Category: Uncategorized

photo by twicebaked in Washington

by Dominic Corva, Executive Director

I have to admit, my seminar talk at CannaCon the day before Hempfest began didn’t really excite me.  I wasn’t sure who my audience was there, and after a bit of confusion around what exactly it was I planned on talking about (sourcing cannabis agriculture, not “managing your inventory”) I was not at all sure I belonged there.  Strangely enough, it was the most engaged audience I’ve ever had outside of a classroom.  Pam from twicebaked took this shot before the seats filled in, but I wish she could have snapped what happened at the end of the talk when a dozen people came up to tell me how useful it was for them.  It turns out the audience was full of I-502 retailers, producers, and processors trying to figure out what’s going on.

So what did I say was going on?  First, I laid out two important dates for significant supply increases.  The first, November 2014, won’t matter as much as the second, November 2015.  Both are the month after greenhouse and full sun production harvest, and although it’s elementary the indoor growing culture here isn’t quite as familiar with seasonality as the outdoor growing culture it will have to become.  We at CASP are working on projecting the October harvest but in the meantime, it doesn’t take a genius to recognize that once a good chunk of Tier 3s get a whole season in, we will be in for a supply glut.

What this means for I-502 licensees, particularly producers, is that they need to make the most of the current windfall prices and plan for price declines in the near future, not a few years.  This will impact indoor producers most of all, since their costs of production are much higher than those of non-indoor producers.  Electricity is the big ticket item, but there’s also the cost of real estate leases, dealing with urban building codes, and so forth.  I’m convinced that the current stabilization of black market prices in California after a 2009-2011 free fall is entirely the result of indoor production getting squeezed out.

The other thing I addressed was current retail pricing, popularly thought of as too high.  Retail stores, I pointed out, were constantly running out of product and having to close.  From a neoclassical economic perspective, that means one thing:  prices are in fact too low, at $20-$25 a gram.  Why might that be?

According to my ethnographic interviews, retailers are worried about not being perceived as price gougers, and they are using current illegal and medical prices as a comparison.  This means that they aren’t just taking market prices from producers: they are seeking below-market prices right now, often trading long-term supply contracts to get them.  And it’s working, to some degree — smaller producers certainly see the benefit of exchanging windfall prices now for sourcing stability later, presumably when market prices fall below the approximately $8/g or $3K per wholesale lb such arrangements generally fall into.

On the other hand, most producers have been in the process so long that they are absolutely starving for revenue, whereas the retailers simply won a lottery ticket.  They need market prices to recapitalize their businesses and prepare for the future.  Sure, some producer/processors seem especially rapacious, but from my interviews they, too, have been concerned about being perceived as price gougers.  For them, however, $11/gram or $5K/lb seems much more fair — and probably is also below the true market price of legal cannabis right now.

Once I finished making these points, the audience stood up and made them again, to each other, and a conversation began.  That’s where it’s got to go if the supply chain is to smooth out: retailers have to relax their definition of price gouging and producers have to provide product that retailers will have no problem paying a little more for.  It was a true seminar moment for me, as someone who has led not a few of those in academic settings.  By way of conclusion, I want to thank Mercedys McKnight for inviting me and Twicebaked in Washington for being a familiar friendly face in the audience, especially before the room filled up.  That was a great experience for me!

 

 

Photo by Doug McVay of Drug War Facts

Video by Steve Hyde

by Dominic Corva, Executive Director

This year our signal contribution to the nation’s largest “protestival” was a Saturday Hemposium tent panel titled “CBD: it’s time for a conversation.”  We are very honored to have one of Sonoma County’s finest, Martin Lee of Project CBD, presenting alongside one of Sohum’s finest, Christopher Larson of Lost Coast Botanicals;  Dr. Michelle Sexton, CASP Executive Medical Research Director and founder of Phytalab; and Alison Bigelow, Washington State CBD rich breeder and patient advocate. for a 45 minute long conversation followed by Q&A.  An introduction of sorts to the conversation can be had by visiting Fred Gardner’s piece here, Michelle’s interview by Martin here, a previous piece in the Ganjier here, and an excellent essay by “William Breathes” over at Toke of the Town here.

The purpose of this particular conversation was to put breeding, growing, extraction, analysis, and distribution knowledge together in one place in order to develop an agenda for CBD-rich cannabis medicine for patients that isn’t shaped by a political and economic agendas that have nothing to do with patients, and to have that conversation in a forum for advancing the cannabis peace at large.  The panel was carefully selected to include CASP associates who have been working with CBD rich cannabis in different capacities, and hence to be “interdisciplinary.”  We were very privileged to have Fred Gardner, Martin Lee’s collaborator on both Project CBD and O’Shaughnessy’s, asking questions from the audience.

My goal, as always, was to open up the conversation so that the public and policymakers could peek beyond the headline hype at the reality of CBD’s potential medical benefits.  Here’s a tip: it works best in conjunction with, not separated from, other cannabinoids but especially THC.  If you click on the primer links above you can get previously published, detailed analyses along these lines.  However, those links won’t get you to the voice that has been heard least, but is just as significant as the others: that of Alison Bigelow.

Alison has a “Douglas Hiatt” collective garden, which in Washington means a garden that has stayed under the radar while others have opened up storefronts and sought the media spotlight.  It is a nonprofit operation, with thin margins and small batch production, but embedded deeply in Seattle’s medical marijuana community.  Her strain “Plum” was the strain around which Dr. Sunil Aggarwal built his Ph.D. medical cannabis ethnography while we were in grad school together in the mid-00s.  Since then she has been working with Ringo’s high CBD genetics and getting by, a situation made more difficult by how hard it is to accommodate lower-income patients while staying afloat.

This is one of the great paradoxes of CBD-rich markets right now:  there is massive growing demand, very few suppliers, and the demand tends to be from lower income patients who couldn’t afford the true market price of high CBD medicine.  Into the void has stepped opportunists, charlatans, and every combination of both, slinging industrial hemp sludge from China on Amazon and claiming that their strain somehow is the only CBD rich strain that works. The money made by the opportunists flows to states like Utah and Florida, where conservative legislators can feel comfortable promoting “CBD-only” legislation.  Martin’s critique of this was, as usual for him, to the point: we are re-purposing the Reefer madness fear of THC by turning CBD into its “good” alternative, so we can safely reinforce the “badness” of THC.  As all the panelists pointed out, patients and researchers are finding that strains that have a robust balance of cannabinoids are more effective as medicine for most conditions.

 

 

 

 

 

video by Steve Hyde

by Dominic Corva, Executive Director

My first Hemposium panel for Hempfest 2014 brought together Don Skakie, Reverend Cannabis, Kevin Oliver, Shawn Denae and yours truly to report on how legalization is going.  It was moderated by CASP Board member Don E. Wirtschafter, sort of, in a highly entertaining fashion.  What’s missing from the beginning of this video is Don’s acknowledgement that he needed a moderator for his moderating, given his own frustrations with the licensing process; and that I should step in.  We had discussed this previously in a slightly different context, so I was highly entertained by the way it played out.  This was by far the most fun panel I’ve ever participated in, as a result.

The video captures Don’s introductory grievance, and before I can get a substitute moderation in Don Skakie — who is a really great guy — jumped in to talk about the alternative legislative initiative he was promoting to replace I-502.  As the minutes ticked by without any reference to what was actually going on with legalization in this state, Shawn Denae and I plotted an intervention.  Right when I was about to interrupt, he wound down his comments and I got us more focused by providing a 2 minute time limit for introductory comments and a request that we stick to the subject of the panel.

My own comments urged the crowd to think about each of the folks on the stage, including Don, as ethnographic examples of what was going on right now. Don’s frustrations are shared by many, but folks like Kevin Oliver, who is an approved Tier 3 producer, provide the examples we need to know about in order to understand the process as it is taking shape.  I provided some of the analysis you can read on this site, while supplementing with more recent ethnographic context from Active and Approved retailers, producers, and processors.

I focused in particular on differences between retailers and producers concerning what constitutes a fair price.  Many retailers I have spoken with are very concerned to provide a fair price to their customers, and as a result may view wholesale producer prices as too high.  The producer/processors are also concerned to provide a fair price to retailers but for them, the sheer length of time since they’ve been able to produce revenue means that those prices are a bit higher — I would say not as high as the rational market price.

But the takeaway point is that there are lots of other factors determining price and availability of legal cannabis besides basic supply and demand.  If there weren’t, retailers would be paying more for wholesale product from producer/processors and also charging more to legal consumers.  If they did that they would be able to stay open because they wouldn’t be constantly running out.  “Basic supply and demand” is therefore a limited explanatory framework for understanding how things are working now.

After taking a seat to cool down Don came back up and launched into another entertaining rant, and things got a little talk show on stage before Don asked us to assign a grade to the Washington State Liquor Control Board.  I finished by assigning a totally different grade than everyone else, and it might not be what you think.  Watch the video to find out what it was!

 

 

 

 

Map by Steve Hyde

by Dominic Corva, Executive Director

I am pleased to publish Steve’s latest map, of the 150 or so producers that have been approved by the WSLCB, as of their 8/5 update.  We have grayed out producers who have been approved less than 10 weeks ago.  We realize some of those may be active, and apologize in advance.  I will be updating this later with more analysis, but in the meantime please enjoy the map.

 

Map by Steve Hyde and Steven Wan

by Dominic Corva, Executive Director

 

Legal Cannabis Retailer	Address	City	County	Phone	When Open
WESTSIDE420 RECREATIONAL	4503 OCEAN BEACH HWY STE 103	LONGVIEW	COWLITZ	3604235261	Th-Su 10-8
NEW VANSTERDAM	6515 E MILL PLAIN BLVD	VANCOUVER	CLARK	3605974739	Su-Th 11-9, F-Sa 11-10
420 CARPENTER	422 CARPENTER RD STE 105	LACEY	THURSTON	3604026368	Su-Sa 11-8
THE HAPPY CROP SHOPPE	50 ROCK ISLAND RD	EAST WENATCHEE	DOUGLAS	5098881597	M-Th 12-7, F-Sa 12-8
MAIN STREET MARIJUANA	2314 MAIN ST	VANCOUVER	CLARK	4259745804	M-Th 11-7, F-Sa 11-8, Su 11-6
TOP SHELF CANNABIS	3863 HANNEGAN RD	BELLINGHAM	WHATCOM	3602243735	M-Th 10-8, F-Sa 10-10
FRESH GREENS	29 HORIZON FLATS RD STE 8	WINTHROP	OKANOGAN	5099962025	M-Th 10-6, F 10-7, Sa 9-7
ALTITUDE	260 MERLOT DR	PROSSER	BENTON	5097864200	M-Th 2:30-6:30, F 1-8, Sa 11-7, Su 1-5
FREEDOM MARKET	820A WESTSIDE HWY	KELSO	COWLITZ	3603550682	M-Su 9-12am
CANNABIS CITY	2733 4TH AVE S 1st Floor	SEATTLE	KING	2066821332	M-Su 12-8
SPACE	3111 S PINE ST	TACOMA	PIERCE	2066508908	M-Su 10-10
VERDE VALLEY RETAIL SALES	4007 MAIN ST	UNION GAP	YAKIMA	5094203430	M-Su 10-10
WHIDBEY ISLAND CANNABIS CO	5826 S KRAMER RD STE A AND D	LANGLEY	ISLAND	3603216151	M-Su 10-10
GREEN COLLAR	10422 PACIFIC AVE S STE B	TACOMA	PIERCE	2532670675	M-Su 10-10
SPOKANE GREEN LEAF	9107 N COUNTRY HOMES BLVD STE B	SPOKANE	SPOKANE	5099196347	M-Sa 10-8:30, Su 10-7
CASCADE KROPZ	19129 SMOKEY POINT BLVD STE B	ARLINGTON	SNOHOMISH	3606595422	M-Sa 10-8
4US RETAIL	23251 HWY 20	OKANOGAN	OKANOGAN	3602240978	M-Sa 10-7
GREENSIDE	10600 MAIN ST	BELLEVUE	KING	2069103811	M-F 10-9, Sa-Su 10-7
2020 SOLUTIONS	2018 IRON ST STE A	BELLINGHAM	WHATCOM	3603938697	M-F 9-9, Sa 9-7, Su 11-6
HIGH TIME STATION	1448 BASIN ST NW SUITE A	EPHRATA	GRANT	5097541047	Out of Product
MARGIE’S POT SHOP	405 E STUEBEN	BINGEN	KLICKITAT	5094930441	Out of Product
420 HOLIDAY	2028 10TH AVE	LONGVIEW	COWLITZ	5093030681	09/01/14
GREEN THEORY	10697 MAIN ST STE B	BELLEVUE	KING	4255027033	09/01/14
HERBAL NATION	19302 BOTHELL EVERETT HWY	BOTHELL	SNOHOMISH	4254852535	08/18/14
CROCKPOT	1703 SE SEDGWICK RD STE 113	PORT ORCHARD	KITSAP	2533127280	08/10/14
SEA CHANGE CANNABIS	282332 HIGHWAY 101 STE 2	PORT TOWNSEND	JEFFERSON	2064228328	08/08/14 Sat 10-run out When supply smooths out F-Sa 10-8; then 7 days a week 10-8
SATORI	9301 N DIVISION ST STE B-C	SPOKANE	SPOKANE	5099947051	08/08/14
MILL CREEK NATURAL FOODS	4315 MAIN ST STE A	UNION GAP	YAKIMA	5098400186	08/08/14
BUD HUT	1123 E STATE ROUTE 532	CAMANO ISLAND	ISLAND	3606293480	Not Yet
CREATIVE RETAIL MGMT	7046 PACIFIC AVE	TACOMA	PIERCE	2536917293	Not Yet
ELLENSBURG APOTHECARY	1516 WEST UNIVERSITY WAY	ELLENSBURG	KITTITAS	5098335556	August 23rd soft August 25th grand
GREEN STAR CANNABIS	1403 N DIVISION ST STE A	SPOKANE	SPOKANE	5099193398	August 7 soft openingAugust 16 Grand Opening M-Th 10-10; F-Sat 10-12am; Su 10-6
CASCADE HERB COMPANY	1240 E MAPLE ST STE 103	BELLINGHAM	WHATCOM	9082856086

 

Map by Steve Hyde and Steven Wan

by Dominic Corva, Executive Director

Part V of this series turns our attention to the notion that I-502 is meant to eliminate the black market right away, and that it is sensible to judge the existing state of legal market capture by whether it is in fact making a dent in illegal cannabis markets.

These notions are wrong.  The shortage is not the story, and it doesn’t matter at all in the short and medium turn how quickly legal cannabis markets develop in order for I-502 to realize its most important social goal.

Why isn’t the shortage the story?

The “shortage” is a stage in the process of market creation, not an anomaly.  The real story is, what stage are we at in the process of market creation?  We are at the stage where reliable information is scarce; not many retailers are open; production is coming on line; and a significant percentage of applications have yet to be approved.  The latter seems to be the only explanation on offer in corporate media coverage of I-502 roll out.  We have established in the other four parts of this series that there are more complex conditions at work than simple WSLCB approval.  Therefore, the shortage is not the story.

If we think about the “shortage” as a completely expected situation on an historical trajectory towards market creation, we can turn our attention to other issues identified in the press as social policy concerns.  Once again, let’s use the Stranger’s coverage as an example.  Has Washington State in fact screwed up its “legal pot system“?

“If it fails to replace the black market, if it fails to extract profits from cartels and the gangs still get rich, if drugs are still easier and cheaper to buy on the street, and if we fail to make pot an above-board industry? Then it becomes a warning to other states, and fodder for those who argue the illegal pot market is unbeatable and legal regulation is too quixotic for America to pursue.

Which is why Washington’s experiment is off to a concerning start.

Most troubling, the system that kicks off Tuesday is designed to replace less than 10 percent of the state’s black market for pot.”

No one disputes that an important legitimizing discourse for I-502 proponents is the movement from unregulated to regulated cannabis commerce.  However, no one with any knowledge of how the black market works would demand that I-502 be deemed a failure for this not happening right away.  Current illegal and medical market consumers have little incentive to buy from the legal market, and won’t until prices become competitive.  In order for prices to become competitive, the market creation process has to mature.  A significant portion of daily cannabis consumers are embedded in social networks of cannabis production that reduce the cost of their own consumption: they buy enough to resell to their friends and consume for “free.”  They won’t be able to do that with limited quantities and high prices available under I-502.  That said, is there any reason to pose this draconian “legal” versus “black market” discourse, as though the two are inherently antagonistic?

The first thing we need to understand is how important the black market is for getting the legal market off the ground.  As each producer enters their 15 day window, thousands and thousands of seeds and clones from the black market establish the conditions necessary for legal production to happen.  There is no way to estimate which sources are the most important, but here are a few:  Dutch seed companies; Canadian seed companies; U.S. “medical” seed companies for whom the first part of the transaction is gray but as soon as those genetics cross state lines become a Federal offense; U.S. medical clone operations that far exceed established medical limits to production; and non-medical versions of the last two.  So first of all, the black market is foundational for the legal market to get off the ground, and thinking about the black market strictly in terms of competition is extremely problematic.

Second, every last master gardener employed by I-502 companies, and most of the I-502 business community got their start in the black market.  All of them. They are utilizing their black market experience and networks to acquire genetics and get help with getting their businesses off the ground, often from black market operators who will continue to operate in the black market.  This optimizes the development of the legal market, on the one hand, and provides an avenue for medical and illegal producers to become “legitimate” as they bootstrap into now-legal professions.  The more these paths are cleared, the sooner many clandestine careers will become successful, professional careers.  This is happening no matter where we are in the stage of market creation, and probably can’t be quantified.  But it is a vital part of the long-term goal of I-502, to reduce and eventually eliminate illegal cannabis markets.

Third, legal markets are designed to operate completely separately from illegal and medical markets once the 15 day window is over.  Legal production, processing, and retail are regulated tightly and therefore separate from illegal and medical markets.  This applies to legal consumers too.  Legal consumers are the last stage of the new market chain, not legal retailers.  Like legal producers, processors, and retailers, they should be considered a distinct subset of cannabis markets and consumers.  It was never a given that everyone who consumed cannabis would automatically switch to legal cannabis consumption: it is a choice structured by conditions of choosing.  What are those conditions?

Legal retail prices are at least double those of medical and illegal retail prices.  Therefore legal cannabis consumers have to be willing to pay more for legal cannabis, and the reasons why anyone would be willing to pay more for an inferior product with less choice (so far) need to be investigated.  Likely explanations include: folks with more disposable income, brand new consumers without access to medical and illegal cannabis; tourists; and people for whom it is a moral, ethical, or political choice to consume legal cannabis.  The Stranger’s Dominic Holden recently published an essay arguing for the latter.

With limited retail shops open, current “high” prices at $15-$30/gram are still low enough to clear the shelves, as evidenced by Seattle’s Cannabis City opening and closing twice already.  This is exactly the condition many retailers who are coming on line hope to avoid: they are waiting till they have supply contracts lined up so that they can stay open instead of paying overhead while supply hiccups get worked out.  Notice, at these prices, supply runs out: this means that prices could actually be higher — but they aren’t, for non-business reasons.  Many retailers are reluctant to charge higher prices.  I won’t go into those reasons here, because I haven’t talked to enough of them, but so far there seems to be a reluctance to charge consumers beyond a certain price.

Given that the black market exists in a social dialectic with other cannabis markets, not in a mutually exclusive competition, we must still ask whether and how much this is even a problem of which we should be concerned, with respect to evaluating I-502 purpose and social policy outcomes.

Does it matter how quickly legal cannabis markets develop, for that evaluation?  Not if we remember that the primary goal for passing I-502 was not in fact the creation of legal cannabis markets.  The primary social goal for cannabis legalization is de-incarceration.  This will be the subject of Part VI.  Stay tuned.