to be some growing pains in this upcoming year for sure.

Matthew: What about do these local municipalities now have the ability then to tax so I would think that some of these revenue starved municipalities in California would jump at the chance to possibly get some more taxes.

Katie: You’d think they would and you’re right, but there are a lot of cities that could use the revenue with medical marijuana, but it seems when you’re sitting at city council meetings that the fear, you know, it’s that cliché fear of robberies or violence or even just increased traffic going through cities is what is keeping them from creating some type of comprehensive regulations in their cities rather than just stop banning them.

Matthew: Right. God it’s amazing the education that still needs to be done. I literally have some relatives in the East Coast that know (22.39 unclear) think that everybody in Colorado sits around and gets high all day, everybody, 100% of the state. So I mean it’s a persistent stigma and I hope; I think a lot of people would be surprised at what cannabis is being grown in their municipality already. If they knew that, maybe they wouldn’t freak out so much.

Katie: Yeah, yeah, exactly.

Matthew: Okay so we talked a little bit about the deadlines; January and March. Anything else on the horizon maybe that’s not set in stone but looks like the way the regulatory boat is turning that we should be aware of?

Katie: Well you know a lot of people are scared by this January 1st deadline that are in the industry, but I assure them that licensing really won’t affect them until 2018. You know government moves slow and I don’t think it’s going to be any exception here. The exciting thing we get to look forward to in 2016 is legalization of marijuana; adult use or recreational use, however you want to call it. That is on the November 2016 ballot. We have a couple of initiatives that are all competing for that vote.

Matthew: Wow that is exciting. That would be big. Now the Napster guy, I can’t remember his name, Shawn?

Katie: Shawn Parker.

Matthew: Yeah okay. So Shawn Parker what’s he have going there because I know he has an initiative that he’s pushing really hard. What is he doing?

Katie: Okay Shawn Parker is a Napster cofounder and former Facebook president. He has gotten behind and backed the Adult Use of Marijuana Act, AUMA. This is the big act that, the big ballot initiative that everyone is focusing on. There’s been you know a little bit of controversy about this act. When you speak to small small growers and dispensary owners they feel that this promotes big business. And for a little while there was another ballot initiative competing with the AUMA, but Shawn Parker has actually come out and said that he will match dollar for dollar all the donations given to support this initiative. Now I don’t know if that’s necessarily true or not. It would be interesting to take him up on his word.

Matthew: Right.

Katie: But recently in the past week or so there’s been some amendments to the AUMA to help rally more people around this act. I think one worry with people in the industry is that there’s so many initiatives out there that the votes are going to all be spread and then again just like in 2010 we’re not going to have legalization. So this time I believe that the AUMA is acting more as a working document right now that can be amended so that we can really; it can be all inclusive for everyone in the industry.

Matthew: One thing that I forgot to ask is that currently if you’re not from California and you’re visiting you can get a medical marijuana card. Is anything changing there with this new; the new regulations and legislation at all?

Katie: Well right now it is very easy to get a medical marijuana recommendation. The environment is very friendly. Now the rule states that you need a California, a valid California ID or a driver’s license and you can get that at the DMV showing that you have a local residency and your medical marijuana recommendation takes all of about 15 minutes to obtain from a doctor. I’ve even heard stories that doctors who are licensed in California can recommend medical marijuana over Skype and you can get it that way.

Matthew: Yeah I’ve heard that too. I’ve also heard from people from out of state coming in and getting recommendations somehow. I don’t know if that’s true.

Katie: You know I would not doubt that especially if they’re going down to Venice to get it.

Matthew: Yeah on Venice Beach it’s like every other shop there is like $50 for a recommendation.

Katie: Oh yes you’ll see them and you can identify them because they’re in doctor scrubs I think with marijuana leaves printed all over it. Very legitimate looking you know. But under the MMRSA that’s all set to change so they say. I don’t know how it will actually be in practice but the state will now be examining and investigating doctors that overly prescribe medical marijuana or recommend it.

Matthew: What does overly mean? Does that mean that they have like if they have 100% recommendation right now they have to lower it to something so they’re rejecting some people?

Katie: Well of course they haven’t given that specific standards but I think what that means is they’re going to be looking at doctors who have patients that come in maybe once a year, one time only you know it’s that revolving door of patients unlike a primary caregiver or a primary physician who you see regularly once a year or you know for specific ailments. You can point them out here in Los Angeles. There are certain centers where you know the doctor all he does all day is recommend medical marijuana. So they will be the subject of investigation by the state. And they’re going to start cracking down. So that may mean that doctors are less likely to hand out recommendations which thus in turn means less people getting their recommendation especially since you have to renew your recommendation each year.

Matthew: Okay. Anything else we should be aware of for 2016, I mean the implications of rec are huge. Does it sound like adult use is going to pass in 2016?

Katie: You know what I mean I personally think that adult use will pass. I think California we were the first one in the nation to allow medical marijuana and now we’ve taken a back seat while states like Colorado, Washington, Oregon have really run with recreational use and I think we’re ready to get in the game and start playing with those states. And I think that the Adult Use of Marijuana Act, the AUMA will likely be the one that will legalize marijuana for us.

Matthew: Katie in closing how can listeners learn more about California Cannabis Law Group and connect with you?

Katie: The best way would be to just email us. Any questions you have about our firm and what it can do for you, you can email us at info@califcannlaw.com .

Matthew: Great. Well Katie thanks so much for coming on CannaInsider today. We really appreciate it.

Katie: Thank you so much Matthew and hope you have a very happy holidays and a great new year.

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(dot)cannainsider(dot)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(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

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

Key Takeaways:
[2:31] – Katie’s background and how she got into the cannabis industry
[3:51] – Katie talks about the California Cannabis Law Group
[4:42] – Katie discusses how cannabis is regulated and treated by officials
[7:40] – New legislation that has passed in 2015
[9:20] – Most important legislative changes for people in the cannabis space
[12:39] – Added costs to the supply chain
[14:10] – Katie talks about the compliance burden
[15:03] – The upside to the new regulations
[16:36] – Katie discusses personal cultivation in California
[17:37] – Changes in labeling requirements
[18:29] – Katie talks about deadlines
[23:12] – New bills on the horizon
[26:06] – Can travelers still get a medical marijuana card in California
[28:59] – Katie gives her prediction for adult use
[29:46] – Contact details for California Cannabis Law Group

Important Update:

What are the five trends that will disrupt the cannabis market in the next five year?
Find out with your free guide at: https://www.cannainsider.com/trends

Love CannaInsider?
Please consider leaving the podcast a review here.
Every 5 star review helps us to bring you the best guests.

Cannabis Changing the Life of Kids with Lung Disease

Fulton Family

The Fulton family relocated from Australia to Canada to help their two daughters, eight-year-old Georgia-Grace and 13-year-old Tabetha have a degenerative lung disease.

Before consuming cannabis oil, Georgia-Grace and Tabetha could barely walk a block comfortably. Now both girls enjoy walking, running and surfing comfortably thanks to cannabis oil.

National Access Cannabis Founder Alex Abellan also joins us on the call to talk about how he has helped the Fulton girls access safe and effective cannabis oil.

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(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)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(dot)com to get started. Now here’s your program.

Hi this is Matthew Kind. I just want to give you a little bit of an update on this interview before we get started. There’s five total individuals in this interview other than me. Alex Abellan of National Access Cannabis, Bobby Jo Fulton and Marcus Fulton who are the parents of Tabitha and Georgia Grace Fulton. Tabitha and Georgia Grace have a degenerative lung disease that causes massive inflammation in their lungs and the only way they’ve been able to experience relief is with cannabis oil and they left their native Australia to come to Canada to access that oil because they haven’t been able to do it there legally. So you’re going to hear their journey from Australia to Canada and how it has affected them as a family and what they’re up to and I just wanted to give you a little context before we got the interview started so I hope you enjoy it.

While many of us here in the U.S. view full cannabis legalization as inevitable and many states have now legalized full adult and medical use that is not the case everywhere. As you’re about to hear our next guests moved from Australia to Canada to legally access the life changing benefits of cannabis to treat degenerative lung disease. I want to welcome to the show Alex Abellan, founder of National Access Cannabis and the Fulton family, mother Bobby Jo Fulton, Tabitha Fulton, Georgia Grace Fulton, and father Marcus Fulton. Welcome to CannaInsiders everybody.

Group: (Group hi’s)

Matthew: Did I get everybody’s name right? I just want to make sure.

Group: (Yes’s)

Matthew: Great. Well first the Fulton family can you tell us where you are in the world right now?

Bobby Jo: Victoria.

Matthew: Okay.

Bobby Jo: A long way from home.

Matthew: Yeah and how about you Alex?

Alex: I’m in Ottawa, Ontario right now.

Matthew: Okay great. Well let’s get a little background here from the Fulton family first. Can you give us a little idea of what you’re doing in Canada and you’re journey from Australia for your two girls? Bobby Jo or Marcus if you want to lead us off that would be great.

Marcus: Go ahead Bobby.

Bobby Jo: Well to begin with we given that it is highly illegal in our own country, Tabitha was getting very sick very quickly. We had no alternative pharmaceutical medicine. We had run out of every option there. So we did a twelve week trial in our own country that proved that we could get her off steroids and in fact off her daily oxygen procedure as well but what we couldn’t do was continue to use the cannabis oil in our own country.

Matthew: Now Tabitha and Georgia Grace how do you feel when you take the cannabis oil versus when you don’t have access to it? How does it affect your life would you say?

Tabitha: Well with the steroids I feel like after a while I wasn’t getting the benefits of the help I was supposed to be getting from the steroids.

Matthew: Okay.

Tabitha: And so obviously I did not have very good quality of life and when I; since being on the cannabis oil I have had an amazing quality of life. I’ve been able to do so many things that I have never been able to do like I got to surf. I got to do so many things. I could ride a bike and to me that’s a big thing. I have never been able to do that in my entire life.

Matthew: Wow.

Alex: Yeah if I could interject here I just want mention that Tabitha and the Fulton Family, Georgia Grace too they’ve been through a lot. Tabitha she was awake for only 45 minutes a day and sleeping the rest of the time because of the lack of oxygen she was getting and her quality of life in Australia was; it was really hard on the Fulton family and I have to say Marcus and Bobby you guys are the best parents in the world for what you guys have had to struggle with and the frustrations you were experiencing in Australia. I can tell you right now that the girls are amazing. They’re doing so wonderful Matt and it’s like a, it’s like night and day. I don’t even know if I could describe how amazing these girls are doing here in Victoria and really what we’re asking is we want to make sure they can go home and have the same safe access there in Australia.

Matthew: Alex let’s back up a little bit and maybe you can tell us what National Access Cannabis is and how you came to help the Fulton family?

Alex: Well the National Access Cannabis was a model that I started in Canada to help my community by helping the people that were using cannabis as a medicine and helping them from being ostracized from the community because if you were; if anybody says I’m using cannabis or marijuana then people all of a sudden with the Reefer Madness everybody would think oh you’re taking drugs when in reality it was a medicine. So the first thing I did was National Access Cannabis came up with a state distribution law.

The number one thing for us whether it’s medical or recreational really it should be done safely. So we developed a model that does risk reduction and health awareness through education and then that way people can make an informed decision if they want to use cannabis recreationally or medically. So that’s how it all started and then that’s how I met the girls because once National Access Cannabis started working with the community we started seeing amazing results. I mean people were coming in it was almost like a miracle for half of these people.

So when we started realizing that we need to spread information out there and help as many people as we can and when I found out that the Fulton’s were having trouble in Australia with these two little girls I said well if you come to Victoria on vacation ya’ll come over here and we’ll see if we can help you out and sure enough they came to British Columbia. They flew all the way from Australia and I think Tabitha you had an attack on the plane I believe right at the airport so we needed to get her a doctor right away. So we ended up getting her a doctor when she came to Canada and because of National Access Cannabis we work within the healthcare industry we had contacts with physicians so we were able to find the girls quite quickly a pediatric lung specialist to help with their lung disease. So we started that way and now we have Bobby and Marcus and the whole family with us and we’re all participating together trying to spread the word.

Matthew: Alex can you give us an overview of the medicine’s that Tabitha and Georgia Grace are taking quantities, strains? What can you tell us about the cannabis oil?

Alex: Okay so presently, well now that we’re allowed to make oils the licensed producers here in Canada are not ready to make the oil in the way that these kids need. The children needed our cold fuse so of course the THCA so that it’s not psychoactive and also with the CBD. So what we did was we connected the Fultons to a licensed producer here in Canada and Bobby their mother is very knowledgeable in making these oils and the father too. So what they did is we presently got them cannabis oil licensed producers and then when the Fulton family received it they did the dosing from what they got from their doctor. So I can let Bobby answer that question. Bobby so can you run us through and Marcus how exactly you’re making your oil?

Marcus: Sure. As you’ve heard we’re using a prescribed amount of cannabis with a prescribed amount of sunflower oil and pairing it with the use of a Magical Butter machine which regulates temperature and basically does the infusing for you. It’s a very reliable way of doing it. Previously we had been using a slow cooker or something like that with that it’s psychoactive and a little bit harder to control. With specific machines like the Magical Butter it makes it very easy to basically dial up what you want and that way you get a very consistent result.

Alex: Yeah so ([10:10] unclear) called Magic Butter where you can make your oil. It doesn’t hold temperature so it does activate the THC so then you can make cold fused oil. So they’re doing it at home and within like the next couple months we’re expecting our licensed producers to have these products available to our patients here in Canada, National Access Cannabis so the future is already here I think with the cannabis industry with these oils so we’re just waiting just for the government to allow us; allow the licensed producers to be able to produce these oils for children.

Matthew: Anecdotally is there any particular strains or concentrations or anything you can tell us that is working better for you Tabitha and Georgia? I mean I guess that question is for Alex or Bobby Jo or Marcus but I mean is there any difference here or is it really any cannabis oil seems to be doing the trick?

Bobby Jo: Well yeah.

Marcus: Besides basically supports a holistic medicine if you like so it needs to provide at least a certain amount of THC as well as the other cannabinoids and CBDs. So realistically something with a high CBD and a lower THC, there are various varieties which are specifically grown by producers now with understanding the specific conditions. So you can definitely get the particular type of flower that you like. Something with a higher CBD and a lower THC so that your extraction will reflect that as well it would be much higher in CBD and lower in THC or both in the acid form. It is still very useful.

Alex: Yeah to answer your question Matt presently right now we’re not going to specific strains. I mean that is the research that we’ll be doing in the office in the clinical trials as well to prove efficacy, but presently we just know that cold fused oil of THC and acid based and also with the CBD that it seems to work for their girls without strain specific. That’s something that we want to look into in the future Matt but presently it’s not strain specific right now.

Matthew: Okay and Alex just to clarify so you said the THC is not active so that means there’s no decarboxylation going on here is that?

Alex: That’s correct. You know there’s different temperature when you depending on how much you heat the cannabis plant or cannabinoids you lose some cannabinoids and you change the dynamics of that cannabinoid. So yeah we’re keeping it below a certain temperature so that the THC does not become psychoactive so you can take THC and just not get high as long as you don’t heat it up and that’s why people have to light a joint or even vaporizing it to have a heat to it to get that high effect but in this case yeah THC won’t give you that psychoactive effect at all.

Matthew: Bobby Jo and Marcus as the parents of Tabitha and Georgia Grace what has it been like for you to witness this transition. I mean we heard first hand your daughters are able to surf and run and do cardio activities. What do you see as the biggest change?

Bobby Jo: Tabitha and I have spent twelve years in the hospital together. The biggest change for us is that Tabitha and I don’t have to spend the time together. Tabitha can live a somewhat normal life. We were told a few years ago that we would have our little girl until she was sixteen if we were lucky. Now we have hope and that’s something that we never had before.

Matthew: That’s great. Now we’ve already heard that the Australian government is not friendly to cannabis right now. Has there been any signs that they may make an exception for the Fulton family or is it something where you’re considering staying in Canada or what’s the next chapter in your journey do you know yet?

Bobby Jo: Oh absolutely. We’ve been pushing our state government for a special exemption to get the girls home and on their oil. The Australian government is taking very, very, very tiny steps towards this but hopefully Tabitha and Georgia Grace can push it a bit further and a bit faster.

Matthew: Yeah.

Alex: Yeah and we’re working now as well, we’re communicating with now, the person we’re communicating with the Health Minister in Australia and definitely they do believe that there are proven anecdotal evidence anyways and there’s also a ([15:37] unclear) in the United States for infants as young as three months old for severe seizures. So the Australian government is aware of those effects, it has a medicinal benefit but they still have a lot of criteria so we keep it very tight for example for these girls that’s not part of their criteria and that’s why we’re communicating with the government over there in Australia to let them know that there are other benefits as well here which we’re doing research and then until we can prove efficacy it seems as though Australia is not willing to allow too many people to try cannabis. Because the last message they want to deliver and I agree with them is that cannabis isn’t a cure all for everything but just because that’s true doesn’t mean that we have to be so stringent on our rules regarding cannabis that has; that’s not going to hurt anybody and show that it’s helping these girls with their rare lung disease.

So that’s where we’re at right now and at least we’re in communication. The government is being really nice and cooperative and they just want more research but the issue we have here today is that I have this family from Australia staying with me here in Victoria and when their VISA expires that they might have to return home and I can’t allow that to happen because first of all they are a beautiful family. I don’t want them to leave at all because they came into my life and just kind of turned it upside down it’s amazing. They’re a beautiful family so I don’t even really want them to leave, but at the same time they have friends back home, they have a life back home and the courage of this whole entire family is amazing. It makes me want to just breakdown and cry. I love these guys and they can’t go back home if they can’t bring the medicine I mean that’s impossible so it’s almost like a hostage.

It’s a strange situation where we’re at right now Matt but I can assure you that we’re going to you know we’re working together and we’re going to make this happen and we’re going to help these kids and I can’t wait till the day till they can all go back home it’s going to be amazing.

Matthew: Yeah. Now can you tell us a little bit about the degenerative lung disease that the girls have because I just want to understand how the cannabis is actually helping? Is it an inflammation fit here where the cannabis is reducing inflammation?

Bobby Jo: Absolutely.

Alex: Talk to Bobby because Bobby is the mother that has been doing so much research on this for her children. She’s the best advocate for her kids so she’s; so Bobby I think this is one that you should just explain you know it from top to bottom do you want to explain that to Matt ([18:15] unclear)?

Bobby Jo: Absolutely. The girls we basically called the rarest of the rare. They were undiagnosable in our own country. They saw every specialist available to them. We then took it a few steps further and actually had them diagnosed by a specialist at Colorado Children’s and their diagnosis is actually an unknown ILD. So basically it’s the outer lung that’s affected. It becomes so inflamed they can’t put oxygen through to their bloodstream.

Matthew: Wow. So you didn’t really receive a diagnosis you’re saying until you came to Colorado. It’s this variant that nobody understood.

Bobby Jo: Yeah absolutely. As I say they’re the only children in the world that we know of like them. We had been told that we won’t have a name until autopsies so it’s not something that we really want to push for as you probably understand. So we’re happy with an unknown ILD. With is an interstitial lung disease which essentially says it affects the outside of the lung. Where asthma intends to affect the inner and outer airways. Our girls have massive inflammation around their lungs.

Matthew: Okay and Tabitha how does that feel when you’re fully inflamed like that with no treatments?

Tabitha: Well like when I was on steroids when I would get; when my lungs would get quite inflamed for a few years steroids would put the inflammation down to an extent but it never really went away. I was always sore chest and when I would breathe you could hear a crackling noise it was not a fun time but unlike the cannabis oils all the inflammation is gone and there’s no crackle anymore which is a good sign.

Matthew: Right. So a lot of listeners out there who might be on the edge and not understand that you can have the access to this medicine without a high. I mean you’re not walking around high. It’s a legitimate medicine. I mean do you get that question a lot Bobby Jo like hey are you giving your kids drugs.

Bobby Jo: Oh absolutely, absolutely. It’s the go too oh my goodness you’re giving your kids joints. No absolutely not, absolutely not. No it is so high in Omega 3, Omega 6, Omega 9, the list goes on and it is not psychoactive in any way, shape, or form.

Matthew: Yeah.

Alex: Yeah and you know Matt that is the most important thing is we need to educate the public, our communities so that families like the Fulton’s don’t get ostracized just because of the word cannabis and that’s one of the issues that we’re trying to tackle right now and of course through education that’s what we’re going to do and hopefully in the next five or ten years with proper research and clinical trials we’ll prove efficacy and we’ll be able to help other children with this same lung disease.

Matthew: Now have any individual politicians in Australia expressed any sympathy towards your cause Bobby or has it just been across the board just no feedback?

Bobby Jo: Oh no we’ve had the leader of the Green in our own state, Tammy Franks, we’ve been working with her for nearly three years now to try and get some type of exemption. Leaving the country was our last resort.

Matthew: Sure. Yeah especially as you approach a Canadian winter I’m sure you’re thinking that more and more.

Bobby Jo: I will tell you I’m glad she’s on Canada soil because a Canadian winter on Prednisone and oxygen there was just no way.

Matthew: Oh my goodness.

Bobby Jo: We had them at the end of that.

Matthew: Well what can we do, what can listeners do to support the Fulton family here and Tabitha and Georgia Grace? I mean this is really, this is really a touching story. It’s hard to believe that governments with the flick of a pen can restrict our personal freedoms like this but I guess it’s the world we live in at the moment. But how can listeners support you Bobby Jo and Alex?

Alex: Well first of all we do have a foundation or we did start something for the girls here. Anybody who wants to help with donation, Bobby will probably know more about that. The most important thing and maybe Bobby can answer that and you can say what it is the name of the foundation or I keep forgetting the name so what was it again Bobby?

Bobby Jo: It’s the Go Fund Me page.

Alex: Yeah and any help we can get would be amazing that’s for sure. You know we’ve been doing all we can and what I’d really like the listeners if they wanted to do anything that ([23:45] unclear) and that is that you should be open minded and to look into this anecdotal evidence and then see for yourself and then hopefully we can get these licensed producers or people that are producing cannabis to start doing more research and clinical trials and create like a den number so that we can get this medicine in pharmacies for these kids and it could be probably covered by the government.

But also I think if there’s anything that I ask for this whole industry is for us to come together and for us not to make people, just because they use cannabis oil, feel ostracized and put them in the same realm as a drug user or stoner when in reality they’re using it as a medicine that helps them to function through life, and I can assure you that I’ve been in this industry for a while and I’ve helped a lot of people, and they’ve actually healed me by educating me on this plant even more through seeing it happening in real life and I just think if we can share that information with everyone out there and it’s happening. The movement has started and it’s an amazing shift that’s happening right now and it’s happening around the world, and I think we should just continue on the path that we’re on and I think people are opening up. People are really looking at cannabis differently and yeah just educate yourselves and through education we can figure out more about this amazing plant that some people consider medicinal and some people call it spiritual and I’m on both camps for sure.

Matthew: Well Bobby Jo, Tabitha, Georgia Grace, Alex, Marcus thank you so much for being on CannaInsider today and sharing your story with us. We really appreciate it and we hope you Tabitha; I know Georgia Grace isn’t in the room anymore but we hope you get continued access to this medicine and there’s a quick resolution to all this for you.

Bobby Jo: ([25:50] unclear)

Tabitha: Yeah.

Alex: Thank you Matt for the time and for you considering how to spread the word this is amazing. I can’t thank you enough Matt for doing this for this Fulton family. They’re a special family and we really need to get this message out there for all the families and Bobby we talk all the time and she’s getting emails from so many families here in Canada wanting to know more about what these kids are doing and how it’s affecting them and how it’s helping them now with their lung disease. So again Matt I can’t thank you enough.

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(dot)cannainsider(dot)com/itunes. What are the five disrutptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on CannaInsider, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

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

Key Takeaways:
[3:27] – Fulton Family background
[4:16] – Tabitha discusses her condition without using cannabis oil
[5:59] – What is National Access Canada
[8:26] – Overview of the cannabis medicines Tabitha and Georgia Grace are on
[11:11] – Particular strains that are working better to treat the ailment
[14:02] – Biggest change in Tabitha and Georgia Grace
[14:58] – The possibility to be able to use the cannabis oil in Australia
[17:58] – What is degenerative lung disease
[19:55] – Tabitha talks about how it feels with no treatments
[22:11] – Are politicians in Australia onboard with the treatments
[23:11] – How can people support the Fulton family

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at: https://www.cannainsider.com/trends

The Impact of Cannabis on Tourism, Consumer Spending, Society and Taxes

adam orens

Adam Orens of Marijuana Policy Group dives into impact studies for the state of Colorado.

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

As more and more cannabis tax revenue rolls into states such as Colorado, Washington and Oregon we begin to see trends emerge in the way that cannabis is impacting society. To help us understand the impact of cannabis on business and societies Adams Orens of the Marijuana Policy Group. Adam welcome to CannaInsider.

Adam: Thanks Matt. A real pleasure to be here.

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

Adam: I am in downtown Denver, Colorado what is the epicenter of cannabis at the moment.

Matthew: Yeah Rand Paul was just in town like a week ago for the debates and he was saying people in Washington think everybody in Denver is running around high with axes naked. It’s just absolute pandemonium.

Adam: Well as I look at my window I don’t see any of that, but what I am noticing and what I would counter that with to the people in Washington is that this is the center of cannabis business and there are a lot of people running around with a lot of great entrepreneurial ideas at the moment and it’s exciting to be here.

Matthew: So Adam tell us a little bit about your background. How did you get started in the cannabis industry?

Adam: Well I started as an economic and public policy consultant and I’ve been doing that for over a decade with a firm in Denver called BBC Research and Consulting. So that’s a local firm that we deal with a lot of pressant issues in economics in Colorado; land use things like that. But what really started getting me into the cannabis industry was I saw the election returns in the Fall of 2012, and when Amend 64 passed and I really felt that this could be a new opportunity for my consulting practice.

What I thought at the time was there was going to be a new highly regulated industry with a lot of curiosity around as too how big it is, what are going to be the characteristics of the recreational market and at that time I decided that I’d like to try and wade into this industry and see as many people as I could meet at the time, and I could not have expected the fast growth and our involvement in it from the beginning but I’m very happy that I made that decision in 2012.

Matthew: Together with your co-authors you prepared a report for the state of Colorado titled “Market Size and Demand for Marijuana in Colorado.” Can you give us a little overview of what was covered in that report and what’s important about it?

Adam: Sure. This was a report that was commissioned by the State of Colorado Marijuana Enforcement Division. It was so the state could get a handle on how big marijuana demand was in Colorado. And the reason they needed to do that is they are the agency in the state that is responsible for regulating the market and also adhering to the conditions that were handed down through what’s called the Coal Memorandum from the Department of Justice. And so the state that needs to ensure that I believe there are about eight conditions; eight to twelve conditions were met from the federal government and two of those that are important for this report were to minimize diversion across state lines into states where marijuana is not legal.

And then the other one was to ensure that the black market is as minimized as possible and those two conditions have to do a lot with price and price is dependent on supply and demand. And so that’s why the state hired my group to put forth some demand estimates for them.

Matthew: We see more tax revenues coming into Colorado and obviously places like Washington and now starting with Oregon we’ll see more too. What other big impacts are there besides tax revenues and how do you see tax revenues shaping or changing the conversation or perception around cannabis?

Adam: Well there’s a number of other impacts. I would say they’re not financial in nature like Texas. I mean one could say and a lot of this is uncertain at the moment. Marijuana legalization has impacts on children, it has impacts perhaps on education attainment, traffic impacts, and those are still being studied at the moment. I don’t think enough time has passed for there to be any real clear findings on that. I also think things like the cost of incarceration is important when thinking about tax revenue impact and other public costs. It costs a lot to keep a lot of people in jail for cannabis.

One thing also that’s not discussed as much that I’d love to get a little more information on or study more is how does cannabis used for medical purposes impact spending on pharmaceuticals and also public programs for that as well. Can cannabis be used as a substitute for expensive pharmaceuticals and I think that those are important points that we’ll find out more about as more research comes forward.

Matthew: Anecdotally when I talk to PTSD sufferers it does seem to have a huge replacement impact on traditional pharmaceuticals which I think is a net positive, but no way to measure or I don’t have any metrics around that but I do hear that pretty consistently which is interesting.

Adam: Yeah and I’ve heard the same and I think we’re really still at the beginning of our discovery of other conditions and other applications for cannabis as far as medical treatments. Cannabis has not been studied into the degree that other substances had, and I think we’ll have a period here in the next few years where there will be new discoveries coming to light.

Matthew: Give us an idea in pounds or tons how much cannabis is being consumed in Colorado now?

Adam: So that was one of the pieces of our study that the state asked us to quantify for them. And so our estimate and this was at the time. This was done in 2014 and we’re still in the process of working with the state to define a scope for what could be our next study. At the time it was about 130 metric tons. So that’s about 290,000 pounds of total demand and that’s including medical and recreational. All of the cannabis users in Colorado and our best estimate as too the amount that they would consume in a year and that includes what we had estimated for tourism as well at the time.

Matthew: Who are the super users of cannabis and what are their consumption habits like? Can you compare and contrast those to say a regular or occasional user?

Adam: Sure and this is a really important point that was a finding in our study and I think is important for your listeners as they think about their cannabis businesses and what segments to market too. Super users or heavy users are those that use daily or near daily. And in Colorado we found that those cannabis users are about 20% to 30% of the market of the past month users in total, but they account for north of 70% of the demand of marijuana. So it’s very important for those that are thinking about segments to market too those heavy users are a very important market segment in terms of sales volume.

And then also they consume more per day right. On any given day of use if you’re just an occasional user, we did a survey as part of our study and there was one done in Washington as well that according to the responses to those surveys said that the heavy users would consume over a gram of cannabis per day and that is a lot more than a very occasional user. Even those that consume once a month or so are far less than that on any one given day. So if you think about it if there is someone using every day and then their amount per day is so much, maybe more than three times what an occasional user would use. That’s why they account for so much of the market and the demand.

Matthew: Sure. Are there any other findings in your report that surprised you as you were gathering data?

Adam: Well that and this was focused on Colorado. Colorado had a higher percentage of those monthly users were in the daily or near daily category. So in Colorado and that was compared to the nation as a whole, and what that says to me is if you are a cannabis consumer on at least a monthly basis in Colorado there is more of a chance that you’re in that very regular consumer cohort or category.

Matthew: In terms of potency have you uncovered anything between flower, concentrates, and edibles in your data gathering?

Adam: We did a second study for the state. On this one was asked or was mandated by a piece of legislation in the state house here, and that was to look at equivalencies between cannabis in different forms. Between flower, concentrate, and edible and one additional piece of information that came from our study was some trends on potency and a quantification of potency using the state’s seed to sale tracking system called “Metric” and to my knowledge it was the first published study that had a whole lot of records behind it to look at these potencies and what we were showing were that flower was at about 17% THC in potency.

So when you compare that to other literature and kind of historically it’s trending up and sure there are other producers out there that can get their flower as high as I’ve seen things higher than 25% and higher than 30% even. So I think due to the genetics and the research being done and I think largely also because of the rec market flower potency is trending up. Concentrates and edibles are very related. They have a lot of similar components and concentrates are used to make edibles and they’re also developing new techniques for efficiency. It’s more efficient if you are making edibles that your concentrate is strong and so that you can use it to spread out among more batches and so we see a lot of these processes becoming more efficient and people developing new techniques that push efficiency when making concentrates and edibles.

Matthew: You mentioned Metric which is the state of Colorado’s seed to sale tracking system. How onerous is it to keep up to date for that for a business? Is this pretty simple? Do you have anything you could tell us about what businesses like about it or don’t like about it? What it does well any gaping holes?

Adam: I see a system that it’s useful for the state, it’s useful for their enforcement practices, and it’s becoming more useful for data gathering and for using market data in leveraging it for scientific studies like that equivalency study that I mentioned. I have heard anecdotally when we were doing that equivalency study. We interviewed a number of concentrate and edible producers and they did say that it is somewhat onerous to use that they have to devote some staff to it.

That it’s a system that has a learning curve. It’s a little difficult to get in and become a comfortable user of it, but I feel that it was a common complaint among the concentrate and edible producers that we interviewed that they have to hire a staff person and devote it to using Metric, and so they do find that somewhat onerous. Anecdotal though I think from what I’ve heard from the state they are committed to making this industry and this system work, and so I’d encourage those that have issue to report some of that back to the state.

Matthew: You mentioned before that the super user uses so much more than the occasional user. Is there any other intelligence a business owner in the cannabis industry should have handy when considering a new product or how to market their product that you would say would make sense?

Adam: Looking at the overall demand figures I think are very helpful, looking at some of the processes in the equivalency study that would be for a new entrepreneur trying to consider as a business. I would find those two documents to be considered would be a very useful part of your kind of elementary education into this cannabis business. I think looking forward there is a lot that is going to be forthcoming. I think for an established cultivator or product company those two reports are a bit basic for them. They already know some of this. They’re already producing things, but I think moving forward there’s going to be more information that segments markets either geographically or also demographically. I think some of that could come out in our forthcoming study for the state when we get to use Metric a bit more and are able to have two years of this data to start to uncover characteristics of the market that haven’t come forth yet.

So I think next year will be an exciting time for this part of it. I think it’s a great question because this industry is maturing right. In places like Colorado it is a few steps beyond other states. And so I think trying to work your margins, target your marketing to specific market segments those things are going to be a lot more important coming up and I think the research is going to start tracking with that, the market research and a lot of that also can come from their own point of sale providers too. These businesses do have a lot of information at their finger tips. Some public like I was describing but also some that are private data that they are collecting on their own. And I think they’ll have a great opportunity to start using these first couple years of data to benefit them in the next few years.

Matthew: Are there any interviews you’ve done with cultivators, dispensary owners, or someone that’s maybe a processor in the cannabis space that really stood out in terms of it being a learning experience that was impactful for you that changed the way you maybe thought about the cannabis marketplace?

Adam: Yeah, yeah and this is the first tour of commercial cultivation that I went on. This was in February of 2014. We were doing our market size study for the state. We were taken on a tour of a larger cultivation in Denver and I was able to see just the amount of professionalism that went on in that operation and that this was industrial agriculture. This was an agricultural operation and it was very dialed in, very precise, and the expense in the infrastructure that went into that cultivation facility was really eye opening.

The science behind the process was also eye opening and I mean it was really kind of important for me understanding the amount of investment that goes into this and how real this industry is. How it has staying power I believe here. I learned that in my first tour of a large grow facility. I’ve also gone on tour with the equivalency study I did. These extractors and edibles manufacturers and those again were just a high degree of professionalism. Very welcoming proprietor of the operation very invested in their processes and the safety. Either food safety or in the extraction process safety and so that also stood out so just the combination of those tours really kind of I earned a high degree of respect for the professionals that are doing that work.

Matthew: If you could wave a magic wand and get some piece of data that seems impossible or just near impossible for you to get right now that you think would shed a lot of light on things what would you; what would that be?

Adam: I’d love it if there was a piece of data that could say if the vision of Amendment 64 here was working. I wish that would exist. I mean I know this is kind of nebulous what I’m talking about here but people are going to start asking is this working, is this a net positive for society here and I don’t think we’ll ever really know that for sure. There will always be these just disparate pieces of data that we all know may be affected by cannabis legalization like number of incarcerations, incarceration costs, emergency room visits, traffic fatalities, graduation rates all these things that people mention are part of how to measure it but we’ll never be able to isolate the impact of cannabis on that in a silo or in a vacuum and so I wish there was a way to point, a figure that we could point to say oh it’s working or oh it’s not. But I don’t think that is going to exist anytime soon.

Matthew: What can you tell us about tourists and their appetite for cannabis? I’ve witnessed some things on my own in their purchasing behavior at dispensaries but I’m curious your thoughts on that. What the tourists are doing?

Adam: Yeah. It’s funny because you hear a different thing from the state tourism office than you do hear from business owners. I think the state says that it’s a very small percentage and I don’t know the exact figure of our tourist related cannabis but in dispensary owners that I’ve talked to and things that I’ve read in the newspapers. The coverage everybody sites their client base or their customer base as being half and half locals and tourists and that’s even around Denver right so I bet if you’re in more of a tourist based county or area like up in the mountains in the ski resort areas I bet that’s higher.

I bet those retail outlets in those mountain communities may have a higher degree of tourists coming in there. I’ve also heard anecdotally that the universities in Colorado, the public ones are having record high amounts of applications coming in from out of state students and yeah I know that’s pretty funny isn’t it. So I see this disconnect and I see also the tourism impact is going to be a declining phenomenon right. I think as more states or to the degree that more states legalize cannabis I think that that tourism component of the market is going to slowly decrease. But still if you have a cannabis consumer that is trying to decide between too going skiing in Colorado versus going skiing in Utah maybe this weighs in the way they decide where to go skiing that week.

Matthew: What has changed in the cannabis market since you put your report together?

Adam: When we put our report out very early on it was released the July after the rec market opened in January and at the time there was a lot of coverage in the media about taxes being way too high and about how the market is not gaining converts from the black-market as fast as we would’ve hoped and from what I can see that impact is starting to subside. I think as more centers came online, as more product was being introduced into the recreational market, as the novelty started to wear off and the high tourism impact in those first few months we’re seeing prices come down and I think that it’s an indicator that this market is working. That the regulatory structure is generally working. Based on some numbers we saw from the first year of sales in calendar year 2014 the regulated market was in both medical and recreational able to satisfy somewhere about 70% of the demand and I’m not including the caregivers in there as well in Colorado.

So I think for a first year rollout that’s a success and I think as prices when they settle, when they steady to an acceptable amount I think the regulated market share what they’re taking from black-market and underground producers is only going to increase and so I think given what has transpired since 2014 I think both the state and the industry have done a great job at trying to cooperate to make this market a success and I think both sides know that they’re success is dependent on the other and I hope all of that will continue going forward.

Matthew: Adam in closing can you tell listeners how they can find the Marijuana Policy Group online and follow your work?

Adam: Absolutely and we do have a news feed that we try and keep updated as best we can. Our website is www.mjpolicygroup.com. Once again www.mjpolicygroup.com.

Matthew: Adam thanks so much for coming on CannaInsider today. We really appreciate it.

Adam: The pleasure is all mine Matt. Thanks.

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.

Topics covered:

  • How much cannabis is purchased in dispensaries
  • How much cannabis super-users purchase, and why you need to pay attention to this particular type of consumer
  • How tax revenues are impacted and how that is changing the perception of the public

Key Takeaways:
[2:24] – Adam’s background and how he got started in the cannabis industry
[4:10] – Adam discusses the report Market Size and Demand for Marijuana in Colorado
[5:59] – Tax revenues and the cannabis industry
[8:19] – Adam talks about how much cannabis is being consumed in Colorado
[9:24] – What are cannabis super-users?
[11:37] – Adam talks about surprising findings in the report
[12:26] – Discussing potency
[15:00] – Adam talks about Colorado’s seed to sale tracking system, Metric
[16:45] – What should entrepreneurs consider before launching a new product
[19:21] – Adam talks about his view of the cannabis market have evolved
[23:04] – Adam discusses the tourists’ behavior around cannabis
[25:10] – What has changed in the market since the report was produced
[27:40] – Contact details for the Marijuana Policy Group

Important Update:

What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at: https://www.cannainsider.com/trends

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