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.

 

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.

 

 

Merit and the Second Wave Application Process

By February 2015, about 120 of lottery-allotted 334 retail stores had opened across the State.

by Dominic Corva, Social Science Research Director

This blog post skips the politics of 5052’s legislative process and focuses instead on how 5052’s mandated “merit process” for approving new I 502 retailers, ostensibly as a window for existing Medical Access points, was defined and implemented, between July 2015 and February 2016. It’s a post about an unfinished process, given that three of our interview subjects aim to be part of that transition but their individual processes are not completed. Dockside has two locations open from the first application window and three from the second wave in process; and Herban Legends transitioned to a new I 502 location almost as soon as the second wave application process achieved lift-off in January.

One of our other three applicants remains unapproved to transition and has a lawsuit pending against the WSLCB over whether there was in fact a merit process; another has fought to remain open in their current location until a Jul 1 switch over, and the fifth interview subject has closed her Access Point down while working to open in another location by July 1. All three in this group received letters from the WSLCB in January 2016 stating that they would remain open at their peril, since they were too far down the Priority I merit list to expect to be approved for Seattle. A flurry of media coverage ensued, as well as a different lawsuit, and about a week later two of these three applicants were informed that they were approved for Seattle, after all.

Which is to say that our Transitioner sample had a very diverse experience with the second retail application round. One of them made the top of the Priority I application list for Seattle; one of them and each of his two other business partners cleared the approval bar right away (two in Seattle and one elsewhere); and the other three have had to fight for Transition approval for different reasons with one of those still fighting.

Now that you know the current status of the results, let’s review the context for these highly variable outcomes.

SB 5052 directed the WSLCB to create a second retail application window based one merit criteria, which the WSLCB would also develop. This process began early summer 2016, not long after the bill was signed by the governor. Interestingly, the merit language appears to have been developed in the legislative process by UFCW, who intended merit criteria to include stringent labor standards. Those merit standards were recently folded into the renewal process, after closed-meeting pressure from the UFCW. It would have been bureaucratically difficult, if not impossible, to triangulate labor standards when the LCB’s main legislative obligation was to re-create Medical Cannabis access for the State by July 1, 2016.

So the initial challenge faced by the LCB was to define merit criteria that was focused on defining what criteria could plausibly be used to identify Medical “good actors” who deserved a chance to get into the I 502 system — especially since the previous window’s lottery process made such qualifications irrelevant.

However, the lottery results were still active — all of the lottery applications from the previous window had numbers, and had been promised that if their numbers came up, their applications would be processed. A second window had to fold the first window in to avoid lawsuits from hundreds of still-pending applicants further down on the lottery draw.

As a result, the LCB settled on two merit criteria that would define three Priority Tiers. The first criteria was, did you apply in the lottery round? And the second was, had you been paying taxes since before January 1, 2013 — roughly, the timeframe in which I 502 had become a reality. Priority I was the list for applications that met both criteria; Priority II was for applications that met the second criteria without the first; and Priority III was for applications that met neither criteria.

Effectively, the primary merit consideration became, did the application include someone who had applied in the lottery round. The secondary merit consideration had to do with whether someone on the application had belonged to an Access Point collective garden, evidenced by tax receipts. The prioritization of lottery applicants meant that every existing I 502 retail store had in hand the primary merit consideration. And that every access point that hadn’t applied did not. Those with the easiest route to Priority I status were access points open and paying taxes before 2013 AND a lottery application in hand. Four of our five Transitioners met those criteria.

A marketplace developed for applicants that had one of the stated merit criteria and not the other. This became especially clear when most of the new retail allocation went to existing I 502 recreational stores, all of whom partnered with a criteria-eligible access point business partner or collective garden employee to meet both merit criteria. Applications were cobbled together to meet both criteria, usually in exchange for business partnership or payout, to such an extent that by mid-November more than 800 retail applications had been received by the WSLCB. That number increased considerably through the March 31, 2016 closure of the second retail window. In the book, we will look more in depth at merit criteria and the way it affected who was able to transition and who was not.

Parallel to the development of the merit criteria, the WSLCB found its retail window process challenged unexpectedly by another powerful State political force, the Association of Washington Cities. The new window was originally conceived as uncapped and indefinitely open: applications would be accepted, assigned a Priority Tier, and then approved on a rolling basis, at LCB discretion. Jurisdictions revolted en masse, individually and through the AWC, citing concerns about clustering and not willing to leave it to the LCB how many could open in each jurisdiction. Even Seattle pressured the LCB for a capped process that would specify how many per jurisdiction would be available, and to close the window sooner rather than later. Some of this pressure was amplified by a new I 502 trade association representing existing I 502 retail stores that clearly didn’t wan’t more competition. But jurisdictions backed up their concerns with a promise to limit new retail stores by zoning them out of possible locations and establishing minimum distance to existing retail stores.

As a result, the LCB initiated a process for determining how many new retail stores could open, and in mid December announced specific allotments per jurisdiction as well as an end-date to the window process. That’s a story for another post, but the takeaway point to this narrative is that the second window application process was shaped considerably by political pressure on the LCB after 5052 was passed. The messiness and discontinuity of that process can’t be laid at the feet of 5052 itself, nor the bureaucracy charged with its implementation. The difficulties with defining merit and the ease with which existing I 502 retailers gamed the system to grab new stores at the expense of possible Medical Transitioners is not strictly the fault of the legislature, nor of the LCB, but broader political and economic developments concerning I 502 in the rest of the State. In the book, we address the complexity of these power relationships as they were experienced by our interview subjects.

 

Caution: Approaching Legislative Vehicles

State Medical Cannabis tax revenues July 2013- November 2014. Source: Washington Department of Revenue
State Medical Cannabis tax revenues July 2013- November 2014. Source: Washington Department of Revenue

by Dominic Corva, Social Science Research Director

NOTE: this excerpt is from a work in progress, as indicated by the first paragraph. We will adjust our analysis going forward, without a doubt.

This post addresses a section of the retail chapter that is a recently discovered blind spot, and for which we have just begun to re-envision, through focused archival research and a few phone calls out. Until recently, Dr. Corva has understood SB 5052, the Rivers vehicle that ended “parallel” cannabis systems as of July 1, 2016, as coming a bit out of the blue due to Senate capture by Republicans in November 2015. In fact neither parts of that narrative are true, although they aren’t completely false either. This post provides a starting point for revising that history, that will be developed completely in the book.

First, let’s start with why it matters. The approximately biannual (because in Washington, bills have a two year life-cycle) tradition of Senator Kohl-Welles’ amendments to RCW 69.51.A since the 00s produced amendments in 2007 and 2010, but generally those amendments were aimed at increasing and/or improving patient access. For example, the 2010 amendment that liberalized authority to write authorizations may have had a great deal to do with the explosion of retail access points, in two ways. First, authorized patients were necessary for medical access points to function in compliance with State law, and now there could be a lot more of them. And second, for collective gardeners (some of whom were vertically integrated into retail spots), there was a surge of demand through less underground “off the street” outlets. Patients could be authorized to grow their own, but that didn’t mean they had the skill, time, or inclination to do so.

Senator Kohl-Welles’ 2011 bill, SB 5073, was a comprehensive reform of the Medical Cannabis legislation in that it sought to improve through regulating the increased and improved patient access to which her previous efforts contributed. There were a LOT of other factors, and it’s impossible to say what percentage each contributed, but here are a few: the election of “choom gang” veteran Obama to the presidency; the financial crisis that had most of our country trying to figure out how to pay mortgages and bills; the Ogden Memo and its successor Federal memos of which the Cole Memo is only the most recent and clearly spelled out; the bankruptcy of State and local budgets including for law enforcement against a plant; the widespread availability of information on how to grow cannabis on the internet; the completion of years-long prosecutions in favor of Medical Marijuana defendants that set a more liberalized precedent; and so forth. If not perfect, it was a hell of a storm for evolving social and policy conditions. And our subjects, along with many others, certainly found those conditions amenable to choosing Medical Cannabis livelihoods.

Certainly, the choices made by more and more people to practice civil disobedience against a racist, unjust and genocidal Federal prohibition meant more and more storefronts becoming visible in the landscape. They not only served a burgeoning number of authorized patients: they channelled cannabis markets off the streets and into a space of visibility that itself may have served to discipline violence associated with street corner dealing and turf warfare. They served to employ an army of unemployable people in the middle of the greatest financial crisis of our lifetime. In the book, we go into more detail about the social benefits of visible access points and the commercialization of domestic sinsemilla. But the point of this paragraph is to highlight the social conditions that, indisputably, made cannabis markets much more visible to policymakers and the public.

But prohibition culture did not recede as rapidly as the post-prohibition economy. Some lawmakers chose the old fashioned response to “seeing cannabis like a prohibition State” (see anthropologist James Scott on “seeing like a State“). Cannabis could be tolerated as long as it remained in the social closet, but the emergence of retail access points in the urban landscape began to promote a politics of “moral panic” that joined with other political currents (I 502 being one of them) to demand something be done. Senator Kohl-Welles SB 5073 caught the State legislature at a moment when the politics of regulation were just beginning to sort themselves out, when those politics could only be framed in terms of reforming the current system rather than attempting to re-create it via not just “recreational” law (I 502, one year later) but the subsumption of Medical into a Recreational legal framework (5052, four years later).

What seems clear is that SB 5073 represented a reformist turn for Senator Kohl-Welles, for which the legislature was ready (but not the Governor); that the Medical Cannabis community had started to go its own way via Representative Appleton in a “improve patient access” vehicle that went nowhere but siphoned energy from the previously unified Kohl-Welles Medical Cannabis front; and that power in the State legislature shifted away from Democrats (and therefore towards Republican lobbyist-recently-turned Senator Ann Rivers. Legislative focus shifted definitively away from “increasing patient access” towards “regulating patient access,” ostensibly in order to “improve patient access” via quality control.

At this point it is obligatory to state that the objective of improving patient access via quality control was always necessary and could have been a focus of legislative energy starting in 1998. It’s not the basic meaning of the discourse that became a point of major social conflict, it’s how the discourse was mobilized in a way that could not improve patient access because it was busy tearing up the access system that had evolved organically over 15 years, through Senator Ann Rivers.

In 2013, Rivers successfully killed Kohl-Welles’ efforts to resurrect SB 5073 and introduced her own vehicle, SB 5887, that definitively shifted how Medical Cannabis would be handled in the legislature right through to 5052’s radical re-writing of what it meant, legally, in Washington State. SB 5887 was introduced late in the 2013 session and re-introduced for the biennial 2014 session, when most of the legislative work that ultimately proved futile was done. It died when revenue sharing disagreements in the context of the ongoing State budget crisis proved irreconcilable. The end of the two-year legislative cycle meant that legislative reform efforts would begin again in 2015 with a clean slate.

Senator Rivers’ majority party advantage established through the “Majority Caucus Coalition” formed with two renegade Democrats 2012 was cemented by the November 2014 elections, when Republicans gained an outright majority. Any cannabis legislative vehicle would have to go through her, and thus the 2015 session began with a radical one: SB 5052. It was economically radical because it sought to re-create cannabis markets in Washington State, rather than align the old with the new via regulation; it was politically radical because it accepted no input or amendment from the political representatives and stakeholders that had been increasing and improving patient access since 1998; and it was culturally radical in that it relied on a campaign of “moral panic” to characterize the Medical Cannabis policy experiment in Washington State a total failure because Medical Cannabis people were “Bad Actors” creating a “Wild West,” “unruly,” and “out of control” environment. Collective gardens were unredeemably greedy, patients were 90% fakers and gamers of the system, and so forth. The only verifiable fact associated with this discourse was that yes, the State could finally begin to see Cannabis culture out of the closet and, over more than 20 years, totally invested in Medical Cannabis in all its definitions, and these just weren’t the people it wanted to regulate. Well, maybe some of them — but just a few.

 

Continuity, Discontinuity, and Contingency between Legal and Medical

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July 2014 map by Steve Hyde, of then-pending Legal retailers and advertised Seattle Medical access points

by Dominic Corva, Social Science Research Director

Legal Cannabis Phase I, for our interview subjects, overlapped with another State legal regime, Initiative 75, which was codified as RCW 69.51.A in 1998. Washington State medical cannabis laws were first passed by citizen initiative in 1998 and amended legislatively multiple times until 2011. The 2011 amendment, SB 5073, was a legislative bill requiring the State to regulate and tax commercial medical cannabis. It was the culmination of over a decade of then-Senator Jeanne Kohl-Welles collaboration with Washington State medical cannabis patients and stakeholders. Those efforts continued for four years, until SB 5052 swallowed them up by folding medical cannabis regulation into the I 502 framework in 2015. First, let’s clarify this timeline, and then let’s discuss how this is relevant to our study of Legal Cannabis Phase I.

The timeline goes something like this.

  1. Medical Phase I: 1998- April, 2011. Key legal framework: affirmative defense for possession; evolving criteria for authorizations; and evolving plant counts.
  1. Medical Phase II: April 29, 2011 — July 1, 2016. Key legal framework change: commercialization tolerated in policy, especially in Seattle and King County, via a noncommercial clause, “collective gardens.”
  1. Legal Phase I: I 502 (December 2012/13 — April 28, 2015/July 1, 2016). Key legal framework: an explicitly non-medical system regulated by the WSLCB.
  1. Legal Phase II: July 1, 2016- .  Key legal framework: a single integrated medical and non-medical system regulated by the WSLCB, plus other reforms to the 502 law. 

      5. Overlap: April 28, 2015-July 1, 2016. Medical Phase II and Legal Phase I co-exist.

This timeline could easily be broken up further. For instance, the 2008 liberalization of authorization authority had a significant impact on the availability of authorized consumers for access points. And the 2011 legislative vehicle was the first of Senator Kohl-Welles’ reform efforts that sought to regulate patient access, rather than improve patient access. Between 2008 and 2011, something or some things happened to centralize legal reform efforts away from “more cannabis and more patients” to “discipline unruly State cannabis markets.” This is the subject of another book or chapter, however.

Instead, we want to understand the dynamics of Medical policy and markets as continuous and parallel to the dynamics of Legal policy and markets. And to do that, we have to unpack the evolution of both processes in relation to and separate from each other. We want to use Medical Phase I to break up and analyze Legal Phase I as the upstart — or start-up — framework with messy and unanticipated dynamics, not a homogenous legal time in which one thing logically followed another until it was time for Legal Phase II in Washington State.

In fact, the reason they evolved separately had less to do with the passage of I 502 than the way the WSLCB chose to implement it. And the way they chose to implement it was to create a completely different system rather than to use State Medical markets as a foundation. This is probably the defining characteristic of the “Washington model,” since no other state has chosen to do it that way.

The WSLCB took about 10 months to go from figuring out what cannabis was at the most basic level to implementing a “starting from scratch” model. For the first six months or so, that process was dominated by public and private meetings across the state so the Board could learn from existing cannabis market stakeholders a few things about the commodity they were charged with regulating. Starting in about April 2013, that process overlapped with a more academic exercise, in which BOTEC was contracted to estimate the size of the cannabis market, its potential environmental impacts, and so forth.

By the fall of 2013, the WSLCB had decided on a course of action that may or may not have been understood by the bureaucracy itself as a model for starting from scratch. There would be a one month window for applications, some time to process producer and processor applications, and then a lottery for retail applications, then some time to process those, and then by June 2014 Legal Phase I would open for business. This is a well-known timeline, but we emphasize two things about it that are poorly understood.

First, the applicant pool was much larger and different from what the WSLCB expected. Instead of a few hundred experienced applicants, they received a few thousand applications, many of whom were “gaming the system” by forging real estate claims and creating rings of applicants from friends, family, or straight up business associates to maximize their odds in the retail lottery or gain control of more canopy than they could otherwise.

And second, applicants to the 502 system were applying to a system that was legally forbidden from making any medical or therapeutic claims about cannabis. Although some of our interview subjects anticipated that this would change, it was a great disincentive to existing Medical Cannabis stakeholders against joining the I 502 system. This applies especially to retail access points, whose products and customer base revolved centrally around making those claims. But it also applies to producers and processors, since medical markets themselves continued to evolve away from simply growing high THC sinsemilla flower, towards CBD-rich cultivars, extracts, and edibles of much greater potency and diversity than would appeal to “recreational” consumers in the new system.

The takeaway for this post is that while the WSLCB may or may not have intended to “start from scratch” with I 502 stakeholders that were overwhelmingly new to cannabis, that’s how it worked out. This is most clear for the retail side of things, in which the lottery system could have by chance favored existing Medical Cannabis access points, but the odds were pretty slim given the amount of applicants and the way they gamed the system.

This is how it shook out for our interviewees. One of them “won” a lottery position outright, but was derailed repeatedly over real estate and business partnership issues. One of them acquired a Shoreline lottery position very early, and once a few of the winning lottery positions failed to take advantage, had their Seattle number come up. They have a Sodo location now. Two others drew extremely low lottery numbers whose numbers never came up. And one did not apply at all, figuring that the two systems would remain separate given that the 502 system was not allowed to be medical in any way. We will address who these are, and how this process shook out, in the book.

Including excluded voices

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Screen shot of the twicebaked blog, taken Wednesday, May 18, 2016, by Dominic Corva

by Dominic Corva, Social Science Research Director

A suboptimal effect of writing a book about medical transitioners is that we exclude medical non-transitioners, reproducing a structural problem associated with the dawn of Phase II on July 1. This post is offered as some small amends: a link to CASP podcast interviewee Pam Dyer representing that voice in a recent post on her twicebakedinwashington blog.

Cannabis Mamas Will Be Criminals July 1

“I’m fresh from the monthly NORML Women of Washington meeting held on the second Saturday of each month at Uptown Espresso in Westlake, Seattle.

I felt some very real anxiety during the meeting when we were talking about what happens to cannabis patients in July. As far as we knew, there are only a few stores that will be set up to provide to cannabis patients when the new laws take effect.

This informed group of cannabis patients, caregivers, and mothers to patients was unable to give a good answer as to where they will be getting their cannabis medicines, come July 1. Correction, they knew where they would be able to get it still but they would become criminals if they did so.” Read the rest here. Her voice is clear, responsible and well-spoken.

Introducing the book in progress: Why Medical Transitioners?

Photo by Lisa Buchanon. Dr. Corva presenting at the Alliance May 12, 2016, at the Swedish Cultural Center, Seattle, WA.
Photo by Lisa Buchanon.
Dr. Corva presenting at the Alliance May 12, 2016, at the Swedish Cultural Center, Seattle, WA.

by Dominic Corva, Social Science Research Director

Last Thursday, Dr. Corva gave CASP’s first public presentation of our book-in-progress, “Washington State Legalization Phase I: An Ethnographic Report from the Perspective of Medical Transitioners.” We will be rolling out pieces of it on this blog through August, and this post introduces the book by explaining up front why we focus on stories of Medical Transition.

The unique value of the book project is its focus on the experiences of Medical Cannabis Transitioners, people and businesses that established livelihood identities as Medical Cannabis stakeholders before deciding to become Legal Cannabis stakeholders. For most, this means becoming a business licensed under the I 502 system. We have conducted 18 in-depth interviews ranging from one to seven hours long, since February. These interviews were transcribed, coded, and we are now in the process of writing four chapters. I’ll talk about those in a moment.

The choice to focus on Medical Transitioners is a calculated one. Here is a short list of reasons, in no particular order, which when put together make a powerful argument for the relevance and salience of this approach.

  1. Our interest in cannabis legalization is continuous with our interest in the historical arc of cannabis policy reform. Law and Policy reforms have built on one another over time, and formal legalization is but the next step in a process whose social dynamics require past progress. No single entity or moment can claim singular responsibility for legalization: it’s the outcome of a social movement, not a campaign that breaks radically with the past. Transitioner stories make this abundantly clear.
  2. Our interest in successful transitioners excludes both non-transitioners and new market actors. These two groups deserve careful study and research, but given the infancy of our State Legal Cannabis policy experiment we find that official efforts (such as the annual WSIPP report) focus almost exclusively on I 502 as a New Market/Policy; and that State actors are indifferent-to-hostile to non-transitioner stakeholders. Transitioner stories help us identify what kinds of knowledge are or can be transitioned into the new system.
  3. Transition knowledge comes from a fundamentally different cultural reality than New Market and Policy knowledge. Transitioner culture is post-prohibition in that it proceeds from civil disobedience to Federal Prohibition, from medical and underground cannabis values in which the plant is not, fundamentally, a threat to society. New Market and Policy culture remains tied to the “social threat” meaning of cannabis in a lot of ways, but chiefly through compliance with the Federal Cole Memo.
  4. There is a fundamentally practical side to examining Transitioner knowledge, since these are the people have far more experience with the plant, its markets, its cultural identities, and even the practice of regulatory compliance with local and State officials than New Market actors. They are the ones who have worked with policymakers and the public to get open as licensed businesses in the absence of central licensing law and policy. They have developed relationships with their communities, police, fire inspectors, and City and County officials, in a way that New Market actors have not. They have developed an organic local legitimacy necessary for sustainable businesses, and translated that legitimacy to the state by becoming licensed I 502 businesses.
  5. The system needs them, therefore — needs that experience and knowledge that comes from creating social trust in the absence of State endorsement. It’s clear that State endorsement doesn’t lead to social trust, necessarily, as evidenced by the Bans and Moratoria that make our State Policy experiment a rather uneven one, geographically. The knowledge about he plant is vital, too, as evidenced by SB 5052’s intention to “protect” medical access through the I 502 system past July 1. The recreational system was literally not allowed to make any kind of claims about cannabis as medicine for Phase I, and desperately needs stakeholders with experience and knowledge of cannabis as medicine to comply with SB 5052’s mandate.
  6. Transitioners have a nuanced critique of our State Policy experiment that is necessary for a robust understanding of not just the outcomes of our State Policy experiment, but the process of designing it. Annual WSIPP reports will provide fantastic information on the results of the experiment, but they’ll never provide a productive and transparent critique of its design and administration. “Productive critique” here does not mean criticism, it means analysis of the power relationships that steer the ship, to mix metaphors, in the direction it says it wants to go: away from prohibition. Transitioners aren’t hamstrung by prohibition culture, so they don’t have to discipline what they say to reflect the Cole Memo’s prohibition values.
  7. Finally, CASP as an organization has spent most of its research efforts on Medical Cannabis organizers and organization. Thus, this ethnography is the outcome of three years in the field for Dr. Corva and Dr. Sexton, not just 18 processed ethnographic interviews. The legitimacy of the interviews as a basis for research reports rests on this fieldwork “embeddedness”: we knew what questions to ask because we were there and often part of it. There is a “participant-observation” aspect to this ethnography, which in the social sciences comes with its strengths and weaknesses. We will address those at length in the methodology section of the book.

This is the first in what should be a summer-long release of different parts of the book as we fill out the chapters from the interview evidence collected. We hope to have a full draft done by August 1, 2016. Our next post will focus on the structure and process of the book, which is more the production of a collaborative research network than any single author. For now, let’s acknowledge authoring collaborators — later we will acknowledge our interview subjects themselves. Our interns are Hillary Bernhardt and Paul Jamison; Dr. Michelle Sexton and Brad Douglass of the Wercshop are primary contributors to the Lab chapter so far, but Dr. Jim MacRae will be getting his crack at it once Brad sends us his comments; Dr. MacRae is also a substantive contributor to the Producer/Processor chapter. And of course Dr. Corva is cat-herder in chief of the project.

ROLLING LEGAL: How a Brazilian is Blazing Trails in Uruguay’s Hemp Industry

fabio

All photos by Fabio Bastos

An interview with Brazilian ganjapreneur Fabio Bastos, CEO of Sediña

by Ras Stephen Charles Flohr

10/6/15

Sao Paulo, Brazil

Sometimes the grass really is greener on the other side. At least that’s been the case for Fabio Bastos, 35, a prominent Brazilian journalist who decided to pack his bags and transplant himself in neighboring Uruguay in pursuit of entrepreneurial conquest in the country’s fledgling hemp/cannabis industry. In collaboration with the Brazilian cannabis portal Smoke Buddies, I had the privilege to catch up with Fabio and pick his brain regarding his journey into greener yet unchartered pastures. At first, Fabio was leary about talking with me and responded to my initial journalistic requests with a dismissive if not brash demeanor. “We at Sediña aren’t interested in such partnerships, he replied”. Yet once I reassured him that my intentions were purely literary and not commercial, he quickly warmed into the gracious, forthcoming and charismatic personality that suited his glimmering reputation as Uruguay’s alien hemp pioneer. “You’ll have to excuse me for being so closed and short with you”, he explained. “It’s just that I get so many requests on a daily basis from people wanting personal information just so that they can set up shop and be my competition”. I assured him that I understood. It’s no doubt that everyone and their grandmother is clamoring for a piece of market share in the fertile yet still uncertain landscape of Uruguayan legalization.

 

sedina1

 

Fabio established his corporation Sediña (translated as rolling paper in Portuguese/Spanish) with the launching of a rolling paper which is advertised as the “Paper of Legalization” and is currently being sold throughout Uruguay and Brazil. Fabio recruits local representatives who are interested in furthering his mission of inspiring the legalization debate in his native country, which he sees languishing in the ice-ages of prohibition, and to give inroads to Sediña’s products in the Brazilian market. He made it clear to us that our work as journalists is in direct alignment with his aspirations of expanding the debate to a broader segment of society so that a more common-sense based, socio-political approach towards cannabis, could flourish. May this interview serve as a rallying point for discourse in unpacking the regional intricacies and entrepreneurial challenges posed by nascent markets in the spectre of global legalization.

How did this idea come about of you becoming a legal and registered grower of cannabis? Was it something that you envisioned implementing in Brazil following a future legalization measure or did this only occur after legalization took place in Uruguay?
Fabio: The path was natural for me because I am a natural born entrepreneur. When I was 18 years old I was already working as an executive producer and director for television programming. When I created the first season of CurtoCircuito ten years ago, I was already in my fifth television contract and it was just me going at it alone, going there, buying the space and showing what I wanted to the public audience that followed my work without any censorship. Little by little I started dealing with herb-related issues in a time when nobody even thought of dealing with such a controversial issue publically. Well, things started closing up, program managers didn’t want to have anything to do with me, I wound up without any work. It was around this time when the issue started gaining steam in Uruguay, people were taking the streets and it seemed like it was really going to happen in that country. Given the way things were turning out for me as I mentioned, the first thing that came to my head was: I have to be a part of this! So I started to study about growing, reading everything about marijuana, watching all the videos I could, I studied the market, legalization, etc.
I went to Uruguay and I was able to follow the entire legalization process firsthand. I made trips back and forth and ended up meeting many Uruguayans who had the same business goals. I started seeing the growth of the market like growshops for example, you know, watching everything unfold right before my very eyes. Without space and, above all, without motivation to continue in the media sector in Rio de Janeiro, I prepared myself to go live and work with cannabis in Uruguay. That’s how it was and before I knew it , I was already super involved.

What was the first step you took after your decision?
Fabio: Once I went to Uruguay, setting myself up as a legal resident and starting the process of getting all the paperwork together in order to start commercial activity was an adventure. Bureaucracy, that seemed small at first, little by little became more and more tedious, although tolerable (after all, I am Brazilian!), until there came the day of registering the business with the DGI (legal organ authorizing business activity in the country). I went with Gerardo, my accountant, and when we explained our business intentions to the very nice clerk who was helping us, she let out a big laugh, excused herself, and then called some of her colleagues to come help her with the process; the system wasn’t even ready to deal with this new segment of the market that the country just established. After a lot of being laughed at and doubts, Sediña became the first industrial hemp business in South America.
In Uruguay, have you experienced prejudice because you are a foreigner investing in a neighboring country after the change in law?
Fabio: Uruguay has a very large elderly population and the majority are against legalization. The youth are super liberal, free from prejudice and thirsty for life. It’s a very interesting combination that teaches us the lesson of how different ideas and points of view can exist side by side. Montevideo is loaded with foreigners and the people there are more used to it. They are receptive, excellent hosts, and they respect cultural differences while demanding respect for their own traditions. Uruguay is a beautiful country, very advanced in infrastructure and very advantageous in terms of opening a new business. Prejudice in Uruguay, with regards to the current generation, doesn’t exist.
What are some of ‘Sediña Marihuana y Derivados’ products that have or will be presented to the market?
Fabio: Sediña entered the market in 2015, and then gradually came along its’ product line. We started with the rolling paper which is now available and soon we will launch CanabidiOIL (CBD oil with 22% concentration), a line of genetics in partnership with BCN Seeds in Spain, specially developed by Karulo Abelan, founder of the magazine Cañamo (Hemp) and the owner of Barcelona’s first growshop. We will also sell the excess production of hemp to industries.

 

sedina2

 

You are currently in China. Can you tell us why?
Fabio: In China, they produce 50%, that’s half of hemp production globally. That’s why I came here. My main objective here is hemp. Since China is a major producer of so many things like electronics, we are also producing here things like vaporizers and other electronics that we work with. So I opened an operation here so that we can work from both sides of the globe, in Uruguay and China, and facilitate our operations. So here’s what I’m going to do, I am going to plant the hemp in Uruguay, then I am going to send it here to China and have it processed, and from there on we will produce our products. From hemp we can do everything, we can make biofuel, clothes, plastics, all in all a great deal of products, and this is my purpose: hemp and hemp derivatives. Sediña doesn’t work with nor has the interest in working directly with smokable marijuana. Since there exists the cannabis market we use this as a marketing strategy, so we made the rolling papers, lighters, vaporizers and these types of accessories, but this is more of a marketing tactic. Our business is hemp. We have our hemp plantation and the idea is to generate products from it.
Can you speak a little about the role that you and Sediña are playing in Brazil and how you are trying to stimulate the debate here regarding legalization?
Fabio: Yes, I am working hard in the area of activism with regards to legalization in Brazil, however, more from the standpoint of industrial hemp and medicinal marijuana, not recreational. I don’t deal with recreational marijuana. I smoke, I enjoy it, we got our own thing going of course, but we don’t work with a recreational focus. Therefore our activism in Brazil is aimed at separating these two things, to make the people understand that industrial hemp is different from marijuana, that one doesn’t have anything to do with the other, and that hemp needs to be legalized in Brazil in order to generate wealth, to drive the economy, to substitute products, less dependence on petroleum, etc. I believe that soon all Brazilians will be able to grow in their homes and have unrestricted access without being subject to heavy firearms nor will they be considered criminals for seeking out a cure for their illnesses. I defend this right of the people and I work so that people who may not have the time, knowledge or willingness to grow their own, can buy these products from specialized businesses.
What is your opinion regarding the Uruguayan model in terms of its’ cultivation and distribution scheme compared to other models that we see, for example, in the United States? Which would you like to see implemented in Brazil?
Fabio: As far as the Uruguay model is concerned, I think it’s right on the money. It’s not completely liberated, it’s something that is very controlled, yet it is a type of control that leads things in the direction of professional development. On one side it is going to generate resources, it’s going to generate jobs in the field and for the industry. In the end, it’s really going to move the economy of the country. Regarding the distribution of marijuana through pharmacies here in Uruguay, I think it’s pretty cool even though it’s not happening yet. It might happen, it might not. The only detail is that I don’t really see a market for it. Why? Because the market is already being supplied by homegrowing and by cannabis clubs. So I don’t see the possibility of a large clientele of Uruguayans for the pharmacies; I think its small. So I don’t see the opportunity for the people and businesses that are investing millions of dollars to enter into this market to see a return on their investment in the short term. And so I don’t see commercial viability for these businesses that are going to sell marijuana in the pharmacies. But this is only a personal opinion and we’re only going to see what will happen after it’s been put into practice. And so I really hope that Brazil adopts the Uruguayan model and not the American model. I think the American model is too liberal and in Brazil, for our culture, I don’t think it would work. The American model is very open, it has less restrictions, it is more accessible. The Uruguayan model is more closed, it has more governmental control. I think for the Brazilian culture, a more controlled model would work better. The American model in Brazil would turn out to be a mess.

What are some of the difficulties and challenges that you have faced in moving forth with Sedina?
Fabio: The main difficulty that we face is overcoming the negative stigma associated with marijuana, even here in Uruguay. And this is my greatest challenge, making the people separate hemp from marijuana and eliminate the inappropriate drug stigma. Sediña is a hemp business and the idea is to produce hemp products using its fiber and such, and so it’s difficult and we are always struggling with this. In Brazil it’s the same thing, the stigma barrier. But Brazil is very, very, very much behind Uruguay at this moment. The business and market of marijuana in itself is something very simple. There is no mystery to it. The mystery is in the taboo that is created in people’s heads. And so our main marketing objective is to demystify the various uses of cannabis, from recreational to medicinal to industrial. Yet for the most part, people here are very open and want to see it work. We’re still in the very beginning of things and so things need to happen step by step. But everybody who I am in contact with and show our projects to are very excited and want to know how they can help. You need to have the soul and predisposition for this type of thing which is something ancient yet new at the same time.