WHERE DID ALL THE MEDICAL PRODUCT GO?

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[Editor’s note: Danielle Rosellison is a longtime friend and cannabis industry organizer, as well as one of CASP’s interview subjects for our forthcoming book on Phase I of Washington State Legalization. She posted this piece about conditions and strategies for producing medical product in Phase II of Washington State Legalization, which began July 1, 2016, on her Linkedin account. We are re-posting, images and all, with permission because the information it contains is of much public interest — Dominic Corva, Social Science Research Director]

All photos by Danielle Rosellison

Author bio: Danielle Rosellison is a wife and mother and has been part of the Cannabis Community for decades.  She is also the owner/operating manager of Trail Blazin‘, a licensed cannabis farm cultivating award-winning, pesticide free, sustainably grown legal cannabis.

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By Danielle Rose-Ellison, Owner/Operating manager of Trail Blazin’ Productions

People keep asking us about medical cannabis.  How’s the transition going?  Who is growing medical cannabis?  Why aren’t you getting medically certified?  I wanted to take a minute to explain the circumstances from the farmers perspective.  First a quick history:

Spring 2015:  SB 5052 is the piece of legislation that changed the medical laws in Washington.  I don’t want to get into a big discussion, but the vast majority of 502 farmers were not proponents of the bill.  They saw the issues with it from a mile away.  Most of the farmers I have had the pleasure of meeting, have been part of the cannabis community for a long time and care deeply about patient access.  They also know several people in the medical market that had worked hard and didn’t want them to suffer at the hands of 502.  On the same token, when your whole life’s savings is wrapped up in a new business, and there are un-taxed, non-tested, completely unregulated businesses selling cannabis for the same price a few doors down, there is a whiff of unfairness about the situation.  Something had to change.   The vessel of that change was SB 5052, right, wrong or indifferent.

July 2016:  All medical stores have been shut down or raided and patients have been asked to go to adult-use stores to secure their medications.  Medical cannabis has been integrated into the 502 system.

So, where is the medical grade product? A recent March 2016 survey by The Cannabis Alliance revealed that although 67% of the growers who participated in the survey were growing a medical grade product, only 13% believed the chances were “high” that they would grow medically certified product by July 1, 2016 and only 31% believed the chances were “high” that they would do it by July 1, 2017.  If all these growers are growing a medical grade product, why not get it certified?  Let me walk you through it:

First, the product needs to be grown in compliance.  When you’re use to going somewhere, purchasing cannabis and consuming it, this may not seem like a large achievement in itself.  However, if you’ve ever grown cannabis, or anything for that matter, you’ll know that taking something from seed or clone to harvest is a process; a process in which any number of things could go wrong.  Agriculture is continuously threatened by pests (insects), molds and mildews that naturally exist in our environment. Mold and mildew spores are floating in the air around you right now.  If you’ve walked through a park or field  or garden or any natural environment recently, you probably have microscopic insects on your shoes and clothes.  To navigate these threats without using pesticides and fungicides in our gardens is extremely difficult.  That’s why organic food is more expensive than non-organic.  For the indoor gardeners, if an environmental control fails, the garden skids sideways in shock, and if the entire crop isn’t wasted, it is usually less than a premium product upon harvest.  All the while every single plant is barcoded and anytime it is combined with another plant, tested, or sold, the barcode changes and you have to retag them.  If anything goes wrong, there are still bills to pay and employees counting on you.  Each time we bring down a harvest we celebrate; we made it!  We didn’t realize that you can hold your breath for 4 months!

Once it’s harvested, trimmed and cured the harvested totals of flower, other (trim), and waste are entered into the system.  This is where medical starts to change from adult use.  You have to declare that the harvest is medical and get it tested for heavy metals and pesticides.  If it passes, then it is sorted into 3 pound lots instead of 5 pound lots (which is required for adult use) and those are sent in for microbial testing.  Don’t even get me started on the lots.  In our case, we have small rooms that are all subject to the same nutrients, water regime and environment.  When we have a 50 pound harvest, we have to pay for ten tests, even though all the plants were treated exactly the same.  For one harvest, we’ve had test results vary up to seven percent in total cannabinoids.  Furthermore, we can’t average the results, so you have varying results with retailers and consumers requesting the highest test results, when it’s all exactly the same product.

Once that box is checked, once you’ve declared it medical, if you fail a pesticide or heavy metal test, the DOH says you have to destroy the entire harvest.  This adds a HUGE risk to the farmer.  What if the farm is downwind from an apple orchard and the 700+ pesticides that apple farmers are allowed to use but we aren’t blow onto our crop? What if we get a false positive from the lab?  What if the nutrients we use had undeclared pesticides?  The list goes on and on.  And you’re telling me if anything goes amiss, we have to destroy the entire harvest?  I’m not sure if you know this, but there are several options out there to process failed material into passing material.  Wouldn’t that be a better use of the product?  It gets even better, if you talk to the LCB, they say if you fail a test “you would be permitted to request a re-test through the LCB”.  So one agency says you have to destroy the harvest, but the other says you can retest it.  Which is it?  I’m so confused.

Well at least if the grower goes through all this, they will benefit from it, right?  In order to benefit from the added risk, who is going to shoulder that increased costs?  Sick, usually on a fixed income, patients.  That’s exactly who good farmers DON’T want to capitalize on!  There is a target audience out there who makes purchasing decisions based on the environmental and social footprint of the product. They pay 60% more in the grocery store to avoid pesticides and purchase locally sourced goods.  Those are the people who should pay a premium for clean cannabis.  Being a patient and paying a premium should not necessarily go hand in hand.

It gets even better.  If it’s medically certified, then at least that’s the only product that the patients save a whooping eight to nine percent sales tax right?  Nope.  Patients registered in the database get to save the eight to nine percent sales tax on ANY product they purchase.  Which is really cool, however we’re back to why would a grower ever take the risk of possibly destroying their entire harvest if patients can buy non-medically certified product for normal price and still save the sales tax?  It just doesn’t make any sense at all, from a grower’s and patient advocacy perspective, to accrue the added risk for the exact, same product.

Now the question becomes if you don’t get medically certified, how do patients KNOW your product is as clean as you say it is?  There are a couple options.  At Trail Blazin’ Productions, we have taken the step to have all of our strains tested for pesticides and we post those pesticide results on our website.  We also post our terpene profiles and potency tests so that we are truly transparent.  All of these results can be linked back to harvest date and lot number on the package.  Another option is to get certified by the Safe Cannabis Project or Natural Clean Cannabis.  Basically, a neutral third party selects a sample, the grower pays for the pesticide tests, and if you pass, you get a little logo and a QR code that the consumer can scan to know that the product is within the regulations for pesticides. These are all great options that help consumers make better choices with their cannabis spending money.

So, it’s not that growers don’t want to get medical cannabis certified.  It’s that the risk is too great based on the rules in place and any reward would be solely on the backs of ill and dying patients.  As a patient, and even as an adult consumer, you have a choice to make with your dollars.  You can spend them on the cheapest weed possible.  Or you can spend it on the farms that are working hard to bring you pesticide tested cannabis, enhance your quality of life and save you money.  What will you decide?

Danielle Rosellison is a wife and mother and has been part of the Cannabis Community for decades.  She is also the owner/operating manager of Trail Blazin‘, a licensed cannabis farm cultivating award-winning, pesticide free, sustainably grown legal cannabis.

 

Terpestival Gratitude

 

Rick Pfrommer, Dominic Corva and Michelle Sexton lead the Terpene Tournament award ceremony at the 2nd annual Terpestival on July 23, 2016.
Rick Pfrommer, Dominic Corva and Michelle Sexton lead the Terpene Tournament award ceremony at the 2nd annual Terpestival on July 23, 2016.

by Dominic Corva, Terpestival™ Producer and Social Science Research Director

Two weeks ago we pulled off the second annual Terpestival™ and Terpene Tournament™ , in Hopland, California. This year’s unique, boutique event was located in California due to new legal restrictions on cannabis events in Washington State, and we succeeded with a very large amount of West Coast social capital. This social capital is comprised of  goodwill, volunteer labor, and even a little straight up donation. This post highlights the amazing support generated in support of our annual fundrasing event. Our gratitude will be presented in (somewhat) chronological order.

First, this would not have happened without the support and labor donated by Wonderland Nursery, directed and executed by Kevin Jodrey , his shop manager Dylan Livingearth and the rest of the team at the nursery. Their guaranteed  10 entries  that were either hustled from their vendors or donated off their shelves!  Wonderland donated 5 entries and delivered 9 others to supply almost half the entries.  Thank you Kevin and Wonderland for your undying support of the CASP Mission!

Rick Pfrommer coordinated the judging  and delivery to SC labs for  17 entries: 6 from Emerald Pharms vendors, 9 from his own networks, and  he accommodated 2 late entries hustled by Jane Stewart of SC Labs, our host testing donor. The late entrant drove his entries to Rick from Santa Cruz and Rick personally delivered those and the other 17 entries to the judges.  Rick executed this singlehandedly and our hats are off to him and his volunteer efforts!  Rick also played a key role introducing us to event sponsor Jessica Peters of Moxie Meds, in the Bay Area, and created the most gender-diverse judging panel that has ever judged a cannabis cup. Rick is an amazing friend that I met in Humboldt a few years back, and look forward to collaborating with in the future.DSC_0059

I should note that our entrants reflected our social network, which is especially rich with amazing women in the cannabis industry. We are very proud to have had such a strong female and gender-queer representation at the event!

Our event staff was cobbled together from our social networks as well. Dr. Tony Silvaggio, our CASP-affiliated Humboldt State environmental sociologist brought members from the lacrosse team he coaches and his awesome partner,Kandis Kelsey,  a dear friend of mine . They worked security, parking, and spent some time manning the gate.

Dr. Michelle Sexton’s partner, Dr. Darryl Bornhop, contributed considerably in every volunteer capacity we needed. This included working for more than an hour, with Michelle, in the taco truck to accommodate the lunch rush.

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Dr. Bornhop entertained guests at the “Aroma Bar” discussing the chemistry of terpenes, extraction techniques, and separation science.

CASP Board member Don E. Wirtschafter contributed not only his welcome and familiar presence to the event, but true to his Rainbow Family ethic, coordinated the  grounds sweep and clean-up after the event. Don and I were the last to leave. Donnie also pinch-hit for a moderator that couldn’t make it at the last minute!

Debby Goldsberry,  who unfortunately had to back out at the last minute for moderating to the Terpenes and Growing panel,  was instrumental. Magnolia Wellness served as strategic  drop-off point for entries in the Bay Area.  Debby was also  a judge for the competition. Debby is a great friend, a fellow veteran of the Cannabis Action Network from the late 1980s and early 1990s, and has provided me personally with mentorship and moral support these last four years.

DSC_0072Our event coordinator Alison Edrington was a rock for CASP during the entire 6 months of planning. She literally propped us up on occasions when the going got tough!  It was her direct collaboration with the host site owner and cannabis retailer, Emerald Pharms, that took us to the finish line.

Allison also brought my friends Dani Burkhart and Thomas Edrington (her husband) to Hopland for help with staffing the event. Thomas created what I believe to be an event innovation: he set “Pokemon Go” lures all over the event, which not only kept the staff happy in the hot sun but provided another invitation to passers-by to discover the event.

The Real Goods Solar Living Center donated the space for the event free of charge, with only a request for insurance. Emerald Pharms itself was a lure for the event: we had many folks who came by to purchase cannabis that stayed for the event. Manager Chelsea Lucich and her staff were terrific hosts, creating the vending spaces in a shady spot on the deck of the dispensary.

Martin Lee of course provided  inspiration for the location and was a key resource for for the Real Goods Solar Living Center and Emerald Pharms to be a key part of the fundraiser.

Dr. Ethan Russo once again provided his wealth of knowledge on terpenes and how they modulate cannabinoid bioactivity as the keynote for the day.  We had a packed tent and a rapt audience primed for education!  We are grateful for his participation in our second fundraiser and for the generous donation of his time and expertise!  DSC_0224

Cuauhtemoc Villa, whom I had the pleasure of moderating at the Golden Tarp event in Southern Humboldt last year, did an amazing job moderating our Terpenes in Health and Ritual panel at this year’s event. On his way out, he stopped by the gate to deliver a ceremonial organic tobacco gift in recognition of CASP’s efforts to produce and promote real education about cannabis.

Frenchy Cannoli was asked to assume a different role than he’s used to, that of panel moderator rather than panelist. His moderation was thus superbly informed and interested by emerging issues and questions around the subject of cannabis extraction.

We are also indebted to our generous sponsors,  first to SC Labs / EnviroCann  for providing the quantitative testing for the terpene content at no cost, but in exchange the Isoprene Laboratory Sponsor.  Alex Dixon and his crew were integral to the experience and contribution to the education.  We are  grateful to our Sesquiterpene Sponsors,  Terpinator  and Thinc Pure. Thank you to TD Cann, Moxie Meds and SoHum Seeds for their Monoterpene level sponsorship!   We are forward looking to our next year’s event and wait for the announcement of where it will be located!   Please contact us if you are interested in partnering for an event in your area, where you can highlight local expertise and locally grown product as well as educate the public on how to be cannabis connoisseurs!

Please read on to learn more about the awards and analytics!

 

 

Phase II of Legalization Begins at the End of Accessibility

Map of relative medical to I 502 storefronts as of January 2015, by Dr. Richard Morrill, Professor Emeritus of Geography, University of Washington. This map was made for Senator Jeanne Kohl-Welles during the SB 5052 legislative session. It was unsuccessful then, but the basic point remains.

by Dominic Corva, Social Science Research Director

Today is June 30, 2016, the last day of two eras. It’s the last day of Medical Cannabis as a tolerated parallel cannabis access system in Washington State, and the last day of Phase I of Legal Cannabis in Washington State. Let’s review what’s changing with respect to “Access,” a topic I was asked to address on Sunday, June 26, at the “22 too many” Veterans for Medical Cannabis fundraiser in Olympia.

  1. Storefront access. In the fall of 2015, BOTEC found 404 medical cannabis access points across the state, according to information provided in a public information request. 73 of those were “not verified” although they were listed because their sources, including the City of Seattle, were found to be fairly credible. This number is probably below peak, given that access points began to close starting in July 2015, when SB 5052 went into effect. As of last week’s WSLCB numbers, 179 I 502 retailers accounted for 98% of the previous three month’s statewide revenue. A large percentage of these applied for “medical endorsements,” but let’s just conclude that the state went from 404 access points to less than 179 on the day that the latter was supposed to provide uninterrupted access to the State’s medical patients.
  2. There is a geographic dimension to this access reduction, which we are working on by mapping those 179 stores relative to those 404 stores. Those maps will be in the forthcoming book, but are not made yet.
  3. Of those “less than 179” I 502 retail stores that are open and doing substantive business, a very small percentage were actually transitioned from medical cannabis. In Seattle, a recent study found that 3 of the 21 “second wave” retail stores went to existing access points at the locations they used to operate. We found that about 6 more were existing access points that relocated. 9 out of 21 is still an “F” for “Failure to meet the intention of SB 5052 to create a second window for existing medical access points to transition into I 502.” Lawsuits are ongoing. But if the WSLCB Failed in Seattle, where access points had perhaps the most favorable circumstances, we can hypothesize with some confidence that they Failed in the rest of the State. We are adapting the methodology of the CBE report to test that hypothesis, and those results will be published in our forthcoming book.
  4. If there were at least 400 storefronts a year ago, there are thousands of individual patient grows that are affected. The State may not have liked medical storefronts, but it has never understood the decentralized market that supplied and supplemented it. Home grow access with an affirmative defense has changed dramatically. The upper limit of patient or collective garden home grows was 15 per patient, up 60 plants with 4 or more medical authorizations. Maximum allowable plants (this includes seedlings and clones!) is now 4 or 6 if one registers with the WSLCB. A registered “cooperative garden” can have up to 24 plants, but not only do they have to register they have to master Biotrack, a feat that’s barely been accomplished by I 502 businesses. I have been asking, but to this date I am not aware of a single cooperative garden that has registered with the WSLCB. If you know of one, please let us know.
  5. Access to authorizations became much more difficult once SB 5052 passed, which intimidated existing doctors who had the expertise and willingness to authorize cannabis for patients. Now, “primary care physicians” have to be involved — and there’s no State requirement that primary care physicians be trained in basic cannabinoid science nor that they be willing to authorize either way. It’s also a class thing: who has primary care physicians in a country when so many have no health care at all, and usually use the health care system only in an emergency?

One could argue that these access concerns are significant only for a small minority of former access point patrons. That’s like arguing that since only a few people have physical disabilities, we don’t need handicap parking or ramps or any of the other ways our infrastructure for the many accommodates the needs of a few. Whether you believe, as our policymakers do, that 90% of medical cannabis patients are “fakers,” or that all cannabis use is medical, the wholesale destruction of access for even that 10% is unconscionable.

It’s unconscionable because it wasn’t necessary, on the one hand, and even if one believes it was necessary, the I 502 system is still too immature and underdeveloped to do it now. The WSLCB proclaims that over 300 retail stores have been approved and we are on our way to 550, but the numbers on the ground say that only 179 retail stores were actually doing business at the beginning of Phase II of Washington State legalization. The State managed to open less than half of its original 335 store allotment over three years, and that includes quite a few “Second wave” retail stores that have been opened in the last 6 months.

Today is a tragedy for common sense and evidence-based policy. You don’t have to like medical cannabis to understand that this is at the very least an extremely premature step, at the very least. SB 5052, the “Patient Protection Act,” has dismantled patient protections without guaranteeing continued patient access, which was just as much a mandate in the law as shutting down storefronts. It’s a bit of a catch-22 for the WSLCB, which was charged with this impossible task (and yes, let’s say the Board and those it answers to supported the general thrust of SB 5052).

What’s going to happen next? A hard legal line has been drawn down the middle of a 20-year social and political phenomenon. In some places, like Seattle, that hard line will be enforced only upon complaint, and it’s likely that civil charges will be preferred to criminal ones. But in many other jurisdictions, those complaints will be aggressive and it will look like prohibition did 20 years ago. It’s also likely, according to former legislator Chris Hurst’s presentation to the Alliance a couple of weeks ago, that complaints will mostly be coming from I 502 retail shops looking to eliminate competition.

There’s no going back, absent some unexpected lawsuit outcomes whose day in court may eventually come. I 502 will grow to maturity over the next few years — I’d say at least 4 before they begin to allocate retail right.

The challenge for those who wield the politics of access is simple. You have to convince the legislature to pass a “home grow” provision, and it doesn’t want to do that for at least 2 years. If patients and patient advocates can unite around this single issue and push the legislature to do something that legislators have clearly stated they don’t want to do, yet, many of the basic issues related to medical cannabis access can be resolved almost entirely. Washington State will eventually have a home grow provision, as all the other legal states do and as California will under AUMA (or legislative action if AUMA doesn’t pass). In the meantime, thousands of previously protected people will in all likelihood live their lives in fear and stress because the law has changed, even if few will get arrested and prosecuted.

It’s that simple. What’s done is done: access for patients has been disrupted against the letter of SB 5052. The politics of access must consolidate around a sane homegrow provision in 2017. There are six months to organize. Go.

 

Imagining Cannabis Communities

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by Dominic Corva, Social Science Research Director

Today’s post examines the meaning of “community” as it intersects with both “culture” and “cannabis.” Let’s start with anthropologist Benedict Anderson’s concept of “imagined communities” (the title of his 1983 publication). Anderson’s big contribution to social theory reconstructs the meaning of community as a signifier of common identity, especially as it applies to the emergence of national identities. Really he was taking part in a social theory turn that was about how social identities are constructed and performed, rather than biological or natural. A good example of this is the concept of “race,” which before the 20th century was a term applied to ethnic and national identities rather than common skin tones: the Irish race this, the Italian race that, and so forth. It was all about the process of defining Selves and Others, and usually had a territorial as well as biological connotation. A community is a group of people who are imagined to be like each other, and nations are “imagined communities” in the sense that all their differences get subsumed under a few common identity markers, one of which is having a place of origin or belonging in common.

But having a place of origin or belonging in common, and having that marker of identity mobilized, can often mean that a great deal of internal difference is being erased, often violently. Okies from Muskogee can only be Okies from Muskogee if they don’t smoke marijuana or take LSD, according to Merle Haggard, but Dr. Sunil Aggarwal has often contested that assertion. If it’s true, then he doesn’t get to belong to the place he grew up. Hence nationalism — and all other imagined community identities — are political: who gets the final word depends on power in social relations, not who’s technically right. The power to define community is the power to include or exclude.

So what’s the cannabis community, exactly. I experience a lot of positive and a lot of negative meanings associated with that post-ethnic identity marker, which can be and sometimes is framed in terms of nationalism. Some mourn the loss of community as cannabis becomes commercialized and inserted into the formal capitalist economy. Some celebrate the opening of cannabis community membership into the ecology of legally sanctioned communities subsumed under national, State, and local identities. What’s the Washington cannabis community like, and so forth.

The challenge for this post isn’t to define what “the cannabis community” is or might be, though I have a few strong feelings about it. The challenge for this post is to identify community formation as an ongoing and vital part of social survival. Communities are always being lost, broken, made, healed: they are created by performing common ground, and they have to be constantly re-created and renewed to gain political and economic purchase on the ecology of community formations in society that aren’t punished for existing.

I must admit I’m pretty ambivalent about “cannabis community” as a singular concept, sweeping up difference under the rug of community. I find that when it’s singularly deployed it tends to be either deployed as a brand, on the one hand, for getting people to buy things; and as a stigmatized group that isn’t allowed to participate in “modern” legal cannabis markets, events, or even spaces outside one’s own home on another end. I find it more useful as a term of aspiration or auto-critique, usually associated with efforts to be together on something or an acknowledgement that the failure to renew community and mobilize it in a productive fashion has created missed opportunities for the cannabis peace movement from which we should learn.

That’s not terribly specific, I know, but this is not a space for dictating how folks who’ve found cannabis therapeutic in their lives should shape their identities. I’m specifically anti-identity in many ways: I’m less interested in what we have in common than how we can peacefully coexist despite our differences, because we are interdependent at the very least in the spaces we share.  But the practice of calling a community together can help considerably in the search for peaceful coexistence.

The way we are organizing for peaceful coexistence involves the production of popular education events. Our Terpestival is a whole plant conference: the focus on Terpenes helps decenter approaches to centralize the meaning of cannabis, and therefore what cannabis communities can be. That problem of centralized meaning is not just a negative power function — “dangerous drug”, signifier of “Bad Actor,” and so forth — but a positive power function with negative effects. The focus on low cost THC production for prohibition markets has dramatically limited non-cannabis communities’ willingness to step away from stigma and let the plant be a plant.

That model, interestingly, is now being perpetuated in Washington’s legal system for public and private reasons. The State wants revenue, and it gets the most revenue when retailers copy the prohibition market’s tendencies toward highest THC and lowest prices. At the same time its onerous regulations make THC information on the label the most reliable information available to consumers (and budtenders) who aren’t allowed to smell the flowers or sample the product. Combine that with the McDonald’s fast-food high volume business model and it’s no wonder cannabis is becoming just another commodity here. And communities based on commodities have a name: industry. Not much room for cultural difference and community formation there, except as ways to brand, market and sell things.

Which is, I suppose, the proverbial American way. It’s the familiar same-old centralized national identity subsuming all of the differences that constitute our social ecologies under the generic flag of consumer identity. It works, for a lot of people in the cannabis industry — especially the new ones, intent on producing a tornado of creative destruction out of which they build their empires of exclusive wealth and individual glory. I’m just not into it.

But it’s not enough to be “just not into it.” If I want cannabis community — and I desire a cannabis community of decentralized differences that peacefully coexist — I have to create spaces where other people can understand what I desire and desire it with me. Also at the same time I have to navigate the social ecology of acceptable and tolerated communities who feel threatened by my cannabis-positive values. I have to understand what they are afraid of, and not get frustrated that their fears are irrelevant even if they aren’t based on evidence. And I have to find and work strategically with people who share my values and are able to act on them.

This last point is crucial. The re-criminalization of medical cannabis in Washington State has meant that for the last year at least, people who share my values — chiefly, that cannabis is a plant with many, many beneficial uses and the problems attributed to it are caused mostly by its prohibition and stigmatization — have been losing their jobs, losing their margins, and transitioning to a new system in which margins are vanishingly small and controlled by people who put profits over social peace. Washington’s model of legalization has certainly made cannabis communities everywhere more afraid of legalization, and that can’t be a good thing.

It’s not a good thing for a lot of reasons, but I’ll point out an especially Big One. Cannabis legalization is first and foremost about getting people out of jail and ending the drug war — both of which affect communities of color disproportionately. It’s not really about cannabis, it’s about the practice of prohibition — which was never about cannabis, but about social control. We need legalization to happen to end the drug war. It’s that simple. But we need models of legalization that care for the hundreds of thousands of people that see themselves part of a community that is under attack. There’s no reason why ending the drug war can’t also promote livelihood continuities and broader spaces of social peace. No reason at all.

But there are no cannabis peace stakeholders at the table, because cannabis communities have always been marginal to society. They aren’t at the table even to write initiatives anymore — that process is clearly being privatized. That marginality is cultural, not just “forced” upon cannabists: cannabis consumption, production and distribution under conditions of prohibition have been carried out largely by people who are culturally disobedient — the counterculture.

This is a fundamental tension that prevents cannabis communities from having a voice in how things are changing. What’s to come is going to depend on how people imagine their communities, and whether those people find a way to act together and actually perform those communities.

 

A few words about our co-fundraising partner: Project CBD

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Martin Lee and Dominic Corva on a tour post 2015 Emerald Cup . Photo by Shango Los.

by Dominic Corva, Social Science Research Director

I first met Martin Lee about 6 years ago, after disembarking from a Seattle Hempfest stage where I delivered my five-minute “now that legalization is on the table, it’s time to talk about how” address. He was on his way up to give his 5 minute talk between music acts, and he stopped me on the stairs to tell me he appreciated my words. I was already familiar with his book “Acid Dreams,” and I knew him not only as a countercultural author but an online journalist and whole plant information organizer through his partnerships with Fred Gardner in O’Shaughnessy’s and Project CBD. What they were doing was familiar to me as grassroots nonprofit “nongovernmental organization (NGO)” work, which I had encountered and been helped by considerably in my research on drug policy in Latin America. There’s no question that their example influenced my decision to leave institutional academia to create CASP: in some ways their “ongoing history of cannabis” work is what I turned to, with a particularly geographical approach given my background.

So when Martin invited me to come hang out at their booth that day I was all over it — there was so much to talk about, especially the cultural history of cannabis reform and the politics of organizing around it. When Debby Goldsberry showed up to hang out a few minutes before catching her flight back to the Bay Area, I got to meet a key historical figure around those topics. She was a key part of the late 80s/early 90s Cannabis Action Network (CAN), itself funded by Zippie pot dealer Steve Deangelo, and the Zippies were a faction of the Yippies, who bridged the counterculture movement and the anti-war movements of the 1960s. In short, Martin opened up a world of amazing people to me starting then, and he’s never really stopped. Debby and fellow CAN pioneer Rick Pfrommer are two key parts of our upcoming Terpestival in Hopland.

Which is more or less the focus of this post. The origins of the July 23 co-fundraiser can be located in Santa Rosa, California, at the 2015 Emerald Cup. Dr. Sexton and I rented a cottage a few blocks away from the event, where we hosted Rob Clarke as the first stage of taking him on a bit of a tour following Tim Blake’s amazing event. The first stage of that tour was taking a group of people in our van to various CBD Guild locations — pretty much all of the ones that got raided last week, with Martin as the tour guide. I had been on a more private tour, with cannabis breeder DJ Short, the previous year, before MRSA compliance kicked the locations into active production. The photo that is at the head of this post gives you some idea what we were looking at, but we also got to see Absolute Extracts and Care by Design, as well as Emerald Pharms (the retail wing of Martin’s network) about an hour north, in Hopland.

This time, Dr. Sexton was with me and at some point Martin raised the possibility of doing a co-fundraiser. After reviewing potential difficulties doing the event in Washington after July 1 of this year, we began our co-fundraiser partnership.

Most of the key partners for this event are friends and allies our organization have in common. Debby’s Oakland access point, Magnolia Wellness, is an entry dropoff point and she will also be participating in our panels. Rick Pfrommer, who I met separately in my Sohum journeys, has assembled an amazing and experienced professional team of judges to cement the legitimacy of our unique competition. Tim Blake, the founder of the Emerald Cup who I’ve also met on my Sohum journeys, made Area 101’s Healing Harvest Farms an entry point and his staff is doing a lot of social media promotion as well as hustling entrees. Kevin Jodrey, who was an integral part of our first Terpestival (and the final stop for the Rob Clarke tour), made Wonderland Nursery an entry point and guaranteed 10 entries which allowed us to move forward when we had no entries at the first deadline, June 8. Emerald Pharms is of course the “host” of the event, located at the Real Goods Solar Living Center which is owned by a good friend of Martin. They are an entry point, promoter, and general organizational asset especially for the day of the event. And Martin and Michelle’s friends at SC Labs picked up the testing tab which makes the event possible at all.

We’ve had lots of challenges, and are still in the process of overcoming some of them, but last week’s Federal raids of the CBD Guild created a big one. After the media publicity around the raid surged and the joint task force found zero butane solvent extraction going on (which was what a disgruntled former employee falsely alleged), charges were dropped, and Dennis Hunter was released on his own recognizance just days after facing a $5 million bail. But the raids came on payday, and over $600,000 in cash was seized. As a result, we lost thousands of dollars in anticipated sponsorship.

Our network allies are stepping up, and in true countercultural fashion are most effective and productive at the last minute anyway. Last year to be honest we were in much worse shape leading up to the event, which turned out to be a sold-out, smashing success. Martin and Michelle are at the annual ICRS conference, along with our keynote speaker and fellow Project CBD collaborator Dr. Ethan Russo. You can be sure that they will bring back the latest whole plant science from the premier cannabinoid research conference in the world, and we are looking forward to the best part of the event, being able to be together and preform a great ritual of community.

Cannabis, Capitalism, Creative Destruction

polanyi
Economic Historian Karl Polanyi

by Dominic Corva, Social Science Research Director

In “The Great Transformation” (1944) economic historian Karl Polanyi considered the rise of the international capitalist order out of the historical conditions set in motion by the collapse of the West’s fuedal-theocratic order. Polanyi’s story elaborated a key analytical concept for our times: “creative destruction,” the process whereby growth and global “order” were created by destroying the lives and livelihoods that depended on that order — that political and economic liberalism did not come from nowhere, but built with and upon the remains of social orders everywhere. This was not strictly a moral critique, but an analytical one: that it happened matters far more than what one thinks of the result. It can however guide us in our search for peaceful cannabis policy.

Without getting too “ivory tower,” I want to use this post to consider the concept of creative destruction as it applies to current cannabis markets and social orders. The movement to end prohibition has little to do with the movement of previously informal markets, people, and knowledge into the “normal” routines and practices of capitalism, but it is clear that cannabis market legalization (different from cannabis legalization) involves a radical restructuring of human lives and livelihoods. For every job created in legal cannabis, an “informal sector” livelihood has been destroyed, even if that job is occupied by someone previously operating in the informal market. For every giant, investor-owned warehouse that becomes regulated (in theory, anyway) and taxed, dozens of small producers have been put out of business. This is certainly the case in Washington, but does not have to be the case elsewhere.

The closer a State gets towards bringing informal markets into the system, the less social impact this destruction has on the existing order. As we put thousands of independent owner-operators out of business, it’s important to remember that these folks were previously able to pay their rent, bills, and groceries, and now they can’t. This creates a social problem that the State of Washington is clearly nowhere near being concerned about, but affects our neighborhoods, our churches, our schools, and our stability.

This isn’t just the case for home growers. It’s especially the case for minority-dominant neighborhoods, where white-owned and operated businesses are putting people of color out of work — people who never had a chance, at all, to be part of the new legal markets given the incredibly high barriers to entry and short, closed windows to even apply.

One thing about medical cannabis markets — as ubiquitous and apparently offensive to policymakers as they were — is that even the “bad actor” access points that barely catered at all to patients did everyone a major social service. They got a lot of cannabis off the streets and into an orderly space. The lack of formal regulation made barriers to entry extremely low, and plenty of folks who can barely function in the normal social order were able to get and keep jobs that made them happy. Some of that was the ability to consume cannabis while they worked! That’s also been destroyed by I 502 and its legislative changes, so much so that I 502 businesses have trouble educating their employees and providing samples.

But the destruction of medical cannabis businesses is most certainly creating non-I 502 jobs, too. Black market job creation is happening, possibly as fast as I 502 job creation, and those aren’t the jobs anyone wanted to create, on the one hand, or go back to, on the other. Given the State’s interest in destroying the black market, I’m pretty sure this isn’t an outcome that the State wants either. At the same time, white-owned retailers who are tone-deaf to the experience of gentrification are stoking the fires of neighborhood resentment.

Let’s consider those I 502 jobs as a mixed bag, though, not just the colonial expropriation of skills, time, investment, and lives by Big Money investors and real estate sharks. Informal markets are notoriously volatile, and being an entrepreneur reliant upon handshakes instead of contracts can be incredibly risky and stressful. Those handshakes, when they do work out, are incredible: they replace credit and threats of lawsuits with trust and human, face-to-face, construction of interdependence. And let’s be clear, there would be no informal cannabis markets now — no formal ones either — if those networks of trust and outlaw community didn’t pay off more often than not.

One more extremely socially optimal outcome is associated with I 502’s “creative destruction” should be highlighted, and it’s a doozy as far as I’m concerned. In Washington, we are replacing a mostly indoor, import cannabis market with what will eventually be a mostly outdoor, environmentally friendly and local one. Eastern Washington is experiencing the beginnings of a sustainable agricultural industry that fits very well into its agriculture-dependent social orders. Virtual ghost towns are being revived: the city of North Bonneville has pioneered a public-private cannabis partnership that means a future instead of extinction. The latest numbers I’ve received from trusted sources indicate that we have a ways to go, but considering that Washington State had so little sun-grown, ecologically sustainable cannabis before I 502 was passed, we’ve come a long way.

The broader implication of these kinds of creative destruction is clear. If States simply make bridges for the previous order to come in and own their own experience, skills, and livelihoods –rather than crush them through unnecessary legislative fiat — the social peace can be optimized. We live in an incredibly and increasingly unequal society, and prohibition was a tool for making that happen. Post-prohibition markets must not reinforce that process. It’s not good for anyone. Let the livelihoods transform themselves, instead of being thrown away like the disposable citizens they seem to be.

 

The Second Annual Original Terpestival

Kevin Jodrey rocking his CASP T shirt and Reverend Jeff Cannabis on last year’s panel. Photo by Steve Hyde.

by Dominic Corva, Social Science Research Director

The second iteration of our Original Terpestival TM will take place in Hopland, California, on July 23, at the Real Goods Solar Living Center. We decided to locate in CA this year, with an option still open for holding another one in Washington, because our dear friend Martin Lee with Project CBD asked us to do a co-fundraiser in his backyard, so to speak, as he operates out of Healdsburg just south of Hopland; and because Washington formally outlawed cannabis events last year in a sneaky, last minute addition to the “Patient Protection Act.” But we are really excited to partner with Project CBD and mobilize our extensive California networks in support of our popular education event.

The event combines world-class scientific knowledge about whole-plant cannabis with Dr. Michelle Sexton’s uniquely designed competition. The “Terpene Tournament” uses terpene profile results from SC Labs, our major event sponsor, to place entries into individual categories based on terpene clusters like “high myrcene.” And then our panel of professional judges, assembled by Cannabis Action Network leader and Harborside ex-buyer Rick Pfrommer, decides the winners for each individual category. We will also compile and analyze the results of the competition and publish them like we did last year.

The competition creates an industry “pull” effect, by giving them better and more information upon which to develop, brand, and market products. I have to say that last year’s event, if it wasn’t the sole catalyst, succeeded wildly in this respect. Last year, this time, there were very few products out there with terpene profiles and associated marketing and branding. This year, at the time of this writing, terpenes have clearly joined THC and CBD at the top of ways to differentiate industry products.

The scientists and information providers who are part of our popular education panels constitute and industry “push” effect by providing real information upon which to base marketing — it’s a “push” because let’s face it, receiving useful information is not usually why industry sponsors or enters the competition. Once they have been “pulled” by the familiar marketing benefits of the competition, they are there to hear Dr. Ethan Russo, perhaps the pre-eminent terpene researcher on the planet, deliver a keynote after our amazing panelists address topics such as “Terpenes and Wellness.”

It’s a win-win for industry, because public interest and private interest are aligned perfectly: the public needs to know what they are consuming and what consumption means for health, and industry badly needs ways to diversify its products to compete in an increasingly saturated marketplace. THC and low prices should not be the only business model out there — that’s the prohibition business model, and to get beyond prohibition culture we need to get beyond THC and into the whole plant.

We are incredibly grateful to our network allies without whom this event could not happen. Wonderland Nursery in Redway, Southern Humboldt, is one of our closest allies. Kevin Jodrey came to our event last year on his own dime to support us, and this year is playing a key role providing advice, collecting entries and mobilizing networks. Healing Harvest Farms at Area 101 in northern Mendocino is also providing human resources and entry collection. True Humboldt in Eureka, Magnolia Wellness in Oakland and Emerald Pharms in Hopland itself are also serving as entry points, providing advice, and mobilizing their networks. And of course SC Labs in Santa Cruz is not only donating the testing but serving as an entry collection point.

At this time we are struggling a bit with sponsors and hustling last minute entries. In Washington State, Thincpure has delivered already on their Sesquiterpene sponsorship. We received a terrible blow with the Federal raids on the CBD Guild last week. Although charges were dropped and Dennis Hunter was released, the raid came on payday and over $600,000 was seized, so we have lost some major sponsors and are working very hard to overcome that.

So this post is both an announcement and invitation to the event, and a call for interest in sponsorship, entries, and vending. Please contact me at my gmail address, corvad@gmail.com , or any of your local entry collection points described above. Our event last year proved tremendously influential and rewarding for industry, and we plead this year not only for solidarity but for industry to recognize that participation is good for their bottom line, good for the public, and co-fundraiser for two very strapped nonprofits.

All relevant information can be found in the following documents. Entrees require 1 oz flower and 4 g concentrate, solventless or Co2 only.

Handbill entry form

TerpestivalDrop-offInstructions2016

CompetitionTerpestival2016

Terpestival2016SponsorshipSheet

Legality, Medicality, and Good/Bad Actors

CASP T Shirt

by Dominic Corva, Social Science Research Director

The previous conceptual post really helped me find a way to engage with complex intersections without flying too far off the ground. Today’s post is an effort to deal with the “moral panic” phenomenon around medical cannabis in Washington, and elsewhere. I start with the assumption that policy that is created in response to moral panic is not good social policy, because (a) prohibition morality stems from fear not science and (b) in order to leave prohibition behind — the urge to punish our way to public health — we have to leave prohibition culture behind. And prohibition morality is perhaps the foundation of prohibition culture. It’s the equation of law with justice absent any critical reflection or nuance. If one is doing something legal, then one is doing something good. That attitude got us to mass incarceration and the politics of fear. Here’s a series of connected engagements with intersection of legality, medicality, and the moral distinction between Good and Bad Actors.

  1. Legality is a technical term, not a moral or ethical one. This is helpful to keep in mind as the State of Washington continues to deploy it as a moral or ethical one — State-legal cannabis is constructed as “good” versus “bad” medical and black cannabis. The logical problem: State-legal cannabis is Federally prohibited but tolerated under interpretations of the Cole Memo. Even those who argue that legality connotes moral superiority — those that disagree with the first sentence — have to face a simple logical argument: any moral or ethical quality associated with State legality is cancelled out by its simultaneous association with Federal illegality.
  2. The basic premise of ending the war on drugs rests on the assumption that laws can be unjust, and therefore morally wrong. The argument about whether legalization can be unjust (not that it is, or is not) is therefore supportable. The argument that legalization can also, at the same time, be just is also supportable. Efforts to critique legalization are not necessarily against legalization.
  3. So, technically: regulation and tax collection are the two main State practices of legalization. The active participation of the State in these two ways constitute what we mean by legalization. There are many dimensions to this participation: altering the legal code is both an end to the first step and the beginning of a network of practices associated with implementing legalization. The implementation of legalization — system creation, output and maintenance — is and always will be an ongoing process.
  4. Technically, this time with respect to medical cannabis: since “medicine” is not a state monopoly, medical cannabis means many, many things. For our purposes here let’s distinguish between medical state laws and “legal medical” state laws, since the former came first. Medical state laws are “decriminalization” laws for which the state plays no active implementation part. “Legal medical” laws require the active participation of the state via regulation and/or special taxation (independent of sales taxes, for example). The core of Washington’s current medical cannabis controversies stems from the State’s unwillingness to transition from medical to legal medical in 2011.
  5. Technically, this can be avoided in every state that adopts “legal medical” either as its first step or as a reform (see California); and then using the existing medical legality to develop (not replace wholesale immediately) the pre-existing legal system. Oregon’s decision to allow and tax over-21 nonmedical purchases at its medical retail points is one example of this. Technically, if the starting conditions for legal medical were unjust, this transition will not necessarily be a socially optimal one.
  6. Oregon is complying with the same Cole memo as Washington, so model variation can’t be explained by that. There was no technical reason why Washington’s medical cannabis system couldn’t have been more slowly transitioned, as the I 502 system continues to come on line. This is not the same as an argument that medical should have remained unregulated. “Regulation” as a practice as opposed to a concept deserves far more critical attention than I can give here.
  7. The illegality of medical cannabis under (some) State laws is now being used to stigmatize and exclude cannabis people by implementing high barriers to entry, while attempting to bring the plant as a commodity into a regulatory framework. That stigma is not necessarily new, and not confined solely to medical cannabis. In fact, the stigmatization of medical cannabis seems to be the re-enclosure of black market cannabis stigma to include informal medical cannabis markets. Prohibition culture never stopped fearing a stoned planet, and that fear is now being encouraged and amplified by legal cannabis militants. Pointing this out does not mean I conclude that “all cannabis markets are good.”
  8. I will say that the closer the consumer is to the grower, in any cannabis market, the easier it is to sort the good from the bad. The distance between consumer and farmer is a function of two things: prohibition, and the fact that most of the rest of the formal economy has been increasing that distance since the Industrial Revolution.
  9. Legal cannabis markets and actors are not inherently “good actors,” nor are they inherently “bad actors.” The legal economy is filled with bad and good actors — many of them both at the same time. The Gilded Age philanthropists whose names are plastered all over our urban landscapes were a symptom of massive inequality, against which the Labor Movement formed. Our second Gilded Age is no different.
  10. Medical cannabis markets and actors are not inherently “good actors,” nor are they inherently “bad actors.” Our medical system in the U.S. is totally commercial, a far cry from the single payer systems of most of our peers. Our herbal product markets are virtually unregulated. Our televisions give us medical advice. Our diet fads rage from year to year. And we are on more pharmaceutical drugs per capita than any other society on Earth. If there is anything nonprofit or community-oriented in a medical marijuana system, then our medical marijuana systems are far more socially conscious than virtually every sector of the formal economy that might be related.

There’s a lot of conditionality and open-ended starting points for engaging with prohibition culture, which is coming now not just from prohibitionists but legalization stakeholders. It should be clear that this critique does not apply to legalization stakeholders en masse. I have no idea how prevalent prohibition culture is amongst legalization stakeholders, but enough of them so that we are getting a socially violent transition via policy. It also should be clear that medical cannabis markets and actors are not necessarily less greedy than the level accepted for non-cannabis markets and actors. Neither of those facts should get in the way of basing policy on facts instead of fear in Washington State.

Cannabis, Culture, Medicine

Photo by Steve Hyde
Photo by Steve Hyde

by Dominic Corva, Social Science Research Director

It’s Friday, so I’m going to approach this meta-social issue a little differently. Not with an organized essay, in other words, because the intersection of those three words — cannabis, culture, and medicine — is hyperdimensional and divergent. There are many wildly different ways to map their intersections, maybe because the words themselves are overflowing with meanings and interpretations. Let’s locate a few combinations and go from there.

  1. Cannabis is a plant, first, and therefore its cultivation by humans is agriculture. An argument can be made that it’s manufacturing, but if so that’s the direct result of how cannabis came to be policed in the U.S., or prohibition. The artificial production of a controlled environment for growing under lights is directly connected to the artificial production of a controlled society under the police function. Every effort to tightly control cannabis production that doesn’t treat cannabis like any other plant by prohibiting its growth to selected social actors so they can make a profit is unnatural, on the one hand, and the continuation of prohibition’s basic logic, which for now we’ll call “prohibition culture.” Which has never been about prohibiting a plant, but punishing and making examples of certain segments of the population (see Michelle Alexander’s ubiquitous “The New Jim Crow” for a basic explanation).
  2. Culture is a system of shared meaning based upon the reproduction (and evolution) of Value in society. Oof. This one’s going to be tough. Cultures are dynamic, open, evolving, alive, contradictory, messy, disciplined, and most of all political. What counts as Valuable in society depends upon who is speaking to whom, where and when. Cultural violence happens when one system of shared meanings not only declares itself the Right One but disciplines and punishes people who deviate from the reproduction of those meanings. Cultural violence is the byproduct of Monoculture, a simplified set of standardizing values that are supposed to mean the same thing, over and over, everywhere and any time. Prohibition monoculture attempted to kill the diversity of value and values associated with a plant, and replace it with one Meaning, “threat to society.” Thus meaning was codified differently over time, but the 1971 Controlled Substances Act is the one that declared the plant a Threat to Public Health by classifying it as one of the most dangerous substances known to humanity. The modern War on Drugs is a perversion of Public Health, in that it has promoted violence as a way of promoting health.
  3. Medicine is the food we consume to make us well. “Wellness” is a pretty broad, polydiverse signifier, and therefore so is medicine. What makes one person well can very well kill the next person, depending on each person’s physical and environmental makeup. This is true for food in general: peanut butter is deadly to many, many people. We don’t prohibit peanut butter, we educate consumers not to kill themselves by ingesting delicious peanut products. Our culture therefore allows for widely divergent understandings of the peanut as both dangerous and delicious.
  4. Foods are composed of lots of different molecules, some of which have multiple medicinal benefits depending on how they are arranged and broken down in the body. When isolated and concentrated, many molecules become powerful agents of biophysical change. In Western/pharmaceutical/industrial medicine, those molecules are evaluated as “dangerous” or “medical” depending on who’s approved their use or not. Unless they are on Schedule I of the Controlled Substances Act, through which they are declared simply dangerous. And even then, Schedule I drugs are legally accessible to pharmaceutical elites who ask the appropriate State representatives the appropriate way.  Foods that are molecularly simplified, standardized, and sold as State-sanctioned promoters of health are called “pharmaceutical drugs.” They are the monoculture of Modern Medicine.
  5. Modernity is a mixed bag, and the fact that this statement might be controversial tells us something about the monoculture of Modernity. The monoculture of Modernity is that on balance, things are getting better, usually in contrast with a prior period of history that is now over. This year compared to last year, this decade before the last, this century before the one before. Modernity is a moving target to which we have arrived, again. Bruno Latour wrote a book that elaborates on this. But Francis Fukuyama wrote a book against this. I’m with Bruno: declaring that we have evolved into the best society we can make is the hubris par excellence of every historical moment there has ever been. The world is round, and every revolution introduces variation that can only sometimes be described as progress.
  6. In the last forty years or so, we have returned to the notion that single molecule medicine, the medical monoculture of modernity, is maybe not all there is and on top of that often extremely flawed, as evidenced by the history of FDA recalls and the evidence of physical disfigurement and death associated with recalled or abandoned miracle drugs.
  7. In the U.S., “alternative and complementary” medicine has returned traditional medicine, herbal products, and a host of other ways to get and be well to the repertoire of Modernity. These heretics used to be burned at the stake, along with the women that knew about them. The cannabis plant has been a vital component of that repertoire for millenia, and the return of cannabis-based approaches to wellness is part of that process. Thanks, hippies.
  8. The monocultures of Modernity have been under serious re-evaluation, and the point above is just one example. Tolerance of diversity, defined as “not killing people, physically or symbolically, structurally or directly, for being different or having different values” is a relatively recent development in the United States. But see point number 5! Tolerations of difference aren’t exactly a recent development in human history, and still aren’t all that prevalent in this society.
  9. Tolerations of difference usually turn on questions of race, gender, religion, ethnicity, language and sexuality in this country. The public debate about diversity is pretty much never about neurological diversity or consciousness, except through the Monocultural lens of  pharmaceutical medicine. Thinking differently is evidence of disease. Thinking that cannabis is a plant that people have played with in search of wellness throughout history is evidence that one is a heretic, a heretic of modernity. Acting on that thought can get you burned at the stake, a phenomenon that started in this culture hundreds of years go.
  10. Being a heretic of modernity means one won’t be taken seriously by Modern, normal people like many politicians, lobbyists, doctors, university administrators, law enforcement officers and so forth. For these folks prohibition may have been a failure, but it was the product of a few bad actors or good actors making bad decisions rather than the structural violence of prohibition culture. Let’s stop incarcerating people who consume acceptable amounts of the plant, but let’s still stigmatize and punish the heck out of people who grow it or distribute it without authorization from the State. Because Public Health! Which Modernity has such a great track record on promoting through punishment, assumably.

I hope to continue this sort of exploration in future posts. It may or may not be included in some form in the forthcoming book, but if nothing else contributes quite a bit to the transparency of the assumptions held by its author(s).

Contingency, Canopy and the Producer/Processor Application Process

Inventory June 15 final

by Dominic Corva, Social Science Research Director

Last week I focused on how the retail application process, however planned, has had to be adjusted on the fly based on unexpected applicant phenomena. Our Medical Transitioners represent, by contrast, a segment of the applicant population that was expected by the LCB, and who may have initially designed their rules in anticipation of their participation. The LCB has had to adjust their rulemaking processes — all of them — significantly based on outcomes they did not, and perhaps could not, anticipate. This post sketches that phenomenon as it applies to “Producer/Processors.”

Before we begin, let’s establish that the formation of 3 different kind of licenses (producers, processors, and retailers) reflected a segmentation of the legal cannabis supply chain that was not balanced so in the underground and Medical markets. Many access points started out at least partially vertically integrated, as an extension of underground gardens and gardeners. Many Medical businesses were collective gardens (and networks of these) that vended to Access Points. And many Medical Cannabis brands developed from singular enterprises that grew, processed, and branded an array of products besides flower.

The tripartite division of licenses developed by the LCB meant that initially, our Medical Transitioners had to figure out what they were and how they would specialize in the I 502 market. So even given the regular input the LCB sought from Medical Collective Gardens like Solstice and Dama at the beginning of their rulemaking process didn’t necessarily give the bureaucracy a clear picture of who would be applying for what, and how many. The process was fraught with contingency and unexpected outcomes, rather than designed and executed in a way that could either benefit or damage existing actors. The purpose of our Producer/Processor chapter, as well as our Specialty Processing chapter, highlight just how uncertain the landscape was for everyone, and how that posed particular challenges for Medical Transitioners.

The evidence considered stems from the fact that the LCB always received far more applicants than it anticipated, for all of its licensing windows, and that a large percentage of these came from applicants that were not ready to actually open or operate their licenses for a variety of reasons. This conclusion is even more stark for Producer/Processors, and is a bit simpler to discern through an analysis not only of applicant numbers, but how these translated into canopy potentials.

That’s because the LCB’s own rules anticipated 2 million square feet of canopy would capture 13-25% of the cannabis consumption market in the first year of retail operation, based on initial BOTEC analysis. Those numbers are easy to identify and break down. By those calculations, it would take four or eight times as much canopy — 8 million to 16 million square feet — to meet 100% of the State’s adult consumption market. That potential canopy was far exceeded in the first round, and sort of only, application round. But only a tiny percentage of those applications were ever able to open, and it appears that of those that opened most have fallen far short of their maximum allotted canopy.

The 30 day application window started Monday, November 16, 2013 and lasted till December 20, 2013. The LCB received almost 3000 producer applications (processor applications usually but not always accompanied producer applications). More than 900 of those applied for the up to 3 licenses permitted by rules. The resulting potential canopy from those applications dwarfed the LCB’s 2 million square foot goal, and in fact exceeded the upper limit that BOTEC had calculated as sufficient for the entire State’s supply. This unexpected development immediately resulted in two significant rule changes.

First, all applicants who applied for more than one producer license were allowed to move forward on just one of them. Last month, the LCB made that change permanent, but with one caveat: starting in January 2016, all licensees would be permitted to acquire up to two more producer licenses by purchasing them on the open market. Over the course of three years, many licenses were acquired via “minority” partnership by existing licensees and new venture interests, a point to which I will return in a moment.

And second, the canopy allotment for each application was reduced by 30%. It was restored last fall, across the board. Let’s discuss the results not only up to now, but how those results threw LCB projections out the window very soon after retail stores opened in July 2014.

Eleven months after the application window opened, LCB director Rick Garza reported that 267 producer/processor applicants were either approved or had begun the process of approval, and that the canopy represented by that population was 2.8 million square feet, about 50% more canopy than their target date for having 2 million square feet of canopy … seven months ahead of schedule. Retail stores had only been open 5 months at that point. Of course, the fall harvest data indicated that about 70 of 182 approved licenses were actually producing and of that number, seven producers accounted for more than 50% of production through December 2014, of which most of it was the fall harvest. Six of those seven were outdoor Tier 3 producers.

This incongruity demonstrates the difference between LCB accounting and real production capacity, which has always been difficult to determine. It’s clear that most producers struggled to get off the ground once they were approved, and the ones that did averaged a very low percentage of their maximum possible canopy. As a result, the potential canopy of the system itself has far exceeded actual production.

This was difficult to “see” as late as December 2014, given the relatively high prices for flower in the few retail stores that struggled to stay open with so little product on the shelves. But the Fall outdoor harvest, which was driven by seven (!) outdoor producers, created an inventory glut that allowed retailers to open, and stay open, for good — and with lower and lower flower prices. Edibles and concentrates remained rare on the shelves until July 2015, when the tiered tax structure choking intermediate supply chains was replaced by an end tax through 2166, 5052’s companion bill.

The inventory glut stabilized about six months later, when monthly indoor production began to exceed monthly retail inventory, and was probably finalized after the Fall 2015 harvest when outdoor’s annual boost created, essentially, a bottomless inventory for the limited retail landscape to exploit.

After two years of production, when it came time to decide whether to open another canopy approval window, the LCB decided that the original application pool — active or not — still represented far more canopy than than the State system needed. As a result, they permanently closed the up to two more licenses applied for by 900 applicants and ruled that all remaining inactive license applications, as well as active ones, could be acquired on an open market starting January 1, 2016. This rule changed in tandem with the decision to allow out-of-state financing at the same time.

The decision to move from a “command economy” approach to a privatized market approach solved one technical problem, how to deal with the vast amount of potential canopy held up by nonviable canopy applicants. But it also created a potential social problem. Producer/processor expansion could only happen via investment, increasingly likely to be out of state investment. “Mom and Pop” small businesses that hoped to expand their way to sustainability given very low wholesale prices had to abandon that hope. They would either have to finance license acquisition themselves or take on investors that could buy them out. The likelihood of Producer/Processor industry consolidation just went through the roof.

This narrative addresses the “aboveground” evidence of canopy allocation and rule changes, but to be clear, investors have been finding ways to acquire licenses and control canopy over the last several years. This is not inherently “bad” for undercapitalized applicants and small businesses, as many have found new life with the right investment partners. But it has been happening in the “loopholes” of I-502 regulation. Shell corporations fronting for out of state money, the most underground example, operate in direct defiance of LCB rules and intent — and many of these are behind some of the biggest producers in the State.

But canopy control doesn’t have to happen through direct ownership. Instead, “brand” companies have emerged to coordinate supply chains from canopy production, usually through agreement with processing licensees, to develop and sell branded products for I 502 shelves.  They are following a model pioneered by original applicant Producer/Processors that have used their Processor license to acquire production and create their own branded products. The tax structure reforms from July 2016 essentially opened up this business strategy by eliminating transaction costs associated with buying product from production licenses not held by the Processor — really, Brander — in question.

The emergence of the Processor/Brander as the market’s primary canopy allocator is really the story of the last year or so. There are plenty of Producers who just want to grow, harvest, and be done with it — especially outdoor producers, whose costs of production are so much lower than those of indoor producers. This is common across the Tiers, and many licensees who originally thought they would be processing and branding from their own production are now sourcing from “Producer only” licensees. This has helped many struggling producers with no branding or distribution inclination stay afloat, and provided otherwise struggling Producers with a way to increase their razor-thin margins.

The basic logic, though, is indifferent to whether its wielders are Big, Medium, or Small. Our interview subjects run the gamut, but every last one of them have shifted or are attempting to shift their business identities from Producers to Producer/Processor/Branders. In fact, that’s kind of what they were when they were Medical. In the book, we will examine how our Transitioners chose to become Producer/Processors, how that process worked for them, and how their business identities are adapting to the changing landscape.