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The Science of Cannabis Testing with Genifer Murray of CannLabs

Genifer Murray of CannLabs

Listen in as Genifer Murray, founder and president of CannLabs (CANL) describes the different ways CannLabs tests cannabis, not just for potency but for harmful substances like mold and heavy metals. Genifer also tells us the highest THC level she has ever seen in a cannabis flower. Don’t miss this episode.

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Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. 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. Now here’s your program. Today we’re going to learn about cannabis testing and why it is important. CannLabs provides cannabis testing services and consulting services to help growers ensure they have the highest quality, safest product for the public. I’m pleased to welcome Genifer Murray founder and president of CannLabs to CannaInsider today. Welcome Genifer.

Genifer: Thank you Matt. I’m very excited to be here.

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

Genifer: Yes, I’m actually in Denver, Colorado.

Matthew: Great, and I want to dig into what CannLabs does testing-wise, but can you give us a little background on yourself and how you started CannLabs?

Genifer: Sure. Basically at the beginning of 2010, so the end of January, I was back visiting my dad in Arizona, and I was at a friend of a friend’s restaurant and started talking to this gentleman. And he found out I had a degree in science and he kind of perked up and I thought that was a little weird. And then he was asking me about if I was… trying to find out if I was pro cannabis or not and quickly he found out I was, and said he had an idea of testing. And I said testing, kind of like everybody else. And he said yeah like, you know, you test milligrams of Vicodin. And that moment changed my life forever. Did my due diligence and we started CannLabs together then I bought him out at the end of 2011, and I brought on another investor. And then we went public in June of this year, 2014.

Matthew: Wow that’s a great story.

Genifer: Yeah it’s crazy.

Matthew: It is. Now many business owners may kind of get dragged into testing hemming and hawing. They say well I already know my cannabis is clean and arguments like that. And then at some point there’s a couple of realizations. A) this is inevitability. I have to get this done. But B) this can really help my business. I can stand out and give, you know, my customers confidence that, you know, my THC level is this high. I don’t have mold and etcetera. Can you help us frame how we should think about testing?

Genifer: Yes, and you’re absolutely right. It’s been a tough road first of all because nobody understood it. I mean it’s new thinking and when you try to explain that to people early on, you know, all they can think about was their unnecessary cost, and that they’re, you know, they’re doing their best to compete and to spend more money, they just didn’t get it. But in actuality it does make you stand out, and it does show that you are selling a top of the line product. And that doesn’t mean… I don’t mean that without testing you don’t have a top of the line product. I just mean that you can prove to somebody that it does not have pesticides, it does not have mold, and give them an exact dose of what they’re taking which is very important to find out why this plant works so well. We need to know the specifics about the plant and the more we know about the plant, the more we’re going to be able to help and make better medicine.

So it’s also to discover new cannabinoids. A funny but tragic story is CBD. So four years ago it was barely talked about, okay. All samples had less than 1 percent. It was insignificant. We really didn’t talk about it much, and then I remember testing for my first 1 to 1 ratio. It was 7 percent/6 percent CBD to THC in the summer of 2010, and I tested it like 10 times to make sure it was what it was. I called… it happened to be Bubblegum Kush, I called and since then he has been growing some amazing genetics. But if you weren’t testing, okay, you found a plant that did not produce a lot of product. It wasn’t a high producer. It didn’t look as pretty as what you thought the THC plants did, and it didn’t really get you high so people got rid of it. And unfortunately that was… those were high CBD genetics. And so a lot… and now we have a CBD shortage. Kids need it, you know, cancer patients. Like it’s a real big contributor to this plant, and so you know, if people that have been testing, they could have had plenty CBD stains now. And I feel like that is the same now for CBC and CBG and THCV and some of these other amazing cannabinoids that we’re learning more about now.

Matthew: Yes. Can you talk a little bit about the entourage effect because you have a really good understand of the cannabinoids, how they interrelate and how we should be thinking about that.

Genifer: Yeah, so to really just make it simple, cannabis brings you back to ground zero, if you will. If you’re neurons are over firing, you know, they will calm them down. If they’re under firing, they’ll bring them up. But the most important thing is in pharmaceuticals you have one interaction, right. You have one active ingredient and thus it creates all of these side effects. Well in cannabis you have over 500 constituents in that plant working for you. There’s over 66, that we know of, cannabinoids to this point. We test for about 9 of them. And then you have all the flavonoids and carbohydrates and protein and chlorophyll and all these other things in the plant that help work together. But these cannabinoids are like… it seems like a lock and key. So that’s why you’re not getting a ton of side effects.

Matthew: Okay. And what tests do you do the most that are the most popular?

Genifer: Well it’s always been potency. It started with potency just because the people that wanted to get ahead with testing, wanted to show that they had high THC, okay. But and now that’s the only thing mandated in Colorado for recreational users. It’s potency of concentrates, edibles and flowers, but soon will be health and safety. But to me all the tests are very important, and if you put product… and as you consume cannabis and you understand it, you can taste… you can taste things. You can taste a bad flush or somebody not flushing. You can taste, you know, butane and propane in hash oils. I mean you get familiar with the tasting of it, but unfortunately when people come from out of state, they don’t know, they don’t understand and everybody thinks, oh well cannabis can’t kill you so you know, why should it be tested. Well we’ve been doing things to cannabis that’s never been done before, one. And two, really like 20 years ago or 10 years ago or even 5 years ago if you were sick and went to your doctor, most likely you’re not going to tell your doctor that you’re consuming cannabis, right.

Matthew: Right, right.

Genifer: So do we really know the specifics on that, no we don’t. But the more we know about it the better.

Matthew: And could you tell us a little bit about how the testing works, let’s just say for THC concentration? I did take a tour of your labs and it’s exactly how most people would picture. There’s people walking around with white lab coats on and there’s machines and it looks very complicated to someone that’s layperson, but can you kind of describe what is happening there in the lab?

Genifer: Sure. So you have different… usually these tests need different instrumentation, and just to give you a difference, machines make things and instruments measure things. So all the things in our lab are instruments as far as when were measuring something. We prefer liquid chromatography. So we use a UPLC, a waters UPLC to do potency. The reason we do that is THC acid is what naturally occurs in the plant, CBD acid, and when you use gas chromatography, you decarboxylate that so you can’t get the acidic numbers. So really… and also you don’t want to change the structure of the molecule. You really want to analyze it in its natural state. And so that’s why we prefer liquid chromatography. But then when you’re talking about residual solvents, you know, you have to ignite the sample so it does take gas. So we use a GC flame ion detector with a head space, and so that ignites the oil sample and it traps the gas in, if there’s any butane or propane and then we measure parts per million for that. And then another chemist test is heavy metals and that’s done with ICPMS, pesticides. Can either be done with liquid or gas. And then micro has its own test. So your micro lab… our micro lab downstairs, mold, mildew and then your bacteria; e-coli, salmonella, we do ph water activity and then we’ll be starting genetics.

Matthew: Now just out of curiosity, how would heavy metal find its way into cannabis? Is that leached in through the water or is there some other way?

Genifer: So it could be reached in through the soil. So actually hemp is used for soil remediation, and so it pulls the impurities out and then you get rid of the plant. That’s one of the ways hemp is used. And so cannabis, kind of the same thing. So if you have bad soil or if you have… if you have nutrients, let’s say, that maybe have some heavy metals in them and your plant’s up taking and you’re not flushing, and then possibly water too.

Matthew: Okay and now how long does a typical battery of tests take, your most common test? Is it a few days, a week or how long?

Genifer: So potency usually we have some customers that get a 24 hour turnaround time. We also have expedited service available for same day as long as it’s dropped off in the morning. But typically it’s 48 to 72 hours. And then with the other stuff usually the residual solvents can get done in the same amount of time as well. But again microbes take a while to grow. So usually that’s 5 to 7 days. But we’re getting our QPCR method validated, and so what that does is it accelerates the growth. So instead of 5 to 7 days, it could be one day or two days. I think two days, and then if there is an infestations then we have to run plates to double check that. You always have to double check micro. And then pesticides it kind of depends on if it’s a pesticide scan or if it’s a quantification of pesticides. Of course quantifying takes a little longer, and it’s a different method. But usually potency and residual solvent, the most popular tests, are you know 48 hours I would say. And we’re trying to get that down to 20-24 hour.

Matthew: There’s so much innovation in the cannabis industry in terms of edibles, concentrates. I mean every time I turn around there’s a half dozen new things. Is that cause some complications as far as having, you know, testing edibles versus flower. Are you having to constantly retool to manage all these things or is it pretty simple?

Genifer: You know what that’s such a great question and usually people don’t ask that and listen it is very complicated. Edibles are the most complicated, right. They have different matrix in them. Some have seeds. Some have nuts. Some have sugar. Some have this. Some have that. And so you.. we have to validate every method we use for everything. So our gummies has an extraction process, our brownies, our chocolate, sodas. And so we absolutely validate each of those methods and they’re all fairly different depending on the makeup of the edible. And then it is crucial to make sure that you extract the edible so you get all the cannabinoids out of it. And that’s kind of been the hard part of it. It’s not actually getting it on the instrument once you have figured out you instrumentation and have calibrated it and validated it and everything. It’s really the extraction process that is most important. And then we also have checks as well. So once the lab tech turns in the values, then we have our manager go over data review. And that’s very very important and I think a lot of labs don’t do that. But you know we’re only human and we can make mistakes whether that’s a decimal point or write down the wrong number on the wrong line. So it’s very important to have checks and also to, you know, have less of a chance for human errors. So we have a lot of things that help us like software for the scales and stuff like that so it alleviates handwritten problems.

Matthew: Now switching gears a little bit to problem mitigation. So let’s say I’m a cultivator. I send in a sample and it comes back with some things that are undesirable, let’s say, how do you work with those cultivators to say look let’s help you so this doesn’t happen again and figure out maybe how it happened?

Genifer: You bet. That’s one of the things that, you know, we do. And because we… these are relationships to us. Really it’s us doing a service for them. And so we just… we’re not like another environmental lab where we’re like hey, yeah sorry here you go. So we remediate. We go out and site track and look at what’s going on. Simple things, filters, that kind of thing that people just don’t understand or maybe their grower is getting lazy or you know, somebody missed it. I mean it could be as simple as covering up water. What kind of water you are using, you know, all of those factors that go into good manufacturing processes. And let’s face it, you know, most people do not have good manufacturing processes, at least what they need to to have a consistent product. So yeah, we help every step of the way, and actually microbial infestation depending on what it is can be remediated, whether that’s extractions, some extraction help. Now obviously if you extract something with pesticides it’s only going to amplify it. So this doesn’t work for pesticides, but with a lot of microbials you can run it through and extractor and it can be cleaned. So that’s an option, and then obviously going through and treating the plant with some safe things. So there’s a lot you can do, and you know with a lot of money riding on these crops, you know, you’re better off testing more and having less infestations. Because as you know you can grow a crop and it’s great and then the next time it’s got powdery mildew on it. So it’s really better to do a lot of testing so you don’t risk losing a crop.

Matthew: So if you had to narrow it down to, and I know it’s a hard thing to answer, but a takeaway for a cultivator. Say look, this is the number one or number two thing that most cultivators overlook that is pretty easy to mitigate to improve their yield, what would you suggest?

Genifer: Well improve their yield or have a healthy yield?

Matthew: I’m sorry, to have a healthy clean plant.

Genifer: You know what it is treating every crop like it’s the first one. So cleaning out the room. Taking everything out of the room and absolutely cleaning everything in the room. You know cleaning all your supplies. Filters, filters are a big one. People don’t think about them and especially filters where you’re sharing a facility with another person, another business. For instance we had somebody that had actual black mold, and it was blowing from the bakery next door.

Matthew: Oh god.

Genifer: So yeah. I mean you really have to be careful. And then of course, you know, should suit up. You should actually, I mean, depending on how, you know, how good you want to be, I mean you should suit up. You should shower when you get there. Suit up, leave your suit there. I mean, you know, not have a dog there, not have a dog in the dispensary that people pet and then go look in the grow. The less people in the grow the better of course. But, you know, those are some things that we definitely recommend. And then there’s, you know, other things depending on how you’re growing as well because there’s so many growing styles. But keeping things absolutely clean.

Matthew: Now if somebody is listening that has a legal home grow, can they send samples to CannLabs too?

Genifer: Sore subject, no they can’t. It’s a real sore subject. Unfortunately since CannLabs has a license and a certification by the state, we are only allowed to take samples from licensed entities, which breaks my heart mainly for the parents that have relocated from across the country if not the world to come to Colorado. And the medicine can be, you know, expensive. So they want to grow their own and then they can’t get it tested to dose it for their children. So they’re desperate and then they go to maybe some labs that aren’t certified. Well there’s a reason those labs aren’t certified. I mean there’s a lot of people that claim to be testers that don’t even have a chemist. It’s ridiculous. So we’re hoping to change that, and then medical marijuana doesn’t have to be tested. So when you come across the country, you still don’t know what’s in your medicine. It’s ridiculous.

Matthew: So is this… what’s the horizon look like for, you know, you’re talking about people that come from other states to get medicine for their kids. Is there a solution on the drawing board or is it still up in the air?

Genifer: We are so trying to, you know, fix it in legislation, this coming legislation period. So starting, I believe, in the end of February or end of January. But I don’t know what to say. And you know I’ve thought about actually opening or having somebody else open another lab because I know what I’m doing, but you couldn’t make it. I mean the labs here are barely making it as it is just because there’s only one thing mandatory and there’s so many labs here now. But so, one person opening up for patients, they couldn’t even make it work. So it’s a really tough situation right now, and we have to get it fixed. And if not, then yeah I’ll have to, you know, we’ll have to do something and have an instrument just at least to do potency.

Matthew: So this is a good transition to what’s going on in politics. I mean we could talk about Denver in particular, but how do you feel in general lawmakers are doing in finding the right balance of, you know, helping consumers, helping cannabis businesses and so forth? Do you think they’re finding the right balance? Is it too conservative some places, too liberal or just is insight lacking in any specific arena apart from what you just mentioned?

Genifer: Well what’s happening, what happened in Colorado specifically is you had an industry before regulation. Okay, so pre-2010 you had dispensaries here. I mean, you’ve had dispensaries all along since it passed in 2000, but nobody knew right. They were way under the radar. They started popping up at the end of 2009 when the Ogden Memo came out in October. So until July of 2010 there was no regulation. So once regulation came, the industry is not going to implement mandatory testing. They don’t want to pay for it. So they lobbied against it. And I didn’t realize that starting up. I had no idea. I had no… I had never lobbied or any, I mean, I’d heard of it but I didn’t really understand it. So once I understood that, then I started lobbying at the capitol and talking to people and you know, and people… most patients and people that consume of course want testing. And so it’s just getting implemented because of 64. Now if 64 wouldn’t have passed, who knows if medical would be tested now, but I would be out of business if it wasn’t. I knew that once recreational passed I would have a market because there’s no way they can make it legal without testing it, but here we are a year later with no health and safety testing. So I was a bit wrong. The other states are implementing it right away. So I don’t see how Colorado will not implement it fully. We recommend AHP, the American Herbal Pharmacopeia. They wrote a great testing regime that they got information from, you know, all the respectable labs and some other scientists and I think it’s a good start. But until we start it, and start testing we’re not going to know if we’re under testing or over testing right. Like Colorado doesn’t require listeria. Well does listeria find itself on the cannabis plant, I don’t know. So maybe we should test it for that to see. So basically the next couple of years are going to be testing and then figuring things out and figuring out what likes to grow within this plant and other things like that. But it’s crucial that we get this data.

Matthew: Now I love your input on this because it’s something I think about a lot, and I really don’t know the answer. So let’s say I’m a cultivator and I’m growing a specific strain of cannabis, we’ll say Star Dog, and I know what the cannabinoids profile is of this plant, but right down the street someone else is growing Star Dog too and their cannabinoids profile is different. I mean how do we get to a place where we can say this is an optimal Star Dog or an optimal Blue Dream? I mean how is that going to work?

Genifer: That’s genetics. So once we start doing genetic profiling in terpenes, terpenes play a big part in the plant. It is thought that terpenes are what distinguishes the sativa and indica. It is not the cannabinoids count. We still need more research on that, but there is no way to know if you’re smoking a sour or you’re using a Sour Diesel. We will have to genetically be able to every strain coming in, test the genetics and then you’ll know what’s what. But until that happens, you know, people are… something happens in the world and they name pot after it. Peyton Manning, you know, back when… what is his name? Charlie Sheen had his own strain for a while, you know. So I think there’s a strain called winning. So you know people change those or they, you know, they fool the customer and they’re like okay well Sour Diesel is a huge, you know, a huge strain. So we’re just going to call this Sour Diesel. So until we have genetics and we have, you know, terpenes and everything, we’re just not going to know. And again so that, you know, hopefully motivates growers to test their stuff so they know exactly what they have and if it’s fading or getting better or whatever that is. Because a lot of people are seeing their mothers, they’ve taken too many clones and their strains are failing. So you know, with testing, you know, we can figure this all out and we’ll know how to prevent things.

Matthew: Now I’m curious, what’s the highest THC concentration you’ve seen in a plant that’s come in for testing?

Genifer: So to date, 4 ½ years later, 32 percent.

Matthew: Wow.

Genifer: And that, I mean, any higher than that, so it’s like you’ll see some 40 percents and high 30s and it’s ridiculous. People are doing the calculation wrong. You don’t add THC acid and THC. It’s not 100 percent decarboxylation. So when you do that you have to take your THC acid number times 5.87 and then add THC and that’s your max THC. Now that doesn’t mean what you’re getting, right, because if you’re smoking or vaping or baking, it could be different decarboxylation rates. So it just… we just give you that’s the max it could be.

Matthew: Okay.

Genifer: But you know, it’s very hard to get that high, I mean, very hard and people should not take that lightly.

Matthew: Right.

Genifer: But it doesn’t mean that… it doesn’t necessarily… also I want to mention that just because it has a high THC doesn’t necessarily mean you’re going to feel higher. It depends on the terpenes and everything in your body as well. I’ve smoked an 8 percent and I was high as a kite, and it was probably because of the terpene profile. So you can’t always lay it on THC.

Matthew. Right. Right kind of we point to that in isolation but it’s really you have to look at the other variables as well.

Genifer: Yep absolutely.

Matthew: So what states CannLabs currently offer testing in right now?

Genifer: So we’re currently in Colorado and Connecticut. And then we just recently got local and state approval for an 8,000 square foot lab in North Las Vegas.

Matthew: How great. Now Las Vegas they’re kind of… they’re regulatory system seems a little bit more aggressive in helping tourism. Is that what you’re seeing as well. Like they really just want to…

Genifer: You bet.

Matthew: They go from 0 to 100.

Genifer: It’s reciprocity. Yeah they’re smart. They did reciprocity. So you know, if I have my card here I can go buy there which was very smart. But I truly believe, I mean, they’re very close to getting… to being recreational and if they decided to go recreational in 2015 I wouldn’t put it passed them. They’re not in great financial… North Las Vegas is not in good financial standing right now. So marijuana will literally turn that state, the city and the county, Clark County they’re around, I mean it’s going to be absolutely amazing just like it did in Colorado. I mean before marijuana, you know, the I70 Corridor was a bunch of empty buildings that have been empty for 10,000… or 10,000 years, for 10 years or so. So I mean it makes a huge economic impact. So we’re really excited about Vegas.

Matthew: As far as requirements go, is it… what requirements are going to be in place for testing in say Vegas or perhaps Oregon or is that still kind of unknown. Like hey THC concentration, pesticides or we don’t know.

Genifer: So they’re funneling AHP, the American Herbal Pharmacopeia. Connecticut is, Nevada is, Illinois is, Washington is. I’m not sure about Oregon, but most of these states, you know, when they’re creating legislation, they don’t know. They don’t understand. They need help and you know, since the monograph is already done, states can understand that. They understand it’s a third party, right. It’s not me telling them. It’s the American Herbal Pharmacopeia that has a ton of monographs for a ton of botanicals. So it’s really been catching on, and I believe that most of the labs are, you know, think it’s a good starting place.

Matthew: And what’s on the horizon for 2015?

Genifer: Whew. So literally it’s like a whirlwind. So you know in the marijuana industry it’s like dog years. So as I’ve only been in 4 ½ years it’s really been 28 ½ years, you know.

Matthew: Yeah you’re an industry veteran. I mean 2010 is that when you started. It’s like that’s really a long time in this industry.

Genifer: It is a long time, but Jill, my compliance director, I mean she started in 2008. So there’s some people that have been doing it a lot longer than I have. But 2015 will be definitely opening we hope first quarter, if not second quarter, you know, we’re going to be opening in Nevada, and then we have a lot of other amazing announcements coming up very soon, but of course I’m a publically traded company so I can’t share those until those are common, until those are public knowledge.

Matthew: Sure.

Genifer: But anybody that would like to look at our ticker symbol you can always go to our website www.cannlabs.com and click on investor, but our symbol is CANL.

Matthew: And could you give out your website Genifer.

Genifer: Sure yeah. It’s www.cannlabs.com.

Matthew: Well this was very informative for me Genifer. I could geek out all day and listen to you talk about this stuff.

Genifer: I appreciate that, and I’m a total science nerd. I love science, and we learn something new, I’m not kidding, every day here. It’s pretty fascinating.

Matthew: Well that’s great. Well thank you so much for being on CannaInsider. We really appreciate it.

Genifer: Well thank you so much for having me 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.

Jake Browne – Pot Critic for The Cannabist

Jake Browne

The New York Times calls Jake Browne “The First Pot Critic.”
Jake is the critic for The Denver Post’s “The Cannabist” Column

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

Key Takeaways

– Jake reveals his favorite strains for people who are trying cannabis for the first time

– How Jake evaluates buds, looking for evidence of disease or insect feces

– The best cannabis for sleeping

– Jake’s favorite strain

– Jake’s favorite vaporizers

– A special discount on a Hempbox.com subscription

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 to 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. While the world of food and wine has had formal critics since the printing press was created, the same isn’t true for cannabis. Today we have on the show Jake Browne who’s perhaps the best known pot critic out there. The New York Times recently followed Jake around for the day to see what it’s like to be him; sampling strains and digesting the unique experience of each one. Jake is also the co-founder of HempBox, a monthly service that provides a curated selection of the best hemp products that Jake handpicks. If all that wasn’t enough Jake is also a comedian and co-host of a podcast called Whisky and Cigarettes. Welcome to CannaInsider Jake.

Jake: Matt thanks so much for having me. I appreciate it.

Matthew: Jake I have to say you’re a busy guy with an interesting life. Can you tell listeners how you got started in the cannabis industry and became a pot critic?

Jake: Yeah. I actually back in 2009 had a friend that opened a dispensary, and I was working part-time, and so you know hey do you want to come in and help me, you know, with some office work. And so I started off helping them kind of get their papers in order. I remember initially they had their files organized by first name because it was always oh, yeah Matt’s coming in, we’ll look him up under “M”. So you know, helping them provide structure. But since then I’ve worked as everything from bud tender to general manager, marketing director and consultant in the industry on top of doing social media management and then blogging, which I won several awards for here locally.

Matthew: Okay and what’s your day-to-day life like as a critic? How do you spend your time?

Jake: You know I’m a freelance journalist first. So, you know, I may be working on something else. When I am doing reviews, I’ll go and check out maybe a couple of dispensaries in a day trying to find something that A) hasn’t been reviewed already by myself or one of the cannabis’s two other critics or I’m, you know, really trying to find something that I think people can find across the United States or even across the world. So I tend to try and find genetics that people should be familiar with and then, you know, take a sample home and give it a shot.

Matthew: You said you were a bud tender before. Since you’ve been on the other side of the table what do you think that bud tenders in general could be doing differently, or how do you think they could be helping consumers more when they come in?

Jake: You know that’s really interesting. I had a big article about this right around the time that recreational shops started opening here in Colorado because a lot of times they weren’t addressing the fact that people still had medical needs, that they weren’t just shopping for recreational purchases. That there were a lot of people that didn’t ever opt into the medical system and some people that couldn’t, for example, veterans with PTSD aren’t covered under Colorado’s medical program. So just that they would actually, you know, make the effort of, you know, at least trying to engage people in that dialogue.

When I, you know, kind of graduated from bud tender to GM, one of the things that I would do every morning was give my bud tenders a blind test and say, listen I’m going to pull five strains that are on the selves, strains that you should be familiar with. Can you identify them by scent alone? Can you identify them by sight alone? And I think that was one of the first things that really peaked my interest in reviewing strains and really getting to know them intimately.

Matthew: Now I’m sure you get a lot of feedback from people because cannabis is such a subjective experience. What kind of criteria do you use to evaluate a strain so people can make sense of it?

Jake: You know I think that with my body of work, you know, over 25 reviews now, I have a pretty good baseline established for at least how strains will affect me. So, you know, even subjective you could say oh well, you know, this strain definitely had a much more dramatic effect on him than others, and people have their own baselines I feel like in a lot of cases. So you know, kind of listening to themselves if they find that sativas tend to make them sleepy for whatever reason and those people do exist, then you know, kind of just read my reviews, you know, opposite or you know it’s a bizarre review for them. But most importantly I think that what I’m trying to do is help people identify strains. That, you know, there isn’t, you know, some governing body that says, “all of the Sour Diesel must have these characteristics.” You know, you can walk in and see things mislabeled or misidentified all of the time. So I’m just trying to give, you know, consumers a tool by which they can go in and say, well you know you’re saying this is OG Kush, but it’s clearly, you know, has these, you know, Sour Diesel notes and body and structure. So, you know, I don’t believe you.

Matthew: Now if someone has a cousin or a parent visiting from out of town that’s really never consumed cannabis before, is there a good kind of toe in the water strain where they can have a good experience that you would suggest?

Jake: For a lot of people that are really trying to make that toe in the water, you know, try if you will, I generally recommend getting one of the vaporizer pens or even just a really low dose of edibles because I tend to find that vaporizing is going to be a little bit of a duller high. It’s not quite as racy. They’re also a lot more accessible for people who aren’t interested in smoking. But, you know, if I have to recommend a strain, and this is one of my least favorite strains that I had reviewed that I Flow is perfectly accessible for someone. I think I even refer to it as the training wheels of pot. You know it’s one of those strains that I never find, you know, all together too overpowering. And you know, I generally find the effects don’t last that long either. But the biggest advice that I can give is no matter what you’re starting with just start slow. You know, there’s always more there to try. I did an interview with a guy who does fitness training out here and incorporates edibles, recently. And he probably made the best analogy that I’ve heard is that edibles or marijuana in general is a lot like salt. You can always add to a recipe, but once you add too much salt, it’s very hard to go back.

Matthew: That’s a great, great way of saying it.

Jake: And it’s so easy for people to understand. It’s like oh yeah we’ve all had something that was too salty. It’s just trying to find that perfect amount of seasoning. And you can tell I’ve been watching too much Top Chef lately.

Matthew: What are two or three of your personal favorite strains. I know you review different strains, but if you were just to go out with some buddies and just grab two or three, what would you grab and why?

Jake: I just recently did my top ten strains for 2014 over at the Cannabists, but that was only the top 10 that I had reviewed and enjoyed from these specific shops. You know, Super Lemon Haze is one of my favorites if I’m looking for a very creative energetic sativa. And, you know, that didn’t make my top 10 because the particular one wasn’t the best example of the genetics, and it was also $24 a gram which is way more than anybody should be paying in Colorado. So I would recommend Super Lemon Haze and sativa. For hybrids I really love Blue Dream. And then in an indica I like kind of old school pre ’98 Bubba Kush, although there’s been some really nice Tahoe OGs that have come out lately, especially Swerve from Kelly Connections Cut. If you can find good Tahoe OG, I always recommend that as a good one to kind of set you down at the end of the night.

Matthew: I love it. How do you compare dabbing to smoking flower to concentrates for people that may have just smoked flower once or twice, they’re not familiar with dabbing. Can you describe how that feels?

Jake: Yeah I mean I don’t do a lot of dabbing anymore, mainly because my tolerance just goes way up whenever I do. It’s best for people that need a large amount of THC in a short amount of time.

Matthew: Okay, moonrocket.

Jake: I mean it’s marijuana but on steroids. You’re talking about, you know, upwards of 90 percents now where these are super, super strong. When you compare high end, you know, flowers are 20 to 30 percent THC right now. So you’re getting a ton all at once. And you know, again with dabs it’s hard to start small I guess would be the easiest way to put it. You know, it’s definitely going to be, you know, that same high experience. I just, I worry that people that aren’t familiar with dabs and want to start off with, you know, a quarter gram at once are going to be in for a really bad time. You know, and it’s not to say that dabs, you know, aren’t for anyone. It’s just it’s really something that I feel like came out of necessity for people that had serious medical conditions and now are becoming kind of this recreational version of Everclear, which might be the easiest way to put it is just, you know, if you’re usually going out and having a white wine spritzer, don’t go out and order two shots of Everclear.

Matthew: You know, you mentioned the vape pens and then we talked about flower having 20 to 30 percent THC at times. I noticed they’ve done some tests on some of these vape pens and some of the vape pens don’t even have as much THC as the flower. Is there any vape pens where you feel like they’re doing a good job and they work pretty well?

Jake: I think, if you’re talking about pre-loaded cartridges, it all comes down to what the material that’s going in is. For example I went to Buddy Boy Brands which is a shop out here and they have these new kind of e-cigars,it looks like a giant cigar and lights up, but it’s, you know, a vape pen. But the one reason I really like them is because they have mahatma concentrates in there, and they’re one of the best, you know, kind of locally strain specific Bruce Banner which I really enjoyed. So it really just matters on what the concentrates are that are going in. I think for, you know, just regular, you know, vapes the Pax is getting some really great reviews out there. I’ve done the Fireflies well, and I really like the Firefly for flower. It’s nicely portable. It’s about the size of a cell phone and it looks really nice too. You know, I think it really depends on what you’re looking specifically for in a vaporizer. And if somebody has specific questions always feel free to hit me up on Twitter on Facebook and I’m sure we’ll talk about those later.

Matthew: Yeah. You had on your 2014 List of Favorite Strains, Blue Dream, and that’s definitely a popular strain. Can you describe what you experienced for people that haven’t looked at that review why you like Blue Dream so much?

Jake: One really interesting thing that people always talk about with Blue Dream is it stimulates the same thing runners high. I don’t know if I’ve ever run so much that I’ve become high from it. It’s just their experience on that one. It’s very much an active strain for people that are worried about, you know, couch lock or you know, I never want to do anything other than sit down with Netflix and catch up on, you know, old episodes of Frasier. It’s a really go kind of body mover to get you up. It’s not ever too, you know, immensely engaging where it can start getting a little anxious or possibly paranoid. For me it’s just very balanced and good for a lot of different times during the day, maybe not right before bed. But, you know, from waking up to, you know, kind of a happy hour strain when you get off work. It pretty much does it across the board for you.

Matthew: Now I’m glad you mentioned, you know, different strains and particularly going to bed in you know for relaxing and things like that. If there’s somebody out there that has monkey mind like me that never shuts off, is there a strain you recommend for that, for just a good night’s sleep?

Jake: Yeah absolutely. I mean I think that there are a lot of new OGs, specifically that Tahoe OG earlier that I talked about or pre ’98 Bubba Kush is always a really good one for me. You’re generally looking for indicas that are lower on the THC side. The White is another example that’s been really prevalent out here in Colorado that I would highly recommend. No pun intended. I mean, it’s so subjective I guess in terms of what helps people sleep, but you know it’s avoiding those hybrids. You know, anything with haze or diesel in it, you know, you can hybridize and you can call it indica dominant all you want to, but if there’s a little bit of those strains in there, your mind can still latch onto that. So it’s really having that conversation with your budtender and going, you know, what’s the closest you have to 100 percent indica and what makes this strain up. I mean, what goes into it because a lot of times they can tell you oh year well it’s got some of this, but it’s really understanding all of those components that will give you a better understanding of what exactly you’re smoking.

Matthew: So when you grab a bud for the first time and before you put it in your pipe, can you just describe, you know, other than scent what you’re looking at, you know, when you’re evaluating it. I meant you’re looking for, you know, obviously maybe some pests or maybe some, you know, gunk on there that you don’t want. How do you evaluate what you’re looking at?

Jake: Yeah, I mean, one of the big things I look for is stippling or stippling in the leaves which are little white spots which generally indicate that a bug has been eating there, and so you’ll kind of notice an absence of chlorophyll. Also mites leave behind little black chunks of, you know, mite gunk I guess. Can we say poop on this podcast?

Matthew: Sure, yes we can.

Jake: So I mean, they’ll leave behind like little tiny bits of fecal matter which nobody appreciates ever. You can also be on the lookout for powdery mildew which looks similar to those white spots, but it’s almost fuzzier. And it will be different than trichomes in that it won’t have the tiny heads on top. You can also be looking for bug mold. This tends to be in denser nugs and you’ll notice towards the middle it’s where moisture couldn’t escape and so the bud will actually start rotting from the inside out. And the best way to look for that, it’s called botrytis, is that it will almost look grey or brown in the middle and you’ll start to see little bits of mold in there as well. So on the kind of pest or fungus mold side that’s what I’m looking for.

But I’m also looking for a stereotypical bud growth. So I’ll be looking at the calyxes. Are they rounded or they’re fox tails, what color are the pistols. And then what was the cure like. Is there a lot of amber in the trichome heads? Are they cloudy which is going to indicate a more sativa high or are they clear which would indicate to me that maybe it was harvested a little prematurely. So there’s all kinds of things that I’m looking for with every sample. And you know, I don’t necessarily write all those up, but they help kind of inform me what kind of smoke I’m in for.

Matthew: Now as we get to the end of a life cycle of a plant before it’s harvested, you’re supposed to, you know, cycle through a lot of water to get, you know, the fertilizer and so forth out of the plant. If that doesn’t happen as it should, what do you taste in your mouth if you were to smoke that?

Jake: There is some people out there, I think William Breeds who reviews for our local Village Voice paper Westward, he is amazing. He can tell what type of nutrients they used by smoking it. You know, for me I’m looking for kind of like a fertilizer, metallic kind of taste to it. Generally it’s going to be a little bit harsher and you’re looking for how it burns, you know, is it going to burn to a clean ash or is it going to be kind of gray to black.

Matthew: Now you’ve attended the Cannabis Cup here in Denver. For somebody that’s never been to one of those, can you kind of paint a picture of what it’s like and also what happens at [4:20]?

Jake: So it’s kind of like going to a trade show, but then on half of the trade show it’s just people that want to get you high. Like you walk up to the booth and instead of handing out like little samples at like Costco on the weekend, they’ve got flower or dabs were huge at [4:20] here last year. I mean people, there were so many different dab stations. So I mean it’s every product that you can think of under the sun. One of my favorites last year was there’s a guy that just had these cool hammocks that you could put up wherever. And so it was like, yeah you know I’ll just go take five in the hammock booth.

Matthew: I like that.

Jake: Yeah, exactly. There are edibles. It’s a little bit of everything. I think that, you know, if you’re interested in being a home grower, there are people that can talk to you about lights or different soils or grow mediums. And then there’s also very much the, you know, the fun side of people hey, we’ve got this new pipe or this new type of rig. It’s literally everything under the cannabis sun that you can think of.

And then [4:20] down at Civic Center Park is a very different experience than it used to be. It used to be a little bit more unstructured. You kind of just walk in and then there’s people passing joints around and throwing Frisbees. And then last year it was a very different year. There was, you know, security checkpoints and everybody goes in. You couldn’t bring your own food or drinks. So there’s been concessions, bands that were playing, things like that. But it’s interesting, [4:20] at Civic Center Park is a much different experience than it used to be, but they’re still very different in that, you know, there aren’t people that are just giving things away at Civic Center Park.

Matthew: Now you’ve kind of watched the market evolve here in the last year. What has surprised you since Cannabis became recreationally legal that you weren’t anticipating?

Jake: I mean prices fell. I think that everybody who was just kind of waiting for prices to fall, but they did so a lot quicker than we had anticipated. And I think that that was kind of due to a lot more shops coming online than I had initially expected. You know I’m not sure what the count is here, you know, in the City of Denver, but it’s got to be over 50 shops at this point. So I think that that competition is been really strong. But, you know, the medical market continues to outpace the retail market. I think that a lot of people were interested in, you know, marijuana but they still don’t want to pay tourist prices. So you’re seeing a lot more interest there. But I also think that you’re starting to see some interesting things in breeding that it’s no longer being done in basements. It’s now being done in laboratories and that plant selection has advanced a lot with the, you know, with testing technology coming along as far as it has. And now a lot of that guesswork is gone because you can take plant samples in and say, you know, how is this testing for CBD, for example, and people can, you know, really pick out those strains where it used to be, well this one looks and smells the best so we’ll keep breeding with that.

Matthew: Now if someone were to just come out and hang out with you for a couple hours who’s never been to Denver and they wanted to consume some cannabis and have a great afternoon, what would you advise them to do?

Jake: Actually we offer a concierge services through my website. If you wanted to come out to Denver and really have a curated experience. But I mean there are a few great dispensaries downtown. I like to show people a few different feeling, couple of different shops where they really get a feel for, you know, what this legalized experience is because not all shops look the same. You have some that feel very much like a day spa. You’ve got some that feel like an Apple store, and then you’ve got some that feel very much like an old school dispensary as well. And you know, one of the nice things too is that I’ve been involved in the food and beverage industry for many years here. I always know good places to drop in and eat, you know, depending on exactly what you’re looking for. And then there’s a great late night scene here as well, and I’ve actually done a few pieces kind of travel related on, you know, if you’re a tourist coming here what is there to see out there, you know, where are the spots that you have to hit and all of that is available on the Cannabist as well.

Matthew: Now switching gears to HempBox, can you tell us what that is?

Jake: So what we did was we started essentially what is a hemp of the month program where people sign up and we’ll send them four to five items, usually one to two full sized items of hemp consumer goods. So it’s not, you know, a necklace and a bracelet every month, but different bath and body products and different nutrition products because hemp is so good for you whether it’s inside or outside. And we’ve found amazing response from people that are using, you know, hemp topical, hemp hair care products, they’re also adding hemp hearts to their smoothies or a protein powder. Every once in a while we’ll do hemp bars or raw chocolate. And so really trying to get out there that hey, you know, you may use hemp in this one aspect of your life, but there’s so many different ways to incorporate it. And I think that, you know, with industrial hemp now being legal here in Colorado and a lot of other states that are looking at bringing industrial hemp online, that very soon we’ll start to see it out pace what we’re doing in the legalized cannabis sativa and indica markets.

Matthew: Can you highlight one or two products in HempBox that you put in there recently that you were just really excited about?

Jake: Yeah absolutely. I mean we helped a company out of Ohio launch called Hemp and Honey Plus, and it was probably one of the best reactions that we’ve had from our subscribers. They went nuts over this body cream. It was just… feels like you’re rubbing a tiny hemp cloud onto your skin. This stuff is amazing, and it not only highlights hemp oil but also manuka honey which has antioxidant properties and antimicrobial properties that they’ve used in this tribe forever.

In our latest box we just shipped out something called Ultra Shake which is such a cool concept. What they do is they use freeze dried berries, hemp seeds and a lot of other different super foods. And then what you do is just add cold water and shake it, and it becomes a smoothie that you can have anywhere on the go, and we’ve already had some really great feedback about that. They offered not only a smoothie sample, but then also a free 4-pack for any of our subscribers. So really excited as we start hearing more and more rollback from there. But, you know, one of the nice things is that we’re always coming up with some really cool products. And you know, we’ve worked with some of the big names in the industry like Dr. Bronners or Manitoba Harvest is another one that comes mind, but we also support some really cool small hemp businesses as well. People that, you know, are going from boutiques to hopefully big box stores pretty soon.

Matthew: Now we had Doug Fine on the show recently, author of Hemp Bound, and he was talking about how they’re using hemp in Europe to create a concrete or a hempcrete out of it and it sounded just amazing. Is there any kind of strange applications like that you’re hearing about?

Jake: I loved the Doug episode by the way. He is such an interesting guy and has been doing amazing work in the hemp industry for so long. And hempcrete is fascinating to me. They’re talking about doing different hemp applications in batteries. I think the thing that I’ve been the most interested in is how much they’re really interested in massage oils. There are so many people that, for example, we just sent out a candle that after it’s done, you know, lighting up your living room turns into a massage oil that can be applied however you see fit. But just the amount of kind of ingenuity that’s going into this, when we got into it I’d always worked in the, you know, medical marijuana industry and people would always give me, you know, hemp products and I would go okay thank you and then it would kind of go into a drawer. And then, you know, we started going through some of the stuff, and I was like wow these products are amazing. You know, now that we’ve really delved into it, I’d say we’ve had contact with over 500 different hemp product companies at this point. So it never ceases to amaze me what people are doing out there and what kind of ingenuity and the entrepreneurs that are in this space, just consistently blows my mind.

Matthew: It really is a super food too because you know, you’ve got the complete protein. You have the Omega3, 6 and 9 in there. You have the fiber. I mean it’s really, it’s incredible.

Jake: You know what we’re seeing too is that there are a lot of athletes that are starting to move over, you know, that don’t want whey protein because it leaves them bloated and they’re switching over to hemp protein. On It is a really good company that we’ve worked with in the past that does a lot of work.

Matthew: Yes we had the founder of On It on the show, Aubrey.

Jake: Yeah we love their products. It’s such a smart way to really fuel your body for the day, and it’s such an excellent protein source that I think a lot of people are missing out on.

Matthew: I agree.

Jake: Very cool.

Matthew: Now Jake as we close how can listeners learn more about your articles and find your reviews, find HempBox, find you on Twitter. Can you let us know?

Jake: Totally. Yes so www.hempbox.com is how you can find out all the information about the boxes. Check out all of our HempBox approved companies, and you know stay up to date there. www.jakebrowne.com has all of my kind of social links. I’m on Instagram, Twitter, Facebook, and then you can always check out the Cannabists, that’s www.thecannabist.co, go over to the Strain Reviews portion and you can always find my latest reviews there or sign up for my mailing list at www.jakebrowne.com and we’ll just get it right to your inbox whenever they come out.

Matthew: Jake is there any special offers for CannaInsider listeners who have never tried HempBox before?

Jake: Yeah if it’s your first time and never seen a HempBox before just enter the code CANNAINSIDER on the checkout page and we’ll get you your first box for 50 percent off. So it will be only $9.99 and you’ll get 4 to 5 different hemp products that will show up on the first week of the next month.

Matthew: Well thanks so much for being on CannaInsider today Jake. We really appreciate it.

Jake: It was so much fun Matt, thanks for having me on.

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.

Harness the Green Wave of Cannabis Investing with Poseidon Asset Management

Emily and Morgan Paxhia

Emily and Morgan Paxhia have jumped on to the scene of cannabis investing with a fury. They are emerging as thought leaders in the industry and focused exclusively on cannabis investments. Learn why they are so bullish on this industry and what they are investing in now.

*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. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. 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. Now here’s your program. What is it like to be at the center of the cannabis investing community, first to hear about deals from entrepreneurs while grappling with decisions about which investments have the best risk adjusted return? We’re going to find out the answer to that question today with our guests Emily and Morgan Paxhia founding partners of Poseidon Asset Management. Welcome Emily and Morgan.

Emily: Hello.

Morgan: Thanks for having us.

Matthew: To give us a sense of geography, can you tell us where you’re located in the world?

Emily: Yes we are located in San Francisco, California which is where we feel is right in the heart of all that is happening to the industry.

Matthew: Now you’re not California natives. Why did you choose California and why do you think it’s the center of it all?

Emily: Yeah because, you know, there’s a lot of things that are great that are happening in Colorado or Washington, but we really had our eyes set on the massive potential of the state of California. From an economic standpoint, the state is the largest… the 8th largest economy in the world, and we feel that once cannabis is legalized for adult use and with the existing medical side getting streamlined and kind of brought under that umbrella, we think the potential is greater than that of Colorado and Washington state’s combined. We also like being near the entrepreneurial spirit of what’s going on in Silicon Valley with all the startups going on there. And then it’s just really easy access for us to travel to all of these great markets including Colorado, Washington, Oregon, Alaska and Las Vegas. So there’s a lot of things really nearby and it just gives us a lot of access.

Matthew: And what does Poseidon Asset Management do?

Emily: So we launched the Pioneer Hedge fund that focused entirely on the cannabis sector.

Matthew: Okay. How did you get started in this business? What’s your background, and how did you come to focus on cannabis?

Emily: Yeah I think we’ll both dive in on this one. Morgan do you want to take it?

Morgan: Sure, yeah I will start off. So I have an investment focus background doing investment management for several years prior to this. And you know, we have a deep tie to the cannabis plant itself which we can touch on that in a minute. So we saw a lot of potential there, and it was just one of those opportunities where we were all at a point in our lives where we were ready to commit to something that we were passionate about. And I feel like there’s only a few times in life where your passion and your profession can align. And so taking my investment background and crafting a strategy that was needed in this industry was really where it brought my interest to this space, and I will let Emily explain about her’s.

Emily: Yep, and so I have a research and consulting background. I worked with a lot of different companies including American Express and all the Viacom entities and even the McKenzie Group. So spent a lot of time doing that, looking at markets, looking at segments, looking at companies and brands and trying to understand where they’re viable and what their potential growth is and how they can improve upon all of that. And we just thought it would be an interesting synergy to come together with Morgan’s financial background and my research and consulting background to really take a look at the market not just from kind of a math and numbers and strong finance side, but also from that kind of qualitative softer side of understanding trends and where they all fit into a market. And then we have another partner who is our digital person. He does all of the work on our website and our blogs, and he’s a writer and he keeps all of that updated. So we really are trying to bring a fresh take on the financial approach to investing and doing so in a very new category.

Matthew: So Emily with your research background was there any particular investments that you thought sounded good, but then when you dig into the numbers you say this particular kind is not as good as I thought, but it looks good on the surface. Are there a lot of those out there?

Emily: Yeah, I mean there are a lot of companies that on first flash look good, and even sometimes their numbers, you know, their projected numbers look good. But then once you really dig in, one of the things we talk about at Poseidon a lot is that we’re really investing in the people, not just the idea. Because the people are really the ones who are going to see a good idea through. So even if a company looks good on paper, it’s really important to get out there and meet with the people and see what they’re actually doing and understand who they’re potentially making this product for or who they’re considering when they’re putting these projects together. We were just up in… as I was telling you earlier, Morgan and I were just up in Washington. We are doing due diligence trips all the time because nothing replaces a face to face meeting and seeing what these facilities look like or what the equipment or what the technology performs like.

Matthew: And Morgan how would you describe your investing style. It sounds like you were in the investment world prior to Poseidon. Did you have the same investing style before coming over and now you just brought it into the cannabis industry? How did that transition look?

Morgan: Yes, there are a lot of crossovers from previous work experience. We’re focusing on managing the risks of the portfolio, building a well constructed, well diversified portfolio of, you know, different assets so they can contribute positively; something that we thought was absolutely necessary in this new industry. You know, we’re very much growth focused as the industry is in growth mode, and we want to make sure that we positioning ourselves appropriately, but also quantifying the risks and building the portfolio around that. So that’s a lot of my background is doing exactly that. And instead of managing investment portfolios for well over 100 families, I’m now focusing on one very focused portfolio. So there’s a lot of similarities, and it’s, you know, everyone thinks cannabis is this esoteric kind of investment. And it’s really just like other sectors in the marketplace. It’s just a new market that’s a newly investible market. So you know, just taking those methodologies that we’ve built over the years and bringing them to this space has worked out very well for us so far.

Matthew: Emily you just highlighted your recent trip to Washington. Can you tell us a little bit about the entrepreneurs you’re doing due diligence on or maybe not these current ones, but some you’ve done in the past. What does that look like, and what kind of investments are actually being made? Are they in physical capital assets? Are they equity stakes? What do the investments look like?

Emily: Yeah, so our investments run the range of the capital spectrum. We’ve done everything from preferred equity stakes, to equity, to you know, like Pre DPO-IPO things to short term high interest rate deals. So we’re looking at everything. We like having that kind of all of that mixture within the composition of the portfolio. You know on these trips that we’re taking we’re looking at pretty much everything. We’ve been taking trips looking at technology around improving growing efficiencies. We’ve been taking trips looking at real estate. So it’s a range of things, and it’s just really exciting to get out there and see what’s happening in the industry. Because I think people from the outside looking in don’t understand just how high tech everything is, how much process and procedure goes into what’s going in the cannabis industry. So you know, we were at an investment conference a couple… actually a month or so ago, and one of the things we have raised with investors is like okay, have you invested in real estate, yes. Have you invested in technology, yes. Have you invested in consulting or business services, yes. Well if you’ve done all that, then basically you’ve done what we’re doing in the cannabis industry.

Matthew: Right. And you mentioned preferred shares. Can you tell listeners a little bit about what preferred shares mean compared to let’s say, common shares and how they’re different?

Emily: Yeah Morgan do you want to take that? That’s definitely your wheelhouse.

Morgan: Sure. So basically you know, looking at the way the capital spectrum lines up, when you’re looking at common stock, you know, you’re just a general shareholder of the company. You are technically have an ownership stake in the company, but when you are moving up, I guess a tier so to speak, when you’re looking at the preferred shares, you know, you might have different rights than, or you should have different rights than the common equity holder. You might have the potential for distributions in the way of dividends that might technically flow down to the equity shareholders. You might have more rights as far as voting in the company in the decision making process. You might have more influence over the decision making process. So it’s a way that in these early stages we’re able to be a more engaged partner than just generally just participating with capital.

Matthew: Okay that makes a lot of sense. Are the new deals you see priced at a fair valuation you would say? Because I’ve heard a lot of different investors speaking and, you know, they’re saying some of the valuations just seem crazy. Are the majority crazy and the minority fairly valued? I mean, feel free either one of you to weigh in.

Morgan: Sure yeah, I’ll jump in. So the valuation, this is such a new investible industry that valuations are really hard to say firmly, this is great, this isn’t, you know, this is a cheap deal or not because we don’t really have a baseline. You know there’s not… this isn’t a developed industry where we can have these easy comparisons versus other companies that are already existing, operating and are trading or valued at X value. So we have our own methodology that we have developed as a way to try to de-mystify the valuation question. And in general though we do feel that the valuations as a whole are too high. There should be a larger risk premium built into this market, and we’re not seeing that for the most part. And I think that is driven by people seeing the growth potential of the industry and thinking, you know, when you put together these financial projections well yeah we should be at this massive company in five years, but reality is not reflecting that. And so so much of what it comes back to is, you know, what does the underlying business actually look like. And to Emily’s point is so much of a qualitative analysis of the entrepreneurs and do we think they’re able to execute even at an X percent of what their projections are, and do we then see that as a good investment opportunity for us.

Matthew: How is the landscape of cannabis investment opportunities evolved in the last year? I mean are you starting to see more of a similar kind of deal structure perhaps real estate or something come up over and over and over again. Because the industry is kind of saying hey this works, you know, investor meets entrepreneur here and these are kind of the terms. Are you seeing more of that happen now, more regularity in terms of deal structure and flow?

Emily: That’s a good question. I think we are seeing… I think we are seeing some patterns in terms of the deal structures that are emerging. But I’m also comforted by seeing some new deal structures emerging that are kind of mirroring what is going on down in Silicon Valley in terms of some of the startup deal structures down there which is kind of nice. But it’s good to see a range of things, but it’s not just pure equity that’s being offered or not just short term debt, but it’s nice to see these things. And you know we are seeing… and the other ways that the investment landscape has evolved is that we are seeing kind of more professional approach of companies seeking funding coming to us. Whereas in the beginning of the year, and this is still happening, but it is improving. In the beginning of the year people are coming and just saying, you know, I have this great idea. And it’s like okay well where is the business plan and where is X, Y and Z. And they hadn’t even thought about that or maybe sometimes haven’t even heard about that idea. So now we’re starting to see these folks taking a little bit more time before they’re approaching us and putting together some of those necessary documents and necessary structures before they’re going to go ahead and start asking for funding. Now I say that.. that is happening more, but it’s not always happening of course. There’s still people rushing into this sector trying to, you know, do the get rich quick thing and just looking, you know, sending off haphazard, you know, that’s poorly typed and not really thinking it through. But we are pleased to see that people are improving in terms of the way that they’re seeking funding.

Matthew: Now being close to Silicon Valley there is just a huge positive in many ways. There’s such a startup culture. There’s a great ecosystem. Have you seen any cannabis startups kind of mimic tech startups where they have an idea, they get capital, it doesn’t work so then they pivot to something else and they’re successful there. Have you seen any of that yet?

Emily: Oh yeah, there’s lots of pivoting going on in this industry, and I think that’s a great thing. Like we said, some of these people are people that are great people. They have great ideas, but maybe they didn’t hit it right the first time and they’re really adaptable and ready to move and make a difference in terms of what they’re bringing to this space. So yes we are seeing that, and I think that’s a good thing. We see that as a sign of adaptability and willingness to stay in this sector and not just to try to do a one off and move on if it doesn’t work out. So we are seeing some of that.

Matthew: Morgan can you tell us a little bit about how some of the real estate deals work? I mean at a high level, you don’t have to disclose any of what you have going on, but just like some of the structure. Like when people say there’s cannabis real estate deals, what does that mean?

Morgan: So typically right now what we’re seeing in the industry is basically a standalone entity that has a real estate, whether it’s one property, ten properties, whatever. It’s an entity that focuses on real estate. And then there’s another entity that is focused on the cultivation or dispensary or whatever that’s actually involved in the cannabis industry. And then you have that underlying cannabis entity then leasing from that real estate property. So that way it’s two separate vehicles and that way as an investor looking at the industry might say, you know, I’m more comfortable having a hard asset such as real estate. Then that way they feel like there’s more of a degree of separation. And you are getting that function of having, you know, the cannabis entity a separate piece and only participating maybe on the real estate side. And that’s also driven because of state laws where for example in the state of Colorado, we’re a California entity, we could not participate in the equity ownership in a Colorado grow facility because we’re not a Colorado resident. However we could invest in a Colorado real estate entity that might so choose to lease to a cannabis grower.

Matthew: Okay. And then looking ahead in the next three years, which is a lifetime in the cannabis industry, here in Colorado we just had vertical integration and pried that dispensaries had to grow 70 percent of what they sell. Now that restriction’s is removed, in what other way do you see the dynamics of the cannabis industry changing?

Emily: Yeah, I mean there’s so many ways that we think the dynamics of the industry will be changing, and not only just like within the state, but we think that once, you know, broader… it grows across the United States, we think that larger corporations and companies will be interested in, you know, putting a towel in and getting involved. And we know that this is already starting to happen. They’re starting to take note and take interest because we know that money talks. But I think it’s going to be very… I mean we’re very interested to see how this is going to play out. It’s a conversation we have with our companies that we’re investing in is where do they see themselves a few years down the line, and how are they going to… are they planning to withstand that influx of bigger companies? Are they trying to kind of keep their niche position or are they looking to potentially be bought out by one of those companies? So that’s like one dynamic that we’re watching to see who are these bigger players who will want to come into the space once they feel it’s safe enough. Morgan do you want to add to that too?

Morgan: Sure yeah. So I think one of the big changes we’ll see in the next couple of years will be banking. That will certainly change the dynamic in the industry right now. That piece is mixing so you have these… you have tremendous amounts of cash being handled which is really unfortunate and unsafe and unfair to the dispensary owners or the growers. Because if they’re being compliant with their state laws, you know, putting that unfair burden to them, but it also prevents them having access to traditional loan instruments that they might need, short term cash, you know, just more of those traditional banking services. So it adds a bit of making their operations less efficient, less profitable. And at the same time it does create opportunities for angel investors funds, you name it, to be able to help them maybe by doing direct loans, but I think that will be a major change for the industry itself. And I think when you see that piece it’s going to also bring in a lot more of that institution money. When they see that green light that banks are functioning and servicing the industry, I think that’s going to bring in a lot bigger capital. And when all of that happens the return profiles are going to shift. The high yield notes we’re seeing right now will go down, you know, you’ll have that yield compression. The equity, you know, how much we’re seeing… even though I was mentioning before about valuations, they’re still generally very positive when you find a good investment. And I think as more capital comes in the return profiles are going to also get compressed. So I think, you know, the opportunities are—as an investor—are the best they’re going to be for the next couple of years. And then as these other services come online, it’s going to change the game.

Matthew: Now Emily maybe you want to start with this answer, but are there any exciting entrepreneurs out there, and they don’t have to be ones necessarily you invested in. They could just be part of the community that you’ve seen and you’re like wow, they’re tackling a big problem and they’re doing something cool. Is there any from out there that you would highlight?

Emily: It’s kind of difficult for us to speak specifics on that just because of the nature of you know, hedge fund rules in the world because it can be seen as us giving guidance. But we are… I can say that we are, yeah, there are some really exciting companies out there. There’s one group that we really like that we think is doing… or a couple of groups that are doing a really good job of consulting. I think consulting is the aspect of the market that’s saturated and a lot people are stepping in saying that they’re going to consult or they’re being consultants, but they really don’t have the experience or acumen to really help people to get their grows off the ground. And there are a couple of those guys that are really standing apart from the rest who are winning the licenses in the critical states that are not giving out very many, and really helping their growth not only once they get the licenses, but then on the other side to help them have the product that’s going to pass muster. There are some really neat things around genetics going on, and you know, when it comes down to these plants, there are a lot of people that are connoisseurs and understanding the niche interests in this industry are important. And I’m getting cloned from A to B is something that’s interesting seeing those really different and unique ways that people are improving on protecting those genetics and getting those things to the patient or clones to the patients or getting them to different shops that need them in order to continue to grow and cultivate the things that their patients are seeking or that their enthusiasts are seeking the adult use market. So that’s a really exciting thing that we’re seeing. Is that okay to be giving kind of that broader level? Is that helping you?

Matthew: Yeah. To your point about the genetics, I mean, there is so much crop lost from mildew and diseases that I don’t know how I feel about genetics, but at the same time I think it will be very positive if we get rid of some of those diseases that cause so much crop loss. So I think that would be great.

Emily: Yeah, no, I think we were talking more about strain genetics in terms of keeping the purity of a strain. We are very… the other side of that, you are absolutely right, like the GMO, anything around, anything that smells of you know, any kind of modifications that reminds us of a big corporation who I will not name.

Matthew: And we’re all thinking the same one. Yes.

Emily: Yes, yes. No, that we are not in support of and we would not be pro that, that would not be tickling us. We want this industry to stay as organic and beautiful as possible without bringing in any unnecessary modifications. And I do think we know there are ways to, you know, promote organic growth of these plants and protect them against pests using all sorts of really natural ways of doing that, and yeah we’re very opposed to anything around that. Thank you for clarifying. Oh and also hemp. How could we not have talked about help yet? Hemp is something that is so exciting to us. It’s something that we feel like is very much in the early stage of getting notice from people in the United States. You know, Kentucky and Colorado just had their first crop harvest, and it was amazing. We went to see a hemp harvest or a crop in Boulder, Colorado, and it was absolutely incredible. I mean speaking of something that doesn’t require genetic modification, the hemp plant can grow in very little water. I mean the ground was cracked and these plants were just thriving. And they’re absolutely amazing, and the things that can be done with hemp are astounding. You can use it to build homes and to replace… BMW and Maserati use it in their cars because—Morgan knows the tensile strength of it—but it basically is super strong and very light. Morgan what’s tensile strength of it? You know that.

Morgan: It’s ten times the tensile strength of steel which is… everyone always turns their head at me sideways when I say that.

Matthew: Wow that’s incredible.

Morgan: Yeah it is incredible. It really is, but it’s just something that’s, you know, we’re only just starting to bring back. We have the strongest seed bank of hemp in the world as of World War II right Em?

Emily: Yep.

Morgan: And we destroyed it all.

Matthew: Now Morgan this dovetails nicely with what you were saying earlier they have a close relationship with the plant. Can you tell us a little bit more about that?

Morgan: Yeah so we have a family history where unfortunately we lost both of our parents to cancer at a young age.

Matthew: I’m sorry to hear that.

Morgan: Yeah it was, you know, and one thing we know is that, you know, it’s not that we’re… you know we still know so little about the plant, but one thing that is pretty obvious to everybody is it benefits from pain management and nausea and helping people with being able to eat because of the nausea relief. And you know, when they were going through… especially thinking back on when our father was going through the intense chemo and just seeing his discomfort and knowing that he actually… he was a flower child back in the day, and you know he really was an advocate for it as well. So we believed he would have benefitted greatly if he would have had safe access to it. You know, we know he would have never have done that in front of us because he wouldn’t want to put us in a… put his family in a tough situation. So just by his discomfort he chose to just deal with the, you know, the general unpleasantness of going through that process. So seeing that first hand really ingrained in our heads just how wrong this was. And I really, at that time when we were so young, I was 12 years old. So I mean it’s not like I was thinking about a hedge fund back then, but when the world started coming around a much more realistic place, I mean that’s really why we felt so passionate about it.

Emily: Actually Morgan I do have to say I think you were born thinking about hedge funds.

Morgan: Sure I did start investing at age 12 so I guess I did.

Emily: Yeah he was born 40.

Matthew: Well that’s an inspiring story and it’s been really interesting to hear a lot of people have different ideological reasons why they feel passionate to get into this industry. So I’m glad you shared that. Is there any… go ahead Emily. I’m sorry.

Emily: I mean one of the things is, I mean, for us it’s like we spend more than a full time job focus on growing our funds and supporting this industry and being passionate about is really what enables us to do that because we really care. And we really care about the funds’ performance and we really care about the benefit of this industry, on the society as a whole. So it’s one of those things where it’s easy to work hard when you believe so strongly in it.

Matthew: That’s true. Do either of you have any investment heroes that you look to for kind of your play book?

Morgan: You know, I’ve always, you know, the big guy in the world today still is, you know, Warren Buffet, he was just a legend. And, you know, he has just always been so focused on the big picture and really getting into these companies and understanding them inside and out, and not getting deterred by what’s going on in the media or the general stock markets. You know, and I think that is something that is so easy to get sucked into day to day with the amount of, you know, headlines and this that and the other thing. And just having that complete focus I think is just something that is so impressive and I think has led him to be, you know, so successful and so I hope that we can, you know, capture as much of his thought process as we can. So he’s always been someone I’ve read his books and follow as closely as we can. And I’m actually reading another one of his books right, or not his books, but one of his favorites, The Intelligent Investor, by Benjamin Graham. And a lot of his, you know, he says he learned a lot from Benjamin Graham and it’s just amazing. You know reading about these guys because even though a lot of these practices they did decades ago are still working today. When you hear this time is different, you always want to question that statement, and those guys have always stuck to that. You know, they don’t let the bobble heads on TV try to tell you different.

Matthew: Great point. Now in closing how can listeners learn more about Poseidon?

Emily: Okay so they can go to our website which is www.poseidonassetmanagement.com, and I should spell it just because a lot of people don’t know how to spell Poseidon. It’s www.poseidonassetmanagement.com . We also have a Twitter page that we’re constantly Tweeting or sharing articles or things that we find really interesting or compelling about the industry or even about related industries. Like if we see something that’s interesting in fact that we think applies to cannabis, we’ll tweet about that. And that’s at @poseidonasset, and then we have a Facebook page as well, and again we post all of our updates to those places. And our blog is of particular interest I think for anyone who is really looking to learn more about what’s going on in this space because our other partner Chris has a lot of content that he is posting. We have original content there about our travels. And we’ve interviewed some people, like we interviewed Doug Fine who is this amazing, amazing person who is really leading the charge on hemp, and he’s written a really important book about it called Hemp Bound. And we’ve got some other interviews that we’re actually working on right now that we’ll be posting before the end of the year probably, but check under our media tab under the buzz header.

Matthew: And are you accepting new investors still or no investors?

Emily: No, we’re accepting investors as we go.

Matthew: Okay and how about… go ahead Morgan. Sorry to interrupt.

Morgan: Oh sorry I was going to say yes, we are open to new investors, but unfortunately the hedge fund we are only able to accept accredited investors.

Matthew: Yes and how about entrepreneurs that think they have a good opportunity for you. They can reach out to you as well?

Emily: Yep. We have a contact section on our website and there’s actually a section for people who are looking to submit potential deals and then a section for investors.

Matthew: Well thank you so much to Emily and Morgan Paxhia of Poseidon Asset Management for being on CannaInsider today. If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guest 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.

Steve DeAngelo – The Provocative Leader of the Cannabis Industry

Steve DeAngelo

Steve DeAngelo is perhaps the most recognized person in the cannabis industry. You will undoubtedly recognize his ever-present pig tails and distinctive hat as well as his two businesses Harborside Health Center and The ArcView Group of Oakland California.

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

What you will discover in this interview:

  • Steve’s background in activism
  • How he co-founded Harborside Health Center, The ArcView Group, and Steep Hill Lab
  • How the legalization of cannabis is unfolding in other countries
  • Why Steve rejects just the two categories of medicinal or adult use for cannabis
  • How cannabis helps people with their patience, sensuality and creativeness

AND…

as well as how many milligrams of THC he puts in his homemade edibles.

If you enjoyed this interview, listen to our interview with Steve’s partner at the ArcView Group, Troy Dayton.

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. 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. Now here’s your program. Our next guest is perhaps the most recognized person in the cannabis industry. You will undoubtedly recognize his ever present pigtails and distinctive hat as well as his two businesses, Harborside Health Center and the ArcView Group of Oakland, California. I’m pleased to welcome Steve DeAngelo to CannaInsider. Welcome Steve.

Steve: Thank you so much. It’s great to be here.

Matthew: Steve most listeners know who you are but may not know your background or how you got started in the cannabis industry. Can you give us a little history?

Steve: Well sure. I’ve been a cannabis activist since I was 15 years old. I got my start doing the 4th of July Smoke Ins with the hippies outside the White House in Washington, D.C. which is where I grew up and spent the first part of my career. So it actually goes pretty far back in time. But once I had spent about ten years as a street activist I became active in the music industry, did a number of benefit albums and concerts for Normal and other activist groups. And then in the 1990s really started my first cannabis business which was a company called Ecolution. It was for about a decade the premier industrial hemp company in the United States. We made about a 100 different hemp products from hemp that we sourced in Eastern Europe which had just become free of communism in those days, ’91, ’92, and ’93.

And I moved out to California about ten years after starting Ecolution, after playing a leading role in the passage of Initiative 59 which was Washington D.C.’s medical cannabis initiative. It passed with 69 percent of the vote. We carried every single precinct in the city which was back in 1998. But the US Congress stepped in and refused to allow that bill to be implemented because they have ultimate governing authority in the District of Columbia. And that infuriated me and frankly disgusted me so much that I decided it was time to come out to California where the first dispensaries were beginning to open.

Matthew: Now you see cannabis and hemp as one issue not two. Can you explain why that is?

Steve: Well it’s one plant. You know, we’re talking about one plant and there’s no technological reason that hemp has to be grown with a low THC content. It’s just become a legally mandated convention. But we’re actually talking about the same plant, and I think that it’s important to look at the cannabis plant holistically to understand the role that it can play in all aspects. It’s really, in my opinion, the single most valuable plant that we have on the planet. It can provide few food, fuel, fiber, medicine. You can manufacture anything that can be made out of cotton or petroleum or trees out of hemp. And you can do so in a much more eco-friendly way.

So just as medical cannabis and cannabis in general has the ability to heal the ailments of our bodies, to heal the unhappiness of our souls, to promote better relations between people, industrial cannabis also holds the potential to help greatly in the healing of our planet which is, you know, going to be one of the great works of coming generations.

Matthew: Now I’ve read that you’re advocating for cannabis to be used only medicinally and not recreationally. Can you explain why that is?

Steve: Well, you know, I reject the categories of medical or recreational. I think that’s a false dichotomy and a false choice. I see most people using cannabis for wellness purposes, and I define wellness very broadly. It certainly includes people who are using cannabis to eliminate their cancer tumors or to control seizures from epilepsy. It includes people who are managing their insomnia or their anxiety or their depression or their chronic pain. But it also includes things like extending you sense of patience and enhancing your appreciation for the flavor of food or the Sound of Music, sparking your creativity, opening yourself to a spiritual experience, waking up your sense of play or your sense of humor, enhancing sensuality and intimacy.

So I don’t see those kinds of things, which is really why people use cannabis, as just getting high. I don’t think that it equates to using substances like alcohol or cocaine or heroin. I think that we’re talking about a qualitatively different experience. When you enhance your creativity, when you extend your sense of patience, when you promote a closer intimacy and sensual experience, this is not about intoxication. If you read the definition of intoxication, it’s to lose control over what you’re doing or what you’re saying, as to become so excited or out of control that you don’t know what you’re doing basically. I just don’t see cannabis operating that way. I don’t see it being helpful to describe it in that way. So I really like to talk about cannabis not for medical purposes or for recreational purposes but rather for wellness purposes.

Matthew: That is a great way of framing it because it seems like it is isolated to those two categories. So I’m glad you’ve expanded it there. You were a pioneer in cannabis testing. How has testing evolved since you started, and where do you see it heading?

Steve: Well you know the testing of cannabis has just played an incredible role in the evolution of the industry. You know, the amazing progress that we’re seeing with CBD rich cannabis and the uses it’s being put to control seizures, especially seizures in children with intractable epilepsy conditions, would not have been possible without the creation of Steep Hill Laboratory and the beginning of the testing industry. We didn’t even know what was in the strains of cannabis that we were providing to patients until testing was possible. And so now we have this whole new category, CBD rich category, of cannabis medicines that really couldn’t have existed prior to testing.

So I think that that’s one, you know, very important contribution that we’ve made. I think that we are also seeing some real leaps and bounds in testing technologies. So when we started Steep Hill, you know, several years ago now, back in 2009, and for the first few years the only way to test cannabis was to actually send a physical sample to the laboratory and put it into a lot of extremely complicated lab equipment. Now we have a mobile device, the QuantaCann, that can be put in any location anywhere on the entire planet that has an internet location, an internet connection and cannabis can be evaluated for its cannabinoid profile, it’s moisture content and eventually its terpenoid profile remotely in something like three minutes.

So huge advances in the technology. I think where we’re headed with it is that, you know, cannabis is this incredibly rich source of therapeutic materials, of wellness materials. There’s a minimum of 65 different unique chemical compounds, cannabinoids in the plant. But some scientists believe that there’s 400 or more of them. Each of these unique compounds has its own effect on human physiology, and many have a unique effect on the human mind. So identifying all of these various different cannabinoids and then analyzing what effects that people associate with cannabis are produced by particular cannabinoids is going to be a very very rich field of research. And you know at some point in the future we’ll see a situation where people can select from cannabis products that are much more precisely dialed in to produce a desired effect.

Matthew: Many of us in the cannabis space have a Colorado, Washington, California focus, but through your travels to Chile, The Czech Republic and Spain, you have a truly international prospective. How do you see the international cannabis community evolving right now, and how is it different than what we see in North America?

Steve: We, you know, my trip to Chile was really really fascinating. And in Chile there’s a model of cannabis culture that’s quite similar to the model of cannabis culture we see in most of Europe which is that the government either tolerates or permits the sale of cannabis seeds and of horticultural equipment, and either tolerates or permits low scale, personal cultivation. However, they you know very strictly enforce any kind of trafficking laws or any kind of large scale cultivation. So Chile it was kind of like going back to California in 1991. There’s this incredible rich cannabis culture. People are using cannabis, talking about cannabis, writing about cannabis, producing cannabis art and cannabis literature and cannabis music. They had the largest cannabis freedom march in the history of the world that I know about last May in Santiago with 200,000 people. This is in a country of 15 million. So it would be like having 4 million at a cannabis freedom march in the United States, something like that. That’s a vast culture.

But unlike here where, you know, I mean I recently saw the Pot Barons of Colorado show on MSNBC, and I was just really appalled by like how the whole show was just focused on… really it was a show about making money. It wasn’t really a show about cannabis. It didn’t talk about the plant or its effects or the good of ending prohibition or helping people. It was really just focused on this race to build a new industry. And you know the contrast between that with Chile was really striking to me, and it made me realize how important it is that as we move forward into legalization, wherever we are in the world, that we make sure that we don’t lose track of the real value that this plant gives us. And the real value that it gives us it’s not simply monetary or opportunities to make profit. It’s the lessons and wisdom that the plant teaches to people who listen with an open mind.

Matthew: Now for those listeners outside of California that may not have been to Harborside Health Center, they might not understand how bustling of a place it is. Can you help paint a picture of what it’s like in there? I mean, I’ve heard there’s even an express line and there’s just so many things going on in there, so much enrichment activities. Can you tell us what’s going on at Harborside?

Steve: Sure. Well, you know, we’re really a full service holistic healing center. So in addition to having, you know, a vast selection of cannabis, we do have about 250 different products to select from on our menu every day. We also have a wide range of services and that includes acupuncture, chiropractic, naturopathy, about ten other therapeutic services. We have a range of support groups for our veterans, for seniors, for parents who have children that are medicating with cannabis, for women. We also have a training center where we teach and incentivize our patients to become involved in activisms. So they come in and spend an hour doing activist work, and they get a gram of cannabis for each hour they spend doing that.

So we have a variety of ways that people can come in and participate. It’s true that at peak hours it can be a really bustling place with a lot of people. And so we’ve, you know, to help people move in and out quickly, we’ve instituted web ordering so people can go online and order online and then come in and pick up from our web pick up station, web order pick up station and generally not have to wait in a line and get in and out of the shop in 5, 6, 7, 8 minutes. So it is. It’s a pretty bustling place. We have, you know, if you walk into our main dispensary room, there is on the left hand side, there’s ten different sale stations. On the right hand side there’s a boutique that sells all sorts of various vaporizers, glassware, t-shirts, books and anything else that we think would be interesting to the cannabis community. Beyond that is a little alter space which is like a non-denominational alter space. And beyond that is our clone department. So it is a big and a bustling place with lots to see and lots of experience.

Matthew: Now you’re also the founder or co-founder of the ArcView Group. We often have entrepreneurs on this show that have presented to ArcView investors. But for people that may not be familiar of what the ArcView group is and does, can you give us some background on why you started it and what it does?

Steve: Sure. I, you know, Troy and I, My partner Troy Dayton and amazing CEO of the ArcView Group, began seeing two different kinds of people coming to us. One were cannabis entrepreneurs who had good ideas. They had startup businesses, they were doing well or at least the potential to do well, but they needed some money to get started or to grow their business. And they were looking for advice on how to do that. Well they came to me at Harborside because I was successful, and they figured I would know how to do this. But, you know, a lot of them really didn’t know how to package themselves or present themselves to investors properly. And at the same time Troy and I were hearing from high net worth people who, you know, most of them had been political donors to the movement, who were starting to get interested in possibly investing in the cannabis sphere. But those investors didn’t know who the players were. They didn’t know how to identify or evaluate the opportunities. They didn’t really know anything about the industry.

And so it became pretty clear to us that there was a need to create a community where the investors and the cannabis entrepreneurs could come together, where they could get to know each other, where we could begin to build a cultural bridge between those two communities. And the idea was that a legitimate and profitable cannabis industry can be one of the most, if not the most, powerful engine moving to end prohibition. And the other idea was that, you know, we decided our main focus in the ArcView Group now is what we call our ArcView Investor Forums. And small generally startup cannabis companies have an opportunity to present their ideas and their companies every couple of months to about 350 investors. And so what we hope to do is, you know, create a very vibrant and very broad based cannabis industry that’s open to a lot of people. You know, we don’t want to just create a new industry. We want to create a new kind of industry in this country that spreads opportunity more widely than others do.

Matthew: Can you highlight a pitch that you are excited about, that you heard recently to give a flavor of what it’s like at these ArcView events for listeners?

Steve: Yeah, you know, my favorite pitch lately was from a company called Canopy, and Canopy’s business model is based on the business accelerators that you see in the tech industry. And what Canopy does is it provides a boot camp for entrepreneurs who have good ideas, who want to get into the industry, but still need a little bit of help with their basic business procedures, with cleaning up their corporate hygiene, with getting themselves into shape to present to investors. So it’s kind of like, you know, a prep course for people who want to come and present at ArcView who don’t feel they’re quite ready to do it.

So I found that to be a really exciting business model both from the point of view from investors, because investors who invest in Canopy end up getting a small but still an equity interest in each of the companies that go through the Canopy boot camp. And the companies, you know, there are so many passionate, creative people in the cannabis community who because the plant’s been illegal for so long just haven’t had an opportunity to learn on how to really build a legitimate cannabis business. And so Canopy is the place for people to come and do that.

Matthew: Let’s say I’m an entrepreneur listening to this interview and I want to create something just incredible for the cannabis space, what big problems need to be solved?

Steve: It depends on what kind of product you are producing and they fall into two general categories; cannabis products and ancillary products. So if you are actually going to be cultivating or distributing a product that contains cannabis, then licensing is going to be, you know, your first objective. You have to be able to do the activity legally. In the course of the last year the landscape for acquiring licenses, for acquiring new license has become intensely competitive. So anybody who’s planning to cultivate cannabis legally or is planning to make products out of cannabis or distribute those products really needs to take a close look at the licensing requirements wherever they plan on doing business and make sure that they assemble a team that’s capable and has the resources to meet those requirements.

So in terms of folks who are going to be creating ancillary products, in other words, products like software or cultivation equipment or real estate, anything that is not the plant itself, they’re, you know, what I would say the largest challenge really is finding a niche in the industry that is not already crowed. A lot of the more attractive niches in the industry have a lot of contenders already. So for example there’s a number of companies who are contending to be the social media center of the cannabis world. And they include Weed Maps, they include Leafly, there’s another of other companies that are aiming for that same target. And so the competitive space is already fairly crowded. You’re already up against some fairly intense competitors. So for new entrance what I would say is you really want to focus on those niches, those products, those services that are not currently being provided to the industry. Unfortunately there’s an almost endless supply of those kinds opportunities.

Matthew: Now switching gear to legalization. There’s some raids even in recent memory. Are we getting close to raids being a thing of the past at the federal level?

Steve: It doesn’t appear to. I mean the Obama administration has conducted about half again as many raids in its first six years as the Bush administration did during their entire eight years. The Bush administration conducted about 180 raids, and the Obama administration is bumping for 100 now. So the pace actually seems to have been increasing under the Obama administration rather than slowing down. Hopefully that will end, but it certainly hasn’t thus far.

Matthew: There is a sense that the legalization of cannabis is such a fragile thing and that the recent progress that has been made in certain states is no guarantee of future progress. How do we ensure that we continue to move the legalization effort toward the right direction, the right way?

Steve: So I think we really need to continue focusing on the benefits that ending prohibition will bring to the entire society. A lot of the conversation in the media right now is focused on the emergence of the industry, the amount of money the people are going to make, the great deal of opportunity that’s there. And I think that that is all important. But right now the main talking point of the most effective opponents of ending prohibition, people like Kevin Sabet from Smart Approaches on Marijuana, is the specter of “Big Pot”, and I think we need to be very careful not to give the impression that the major motivation for changing the laws is so that people can make a lot of money. Rather we need to keep the focus on things like ending the racial disparities and enforcement ending over incarceration, tax fairness and sanity, actually focusing on violent crime instead of cannabis violations, and really articulate the full spectrum of benefits that are going to come to the entire society.

Matthew: Do you think cannabis will be removed from the list the Schedule I drugs? I mean that’s when the wall really comes down between state commerce. Is that going to happen?

Steve: Well I actually prefer to talk about descheduling rather than rescheduling. I don’t think that cannabis should be a scheduled drug. This is a substance that has been used safely by human beings for thousands and thousands and thousands of years. It is not a new drug, and it is in fact not really a drug at all. It’s an herbal product, and I think that that’s the way that we wanted to regulate it. When we agree to a Schedule II designation for cannabis what we are essentially doing is handing the industry over to the pharmaceutical companies. Because you cannot dispense a Schedule II substance unless you are a federally licensed pharmacists, and you cannot produce a Schedule II substance unless you are a federally licensed pharmaceutical manufacturer. So I think that there’s some real problems when you talk about rescheduling as opposed to descheduling.

Matthew: Now you’re a California native and California is such a pivotal state. What is going to happen in 2016 in California from a political and legalization point of view?

Steve: Oh well we’re going to pass the initiative in 2016, and it’s going to be the biggest and most significant victory that the cannabis movement has seen thus far. I think that it is going to be a shot that is heard around the world. We are already seeing many many countries around the world moving towards reforming their laws. Some countries like Uruguay have actually legalized cannabis already, and I think when California takes that step you’re going to see that snowball start rolling a lot faster.

Matthew: Steve you always seem to be in front of the camera steering the message in such a meaningful and authentic way. For other leaders in the cannabis space, can you offer any advice on how to successfully navigate interactions with the press?

Steve: Well it’s really important to know what it is that you want to say and to be very clear on what your talking points is. You know the advice that I always try to give people is figure out the most important thing that you want to say and figure out how to say it in seven words or less. So if you can make that point effectively in a sound bite then, you know, you can do.. you get a much broader reach. With the press often a shorter… shorter is better in terms of the amount of coverage that you’ll get. So I think that’s important. And the other thing that is important is to be honest and to be real. If you don’t know the answer to a question then say that you don’t know the answer to a question. If you prefer not to answer that question, say you prefer not to answer that question. But don’t guess and don’t mislead and try to the degree possible to speak from the heart. The cameras are very sensitive to any perception of insincerity.

Matthew: And I understand you have a book coming out in 2015. What’s that going to be about?

Steve: Well the book is The Cannabis Manifesto. It is intended to be both a handbook for activists and an introductory primer for people who still don’t know much about the issue. It is going to be a short book, about 150 pages long. There will be about nine chapters. Each chapter is a statement of belief like cannabis should never have been made illegal in the first place. And then that statement of belief is backed up with up with history, political analysis, science and personal anecdotes from my 40 years of cannabis activism. And hopefully it’s something that activists will be able to use to sharpen their own arguments and also to, you know, hand to your conservative uncle or grandfather and change their mind.

Matthew: Now to get a sense of you personally, Steve, is there a strain of cannabis that you’re enjoying right now that you’d like to share with us?

Steve: Well you know I’m 57 years old now, and I’ve smoked an awful lot of cannabis in my life. And a couple of years ago my lungs just sent a message to me and said, you know, dude that’s enough, no more. We’re not going to take it anymore. So almost all of my cannabis consumption is edible now. I prefer to make my own edibles because quite frankly none of the edibles on the marketplace are strong enough to have much of an effect on me. So I generally make my own cookies with the CO2 extract. They, you know, contain upwards or close to a 1,000mg of THC each. So that’s my personal regimen. If I had to pick a strain that I really love, I would say it would have to be Neville’s Original Haze.

Matthew: Great. In closing how can listeners learn more about Harborside Health Center, the ArcView Group, and how can they follow you personally?

Steve: So Harborside Health Center go www.harborsidehealthcenter.com. Our website’s there and you know have a good time exploring that and it will give you lots of information about who we are and what we’re about. You can also go to www.stevedeangelo.com to keep up on what’s happening with me on a more personal level. And then the ArcView Group at www.arcviewgroup.com.

Matthew: Thanks so much for being on CannaInsider today Steve. We really appreciate it.

Steve: It’s very nice to be here. Thanks for having me, and thanks for listening to me everybody.

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.

Infographic: Looking Back at Legalization in 2014

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Marijuana Legalization Stats 2014