The Capitol Building of Iowa in Iowa City.

Iowa Inches Toward Comprehensive MMJ Regime

Lawmakers in Iowa are considering legislation that would expand the qualifying conditions under the program, prevent it from expiring in July, and permit medical cannabis to be grown and sold in the state, the Globe Gazette reports. Currently, only patients with intractable epilepsy are able to access the program, and they must obtain their medicine elsewhere – in violation of state and federal laws.

The additional medical conditions covered by the program would need to be recommended by the University of Iowa’s medical college and approved by state lawmakers, and the products grown in the state would be low-THC and high-CBD, according to the bill text. The measure would also allow medical cannabis card holders from other states to make purchases in Iowa.

Although all three members of the panel approved the measure, Chairman Rep. Jared Klein indicated changes would be possible.

“This is a working vehicle,” Klein, a Republican, said in an Iowa Public Radio report. “This is not a set in stone thing.”

The measure is set now to be introduced in the GOP-controlled Iowa House, which rejected a similar proposal last April, according to the IPR report. That bill had narrowly passed the Democrat-led Senate.

End


Cannabis plants in a professional growing environment.

Future Hazy for Sonoma County Cannabis Cultivators Following New Zoning Laws

A plan approved by Sonoma County California’s Board of Supervisors last December could force thousands of the region’s cannabis growers out of business, resulting in the loss of jobs and millions of dollars in tax revenues, according to a Press Democrat report. The law bans large-scale commercial cannabis cultivation in areas outside the city limits.

Many of the growers affected are described as “mom and pop” businesses and have few options due to the rising cost of local land. Cultivators would be able to move their operations to the county’s agricultural, resources, and industrial zones.

Erin Carlstron, an attorney who represents about 50 of the cultivators, said the new order is causing “a lot of anxiety” for her clients.

“There’s no path forward for them,” she said in the report.

According to the report, county code enforcement steps began last month after about 15 to 20 complaints about growing in single-family homes. Tennis Wick, the county planning director, indicated that such grows are illegal throughout the county and that officials would start cracking down on outdoor operations after the planting season arrives.

Supervisor James Gore indicated that no other businesses are allowed to operate in residential areas and questioned why they would make an exception for any industry.

The county would need between $700,000 and $1.2 million to hire staff to enforce the new regulations, according to a county analysis outlined in the report.

In March, voters will decide whether to approve a 10 percent tax on the gross receipts of licensed cannabis operators, which is not supported by the Sonoma County Growers Alliance because the tax would “exceed profitability.”

End


City skyline view of Rotterdam in The Netherlands.

Bill to Legalize Cannabis Cultivation Passes Dutch Parliament Lower House

A bill that would legalize cannabis cultivation in the Netherlands has narrowly passed the lower house of Dutch Parliament and will next move to the First Chamber for consideration, according to a report from The Telegraph. It’s not clear whether the bill has enough support in the upper house, but if it does it would be a huge step in normalizing the coffee shop culture in The Netherlands. Although famous for its Amsterdam coffee shops, there is currently no way for those businesses to legally obtain their products.

If the votes in the First Chamber follow the same party lines as the lower house, the bill would not pass, the report says, citing Dutch broadcaster NOS. If that ends up the case, the issue could become a bargaining chip for lawmakers after March’s lower house election.

“It is good news for the coffee shop industry because it will finally — if it passes the First Chamber — put an end to a lot of stuff we can’t organize in a normal and transparent way,” Joachim Helms, chairman of the Coffee Shop Union, said in the report.

Alexander Pechtold, Parliamentary Leader of the Democrats 66 party, who drafted the legislation, called the lower house approval “a historic breakthrough.” He said the measure would implement taxes on the industry, and allow product inspections, while freeing up law enforcement resources currently utilized to stem the grows.

End


Many pounds of cured and trimmed cannabis bagged up inside of a large plastic bin.

Australian Firms React to Federal MMJ Importation Plan

Under new medical cannabis rules in Australia, approved companies can legally import, store, and sell cannabis to approved patients until domestic production can meet the nation’s needs, the West Australian reports. The announcement was met with overwhelming support by Australian medical cannabis companies.

Dr. Miri Halperin Wernli, Creso Pharma CEO and co-founder, called the move “great news for all Australians,” adding that the move could change hundreds of lives.

“By effectively establishing a legal marijuana trade, the government is showing that compassion for patients can extend beyond just family and friends and is an issue for society,” she said in a statement. “People with serious or terminal conditions should not be treated like criminals for trying to ease their pain.”

Auscann Managing Director Elaine Darby said the new rules will “drastically” improve the company’s timelines for supplying patients with medical cannabis products.

“Yesterday we welcomed the news from the Office of Drug Control that we can now import cannabis medicines from our Canadian partners Canopy by being able to demonstrate a potential process for a supply chain to patients through medical practitioners through the special access schemes,” said Darby in a statement.

Nativ Segev, CEO of MGC Pharmaceuticals, praised the plan by the federal government as a “great step forward.”

“The most important next step is to ensure that medical professionals are ready and willing to prescribe products to their patients,” he said in a press release. “This is an important hurdle to overcome and can be achieved through better education and working closely with leading research institutes in Australia, including working together on further clinical trials.”

Federal Health Minister Greg Hunt indicated the program would allow for an “effective national inventory” while a national scheme is established.

End


Shaping Fire: Kristen Baldwin, Running a Professional Trimming Agency

We are excited to bring this special episode of Shaping Fire, hosted by Shango Los, to the Ganjapreneur audience. Shango recently interviewed Kristen Baldwin, the director of operations for Green Mountain Harvest, a Colorado-based cannabis trimming agency that sends its employees to grow sites around the state to help commercial and residential growers complete the final steps of their harvest cycle. In this interview, they discuss the many demands and expectations of running a professional trimming agency, including workplace safety concerns, ideal trimming strategies and tools, and the general business plan that Green Mountain Harvest follows to find success in the industry.

Listen to the interview below, or scroll down for the full transcript. For more episodes of Shaping Fire, visit www.ShapingFire.com.


Listen to the podcast:


Read the transcript:

Shango Los: Welcome to the Ganjapreneur.com podcast, I’m your host and founder of the Ganjapreneur podcast, Shango Los. You’ve not heard my voice here in a while. Back in April 2016 I took a break from Ganjapreneur to focus on consulting for new cannabis startups, and traveled the country to get a better understanding about what was happening in cannabis states. I’ve now launched a new podcast called Shaping Fire. You can find it at ShapingFire.com, or wherever you download podcasts. During episodes of Shaping Fire, I interview the cannabis industry’s top professionals, and cannabis business, health, and public policy. Very much like I did for the first 54 episodes of the Ganjapreneur podcasts.

If you’ve not heard those first 54 episodes, be sure to check them out at Ganjapreneur.com in the podcast section. Today though, Ganjapreneur has invited me to share with you this week’s episode of Shaping Fire. I hope you enjoy it, and I hope you subscribe to Shaping Fire to listen to more episodes in the future. Thanks to Ganjapreneur for inviting me back to spend this time with you.

Trimming is a constant companion of the cannabis community. Since the earliest days of commercial cannabis, growers have been trimming their cannabis flowers to increase their bag appeal, and clean up the flavor profile from being overly green tasting. Trimming styles change depend on where you live, and what your final use of the flowers will be. One thing for sure though, trimming is very time intensive, and it’s hard on your hands, and usually your back and butt too. It is true though that it is a necessary step in producing fine cannabis, and both home growers and commercial growers need to get the job done one way or another.

You are listening to the Shaping Fire podcasts, and I am your host, Shango Los. My guest today is Kristen Baldwin, director of operations of Green Mountain Harvest. They are a mobile trimming company that sends out teams of between one and 15 or so people to trim home grows and large scale commercial grows too. Today we’ll talk about the different styles of trimming, their favorite scissors to use, and get a better understanding of their business plan and how they make money in this area that many in cannabis consider a difficult necessity. Welcome to the show, Kristen.

Kristen Baldwin: Hey Shango, good to be here.

Shango Los: So glad you could make the time to join us. The cannabis market is exploding of course as licensees, and patients, and even just everyday citizens are beginning to grow. What are the kinds of clients that you find calling you for trimming services?

Kristen Baldwin: It’s interesting, we see clients all the way from large-scale commercial growers who have several locations in which we trim with teams of 15 to 20 trimmers several days a week to personal growers in their homes who have just a few plants. Really, it’s a huge range.

Shango Los: It probably feels like two different departments because of the demands of your big commercial growers, the expediency, and the regularity, and how after once the contract is set up, it’s plug and play versus your personal trimming services where you might just be at somebody’s house for a day or two, and so you have to create that relationship anew with that person, way differently than the commercial clients.

Kristen Baldwin: For sure, and to that effect, we make sure that the people we send to, our personal grow clients, our supervisors, they’re are our best trimmers, they’re our fastest, and also they’re in a position to educate in the home as the client wants us to or doesn’t want us to. They may want to sit with the trimmer, they may not. It’s really up to them how involved in the process they are, and how closely they work with the team.

Shango Los: Yeah, I can imagine that. I can imagine that there’s a lot more customer service. Actually, it’s probably really weird too to be in some people’s homes. That’s awfully intimate, and if they’re growing, maybe sometimes they’re a little sketchy about having people in their homes. Then heck, if they’re patients, some patients, they’re living in some rough situations sometimes. I can imagine that’s a very colorful environment for your team.

Kristen Baldwin: Yeah. What we find is that it’s really just great people who generally are either caregivers for their own needs, or caregivers for a friend, or family, or group of patients, and they’re genuine kind individuals who just really need a service sometimes. Especially with the older folks, it’s just that they’re not able to manage it themselves. With some folks it’s that they’re new. It just depends on the situation. Some folks are just not able to physically take care of the plants themselves, so there’s sometimes that we go do harvesting, and gardening, we can move clones around. It’s really a fit to your need kind of service, especially in that circumstance. Really, even all the way up to the commercial grower. It multiplies out in the same way. We use the same formula regardless of where we are.

Shango Los: I can actually imagine. I’m a patient and all, but my hands still work fine, and I can do my own trimming, but I hate trimming. Right?

Kristen Baldwin: Right.

Shango Los: If you were in my state, I think I would just call, because my time is better spent recording a podcast, or calling an advertiser instead of spending my time trimming. I would expect that you have a lot of people who certainly can, but it’s just not how they prefer to spend their time.

Kristen Baldwin: That’s exactly it. Also, that’s even true in the commercial space is that it’s not that they couldn’t hire and manage that staff, it’s that they prefer not to. It’s that they have enough on their hands just managing growing the plants. It’s a completely different skill set. That’s the other thing. Just because you know how to grow doesn’t mean you know how to manicure. Interestingly, we find some of the best trimmers come from industries like cosmetology school graduates for example make excellent marijuana trimmers as you can imagine. They’re the fastest that we’ve seen, and the most deft with the smaller work, which some of it can be quite meticulous.

Shango Los: Yeah, that makes a lot of sense. Do you charge by weight or time?

Kristen Baldwin: We charge per person per hour. Based on the size of the team that we send you, and the number of supervisors versus trimmers, that calculates an hourly rate. We don’t charge any administrative fees or anything weird on top of that. On a daily basis, that gets observed by the grower, whether that’s a personal grower or a huge commercial grow, they see the same tablet that says, “This is how long we were here, this is who was here, this is how much it costs you.” We try and keep it as transparent and without much room for error. I find that doing it by weight, it just lends to a lot of variance and ways that things can go askew.

Shango Los: Yeah. Well, then you have to change the price for dry or wet, and how dry is it. Yeah, yeah, I could see that be a lot of malarkey. Well, I’m sure that I’m not the only one listening to you who’s curious about a ballpark figure for what this would cost. I also figured that you probably have got a wide range of pricing from your bulk commercial clients, to somebody who is a personal grower. Let’s say that somebody’s just got your simple, legal six-person grow, and they’ve got very moderately sized plant. Let’s say everything’s a medium. What would I expect it to cost to have one or two of your people come and trim out my six plants?

Kristen Baldwin: I think that it would really be just a few hundred dollars. It would be a day of work for one or two people. If it’s six really productive plants, like a big, big fat Indica, versus a Sativa that’s going to have a lot fewer, smaller buds that are further apart, that would make a difference in how many hours it would take. Generally, we wouldn’t book more than a day. All of our personal grow clients, I’ve never really seen it go over more than two days unless the objective is for us to come and cut the plants down on one day, and do the harvesting and defanning, and then let it dry and come back and do the trimming on another day. Which is quite often how it goes. It could be two days, but it might only be four to six hours of work on each day.

Shango Los: I get that, I get that. For me to think, “Okay, my six plants go from being cut and hung, which I would do, to being nice and in jars done for a few hundred bucks. I’d be in.

Kristen Baldwin: Right, most people would.

Shango Los: Yeah, totally. There is a lot of variety in trimming styles, like if you’re trimming for bag appeal, it’s going to be a lot tighter. Where I live out here on Vashon Island, people leave their flowers really shaggy, because they’re like, “Look at all those tricombs on there. I’d rather have those on my flower than in the trim, which you’d normally go somewhere else.” What sort of client intake do you perform to make sure that your team is providing trimming that matches the client’s expectations?

Kristen Baldwin: Right. Every time we get a new client, there’s an intake they go through that talks about, do you trim your stuff wet? Do you trim dry? Is this just us prepping a large amount of cannabis to go into a trim machine? Which is one job that we do for really, really big clients. Are you going to make some sort of extract out of this? Are you extracting in some way? Are you making hash? What are you doing? That’s the end game can dictate the trim in some cases. Then all the way down to I want a loose, leafy trim, maybe for something like a caviar role where you want to take all your excess keef and reroll those buds in it so the leaves are something for it to stick to. We have some clients who are absolutely, because their medical clients are on such a tight budget, they want to make sure that there’s not even any little tiny crow’s feet, or anything left on the buds that’s extra stem, because that’s a lot of time what the client is looking for. The end user.

As the intermediary, our big deal is we will do it exactly how you want. Why we have the supervisors there who can interface directly with the client, and get really specific information on what the team is supposed to do. Then also, over time, because a lot of places we go back over and over, they’ll develop a rapport, and then it becomes almost fluid as a new member of the team comes on to really get them up to speed on that particular style for that place fairly quickly.

Shango Los: Right on, that makes a lot of sense. Let’s dive into one aspect of that a little more specific. Let’s say that you’ve got three clients, one’s going to make everything into bag hash, one person is going to process it in a BHO tower or something, and the third person is going to just roll it up and smoke it. How would you trim differently for those three clients?

Kristen Baldwin: Okay, so for someone who is doing a BHO extract, they may be wanting a very heavy trim product, and that may be all they’re using to make their BHO. They may be then separating out the bud, or they may be doing what’s called a nug run, which would be that extraction using the buds as well. That would be the point of clarification there. Is your main product goal for the hash going to be the trim or the trim plus the bud? Which thing do you want? Then if they really want everything together, the Phoenix tears, then it would just be shucking. Essentially, getting it off the stem and ready for processing. That would probably happen wet.You wouldn’t do much more to it after that.

For somebody who’s going to smoke the buds themselves, then typically, we would do something more of a de-fan first in the harvest, flip, and then trim it down dry, because you can get a much finer trim on a dry product. It’s a more time-consuming manicure, but ultimately, you’re getting a lot more flavor that’s solely from the bud, and you’ll lose that hay taste or smell a lot more quickly if you trim it that way.

Shango Los: I remember the first time I was involved with a grow for a large CO2 run. It was the first time I have been shucking. Up to that point I had always just trimmed for personal smoke, but then, I was being mentored and learning how to do this, and I saw these folks just shuck it right off the branch, and it drops into the bin, and I’m like, “No F-ing way.” You’re somewhere in between, “Is that disrespectful to the flower?” To, “Oh my god, this is going to be the easiest trim ever, right?

Kristen Baldwin: Exactly, right. You’re never really sure which thing is true when you’re doing that process.

Shango Los: Well, especially if you’re working for somebody else, right?

Kristen Baldwin: Yeah, absolutely. It’s a big responsibility to take somebody’s hard work over several weeks and then take it from that state to a usable end product. That’s really the intermediary that the trimmer performs in a lot of cases, especially if it’s not going through an extraction process. If the trimmer mangles the buds, they mangled the buds. That’s it. If they’re squashed, they’re squashed.

Shango Los: It’s not like you can suddenly replace them, it’s like, “Oh, sorry.”

Kristen Baldwin: No, there is no little bike tire pump that you can stick back into it and, “Oops.” Once you’ve squished it, it’s over. I think that that’s why it’s such an intense process. Also, these guys are working under extreme scrutiny, and that’s another thing to keep in mind on the commercial level is that we’ll have a team of 10 people, they’ll have three or four cameras on them at all times, everything has to be meticulously weighed and accounted for because of the systems here that are extremely rigorous in managing this whole market, both on the medical and retail side. It’s a lot of responsibility, and we don’t take that lightly. Nor does anyone really in the whole chain of process that’s involved with this on a commercial level. You have to take it really seriously.

Shango Los: Right on. We’re going to take our first short break and be right back. You are listening to Shaping Fire, and my guest today is Kristen Baldwin of Green Mountain Harvest.

If you like podcasts like Shaping Fire, chances are that you will like audiobooks too. Pretty much, audiobooks are like podcasts except with less stuttering, better production quality, and more targeted topics. Yeah, I know, I make audiobooks sound better than a podcast, and maybe they are. I get you, I like podcasts too. I like to learn from people talking to me while I’m doing something else, like driving, or cleaning my house, or making dinner, or even being at work, whatever. Here’s the thing, Audible.com has an offer I want to tell you about.

Right now, they are offering a trial of their audiobook service for absolutely free. You can go to ShapingFire.com/Audible, and you will get a free audiobook straight up. You can listen to it on your mobile device, on your computer, or you can download it and listen to it pretty much anywhere. It’s really simple. Of course, they really want you to subscribe to their service forever and enjoy more and more audiobooks. As cannabis users, you also know how this goes, the first one is free. They’re going to hate I’ve said that. It’s pretty great. I listened recently to Smoke Signals by Martin Lee from ProjectCBD.org. Martin’s book is a classic of cannabis advocacy. He explains the history of cannabis in America, THC and CBD cannabis science, and white cannabis policy in America has gotten so jacked.

If you consider yourself a cannabis person, this book really is a must. Talking cannabis we all sound radical just because we’re talking about weed, but if you learn the history and science of cannabis, suddenly you become smart and trustworthy to people. The book was really incredible, and there’s no doubt that Martin Lee is the real deal. You can get the book for free just for doing the trial. If you don’t want to listen to a cannabis book, that’s cool too. There’s everything else. There is sci-fi, and history, biography. Hell, you can even listen to a book about card counting in blackjack. Whatever, it’s all pretty rad. Here’s the deal, your first book is free, it’s easy to sign up, it’s easy to quit. They do do a pretty good job making me want to stay every month. Just check it out. Go to ShapingFire.com/Audible to find out more.

Welcome back, you are listening to Shaping Fire, I’m your host Shango Los. Our guest this week is Kristen Baldwin, director of operations at Green Mountain Harvest. In the first set we talked a lot about the idea of the trimming business, and the kinds of people who hire you, and actually, how damn necessary it is in the new legal market. It’s funny because a lot of people have trimmed before, and so a lot of people have got their preferred method, and their preferred scissors. I’m totally curious.

In online grower farms, it seems like everybody has their own favorite scissors. I, myself, like small spring-loaded scissors with a curved tip, so I can get on in there in the flower. My growing mentor, he prefers tiny scissors without a spring, but with really big hand openings. Do you find that your team, like everybody likes their own style, or is there a particular style that seems to really come out as being universally best by professionals?

Kristen Baldwin: Sure, yeah, so we, I think in the early days of Green Mountain Harvest, so that was like six years ago, they did experiment with several different styles of shearers. What we’ve settled on, and really, we provide all of the tools through a supervisor kit that they carry in the field, we use the Hydro Farm curved blade shearer, and we chose that one because for a few reasons, one it’s super affordable, we think it’s a really good price point. The curved blade, kind of like you said, is really what we think creates the tightest trim, and also, it’s the easiest on your wrist we find because you’re not curving your hand as often. The blade is curved, so you can have a straighter arm. Allow the curve of the blade and then the twist of the plant, rather than arcing your wrist at a funny angle.

Shango Los: That makes me think about OSHA standards, and just general worker health. You’re in this odd position, because your company has the state level, but obviously, cannabis is still illegal federally. What kind of best practices have you put together for creating an environment that is ergonomically healthy for your trimmers, even though they spend their entire day using their hands and probably sitting down, which is probably two of the worst things that you could be doing?

Kristen Baldwin: Yeah, for sure. Actually, we really, really made a point of keeping safety as a main priority for our team. To that effect, when they are hired, they are given a set of exercises for their wrists and their backs. We also have a system in place where our trimmers can sit or stand, and they can go back and forth. Unless there’s some really heavy space constraints that would disallow somebody from being able to get up and choose to sit or stand, we encourage people to really take both of those options. Surprisingly, though OSHA is a federal organization, they have been great working with me directly over my years in this industry, regardless of the context, and really come and educated us, and had open dialogue with the industry. Yeah, we’re in a funny place.

There is no doubt about that. Our main goal is to create an environment for our trimmers that’s healthy, so that also involves not just an ergonomic situation, but some other things as well. To that effect, we have some other things. Masks if there’s any kind of mold or mildew present. We use a food grade brown butcher paper on the tables so that each environment is sterile. Our trimmers all use a new set of gloves after each break, so they are able to have left the building and come back in clean.

Shango Los: Do you have a daily team that’s pretty much full-time, or is it pretty much all part-timers who are on call?

Kristen Baldwin: All of our people are part-time, they are employees with us, which allows them to be covered under our Workmen’s Comp, which is a huge key in this industry. We’re really trying to put as many of those standards of normal working conditions in place for people, even though, again, we’re in that funny gray area. Generally, the trimmers work between 25 and 35 hours a week. December is certainly slower. We joke that we think that the trimmers get less work because the growers plan not to have to harvest right around Christmas, because why would they want to? That’s fine, we can plan for that. I’m looking at our January schedule, and it’s totally insane.

I think everyone who didn’t harvest in December is harvesting in January. Then we also lovingly call October Hemptober here in Colorado, because all the big outdoor farms, that’s a big, big time for them. That can be really fun and exciting little trips for the trimmers out to these really cool, outdoor, big, really, really nice farms.

Shango Los: That’s one of the funny things about outdoor, isn’t it? The idea of harvest? Obviously, there is lots of indoor in the country, and there’s certainly way more harvesting taking place as far as around the calendar, but in volume, harvest, suddenly you’re needed everywhere. Do you have a seasonal spike where you need to over hire just for harvest season, and then you get back down to a more basic crew for the rest of the year?

Kristen Baldwin: We actually don’t follow that kind of hiring practice. Once you’re an employee with us, you’re an employee, and we do our best to provide you hours consistently. For us, it really is a balance of demanding excellence from our team so that the people that do stay with us are the best ones, and then making sure that those people have work. It’s a delicate balance. I do handle a lot of the hiring, and firing, and all the stuff in between, and I do find that I do want to be able to provide work for people immediately when I hire them, but I do have to caution them that this is a business where there are lulls. We give our employees the opportunity to create their own schedules in the sense that they have some big flexibility there, which to that effect, if they need to have another part-time job to supplement this, we understand that that’s part of the deal.

Shango Los: On that note, is it a hard to find skilled trimmers to fill all the ranks? Because so many people say they’ve got experience, and then maybe they’re too slow, or distracted, or sloppy, or drunk, or whatever.

Kristen Baldwin: Yeah, so all those things have happened, and that’s part of why we have this supervisor in the field for each group of 12 trimmers. That allows us to, regardless of what your resume says, really watch what you do in that first 30 day probation period, and then if we can’t get you up to speed in that first 30 days, then typically, that’ll be it for people who just can’t cut the mustard. Sometimes, the other side of the equation is true, people find out that they really can’t or don’t enjoy the repetitive nature of the job. We do have people who will do it for a couple weeks and then say, “Yeah, I don’t want to do this.”

For people that want to put their headphones on and listen to an awesome podcast like this one, and trim some plants, and be with some great people, it’s a great job. The other cool thing is that we can hire people with some disabilities, so that’s pretty neat, because it’s like you have a walker, hey, man, if you can get into the facility, and we’ll make sure you can, then you can sit down and trim. That’s good for people who are retired, we have a lot of folks that just trim with us one or two days a week, and have their own grows, and just love it, and have been with us for years and years.

We have other people who are fast, young people, directly from the industry in the last few years who just are amazing, and so, so, so, so fast. That’s the other side of the workforce, is people who’ve just been trained commercially in the last few years. We don’t hire anyone directly who doesn’t have some sort of trimming experience. If you don’t have any charming experience, then we have a trimmer training school sort of program you can choose to go through.

Shango Los: I’ve met some folks who are on the autistic spectrum, and it’s amazing how appropriate trimming is for a lot of the folks who have got the hyperfocus ability, and they can work for long periods of time. You allow them to wear their headphones, and let them know you need done, and boom, and you’re like, “Damn, it was done fast, and efficiently, and in good cheer.” It’s really great. It’s amazing the kinds of people who are able to work in our industry who have not necessarily had the opportunity before. Can folks get high on the job?

Can folks get high on the job?

Kristen Baldwin: No, no. Yeah. There’s really strict regulations in place around use, anywhere within 500 feet of a commercial facility, whether it’s a grow, or a store, and extraction facility, you can’t use the product, or even bring personal product into that facility. Technically, when you go into a dispensary, you’re not supposed to even have any cannabis already on you. Technically, if they see that, they have to ask you to leave. If one of our trimmers is observed using cannabis within 500 feet of a facility, we have to fire them that day. Because they can lose their badge essentially to work in the industry. For just that.

Shango Los: I can imagine that for a lot of trimmers that’s a dealbreaker right there, like, “Listen, if I’m going to be trimming 30 hours a week, I want to be high for it, so no good, no good for me.”

Kristen Baldwin: Right. Well, what you do at home is your business, what time of day you do that is also your business, what you do when you leave the facility is your business, but what you do while you have to be at the facility, that’s the key. On a 15 minute break where you’re not allowed to leave, you can go outside and stretch, but it’s 15 minutes, you can’t leave the facility, you can’t smoke weed. I feel like there’s ways that people could probably get around that if their dosage requires a morning use, they could maybe supplement with an edible, or something else. No one is suggesting that, especially for a medical patient, they don’t do what they need to do. You can’t be using the product on the job. That’s the main thing, and that’s true just across the board. I think that that’s one of the big differences between what people think we do in this industry, and what we do. Is that there really isn’t a lot of use in the actual manifestation of the industry itself. That’s a completely separate thing at this point.

Shango Los: I think the more commercial and commodity-based it becomes, it’s going to continue in that direction. I remember when everybody was working in medical, and it was much less regulated and loose, everybody would get high at the beginning of just about every business meeting, because that’s how cannabis culture was. I found that frustrating a lot of time, because even though I got to try some amazing flowers and oils from that people would bring to the meetings, at the same time, so many of the folks would not remember the key points of the meeting, or what they committed to do, and then I would have to send follow up emails to remind them what they agreed to. Even though I enjoy the social aspects of it, I do see, as cannabis businesses are getting more serious, there are less people who are doing it cooked.

Kristen Baldwin: Yeah, it’s like I guess the three martini lunch would be the closest equation. Even if you’re in the beer industry, you’re not testing beers at 9 AM every day. You can’t do it, it’s just like in any industry where there is this quality to it where there’s some sort of state of alteration that’s going to occur. I think that in this industry, the reality is you’re trying to mitigate that weird, gray area. That weird, federal state, gray area. I think this is one of the ways that they’ve done that. Then the other side of it is exactly what you’re talking about. Professionally, at 10 AM, would it be appropriate to pop a bottle of wine? Maybe on a special day, but probably not. Probably not if you want to get a lot done.

What people need to do to take care of themselves medically, again, is another thing, but I would say recreational use in a meeting is really bad, especially because you could have 10 different people who respond to that particular strain super differently. That could be one that’s really makes you really focused, but it may not work that way for this whole group of people that now you have to make decisions with.

Shango Los: Yeah, that makes sense. We’re going to take another short break and be right back. You are listening to Shaping Fire, and my guest today is Kristen Baldwin of Green Mountain Harvest. Businesses everywhere are constantly striving to reach out to people through advertising. We all know though that trying to reach a cannabis audience with a quality message is pretty difficult. That’s why many people choose to advertise on the Shaping Fire podcasts. Advertising on this show allows us time to talk about your product, service, or brand in a way that really lets people know what sets your company apart from others. Bold people who own companies know that getting into a relationship with their customers is essential. That is what we offer.

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Welcome back, you are listening to Shaping Fire. I’m your host, Shango Los, and our guest this week is Kristen Baldwin, director of operations at Green Mountain Harvest. Before the break, we were talking about a lot of the specifics on not only running a business, but working the best possible customer service with either the commercial growers, or with personal growers. During the break, I was thinking about it, and it made me wonder about employee theft, because in a big commercial environment, maybe you can do something on the slide that the cameras don’t see, and if you’re in a real informal situation in somebody’s home, I can imagine being able to abscond with some there. What’s your experience with employee theft? Is that much of an issue?

Kristen Baldwin: Yeah, so we really, really, really just impale with every ounce of our strength into our employees how dumb it would be to try. We don’t typically have a lot of problem with that. That being said, people try all kinds of crazy things-

Shango Los: Like what?

Kristen Baldwin: Well like, there was an incident in one of the very first dispensaries that I worked in where the employee, he was in on their trim team, and what he would do would be to put several gloves over his glove, and then he would successively put a bud in each glove and stick it in his pocket as he was trimming. I don’t think that he really understood that his Adidas running pants were very much showing the outline of these, what looked like golf balls in his pockets. I noticed this, and I couldn’t figure out what was going on, because he definitely didn’t have golf balls in his pocket when he came to work. That was one of those situations where I think it seemed like a good plan at the outset, but in execution, particularly with the number of cameras that he was visible on, it just did not go well for him.

Shango Los: Yeah, I can imagine that. What I find, there’s so much cannabis just around in the industry, it’s a really dumb play to steal from work. Everybody’s got it in the industry, so why would you then go and risk your job to steal it?

Kristen Baldwin: Right, but here’s the funny thing, even at the beginning there was a whole point of contention around, well, what do you do with the little buds that fall on the floor? Like oh, it’s floor weed. In the early days, that was just going out the door. That was floor weed. Even that, in the long term, had to be accounted for, and there had to be standards of operation put in place to say, “No, you have to actually take that back, and weigh it, and say, “This is how much we wasted.” Account for it, and then destroy it. You can’t just sweep it up, and stick it in a jar, and take it home.

Shango Los: Let’s flip that dynamic around. Instead of the trimmer stealing, let’s talk about arbitrage. What if you get somebody who’s got a personal grow, and in lieu of paying you for some or all of it, they want to give you their trim for you to then resell to a BHO person or something? A, is that legal, B, is that something that you ever come across?

Kristen Baldwin: Right. No, that’s not legal. The only intermediary we would be in that process would be if we’re brought into trim, and then they’re separating those things out, and they send it with a licensed courier from their operation or another to take that to an operator. We can’t have the product at any point. That’s the nature of the difference in our licensing. Doesn’t allow us to have it, to move it, to grow it, to sell it. Nothing like that. Because that requires a much different license than what we have. We’re an ancillary vendor.

Shango Los: You can’t play middleman on the deals.

Kristen Baldwin: We can’t. Yeah. All that stuff is our FID tag, so essentially, we don’t own or move any RFID tagged product. Yeah.

Shango Los: Let’s talk about licenses in a different way. Up to this point we’ve been talking about either having a license to do a cannabis business, or an individual person having their badge, which allows them to work in the industry. I have not come across actually, you’re the only one actually, you’re the first trim company that I’ve come across, which is why I was so curious to have you on the show. I’ve been all over the country talking to people at this point, and so I think that the days of trimming businesses have now arrived. You’re going to be having a lot more competition soon. Are you looking to other states to license your intellectual property? Not a franchise, because we all understand that franchising is illegal, but are you looking to expand the Green Mountain Harvest name into other states?

Kristen Baldwin: We are, absolutely. Yeah, we have business opportunities now available in any state where it’s medical, or retail, or somewhere in between. We are available to create business opportunities for people who want to do this there. When the owner, Susan Chicovsky, started this six years ago, she really saw a need for this as an industry, and no one else was doing it. She had to go to the state and say, “This is what I want to do.” They said, “Wow, that’s a really good idea, we hadn’t even thought about that.” Hadn’t even crossed anybody’s mind that this was a really valuable and necessary piece of the puzzle to make all this work.

We have lots of different services available to that end. We sometimes just go and we’ll train teams of trimmers for people that already have an existing operation, and want to have an on-site team. We’ve sent people to other states, and we’ll send, again, some of our supervisors. Susan, the owner, will go, and they stay for a few days, or a week or two, and they get everybody up to speed. That’s one option. The other option is to actually become a partner, a Green Mountain harvest partner, and carry that name into another state. In that case, then you get a huge amount of our intellectual property, and our standard practices, and how we operate in that gray area successfully. Which is part of the key for sure.

Shango Los: Let’s circle back to you mentioning Susan going to the state to try to get the blessing for this kind of a business model. Because that is a really important entrepreneurial point. A lot of people are like, “Oh, now that cannabis is legal, I’m just going to start a business, and I don’t have to be an activist.” I think that all entrepreneurs in cannabis have to remain activists. Not only to make sure that your local government doesn’t pass some kind of moratorium that’s going to suddenly tie your hands, but what Susan did, Susan had to come up not only with the business idea, but then she had to lobby for it with regulators so that there was a license allowance for it. That’s extra credit to Susan for stepping up and following that, and I think that’s a good lesson for everybody that you might have a groundbreaking idea, and you’re going to have to sell it to your regulators.

Kristen Baldwin: Absolutely. Yeah. It’s all about being part of the movement overall. You may have a great idea, and you may be really scared about coming out of a gray market, or a black market with that idea, but unless you stand up, and unless you become part of the movement, and say, “This is what I’m doing, and this is why it’s important.” Then you don’t move us all forward as a whole. That’s really what she did was say, “Not only do I want to provide a safe way to handle the product for this particular point in its process, but also, what does a business model look like that really supports its employees as if this were any other industry?”

You have to have Workmen’s Comp. You have to make people employees, and not have them work as contract labor, which is so often what people are more apt to do, because it’s easier for the employer, but it provides the employee no protection. They’re not an employee. They have no protection. Susan really did say, “I want to do this, but I want to do this right, and what does this look like?” Got amazing certifications put in place for our company that say we are the most compliant, and this is how that looks. That’s why I was excited to come and work with her after years of doing other things in the industry for sure.

Shango Los: I think that it really helps the industry as a whole when people like Susan provide that leadership, because then the regulators can point and say, “Look, here’s a good actor who is doing it the right way, who is doing the things that cause us to feel more safe as regulators.” Then hopefully, eventually some of those regulations can be a little loosened so that they don’t cost as much for companies to comply. For now, we’ve got this strange dance between entrepreneurs and regulators of, what can the entrepreneurs get away with, versus the regulators wanting to regulate and/or ban everything, because they’re afraid of risk.

Kristen Baldwin: Absolutely. Absolutely, and that’s why people have to be really vocal, and they have to get out there. Even to the point of for children who are using cannabis patches in schools, that was a big, big hurdle that we had to overcome here in Colorado. Helping people understand that this is a medicine, and that these kids are using it. They’re not getting high at school. A kid in a wheelchair who can move their arms solely because they’ve started using these patches isn’t getting high. They’re having a better quality of life. Even something as simple as that takes a huge group of people, and a lot of effort, and a lot of people coming forward.

What I would say to anyone in those states where it’s still gray is don’t stay in the dark. Just get out there and be vocal, and get ready to be part of something special, because the amazing other side of this is that after you’ve been in this state where it’s gone recreational, and you’ve supported the medical market, and you’ve seen what’s happened here in Colorado, some of the outcomes with people getting out of jail, and all the cool stuff that happens on the side with the medical research, and the kids getting better, and the seizures going away, it’s worth coming out of the dark. Susan is going to Pennsylvania for example to speak at a conference that’s all just for doctors. Just getting the doctors on board is crucial. There’s work to be done in every state, and what I say is just be brave and go do it.

Shango Los: Thanks for being on the show today, Kristen.

Kristen Baldwin: Thank you, it’s my pleasure. How exciting. Thank you for doing such good work in getting this information out there.

Shango Los: Kristen Baldwin is director of operations of Green Mountain Harvest. You can find out more at GreenMountainHarvest.com. You can find more episodes of the Shaping Fire Podcast, and subscribe to the show at ShapingFire.com, and on Apple iTunes, Stitcher, YouTube, and Google Play. On the Shaping Fire website, you can also subscribe to the weekly newsletter for insights into the latest cannabis news and product reviews. On the Shaping Fire website, you will also find transcripts of today’s podcast as well. For information on me and where I’ll be speaking, you can check out ShangoLos.com.

Thanks a bunch to Ganjapreneur for having me back for a visit. Be sure to check out Ganjapreneur every day for the latest cannabis news. I’ve been your host, Shango Los.

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Flower medical cannabis product at the National Holistic Center in Washington D.C.

Massachusetts Committee Likely to Re-Write Adult-Use Law

Democratic lawmakers have been tabbed to re-write Massachusetts’ adult-use cannabis law, in what could be another setback for the initiative approved by voters last November. According to a WWLP report, the House and Senate Committee on Marijuana Policy aims to make significant changes to the law, due to concerns about public safety, the tax structure, and the number of plants allowed in home grows.

State Sen. Pat Jehlen, a supporter of legalized cannabis, will work with House vice-chairman Rep. David M. Rogers, Senate vice-chairman Sen. Jason M. Lewis, and Rep. Mark Cusack on re-writing the law. Cusack has not taken a public position on the issue but said in an interview with the Boston Globe that he would follow the will of the voters.

“I think the will of the voters is they wanted recreational marijuana, not that they sat there and read every word of the ballot measure before they voted for it,” he said in the interview. “It was really: Do you want it or do you not?”

Jehlen said the committee would seek out experts from other states with adult-use markets, and hold hearings throughout the state.

“I don’t think the voters were expressing deep engagement with every single sentence,” she said. “But I think the concept of allowing people to own and use and grow marijuana legally, that is what is our mandate, to protect that.”

The committee is expected to provide their recommendations to Republican Gov. Charlie Baker – who opposed the measure – by June.

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The state flag of Pennsylvania flying at the state capitol building.

Pennsylvania Health Department Accepting MMJ Industry Applications

Pennsylvania’s Department of Health is now accepting applications for medical cannabis dispensaries, cultivators, and processors, Fox43 reports. Under the state’s medical cannabis laws, the Department of Health is allowed to issue up to 25 grower/processor licenses and up to 50 dispensary permits.

Grower and processor applicants are required to pay a $10,000 non-refundable permit fee plus another refundable permit fee of $200,000. Grower/processor applicants must also be able to prove they have $2 million in capital, $500,000 of which must me on deposit with a financial institution. Dispensary applicants must pay a $5,000 non-refundable fee plus another $30,000 refundable permit fee and must be able to prove $150,000 in capital.

Pennsylvania’s medical cannabis rules do not allow for full-plant use, instead patients will have access to pills, oils, topicals, tinctures, liquids, and “a form medically appropriate for administration by vaporization or nebulization,” the draft rules for the program state.

According to the 33-page grower/processor application, applicants must include a diversity plan “that promotes and ensures the involvement of diverse participants and diverse groups in ownership, management, employment, and contracting opportunities.” The diversity plans will be scored by the department on a 100-point system.

Applications are open until March 20.

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Stacks of $100 bills in rubber band rolls.

U.S.-Based Kalytera Therapeutics Acquires Israel-Based Talent Biotech

Kalytera Therapeutics has completed the acquisition of Israel-based Talent Biotech in a deal worth more than $10 million, the company announced in a press release. To date, the Massachusetts-based firm has made $10 million in cash payments and issued 17,301,208 common shares to Talent, and will pay up to $20 million in aggregate future contingent payments and other securities considerations.

Talent, which is privately held, studies the use of CBD to prevent and treat Graft versus Host Disease – which sometimes arises following hematopoietic stem cell transplantation. The procedure is often performed for diseases of the blood and bone marrow, including sickle cell anemia, leukemia, and Hodgkin and Non-Hodgkin lymphoma. Talent has so far completed two clinical trials at the Rabin Medical Center in Petah Tikva, according to a Times of Israel report.

Dr. Andrew Salzman, Kalytera CEO, said the company is “incredibly fortunate” to continue Talent’s “groundbreaking work.”

“There are currently few options to prevent or treat persons with GvHD, a large and critically underserved market. The results of Talent’s Phase 2 clinical studies are unprecedented, and mark a major milestone in the potential prevention and treatment of this severe and life-threatening disease,” he said in a statement. “We are encouraged by the data and seek to rapidly advance the GvHD program into FDA Phase 2b clinical studies.”

The deal has been conditionally approved by the TSX Venture Exchange but is subject to final approval.

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The Kansas Capitol Building in Topeka, Kansas.

Kansas Senate Committee Hears MMJ Proposal

A bill to legalize cannabis for medical use was heard by the Kansas Senate’s Federal and State Affairs Committee yesterday, according to a KAKE report. Democratic State Sen. Davis Haley, the chief sponsor and author of SB.155, called the measure overdue, with benefits that “far outweigh the detriments.”

According to the Marijuana Policy Project, there are at least three other proposals being floated in both houses of the legislature, including a bill similar to one that passed the House, but died in the Senate last year.

During his testimony in front of the committee, Haley indicated that his support for the measure is not only driven by providing medical cannabis access for patients in need, but an attempt to reduce the number of deaths from prescription opioid drugs – of which there were more than 600 in Kansas in 2015.

“It’s been very clearly shown in the states where medical marijuana is authorized, there is a marked decrease in those who die, or who even abuse prescription pharmaceutical drugs,” Hadley said in a WIBW report, adding that it’s a public health, not a budget, issue.

“I won’t talk about the economy and the revenue in other states issuing from taxing marijuana. Frankly, that’s not an issue that’s big with me, but I know that it’s important to some of us,” he said in the report. “I just think that what we’re hearing is that so many people want a natural alternative to other available substances to ease an array of maladies.”

Ed Klumpp, a lobbyist for state law enforcement associations, opposed the measure, calling the medical benefits of cannabis “questionable at best.”

The bill has not yet been added to any Senate calendars for a full floor vote.

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Commercial plants inside of grow cages at a licensed grow operation in Washington state.

Vermont Bill Would Legalize Adult Possession and Home Grows

Vermont’s legislature is considering a bill that would legalize cannabis possession by adults and allow for home grows, the Associated Press reports. The measure, H.170, is sponsored by Democrat state Representatives Maxine Grad and Charles Conquest, and Republican state Rep. Tom Burditt.

According to the bill text, all criminal and civil penalties for possession up to 1 ounce by adults 21 and older would be removed, and those 21 and older would be allowed to grow up to two mature, and seven immature, cannabis plants in their homes. The number of plants allowable under the scheme is not dependent on the number of adults living in a residence; however the 1 ounce limit would not include cannabis harvested from the plants so long as it remains on the premises where it is cultivated.

Additionally, the measure would outlaw cannabis extraction using butane or hexane by individuals, but allows medical cannabis dispensaries to continue using those gasses for extraction purposes. The bill provides penalties of two years imprisonment and fines up to $2,000 for violating the extraction order, and five years imprisonment with up to $5,000 fines if someone is injured as the result of an extraction accident.

The bill has been sent to the House Judiciary Committee.

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An old fashioned Drive-Thru sign.

Drive-Thru Retail Dispensary Approved in Parachute, Colorado

Green Cross Colorado LLC, has won approval to open the state’s first drive-thru retail cannabis dispensary as Tumbleweed Express is set to open at a former carwash in Parachute, the Post Independent reports. The service will have to follow the same rules and regulations as the other retail shops in the state.

Parachute Town Manager Stuart McArthur welcomed the “creative and innovative idea,” adding that about $310,000 out of about $1.05 million of the town’s sales tax receipts were derived from cannabis sales in 2016 – or about 30 percent. He said that other businesses, such as restaurants, are also benefitting from the legal cannabis industry’s presence in the town.

In a memo to the Parachute Board of Trustees, McArthur wrote that in December 2016, 26.8 percent of the town’s sales tax was from recreational cannabis sales – $25,016 out of $93,320 total.

“The percentage is down from previous months, indicating that other sales tax is increasing as a percentage of the total,” he wrote.

Parachute had previously barred cannabis operations in the town, but the decision was reversed in June 2015. According to the report, earlier this month at a Rifle Area Chamber of Commerce luncheon, Mayor Roy McClung said that despite his personal feeling about legal cannabis the town’s economy would have been in serious trouble without it.

Tumbleweed Express is set to open next month.

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A trichome-rich home grown cannabis plant.

Cannabis College Launches in Independence, Ohio

The Cleveland Cannabis College is set to begin offering courses as the state crafts its medical cannabis regulations, NewsNet5 reports. According to the college’s website, its next course, Introduction to Cannabis, is to be conducted this weekend at the campus in Independence.

The college will offer training and educational courses about medical cannabis laws and history, and courses on horticulture.

“We offer a well rounded program that educates individuals in horticulture, history, legal, retail, activism, patient access and more,” the website states. “After completing the general coursework, our staff is dedicated to finding high paying jobs and internships in all areas of the cannabis industry.”

According to the NewsNet5 report, educators anticipate students will get jobs six months after graduation.

The two-day 14-hour introduction course, which is required for all majors, costs $250, and will cover horticulture, history, legal, business, extracts, edibles, and topicals, activism, and patient access.

From there, students are encouraged to pick a major which they will be able to pursue in the Summer/Fall semester of 2017. Students will be able to receive credits for attending cannabis seminars and events, and enrollees will also have access to incubator space and study labs so long as they remain enrolled.

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The flag of South Africa.

South Africa Legalizes Medical Cannabis

South Africa has legalized cannabis for medicinal use as the Medical Control Council announced it would publish guidelines for medical cannabis production, according to an IOL report. The framework would allow patients with severe medical conditions to appeal to the council for approval for medical cannabis which would be dispensed under supervision by medical practitioners.

Members of the Inkatha Freedom Party called the decision a “major victory” and tribute to late MP Mario Oriani-Ambrosini who pushed for legalizing medical cannabis prior to his death from lung cancer in 2014.

IFP MP Narend Singh hailed the reforms as a “major breakthrough and fantastic news for freedom of choice.”

“Mario had fought tirelessly for this and although he proposed cannabis beyond medicinal use to also include it for recreational use, we agreed to withdraw every clause relating to non-medicinal use in our efforts to ensure it becomes legal,” Singh said in the report, noting that “thousands of patients” are already using the oil but at “exorbitant costs.”

“Production must be aimed at making it a medicinal, affordable drug for those who need it. It should not be an exclusive drug of choice for those who have the money,” he said. “That is what we are arguing for.”

Quintin van Kerken, a representative for South Africa’s Anti-Drug Alliance, said that medical professionals “need massive education” about the products before they are able to recommend their use to patients.

“They need to unlearn a lot of the negative myths around cannabis if patients’ right to cannabis can be fully supported by health professionals,” he said.

The Medical Control Council did not provide a timeline for the guidelines’ publication.

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Bipartisan Lawmakers Form Congressional Cannabis Caucus

A bipartisan coalition of lawmakers from states with adult-use cannabis laws have come together to form the Congressional Cannabis Caucus, hoping to embolden support for normalizing the industry on the federal level.

California Rep. Dana Rohrabacher, a Republican, said the lawmakers are seeking “to make major changes” in the national attitude toward cannabis. “If we do, many people are going to live better lives,” he said during a press conference announcing the caucus’ launch.

Rohrabacher is joined on the caucus by Democratic Representatives Earl Blumenauer (Oregon) and Jared Polis (Colorado), and Rohrabacher’s fellow Republican Rep. Donald Young (Alaska).

“We will be trying to do everything we can to keep the momentum going that we’ve established in these last four to five years as we’ve seen great progress on this issue,” Roharbacher said. “Now with a new administration it’s vitally important that we pay attention and don’t do this haphazardly and we get together and have a professional presentation to the people of the United States and to our fellow members of why it’s important to us to take the policies that have not worked…and change those policies so it works for the people of this country.”

Blumenauer said he has become “deeply concerned” about the gap between the public and the policy makers, between “what is rational policy, and where the federal government is,” he said.

“We saw this wave crest in November with eight states moving successful ballot measure to expand adult-use or medical marijuana,” he said. “We’re at the point now where 95 percent of the American public are in states or territories where some aspect of marijuana or medical marijuana is available.”

During the press conference, the members indicated they would be seeking like-minded legislators to join their cause.

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The Arizona state flag.

Safer Arizona Files Adult-Use Initiative for 2018

Safer Arizona has filed an initiative with the Secretary of State’s office seeking to legalize adult-use cannabis in the state after the measure was narrowly defeated by voters during November’s General Election, according to a report from Cronkite News. Arizonans would have another chance at legalization if the advocates can collect 152,000 valid signatures from registered voters by July 1, 2018,

The Safer Arizona Cannabis Legalization Act would legalize possession, use, consumption, and transportation of cannabis for adults 21 and older, create a regulated and taxed cannabis market, and allow the home growing of up to 48 plants. Additionally, the measure would provide relief for individuals with some previous cannabis convictions, and seeks to provide protection for parental custody rights and for firearm owners. It also includes language that would prevent the state from “re-implementing cannabis prohibition and conspiring with other governments to enforce cannabis prohibition laws.”

“This is what people are getting at when they go for cannabis legalization,” Dave Wisniewski, chairman of Safer Arizona, said in the report. “Everything that has passed so far has been investor driven and doesn’t take on the whole problem.”

Chuck Coughlin, president of HighGround, a public affairs firm, said Proposition 205, which was the only state cannabis measure to be rejected by voters last November, was poorly crafted and put to voters too soon – Arizona passed their medical cannabis laws in 2010.

“It is a dramatic amount of change in a short amount of time,” he said. “Other places had medicinal legalized for some time before full legalization.”

Wisniewski indicated that the new proposal sets caps on the general sales tax, allows more plants per home grow, and places the regulation under the state Department of Agriculture rather than creating a whole new agency.

“Prop. 205 was legitimately a very flawed law. There was a large population of cannabis consumers who voted ‘no’ on it,” Wisniewski said. “I don’t believe Arizona voted down Prop. 205 because they didn’t want marijuana.”

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South Dakota Hemp Bill Passes Committee, Moves to House

The South Dakota Agriculture and Natural Resources Committee has approved a measure that would legalize full-scale hemp production in the state, designating hemp as an oilseed, according to a South Dakota Public Radio report.  The committee passed the bill 9-2.

Proponents pointed to the success of North Dakota’s pilot hemp program, but opponents were concerned that the federal government could crack down on hemp farmers.

“We have an opportunity to maybe start something a little new, it’ll take years to get to a point where it’ll make an impact on our state ag economy but it has to start somewhere, you know, years ago soybeans were in the same spot, people didn’t raise a lot of soybeans and the ethanol industry, like you said was probably started in somebody’s garage in a very small way, so not trying and not even wanting to try is kind of the biggest shame, I think,” Committee Chairman Rep. Herman Otten said in the report.

Jenna Howell, director of the state Department of Safety’s Legal and Regulatory Services, said the state’s law enforcement doesn’t have the resources to test crops to ensure they contain less than the .3 percent of THC allowable to be considered hemp under the 2014 federal Farm Bill.

“Having those things legally grow in our state, we are concerned send mixed messages to our youth who we are trying to warn about the dangers of illegal drugs, and we would ask we not further confuse that issue,” she said.

The proposal includes testing requirements, permitting for the destruction of crops that contain more than the allowable THC content. The measure will head to the House for a full vote.

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Clones lined up inside of a Washington cultivation facility.

Georgia Bill Would Add Autism to MMJ List, Drop Allowable THC Content

Georgia’s Senate has passed legislation that would add autism to the medical cannabis qualifying conditions list in the state, but also drops the allowable maximum THC levels in cannabis oil from 5 percent to 3 percent, according to an Atlanta Journal-Constitution report. Advocates have warned that the measure, sponsored by Republican state Sen. Ben Watson, would alienate dozens of families who are using cannabis products allowed under the state’s current laws.

The proposal aims to put the state’s regulations more in line with those in other states that permit low-THC cannabis oil for medical purposes; however, according to the report, there have been no issues with the program in its current form. Advocates and doctors, though, have said that the low-dose oil currently permitted doesn’t work for everybody and some patients respond better to products with higher THC percentages.

Watson, who is a medical doctor, also called on the federal government to reconsider cannabis’ Schedule I classification under the Controlled Substances Act, saying that rescheduling would allow for more studies and flexibility for sanctioning its use medically.

“To say cannabidiol has no medicinal value is just not true,” Watson said in the report.

The bill moves next to the House, who are also considering legislation to expand the qualifying conditions approved for medical cannabis use, and another that would allow in-state medical cannabis production. Both of those measures are sponsored by Republican state Rep. Allen Peake.

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The Eiffel tower in Las Vegas.

Nevada Official Wants Tandem Recreational & MMJ Market

The official in charge of Nevada’s medical cannabis program told the state Senate Finance Committee that the same products should be sold in both the medical and recreational cannabis markets in the state, with only different taxes applied at the point-of-sale, the Las Vegas Review-Journal reports.

Joe Pollock, the deputy administrator of the Division of Public and Behavioral Health, said treating the products differently would create regulatory burdens on the industry.

“I think there’s a lot of advantages of having recreational and medical marijuana treated the same, right up until the point of sale,” Pollock said in the report.

The setup would be different than the current system in place in Colorado, where there are different checkout counters for medical and recreational sales.

Pollock’s comments are the latest sign that Nevada’s adult-use market could differ from the infrastructure in other states. Lawmakers are expected to take up a public-use bill this session that would allow social clubs to operate in the state. And while the state legislatures in Maine and Massachusetts have both passed legislation delaying the implementation of the voter-approved cannabis measures, Nevada officials have indicated that they are six months ahead of schedule, anticipating adult-use sales to begin as early as July 1.

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The state flag of Iowa flying on a sunny, blue-skied day.

Poll: 80% of Iowans Support MMJ

According to a Des Moines Register/Mediacom poll, 80 percent of Iowans support legalizing cannabis for medical purposes; yet, just 39 percent indicated support for a recreational market. In a 2013 poll, just 58 percent supported a medical program, with 29 percent in support of a recreational cannabis market.

The poll found strong majorities among age groups and political affiliation with 88 percent of young adults, and 87 percent of Democrats supporting medical cannabis access; along with 66 percent of Republicans, 67 percent of senior citizens, and 87 percent of registered independents. Additionally, 76 percent of Protestants, 79 percent of Catholics, and 91 percent of those claiming no religious affiliation backed medical cannabis legalization. Rural residents were less likely to favor the issue than their city-dwelling counterparts, 73 percent to 82 percent respectively.

Iowa currently has a medical cannabis pilot program, which is set to expire this summer. The limited program allows patients with epilepsy to possess cannabis oils high in CBD with minimal THC content, however, it doesn’t provide for distribution of the oils, which leaves patients without access to their medicine or forces them to break federal law by obtaining it out-of-state.

According to the report, there are at least three bills in the state legislature aimed at the state’s medical cannabis program.

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Boat's view of the New York City skyline.

Bill Sealing Low-Level Cannabis Possession Convictions Heads to NY Senate

A proposal to seal criminal records of individuals arrested for possession of cannabis in public view in New York has passed the State Assembly 95-38 – if it’s approved by the Senate it could impact more than 800,000 convictions in the state. Citizens charged with possession in public view are often accused of the crime only after being subjected to controversial stop-and-frisk searches.

Assemblymember Crystal Peoples-Stokes, the bill sponsor, said the measure is necessary “because drug laws have created a permanent underclass of people unable to find jobs after a conviction” adding that communities of color have been the most affected by 40 years of “bad drug policies and hyper-criminalization” and are often targeted during stop-and-frisk stops.

“If today’s moment of increased attention to heroin encourages us to center public health in our drug policy, then we need to ensure that we are making amends to communities of color by alleviating the burden bad policies have had on their lives,” she said in a press release. “Sealing low-level marijuana possession convictions is the first step to reintegrating thousands of New Yorkers who are inhibited daily from accessing employment, housing and an education all due to a conviction on their record for simple possession of marijuana.”

Kassandra Frederique, Director of the Drug Policy Alliance, applauded the Assembly vote and said that the measure is “most urgent” under the Administration of President Donald Trump, whose policies have, thus far, been anti-immigrant.

“Comprehensive drug law reform must include legislative and programmatic measures that account for our wrongheaded policies and invest in building healthier and safer communities, from the Bronx to Buffalo, Muslim and Christian, US-born and green card-holding,” she said.

The measure now moves to the state Senate where it is sponsored by Sen. Jamaal Bailey.

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Colorado Officials Moving on Denver Social-Use Rules, Considering State-Wide Legislation

Members of Denver, Colorado’s Social Consumption Advisory Committee are set to hold their third meeting next week, continuing to devise rules under which the voter-approved Initiative 300 will operate in the city. During their second meeting, the committee offered rules restricting social-use clubs from operating 1,000 feet “from where children congregate,” proposing application and operation requirements and determining some “unlawful acts” related to storage, processing, quantity limits, advertising, and visible intoxication.

According to an Associated Press report, state lawmakers are considering legislation that would allow cannabis “tasting rooms” run by dispensaries, or smoke-friendly clubs akin to hookah lounges or cigar bars. The state-level considerations come as lawmakers on both sides of the aisle are reportedly fed up with seeing cannabis smoked in public spaces and on the street.

Republican state Sen. Chris Holbert said that he has been asked for cannabis by panhandlers by the state capitol.

“It’s a problem we’ve got to address. I mean, look at me. If I’m getting hassled, everyone’s getting hassled,” Holbert said to reporters while pointing to his suit and gray hair.

A bill to treat cannabis clubs like cigar bars is currently being re-written over language that allowed medical cannabis patients to socially consume – which drew the ire of some lawmakers and opponents of the social use measure. Other legislators indicated that they should move slowly on any new regulations because of uncertainty at the federal level.

The Advisory Committee has three more meetings on its agenda for Mar. 10 and 24, and April 6.

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Young cannabis clones in a licensed Washington grow site.

IRC §280E: A Taxing Situation for the Cannabis Industry

Following the 2016 elections, cannabis is now legal in some capacity in 28 states. However, even though it’s legal in certain states, the federal government considers the plant an illegal Class I narcotic, and as a result business owners in the marijuana industry have hit a wall with IRC §280E, which states:

“No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”

IRC §280E will only cease to apply to cannabis businesses if and when cannabis is no longer classified as a Schedule I or Schedule II controlled substance.

When IRC §280E was enacted in 1982 to overturn the result in the Tax Court case Jeffrey Edmondson v. Commissioner, it held that the taxpayer, who was engaged in an illegal drug dealing business, was entitled to deductions for “telephone, auto, and rental expenses” that he incurred in his business. The Senate report makes clear that IRC §280E was intended to overturn the decision in Edmondson and deny deductions to illegal drug dealing businesses.  However, for Constitutional reasons, Congress did not attempt to prevent taxpayers from using cost of goods sold (COGS) to compute gross income. Thus, IRC §280E denies all deductions from gross income in computing taxable income, but illegal drug dealing businesses are permitted to take COGS into account in computing gross income.

IRC §61 defines “gross income” as “all income from whatever source derived.” One category of income listed in IRC §61 is “gross income derived from business.” Reg. §1.61-3 states that “gross income” for manufacturing and merchandising businesses, “means total sales, less the cost of goods sold.” As the Tax Court has observed, “cost of goods sold is an item taken into account in computing gross income and is not an item of deduction.”

Coping strategies for cannabis companies

There are various strategies that those in the marijuana industry have employed.  The first approach derived from Californians Helping to Alleviate Medical Problems, Inc. (CHAMP) v. Commissioner.  In this Tax Court Case, the California-based marijuana dispensary provided marijuana to its patients, but also provided non-cannabis services, including counseling and caregiving services for its patients.  This allowed the company to fully deduct the expenses associated with those practices.

It is perfectly okay to run two separate businesses under one roof.  If the business is a medical marijuana dispensary, it could certainly provide other caregiving services under another company.  It can also then share employees with the dispensary, paying the employees minimum wage under the dispensary company, and making up the difference with the caregiving company.  The dispensary is only allowed to deduct COGS, whereas the caregiving business isn’t held to the same restrictions.

However, not all cannabis businesses have been successful in separating their businesses between dispensary and non-dispensary activities. In the Tax Court Case Olive v. Commissioner, the Court found that the taxpayer’s activities of providing free yoga classes, chess and other board games, movies with popcorn and drinks, chair massages, use of vaporizers, education on medical marijuana and its responsible use, and snacks, did not constitute a business separate from the taxpayer’s dispensary business.

Cannabis companies face some taxing issues that are entirely unique from other industries. Photo Credit: Rory Savatgy

The second approach to minimizing the impact of IRC §280E is to characterize as many costs as possible as COGS rather than operating expenses.

As the Tax Court has observed, “[the concept of COGS] embraces expenditures necessary to acquire, construct or extract a physical product which is to be sold; the seller can have no gain until he recovers the economic investment that he has made directly in the actual item sold.”  In other words, the total costs incurred to create a product or service that has been sold.  Generally, a taxpayer first determines gross income by subtracting COGS from gross receipts, and then determines taxable income by subtracting expenses from gross income.

The IRS and cannabis

IRC §471 gives broad authority to the Internal Revenue Service (IRS) to force taxpayers to account for inventory in a way that most clearly reflects income. IRS regulations under IRC §471 provide that a producer of property generally is required to treat indirect costs as COGS if they are “incident to and necessary for production” or manufacturing operations.  In 1986, Congress enacted IRC §263A, which requires purchasing, handling, and storage expenses, as well as a portion of third party service costs such as accounting or legal fees, to be included in COGS, in addition to the costs covered by the IRC §471 regulations.

Absent an inclusion in COGS, indirect costs for cannabis businesses are subject to IRC §280E, which denies deductions from gross income. It does not impact costs for determining gross income. Increasing COGS decreases gross income and decreases the amount of denied deductions from gross income as a result of IRC § 280E. This creates an incentive for cannabis businesses to maximize their costs included in COGS.

Normally, taxpayers with inventories prefer to treat costs as deductible expenses rather than including them in COGS because expenses are currently deductible, while COGS does not reduce income until the taxpayer sells the inventory items to which the COGS relates. However, because IRC §280E prevents the deduction of many cannabis-related costs as current expenses, taxpayers in the cannabis industry have reversed the normal tax planning objective and prefer to maximize the costs treated as COGS.

A recent IRS pronouncement attempts to limit reliance on IRC §263A to maximize COGS and minimize expenses subject to IRC §280E. Chief Counsel Advice memorandum 201504011 (CCA) takes the position that a taxpayer who traffics a Schedule I or Schedule II controlled substance must determine COGS using the applicable inventory-costing regulations under IRC §471 as that IRC § existed when IRC §280E was enacted. Thus, the IRS is taking the position that IRC §263A does not require — indeed, does not allow — taxpayers to include in COGS cannabis-related costs that would be nondeductible under IRC §280E if they were not capitalized.

The CCA interprets two tax provisions in making its conclusion. First, the CCA interprets language in IRC §263A(a) (2) to limit indirect costs included in COGS to those that are deductible from gross income when calculating taxable income. Stated differently, an indirect cost cannot be included in COGS by reason of IRC §263A for determining gross income if that cost could not be deducted from gross income if it were not included in COGS.

Second, the CCA points to legislative history to interpret IRC §280E. The Senate report notes the adjustment to gross receipts for COGS was not affected to preclude Constitutional challenge. Congress feared that denying COGS to determine gross income might be held unconstitutional.

Interestingly, the CCA concludes that a business trafficking in cannabis “is entitled to determine [COGS] using the applicable [COGS] regulations under IRC §471 as they existed when IRC §280E was enacted.” The CCA does not explain its basis for making this assertion. It is unclear why changes to the IRC §471 regulations subsequent to the enactment of IRC §280E should not apply to businesses trafficking in cannabis.

It appears the IRS is asserting that COGS, as defined by the IRC §471 regulations at the time IRC §280E was enacted, represents COGS that are Constitutionally protected when determining costs for gross income. Further, the IRS interpretation permits costs generally included in COGS to be denied as a cost for determining gross income whenever COGS includes incremental costs from when IRC §280E was enacted. Presumably, the IRS does not find these incremental costs to be Constitutionally protected.

The analysis by the CCA is flawed because:

(1) it provides no support for the position that COGS may be defined differently for certain classes of taxpayers, and;

(2) the fact that IRC § 263A does not apply to indirect costs of a cannabis business does not mean that those costs cannot be capitalized.

Filing taxes in the cannabis industry can be a real headache without a proper plan and lots of preparation. Photo Credit: 401(K) 2012

Cannabis businesses should be entitled to include in COGS all costs that may be included in COGS under all capitalization rules other than IRC §263A. The fact that IRC §263A requires the capitalization of particular costs does not preclude such costs from capitalization under other rules. Capitalization must be decided based on the IRC §471 regulations as currently written, and IRC §280E has no impact on capitalization requirements.

Looking to the future

Under the 16th Amendment, Congress has the ability to tax only gross income, not gross receipts. The determination of what is included in COGS determines gross income. Both IRC §471 and IRC §263A determine whether a cost is included in COGS. The U.S. Supreme Court in New Colonial Ice Co. v. Helvering held that deductions from gross income depend “upon legislative grace,” and a particular deduction can be allowed only if it is clearly provided by the statute.

By enacting IRC § 280E, Congress has denied its legislative grace to deductions from gross income for businesses trafficking in Schedule I or Schedule II controlled substances. However, the IRS provides no evidence that a court has applied the concept of “legislative grace” to the inclusion of costs in COGS. It is therefore unclear whether Congress has the authority to create a separate and narrower definition of COGS for these businesses. If it does not, the Constitution requires that IRC §263A be taken into account in determining COGS for cannabis businesses in the same manner as it is taken into account for other businesses — that is, without regard to IRC §280E.

One case, Alpenglow Botanicals, LLC, Et Al. v. U.S., is challenging the very concept of IRC §280E.  On February 3, 2016, plaintiffs Alpenglow Botanicals, LLC, filed a Complaint against defendant The United States of America seeking declaratory, injunctive, and monetary relief so as to overturn the IRS’ decision to deny deductions to income obtained during the course of plaintiffs’ business for the tax years 2010, 2011, and 2012. More specifically, plaintiffs raised the following claims:

  1. The IRS went beyond its jurisdiction in administratively determining that plaintiffs were not entitled to certain deductions pursuant to 26 U.S.C. §280E;
  2. Congress exceeded its power under the Sixteenth Amendment in passing §280E;
  3. The IRS violated the Fifth Amendment in taking evidence from plaintiffs without informing them that they were under investigation for violating the Controlled Substances Act (CSA); and
  4. §280E violates the Eighth Amendment’s prohibition on excessive fines and penalties.

The appellate court ruled in favor of the government, setting up a showdown that could soon take place in the Supreme Court.

One thing is for sure: with marijuana now legal in over half the states in America, §280E may soon be a thing of the past.

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The detail at the top of the State Capitol Building in Lansing, Michigan.

Lansing, Michigan Passes MMJ Home-Grow Ordinance

Lansing, Michigan’s City Council has set new rules for medical cannabis home-growing which require patients to register with the city if they continuously or intermittently use more than 3,500 kilowatt hours of electricity, the Lansing State Journal reports. It’s unclear whether those who register would need to pay a fee, but failure to register with the city could result in a civil infraction.

Mayor Virg Bernero said the city would be conducting inspections to ensure the new rules are being followed, noting that the ordinance was supported by several neighborhood groups.

“We know that it is legal under state law for medical marijuana patients and caregivers to grow marijuana in their home, but this activity must be done in a safe manner that does not create a nuisance or put their neighbors in harm’s way,” Bernero said in the report. “Protecting the quality of life in our neighborhoods is vitally important. With the new tools this ordinance provides, we can make sure that any hazards or neighborhood nuisances caused by home growing of marijuana can be addressed and resolved.”

T.J. Doyle, a registered patient and caregiver in the capital city, called the move “misguided” and an “overreach.”

“You don’t punish every single person in the program because you have a handful of people doing things poorly,” Doyle said. “The city didn’t have to get draconian with it.”

Officials indicated that the registration records would be maintained by the city and would be protected under both the general privacy exemption of the Freedom of Information Act and the Health Insurance Portability and Accountability Act.

The ordinance was approved unanimously by the City Council.

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A plant growing on a Jamaican ganja farm.

Jamaica Approves First Preliminary MMJ Cultivation, Processing Licenses

Jamaica’s Cannabis Licensing Authority has issued its first conditional licenses for medical cannabis cultivators and processors in the island nation, according to a Jamaica Observer report. The licenses were approved for two small cultivators, and one small processing facility. Another cultivation license was considered – however, the owners could not establish that the venture was “substantially owned or managed by individuals ordinarily resident in Jamaica” as required under the nation’s laws.

According to the report, the CLA had been under pressure from stakeholders to issue licenses – having announced the regulatory scheme in May after passing the reforms in February 2015. The agency said the approvals require extensive verification and that the processes in Colorado and Uruguay initially took about two years.

“At the outset, the authority mapped the application process and noted that the processing of conditional approvals could take up to six months provided all relevant information was supplied,” CLA Chairman Cindy Lightbourne said in the report. “In several instances, information has been requested by the Authority to help verify applications and any delay by applicants in providing this requested information adds to the processing timelines.”

In September, Minister of Tourism Edmund Bartlett estimated cannabis would help the island nation move away from the all-inclusive, mass tourism model, expecting “a full roll-out” of a cannabis-centric health and wellness tourism subsector by the end of this year.

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