Volume 1, Issue 6

August 2014

FINALLY! Washington celebrates the long-awaited opening of retail stores for recreational marijuana. Page 45.

PLUS: Interview with Ed Rosenthal Marijuana marketing A how-to guide on breeding Using the ‘tomato model’ And more ...

August 2014 $6.99

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A MESSAGE FROM THE PUBLISHER A joint that is half smoked or a roach? A cup half full, or half empty? That famous question perfectly sums up the difference in attitude that can be found in so many Amer- icans and in so many different situations and challenges. In the new legal marijuana busi- ness, it’s as true as it’s ever been. The optimist Marijuana Venture versus the pessimist. I write this because of Volume 1 | Number 6 something in one of our opinion pieces in the August 2014 July issue of Marijuana Venture. The writer mentioned that the legal mar- Publisher ijuana business could/would thrive as long Greg James as the government stayed out of the way and [email protected] didn’t blow it with high taxes and regulation. Editor I’m mostly in agreement there. I think the Garrett Rudolph states needs to be very careful. If taxes and more millionaires, billionaires and zillionaires [email protected] regulations are too high, lots of smart and in the U.S. than any other country on the plan- Account executive et. And by a wide margin. This is because the well-meaning people will throw in the towel Lisa Smith and decide that the price of entry simply ex- U.S. actually has a very good environment for [email protected] ceeds the potential for profits. If that happens, businesses in general. Taxes are in line — or the black market goes on, nothing much is lower than — most of the rest of the developed Graphic design achieved, and huge sums of money are squan- world (especially when you look at “effective” J. M. Steinmetz dered failing to set up some- rates and not “statutory” ones), [email protected] thing that most Americans and the overall business climate Contributors now agree should exist and Going into new and attitude is actually very William Bates should be legal. much in favor of free enter- Chris Bayley However, the other side of territory is never prise. So why all the “grousing?” Rachel Cavanaugh the coin is that the state has a easy, and it would Like everything else in life, Jeremy Elkins duty to ensure that the busi- there are winners and losers. Shane Hutto nesses it allows are regulated, be completely For every Sam Walton, there is David Kerr taxed (like everyone else), and unreasonable to a guy whose corner store went Debora Peters set up in a manner that is well out of business because of a Crystal and Kevin Oliver organized and for the good expect a smooth Walmart. For every Bill Gates, Renata Rollins of the rest of the residents of process devoid there are CEOs of computer Kristen Schell Washington State. software companies that Mic- Miles Stover My own belief is that the of “bumps in rosoft destroyed. It’s inevitable: Scott G. Warner taxes are probably set higher There are winners and losers in Patrick Wagner the road.” Ben Wu than they should be, and that business, and there always will the whole process of legaliza- be. And, the losers often com- Contact Marijuana Venture tion and licensing could be plain that the reason for their P.O. Box 1419 made far simpler and less onerous. It’s a matter loss was just about anything other than what Renton, WA. 98057 of balance. And remember, what we’re doing it really was — their own poor management 425-281-1348 in Washington and Colorado is still a grand and planning. The key is to have a level playing www.marijuanaventure.com experiment that is being watched by the rest of field. Facebook.com/MJVenture If taxes or regulations are high in a particu- the country. Going into new territory is never Marijuana Venture assumes no easy, and it would be completely unreasonable lar industry (but still level for everyone in that responsibility for any claims or to expect a smooth process devoid of “bumps industry), then winning is just about who does representations contained in the in the road.” the best job. Plain and simple. magazine or in any advertisement. All material contained is for educational As far as the general business climate in the purposes and intended for the legal United States goes, I tend to think of the cup GREG JAMES PUBLISHER marijuana business where allowed by as half full and not half empty. Why? There are Marijuana Venture state law. Marijuana Venture does not encourage the illegal use of any of the products contained within. 3 | WWW.MARIJUANAVENTURE.COM Contents Features Marketing your marijuana business...... 9 Ed Rosenthal: The Original Expert...... 15 Legal Pages: Trademarks, transportation...... 21 Breeding: A how-to guide...... 29 Basics on cooling your grow op...... 37 Advantages of a turn-key facility...... 41 Retail stores open in Washington...... 45 Sustainable clothing by Dash Hemp...... 55 Scaling up greenhouses...... 57

Products/Services Kush Bottles...... 61 Viridian Staffing...... 63 Aldilas Software...... 65 HydroFLOW...... 67 Advertisers directory...... 82

Guest columns Miles Stover: Business...... 73 Debora Peters: Accounting...... 77 Crystal and Kevin Oliver: Local politics...... 79

Editorial A message from the publisher...... 3 A message from the editor...... 81 Growing expert Ed Rosenthal speaks with Marijuana Venture. Misc. Page 11. Forum...... 7

Photo courtesy Odds and Ends...... 69 Quick Trading Company

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.

WWW.MARIJUANAVENTURE.COM | 6 MARIJUANA VENTURE FORUM Contribute to the Marijuana Venture forum by emailing [email protected].

ing multiple spectrums of light from dif- lamps will increase the useable PAR light Lighting debate continues ferent types of lamps is advantageous but output for each watt of power used. Inde- for commercial grows is not always practi- pendent tests have proven that high fre- Much discussion has taken place over cal due to the cost of running HID lamps. quency digital ballasts produce up to 40 the years regarding high-intensity dis- Therefore, growers have always gone with percent more PAR than coil/core magnetic charge lighting and which type of lamp best the lamp that provides maximum yield ballasts. They also run cooler and more ef- suits indoor cannabis cultivation. Light is but doesn’t always provide the best quality ficiently. an extremely complex subject. We agree product. Coil/core magnetic ballasts are consid- that university studies are a great place to Our preferred lamp for a single-lamp ered to be a low total harmonic distortion find information on the efficacy of differ- system would be a 4,000 Kelvin MH lamp. (THD) output ballast but they run hot, are ent types of supplemental lighting. The They provide more full spectrum light (in- noisy and risk the chance of self-immola- photosynthetic photon flux density (PPFD, cluding UV) than HPS. We concede that a tion. They are also power hungry, which values in μmols/s) for photosynthesis in single MH light source would yield slightly gets worse with age of the capacitor. Most indoor grow rooms are provided by HID less than an HPS but the quality of the end electronic/digital ballasts are high-THD lamps alone, they are not supplemented by product would be superior to HPS. systems which create acoustic resonance any other source. The black market is all about yield as in the lamp and prematurely destroy 50-60 Plants, like humans, have evolved over an indication of success. The use of plant hertz lamps. Using a high-frequency, low- time to require the sun. The thermo-nu- growth regulators and bombarding the THD digital ballast with a matched digital clear reactor that is our sun emits heat, plant with a narrow spectrum of visi- lamp will provide more than 98 percent light and charged particles. Most of the ble light, achieves a fast-flowering, bulky light maintenance after 6,000 hours. life-damaging UV radiation emitted by the product but quality suffers as a result. We The newly legal recreational markets sun is filtered by the Earth’s stratosphere, believe the emerging I-502 market will be will give equipment manufacturers the op- ozone layer and troposphere. An artificial- quality driven. Customers will demand a portunity to prove their products and the- ly-lit environment offers only part of what high-quality product with all the nuances ories in real time and publish the results for plants have evolved to require for healthy of fine wine. Growers will achieve a greater the good of all concerned. growth and yields. return from their investment by providing BRETT HENRY Light, as humans see it, is electromag- their customers with a high quality prod- OGA LLC DIRECTOR netic radiation that’s visible to the human uct. eye. It’s the part of the spectrum we call vis- Also plants will yield more resin glands Brett, ible light. Sunlight is described as full-spec- under full spectrum light, creating more Thanks for the reply. We are open to trum light and includes the range of wave- return for the grower from the increased ideas, and like to get feedback. Univer- lengths necessary to sustain life on Earth: value of concentrates. sity studies on supplemental lighting are infrared, visible and ultraviolet (UV). The use of different spectrums of light admittedly not done on marijuana, and Vegetative growth can be achieved un- at different times has been thoroughly test- therefore might not be perfect “apples to der high-pressure sodium lighting but the ed, especially when finishing with a 10,000 apples.” internodal spacing will be greater than Kelvin MH lamp. The high UVA/UVB out- However, three professors I personal- under metal halide light. What we do in put of a 10,000 Kelvin lamp will increase ly talked to in the field of horticulture all vegetative growth will dictate the number aroma, potency and quality in cannabis seemed to agree that the increased blue of budding sites and potential yield. MH when used for the last seven to 14 days of in MH should have little or no effect on delivers less lumens than HPS, but lumens flowering, depending on variety. marijuana other than slightly shortened are a measurement of visible light, MH de- We therefore recommend 4,000K or internodes, which would then also affect livers more full spectrum light than HPS. 6,000K MH for vegetative growth, and for light penetration. (In other words, bad for HPS light will deliver 30 percent more up to the first three weeks of flowering to light interception, good for short plants). photosynthetic active radiation (PAR) than prevent transitional shock and higher col- Also, while increased UV can increase sec- a MH lamp but in a narrow spectrum of or-rendering index (CRI) values to main- ondary metabolism (THC production), it visible light with little or no UV. The ap- tain plant health and resistance to pests would then be an argument for using MH parent MH effect is the plant responding to and diseases. HPS is recommended for in flowering! higher levels of full spectrum light. weeks four to six to bulk up flowers and Personally, I hope that as the legal busi- We agree that HPS are more efficient focus on yield with a red dominant spec- ness blossoms, we will actually start to see for PAR than metal halides but through trum. 10,000 Kelvin MH is recommended some really good double blind/control our experience, plants require different for weeks seven to nine or to finish. UVA/ studies on how various inputs affect the artificial light sources at different stages of UVB values of the 10,000K lamps produce growth — and potency — of marijuana in growth. The ultimate grow light would pro- plant resin and oils that increase quality controlled environment agriculture (CEA). vide full spectrum light, like the sun, all the and flavor. time. No single grow light to date provides The use of high-frequency digital bal- GREG JAMES a complete substitute for the sun. Deliver- lasts with matched high-frequency digital MARIJUANA VENTURE PUBLISHER

7 | WWW.MARIJUANAVENTURE.COM Marijuana MARKETING By Renata Rollins

f your instincts are telling you the time is ripe to get into the legal marijuana business, you’re probably right. Even the I-502 advertising regulations Iconservative-to-moderate Marijuana Busi- The following is a summary of library or game arcade. ness Factbook research editors believe that advertising rules pertaining to as of 2014, the cannabis industry is “on the • Ads may not appear on public tran- recreational marijuana in Wash- sit vehicles, nor on other publicly verge of going mainstream.” ington State. Consult an attorney owned or operated property. Just like any emerging, fast-growing in- for further information. Source: • Giveaways, coupons, and distri- dustry, the winners will be those who know WAC 314-55-155 their market. And, as in any other busi- bution of branded merchandise are ness endeavor, nothing is more costly than • Retail stores are limited to one sign banned. with the business name, visible from guessing wrong. In a field historically run by • All ads must contain four legally-re- the public right of way. Sign must the black market, it’s easy to rely on long- quired warnings related to product’s not exceed 1,600 square inches. standing cultural myths about the customer effect, safe use, health risks and age base, but those myths can limit your appeal • Ads may not promote overcon- requirements. sumption, nor speak to the thera- and send potential customers to your com- “This product has intoxicating effects and peutic effects of marijuana, nor con- petition. may be habit forming.” tain false/misleading statements or So what does a marijuantrepreneur need images. “Marijuana can impair concentration, to know about branding and marketing in coordination, and judgment. Do not • Ads may not depict people under this newly opened space? operate a vehicle or machinery under age 21, nor in any way target/attract First, forget the conventional wisdom the influence of this drug.” about who consumes marijuana. While re- this population through imagery in- cluding toys or characters. liable demographics are hard to come by in “There may be health risks associated with consumption of this product.” the industry, existing market data does give • Ads must not be within 1,000 feet some clues about the customer profile. of a school, playground, recreation “For use only by adults twenty-one and older. According to CannaBusiness Media’s center, child care center, public park, Keep out of the reach of children.” nationwide survey of medical >>>>> 9 | WWW.MARIJUANAVENTURE.COM marijuana customers, the market increas- diverse, more discerning, more health-con- marketing? Social networking will be huge. ingly seeks a mainstream, relaxed, slightly scious, more mainstream — and, it’s worth Signing up for a Facebook page is free and upscale atmosphere to purchase, similar to noting, more female — than Pineapple Ex- easy, but as the web itself becomes smarter, a coffee shop. Nearly half (47 percent) of re- press, Cheech and a true social media spondents said this describes their ideal re- Chong, or The Big strategy goes be- tail marijuana setting, up dramatically from Lebowski would Many startup businesses yond mere presence. 35 percent a year ago. have us believe. choose to focus on their For example, in The survey found product variety, Once you know the current “Web high-potency offerings and “organic” can- your target audi- core competencies, and 3.0” reality, peo- nabis attracts patrons more than bargain ence, the challenge hire a social media ple don’t find your prices. In fact, strain selection topped the becomes how to brand by search- list of reasons for switching shops, with 59 reach it. In this in- marketing firm to do the ing for it. It’s the percent of respondents saying they would dustry, “challenge” is tweeting. other way around: switch for better selection. an understatement. Your brand finds These numbers don’t tell us everything, Between continued customers through but it’s not hard to see what’s going on. federal prohibition, complicated, large- We’re witnessing a widening gulf between ad bans by companies like Google, and state ly invisible web algorithms based on user the popular image of “the stoner,” and the law limiting marijuana advertising (see demographics, browsing history, keywords reality that marijuana consumers are more sidebar on Page 7), many conventional me- and other so-called “smart” features. Tailor- dia are off limits. ing a marketing effort to this online reality is Renata Rollins is a former board But there is hope. After all, ad bans (and part art, part science. It requires ever-fresh member of the state NORML prohibition) didn’t stop cannabis from ri- content, which then gets “pushed” to your chapter and a copywriter for valing apples as Washington’s top cash crop target audience. SmartMeme Studios. Based in during the last decade. The key then is the In this context, it’s more important than Washington, SmartMeme Studios key now: word of mouth. National research ever to be in touch with topics that matter to provides story-based strategic on the marijuana industry finds word-of- your customers (and their friends). What’s marketing and design services mouth marketing is make or break, more “trending” changes day to day, even hour to nationwide, specializing in so than in other fields. It’s not something to hour. Many startup businesses choose to fo- environmental and social issues, leave to chance. cus on their core competencies, and hire a including cannabis marketing. How do you generate word-of-mouth social media marketing firm to >>>>> do the tweeting. Ultimately, word-of-mouth marketing comes down to stories: connecting the story Even the of your business and product with the sto- size of a 502 MEDICAL & RECREATIONAL MARIJUANA INSURANCE PROGRAMS ries of your target audience. When people business’ sign identify with your story — when they gen- is limited. uinely see a reflection of themselves, their interests, their lifestyle, their humor, their Photo by Garrett Rudolph Our Marijuana Program is cultures, their values, their hopes, their dreams — they share this story with the available in all states where world, again and again. That’s the essence of story-based strategy, marijuana is legal. We cover a technique SmartMeme Studios has devel- acter types, fashion trends, technological “10 Guy” or “Good Guy Greg” if you haven’t most aspects of the marijuana oped and executed with small businesses, advances, you name it. They’re as recent seen them. international nonprofits and grassroots as the miniskirt, as old as the campfire, as But here’s the thing: All these memes industry, including: campaigns of all sizes, for over a decade. common as the handshake, as niche as the came about under prohibition. Marijuana Story-based strategy, also called strategic grow light. may be going mainstream, but how many E Products Liability narrative, works in the realm of deep-seated The successful memes catch on, stick from the mainstream public can really see mental frames and scripts people live their around, and evolve with each generation. their stories in these memes? How many E Indoor Growing everyday lives by. These scripts influence The “star-crossed lovers” is one meme that would even want to? Can any of these me- E how people raise their children, whether came to life in Romeo and Juliet, West Side mes inspire word-of-mouth buzz amongst Outdoor Growing they go to church, who they vote for — and Story, Paris and Helen of Troy, and countless office managers, parents, social workers, E Dispensaries down to preferences like Pepsi or Coke, legends throughout the ages. People love the school teachers, lawyers, Pilates instructors, wine or beer, sativa or indica. meme, because they relate on some level. engineers, tourists? E Recreational Retail Scripts are powered by genes of culture, We all know the memes associated with The innovative entrepreneurs won’t let E known as memes. Memes are more than cannabis culture: 420, the munchies, the prohibition memes drive their marketing Bakeries those viral images on the Internet. A meme Grateful Dead, patchouli, Snoop Dogg, strategy. They’re getting to know their cus- E Infusion Centers is any idea, behavior or style that spreads Cheech and Chong, and every pair of on- tomers, calling on their creativity, and light- from person to person. Memes take the screen stoner buddies to follow. There are ing up the public imagination with new sto- E Co-ops form of songs, plots, dance moves, char- even a few Internet memes — search for ries — stories with lives of their own. MV E Hydroponic Stores E Edible Manufacturers E Testing Laboratories

1501 Fourth Avenue, Suite 730 Seattle, WA 98101-1637 www.SIGinsures.com (206) 957-7067 | [email protected]

We know the medical & recreational marijuana industry. Q&A with Ed Rosenthal The Original Expert It’s been said that Ed Rosenthal has marijuana needs to be regulated civilly, turned more people on to pot than and not as a criminal offense. And sec- Cheech and Chong. ondly, people must have the right to grow There’s no doubt Rosenthal — the Guru their own. of Ganja — is one of the foremost experts “Those are two fundamental rights that and activists in the world when it comes have to be won back,” he said. to cannabis cultivation. He has written “Fundamentally, we haven’t won un- or edited more than til people have easy a dozen books on the access into and out subject in a career of the market,” he spanning nearly four added. “That means decades. you can start a com- The movement to pany and you can legalize marijuana, close a company, just with Colorado and the same as a farmer Washington taking with tomatoes. One Industry legend Ed the lead by opening year, he may decide Rosenthal recently spoke with Marijuana Venture markets for recre- he doesn’t want to about growing, learning ational sales, is a first grow tomatoes.” and one of the most step in the process of At the risk of dat- important pieces of advice restoring a long-lost ing himself, Rosen- he’s ever received. civil right, Rosenthal thal said he remem- Photos courtesy said. bers when pizza Quick Trading Company “For most of shops began to gain America’s existence, popularity in the marijuana was total- 1950s. ly legal and unregu- Ed Rosenthal’s Marijuana Grower’s At first, it was lated. We’re winning Handbook is one of more than a just one, he said. In our freedom partially dozen books the well-known author a short period of has written or edited in his career. back,” he said. time, four more had Rosenthal said he popped up. Not long doesn’t have a problem with the govern- after that, three of those pizza parlors had ment taxing marijuana. gone out of business. The point is “let the However, he said much of the over-reg- market decide,” he said. ulation that is being installed is “funda- “Nobody said you have to be profitable mentally un-American.” He pointed to or successful, but people have a right to two specific issues that stand out. First, put out their fishing pole.”

15 | WWW.MARIJUANAVENTURE.COM WWW.MARIJUANAVENTURE.COM | 16 Q&A with Ed Rosenthal

From one famous smoker to another: Snoop Dogg provides a light for Ed Rosenthal.

Marijuana Venture: In terms of growing, what’s one of they need training or don’t need to work or do more the best pieces of advice you’ve received from either reading or look at more techniques. They just stick to a mentor or somebody else you respected? their old ways.

What I’ve seen in some consulting firms is that Ed Rosenthal: It wasn’t necessarily just about this, they have a certain pattern, which is good for say, but be realistic and don’t try to do more than you can a 20-light garden. And then, rather than having a do. Especially, with plants. Let’s say you’re building different pattern and accommodating economies of a building and it takes more effort than you think. scale, they’ll do that same pattern in a cookie-cutter The thing is that the building is not a living thing. way. You don’t have to care for it, or feed it, or water it, or harvest it. They don’t have economies of scale. That’s common. But with plants, plants don’t wait. You shouldn’t be MV: Talk a little more about that learning process. You over-ambitious with it. mention people that have experience and get to a point where they stop learning. How much have you MV: What’s a common pitfall you see more inexperi- continued to learn and change some of your meth- enced growers affected by that would have a large ods, or improve some of your techniques? How much potential to ruin their crop, and what kind of steps of that has been an ongoing process despite all your can people take to mitigate that potential. experience in the industry? Rosenthal: The first thing is that the equipment is Rosenthal: Well between July 12th and July 19th, quite costly. Information — in terms of the amount of I won’t be available because I’m taking classes in savings and effort and increase in yield — informa- Ohio on agriculture. … I lead a team called Quantum tion is the cheapest way to go. 9. What we are helping people do is go from mar- Most people, especially if they’ve grown for a few ket gardening to farming. The difference between years, think they’re total experts and they don’t think market gardening and farming isn’t in the >>>>>

WWW.MARIJUANAVENTURE.COM | 18 quality, or even the yield. It’s in the to a much larger grow operation? is going to happen. amount of labor per unit of yield, and also the amount of energy Rosenthal: Well, I can liken it to If you have a 20,000-square-foot used. something that’s happened in the greenhouse, you might want to look and see if there’s a graduate So by enlarging and going to econ- dispensary industry. It started off who studied horticulture, rather omies of scale, you can bring down as activists. … A lot of the dispen- than this grower who’s been doing the cost of production. It’s hard to saries are now owned by business the same thing for 20 years. risk your property on something people rather than activists. you don’t know, because you’re And also, even the first business Of course, there are some of those spending all season on it and then people that came in, that was the growers who have been doing it you’re not sure it’s going to come first step in an evolution of busi- for 20 years who are really into in. This other method that you’re ness people that have come in, so the science of it, and that grower using, it might not be the most then a different type of business would be a perfect person. productive, but it’s reliable. person has come in when there’s less risk. So it’s a hard choice for farmers, MV: What are some of the projects and a lot of farmers won’t take In terms of cultivation, just be- you’re working on right now? that jump. cause somebody was a great Time marches on. Science is ad- cultivator with five lights doesn’t Rosenthal: I’m not focused enough, vancing at a faster pace, so there mean they have the knowledge but aside from my publishing com- are new ways of doing things. or information to scale up. As pany (Quick Trading) and writing, far as cultivation is going to be I’m trying to develop products concerned, in five years, it’s going based on my original research. MV: There are obviously going to be a whole different group of Some of those products are going to be challenges of scaling up a people coming in. to be coming out soon. I’ve been smaller grow operation to a com- working on increasing the scope of mercial grow. What are a couple There will be some people that my publishing company. things you would advise people will be self-trained, but most of to keep in mind as they’re going them are going to be out of more I have other projects, too, because through the process of scaling up formal schools. That’s what I think I’m always doing experiments. MV The Legal

Marijuana Venture has enlisted several top attorneys to share their wide-ranging expertise with prospective business owners. The columns on the following pages are provided as general information about legal developments and not for the purpose of providing legal advice. You should contact an attorney for advice on Pages your specific legal issues. Trademarks and interstate commerce In our June installment on intellectual property and the marijuana industry, we introduced various types of protections that Scott G. Warner businesses engaged in the industry might use to protect their intangible assets. We continue here to drill down on the first type THE LEGAL PAGES discussed – trademark. As discussed previously, trademark [email protected] rights arise through use in commerce. And, to qualify for registration with the U.S. Pat- ent and Trademark Office (PTO) under the statute and the benefits of nationwide pro- state of Washington (See Section 3 of RCW there would not violate state or federal law. tection, that use must be in interstate com- 69.50.325). So, how does a Washington Second, it is possible to establish rights merce (15 U.S.C. § 1051). licensee protect its trademark from being in other jurisdictions where marijuana has And, of course, that’s the rub: business- used elsewhere by third parties and qual- been legalized and thus satisfy the interstate es licensed to produce marijuana and re- ify for federal registration if it can’t sell its commerce requirement without actually lated products under RCW 69.50.325 are products in another state? sending the products or services associ- only permitted to sell their products in the First, know that this limitation really ated with the mark across state lines. This only applies with respect to marks that are could be done via a trademark license un- Scott Warner, of Garvey Schubert associated with goods or services that, if of- der which the trademark owner authorizes Barer Law, provides guidance to fered for sale outside the state of Washing- a party in a state where marijuana is legal to clients in intellectual property ton, would violate state or federal law. sell products under the mark in that state. rights and represents a diverse Marks that are associated with other In this way the trademark owner establishes array of clients, including products or with marijuana and other prod- rights in the destination state and qualifies hospitals, software, hardware and ucts, may still qualify for registration. So, all for federal registration. video game companies, and more. other things being equal, “Marijuana Ven- But a trademark license is not without He was once named “Washington’s ture” would be eligible for federal registra- issues. For example, by statute, a trademark Most Amazing Lawyer” by tion as a trademark if distributed in Oregon, owner must exercise a level of control over Washington CEO Magazine. because it is a magazine and its distribution the nature of the goods or ser- >>>>>

21 | WWW.MARIJUANAVENTURE.COM vices sold under the trademark, and estab- lish and require that its licensees meet qual- ity standards with respect to those goods The takeaway is that trademark owners must walk a and services (see 15 U.S.C. § 5, 45). And the fine line in order to qualify for registration and avoid owner must monitor the licensee’s perfor- mance to confirm compliance. Otherwise liability. While not a silver bullet, requiring the license risks being classified as a “na- indemnities and insurance as part of the license ked license” and exposing the trademark to terms can help minimize the risk. abandonment. 1 Perhaps more important, exercising (or failing to exercise) control over the licensee’s goods and services may expose the trade- trademarks.” minimize the risk. That, and monitoring the mark owner to product liability and other Versions of this rule have been applied licensee’s performance in a way that both claims relating to the licensed products as in both Washington and Colorado, and thus preserves the mark and does not stray too the “apparent manufacturer.” This doctrine, need to be kept top of mind when consider- far into the province of the licensee. set out in the Restatement (Third) of Torts: ing whether to license. 2 One more thing. The above focuses on Product Liability, Section 14 (1998), pro- In the same fashion, trademark licensers only a single issue involved in the registra- vides that a trademark licensor is “liable for may be subject to liability for fraud, misrep- tion and maintenance of a trademark. Oth- harm caused by defective products distrib- resentation and other torts related to the li- ers abound. For example, care should be uted under the licensor’s trademark or logo censed products. taken when handling royalties or other con- when they participate substantially in the The takeaway is that trademark owners sideration due under the trademark license design, manufacture or distribution of the must walk a fine line in order to qualify for so as not to trigger federal issues – assuming licensee’s products. registration and avoid liability. While not a you can actually find a bank to take deposits In these circumstances they are treat- silver bullet, requiring indemnities and in- and handle the transaction. That is a topic ed as sellers of the products bearing their surance as part of the license terms can help for a future installment. MV

1. See, e.g., Barcamerica Int’l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589, 597 (9th Cir. 2002) (“[u]ncontrolled or ‘naked’ licensing may result in the trademark ceasing to function as a symbol of quality and controlled source”) (internal quotation omitted); Creative Gifts, Inv. V. UFO, 235 F.3d 540, 548 (10th Cir. 2000) (“naked licensing if established is treated as an abandonment of the trademark, which triggers the loss of trademark rights against the world. . . .”).

2. See Long v. United States Brass Corp., 333 F.Supp.2d 999, 1003 (D.Colo. 2004) (“nearly every jurisdiction confronted with the issue has adopted the apparent manufacturer doctrine”); Turner v. Lockheed Shipbuilding Co., No. C13-1747TSZ, 2013 WL 7144096 (W.D.Wash. Dec. 13, 2013). A deeper look at I-502 transportation Moving product in Washington from Point A to Point B, safely and securely

There are many elements of the I-502 Operating Plan that require detailed plan- ning and careful consideration because they hide some complex and thorny issues. David Kerr The transportation element is one of the el- ements in which danger lurks. Applicants are understandably eager to THE LEGAL PAGES discuss their grow operations, cool tech- [email protected] niques, inventory projections, fancy labels and logos, and security, security, security. These are all good and valuable elements that require an applicant’s attention. Then can construct, with video surveillance and have training in how to respond to poten- we get to the transportation element and it alarms and reporting and tracking, and we tial criminal activity. is easy to consider this sort of a throwaway turn it loose on the roadways where, aside 2. Drivers must take the direct route to – after all it is just making a simple delivery, from putting it in a locked compartment, the destination. right? there is no security at all. As a thief and a robber, this again makes your job somewhat easier. Since WAC 314- The problem with not It gets weirder 55-085 says transport drivers must travel allowing vertical integration directly from the shipping licensee to the For a moment, let’s forget that your pro- receiving licensee and not make any un- The Washington State Liquor Control fessional ambition is to be a fine, upstand- necessary stops in between, the routes will Board rules do not allow cannabis busi- ing and completely reputable producer, tend to be fairly regular and predictable. nesses to participate in both the production processor and distributor of a federally il- You might expect the route followed by and retail side of the cannabis trade. This legal, Schedule 1 narcotic. Instead, let’s as- the I-502 transport driver will be the same, disallows the business model known as ver- sume you are a much less savory individual. shortest route between the production fa- tical integration, and it reflects the Liquor Let’s pretend you are a thief and a robber cility and the retail outlet every time. Control Board approach to alcohol and li- and your preferred crime is to steal illegal The thief loves this provision, because, quor regulation. drugs. if it becomes the most direct route every That means you can’t grow marijuana You are also kind of a lazy criminal that time, it will narrow delivery routes to a few in the back of your production warehouse would prefer not to work very hard. So, known — and possibly less safe — routes and just carry the packaged products up to then, consider how the mandatory trans- of travel. the front end retail space of the facility for portation provisions under Washington As an I-502 business, possibly located sale to the general public (note: Colorado Administrative Code 314-55 make it easier in a remote part of Washington, consid- decided it was the safer route). for you. er choosing a safer, even of longer, route. Instead, in Washington we require that There are three serious issues with I-502 Avoid cell phone coverage dead zones. unaffiliated producer/processors take large and the transportation rules as they are Bypass isolated or remote areas in favor of quantities of marijuana out of their produc- currently drafted. the more heavily traveled routes. Consider tion facilities (secured with 24/7 video sur- 1. Transport must be by an employee of varying your routes. veillance and alarm systems) and stow this the licensed entity. 3. Addresses and operating plans are product in a locked compartment in the As a thief and a robber, you love this public documents. back of a vehicle, and then drive around the provision. It means that an I-502 business For the thief and robber, perfect! Let’s highways and byways of Washington State, cannot contract with a professional de- say you’ve come up with some clever and making deliveries to one or more I-502 livery company to deliver their products. expensive way to protect your product and marijuana retail shops. Marijuana in Washington State is not going employees during the transportation and So, we take marijuana out the most to be transported by armored car compa- delivery process. You are required to spell controlled and secured environment we nies, with trained and armed security per- this all out in the Operating Plan you sub- sonnel on board. mit to the Liquor Control Board. Attorney David Kerr serves It is not even going to be delivered by Anyone who files a public records re- business clients throughout the regular shipping companies with their quest can determine: 1. The address of your state, including an emphasis on proven systems of dispatch and control. facility; 2. Exactly what kind of security and the emerging legal, regulatory and Rather, it is going to be entrusted to one alarm system it has; 3. What your transpor- compliance issues facing new of the employees of the licensed I-502 pro- tation and delivery procedures and proto- cannabis businesses. cessor business, who most certainly doesn’t cols are going to be; and 4. Just >>>>>

WWW.MARIJUANAVENTURE.COM | 26 about everything else about your operation. each of these issues, and these mandatory breaks down in the middle of nowhere You can’t exaggerate the level of security provisions should inform your transporta- Washington? What is your driver supposed you will have or the steps you will take in tion safety and security choices. to do? Do they have a cell phone? Do they the transport and delivery process to make Further, and I cannot stress this point have a backup cell phone? your transport seem enough, now is the Then, assume that sometime, some more secure than it perfect time to figure place, your delivery just may get hit. Think really will be. Consider what kind it out! When you are about how you want your employees to If your Operat- actually running a handle this, with their safety and welfare as ing Plan says you are and level of training you business, how much paramount concerns. going to hire off-du- are going to provide your time will you have ty police officers to to consider preven- Let’s fix this follow your delivery transportation employees, tative measures? Do vehicle (very expen- and provide it. you suppose it may The legislature can fix this. It’s easy. Let sive), or that you are be less than the time I-502 producer/processors contract with going to keep three you have now to professional delivery companies to deliver attack Dobermans work it out? their products. The companies will spring in the back of your delivery van (loud and Consider what kind and level of train- into existence the minute the legislature awkward), or that you are going to send out ing you are going to provide to your trans- passes the fix. It will make the industry saf- three identical vehicles at the same time, so portation employees, and then provide it. er, more efficient and more professional. no one can tell which one actually has the Think about how many employees you can product (complicated and expensive), then afford to send out to transport your prod- Lastly, a final word the Liquor Control Board is going to re- uct (just sending one might be foolish), and about guns: No quire and expect to see those off-duty cops, whether or not it is worth it to have specif- Dobermans or multiple vehicles. ically dedicated and trained employees for I will leave it to the criminal defense just this task. attorneys to explain how having a gun in Think about this, Think about how often and how your your possession, along with the marijuana and be smart transportation employees are going to re- you are delivering, gets you a federal penal- port back when they are out on delivery. ty enhancement and earns you an extra five Here’s the good news: you can address What happens when the delivery vehicle years in federal prison. MV Macro photos of buds from the African Free (left) and Blue Fruit strains, courtesy of Green Candy Press. BREEDING

A beginner’s guide on how to get started; the second part of a series on the importance of cannabis breeding By Chris Bayley

hen Initiative 502 was ap- proved by Washington vot- ers in 2012, the first thought that went through many Wgrowers’ minds was the possibilities for breeding. Yes, the idea of growing a ton of resin-coated ganja that stinks to high heav- en — without the fear of repercussion — is cool. But it was the possibility of germi- nating a thousand seeds that many experts found exhilarating. Let us examine the journey cannabis has taken as it has been cultivated and bred by loving gardeners throughout the millennia. The following pages will touch base on two of the major milestones that have and will allow us to make major breakthroughs in breeding the next great strain. Finally, since most producers are beginning their pro- grams with only female clones and have no seeds of that variety, we’ll explain how you can preserve that special female and end up with seeds that come close to replicating her. Through the years, many growers, breed- ers and industry experts have often spec- ulated on what it would be like to select plants without ever having to grow them out. Generally speaking, to sta- >>>>>

29 | WWW.MARIJUANAVENTURE.COM lize any given trait within a strain, you’re looking at about two-plus years. To make a strain true-breeding for a number of traits, add more time. If you want to do this with a num- Before getting started, the importance of ber of strains, you better set aside an adequate amount of documentation should be noted. You will space and bump your timeline even further. The prospect of knowing what mojo a particular seed or want several notebooks or preferably a seedling has without spending six months bringing it to laptop to keep track of your projects. fruition is tantalizing. Collectively speaking, we may be on the verge of forging a completely new paradigm in breeding cannabis. time to make a game plan. Your overall goal will be to make Breeding 101: Laying the ground work seed lines of all the genotypes that make the cut, plus the This segment will walk you through the beginning stages continual improvement of the Big Bud line. of a breeding project. This example will show you one route The first step is going to be the process of elimination. you can go when deciding to undertake such a venture. Out of the 100 strains, we’ll assume that 10 of them are prov- Before getting started, the importance of documentation en producers and can move right into production. The rest should be noted. You will want several notebooks or prefer- of your new clone varieties will need to be flowered in small ably a laptop to keep track of your projects. containers so you can determine which ones to keep or toss This needs to be the same for everything else to do with out. the operation — watering, fertilizing, crop schedules, main- With the seeds, you’ll need to begin by germinating and tenance, harvesting, etc. There is simply way too much in- growing them out to see which phenotypes (the expression formation to keep track of, especially if you’re sampling your of an organism’s observable traits) will move onto the next work along the way. phase. For new breeders or the inexperienced, the selection For the purpose of this mock breeding program, let’s as- process can seem daunting at times. In the beginning, it’s sume you procured 100 strains and 100 seeds of the geno- always difficult to destroy plants that you haven’t brought to type “Big Bud.” A quick reminder when purchasing seeds fruition because you’re always wondering what you might — you always want to buy regular (male/female) seeds. The be missing. reason for doing this is twofold. One reason is simply to A good habit to get into when you’re learning to cull assure you end up with a staminate (male cannabis plant) young seedlings is based off the earliest morphological to breed with, and the second reason is that breeding with (structural) traits. These traits include leaf structure and a male decreases the likelihood of hermaphroditism (plants stalk shape/type, internodal spacing, branching pattern, vig- containing both female/male sexual organs) in your future orousness, etc. generations. At this point, you have flowered out the remaining 90 Now that you have these clones and Big Bud seeds, it is strains and have settled on 20 of them. Alto- >>>>> Beginning the breeding journey A brief history of cannabis and genetics | By Chris Bayley It’s the axiom of cannabis that through hundreds, if not thousands of especially in today’s legal market, has humans were meant to be intertwined generations, as farmers selected the become the new golden mean within with such a multidimensional plant. finest seeds to plant from the previous our industry. Cannabis has one of the longest year’s crop. Their selection process was recorded histories as far as our inter- very basic, probably focusing on two actions with plants go. Dating back to major factors. The first being resistance THE GAME CHANGERS 6,000 B.C., cannabis has been cultivat- to environmental factors, such as pests From the end of the 19th Century ed for many purposes. and climate. The second being the up until 2012, the breeding of canna- cannabinoid profile itself. bis has taken increasingly exponen- Thought to have originated in Asia, tial jumps as science and technology cannabis slowly migrated around the After so many generations spent in a caught up with our desire to breed world and eventually developed into particular ecosystem, a strain receives increasingly better weed. three sub-species. These sub-species the title ecotype, or in our industry, are cannabis sativa, indica and ruder- landrace. At this point in history, all the Botanists had been conducting alis. There is some debate that there drug-type cannabis around the world is plant breeding experiments for hun- are actually five sub-species, with considered to be purebred (a term used dreds of years. However, it wasn’t until cannabis afghanica and hemp being to describe a plant, that when bred, 1856 that Gregor Mendel began his four and five. Either way, these incredi- only produces offspring with the same famous pea breeding experiments that ble landrace strains were acclimatized genes). Developing purebred strains, gave us the basic rules of >>>>> 31 | WWW.MARIJUANAVENTURE.COM This macro photo of gether, you now have 30 solid strains that are worthy of the The knowledge you’re building through documentation, Sweet Lafayette, from collection. Some of these 30, let’s say 10 of them, aren’t pro- third party testing, coupled with the completion of the can- Nine Point Growth duction ready but have traits that make them worthwhile to nabis genome project, will someday allow you to go through Industries, was keep for future breeding projects. These 10 plants will be put the plant selection process without ever having to flower a taken by Confidence in the grow room where they will be continually cloned until plant. Are we having fun yet? Analytics as part of you have a use for them. At this point, we have whittled down the original 100 clone the service it offers Meanwhile, you have carefully selected varieties to 30, and have selected the best customers. twenty of the best seedlings based off your female and male out of the Big Bud seeds. early culling stage criteria. The seedlings will Depending on your The next step is a fairly easy one. You will then need to be cloned, tagged and put into take all the females and sole male, put them florescence (horticultural term for flower- operation, whether into a flowering room and let nature take its ing). Once the plants have shown their sex, it’s indoor, outdoor course. On a side note, the conditions you’re the male plants will need to be placed into a breeding your plants in should be the same separate flowering chamber. or in a greenhouse, conditions in which you’re stabilizing them. Once there, the male’s plants will be ful- keep in mind that Depending on your operation, whether it’s ly flowered in order to determine which one indoor, outdoor or in a greenhouse, keep in will be the patriarch of your future seed lines. you’re programming mind that you’re programming or “acclima- After the male has been chosen, the clone or “acclimatizing” tizing” your strains to those conditions. you originally took off him will be kept in a At this time the decision needs to be made continual loop of growing and cloning until your strains to those on what to do with the breeding program you’re ready to breed. conditions. from this point forward. The seeds coming Finally we are down to the females. One of off of all the clones you originally bought will the most enjoyable parts of growing canna- be considered F1 hybrids (first generation) bis is getting to see a new variety flower for which will make the seeds 50 percent like the first time. As with the males, you will have to make a the mom. The seeds coming off the Big Bud will be consid- determination on which female you will keep. To complete ered F2s (second generation). If the Big Bud strain were true this process, the finished flowers will need to be inspected, breeding and stable, then the seeds you made may be all the tested, and sampled. Five major factors used in determining farther you need to go with that strain. the female plant are vigorousness, cannabinoids, terpenoids, The simplest way to preserve these clones you began with maturation time and yield. is to begin a backcrossing program referred to as cubing. The With the availability of today’s testing facilities, it is ad- goal of this is to end up with seeds that closely resemble the visable that you have all your strains tested for terpenes and original female parent. We have already begun the program cannabinoids. The data collected from testing provides a by seeding our female only clones with the Big Bud male. baseline with which you can compare your notes against. From this point forward, the project becomes >>>>>

inheritance. For more than a decade, Around the 1960s, with the advance- ly-maturing, resin-coated strains would world’s foremost authority on breeding with serious consideration to produc- recombinant DNA technology because Mendel worked with thousands of pea ment in worldwide travel, exotic land- soon get crossed with the purebred cannabis, says that it was the late ‘70s tion growers, as to the value of breed- DNA from different sources are com- plants in an attempt to figure out how race sativas began showing up in the and hybrid sativas, changing cannabis when widespread sub-species crossing ing a really great strain. Sometime bined, inserted into a molecule, and and why specific traits/genes did or did United States. A large majority of these as we had known it to be. began in earnest. The combination of within the next decade, a clone being then transferred into another living not express through the generations. seeds were being grown in southern these early crosses, plus the subse- sold for more than six figures is not organism. and central California. Although the In his book, “Marijuana Botany,” quent introduction of high-wattage outside the realm of possibility. It was through Mendel’s observa- The implications of this are far climate there is fantastic for growing, a Robert Connell Clarke talks about the grow lights began a new area in can- tions of how certain traits seemed to reaching and the impact on us and lot of these early sativas still had to be outcome of these early crosses. He de- nabis production. These new strains come and go through the generations A GREENER FUTURE the environment is little understood. finished in greenhouses. scribes one of these early hybrids as a and high-powered lights allowed that he concluded some genes must be On Aug. 18, 2011, less than three Besides, after going through all the “huge upright phenotype.” The majority growers to leave the uncertainty of dominate and others recessive. A tool The maturation times of these years ago, a company called Medicinal hard work of receiving your license of these crosses had the appearance of outdoor growing behind for the more used to get a visual representation long-flowering sativa strains eventual- Genomics became the first company and setting up your grow, do you really indica plants with the size and vigor of comfortable confines of an environ- of how Mendelian inheritance works ly came down when earlier-maturing to map the cannabis sativa genome. want to hand it over to someone else sativa plants. These initial sub-species mentally stable grow room. is called a Punnett square. This table sativas from Mexico and elsewhere crosses were the original super-hy- Just this year, the University of Colora- because their GMO “patented cannabis” is used to show us all the possible became available. An example of this brids. The 1980s, which were consid- do announced the launch of a project pollinated yours, essentially making phenotypic outcomes from breeding is the original Haze strain, allegedly ered by many to be the golden age of called the “Cannabis Genome Research your new seeds their property? plants. developed by the “Haze Brothers” of Different people who were in central breeding, saw the West Coast explode Initiative.” Having the cannabis genome southern California. These new sativa to northern California during the ‘70s with what are the cornerstones to al- Knowing the probable dominate These projects, and the ones to sequenced in and of itself just be- hybrids were able to finish well within affirm what Clarke postulated in his most every strain we work with today. and recessive outcomes from cross- follow, will eventually be the new comes a tool for us to get to the end the photo periods that California and book. I often heard these descriptions: The most well-known of these strains ing strains completely takes a large standard from which we base our result more quickly. Since the goal the southern border states had to offer. tree-like plants that were so big that piece of the guess work out of breed- include Hash Plant, Northern Lights, they had to be cut down in stages with breeding projects. To be clear, we are with breeding this plant is eventual ing, and is the very basis on how one The start of the ‘70s introduced the Skunk #1, and of course Big Bud. chainsaws and routinely yielded in the not talking about genetically modify- human consumption, science by itself goes about the selection process for little-known indica sub-species that range of 10 to 20 pounds. Big Bud is purportedly to have sold ing our plants (a.k.a. GMO). GMOs are may have a hard time replacing the conducting breeding programs/exper- would soon revolutionize the indoor routinely for around $10,000 a clone. a completely different ballgame. The discerning palate and keen eyes of a iments. grow scene. These short-stature, ear- DJ Short, possibly the >>>>> This last point should be looked at process for creating GMOs is known as conscience breeder. MV 33 | WWW.MARIJUANAVENTURE.COM WWW.MARIJUANAVENTURE.COM | 34 more time consuming, because where- As explained earlier, after your seed- his mom, which now makes your seeds as the original cross took place all at lings are about a foot tall, begin your se- at around 75 percent representative of once, the process of cubing every gen- lection process by choosing the plants the original female. Following through otype will require individual breeding that best fit your morphological goals. this step one more time completes the chambers. This ensures controlled pol- The plants you’ve selected will then get cubing process, making the progeny at linations, and without it, you could end cloned and put under a 12 hours on/12 around 90 percent representative of the up with stray pollen contaminating hours off light schedule to induce their original female. After completing these your other strains, losing you time and sex. steps for your original 30 females, you money. After determining their sex, the fe- now have a baseline from which you Once your rooms are ready, it’s time male plants can be flowered for obser- can continue improving your strains to germinate your seeds. Hopefully vational purposes. This should happen through different breeding methodol- when the F1 cross took place you end- after every generation in order to track ogies. ed up with a couple thousand seeds so how your project is going. The males In closing, even though backcross- you can begin each project with about should also be flowered for selection ing accomplishes preserving your 200 seeds and still have plenty in re- purposes. Perhaps the biggest contrib- original female clone, it does not take serves. uting factor to keep in mind here, ac- into account the goal of making your Special care should be taken to pre- cording to DJ Short, is that the males females true-breeding, nor does it ac- serve your leftover seeds to retain high are responsible for the amount of flavor complish a recessive trait you’re trying viability rates. Remember to bring this and odor being passed on to the next to stabilize. point up when working with your con- generation. The breeding projects to accomplish sultant. Once you have selected your male, those goals would take too much time it’s time to take the corresponding to explain in this article. For produc- Chris Bayley operates a consulting clone you made, grow him up a bit, ers who wish to delve into such an un- company called Hortistructure, and place him in the chamber with dertaking, it would be well-advised to Inc., geared toward licensed your chosen female plants and induce work with a consultant who can lay out producers and processors. He the flowering cycle. a road map to ensure the highest pos- is also the co-owner of an I-502 You have just completed the second sible success. focused gardening store opening step (squaring) in the cubing program Remember, stay focused and let it mid-July in Okanogan County. by back-crossing the F1 male back to grow! MV

“Cooling down a home and cooling down an indoor horticultural operation are two very different climates that require separate sizing formulas.”

here are no short cuts to efficient climate horticultural climate control. control. However, there are ways to ensure you’re not wasting time and ave you ever wondered why the Tmoney. Many different methods for cooling a temperature outside feels much space exist, but there is only one correct path to warmer than it really is on a hot a KEEPING IT get there, and that’s through knowing your true Hsummer night? No, it’s not that your bargain- BTU (British thermal unit) heat load. priced thermometer turned out to be nothing If you do not properly size the system more than an inaccurate wall decoration. It’s accordingly, it will never keep up with your because there is a higher relative humidity in demands, regardless of whether you are using the air, which is called “latent heat.” a conventional on/off air conditioner, or a To better understand the relationship variable refrigeration flow heat pump. between latent heat and climate control, let’s So, why is it important to know how many compare it to the scenario of trying to drive BTUs you have in a room? It may not be if up a snow-covered mountain pass in your car. you’re talking about cooling down a house on In order for vehicles to make their way up the an early summer afternoon for the sole purpose pass, they need to be able to grip the road. If By Jeremy Elkins | Elkins Climate Control of human comfort. In fact, most of us could the road is covered in snow and ice, drivers will probably do without having air conditioning be struggling to move forward. Some vehicles, all year long, depending on what area of the such as a four-wheel-drive truck with winter country we live in. tires, will be able to climb the mountain much Of course, if you’re talking about trying to quicker. Other vehicles, such as a rear-wheel- COOL cool down a room that has 20,000 watts of high- drive muscle car, will have to go much slower intensity artificial sunlight hanging directly or may not make it to the top at all. Think of above water-saturated live plants emitting large your room temperature as the mile markers amounts of moisture in the air, then that’s a on the road, your climate control system as the different story all together. vehicles trying to drive, the top of the mountain Cooling down a home and cooling down as your target temperature, and the snow on the an indoor horticultural operation are two very road as humidity. different climates that require separate sizing When designing your climate control formulas. Normally, when designing a cooling system, if you do not take in consideration all system for a house, builders tend to primarily the contributing factors of your environment, base their configuration off the square footage then you might be stuck trying to drive a of the home. Ford Mustang over the Rocky Mountains in he sun produces heat. Add water and heat produces humidity. When designing a climate control system the middle of winter. Or, in the case of indoor And humidity? It produces a major problem, at least for your for horticulture, engineers do look at the horticulture, trying to cool down a 110 degree climate control system. Why are we talking about heat, humidity square feet, but more importantly they need room at 75 percent humidity with only a Tand climate control when most people are just looking to cool down a to know the building insulation R-factor, light portable air conditioner. horticulture room? BTU load count, humidity levels, hydroponic or soil usage, organic or synthetic plant ne aspect of climate control that is When you’re talking about horticulture, you are not talking about strains, cubic feet per minute (CFM) of air often overlooked due to its simplicity, is air conditioning. AC plays a role in helping maintain your horticulture circulation, and much more. These core factors ensuring proper air circulation within environment, but that is the equivalent of saying gasoline plays a role are what make up the distinct difference Oa room. A common scenario that is played in driving your car to work. It’s only one small part of a much larger between conventional cooling methods, and out repeatedly throughout the >>>>> picture. If you want to cool down your house, install an air conditioner. If you want to maintain a certain environmental element that best suits your plants’ ability to reach their maximum potential, you need to control the climate. >>>>>

37 | WWW.MARIJUANAVENTURE.COM WWW.MARIJUANAVENTURE.COM | 38 indoor horticulture industry is having the right amount of cooling BTUs, or tons of air conditioning (a ton being a term from when ice was still being used for cooling; 12,000 BTUs equals one ton) needed to cool down a room, but with only a limited amount of wall fans trying to circulate the air. This issue can be further compounded if the air conditioning unit is a wall-mounted ductless split, rather than a spiral-ducted conventional AC system. The main difference between these two systems is that spiral ducting delivers cool air through an evenly dispersed supply duct usually running the entire length of the room, compared to ductless split indoor wall-mounted units supplying cool air directly to only one location. Either type of system will be effective for maintaining a desired room temperature when properly sized, but only if each of them have the adequate air circulation needed to fully operate. If you were to take a look at an active indoor horticultural operation through the eyes of a thermal imaging camera, you would see extreme temperature differences throughout a room, especially between the amount of heat near the lights, and the heat lingering by the return air. Being able to move hot air away from the source of heat, and direct it into the return ducting of the air conditioning system to be cooled down for resupply, is key to maintaining even temperature uniformity throughout the entire room. The easiest method for circulating air throughout a room to achieve the right An indoor grow amount of cool air disbursement is to operation with HVAC simply place the correct amount of air fans set up by Elkins Inc. as determined by the amount of needed CFM, and placed in the right location. In addition to wall fans, it is equally important space, giving you complete control over Your indoor horticultural environment to add multiple temperature averaging the environment, and disallowing hot air also includes many of these same elements sensors throughout the room in order to pockets to potentially damage your plants. such as CO2 levels, air circulation, moisture capture a more accurate reading for the content and, of course, temperature control. thermostat controlling your climate control nowing what you need for cooling One thing to always keep in mind when system. is half the battle to maintaining thinking about having your next climate These vital measures will keep your a stable environment for your control system designed is to ask yourself room temperature even across the entire Kplants to thrive. When we talk about what you want out of it. If you are looking climate control, what we are really talking to most closely replicate nature at its best Jesse Elkins is the founder and about is much more than just heating in order to create a matching environment developer of ClimaGrow (www. or cooling though. The earth’s climate is that mimics your plants’ natural thriving climagrow.com) by Elkins Inc. He made up of many factors such as variation climate, then you have your work cut out has more than nine years of in temperature, humidity, atmospheric for you. If not, then there are always plenty experience helping growers pressure, wind, precipitation, atmospheric of online retailers biting at the bit to sell you through proper climate control particle count and other meteorological what they call the world’s best and cheapest and monitoring methods. variables. air conditioner. MV

WWW.MARIJUANAVENTURE.COM | 40 Evaluating a turn-key growing facility By Rachel Cavanaugh

s a combination of longtime garage A great deal hinges on how well the de- levue, Wash., a lot of emerging marijuana growers expand their businesses in velopers have set up the space, experts say, entrepreneurs assume that all facilities have the wake of recent marijuana legal- and how much they want to charge you to been built by grow experts. While that is Aization and throngs of new entrepreneurs lease it. sometimes the case, he said, other times it jump into the industry, the concept of turn- For a grower who wants simplicity and is not and business owners need to be able key production facilities has garnered the convenience, it can be an excellent decision. to bring their own discretion to the table attention of potential lessees. Many facilities are fully equipped with when looking at a place. Many growers or aspiring growers want all of an operation’s electrical needs, water “I would just stress that people do their to know whether it makes sense to lease supply, air filtration, HVAC, security cam- homework,” Allen said. “Make sure they’re a facility that is already set up to produce eras and grow lights. Some are even stocked making a good choice. Check out all their cannabis, or if they’re better off building with office furniture and computers. options and recognize that they’re probably everything themselves from scratch. The Yet, according to Craig Allen, a consul- talking to a salesman. [That] doesn’t mean answer appears to be that it depends. tant and co-owner of Groco Supply in Bel- that they’re getting sold some- >>>>> 41 | WWW.MARIJUANAVENTURE.COM thing bad but the salesman that people just naturally waste. Bring along a is going to have a lot of good “But very quickly prices are things to say and he’s not going going to drop and waste is go- 3. consultant At a glance to tell you the bad things.” ing to become important. So You have to know what There are five pro tips that why would you set yourself up you’re looking for and even in- The THC Law Firm Allen said he’d give to business for failure with a facility that dustry veterans may not know Four things to owners considering a turn-key doesn’t already have the effi- what that is in a large-scale fa- keep in mind facility. ciencies built in?” cility. The point becomes even when considering Allen said you should aim more relevant for people just a turn-key growing for a maximum 2:1 ratio when getting into the business. facility: LEGAL HELP FOR Make sure it’s looking at canopy space versus “It’s really important if you 1. space efficient. aisles and processing space. don’t have a strong understand- 1. Make sure it’s BUSINESS An ideal situation for 21,000 ing of growing to have some- space efficient. A lot of people have the mis- of canopy space — currently one there with you when you’re taken idea that having wide the largest canopy allowed in checking out leases,” Allen said. 2. Assess the OWNERS! aisles and plenty of room to Washington State —would be “Someone that knows advanced processing area. 502 walk around makes a facility a 40,000 square-foot facility. grow techniques in large-scale Chris Crew is one of the leading 502 attorneys more luxurious, Allen said. But That would allow approximate- facilities can point out glaring 3. Bring along a in the state the opposite is actually true. If ly 21,000 for plants and roughly problems really quickly in some consultant you’re not highly efficient with 9,000 going to aisles, doors and of these rooms. Just because  THC Law firm specializes in 502 business. your canopy space, he said, windows. The remaining 10,000 it’s a big, clean, brand-new, ex- 4. Remember the your utility bills will be high, outside the canopy would be pensive operation doesn’t mean model’s changed. That’s all we do! you’ll lose valuable square foot- used for processing and admin- whoever built it knew what they  age for planting, and your facil- istrative space. were doing any more than you Licensing, appeals, negotiations, ity will yield smaller crops. d o.” “There’s an attitude in this partnerships, leases. “The idea that you should Assess the He added that if you’ve been industry that it’s fairly easy to have three or four feet between used to a smaller operation you do [on your own],” Allen said.  On-site visits and consultation. your rows so you have all kinds 2. processing area may not fully understand the “And I think it’s because of how of room to walk around and impact that small decisions can the industry used to be.  Lead counsel for The Marijuana League. comfortably garden is really It is important to know have in a large-scale facility. “People had to be their own  just wasteful,” he said. what you are going to be using “You can make mistakes electrician. They had to be their Licensed in the State of Washington and The biggest problem is that your processing area for and small-scale and it’s a small mis- own plumber; they had to be Federal Court. inefficiently designed cano- make sure the space you’re take. But you can just magnify their own contractor to build py spaces minimize the ability looking at fits those goals, he the size of that and all of the out space; they had to be their  Complete start to finish programs for one to use multiple grow lights on said. sudden you have a huge mis- own gardener. Because it was il- each row. Different growers have dif- t a ke .” legal on one end and definitely a low cost. If you have a 10-foot-wide ferent objectives for their fi- It is also advisable, he said, to gray area on the other end. You  swath of plants, for example, nal products. Each business use a commercial leasing agent. couldn’t call an air condition- Clients state-wide. there will be multiple lights model has a different target for They will be more familiar with ing guy to come to your house. overlapping; however, if you post-grow processing and you local lease prices and able to Whatever it was, you had to do have extra space between the need to determine whether perform the lease to make sure it yourself. rows then that light hits the the facility meets your needs. that you’re not getting unfavor- “People in this industry have Call the THC Law Firm for ground. Specific rooms will have able terms. historically been do-it-your- Multiple lights make crops certain features built in and selfers and so now a lot of these expert advice & legal counsel. bigger, cut utility costs, and you need to be sure they are Remember the garage growers are trying to maximize production per in line with your purposes. go large-scale and they think,  360-861-8142 square foot. The practice is an For example, if you plan to 4. model’s changed ‘Sure, I can find a building. I can industry standard for all indoor have a trimming room, you’ll do my own build-out.’  360-861-8578 growing worldwide, he said, need it well-insulated. If you For a long time, marijuana “But what they’re really whether you’re talking about want to have a drying room, growers were operating under coming up against is that this  [email protected] cannabis or tomatoes or orna- then you’ll need good dehu- the radar, Allen said. Facilities is a whole different beast. This mental cactus. midification capabilities. CO2 were smaller and strategies isn’t just garage growing. This is “These are really well-re- extractions require special ex- were different. Now, many peo- a structured business.” searched techniques that aren’t haust systems and other fire ple think they can move into a Remembering that the busi- really up for debate here,” he safety capabilities. larger facility and expect to do ness model has changed will said. “...The problem with can- “Make sure the processing the exact same thing. But Al- suit you well when deciding nabis especially is that the mar- area will work with the type len cautions that when looking whether or not to lease a turn- gin is so high on the price ver- of processing you want to do,” at larger turn-key facilities you key facility, along with multiple sus the cost to produce a unit Allen said. need to keep that shift in mind. other areas. MV

43 | WWW.MARIJUANAVENTURE.COM open for business 45 | WWW.MARIJUANAVENTURE.COM Washington retail stores open doors to the public | By Garrett Rudolph uly 8 was a day that consumers and busi- ness owners alike had been anticipating with bated breath ever since Initiative J502 was approved by Washington State vot- ers in 2012. It brought I-502 to fruition and marked Washington’s first day of fully legalized marijuana sales. It was a whirlwind process that included 24 businesses receiving their licenses from the Washington State Liquor Control Board at approximately 1:40 a.m. July 7 — just 30 hours before they were giv- en the go-ahead to open for business. Most, either by design or due to some de- lay in the process, did not open their doors at the earliest moment possible, resulting in a staggered series of grand opening celebra- Top: Cannabis City employees discuss the store’s options with a tions over the course of the next two weeks. customer July 8. For the four stores that did make the opening day launch, July 8 was a madhouse Below: Hundreds of cannabis enthusiasts use cameras and of shoppers, supporters, protesters and me- phones to record history being made as Seattle City Attorney Pete dia. Holmes holds up his package of OG Pearl in the background. “It was a pretty intense day overall,” said Ken Delp, co-owner of Altitude, which Previous page: Customers flood Top Shelf Cannabis in Bellingham opened in Prosser just after 8 a.m. July 8. on opening day. Delp said the 30-hour window between Altitude receiving its business license and Next pages: One man inspects the product inside Top Shelf Can- opening day was a frenetic, busy stretch for nabis, while a man outside holds a sign declaring the drug war the owners, employees and vendors. over. “To say the least, we didn’t >>>>> Photos by Garrett Rudolph

47 | WWW.MARIJUANAVENTURE.COM 509-919-7119 get much sleep at that time,” he said. Altitude contacted producer/processor Monkey Grass Farms about product early in the morning July 8. “They ended up leaving Wenatchee around 4:35 a.m. that morning and getting there about a half hour before 8 a.m.,” Delp said. “At that point, we had to do all the counting and making sure everything was good to go there. It was a lack of sleep, but it was definitely worth it.” The other stores that opened at the earli- est possible moment were Top Shelf Canna- bis in Bellingham and Spokane Green Leaf. Cannabis City took advantage of being the only retail location licensed in Seattle with a noon opening and a throng of enthu- siasts that crowded the front entrance and blocked off part of Fourth Avenue, as well as a line that looped all the way around the building. Among the initial customers at Canna- bis City were Alison Holcomb, architect of Initiative 502, and Seattle City Attorney Pete Holmes. Holmes purchased a pair of 2-gram pack- ages of OG Pearl at Cannabis City. “I’m keeping one bag for posterity and one for personal enjoyment at >>>>> some point when it’s appropriate,” Holmes told the gathered media. Over the course of the next two weeks, more stores enjoyed strong opening day sales, including The Happy Crop Shoppe in East Wenatchee, 2020 Solutions in Bell- ingham, New Vansterdam and Main Street Marijuana in Vancouver, Cascade Kropz in Arlington, 420 Carpenter in Lacey and 4US Retail in Okanogan. The Prosser shop, Altitude, has been open each day since July 8, capping sales at 300 customers per day to conserve its supply at a time when the demand outweighs the number of licensed producers and proces- sors ready to ship product. “Our goal was to make sure we had enough product each day,” Delp said. Others haven’t been so fortunate, as the enormous crowds during the first days wiped out a limited supply. Part of the prob- lem is a lack of licensed producers and pro- cessors that have had enough time to harvest crops. Cannabis City ran out of product in just three days, but planned to reopen July 25, when it had acquired enough cannabis products to avoid a cycle of closing and re- opening. Another problem is a backlog among some of the testing laborato- >>>>> ries, said Lisa Wendt, co-owner of The Hap- py Crop Shoppe. A Seattle coffee stand makes light of the July Wendt said The Happy Crop Shoppe’s 8 festivities, while in Bellingham (below), July 14 opening received a great turnout, the line wraps around Top Shelf Cannabis. with people camping overnight and about 45 people in line by the time the doors opened. “Everybody was pretty excited,” Wendt said. “They thought the store looked great and we got really positive feedback.” With the delayed opening, The Happy Crop Shoppe was able to have product in and inventory in place with time to spare by the time its first customer walked through the doors. However, one of the major obstacles that had to be contended with was the Internet going down. “We have a really great staff and they did a good job of tracking the inventory and be- ing able to take care of it on the fly,” Wendt said. The opening stretch of legal marijuana sales in Washington resulted in a strong haul for the state. The excise taxes due from the first three days of cannabis sales totaled nearly $150,000 — not including state and local sales taxes. Excise taxes from the opening day were more than $60,000, which was cut by more than half by day two, before rising back to nearly $56,000 Thursday. MV

53 | WWW.MARIJUANAVENTURE.COM LIFESTYLE: Dash Hemp Innovative, sustainable clothing By Kristen Schell

he legalization of marijuana in Washington and Colo- rado has helped revitalize the conversation about the This country was founded on industrial wide-ranging varieties and uses of the cannabis plant, Tincluding its medicinal properties and the cultivation of in- hemp. ... It’s a vital part of our history, a dustrial hemp. vital part of our heritage. It’s a vital part Although hemp lacks the psychoactive THC of its mar- ijuana cousin, cultivation remains largely outlawed in the of our planet. United States. However, as the taboo of marijuana is disap- pearing, so too are some of the restrictions against hemp, allowing the U.S. to move closer to building mills that can beautiful detailing and a wide variety of clothing styles. produce hemp yarn and other goods. The pros of using hemp yarn over other traditional fibers, What does this mean for the future of retail? The answer such as cotton or polyester, are endless. It is lightweight, has is simple: hemp could become a primary resource for a wide paradoxical temperature regulation and requires minimal range of consumer goods due to its versatility. washing due to its anti-microbial properties. Richard Dash, founder of Dash Hemp and a board mem- Hemp is used differently from marijuana, although they ber for the Hemp Industry Association, said he believes the are both derived from the cannabis plant. Hemp can be used industrialization of hemp will become mainstream within to make a number of different products (soaps, lip balms, the next five to seven years in America. clothing, building materials, food, etc.), making it incredibly “This country was founded on industrial hemp. … It’s a versatile. It is important to know that THC is not present vital part of our history, a vital part of our heritage,” Dash in any quantity that will induce a high from consumption. told Marijuana Venture. “It’s a vital part of our planet.” Hemp can be grown organically in virtually any climate, and Dash’s passion for hemp began in Eu- naturally suppresses weeds. It can also produce more pulp gene, Ore. in 1997. He spent two days than timber. at a hemp festival, conversing “Hemp is something everyone can get behind,” among hemp enthusiasts. Dash said. His background in cloth- Dash has all of his hemp grown and produced in ing, having founded a line of China. He prioritizes the quality of the work envi- women’s apparel in Hawaii ronment for his employees, takes care of the mom- in the 1970s among other and-pop shops, and cares about the consumer. endeavors, combined with Dash Hemp, which is based out of Santa his newfound interest in Cruz, Calif., is a humanitarian company hemp, led him to decide with a drive to pave the way for future industrial hemp was going hemp retailers to come. to play an integral role in his future. It was this excur- Richard Dash is the sion that led to Dash Hemp founder of the Dash Hemp (www.dashhemp.com), an clothing company. upscale retail company with Photos courtesy Dash Hemp

55 | WWW.MARIJUANAVENTURE.COM WWW.MARIJUANAVENTURE.COM | 56 Effective legal services for entrepreneurs, start-ups and risk-takers

• Washington State marijuana law • Contract law • Business law • Intellectual property

GREENHOUSE GROWING Use the tomato model By Shane Hutto | Horticultural Solutions Ltd.

s the cannabis market sees a huge very most out of that footprint we can. higher yields will drastically increase your influx of cash, with investors all When you’re setting up a high-tech fa- profits. wanting a piece of the pie, many cility, should you try and reinvent the wheel When specifically using the tomato Anew grow facilities will be looking at the or look at what has already been done? The model, there are two primary options for greenhouse option. I can argue until I’m easy answer is use the existing model that substrate. First and foremost is stone wool, blue in the face as to why the greenhouse is has already been optimized and perfected. this product is specially designed to give the correct option over So let’s talk tomatoes! the grower ultimate control over the root a warehouse, but real- Tomatoes have zone. Your other substrate option is coco. istically people just ha- Using the tomato model been grown using hy- When I talk coco, I don’t mean the bricks ven’t seen what’s possi- droponic methods in or loose fill bags you buy in your hydro ble in a greenhouse. is not easy, but it is the greenhouses for de- store, I am talking the professional grower’s Most of the canna- right way to go. cades. Now, with tech- coco, slabs and blocks. Many of our canna- bis greenhouses, and nology advances, crops bis growers don’t even know these exist, let even some of the large are producing higher alone where to get them. I’ll get into that warehouses are simply yields than ever. Can- in a minute. scaling up from using the basement grow- nabis is no different. We can use the same Next, look at what your slabs are sitting ing model, with hand-watered pots on the modeling, equipment and technology to on. The pros don’t use tables or sit their floor. This makes absolutely no sense when give a greenhouse the highest possible out- plants on the floor. This is just unsanitary it comes to a commercial production en- put. and tables are a pain in the butt, plus once vironment. First, we can all understand Using the tomato model is not easy, the crop is flowering, it shouldn’t be mo- why watering should be fully automated. but it is the right way to go. You may pay bile. The crop should stay in place once Next, we need to look at utilizing every bit more for a consultant and the equipment flowering is initiated and preparations of available growing space and getting the up front, but your lowered labor costs and should be made for stabilizing >>>>>

57 | WWW.MARIJUANAVENTURE.COM the top heavy branches. Whatever method of stabilization you choose, whether it is a trellis or hooks and twine, it should spread the canopy to get maximum light penetration as well as cover the entire footprint allotted for each plant. For those of you wondering about the hooks and twine, it is essentially a yo-yo that at- taches the string to the plant and can wind around the yo-yo like a hook as the plant grows taller. This is an excellent method for low-stress training, particularly in a green- house. This method is used widely in the commercial vegetable model. Once you’ve got plants in media, you’ve got to feed them. Professional greenhouses don’t feed by hand whatsoever, so why on earth would cannabis be any different? It’s not. It’s a matter of knowing what automat- ed technology is available, and not only how to use it, but how to get it and how to install it. Also, sometimes your structure may have to be adapted so the technology conforms to building/fire code. There are tons of auto- mated irrigation systems, and any commer- cial cannabis grower should have a custom irrigation plan to meet the designs of their facility. The key is having the right consul- tant to help you plan a retrofit or do a new overall design. The consultant should have access to all the suppliers already for any products he recommends to you and should be able to use those contacts to get you the best deal. So now you’ve got the plants taken care of, but what about lighting? If you’re using a greenhouse, you are obviously going to use as much natural sunlight as possible. How- toperiod, temperature and humidity using is during the winter. Greenhouses can get ever a major misconception is that a profes- these technologies in conjunction with each too hot from the heaters running in the sional greenhouse doesn’t need lights. This other. morning and then the sun continuing to is wrong. A commercial cannabis green- If you decide to go the greenhouse route, increase the temps. Then they need to vent house will have lights throughout, simply you’ll want to hire a greenhouse contrac- to decrease temperature, but because it’s for photoperiod control; they will also be tor. There are a number of them now that cold outside and warm in the greenhouse utilized during low-light days as an additive are very willing to sell to cannabis grow- the vents won’t work properly in all cases. source of energy to maintain plant growth ers. Be careful though because you will get Often the greenhouse will fill with fog or rates. Automated blackout cloths will likely what you pay for. The cheapest greenhouse condensate and completely screw your hu- need to be used because the hours of sun- manufacturers are famous for building your midity balance. We all know this is a major light per day are often too many for flow- structure and walking away without in- problem for cannabis during flowering so ering cannabis. These cloths can even black stalling all the ancillary equipment. These the tall peak heights can curb the effects of out individual zones at different times. The cheapies are also not really designed in con- this issue to some extent. real key is knowing how to manage the pho- junction with the high-tech systems that are The things I have mentioned here are available. One major requirement is wall truly only the tip of the iceberg and the Shane Hutto is the owner of height. The higher the ceilings are, the more technology being employed in the com- Horticultural Solutions, a suitable the structure — not because we are mercial market is far better than what most consulting firm based in Colorado. growing particularly tall plants, but because cannabis growers are doing. I hope that this He specializes in high-tech the high ceilings allow us easier control over read has given you a wider eye to not just greenhouses and large-scale the temperature and humidity, especially in follow convention of cannabis, but follow warehouses, as well as other time of extreme temperature. For example convention of agriculture; after all, we are aspects of the cannabis industry. one of the biggest issue growers run into just growing flowers! MV

59 | WWW.MARIJUANAVENTURE.COM Safe, certified, child-resistant cannabis containers SORTING FACT FROM FICTION By Ben Wu | Kush Bottles CEO

ecently, I read a press release claim- ing that marijuana dispensary packaging made in China was “out- Rperforming domestic manufactured dis- pensary supplies.” The press release stated, “Chinese man- ufacturing had helped to keep packaging prices low. The fact that these lower-priced options exceed domestic quality standards in the last few years is why [they are] proud of [their] business partnerships in China.” As someone who is very familiar with the Chinese-manufactured cannabis con- tainers, I strongly disagree with the state- ment that they exceed the quality of the product from domestic sources. I am keenly familiar with the production quality of bottles and packaging coming from China, and I can unequivocally state that they are far inferior to the product coming from American factories, which use FDA-approved materials and have been independently tested and certified to meet ize that in order for a ed states at great risk. that are made in China as part of our Val- guidance. We can’t expect dispensary own- We have also invested in training so that and exceed the standards for child-resis- bottle or container to The potential liability ue Line, and offers them as an inexpen- ers to know the sometimes-subtle differenc- we have experts on staff who are up to date tance set by the specific requirements of be absolutely certified Moreover, many of the and tradeoff in quality sive packaging solution for dispensaries in es in packaging products, and accordingly, on each state’s complex regulations regard- Title 16 CFR 1700 of the Poison Prevention as child-resistant and bottles and containers is not worth the slight states that are not strictly regulated, such as they must rely on the judgment and state- ing the packaging of cannabis and canna- Packaging Act. meet the requirements savings. California. ments of others who are more intimately bis-based products. Dispensary owners, Moreover, many of the bottles and con- of the Consumer made in China do NOT Unfortunately, However, for regulated states like Wash- familiar with that niche of the market. operators and growers frequently call us tainers made in China do NOT meet the Product Safety Com- meet the standards for these products are be- ington and Colorado, the use of Chi- We owe it to ourselves and to our in- with questions, which we are happy to an- standards for child resistance in states with mission (CPSC) and ing marketed as “cer- nese-made bottles can put a dispensary in dustry to be truthful and forthcoming in swer. No sales pitch included. child resistant packaging regulations. ASTM Internation- child resistance in states tified child resistant,” risk of non-compliance. We caution dis- all of our representations. We cannot put We enjoy working with dispensary op- Many dispensary operators do not real- al, it must be tested with child-resistant which is simply not in pensary owners that statements that these the thrill of making another sale above the erators, and providing a resource to help and approved in this line with the facts. The bottles are “approved” are ill-informed or greater good, by misrepresenting any as- them navigate their state-specific rules, Kush Bottles CEO Ben Wu is a cum country. Even if the packaging regulations. onus is on dispensary misleading. pect of a product, its attributes, or its cer- codes and regulations. laude graduate of New York made-in-China bot- operators to dig a little We sell thousands of bottles every day, tifications. The bottom line, to borrow an old ex- University, who began his career as tles were tested in the deeper and find out if but we won’t sell an unapproved product We have become a leader in providing pression, is that sometimes trying to save an investment banker. More United States and then manufactured over- their packaging solution does indeed meet in a regulated state, and potentially put the high-quality, child-resistant containers to a few cents can really be penny-wise and recently, he served as vice seas, each time a size or mold is changed their state’s regulations regarding child re- dispensary in jeopardy. the cannabis industry, in part because we pound-foolish. We won’t sell a product to president at Wedbush Capital Man- or a resin altered in the slightest, it must be sistance. Let’s face the reality of our new industry: hold our employees to the highest ethi- a dispensary that will put their license in agement, with a specific focus on recertified. That is simply not happening I am not against the made-in-China Everyone is relatively new to this game, and cal standards. We would rather walk away jeopardy, even if it saves them a few cents. working with high growth, with the Chinese-made products, and this cannabis packaging products. In fact, our throughout our industry, decision makers from a sale, than sell a product to a dispen- We urge all others in the industry to fol- entrepreneur-oriented companies. is putting dispensary owners in regulat- company, Kush Bottles, sells containers must rely on others for their expertise and sary that won’t meet their state’s codes. low this example. MV

61 | WWW.MARIJUANAVENTURE.COM WWW.MARIJUANAVENTURE.COM | 62 Muret said. “We expect competition in this know each other personally and meet on a The second misconception is that Virid- industry to be fierce, and the regulators to fairly regular basis to share stories and tips, ian Staffing’s services must be particularly be particularly thorough and unforgiving.” which is how we have managed to stay on expensive. Gone are the days in which business- top of our game for so long,” Bradford said. “When I tell people I have an MBA in es active in the cannabis industry can af- human resources and over 14 years of For- ford to play fast and loose with their HR iridian has certainly had to battle its tune 100 recruiting experience, the conver- practices, or to source their talent entirely Vfair share of misconceptions. The first sation often pivots immediately to cost,” from their immediate peer groups. Some being that all it does is place trimmers and Bradford said. “And rightfully so. Elite re- will certainly try, but may quickly find budtenders. cruiters like myself and the majority of my themselves outpaced and outclassed by “We’ve been at this for nearly a year peers bring down as much as some attor- companies who take such matters more now, and we’re just now starting to see the neys because we’re good at what we do and seriously. first requests for those types of positions,” our services are in high demand. But where It took months of hard work to lay the Muret said. “We’re happy to supply our cli- the jaws really hit the floor is when I tell foundation. But now that I-502 business- ents with whatever they need, but the vast my fellow recruiting friends how thin our es are finally being given the green light, majority of the positions we’ve filled so far, mark-ups are, approximately 50 percent Viridian Staffing (www.viridianstaffing. and where our value is most apparent, is less than most agencies, because the vast com) is scaling fast and leveraging the top closer to the top of the food chain — your majority of businesses in this industry are recruiting talent in the Pacific Northwest master growers, C-level executives, engi- still start-ups and we started Viridian to be and beyond to support the tidal wave of neers, chemists, doctors, research scien- of service to these companies, not merely job requests. tists, sales managers, etc. to exploit a short-term market opportunity Viridian has already doubled its staff in And it’s not merely your grow ops and at the expense of developing long-term re- Colorado and is flexing in some of the most retailers. Matter of fact, most of Viridian’s lationships. senior recruiters from Fortune 100 compa- earliest and most loyal clients have come “But yeah, my friends question how we nies like Amazon and Microsoft, most of from the ancillary businesses: testing Labs, can afford to stay in business or remain them long-term friends and associates of extraction technologies, clinics, packing motivated, to which I answer ‘the love of David Muret Bradford, who is deeply networked in the and logistics. this industry and the people we work with.’ and Kara recruiting space. “Even people active within the industry Profitability has never been and never will Bradford. “Outsiders fail to realize what a small are just beginning to appreciate just how be our number one concern. Our philos- Photo by Harley community it is, and that most of us who broad and sophisticated the industry is be- ophy is, do what you love and do right by Lever, Harley’s Eye Photography have been doing this for more than 10 years coming.” your clients and the money will come.” Viridian fills staffing service need ack in 2013, Kara Bradford sat in the dustry. mers, budtenders, etc.), it became clear Bmain meeting space at Delta 9 and lis- As she listened closely to each of the that there wasn’t a single bona fide, experi- tened with her future business partner as presenters, she detected a subtle, but con- enced recruiting or human resources pro- multiple I-502 license applicants and ancil- sistent theme: the need for qualified, pro- fessional actively and explicitly serving the lary businesses presented their companies fessional talent to help move these busi- industry. to a handful of people who constituted the nesses forward. Given the fact that the earliest members of recruiting industry is ince no business can excel without great the Washington Mar- so big in the greater Stalent, or avoid unnecessary liabilities ijuana Business Asso- Our philosophy is, do Seattle area, and that without a good working understanding of ciation. so much attention was HR best practices, Bradford and Muret de- Bradford had been what you love and do being focused on the cided to step up and answer the call. With- one of Seattle’s preem- right by your clients and emergent cannabis in a month, Viridian Staffing was born. inent tech recruiters, industry in general, “We quickly realized that the majority of attending and help- the money will come. she initially assumed these business owners had already burned ing organize industry someone else would through their list of family and friends to mixers in the Pacific have already identified staff their operations,” Bradford recalled. Northwest for years. It was one of those the market need and was already providing Bradford and Muret agreed that in or- events, the Seattle Tech Meetup, that Brad- such professional services to the industry. der for canna-businesses to succeed, they ford met David Muret, a recent transplant After some research, however, she was were going to need the best and brightest, to Seattle with big dreams and a shared surprised to learn that at that time, nobody not unlike the tech sector. mutual interest in the cannabis sector. was providing cannabis-industry employ- “For us it wasn’t just about the market Despite her background in recruiting, ment services in Washington State. opportunity or first-mover advantage, but the 2013 meeting at Delta 9 was Bradford’s While Colorado appeared to have a sin- a genuine desire to help the industry suc- first networking event in the cannabis in- gle firm providing low-skilled labor (trim- ceed and enjoy the respect it deserves,”

63 | WWW.MARIJUANAVENTURE.COM Aldilas offers cloud computing option By William Bates Adilas saw a need to have accounting prin- virtually limitless data storage capabilities CIPS LLC CEO ciples be the driver and then blended the unmatched by those programs installed on fundamentals of traceability, inventory a system’s hard drive and stored in server Application programming interface control and many other features into the banks. (API) systems that utilize cloud computing development of their point-of-sale soft- As the global marketplace continues have been providing scalability and useful ware. its migration to the Internet, it’s clear that services outside of the cannabis industry Additionally, they wanted a solution for cloud accounting software is the most sen- — including the automotive and transpor- their clients that was robust and allowed sible option when choosing how to manage tation industries — for years. Systems, such them to draw upon the software strength shared information safely and efficiently as Adilas Software, which is sold and ser- to standardize information. Adilas was al- while maintaining on-demand access ca- viced by CIPS LLC in Woodinville, Wash., ready working within the medical marijua- pabilities. could be the answer for a highly scalable na community in Colorado, and thus, had a Cloud computing is not a new thing in option for the cannabis industry. proven track record of success to rely upon. the information technology world. It has Adilas Software is an alternative for Adilas point-of-sale software is custom- existed since 2005 and it has been recog- management of the back office functions izable and able to fit the individual needs of nized and widely used for the last four to and it simplifies various business processes their users resulting in peak performance five years. For a layperson, the term cloud and operational requirements in produc- levels. computing can be understood as delivering tion, wholesale and retail. The founders created a dashboard in applications or business infrastructure as a The Washington State Liquor Control “real time,” specifically for the Washington service through the Internet. It is an online Board will require current information State Liquor Control Board, so agency ad- computing technology where the user does plus the ability to audit when necessary to ministrators can evaluate the stores’ order not need servers — only an Internet con- ensure that business owners are paying tax- entry process, check inventory numbers, nection is required to access this service es, managing inventories and following the ensure that orders are being entered cor- and it can be operated from any corner of I-502 rules as mandated. rectly and conduct periodic audit reviews. the world in real time. Software firms have been developing Adilas also has unique passwords to access Cloud computing applications are a their own cloud accounting solutions for uploaded data; this eliminates the risk of perfect solution for cannabis operations years, making it an increasingly viable unauthorized data. that allows them to coordination among option for a traceability and point of sale Since cloud-based software makes use of the production, processors and retail op- solution for Washington. The founders of the Internet and third-party servers, it has erators. lants require light, nutrients and keeping fruit processing flumes clear and – that would help me the most,” Thrapp water. These resources can be eliminating hard scale buildup on HVAC said, “The more the molecules are broken Testing managed an infinite number of systems. down the easier the uptake for the plants Pways. Most marijuana magazines devote Here’s how HydroFLOW works: – that’s my theory.” a lot of ink to the topics of lighting and Bacteria and algae attach to surfaces nutrients, while water is considered to and form a layer known as biofilm. By he installation process for the be, well, just water. This three-part series applying a constant 150 kHz signal into HydroFLOW device is relatively HydroFLOW will focus on one grower’s effort to man- the water, essentially turning the water painless and Acoustic Water looks age water to increase yields and profits. into a wire, bacterium passing through Tto create measurable data points for the Tap water in the city of Seattle has an the HydroFLOW unit become charged installations wherever possible. Part I: Grown on the Fourth of July approximate pH of 7.0 – neutral for most by the signal. “It’s all about the customer when it applications, but a little too alkaline for Water molecules are attracted to the comes to metrics,” Lukey said. “We mea- This three-part series features a partnership between cannabis. Lowering pH toward the acidic charged bacterium, thus creating a wet- sure what they find valuable. From there Acoustic Water Treatment Services and Sea of Green side of the scale is easy; however, keeping ting layer of pure water. Osmosis draws we can determine return on investment.” it there is challenged by algae. the pure water into the bacterium. The For this installation, Lukey chose a Farms in Seattle. The purpose is to test the efficacy of the “Algae” is a catch-all term that refers osmotic pressure built inside the bacte- HydroFLOW S38 unit which fit around HydroFLOW device on a commercial marijuana grow. to single-celled plant (plus a few simple rium causes it to burst and die. the grow table’s ¾-inch PVC supply line. multi-celled) organisms that photosyn- In Western Washington, Hydro- HydroFLOW units are branded by size – thesize right alongside your crop. FLOW products are sold and installed an S38 can handle a maximum 38-milli- Once established, algae cover mari- by Acoustic Water Treatment Services of meter outside diameter pipe. juana plant roots, and every surface the Seattle. With a portable oscilloscope, Lukey water touches with slime resulting in re- “There’s a lot of ‘snake oil’ being of- checked the signal from the S38. The duced photosynthesis and reduced nutri- fered to companies that need clean wa- screen showed a consistent 150 kHz sig- ent uptake. The slime eats first, reducing ter for their product,” Lukey said. “In nal. After mounting the device around nutrient uptake for the plant. This can fact, there’s a whole website devoted to the water supply tube and securing it, lead to a condition called “brown root” debunking claims made by other water the Sea of Green team started the water or “root rot” and promote fungus. Algae treatment systems. HydroFLOW is not pump and filled the table, just covering growth means more nutrients, more test- on that website – because it works. the media bed. At the end of the table, in ing, more frequent water changes and “Placement of the HydroFLOW de- the water, the oscilloscope reported the more time spent cleaning equipment be- vice on the pipe is critical, and we have same 150 kHz signal, with only a slight tween crops. to measure the signal strength at every drop in voltage. Hobbyists may have time for this, but installation to make sure it’s working. I In Flower Room 3, the grow tables professional growers do not. wish we could just plug the unit in and share the light, but each has its own go, but there’s more to it.” water supply. This setup allows the Hy- ea of Green Farms, located in the droFLOW device to treat just one of the Magnolia neighborhood, is the n Friday, July 4, Lukey joined six tables in the room, removing the op- first licensed marijuana grower Thrapp at the Sea of Green fa- portunity for the signal to pass to other Sin the city of Seattle. After being intro- cilities for the first documented tables. The daily tests and visual com- duced to Acoustic Water Treatment Ser- Oinstallation of a HydroFLOW device on a parisons will be performed as usual and A young, vice’s founder and CEO, Charles “Luke” commercial marijuana grow. documented against the other plants in hydroponically- Lukey, the head grower, Mike Thrapp, Sea of Green uses an “ebb and flow” the room. grown cannabis researched the claims of a British device hydroponic method in Flower Room 3. The plants Thrapp chose for this grow plant at Sea of called HydroFLOW and wanted to learn Each 100-gallon growing tub is set on a are Blue Dream, a strain popular in the Green Farms in more. sturdy table and supplied with a water / Northwest. Seattle utilizes the The HydroFLOW concept is simple nutrient mix from a 50-gallon container “I’ve been growing it for years,” HydroFLOW device – run a consistent 150 kilohertz (kHz) located under the table. Every few hours Thrapp said. “It’s quality product and I (not pictured). signal through the water. Not enough the pump starts, the table is flooded and know what it likes.” to shock, but just enough to kill bacteria the roots are submerged. The pump then The HydroFLOW device was installed and algae. This technology, first used by stops and the mix drains back into the on Grow Table 1. Just across the aisle, on British Gas to halt the buildup of calcium container. Grow Table 6, is the same strain of Blue deposits in water heaters, has been in use While this method has been success- Dream. Over the next 10 weeks, Sea of for more than 20 years. ful for Sea of Green, Thrapp wanted to Green will follow the status of these two HydroFLOW products are used in learn if the HydroFLOW device could tables, with daily checks of water levels, agriculture to eliminate slime and lime improve nutrient uptake, enhance root parts-per-million levels for nutrients and scale buildup in irrigation systems. Oth- growth and contribute to overall plant pH balance. Stay tuned. Next month’s is- er uses include treating water for apple vigor. sue will take a look at the data, along with orchards to reduce calcium buildup, “Breaking down the molecules of salt photos of the progress.

67 | WWW.MARIJUANAVENTURE.COM WWW.MARIJUANAVENTURE.COM | 68 A PAC for the 502 community ATTENTION 502 APPLICANTS AND LICENSE HOLDERS: Everything has changed with the legalization of recreational marijuana in Washington and Colorado. It’s a new world now. What was once a black market business — in which product was clandestinely grown in basements and garages ODDS — is changing and evolving rapidly. Business licenses need to be obtained, along with insurance and security sys- tems. Taxes now must be paid, and to do them correctly, legal marijuana busi- nesses will often need the assistance of smart tax experts as well as lawyers and and CPAs. Yes, it’s a different world, but it’s also a world where the sky is the limit. Going legal should be exciting and challenging. It will be more work than selling pot in a baggie and not paying taxes, but, hey, it’s legit now! In this issue, we are calling out for help to form a 502 political action commit- tee (PAC) in Washington. It’s badly needed right now because the 502 commu- ENDS nity is subjected to rules and regulations that are hindering its development by Events not allowing it to grow in the same mostly free (if not freewheeling) manner as August will be a big month for trade other legal businesses. For the record, I’m okay with the idea that legal marijuana shows and events in the cannabis industry, needs to be regulated and closely watched at first, but creating an environment with CannaCon and Seattle Hempfest set that sucks huge sums of money away from the industry and into a regulatory to happen during the same time frame in bureaucracy is probably not going to help in the long run. Washington. Washington and Colorado have a great opportunity to show the rest of the The inaugural CannaCon will be Aug. country that they are leaders in new business ideas and concepts. Think about 14-17 at the it, here is Washington with several recently-formed corporations that domi- Tacoma Dome, nate their sectors: Costco is No. 1 in warehouse-style retailing; Microsoft rules and will in- personal computer software; Starbucks pioneered the upscale coffeehouse well clude speakers, ahead of the competition; and Amazon is the undisputed king of Internet sales. vendors and In other words, we’re pretty darn good at taking new ideas and making them big. more. Marijua- With the right business environment, this state could become the center of a new na Venture will and rapidly growing/evolving legal marijuana business. We could be to cannabis be among the what Virginia is to tobacco, the Napa Valley is to wine, and Kentucky is to whis- vendors with a key. But it will take work, as well as a business environment that promotes the booth (No. 117) marijuana industry, rather than an environment that is indifferent. at the conven- I urge you to get in touch with John Comerford ([email protected]), tion. who is organizing the 502 PAC effort in Washington. Let’s create a strong polit- Organizers ical action committee that pushes for laws and regulations that free up the legal are calling Can- marijuana business in Washington to operate in a manner that is smart and re- naCon the “na- sponsible, but that is also able to grow, rapidly expand and become the center of tion’s largest legal cannabis convention and what is inevitably going to be a big international industry. lifestyle expo ever.” GREG JAMES The goal of the event is to businesses MARIJUANA VENTURE within the cannabis industry to each other, as well as connecting the entire industry to the public. the pinnacle of cannabis events. It will run ing an episode of its Emmy award-winning The event will truly be the first of its Aug. 15-17 at three Seattle waterfront parks: series True Life, around the lifestyles of kind with marijuana recently being legal- Centennial Park, Myrtle Edwards Park and those who are enjoying the use of recre- THE TIME IS NOW TO ORGANIZE AND INFLUENCE. ized in Washington. Olympic Sculpture Park. ational marijuana. The four-day event will feature a variety It is considered the world’s largest can- The series aims to find cast members be- We are forming a Political Action Committee (PAC) of seminars to help business owners suc- nabis protest rally, featuring six stages tween the ages of 18 and 28, or parents with ceed during the impending green rush. of music, world-renowned speakers and children roughly that age whose family life for the purpose of advancing the business interests of There will be lessons in business opera- hundreds of food, arts, crafts and political is now impacted by recreational marijuana those within the licensed marijuana trade. tion, grow techniques and in general, a cel- booths. use in the now legal areas of Washington ebration of cannabis as a lifestyle. More in- This is the 23rd anniversary of Hemp- and Colorado. The show looks to narrate We will: fest, which generally attracts nearly half the stories, while hopefully examining the WE NEED YOUR HELP formation can be found at www.cannacon. · Lobby for less onerous regulations and taxes org. The event will be the same weekend as a million people to Seattle. Admission to positive and negative effects of recreational AND SUPPORT! Seattle Hempfest, but being 502 compliant, Hempfest is free. cannabis at equal lengths. Email TLPPcast- · Advance the interests of 502 businesses there will be no cannabis consumption at [email protected] for more information, or if · Challenge moratoriums and unfair For more information contact: the site or sale of cannabis goods. Television you know somebody that might be willing business discrimination John W. Comerford at: [email protected] Meanwhile, Seattle Hempfest remains MTV recently announced it will be bas- to be featured. >>>>> · Contribute to politicians that support our industry with WACPAC SUPPORTER in the subject line. 69 | WWW.MARIJUANAVENTURE.COM Licensing The Washington State Liquor Control Board faces at least one lawsuit from an I-502 applicant regarding its retail licensing pro- cess. Pete O’Neil, managing member of C&C Cannabis Company an- JEFFREY nounced July 18 that his Seattle-based company had filed a lawsuit against the Liquor Control Board, due to the rejection of TEINBORN C&C’s application for a retail location in Lynwood. S O’Neil has long been a crit- ic of the agency’s roll out of LAWYER the new recreational marijua- “The Constitution is not a technicality.” na industry over the past two years. • C&C is currently in the fi- Criminal defense since 1968 nal stages of its initial invest- ment period, which ends the • I-502 and problems with the end of August. With the filing Washington State Liquor Control Board of the lawsuit C&C will now be required pursuant S.E.C. • rules to file a Material Event Licensed in State and Federal courts Notice. • The company has attracted local investors willing to invest Experienced in search and $25,000 a share “to be part of C&C’s plan to build the Starbucks of seizure and forfeiture law marijuana,” O’Neil said in a press release. While struggling to se- cure 502 retail locations, the firm has made progress toward open- 119 1st Ave. S., Ste. 260 206-622-5117 ing a medical marijuana retail location and is in the planning stages Seattle, WA 98104 [email protected] of expanding its operations to new states. MV Stay connected Check out the Marijuana Venture booth at CannaCon - #117

Marijuana Venture is the only B2B magazine devoted to the legal cannabis industry and helping business owners operate profitably and within compliance of state laws. Email [email protected], or go online to www.marijuanaventure.com to manage your subscription information. One year: $49.99 (print), $19.99 (digital) Best value: $49.99 (print and digital) Understand the causes of failure Business information and strategies | By Miles Stover | Turnaround, Inc. | TurnRight, Inc.

hy do businesses fail? It’s a subject 1. Leaders can’t be dictators and think Section 2: External Wyou should understand before tak- they can control the environment. Sorry, The external reasons for business failure ing the plunge and launching your own but no one controls the environment right are not the minor changes in your every- venture. now. day life, but rather the relatively few trends In a series of articles, I will identify the 2. Leaders need to surround themselves and events that threaten the core of your causes that account for about 87 percent of with strong people. Initially there will be a company and industry. Not to foresee such business failures. Although I will attempt to need for macro- and micro-oriented lead- events and not evaluate their consequences focus on the “marijuana arena,” I suspect ers and team members. can set the stage for failure. I call this “pay- readers will see that their businesses are not 3. Leaders can’t lack an openness to ing attention to your personal business and unique in being exposed to these hazards. change. Things will be not paying attention to the The sections discussed here will be in- changing weekly, daily, or world of business.” ternal and external factors of failure, with even hourly. This doesn’t Studies again and Studies again and again more to come on the financial aspect in the mean teams will need to show that failures don’t future. change for the sake of again show that result from unforeseen After I identify generally what we are change, but there will be a failures don’t result events. In almost every talking about, I will speak specifically in need to be a mechanism to case, the event was fore- future articles on how to eliminate the ex- change when a change is from unforeseen seen but disregarded. Aid posure and/or fix the situation if you are al- required. events. In almost yourself by identifying ready in need of help, as well as alert you to Unbalanced man- three or four resources multiple ways to get assistance and support. agement teams: With so every case, the that are motivated to fol- The goal of this article and the articles to many unknowns, cur- event was foreseen low the external changes. follow is to help you identify what problems rent management teams Magazines, such as Mar- result in business failure, identify how to shouldn’t be unbalanced, but disregarded. ijuana Venture and other eliminate or reduce the problem to a man- meaning completely sales business publications, are ageable level, and where to go for help and oriented or completely good sources. Find others how to ask for help. production oriented. Without some bal- that focus on your stage of interaction in ance, external threats are more likely to go the arena, because different license hold- Section 1: Internal unnoticed. ers have different and specific information Internal factors account for between 50 Weak finance function:Expect more needs. Read them religiously. The 30 min- and 100 percent of business failures. Failure details on this area in future articles. Ini- utes a day you spend reading might save happens because of non-constructive con- tially, you do need working capital controls, your financial life. duct of management and lacking knowl- such as accounts receivable, accounts pay- Good economic times often mask prob- edge of costs. able and inventory levels. I know you “just lems in an organization. Good times mask While the rules of this industry get bet- want to sell stuff,” but budgets and internal lots of initial environmental problems. ter defined, all teams still need a leader. controls are vital. It’s easy for me to say, but Good performers always outperform poor But the team still needs some traits to be in keep the fixed assets at a minimum level, performers. Good management can offset place from the beginning so when the rules don’t incur excessive debt, and always be poor economic conditions. You have reason are defined, there still is a need for a team. lining up capital infusions. Don’t be sur- to expect there to be good times in the near- prised that there will be lots of equipment term. However, good times might not last, Miles Stover is the founder and becoming available cheap when weak par- so let’s get your management into fighting president of Turnaround, Inc. and ties fail. shape. TurnRight, Inc. For more than You are going to be busy initially. Don’t Statistics indicate that competitive three decades, he has worked be so busy you fail for the wrong reason. change makes up 35 percent of why indi- hands-on with organizations from You might want to read this article once a vidual competitors fail (6 percent general start-ups to Fortune 100 week to keep the subjects in front of you competition and 29 percent loss of market). companies in a variety of roles. that will cause failure. Are you surprised that this is >>>>> 73 | WWW.MARIJUANAVENTURE.COM not the largest contributor to failure. Initial- ly, you must expect the presence of compe- tition to be huge as loyalties are developed. Emergence of low-cost competitors, mergers of multiple companies and price competition will all occur in your arena. Count on it. Social change, in terms of attitude to- ward the sector you occupy, should be fa- vorable to you in the near-term. Exactly how the social change will manifest itself is unknown right now, but surviving com- panies will watch to understand how the changes affect them. High costs will be in- curred when you don’t recognize and ad- just for social change. Again, read articles from reputable authors whose job it is to keep track of social change. Don’t be sur- prised how society will or will not accept the changes coming. Your job is to understand “what is the best use of your time right now.” Knowl- edge of how society is changing is a good use of your time. Also note that being “ac- tion oriented” is vastly superior to being “reactionary” at this point in history. The two main sources of technological change in the external environment will be in the information and transportation areas. You know that the amount of infor- mation that will become available will be staggering. You won’t have time to read ev- erything put before you – you do need to identify what technological changes will affect your costs and margins so keep your eyes open for those pieces of information. Transportation will be as much as 15 percent of your variable costs and one of your top three variable costs. If you don’t believe me now, you will soon. Getting product, delivering product, costs to han- dle product, accounting for the transporta- High quality R600 tion, inventorying the product coming in, N-Butane and insurance, security during transportation, transportation to packagers, vehicles, driv- R290 N-Propane er labor costs, associated taxes. The list goes on and on. Something as simple distribut- refrigerants in ing product to and from multiple retailers and producers will be huge, especially since 30 lb. and 50 lb. the regulators haven’t fully decided how it will be done. cylinder sizes The next article will focus on one or two very specific issues related to knowing your costs and pricing by category. We will also start to discuss the early warning signs of decline and failure. Phone: (530) 378-4443 Email: [email protected] Your future can be very, very exciting. *DISCLAIMER: This product is intended to be used as a refrigerant only and For now, pay attention to details and watch EcoGreen Industries, L.L.C. is not responsible for any results obtained from any your costs. MV other use, including personal injury or death. The many woes of DO YOU NEED Land Section 280E FUNDING? available • Unique 80 acres of flat prime Agricultural Taxes, recordkeeping and money management | By Debora Peters | Peters Tax Solutions LLP Land for leasing, north of the Moses Lake Grant County airport. usinesses will face so many challenges Although the Internal Revenue Service • Factory overhead expenses. Bwhen tax time rolls around in January has issued strict guidance for enforcing Deductions are strictly a matter of leg- • Lots of privacy in the middle of nowhere; 2015. I have heard a lot of opinions sur- 280E and disallowing ordinary and nec- islative grace. about a 10-minute drive on a dirt road once Marijuana Venture Group may be able to rounding the dilemma of Internal Reve- essary business expenses, it has also stated As a business owner/operator, the bur- you leave pavement. The land is basically clear nue Code Section 280E for cannabis busi- that a deduction for the cost of goods sold den of proof falls on you. The key to suc- help fund your 502 business operation. without any rocks and no sagebrush. ness activity. will be allowed. cess is contemporaneously kept books To put it in a nutshell, if you are in- Cost of good sold is not a deduction and records, as well as record retention. Coming soon: Leasing options volved in an activity that is considered il- within the meaning of Statutes of limitations • Moses Lake’s climate is the envy of the legal at the federal level, you need to know Section 162(a) but is generally limit the time for lights and HVAC available Northwest. Spring arrives early, where the dos and don’ts for federal tax purposes. subtracted from gross To put it in a nutshell, the IRS has to make tax Send inquiries to: summers are sunny, warm and dry with For goodness sake, if something sounds receipts in determining assessments (audit) to temperatures averaging in the 80’s and 90’s. too good to be true — it probably is. a taxpayer’s gross in- if you are involved in within three years after [email protected] • IRC 280E states there will be a disal- come. an activity that is a return is due or filed, lowance of ordinary and necessary busi- By allowing the cost whichever is later. That or call 206-866-6986 Contact Steve @ 425-306-1717 ness deductions. of goods sold deduction, considered illegal at particular date is also PO Box 1419 | Renton, WA 98057 | Attn: Marijuana Fund or email [email protected] • No deduction or credit shall be al- a taxpayer would be able the federal level, you referred to as the statute lowed for any amount paid or incurred to reduce their gross in- expiration date. during the taxable year in carrying on any come, received by cer- need to know the dos If you are a retail trade or business if such trade or business tain qualified cost ofand don’ts for federal shop, you are going to be (or the activities which comprise such goods sold expenses and faced with the additional trade or business) consists of trafficking in only taxed on the gross tax purposes. challenges of selling par- controlled substances (within the meaning profit. aphernalia, which is not of Schedule I and II of the Controlled Sub- There is not a defin- on the controlled sub- stance Act) which is prohibited by federal itive list of what is considered within the stance list, and therefore would be allowed law or the law of any state in which such cost of goods sold; this list seems to vary a deduction for ordinary and necessary trade or business is conducted. based on the industry. Below is a list of the business expenses. most common cost of goods sold expens- Due to the complexity of this topic, I Debora D. Peters, of Peters Tax es: will address it specifically in next month’s Solutions LLP, is an accredited • The cost of products or raw materials; issue. tax preparer who has represented • Freight or shipping charges; I would recommend seeking qualified hundreds of clients under federal • The cost of storing products the busi- professional guidance when setting up and state audits. She obtained her ness sells; your accounting software and planning Enrolled Agents License in January • Direct labor costs for workers who how you will be conducting your day-to- 2009. produce the products; day operations.

www.hortsolutionscolorado.com | Cannabis Consulting

77 | WWW.MARIJUANAVENTURE.COM The importance of local politics By Crystal & Kevin Oliver | National Organization for the Reform of Marijuana Laws (Washington)

he stores have begun opening, prod- at risk of having the rug pulled out from cal library or community center to hold Tuct is flying off the shelves and many underneath them. a strategy meeting with other impacted of you are now approaching the final stag- Knowing that this risk exists regardless producers, processors and retailers before- es of being licensed with the Washington of current zoning in your city or county, hand. Washington NORML will provide State Liquor Control Board. what can you do to protect your business email and Facebook advertisement of your You’re excited and eager to start pro- and investment? meeting, as well as the upcoming hearing duction, processing and packaging of your 1. Keep up to date on local politics, if you email us at [email protected], products to supply to the stores that have specifically the city council and county with “502 Zoning Issue in ______(city/ hundreds waiting in line to purchase legal commissioner meetings and hearings. county)” in the subject line. marijuana. City council and county commission- • Show up to the hearing, meeting or Unfortunately, the opening of stores has er meetings, hearings and workshops are workshop and provide comment and sub- gained the attention of individuals who are where these new zoning ordinances are mit written comment as well. Remember scared of or against marijuana legalization being discussed and decided upon. too and they’ve begun making their voic- Most counties and cities in Wash- es heard at county commissioner hearings ington publish the agendas, as well and city council meetings. If you think this as the minutes from these meetings, We understand that starting up is no big deal because you already spoke to online. a 502-compliant business is a the city or the county and they said your Make it a habit to check these on location was zoned appropriately, think a bi-weekly to weekly basis and keep time-consuming and again. your eye out for any marijuana-re- labor-intensive venture, but it’s In the last two weeks a number of coun- lated items and comments, or, better ties and cities have begun considering yet, attend the hearings and meet- critical that we as a community even more restrictive zoning of recreation- ings to make sure you are there to stick together and continue to al marijuana producers, processors and represent your business interest. retailers. 2. Be active, engaged, and orga- be politically active to ensure The city of Pasco will consider institut- nize others if marijuana business- our business interests are ing a ban on marijuana businesses prior to es are added as an agenda item. the end of its six-month moratorium that We recommend individuals to do protected. was set to expire in September. Spokane the following when they know that Valley is now considering requiring retail- a hearing, workshop or meeting will ers to be 1,000 feet from any city owned or be held to discuss marijuana zoning: to keep your comments brief, unique and leased property. • Email, call and meet with your local respectful, and to bring written copies. Auburn is now considering a ban and/ officials. Offering to meet over lunch — Through effective organization and or excessively restrictive zoning. Mason your treat — is an effective way to get on education efforts, several counties and and Kittitas counties are now considering a booked local official’s packed calendar. cities, including Spokane County, What- placing more restrictions on where a le- Let your commissioner or council person com County and the city of Bellingham, gal marijuana business can operate. Many know how restrictive zoning will impact have been able to get councilmembers and I-502 business hopefuls who haven’t been you, your family and your business. Ask commissioners to modify restrictive zon- keeping up to speed on local politics are for what you want and need to continue ing and put reasonable zoning in place. your business. We understand that starting up a Kevin Oliver is the executive Address any of their concerns, answer 502-compliant business is a time-consum- director of the Washington their questions and maintain a profession- ing and labor-intensive venture, but it’s affiliate of the National al and calm demeanor. critical that we as a community stick to- Organization for the Reform of • If the hearing, meeting or work- gether and continue to be politically active Marijuana Laws, while Crystal is shop won’t be held for a couple of weeks, to ensure our business interests are pro- the executive secretary . we recommend reserving space at a lo- tected.

79 | WWW.MARIJUANAVENTURE.COM A MESSAGE FROM THE EDITOR MARIJUANA VENTURE ADVERTISERS DIRECTORY

Not without problems, but it’s a start Accounting/tax services Trojan Litho...... 23 Earthwise Packaging...... 39 Legal weed is finally a reality in Wash- Prices were too high. Aside from the Peters Tax Solutions LLP...... 75 WS Packaging...... 49 ington State, and I have to say July 8 was novelty of buying legal weed, most con- VacuPack...... 78 one of the more interesting days I’ve ever sumers have access to product at half the Buildings/land available South Fork Business Park...... 48 been a part of in my journalism career. For price — or even cheaper — than what the Insurance one thing, as the editor of a cannabis busi- recreational retail stores were selling for Steve Oliver...... 78 Sprague Israel Giles...... 14 ness magazine, I’ve been pretty well tied during the opening week. I heard one per- Gunning and Associates...... 36 in to the fact that the process has taken far son say, “Only millionaires will be able to Business services Premier Dispensary Insurance...... 76 longer than anybody expected. buy weed at these prices.” A wild exagger- Green Thumb Logistics & Services...... 20 Marijuana Venture...... 66, 71 It’s gratifying to see business owners, ation, but the sentiment probably isn’t far Investment who have put in hundreds of hours of work, off. But we know the prices will come down ASM Direct Services...... 64 Marijuana Venture Group...... 78 thousands of dollars in start-up costs and as more licensed businesses are able to even Consulting endured countless setbacks and obstacles, out the supply and demand teeter-totter. Labeling finally able to bring in the first real revenue Hopefully, loosening some of the more Tri-Q Systems...... 10 Leading Edge Labels...... 8 of Initiative 502. over-bearing regulations will also allow the 502 Enterprise...... 5 Steve Fuhr...... 77 And not just for the 502 business own- I’ve been to plenty of events in my ca- cost to come down. Legal ers themselves, but the ancillary businesses reer — ranging from gun shows to Easter As expected, stores ran out of product, Horticultural Solutions Ltd...... 77 Garvey Schubert Barer Law Firm...... 19 joining the green rush that directly (and in egg hunts — where folks shield themselves and some that had planned on opening July THC Law Firm...... 44 some cases, solely) service the cannabis in- from the camera, harass the reporters and 8 were forced to delay, due to an inability to Electrical distributors/retailers David Kerr...... 58 dustry — testing labs, lawyers, accountants, take a generally adversarial approach to acquire product. Indoor Tropics...... 25 Jeffrey Steinborn...... 71 insurance companies, scale companies, the media. That was not the case July 8, as The state licensed 24 retailers, but only a North Coast Electric...... 27 The Grow Shop...... 58 contractors, etc. all the shoppers and store employees were small fraction were able open their doors on Lighting/electrical supplies I think the opening day of legal, li- very friendly. In addition to everybody’s the first day allowed. They way it was done OGA LLC...... 72 Powerbox...... 1 censed, recreational, state-regulated mari- acceptance of photographers, I thought the — with licensed being approved at 1:40 Groco...... 84 Dorm Grow LED...... 13 juana sales was a momentous occasion and two grand openings I visited were both very a.m. Monday morning and stores being al- SolisTek...... 17 a positive sign for the state and the industry well done. lowed to open Tuesday at 8 a.m. — seemed Employment Cycloptics...... 22 moving forward. Even for the businesses I didn’t see anybody openly smoking pot like a disaster right from the start. Perhaps Viridian Staffing...... 50 Eco Grow...... 24 that are still mired in the confusion and in the streets. I didn’t see any fights about the Washington State Liquor Control Board North Coast Electric...... 27 hassle that is the I-502 application process, places in line. In Bellingham, one older had a valid reason for that timing, but I’m Events iGrow...... 60 I think there was a feeling of relief that the gentleman scrounged through his pockets not seeing it. To me, it would have made HempCon...... 54 Groco...... 84 day had finally come. They will get their to find he was $3 short of his $46 purchase a lot more sense to approve licenses, then CannaCon...... 80 chance, too. No, there won’t be the fanfare (damn cash-only industry). The younger allow five days before opening day, rather Security of the first stores opening, but that won’t af- man behind him was quick and neighborly than cramming the 24-hour quarantine, Greenhouses Security Safe & Lock...... 4 fect long-term success. to pull out a couple extra crumpled Wash- the delivery and all the other setup tasks Horticulture Services...... 51 CCTV Dynamics...... 52 There were a few things that struck me ingtons from his pocket to cover the differ- into a 30-hour time frame. SCAR Military...... 72 as I started my day at Top Shelf Cannabis ence. I know the opening of retail stores will HVAC Elkins Climate Control...... 74 in Bellingham (the home of my alma ma- Police presence was both minimal and do little to quell the distrust and dislike that Software ter), before heading south for the wild mass unnecessary. I didn’t see any officers at many potential business owners have for Wescor...... 65 BioTrackTHC...... 35 of people that had converged on Cannabis the Top Shelf Cannabis opening, and only the Liquor Control Board. I know every- CannabisTracker...... 58 City in the SODO district of Seattle. a couple uniformed cops looked over the body wanted to be first — the first grower Machinery Tri-Q Systems...... 8 For one thing, I was a little surprised scene from across the road at Cannabis licensed, or the first producer/processor to Soil/nutrients at the relatively small media horde at the City. The Seattle store’s opening did force sell product to a retail store. Or the first re- Eden Labs...... 50 North County Bounty...... 28 Bellingham shop’s 8 a.m. opening. Not to one lane of traffic to be blocked off on tail store to open its doors to the public. Apeks Supercritical ...... 32 Miller Soils...... 42 say that it was empty — there were still Fourth Avenue, but considering the magni- But there should be a factor of accom- Merchant services television vans, radio crews and dozens tude of the event, even that was a minimal plishment, regardless of who was first and Testing labs of reporters and photographers — but I disruption to the rest of the metro area. whether your business is next in line for DMS Financial...... 66 Confidence Analytics...... 12 expected the first legal sale in the state at I thought the wild costumes, the wigs, a license, or won’t be licensed until next U.S. Debit Services...... 72 approximately 8:03 that morning would the picket signs, the clever T-shirts, the tie- spring. Trade/business associations attract a bigger flock of attention, with the dye (yes, Mitch ... the tie-dye!) all added to Misc. supplies Washington Cannabis PAC...... 70 Seattle store opening four hours later and the excitement, in much the same way as EcoGreen Industries...... 76 leaving plenty of time for reporters to hit rabid fans add to a sporting event. Water equipment both events. Granted, the opening week was fraught Packaging Acoustic Water Treatment Services...... 66 Another thing that amazed me was how with the mishaps we’ve come to expect with Kush Bottles...... 11 open, willing and cooperative the shoppers the over-regulated, burgeoning, legal mari- were with photographers. juana industry in Washington. GARRETT RUDOLPH EDITOR

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