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The Napa Valley of Cannabis – Vashon Island with Shango Los

Shango Los

In this interview with Shango Los, Founder of Vashon Island Marijuana Entrepreneurs Alliance, we explore how an island near Seattle that has been zoned for cannabis cultivation is working hard to be the Napa Valley of cannabis.

*Guess What? You could be listening to this interview on your commute. Get the free podcast for your iPhone or Android Device*

Key Takeaways:
[1:09] – Shango’s background.
[2:32] – How did Vashon Island become a place to grow cannabis?
[5:27] – How do Vashon Island residents feel about legalization?
[6:53] – Frictions for the small minority of residents that don’t approve the legalization.
[8:39] – Growing limitations for cultivators.
[10:26] – Shango gives tips on how to have a successful crop in the Pacific Northwest.
[13:15] – Shango talks about the Vashon Grown label.
[16:17] – What are residents embracing besides cultivation?
[19:34] – How do the black market growers and the new cultivators getting along?
[23:00] – Shango talks about things he would do differently if given the chance to go back.
[26:18] – Shango discusses the 25% excise tax in Washington.
[28:09] – Contact details for Shango and VIMEA.

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.

Washington State’s Vashon Island, often referred to as Weed Island, has been designated as a place where cannabis will be allowed to be grown by state officials. We’re going to find out the challenges and opportunities facing Vashon Island today with our guest Shango Los, the Director of Vashon Island Marijuana Entrepreneur’s Alliance, also known by its acronym VIMEA. Welcome Shango.

Shango: Yeah thanks Matt. Thanks for having me on the show.

Matthew: I want to dive into what you’re doing on Vashon Island, but before we do that can you tell us a little bit about your background and how you got into this industry?

Shango: Sure. Well I’ve been involved in the cannabis industry in one way or another since 1989, but most of that has been as an enthusiast. In 2012 though when recreational marijuana was legalized here in Washington, my clients started to change. My primary career’ as a Brand Strategist and Product Developer. And I found that all my new clients here in Washington were interested in bringing legal cannabis products to the market. And here on Vashon Island we’ve been producing marijuana for years. But all of my clients who are coming to me were concerned with how they would be seen in the community because even though marijuana is grown here, not everyone’s in favor of it. And so they were resisting starting their businesses because they were concerned with how they’d be received in the community. And so I got involved with legal cannabis and started VIMEA as a way to do some outreach in favor of marijuana in the community, to make the island feel safer for Vashon Island growers.

Matthew: And can you help listeners understand how Vashon has become a place where residents will be growing cannabis. There is a sequence of events with the regulators and so forth. Can you just let us know how that unfolded?

Shango: Absolutely. It hasn’t been very linear or smooth here in Washington unfortunately, but the first thing that happened was 15 years ago Washington passed legal medical marijuana which really got folks talking about cannabis as medicine. Certainly people had been thinking about cannabis as a recreational intoxicant for a long time. But it wasn’t until about 15 years ago that people really started thinking about what it could do for us as a holistic adaptogen for the human body. Then just two years ago in 2012 the state legalized recreational cannabis through I502, and that brought a whole new wave of folks interested in the money making aspects of marijuana, more than interested in either recreation themselves or using it as medicine.

However, you know, Vashon Island has been producing prohibition era marijuana for almost 40 years, and we’ve got a reputation far and wide for some of the best indica and unique growing practices anywhere. So it’s been something that’s been part of our culture for a couple of generations. But legally in Washington that landscape has begun changing just in the last 15 years.

Matthew: Now what is it like living on Vashon Island in terms of cultures and values and people? I mean, give us sense of how big the island is and what it’s like to live on the island.

Shango: Sure. Even though we’re close to Seattle, it’s very rural here. Vashon Island is a small island that it can only be reached via a 20 minute ferry from Seattle. So it’s a rural farming community, but we also have got easy access to Seattle both to buy fertilizer and hydro gear and lights, but also as a market for our produce as well. Vashon has the highest number of advanced degrees per capita than any US city. With that said, again our primary activity is organic and permaculture, agriculture.

The values of the community are pretty diverse. Some see Vashon as a vacation destination. Some see it as an artists’ enclave, but most everyone values the farms though because that’s usually what brings people to Vashon. They come to Vashon for whatever reason, and they get a taste of what it’s like to shop at a farm stand and buy organic and permaculture produce directly from the farmer without any middleman. And you see the health of the produce like you don’t in the grocery store. And people just tend to move here to be closer to that kind of eating experience. And so you know, we’ll talk a minute about kind of the culture split around marijuana on the island, but one thing that brings people together is the love of the rural living and love of the organic food itself.

Matthew: Where do Vashon residents stand in terms of favoring legalization versus say the rest of
Washington State as a whole?

Shango: Well when legalization was voted upon two years ago, 70% of the residents of Vashon Island voted in favor of it, where as the rest of the state was just above 50%. So when our King County officials, where we live, come out and talk to us about incorporating marijuana agriculture into our island, they speak to us with an assumption that we are in favor of it, and that’s probably why they zoned the entirety of our island for outdoor grows.

Matthew: Yeah that’s pretty crazy that they zoned the whole island.

Shango: Yeah it’s actually really humorous here. When we originally saw the maps, and we thought that the color chart was off because the color for an okay place was to be shaded green. And the entire island was shaded green, and we thought it was an error, but indeed it was not. It’s because the way that the zoning works. You have to be on agriculturally zoned land, and almost the entire island is.

Matthew: Well so there’s a culture of agriculture on the island. Is there anything else about the island? We’ve got 70% of the population that is in favor of legalization. You’ve also got an agriculture background. Is there anything else? And also for the other, the small minority that’s not in favor, is there any problems there? Is it causing some friction?

Shango: Well friction, yes. Not as much as some would have thought though. Mostly the folks who are concerned are concerned about marijuana getting into the hands of their kids. And so that’s something that you’d have to deal with on the island regardless of legalization because marijuana is just such a part of the island and was even in the prohibition era. I don’t think that the availability of cannabis on our island has increased at all with legalization. It’s just the same, you know, if you’ve got a full cup, you can’t fill the cup up any more. But I understand some of their concerns with specifically edibles.

We had an issue in the last year where edibles producer, EdiPure, was planning on moving to the island and purchasing the largest building on the island to grow and produce their candies and other edibles here. Well unfortunately EdiPure mostly shows their candies and gummy bears and things like that in their advertising, and that’s what the concerned parents focused in on. They didn’t want cannabis candy being produced on the island. And some folks pushed back against that, and we did quite a bit of outreach. In the end, EdiPure decided that the location wasn’t appropriate for them mostly because of the zoning laws here in King County. But it did cause a lot of grief in our small 10,000 person island, and it did cause a schism. Other than that though, people are pretty much behind the legalization of marijuana on the island, and especially as it relates to medicine. They’re just not as much in favor of the candy aspects of it.

Matthew: And how much are cultivators limited in how much they can grow.

Shango: Well that depends on what set of regulations you’re participating in. So for example many producers are medical producers, and so if you can pull together yourself and two other people, you can put your three medical authorizations together and grow up to 45 plants. And that’s what you see mostly here on Vashon Island. If you get a recreational license from the state, you can grow up to 30,000 square feet of canopy, which is a very significant grow. As of now we have one licensed grower on the island. We have five more that are in the licensing process, and we’ve got a whole sleuth of new folks that will be submitting license applications when they reopen the window, whenever that may be.

For most folks though, they are not legally allowed to grow. So the vast majority of folks are growing for themselves, for their medicine and that is strictly black market because in our state you’re not yet allowed to grow for personal consumption. So I would say the majority of the growers are black market, but they’re small growers. And then the next step up are medical growers of which there are many, many of those who are all around 45 plants. And then the newly arriving I502 growers which can have up to 30,000 square feet of canopy.

Matthew: And now being in the Pacific Northwest and having a strong tradition of growing outside as well, I’m sure it presents with the moisture some specific problems and issues. Is there any tips or advice you can give people that are growing in those type of geographies on how to have a successful crop?

Shango: Yeah you’re right about that. Where we live in the Northwest is not necessarily the most opportune place to grow. Even our friends over in Eastern Washington have got longer, hotter summers than we do here on Vashon Island. The big advantage we have is just that we’ve been doing it for so long. We’ve got a collection of artisan growers who have been collecting genetics, and have been designing their own adaptive land races over the last 30 to 35 years. When you get a set of genetics that you really like and you can really work with, and then you grow that and you seed it year over year, your best plants, what you end up with are plants that have got a short blooming cycle. They are resistant to mold and rain. And because of our short seasons we tend to specialize in indicas because the sativas just simply don’t have the time to finish outdoors. And really outdoors is the preferred way.

I mean people have had to move indoors because of law enforcement and the prohibition of it. But I would say that the tendency towards Vashon growers to grow them under the sun so that you can get a wider terpene profile, better taste and you know certainly better the environment. We’ve got an island full of environmentally aware folks. And as much opportunity as people can find to decrease their electrical use, the better. So what we find, we collect genetics from Vancover BC, Canada and from Oregon and some stuff from Humboldt. And then we year over year adapt it for our region, and that’s what people tend to use. People don’t flirt with a lot of strains. We’ll find a strain and work with it year over year to adapt it for where we are which is not so as common in Seattle where a lot of our friends are, because a lot of our friends in Seattle are growing indoor. And so with indoor they can grow seeds from anywhere, and strains come and go a lot more quickly in Seattle than just 20 minutes away out here on Vashon where truly is handled more like marijuana agriculture than it is a seed could grow in a warehouse.

Matthew: Now you want to create a Vashon Grown label which sounds like a really good idea. Can you tell us a little bit about what that is and maybe some thought on how other communities can do something like that because that really maybe adds a value? And also as time goes on, you know, you want some way to stand out and maintain a profit margin as more and more cannabis comes on the market. So if you could just talk a little bit about the Vashon Grown label.

Shango: Sure. So we see Vashon Island as an Appellation region like Napa is for wine or Champaign, France is for Champaign, or even our friends in Humboldt County for cannabis flower as well. All of these places produce a certain kind of product that people can rely on that region to grow. And with Vashon Island Cannabis because we are primarily are growing outdoors, we’ve developed these seeds that really explode in our environment, and just the quality of indicas that come from our island. People have come to know that they can rely on Vashon Island for high quality, organic marijuana for, you know, either recreation or for medicine.

And you know when I started VIMEA originally it was to help make the island feel more comfortable for growers so that people would come out of the woodwork and participate in the community as a grower. But as people came out and growing became more normalized on the island, we moved into more of a marketing stage because VIMEA the organization itself does not produce cannabis. We are a community outreach and marketing trade organization. And so we do things to support the growers themselves. We do things like have a booth at the farmers’ market where people who have questions about cannabis medicine or growing or the law or how to keep it out of their kids’ hands, so they can come and ask questions. And we do all sorts of, we do a monthly visiting expert series so people can get educated.

And so by doing all of this we’re creating an environment that is beneficial for growing cannabis. And so when you feed and water this environment it grows, and so we extend that into the national community by telling people what we’re doing, and people start to understand that. I understand, you know, if I want a pinot noir of a certain kind I’m going to go the Willamette Valley region or Oregon. But if I want really fantastic, organic, outgrown indicas, well I want that from Vashon Island. Also we’ve got a great deal of folks here who are into creating value out of product medicines, you know, salves and tinctures and things like that. And when you see Vashon Island Produced on labels people just feel like they can trust it a little bit more because we are rural, and we have been doing this for a long time, and we’re not just a new company that’s popped up, you know, just because of the I502 recreational movement.

Matthew: Now you mentioned that some of the residents are creating tinctures and salves and things like that. Is there any other residents that are doing things besides cultivation that are somehow embracing the end of prohibition on the island?

Shango: Sure. Well we have so many homeopathic healers on the island. It’s amazing. We’ve had people who are making non-cannabis tinctures for generations to heal themselves and their families. And a lot of those folks they used cannabis as medicine but just didn’t talk about it to many people because it wasn’t as socially acceptable yet. But now we find that those same holistic, herbal healers who were using other plants are now feeling more comfortable to use cannabis in their tinctures and their salves, in their lip treatment. What do you call it, like the chap stick, you know, lippy, and in all these different applications. And because they are already so experienced with making these medicines with other plants, just swapping out to cannabis is an easy jump.

Yeah I would say, you know, we’ve Vashon Botanical Society who produces a lot of things for the medical dispensary market here on the island. And Vashon Seed and Mercantile which produces medical specific genetics for the rest of the Northwest. So with the island already being rural it was just a natural extension of what we do here.

Matthew: How have people from Seattle and off the island shown interest in what’s going on in Vashon?

Shango: Well first of all they love to get on a ferry and come over here and buy some mota directly on the island. We’ve got a medical dispensary here that specializes in Vashon Grown flower. Also, you know, it’s just available around the island. It’s not all that hard. So people enjoy either coming over and staying at a bed and breakfast, and coming across some cannabis while they’re here. We’ve got a beautiful island with lots of trails and they experience those. And if you’re here at the right time of year you can go to the beach and watch orca, you know, killer whales off the coast and that’s great.

Matthew: That’s awesome.

Shango: So you know it’s very much a wonderful vacation-y place to be, you know, even if you just come for a weekend. And you know, living on an island has got a certain aspirational quality to it. And so I think that’s one of the reasons why Vashon Island marijuana is so appreciated in Seattle proper because when you’re smoking organ cannabis from Vashon your headspace is that of an islander. And you’re like, you know, this came from the island and this was grown with care for me, and you know it kind of warms the soul a little bit. And I think that’s part of the image and the marketing that people enjoy about Vashon Island is that Vashon’s a calm, good place with nice folks and they grew this cannabis just for me.

Matthew: Now how are growers that have been doing it in the black market way getting along with maybe the new cultivators? Are they the same parties, are they kind of cross pollinating or are they kind of like the Montague’s and the Capulet’s where they’re totally separate?

Shango: That’s a really good question actually. They don’t interact all that much honestly. The prohibition era farmers are still pretty spooked. We had DEA enforcement and helicopters, you know, all through the 90’s. And you know the bigger prohibition era farmers on the island, it’s how they afford the clothes for their kids to go to school. And it’s very real and important income for these folks. And so the larger prohibition era growers they simply haven’t come out of the closet. They are still invisible. They have not picked up medical licenses. They don’t have medical authorizations because they don’t trust the government. And with what we’ve seen here with enforcement over the last 30-40 years there’s good reason for them to feel sketchy about coming out into the light so quickly, and so I don’t blame them.

So luckily they reach out to me because they know that I’m a good resource for them and I’m not a threat. And so I get to go and visit grows and help them get in contact with the people they want to get in contact to get exotic genetics. But mostly they stay pretty invisible. The medical growers, many of them are prohibition era growers who have decided to take the risk to be a little more public, and those folks are very social. They work together, they work with VIMEA, and we get together with bulk orders for certain fertilizers or to have a big truck of soil, specialty soil to be brought to the island or things like that. And so the medical folks, there’s much more social in that.

When people come out to the VIMEA meetings I would say that it’s a vast majority medical growers with some prohibition growers, you know, mixed in. And then you’ve got the mom and pop folks and that’s the part that’s taking off are folks who just feel confident to grow, you know, six or ten plants for their own use on their property, mixed in with their other crops. And those folks are downright gregarious about it because with the possession of marijuana being legal here and with the amount that they’re producing being so low, they just feel like there’s little to no risk. And so you’ll get folks that are just nice neighbors and you go over to their house for tea on their porch and you just happen to see they’ve got six nice plants out in the back. And, you know, it’s a little bit a joke to them, but they’re not really concerned about it anymore.

It’s not like it used to be where if your neighbor knew that you were growing five or six plants that they throw you under the bus and call the sheriff. I mean if you call the sheriff there’s nothing going to happen anymore. And so people are feeling much more comfortable to grow for their own personal use, and I think that’s part of the normalization of what’s happening where people are just, the fear is going away. And as the fear goes away, we’ll see an increase in diversity of growers and what they’re growing and of the medicines. And I think that will be to everyone’s benefit.

Matthew: If you were to do this all over again and start from the beginning with the advantage of hindsight, what are one or two things you would do differently that you might suggest to other communities that might be in a similar situation?

Shango: Well that actually brings up two different lines. So I’m going to give you two different answers. The first thing is that I would probably choose to use the word cannabis in the organization’s name instead of marijuana because the primary complaint I’ve gotten from people is by using the word marijuana and what they believe it to be a negative term and a slur which I was never aware of. And where I was brought up it was just what it was called. It was just a colloquial term. But as the organization gets more national and international exposure, I think I probably would have used the word cannabis instead of marijuana in the name.

That aside, other communities in the country are actually reaching out to us to learn from the mistakes that we have made and how they best can integrate marijuana agriculture into their community. And the thing that they invite me most to speak about is I invite folks in these communities that just approaching legalization to embrace their local pot farmer. Because you know, we really want members of the community who are already upstanding, friendly, good folks who are involved with the schools or their churches or they already own a business. These are the people that we want moving into the legal marijuana sector to produce the product.

What we don’t want is that a stigma continues to exist around farming cannabis so that the good folks in the community shun it and stay out of the game. Thus making the only people who are interested in growing cannabis the fringe folks who already may not care about the community values. And because they don’t care about the community values is why they’re choosing to grow. What we encourage folks to do is if you’re in favor of cannabis, if you understand that it’s healing, if you understand that the prohibition of it hurts our economy and is racist, go to your neighbor and say, hey neighbor I just want to let you know that if you got into the cannabis business I would be in favor of it.

Take a proactive position to just openly speak to folks and saying I’m into it. So go ahead and feel comfortable to grow neighbor of mine because if we don’t make our communities open to cannabis when it does come, and it’s going to come. We can see through the most recent elections, that the cat’s out of the bag, the genie’s out of the bottle. This is going to be national now, and the best way that we can integrate it is if communities are open to it so that good community folks who have got the entrepreneurial knowledge and hopefully they can partner with an experienced grower. They get together and do something. So the profits are going back into the community and the company itself is working in a way that benefits the community.

Matthew: Now switching gears a little bit to regulation and tax issues. There’s a 25% excise tax for cannabis in Washington. Does that seem punitive and unfair, and what has been the reaction to that?

Shango: Well it’s actually even worse than that. It’s actually 75% because it’s a 25% tax at each level. So the grower gets taxed 25% on their sale, and then when the producer sells to the retail store there’s a 25% tax there, and then when finally purchased by the end user there’s a 25% tax there. Yeah it’s huge. And so unfortunately the I502 recreational marijuana that is on the market now is exceptionally expensive. You know it’s $25 to $35 a gram right now. And while we do expect that number to decrease as more growers get licensed and there’s more in the market, the going price is $10 in the medical and black markets. So it really makes it hard for anyone to see why to go to an I502 recreational store and pay $25 to $30 for that gram when you can actually get a better gram for $10 at the medical shop.

So most of us expect that the 75% tax will be amended more than like this next legislative session and to decrease the burden. Some of the bills that I have seen that have been prereleased for this legislature do that, and we’ll have to see how it goes. But they’ll have to increase the number of I502 legal growers first off to be able to decrease that price, and then they’ll probably have to decrease the taxes a bit as well.

Matthew: In closing, how can listeners learn more about what you’re doing on Vashon Island and follow your work personally, Shango?

Shango: Sure. You can go to our website which is www.vimea.org, and we’ve also got a fantastic Facebook page where you can get some flavor about what’s going on here and see some great photos, and that is www.facebook.com/vimea. And I’m Shango Los, and if you and your community are interested in learning more about the experiences that we’ve had and how you can benefit from the good things and the bad things that we’ve done, feel free to reach out and we’ll see if we can help you help each other.

Matthew: Well Shango, thanks for being on CannaInsider today. We really appreciate it, and we also appreciate all the work you’re doing to help the community where you are in Vashon. That sounds like a lot of fun work you’re doing.

Shango: Well thank you very much. I’m a fan of the show, and I’m grateful to be on it, and thank you for hosting me.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. 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 shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us feedback@cannainsider.com. We would love to hear from you.

Exploring the Cannabis Genome and Its Promise to Revolutionize Growing

Nolan Kane

Nolan Kane PHD is mapping the cannabis genome at The University of Colorado (Boulder) and Kevin Frender is a Managing Partner at BlackDogLed. They help us digest and understand the promise and opportunity of genetic study as it pertains to cannabis.

*Guess What? You could be listening to this interview on your commute. Get the free podcast for your iPhone or Android Device*

Key Takeaways:

[1:35] – Nolan describes his research
[2:52] – Kevin discusses the promise of genetic study in cannabis
[3:36] – Nolan explains what determines the genetic profile of a plant
[4:43] – What is synthase?
[5:38] – Kevin talks about Epigenetics
[6:29] – Nolan explains how his research helps cultivators
[11:08] – Broader look at Epigenetics
[13:59] – Nolan explains hybrid vigor in the context of genetics
[16:41] – Kevin explains what hybrid vigor looks like
[17:30] – What aspect of Nolan’s research is exciting businesses
[18:52] – Kevin explains the benefits of LED lighting
[20:33] – Nolan gives information on how to donate to his research

 

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.
We are going to do something a little bit different today. We are going to explore the cannabis genome and its promise to transform the cannabis industry. With me are two special guests. First is Nolan Kane. Nolan is leading a groundbreaking effort to map the cannabis genome. Nolan holds a PhD in Ecology and Evolutionary Biology from Indiana University/Bloomington. Nolan is currently an associate professor and researcher with the University of Colorado Boulder’s Department of Ecology and Evolutionary Biology. Next is Kevin Frender. Kevin is a managing partner of Black Dog LED and has an incredible combination of horticultural knowledge and first hand growing experience from his 20+ years of growing. Nolan and Kevin welcome to CannaInsider.

Nolan: Thank you.

Kevin: Thank you very much.

Matthew: Nolan let’s start with you. Can you describe the research you’re doing at Colorado University in Boulder?

Nolan: Sure. Basically what I do is I study actually quite a few different kinds of plants, mainly sunflowers and some wild mustards of different kinds and now cannabis. And what we do in my lab is we sequence all the genes, in other words, the whole genome. That’s what we call all of the genes that make up an organism. And we use that to understand what makes that particular species interesting and unique, how it differs from other related species, what some of its evolutionary history is, and a lot of the work that we do ends up providing a lot of applied tools as well. Because basically as you sequence the whole genome and understand how a plant or animal works, then that helps anyone who wants to study that plant in the future or animal.

Matthew: Now Kevin when you look at Nolan’s work and the mapping of the cannabis genome, how do you understand this? Where do you think the biggest promise is here?

Kevin: Well I think it really holds a lot of promise in terms of the implications for better understanding the plants and allowing for better breeding and cultural practices to get what we really want out of plants. Once we understand what the plants are really capable of, what their genetic constructions allow them to do and how best to use those particular instructions to our advantage, we can grow crops a lot more efficiently and get what we really want out of them.

Matthew: Now Nolan when you say the genetic profile of a plant, for someone that’s a novice, what does that mean? How can you frame that for someone that really doesn’t have that big of an understanding of genomics?

Nolan: Yeah that’s a good question. So what determines the genetic profile is the DNA of a plant. So what we do is we sequence all the DNA which is really the instruction book for that organism. And for instance if a particular plant that we sequence has the sequence for THC synthase, we know it has the capacity to make THC. But if it instead has the capacity to make CBD, it will have CBD synthase sequence instead, and some plants have both in which case they can make both of those compounds. So that’s just one example, but that tells us a lot about the plant, helps us make sure that we’re growing what we want to grow, and it certainly could be used by people on the private side to make sure they’re growing what they want to grow.

Matthew: Can you just back up and explain what synthase means?

Nolan: That’s a good question. So synthase is just a protein that makes something. So THC synthase makes THC. CBD synthase makes CBD. Any other number of compounds are made by other types of synthases or related types of proteins.

Matthew: So Kevin when you think about the genetic profile, what’s the most important thing you think about when you think about a plant’s genetic profile?

Kevin: Well the genetic profile is basically the set of instructions on how to build that plant and get it to live as well as generate any other compounds or fruit or flowers or substances within those fruit or flowers. So it’s important to understand what a plan is really capable of. Epigenetics is a fairly recent discovery compared to genetics. And it’s basically like bookmarks in this set of instructions telling you, “Hey follow this,” or “Ignore this section”. And only by understanding both can you really understand and figure out how to make changes that you really want either through breeding or cultural practices to get what you really want out of the plant. And by understanding everything involved, we aren’t poking at something in the dark anymore. We can actually make educated guesses and make a lot more progress.

Matthew: Nolan, how can your research help cultivators identify and select the best seeds and plants. Because at the end of the day, I mean this is incredibly interesting, but they’re saying, okay now what can I take away from your research to help me as a cultivator?

Nolan: Yeah absolutely. It is a challenge because we cannot work very easily directly with most of the growers and breeders. However, the information that we’re providing to the public can be used by growers and breeders to do all kinds of things. So as more and more people are interested in breeding for high CBD, for instance, a number of people have become interested in using genetics to do that. And instead of growing the plants up to maturity and letting them flower and then testing the THC level and the CBD level, they can throw out a good portion of the plants that they don’t want by just looking at the genes. And if they don’t want THC to be created, they can just toss any seedlings very early on just based on the genes that those seedlings might have. If they have THC synthase, if you don’t want THC, you can just throw those away. On the other hand if you want some level of THC and CBD, you can select plants that have both of those. If you only want THC, I suppose you could just select the high THC plants.

So that’s just one example. In our own work we’re also interested in flowering time and all kinds of other traits. And as we develop a better genetic understanding of all this, we can develop the tools so that people could select any combination of traits that they wanted at the seedling stage. That would allow them to grow potentially thousands of seedlings, select which should be the best three or four out of those, grow those up to maturity and see which ones have the traits in the best combinations that they want.

Matthew: Kevin, on a practical level how big of a benefit is what Nolan just described in terms of being able to identify a seed or a seedling that has optimal characteristics for a cultivator?

Kevin: Yeah Nolan actually covered most of it. Just like any other crop cannabis has and will continue to undergo selective breeding and modification. And being able to understand the genetics which effect the whole process allows us to selective but conventionally, without direct genetic modification create hybrids which perform better than their parents and demonstrate the traits of combinations of traits that we are really looking for. So being able to correlate specific genes with traits you’re looking for and being able to easily test for those allows you to select the so called perfect seed from among thousands.

So with traditional breeding you might cross two plants and end up with a thousand seeds, and the only way you would be able to tell which of those seeds were the best in the past was to literally plant every one of the thousand seeds, grow them up and wait for them to show what they were going to do which takes months and a lot of space, time and effort, not to mention money. So with genetic testing you can test the seedlings at a very small stage and literally pick the two out of a thousand seeds that you want to grow up and look the most promising and not waste your time, space or money on growing the other 998 that aren’t going to be of use to you.

Matthew: So that’s huge. So we have the confidence of a cultivator saying I have near complete confidence what this test will produce that, you know, these plants, these three out of a hundred or a thousand will have the optimal results which means better return on investment for a cultivator, speed and taking out a lot of the variables, and then an optimal harvest not just for the cultivator, but also for the end user that’s looking for a certain characteristics that are totally dialed in. So that’s pretty transformative. Now Kevin you touched a little bit on Epigenetics, and I’m going to show my ignorance here. My understanding of Epigenetics are somewhat a plant interpreting it’s environment to express its genes in a certain way. Can you talk a little bit about Epigenetics and what that means?

Kevin: Certainly. So if genetics are the instruction book for how to grow a plant. Epigenetics are like bookmarks that say, “Hey read this section, do this or skip this one”. And a lot of research is just recently started looking into Epigenetics over the past decade or so. And we found that interpreting the genome is a lot more complex than we had originally thought it would be. Without understanding how this Epigenetic instruction selection, I guess, is actually being interpreted by the plant. The plant may have a gene. For example, the codes for CBD production, but if it’s not being triggered into actually creating that it does you no good. So you have to understand whether or not that gene is turned on or off and that is Epigenetics, and it turns out more research that’s being done into Epigenetics that a lot of Epigenetic factors come from cultural practices as well as even previous cultural practices. So the plant may remember essentially that fact that 3 months ago it went through a period of drought, and that may have triggered some Epigenetic changes. And being able to figure out how to trigger those ourselves or undo those if we need to is really important for getting the most out of our cultural practices with plants.

Matthew: Wow, Epigenetics just sounds like a fascinating field of study. Nolan, are there any other examples of plants using Epigenetics to respond to its environment so it can thrive that you can think of?

Nolan: Yeah plants use a combination of genetic and environmental signals to interpret their environment all the time. They can’t move like animals can. So instead they respond to their environment in all kinds of complicated ways. They grow differently depending on whether they’re in the sun or in the shade, even on what kind of shade. They can sense when they have neighbors nearby that are plants and grow differently in response to that. So our understanding of Epigenetics is only, people have done a lot of good work on it, but I feel like it’s only beginning to be at the point where we can actually use it in a non-model plant like cannabis where there’s a lot less research than some other species.

Matthew: Now Nolan can you introduce the idea of what hybrid vigor is and how we can understand what that is in the context of genetics?

Nolan: Yeah. Hybrid vigor is just any time when having… Well I guess let me start all over. So I guess hybrid vigor is when yo have two parents that are very different from each other and the offspring does better than if you have two parents that are very much the same. So for instance in humans there’s all kinds of laws about who you’re allowed to marry. You’re not allowed to marry siblings or cousins and that sort of thing because there are a lot of genes where it’s really really harmful to have inbreeding. The hybrid vigor is the opposite of inbreeding really, and we take advantage of that in plant breeding to cross very distant relatives. In many cases that leads to something superior compared to crossing two things that are very closely related.

Matthew: Nolan, is there an example from human genomics that can illustrate hybrid vigor?

Nolan: Well yeah. So the Hapsburgs famously died out because of all kinds of genetic inbreeding, same thing with Russian Princess’s royal family there. Many of them had hemophilia which is a recessive gene, and they wouldn’t have… They would’ve still had that gene, but that gene is masked by the normal gene. So if they had married a Russian peasant instead of their close cousin, they would’ve had offspring that were perfectly healthy, but because they married somebody else that also had that same hemophilia genetic background, a lot of their kids, even in some cases, all of their kids had hemophilia and all of the health problems associated with that.

Matthew: Interesting. So is it fair to say, Nolan, that nature loves diversity?

Nolan: Sure that’s one way to put it, absolutely.

Matthew: Okay. And Kevin, just in your day to day growing practices, have you witnessed hybrid vigor? What does that look like in action?

Kevin: Oh absolutely. Oftentimes you can cross two different plants and end up with a child that is two to three times the size of its parents and just grows much more vigorously, produces much better. It’s a genetic play of the lottery any time you cross two things. And the more different genes you have, the more chances your lottery ticket is going to have of winning it big I guess.

Matthew: Okay. Now Nolan, your research is really important. A lot of people are watching it. What kind of businesses are approaching you, and what kind of questions are they asking? What are they getting excited about concerning you research?

Nolan: Well so my research has a lot of different applications. I mean a lot of the stuff that I do is really fundamentally valuable science from basic science point of view. In terms of more applied side of things the main interest has been on CBD breeding efforts as well as breeding hemp that will do better in Colorado due to flowering time and other environmental signals making it so that it will really thrive in the Colorado environment.

Matthew: Now Kevin we had you on the show a few months back talking about LED versus traditional lights. And I think there’s still a lot of confusion out there about, you know, the benefits of LEDs and how they compare and contrast to traditional lighting. Nolan’s using the Black Dog LEDs to grow some of his plants. Can you just describe again the benefits of using LED in particular, you know, usable light? There’s one thing that you mentioned in the past about, you know, infrared just being entirely unusable, yet that’s what so much of the traditional lights put out there.

Kevin: Right so plants evolved over millions of years to exploit the environmental niche they had to grow in, and LED lights allow us to tune the spectrum for exactly what plants want and what plants need to grow. It turns out plants don’t typically use a lot of light in the yellow and green area of the spectrum. That’s why they look green to our eyes. They reflect most of it. And so it’s wasteful to actually give a plant a lot of that light as opposed to the light it actually can absorb and use. So LEDs allow us to tune that spectrum to not create wasted light that the plant isn’t going to use and is gong going to serve to heat up the growing environment and the plant’s leaves.

Matthew: Now Nolan, watching the Black Dog LEDs in action as you grow your plants at the university, what’s your feeling about them?

Nolan: We haven’t done any formal tests of LEDs versus anything else in sunflowers or any of the other plants that we’re growing, but the plants that we’re growing are certainly very healthy . And I feel like the… I’ve been very impressed by the quality of the lighting and the performance of plants under them.

Matthew: Now Nolen in closing, how can listeners learn more and support your work because I understand you operate under donations at the university. How can listeners support what you’re doing?

Nolan: Yeah. So we don’t have any big grants to fund any of this. It’s hard to get funding for any science these days, especially this kind of potentially very politically sensitive topic. It’s really hard for federal agencies to find money to support us. But fortunately we have had some very generous donations from some private individuals through the CU Foundation. If you’re interested you can go to my website www.cannabisgenomics.org/donate. There’s a lot of different ways that you can donate to my work or work from related nonprofits that my colleagues are in, but really the neat thing is that the university has set up a fund to make my research easy to fund. And you can donate to the University of Colorado Foundation Fund 0125196. And so the next time the University of Colorado calls to ask for your annual donation, you can have it directed towards my research if you’re interested.

Matthew: Great. And Kevin how can listeners learn more about Black Dog LED?

Kevin: Probably just to go to our website. We’ve got a lot of information up at www.blackdogled.com.

Matthew: Excellent. Well Nolan Kane and Kevin Frender, thank you so much for coming on the show today on CannaInsider and educating us about, you know, the cannabis genome and how to think about it. We really appreciate it.

Nolan: Thank you.

Kevin: Thank you very much.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. 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 shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us feedback@cannainsider.com. We would love to hear from you.

Cultivating Hemp and Creating Hemp Coffee with Veronica Carpio

Veronica Carpio

Veronica Carpio is on the cutting edge of cultivating hemp in North America. She tells how we can think about the hemp opportunity, the ins and outs of growing hemp and about her tasty hemp coffee, called Colorado Hemp Coffee.

Key Takeaways:
[1:22] – Veronica explains how she became involved in the hemp industry.
[2:08] – The evolution of hemp importation to now domestic growing
[3:25] – How hemp seed is sterilized
[4:11] – Characteristics of hemp
[5:51] – Compare and contrast hemp and cannabis
[8:13] – How does hemp help restore the environment?
[10:20] – Federal guidelines on hemp
[12:24] – Extracting CBD from hemp
[16:33] – Most common questions asked by people looking to get started with hemp
[18:36] – Veronica explains hemp coffee
[22:27] – How to learn more about Veronica’s coffee and hemp farming

*Guess What? You could be listening to this interview on your commute. Get the free podcast for your iPhone or Android Device*

Read Full Transcript

Our next guest is a hemp advocate and business owner. She’s the owner of Colorado Hemp Coffee and actively cultivates hemp herself. I am pleased to welcome Veronica Carpio to CannaInsider today. Welcome Veronica.

Veronica: Hi everybody, thanks for having me.

Matthew: Now Veronica can you give listeners a sense of geography, where are you in the world today?

Veronica: Yes, I’m located in Boulder, Colorado. I’m a native from Colorado, and I currently work and live in Boulder.

Matthew: A rare native. They’re elusive.

Veronica: Yeah it used to be everyone was a native, but that’s changed.

Matthew: Now what’s your background on hemp? How did you get involved in the hemp industry?

Veronica: Well my background came from the marijuana world originally. I was involved with dispensaries and stuff like this for quite a while. And then I would say I evolved to hemp. So I started doing hemp quite a while ago. I would say about three years ago, and I started that primarily for my hemp coffee product. So I wanted to try to grow the hemp instead of import the hemp seed I use for my hemp coffee, and it escalated from there.

Matthew: Great point. So a lot of people don’t know the background here with hemp and how you have to import it and so forth. Can you give us a little background on how you previously used to have to get hemp and how you can cultivate it now in the US?

Veronica: Sure. So basically you can only import viable hemp seed, that’s still the problem now because the DEA is currently in our way when it comes to importing viable hemp seed. So the only kind of hemp that can be really imported into this country is sterilized hemp seed and/or “hemp concentrate” that passes at 1% THC or below. So that’s traditionally the only ways that you can get something passed customs is having non-viable seed and/or a concentrate material of hemp that is 1% or below.

So that was, you know, the seed that is viable from Canada or is non-viable, I’m sorry, the seed that’s non-viable from Canada that I was using for my hemp coffee, it’s been sterilized. It doesn’t taste as good as fresh seed. Tasting fresh seed is just completely a different experience than a sterilized seed. It doesn’t taste the same at all. So that was one big difference why I tried to grow it.

Matthew: How do you sterilize seed? I’m totally unfamiliar with that?

Veronica: There’s a few different ways that they sterilize it, but it makes it so it can’t grow. It does seem to change some of the compounds too and definitely the taste I think is affected significantly as well. Nobody really is used to eating fresh hemp seed in this country for at least 80 years. So when you taste the difference between sterilized hemp seed and viable hemp seed, you can tell a significant difference.

Matthew: And, you know we’ve all heard this kind of factoid here or there about the strength and versatility and health benefits of hemp, but can you go into some detail about the promise of this plant?

Veronica: Oh yeah so hemp is like a super food, I would say like the super food of super foods. The seed itself has amazing super food qualities such as Omega 3, protein, insoluble fiber. This seed itself or the oil from the seed is a wonderful thing to put in your body every single day. It does also have small amounts of cannabinoids such as CBD or THC, but in those countries where the oil comes from, the hemp press seed oil, they consider those contaminants so they don’t list them or label them. In this country we don’t consider cannabinoids contaminants. So the hemp press seed oil is a really great product just for anyone in any country, at any age to take.

The potential with hemp is so diverse. I would say that the industry is going to be much bigger than like for example marijuana which is a thriving industry right now here in Colorado. The ability to use hemp in fiber is really promising for example. Hemp fiber less like to hold on to germs and viruses unlike cotton. The fabric itself is much more durable. We can make biodiesel out of hemp. We can, you know, do some animal feed. Theirs is really an unlimited potential using the whole plant in hemp. It’s super diverse. So the opportunities are just unlimited.

Matthew: Now you’ve grown cannabis and you’ve grown hemp. How do they compare and contrast?

Veronica: Okay well first of all cannabis would incorporate hemp. So you have cannabis, the species cannabis, and then under that you have marijuana and hemp. So marijuana and hemp are kind of like you could say cousins or sister and brother maybe. But cannabis describes both hemp and marijuana. So the difference between growing marijuana and hemp is actually quite significant. You don’t really want to use your marijuana cultivating skills and use them, apply them to hemp growing.

So hemp takes less water. It has an extensive root system. Usually the biggest difference with hemp is you’re growing male and female plants. So you have pollen. And in marijuana you usually only have female plants and there is no pollen. So the pollen is basically a marijuana grower’s worst nightmare. But to the hemp people we love it. So, you know, in Colorado it’s important that marijuana growers and hemp growers become educated and learn how to work together versus a future hemp/marijuana war because of the pollination issues.

Matthew: So for a typical crop that you would be supervising of hemp, what was the last crop? How long did it take from germination to harvest?

Veronica: Well you can cultivate all year round. So when people ask me, you know, that question I say it can vary especially when you’re doing indoor cultivation. When you’re doing outdoor and you’re going solely by the natural environmental factors of the sun and nature itself, then you know, I plant anywhere between April and May, and then I will harvest in October. So that’s usually kind of the life span for hemp here in Colorado outdoors. Although we are able to also cultivate year round and part of those cultivation efforts, I would say the majority of the cultivation efforts for indoors is solely focused on production of more seed.

Matthew: Now I’ve heard hemp referred to as a restorative crop that can help the soil and the environment. Can you talk a little bit about that?

Veronica: Oh yes. So hemp is a great soil reclaimer. It’s been used in the past for toxic disasters to kind of clean up the environment. It’s really important that people do understand that hemp does this especially with soil remediation because for example if a Kentucky farmer acquired some seed from Colorado, they could have soil that is really not ideal for the first few harvests, and the soil itself will start being reconditioned by the hemp itself.

So people may not have the best soil to work with, but the hemp itself will start fixing that problem, and it may also reflect in their harvest. So harvest may be affected by conditions of the soil while the hemp is doing its thing. So when you leave hemp in the ground, like the hemp roots and stuff like this even over the winter, it actually will become more nitrogen rich. There’s not a lot of work to do for, you know, getting your soil ready every year once you’ve already started growing hemp. The hemp is actually quite amazing when it comes to soil restorations or fire damaged areas or if there’s been like a Chernobyl situation with radiation exposure. So hemp is an awesome plant that can do all of that.

Matthew: And you mentioned that you can only have sterilized seed come across the border. Can you give a snapshot of where we are at the federal level and at the state level on hemp because I know there’s people in other states that will be curious, you know, how they can get involved with hemp, what the regulations are and are those regulations loosening.

Veronica: Sure. So hemp has been quite easy to get through different legislative levels, both state, local and federal. Federal there is a farm bill that was passed that basically allowed research and development in the states to develop hemp as well as some other actions that have went recently saying no more Department of Justice money can go into, you know, enforcement or raids. Like stuff like this into legal hemp states.

So regarding the importation of the seed, unfortunately the DEA is still in our way. They don’t really want to let go. Last year when the Kentucky Department of Agriculture tried to bring in seed and they seized it, they decided to sue the DEA. DEA came back to Kentucky and Colorado and said that we would be able to import seed under special circumstances with the DEA approval for those individual applicants. Most people do not want to go through the DEA. They don’t believe they should even have legal authority over seed. So until something changes at a federal level which it will but what will happen is that it will change it on an interstate into an interstate commerce level so we can start shipping it in the mail. The oil can kind of go back and forth as long as it’s a hemp extract. So this probably will be our first step federally to kind of allowing interstate commerce between the different states that are legal. But federally importation of seed is not gonna probably happen for quite a while.

Matthew: Now extracting CBD from hemp is something we do with the cannabis plant with either CO2 or butane hash oil. Can you talk about that process a little bit, why someone would want to extract CBD, what it is and how you extract it from hemp?

Veronica: Sure so hemp is a plethora of different cannabinoids sometimes not often found in marijuana strains. So in marijuana we call them strains and help we call them cultivars. There are cultivars that are dominant in CBD that are hemp cultivars that are meeting 0.3% or below in dry raw material. So the CBD some people seem to be confused that CBD from hemp is different than CBD from marijuana. That’s not the case. The compounds are exactly the same. CBD is CBD.

So now the levels of CBD in hemp tend to vary. Some people want high CBD like 30% and it’s almost impossible to find that realistically in hemp. The levels of hemp and CBD are much lower, and what happens is when you concentrate the material that’s when you start raising that potential or the actual amount of active CBD, CBDA, sometimes CBDV if you’re lucky.

So extraction, I’ve never seen anyone successfully extract hemp with a CO2 machine so far. I do know one person who has been successfully using butane to make some hemp concentrate CBD dominant, and then I use alcohol process. I run big batches and do an alcohol extraction process because that seems to be the cleanest, safest, healthiest way for someone who’s ingesting CBD, especially if they’re sick or they’re immune system’s compromised, to get quality intake versus other contaminants perhaps.

Matthew: That’s interesting. I’ve never heard of the alcohol extraction method.

Veronica: Yeah that’s an adjustable version. I only do a pure concentrate. There’s no, you know, other solvents or emulsifiers or there’s no dilution in my concentrate. You can dilute it if you choose, but when I make concentrated it’s the core raw concentrated material CBD dominant oil.

Matthew: And I know sometimes when you look at some of these concentrates they’ll say, you know, tripled filtered and so forth. What does that mean exactly?

Veronica: Well so all of the products on the market are primarily imported. I would call them imported crap material from other countries that has been reprocessed here in this country or comes in some kind of paste. Dixie Elixir kind of was the first one to do this back in the day. So all of this material coming in is imported and then either reprocessed here in this country. So when they filter it, they filter it because they probably use different solvents and they do filtration of different solvents so it can become consumable and not poison people. Al though unfortunately a lot of confusion has happened with all these CBD companies that are importing with labeling or really discernment of what it really is or what’s in those containers or those syringes because there’s no real quality control and no testing or over sight for any of this right now. So they’re kind of free to label whatever they want. So there’s a big lawsuit actually going on right now regarding some of these CBD oil companies and misleading the public about the truth regarding contaminants and toxicities and other stuff that has been found in them.

Matthew: Interesting.

Veronica: Yeah so it’s really important, you know, buyer beware. Do your best to educate yourself. You know, CBD oil should not cost $500, it’s not realistic.

Matthew: Now I’m sure you get a lot of emails and phone calls from people that are interested in getting involved in hemp. What are some of the most popular questions you get asked?

Veronica: Well the number one question is where do I get hemp seed. And then the other question is where do I get medical hemp seed. Well there’s no such thing as medical hemp seed at all. This was a definition that the Stanley brothers made up. It’s not recognized anywhere in this country at this point. So no such thing as medical hemp seed. I do get the call all the time for hemp seed. Then people also want to, you know, know how to grow the hemp. They want to know the laws behind the hemp. They want to know how to sell their hemp. That is probably one of the other biggest questions. If I grow the hemp, can you help me sell it. So, you know, people want to get involved, but since it’s such a new industry there’s a lot of other considerations.

Matthew: Sure. Now do you have one or two recipes that with hemp seed that you could recommend to people that are just trying to get started consuming it as a health food or super food?

Veronica: Oh yeah hemp seed is like the best, easiest thing to integrate into any food you have and really the best way to trick your kids to eating healthy. So we use hemp seed at my household for every recipe from eggs, to our salads, to our pulled pork, to our enchiladas and tacos. So I literally add hemp seed in either the hemp hearts or the crushed whole hemp seed and use it in almost all my recipes because it brings out the omega 3s. It gives us fiber, protein. You can’t even tell it’s in there half the time. My kids never know. So it’s a great way to kind of trick them. They’re eating of healthy stuff. So you can implement hemp really into almost any recipe you currently, you know, is your favorite or you utilize often at your home.

Matthew: Now switching gears to your coffee. What is hemp coffee?

Veronica: Hemp coffee is a special blend of organic free trade coffee beans and now Colorado hemp seed together. So it’s a special blend. I also have a mushroom blend and hemp seed which is kind of cool because mushroom has different health effects. But the benefits from the coffee primarily is some Omega 3s. It also helps kind of to help people with their acidity when people have a hard time drinking coffee or it upsets their stomach. The hemp seed kind of counteracts that so they don’t usually get like upset stomachs or have that reaction, and it gives a little bit of a nice flavor. So those are the benefits of the hemp coffee.

Matthew: Now you said mushroom coffee. I know, what kind of mushroom do you have in some of the coffees?

Veronica: It’s ganoderma mushroom so it’s real good for, you know, I would say outside cancer, some other inflammation issues. You know in America we can’t cure for things like this, but that’s commonly what this mushroom is used for is anti-cancer properties and anti-inflammation, stress.

Matthew: Do you taste the mushroom or does the coffee pretty much over power the mushroom and it’s just an additive?

Veronica: Yeah it pretty much overpowers, sometimes there’s like a slight kind of taste, almost chocolate. Most women tell me that for some reason. The men, you know, they just like the coffee, you know for the coffee drinkers or people who aren’t coffee drinkers. I also supply a hemp leaf tea. The hemp leaf tea is more dominant, is dominant in CBD. So that’s a different kind of product for people who aren’t coffee drinkers, want to drink tea and also get some CBD.

Matthew: Right. And so we’ve talked a lot about CBD, but the people who use it generally are looking for relief from a lot of should we say autoimmune diseases, rheumatoid arthritis, Crohn’s disease, psoriasis, those type of things. Is there some others that I’m missing?

Verionica: Sleep, a lot of people yeah they experience good rest off CBD. Like on the hemp leaf tea, a lot of older people will tell me that they sleep better when they drink the tea. So that’s been great, great news. You know, the CBD is really popular right now, but again hemp has a lot of other cannabinoids that people aren’t familiar with such as CBDV or THCV. These will be big, big down the road. There’s just not a lot of information on them right now.

Matthew: Right, I’ve kind of joked that CBD is the Justin Bieber of the cannabinoids right now. It’s so popular, stealing all the headlines.

Veronica: Oh yeah exactly, yep that’s a good way to put it.

Matthew: So any other hemp related products you have coming out down the road?

Veronica: You know I am pretty much focused on my hemp tea, the hemp coffee and the oils and then whatever special remedies I kind of make for people or special blends. I do a lot of wholesaling, people do private labeling. You know, hemp stores are becoming kind of popular either online or physical storefronts. So people are looking for inventory like this to carry. My biggest focus is providing seed, cultivating more seed and really, hopefully working on seed certification to become, you know, one of the first few people to actually have certified seeds in this country.

Matthew: Oh great. And how can people learn more about you Veronica and follow your work and get your coffee?

Veronica: Sure, they can go to either www.coloradohempcoffee.com and check out kind of that product list, or they can go to www.growhempcolorado.com. That site is currently being revamped and it will be up at the new version in about a week. So that www.growhempcolorado.com is a free open source website that has tons of information on hemp and videos and audio and a bunch of new relevant information if you really want to stay updated.

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

Veronica: Thanks for having me.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. 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 shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us feedback@cannainsider.com. We would love to hear from you.

Hemp will Change the Planet with Doug Fine Author of Hemp Bound

Doug Fine

Outspoken hemp advocate and author Doug Fine talks about how hemp is transforming industries in remarkable and sustainable ways. Doug’s charisma and energy shine through as he inspires us to reconnect with the earth.

Key Takeaways:

– What prompted Doug to drop out of traditional urban society and raise goats
– Hemp as a superfood
– Hemp can be used as a fuel
– Using hemp as a superior form of concrete, called Hempcrete
and more

*Guess What? You could be listening to this interview on your commute. Get the free podcast for your iPhone or Android Device*

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a new episode where I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. What are the five major trends that will disrupt the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That’s www.cannainsider.com/trends. Now here’s your program. As hemp continues its double digit growth trajectory each year, many of us hear about the outrageous, society changing potential for hemp, but we don’t often hear the details or specifics about what is going on in the hemp world. Today’s guest, Doug Fine, is the author of Hemp Bound. Doug is going to share with us his expert knowledge of the plant and opportunity before us. Welcome Doug.

Doug: Good to be with you Matt.

Matthew: Doug I want to jump into a lot of the questions related to hemp, but to give listeners a sense of your background, can you tell us how you became a hemp advocate?

Doug: Sure. My life and career have been on a fairly consistent trajectory. In 2004 I wrote a book called Farewell My Subaru which describes journalistically but humorously my efforts to significantly reduce the fossil fuel use in my life without giving up digital age comforts. I wanted goat milk and Netflix for instance. And so I still we’re speaking from that ranch in New Mexico today. I still live that life when I’m not travelling on the road for my other work, and it’s informed everything that I do. When I wrote my next book which was called Too High to Fail, a look at a sustainable economic model, a farmer centric model for the inevitable coming above ground of the cannabis industry, that keyword was in there as well, sustainable. I was spurred to write about the drug war by some of the insanity that has most of the world ready to end the drug war. A neighbor of mine, a senior citizen got raided for cultivating a few cannabis plants for personal use while, you know, just south of the border where I live here, you know, tens of thousands of people are being killed in drug violence. But the sustainability angle was imperative.

And while I was researching a group of very progressive sustainable cannabis cultivators in Northern California, they were making an effort to centralize their flower processing facilities, and it was they who first put me onto the idea of the fact that they’re only processing for the flowers or you might also say for the shake and the leaves for infused cannabis derived products. But the stalks were left over and hey what’s the potential for energy there. Knowing hemp’s famous per acre biomass yield that is almost unrivaled in the natural world, I started my research for what became two years of study about the potential of what we may call the industrial cannabis plant or the agricultural cannabis plant, the side of cannabis that has today, which today you’ll find is .3 percent of THC or less, non-psychoactive. And what I found made me feel like your roommate with the lava lamp and the tie-dye was understating the potential of the plant.

Matthew: Wow. So help us understand that. What is the potential? What excites you the most about hemp?

Doug: I’ll have to pick from a pile, a big pot on that. The most exciting new one that came up… what’s so exciting about when you talk about hemp is you’re talking about applications that go back to humanity’s earliest hunter gather endeavors, pre sedentary agriculture, hemp was what anthropologists call a camp follower. Humans would bring it from one seasonal home to another because it grows quickly and provides so much. You know, I joked about the your roommate with your lava lamp, but when you put it in the terms of, let’s say an author like Michael Pollan who says we co-evolved with the cannabis plant, it sounds a little bit less woo-woo. Of course, you know, we breed Golden Retrievers to be friendly and to retrieve ducks without crushing them. Why wouldn’t we over ten millennia or more develop a plant that at once provides strong fiber for clothing, housing building materials, carrying cases, baskets, good medicine, healthy food and you know a good time at a party.

So we could go back a really long way. The fact that before this call in my entire family’s shake, we had two tablespoons of hemp seed oil which is a nutritive super food. I mean I just wrote a piece about this. It’s not you can just throw out that statement, but it has a three to one Omega six to Omega three balance that’s unrivaled in any other kind of nutritive oil, even fish oil. So that’s all real, but the one this is all lead up to give you an answer of a new app that I’m really excited about and that is something that just came out this year. I know from being a solar powered goat herder here in New Mexico that the environmental black hole in my solar powered life is the battery system. You want to be off the grid and a rugged individualist and you have heavy lead cadmium environmental nightmare. Now there’s good recycling and all that jazz which helps a little bit, but I’d rather not have lead and acid and other things that are harvested in disgusting ways on my, you know, on my homestead.

So what came out this year is we’ve got this next generation kind of battery that people have been researching for the last decade or so. It’s called, the general category is super capacitors. The material that is used to conduct batteries in this incredible way that, you know, can charge your car in ten minutes and your phone in one minute, that kind of application. It’s called graphene and it’s basically one carbon thick sheets that conduct the material. The leading material up until this year, late 2014 for those who may be listening in the future, has been fairly toxic and extremely expensive to produce. That’s what slowed down this material. That’s why I’ve still got a lead cadmium set of batteries in my battery shack here behind my adobe. So it turns out a bunch non-hippy scientists revealed at the American Chemical Society Conference this year, not you know, Hemp Fest, it turns out that hemp nano sheets of this one carbon atom thick graphene sheets we’ve been discussing. When it’s derived from hemp, in short, super capacitors slightly outperform the current synthetic, somewhat toxic and hard to produce graphene sheets at 1/1000 of the cost. So what this means is I need to get on the phone with Elon Musk and say the teslas have to be… the bodies of the teslas as Mercedes and BMWs are as we speak, comprised of hemp based composites, but also the batteries to charge them should be made from hemp. And then as a father, human father as well has a goat father, I’m starting to feel optimistic about the future.

Matthew: Wow I’ve never heard of that application. That’s pretty crazy. Now there is another application, hemp in construction. Can you tell us a little bit about hemp construction and Hempcrete specifically?

Doug: Yes. When I was doing my research for what became the book Hemp Bound, people from multiple continents were saying that they believed that when the US came online with hemp as we now have. For listeners who aren’t aware, this past February 7th when the President signed the farm bill, it legalized hemp. It was a major change in US policy. As you can tell by the very very few groups that opposed it, and it was a fairly overwhelming victory. It allowed research purposes for hemp to be cultivated for research purposes in states that have their own hemp laws with a few provisions. So it’s not full legalization. That’s coming, but it is allowing hemp cultivation, let us hope, in 20 plus states this coming 2015 season. And I hope to be involved in projects in multiple states this coming season as well. As in addition to putting out a follow-up, a short a first legal harvest update follow-up to Hemp Bound on partly American grown hemp in the Spring of 2015. So stay tuned for that.

But when I was researching the book people kept saying that when the US comes online the first likely killer application on the fiber side of the hemp plant will be for construction. I should say the no brainer, the reason why hemp has been legalized has to do with farmers not being stupid and conservative or progressive recognizing that their brothers and sisters north or the border in Canada are part of a billion dollar industry that as you said is growing 24 percent per year, and that’s just from the seed oil, the nutritive super food and other oil applications that we’ve been discussing and seed applications, seed protein applications and industrial applications from the seed and seed oil. That’s all the Canadians are doing at this point. And that’s already this billion dollar industry. That’s where the money is. That’s why people, American small farmers are returning to hemp. But then you have the fiber which the Canadians are doing nothing with. You can do something with it.

Briefly architecture of the hemp plant is a long bast fiber famously stronger than steel. If you’ve ever read Jack Herer’s The Emperor Wears No Clothes or had a roommate who had a lava lamp you will know hemp has the world’s strongest natural fibers, incredibly strong fibers. I’ve been testing them around the world. It’s incredible. You can’t step through these things or karate chop them or rip them in half or anything. So those are for higher end applications including publishing and the textiles, hemp pants I’m wearing right now, and also the super capacitors, nano technology, next generation stuff; body armor, space ship parts, you know, space station parts, that kind of thing. But you’re left with this woody core called the herd that on the surface is less valuable. It’s certainly less difficult to generate. There’s a lot of herd when you’re done with hemp cultivation.

So what do you do with that herd, and one of the things you famously can do with it is bed animals. It’s antimicrobial. The queen of England beds her, you know, stables on hemp, the herd. But if you mix it with a natural binder like lime, and there’s a lot of different ways you can do this. It’s already evolving into Hempadobe and other materials, but if you bind basically hemp with a natural binder, maybe a little bit vitamin C to keep mold away, it creates a building material known generically as Hempcrete that insulates, when done right, better than… and I recognize this isn’t saying much, better than our kind of what we call conventional, you know, the boxed home supply store, toxic combination of imported press board, nonsense and drywall with, you know, gross fiberglass particles. We can do away with that, improve performance, improve the health of our structures because not only is the insulating or our value looking like it’s superior, you can use it in load bearing applications, soundproofing applications and on top of that I didn’t mention the best part, the mixture of lime of other binder with hemp winds up actually sequestering carbon from the atmosphere so your house itself becomes a carbon sink and your house becomes carbon negative which is you know, nice for the conscious and nice for the planet.

Matthew: So I guess the reason why Hempcrete’s not taking off yet is just because people don’t know about it or perhaps there’s not as much infrastructure around creating Hempcrete like there is other industrial and commercial building materials. Is that the reason you can think of?

Doug: It is taking off. It’s starting across the pond in Europe and in Australia, but focusing on Europe for a moment where there hasn’t been, where hemp prohibition ended a little bit sooner than ours and in some places never was prohibited in China and France. But for the last decade plus there’s been a strong growing hemp building market in Europe. Entire subdivisions built of Hempcrete homes. A good example is the Marks and Spencer Department store in Britain built this, you know, monster flagship store in a suburb of London out of Hempcrete for a very bottom line reason. They’re energy costs were clearly going to go down. In the US even before hemp prohibition ended this February, Hempcrete projects are… I know of some, I want to say at least a half dozen hemp projects in the US. I visited on site one in Manitoba. The issue is again largely one caused by prohibition is initial cost of the hemp herd.

When everybody, when farmers are growing hemp by the millions of acres, which I hope they will be, there’s going to be a lot of herd. It’s not as easy as this. There’s a quality issue, moisture issue, but assuming you have decent quality herd, you bag it up. It’s in your hardware store. It’s ready to go as a building material. It’s not going to be something that’s rare at all. Bigger picture, biomaterials in general are huge for the future of industry. This is something that think tanks and research has been telling me all over the world. These are not people politically or philosophically advocates for hemp or other biomaterials. What they tell me, and this is all in Hemp Bound, is we can’t keep building things out of synthetic chemicals and petroleum based plastics. It doesn’t last as long. It doesn’t work in the cost ratio. It doesn’t work anymore. We have to move to biomaterials, and the good news is they work better.

Matthew: Now let’s turn and talk a little bit about hemp on the farm. Can you talk about hemp as a feed for animals. Because we all know that a lot of animals are eating corn as feed, in a lot of cases GMO corn, and we’d like to hear about alternatives. So can you tell us a little bit about hemp as a feed for animals?

Doug: Yeah, although I use hemp for a lot of applications already and it’s always been something that’s won in the marketplace for me. Not some, you know, something I was trying to support for political reasons. The one that I feel is thus far had the biggest impact on my life is the nutritive benefits. Knock on wood, I’m a healthy dude as are the members of my family, and that could just be, you know, good luck or other aspects of my lifestyle, optimism or whatever, all these factors that go in to it. But I like to think that it has a good deal to do with the fact that I put those several tablespoons of hemp seed oil and hemp protein into my morning shake everyday and have for years. This is now documented as healthy in animals.

The study that I include in the book is a Canadian study that fed laying hens hemp based feed and hemp seed based feed. The control group eating the usual GMO corn and low and behold the nutritive profile of the eggs that the hens laid, that we of course in turn eat, were significantly higher. What hemp has besides the omega balance is high mineral content, especially in a food that’s suitable for vegetarians and vegans. Unusually high selenium, magnesium. It also has in the type of proteins that are in hemp, the amino acids and building blocks that researchers believe are important for things like cell health, cell structure strength and cardio health. So clearly this is something that my goats can’t wait to get in their morning feed, my goats and chickens and ducks. And there’s a study on now, not yet published, about animals being fed on hemp. This is a Washington State study. Pigs being finished on hemp going to slaughter at significantly higher weight than those on, you know, what we today call conventional corn based food.

When I was talking about this at a Hemp Bound event a few months ago an older lady came up to me from Nebraska and said her daddy used to… first thing she knew winter was over, plant hemp along the irrigation ditches. The structure of the plant is such that it is for an annual has very long tap roots that grow very quickly. And so the reason why they planted it along the irrigation ditch was it was an erosion control mechanism. No matter how much water and flooding they got during the season it would protect their other crops. But she said she also knew it was near the end of farming season because the cattle would be put out to be finished along the ditches and they loved, she said with a giggle, they loved those hemp flowers and the hemp leaves and the hemp plants. So they, farmers in Nebraska, cattle farmers knew a century plus ago the nutritive benefits of feeding live stock hemp.

Matthew: Now you mentioned your morning shake. I’m curious what else you put in there besides hemp seed oil.

Doug: You know all kidding aside, you know everybody is… you know you want to draw visitors to your site and do all that kind of stuff, and I thought yeah, when people are willing to pay whatever it is dollar a year to be reading my, you know, dispatches from the Funky Butte Ranch and all that, I’ll reveal all the ingredients on this because I believe it to be my, and I apologize for sounding grandiose, I recognize my infinitesimal role as a human let alone in the wider cosmos. But I consider this morning shake the nutritive benefits to be my greatest non-literary contribution to humanity today. So I’ll throw out a few things. It’s a bunch of prunes, blueberries are really good for you and there’s ginger in there. I put astragalus in it. What are a few other things I can mention. My goat yogurt we make from our goat’s milk. It’s a great way to get my kids to eat greens. I put a handful of spinach kale or whatever in there, and it just tastes like a delicious shake. So there’s a bunch in there, but bottom line you put your favorite fruit, some yogurt, some greens and some hemp seeds and/or hemp oil in your shake and you’re going to be doing good things for your health in my opinion.

Matthew: Now some people compare and contrast the CBD oil coming from cannabis and hemp. Do you see a difference in the quality or is it just a different grade? How should we think about that?

Doug: It comes from a different place. So here’s the situation. We’re talking now about the cannabis plant. Let’s pretend there wasn’t the absurd nightmare prohibition. The impacts of prohibition right now, the lingering impacts of prohibition are when people talk about hemp they have a real fear of THC, the psychoactive cannabinoid or I should say the best known psychoactive cannabinoid. And at first I was okay with creating this delineation, the relatively recent and arbitrary definition of industrial hemp is cannabis with .3 percent of THC or less. That’s the way it is the world over right now. There’s a funny ridiculous back story to why it’s that, but let’s just accept it for a moment because otherwise I argued until about a month ago why… and it shows by the way how much is evolving in the return of the cannabis plant to society, economy and humanity. But I argued how are you going to get a GOP state legislator in Nebraska and Tennessee, both hemp states, to vote for this unless they’re absolutely convinced that in the next primaries some wacko isn’t going to come after him and say that they’re soft on drugs or something like that.

I’ve changed my view on that for two reasons. One is farmers all over the world are telling me, also breeders and agronomists, that by forcing that limitation and taking out so many varieties of the cannabis plant, you are very likely restricting developments in fiber strength on the fiber side and even things like seed oil production on the seed side. And so we have to get passed this ridiculous fear of cannabis. We have a majority of Americans that recognize it should be legal. We have the President of the United States saying it’s no more dangerous than alcohol actually. What most studies indicate is that it’s far less dangerous than alcohol. But the fact is when the promise land is reached and the mental slaves who don’t understand the benefits of the plant have gone or least opened their minds as my 80 year old parents have, that we won’t be discussing these silly nuances anymore. But it was important for me to mention that when we get into this discussion because there’s misunderstanding and confusing marketing going on.

Here’s the thing. If you’re talking about hemp seed oil, hemp seed products, the protein cake that comes when you squish hemp seeds and what you have left, hemp hearts, the actual delicious stuff that remains when you let’s say dehull it, that’s another way of doing it, all of which I have in my home. All of which I regularly… that’s zero percent. That is like you could feed it to your kids and toddlers. It’s broccoli, carrots, beets, hemp seed. It’s the same in terms of not being psychoactive. If you grow a cannabis plant for the flower and render an oil from that, that is something else. Theoretically, yes you could develop cultivars, as we call strains on the hemp side, of hemp that are high in non psychoactive cannabinoids.

There are 100 known cannabinoids now. So I’m somebody who likes to go, as we say, beyond this discussion of CBD which is just a wonderful but one percent or less of what we’re really talking about in cannabinoid studies, and something that I think will be not part of the dialogue in five years. It will be much much broader than just talking about CBD and THC. We’ll be talking about dozens if not scores of cannabinoids and their, what they call the entourage effect, their interplay in how they can be beneficial for health maintenance and/or combating acute diseases. But the fact that CBD has been latched onto first and it appears to be having great effects on epileptic seizures let’s say in young kids. That’s fantastic. I’m all for it. But that’s a completely different product. It comes from the flower. It’s rendered and it’s not hemp seed oil. It’s an entirely different thing. The correct nomenclature for that in my view, whether or not it’s psychoactive, because you can render oil of course from psychoactive plants for medicinal or social reasons, health maintenance reasons. All of that should be called cannabis oil in my view. The word hemp shouldn’t be included in that even if you are rendering a flower with low THC because it confuses the issue and is not the same as hemp seed oil.

Matthew: And one concept I was hoping you could help explain is that of tri-cropping. Can you just tell us a little bit about that?

Doug: Yeah that is the major concept in Hemp Bound and something that I am actively working on now to try to help farming communities around the nation, around the world make use of. Here’s the situation. What surprised me when I was researching hemp around the world is how segmented the industry is. As I mentioned earlier, Canada is doing only seed. Europe until very very recently has been doing almost exclusively fiber. China is way eschewed on the fiber side as well although everybody’s starting to come around on this thing.

The plant has it all, fiber and seed and then potential leftover biomass for energy. That’s the third leg of tri-cropping. Tri-cropping is growing. One year there might be one crop that’s kind of a hybrid that is good for seed and fiber or it might because of the short growing season. Two crops or two different plots, two different fields seven miles away from each other by the way so as not to cross pollinate and seven miles away from psychoactive cannabis for those who are wondering. So you have a seed harvest, a fiber harvest and anything biomass leftover from hemp and/or other crops for potential biomass gasification, a small unit that creates relatively carbon friendly anaerobic combustion to power your facility and/or your community. Folks who want to know more about this just look up the town of Bellheim, Germany which became completely energy independent from their farm biomass and gasification.

So those are the three legs. Everything you can potentially do with seed and flower. Everything you can potentially do with fiber which includes, as we discussed earlier, high end vast applications on the herd applications and energy. Those are the three legs of tri-cropping. And what I want to do is provide facilities where a farming community can order sort of from a menu what equipment they would need to harvest and process for the applications that they want to do. These are modular and scalable and include the facility themselves, turnkey as they say.

So folks who want information on that are welcome to contact me. And the thinking on this was something that one of Canada’s big modern hemp moguls, Shawn Crew, of Hemp Oil Canada told me which is farmers in the field today for their hemp seed oil are getting about five times, right out of the field, if you don’t want to do anything except grow a seed heavy cultivar of hemp, harvest it correctly and sell it to Hemp Oil Canada, you’re profiting in the realm of about $300 per acre. That’s a lot. That’s about five times the GMO cycle crops are given in the best of circumstances. So if you want to know how much that is, if you’re a huge prairie Manitoba, Saskatchewan or for that matter North Dakota, Nebraska, Colorado, Eastern Colorado farmer growing a 1,000 acres profiting, not income but profit, profiting $300 net per acre, that’s $300,000 on a 1,000 acres. That’s a real income from a short bridge crop. As we discussed many climates can grow another crop, hemp or another crop in the same season. So we’re talking about a real income right out of the ground, but what Shawn Crew said is you increase that profit a hundred fold if you are the person sticking it in a bottle and calling it Joe’s Hemp Cream Toothpaste, Hemp Cream Moisturizer, Hemp Crème, you know, hemp seed oil for your morning shake or your salad dressing. And so that’s what I’m trying to do.

I’m trying to allow a community in a small part of Kentucky or Tennessee or Arizona say we want to do the next crox. We want to make hemp sandal, locally produced sandals from our fiber and sell the seed oil but we’re going to make our mark on this fiber application, if you bring us the facility and sell us the material we need to process that. So that’s tri-cropping. Allowing from one harvest the utilization of what hemp gives us. Everything that you need from seed and flower. Everything that you want to make from fiber and everything… and the potential leftover biomass energy production.

Matthew: Now last question Doug. I’ve heard, we know you have goats, but is it true that you meditate with them?

Doug: I do meditate with the goats. Yeah, everyday. The source of what I will allow the world to judge whether or not I’m being accurate. What I describe as my sanity comes from the fact that my alarm clock much of the year is the sound of hummingbird wings in the feeder outside of my bedroom window, and the fact that I can sit and meditate with goats. Humans have interacted with goats as long as we have with dogs. I imagine as long as we have with hemp as well. And so they’re very friendly and they love you and they’ll come over and put their head on your shoulder, and they have good senses of humor and very mischievous. So I’ve learned a lot. And that’s what (30.28 unclear). I’ve learned a lot from being outsmarted by goats and moving to solar. But that’s where my sanity resides and allows me to do all the rest of the things that I do.

Matthew: Doug in closing, what’s the best way for listeners to learn more about your books and follow your work?

Doug: Thanks for asking and also thanks for the great questions. I’ve enjoyed speaking with you. The two best ways to find out more about hemp and sustainability and to contact me to talk about anything from consulting to live events is at my website www.dougfine.com. Easy enough, my name www.dougfine.com, and I also Tweet the latest everyday on Twitter @organiccowboy, one word organiccowboy.

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

Doug: Thank you Matt.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. 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 shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us feedback@cannainsider.com. We would love to hear from you.

Cannabis Businesses are Banking with Us – James Collins of OBEE Credit Union

James Collins OBEE Credit Union

OBEE Credit Union of Olympia Washington currently serves twenty cannabis-related businesses and has more in queue. James talks about why they decided to help their members that own cannabis businesses. James also reveals a very clever way that dispensaries can avoid using so much cash.

Key Takeaways:
[1:13] – Background of OBEE.
[2:55] – James explains the decision for OBEE to serve the cannabis industry.
[4:25] – How are members reacting to supporting the cannabis industry?
[5:51] – James explains how deposits are made.
[9:28] – Are LLCs in Washington that operate in another state eligible for banking?
[10:10] – Limitations on money transactions.
[13:03] – James discusses the Dodd Frank Act.
[15:01] – Contact details for OBEE Credit Union.

*Guess What? You could be listening to this interview on your commute. Get the free podcast for your iPhone or Android Device*

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.

I am pleased to welcome to the show James Collins, CEO of O Bee Credit Union in Washington State. OB’s board of directors approved a plan in September 2014 to open business relationships with cannabis producers, processors and retailers. Welcome to CannaInsider James.

James: Thanks.

Matthew: First kudos to you and your board for approving the measure to allow banking to licensed cannabis businesses. History is on your side, and I hope you get a lot of new business from this. Can you give us a little background on O Bee’s decision to do this?

James: Yes, first off a little bit of a background on the credit union. Founded in 1955 from the employees of the Olympia Brewery or it was named at the time The Olympia Beer Company. That give us our name. The Brewery declined, but we’ve adjusted our membership to be statewide, but we’re primarily still based upon Western Washington. We started on this business because over the years we have had a lot of members that had a lot of businesses. And we had a member who had a business that came in and he had a new 502 business, and yes the simple question of if you supported my last business, why won’t you support this new business.

Matthew: Good question. Now do you serve clients only in the Olympia, Washington area or anywhere else?

James: We serve members throughout the State of Washington as long as they live or work here, and we serve I 502 businesses throughout the state though we do have some limitations on retailers.

Matthew: Okay. Now can you tell us about the board’s decision to start working with licensed cannabis businesses in Washington State. I know that it’s kind of a tricky thing for you because you’re kind of moving on the bow wave here. In a couple of years this will look totally safe and normal and nobody will even be talking about it. But as a first mover there might me some trepidation or a concern about doing this. Can you tell us how you grappled with the decision and how you ultimately decided for it?

James: Well when it first passed we left it up to others to deal with I 502 businesses, but after a time it was evident that that wasn’t going to happen. And we had the one member come to us and ask for an account specifically. And the board grappled with the decision on a couple of areas, and in the end we ended up with three reasons why we would go ahead with it. The first was from the community, we thought it would enhance public safety. I mean drugs and cash in the community is a recipe for trouble. And the second reason is that is it’s not our goal or our desire to ever tell members what they can and cannot do. So we have a lot of members that own other businesses that might be questionable. We don’t question them. So we’re going to support our membership. And then the last reason there is that credit unions were formed many many years ago because people couldn’t get bank accounts. That’s why the entire industry started and this kind of seems a very familiar subject. These people can’t get bank accounts.

Matthew: Right, right. History repeating over and over. Now has the membership been divided on this subject as far as welcoming cannabis related businesses or what’s the response been?

James: After we had an initial feel phase where we just kind of opened a few accounts, saw how they acted so we could communicate with our membership what it was we were doing, and also making sure we were doing what we needed to do, and we could do it. And then we announced it in our internal newsletter which went out to membership. And then that response was only positive, and then we were featured in an Olympian article, and that response was only positive. So again our roots are from an industry that had had its share of people that didn’t like it. And so, you know, it was really never an issue for us.

Matthew: And do you have a tally on how many cannabis related businesses have open accounts?

James: We have more than 20 right now that are actively with us, and I think we have about another 10 in the queue waiting to join.

Matthew: Now is there any kind of creative ways to deposit cash or do this electronically? I mean how are your members that have cannabis businesses, how do they make deposits? Is it different than any other client or member?

James: We’ve been pushing our retail clients especially to have an electronic way to deal with cash.
The leader that I’ve seen so far is Cannatransact which puts basically a cashless ATM in the retailer and charges a small fee, but what it does is it eliminates cash. The retailer doesn’t have to take cash and they get credited in their account here the next business day or two business days, whatever Cannatransact does. So we had expected a large influx of cash, and we’ve not really seen a large influx of cash. A second piece is once you have retailers, growers and processors all banking with us they can exchange checks and everything else just like a normal business. So the cash basically drives itself out of the system.

Matthew: That’s a pretty clever way of doing things. As long as a cannabis business is properly licensed, can they become a customer or is there any other… or a member? Is there any hurdles apart from that?

James: They could be eligible. We have a couple of limitations. One is we are responsible for looking through their application, even if they have been approved by the LCB and making our own judgments. And there’s been a couple where we’ve not, we found something that we didn’t like and we refused. A second thing is that we want to make sure that retailers don’t violate federal law by having marijuana cross the borders. So currently we’re not supporting any retailer that is in a county bordering either state or other country. That’s our only limitations at this point. But everybody else is fine; growers, processors, labs. We don’t have any issues. We do not serve anybody in the medical side because that’s a non-regulated business.

Matthew: Okay. The Omnibus or some people call it the Cromnybus spending bill that passed in December of 2014 and it was signed into law defunds the DEA and the Department of Justice from prosecuting cannabis related businesses that are complying with their own state laws. Does this make you feel more confident about the direction things are turning for the banking sector and credit unions helping cannabis members?

James: To be honest, no. That is an interesting way that they did that, but I’m hoping that our politicians can get together and pass legislation which says it’s either legal or it’s totally illegal and really be definitive. These things that are either executive orders or funding things they can change in a moment. So, you know, we do not like that risk of not knowing what’s going to happen tomorrow.

Matthew: If a business opens an LLC in Washington, does that make them eligible for a banking relationship even if they might have the bulk of their operations in California or Colorado?

James: We are relying on the liquor control board’s, licensing and a lot of their over watch on these businesses. So if we cannot rely on that because maybe they’re doing business in California, we could not serve them.

Matthew: Okay. Now is there any limits to the… you mentioned some of the creative things with the cashless ATM, but you were saying before that processors and so forth can send payments back and forth so they have the full spectrum of services you offer that can do a wire transfer, electronic bill pay, pretty much anything any other business member can do.

James: They can. The one limitation that we do have on them is they cannot use what is called shared branching. Most credit unions are on shared branching. So you could go into any credit union and make a deposit, pay a loan to any other credit union. Because those other credit unions haven’t agreed to handle I 502 accounts, we do not allow our members to use that service, but they can use normal online banking, our ATMs that we own, and they can use their debit cards of course at any ATM, ACH. We do not offer any lending to them, that’s another limitation.

Matthew: Okay, now as you mentioned you had around roughly 20 members that are in the cannabis industry. Have you noticed any particular needs they have that make you think about hey, maybe we should create this service just for cannabis members because we see a certain need over and over again? Is there any peculiar things you notice about the cannabis businesses that you could do to help them?

James: For us, no. I mean what we’re just trying to do is provide basic services so they can deposit money, they can get out money, they can write checks, they can run their payroll. They can pay their taxes. They get to save on, you know, if you pay your taxes in cash there’s a surcharge on that. So we’re doing all those basic things. I think one thing that’s outside of what we can do that is really needed for that industry to really take off is for some processor to step up and allow them to use debit cards at their branches outside of that Cannatransact type of methods.

Matthew: Now this is really unrelated to the cannabis industry, but it was in the fore mentioned Omnibus spending bill where provisions of the Dodd Frank Act that would prevent banks from using FDIC insured funds for trading operations. That part was repealed so banks, many commercial banks are now using depositors’ funds for trading or other services or activities besides making loans. I know credit unions are different, but how do you feel about that in general?

James: About being able to use basically big bets with your customers’ money?

Matthew: Yeah.

James: Well that’s not something that I think the credit union movement was all about. We’re kind of, if you look at the credit unions in general, we’re a little bit of the Miracle on 42nd Street type bank. It’s the local members, local people in the community actually own the credit union. They are the members, and they put their deposits in here and they allow other people that they know to take it out as a loan. That’s the only thing that we do. It’s simple. You don’t get in problems. Credit unions never got in problems in a financial meltdown. It’s just a lot more stable and a lot cleaner way to do it.

Matthew: Yeah, I agree. And you know I think a lot of people are with the giant monster megabanks because there’s one on every corner and there’s a perception well if I want to get cash, there it is. But as we move more and more to a cashless society do you think that credit unions will experience, you know, will experience more turnover? They’ll get more customers that are leaving these big giant monster mega banks?

James: I can’t say for the industry, but I can say from our standpoint prior to the economic recession our average growth rate was maybe two to three percent. In the last three years we’ve averaged about eleven.

Matthew: That’s great.

James: It’s obvious that there has been a change in the public’s mind anyways. In particular Washington State has a very strong credit union movement. And we are kind of a much higher percentage of people that use credit unions than the rest of the nation.

Matthew: Okay, great. Well James as we close how can listeners find out more about O Bee Credit Union?

James: Well I would first have them go to our website which is www.obee.com, it’s Olympia Brew, Olympia Beer. But if you’re in the I 502 industry, I would just have them call us and our 800 number is 800-642-4014, and let the representative know that you have an interest in our I 502 offerings, and one of our specialists that only deal with that will get back with you.

Matthew: Awesome. Well I really encourage listeners to not only open an account with O Bee, but wherever you are in the country to please look at credit unions. It helps to circulate money locally instead of having it siphoned back to Wall Street for other activities, and there’s really just no downside anymore to being with a credit union because, you know, all the services that James just mentioned are available at your local credit union. So thanks again James for being on CannaInsider. We really appreciate it.

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