Marijuana Venture Watch

WWW.MARIJUANAVENTURE.COM VOLUME 2 / ISSUE 5 M A R I J U A N A

THEVENTURE JOURNAL OF PROFESSIONAL CANNABIS GROWERS AND RETAILERS BANKING WHAT’S NEW?

BUILDING A TOP-NOTCH COMMERCIAL GROW OP A step-by-step look at designing the best facility possible

MAY 2015 $6.99 SEEDS VS. CLONES Get your grow started on the right foot

A MESSAGE FROM THE PUBLISHER Strictly business: That means no porn stars here Marijuana culture is not our focus, and never will be ecently, a friend to produce what you personally find -in Rtold me that he’d teresting, there’s nothing wrong with heard some disparag- that. However, you might go out of busi- ing comments about ness creating obscure videos few want to Marijuana Venture watch. If you want to make money, do from the folks at an- what the market demands of your busi- other pot publication. ness, and create the stuff you love on the PUBLISHER According to him, side. the nastiness centered on the idea that Furthermore (and trying not to sound GREG JAMES we weren’t qualified to publish a - maga too boastful), I believe my prior expe- [email protected] zine on the cannabis industry because we rience in starting and building a top-10 EDITOR weren’t regular users of marijuana. consumer software publishing company GARRETT RUDOLPH If that type of thinking were the rule in with no outside funding, that sold to every [email protected] American business, there would be a lot major retailer in the USA, that had 75 em- of companies that wouldn’t exist, and a ployees at one point and revenues of $60 SALES MANAGER lot of successful people would be disqual- million in 2004, actually gave me a bit of LISA SMITH ified from operating highly profitable -in an advantage when launching a magazine [email protected] dustries. You couldn’t own a McDonald’s on this exciting new business. See, in the franchise unless you ate burgers and fries end, staying objective and not having an STAFF WRITERS every day; wineries would have to be op- emotional attachment to cannabis is prob- CHRIS BAYLEY erated by winos, etc. ably an asset. PATRICK WAGNER The point is that running a successful Marijuana Venture is a business mag- CONTRIBUTORS business often has nothing to do with us- azine, and the goal was always to create Craig Allen Matt Goldberg ing the product you’re selling or manufac- something useful for legal, licensed mar- Sean Badgley Neil Juneja turing. ijuana business owners. We fully admit Joy Beckerman Jennifer Martin Michele Brooke David Murét In fact, I’d argue that not being a user that we have no interest in marijuana cul- Joel Caudill Hal Snow might be an advantage because you’d be ture. If you want to read about porn star Rachel Cavanaugh Jana Weltzin more objective. My biggest hit as a doc- Ron Jeremy and his occasional use of Chris Crew Marissa Willman Alexa Divett umentary producer had nothing at all to weed, there was a recent cover story on MARIJUANA VENTURE VOL. 2, ISSUE 5 do with my personal interests. It was the him in Culture Magazine. Want to know Marijuana Venture (ISSN #2376-0710) is published “Learn Country Line Dancing” series more about getting baked in Barcelona? monthly by MJ Directions LLC. PO Box 1419, Renton, WA, 98057. Phone: (425)281-1348. Website: www.mari- sold on VHS back in the early 1990s. I’ve Cannabis Now might be for you. Think juanaventure.com. Copyright 2015 by Marijuana Venture. never had any interest in line dancing or bliss is found with the most potent bud? All rights reserved. Reprinting, in whole or in part, is expressly forbidden without written permission from the country music. Read High Times. publisher. However, taking note of the craze that We are big supporters of marijuana le- ADVERTISING was sweeping the nation, I quickly shot galization, and believe it comes down to For advertising rates, call (425)281-1348 or email Greg@ half a dozen instructional videos with 30 personal freedom and rights. However, MarijuanaVenture.com. SUBSCRIPTION SERVICES grand I had in savings. our own use or non-use of the drug is For subscription services, please call (425)281-1348, visit The series eventually sold more than irrelevant. Our mission has always been www.marijuanaventure.com or email Editor@Marijua- naVenture.com. For change of address, please include the 2.5 million copies and grossed about $25 crystal clear — create a publication that old address and new address, along with an address label million in sales. Talk about return on in- deliberately avoided marijuana culture from a recent issue, if possible. Please allow up to three weeks for address to be changed. If an address is not up- vestment! To this day, it is one of the top and focused 100% on business. dated when the magazine is mailed, we are not responsible five all-time selling non-theatrical VHS And by the way, I actually did read the for delivery of your magazine. If the Post Office alerts us that your magazine is undeliverable, we will suspend our products (the Jane Fonda workout video article on Ron Jeremy while enjoying a subscription until a correct address is received. is No. 1). glass of my favorite single malt. Marijuana Venture assumes no responsibility for any I’ve used that story countless times claims or representations contained in the magazine or in any advertisement. All materials contained are for ed- when advising other producers on what ucational purposes and intended for the legal marijuana to shoot, or how to run their businesses. GREG JAMES business where allowed by state law. Marijuana Venture PUBLISHER does not encourage the illegal use of any of the products In short, my advice was that if you want contained within.

2 | Marijuana Venture // May 2015

TABLE OF CONTENTS

About the cover: Traditional banking has been slow to embrace the cannabis industry, which, by and large, remains a cash business. Photo by Garrett Rudolph. More on Page 54.

FEATURES 32 | Tourism Rising 54 | Banking 98 | Seeds vs. Clones States that have legalized marijuana for Despite shifting public opinion and Which one is better for starting your recreational use are seeing increased legislation, the cannabis industry grow? It depends on the needs and travelers, according to flight data remains overwhelmingly cash only goals of each individual cultivator 36 | Breeze Botanicals 62 | The Legal Pages 102 | Powdery Mildew For Brie Malarkey, her Southern Oregon Expert attorneys address banking University professor’s research on dispensary is just one facet of three challenges, upcoming changes to ornamental plants leads to better different businesses she runs Oregon’s recreational law and more understanding of symptoms and causes 46 | Drought Watch 78 | Ultimate Grow 108 | Hemp History With California and other states getting Cultivation expert Craig Allen provides The United States’ demonization of ready for a drought, what impact will an extensive look at how to avoid industrial hemp is a portrait of there be on the cannabis industry? common pitfalls in grow op planning hypocrisy, considering historical link

www.marijuanaventure.com | 5 TABLE OF CONTENTS

BASICS 8 | Calendar

PROFILES 13 | Caribou Corner Cannabis 14 | Brooklyn Holding Company 16 | Arizona Organix 20 | O.pen VAPE/Organa Labs

SPOTLIGHTS 22 | AiroCide 22 | ‘Weed the People’ 24 | Bud Bar Displays

LIVING THE DREAM Page 14 26 | Meghan Walstatter 28 | Billy Ellyson 30 | Shawn DeNae Page 20 30 | Colette Thomas

GUEST COLUMNS 114 | Vicki Christopherson 118 | Alexa Divett 120 | David Murét 122 | Joel Caudill

OPINIONS 2 | Message from the Publisher 124 | Letter from the Editor

MJVenture

Marijuana Venture’s goal is to provide the best information possible to the legal, licensed, commercial marijuana business. Our belief is that a great business publication will help professionals in MISSION the industry create more efficient and profitable businesses.

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CANNABIS CALENDAR

The Dena’ina Civic and Convention Center in Anchorage, Alaska.

Orange Show (NOS) in San Bernardino, California. Cannabis Classic set to kick The shows will feature hundreds of exhibitors, competitions and seminars. start Alaska’s new industry More information: hempcon.com. ANCHORAGE, Alaska — The Alaska show to follow. May 19-21: The Marijuana Business Cannabis Classic is the first stop on a tour “There’s a buzz in the lower 48 about Conference and Expo will hit Chicago of three trade shows and cannabis compe- what we’re doing,” Wray said. “We’re get- for a three-day, business-only event that is titions that will also feature events in Taco- ting a ton of phone calls every single day. expected to have more than 125 exhibitors ma, Washington and Portland, Oregon later The way that we structured it, focusing on and 70 expert speakers, including dispen- in the year. The three-day kick-off event at the northwest as well as having smoking sary owners, private equity leaders and top the Dena’aina Center in Anchorage will in- but maintaining professionalism, it sets us lawyers. With Illinois recently joining oth- Photo by Paxson Woelber/Wikimedia Commons clude vendors, product demonstrations, in- apart from something like the Cannabis er states that have legalized medical mari- formative seminars, a hemp fashion show, Cup.” juana, there will also be a “marijuana busi- live music and networking opportunities. The Tacoma event will be July 18-19, ness crash course” — a workshop for new Despite the recent ban on marijuana in while the Portland event is set for Sept. business owners in the cannabis industry. public facilities by the city of Anchorage, 19-20. Consumers and the general public are show organizer Cory Wray has worked More information: nwcannabisclassic. not invited to Marijuana Business Confer- around the ban so the show can go forward com. ences. as planned. “We’ve been sitting down with More information: mmjbusinessdaily. the mayor’s office, the city attorney and we MORE EVENTS com/conference. go in front of the city assembly on April May 15-17: Only the busiest travelers 23, to get our permit,” Wray said. “So will be able to hit all the Hempcon shows May 29: THC Plexus will be hosting a we’re getting a permit to allow us to have scheduled for 2015. The next event of the networking event in Bellingham, Washing- cannabis in the Den’aina Center. We won’t series will be May 15-17 at Cashman Cen- ton on May 29 from 7-9 p.m. be able to smoke within the facility but ter in Las Vegas. The event is open to anybody involved they have an outdoor terrace and we have a Subsequent Hempcon events will be in the medical or recreational cannabis in- permit from the fire marshal stating that we May 29-31 and Aug. 21-23 at the Wash- dustry. Registration must be done online. can have outdoor smoking there.” ington State Fairgrounds in Puyallup, The event’s location after attendees RSVP. The competition will feature locally-pro- Washington, Oct. 9-11 at the Denver Mer- More information: www.thcplexus.com. duced cannabis products with an awards chandise Mart and Nov. 6-8 at the National >> CONTINUED ON PAGE 10

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CANNABIS CALENDAR

<< CONTINUED FROM PAGE 8 June 18-19: The International Cannabis ital Hilton for the weekend and is being Association will host the second Cannabis sponsored by a variety of local and nation- May TBD: The Secret Cup takes a dif- World Congress and Business Exposi- al businesses. The training courses being ferent approach to the different cannabis tion at the Javits Center in New York. offered are intended to prepare attendees competitions across the nation, putting its The event will bring entrepreneurs, busi- with all of the critical information that they focus on the hash-maker. The event mix- ness professionals and lawmakers together will need to venture into the cannabis mar- es vendors and competition, with the next with cannabis industry veterans at the larg- kets of Washington, D.C. event being set for May in Oregon. Details est marijuana-related business show on the “The District of Columbia has posi- are pending so keep your ear to the ground East Coast. Organizers are planning to have tioned itself as a leader in the legal mari- if you want to attend. more than 150 exhibitors and 50 speakers juana movement, and we are proud to bring Other stops on the Secret Cup schedule at the two-day event, geared to help aspir- our deep bench of industry knowledge and (exact dates and locations to be determined) ing entrepreneurs understand what it takes experience to help D.C.’s and other East include Northern California, Rhode Island, to succeed in this rapidly growing industry. Coast cannabis industry pioneers grow Colorado, Las Vegas and Los Angeles. Speakers will include Ryan Hurley, a their careers and emerging businesses,” More information: www.thesecretcup. partner at Rose Law Group, Andy Joseph, said Dale Sky Jones, executive chancellor com. president of Apeks Supercritical, and Dean of Oaksterdam University. Space is limit- Guske, a CPA with more than 30 years of ed, so attendees should sign up by May 31. June 5-7: The 11th annual Green Festi- experience. There will also be a subsequent More information: www.oaksterdam. val will take place in the D.C. Convention show in Los Angeles in the fall. com/dcseminar. Center in Washington, DC. The Green Fes- More information: internationalcanna- tival is the longest running event focused bisassociation.com. July 11-12: The Indo Expo Trade on green living, environmental action and Show will be at The Denver Mart Expo sustainability in the United States. June 26-27: High Times, the famed can- Building for two days in July. The trade The event regularly draws more than nabis culture magazine, keeps its Canna- show aims to cement relationships between 20,000 attendees and features vendors bis Cups on the road and headed to North- growers, manufacturers, wholesalers and from industries such as the legal cannabis ern California near the end of June. The retailers by providing a networking event market to industry leaders like Wells Fargo event will feature the usual festivities, like that will allow the new and old to construct and BMW. competitions, vendors and entertainment new ideas, exchange information and forge The show promises to be one of the most in sunny Nor-Cal. new partnerships. diverse gatherings of 2015 and should pro- Details on the show location and per- The expo will be bringing together local vide a unique opportunity for business pro- formers are still pending for the Nor-Cal and national industry leaders from around fessionals to meet and network outside of show as well as the next few stops in Port- the country for their two day, weekend their usual market. land, Oregon, Clio, Michigan, Seattle, event. The first day of the show will be re- This is only the second stop for the Washington and Southern California. served for industry insiders only. The fol- Green Festival, after Washington DC the More information: www.cannabiscup.com. lowing day will be open to the public and show will head out west to Los Angeles at will also host a job fair where new talent the LA Convention Center for September June 29-July 1: More than 2,000 at- can be hired and contracted. 25-27, then a couple months later in San tendees are expected at the second Nation- More information: www.indoexpoco. Francisco’s Cow Palace on November 13- al Cannabis Business Summit and Expo com. 15 and then concluding with its first ever starting at the end of June. The event, host- show in Portland, Oregon on December ed by the National Cannabis Industry As- July 25-26: Maximum Yield brings to- 11-13 at the Oregon Convention Center. sociation, will be held at the Denver Con- gether several industry leaders for the 2015 More information: www.greenfestivals.org. vention Center. Los Angeles Indoor Gardening Expo Topics will include infused products, which will be held at the Los Angeles Con- June 11-13: CannaCon is preparing for cultivation management, policy and regu- vention Center. its third show this year to be held in Denver lation, emerging trends and more. The weekend event will be divided into at the Colorado Convention Center. Show The show is expected to have more than two sections — Saturday is dedicated to organizers are looking to host 10,000 at- 100 exhibitors, 70 speakers, 55 educational industry only and will host a VIP seminar, tendees and more than 300 vendors at the sessions and 10 hands-on workshops. expert panel discussion and a six-hour net- 100,000-square-foot venue. More information: thecannabisindus- working period; Sunday will be open to the The show also will be hosting more than try.org. public and industry alike. 50 seminars led by industry experts in their More information: www.indoorgarden- fields. June 27-28: Oaksterdam University expo.com/show-info-los-angeles/ People interested in speaking at Canna- will be hosting its own certification and Con must submit a proposal no later than training program for the emerging recre- To submit events for consideration in May 4 at 9 a.m. More information: www. ational marijuana market in Washington, Marijuana Venture’s calendar, send an cannacon.org. D.C. The event will take place at the Cap- email to [email protected].

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BUSINESS PROFILES

Teresa Tindoll, owner of Caribou Corner Cannabis.

Company: Caribou Corner Cannabis Location:Okanogan, Washington Employees: 3 Top vendors: Several local producers from Okanogan County Caribou Corner Cannabis Most popular products: “It’s all been Rural marijuana retailer experiencing the American Dream pretty popular. Most folks are just happy to buy legal weed.” By Garrett Rudolph OKANOGAN, Wash. — Teresa Tindoll that was more than nine months ago. ee run the entire operation. may have coined a new phrase to describe “It’s been like a fast-moving freight “Probably the biggest challenge is just the interior design of her small, rural mar- train,” she said. “It’s been fun and a learn- having to wear so many different hats, ijuana retail store: “whimsical farm shed.” ing experience. Most people that come in and there are so many moving pieces and The motif of Caribou Corner Cannabis are so happy and excited that they can buy changes that all need to be paid attention to fits perfectly with the agricultural region of marijuana legally and without the stigma.” equally,” Tindoll said. North-Central Washington, which features Caribou Corner faces several challenges Prior to opening Caribou Corner, Tindoll not just some of the world’s most prolific of being located in a remote part of the state. had been part of the “corporate crash,” she fruit farms, but also includes 23 active, li- Many customers have to travel 45 minutes said, after having worked in the insurance

Photo by Greg James Greg by Photo censed cannabis producers. or more — often through inclement weather industry as a national corporate sales train- Meanwhile, Caribou Corner Cannabis is in the winter — to reach the store, so Tin- er. She was unemployed for four years, but one of just two retail stores open in Okan- doll relies on social media to keep shoppers it gave her time to take care of her grandson, ogan County — the largest county in the abreast of inventory changes. while her son was deployed in Afghanistan. state, geographically (the other is Fresh “We try to keep communication with When the Washington State Liquor Con- Greens in Winthrop) — so Tindoll’s cus- those folks, so they can call ahead before trol Board began accepting applications for tomers come from all around, including a they lock in the four-wheel drive and come marijuana business licenses, she saw it as fair number of visitors from Canada. on down,” she said. an opportunity she couldn’t ignore. It was part of the group of 24 stores in the The store also operates with possibly the “We’re the American Dream, really when state that were the first to receive retail li- smallest staff of any marijuana retail store. you think about how we were able to do censes, and Tindoll said it’s hard to believe Tindoll, her son and one part-time employ- this,” she said.

www.marijuanaventure.com | 13 BUSINESS PROFILES

Company: Brooklyn Holding Company Location:Portland, Oregon Brooklyn Holding Company’s Prohibition-era Employees: 6 theme extends beyond the woodworking of the dispensary. Will your business be next? Interested in having your business profiled in Marijuana Venture? Each month, magazine staff will feature Brooklyn Holding Company different growers, retailers and End of cannabis prohibition inspires Roaring Twenties style specialty businesses in a short profile By Patrick Wagner section. For more information, or to pitch a company to be featured, send PORTLAND, Ore. — John Tester and the walls are covered in imported English an email to Editor@ Photo courtesy Brooklyn Holding Company Jeff Myers opened Brooklyn Holding wallpaper with golden hues bordering the MarijuanaVenture.com. Company, a state-licensed medical mari- flowered design; all the signs are painted juana dispensary, at the beginning of this in a style that largely disappeared with the to the Prohibition era.’” year because they both wanted something Great Depression; the cabinets are hand- But the duo didn’t stop there. Even the different and they had the good fortune to made with intricate carvings; the doors Brooklyn Holding Company employees do something about it. look like they came from a haunted man- dress in period-appropriate outfits. Tester, prior to being a massage prac- sion and all of the details were aged to “John was the one that said, ‘Hey, why titioner, had spent several years as a pro- match the period. Even the iron gate over don’t we just dress the part while we’re at fessional painter. Myers had more than 20 the door was crafted to show the initials it?’ I was like, wow, why wouldn’t we?” years of experience working as a flooring BHC in a classic style. Myers laughed. “We want to make an ex- contractor. A lifetime worth of experience “The genesis of it came from my part- perience.” has been poured into nearly every inch of ner John, who has an affinity for antiques,” While Brooklyn Holding Company the store. Myers said. “I’m a modernist guy. He might fit with Portland’s eccentric theme, “We built all the walls. We put in all of wanted to make it old style … and out of the Powell Boulevard dispensary is more the trim work. We built all of the cabinets, that grew the (Roaring Twenties) concept a labor of love shared over the course of a every bit of it, with the exception of part of that makes sense because we’re basically 30-year friendship, Myers said. the furniture,” Myers said. watching the slow, long death of prohibi- “We just got lucky and knew a talented The details are painstakingly gorgeous, tion, and we’ve already seen one of those. pool of people that could come in and help reminiscent of the Roaring Twenties — So we said, ‘Well, let’s just do a throwback us get it really focused,“ Myers explained.

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BUSINESS PROFILES

Arizona Organix employee Janeth Ortega waters plants in the veg room.

Company: Arizona Organix Arizona Organix Location:Glendale, Arizona State’s first licensed dispensary plans for expansion Employees: 20-25 in some facet of land development, con- By Garrett Rudolph struction and real estate prior to starting GLENDALE, Ariz. — As Arizona nears 15,000-square-foot greenhouse. Arizona Organix, Ben Myer said. the precipice of legalizing marijuana for The increased space will not only allow At the time, Arizona’s housing market recreational use, the state’s original med- Arizona Organix to better serve a grow- had crashed and Myer said he was looking ical dispensary is expanding its operation ing medical market, but also prepares the to make a career shift. to prepare for the rapidly-growing market. business for the long run, co-owner Ben “Just having the backgrounds in land Arizona Organix, which opened its Myer said. development really helped us with the doors for business in December 2012, is When the dispensary first opened, -Ar permitting, understanding the zoning and in the process of nearly doubling its grow izona had roughly 33,000 qualified -pa application process,” he said. facility. The business currently has about tients. Since then, that number has ex- That experience gave the business own- 8,000 square feet of indoor growing space ploded to about 70,000 patients, served ers a leg up when it came to getting their and employs 20-25 people. By the time its by about 100 operating dispensaries and license. Each city was limited to a partic- current construction project is complete, it vertically-integrated grow operations. ular number of dispensaries. For the city will be able to utilize about 14,000 square Myer owns the business, along with of Glendale, which has a population of feet indoors, with eventual plans to sup- his father, Bill Myer, and business part- more than 234,000 people, Arizona Orga- plement the growing operation with a ner Ryan Wells. All three were involved >> CONTINUED ON PAGE 18

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<< CONTINUED FROM PAGE 16 Above: Young cannabis plants flourishing at nix was one of just two dispensaries to be the Arizona Organix cultivation facility. At left: licensed. A flowering plant nears harvest time. Arizona “Everybody kind of goes to their re- Organix currently grows all its own product gional shops,” Myer said. “It provides the indoors, but has plans of implementing a patients with a variety of outlets to shop greenhouse in the near future. at, but still keeps the market pretty strong from an operator’s standpoint.” We’re still game-planning that it is. What Having construction backgrounds also we’re hearing is that six states sound like- helped when it came time to set up its cul- ly to go (legalize marijuana for recreation- tivation facility, Myer said. al use), and Arizona is one of them.” “A lot of our skills have translated Recent polling suggests Arizona resi- over,” he said. dents are leaning more in favor of mari- Photos courtesy Arizona Organix Myer said Arizona’s medical system juana legalization. When Proposition 203 does have a high level of regulation, but hit the ballot in 2010, it passed by the one area that was set up favorably was its narrowest of margins — it received just tax structure. There are no excise taxes for 50.13% of the vote. Some polls show sup- medical marijuana, and Arizona Organix port for legalization is currently as high ends up with a 10.2% sales tax. The li- as 59%, while others still show it evenly cense application was $5,000. split. As the business has grown, Arizona Or- Despite the approval of the voters, Ar- ganix has been able to bring prices down izona’s cannabis industry has faced its from $110 for a quarter-ounce down to share of political resistance and Reefer about $85 since opening. All of the prod- Madness. ucts it sells are grown in-house. Maricopa County Attorney Bill Mont- Myer said he’s looking forward to the gomery maintained the opinion that fed- 2016 election, which could bring Arizona be two initiatives hitting the ballot,” he eral law trumped the will of local voters, into the fold of states that have legalized said, referring to competing campaigns by therefore leaving the door open to pros- marijuana for recreational use. Marijuana Policy Project and Arizonans ecute anybody growing or selling mar- “We’re really excited, watching how for Responsible Legalization. “Most peo- ijuana, even if they were state-licensed Colorado has seemed to flourish,” he said. ple say if two hit the ballot, neither will businesses operating in compliance with “Unfortunately, it looks like there could pass. Hopefully that will get figured out. Arizona law.

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BUSINESS PROFILES

An O.pen VAPE employee fills a beaker full of cannabis oil.

Company: O.pen Vape O.pen VAPE Location:Denver, Colorado Employees: 72 Denver company pairs vape technology with CO2 extraction Most popular product: Go-Pen By Patrick Wagner

DENVER — In 2012, when O.pen “He’s really passionate about the oil as of the company,” Berg explained. Photos courtesy O.pen VAPE VAPE CEO Ralph Morgan began invest- a medicine and the importance of this oil O.pen VAPE’s marketing tagline con- ing in the new smokeless vapor technolo- product,” Berg said. “When he was joined tains another reason for its success, “It’s gy, vape pens weren’t the crowded market by LaConte’s Dispensary and Cultivation what’s inside that counts.” Crossing state that they are today. At the time Morgan Group, that side brought a lot of insight, lines with any cannabis product is illegal. had already jumped into Colorado’s medi- creativity and expertise in terms of brand- But by reaching out to cultivators in oth- cal marijuana market when he opened Ev- ing, marketing and vaporization devices.” er states and by leveraging its successful ergreen Apothecary with his wife Heidi. Berg explained that the six total part- branding, O.pen VAPE has been able to Following the opening of the dispen- nerships became a successful production license its brand into nine states. sary, vertical integration brought Morgan model for O.pen VAPE. Companies like “I think that it is fair to say that we are together with his business partner, Tim Oragna Labs were focused on the pro- a national brand since O.pen VAPE prod- Cullen who owned the cultivation facility, duction, while O.pen VAPE was able to ucts are represented coast to coast, from Colorado Harvest Company. Shortly after utilize companies that were tuned into the California to Maine. We’re in around a the integration, Morgan founded Organa importance of marketing and branding, thousand dispensaries and recreational

Labs, a CO2 extraction facility developed like LaConte’s Dispensary. stores where they are allowed by law,” to provide a consistent supply of cannabis “One of the great successes that O.pen Berg said. oil for O.pen VAPE pens. VAPE had was to really figure out the The licensees are also contracted to O.pen VAPE CFO Steve Berg refers to right product and couple that with the uphold O.pen VAPE’s protocol and pro- Morgan as an early pioneer in cannabis oil right branding and marketing approach. cedural standards in order to keep a con- extracted with CO2. The two together really define the success sistent level of quality, Berg said.

20 | Marijuana Venture // May 2015 PREMIUM. ALL-NATURAL. ORGANIC. YOU CAN’T BEAT BIOCHAR

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Weed the People so-called “marijuana the need for in- Author, journalist and cannabis indus- millionaires,” includ- creased fund- try expert Bruce Barcott chronicles how ing how early in- ing to study marijuana is changing from a demonized vestors are getting the effects of drug to a medicine and mild intoxicant in in on the business, marijuana on his latest book published by TIME Books. how long-time PTSD sufferers, It is available through most major book pot growers have the potential retailers, including Barnes & Noble. converted to legal link between “Weed the People” takes an insightful practices and how marijuana use and often funny look into the booming entrepreneurs in and schizophre- cannabis industry and a look at the le- Washington and nia and even how gal, social, cultural and personal chang- Colorado are in- doctors can talk es brought about by the changing status vesting in store- to their patients of the world’s most controversial plant. front business- about marijuana It asks the question, “Have the past 75 es; as a tool to combat years of marijuana prohibition been • Which state various ailments. wholly unnecessary, or are we deluding model — Colo- Barcott is a -con ourselves about the harm we’re about to rado or Wash- tributor to the New unleash?” ington — is York Times, Roll- Subjects of the book range from the succeeding, ing Stone, National trivial to the profound, including: and which Geographic, Atlan- • Increased conversation about mari- state model tic Monthly, Outside juana legislation in 2016 as political can- is not; Magazine and many didates appeal to younger voters, who • How the War on Drugs has led to other publications. His tend to pass progressive measures and increased marijuana-related arrests and previous books include “The Last Flight vote in higher rates during presidential disproportionate law enforcement and of the Scarlet Macaw” and “The Measure elections; sentencing over the past 40 years; of a Mountain.” • The emerging economics of the vari- • What legalization means for medical More information: www.brucebarcott. ous aspects of the marijuana industry and practices, research and funding, such as com.

AiroCide Controlling mold spores, powdery mildew, fungus, bacteria and other maladies from infiltrating cultivation and processing facilities is a significant challenge for Spotlight photos courtesy Time Inc., KesAir, Bud Bar Displays those in the cannabis industry. Using technology developed by NASA, KesAir has introduced a product designed for safe, energy-efficient, chemical-free and effective air sanitation for any type of environment. AiroCide uses a photocatalytic reac- tor (rather than a filter) to kill airborne bacteria, mold/fungus, viruses, allergens and mycotoxins that could be detrimental to a grow facility or processing room. It produces no ozone, while oxidizing volatile organic compounds (VOCs), to remove harmful gases and undesirable An AiroCide system hangs on the wall of a winery. odors. AiroCide is extremely energy-efficient, ing of yearly replacement for the propri- rofitted into most facilities and does not requiring just four amps and consuming etary high-intensity photocatalytic oxi- need to be incorporated into the HVAC less energy than three 100-watt light dation lamps. system. bulbs. Maintenance is minimal, consist- AiroCide can quickly and easily be ret- More information: www.kesair.com.

22 | Marijuana Venture // May 2015

PRODUCT SPOTLIGHT

Bud Bar Displays Entrepreneur Will Smith has ventured an eclectic career path that led him to launch Bud Bar Displays. Smith’s journey began more than 30 years ago, when he was designing and fabricating specialty acrylic display cases and store fixtures for a variety of retailers. He also took a brief detour through Hollywood, where he crafted memo- rabilia cases to protect items like Judy Garland’s dress from The Wizard of Oz and Humphrey Bogart’s trench coat from Casablanca. But after a serious accident left one of legs paralyzed, he began visiting medical dispensaries and became inspired to help the cannabis industry step up its level of function and design with its point, the display cases, are sometimes Bud Bar Displays can also custom retail fixtures. primitive — even using ‘found’ displays build cases for those business owners What he saw was that many dispen- which don’t match the dispensary envi- with a specific need or look for their saries — even the ones that put a great ronment.” store. Smith said his customers have of- deal of energy into the interior design The California-based company’s ten heard more comparisons to jewelry — tended to take short cuts when it product line includes a wide variety of stores than medical marijuana dispen- came to displaying the actual product. cabinets, dishes, sniff jars, concentrate saries. “I wanted to create the tools (dis- displays, humidors and custom display The Bud Bar Displays products uti- plays) for collectives to help them cases, all designed to give an upscale lize only laboratory-grade acrylic that achieve a more refined look and - pre look to marijuana retail businesses. doesn’t have a chemical interaction sentation of the cannabis and to make “My goal is to play a part in this with the cannabis. Many of the displays the transaction between budtender emerging market by providing assorted feature LED lighting, protecting the and patient a more enjoyable and- ef designs of our Bud Bar Displays equip- products from heat stress created by ficient experience,” Smith said. “I’ve ment, so that each collective’s vision for traditional bulbs. seen dispensaries and collectives with a professional appearance can be real- More information: www.budbardis- beautiful interiors, but their main focal ized.” plays.com.

24 | Marijuana Venture // May 2015

Marijuana Venture sought out a Living the group of professionals to tell the trials and tribulations of everyday DREAM life in the legal marijuana industry. Pure Green Meghan Walstatter Portland, Ore. Dispensary

brand or business in the interval before federal prohibition ends. Those of us that have risked everything to lay the foundation for this newly-legal industry should be able to reap the re- wards. A residency requirement affords Oregon entrepreneurs the opportunity to build strong businesses, which creates jobs and economic growth for the state. Most importantly, it keeps the Oregon economy healthy. My husband and I both agree that there should be no restrictions on - in A look at the display cases and products at Pure Green, a state-licensed medical dispensary in vestment. Oregon is not a wealthy state Portland, Oregon that is owned by Matt and Meghan Walstatter. and has a limited amount of investment capital. He believes it will be harder to esidency has fast become one of We are members of the Oregon Can- find investors if we adopt a residency the hot topics in the recreational nabis PAC and the Measure 91 finance restriction. I believe mandating majority Rmarket conversation in Oregon. committee. Both groups have strong ownership from Oregon allows Orego- The drafters of Measure 91 intentionally lobbying efforts, although neither group nians to find out-of-state funds to build excluded residency requirements. How- has been able to craft a formal state- their brands while keeping away corpo- ever, the Oregon Liquor Control Commis- ment about their position on residency. rate weed. sion and some state legislators want to We expect both to come out in favor At the end of the day, we are both require license-holders to be Oregon res- of some residency requirements in the right. Restrictions or not, the cannabis idents. The time frame ranges between near future. industry is here to stay. We have no way one and four years. Some people believe that a residen- of predicting exactly how a restriction I agree that we should have a resi- cy requirement helps Oregonians by al- will play out in the constantly evolving dency requirement. My husband, who lowing them the first chance at finding marijuana political landscape. We need is also my business partner, disagrees. a place within this burgeoning industry. to follow our gut; that’s how we made He wants to see marijuana businesses Others think residency restrictions make it this far. treated like every other business and it harder for marijuana entrepreneurs views any restriction to entry as another to conduct their business like everyone Meghan Walstatter and her husband, Matt, means of treating us differently. - Need else. own Pure Green, a licensed medical dispensa- less to say, we try not to talk about it too Oregon is known for its well-crafted, ry located in Portland, Oregon. She is a found- much with one another. It’s out of our artisan cannabis. Local growers have ing member of both the Oregon Growers PAC hands. Sort of. earned the opportunity to build their and the Oregon Growers Association.

26 | Marijuana Venture // May 2015

LIVING THE DREAM

focus on any producer that was able to of camping on the Mattole River in the Welkin obtain a license in Washington’s legal, heart of grow country. By the end of the recreational cannabis market. But we trip, the seeds of inspiration had been Creative quickly found obstacles that ranged from sown and we started to develop a plan Billy Ellyson a lack of trust to substandard product. to brand Humboldt premium sun-grown Meanwhile, I was working feverishly on cannabis. Seattle, Wash. developing quality-control criteria for Our plan was to help the entire com- Botanist farms that wanted to produce premium munity of Humboldt whose economy cannabis. has increasingly relied on cannabis pro- I had a difficult time philosophically duction due to the fallout of the timber graduated from Humboldt State Uni- with indoor grows; we’d hoped to focus industry. I asked a good friend to gather versity in 2001 with a master’s degree exclusively on organic techniques, which a group of trusted and experienced farm- in botany. I’d just published my thesis were not the norm. Before long the team ers to learn what marketing might have I began working to offer. on canopy epiphytes in a 300-foot tall redwood forest canopy and was excited with a promi- In practically about my looming future climbing trees nent sun-grown no time we had a as a canopy botanist. farmer, Jeremy group of profes- Fast-forward 14 years. After countless Moberg of Can- sional, ecologi- field science related contracts and- for naSol Farms. cally responsible est adventures, you’re looking at a man Meanwhile, I farmers that not whose body might not hold up many divided my time only trusted us more seasons. As I accumulated more between Welkin thanks to my aches and pains over the past six years, and working my good friend, but one question kept popping up: “What’s butt off mea- also were ready next?” suring trees, to step into the My question was soon answered- af counting logs open light and ter a discussion I had with my brother- and estimating join the business in-law. He had gotten together with his plant cover in world directly. marketing friends in New York to discuss the rugged Sis- I made the de- the emergence of a potentially booming kiyou National cision to start cannabis industry. He knew I was a fan of Forest. I wasn’t working full time cannabis, had quite a bit of knowledge in sure, but I suspected this would be my developing a co-op with our farmers. the industry, and had lived in the com- last field season in forest botany. We began to build an organization that munity of Humboldt for more than a de- Things got more interesting last sum- would ultimately welcome all experi- cade. mer, when I spent time with some of my enced and locally oriented farmers that It was not long into the discussion that Humboldt friends. They found my new were willing to meet our quality stan- my brother-in-law realized that I could job very interesting, and wanted to know dards. So be on the lookout for sustain- potentially be an asset to their team. So as farmers for California’s medical canna- ably sun-grown True Humboldt Cannabis last April I began working with Welkin bis program how I might be able to help in California dispensaries this summer. Creative as a cannabis botanist in Wash- them. Very quickly I started to realize While I will miss swinging through the ington. I found myself engaged in incred- Humboldt farmers needed to preserve trees, I am very excited to be ascending ibly interesting discussions with other their position as the premier producers to new highs in the cannabis industry. cannabis professionals, eating with them of premium cannabis in this great coun- in fantastic restaurants and sampling try of ours. I invited Welkin’s CEO, An- Billy Ellyson is a botanist with Welkin Creative, sometimes fantastic strains. drei Edwards, down to the remote town a team of marketers and agricultural scientists In the beginning, Welkin started its of Honeydew, California for a weekend that helps develop true premium brands.

28 | Marijuana Venture // May 2015

LIVING THE DREAM

Cooperative that has worked so hard to to the production of marijuana. I have Washington educate members of the council had to colleagues that grow and provide med- view this as a victory. The conversation ical marijuana but never even applied Bud Company has moved from a black-and-white “yes” for a recreational marijuana business Shawn DeNae or “no” to one of details on how to lift license, because they believed the med- the moratorium. ical suppliers would be legally protected Advisor I wish I felt more excited about it. by now. Producer/Processor Many of the conditions are a ban in It is emotionally exhausting and- fi sheep’s clothing. nancially draining going through this y hope was to be able to boast Two council members seem willing process, and now we understand that it about how effective we were in to allow the industry with special con- may take several years before sensible overcoming an emergency ordi- ditions. Two others are ready to ban regulations become the standard. If ever M permanently. The swing vote for major- there was a time for the entire industry nance prohibiting marijuana businesses in Snohomish County. However, the saga ity rule is Stephanie Wright — the only to come together, it was yesterday. The continues after the March 25 delibera- woman on the council and most silent of heritage growers, the legacy medicine tion did not result in lifting the ban, but all the members. The good news is that makers, the green rush entrepreneurs, it did open the door for more negotia- I’ve heard she studies extensively, and the rule makers and the lawmakers need tion with the County Council. The can we have given the council a lot to study. to round-table up and fix this thing be- was kicked down the road once again. The bad news is a simple Internet search fore good, hardworking folks lose every- The council members listened to a will fill her mind with whatever she is thing to this experiment and the state is briefing by analyst Will Hall, before- re looking for to justify her vote. Pro or con, left holding a huge bag of failure. tiring to chambers. They emerged with a there is a lot of garbage information on Hopefully, soon I will be able to crow plan to hear several options on R5 zoned the Internet about cannabis. about a victory in Snohomish County, land at another hearing later in April. Our journey to become a licensed pro- but until then, don’t hold your breath. The special conditions being consid- ducer/processor began three years ago That can may be kicked again and again. ered by the council are vast and range and my hope was high that Washington from sunsetting the industry in 10 years, State was the wise champion to make Shawn DeNae is CEO of Washington Bud to requiring 10 acres minimum, to ex- it happen in a logical, well thought-out Company, an aspiring applicant for a produc- tended setbacks of football-size propor- manner. I have licensed friends who are er/processor license. She is one of the found- tions, to restricting operations from 9 struggling under the heavy tax and over- ing members of the Marijuana Business Asso- a.m. to 5 p.m. and dozens more. The R5 sight burdens that add unnecessary cost ciation Women’s Alliance.

marijuana licenses to Oregon residents; child-resistant packaging; Recreational • Widespread support for not over-reg- OLCC spokesman Tom Towlsee said ulating recreational marijuana; there is a lot of discussion about if rec- Marijuana • Consistent testing standards of mari- reational and medical can feasibly move Management juana products; forward separately. Medical cardholders • General concern about cities/coun- do not want the system to change, but

Colette Thomas ties banning marijuana-related business- the OLCC is concerned that products are Living the Dream photos courtesy Pure Green, Billy Ellyson Advisor es, but benefiting from the revenue gen- leaking into the black market. The agen- erated from the industry; cy seems to believe this will continue un- Since the passage of Measure 91, Or- • Strong support for making marijua- less there are changes to the system. egon officials have been paying close na-infused edibles available; Recreational marijuana becomes legal attention to the cannabis industries in • Strong support for the importance in Oregon on July 1, 2015, prompting two Washington and Colorado. The Oregon of growers having a security system, but common questions for the OLCC: Where Liquor Control Commission (OLCC) has with the provision that it should not be a do I get my seeds to plant on July 1? And hosted a series of community forums requirement; where can I deposit proceeds from my and an online survey. • Mixed support for collocating medi- business? The OLCC is likely to begin ac- About two-third of the people who cal and recreational retail outlets; cepting recreational marijuana license responded to the survey were linked to • Mixed response to requiring em- applications in January 2016. That leaves the Oregon Medical Marijuana Program. ployees of recreational facilities to be nine months to develop rules and regu- The results showed local residents favor licensed by the state, similar to what the lations. small, existing, in-state marijuana grow OLCC demands for employees at loca- operations and residency restrictions tions where alcohol is served; Colette Thomas is an advisor for Recreation- over new, larger grow operations. • Mixed response to different require- al Marijuana Management, which provides Other common areas of concern ments for indoor versus outdoor grow consulting services for retailers on licensing were: operations; and compliance. She can be reached at colette. • Overwhelming support for issuing • Mixed support for child-proof or [email protected].

30 | Marijuana Venture // May 2015 We have over 40 i-502 surveillance systems approved and operating! Tourism Rising Cannabis-friendly states become vacation destinations By Marissa Willman ove over, Amsterdam and Vancou- states to legalize recreational marijuana, Mver, British Columbia (sometimes and both states began sales in 2014. More known as “Vansterdam” for its notori- recently, Oregon, Alaska and Washington, ously loose, yet still illegal, pot culture): D.C. have voted to legalize recreation- There’s a new plume of cannabis tourism al marijuana, with sales likely to begin locales on the rise in the United States. sometime in 2016 in Oregon and Alaska, Amsterdam has long topped lists of while the debate over the details of mari- destinations for travelers seeking legal juana legalization continues in D.C. recreational marijuana, but new laws The nation’s capital aside, there’s no across the U.S. are producing a fresh crop doubt travelers are showing interest in of hot pot spots. taking toke-worthy trips now that the Colorado and Washington were the first >> CONTINUED ON PAGE 34

32 | Marijuana Venture // May 2015

<< CONTINUED FROM PAGE 32 terest in The Centennial State. Visitors to From left to right: The Space Needle, in Seattle, option is there. Data from Cheapflights. Colorado — or the now even more aptly Washington; Crested Butte in Colorado; com showed travelers were significantly named Mile High City of Denver — are Multnomah Falls in Bridal Veil, Oregon; the more interested in traveling to Colorado, welcome to indulge, with a few caveats. Northern Lights above Bear Lake, Alaska. Washington State, Alaska and Oregon in You’ll need to be at least 21 years old and 2014 than they were in 2013 — a trend present photo ID to enter a cannabis retail nue’s Marijuana Enforcement Division likely to continue as the recreational mar- store. Out-of-towners can still purchase reported more than 17 tons of marijua- kets develop. In fact, flight searches for marijuana, but they are limited to seven na flowers being sold in its first year of Washington State on Cheapflights.com grams, whereas Colorado residents can recreational sales — still dwarfed by the Photos by (from left): Garrett Rudolph, Pixabay, Joshua Strang/USAF Michael Theberg/NOAA, jumped 82% from 2013 to 2014, while purchase up to an ounce. The state law medical market, which moved nearly 50 flight searches to Alaska went up a whop- also allows for anyone to possess up to tons of product. ping 204% year-on-year between 2013 one ounce of marijuana. By the end of 2014, there were 322 retail and 2014. When it comes time to partake, visitors stores licensed in Colorado, to go along So what do you need to know before should be aware that marijuana cannot le- with 1,416 medical marijuana businesses. taking a trip to one of these rising tour- gally be consumed in public places. Colo- While Denver is a hot-spot for cannabis ist destinations in the U.S.? And how can rado’s recreational marijuana legalization activity, much of the state remains in the business owners capitalize on this influx also came with a new DUI law, so avoid dark. There are 228 jurisdictions across of visitors? Take a look at this snapshot of getting behind the wheel if using marijua- Colorado that prohibit both medical and the U.S. destinations where lighting up is na. recreational marijuana businesses, com- already, or at least soon to be, legal. As far as bringing your stash back pared to 67 that allow both. home? Don’t even think about it. Mari- COLORADO juana is still illegal under federal law, so WASHINGTON STATE Voters in Colorado legalized recreation- make sure to enjoy your recreational stash Washington voters legalized marijuana al marijuana use in November 2012, with within Colorado’s state lines. for recreational use at the same time Col- retail sale of cannabis starting in January During 2014, Colorado registered near- oradans did, though it took longer for the 2014. Flight searches to Colorado jumped ly $700 million of both medical and rec- Evergreen State to implement sales. July 37% from 2013 to 2014 — an indication reational cannabis. 2014 saw the first shops open. Current that travelers are showing increased in- The Colorado Department of Reve- state law caps the total number of retail 34 | Marijuana Venture // May 2015 stores at 334, although only 125 were offi- be able to consume cannabis legally. Or- from Cheapflights.com, flight searches to cially licensed as of early April 2015. egon voters approved cannabis legaliza- the Last Frontier almost tripled between The delay hasn’t deterred travelers, tion in November 2014. However, the law 2012 and 2014, and the destination went though. At the end of 2013, Washington doesn’t take effect until July 2015, and from being the 34th most searched state at was 12th most searched state through sales likely won’t begin until 2016. Nev- the end of 2013 to the 22nd most searched Cheapflights; a year later, it now sits at ertheless, travel interest is already on the at the end of 2014. sixth. rise: Flight searches to Oregon climbed The regulations for consumers are quite 34% from 2013 to 2014. The same age WASHINGTON, D.C. similar to Colorado: People can pur- restriction applies as the other states, but The nation’s capital also voted to legal- chase recreational marijuana at any of the many of the other details remain up in the ize possession of cannabis for recreation- state-licensed shops, as long as they’re at air. State law allows for purchase limits of al purposes during the 2014 election, but least 21 years old and have valid photo one ounce, but an individual can possess the future of the industry remains hazy, at ID. Washington’s law doesn’t differenti- up to eight ounces legally in private. best, due to opposition from some mem- ate when it comes to purchase limits be- bers of Congress. tween residents and visitors, so anybody ALASKA It’s now legal to possess marijuana in can buy up to an ounce of flowers, 16 Alaska became the fourth state in the Washington, D.C., but there are no plans ounces of solids or 72 ounces of liquids. union to legalize recreational cannabis in place for a regulated industry. Sales are Again, avoid lighting up in public or in November 2014. The law took effect still prohibited, but cannabis can be gift- driving while under the influence, and in 2015, but travelers looking to light up ed from one person to another. Recently, keep in-state purchases within Washing- should wait to take their Alaska trips until the D.C. Cannabis Campaign hosted a ton’s borders. 2016, when sales will likely begin. The free seed exchange, where local residents In its abbreviated first year of retail state is still in the rulemaking process, could give or receive cannabis seeds, so sales, Washington businesses sold about so many of the details about retail stores, long as no money exchanged hands. $64 million of legal cannabis in 2014. cultivation and the rest of the industry remain unknown. This article was originally published on OREGON Although other factors are clearly at Cheapflights.com, and reprinted with permis- Soon, Washington won’t be the only Pa- play, interest in Alaska has been on the sion (www.cheapflights.com/news/cannabis- cific Northwest locale where visitors will rise for several years. According to data tourism-travel-us-pot-spots).

www.marijuanaventure.com | 35 36 | Marijuana Venture // May 2015 Southern Oregon HOSPITALITY Pair of state-licensed dispensaries are the cornerstones of a business that also includes farming and processing divisions

By Garrett Rudolph rie Malarkey doesn’t consider herself an activist. Malarkey is a self-taught herbalist who’s been studying plant Bmedicine for more than 10 years. She’s a college graduate and a savvy business woman, an organic farmer who oversaw 40 acres of cows, goats, pigs, herbs and vegetables. She’s an educator, having home-schooled her teenage son until he recently enrolled in college. She’s a believer in the importance of knowing where your food comes from. She’s enthusiastic about hiring employees with more expertise than she has. Activism had never really been part of her agenda. But that changed quickly when she be- In June of 2014, opponents of the dis- gan the process of opening a state-licensed pensary launched an effort to recall the medical marijuana dispensary in Southern four council members who supported the Oregon. She was surprised at how canna- ordinance allowing medical marijuana bis remained demonized, even more than retailers within city limits. Deb West, a a decade after Oregon legalized marijuana member of the Gold Hill budget commit- for medicinal purposes. The message from tee, spearheaded the recall campaign. a vocal minority of local residents was one “This could have been so simple. All of hatred and misguided fear. they had to do was put this to a vote of the “I was really shocked,” Malarkey said. people, and they chose not to,” West told “I personally don’t have a need to use the Medford Tribune. medical marijuana. I don’t use the herb, “They made all kinds of excuses as to but I believe in freedom of choice, and I why the people should not have a voice in believe that people who need it, need safe this. And that’s what brought this recall to access.” the forefront,” she said. Her excitement and passion resonates in The harsh opposition solidified Malar- the rhythm of her speech. key’s stance. Malarkey’s proposal to open a medical “I had no idea there would be that kind dispensary in Gold Hill sparked outcry, of animosity, and it’s no wonder the white protests and a steady stream of misinfor- collar crowd remains in the closet about mation from local residents. The picketing cannabis, because of all this judgment was not just directed at her, but also her and ridicule,” Malarkey said. “It made me customers and the elected City Council want to fight even harder.” members who supported the opening of The recall effort fell flat. Breeze Botanicals. >> CONTINUED ON PAGE 38

www.marijuanaventure.com | 37 << CONTINUED FROM PAGE 37 Each of the four council members sur- vived the special recall election, which cost the city of Gold Hill about $1,500. In each case, about 60% percent of the voters stood by the council members. I HAD NO IDEA THERE WOULD BE THAT KIND OF ANIMOSITY. ... IT MADE ME WANT TO FIGHT EVEN HARDER. BUILDING THE BUSINESS It’s been nearly a year since Breeze Bo- tanicals opened amid controversy in Gold Hill. Malarkey opened Breeze Botanicals’ second dispensary in Ashland in Febru- ary 2015, and she’s been able to double her efforts to support the local economy by focusing on a variety of herbs grown sustainably and organically in the Rogue Valley. She puts a heavy emphasis on helping people, even as she prepares for the uncertainty of Oregon’s Measure 91 rollout. One of the big surprises she’s had since opening Breeze Botanicals is the number of people that have tried to come in without medical cards. Within her first month of being open, she said she had to turn away women who were suffering from Photos courtesy Joe McLaren/RogueAgentPhoto.com Stage 4 breast cancer because their on- cologist refused to issue them a medical authorization. Even for people with quali- fying conditions, it’s not uncommon for a wait of at least six weeks to get a medical card, Malarkey said. Breeze Botanicals’ number one demographic is 65- to 75-year-old women, often with their husbands as caregivers, Malarkey said. The implementation of Measure 91, the voter-approved law that legalizes marijuana for recreational pur- Breeze Botanicals poses, will give her the “freedom to help owner Brie Malarkey anybody who wants medical access,” Ma- peers over a display larkey said. “As a healer, I want anybody case full of tinctures. to be able to come in and make a decision about their own body.” However, marijuana legalization con- >> CONTINUED ON PAGE 41

38 | Marijuana Venture // May 2015 Packaging is the Perfect Finish to Your Brand Packaging is the ﬁnal element to present your product effectively. WS Packaging is the single source to help you differentiate your brand and products.

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<< CONTINUED FROM PAGE 38 tinues to face the same roadblocks as it has for years, despite substantial support from the voting public. Malarkey called it a statewide version of what she went through last summer, when hysteria and opposition produced the loudest voices. The League of Oregon Cities and the Oregon State Sheriffs’ Association have both taken prohibitionist stances in regards to Measure 91, and there’s plenty of discussion about how municipalities and law enforcement agencies could potentially undermine the program. Joe McLaren, manager of the Ashland store, said he expects Measure 91 to have a positive impact on the state. “Measure 91, I see as a bonus,” he said. “It’s a really good opportunity for people that don’t have a medical card.” The biggest question marks he sees include whether or not the Legislature will allow dispensaries to have both recreational and medical licenses, and whether or not the rules put in place help create a viable system for the recreational market. “I see it as a win-win situation for Ore- >> CONTINUED ON PAGE 42 The storefront of Breeze Botanicals’ Ashland location, which opened in February.

www.marijuanaventure.com | 41 << CONTINUED FROM PAGE 41 gon in general,” McLaren said. Malarkey said she fears a short-sighted approach and heavy-handed regulations could choke off Oregon’s legal cannabis industry before it’s ever allowed to leave the black market. Southern Oregon is well-known for its skilled, artisan growers that have oftentimes spent decades honing their craft. The questions are if and how they will integrate with a commercial market. Malarkey said she’s worries state legislators might bow to special interest groups that want to ex- ploit Oregon’s existing industry and might calling it a “Goldilocks” situation — the ORGANIC EMPHASIS not consider environmental impacts such amount of cannabis produced by Oregon As an organic farmer herself, Malarkey as indoor growing and nutrient run-off. has to be just right. puts a heavy emphasis on healthy and sus- “I really implore legislators, as they de- If Oregon produces too much marijua- tainable growing practices. velop policy, to think about the Oregon na, prices will fall and it will be exported Breeze Botanicals is the retail arm of economy,” she said. “We are known for illegally to other states. If the state doesn’t Malarkey’s business scope (www.sunbree- our micro-creameries, micro-distilleries, produce enough, the laws of supply and zeinc.com), which also includes Sunna Ra our wonderful, craft artisan beer-makers, demand will force the prices up and allow Acres in Shady Cove and Sun God Medic- and we can add cannabis to that mix and the black market to thrive. inals in Gold Hill. we can have a wonderful cannabis product “It’s not like the wine industry or the Sunna Ra Acres was originally founded that may, eventually, someday, be a viable grass seed industry that are thriving in in 2012 to focus on sustainable food pro- export product.” Oregon,” she said, pointing to industries duction, but has shifted somewhat more With that said, she recognizes the chal- that can legally be shipped out of state and recently toward raw milk, heritage pork, lenge of establishing a balanced market, have flourished as export products. >> CONTINUED ON PAGE 44

42 | Marijuana Venture // May 2015 A dragonfly guards Southern Oregon cannabis plants at Sunna Ra Acres. Clockwise, from the left, are Sun God herbs and tinctures, herbal teas, the Breeze Botanicals display case, and a package of medicated salve.

www.marijuanaventure.com | 43 Owner Brie Malarkey speaks with a patient at Breeze Botanicals.

<< CONTINUED FROM PAGE 42 make sure they’re growing sustainably. Malarkey also puts each batch of can- free-range eggs and herbs. Among the The application covers everything from nabis through lab testing that goes above herbs it produces are hops, peppermint, the amendments that were used to the type and beyond state-requirements, she said. spearmint, anise, echinacea and chamo- of music that was played in the garden. She examines the terpene and cannabinoid mile, as well as cannabis. Once suppliers have gone through the ex- profiles so consumers can be better edu- Sun God Medicinals is nearing its one- tensive vetting process, it tends to create cated about what they’re buying. year anniversary as a producer of herbal longer-lasting re- “I really wanted teas, tinctures, topicals, edibles and ex- lationships and a PEOPLE CAN to go beyond the tracts — both with and without cannabis level of confidence strain name,” Ma- — that are geared toward addressing spe- between the grower ACTUALLY FEEL THEY larkey said, point- cific symptom relief, such as pain or sleep- and the dispensary ing out that stress- lessness. that benefit the con- ARE GETTING THE ors, individual “Marijuana’s been the star, and is still sumers. climates, growing kind of being the star, but people are for- Breeze Botani- RIGHT INFORMATION techniques and ter- getting other vital herbs that can go right cals takes a some- AND NOT JUST BEING roir can all affect along with and deserve some spotlight what unique, ho- the final product. too,” McLaren said. listic approach to SOLD POT. “One man’s Sour In addition to the products of its sister herbal medicine Diesel is not anoth- companies, Breeze Botanicals will also that goes beyond cannabis. In addition to er man’s Sour Diesel.” buy traditional herbs directly from farms medical marijuana, the two stores each That educational process is key for the or wholesalers if they are certified organic. feature more than 40 different herbs that success of Breeze Botanicals, McLaren When it comes to cannabis, Malarkey puts are cultivated and wildcrafted in Southern said. growers through a rigorous vetting process Oregon for different purposes. “We’re really trying hard to make that before allowing their product to be sold in Breeze Botanicals also has a local food difference in the dispensary and make it her stores. and art boutique that is open to the general way more professional and more comfort- That process includes face-to-face public, with or without a medical marijua- able,” McLaren said. meetings with the growers, who must na card. Shoppers can enjoy local treats, “People can actually feel they are get- also sign a contract that gives Breeze Bo- handmade jewelry, herbal teas, handcraft- ting the right information and not just be- tanicals the right to audit their facility to ed soaps, local honey and more. ing sold pot.”

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Erby-‐[email protected] Call Us: 855.734.6640 www.TheWercShop.com CANNABIS and the DROUGHT By Rachel Cavanaugh

46 | Marijuana Venture // May 2015 rought conditions are expected to reach epic propor- tions this year, causing a devastating ripple effect Dthroughout agricultural industries and everyday life. California is already reeling from the past three years that have been the driest stretch on record, with 2014 also being the hottest. Significant water restrictions have already been imposed and environmental officials across the nation are taking steps to brace their states for the impact. However, there’s a growing sense of concern that it might be too little, too late. Many growers and retailers are wondering how this drought — which extends well beyond the borders of California — will impact the cannabis industry. >> CONTINUED ON PAGE 48

www.marijuanaventure.com | 47 << CONTINUED FROM PAGE 47 ith freshwater streams, lakes and Wreservoirs drying up rapidly in California, the buzz surrounding the so- called megadrought is escalating, particularly among the Western states. But so far, there’s no clear-cut agreement how the cannabis industry will be affected by the water crisis. Last year, multiple media outlets warned that marijuana prices could double as a result of the burgeoning drought. A story by the Huffington Post quoted growers say- ing they were planning to harvest fewer plants due to the water shortage. Over the summer, speculation grew about how the market might shrink due to the drought. However, now that harvest season has come and gone, it doesn’t appear prices have changed dramatically, and the quantity of marijuana on the market doesn’t seem to have decreased. Jennifer Martin, an independent cultivation consultant with MarijuanaPropaga- tion.com, said she thinks the volume has actually increased since more people have jumped into the game. Furthermore, if the plants themselves are indeed smaller due to the drought, some experts think that’s a good thing. Rick Pfrommer, a buyer at Oakland’s Harborside Health Center, told SF Weekly in January that many of the buds coming out of California are higher quality this This USDA map shows the snowpack levels for mountain ranges in the year because of the water shortage. Western United States, based on the percentage of median years from 1981 to 2010. The dark red dots represented heavily in California, Oregon This is because in normal years growers and Washington indicate mountains with less than 25% normal snowpack. tend to over-water their plants to maxi- The green dots, most heavily populated in Wyoming, represents mountains mize size and weight. The practice makes within 10% of normal. the plants heavier and more lucrative; however, it also causes the cell walls to serving water unless customers ask for haven’t been having the faucets turned swell, Pfrommer said. This diminishes the it, prohibit lawn and landscape watering off and so everybody’s just kind of pro- quality of the buds. within 48 hours of measurable rain, and ceeding as if everything is fine and it’ll In contrast, when the amount of water is require municipalities and private compa- rain more next year. ... They’re not having limited, the buds are denser, he said. The nies to limit lawn watering to two days a some governmental agency come to their resin content is also higher and they have week. house and meter the water and stop them a more robust flavor. In that regard, the The state water board has said that out- at a certain point. So until that happens, drought could inadvertently help break an door irrigation accounts for 44% of water they’re just going to do what they need to ongoing, industry-wide habit of over-wa- use in California’s urban and suburban do in order to make their money.” tering. communities, according to a recent USA The problem is that the culture isn’t Yet even if that is true in some markets, Today story. changing, she said. The drought conver- Martin said that overall she doesn’t think Furthermore, outside of the medical sation has been escalating in California the water restrictions in California are marijuana sector, the majority of growers for several years but very few people are reaching the bulk of marijuana growers. in California are underground operations, doing anything to modify their behavior. Although the state’s governor did im- so even if the restrictions did apply, they Some authorities have suggested that il- pose the first restrictions on April 1 — or- wouldn’t be regulated anyway. legal marijuana farms may be to blame for dering 400 local water-supply agencies to “So far the restrictions on the drought a number of streams that have gone dry in deliver 25% less water in the coming year have not had a big effect on most people Northwestern California. — those only apply to residential zoning. because they’ve just been pretending that A recent study by the California State Current rules ban all restaurants from there’s no drought,” Martin said. “They >> CONTINUED ON PAGE 50

48 | Marijuana Venture // May 2015

YOU HAVE TO DRAW A LINE BETWEEN RESPONSIBLE GROWERS AND IRRESPONSIBLE GROWERS BECAUSE THERE IS A BIG CULTURE DIFFERENCE.

<< CONTINUED FROM PAGE 48 Department of Fish and Wildlife found that the water demand of marijuana irrigation in several northern rural counties is high enough to divert substantial portions of local stream-flow. “Diminished stream-flow is likely to have lethal or sub-lethal effects on state- and federally-listed salmon and steelhead trout and to cause further decline of sensi- tive amphibian species,” the study reads. Martin said she isn’t surprised, noting that black market operations are not play- ing by the rules in a number of ways. In places like Nevada City, for example, churches and schools have reported water being stolen out of their tanks. Authorities attribute this to marijuana growers, she Photos by Ivan Dzyuba/123RF, USDA, National Climate Data Center, Washington Department of Ecology said. “I’ve heard that the streams have been The dark red zones in the map above represent areas of “exceptional drying up because the pot growers are drought” in 2015. Areas in red are one step less threatening —“extreme overdoing it and I would imagine they drought” — followed by “severe drought” in orange, “moderate drought” will just keep going that way,” Martin in tan and “abnormally dry” in yellow. California and Nevada face greater said. “They will just start stealing if they areas of exceptional drought than anywhere in the nation, while Texas and can’t get it from nature or from a faucet.” Oklahoma are the only other states registering any areas of exceptional She said these illegal operations are drought. This map was produced by Michael Brewer and the National Oce- anic and Atmospheric Administration/National Climate Data Center. damaging the environment and giving a bad name to honest growers who want to do right by the industry. There is an entirely separate contingent Chris Bayley, owner of the consulting “You have to draw a line between re- of people who want to play by the rules, company Hortistructure Inc., pointed to sponsible growers and irresponsible she said. Those growers aim to minimize extremely low snowpack levels in Wash- growers because there is a big culture dif- pesticides and use water responsibly. ington that have prompted Gov. Jay Inslee ference,” she said. In states like Washington and Colorado, to place an emergency drought declara- Martin said the black market growers the legitimate growers are heavily regulat- tion on approximately 44% of the state. are often using land they don’t own, steal- ed by the government. It means they have “This is an ongoing emergency, and ing resources and using fertilizers and to play by the rules or risk losing the li- we’re going to have some long, hard pesticides that damage the environment. cense they fought hard to acquire. months ahead of us,” Inslee said in a writ- Those growers are “making everybody While California is being hit hardest by ten statement. “We’re moving quickly so who is trying to be responsible look really the 2015 drought, other states are being that we’re prepared to provide relief to bad,” she said. impacted as well. >> CONTINUED ON PAGE 52

50 | Marijuana Venture // May 2015

The Washington Department of Ecology recently released this map showing approximately 44% of the state faces drought conditions.

<< CONTINUED FROM PAGE 50 Drought predictions aren’t quite as dire stead of into a container and using good farms and fish this summer.” for Colorado, but this year had one of the soil mixes and biochar. Groundwater will be minimal this sum- warmest and driest months of March on “They’re just like any other plant,” he mer as a result, Bayley said, and if tem- record. said. “They will use up a lot of water, es- peratures are high on top of it, farmers Bayley also brought up the situation in pecially if they’re really big, so (conserva- will have to give their plants more water California. tion) just becomes that much more imper- than they normally would. “I’ve talked to quite a few people down ative. They’ve got to do everything they This will especially impact growers there about growing,” he said. “And they can to not let any of it evaporate.” who have to pay municipalities for water, all know that there are bad times ahead as In the long-term, conservation has to be he said. far as water usage goes. There are all sorts a priority, Martin said, noting that water “Those (environmental conditions) of conversations taking place between conservation isn’t only important for the will drive water needs up astronomical- consultants and growers about how to marijuana industry. ly,” Bayley said. “And if you have to pay handle this exact issue.” “If the drought goes on the way that it somebody for that water on a regular basis In the meantime, Martin pointed to nu- is, you’re looking at much more than a it will get quite expensive.” merous measures that responsible grow- cannabis supply issue,” she said. “You’re Oregon is also on high alert regarding ers can take to minimize water use. These looking at the fall of civilization. I mean, drought conditions due to a record-low include drip irrigation systems and organ- this is how part of the fall of Rome oc- snowpack. ic cultivation methods which tend to use curred. ... The impact is going to include “Oregon’s unusually warm and dry less water than mineral-based fertilizers. everyone and and all of the food. Pot is winter has potentially dire consequences,” Bayley agreed, pointing to additional going to just be one small component of Gov. Kate Brown said in a statement. strategies like planting into the ground in- that.”

52 | Marijuana Venture // May 2015

Financial services for the cannabis industry?

DON’T BANKBy Garrett Rudolph ON IT

Thirty months have gone by since Washington and Colora- do voters legalized marijuana for recreational use. In that time frame, the cannabis industry has taken one monumental leap forward after another. Now, twice as many states — plus the nation’s capital — have approved legislation to end marijuana prohibition, with at least a half-dozen more that seem imminent to follow suit with the 2016 election. Nearly half the country has legalized marijuana for medical uses, and the mainstream media — once firmly planted on the “drugs are bad” platform — has shifted its voice toward one of acceptance, curiosity and even luke- warm support. >> CONTINUED ON PAGE 56

54 | Marijuana Venture // May 2015

<< CONTINUED FROM PAGE 54 credit union officials told Marijuana Venture. nancial institution to feel comfortable banking While marijuana’s true medicinal value re- And the most current data from the Financial the industry, they would need to really delve mains in debate, it’s clear that the often demon- Crimes Enforcement Network (FinCen) shows into the ins and outs and really understand the ized drug is the wrongfully convicted inmate that many banks are accepting cannabis cash, industry and the state laws and regulations,” among its Schedule I brethren. Even the federal but most are doing so in a discrete manner. Houston said. “It’s not something you can dab- government seems to be coming along on that According to a Wall Street Journal story, more ble in a little bit. I think you have to go all in subject — albeit slower than those in the can- than 1,700 “Marijuana Limited” suspicious and really understand it or not do it at all.” nabis industry would want. activity reports have been filed from 25 states Both Salal and O Bee Credit Union have Most polls indicate a majority of Americans since the U.S. Department of Treasury issued established their own guidelines for setting up support the legalization of marijuana. A recent its guidance memo for banks handling marijua- accounts with cannabis businesses. For O Bee, poll by CBS News showed 53% of Americans na money in February 2014. all state-licensed producer/processors are eligi- are in favor of legalization — the highest num- The Marijuana Limited designation indi- ble for accounts, but licensed retailers located ber since the news organization began asking cates a financial institution has a client operat- in counties that border Canada, Oregon or Ida- that question in 1979. ing a marijuana-related business in compliance ho are not eligible. The border counties make Yet, for thousands of legitimate business with both the Cole Memo priorities and state it hard to said to ensure product is not being owners across the country, the act of opening a law (see more about the federal government’s carried across state lines, said Jennifer Roberts, checking account remains a dicey proposition. guidance memos regarding banking in attorney chief operating officer of O Bee. Marijuana may be going mainstream, but Jana Weltzin’s column on Page 64). “Producer/processors don’t have that restric- banking for the industry remains very much The Wall Street Journal’s story was based tion because they’re only selling to retailers, so underground. on a Freedom of Information Act request by it’s easier to say product isn’t being diverted anti-money laundering experts Alison Jimenez over state lines,” she said. and Steven Kemmerling. While the majority of Salal requires cash pickup and delivery ser- In general, there are two types of people in the SAR filings have been the safe variety, there vices through a contracted armored car com- the cannabis industry: Those that have had their were 313 Marijuana Priority filings, which in- pany. bank accounts closed, and those that never had dicate a client operates a marijuana business Salal currently has about 70 marijuana-re- a bank account to begin with. that violates state law or the Cole Memo guide- lated accounts, which makes up for about 20% Given enough time, most people involved lines, and 1,300 Marijuana Termination filings, of its total business accounts, Houston said. At with the production and sale of marijuana specifying the financial institution has closed some point in the near future, Houston said Sa- products — even in full compliance with state an account due to marijuana activity. lal plans to offer some lending services on a laws — will have their accounts shut down. very limited basis. Those loans would mostly At the pace the rest of the marijuana industry cover commercial real estate and large capital has made progress, the banking aspect remains equipment that is not industry specific, she said. stagnant. Washington State has been widely criticized “And we obviously can’t take product as col- Only a small handful of financial institutions for taking a slow and suffocating approach to lateral,” Houston added. have been willing to publicly announce they the recreational cannabis market. Meanwhile, O Bee currently has about 20 would service licensed marijuana businesses, The licensing process has been too slow; the accounts, Roberts said. and two of the most notable have been fraught regulations have been too steep; the taxes are Numerica Credit Union did not respond to with challenges. outrageous and competition with the unregu- requests for an interview. In January, Oregon-based MBank took its lated medical market is untenable, critics have Both Salal and O Bee said the majority of first foray into the legal marijuana world by said. applicants have been granted accounts. opening accounts to businesses in Colora- However, while Washington’s regulations Part of that is aided by the Washington State do. That experiment lasted one week, before have been onerous for potential business own- Liquor Control Board’s extensive application MBank pulled the plug and closed the bank ac- ers, the system set up under Initiative 502 has process, which both credit unions said they re- counts it held with five different marijuana-re- allowed some financial institutions to cautious- view prior to opening any accounts. They then lated businesses, according to a Denver Post ly enter the market. perform their own due diligence to verify credit story. About 60 other businesses in the Mile Three credit unions have publicly serviced history, criminal background, source of start-up High State had been awaiting approval from the cannabis industry: Salal, Numerica and O funding and more. MBank. Bee. The Liquor Control Board application gives MBank didn’t pull out of marijuana alto- Carmella Murphy Houston, vice-president the credit unions “one beautiful package for us gether. It maintained its working relationships of business services at Salal Credit Union, said to look through and check everything off of with businesses in the Pacific Northwest for Washington’s in-depth application process and our list that we’re very comfortable that each nearly three more months. However, in mid- complete seed-to-sale tracking requirements of company that has been licensed by the Liquor April, MBank announced the closure of those cash and product were two big factors in bank- Control Board is operating under the state laws accounts as well. MBank CEO Jef Baker told ing the industry. well enough that we feel the federal guidance is the Willamette Week that 75 cannabis business Salal only serves the licensed, recreation- complied with,” Roberts said. accounts would be closed within the next two al marijuana businesses in Washington. The Common reasons for rejection have been ex- months. medical market, as it currently stands, does tensive criminal history and poor credit. Once again, business owners were left to not have enough regulation to ensure the Cole “What we look for is folks that have a good hunt for bank accounts or go back to operating Memo priorities aren’t violated. business background and financial acumen,” in a cash-only environment. She said other states currently don’t have the Houston said. “In this regulated industry, we The news is not all negative, though. level of regulation that Washington does, but want to make sure the business owners have In Washington State, three credit unions the future of the industry will vary from state the financial acumen to meet the rigorous stan- have publicly opened their doors to the grow- to state, depending on regulations that are im- dards. Someone’s historical way that they han- ing recreational marijuana market. So far, those plemented. dled their finances is a good indication of how accounts have been operating smoothly, two “It’s kind of a niche market. I think for a fi- >> CONTINUED ON PAGE 58

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LAKEWOOD LOCATION RAYMOND LOCATION (253) 301-3439 3815 100th Street SW • Suite 2B 310 Commercial Street Lakewood, WA 98499 Raymond, WA 98577 www.THCLawFirm.com << CONTINUED FROM PAGE 56 “When that happens, the slow boat gets they’re going to handle future finances.” slowed down to just a putter,” he said. Salal opened its first marijuana-related ac- Despite the near standstill pace of banking count in July 2014, and it’s been refining its options in the cannabis industry, Comerford process as the months have gone by. The credit remains cautiously optimistic that people rec- union first started serving only Western Wash- ognize “the times have changed” and leaders ington businesses, but quickly opened its doors will emerge. to businesses on the east side of the state be- “In the end, we’re going to benefit in ways cause there was such a demand. that we can’t even anticipate,” he said. “A lot of Roberts said she was surprised by the de- that has to do with the real sleeping giant here, mand. She originally expected mostly busi- which is the industrial hemp industry, which I nesses near the credit union’s Thurston County think is going to dramatically change our agri- location to apply, but quickly discovered busi- cultural and industrial landscape.” nesses looking for service throughout Western Washington. Initially, O Bee was able to process applications within about two weeks, Roberts said. However, the Liquor Control Board is so in- The level of regulation in Washington cre- undated with public records requests that that ates a challenge for business owners, but it process has been stretched to about six weeks might be a blueprint for future states to take the on average. cash aspect out of the equation as they legalize “We’re doing the best we can,” Roberts said, marijuana. “but the turnaround time hinges on waiting for Roberts said O Bee has been contacted by those public records requests to be fulfilled.” several financial institutions in Oregon that are Meanwhile, John Comerford has been pay- looking at banking in the cannabis industry. ing close attention to the banking situation “We try to keep a pretty close eye on what’s since I-502 was approved by voters in Novem- happening nationwide,” Roberts said. “This is ber 2012. just my opinion, but I think the momentum has Comerford is a director with the Washington built to a point where it’s not necessarily going Federation for Marijuana Businesses, a 501(c) to turn around unless something major in the (6) trade organization that has been collecting next election cycle happens.” data on the cannabis industry. He said business owners clearly have a lot of concerns when it comes to banking, namely that it’s “not available and if it is available, it’s very difficult to access and it’s expensive,” he said. The costs are high because banks and credit unions have high compliance costs in order to service the cannabis industry and keep regulators satisfied. “Banking is lagging behind where the people and the market are,” Comerford said. “I think that’s really important because the people who are doing all the work of production, processing and retailing need to have a financial backbone that offers them everything from transac- tions to lending.” Comerford said there are dozens of community banks interested in being involved in the industry, but are stuck in a holding pattern due to concerns of federal compliance. “A lot of people are waiting for additional signals from the Fed,” he said. And while public perception of cannabis and a general mainstream acceptance helps, a true solution to the banking question might not be imminent. Not only does Congress seem hope- lessly deadlocked on most issues, but the focus shifts more toward campaigning and away from governing as the 2016 election cycle nears, Comerford said. That shift could be even more noticeable when it comes to a controversial subject like cannabis that still carries a certain amount of social stigma and political risk. >> CONTINUED ON PAGE 60

58 | Marijuana Venture // May 2015

<< CONTINUED FROM PAGE 58

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60 | Marijuana Venture // May 2015

LEGAL PAGES Banking landscape shifting with historic legislation Centerpiece of the CARERS Act would reschedule marijuana By Hal Snow hen I was juana laws. Wasked to pro- Both the CARERS Act and the spend- vide an update on the ing bill deal only with medical marijuana. banking status of the Recreational marijuana is not addressed cannabis industry, I in either. Also, despite a potentially broad thought that the article coalition of the members on both the left would be simple and and right in Congress, passage of the straight-forward. De- CARERS Act is not likely to occur this spite the Cole Memorandum of August year. 2013 and the FinCEN Memo of February Still, these two events represent a sig- 2014, which attempted to provide federal nificant shift in government attitude at guidelines to financial institutions electing the federal level. With 23 states having to service marijuana businesses, only a legalized some form of medical marijua- few banks and credit unions have opened na and four having legalized recreation- their doors to the industry. al marijuana, the shifting voter opinion And much of the landscape has shifted might cause more widespread movement recently. On March 10, Sens. Rand Paul concerning the banking of the cannabis in- (R–Kentucky), Kirsten Gillibrand (D– dustry during the next three to five years. New York) and Cory Booker (D–New Looking now at banks and credit unions Jersey) introduced the Compassionate Ac- in Washington State working with the cess Research Expansion and Respective marijuana industry, the OBU Credit Union States (CARERS) Act in the Senate. of Tumwater is the most recent financial The centerpiece of the CARERS Act is institution to offer services to producers, to reclassify marijuana from a Schedule I processors and even retailers. drug like heroin, LSD and peyote, which OBU Credit Union is offering checking, are deemed to have the highest potential deposit and savings services only to the for abuse and “no currently accepted med- industry. It has not begun offering loans to ical use in treatment in the United States” customers in the marijuana industry. to a Schedule II drug. That would be an Other credit unions offering services in- acknowledgment under federal law that clude Numerica in Spokane and Salal of marijuana “has a currently accepted med- Seattle. ical use in treatment in the United States Due to the current uncertain nature of or a currently accepted medical use with the medical marijuana industry in Wash- severe restrictions.” ington State, none of the credit unions are The second important aspect of the providing financial services to the medical CARERS Act is the provisions within marijuana industry. Further, in general, Section 6 which would create a safe har- the financial services are usually limited bor for banks and financial institutions to to depository services such as savings do business with medical marijuana busi- accounts, checking accounts and payroll. nesses operating legally under state law. Traditional lending services remain very On March 14, Congress went one step limited. further by passing a 1,635-page spending bill which effectively ended the feder- Hal Snow is a partner at Garvey Schubert al government’s prohibition on medical Barer Law. He has more than 30 years of expe- marijuana. The spending bill forbids the rience counseling business owners in the areas federal government from using any of its of asset protection planning, wealth transfer resources to impede state medical mari- and transfer tax minimization.

62 | Marijuana Venture // May 2015 FOR SALE OR LEASE 16 ROOMS v 44,000 SQUARE FEET v $2,400,000 Large, insulated industrial warehouse on 14 acres of irrigated ground located in Okanogan County, Washington. The property is just off Hwy. 97 in Tonasket, about 20 miles south of the Canadian border, and could be a prime location for a Cannabis business. CALL 509.322.4732 OR EMAIL [email protected] LEGAL PAGES

Under the BSA, banks are obligated to file Suspicious Activity Reports (SARs) re- Marijuana businesses face gardless of state law. The institution must file a SAR if it suspects, or has reason to suspect, that a transaction conducted in- extra scrutiny from banks volves funds derived from illegal activity, is designed to evade regulations promulgated Federal government memos provide guidance, but little else under BSA, or lacks a business or apparent By Jana Weltzin lawful purpose. The last of these — “lacks espite growing • Preventing the diversion of cannabis a business or apparent lawful purpose” — is Dsupport for legal- from states where it is legal under state law problematic for cannabis businesses, which ization of cannabis, in some form to other states; are all unlawful under federal law. federal law remains • Preventing state-authorized marijuana Under the 2014 Treasury memo, banks stagnant, making banks from states where it is legal under state law are required to file SAR for cannabis busi- uneasy about doing in some form to other states; nesses, even if those businesses are 100% in business with cannabis • Preventing state-authorized activity compliance with state law. companies. from being used as a cover or pretext for the The memo addresses this issue and lays The federal government has yet to enact trafficking of other illegal of other illegal out the varying levels of SAR filing. an authoritative law that explicitly gives drugs or other illegal activity; The first level of SAR is “Marijuana banks the blessing to do business with can- • Preventing violence and the use of fire- Limited.” These must be filed by a financial nabis companies. arms in cultivation and distribution of mar- institution that believes its client operates a However, the U.S. Department of Jus- ijuana; marijuana business that complies with both tice’s guidance memo from August 2013 • Preventing drugged driving and exac- the Cole Memo priorities and state law. bluntly states that the federal “Cole Memo” erbation of other ad- The next level of priorities may be “affirmatively addressed verse public health UNDER THE SAR filing is referred … with a tightly regulated market in which consequences associ- to as “Marijuana Pri- revenues are traced and accounted for.” ated with marijuana BSA, BANKS ARE ority.” These are to be It would seem, given the federal govern- use; filed when a financial ment’s concession that a tightly regulated • Preventing the OBLIGATED TO FILE institution reasonably and tracked marijuana market would help growing of marijuana believes its client op- achieve its priorities, the next logical step on public lands and SARS REGARDLESS erates a marijuana would be to change the law in a manner that the attendant public business that impli- would give banks the assurance they need safety and environ- OF STATE LAW. cates one of the Cole to do business with cannabis companies. mental dangers posed by marijuana produc- Memo priorities or is in violation of state This would allow cannabis companies to tion on public lands; law based on red flags identified in the 2014 more easily track and account for all money • Preventing marijuana possession or use Treasury Memo. coming in and going out. on federal property. If the financial institution deems it nec- In February 2014, the Department of the The 2014 Treasury memo urges financial essary — based on identification of red Treasury Financial Crimes Enforcement institutions to consider key factors when flags — to terminate the relationship with Network authored another guidance mem- conducting its due diligence for assessing the marijuana-related business in order to orandum clarifying expectations relating to the risk of doing business with a cannabis maintain an effective anti-money launder- the Bank Secrecy Act (BSA) and cannabis company. These factors include confirming ing compliance program, it is required to businesses. This memo aimed to clarify whether the business is duly licensed and file a “Marijuana Termination” SAR. how financial institutions may provide ser- registered, review of the license application The red flags identified in the 2014 Trea- vices to cannabis related businesses while and ancillary documentation that was sub- sury memo include some pretty arbitrary upholding their obligations under BSA. mitted to the state to obtain its license, re- and discretionary observations. For exam- BSA requires financial institutions to quest information from state licensing and ple, if the business receives more revenue issue reports that include information that enforcement authorities about the business than “reasonably expected” given the lim- is aimed to aid federal enforcement and and related parties, develop an understand- itations imposed by the state in which it op- further the objectives laid out in the Cole ing of the normal and expected activity for a erates, the financial institution should deem Memo, which are: cannabis business, including types of prod- that a red flag under the SAR reporting re- • Preventing the distribution of cannabis ucts sold and customer base, monitoring of quirements. to minors; publicly available sources for adverse infor- Clearly, this is problematic for both the • Preventing revenue from the sale of mation relating to the business and related institution and the cannabis business — cannabis from going to criminal enterprises, parties and monitoring for ongoing suspi- what does the term “reasonably expected” gangs, and cartels; cious activities. >> CONTINUED ON PAGE 66

64 | Marijuana Venture // May 2015 INSURANCE REQUIRED BY THE STATE

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200 First Ave. W. | Suite 108 | Seattle, WA 98119 www.gunningins.com << CONTINUED FROM PAGE 64 mean? Surely Colorado’s market was not expected to be as robust as it was, but should that trigger a red flag? And what education and training are these institutions supposed to provide their compliance officers to aid them in identifying these red flags? Overall, the 2014 Treasury memo provides good guidance to financial institutions, but unfortunately, the guidance is just that — guidance. It provides no assurance of legal protection to financial institutions or cannabis businesses. Because marijuana is illegal under federal law, and there is no exemption for state law legalizing cannabis, guidance alone isn’t going to be enough for most banks to be comfortable doing business with cannabis companies. The guidance memos make for nice cocktail hour chit-chat, but when it comes down to legal- ities, the memos offer no binding authority, nor do they provide a legal defense.

Jana Weltzin is a member of Rose Law Group’s medical marijuana and zoning/land use depart- ments. She advises clients in the cannabis industry in Arizona and Alaska. Rose Law Group assists its clients with business structure, compliance with state and local laws, zoning approval and use permits, site selection, and product regulations.

66 | Marijuana Venture // May 2015

LEGAL PAGES

be optimistic about the current downturn in prices. Oftentimes, a downturn in a market Recreational market prime can cause an industry to restructure and come out stronger than before. That is very likely the case here. for a massive expansion As the recreational marijuana prices find parity with the rest of the marijuana market, Price fluctuations could lead to a stronger overall industry there will be a tremendous opportunity for By Chris Crew the recreational market to grow in size and ver the last few prices range around $8-16 per gram. strength, maybe even tenfold or more. This Omonths I have had a Since the licensing process began, produc- will likely usher in a new level of market flurry of calls and meet- ers have come online at a steady pace. These stability and strength that will benefit all li- ings with friends and new businesses coming online combined censed marijuana businesses by creating far clients wondering if the with the October/November 2014 outdoor more reliable customers than ever before. In recreational marijuana harvest, created a glut of supply in the mar- addition, competitive prices are necessary for market is crashing and ket. This glut forced processors to dramati- the goals of marijuana legalization to be fully if they should get out cally reduce industry pricing. Most of my realized. now. It is likely too ear- processor clients report their prices to retail Let us not forget that one of the main ar- ly to tell how the market will end up in the stores have been cut in half. Many processors guments that led to the successful passage long run, but I am confident that the current are now selling their smokable marijuana to both legalization measures in Washington, price fluctuations are a sign that the market is retail stores for around $4-6 per gram. Colorado, Oregon and Alaska was that legal primed for a massive expansion. This price reduction by processors led cannabis is going to put the illegal market I have read and heard a variety of estimates a handful of retail stores to follow suit and out of business. In order for the legal market about what percentage of the overall marijua- reduce their prices accordingly. Some recre- to put the illegal market out of business, the na market is being fulfilled by the recreation- ational retail stores are now selling marijuana legal market must be priced competitively. al market versus the medical or black market. for as little as $10 per gram and those stores I predict that it will not be long before the Those estimates tend to range from as little have reported massive increases in sales. Af- recreational market will do just that — it as 2% to as much as 25%. Although these es- ter one of my retail store clients dropped his will grow to become the only major market timates vary pretty considerably, what is not pricing, his store became nearly five times in the state by gobbling up the medical and in dispute is that the high prices dominating as busy and his monthly revenues went from the black markets alike. This is not going to the recreational market have stopped it from around $100,000 to around $250,000. Even be because of legislative changes, outlawing successfully competing with the medical and though he made less profit on each sale, his medical or law enforcement more heavily black markets. revenues skyrocketed because he made so cracking down on the black market. Rather, At the outset of the recreational market, many more sales. The average store is cur- this change will come just as legalization ad- there was a tremendous buzz and very little rently making around $90,000 per month vocates have predicted for decades — people supply as producers and processors were just in revenues. Most of the recreational stores will choose the safe and secure legal store starting to come online. Many of my clients’ have not reduced their prices to pass cost over the black market if they offer similar processor-to-retail prices were in the $8-12 reductions along to the customer, but they prices. I believe this is finally materializing. per gram range. Retail stores were selling rec- are behind the curve. They will most likely reational marijuana to the public for around figure that out in the next few months or get Chris Crew is the owner and senior attor- $20-30 per gram. Of course these high prices trounced by their competition. ney of THC Law Firm, which represents mar- were not terribly enticing to customers with Despite the uncertainty that failing pric- ijuana businesses in Washington. He is also options in the medical or black market where es have brought, there are good reasons to lead counsel for the Marijuana League.

68 | Marijuana Venture // May 2015

LEGAL PAGES The difference between a trademark and a trade name Registering a trade name doesn’t provide much protection By Neil Juneja ot a week goes by of a trademark law — to protect not only Nwithout a client names, but also logos, packaging and other informing me that they aspects of a brand that differentiates one’s have saved their im- products from all others. Trademark protec- portant brand names by tion also extends beyond identical marks, registering each set of and also protects against all other confus- words with the Secre- ingly similar trademarks. This is the type tary of State as a trade of protection that one is seeking when one name. In reality, they have saved very little. registers a trade name. A trade name (a.k.a DBA, assumed name, Trademarks rights can accrue through fictional name or commercial name) is the common law, state registrations and federal name in which a company conducts busi- registration. Common law rights exist in the ness. When filing the business entity- for region in which the mark is used in com- mation documents with the Secretary of merce. However, the federal Lanham Act is State, a trade name can also be entered for the authority in which common law rights a minimal fee that varies from state to state are enforced. Asking a federal court to en- (e.g. $5 in Washington, $50 in Oregon). The force a cannabis-related common law mark registered trade name allows the entity to do can ultimately prove to be a dicey affair. the following: Therefore, an astute entrepreneur should • Open a bank account; consider brand protection strategies long • File a lawsuit; before enforcement and protection of the • Use on any official document; trademark becomes due. A state trademark • Prevent others from using the identical provides some protection, as well as mini- trade name in that same state. mal resistance for cannabis-related marks, A trade name acts as little more than an as long as that state has legalized marijuana administrative function. It is especially in some regard. useful when doing business as a sole pro- However, a state’s trademark protection prietorship, which begins life with the le- ceases at the state border. This can create a gal name of its sole owner. For instance, if barrier to future projected growth. Finally, Mary Jane forms a catering company and a federal trademark registration is the best wants to open the bank account and deposit protection for a brand that one can achieve checks in a name other than “Mary Jane,” in the U.S. This type of registration protects then she will register a trade name such as a trademark for as long as it is used in com- “Mary Jane’s Last Dance Catering.” How- merce, coast-to-coast, and against all other ever, Mary Jane is not protecting her cater- marks that are likely to cause consumer ing company’s name by these actions alone. confusion. To accomplish the goal of real protection, Of course, registering a marijuana-re- she must look to trademark law. lated brand with the federal government Registering a trade name may even cause brings its own set of challenges. However, significant problems. Upon registering a if successful, the rights established are well trade name, Mary Jane might believe that worth the difficulties. the name is now protected against all others. Not only does this provide no real pro- Neil Juneja is the founder and managing tection in commerce, but use of the trade partner at Gleam Law, a full-service canna- name may constitute infringement of other bis-law practice in Washington and Oregon. trademarks and result in litigation. He is a registered patent attorney and focuses A trade name simply cannot function as on intellectual property and cannabis law. He brand protection. This is the sole province can be reached at [email protected].

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LEGAL PAGES

al. Under a relatively unknown provision of the U.S. Constitution, the Privileges Oregon ponders question and Immunities Clause, which applies to the states through the 14th Amendment, it is unconstitutional for one state to dis- of keeping medical intact criminate against residents of another state when it comes to certain fundamental Residency restrictions could also be added to Measure 91 rights, including the right to earn a living. By Matt Goldberg In the 1948 case Toomer v. Witsell, the he news of “mar- rec market to recast the OMMP. This is the U.S. Supreme Court held that South Car- Tijuana czar” Tom beginning of the end of Oregon’s current olina’s license fees for out-of-state shrimp Burns being suddenly medical marijuana system, which is, com- boats, which were 100 times higher than fired broke the after- paratively speaking, pretty unregulated, the fees for in-state boats, were an uncon- noon before the Or- and cannot remain in its present form in stitutional violation of the Privileges and egon Liquor Control the era of the Cole Memo and seed-to-sale Immunities Clause. Commission’s March tracking systems. This is, incidentally, the The state argued that the discriminatory meeting. He was just same problem being faced in Washington. licensing scheme was necessary to pro- three months into his tenure as the head of The difference is that Oregon aims to “har- tect the state’s natural resources. Uncon- the state’s recreational marijuana program. monize” the two systems before rec goes vinced, the court found that the state’s real The meeting went forward as planned, into effect, whereas Washington legisla- goal was to create a monopoly for in-state with no official mention of Burns, but the tors waited until rec was fully operational, residents. Sound familiar? OLCC’s surprising disavowal of its own which could be even harder to accomplish. It is by no means certain that a Privi- main man on marijuana was the elephant Another potentially huge change to leges and Immunities Clause challenge in the room. By that afternoon, enterpris- Measure 91 concerns residency require- would overturn state marijuana residen- ing journalists were reporting what had ments. Measure 91’s text contains noth- cy laws. For one, the clause applies only happened: Burns had been fired for leaking about residency requirements, a point to individual citizens, not corporations ing an internal OLCC policy document to that received much attention from com- or other business entities. Second, one a lawyer and lobbyist and then lying when mentators both before and after the mea- would expect a state on the receiving end asked about it by agency brass. sure’s passage and led many to speculate of a lawsuit would argue that the restric- The leaked document contained a blue- that Oregon would take a different path tions on out-of-state participation were print for bringing much of Oregon’s prodi- than Washington and Colorado and not necessary to thwart leakage into the black gious medical marijuana production under put such protectionist measures in place. market. Whether a court would find that OLCC jurisdiction. Such an act should be Imagine, then, the surprise for attendees reason more compelling than South Car- prohibited based on the text of Measure of the recent Oregon Medical Marijua- olina’s argument to exclude non-resident 91, which states that the legalization of na Business Conference when state Sen. fishermen is hard to know. What is clear, recreational marijuana would not affect Floyd Prozanski (D-Eugene) announced though, is that a trial court would need the Oregon Medical Marijuana Program his support for a four-year residency re- to take evidence on whether it could be (OMMP). However, unlike Colorado’s quirement as part of a retooled Measure demonstrated that limiting ownership of Amendment 64, the Oregon measure is not 91. — or investment in — cannabis business- an amendment to the state constitution. As The idea of residency requirements es to in-state residents actually does thwart a result, the Oregon Legislature is free to holds a certain visceral appeal among leakage to the black market. tinker with the legislation as it sees fit. the mom-and-pop entrepreneurs who are The kerfuffle over marijuana residen- Two bills that would overhaul the pres- the backbone of the cannabis industry, as cy laws, like with IRC 280E of the tax ent medical marijuana system, SB 936 and evidenced by the populist cheers accom- code or the unavailability federal cannabis HB 3400, have been causing a ruckus in panying Prozanski’s talk. However, the trademarks, likely will blow over once in- the state capitol. The proposed bills would contours of the proposed requirement are terstate cannabis commerce becomes a re- subject medical growers and processors unclear. Does it apply to ownership of a ality. At that point, states will lose any po- to new plant limits and reporting require- licensed cannabis business or to financing tentially compelling argument that would ments. Grow sites larger than a certain size as well? Do 100% of the owners have to justify keeping one state’s residents from — 48 total plants at most — will not be be Oregon residents or simply a majority participating in another state’s cannabis medical anymore, regardless of the intend- of them? At press time, these questions economy. ed consumer. They would be regulated by remained unanswered, leaving business the OLCC as part of the rec system. lawyers to start brainstorming strategies Matt Goldberg advises cannabis busi- Oregon’s legislators and regulators have for working around any residency require- nesses throughout the Pacific Northwest concluded that the federal imperative to ments that come to pass. at Cannabis Lawyers NW, LLC (www.can- stem leakage into the black market re- One problem with residency require- nabislawyersnw.com). He can be found on quires reaching beyond the confines of the ments is that they may be unconstitution- Twitter at @Cannabis_Lawyer.

72 | Marijuana Venture // May 2015 GOT NO PLACE TO GROW? PRODUCTION SPACE FOR LEASE IN BENTON COUNTY Some of the lowest power costs in the state ($.0684/KWH) 3-phase power, natural gas and a private well on site 6+ acres for indoor building or outdoor greenhouse I-502 and county approved, zoned heavy industrial On-site processor to purchase all your products Exclusive space for Producer Only licenses Very competitive grow space pricing CALL NOW! WE ARE FILLING UP FAST! Call (509) 205-1457 or email [email protected] LEGAL PAGES

There is no room for puffery when we are talking about a person’s medicine. In- Accurate labeling is more tegrity in labeling is vital.

IMPLIED WARRANTIES crucial than many realize Products may have an implied warranty of merchantability and/or an implied war- Misrepresentation of products could open door for lawsuits ranty of fitness for a particular purpose. If By Michele Brooke there is no warranty implied or intended, a s strain-specific toward medical marijuana patients seek- well-worded disclaimer may be appropri- Aproducts (flow- ing marijuana strains that claim to be high ate. ers, infused products, CBD. These seeds, plants, tinctures and An implied warranty of merchantability oils, etc.) become more oils are becoming increasingly popular, may arise from the transfer of a product by popular, the impor- and people will pay extra for them. For someone who deals in that product as part tance of understanding example, AC/DC, Catatonic, Charlotte’s of their regular business, or if they hold legal warranties and Web and Harlequin strain-specific prod- themselves out as having particular knowl- disclaimers becomes ucts may command more than a product edge in regards to a product. So, if a pro- vital. Where strain-specific products are containing Juicy Fruit. This could open the ducer or cultivator supplies medical mari- being made available to medical marijuana door for unscrupulous people, seeking top juana to a dispensary, claiming to know all patients, as opposed to recreational users, dollar, to mislead regarding strains they about the flowers, the strain, etc., they are accurate labeling and warranties become are supplying to manufacturers or dispen- creating a warranty of merchantability. an even higher priority. saries. This is serious. And it is advisable An implied warranty of fitness for a par- Honest, non-misleading labeling, war- that suppliers and producers ensure their ticular purpose may exist when the dispen- ranties and disclaimers still apply even in plants are genetically tested if a strain-spe- sary owners tells the supplier they are try- states that do not have formal cannabis-in- cific product is the goal. Likewise,- man ing to provide strains for patients who are fused food regulations. And they must be ufacturers should ensure THC/CBD or suffering the effects of chemotherapy, and properly affixed or otherwise communicat- genetic testing has been completed by a the supplier says, “XYZ Kush is perfect!” ed as required by state law. reputable lab. Based on expressed expertise, the dis- Dispensaries should seek written war- pensary owner then purchases several ACCURATE LABELING ranties from their suppliers or producers, pounds, based on the implied warranty that Under California law, honesty in label- to ensure the end product has an accurate XYZ Kush will help patients. ing is required to be in compliance with label affixed, and that the label describes federal law, as well as state food and food the genuine product to the patient — who DISCLAIMERS retail laws. This means all consumables may be relying on the accuracy and consis- Disclaimers in general are used to avoid (including infused foods, waxes, oils, etc.), tency of this product as medicine. or limit liability. Sometimes a disclaimer is even if made in a home kitchen, must be appropriate, but sometimes they are reject- properly labeled. This requires producers EXPRESS WARRANTIES ed by courts as a matter of law or public and distributors to take a close look at the Under California law, and likely under policy. Disclaimers are specialized — one fine print. What does it say and what does the law of your state, the legal doctrines of size does not fit all. Discuss disclaimers for it mean? Honest labeling means if you express and implied warranty are import- your products with your lawyer. print something on the package, it should ant — and the fodder of more lawsuits than Labeling, warranties and disclaimers are be true and not misleading. About a year you might imagine. So, when it comes to as important in the marijuana industry as ago, I met a business owner who was sell- the manufacturing or distribution of any they are for any other product or service. ing cannabis-infused pastries with a pop- product, these legal doctrines need to be Our focus here is primarily on the integrity ular strain name on the package. When I on your radar. Express warranties mean an of the plant and infused products, but they asked him about the strain in his product, affirmative statement of fact about a prod- may apply to any product, ranging from he informed me that they were not really uct by the seller. That statement of fact in- that amazing electronic bud trimmer to the using the strain on the label — the strain cludes or conveys some sort of warranty. infused protein shake. The bottom line is to was just a sales tactic. This is misleading For example, a warranty that a product was value integrity and honest communication, labeling. produced without pesticides, that it is not and to give our patients, and ourselves, the Up until now, not much attention has misleading about being a particular “fa- safest, most effective products possible. been paid to labeling. However, as the in- mous strain,” that it was a “two-time Can- dustry grows, and, for example, the devel- nabis Cup winner” (when it wasn’t), or that Michele Brooke is an attorney in California opment of high-CBD products increase in it will have a particular effect (and there is who practices civil litigation and civil cannabis market share, labeling will become even no data to support that claim); these are un- law (www.brookelawgroup). She is a member more critical and more scrutinized. true statements and warranties for which a of Americans For Safe Access, NORML and the Many are becoming aware of the trend supplier can be held legally liable. American Herbal Products Association.

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non-prosecution policy, it is unlikely that North Bonneville will face federal pros- Cannabis legislation shows ecution. However, private citizens may choose to challenge the North Bonneville endeavor. power of 10th Amendment Derived from the 11th Amendment, the principle of sovereign immunity bars law- Lawsuits still expected from those that oppose legalization suits against state governments in state and By Sean Badgley federal courts brought by private individu- n a small Washing- by the Obama Administration’s respect for als. This immunity is subject to certain ex- Iton town, a histori- state legalization efforts through a non-en- ceptions, including the non-application of cal moment has taken forcement policy. Although this policy the principle to local government, though place toward ending was initially criticized by many 2016 states may modify this exception. the federal prohibition presidential hopefuls, the general attitude The first articles breaking the news of on cannabis. The city among these likely candidates is greater the North Bonneville endeavor mentioned of North Bonneville respect for the 10th Amendment. the possibility of private citizens contem- was granted a license As clarity between the federal and state plating a lawsuit. The desire to defeat the to open a marijuana retail store through a laws is lacking, the future of prohibition legalization efforts in the name of feder- government-run corporation. This marks lies primarily in the interpretation of the al supremacy is a real factor. Recently in the nation’s first recreational marijuana 10th Amendment by the courts and the ex- Colorado, several sheriffs have joined in license issued to a government-run entity. ecutives that follow the current adminis- a suit to challenge the legalization of mar- This is historical because it is a robust tration which seem to favor a more broad ijuana by Colorado, arguing that the Su- step toward resolving the tension between interpretation of the 10th Amendment. premacy Clause prevents them from up- federal and state marijuana laws. holding state laws. On the one hand, the state is asserting THE POTENTIAL COMPETITOR Though litigation in this area is unpre- its rights under the 10th Amendment to an When the prohibition of alcohol was dictable, clarification should be welcomed even more substantial degree by actively lifted, state entities used the sale and dis- by the cannabis community. Clarity of law participating in the sale of cannabis. On tribution of alcohol as a means of increas- offers many benefits including increased the other hand, litigation concerning the ing their source of investment opportu- federal and state law conflict is likely to revenue. North Bon- RECENT nities, as investors occur in the near future because local gov- neville is following may more readily ernment is not protected by sovereign im- this post-prohibition LEGALIZATION assess the risks in- munity and may be sued by private parties, model by seeking volved with their in- regardless of the Department of Justice’s to generate revenue LAWS GAVE NEW vestments. non-prosecution policy. through cannabis Litigation on these Though the exact outcome of any future sales to support its LIFE TO THE 10TH matters is inevita- litigation is largely unpredictable and dis- budget and improve AMENDMENT. ble. The only issue cretionary, the political attitudes toward public services. is when, not if. The the 10th Amendment implicated by legal- However, unlike the end of alcohol pro- advent of a government-run corporation ization statutes are swaying toward the hibition, the end of cannabis prohibition engaging in the sale of cannabis will likely end of prohibition at the discretion of the at this juncture will still require that states speed up process, as the federal govern- states. comply with federal requirements for ap- ment is forced to define the outer limits of proval. its non-prosecution tolerance and private 10TH AMENDMENT This means an increased likelihood of citizens may take on the matter on their The 10th Amendment provides that the denial, as the members to government-run own, regardless of the federal non-prose- powers not specifically delegated to or applications will be greater, increasing the cution policy. prohibited by the federal government are likelihood of conflicts. The political and legal atmospheres reserved for the states or its people. It’s the As long as government-run corpora- favor a broad interpretation of the 10th source of power states rely on to unilater- tions are subject to the same requirements Amendment, which bodes well for the fu- ally enact cannabis legislation. as private ventures, it is not likely that the ture of the cannabis industry. Historically, the 10th Amendment has market will become flooded with govern- endured years of diminishment by the in- ment-run entities even if prohibition is lift- Sean Badgley is a Washington State attorney creased federal breadth of power through ed at the federal level. who’s been working in the cannabis industry domestic affairs legislation. for more than two years. He has a degree in Recent legalization laws gave new life SOVEREIGN IMMUNITY business economics, and currently works with to the 10th Amendment. This is reflected Since the federal government follows a Ashby Law Group

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THE ULTIMATE

PlanningGROW out a commercial grow facility in advance can prevent problems in the long run By Craig Allen

ike any construction project, building the 2014 issues of Marijuana Venture. Since then, ultimate grow operation begins long before each of the three parts have been among the Lthe first walls are erected or the first wires most-read stories ever published on Marijuana are installed. It begins with proper planning and Venture’s website. an excellent design, so when it comes time to Due to the popularity of the original series and set up a facility, don’t make the all-too-common requests from readers, Marijuana Venture pres- mistake of rushing the early stages. ents a revamped version of story in its entirety, A version of this story was originally published along with the original blueprint sketches. as a three-part series in the May, June and July The following pages outline the steps of build-

78 | Marijuana Venture // May 2015 ing a top-notch, 30,000-square-foot growing fa- holistic approach to the system design, you can cility, including technical aspects of the build-out set yourself up for a much easier path to suc- and environments of each major room of a process. That being said, the mock system outlined duction operation. here was laid out under the assumption that a Among the limiting factors for marijuana group has a master gardener, a large and ideal- producers, some of the most common include ly-shaped building and strong finances. growing expertise, physical space and financing. Not all groups will have everything, but prop- When designing a growing space, all producers er planning can make a big difference in closing should keep these aspects in mind. By taking a some of the gaps.

www.marijuanaventure.com | 79 SITE LAYOUT If saving money and increasing produc- Transplant tion are important factors, then system (Veg 1) design should be a top priority. This is 2200 sq. ft. Veg 2 true whether the goal of the venture is a 50 T-5 4400 sq. ft. large-volume commercial enterprise or a 144 1000w boutique, small-batch brand. 20 ft. When designing a system, there are two 55 ft. Mothers Cloning important questions to address with the fa- Material Material and preparation room storage

16 1000w 20 ft. cility: How big is the space and how much of the space is usable for growing canopy? Indoor gardens need area for more than just plant canopy; it’ll need aisle ways, Bloom 1 places for key activities like transplanting 1800 sq. ft. Bloom 2 or equipment maintenance and spill-over 72 1000w room for those times when plants get too big.

Some growers will also decide to work security, Admin, break bathroom, etc. room, with vertical gardens to increase canopy Bloom 3 Bloom 4 size on a smaller footprint. The key here 30 ft. is not to squeeze yourself out of a place to work. A smaller, healthy crop will produce 60 ft. Hallway higher-quality product than a larger, out- of-control-system. That means a stronger business might have fewer lights in the air. Bloom 5 Bloom 6 The design layout for this grow operation needs to take into account factors like electrical constraints, drain locations, 75 ft. building insulation, bay door locations, Packaging, shipping storage, ceiling heights and even the slope of the floor. But perhaps the most important part Bloom 7 Bloom 8 of the build-out has to do with labor. The site layout can reduce the bottom line with lower staffing expenses. With cities like Seattle considering a $15 an 5 ft. hour minimum wage, marijuana business- Trimming room Drying room Utilities es need to keep an eye on labor rates that could become the largest expense of a growing operation. One good way to do For the sake of this story, a grow facility between 20,000 and 30,000 square feet was mocked up. this is searching for processes that can be large-scale gardening that recent legal- for innovation — but it’s probably best to improved in order to save time. An assem- ization allows, and with that scale comes reinvent the wheel in your spare time, and bly line — a well-organized flow of oper- heavy-duty equipment. For example, in- not with your entire budget. ations where raw materials go in and fin- stead of mounting flip boxes to use one ished product goes out — can save many ballast in two bloom rooms, commercial SCALABILITY AND USE OF SPACE labor hours. Higher efficiency may be the relays can be installed for half the cost. This size grow operation will be out key to a quicker expansion. The same tactic can be employed with of reach for boutique producers, and that commercial air-conditioning systems by means some folks will need to figure out KEY COMPONENTS installing automated louvers to manage good methods of scaling down and trying Once the system layout is drawn up, do the temperature in multiple rooms. to increase efficiency. a fair amount of research about sourcing For the purpose of this mock system, When designing the growing space, the proper equipment to outfit the build- the goal was to illustrate a proven busi- plan to build out veg rooms to around 30% ing. Remember, living things are being ness model that has demonstrated results of the canopy. The goal of the veg room grown. If a balanced environment is cre- and reliability. The system outlined here should be to keep a healthy supply of veg ated for the plants, they will be healthier implements the style found in almost all plants on hand, so the bloom room can be and have a higher yield. The major com- high-output, professional growing appli- filled up and flipped the same day it is har- ponents needed to create this balanced en- cations. Based on years of trial and error vested. One of the best ways to compete is vironment are electrical, lighting, HVAC in the medicinal market, this model has to have no down time for blooming. If the and plumbing. been shown to create the optimal return on bloom room is down for two weeks every Many growers may not be used to the investment. There is something to be said >> CONTINUED ON PAGE 82

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240-volt For switching power power cord between lights Bloom A

Light 1 Ballast Relay

Bloom B

Ignites HPS or Timer Light 2 metal halide lamp For telling the relay when to flip between lights A commercial relay setup can be used to power two lights with one ballast.

<< CONTINUED FROM PAGE 80 mean big problems down the line. It may to run electrical lines and how to install cycle, one full cycle is lost each year — be a good idea to hire an expert to over- outlets properly. The scale of commercial- 25% of the profit, gone. look the finished layout before construc- ly-licensed growing operations means the Another tip is finding ways to maximize tion begins. Hiring a consultant for a sec- end of “dryer plug” bloom rooms and the the footprint of the building. Leased space ond opinion will be cheaper changing the beginning of backup generators, thermal is pricey and often under-utilized by grow- floor plans halfway through construction. overload cutoffs and commercial relays. ers. One easy way to maximize the space Ultimately, if you shine lights on plants, Pricey professional electrical installations is to combine the drying room with the they’re going to grow. But now the goal are now the norm, but the benefits are trimming room. If the plan is for bloom should be process improvement, making safety and greater capability. Photo by Garrett Rudolph; Blueprint sketches by Craig Allen and Garrett Rudolph cycles to finish once every two weeks, the facility more efficient, saving on labor Some producers will have growing fa- that can give enough time to finish trim- and increasing output. cilities with power installed and some will ming the previous harvest before the new The conventional knowledge about pro- have the opportunity to build out from harvest needs to start drying in the same duction has hinged on one question: How scratch. If you plan to purchase or lease an space. much bud can be grown under one 1,000- existing structure, keep in mind that power If the building has tall ceilings, a watt high-pressure sodium grow light? It’s is expensive to install; try to get a building 3,000-square-foot canopy might be able to been a pertinent question in the medical with as much installed power as possible be grown in a 2,000-square-foot building. realm for years, and it has helped advance to save time and money. A project that Stacking rooms is a great option for some many techniques for increasing yield. But, requires new construction will cost more growers, allowing easy sharing of equip- these days, the big constraint isn’t so much up front. However, in the long run, it may ment and power. Some buildings may not power availability or number of plants. It increase ease and efficiency. Not every- have enough height for two bloom rooms will be space. So, the real question now is: one has the resources necessary to build stacked on top of each other, but they may How much bud can be grown per square everything at once, so try to build while have enough space for a drying and trim- foot? keeping future expansion plans in mind. ming room, finished product storage or Do not waste future profits removing and even cloning and small veg plants. POWER replacing systems have already been built. The best practice for designing the lay- The subject of electricity has mystified out is to plan. And once planning has been growers for decades. Every grower must ELECTRICAL NEEDS PER ROOM completed, it should be scrutinized with negotiate the available power, its loca- It is important to plan out the electrical critical eyes. Often small mistakes can tion compared to the growing space, how >> CONTINUED ON PAGE 84

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Main To control power panel Thermometer controls all ballasts on power to independent the facility Bloom ballast ground for sub-panel less Thermal interference Power from cut-off main panel for each bloom room Cuts power to ballasts if room gets too hot

This sketch shows the wiring setup of a thermal cut-off switch that should be considered when setting up the ultimate grow facility.

<< CONTINUED FROM PAGE 82 high-pressure sodium (HPS) bulbs. Metal the production output of traditional HPS needs for each room in detail. If you plan halide bulbs are a good choice at this stage lighting. That said, HPS bulbs consume a properly, you can avoid things like an ex- because their light output is about 25% good deal of energy, so each bloom room tension cord jungle. In this plan’s design, less than HPS. This eases the transition for will need dedicated power. each room will need different amounts of the still-fragile plants as they are moved One way to manage this is to bring pow- power and power for different purposes. from T5 lights in Veg 1 to HPS lights in er in from the main panel to a sub-panel. Some rooms will need a good deal of 120- the bloom stage. To encourage this transi- This sub-panel will control all equipment volt, and others will need dedicated 240- tion even further, it’s also recommend be- — 120-volt and 240-volt — in the bloom volt sub-panels. ginning the Veg 2 stage with dimmed met- room (this includes fans, controllers, de- Cuttings will first be grown in the clon- al halide lights (around 600 watts), then humidifiers, air conditioners, meters and ing/transplants room, or “Veg 1.” This increasing the output to 750 watts or 1000 more). Off of this sub-panel, power will room is designed to bathe the young plants watts after the first few days. The design be drawn to a second sub-panel dedicated in gentle light, allowing them to set their shown in this article series calls for 144 to ballasts so that they can be ground sep- roots. This stage is probably the most im- 1000-watt ballasts in Veg 2, so a hearty arately. Digital ballasts are best installed portant for the future growth of the can- sub-panel will be needed to direct power. with a separate ground from the rest of the opy. Since young plants are very fragile, Once the canopy in Veg 2 is lush, it electrical equipment because the electro- their growth can be stunted by many fac- is time to bloom the crop. In the design magnetic feedback from their operation tors, including too much light, heat, cold, shown on Page 80, there are eight bloom can render other equipment inaccurate. nutrients, imbalanced pH, etc. rooms, and each bloom has 72 digital For example, a nutrient meter can show Providing the proper atmosphere for 1000-watt ballasts running high-output incorrect readings if the power source it growth during this 10- to 18-day period HPS bulbs. Double-ended HPS bulbs can is plugged into has feedback from nearby will ensure that the adult plants are strong also be used; they have a higher light out- ballasts. The last thing a grower wants is a enough to produce dense flowers. T5 fix- put, but also have a higher initial cost and false reading on a nutrient meter. tures are suggested for this room to give produce more heat. Outside of growing space, work light- the plants that gentle and steady light they Blooming plants with HPS bulbs is ing and climate control systems will need will need. As a general rule, T5s run on drastically more productive than any other to be installed, as well as some generic 120/240-volt power. Install a sub-panel lighting type, per watt. Some people will power outlets for tools and other gear. with enough power to handle both the T5s choose to use LED fixtures and plasma These needs should be fairly minimal and for cuttings and some high-intensity dis- lighting options to bloom, but the initial an electrician can help determine the best charge (HID) lights for the mother plants. cost is far more expensive than other fix- way to install those systems. After transplants are rooted, they will tures, although the long-term cost is miti- make the transition to “Veg 2.” This room gated to a degree by lower energy costs. TRICKS OF THE TRADE will generally have dimmable 1000-watt Independent tests have demonstrated Commercial growers have discovered HID lights — either metal halides or that most fixtures sold today cannot match >> CONTINUED ON PAGE 86

84 | Marijuana Venture // May 2015

<< CONTINUED FROM PAGE 84 some effective ways to save money and protect crops from equipment failure. For example, one of the most important and overlooked safety items in an electrical setup is a thermal power disconnect. This is installed between the main panel and a sub-panel, and it’s controlled by a small thermostat in the grow room. In the event of a climate control failure — for example, if the air conditioner malfunc- tions but the ballasts are still on — the unit will automatically cut power to the entire system when the room temperature rises above a set amount. This will protect the crop from certain heat damage until the air-conditioning can be fixed and the room can be cooled down. A backup generator system is another highly recommended piece of equipment. When the power goes out — and it will — essential systems must be protected to ensure yield is not affected. Ideally, the generator could power the entire facility so that there is minimal downtime. But more practically, generator only needs to handle 10-20% of overall power needs. The most important systems are cloning machines, minimal lighting in Veg 1 and Veg 2, minimal lighting in the bloom rooms and minimal HVAC. Electrical components can be pricey, and one of the most expensive is wire. This is one reason why sub-panels are so prevalent in this design. Running one large wire to a sub-panel 100 feet away from the main panel prevents running 20 smaller lines that same distance. These savings will add up and leave more money for other aspects of the build-out. Once again, if the plan is to expand the grow facility over the course of a few months or a year, the space should be wired for what it will look like when it is completed; this will make expansion much easier and more cost effective. Another item which can save strapped- for-cash producers in their initial build- out is a commercial relay that powers two HPS lights with one ballast. This works by switching the output of the ballast from one lamp cord to another lamp cord. So let’s say there are five HPS lights in Bloom Room A, and five HPS lights in Bloom Room B; normally 10 ballasts would be needed to power all 10 lights, but that number can be cut in half by installing commercial relays. >> CONTINUED ON PAGE 89

86 | Marijuana Venture // May 2015 (503) 477-8284 Transplant Bloom room close-up (Veg 1) Ventilation 2200 sq. ft. Veg 2 This image 50 T-5 4400 sq. ft.HPS HPS HPS HPS HPS HPS shows the 144 1000w 20 ft. setup of a HPS HPS HPS HPS HPS HPS 55 ft. bloom room Mothers Cloning Ventilation with 72 Material Material and preparation room storage HVAC

16 1000w 20 ft. 1000-watt HPS HPS HPS HPS HPS HPS HPS lights Bloom 1 HPS HPS HPS HPS HPS HPS Bloom 2 1800 sq. ft. Ventilation 72 1000w Admin, security, security, Admin, break bathroom, etc. room, Bloom 3 Bloom 4 30 ft.

60 ft. Hallway

Bloom 5 Bloom 6 75 ft. Packaging, shipping storage,

Bloom 7 Bloom 8

5 ft. Trimming room Drying room Utilities

88 | Marijuana Venture // May 2015 growers have not relied upon complex HVAC systems to keep their rooms in appropriate conditions, but instead have used fans to vent in cooler air from out- Transplant Bloom room close-up side their grow rooms, while pushing the (Veg 1) warm air out. This method has several Ventilation drawbacks, from possible contamination 2200 sq. ft. Veg 2 This image by bugs and molds to the temperature and 50 T-5 4400 sq. ft.HPS HPS HPS HPS HPS HPS shows the humidity fluctuations of the season. By 144 1000w using HVAC tools like air conditioning, a 20 ft. setup of a grower can keep the temperature within a HPS HPS HPS HPS HPS HPS 5 degree range all year and utilize grow- 55 ft. bloom room ing methods like CO2 enrichment, which Mothers Cloning can increase yield dramatically. Now, with Ventilation with 72 larger-scale production facilities coming Material Material and preparation room storage HVAC

16 1000w 20 ft. 1000-watt online, and the challenges of operating in a HPS HPS HPS HPS HPS HPS highly-regulated, highly taxed market, it is HPS lights more important than ever to increase yield and maintain quality. The main purpose of an HVAC system Bloom 1 HPS HPS HPS HPS HPS HPS is to combat the heat generated by a light Bloom 2 source — most commonly high-pressure 1800 sq. ft. Ventilation sodium bulbs. This heat output is mea- 72 1000w sured in BTUs (British thermal units). Air conditioning systems are rated by either << CONTINUED FROM PAGE 86 BTUs or tons of cooling, where one ton Now Bloom A can run five lights for 12 INTERIOR SPACES of cooling is equivalent to 12,000 BTUs. hours, then the power switches rooms and It has been said in the growing commu- As a general rule for air conditioning, a Admin, security, security, Admin, break bathroom, etc. room, Bloom B has five lights on for 12 hours. nity that you can tell the state of a person’s grow facility should feature 1.2 times the There are some prepackaged products on life by looking in their grow room. When total BTUs that need to be cooled; a slight- Bloom 3 Bloom 4 the market called “flip boxes” that allow attempting to create a business that pro- ly oversized system will slow the wear on 30 ft. up to 10 or 20 ballasts to flip between duces a large quantity of marijuana, the the system’s components and increase re- rooms, but they are costly, ranging be- foundation begins with a well-built grow- liability.

60 ft. Hallway tween $50 and $100 per ballast replaced. ing facility. Each business needs to have a Traditionally an open-hood 1000-watt In large commercial installations, it is strong understanding of what it is trying to HPS lamp emits upwards of 3,800 BTUs far less expensive to buy the components accomplish, and what helps it thrive. of heat, but a vented hood should reduce and hardwire ballasts and lamp cords to Many things will impact the ability to that number by about 40-50%. Keep in separate commercial relays which may plan and execute, including security, staff- mind, vented hoods will reduce heat, but Bloom 5 Bloom 6 only cost $12-15 per ballast replaced. But ing, sales, branding, material sourcing there will be a 6-8% loss in light energy they do have to be wired, which takes and monitoring competition. All of these reaching the canopy (that light is absorbed more time than a plug-and-play unit. can be important for success; but once by the glass on the vented hood). On the This commercial production design the facility is built and licensing is com- upside, decreasing air-conditioning needs 75 ft. needs a lot of power, and it will require plete, generating revenue hinges on one by roughly half can reduce installation roughly a 3,000-amp service from the key point: producing marijuana. The best costs by tens of thousands of dollars. LED electrical provider. The nuances are not way to do that is to create and maintain grow lights produce significantly less heat, Packaging, shipping storage, the same as a 200-amp home panel, so it thoughtful spaces in which to cultivate it. opening the door to reduce cooling needs will be important to find a good electrician even further. Bloom 7 Bloom 8 who is willing to help discover the best HVAC SYSTEM Air-conditioning systems this size are way to apply these methods to the space. Each room of a grow operation will costly to install and operate, with an up- Getting the major systems like electrical have a different purpose and should be front cost between $1,000 and $2,000 per correctly managed in the beginning will built keeping that purpose in mind. The ton of cooling, depending on the equip- help build a strong business with good conditions inside the grow and bloom ment and installer. Many budgets will not 5 ft. operational flow and product output. You rooms are the Achilles heel of an opera- be able to afford dedicated systems for all now have just enough information in your tion; the best way to protect production is of the lights planned for an operation. A hands to be dangerous, so bear in mind to build HVAC systems that maintain ideal good way to reduce these costs is to split Trimming room Drying room Utilities that you should still discuss your final conditions. Production rooms will need to the 100 lights into two separate rooms of plans with an experienced growing con- have the proper balance of temperature, 50 lights, setting the lights to operate on sultant. Through preparation, organization humidity and airflow. 12-hour periods — 50 lights in Room A and processes, you can create balance. Historically, the majority of medical >> CONTINUED ON PAGE 90

www.marijuanaventure.com | 89 << CONTINUED FROM PAGE 89 turn on for 12 hours, then turn off, while the other 50 in Room B turn on. This way half of the cooling can be used by setting up dual-zone climate controls and ventilation. It’s also cost effective to insulate and drywall the rooms; R-19 insulation can save equipment a lot of working hours per year by maintaining the internal temperatures. Along with temperature, controlling the humidity of a room can help acceler- ate the plants’ growth in all stages of life. Marijuana plants respond well to higher humidity during the cloning process and the early veg period, which means that veg and cloning rooms may require humidifiers depending on the climate and season. If left unchecked, humidity can also ruin a crop; for example, high humidity in late bloom can allow the growth of molds that The cooling needs of a grow facility will partially be determined by what type of lighting is used. will render the product unsalable. Through LEDs, such as the ones used by Trail Blazin’ Productions in Bellingham, Washington (top), are the growing process, plants will absorb cooler and more energy-efficient than HIDs (pictured below), but the initial cost is also higher. and release hundreds of gallons of water, so the battle in most grow rooms will be keeping the humidity low. Air conditioners are great dehumidifiers — in their cooling process the copper coils in the air handlers will condense water vapor into droplets. Along with the dehu- midification achieved by air conditioners, most rooms will need additional dedicated dehumidifiers. Each room’s air conditioners and dehumidifiers will collect many gallons of water per day. For example, a five-ton air conditioner will condense an average of 15-20 gallons in 24 hours. If that conden- sation is captured and piped into watering bins, all that pure water can be recycled back to the plants. Keep in mind that if equipment is kept clean, the water that is recycled will most air many times daily, which offers an- UV light is deep in the ventilation system. likely be cleaner than the water from the other opportunity to impact the environ- tap. A well-run grow room might need ment by filtering and cleaning the air as it GARDEN ENVIRONMENT only an additional 10-20% of outside wa- passes through the chambers. Applying a Each room will require different inputs ter per day, which means a lower water bill high-quality filter to the return air supply for healthy plant growth. The clone room and a lower impact on the local environ- will help capture large particles like dust will need to have higher humidity and less ment. and sediment, keeping them off of the can- light, while the bloom room will thrive Finally, the HVAC system will need to opy, which is good for photosynthesis. with lower humidity and more intense do something it was created to do — move A good filter can also snag mold spores, light. Bear in mind that some strains may air. Airflow is vital to a healthy plant can- and the fewer mold spores in the air, the prefer different conditions. opy; it will help prevent hot or cold spots lower probability they will take hold in The clone and transplant room needs and keep molds and mildews from seed- buds. Along with a filter, another way to warm temperature and high humidity. ing. It will also keep plants moving and vi- clean the room’s air is to add ultraviolet Young cuttings and transplants can’t effec- brating, creating stronger stalks and heart- light into the ventilation system. UV light tively feed through their roots, so they feed ier vegetation, which will help the plants can destroy mold spores if given adequate through their epidermis (the plant equiva- produce and support larger buds. contact time. But be careful because it will lent of skin cells). The clone room should The ventilation system will cycle the also damage human eyes; make sure the >> CONTINUED ON PAGE 92

90 | Marijuana Venture // May 2015

<< CONTINUED FROM PAGE 90 to around 35%. This will allow the plants rather than a fewer large plants has sev- also have good airflow to prevent mold a good transition from growth into bloom- eral benefits, including quicker veg time, from growing; but since young plants are ing, and prevents mold from taking over in which means an earlier harvest. still fragile, be careful not to agitate small late bloom. Airflow is another means for The faster you can bloom, the faster you plants too much. Clone and transplant pro- controlling molds. Bloom rooms should can harvest and also cycle through plant duction is a vital aspect of a production fa- have powerful HVAC genetics. If it takes three cility as it can keep production on point or systems in addition to BUILD THE weeks to veg and eight it can lose a lot of money through delays. fans blowing air over the weeks to bloom, that The goal here is to produce your quota of canopy. FACILITY WELL means a new strain can healthy, rooted plants as quickly as possi- The bloom room’s be brought to market in ble; a delay of even one week for a batch HVAC system should be AND BUILD IT about three months, and of clones can mean lost revenue of tens of able to keep the room be- WITH INTENT. it also means the market thousands of dollars or more. tween the high-70s and can be supplied with The veg rooms will not need to be as mid-80s. This temperature range, along in-demand strains in healthy quantity. A humid as the clone and transplant room, with CO2 enrichment, will allow for in- good rule of thumb is to bloom as soon as but the plants still benefit from higher hu- creased photosynthesis. CO2 enrichment the canopy is full. The more healthy, root- midity in this stage. Humidity levels of is a method of growing that supplements ed plants that are in veg, the more cano- 50-65% are ideal. Along with the humid- the environment’s natural CO2 level of py gets covered, so the quicker plants can ity, veg plants will benefit from warmer 350 parts per million up to 1,200-1,500 bloom. temperatures, so somewhere in the high parts per million. Providing the plants Many growers believe in “lolly-pop- 70s is great for a balanced environment. with more CO2 to use for photosynthesis ping” the stalks, which essentially means The plants will be seeing HID lights for can allow them to grow up to twice as fast. cutting off all growth except for the top the first time here so whether the room 8-10 inches. Under-pruning like this pre- uses HPS or metal halides, keep the lights GARDEN LAYOUTS vents the lower leaves — those that don’t three feet or so above the canopy at first to In a large-scale production facility, like produce quality marijuana buds — from prevent light and heat stress. the 30,000-square-foot facility outlined taking energy away from the more dense Once the plants are in the bloom phase, here, it is important to keep labor — and and marketable top colas. with the humidity should start around 50- therefore plant maintenance — to a min- Unfortunately, every time a leaf is cut, 55% and drop over the course of the bloom imum. Producing many smaller plants, >> CONTINUED ON PAGE 94

92 | Marijuana Venture // May 2015

<< CONTINUED FROM PAGE 92 will make it easier to install trellis netting. ed territory is a daunting and complicat- days of growth are being cut too. And A benefit to growing lots of smaller ed proposition. At this junction in history, days of growth means days of expenses. plants in the veg room is that their branch- with many people and groups investing So if removing leaves can be avoided, es don’t need support to hold them up, their life savings into this new industry, it while still getting full-quality production, so workers won’t be spending countless is important for investors, business own- the system has been maximized. With the hours of labor connecting bamboo stakes ers and growers to be conscious of their price and demand for oils and extracts in- to the branches. A narrow aisle every five decisions. creasing rapidly, any plant material con- feet or so will be sufficient space to allow All too often, people forget that the de- taining THC, including the sugar leaf and for plant maintenance. cisions made today will guide the next 10 undeveloped buds, can challenge the value When plants are moved into the bloom years or more. For indoor producers, re- of high-quality trimmed buds. room, they will grow quickly, possibly member that the core of the business is in- A wise grower may choose to stop un- doubling in height within about three side the walls of the building, and more to der-pruning altogether, decreasing labor weeks. All of that growth will need some the point, they are inside the boundaries of and gaining in gross product. Growing structure, and one of the best ways to pro- your decisions. Build the facility well and smaller plants with a final harvest foot- vide that structure is a trellis net. build it with intent. print of one or two square feet will allow When the veg plants are first moved into The Ultimate Grow series was written waste and delays to be minimized. the bloom room, cover each 10-foot row to describe how to design and build a The layout of a large veg room should with trellis nets that run the length of the 30,000-square-foot facility, but the major- take into account the vast number of plants room. Allow the plants to grow into the ity of producers are working with smaller in it. A veg room might have enough plants trellis netting so that it can support their grow operations. All of the ideas in this in transition to supply three to four bloom flowers when they start to get heavy. Be- series can be used for any size grow. Re- rooms, which could be 2,000-2,500 plants. cause individual plants won’t need to be member that a smaller facility that is run Organization will be vital, so calculate managed, the plants will naturally grow well can profit more than a larger, ineffi- how many plants of different ages need to into every spare inch of light, minimizing cient facility. be in rooms at any time to divide the room labor and maximizing the canopy’s foot- into equally-spaced sections. print. Craig Allen is an experienced grower and Painting lines on the ground between consultant. He is the co-owner of Groco Sup- groupings is an easy way to save time. CONCLUSIONS ply in Bellevue, Washington (grocosupply.com; Dividing the room into 10-foot wide rows Developing a large business in unchart- 425-998-7212).

94 | Marijuana Venture // May 2015

SEEDS vs. CLONES

98 | Marijuana Venture // May 2015 Positives and negatives exist for both starting methods By Jennifer Martin very marijuana cultivation operation tal amount of time spent from planting Eis faced with the question of how to to harvesting is four to six weeks short- get starter plants for each flowering cycle. er with clones than with seeds. You don’t On one hand, growers want to harvest and have to take the time to sprout and sex the sell each crop as quickly as possible. The plants before you can go into a 12/12 light flip side is aspiring to have the cleanest, cycle. highest-quality plants possible. Clones are all females, ready to flower That’s where the dilemma of whether as soon as they are big enough. to start from seeds or clones comes into Cloning has some shortcomings as play. Which is the better and why? well, and these are more significant for It turns out that both strategies have some growers than for others. For one, their strengths and weaknesses, and the mother plants can acquire viruses and choice between them depends on the par- other infections over time that weaken ticular priorities of the managing organi- the strain in some way. This is often at- zation. tributed to “genetic The industry stan- IF A STRAIN IS drift” in the culti- dard for cultivation vation community, operations is to in- LOSING STRENGTH but there’s no sci- clude a partitioned entific evidence for room for mother FROM ONE genetic changes in plants of the de- clones through the

Photo by Oregrown Photography GENERATION TO THE sired strains and an course of multiple area where they are NEXT, IT’S ALMOST generations. Many cloned and rooted clone-only strains on a regular basis, to CERTAINLY BECAUSE have been around resupply the flow- for decades and are ering operation as IT HAS BEGUN TO still going strong. needed. Clone pro- If a strain is losing duction is typical- ACCUMULATE PLANT strength from one ly done with either generation to the aeroponic cloning DISEASES. next, it’s almost cer- machines or with more traditional slabs tainly because it has begun to accumulate or plugs that are incubated on shelves plant diseases. with heat mats. Regardless of the root- These diseases are where the downside ing method, cloning provides a quick and of cloning most commonly shows itself, consistent way to keep flower harvests particularly when clones are acquired coming in. from outside sources. Aside from workers Cloning from your own mother plant bringing bugs in on their clothing, infesta- stock has several advantages over starting tions from dirty clones are the most com- from seed. For one, it guarantees genet- mon way that gardens run into trouble. ic consistency. All your flowering plants A quarantine space is an absolute must will be the same, whereas sprouting seeds for the clone acquisition process. Newly often comes with unwanted variation introduced clones should have a sepa- from plant to plant. And second, the to- >> CONTINUED ON PAGE 100

www.marijuanaventure.com | 99 << CONTINUED FROM PAGE 99 healthier plants. Many growers don’t tion for growers. Traditionally, seeds take rate room where they live for one or two believe it until they’ve seen it with their four to six weeks to show gender, now in- weeks, under domes, with an eagle-eyed own eyes, but the value of the taproot expensive genetic tests can help weed out worker examining them daily for any in- should not be underestimated. The first males as early as 10 days after planting. sect activity, before they are allowed into root to come out of a seed and penetrate This is especially helpful in state-regulat- the larger facility. into the medium has strength that no oth- ed grow operations that have space and Anyone who has been growing can- er roots can match. It will help produce plant-number limits. The sooner you can nabis for more than a year or two has a flowering plant that’s 10-15% larger get unwanted males out of a garden, the most likely encountered a wide range of and more productive than a cloned plant faster you can use that space for more pest problems. It’s worth doing anything of the same size. This improvement in valuable plants. If you have a genetically possible to avoid infestations in the first yield helps offset the time loss that comes stable source of seeds, then starting from place. Prevention is much cheaper and along with seed use. seeds and using a sexing test offers the more enjoyable than ongoing abatement, Seeds also fit better into certain styles best of all worlds — a bug-free, fast and especially in an operation that’s designed of growing. Many outdoor growers prefer consistent approach to ongoing flower for continuous harvests, which most legal seeds, because they favor natural tech- production. operations are. niques and are accustomed to a single In the end, growers should try each and This is where seeds become an attrac- growth cycle (with very large plants) each every approach to plant stock regenera- tive alternative to clones. They are free year. Seeds are also easier to transport tion until they find what suits their setup of all infections, including all insects and and more affordable than clones. They the best. Any method that can save time systemic diseases, which can be a major have more genetic diversity, which can be without quality loss will win out over the relief to the growers. Starting from seeds a drawback, but it’s precisely that genetic long term. rules out one of the two major ways bugs diversity that is so important to the future get into marijuana gardens. If you start of cannabis. Jennifer Martin is the winner of the 1998 from seeds and you can keep your site Not everybody needs to grow from San Francisco Bay Area Cannabis Cup, and is workers from bringing bugs from other seed, but hopefully some people will keep a pioneer in the US marijuana clone industry. gardens, then you’ve got a good thing doing it, so that new and interesting phe- She currently speaks at national conferences going. notypes continue to appear. and consults for the legal cannabis industry. Seeds have another major advan- Biotechnology is also doing its share to She can be reached through her website Mar- tage over clones — they produce larger, make seed-based cultivation a better op- ijuanaPropagation.com.

100 | Marijuana Venture // May 2015

Powdery mildew infects several oak leaves.

the disease and just because a plant happens to be free of lightly colored powders The Powdery Plague does not mean that the plant is free of in- Ornamentals, cannabis alike are prone to mildew diseases fection. DISEASE CYCLE By Patrick Wagner For outdoor plants, the spring breeze owdery mildew is a typical disease it is the disfiguration and mildew itself that helps the disease spread to the newer, tender that can befall ornamental plants, and will destroy a hard-earned harvest. For plant tissues, usually the broad photosynthe- P Photo by Roger Griffith/Wikimedia Commons it’s also one of the most devastating and landscape plants, this might mean the loss sizing leafs that are beginning to sprout up common diseases that cannabis growers of some of its beauty. However, for canna- from the soil surface. The spores are asexu- have to contend with. bis that is meant for human consumption, al, meaning that every contact with the plant Caused by a range of microscopic fun- a serious outbreak of powdery mildew spores could result in another possible infec- gi, it’s easy for people to believe that the could mean the loss of an entire crop. tion on new crops the following year. mildew is the same from plant to plant; in In most cases, with the exception of As the spores begin to reproduce over reality, there is a wide variation among the some perennials, powdery mildews are time, the leaves (in most cases) will begin to many different diseases associated with plant specific. Therefore, the risk of give off a white-to-light gray residue. This powdery mildew. cross-contamination between different mildew can be common in cooler and more Based on the published research of Jan- species is low. humid climates, like greenhouses or in ex- na Beckerman, from Purdue University’s Powdery mildew can first be spotted by tremely dry climates like several styles of Department of Botany and Plant Pathol- discolored leaves that defoliate and then indoor grow operations. ogy, the following is an account of the die, or by disfigured shoots or deformed The most common solutions to powdery symptoms and disease cycles found to be flower buds. The plant will usually turn mildew in landscaping plants has been to in- typical of powdery mildew in urban grow yellow and will darken from the infection. crease air circulation and light penetration operations. On younger plants, common indicators of for the infected plants. For cannabis, there infection can include longer, malnourished are a wide range of chemicals that can be SYMPTOMS stems, a shortage of leaves and leaf discol- used, but growers are well-advised to take Typically, powdery mildew has not been oration.The powdery mildew that is easily preventative measures before the disease known to be fatal toward its host, however recognized is just one of several forms of strikes.

102 | Marijuana Venture // May 2015

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108 | Marijuana Venture // May 2015 HISTORY INTERTWINED The U.S. has a long, complicated and hypocritical relationship with cannabis and industrial hemp By Joy Beckerman he paradox of America’s history and could pay their taxes with industrial Tits cannabis prohibition policy are hemp throughout the country. multitudinous, glaring and saturated in Paper money was regularly of little use irony. Perhaps none is more protrusive and value to the colonists, whose econ- than the rejection of cannabis-related omy often revolved around a barter sys- currency by the Federal Reserve, because tem. The steadfast and universal demand not only was America’s independence for hemp, along with its uniformity and from England reliant on industrial hemp, resistance to deterioration and value con- but also because the raw material itself mpared to other raw produce made it a was used as U.S. currency for more than standard commodity in the developing 200 years. country. For thousands of years, including into In 1776, governing officials described the early 1800s, hemp was the foremost hemp as “a valuable economic commod- global business and industry, with its fi- ity to colony and mother country alike,” ber moving virtually all of the world’s as part of a concerted public awareness shipping. The world’s economy utilized campaign. and relied upon the countless necessities Even then, neither England nor Amer- produced and derived from hemp. ica were able to cultivate enough hemp Several books, including “The Emper- to meet their respective needs, and each or Wears No Clothes,” by Jack Herer, had to import great quantities from Rus- chronicle the United States’ historic rela- sia, Hungary, Czechoslovakia and Po- tionship with hemp. land. In 1809, while John Quincy Adams was serving as the American Consul at HISTORY St. Petersburg, Russia, he noted seeing At Jamestown Colony, Virginia in “as many as 600 clipper ships flying the 1619, America’s first cannabis law was American flag, in a two week period … enacted. However, instead of making the loading principally cannabis hemp for plant illegal, all farmers were mandated England … and America, where quality to grow “Indian hempseed.” hemp is also in great demand.” Similar compulsory hemp cultivation According to the 1850 U.S. Census, laws were enacted across the colonies America was then home to no less than into the 1700s. Hemp was considered 8,327 hemp plantations — with a planta- legal tender in most of the nation from tion meaning a minimum of a 2,000-acre 1631 through the early 1800s. During pe- farm. This equates to at least 16 million riods of scarcity, farmers could actually recorded acres of hemp cultivated in the be incarcerated for not producing hemp. U.S. — a number that doesn’t even ac- For more than 200 years, U.S. citizens >> CONTINUED ON PAGE 110

www.marijuanaventure.com | 109 Workers bundle harvested hemp from a field in Kentucky in this 1898 photo that was originally published in Popular Science Monthly, Volume 54. On the previous page, huge drop hammers guided by thick hemp ropes form sheet metal parts for United Nations bombers and fighters at the North American Aviation, Inc. plant in Inglewood, California in 1942. The photograph was taken by Alfred T. Palmer and is part of the U.S. government’s Farm Security Administration/Office of War Information collection in the Library of Congress.

<< CONTINUED FROM PAGE 109 The most obvious ropewalk building of the treasury from 1921 to 1932, was count for the tens of thousands of smaller that comes to mind is Faneuil Hall, also one of America’s richest men, paying the farms growing hemp, nor the potentially known as Quincy Market, in Boston, third-highest income tax in the country, hundreds of thousands of family hemp which was heavily populated with similar behind only John D. Rockefeller and patches that were being grown across the ropewalk buildings. Henry Ford. nation. Until approximately 1800, hemp seed He was born into tremendous wealth All one needs to do is ponder the mu- oil was the most used oil for lighting in and became an extraordinarily success- nicipality names “Hempstead Coun- America and the rest of the planet. It was ful lumber and coal businessman. He ty, Arkansas,” “Hempstead, Texas,” second only to whale later joined, then took “Hemphill, North Carolina,” or “Hemp- oil between 1800 and MARIJUANA ownership of, his fa- field, Pennsylvania” to arrive at the con- the 1870s. ther’s banking firm, T. clusion that industrial hemp was obvi- All fine paints and WAS CLEARLY Mellon & Sons. Mellon ously an exceedingly significant part of varnishes were made assisted with the forma- American life. from hemp seed oil THE SCAPEGOAT tion of the Union Trust About 90% of all sails for ships were and/or linseed oil for Company and Union made from hemp (the word canvas is ac- thousands of years. Ac- FOR HEMP. Savings Bank of Pitts- tually derived from cannabis). Hemp has cording to the National burgh, which loaned also been used for basically all rigging, Institute of Oilseed Products’ congressio- DuPont nearly 80% of the funds needed anchor ropes, nets, shrouds and uniforms; nal testimony against the 1937 Marijuana to grow its petrochemical enterprises. 80% of all textiles were primarily made Transfer Tax Law, 58,000 tons of hemp Mellon then expanded his own industri- with hemp fiber through the 1820s; 75- seed were used in American paints and al activities to oil, steel, shipbuilding and 90% of the world’s paper was made with varnishes in 1935 alone. After the Mar- construction. hemp fiber until 1883, and leftover hemp ihuana Tax Act passed, the hemp drying His financial backing also birthed scraps and clothing were recycled into oil business was swallowed up by Du- enormous conglomerates involved with hemp paper until that time (thus the term Pont’s petrochemicals. aluminum, industrial abrasives and coke. “rag” paper); 70-90% of all rope, twine Surely this story of engineered inequal- Mellon financed the refinery that grew and cordage was made from hemp until ity cannot be told in full without sharing into the giant Aluminum Company of 1937, and nearly every city and town the nefarious role of multi-millionaire America (Alcoa). in the world had some type of hemp Andrew Mellon in cannabis prohibition. He partnered with Edward Goodrich rope-making industry. Mellon, who served as U.S. secretary >> CONTINUED ON PAGE 112

110 | Marijuana Venture // May 2015

<< CONTINUED FROM PAGE 110 Acheson in manufacturing the inorganic compound silicon carbide, a revolution- ary abrasive, and formed the Carborun- dum Company. And he created an entire industry by way of financing Heinrich Koppers, inventor of coke ovens that converted industrial sludge into coal-gas, coal-tar and sulfur. Coke is a fuel with a very high carbon content. The more commonly used form of coke is manmade, derived from oil refinery coker units or other cracking processes, and is known as petroleum coke or pet coke. Mellon’s caustic petrochemical and A tax stamp that allowed for the production of hemp during World War II. banking wealth peaked to approximately late-night proceedings that culminated in superlative worst that capitalism bears $300-400 million in 1929 and 1930. And the 1937 Marihuana Tax Act. which has created cannabis prohibition in 1930 — just seven years prior to the and the banking laws facing legitimate abrupt passage of the Marihuana Tax Act, COMMENTARY medical and adult-use marijuana com- and two years prior to the end of Mellon’s Marijuana was clearly the scapegoat merce today. service as secretary — the Department of for hemp, while the U.S. developed and We must use our voices, our phones, the Treasury created the Federal Bureau glorified (with the help of social engineer- our pens, our computers and our dollars of Narcotics, now known as the Drug En- ing) new-fangled, inorganic inventions to send the bellowing message to Con- forcement Administration. that were detrimental to the environment. gress that we will no longer tolerate this Also in 1930, Secretary Mellon’s then- There’s no soothing shade of lipstick to absurd theater. nephew-in-law-to-be, Henry Anslinger, put on this industrialist pig of charade. was appointed as the first commissioner While the Federal Reserve allows for Joy Beckerman is the president of Hemp Ace to this new Federal Bureau of Narcotics. hemp commerce — a beacon of light in International and president of the Washington It was Anslinger who presided over the the darkness — it is sheer greed and the chapter of the Hemp Industries Association.

112 | Marijuana Venture // May 2015 Oregon is the future of CANNABIS The Hughes Companies – Industry Knowledge and Legal Expertise

CALL TODAY (888) 878-9108 Contact us to obtain your FREE assessment from an Oregon lawyer www.TheHughesCompanies.com [email protected] GUEST COLUMN

recommend, and for patients to access consistent therapeutics. Test results emphasize Furthermore, The Werc Shop analyses have found that roughly 20% of the medical products tested by its lab over the past importance of regulations five years do not meet the microbiological standards established for Washington’s Quality control becomes even more vital for medical patients recreational market. By Vicki Christophersen This is not meant to suggest that the n Washington State, doctor-patient relationship and the value microbiological standards currently man- Iwe are making of not restricting the practice of medicine dated by the Washington State Liquor progress toward a sin- unnecessarily. Control Board are perfect, because they gle regulated system But as a scientist, and in his conversa- are not. However, it does seem inane to where consumers can tions with regulators in Olympia, he has accept that medical products should not safely purchase can- testified at public hearings and submitted at least meet those microbiological stan- nabis products from letters to policymakers expressing serious dards established for products that are fully-licensed and reservations about labeling cannabis as a meant for infrequent use by healthy indi- state-inspected businesses. While we “medical” product while also treating it as viduals. For any perishable product, mi- Washingtonians think of ourselves as pro- somehow different crobiological stan- gressive — giving new meaning to the from all other med- IT IS NOW, IN THESE dards are a means to Evergreen State — the truth is that nearly ical products. With- ensure basic sanita- half of the country permits the medical out minimal quality EARLY DAYS OF A tion and safety prior use of marijuana. There are now 23 states control and labeling to human consump- plus the District of Columbia that have requirements, it is LEGAL CANNABIS tion. Even the food approved the use of cannabis for medical impossible for ei- we buy in grocery purposes. The range of regulations varies ther health providers INDUSTRY, stores is tested for considerably from state to state, but the or patients to make THAT WE MUST microbiological momentum toward legalization nation- informed decisions insults, such as E. wide is undeniable. about safety, consis- BUILD A STRONG coli and Salmonella. It is now, in these early days of a legal tency and efficacy. Cannabis should be cannabis industry, that we must build a A regulated system FOUNDATION FOR no different. strong foundation for its growth. Its mat- committed to safety There is no place uration out of the shadows and into the and understanding, ITS GROWTH. for a casual “why light demands it. Part of that effort in for patients and all fix what ain’t broke” Washington has been devoted to the in- others, must account for the composition approach to cannabis simply because of spection and testing of cannabis products of the product. We already do this for the old ideas about marijuana use. As the le- to ensure safety, quality and potency with food found in our grocery stores. The gal framework surrounding cannabis be- the goal of determining fitness for sale to same should be true for cannabis found in comes firmly established in Washington the public. our medical access points. and other states, many more individuals These safeguards are critical to building The Werc Shop began testing medical will begin to explore the benefits of can- public trust and ensuring accountability. cannabis five years ago with the purpose nabis. Increasing the probability of pa- Such safeguards also empower advocates of helping to make safe, consistent and tient safety requires transparency and a of legalization and medical cannabis alike reliable medical cannabis available to pa- willingness to identify and address issues to make a stronger case for consumer tients. Five years of cannabis testing data with cannabis — right now. safety. in The Werc Shop archives has revealed a It is only by shining light upon the bur- One member of the Washington Can- few things. First, medical cannabis strains geoning cannabis industry that we can naBusiness Association, Brad Douglass, are often misidentified and mislabeled. position ourselves as responsible citizens is a Ph.D. organic and medicinal chemist For example, products offered as being and leaders. We should strive to enact with expertise in the regulation of health “high in CBD,” a cannabis component standards that will help protect patients products. frequently touted for its medical benefits, and adult-use consumers alike while also In his role as scientific director at The are commonly found to have low levels of supporting those conscientious produc- Werc Shop, a botanical quality control CBD. ers and providers that seek to make safe, and research laboratory in Bellevue, Sometimes these same products contain consistent and reliable cannabis products Washington, Douglass has been strongly high levels of THC, which is regarded as available. encouraged by the positive benefits that the primary psychoactive component of cannabis has for a range of patients. Like cannabis. Such a situation makes it im- Vicki Christophersen is the executive director many, he is also a firm believer in the possible for health providers to reliably of the Washington CannaBusiness Association.

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For example, a garden supply store could provide a monthly gardening news- Emails remain a strong letter with indoor and hydroponic gardening tips and a dispensary owner would do well sharing informative content about technique for marketing the ways in which marijuana works in the body and how the different products can Rise of mobile devices has changed the way people interact help different ailments. By Alexa Divett By providing valuable information, you or the past two your other marketing channels. will demonstrate your expertise and create Fdecades, email Email marketing works especially well a trusting relationship with your prospects marketing has been an for the cannabis industry because it is a and customers. As I’m sure you’ve heard important promotional mostly unregulated channel for business before, people like to do business with channel for all kinds owners to get their messages across. people they know, like and trust. of business, big and Unlike Facebook and Google, which Additionally, over-delivering value in small. Despite the wor- restrict cannabis-related ads, permis- the form of fresh, relevant and informa- ry that the arrival of sion-based email marketing is wide open tive content will help you avoid the one- social media marketing and mobile smart regarding pictures of cannabis, descrip- way shouting dynamic that is a sure-fire devices would make email obsolete, we tions of different marijuana products and way to turn off your customers. are seeing that email marketing remains your overall message. • Easily read on a smart phone: Today alive and well. Of course, there’s more to email mar- more than half of all emails are read on Companies are still receiving a substan- keting than simply hitting the send button. a mobile device. Knowing this, consider tial return on their investment with email The most successful email marketing the following five recommendations - be and cannabusiness owners would be wise campaigns have the following three things fore sending your next email marketing to consider implementing or increasing in common. campaign. their email-marketing budget in 2015 and • Permission-based: While it may be 1. Use a clean and simple design that is beyond. tempting to lift an email address from an responsive and mobile friendly. So what is email marketing and why online order or from your seed-to-sale 2. Write concise text that immediately does it work? software, if you are sending sales messag- gets to the point. Email marketing refers to sending mes- es via email without the customer’s per- 3. Use bold headings to break up your sages with the purpose of enhancing the mission you not only put your reputation sections. relationship of a business or business at risk with your customer but you risk 4. Choose a font that’s easy to read on a owner with its current or previous cus- being slapped by the Federal Trade Com- mobile device. tomers, encouraging customer loyalty and mission. 5. Avoid images that take a long time to repeat business, acquiring new customers Because the cannabis industry is new download. or convincing current customers to pur- and still slightly controversial, it is under 6. Be sure response buttons can accom- chase something immediately, and adding a microscope and the last thing you want modate index fingers and thumbs. advertisements, special promotions and to do is violate the Federal Trade Com- As email continues to evolve it will still sales to email messages. mission’s CAN-SPAM Act of 2003. be the number one marketing tool for the As the original online marketing vehi- The CAN-SPAM Act — a shortened foreseeable future. Because of its ability cle, email still leads the pack because it way of referring to the Controlling the As- to engage customers on a one-on-one ba- works. Here’s why. First, email gives you sault of Non-Solicited Pornography and sis, its less-restrictive nature than social complete control over the content of your Marketing Act — was a direct response media, its ease of use and its inexpensive message, including who receives it and to the rapidly-increasing number of com- cost, email marketing will give people in when they receive it. plaints about email spam. the cannabis industry more bang for their This control allows you to personalize Instead of assuming your prospects and buck and provide a higher return on in- messages and foster long-lasting custom- customers want to hear from you, simply vestment than other marketing channels. er relationships, which leads to repeat ask permission. You’ll get the green light sales and referrals. Also, when you com- when you engage customers, provide a pare the time, effort and results of all the “wow” experience, and let them know the Alexa Divett is the co-founder and mar- marketing vehicles, email is still the best benefits of subscribing to your newsletter keting director of Maya Media Collective bang for your buck. such as insider deals and expert tips. (http://www.mayamc.com), an Oregon-based Additionally, email marketing works • Loaded with great content: The best marketing and design firm that specializes in because it is no longer just about email; email campaigns aren’t built around deep the cannabis industry. She and her team help it is about delivering value to your cus- discounts. Instead, they engage custom- brands achieve their goals through education, tomers through informative content and ers through balanced content that features thoughtful design concepts and inventive mar- helping them to engage with you through valuable insight and offers. keting solutions.

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companies in the world have come to realize that this tends to be a far more desir- Don’t post and pray: Reach able pool of candidates than the 10% who are actively searching the job boards. It’s also why the vast majority of desir- the rest of the talent pool able positions are never advertised publicly. Most of the best job candidates aren’t actively seeking work Those positions are typically sourced By David Murét by either an experienced in-house recruit- here are a couple which service you choose, you’re still er or an agency the company contracts Tthings we know only reaching a tiny fraction of the avail- with to find talent. As you can imagine, for certain about op- able talent pool and hardly the cream of the results of these two approaches are erating a company on the crop. radically different — the latter is much the front lines of legal Why is this? It’s because all the job/ easier for a hiring manager than attempt- cannabis: It isn’t easy, resume boards on the Internet combined ing to handle the entire process on their and it isn’t cheap. only make up approximately 10% of the own. As an entrepreneur available talent pool at any given time, When you add up the opportunity cost or executive in this industry, the demands the so-called “active” job-seekers. of everything that might have been done on your finite resources seem endless. while you were digging through resumes, When you consider the risks of being un- double-checking references, conduct- der-capitalized in such a volatile market, HAVE YOU REALLY ing background checks and putting each it seems wise to trim costs wherever you candidate through all the stages of the can. CONSIDERED HOW interview and vetting process, it’s usual- For many companies that means turn- ly cheaper from both a time and money ing to one of the countless job boards to MUCH TIME AND standpoint to leave this chore to a profes- search for talent. Why engage the ser- ENERGY IT TAKES sional. vices of a recruiter when a single job You still maintain the final decision, posting on Craigslist can yield hundreds TO FIND THE RIGHT but are likely to attract superior talent of resumes? with a lot less fuss and considerably low- It’s been said that time is money and PERSON TO FILL er turnover. nowhere is that more apparent than in a According to the U.S. Bureau of Labor fast-paced emerging market like the can- A KEY POSITION Statistics, employee turnover costs em- nabis industry. ployers anywhere from 30% to 200% of So the first thing to consider is how WITHIN YOUR an individual’s annual salary. valuable your time is. Have you really When you look at it that way, engaging considered how much time and energy it COMPANY USING the services of a qualified recruiter is typ- takes to find the right person to fill a key AN ONLINE JOB ically less tedious, more rewarding and position within your company using an less costly than trying your luck on the online job board? BOARD? job boards. If not, here’s what’s generally in- Don’t assume that this sort of profes- volved: First, you’ll need to go to the sional support is out of reach for your trouble of creating a detailed ad and job Most of these people are currently un- early-stage small business. You’ll most description, spelling out all your wants employed because they are the ones most likely be surprised to learn just how af- and needs without inadvertently violat- likely to advertise the fact that they’re fordable it is. ing fair employment laws (which isn’t actively looking for work or motivated Given the value of your time at this as easy as it sounds); second, you’ll need enough to frequent the job boards to see critical stage in your company’s develop- to decide which of the hundreds of job your ad. ment, you’ll likely find that it’s far more boards to choose from. The other 90% of the available talent costly to do it yourself. Do you use one of the highly-adver- pool is made up of the gainfully em- tised knock-off services claiming to be ployed and casual job seekers. These are the “CareerBuilder of Cannabis” or use the individuals that experienced recruit- David Murét is the co-founder and COO the actual CareerBuilder? ers have spent years of their lives learn- of Viridian Staffing. He has a diverse- back Or would it be better to use one of ing how to identify, qualify and attract to ground that includes everything from public those cannabis news websites or social businesses looking to maintain a com- policy and law to information technology, networks that recently added a classi- petitive edge. Whether they are casually finance and business development and, as a fieds section that includes job postings? keeping their options open or minding veteran of multiple start-ups, appreciates the Or perhaps your local paper? No matter their own business, the most competitive challenge of assembling the right team.

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tools to help you store addresses and send emails. Some, such as Mailchimp, are Turn your website into even free if you have a website and fewer than 2,000 subscribers. All you do is add an email sign-up box an online sales machine in a prominent place on your site using a plug-in or other simple tool. You may If customers don’t show, your business cannot grow want to offer free business information or By Joel Caudill other valuable content to entice people to f you’re not using descriptions, meta tags, content and URL share their addresses. Ia website to attract structure. It also includes improving your Finally, no solid SEO strategy is com- customers through authority online, which comes from in- plete without analytics, and Google An- search engines, you’re bound links to your site, social signals, ci- alytics is the recommended platform of missing a huge mar- tations and other references from trusted choice. keting and sales op- places on the Web. It’s free, simple to set up and integrates portunity. Adding your A solid SEO strategy also involves reg- with Google Webmaster Tools and other business to locater ularly adding useful content to your site applications. The information it gathers sites such as Leafly and Weedmaps or to attract relevant visitors — those most allows you to track click-through rates, local listings like Google My Business is likely to turn into responses to specif- one step, but it’s only a start. customers. You do RELYING SOLELY ON ic offers, conver- Relying solely on local search is like this by writing blog sion rate of landing hanging an open sign in your digital win- posts or articles that LOCAL SEARCH IS pages and the total dow and calling it a marketing campaign. answer questions number of sales and That’s not enough in this competitive en- and provide infor- LIKE HANGING AN sales leads generat- vironment. mation people are OPEN SIGN IN YOUR ed by your site. You need to actively seek out and at- seeking with search Be sure to take tract customers, and a website is the best engines. DIGITAL WINDOW advantage of goal way to do that. The content you tracking (or conver- But not all websites are created equal. post also lets you AND CALLING IT sion tracking). By Your site needs to be responsive and mo- share your expertise setting up simple bile-friendly. A responsive website adapts and perspective as A MARKETING site goals in Google to whatever device it’s viewed on — a brand, so quality Analytics, you will smart phone, tablet, laptop or desktop — counts. For best re- CAMPAIGN. be able to identify so that it looks good and works well on all sults, your posts should be at least 300 information about your customers such as screen sizes. words and include keywords and phrases their location, demographic data, the type This point is critical for two main rea- in the title and body of the text that people of device they used for their purchase, sons. First, mobile search is growing ex- would use as search queries. what pages they reviewed before convert- ponentially as more people access search When you do publish content, include ing and much more. This invaluable in- engines using their smart phones. Second, relevant images and videos to make it en- formation will inform your decisions and Google recently changed its ranking al- gaging and worth sharing. If you use so- help you create more targeted marketing gorithm to give preference to responsive cial media for your business, and we think plans. sites. That means that if your site isn’t you should, be sure to share your content Creating a website is not something you mobile friendly, you are losing valuable through your channels while linking back set and forget. It requires regular updates search traffic from the fastest growing to your website. to coding and content as well as a plan traffic source on the Web. As mobile Gaining visitors is great, but turning for capturing business information. But continues to grow in importance for both them into customers is even better. A the returns can be enormous. You’ll be search and e-commerce, so will the op- great way to do that is to capture emails able to adjust and adapt to market chang- portunities to connect with potential cus- and build your marketing lists. Remember es and customer demands quickly while tomers. that every address you gather is a poten- also learning about your customers. All of You can get the most from your respon- tial customer. which makes it easier to stay connected to sive site by applying the principles of Use these lists to keep people informed them so you can be profitable in the long search engine optimization (SEO). SEO about product releases, new services and run. refers to a broad set of techniques for in- other relevant news about your business. creasing site traffic and improving search This helps you form connections with Joel Caudill is the owner of Yabaseo, which engine rankings. This is the behind-the- customers and separate yourself from provides Internet marketing strategies and scenes work that includes adding key- competitors. services exclusively to the cannabis industry words to your page titles, headings, meta There are many good, inexpensive (www.yabaseo.com).

122 | Marijuana Venture // May 2015 NOT JUST POT 46 years experience solving a wide variety of legal problems in administrative, state and federal courts, including appeals.

LAW OFFICE OF JEFFREY STEINBORN 206-622-5117 [email protected] www.steinbornlaw.com A LETTER FROM THE EDITOR

In the long run (which could only be a couple years down the road, with the pace To close off the borders or that marijuana is becoming mainstream), residency restrictions will be a moot point. Following the 2016 election, there will not? An interesting debate likely be at least six states that have legalized marijuana for recreational purpose — Eventually, residency restrictions will be a thing of the past and maybe, depending on how things play he fight over resi- Big business will join the cannabis in- out in the near future, that number could Tdency restrictions dustry whenever it wants to. It has deeper be as many as a dozen. is, to me, one of the pockets, more lawyers and bigger lobby- By the time more than a small, isolated more interesting de- ing budgets than almost any individual. I handful of states have ended the prohibi- bates taking place in know that idea terrifies a lot of people in tion of cannabis, nobody is going to care the cannabis industry the industry, and with good reason. whether business owners or investors are right now, both for the The “Green Rush” mentality has already in-state residents, the same way nobody two most recent states driven countless business people — both cares if a restaurateur has been a local res- to legalize recreational marijuana and for from inside and outside the existing can- ident for more than a year before opening those that are likely to end cannabis prohi- nabis industry — to concentrate efforts a steakhouse. bition in the near future. on Washington and Colorado’s regulated I’m not convinced that Budweiser, Phil- Two stories in this issue specifically recreational markets, despite residency re- lip Morris and other wildly successful, address that question as it pertains to Or- strictions being in place. The Washington billion-dollar empires are champing at egon and the implementation of Measure State Liquor Control Board opened a one- the bit to get into the cannabis game. If 91. Dispensary owner Meghan Walstat- month window for marijuana business ap- they were, legalization may have occurred ter talks about in her Living the Dream plications back in 2013. Based on numbers much sooner. piece on Page 22. She supports residen- out of Colorado, about 2,200 applicants Yes, eventually some Fortune 500-type cy restrictions; her husband and business were expected for producer, processor and company will enter the marijuana arena. partner, however, does not. Meanwhile, at- retail licenses, agency director Rick Gar- But by the time that happens, we’ll al- torney Matt Goldberg addresses that same za told Marijuana Venture in a May 2014 ready be living in a very different world subject in his column on Page 72, noting interview. In the end, more than 7,000 ap- than the one that exists right now. It would that some business lawyers have already plications were submitted — triple the ex- mean the end of marijuana prohibition at started “brainstorming strategies for work- pected number, despite an extremely small the federal level — and that’s a day many ing around any residency requirements application window. of us in this industry never believed would that come to pass.” Imagine the rush Oregon or Alaska happen, even just a few short years ago. Like any good, objective journalist and would experience if they opened the li- Now, it feels anything could be possible. ardent fence-sitter, I see both sides of the censing process to all U.S. citizens. Be- argument. I fully understand why Oregon cause of its remote location, Alaska would GARRETT RUDOLPH and Alaska residents would fight to put up probably remain somewhat isolated with EDITOR an iron curtain around their state’s borders. only a medium-sized bump in outside Keep big business out. Keep local dollars investment. Oregon, on the other hand, Corrections local. would be flooded with investors, entre- The following are corrections from But the flip side of stout in-state re- preneurs and cannabis enthusiasts from the April 2015 edition of Marijuana quirements is also true. Preventing outside around the nation. Venture. investments mean more significant chal- Sleepy Southern Oregon could poten- Rather than selling its products lenges in raising venture capital needed tially become the Silicon Valley of the directly, Vaportek depends on its to launch marijuana businesses, and un- cannabis industry. distributors and dealers. Those dis- der-capitalization dooms more start-up Naturally, most existing businesses are tributors can be found at www.va- businesses than any other factor. This po- fiercely committed to holding onto what portek.com. tential pitfall is even more critical when makes them special and unique, and there- The Vaportek system doesn’t considering the exorbitant federal, state fore profitable — much the same way an use filters. Its essential oil, dry- va and local tax obligations the cannabis in- inventor covets a patent. por technology eliminates odors dustry faces. Remember, opening a can- For Washington, Colorado, Oregon and through molecular pairing. nabis retail store isn’t like starting a bak- Alaska, residency restrictions are a signif- Also, the correct spelling of the ery. You can’t walk into your local bank icant topic of conversation. Mostly, I think Vaportek media coordinator’s name branch, show the manager your business that’s because they are the pioneer states is Sunny Schneider-Christensen. plan and excellent credit history and re- that were willing to venture into the un- ceive a small business loan. known territory of legalized cannabis.

124 | Marijuana Venture // May 2015

MARIJUANA VENTURE ADVERTISERS DIRECTORY

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