A secure briefcase filled with cash dollars.

Colorado Sets New Cannabis Sales Record in March

For the tenth consecutive month, legal cannabis sales in Colorado have reached more than $100 million with March setting a new record of $132 million in combined medical and recreational sales, according to state Department of Revenue figures outlined by the Cannabist. Sales tax revenues derived from legal cannabis sales in March topped $22.9 million.

Adult use sales represented $93.3 million of March’s record-breaking sales, while medical cannabis sales totaled $38.4 million.

The March sales are 48 percent higher than sales from March 2016 and represents the end of the quarter, which saw sales up about 36 percent from the first three months of last year. In 2016, the quarterly growth year-over-year ranged from 29 percent to 36 percent. Monthly growth rates from 2015 to 2016 averaged about 34 percent, according to the Cannabist analysis.

Andrew Livingston, director of economics and research for the cannabis law firm Vicente Sederberg, said that the year-over-year trends indicate that the market has not yet reached a point where it’s starting to “cap out the market” at which point the growth rates would decline.

Livingston added that if the growth rates stay steady April 2017 would be another banner month, and this summer would set all new records. He estimates that by the end of the year Colorado’s sales could reach $1.6 billion.

According to the Department of Revenue, ten months into the state’s fiscal year, licenses and application fees for medical cannabis businesses have fallen 8.5 percent, and 25.4 percent for retail businesses. Miles Light, an economist with the Marijuana Policy Group, said the decline “shows that fewer new firms are entering and… sales should be tapering off or declining.” However, he was surprised that sales “continue to grow so quickly.”

“We are not surprised that almost all of the sales growth is in the retail marijuana space,” he said.

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An indoor medicinal marijuana plant that is several weeks from maturity and harvest.

Adult-Use Bill Approved by Delaware Legislative Committee, Moves to House

A bill that would create a taxed-and-regulated cannabis market in Delaware has passed the House Revenue and Finance Committee and will move next to the House floor for a full vote. According to the bill text, the legislation would regulate and tax cannabis “in the same manner as alcohol,” allowing adults 21-and-older to purchase cannabis products but it does not include home grow provisions.

State Rep. Helene Keeley, a Democrat and the bill’s sponsor, said she believes the measure has enough support to pass the House, which will likely take up the legislation after the legislature’s June recess.

“The numbers that we’re getting, about $22 (million) and $25 million on the conservative side that’s just off the sale,” Keeley said in a WMDT report. “If we actually look at this as an economic driver it makes perfect sense.”

Senate Majority Whip Margaret Rose Henry is supporting the measure in the Senate.

“Education is suffering. Revenue from legalizing marijuana could help struggling schools and seniors, among other causes and close major budget deficits in Delaware,” she said at a Medical Marijuana Act Oversight Committee meeting.

The measure would provide 20 percent of tax revenues collected from legal cannabis sales to the Department of Education.

If approved by both chambers and signed by Democratic Gov. John Carney, the initial regulations governing the program would need to be adopted not later than 9 months after the passage of the bill.

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The Golden Gate Bridge in San Francisco, enshrouded by fog.

California AG Vows to Fight Feds on Cannabis

In an interview with Politico, California Attorney General Xavier Becerra said he would “probably be the 1 millionth person in line” to fight Attorney General Jeff Sessions if he tried to crackdown on California’s legal cannabis industry.

“Cannabis is last century’s argument. We’re beyond that,” Becerra said in the interview. “I suspect if you took a real quick poll here, I bet if we took a poll, who has got cannabis, it’d be pretty — you don’t have to raise your hand, but you know what I’m saying.”

When asked by reporter David Siders about his own cannabis use, the former Democratic Congressman admitted that he had tried it “at a younger time.”

“So then it was illegal?” Siders asked the Attorney General.

“I also drive over the speed limit periodically, so,” Becerra responded.

Becerra has vowed to defend the state’s voter-approved measure allowing an adult-use cannabis market to operate in the state. The federal budget does include an amendment that prevents the Department of Justice from using federal funds to interfere with state-legal medical cannabis regimes and hemp programs but it does not include language preventing a crackdown on recreational programs. However, also included in the omnibus spending bill is a statement by President Donald Trump that could allow him to ignore the amendment.

“I would love to see Jeff Sessions come to California and tell us we’re not going to move forward on cannabis,” Becerra said. “Something tells me that it’s not gonna happen.”

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The New Hampshire Capitol Building located in Concord, New Hampshire.

New Hampshire Decriminalization Bill Clears Senate, Moves Back to House

Cannabis decriminalization in New Hampshire has just two more hurdles after the Senate passed HB.640; however the measure must go back to the House after the Senate amended the measure to drop the cannabis possession limits from 1 ounce to three-quarters of an ounce. The bill would eliminate jail time for possession up to three-quarters of an ounce up to five grams of “hashish” and reduce the fine from $350 to $100 for adults 18-and-older.

The original House version, which passed 319-36 in March, decriminalized up to 1 ounce of flower, but was reduced via a Senate amendment.

Rep. Renny Cushing, a decriminalization proponent, told WMUR that he was confident the House would concur with the Senate version of the bill, paving its way to the desk of Gov. Chris Sununu who has indicated he would sign it.

“I want to thank the legislature for passing common sense marijuana reform,” Sununu said following the Senate vote. “I look forward to signing House Bill 640 into law.”

Under the measure, the fines will increase to $300 for a third offense and a fourth offense would result in a Class B misdemeanor charge. Minors convicted of possessing less than the law allows would be subject to a delinquency petition.

The bill specifically forbids law enforcement officers from making arrests for cannabis possession violations.

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U.S. President Donald Trump speaks before a crowd of supporters in 2016.

Trump Reserves Right to Ignore Federal MMJ Protections in $1 Trillion Spending Bill

In a move that could lower Donald J. Trump’s popularity even further with cannabis supporters, the president signed his first piece of major legislation last Friday — a $1 trillion spending bill that prevented a federal government shutdown — but with his signature he also included the reservation that he may ignore medical cannabis protections found in the bill.

“I will treat this provision consistently with my constitutional responsibility to take care that the laws be faithfully executed,” President Trump wrote in his signing statement, according to a Summit Daily report.

While previous presidents have made similar statements when signing omnibus spending bills, White House officials have for months leading up to the bill’s passage signaled a potential for cannabis crackdowns in the future.

The protections in question stem of course from the Rohrabacher-Farr amendment, which was originally established in 2014 and has been annually renewed since then.  The amendment blocks the Department of Justice from using any funds to prevent the implementation of medical marijuana laws in U.S. states and territories, granting a limited sense of ease for patients and entrepreneurs who are otherwise operating in a federally illegal marketplace. The amendment, however, does not prevent DOJ intereference in states with legalized adult-use markets.

Other provisions in the 2017 spending bill included funding increases for NASA, the military, and border security (but not for the Mexican border wall that President Trump has promised to build).

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A sunny day at the Texas State Capitol Building in Austin, Texas.

Slow Paperwork Prevents Texas MMJ Vote

Texas’ legislature failed to pass a comprehensive medical cannabis regime before the end of the session and, according to the Texas Cannabis Report, the failure was due to the Calendars Committee not receiving paperwork for the bill on time.

According to the report, the measure was not heard by the Public Health Committee until one week before the end of the legislative session. By the end of that hearing, which lasted until almost 2:00 am, 77 of the House’s 150 members had signed on in support — enough to pass the bill. The bill was passed by the committee on Friday, 7-2.

Heather Fazio, a member of Texans for Responsible Marijuana Policy, said that Health Committee Chair Rep. Four Price might have had “his heart and mind” opened by the testimony at the hearing.

“He still wasn’t ready to vote for the bill himself, but he was attentive during the hearing and demonstrated exceptional character when he allowed the bill to be voted on by the committee,” Fazio said in the report.

On Monday, the bill hadn’t been scheduled by the Calendar Committee because, they said, the paperwork hadn’t arrived. On Tuesday, it came too late for the House to take up. The next opportunity to revisit the legislation is 2019 as the Texas legislature meets every other year from January through May.

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The national flag of Chile flying in the Andes Mountains.

Pharmacies in Chile Set to Dispense MMJ This Week

Pharmacies in Santiago, Chile will begin selling medical cannabis products this week as the nation’s legislature is considering allowing small home grows for patients, Reuters reports. The products will be imported by Canadian licensed producer Tilray in partnership with Alef Biotechnology, which is licensed by the Chilean government.

The Tilray products, T100 and TC100, will cost about $310 per month for individuals with a prescription. Chile legalized medical cannabis in 2015 but MMJ therapies were only available through a limited number of dedicated farms set up by a charity.

“By importing Tilray’s medical cannabis products to Chile we intend to ease the suffering of those in need by offering pure, precise and predictable medical cannabis products,” Roberto Roizman, Alef board president, said in a statement.

In April, Australia’s AusCann Holdings and Chile’s Fundacion Daya harvested its first crop in the South American nation; however, those formulations must complete successful clinical trials before being registered with the Chilean Institute of Public Health and made available for patients.

Last March, Argentinian lawmakers passed legislation legalizing medical cannabis for patients with a prescription and for research purposes. In July, some pharmacies in Uruguay will begin selling cannabis to adult residents who register with the state. Uruguay legalized the cultivation and sale of cannabis in 2013.

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Cannabis foliage inside of a licensed grow operation in Washington state.

Pro-Rec Cannabis Trade Association Forms in New Jersey

A newly formed cannabis trade association is looking toward the end of Gov. Chris Christie’s term with plans on pushing for the legalization of recreational cannabis in the Garden State, according to an NJ.com report. The New Jersey Cannabis Industry Association is bringing together members of the agriculture, technology, chemistry, and security sectors in order to build support for a bid as early as next year.

The association is founded by Peter Cammarano, a lobbyist and former chief of staff to Sen. Richard Codey. Cammarano did not disclose who would serve on the association’s board.

“In other parts of the country, we are seeing a safe and well-regulated industry that has lifted the regional economy and generated significant tax revenue,” he said in the report. “Our current cannabis laws are ineffective and as a result, New Jersey remains mired in dealing with the effects of a black-market industry.”

In January, former state legislator Scott Rudder announced the creation of the New Jersey Cannabusiness Association. In 2015, another group led by civil rights, public safety, religious, and academic leaders called the New Jersey United for Marijuana Reform was formed and last year released a report that estimated recreational sales in the state could generate $300 million in state tax revenues.

Christie, whose term ends in January, called legalization “beyond stupidity” during remarks to the New Jersey Hospital Association earlier this month.

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The Vermont Statehouse, where lawmakers became the first legislative body to pass an adult-use cannabis law.

Vermont Legislature First to Pass Cannabis Legalization Measure

Vermont’s legislature has approved a bill that, if signed by Republican Gov. Phil Scott, would legalize cannabis possession and small grows for adults while creating a Marijuana Regulation Commission that will draft legislation for a tax-and-regulate system.

The passage marks the first time a state legislature has approved ending cannabis prohibition.

Under the law, adults 21-and-older can possess up to 1 ounce of cannabis and grow up to two mature and four immature plants beginning on July 1, 2018. The Marijuana Regulation Commission is directed to draft legislation for a comprehensive market by Nov. 1, with the bill ready for a vote by Jan. 2018.

“Vermont lawmakers made history today,” Matt Simon, the New England political director for the Marijuana Policy Project, said in a report from The Hill. “The legislature has taken a crucial step toward ending the failed policy of marijuana prohibition.”

The measure, tacked on to an unrelated bill, was a compromise between the Senate – who passed a tax-and-regulate measure last week – and the House, who passed their own bill last week to legalize possession and small grows. The legislature was set to adjourn on Saturday but reconvened in order to tie up loose legislative ends, including the cannabis compromise.

According to the Hill report, the governor has not indicated whether he will sign the measure and has previously said cannabis legalization was not “a priority.”

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A heavy-laden cannabis plant inside of a licensed cultivation center in Washington state.

Canadian Labor Union Adds MMJ to Health Benefits Plan

A Windsor, Ontario, Canada labor union is now offering medical cannabis coverage options through its health benefits plan as part of its efforts to combat the use of opioid-based pharmaceuticals by members, according to a report from the CBC. The Labourers’ International Union of North America (LiUNA) 625 will expand their benefits plan to cover full-plant medical cannabis for its retired or permanently injured members but will only cover reduced THC cannabis oils for members still on the job.

Members will pay out-of-pocket for the products and will be reimbursed.

Rob Petroni, business manager for LiUNA, said the “most important part” of the new plan is to “reduce the opioid use and/or abuse” and that because they are able to track the supply chain, “there’s no chance of manipulating the system.”

“Now that we’ve added this, we’re hoping more doctors … will move towards prescribing the cannabis oil as opposed to the opioids,” Petroni said in the report. “We’re able to keep an eye on exactly who’s prescribing (cannabis), how much is being prescribed.”

The union also plans on monitoring opioid prescriptions in an effort to track reductions as the medical cannabis benefits roll out beginning on June 15. Their data might help convince other benefits plans to offer their own program.

“Quite honestly, out of 3,600 people, if one person gets off opioids, it’s better than nobody,” Petroni said.        

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View from the ground inside of a greenhouse built for basic flower production.

The Greening of Architecture: Design Options for a Successful Cannabis Facility

The choice of building materials for a cannabis project requires considerations of aesthetic appeal, initial and ongoing costs, life-cycle assessment considerations (such as material performance, longevity, durability, availability, and impact on the environment), and the ability to reuse, recycle or dispose of the material during construction and at the end of its life-cycle. Whether designing a grow house, extraction plant, food preparation facility, or retail dispensary — and whether doing so with new construction or the reuse of an existing structure — the following is a short summary of design issues that need to be addressed in order to produce an effective facility.

Site Selection

The following are the major considerations for site selection:

  • Location – size, adjacencies, climate, and site access.
  • Orientation and topography – sunlight, wind, and slope of the site.
  • Facility access – roads, parking, and handicap accessibility.
  • Utility access – water, electricity, and sewer.
  • Governing regulations, zoning, and codes – what is or isn’t allowed?
Do your planning on paper, first. Fixing mistakes with an eraser is easier than having to tear down and reconstruct an entire wall just because it was six inches out of place. Photo Credit: Pexels.com

Facilities Master Plan

For a larger facility utilizing new construction, a master plan provides a framework for the orderly construction of the buildings and should be based on a sound business plan.  The plan starts with a survey of any existing facilities, evaluates the benefits and constraints of the site (parking, outdoor production areas, fire department access, storage, etc.), and establishes where new and future facilities should be built.  It is best to do the planning on paper so that several alternatives can be evaluated, and it may be a good idea to hire an architect with experience creating cannabis facilities to help you with the planning process.

In addition to grow rooms, nurseries, and germination areas, an attached building or a section within the greenhouse containing work areas for production and packaging, offices, shipping and receiving, utility rooms, and employee areas, should be designed to support the growing, drying and trimming facilities.  

Building Design

Money is the limiting factor here. The actual exterior building design features, form, and structure have little to do with marijuana growth and cultivation, however, they have a lot to do with acquiring the customer base, and for creating a profitable facility. It is well known that aesthetically pleasing facilities tend to sell more product and have the deeper client bases, but it is not the only issue.

In terms of floor layout, think through how the space will be used. Generally, separating the public entry from the employee entrance limits the interaction of the workers with the general public.  There is a general process for workflow that must be evaluated and designed into the facility from material acquisition, to growing, to trimming, to drying, to processing, to testing, to packaging, to shipment, to sales.  Along these general lines, requirements for employees also must be addressed — offices, locker rooms and showers, and break rooms — and must be predetermined during the design stage.  Designing with change is mind is a good practice.

Environment Control

Heating and Cooling – Each greenhouse or bay should have independent temperature control for different crop needs. Evaporative cooling may be necessary if plants will be grown during the summer. The moisture provided picks up excess heat that is exhausted by the fans. In addition, small circulating fans should be placed to develop a horizontal pattern of air movement that mixes the air, removes moisture from leaf surfaces to reduce disease potential and increases carbon dioxide to the plants.

Lighting – The intensity of heat will affect the growing stages and hormones of the plant. It is important to choose the right artificial lighting type. Incandescent, LED’s, and HID’s are all options for the growing environment.  Incandescent bulbs are the least expensive but burn the hottest so the possibility of burning the plants is a consideration. LEDs run cooler but can be expensive. High-intensity discharge lighting (HID) is now considered the most effective for turning electricity into light and mimicking natural sunlight. There are two types of HID that can be used, Metal Halide (MH) and High-Pressure Sodium (HPS). MH lights can emit lights in the blue spectrum. This color of light produces the marijuana plant growth and is great for the leafy growth, and for making the marijuana plants compact. HPS emits the orange-red rays. These rays can stimulate the hormones in the marijuana plants for more intensified flowering and budding.

Controls – Accurate thermostats or an electronic controller should be installed to control heating and ventilation equipment. Automated building control is best for integrating the heating, cooling, lighting and other systems in larger operations but can be initially expensive.

Irrigation – Drip irrigation is a very effective way to preserve water, deter weeds and keep nutrients closer to your plants’ roots, and deletes the need for unfriendly garden hoses throughout the facility.

Interiors – With the basic structure of the building decided, you’ll turn your attention to the interior details. Depending on the use and classification of the facility, whether for plant cultivation and processing, or for retail sales, the interior environment is key for adequate maintenance, employee retention, and customer support.

A well thought out and constructed facility will make every entrepreneur’s job easier as they bring their dream cannabis company to life. Photo Credit: Cxelf

It is best to have concrete floors throughout for cleanliness and access. Carpet is not recommended except for offices and point-of-sale retail areas, and should be avoided as much as possible. To spruce up a facility and to provide ease of maintenance, low-cost resilient flooring or fluid-applied high-performance flooring can be utilized. Adequate drainage should be provided, especially in areas where water is used for irrigation and cleaning.

Wall materials should be easily cleanable, such as epoxy paint on gypsum board, fiberglass reinforced plastic paneling, or even stainless steel panels.

Ceilings should also be cleanable and scrubbable. Gypsum board or vinyl coated acoustical ceiling tiles are suggested. Also, exposed-structure ceilings are acceptable in grow areas.

Although initially more expensive, double insulated low-e glass is the preferred glazing where high light levels are required during the winter, and to meet current energy codes. Polycarbonate is another option, and though less expensive, the life-cycle cost for replacement over time makes this option less attractive. Energy/shade screens can help to reduce heat loss and provide shading during the summer. Passive cooling with flow-through natural ventilation is an option. 

Beyond the basic need for floor, wall and ceiling treatments, consideration for aesthetic appeal should be given to address sales and showroom areas, and employee-use areas. Color, texture, and form can be manipulated to create warm, welcoming, and comfortable facilities. It is thoroughly documented that the creation of profitable space requires an adequate understanding of human limitations and human desire so that employees remain happy and less-fatigued, and so customers feel invited and comfortable.

 

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Georgia's state flag flying on a blue-skied, sunny day.

Georgia Gov. Signs MMJ Expansion Bill

Georgia Gov. Nathan Deal has signed legislation expanding the medical cannabis qualifying condition list to include six more conditions, according to an Atlanta Journal-Constitution report. Patients suffering from AIDS, Alzheimer’s disease, autism, epidermolysis bullosa, peripheral neuropathy, Tourette’s syndrome, and those in hospice care are now able to possess low-THC cannabis oil, but there is still no way to legally obtain it in the state.

Initially the bill would have dropped the allowable THC content from 5 percent to 3 percent; however, the chamber agreed to keep the 5 percent threshold intact after law enforcement and public health officials reported that there were no issues with the THC content.

State Rep. Allen Peake, a Republican who has been supplying cannabis oils to some of the state’s registered patients and author of the House version of the newly-signed bill, said the expansion offers patients “a ray of hope for a better quality of life.”

“My hope is that in 2018 we can fill the gaping hole that still remains, and provide legal access to medical cannabis oil here in our state with a safe, lab tested product produced within our own borders,” Peake said in a statement. “The job will not be finished until we accomplish this task.”

Georgia has 1,738 patients and 354 physicians registered with the medical cannabis program.

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A cannabis worker inspecting plants inside of an indoor grow operation in Washington state.

Court Rules Against Cannabis Company in Bid to Prevent IRS Audit

The bid by an Aurora, Colorado licensed cannabis company to prevent the IRS from investigating whether it violated federal drug trafficking law was defeated by the U.S. Court of Appeals Tenth Circuit who ruled that the company could not enjoin the agency from auditing the business due to previous case law, specifically Lowrie v United States, 1987, and the federal Anti-Injunction Act, according to a report from Forbes.

Green Solution Retail Inc., argued that they would suffer “irreparable harm” if the IRS were allowed to continue their investigation because “a denial of deductions would deprive it of income, constitute a penalty that would effect a forfeiture of all of its income and capital, and violate its Fifth Amendment rights.”

The IRS contended that the Anti-Injunction Act prevents lawsuits “for the purpose of restraining the assessment or collection of any tax;” Lowrie prevents tax deductions for personal, living, or family expenses. In the cannabis space, businesses file their taxes under IRS Code 280E which denies legal cannabis businesses the ability to make deductions allowed by federally-approved businesses.

Kyle Speidell, president of The Green Solution LLC, said the company was “of course disappointed” by the decision but planned to continue “aggressively” pursuing “all remedies on this matter in opposition to the IRS.”

“An IRS position we might add which gives full voice to former Supreme Court Chief Justice John Marshall’s admonition that ‘the power to tax is the power to destroy,’” Speidell said in the report. “We fully intend to prevail in the court of law as we have and continue to do in the court of public opinion.”

The company could try to bring the matter to the U.S. Supreme Court who overruled Lowrie in Direct Marketing Association v. Brohl, 2015; however, the Tenth Circuit concluded it was still bound by the Lowrie case.

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A top-down view of the beach and a nearby road in the Cayman Islands.

Cayman Islands Hospital Begins Dispensing MMJ

A Cayman Islands hospital has begun dispensing medical cannabis oils nearly six months after Gov. Helen Kilpatrick signed the medical cannabis bill into law, according to a CNS Business report. Grand Cayman’s CTMH Doctors Hospital & Cayman Pharmacy Group will prescribe and dispense the oils for treatment of serious, chronic, conditions such as epilepsy and cancer, and as a pain reliever for rheumatoid and osteoarthritis symptoms.

Under the law, medical cannabis products are not permitted to be cultivated or produced on the islands, instead opting for an importation scheme. The hospital is being supplied by Canada’s CanniMed Therapeutics Inc., and the products will be imported by Caribbean Medical Distributors Ltd. CMD. Hospital officials indicated that the initial phase will see cannabis oils dispensed to a small number of physician-selected patients as they seek to educate themselves and track patient progress.

“There will be follow-up phone calls from the pharmacists themselves to closely monitor each patient. The pharmacist will also provide feedback for the physicians and together they will work towards an individually tuned treatment plan,” the hospital said in a press release. “Professional Pharmacy will consider prescriptions for cannabis oil from all licensed prescribers. Patients are encouraged to seek medical advice on this therapy directly from their physicians.”

In the release, officials cited case studies that show “life-changing results” with medical cannabis use for patients suffering from “chronic pain, neuropathic pain, and seizures.”

The group’s physicians and pharmacists were trained on procedures for prescribing medical cannabis last month.

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Serge Chistov: Choosing “The Road to Pure”

Serge Chistov is the financial advisor for the Honest Marijuana Company, a Colorado-based cannabis cultivation group that prides itself on providing clean, premium cannabis products to the medical and recreational consumer markets.

In this episode of the Ganjapreneur.com Podcast, our host TG Branfalt and Serge discuss the importance of all-natural cannabis growing, what qualities Serge looked for in a company before getting involved in the cannabis industry, and — with Serge coming from a previous career in liquor and spirits imports — how he believes cannabis legalization will affect the alcohol industry. The two also discuss reusable, quality packaging options in the cannabis industry and much, much more!

You can listen to the podcast episode below, or keep scrolling down to read a full transcript of the interview.


Listen to the podcast:


Read the transcript:

TG Branfalt: Hey there, I’m TG Branfalt and you are listening to the Ganjapreneur.com podcast, the Ganjapreneur.com podcast gives us an opportunity to speak directly with entrepreneurs and experts who are working on the front lines of the industry to normalize cannabis through responsible business, education, and activism. As your host, I will do my best to try to bring you actionable information to help you plan, grow, and manage your cannabis business. Today I’m joined by Serge Chistov, he is the financial advisor for the Honest Marijuana Company. How you doing this morning, Serge?

Serge Chistov: I’m doing fantastic and thank you for having me.

TG Branfalt: Hey, man, it’s a pleasure. I’m excited to talk to you guys about some of your green products that you’re rolling out but before we get into that, I like to start with the background of the guest. So what’s your background? What did you do before getting involved in the industry?

Serge Chistov: I would say that a stockbroker by trade, financial advisor and consultant since early ’90s on Wall Street. I built and expanded an import company in the liquor and spirits business, wine and spirits business, from 2006 until now. And somewhere at the end of the 2008-2009, I started to look into the cannabis field as something that is exciting, brings a lot of very interesting and passionate people, and obviously something that is dear to me as a substance for many, many years. And that’s how I end up in the cannabis space.

TG Branfalt: And there’s a lot of discussion always about how cannabis is going to impact the alcohol industry. As somebody who worked in the alcohol industry, what are your thoughts on the relationship between the two businesses?

Serge Chistov: The relationship between the two businesses? If there is an impact of cannabis consumption on the liquor consumption, it’s not like cannabis was not a part of our culture for the last 50-60 years, so I do not believe that we are looking at this sizeable quantitative number that alcohol will be or wine will be reduced by when we’re gonna start buying pot in establishments specifically directed to sell pot versus buying it from the local guy based on availability and his presence in the area. Do you know what I mean?

TG Branfalt: Yeah.

Serge Chistov: So to me, I believe that one has lived with the other for quite some time and we already have seen their symbiosis. We’ve seen how much wine will sell, which I believe was approximately 90 billion dollars or 99 billion dollars a year, that was the number from last year. And by some of the conservative estimates, legalized cannabis can be approximately the size of the developed wine market. So by some guesstimates, we’re looking at the 80 to 100 billion dollar a year industry. So quite frankly, liquor industry will not get affected as much as the illegal black market trade. The only thing that is affected by the rapid legalization and the controlled legalization of cannabis is the cartels’ bottom line, and our ability and our access to the good quality verified products, that is what’s affected. In no means, I do believe that increased liberalization of cannabis use in the US will affect negatively the wine or alcohol industry.

TG Branfalt: So moving on a little bit, I want to talk to you about the Honest Marijuana Company, it’s vision. You guys refer to it as the road to pure, why is this important for you guys to have this road to pure?

Serge Chistov: That’s a great question, thank you for actually noticing that. The approach to road to pure is coming from realization that the more we’re learning about the plant the more fascinated we are by the ignorance of the masses. And us at the same token. When you smoke or consume cannabis for the last 20 or 35 years as I did in probably 4 different continents, now knowing more about subject, I wonder what else was I consuming while trying to engage in some cannabis consumption. When the pesticide testings and when the different grow techniques and some of the shortcuts became known to the industry of what the manufacturers are doing to maximize their bottom line, quite frankly it is a scary thought to know that for the last 30 years the only basis for you to acquire cannabis was the local availability. If you know what I mean?

TG Branfalt: Absolutely.

Serge Chistov: So today having an understanding what actually goes into the production, what are the different variations of the chemicals, and organic pesticides and non-organic pesticides. Organic nutrients and non-organic nutrients. Different types of soils, different water contaminants, etc, etc. You just start really wondering what did we have to endure to get so far? And this is just the basis, look at it. Let’s take a look at the delivery system. Today majority of the cannabis is being smoked. And no matter how you slice it and no matter what the public tells you about it’s safer to smoke cannabis than smoke cigarettes and it sounds good but in reality it is a total bullshit. Because smoking is a dangerous form of delivery regardless of what is it that you’re smoking because combustion. What causes the cannabis to actually enter your body? Nowhere in the manual for the human operation we have read somewhere that you should set up a huge bonfire and walk into it and start inhaling the smoke. This is just not good for you.

So road to pure means us learning about the plant and finding the most organic way for the plant to manufacture its medicine. And then we’re taking it a step further and we’re working on a new and improved way to preserve it and actually delivery it to the consumer. Because at the end of the day, this is a medicine we’re after. It’s not the smoking sensation, it’s not really the traditional use of it for some of the shamans, or for us to dance around the campfire, the majority of the people are looking at cannabis as a medicine. And this is to relieve your stress or whatever other reason you use it, you’re using it to mitigate certain condition in your body because of that it is a medicine.

TG Branfalt: Was that important to you as an investor to find a company that was doing this sort of the right way?

Serge Chistov: Of course it is. As you watch the development of the market in a developed market like Colorado, it all starts with the hype. “Oh, we can smoke free. And we can smoke legally now.” So people totally disregarding to the fact what is that that they smoking but rather concentrating on the fact that now it’s legal. A little bit time passes and people start looking at the differences between the different smoke, they become more educated, and slowly but surely the process continues. Customer becomes aware of all of those different variations in the production, preservation, and delivery mechanisms so I wanted to be ready when the customer will become aware.

And because of that of course, the company was built with the three, four, five steps ahead of the curve, ahead of the crowd, in terms of manufacturing, in terms of preservation and packaging, and in terms of the delivery. Simply because we know where this market is heading assuming current administration will keep it the way it promised us in the hands of the state and the movement will continue. So we know where it’s going so why not be there when the market will be ready? That was the logic behind it and so far it’s been working quite well. People really do appreciate what is it that we do for a living and appreciate those extra steps we take in order to make our product the best product it can be.

TG Branfalt: Well when you talked about the preservation and the packaging and I do want to talk to you about the reusable tins, how’d you guys come up with the idea for the tins and what has the customer feedback been like? And how’d you come up with nitrogen packaging solution? It’s really …

Serge Chistov: You’re flattering me, man. I wish I would be that bright. Quite frankly, if you stop looking at cannabis as something unique and special and start looking at it for what it is, it is a green perishable, something that grows on the farms and can be cultivated organically or otherwise, answers just come to you. We reached out to the neighboring industries just like farming and the supermarkets. We reached out to people in the tobacco industry, the guys that seem be participating in very similar industries are manufacturing their raw material, processing it, packaging it, keeping it fresh, keeping it diversified, and we started to get the ideas of what the best practices in the different industries are. So nitrogen flushing, obviously, is the already probably 30, 50 year old strategy that allows to keep perishable products in the indoor atmosphere. Simple because oxygen happens to be one of the biggest deterrents of THC. If you leave the product …

Cannabis has a very unique combination of cannabinoids and terpenoids present which the public calls the entourage effect and that word becomes better understood by a lot of people. What it means is that there is a very unique and fragile complex combination of the different chemicals in very certain proportions which make the effects of each particular strain so unique and different. Medicinal or otherwise. For people of different walks of life. So if I were to allow … I’ll give you an example, a Sour Diesel strain perfectly pure, it’s perfectly genetic specimen of the Sour D, being pure to the best of our knowledge and ability and now here it is. What I’m saying is, two or three hours later, and I’m not even talking about two or three days later, the same exact herb will chemically be completely different species. Do you understand what I mean?

TG Branfalt: Yeah, I absolutely do.

Serge Chistov: Okay. So the plant will lose some of those smaller more flying particles like … and the single terpenes that will simply populate the air. So if you smell it, they’re already gone from the plant. And slowly but surely with the help of oxygen and light the plant’s starting to deteriorate if not preserved correctly. And what we have found is that when we make this plant ready for us to consume, most of us at the grow, we believe that we know how the proper consistency of the right bud needs to be. Or at least we believe that we know. And right as we ready to smoke it ourself, this is very important, we’re making sure that this product is preserved, canned, and flushed with liquid nitrogen before closing so we can preserve this feeling and experience to the customers. And make it a repeatable experience. So they can come back if they like what we do and buy something that is very very similar to what is that that they smoked before because it is preserved and the perishability’s slowed down.

Now in Colorado, as you know, there is a very big handicap as far as the preservation. The air is extremely dry, especially in the high altitudes where we are. So leaving the product with a very limited access to oxygen by definition is very good, yet it dries out the plant and whatever the oxygen is still in the air, even here in altitudes of the mountains, is destroying the THC content. Light and changes of the temperature obviously helps in it and if we’re spending so much time and money to let this plant be the best plant it possibly can, not preserving it, to keep it at what we actually established or accomplished through our growing process, it’s almost criminal, it almost doesn’t make sense to grow it that well if we’re just simply gonna drop it in the bag and let you sort it out in some dispensary God knows where at what some time in the future under the supervision of the bartender that probably wouldn’t know the difference from our herb from somebody else’s at that time. Does that make sense?

TG Branfalt: Absolutely. So it’s not just a freshness thing but it’s also a way to prevent you guys from losing money, essentially?

Serge Chistov: It is and it isn’t. As a smoker, I’m a smoker of cigarettes for many years, I mean I’m a recovering smoke of cigarettes for many years, and I gotta tell you, when you open a pack of cigarettes, it’s a product of the very established industry. You expect that cigarette, especially the first or the second, to be exactly as the previous pack or the previous experience in your life. You want it to be consistent in how it was rolled, you want it to be consistent in how dry or moist the tobacco is, you expect the same consistency. Same thing with the bottle of wine you purchased. When you went in and you liked a particular brand of cabernet and you came back a week later and you bought the bottle, you expected very similar results.

In cannabis industry, it’s almost impossible to achieve it when it comes down to flower because flower is not preserved as it needs to be on the shelves or in the dispensary vaults. Cans where the cannabis are held being opened and closed from a consistent basis and by the time the flower comes from the farm to the store, being sorted from one can to another, to the third and to the fourth, oxygen, light, and changes in the temperature reducing the chemical composition of this blend to almost something new. I’m not saying it’s not potent or will not get you high but it’s definitely not the medicine that we spent time creating because it’s missing things. And the potency’s been deteriorating so not to preserve it is … I just don’t even understand how we were allowed to go that long without preservation.

People screaming about organic and how federal law does not allow us to grow organic pot, you can grow organic pot. You just cannot call it organic pot. But part of the organic consideration is also perishability. You need to know that that organic parsley or dill that your farm manufactured can only stay good for the humans and being fully organic only certain period of time. Unless you truly don’t care. And any manufacturer today who cares about the fruits of their labor, they’re spending a lot of time and money preserving what is that that they grow and manufacture. So for us it was not even a consideration should we do it or not? It was the only way to do it. We were looking into different ways to put the flower into different compartments because nitrogen flushing is not a really complex process, you can do it in the plastic bags, you can do it in a lot of different packing solutions.

But looking up and down the market, we found a company that is allowing us to do that in the recyclable tins and obviously their approach being fully recyclable and even labels are done in such a manner where it can be recycled, really was appealing to us. And the size and the transportability and preservation offered in the different locations of our retail partners also is a huge help and that’s how we have discovered N2 packaging, the guy’s that actually supplying us with the cans right now.

TG Branfalt: And so you guys have also used this nitrogen packaging process for your Honest Blunt which is a tobacco-free blunt. What was that design process like and what’s the cost of those compared to other available pre-rolls?

Serge Chistov: That’s a very good question. The design was very similar in all of our product development. We looked at what are the best strategies that other companies utilizing or other industries utilizing in preservation, the manufacturing of our similar perishable products. And obviously tobacco industry was very close in at least a general approach to what is it that that they’re trying to do which is package and deliver pretty fresh and reliable in consistency smoke-able material to their customers. So we reached out to couple of the tobacco manufacturers and though we’re almost a year of research, we’re able to adapt some of the machinery that we were able to purchase to work with our let’s call it tobacco, with our product, which is very different from tobacco on the many chemical and physical characteristics.

So adaptation of the equipment was the first big challenge that we completed and after that again the question came out so, “Okay, now we’re able to control the quality of the material that goes into the pre-roll. We’re able to control the time when these pre-rolls are manufactures, all we need to know now is how do we preserving this pre-roll to make it last? And to have customer actually being able to experience it the same way we created it?” Not in the two or three weeks when the blunt is dried out and probably smokes very harsh, no. We want the same repeatable experience. Same concept, same approach, as it is to the herb by itself and the result was a blister packaging technology that allows us before closing the individual pack of the pre-rolls in the cavity that’s flushed with nitrogen. That actually turns the product into a better preserved more uniform smoke, even in a couple of months after the product was manufactured.

From the standpoint of the cost, it is a competitive market obviously. But because we utilize more of the machinery and more advanced packaging technologies, we believe that we can create this product in a very attractive market price which will make us extremely competitive in the marketplace and the customers’ feedback was outstanding. People really love it. They love the fact that … A lot of people like blunts and they like that slow burning experience where me and you are enjoying that smoke and by the half of it we’re already deep in our discussion and you’re looking at the blunt and it’s still there. That’s really the slow, even smoke what was always a big reason for people to engaging in a blunt smoke. That’s at least my belief and what I know from my friends. Again, tobacco having the reputation as it is and nicotine having the reputation as it is and slowly but surely more and more people are slowing down or walking away from nicotine, rightly so. It was a challenge for us since we could not use tobacco leaf to manufacture our blunts, we had to go search up and down to find a alternative.

TG Branfalt: With the Honest Blunt, where are you guys getting your hemp from and did you have any trouble procuring that at all?

Serge Chistov: Actually we did go through … organic hemp. At the end of the day, we found it in a couple of the European countries, specifically sourced it from one location which is the most advantageous in terms of the minimum order quantities that we need to purchase because it also needs to be processed to work with our equipment. So it was a challenge but nevertheless, we were able to source a very reliable organic hemp material which was converted into the wrapping material for our blunts that work on our machinery.

TG Branfalt: I want to move on to talk to you a bit about Colorado’s policy and some of the changes that have been made there but before we do that we gotta take a short break. I’m TG Branfalt with Serge Chistov, this is the Ganjapreneur.com podcast.


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TG Branfalt: Welcome back this is the Ganjapreneur.com podcast, I’m TG Branfalt with Serge Chistov, financial advisor for Honest Marijuana Company. So as I said before the break, I want to talk to you about Colorado’s policies. Most notably the state senate has recently passed a social use measure and Denver’s considering its own. Why do you think that this is important as the market’s maturing out there in Colorado?

Serge Chistov: That’s a great question. I believe that the overall Colorado and the Colorado’s legislature towards marijuana being looked upon from a lot of different places in the United States as a road map or something as a social experiment that worked in generating quite a bit of revenue and generating quite a bit of data for other states and other municipal entities to look at the potential of legalizing, controlling, or enforcing anything pertaining to use of the medical or recreational marijuana. So obviously, any innovation or any new ways of using, consuming will generate taxable revenues by the MED in Colorado will be very closely monitored by old, future, and current participants of the market. I do believe that market in Colorado is the most mature market where you have a natural business forces like a competition, challenges of the distribution, reliability of the delivery services, testing it, all of it’s been present for quite some time and proper strategies and proper strategies and proper techniques were developed using that experience.

So obviously there was a new direction in the utilization of usage of cannabis on private or off private properties that I am sure the rest of the market is very closely monitoring and making sure that first tests will be available in Colorado and based on that I’m sure the overall policy of consumption of cannabis will be definitely reflecting the new experiments that have taken place in Colorado right now.

TG Branfalt: And as somebody who has some experience also in the alcohol industry, are you a proponent of them keeping alcohol and cannabis separate in these cannabis clubs essentially?

Serge Chistov: I believe that in the beginning they will obviously try to isolate individual recreational substances simply to get some clear data. Something that will not be as clear if we just gonna allow saloons to sell pre-rolled joints. I don’t believe that my opinion on the subject as a personal, as a user, is as important as the whole idea that the government of Colorado realizes the social aspect of consumption of cannabis and realizing the fact that from that standpoint, cannabis is no different that a tea room or a cocktail lounge or a movie theater. It is something where people gather in order to consume their preferred adult beverage, or adult substance, which is fully legal, fully controlled.

But I believe that the state would want to get some clean data and I believe in the beginning they might have a tendency of keeping cannabis and alcohol separate just not to bring an un-clarity to the experiment. And going forward as this experiment will mature and we will have enough sufficient data and we’ll be able to track social behaviors of the public based on this new discovered liberties, I think government will have a much better picture on what can and should not be used together or separately. I hope that makes any sense to you.

TG Branfalt: So the state recently passed bills that they better align the medical and recreational sector and that’s in spite of the legislative research committee finding that what they were doing would actually cost the state some revenues. So with these new rules to better align the two sectors, they include remediation and some other things, what were your thoughts as an operator on these new rules?

Serge Chistov: Yeah, the regulation of the two separate by tax entities, recreational and medical, because that’s really the true difference. The taxation is different on the product. And because of that they’re trying to keep it separated. So that I’m sure is an extra layer of costs that MED would probably be looking to somehow consolidate or somehow protect from extra spending. From the manufacturer’s standpoint I can only tell you I don’t have enough information or enough experience with the medical part of the manufacturing because we’re the recreational wholesale growers and producers. Consistent changing in regulations and consistent changing in packaging requirements is quite difficult to deal with because we just completed creating packaging based on the previous, latest regulations just to find that the regulation’s gonna be changed by the beginning of 2017.

We had enough time to respond to it but if that were to continue, I’m sure small to medium sized manufacturers not really gonna be welcoming that too much because, again, cost money, creates unnecessary work, and definitely increases the pressure on the cashflow, etc. So from the business standpoint, I would like for regulations to kind of find that common ground with the reality of the MED operations and for them to get established. And for us to be left alone for at least couple of years without changing our packaging.

TG Branfalt: So the changes for an operator, are they welcome for you or is the jury still sort of out at this point?

Serge Chistov: I believe that the jury is still sort of out but so far, any new regulations that came in the industry were accepted as such and new regulations. But over a time, so far have proven to be a valuable and a smart regulation scheme that only promotes the business and the numbers are here to show it. The sales are continuously growing, the tax revenues are continuously growing, from that standpoint the social experiment of Colorado is a winner. And a lot of people outside of Colorado, all across the country, looking at the state and trying to learn what’s the best way to do it?

TG Branfalt: And I want to talk to you a bit more about Colorado and their social experiment, some of the business trends that a lot of people have noticed. But before we do that we gotta take our last break, this is TG Branfalt, the Ganjapreneur.com podcast.


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TG Branfalt: Welcome back this is the Ganjapreneur.com podcast, I’m TG Branfalt with Serge Chistov, the financial advisor for the Honest Marijuana Company. Something specific to Colorado that I actually spoke to a lot of people on is this idea of distressed assets. Business that are struggling, businesses that enter the space that can’t maintain, and long-standing businesses who are being forced out of the space, as a financier what is your take on those distressed asset type deals? Who should get into them? Is it something for a long time producer to get into, is it something for a new market entrant?

Serge Chistov: That’s a very good question you’re asking. I don’t think there is as simple of an answer I can give you but I would definitely strongly recommend for any investor in any market, especially in distressed asset market, to look at the reasons to be present in the marketplace. To do their due diligence, obviously, to have a solid business plan which is not solely based on the best case scenario. But also run your numbers assuming that the price of the raw material and the price of the flower and concentrates are continued to go down, simply under the pressure of overproduction. The rents and some of other opportunities might not be as profitable right now as they were maybe a couple of years ago or they might be a year or so from now. So keeping that in mind, I don’t believe that you should look into distressed assets in Colorado right now any different than purchasing distressed assets in any other spectrum of the business, real estate, or any other part of the country.

Having said that, I do believe that the market is going through the consolidation stages where larger retail entities are acquiring new and existing licenses. Manufacturers that are not able to brand or properly position their product as a segment leader, or at least a participant, are facing in trying to brand or market a commodity with a continuously dropping price. Very challenging. But nevertheless I am sure that there are business opportunities for an investor to buy in some of the assets that are distressed, as you mentioned, at 40, 50, 30 cents on a dollar of what the construction or re-manufacturing costs of that will be. And that creates a definite opportunity for the smart operator.

TG Branfalt: So as an investor, you’re in a very interesting position as you’re not only involved in operations but I’m sure that you’re constantly looking for
other ways to make your money work for you, on a federal policy level in this Trump climate, this Republican climate, this Jess Sessions climate, as an investor, what are you feeling in this uncertain climate? And what’s your advice for entrepreneurs that might be looking to get into the industry now in this era of Trump?

Serge Chistov: I believe that the era of Trump is actually a good era for cannabis. Assuming that Trump will keep the promise that he gave prior to election which is to keep the business of cannabis in the state hands. From that standpoint, I welcome the policy based on that concept. If Trump is all about job creation, profitably, America first, this is a perfect example of what is that our industry is doing. We’re creating jobs, we’re creating income that is not taking from any other industry rather than taking out of the pocket of the cartels and the non-taxpaying entities of the black market. So from that standpoint, it’s a win-win. And I know that Trump likes that philosophy.

Now Jeff Sessions was a conflict selection, something based on a lot of past emotions about him being noticed as a racist, him being noticed as an opponent of the cannabis legalization, I’m sure Jeff doesn’t like certain foods and we’re not gonna stop eating them. So as far as Jeff’s ability and his bite versus his bark, my money is on the fact that the genie’s not going back in the lamp. The cat is out of the bag. Whichever way you want to phrase it. And then we’re not going back to cannabis being illegal. If the District of Columbia decriminalized the product right outside of the White House and states like Arkansas which is south, if you drop everything out of it, it is as south, maybe not as Alabama south, but definitely south looking into the medical and into some of the growth.

What is Jeff gonna do? Truly? What is he gonna do? Couple of the PR stunts, a little bit of the screaming and yelling, raise couple of the news cycles on the potential crackdown, and at the end of the day he’s just gonna continue to do what he’ve been told and what he’ve been told is to go deal with the real crime, deal with the causes for the massive epidemics of real drug consumption and opiod overdoses and deal with the issues that he is better equipped to deal with instead of running around the states trying to promote the old way of living and trying to replay to us Reefer Madness movies. This is all look very Mickey Mouse to me, I don’t believe that Jeff has the bite to slow down the movement and I do believe that the overall Trump administration policy is aimed on increasing the involvement of this industry across the marketplace and generate more revenue, create more jobs, so that’s my outlook. I wouldn’t stop or wouldn’t slow down investing in the industry just because a southerner is Attorney General right now.

TG Branfalt: So overall what is your advice to entrepreneurs looking to enter this space right now?

Serge Chistov: Look at it as a regular business. Look at it as the business advantages, check your business plan, make sure that you’re going into the right price structures, that you’re not basing it on the existing or the best case scenarios. Do your numbers correctly, find the right opportunities, continue searching. The excitement of the fact that this is cannabis and it’s a semi-prohibit business will wear off very shortly. And we’re gonna get back to the fact that this is nothing but farming, it is nothing but manufacturing, it is nothing but extracting, it is nothing but packaging, it is nothing but marketing, it is nothing but advertising, and it’s nothing but competing for the shelf space, etc, etc. The excitement of the word cannabis and the business will wear off very shortly. I think it already starting to wear off and now it’s just a business.

And my advice going into any business is calculate it, calculate it, and calculate it. Count many times before you will invest your money, make sure that you have a proper exit strategy, that you’re not committing your entire capital just because of the excitement, keep emotions away from it, and by all means, invest. That would be my suggestion.

TG Branfalt: And finally, can you tell us where we can find more about the Honest Marijuana Company?

Serge Chistov: I believe that the great source would be to start your Google research if you look for terms like organic marijuana, I’m sure our website would come up first. And we have a lot of information on our blog site, we’re continuously updating database of our knowledge, would like to share everything that we learned about the plant with our readers and our consumers and our customers. So our website would probably be a great resource, honestmarijuana.com. If you have any questions, always write us a letter at info@honestmarijuana.com where we’ll be more than happy to answer some of the questions. And again, keep researching, keep learning about the plant.

TG Branfalt: Well I want to thank you so much for taking the time out to participate in the podcast. Spasiba, if you will.

Serge Chistov: Thank you.

TG Branfalt: You can find more episodes of the Ganjapreneur.com podcast in the podcast section of Ganjapreneur.com and the Apple iTunes store. On the Ganjapreneur.com website you will find the latest cannabis news and cannabis jobs updated daily along with transcripts of this podcast. You can also download the Ganjapreneur.com app in iTunes and Google Play. This episode was engineered by Jeremy Sebastiano, I’ve been your host, TG Branfalt.

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A Chalice Farms employee applies a label to some product inside of the Portland, Oregon dispensary.

Nevada Tax Department Approves Early Start, Licensing to Begin July 1

The Nevada Tax Commission has approved the Early Start provisions for an adult-use cannabis regime that will allow the state to begin issuing recreational licenses by July, 1, according to the Las Vegas Review-Journal. The plan will allow current medical cannabis dispensary operators the first chance to participate in the adult-use industry.

According to Deonne Contine, Tax Department Director, the Early Start was necessary in order to meet requirements in Gov. Brian Sandoval’s proposed budget that includes $70 million from recreational cannabis sales over the next two years.

“If we don’t adopt the regulations, we will not have a temporary program,” Contine said in the report. “If we don’t have a temporary program, we will not have the revenue that’s included in the governor’s budget.”

Clark County, of which Las Vegas is a part, is set to begin licensing on July 1, and officials for Sin City and North Las Vegas plan to begin the licensing process on that date. In February, officials in Henderson implemented a six-month moratorium on recreational sales, which means the five dispensaries operating in the city will have to wait until at least August to participate in the recreational program.

“It’s great for the state. It’s great for the industry. I think it’s great for everybody,” said Armen Yemenidjian, owner of Essence Cannabis dispensaries. “This is a display in how Nevada gets things done.”

The regulations approved by the department do not allow liquor distributors to apply for distribution licenses due to the potential conflict with federal law.

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A commercially grown cannabis plant inside of a licensed cultivation facility in Washington state.

Longtime Cannabis Activist Now Fighting for Livelihood in Ongoing Hostile Takeover

Since 2016, longtime cannabis activist Paul Stanford has been embroiled in a lawsuit that encompasses companies in at least two countries and five states threatening his livelihood (more so than it already has), his Internet domain holdings, and even his public access cable show “Cannabis Common Sense.”

The lawsuit stems from Stanford’s desire to do two things: raise funds for a ballot initiative to legalize adult-use cannabis in 2014 in Oregon and take his medical clinics company, Presto Quality Care — which operated dispensaries in Washington, Oregon, Nevada, Michigan, and California — public. Stanford said he was approached by Canadian venture capitalists about investing in his company, and in May 2014, he agreed he would work with them to launch Presto on the U.S. over-the-counter market if they agreed to give him $400,000 for the ballot initiative.

Activist Paul Stanford speaking in July 2016 at the first cannabis conference held in Japan.

“They promised they would do that but in the end the money came in too late to be effective in the campaign,” Stanford said in an interview with Ganjapreneur; but he pushed forward in his plans to go public and started working out a deal with representatives from TY & Sons Investments Inc. who identified themselves as working with Orange Capital. “I continued working with them because I wanted to take my company public. In fact, I made $5,000-per-month payments to Orange Capital to take the company public,” Stanford said. He made 10 payments in all.

At the center of the deal was a database with more than 250,000 patient details, which his new partners allegedly valued at $100 per name.

In January 2015, Stanford formed Empower, and in June he transferred all of Presto’s assets and was a 90 percent shareholder. According to Multnomah County, Oregon Circuit Court documents obtained by Ganjapreneur, that same month Stanford had reached a formal agreement with the British Columbia, Canada-based group led by Talal Yassin and Martin Bajic that would see the creation of a new company – the Stanford Medical Agricultural and Applied Retail Technology, or SMAART – which would take over Stanford’s clinics and then carry out a reverse takeover of Adira Energy, a company that was already trading on the Toronto Venture stock exchange. Stanford said the investors favored the TSX-V because they claimed they “could get a better deal.”

The court documents show that in 2015 Stanford sold 100 percent of his shares in the Empower subsidiaries to SMAART “in order to infuse capital into the subsidiaries and position the companies to go public through the Toronto Venture Exchange.” Stanford expected he would receive his shares in the parent promised by Bajic – who is listed on incorporation documents as the sole director of SMAART, a move that was allegedly designed to push Stanford out.

According to court documents and emails between Stanford and Bajic, Stanford was promised 50 percent ownership in the new company – which is also confirmed in an email between Stanford and Yassin – and Bajic said there would be 1 million shares issued in all.

“500,000 to your side,” Bajic wrote in a July 10, 2015 email to Stanford. “Who do you want receiving the 500,000 shares.(sic)

“450k for me, 50k (sic) for William Appel,” Stanford wrote back, referring to his business partner who was also named in the suit.

A Nov. 2015 Stockwatch Daily report purported that under the agreement, Adira, an oil and gas exploration company, would also issue 90 percent of their 17,112,022 outstanding shares to SMAART shareholders. To date, Adira’s trading has been halted and the shares have not been issued; however Stanford said once they dilute his shares to under 10 percent, and the year-long audit is closed, the deal could commence.

Activist Paul Stanford has been locked in a legal battle in the Multnomah County, Oregon Circuit Court since June 2016. Photo Credit: Karen Neoh

Last month, Stanford’s former attorney Anne Witte filed an official complaint to the Law Society of British Columbia against William MacDonald, the lawyer hired by SMAART to create the company in 2015. The complaint alleges that the attorney “secretly, with malice afterthought, declared [Bajic], a partner of Yassin, the sole director of the new corporation and issued Bajic one share of stock.”

“Bajic then took complete control of the new corporation as self-declared 100 [percent] owner and thenceforth ran the company to the total detriment to Stanford,” the complaint says.

In an email dated Dec. 21, 2015, Stanford wrote to Yassin explaining why he had thus far refused to sign resolutions related to the four “Oregon corporations” saying that he first needed to see SMAART’s articles of incorporation and he, officially as an officer of the company, called a shareholder meeting. A date was set but no meeting ever materialized; Stanford again complained to representatives about the lack of either a Board of Directors or shareholders meeting on May 5, 2016.

“I thought they would have to meet the basic requirements of corporate governance and the shareholders would have a meeting and elect a Board of Directors, but they managed to cheat me outta that,” Stanford said. “There has never been a shareholder meeting.”

The plaintiffs argue that Stanford was offered, and refused, an employment contract with the new owners in March 2016. Lawyers for SMAART claim that in April of that year Stanford began withholding information and refused to cooperate with an audit as part of the TSX-V regulations. They claim that the obstruction was Stanford’s “attempt to negotiate a more lucrative role for himself in the management of SMAART BC.”

By May, the parties were only communicating through counsel. Stanford was officially fired on June 3, 2016. Three days later SMAART privately placed 23 million shares of stock at CAN$.01, diluting shares held by Stanford and Appel. Through his then-lawyer, Stanford formally objected to the offering.

By June 9, the court granted the plaintiffs a temporary restraining order against Stanford requiring that he cease from depriving the new company officers “access to and control” over the businesses; stop using, disclosing, and benefiting from “trade secrets” (i.e., the patient database); remit all properties related to the businesses; and to halt purporting to act on the company’s behalf. According to Stanford, that patient database has been sold to a Canadian seed-to-sale company; a charge denied by SMAART and unverified by this reporter.

Stanford continues operating clinics, defying the will of his former associates. On May 1, 2017, counsel for SMAART sent a letter to Witte threatening to have Stanford jailed if he continued refusing to give up the rights to 10 internet domains. One of those sites is CRRH.org, used for the 2012 Campaign for the Restoration and Regulation of Hemp, another is for Hempfest – neither entity was subject to the SMAART takeover. Additionally, Stanford said, attorneys are now coming after Open Signal, the Portland, Oregon public access broadcaster that airs “Cannabis Common Sense” over a joke made by his co-host and for discussing his plight. “They accused me of being anti-Semitic and racist, which is just crazy,” Stanford said. “I guess I can’t say [Adira] is a Canadian-Israeli oil company.”

Stanford is out of money, against a team of lawyers, and running thin on options. His family and friends have all been fired from the clinics, his partner sued. He’s spent a small fortune on legal representation but he still doesn’t have his company back and, what’s worse, “they want me to stop using my name,” he said, referencing the order seeking to stop him from operating the clinics that bear his name. He hopes he can get the case in front of a jury of his peers but, presently, he doesn’t have counsel.

“They’re trying to create so much paperwork and so much malarkey – like saying I’m a racist, and I cheated them, and I’m a liar and a thief,” Stanford said. “I’ve donated everything I’ve ever had my whole life and now I have nothing.”

(Neither Yassin, Bajic, not their representatives returned repeated requests for comments.)

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New York Health Department Publishes MMJ Physician List

New York’s Department of Health has, for the first time, made public a list of medical cannabis providers in the state – but the list is not complete as some 60 percent of the registered physicians did not consent to the publication of their information, the Times-Union reports. There are now 1,000 providers, including nurse practitioners and physician assistants, registered to make medical cannabis recommendations in the state.

The Health Department has also reported a 3,300 increase to the state’s patient list since chronic pain was added to the qualifying condition list in late March, pushing the total number of registered patients over 18,000.

“We are improving access to medical marijuana for patients in need across New York state,” Health Commissioner Dr. Howard Zucker said in the report. “As we have said from the very beginning, we will continue to grow this program responsibly and help ease the suffering of those who may benefit from this treatment option.”

The spike in patient counts is good news for providers operating under the state’s limited regime, but the counts are still far below the 200,000 patients expected when the program launched. Earlier this month, four out of the five operators filed a lawsuit against the Department of Health to prevent them from adding any additional licenses, arguing that expansion could harm patients and decimate the state’s tightly regulated industry.

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A gardener plunges their spade into fresh, damp soil.

Cooperative Gardens Not Faring Well Under Washington MMJ Laws

Despite being among the first states to legalize medical cannabis, Washington state has backpedaled in recent years. Particularly, patients who rely on cooperative gardens are not faring well, according to a document obtained by Ganjaprenuer through a Freedom of Information Act.

Washington’s medical cannabis system evolved for fifteen years following the passage of I-692 in 1998. The system was founded on an innovation in cannabis production known as Collective Gardens — these gardens were based on the old adage “many hands make light work.” Under the state’s medical cannabis law, patients could form a cannabis garden together and subsidize each other to produce the sometimes large amounts of cannabis needed to treat some qualifying conditions, such as cancer. This system was officially put into statute in 2011, but no regulatory framework ever emerged. Eventually, legislative inaction led to a vast, unregulated network of collective gardens across Washington. Some of these, but not all, would eventually make the leap into brick and mortar storefronts — it’s estimated that there were once thousands of these small businesses scattered throughout the state.

After last year’s merging of the recreational and medical markets, however, patient collective gardens were phased out along with the majority of medical cannabis shops. Under the new system, group grows are now known as “cooperative gardens” — and though the name has only slightly changed, cooperative gardens are very different from collective gardens. These new grows can include only four patients or designated providers (down from the collectives’ limit of ten). Participants also must be over age 21, registered on the Marijuana Authorization Database, and must have obtained a medical cannabis recognition card.

Patients are allowed to grow up to sixty plants per co-op, which must be located at a member’s home. Lawmakers also added the barriers that no member can live within one mile of a recreational cannabis store and all gardens are subject to the same geographic restrictions regarding schools and playgrounds as cannabis shops.

Cooperative gardens are required to track their cannabis from seed to consumption, submit monthly reports, and agree to random home inspections by the Liquor and Cannabis Board (LCB). According to the LCB, these inspections can be held between the hours of 8 am and 8 pm and are legal under the 4th Amendment and Washington’s statute.

According to the Freedom of Information request carried out by Ganjaprenuer, the number of cooperative gardens in Washington has been dramatically reduced. The document reveals that only nine applicants out of fifty have been “Set for Final Process.” Thirty-seven of the applications have been withdrawn, with the reason for withdrawal listed as “Local Authority Restriction” or “Too Close to a Restricted Entity”. The restricted entity type is not noted, which could be a school, playground, or even a recreational cannabis store. Only eleven of the withdrawals are from applicant request or documents not received. Four applications are still in process.

Currently, there are only 36 patients out of 20,224 registered on the Marijuana Authorization Database being served by these cooperative gardens. That is only 0.02% of the registered medical cannabis patients in the state.

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A shelf stacked with medical models of the human brain.

Study: Cannabis Could Help Reverse Brain Aging

Researchers at Germany’s University of Bonn, along with colleagues from the Hebrew University of Jerusalem in Israel, report that low doses of THC can help reverse some of the effects of brain aging and assist in restoring memory, according to a study published in the journal Nature Medicine. The studies were performed on mice, and found that old animals were able to regress to the state of two-month-old mice with prolonged low-dose THC treatments.

“The treatment completely reversed the loss of performance in the old animals,” Andreas Zimmer, from the Institute of Molecular Psychiatry at the University of Bonn and member of the Cluster of Excellence ImmunoSensation, said in a Neuroscience News report. “With increasing age, the quantity of the cannabinoids naturally formed in the brain reduces. When the activity of the cannabinoid system declines, we find rapid aging in the brain.”

Mice have a relatively short lifespan and show cognitive deficits often after one year. The researchers administered small quantities of THC to mice aged two, 12, and 18 months over a four-week period testing their learning capacity and memory performance with mice given a placebo. The mice given a placebo displayed normal age-dependent cognitive losses, while the 12 and 18-month-old mice given THC were found to have cognitive functions as good as the two-month-old control animals.

Researchers hope to next perform human trials.

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Viewing palm trees from below on a sunny day.

Florida Legislature Fails to Pass MMJ Expansion Bill, Moves to Health Department

After a failure by Florida’s legislature to compromise on legislation that would enact the state’s voter-approved medical cannabis amendment, the implementation responsibility now moves to state health officials who have long been criticized by patients, industry operators, and lawmakers for their handling of the current regime, according to an Orlando Weekly report.

Ben Pollara, executive director for Florida Care and campaign manager for the political committee that backed the expansion, said that the legislature “chose political gamesmanship over the will of 71 percent of voters.”

“The will of the people was thwarted again today by Tallahassee politicians, but they can’t deny us forever,” Pollara said in the report. “Florida for Care will continue fighting to implement the Constitution and bring a compassionate medical marijuana law to this state’s patients.”

The legislative deal fell apart when the House amended its proposal to expand the number of retail outlets permitted for each of the state’s medical cannabis operators to 100; the Senate had proposed setting the limit at 10.

The Senate decided not to take up the House plan before the session ended at midnight.

Sen. Rob Bradley, the Senate bill sponsor, said the chambers “just couldn’t bridge the gap.”

“That’s a real concern,” Bradley, a Republican, said. “The Legislature at some point in time needs to have a bill that implements Amendment 2. It’s disappointing that we didn’t get it done this session.”

Mara Gambineri, a spokeswoman for the Department of Health, said the agency “is committed to quickly moving through the rulemaking process” to create a regulatory structure for the expanded industry.

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Maggie Widlund: Experiences From a National Cannabis Law Firm

Maggie Widlund is an attorney at 7 Point Law, a leading national law firm dedicated to the protection of cannabis entrepreneurs and the betterment of the industry.

Passionate about cannabis and the evolving industry, Maggie comes from a background in corporate litigation, having learned to mitigate legal battles in the tech world of Silicon Valley; Maggie’s other specializations include intellectual property and corporate transactions. Before joining 7 Point Law, she had worked with a wide variety of clients including investors, startup companies, as well as mature companies being traded on public markets.

Maggie recently joined us for the following interview, wherein she shares advice for aspiring ganjapreneurs in newly legal states, identifies useful knowledge and skills for a law student interested in working for cannabis companies, discusses the industry in terms of a potentially hostile presidential administration, and more!


Ganjapreneur: What was your specialization prior to joining 7 Point Law, and how has it come into play while working for the industry?

Maggie Widlund: Prior to joining 7 Point Law (formerly NWMJ Law), I was a corporate litigator in the Silicon Valley for nearly ten years. My clients ranged from business-savvy, high-net worth individuals and lean, VC-funded start-ups to established public companies, boasting household names. As a litigator, I was in the unique position of viewing the aftermath of corporate agreements — prosecuting and defending deals gone wrong — which imbibed me with insight into universal conflicts that arise in the context of entrepreneurial business relationships. The cannabis industry is no different than the tech industry, or any other emerging industry, in this way. The same issues and conflicts that are prominent among tech companies commonly arise between business partners and investors in the cannabis industry. In fact, due to the current start-up phase of the cannabis industry, much of my practice centers around resolving conflicts and disputes between business partners and investors in the pre-litigation stage of a case.

Why did you decide to bring your expertise to cannabis?

The piecemeal legalization of cannabis throughout the country has spurred lawmakers and legislators to define a new area of law—which is a rare thing — and an amazing opportunity for attorneys generally. I was drawn to the practice of cannabis law because it offers the opportunity to work in a burgeoning area of American legal jurisprudence, where each case or client has potential to shape and define the regulation of and theory behind the industry. This potential exists in an environment that is constantly evolving and changing, giving the industry a thrilling but almost ruthless and wild sensibility. What is more, being on the forefront of such a fast-paced industry has the added benefit of working toward a sea of change in the prevailing cultural and social attitudes toward cannabis, locally and nationally.

With more and more states choosing to forsake the federal prohibition of cannabis, what preparations should ganjapreneurs be making if they live in a freshly legal state?

In preparation for a thriving cannabis industry in states recently joining the growing list of jurisdictions to legalize, ganjapreneurs should borrow roadmaps from other successful start-up industries. A successful approach requires both keen business-mindedness, and a passion for cannabis. Bearing in mind that the cannabis industry is a highly-regulated, intensely scrutinized industry, ganjapreneurs need to do their research and educate themselves thoroughly about all aspects of new business ventures including start-up costs and funding, potential locations and markets, demand in the community, and municipal regulations impacting state-wide statutory schemes. Furthermore, with stringent licensing and compliance requirements, business owners must be diligent about screening the partners, investors, employees and contractors they choose to work with and complying with all licensing and taxation requirements established for their businesses.

How has the new presidential administration affected your interactions with clients?

Initially, I received a bevy of calls from clients reacting to the White House press secretary Sean Spicer’s comments regarding a potential increase in federal enforcement efforts and did see one or two deals abandoned due to concerns over Spicer’s statements. However, the fact of the matter is that it would take a major shift at a policy level, require the diversion of substantial federal resources, and a lengthy judicial challenge process to any proffered change in enforcement before the cannabis industry would be impacted in a significant way. The bottom line is that cannabis is a revenue source for both states and the federal government, and even the current White House would be hard-pressed to rationalize gutting such a lucrative industry.

What actions can business owners take to prepare for, or help prevent, an increase in federal enforcement?

Given the cultural momentum and revenues generated from the growing cannabis industry in the United States, it is unlikely that an increase in federal enforcement will occur. However, should enforcement become more likely, the best defense is a good offense. This industry was founded by activists and pioneers. Business owners should strive to maintain that tradition of activism by promoting the cannabis industry at the local, regional and national level, and being vocal about issues that impact the industry.  As an additional measure, business owners should always ensure that they are in keeping with applicable licensing and compliance requirements at all times. Business taxes should be paid on-time, annual licensing renewal fees should be paid promptly, corporate governance statements and filings must be maintained, and all business and financial records should be kept current.

What’s the most rewarding aspect of working alongside cannabis entrepreneurs?

The most rewarding aspect of working with cannabis entrepreneurs is the innovation and creativity that they bring to the industry — it’s invigorating. Clients often come to 7 Point Law for guidance on establishing and protecting their brands, bringing new products to market and facilitating collaborations with other businesses in the industry. Discussing the fast-paced evolutions of the industry with clients while advising them on the legal issues surrounding their conceived innovations inspires me to strive for more creative approaches to legal challenges faced by my clients. In short, interacting closely with my clients makes me a better advocate.

What’s been the biggest obstacle you’ve faced so far since becoming a cannabis specialist?

I am not sure I would consider it an obstacle, but I have encountered misconceptions among non-cannabis law practitioners and others unfamiliar with the industry regarding the scope of work that cannabis attorneys perform; as the industry evolves, so does the complexity of the legal services demanded. I do my best to dispel that misconception by striving for excellence in the representation of my clients on a daily basis and informing others about the comprehensive nature of legal services 7 Point Law provides to its clients.

How do you expect the cannabis industry to change over the next 5-10 years?

There are growing pains associated with every start-up industry and the cannabis industry is no different. In the next five to ten years, we will witness the weeding-out of under-funded and unsophisticated businesses in favor of enterprises run by individuals who recognize that longevity is to be achieved through innovation founded on time-tested, traditional business principals. With the industry on-point to mature and flourish on a national scale as more and more states legalize recreational schemes, ganjapreneurs need to evolve their business practices in kind in order to remain competitive.

What recommendations would you offer a law student who wants to specialize in the cannabis sector?

Law students looking to get into cannabis practice should focus their studies on contract law, business lawyering and administrative law courses. Due to the highly-regulated nature of the cannabis industry, service of cannabis clients demands a working knowledge of specific statutory schemes and the rules and procedures of the state administrative agency tasked with licensure, regulation and enforcement of the state-specific laws governing the industry. In addition, a strong foundation in contracts, entity formation and corporate governance will enable young lawyers to provide comprehensive guidance to clients in this nuanced area of law.


Thank you, Maggie, for sharing your stories and insights with our audience! If you happen to have any questions for Maggie or want to learn more about 7 Point Law and the work they do for the cannabis industry, you can seek more information or contact the firm here.

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The Vermont Statehouse in Montpelier, Vermont.

Vermont Senate Passes Compromise Cannabis Bill, House Extends Session

Vermont’s legislature could take up cannabis legalization before this session ends after all, as the Senate passed a compromise bill on Friday which could be taken up by the House on Wednesday, the Associated Press reports. Last week, the chambers passed separate measures that were too far apart – the House version would allow adult possession and cultivation, while the Senate version would implement a taxed and regulated regime.

The legislature was set to adjourn on Saturday, leaving both bills in limbo, however Democratic House Speaker Mitzi Johnson said the chamber would reconvene on Wednesday. It’s not clear whether the House will take up the compromise legislation; which would legalize possession of small amounts and limited home grows by adults beginning in July 2018. In the meantime, a commission would develop a tax-and-regulate scheme and present it to the legislature next year.

Sen. Dick Sears, a pro-legalization Democrat, called the compromise “a way for Vermont to join two other New England states (Massachusetts and Maine) to have a legalized, regulated seed-to-sale system at some point in the hopefully near future.”

The measure passed the chamber 20-9. However, Gov. Phil Scott, a Republican, has not supported any plan legalizing cannabis and there is no guarantee he will sign the measure if it makes it to his desk.

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Hemp seeds are quickly taking their place as one of the latest, popular "super foods."

Australia and New Zealand Approve Hemp Food Sales

The Australian and New Zealand Ministerial Forum on Food Regulation has approved the sale of hemp as food but also imposed strict guidelines around the products’ marketing and labeling, according to Grain Central, an Australian grain industry publication.

The guidelines ban any references to the presence of CBD in the product and prevent any branding linking the products to illicit cannabis or suggesting that the products have psychoactive or therapeutic effects. Hemp food contains high levels of protein and near-perfect ratios of Omega 3 and Omega 6.

New South Wales Minister for Primary Industries Niall Blair said the approval will allow “Australians to reap the benefits” of both hemp food – which is legally sold in 21 nations – and an expanded hemp industry.

“Low THC hemp is legally already grown in NSW under strict licensing conditions and it is a hardy and sustainable crop that has enormous potential for both domestic and export markets,” Blair said in the report.

Currently, Australian hemp cultivators are working to develop drought resistant hemp varieties for both domestic and export markets. Under New South Wales regulations, legal hemp crops contain less than 1 percent THC. Australia legalized industrial hemp production nationwide in 2008.

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