marijuana venture

THE JOURNAL OF PROFESSIONAL CANNABIS GROWERS AND RETAILERS

MAY 2015 $6.99

M A R I J U A N A

VENTUREWWW.MARIJUANAVENTURE.COM VOLUME 2 / ISSUE 5

WHAT’S NEW?BANKING

BUILDING A TOP-NOTCHCOMMERCIAL GROW OP

SEEDS VS. CLONES

A step-by-step look at designing the best facility possible

Get your grow started on the right foot

PUBLISHERGREG JAMES

[email protected]

EDITORGARRETT RUDOLPH

[email protected]

SALES MANAGERLISA SMITH

[email protected]

STAFF WRITERSCHRIS BAYLEY

PATRICK WAGNER

CONTRIBUTORSCraig Allen

Sean BadgleyJoy BeckermanMichele Brooke

Joel CaudillRachel Cavanaugh

Chris CrewAlexa Divett

Matt GoldbergNeil Juneja

Jennifer MartinDavid Murét

Hal SnowJana Weltzin

Marissa Willman

MARIJUANA VENTURE VOL. 2, ISSUE 5Marijuana Venture (ISSN #2376-0710) is published monthly by MJ Directions LLC. PO Box 1419, Renton, WA, 98057. Phone: (425)281-1348. Website: www.mari-juanaventure.com. Copyright 2015 by Marijuana Venture. All rights reserved. Reprinting, in whole or in part, is expressly forbidden without written permission from the publisher.

ADVERTISINGFor advertising rates, call (425)281-1348 or email [email protected].

SUBSCRIPTION SERVICESFor subscription services, please call (425)281-1348, visit www.marijuanaventure.com or email [email protected]. For change of address, please include the old address and new address, along with an address label from a recent issue, if possible. Please allow up to three weeks for address to be changed. If an address is not up-dated when the magazine is mailed, we are not responsible for delivery of your magazine. If the Post Office alerts us that your magazine is undeliverable, we will suspend our subscription until a correct address is received.

Marijuana Venture assumes no responsibility for any claims or representations contained in the magazine or in any advertisement. All materials contained are for ed-ucational purposes and intended for the legal marijuana business where allowed by state law. Marijuana Venture does not encourage the illegal use of any of the products contained within.

Recently, a friend told me that he’d

heard some disparag-ing comments about Marijuana Venture from the folks at an-other pot publication. According to him,

the nastiness centered on the idea that we weren’t qualified to publish a maga-zine on the cannabis industry because we weren’t regular users of marijuana.

If that type of thinking were the rule in American business, there would be a lot of companies that wouldn’t exist, and a lot of successful people would be disqual-ified from operating highly profitable in-dustries. You couldn’t own a McDonald’s franchise unless you ate burgers and fries every day; wineries would have to be op-erated by winos, etc.

The point is that running a successful business often has nothing to do with us-ing the product you’re selling or manufac-turing.

In fact, I’d argue that not being a user might be an advantage because you’d be more objective. My biggest hit as a doc-umentary producer had nothing at all to do with my personal interests. It was the “Learn Country Line Dancing” series sold on VHS back in the early 1990s. I’ve never had any interest in line dancing or country music.

However, taking note of the craze that was sweeping the nation, I quickly shot half a dozen instructional videos with 30 grand I had in savings.

The series eventually sold more than 2.5 million copies and grossed about $25 million in sales. Talk about return on in-vestment! To this day, it is one of the top five all-time selling non-theatrical VHS products (the Jane Fonda workout video is No. 1).

I’ve used that story countless times when advising other producers on what to shoot, or how to run their businesses. In short, my advice was that if you want

to produce what you personally find in-teresting, there’s nothing wrong with that. However, you might go out of busi-ness creating obscure videos few want to watch. If you want to make money, do what the market demands of your busi-ness, and create the stuff you love on the side.

Furthermore (and trying not to sound too boastful), I believe my prior expe-rience in starting and building a top-10 consumer software publishing company with no outside funding, that sold to every major retailer in the USA, that had 75 em-ployees at one point and revenues of $60 million in 2004, actually gave me a bit of an advantage when launching a magazine on this exciting new business. See, in the end, staying objective and not having an emotional attachment to cannabis is prob-ably an asset.

Marijuana Venture is a business mag-azine, and the goal was always to create something useful for legal, licensed mar-ijuana business owners. We fully admit that we have no interest in marijuana cul-ture. If you want to read about porn star Ron Jeremy and his occasional use of weed, there was a recent cover story on him in Culture Magazine. Want to know more about getting baked in Barcelona? Cannabis Now might be for you. Think bliss is found with the most potent bud? Read High Times.

We are big supporters of marijuana le-galization, and believe it comes down to personal freedom and rights. However, our own use or non-use of the drug is irrelevant. Our mission has always been crystal clear — create a publication that deliberately avoided marijuana culture and focused 100% on business.

And by the way, I actually did read the article on Ron Jeremy while enjoying a glass of my favorite single malt.

GREG JAMES PUBLISHER

Strictly business: That means no porn stars here

A MESSAGE FROM THE PUBLISHER

Marijuana culture is not our focus, and never will be

2 | Marijuana Venture // May 2015

www.marijuanaventure.com | 5

TABLE OF CONTENTS

FEATURES

32 | Tourism RisingStates that have legalized marijuana for recreational use are seeing increased travelers, according to flight data

36 | Breeze BotanicalsFor Brie Malarkey, her Southern Oregon dispensary is just one facet of three different businesses she runs

46 | Drought WatchWith California and other states getting ready for a drought, what impact will there be on the cannabis industry?

54 | BankingDespite shifting public opinion and legislation, the cannabis industry remains overwhelmingly cash only

62 | The Legal PagesExpert attorneys address banking challenges, upcoming changes to Oregon’s recreational law and more

78 | Ultimate GrowCultivation expert Craig Allen provides an extensive look at how to avoid common pitfalls in grow op planning

98 | Seeds vs. ClonesWhich one is better for starting your grow? It depends on the needs and goals of each individual cultivator

102 | Powdery MildewUniversity professor’s research on ornamental plants leads to better understanding of symptoms and causes

108 | Hemp HistoryThe United States’ demonization of industrial hemp is a portrait of hypocrisy, considering historical link

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

ANCHORAGE, Alaska — The Alaska Cannabis Classic is the first stop on a tour of three trade shows and cannabis compe-titions that will also feature events in Taco-ma, Washington and Portland, Oregon later in the year. The three-day kick-off event at the Dena’aina Center in Anchorage will in-clude vendors, product demonstrations, in-formative seminars, a hemp fashion show, live music and networking opportunities.

Despite the recent ban on marijuana in public facilities by the city of Anchorage, show organizer Cory Wray has worked around the ban so the show can go forward as planned. “We’ve been sitting down with the mayor’s office, the city attorney and we go in front of the city assembly on April 23, to get our permit,” Wray said. “So we’re getting a permit to allow us to have cannabis in the Den’aina Center. We won’t be able to smoke within the facility but they have an outdoor terrace and we have a permit from the fire marshal stating that we can have outdoor smoking there.”

The competition will feature locally-pro-duced cannabis products with an awards

show to follow.“There’s a buzz in the lower 48 about

what we’re doing,” Wray said. “We’re get-ting a ton of phone calls every single day. The way that we structured it, focusing on the northwest as well as having smoking but maintaining professionalism, it sets us apart from something like the Cannabis Cup.”

The Tacoma event will be July 18-19, while the Portland event is set for Sept. 19-20.

More information: nwcannabisclassic.com.

MORE EVENTSMay 15-17: Only the busiest travelers

will be able to hit all the Hempcon shows scheduled for 2015. The next event of the series will be May 15-17 at Cashman Cen-ter in Las Vegas.

Subsequent Hempcon events will be May 29-31 and Aug. 21-23 at the Wash-ington State Fairgrounds in Puyallup, Washington, Oct. 9-11 at the Denver Mer-chandise Mart and Nov. 6-8 at the National

Orange Show (NOS) in San Bernardino, California.

The shows will feature hundreds of ex-hibitors, competitions and seminars.

More information: hempcon.com.

May 19-21: The Marijuana Business Conference and Expo will hit Chicago for a three-day, business-only event that is expected to have more than 125 exhibitors and 70 expert speakers, including dispen-sary owners, private equity leaders and top lawyers. With Illinois recently joining oth-er states that have legalized medical mari-juana, there will also be a “marijuana busi-ness crash course” — a workshop for new business owners in the cannabis industry.

Consumers and the general public are not invited to Marijuana Business Confer-ences.

More information: mmjbusinessdaily.com/conference.

May 29: THC Plexus will be hosting a networking event in Bellingham, Washing-ton on May 29 from 7-9 p.m.

The event is open to anybody involved in the medical or recreational cannabis in-dustry. Registration must be done online. The event’s location after attendees RSVP.

More information: www.thcplexus.com.

CANNABIS CALENDAR

>> CONTINUED ON PAGE 10

Cannabis Classic set to kick start Alaska’s new industry


Photo by Paxson Woelber/W

ikimedia Com

mons

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


May TBD: The Secret Cup takes a dif-ferent approach to the different cannabis competitions across the nation, putting its focus on the hash-maker. The event mix-es vendors and competition, with the next event being set for May in Oregon. Details are pending so keep your ear to the ground if you want to attend.

Other stops on the Secret Cup schedule (exact dates and locations to be determined) include Northern California, Rhode Island, Colorado, Las Vegas and Los Angeles.

More information: www.thesecretcup.com.

June 5-7: The 11th annual Green Festi-val will take place in the D.C. Convention Center in Washington, DC. The Green Fes-tival is the longest running event focused on green living, environmental action and sustainability in the United States.

The event regularly draws more than 20,000 attendees and features vendors from industries such as the legal cannabis market to industry leaders like Wells Fargo and BMW.

The show promises to be one of the most diverse gatherings of 2015 and should pro-vide a unique opportunity for business pro-fessionals to meet and network outside of their usual market.

This is only the second stop for the Green Festival, after Washington DC the show will head out west to Los Angeles at the LA Convention Center for September 25-27, then a couple months later in San Francisco’s Cow Palace on November 13-15 and then concluding with its first ever show in Portland, Oregon on December 11-13 at the Oregon Convention Center.

More information: www.greenfestivals.org.

June 11-13: CannaCon is preparing for its third show this year to be held in Denver at the Colorado Convention Center. Show organizers are looking to host 10,000 at-tendees and more than 300 vendors at the 100,000-square-foot venue.

The show also will be hosting more than 50 seminars led by industry experts in their fields.

People interested in speaking at Canna-Con must submit a proposal no later than May 4 at 9 a.m. More information: www.cannacon.org.

June 18-19: The International Cannabis Association will host the second Cannabis World Congress and Business Exposi-tion at the Javits Center in New York.

The event will bring entrepreneurs, busi-ness professionals and lawmakers together with cannabis industry veterans at the larg-est marijuana-related business show on the East Coast. Organizers are planning to have more than 150 exhibitors and 50 speakers at the two-day event, geared to help aspir-ing entrepreneurs understand what it takes to succeed in this rapidly growing industry.

Speakers will include Ryan Hurley, a partner at Rose Law Group, Andy Joseph, president of Apeks Supercritical, and Dean Guske, a CPA with more than 30 years of experience. There will also be a subsequent show in Los Angeles in the fall.

More information: internationalcanna-bisassociation.com.

June 26-27: High Times, the famed can-nabis culture magazine, keeps its Canna-bis Cups on the road and headed to North-ern California near the end of June. The event will feature the usual festivities, like competitions, vendors and entertainment in sunny Nor-Cal.

Details on the show location and per-formers are still pending for the Nor-Cal show as well as the next few stops in Port-land, Oregon, Clio, Michigan, Seattle, Washington and Southern California.

More information: www.cannabiscup.com.

June 29-July 1: More than 2,000 at-tendees are expected at the second Nation-al Cannabis Business Summit and Expo starting at the end of June. The event, host-ed by the National Cannabis Industry As-sociation, will be held at the Denver Con-vention Center.

Topics will include infused products, cultivation management, policy and regu-lation, emerging trends and more.

The show is expected to have more than 100 exhibitors, 70 speakers, 55 educational sessions and 10 hands-on workshops.

More information: thecannabisindus-try.org.

June 27-28: Oaksterdam University will be hosting its own certification and training program for the emerging recre-ational marijuana market in Washington, D.C. The event will take place at the Cap-

ital Hilton for the weekend and is being sponsored by a variety of local and nation-al businesses. The training courses being offered are intended to prepare attendees with all of the critical information that they will need to venture into the cannabis mar-kets of Washington, D.C.

“The District of Columbia has posi-tioned itself as a leader in the legal mari-juana movement, and we are proud to bring our deep bench of industry knowledge and experience to help D.C.’s and other East Coast cannabis industry pioneers grow their careers and emerging businesses,” said Dale Sky Jones, executive chancellor of Oaksterdam University. Space is limit-ed, so attendees should sign up by May 31.

More information: www.oaksterdam.com/dcseminar.

July 11-12: The Indo Expo Trade Show will be at The Denver Mart Expo Building for two days in July. The trade show aims to cement relationships between growers, manufacturers, wholesalers and retailers by providing a networking event that will allow the new and old to construct new ideas, exchange information and forge new partnerships.

The expo will be bringing together local and national industry leaders from around the country for their two day, weekend event. The first day of the show will be re-served for industry insiders only. The fol-lowing day will be open to the public and will also host a job fair where new talent can be hired and contracted.

More information: www.indoexpoco.com.

July 25-26: Maximum Yield brings to-gether several industry leaders for the 2015 Los Angeles Indoor Gardening Expo which will be held at the Los Angeles Con-vention Center.

The weekend event will be divided into two sections — Saturday is dedicated to industry only and will host a VIP seminar, expert panel discussion and a six-hour net-working period; Sunday will be open to the public and industry alike.

More information: www.indoorgarden-expo.com/show-info-los-angeles/

To submit events for consideration in Marijuana Venture’s calendar, send an email to [email protected].

CANNABIS CALENDAR

<< CONTINUED FROM PAGE 8

OKANOGAN, Wash. — Teresa Tindoll may have coined a new phrase to describe the interior design of her small, rural mar-ijuana retail store: “whimsical farm shed.”

The motif of Caribou Corner Cannabis fits perfectly with the agricultural region of North-Central Washington, which features not just some of the world’s most prolific fruit farms, but also includes 23 active, li-censed cannabis producers.

Meanwhile, Caribou Corner Cannabis is one of just two retail stores open in Okan-ogan County — the largest county in the state, geographically (the other is Fresh Greens in Winthrop) — so Tindoll’s cus-tomers come from all around, including a fair number of visitors from Canada.

It was part of the group of 24 stores in the state that were the first to receive retail li-censes, and Tindoll said it’s hard to believe

that was more than nine months ago. “It’s been like a fast-moving freight

train,” she said. “It’s been fun and a learn-ing experience. Most people that come in are so happy and excited that they can buy marijuana legally and without the stigma.”

Caribou Corner faces several challenges of being located in a remote part of the state. Many customers have to travel 45 minutes or more — often through inclement weather in the winter — to reach the store, so Tin-doll relies on social media to keep shoppers abreast of inventory changes.

“We try to keep communication with those folks, so they can call ahead before they lock in the four-wheel drive and come on down,” she said.

The store also operates with possibly the smallest staff of any marijuana retail store. Tindoll, her son and one part-time employ-

ee run the entire operation. “Probably the biggest challenge is just

having to wear so many different hats, and there are so many moving pieces and changes that all need to be paid attention to equally,” Tindoll said.

Prior to opening Caribou Corner, Tindoll had been part of the “corporate crash,” she said, after having worked in the insurance industry as a national corporate sales train-er. She was unemployed for four years, but it gave her time to take care of her grandson, while her son was deployed in Afghanistan.

When the Washington State Liquor Con-trol Board began accepting applications for marijuana business licenses, she saw it as an opportunity she couldn’t ignore.

“We’re the American Dream, really when you think about how we were able to do this,” she said.

Caribou Corner CannabisRural marijuana retailer experiencing the American DreamBy Garrett Rudolph

BUSINESS PROFILES

Company: Caribou Corner CannabisLocation: Okanogan, WashingtonEmployees: 3Top vendors: Several local producers from Okanogan CountyMost popular products: “It’s all been pretty popular. Most folks are just happy to buy legal weed.”

Teresa Tindoll, owner of Caribou Corner Cannabis.


Phot

o by

Gre

g Ja

mes

PORTLAND, Ore. — John Tester and Jeff Myers opened Brooklyn Holding Company, a state-licensed medical mari-juana dispensary, at the beginning of this year because they both wanted something different and they had the good fortune to do something about it.

Tester, prior to being a massage prac-titioner, had spent several years as a pro-fessional painter. Myers had more than 20 years of experience working as a flooring contractor. A lifetime worth of experience has been poured into nearly every inch of the store.

“We built all the walls. We put in all of the trim work. We built all of the cabinets, every bit of it, with the exception of part of the furniture,” Myers said.

The details are painstakingly gorgeous, reminiscent of the Roaring Twenties —

the walls are covered in imported English wallpaper with golden hues bordering the flowered design; all the signs are painted in a style that largely disappeared with the Great Depression; the cabinets are hand-made with intricate carvings; the doors look like they came from a haunted man-sion and all of the details were aged to match the period. Even the iron gate over the door was crafted to show the initials BHC in a classic style.

“The genesis of it came from my part-ner John, who has an affinity for antiques,” Myers said. “I’m a modernist guy. He wanted to make it old style … and out of that grew the (Roaring Twenties) concept that makes sense because we’re basically watching the slow, long death of prohibi-tion, and we’ve already seen one of those. So we said, ‘Well, let’s just do a throwback

to the Prohibition era.’”But the duo didn’t stop there. Even the

Brooklyn Holding Company employees dress in period-appropriate outfits.

“John was the one that said, ‘Hey, why don’t we just dress the part while we’re at it?’ I was like, wow, why wouldn’t we?” Myers laughed. “We want to make an ex-perience.”

While Brooklyn Holding Company might fit with Portland’s eccentric theme, the Powell Boulevard dispensary is more a labor of love shared over the course of a 30-year friendship, Myers said.

“We just got lucky and knew a talented pool of people that could come in and help us get it really focused,“ Myers explained.

Brooklyn Holding CompanyEnd of cannabis prohibition inspires Roaring Twenties styleBy Patrick Wagner

BUSINESS PROFILES

Brooklyn Holding Company’s Prohibition-era theme extends beyond the woodworking of the dispensary.


Will your business be next?Interested in having your business profiled in Marijuana Venture? Each month, magazine staff will feature different growers, retailers and specialty businesses in a short profile section. For more information, or to pitch a company to be featured, send an email to [email protected].

Company: Brooklyn Holding Company Location: Portland, OregonEmployees: 6

Photo courtesy Brooklyn Holding Company


GLENDALE, Ariz. — As Arizona nears the precipice of legalizing marijuana for recreational use, the state’s original med-ical dispensary is expanding its operation to prepare for the rapidly-growing market.

Arizona Organix, which opened its doors for business in December 2012, is in the process of nearly doubling its grow facility. The business currently has about 8,000 square feet of indoor growing space and employs 20-25 people. By the time its current construction project is complete, it will be able to utilize about 14,000 square feet indoors, with eventual plans to sup-plement the growing operation with a

15,000-square-foot greenhouse. The increased space will not only allow

Arizona Organix to better serve a grow-ing medical market, but also prepares the business for the long run, co-owner Ben Myer said.

When the dispensary first opened, Ar-izona had roughly 33,000 qualified pa-tients. Since then, that number has ex-ploded to about 70,000 patients, served by about 100 operating dispensaries and vertically-integrated grow operations.

Myer owns the business, along with his father, Bill Myer, and business part-ner Ryan Wells. All three were involved

in some facet of land development, con-struction and real estate prior to starting Arizona Organix, Ben Myer said.

At the time, Arizona’s housing market had crashed and Myer said he was looking to make a career shift.

“Just having the backgrounds in land development really helped us with the permitting, understanding the zoning and application process,” he said.

That experience gave the business own-ers a leg up when it came to getting their license. Each city was limited to a partic-ular number of dispensaries. For the city of Glendale, which has a population of more than 234,000 people, Arizona Orga-

Arizona OrganixState’s first licensed dispensary plans for expansionBy Garrett Rudolph

BUSINESS PROFILES

Company: Arizona OrganixLocation: Glendale, ArizonaEmployees: 20-25

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


nix was one of just two dispensaries to be licensed.

“Everybody kind of goes to their re-gional shops,” Myer said. “It provides the patients with a variety of outlets to shop at, but still keeps the market pretty strong from an operator’s standpoint.”

Having construction backgrounds also helped when it came time to set up its cul-tivation facility, Myer said.

“A lot of our skills have translated over,” he said.

Myer said Arizona’s medical system does have a high level of regulation, but one area that was set up favorably was its tax structure. There are no excise taxes for medical marijuana, and Arizona Organix ends up with a 10.2% sales tax. The li-cense application was $5,000.

As the business has grown, Arizona Or-ganix has been able to bring prices down from $110 for a quarter-ounce down to about $85 since opening. All of the prod-ucts it sells are grown in-house.

Myer said he’s looking forward to the 2016 election, which could bring Arizona into the fold of states that have legalized marijuana for recreational use.

“We’re really excited, watching how Colorado has seemed to flourish,” he said.

“Unfortunately, it looks like there could

be two initiatives hitting the ballot,” he said, referring to competing campaigns by Marijuana Policy Project and Arizonans for Responsible Legalization. “Most peo-ple say if two hit the ballot, neither will pass. Hopefully that will get figured out.

We’re still game-planning that it is. What we’re hearing is that six states sound like-ly to go (legalize marijuana for recreation-al use), and Arizona is one of them.”

Recent polling suggests Arizona resi-dents are leaning more in favor of mari-juana legalization. When Proposition 203 hit the ballot in 2010, it passed by the narrowest of margins — it received just 50.13% of the vote. Some polls show sup-port for legalization is currently as high as 59%, while others still show it evenly split.

Despite the approval of the voters, Ar-izona’s cannabis industry has faced its share of political resistance and Reefer Madness.

Maricopa County Attorney Bill Mont-gomery maintained the opinion that fed-eral law trumped the will of local voters, therefore leaving the door open to pros-ecute anybody growing or selling mar-ijuana, even if they were state-licensed businesses operating in compliance with Arizona law.

Above: Young cannabis plants flourishing at the Arizona Organix cultivation facility. At left: A flowering plant nears harvest time. Arizona Organix currently grows all its own product indoors, but has plans of implementing a greenhouse in the near future.



Photos courtesy Arizona Organix


DENVER — In 2012, when O.pen VAPE CEO Ralph Morgan began invest-ing in the new smokeless vapor technolo-gy, vape pens weren’t the crowded market that they are today. At the time Morgan had already jumped into Colorado’s medi-cal marijuana market when he opened Ev-ergreen Apothecary with his wife Heidi.

Following the opening of the dispen-sary, vertical integration brought Morgan together with his business partner, Tim Cullen who owned the cultivation facility, Colorado Harvest Company. Shortly after the integration, Morgan founded Organa Labs, a CO2 extraction facility developed to provide a consistent supply of cannabis oil for O.pen VAPE pens.

O.pen VAPE CFO Steve Berg refers to Morgan as an early pioneer in cannabis oil extracted with CO2.

“He’s really passionate about the oil as a medicine and the importance of this oil product,” Berg said. “When he was joined by LaConte’s Dispensary and Cultivation Group, that side brought a lot of insight, creativity and expertise in terms of brand-ing, marketing and vaporization devices.”

Berg explained that the six total part-nerships became a successful production model for O.pen VAPE. Companies like Oragna Labs were focused on the pro-duction, while O.pen VAPE was able to utilize companies that were tuned into the importance of marketing and branding, like LaConte’s Dispensary.

“One of the great successes that O.pen VAPE had was to really figure out the right product and couple that with the right branding and marketing approach. The two together really define the success

of the company,” Berg explained. O.pen VAPE’s marketing tagline con-

tains another reason for its success, “It’s what’s inside that counts.” Crossing state lines with any cannabis product is illegal. But by reaching out to cultivators in oth-er states and by leveraging its successful branding, O.pen VAPE has been able to license its brand into nine states.

“I think that it is fair to say that we are a national brand since O.pen VAPE prod-ucts are represented coast to coast, from California to Maine. We’re in around a thousand dispensaries and recreational stores where they are allowed by law,” Berg said.

The licensees are also contracted to uphold O.pen VAPE’s protocol and pro-cedural standards in order to keep a con-sistent level of quality, Berg said.

O.pen VAPEDenver company pairs vape technology with CO2 extractionBy Patrick Wagner

BUSINESS PROFILES

Company: O.pen VapeLocation: Denver, ColoradoEmployees: 72Most popular product: Go-Pen

Photos courtesy O.pen VAPE

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

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Miller Soils bio-char in action at a California farm.


PRODUCT SPOTLIGHT

Weed the PeopleAuthor, journalist and cannabis indus-

try expert Bruce Barcott chronicles how marijuana is changing from a demonized drug to a medicine and mild intoxicant in his latest book published by TIME Books.

It is available through most major book retailers, including Barnes & Noble.

“Weed the People” takes an insightful and often funny look into the booming cannabis industry and a look at the le-gal, social, cultural and personal chang-es brought about by the changing status of the world’s most controversial plant. It asks the question, “Have the past 75 years of marijuana prohibition been wholly unnecessary, or are we deluding ourselves about the harm we’re about to unleash?”

Subjects of the book range from the trivial to the profound, including:

• Increased conversation about mari-juana legislation in 2016 as political can-didates appeal to younger voters, who tend to pass progressive measures and vote in higher rates during presidential elections;

• The emerging economics of the vari-ous aspects of the marijuana industry and

so-called “marijuana millionaires,” includ-ing how early in-vestors are getting in on the business, how long-time pot growers have converted to legal practices and how entrepreneurs in Washington and Colorado are in-vesting in store-front business-es;

• Which state model — Colo-rado or Wash-ington — is s u c c e e d i n g , and which state model is not;

• How the War on Drugs has led to increased marijuana-related arrests and disproportionate law enforcement and sentencing over the past 40 years;

• What legalization means for medical practices, research and funding, such as

the need for in-creased fund-ing to study the effects of marijuana on PTSD sufferers, the potential link between marijuana use and schizophre-nia and even how doctors can talk to their patients about marijuana as a tool to combat various ailments.

Barcott is a con-tributor to the New York Times, Roll-ing Stone, National Geographic, Atlan-tic Monthly, Outside Magazine and many other publications. His

previous books include “The Last Flight of the Scarlet Macaw” and “The Measure of a Mountain.”

More information: www.brucebarcott.com.

AiroCideControlling mold spores, powdery mil-

dew, fungus, bacteria and other maladies from infiltrating cultivation and process-ing facilities is a significant challenge for those in the cannabis industry.

Using technology developed by NASA, KesAir has introduced a product de-signed for safe, energy-efficient, chem-ical-free and effective air sanitation for any type of environment.

AiroCide uses a photocatalytic reac-tor (rather than a filter) to kill airborne bacteria, mold/fungus, viruses, allergens and mycotoxins that could be detrimen-tal to a grow facility or processing room.

It produces no ozone, while oxidizing volatile organic compounds (VOCs), to remove harmful gases and undesirable odors.

AiroCide is extremely energy-efficient, requiring just four amps and consuming less energy than three 100-watt light bulbs. Maintenance is minimal, consist-

ing of yearly replacement for the propri-etary high-intensity photocatalytic oxi-dation lamps.

AiroCide can quickly and easily be ret-

rofitted into most facilities and does not need to be incorporated into the HVAC system.

More information: www.kesair.com.

An AiroCide system hangs on the wall of a winery.

Spotlight photos courtesy Time Inc., KesAir, Bud Bar Displays


PRODUCT SPOTLIGHT

Bud Bar DisplaysEntrepreneur Will Smith has ventured

an eclectic career path that led him to launch Bud Bar Displays.

Smith’s journey began more than 30 years ago, when he was designing and fabricating specialty acrylic display cas-es and store fixtures for a variety of re-tailers.

He also took a brief detour through Hollywood, where he crafted memo-rabilia cases to protect items like Judy Garland’s dress from The Wizard of Oz and Humphrey Bogart’s trench coat from Casablanca.

But after a serious accident left one of legs paralyzed, he began visiting medi-cal dispensaries and became inspired to help the cannabis industry step up its level of function and design with its retail fixtures.

What he saw was that many dispen-saries — even the ones that put a great deal of energy into the interior design — tended to take short cuts when it came to displaying the actual product.

“I wanted to create the tools (dis-plays) for collectives to help them achieve a more refined look and pre-sentation of the cannabis and to make the transaction between budtender and patient a more enjoyable and ef-ficient experience,” Smith said. “I’ve seen dispensaries and collectives with beautiful interiors, but their main focal

point, the display cases, are sometimes primitive — even using ‘found’ displays which don’t match the dispensary envi-ronment.”

The California-based company’s product line includes a wide variety of cabinets, dishes, sniff jars, concentrate displays, humidors and custom display cases, all designed to give an upscale look to marijuana retail businesses.

“My goal is to play a part in this emerging market by providing assorted designs of our Bud Bar Displays equip-ment, so that each collective’s vision for a professional appearance can be real-ized.”

Bud Bar Displays can also custom build cases for those business owners with a specific need or look for their store. Smith said his customers have of-ten heard more comparisons to jewelry stores than medical marijuana dispen-saries.

The Bud Bar Displays products uti-lize only laboratory-grade acrylic that doesn’t have a chemical interaction with the cannabis. Many of the displays feature LED lighting, protecting the products from heat stress created by traditional bulbs.

More information: www.budbardis-plays.com.


DREAMLiving the Marijuana Venture sought out a group of professionals to tell the trials and tribulations of everyday life in the legal marijuana industry.

Residency has fast become one of the hot topics in the recreational market conversation in Oregon.

The drafters of Measure 91 intentionally excluded residency requirements. How-ever, the Oregon Liquor Control Commis-sion and some state legislators want to require license-holders to be Oregon res-idents. The time frame ranges between one and four years.

I agree that we should have a resi-dency requirement. My husband, who is also my business partner, disagrees. He wants to see marijuana businesses treated like every other business and views any restriction to entry as another means of treating us differently. Need-less to say, we try not to talk about it too much with one another. It’s out of our hands. Sort of.

We are members of the Oregon Can-nabis PAC and the Measure 91 finance committee. Both groups have strong lobbying efforts, although neither group has been able to craft a formal state-ment about their position on residency. We expect both to come out in favor of some residency requirements in the near future.

Some people believe that a residen-cy requirement helps Oregonians by al-lowing them the first chance at finding a place within this burgeoning industry. Others think residency restrictions make it harder for marijuana entrepreneurs to conduct their business like everyone else.

Oregon is known for its well-crafted, artisan cannabis. Local growers have earned the opportunity to build their

brand or business in the interval before federal prohibition ends.

Those of us that have risked everything to lay the foundation for this newly-legal industry should be able to reap the re-wards. A residency requirement affords Oregon entrepreneurs the opportunity to build strong businesses, which creates jobs and economic growth for the state. Most importantly, it keeps the Oregon economy healthy.

My husband and I both agree that there should be no restrictions on in-vestment. Oregon is not a wealthy state and has a limited amount of investment capital. He believes it will be harder to find investors if we adopt a residency restriction. I believe mandating majority ownership from Oregon allows Orego-nians to find out-of-state funds to build their brands while keeping away corpo-rate weed.

At the end of the day, we are both right. Restrictions or not, the cannabis industry is here to stay. We have no way of predicting exactly how a restriction will play out in the constantly evolving marijuana political landscape. We need to follow our gut; that’s how we made it this far.

Meghan Walstatter and her husband, Matt, own Pure Green, a licensed medical dispensa-ry located in Portland, Oregon. She is a found-ing member of both the Oregon Growers PAC and the Oregon Growers Association.

Pure Green

Meghan WalstatterPortland, Ore.

Dispensary

A look at the display cases and products at Pure Green, a state-licensed medical dispensary in Portland, Oregon that is owned by Matt and Meghan Walstatter.


LIVING THE DREAM

I graduated from Humboldt State Uni-versity in 2001 with a master’s degree in botany. I’d just published my thesis

on canopy epiphytes in a 300-foot tall redwood forest canopy and was excited about my looming future climbing trees as a canopy botanist.

Fast-forward 14 years. After countless field science related contracts and for-est adventures, you’re looking at a man whose body might not hold up many more seasons. As I accumulated more aches and pains over the past six years, one question kept popping up: “What’s next?”

My question was soon answered af-ter a discussion I had with my brother-in-law. He had gotten together with his marketing friends in New York to discuss the emergence of a potentially booming cannabis industry. He knew I was a fan of cannabis, had quite a bit of knowledge in the industry, and had lived in the com-munity of Humboldt for more than a de-cade.

It was not long into the discussion that my brother-in-law realized that I could potentially be an asset to their team. So last April I began working with Welkin Creative as a cannabis botanist in Wash-ington. I found myself engaged in incred-ibly interesting discussions with other cannabis professionals, eating with them in fantastic restaurants and sampling sometimes fantastic strains.

In the beginning, Welkin started its

focus on any producer that was able to obtain a license in Washington’s legal, recreational cannabis market. But we quickly found obstacles that ranged from a lack of trust to substandard product. Meanwhile, I was working feverishly on developing quality-control criteria for farms that wanted to produce premium cannabis.

I had a difficult time philosophically with indoor grows; we’d hoped to focus exclusively on organic techniques, which were not the norm. Before long the team began working with a promi-nent sun-grown farmer, Jeremy Moberg of Can-naSol Farms.

Meanwhile, I divided my time between Welkin and working my butt off mea-suring trees, counting logs and estimating plant cover in the rugged Sis-kiyou National Forest. I wasn’t sure, but I suspected this would be my last field season in forest botany.

Things got more interesting last sum-mer, when I spent time with some of my Humboldt friends. They found my new job very interesting, and wanted to know as farmers for California’s medical canna-bis program how I might be able to help them. Very quickly I started to realize Humboldt farmers needed to preserve their position as the premier producers of premium cannabis in this great coun-try of ours. I invited Welkin’s CEO, An-drei Edwards, down to the remote town of Honeydew, California for a weekend

of camping on the Mattole River in the heart of grow country. By the end of the trip, the seeds of inspiration had been sown and we started to develop a plan to brand Humboldt premium sun-grown cannabis.

Our plan was to help the entire com-munity of Humboldt whose economy has increasingly relied on cannabis pro-duction due to the fallout of the timber industry. I asked a good friend to gather a group of trusted and experienced farm-ers to learn what marketing might have

to offer. In practically

no time we had a group of profes-sional, ecologi-cally responsible farmers that not only trusted us thanks to my good friend, but also were ready to step into the open light and join the business world directly. I made the de-cision to start working full time

developing a co-op with our farmers. We began to build an organization that

would ultimately welcome all experi-enced and locally oriented farmers that were willing to meet our quality stan-dards. So be on the lookout for sustain-ably sun-grown True Humboldt Cannabis in California dispensaries this summer.

While I will miss swinging through the trees, I am very excited to be ascending to new highs in the cannabis industry.

Billy Ellyson is a botanist with Welkin Creative, a team of marketers and agricultural scientists that helps develop true premium brands.

Welkin CreativeBilly EllysonSeattle, Wash.

Botanist


My hope was to be able to boast about how effective we were in overcoming an emergency ordi-

nance prohibiting marijuana businesses in Snohomish County. However, the saga continues after the March 25 delibera-tion did not result in lifting the ban, but it did open the door for more negotia-tion with the County Council. The can was kicked down the road once again.

The council members listened to a briefing by analyst Will Hall, before re-tiring to chambers. They emerged with a plan to hear several options on R5 zoned land at another hearing later in April.

The special conditions being consid-ered by the council are vast and range from sunsetting the industry in 10 years, to requiring 10 acres minimum, to ex-tended setbacks of football-size propor-tions, to restricting operations from 9 a.m. to 5 p.m. and dozens more. The R5

Cooperative that has worked so hard to educate members of the council had to view this as a victory. The conversation has moved from a black-and-white “yes” or “no” to one of details on how to lift the moratorium.

I wish I felt more excited about it. Many of the conditions are a ban in sheep’s clothing.

Two council members seem willing to allow the industry with special con-ditions. Two others are ready to ban permanently. The swing vote for major-ity rule is Stephanie Wright — the only woman on the council and most silent of all the members. The good news is that I’ve heard she studies extensively, and we have given the council a lot to study. The bad news is a simple Internet search will fill her mind with whatever she is looking for to justify her vote. Pro or con, there is a lot of garbage information on the Internet about cannabis.

Our journey to become a licensed pro-ducer/processor began three years ago and my hope was high that Washington State was the wise champion to make it happen in a logical, well thought-out manner. I have licensed friends who are struggling under the heavy tax and over-sight burdens that add unnecessary cost

to the production of marijuana. I have colleagues that grow and provide med-ical marijuana but never even applied for a recreational marijuana business license, because they believed the med-ical suppliers would be legally protected by now.

It is emotionally exhausting and fi-nancially draining going through this process, and now we understand that it may take several years before sensible regulations become the standard. If ever there was a time for the entire industry to come together, it was yesterday. The heritage growers, the legacy medicine makers, the green rush entrepreneurs, the rule makers and the lawmakers need to round-table up and fix this thing be-fore good, hardworking folks lose every-thing to this experiment and the state is left holding a huge bag of failure.

Hopefully, soon I will be able to crow about a victory in Snohomish County, but until then, don’t hold your breath. That can may be kicked again and again.

Shawn DeNae is CEO of Washington Bud Company, an aspiring applicant for a produc-er/processor license. She is one of the found-ing members of the Marijuana Business Asso-ciation Women’s Alliance.

Since the passage of Measure 91, Or-egon officials have been paying close attention to the cannabis industries in Washington and Colorado. The Oregon Liquor Control Commission (OLCC) has hosted a series of community forums and an online survey.

About two-third of the people who responded to the survey were linked to the Oregon Medical Marijuana Program. The results showed local residents favor small, existing, in-state marijuana grow operations and residency restrictions over new, larger grow operations.

Other common areas of concern were:

• Overwhelming support for issuing

Recreational Marijuana

ManagementColette Thomas

Advisor

Washington Bud Company

Shawn DeNaeAdvisor

Producer/Processor

LIVING THE DREAM

marijuana licenses to Oregon residents;• Widespread support for not over-reg-

ulating recreational marijuana;• Consistent testing standards of mari-

juana products;• General concern about cities/coun-

ties banning marijuana-related business-es, but benefiting from the revenue gen-erated from the industry;

• Strong support for making marijua-na-infused edibles available;

• Strong support for the importance of growers having a security system, but with the provision that it should not be a requirement;

• Mixed support for collocating medi-cal and recreational retail outlets;

• Mixed response to requiring em-ployees of recreational facilities to be licensed by the state, similar to what the OLCC demands for employees at loca-tions where alcohol is served;

• Mixed response to different require-ments for indoor versus outdoor grow operations;

• Mixed support for child-proof or

child-resistant packaging;OLCC spokesman Tom Towlsee said

there is a lot of discussion about if rec-reational and medical can feasibly move forward separately. Medical cardholders do not want the system to change, but the OLCC is concerned that products are leaking into the black market. The agen-cy seems to believe this will continue un-less there are changes to the system.

Recreational marijuana becomes legal in Oregon on July 1, 2015, prompting two common questions for the OLCC: Where do I get my seeds to plant on July 1? And where can I deposit proceeds from my business? The OLCC is likely to begin ac-cepting recreational marijuana license applications in January 2016. That leaves nine months to develop rules and regu-lations.

Colette Thomas is an advisor for Recreation-al Marijuana Management, which provides consulting services for retailers on licensing and compliance. She can be reached at [email protected].

Living the Dream photos courtesy Pure Green, Billy Ellyson

We have over 40 i-502 surveillance systems approved

and operating!


Tourism RisingCannabis-friendly states become vacation destinations

By Marissa Willman

Move over, Amsterdam and Vancou-ver, British Columbia (sometimes

known as “Vansterdam” for its notori-ously loose, yet still illegal, pot culture): There’s a new plume of cannabis tourism locales on the rise in the United States.

Amsterdam has long topped lists of destinations for travelers seeking legal recreational marijuana, but new laws across the U.S. are producing a fresh crop of hot pot spots.

Colorado and Washington were the first

states to legalize recreational marijuana, and both states began sales in 2014. More recently, Oregon, Alaska and Washington, D.C. have voted to legalize recreation-al marijuana, with sales likely to begin sometime in 2016 in Oregon and Alaska, while the debate over the details of mari-juana legalization continues in D.C.

The nation’s capital aside, there’s no doubt travelers are showing interest in taking toke-worthy trips now that the


option is there. Data from Cheapflights.com showed travelers were significantly more interested in traveling to Colorado, Washington State, Alaska and Oregon in 2014 than they were in 2013 — a trend likely to continue as the recreational mar-kets develop. In fact, flight searches for Washington State on Cheapflights.com jumped 82% from 2013 to 2014, while flight searches to Alaska went up a whop-ping 204% year-on-year between 2013 and 2014.

So what do you need to know before taking a trip to one of these rising tour-ist destinations in the U.S.? And how can business owners capitalize on this influx of visitors? Take a look at this snapshot of the U.S. destinations where lighting up is already, or at least soon to be, legal.

COLORADOVoters in Colorado legalized recreation-

al marijuana use in November 2012, with retail sale of cannabis starting in January 2014. Flight searches to Colorado jumped 37% from 2013 to 2014 — an indication that travelers are showing increased in-

terest in The Centennial State. Visitors to Colorado — or the now even more aptly named Mile High City of Denver — are welcome to indulge, with a few caveats. You’ll need to be at least 21 years old and present photo ID to enter a cannabis retail store. Out-of-towners can still purchase marijuana, but they are limited to seven grams, whereas Colorado residents can purchase up to an ounce. The state law also allows for anyone to possess up to one ounce of marijuana.

When it comes time to partake, visitors should be aware that marijuana cannot le-gally be consumed in public places. Colo-rado’s recreational marijuana legalization also came with a new DUI law, so avoid getting behind the wheel if using marijua-na.

As far as bringing your stash back home? Don’t even think about it. Mari-juana is still illegal under federal law, so make sure to enjoy your recreational stash within Colorado’s state lines.

During 2014, Colorado registered near-ly $700 million of both medical and rec-reational cannabis.

The Colorado Department of Reve-

nue’s Marijuana Enforcement Division reported more than 17 tons of marijua-na flowers being sold in its first year of recreational sales — still dwarfed by the medical market, which moved nearly 50 tons of product.

By the end of 2014, there were 322 retail stores licensed in Colorado, to go along with 1,416 medical marijuana businesses. While Denver is a hot-spot for cannabis activity, much of the state remains in the dark. There are 228 jurisdictions across Colorado that prohibit both medical and recreational marijuana businesses, com-pared to 67 that allow both.

WASHINGTON STATEWashington voters legalized marijuana

for recreational use at the same time Col-oradans did, though it took longer for the Evergreen State to implement sales. July 2014 saw the first shops open. Current state law caps the total number of retail

Photos by (from left): Garrett

Rudolph, Pixabay, Michael Theberg/N

OAA, Joshua Strang/U

SAF

From left to right: The Space Needle, in Seattle, Washington; Crested Butte in Colorado; Multnomah Falls in Bridal Veil, Oregon; the Northern Lights above Bear Lake, Alaska.



stores at 334, although only 125 were offi-cially licensed as of early April 2015.

The delay hasn’t deterred travelers, though. At the end of 2013, Washington was 12th most searched state through Cheapflights; a year later, it now sits at sixth.

The regulations for consumers are quite similar to Colorado: People can pur-chase recreational marijuana at any of the state-licensed shops, as long as they’re at least 21 years old and have valid photo ID. Washington’s law doesn’t differenti-ate when it comes to purchase limits be-tween residents and visitors, so anybody can buy up to an ounce of flowers, 16 ounces of solids or 72 ounces of liquids.

Again, avoid lighting up in public or driving while under the influence, and keep in-state purchases within Washing-ton’s borders.

In its abbreviated first year of retail sales, Washington businesses sold about $64 million of legal cannabis in 2014.

OREGONSoon, Washington won’t be the only Pa-

cific Northwest locale where visitors will

be able to consume cannabis legally. Or-egon voters approved cannabis legaliza-tion in November 2014. However, the law doesn’t take effect until July 2015, and sales likely won’t begin until 2016. Nev-ertheless, travel interest is already on the rise: Flight searches to Oregon climbed 34% from 2013 to 2014. The same age restriction applies as the other states, but many of the other details remain up in the air. State law allows for purchase limits of one ounce, but an individual can possess up to eight ounces legally in private.

ALASKAAlaska became the fourth state in the

union to legalize recreational cannabis in November 2014. The law took effect in 2015, but travelers looking to light up should wait to take their Alaska trips until 2016, when sales will likely begin. The state is still in the rulemaking process, so many of the details about retail stores, cultivation and the rest of the industry re-main unknown.

Although other factors are clearly at play, interest in Alaska has been on the rise for several years. According to data

from Cheapflights.com, flight searches to the Last Frontier almost tripled between 2012 and 2014, and the destination went from being the 34th most searched state at the end of 2013 to the 22nd most searched at the end of 2014.

WASHINGTON, D.C.The nation’s capital also voted to legal-

ize possession of cannabis for recreation-al purposes during the 2014 election, but the future of the industry remains hazy, at best, due to opposition from some mem-bers of Congress.

It’s now legal to possess marijuana in Washington, D.C., but there are no plans in place for a regulated industry. Sales are still prohibited, but cannabis can be gift-ed from one person to another. Recently, the D.C. Cannabis Campaign hosted a free seed exchange, where local residents could give or receive cannabis seeds, so long as no money exchanged hands.

This article was originally published on Cheapflights.com, and reprinted with permis-sion (www.cheapflights.com/news/cannabis-tourism-travel-us-pot-spots).



But that changed quickly when she be-gan the process of opening a state-licensed medical marijuana dispensary in Southern Oregon. She was surprised at how canna-bis remained demonized, even more than a decade after Oregon legalized marijuana for medicinal purposes. The message from a vocal minority of local residents was one of hatred and misguided fear.

“I was really shocked,” Malarkey said. “I personally don’t have a need to use medical marijuana. I don’t use the herb, but I believe in freedom of choice, and I believe that people who need it, need safe access.”

Her excitement and passion resonates in the rhythm of her speech.

Malarkey’s proposal to open a medical dispensary in Gold Hill sparked outcry, protests and a steady stream of misinfor-mation from local residents. The picketing was not just directed at her, but also her customers and the elected City Council members who supported the opening of Breeze Botanicals.

In June of 2014, opponents of the dis-pensary launched an effort to recall the four council members who supported the ordinance allowing medical marijuana retailers within city limits. Deb West, a member of the Gold Hill budget commit-tee, spearheaded the recall campaign.

“This could have been so simple. All they had to do was put this to a vote of the people, and they chose not to,” West told the Medford Tribune.

“They made all kinds of excuses as to why the people should not have a voice in this. And that’s what brought this recall to the forefront,” she said.

The harsh opposition solidified Malar-key’s stance.

“I had no idea there would be that kind of animosity, and it’s no wonder the white collar crowd remains in the closet about cannabis, because of all this judgment and ridicule,” Malarkey said. “It made me want to fight even harder.”

The recall effort fell flat. >> CONTINUED ON PAGE 38

Brie Malarkey doesn’t consider herself an activist. Malarkey is a self-taught herbalist who’s been studying plant

medicine for more than 10 years. She’s a college graduate and a savvy business woman, an organic farmer who oversaw 40 acres of cows, goats, pigs, herbs and vegetables.

She’s an educator, having home-schooled her teenage son until he re-cently enrolled in college. She’s a believer in the importance of knowing where your food comes from. She’s enthusiastic about hiring employees with more expertise than she has.

Activism had never really been part of her agenda.

Southern Oregon

HOSPITALITYPair of state-licensed dispensaries are the cornerstones of a business that also includes farming and processing divisions

By Garrett Rudolph


Each of the four council members sur-vived the special recall election, which cost the city of Gold Hill about $1,500. In each case, about 60% percent of the voters stood by the council members.

BUILDING THE BUSINESSIt’s been nearly a year since Breeze Bo-

tanicals opened amid controversy in Gold Hill.

Malarkey opened Breeze Botanicals’ second dispensary in Ashland in Febru-ary 2015, and she’s been able to double her efforts to support the local economy by focusing on a variety of herbs grown sustainably and organically in the Rogue Valley.

She puts a heavy emphasis on helping people, even as she prepares for the un-certainty of Oregon’s Measure 91 rollout.

One of the big surprises she’s had since opening Breeze Botanicals is the number of people that have tried to come in with-out medical cards. Within her first month of being open, she said she had to turn away women who were suffering from Stage 4 breast cancer because their on-cologist refused to issue them a medical authorization. Even for people with quali-fying conditions, it’s not uncommon for a wait of at least six weeks to get a medical card, Malarkey said.

Breeze Botanicals’ number one de-mographic is 65- to 75-year-old women, often with their husbands as caregivers, Malarkey said. The implementation of Measure 91, the voter-approved law that legalizes marijuana for recreational pur-poses, will give her the “freedom to help anybody who wants medical access,” Ma-larkey said. “As a healer, I want anybody to be able to come in and make a decision about their own body.”

However, marijuana legalization con->> CONTINUED ON PAGE 41


I HAD NO IDEA THERE WOULD

BE THAT KIND OF ANIMOSITY. ... IT MADE ME WANT TO FIGHT EVEN

HARDER.


Photos courtesy Joe McLaren/RogueAgentPhoto.com

Breeze Botanicals owner Brie Malarkey peers over a display case full of tinctures.

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tinues to face the same roadblocks as it has for years, despite substantial support from the voting public. Malarkey called it a statewide version of what she went through last summer, when hysteria and opposition produced the loudest voices.

The League of Oregon Cities and the Oregon State Sheriffs’ Association have both taken prohibitionist stances in regards to Measure 91, and there’s plenty of dis-cussion about how municipalities and law enforcement agencies could potentially undermine the program.

Joe McLaren, manager of the Ashland store, said he expects Measure 91 to have a positive impact on the state.

“Measure 91, I see as a bonus,” he said. “It’s a really good opportunity for people that don’t have a medical card.”

The biggest question marks he sees in-clude whether or not the Legislature will allow dispensaries to have both recreation-al and medical licenses, and whether or not the rules put in place help create a viable system for the recreational market.

“I see it as a win-win situation for Ore-



The storefront of Breeze Botanicals’ Ashland location, which opened in February.


gon in general,” McLaren said. Malarkey said she fears a short-sighted

approach and heavy-handed regulations could choke off Oregon’s legal cannabis industry before it’s ever allowed to leave the black market.

Southern Oregon is well-known for its skilled, artisan growers that have often-times spent decades honing their craft. The questions are if and how they will integrate with a commercial market. Malarkey said she’s worries state legislators might bow to special interest groups that want to ex-ploit Oregon’s existing industry and might not consider environmental impacts such as indoor growing and nutrient run-off.

“I really implore legislators, as they de-velop policy, to think about the Oregon economy,” she said. “We are known for our micro-creameries, micro-distilleries, our wonderful, craft artisan beer-makers, and we can add cannabis to that mix and we can have a wonderful cannabis product that may, eventually, someday, be a viable export product.”

With that said, she recognizes the chal-lenge of establishing a balanced market,

calling it a “Goldilocks” situation — the amount of cannabis produced by Oregon has to be just right.

If Oregon produces too much marijua-na, prices will fall and it will be exported illegally to other states. If the state doesn’t produce enough, the laws of supply and demand will force the prices up and allow the black market to thrive.

“It’s not like the wine industry or the grass seed industry that are thriving in Oregon,” she said, pointing to industries that can legally be shipped out of state and have flourished as export products.

ORGANIC EMPHASISAs an organic farmer herself, Malarkey

puts a heavy emphasis on healthy and sus-tainable growing practices.

Breeze Botanicals is the retail arm of Malarkey’s business scope (www.sunbree-zeinc.com), which also includes Sunna Ra Acres in Shady Cove and Sun God Medic-inals in Gold Hill.

Sunna Ra Acres was originally founded in 2012 to focus on sustainable food pro-duction, but has shifted somewhat more recently toward raw milk, heritage pork,




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


free-range eggs and herbs. Among the herbs it produces are hops, peppermint, spearmint, anise, echinacea and chamo-mile, as well as cannabis.

Sun God Medicinals is nearing its one-year anniversary as a producer of herbal teas, tinctures, topicals, edibles and ex-tracts — both with and without cannabis — that are geared toward addressing spe-cific symptom relief, such as pain or sleep-lessness.

“Marijuana’s been the star, and is still kind of being the star, but people are for-getting other vital herbs that can go right along with and deserve some spotlight too,” McLaren said.

In addition to the products of its sister companies, Breeze Botanicals will also buy traditional herbs directly from farms or wholesalers if they are certified organic. When it comes to cannabis, Malarkey puts growers through a rigorous vetting process before allowing their product to be sold in her stores.

That process includes face-to-face meetings with the growers, who must also sign a contract that gives Breeze Bo-tanicals the right to audit their facility to

make sure they’re growing sustainably. The application covers everything from the amendments that were used to the type of music that was played in the garden. Once suppliers have gone through the ex-tensive vetting process, it tends to create longer-lasting re-lationships and a level of confidence between the grower and the dispensary that benefit the con-sumers.

Breeze Botani-cals takes a some-what unique, ho-listic approach to herbal medicine that goes beyond cannabis. In addition to medical marijuana, the two stores each feature more than 40 different herbs that are cultivated and wildcrafted in Southern Oregon for different purposes.

Breeze Botanicals also has a local food and art boutique that is open to the general public, with or without a medical marijua-na card. Shoppers can enjoy local treats, handmade jewelry, herbal teas, handcraft-ed soaps, local honey and more.

Malarkey also puts each batch of can-nabis through lab testing that goes above and beyond state-requirements, she said. She examines the terpene and cannabinoid profiles so consumers can be better edu-cated about what they’re buying.

“I really wanted to go beyond the strain name,” Ma-larkey said, point-ing out that stress-ors, individual climates, growing techniques and ter-roir can all affect the final product. “One man’s Sour Diesel is not anoth-

er man’s Sour Diesel.” That educational process is key for the

success of Breeze Botanicals, McLaren said.

“We’re really trying hard to make that difference in the dispensary and make it way more professional and more comfort-able,” McLaren said.

“People can actually feel they are get-ting the right information and not just be-ing sold pot.”

PEOPLE CAN ACTUALLY FEEL THEY

ARE GETTING THE RIGHT INFORMATION AND NOT JUST BEING

SOLD POT.


Owner Brie Malarkey speaks with a patient at Breeze Botanicals.

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CANNABISDROUGHT

and the

By Rachel Cavanaugh

Drought conditions are expected to reach epic propor-tions this year, causing a devastating ripple effect throughout agricultural industries and everyday life.

California is already reeling from the past three years that have been the driest stretch on record, with 2014 also being the hottest. Significant water restrictions have already been im-posed and environmental officials across the nation are taking steps to brace their states for the impact. However, there’s a growing sense of concern that it might be too little, too late.

Many growers and retailers are wondering how this drought — which extends well beyond the borders of California — will impact the cannabis industry.



With freshwater streams, lakes and reservoirs drying up rapidly in

California, the buzz surrounding the so-called megadrought is escalating, particu-larly among the Western states. But so far, there’s no clear-cut agreement how the cannabis industry will be affected by the water crisis.

Last year, multiple media outlets warned that marijuana prices could double as a re-sult of the burgeoning drought. A story by the Huffington Post quoted growers say-ing they were planning to harvest fewer plants due to the water shortage. Over the summer, speculation grew about how the market might shrink due to the drought.

However, now that harvest season has come and gone, it doesn’t appear prices have changed dramatically, and the quan-tity of marijuana on the market doesn’t seem to have decreased.

Jennifer Martin, an independent culti-vation consultant with MarijuanaPropaga-tion.com, said she thinks the volume has actually increased since more people have jumped into the game.

Furthermore, if the plants themselves are indeed smaller due to the drought, some experts think that’s a good thing.

Rick Pfrommer, a buyer at Oakland’s Harborside Health Center, told SF Weekly in January that many of the buds coming out of California are higher quality this year because of the water shortage.

This is because in normal years growers tend to over-water their plants to maxi-mize size and weight. The practice makes the plants heavier and more lucrative; however, it also causes the cell walls to swell, Pfrommer said. This diminishes the quality of the buds.

In contrast, when the amount of water is limited, the buds are denser, he said. The resin content is also higher and they have a more robust flavor. In that regard, the drought could inadvertently help break an ongoing, industry-wide habit of over-wa-tering.

Yet even if that is true in some markets, Martin said that overall she doesn’t think the water restrictions in California are reaching the bulk of marijuana growers.

Although the state’s governor did im-pose the first restrictions on April 1 — or-dering 400 local water-supply agencies to deliver 25% less water in the coming year — those only apply to residential zoning.

Current rules ban all restaurants from

serving water unless customers ask for it, prohibit lawn and landscape watering within 48 hours of measurable rain, and require municipalities and private compa-nies to limit lawn watering to two days a week.

The state water board has said that out-door irrigation accounts for 44% of water use in California’s urban and suburban communities, according to a recent USA Today story.

Furthermore, outside of the medical marijuana sector, the majority of growers in California are underground operations, so even if the restrictions did apply, they wouldn’t be regulated anyway.

“So far the restrictions on the drought have not had a big effect on most people because they’ve just been pretending that there’s no drought,” Martin said. “They

haven’t been having the faucets turned off and so everybody’s just kind of pro-ceeding as if everything is fine and it’ll rain more next year. ... They’re not having some governmental agency come to their house and meter the water and stop them at a certain point. So until that happens, they’re just going to do what they need to do in order to make their money.”

The problem is that the culture isn’t changing, she said. The drought conver-sation has been escalating in California for several years but very few people are doing anything to modify their behavior.

Some authorities have suggested that il-legal marijuana farms may be to blame for a number of streams that have gone dry in Northwestern California.

A recent study by the California State




This USDA map shows the snowpack levels for mountain ranges in the Western United States, based on the percentage of median years from 1981 to 2010. The dark red dots represented heavily in California, Oregon and Washington indicate mountains with less than 25% normal snowpack. The green dots, most heavily populated in Wyoming, represents mountains within 10% of normal.


Department of Fish and Wildlife found that the water demand of marijuana irri-gation in several northern rural counties is high enough to divert substantial portions of local stream-flow.

“Diminished stream-flow is likely to have lethal or sub-lethal effects on state- and federally-listed salmon and steelhead trout and to cause further decline of sensi-tive amphibian species,” the study reads.

Martin said she isn’t surprised, noting that black market operations are not play-ing by the rules in a number of ways.

In places like Nevada City, for example, churches and schools have reported water being stolen out of their tanks. Authorities attribute this to marijuana growers, she said.

“I’ve heard that the streams have been drying up because the pot growers are overdoing it and I would imagine they will just keep going that way,” Martin said. “They will just start stealing if they can’t get it from nature or from a faucet.”

She said these illegal operations are damaging the environment and giving a bad name to honest growers who want to do right by the industry.

“You have to draw a line between re-sponsible growers and irresponsible growers because there is a big culture dif-ference,” she said.

Martin said the black market growers are often using land they don’t own, steal-ing resources and using fertilizers and pesticides that damage the environment.

Those growers are “making everybody who is trying to be responsible look really bad,” she said.

There is an entirely separate contingent of people who want to play by the rules, she said. Those growers aim to minimize pesticides and use water responsibly.

In states like Washington and Colorado, the legitimate growers are heavily regulat-ed by the government. It means they have to play by the rules or risk losing the li-cense they fought hard to acquire.

While California is being hit hardest by the 2015 drought, other states are being impacted as well.

Chris Bayley, owner of the consulting company Hortistructure Inc., pointed to extremely low snowpack levels in Wash-ington that have prompted Gov. Jay Inslee to place an emergency drought declara-tion on approximately 44% of the state.

“This is an ongoing emergency, and we’re going to have some long, hard months ahead of us,” Inslee said in a writ-ten statement. “We’re moving quickly so that we’re prepared to provide relief to



YOU HAVE TO DRAW A LINE

BETWEEN RESPONSIBLE

GROWERS AND IRRESPONSIBLE

GROWERS BECAUSE THERE

IS A BIG CULTURE DIFFERENCE.

Photos by Ivan Dzyuba/123RF, USDA, N

ational Climate Data Center, W

ashington Department of Ecology

The dark red zones in the map above represent areas of “exceptional drought” in 2015. Areas in red are one step less threatening —“extreme drought” — followed by “severe drought” in orange, “moderate drought” in tan and “abnormally dry” in yellow. California and Nevada face greater areas of exceptional drought than anywhere in the nation, while Texas and Oklahoma are the only other states registering any areas of exceptional drought. This map was produced by Michael Brewer and the National Oce-anic and Atmospheric Administration/National Climate Data Center.

farms and fish this summer.”Groundwater will be minimal this sum-

mer as a result, Bayley said, and if tem-peratures are high on top of it, farmers will have to give their plants more water than they normally would.

This will especially impact growers who have to pay municipalities for water, he said.

“Those (environmental conditions) will drive water needs up astronomical-ly,” Bayley said. “And if you have to pay somebody for that water on a regular basis it will get quite expensive.”

Oregon is also on high alert regarding drought conditions due to a record-low snowpack.

“Oregon’s unusually warm and dry winter has potentially dire consequences,” Gov. Kate Brown said in a statement.

Drought predictions aren’t quite as dire for Colorado, but this year had one of the warmest and driest months of March on record.

Bayley also brought up the situation in California.

“I’ve talked to quite a few people down there about growing,” he said. “And they all know that there are bad times ahead as far as water usage goes. There are all sorts of conversations taking place between consultants and growers about how to handle this exact issue.”

In the meantime, Martin pointed to nu-merous measures that responsible grow-ers can take to minimize water use. These include drip irrigation systems and organ-ic cultivation methods which tend to use less water than mineral-based fertilizers.

Bayley agreed, pointing to additional strategies like planting into the ground in-

stead of into a container and using good soil mixes and biochar.

“They’re just like any other plant,” he said. “They will use up a lot of water, es-pecially if they’re really big, so (conserva-tion) just becomes that much more imper-ative. They’ve got to do everything they can to not let any of it evaporate.”

In the long-term, conservation has to be a priority, Martin said, noting that water conservation isn’t only important for the marijuana industry.

“If the drought goes on the way that it is, you’re looking at much more than a cannabis supply issue,” she said. “You’re looking at the fall of civilization. I mean, this is how part of the fall of Rome oc-curred. ... The impact is going to include everyone and and all of the food. Pot is going to just be one small component of that.”



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



Financial services for the cannabis industry?

DON’T BANK ON IT Thirty months have gone by since Washington and

Colorado voters legalized marijuana for recreational use. In that time frame, the cannabis industry has taken one monumental leap forward after another.

Now, twice as many states — plus the nation’s capital — have approved legislation to end marijuana prohibi-tion, with at least a half-dozen more that seem immi-nent to follow suit with the 2016 election. Nearly half the country has legalized marijuana for medical uses, and the mainstream media — once firmly planted on the “drugs are bad” platform — has shifted its voice toward

By Garrett Rudolph




one of acceptance, curiosity and even lukewarm support.

While marijuana’s true medicinal value remains in debate, it’s clear that the often demonized drug is the wrongfully convict-ed inmate among its Schedule I brethren. Even the federal government seems to be coming along on that subject — albeit slower than those in the cannabis industry would want.

Most polls indicate a majority of Ameri-cans support the legalization of marijuana. A recent poll by CBS News showed 53% of Americans are in favor of legalization — the highest number since the news or-ganization began asking that question in 1979.

Yet, for thousands of legitimate business owners across the country, the act of open-ing a checking account remains a dicey proposition.

Marijuana may be going mainstream, but banking for the industry remains very much underground.

STATE OF BANKINGIn general, there are two types of people

in the cannabis industry: Those that have had their bank accounts closed, and those that never had a bank account to begin with.

Given enough time, most people in-volved with the production and sale of marijuana products — even in full com-pliance with state laws — will have their accounts shut down. At the pace the rest of the marijuana industry has made progress, the banking aspect remains stagnant.

Only a small handful of financial insti-tutions have been willing to publicly an-nounce they would service licensed mar-ijuana businesses, and two of the most notable have been fraught with challenges.

In January, Oregon-based MBank took its first foray into the legal marijuana world by opening accounts to businesses in Colorado. That experiment lasted one week, before MBank pulled the plug and closed the bank accounts it held with five different marijuana-related businesses, ac-cording to a Denver Post story. About 60 other businesses in the Mile High State had been awaiting approval from MBank.

MBank didn’t pull out of marijuana altogether. It maintained its working re-lationships with businesses in the Pacific Northwest for nearly three more months. However, in mid-April, MBank an-

nounced the closure of those accounts as well. MBank CEO Jef Baker told the Wil-lamette Week that 75 cannabis business accounts would be closed within the next two months.

Once again, business owners were left to hunt for bank accounts or go back to op-erating in a cash-only environment.

The news is not all negative, though. In Washington State, three credit unions

have publicly opened their doors to the growing recreational marijuana market. So far, those accounts have been operating smoothly, two credit union officials told Marijuana Venture.

And the most current data from the Fi-nancial Crimes Enforcement Network (FinCen) shows that many banks are ac-cepting cannabis cash, but most are doing so in a discrete manner. According to a Wall Street Jour-nal story, more than 1,700 “Marijuana Limited” suspicious activity reports have been filed from 25 states since the U.S. Department of Trea-sury issued its guid-ance memo for banks handling marijuana money in February 2014.

The Marijuana Limited designation in-dicates a financial institution has a client operating a marijuana-related business in compliance with both the Cole Memo pri-orities and state law (see more about the federal government’s guidance memos re-garding banking in attorney Jana Weltzin’s column on Page 64).

The Wall Street Journal’s story was based on a Freedom of Information Act request by anti-money laundering experts Alison Jimenez and Steven Kemmerling. While the majority of the SAR filings have been the safe variety, there were 313 Marijuana Priority filings, which indicate a client operates a marijuana business that violates state law or the Cole Memo guide-lines, and 1,300 Marijuana Termination filings, specifying the financial institution has closed an account due to marijuana ac-tivity.

WASHINGTON CREDIT UNIONSWashington State has been widely crit-

icized for taking a slow and suffocating

approach to the recreational cannabis mar-ket.

The licensing process has been too slow; the regulations have been too steep; the taxes are outrageous and competition with the unregulated medical market is un-tenable, critics have said.

However, while Washington’s regu-lations have been onerous for potential business owners, the system set up under Initiative 502 has allowed some financial institutions to cautiously enter the market.

Three credit unions have publicly ser-viced the cannabis industry: Salal, Numer-ica and O Bee.

Carmella Murphy Houston, vice-pres-ident of business services at Salal Credit

Union, said Wash-ington’s in-depth ap-plication process and complete seed-to-sale tracking require-ments of cash and product were two big factors in banking the industry.

Salal only serves the licensed, recre-ational marijuana businesses in Wash-ington. The medical market, as it currently

stands, does not have enough regulation to ensure the Cole Memo priorities aren’t violated.

Houston said other states currently don’t have the level of regulation that Washing-ton does, but the future of the industry will vary from state to state, depending on reg-ulations that are implemented.

“It’s kind of a niche market. I think for a financial institution to feel comfortable banking the industry, they would need to really delve into the ins and outs and really understand the industry and the state laws and regulations,” Houston said. “It’s not something you can dabble in a little bit. I think you have to go all in and really un-derstand it or not do it at all.”

Both Salal and O Bee Credit Union have established their own guidelines for set-ting up accounts with cannabis business-es. For O Bee, all state-licensed producer/processors are eligible for accounts, but licensed retailers located in counties that border Canada, Oregon or Idaho are not eligible. The border counties make it hard-er to ensure product is not being carried

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across state lines, said Jennifer Roberts, chief operating officer of O Bee.

“Producer/processors don’t have that restriction because they’re only selling to retailers, so it’s easier to say product isn’t being diverted over state lines,” she said.

Salal requires cash pickup and delivery services through a contracted armored car company.

It currently has about 70 marijuana-re-lated accounts, which makes up for about 20% of its total business accounts, Hous-ton said. At some point in the near future, Houston said Salal plans to offer some lending services on a very limited basis. Those loans would mostly cover commer-cial real estate and large capital equipment that is not industry specific, she said.

“And we obviously can’t take product as collateral,” Houston added.

Meanwhile, O Bee currently has about 20 accounts, Roberts said.

Numerica Credit Union did not respond to requests for an interview.

Both Salal and O Bee said the majority of applicants have been granted accounts.

Part of that is aided by the Washington State Liquor Control Board’s extensive application process, which both credit unions said they review prior to opening any accounts. They then perform their own due diligence to verify credit histo-ry, criminal background, source of start-up funding and more.

The Liquor Control Board application gives the credit unions “one beautiful package for us to look through and check everything off of our list that we’re very comfortable that each company that has been licensed by the Liquor Control Board is operating under the state laws well enough that we feel the federal guidance is complied with,” Roberts said.

Common reasons for rejection have been extensive criminal history and poor credit.

“What we look for is folks that have a good business background and financial acumen,” Houston said. “In this regulated industry, we want to make sure the busi-ness owners have the financial acumen to meet the rigorous standards. Someone’s historical way that they handled their fi-nances is a good indication of how they’re going to handle future finances.”

Salal opened its first marijuana-related account in July 2014, and it’s been refin-ing its process as the months have gone

by. The credit union first started serving only Western Washington businesses, but quickly opened its doors to businesses on the east side of the state because there was such a demand.

Roberts said she was surprised by the demand. She originally expected mostly businesses near the credit union’s Thur-ston County location to apply, but quickly discovered businesses looking for service throughout Western Washington.

Initially, O Bee was able to process applications within about two weeks, Roberts said. However, the Liquor Con-trol Board is so inundated with public re-cords requests that that process has been stretched to about six weeks on average.

“We’re doing the best we can,” Roberts said, “but the turnaround time hinges on waiting for those public records requests to be fulfilled.”

Meanwhile, John Comerford has been paying close attention to the banking sit-uation since I-502 was approved by voters in November 2012.

Comerford is a director with the Wash-ington Federation for Marijuana Busi-nesses, a 501(c)(6) trade organization that has been collecting data on the cannabis industry.

He said business owners clearly have a lot of concerns when it comes to banking, namely that it’s “not available and if it is available, it’s very difficult to access and

it’s expensive,” he said. The costs are high because banks and

credit unions have high compliance costs in order to service the cannabis industry and keep regulators satisfied.

MOVING FORWARDThe level of regulation in Washington

creates a challenge for business owners, but it might be a blueprint for future states to take the cash aspect out of the equation as they legalize marijuana. High levels of regulation help ensure product is not be-ing moved out of state, not contributing to criminal activities and not being sold to minors, which are some of the key sticking points of the Cole Memo.

Roberts said O Bee has already been contacted by several financial institutions in Oregon that are looking at banking in the cannabis industry.

“We try to keep a pretty close eye on what’s happening nationwide,” Roberts said. “This is just my opinion, but I think the momentum has built to a point where it’s not necessarily going to turn around unless something major in the next elec-tion cycle happens.”

Banking for the cannabis industry has undergone a rocky launch in Colorado.

Aside from MBank, there have been nu-merous banks and credit unions that have attempted to service the industry, but none

Taking the cash out of the cannabis industry is one of the big reasons banking is not just an indus-try concern, but a public safety concern.



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have been successful in implementing an ongoing program that openly works with marijuana businesses.

The Fourth Corner Credit Union, pro-claimed by Rolling Stone as “the legal weed industry’s first credit union,” is still waiting on federal approval to open.

Fourth Corner Credit Union did not re-spond to requests for an interview.

While it seems only a matter of time before financial institutions are more will-ing to service the cannabis industry or the federal government updates banking laws, that promise offers little in the way of help for businesses that are currently in oper-ation.

“Banking is lagging behind where the people and the market are,” Comerford said. “I think that’s really important be-cause the people who are doing all the work of production, processing and retail-ing need to have a financial backbone that offers them everything from transactions to lending.”

Comerford said there are dozens of community banks interested in being in-volved in the industry, but are stuck in a holding pattern due to concerns of federal compliance.

“A lot of people are waiting for addi-tional signals from the Fed,” he said.

And while public perception of canna-bis and a general mainstream acceptance helps, a true solution to the banking ques-tion might not be imminent. Not only does Congress seem hopelessly deadlocked on most issues, but the focus shifts more toward campaigning and away from gov-erning as the 2016 election cycle nears, Comerford said. That shift could be even more noticeable when it comes to a con-troversial subject like cannabis that still carries a certain amount of social stigma and political risk.

“When that happens, the slow boat gets slowed down to just a putter,” he said.

Despite the near standstill pace of banking options in the cannabis industry, Comerford remains cautiously optimis-tic that people recognize “the times have changed” and leaders will emerge.

“In the end, we’re going to benefit in ways that we can’t even anticipate,” he said. “A lot of that has to do with the real sleeping giant here, which is the industrial hemp industry, which I think is going to dramatically change our agricultural and industrial landscape.”


When I was asked to pro-

vide an update on the banking status of the cannabis industry, I thought that the article would be simple and straight-forward. De-

spite the Cole Memorandum of August 2013 and the FinCEN Memo of February 2014, which attempted to provide federal guidelines to financial institutions electing to service marijuana businesses, only a few banks and credit unions have opened their doors to the industry.

And much of the landscape has shifted recently. On March 10, Sens. Rand Paul (R–Kentucky), Kirsten Gillibrand (D–New York) and Cory Booker (D–New Jersey) introduced the Compassionate Ac-cess Research Expansion and Respective States (CARERS) Act in the Senate.

The centerpiece of the CARERS Act is to reclassify marijuana from a Schedule I drug like heroin, LSD and peyote, which are deemed to have the highest potential for abuse and “no currently accepted med-ical use in treatment in the United States” to a Schedule II drug. That would be an acknowledgment under federal law that marijuana “has a currently accepted med-ical use in treatment in the United States or a currently accepted medical use with severe restrictions.”

The second important aspect of the CARERS Act is the provisions within Section 6 which would create a safe har-bor for banks and financial institutions to do business with medical marijuana busi-nesses operating legally under state law.

On March 14, Congress went one step further by passing a 1,635-page spending bill which effectively ended the feder-al government’s prohibition on medical marijuana. The spending bill forbids the federal government from using any of its resources to impede state medical mari-

juana laws.Both the CARERS Act and the spend-

ing bill deal only with medical marijuana. Recreational marijuana is not addressed in either. Also, despite a potentially broad coalition of the members on both the left and right in Congress, passage of the CARERS Act is not likely to occur this year.

Still, these two events represent a sig-nificant shift in government attitude at the federal level. With 23 states having legalized some form of medical marijua-na and four having legalized recreation-al marijuana, the shifting voter opinion might cause more widespread movement concerning the banking of the cannabis in-dustry during the next three to five years.

Looking now at banks and credit unions in Washington State working with the marijuana industry, the OBU Credit Union of Tumwater is the most recent financial institution to offer services to producers, processors and even retailers.

OBU Credit Union is offering checking, deposit and savings services only to the industry. It has not begun offering loans to customers in the marijuana industry.

Other credit unions offering services in-clude Numerica in Spokane and Salal of Seattle.

Due to the current uncertain nature of the medical marijuana industry in Wash-ington State, none of the credit unions are providing financial services to the medical marijuana industry. Further, in general, the financial services are usually limited to depository services such as savings accounts, checking accounts and payroll. Traditional lending services remain very limited.

Hal Snow is a partner at Garvey Schubert Barer Law. He has more than 30 years of expe-rience counseling business owners in the areas of asset protection planning, wealth transfer and transfer tax minimization.

Banking landscape shifting with historic legislationBy Hal SnowCenterpiece of the CARERS Act would reschedule marijuana

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Despite growing support for legal-

ization of cannabis, federal law remains stagnant, making banks uneasy about doing business with cannabis companies.

The federal government has yet to enact an authoritative law that explicitly gives banks the blessing to do business with can-nabis companies.

However, the U.S. Department of Jus-tice’s guidance memo from August 2013 bluntly states that the federal “Cole Memo” priorities may be “affirmatively addressed … with a tightly regulated market in which revenues are traced and accounted for.”

It would seem, given the federal govern-ment’s concession that a tightly regulated and tracked marijuana market would help achieve its priorities, the next logical step would be to change the law in a manner that would give banks the assurance they need to do business with cannabis companies. This would allow cannabis companies to more easily track and account for all money coming in and going out.

In February 2014, the Department of the Treasury Financial Crimes Enforcement Network authored another guidance mem-orandum clarifying expectations relating to the Bank Secrecy Act (BSA) and cannabis businesses. This memo aimed to clarify how financial institutions may provide ser-vices to cannabis related businesses while upholding their obligations under BSA.

BSA requires financial institutions to issue reports that include information that is aimed to aid federal enforcement and further the objectives laid out in the Cole Memo, which are:

• Preventing the distribution of cannabis to minors;

• Preventing revenue from the sale of cannabis from going to criminal enterprises, gangs, and cartels;

• Preventing the diversion of cannabis from states where it is legal under state law in some form to other states;

• Preventing state-authorized marijuana from states where it is legal under state law in some form to other states;

• Preventing state-authorized activity from being used as a cover or pretext for the trafficking of other illegal of other illegal drugs or other illegal activity;

• Preventing violence and the use of fire-arms in cultivation and distribution of mar-ijuana;

• Preventing drugged driving and exac-erbation of other ad-verse public health consequences associ-ated with marijuana use;

• Preventing the growing of marijuana on public lands and the attendant public safety and environ-mental dangers posed by marijuana produc-tion on public lands;

• Preventing marijuana possession or use on federal property.

The 2014 Treasury memo urges financial institutions to consider key factors when conducting its due diligence for assessing the risk of doing business with a cannabis company. These factors include confirming whether the business is duly licensed and registered, review of the license application and ancillary documentation that was sub-mitted to the state to obtain its license, re-quest information from state licensing and enforcement authorities about the business and related parties, develop an understand-ing of the normal and expected activity for a cannabis business, including types of prod-ucts sold and customer base, monitoring of publicly available sources for adverse infor-mation relating to the business and related parties and monitoring for ongoing suspi-cious activities.

Under the BSA, banks are obligated to file Suspicious Activity Reports (SARs) re-gardless of state law. The institution must file a SAR if it suspects, or has reason to suspect, that a transaction conducted in-volves funds derived from illegal activity, is designed to evade regulations promulgated under BSA, or lacks a business or apparent lawful purpose. The last of these — “lacks a business or apparent lawful purpose” — is problematic for cannabis businesses, which are all unlawful under federal law.

Under the 2014 Treasury memo, banks are required to file SAR for cannabis busi-nesses, even if those businesses are 100% in compliance with state law.

The memo addresses this issue and lays out the varying levels of SAR filing.

The first level of SAR is “Marijuana Limited.” These must be filed by a financial institution that believes its client operates a marijuana business that complies with both the Cole Memo priorities and state law.

The next level of SAR filing is referred to as “Marijuana Pri-ority.” These are to be filed when a financial institution reasonably believes its client op-erates a marijuana business that impli-cates one of the Cole

Memo priorities or is in violation of state law based on red flags identified in the 2014 Treasury Memo.

If the financial institution deems it nec-essary — based on identification of red flags — to terminate the relationship with the marijuana-related business in order to maintain an effective anti-money launder-ing compliance program, it is required to file a “Marijuana Termination” SAR.

The red flags identified in the 2014 Trea-sury memo include some pretty arbitrary and discretionary observations. For exam-ple, if the business receives more revenue than “reasonably expected” given the lim-itations imposed by the state in which it op-erates, the financial institution should deem that a red flag under the SAR reporting re-quirements.

Clearly, this is problematic for both the institution and the cannabis business — what does the term “reasonably expected”

LEGAL PAGES

Marijuana businesses face extra scrutiny from banksBy Jana WeltzinFederal government memos provide guidance, but little else

UNDER THE BSA, BANKS ARE

OBLIGATED TO FILE SARS REGARDLESS

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mean? Surely Colorado’s market was not expected to be as robust as it was, but should that trigger a red flag? And what education and training are these institutions supposed to provide their compliance officers to aid them in identifying these red flags?

Overall, the 2014 Treasury memo pro-vides good guidance to financial institu-tions, but unfortunately, the guidance is just that — guidance. It provides no assurance of legal protection to financial institutions or cannabis businesses. Because marijuana is illegal under federal law, and there is no exemption for state law legalizing cannabis, guidance alone isn’t going to be enough for most banks to be comfortable doing busi-ness with cannabis companies. The guid-ance memos make for nice cocktail hour chit-chat, but when it comes down to legal-ities, the memos offer no binding authority, nor do they provide a legal defense.

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



Over the last few months I have had a

flurry of calls and meet-ings with friends and clients wondering if the recreational marijuana market is crashing and if they should get out now. It is likely too ear-

ly to tell how the market will end up in the long run, but I am confident that the current price fluctuations are a sign that the market is primed for a massive expansion.

I have read and heard a variety of estimates about what percentage of the overall marijua-na market is being fulfilled by the recreation-al market versus the medical or black market. Those estimates tend to range from as little as 2% to as much as 25%. Although these es-timates vary pretty considerably, what is not in dispute is that the high prices dominating the recreational market have stopped it from successfully competing with the medical and black markets.

At the outset of the recreational market, there was a tremendous buzz and very little supply as producers and processors were just starting to come online. Many of my clients’ processor-to-retail prices were in the $8-12 per gram range. Retail stores were selling rec-reational marijuana to the public for around $20-30 per gram. Of course these high prices were not terribly enticing to customers with options in the medical or black market where

prices range around $8-16 per gram.Since the licensing process began, produc-

ers have come online at a steady pace. These new businesses coming online combined with the October/November 2014 outdoor harvest, created a glut of supply in the mar-ket. This glut forced processors to dramati-cally reduce industry pricing. Most of my processor clients report their prices to retail stores have been cut in half. Many processors are now selling their smokable marijuana to retail stores for around $4-6 per gram.

This price reduction by processors led a handful of retail stores to follow suit and reduce their prices accordingly. Some recre-ational retail stores are now selling marijuana for as little as $10 per gram and those stores have reported massive increases in sales. Af-ter one of my retail store clients dropped his pricing, his store became nearly five times as busy and his monthly revenues went from around $100,000 to around $250,000. Even though he made less profit on each sale, his revenues skyrocketed because he made so many more sales. The average store is cur-rently making around $90,000 per month in revenues. Most of the recreational stores have not reduced their prices to pass cost reductions along to the customer, but they are behind the curve. They will most likely figure that out in the next few months or get trounced by their competition.

Despite the uncertainty that failing pric-es have brought, there are good reasons to

be optimistic about the current downturn in prices. Oftentimes, a downturn in a market can cause an industry to restructure and come out stronger than before. That is very likely the case here.

As the recreational marijuana prices find parity with the rest of the marijuana market, there will be a tremendous opportunity for the recreational market to grow in size and strength, maybe even tenfold or more. This will likely usher in a new level of market stability and strength that will benefit all li-censed marijuana businesses by creating far more reliable customers than ever before. In addition, competitive prices are necessary for the goals of marijuana legalization to be fully realized.

Let us not forget that one of the main ar-guments that led to the successful passage both legalization measures in Washington, Colorado, Oregon and Alaska was that legal cannabis is going to put the illegal market out of business. In order for the legal market to put the illegal market out of business, the legal market must be priced competitively. I predict that it will not be long before the recreational market will do just that — it will grow to become the only major market in the state by gobbling up the medical and the black markets alike. This is not going to be because of legislative changes, outlawing medical or law enforcement more heavily cracking down on the black market. Rather, this change will come just as legalization ad-vocates have predicted for decades — people will choose the safe and secure legal store over the black market if they offer similar prices. I believe this is finally materializing.

Chris Crew is the owner and senior attor-ney of THC Law Firm, which represents mar-ijuana businesses in Washington. He is also lead counsel for the Marijuana League.

LEGAL PAGES

Recreational market prime for a massive expansion By Chris CrewPrice fluctuations could lead to a stronger overall industry


Not a week goes by without a client

informing me that they have saved their im-portant brand names by registering each set of words with the Secre-tary of State as a trade

name. In reality, they have saved very little. A trade name (a.k.a DBA, assumed name,

fictional name or commercial name) is the name in which a company conducts busi-ness. When filing the business entity for-mation documents with the Secretary of State, a trade name can also be entered for a minimal fee that varies from state to state (e.g. $5 in Washington, $50 in Oregon). The registered trade name allows the entity to do the following:

• Open a bank account;• File a lawsuit;• Use on any official document;• Prevent others from using the identical

trade name in that same state.A trade name acts as little more than an

administrative function. It is especially useful when doing business as a sole pro-prietorship, which begins life with the le-gal name of its sole owner. For instance, if Mary Jane forms a catering company and wants to open the bank account and deposit checks in a name other than “Mary Jane,” then she will register a trade name such as “Mary Jane’s Last Dance Catering.” How-ever, Mary Jane is not protecting her cater-ing company’s name by these actions alone. To accomplish the goal of real protection, she must look to trademark law.

Registering a trade name may even cause significant problems. Upon registering a trade name, Mary Jane might believe that the name is now protected against all oth-ers. Not only does this provide no real pro-tection in commerce, but use of the trade name may constitute infringement of other trademarks and result in litigation.

A trade name simply cannot function as brand protection. This is the sole province

of a trademark law — to protect not only names, but also logos, packaging and other aspects of a brand that differentiates one’s products from all others. Trademark protec-tion also extends beyond identical marks, and also protects against all other confus-ingly similar trademarks. This is the type of protection that one is seeking when one registers a trade name.

Trademarks rights can accrue through common law, state registrations and federal registration. Common law rights exist in the region in which the mark is used in com-merce. However, the federal Lanham Act is the authority in which common law rights are enforced. Asking a federal court to en-force a cannabis-related common law mark can ultimately prove to be a dicey affair.

Therefore, an astute entrepreneur should consider brand protection strategies long before enforcement and protection of the trademark becomes due. A state trademark provides some protection, as well as mini-mal resistance for cannabis-related marks, as long as that state has legalized marijuana in some regard.

However, a state’s trademark protection ceases at the state border. This can create a barrier to future projected growth. Finally, a federal trademark registration is the best protection for a brand that one can achieve in the U.S. This type of registration protects a trademark for as long as it is used in com-merce, coast-to-coast, and against all other marks that are likely to cause consumer confusion.

Of course, registering a marijuana-re-lated brand with the federal government brings its own set of challenges. However, if successful, the rights established are well worth the difficulties.

Neil Juneja is the founder and managing partner at Gleam Law, a full-service canna-bis-law practice in Washington and Oregon. He is a registered patent attorney and focuses on intellectual property and cannabis law. He can be reached at [email protected].

LEGAL PAGES

The difference between a trademark and a trade nameBy Neil JunejaRegistering a trade name doesn’t provide much protection


The news of “mar-ijuana czar” Tom

Burns being suddenly fired broke the after-noon before the Or-egon Liquor Control Commission’s March meeting. He was just

three months into his tenure as the head of the state’s recreational marijuana program.

The meeting went forward as planned, with no official mention of Burns, but the OLCC’s surprising disavowal of its own main man on marijuana was the elephant in the room. By that afternoon, enterpris-ing journalists were reporting what had happened: Burns had been fired for leak-ing an internal OLCC policy document to a lawyer and lobbyist and then lying when asked about it by agency brass.

The leaked document contained a blue-print for bringing much of Oregon’s prodi-gious medical marijuana production under OLCC jurisdiction. Such an act should be prohibited based on the text of Measure 91, which states that the legalization of recreational marijuana would not affect the Oregon Medical Marijuana Program (OMMP). However, unlike Colorado’s Amendment 64, the Oregon measure is not an amendment to the state constitution. As a result, the Oregon Legislature is free to tinker with the legislation as it sees fit.

Two bills that would overhaul the pres-ent medical marijuana system, SB 936 and HB 3400, have been causing a ruckus in the state capitol. The proposed bills would subject medical growers and processors to new plant limits and reporting require-ments. Grow sites larger than a certain size — 48 total plants at most — will not be medical anymore, regardless of the intend-ed consumer. They would be regulated by the OLCC as part of the rec system.

Oregon’s legislators and regulators have concluded that the federal imperative to stem leakage into the black market re-quires reaching beyond the confines of the

rec market to recast the OMMP. This is the beginning of the end of Oregon’s current medical marijuana system, which is, com-paratively speaking, pretty unregulated, and cannot remain in its present form in the era of the Cole Memo and seed-to-sale tracking systems. This is, incidentally, the same problem being faced in Washington. The difference is that Oregon aims to “har-monize” the two systems before rec goes into effect, whereas Washington legisla-tors waited until rec was fully operational, which could be even harder to accomplish.

Another potentially huge change to Measure 91 concerns residency require-ments. Measure 91’s text contains noth-ing about residency requirements, a point that received much attention from com-mentators both before and after the mea-sure’s passage and led many to speculate that Oregon would take a different path than Washington and Colorado and not put such protectionist measures in place. Imagine, then, the surprise for attendees of the recent Oregon Medical Marijua-na Business Conference when state Sen. Floyd Prozanski (D-Eugene) announced his support for a four-year residency re-quirement as part of a retooled Measure 91.

The idea of residency requirements holds a certain visceral appeal among the mom-and-pop entrepreneurs who are the backbone of the cannabis industry, as evidenced by the populist cheers accom-panying Prozanski’s talk. However, the contours of the proposed requirement are unclear. Does it apply to ownership of a licensed cannabis business or to financing as well? Do 100% of the owners have to be Oregon residents or simply a majority of them? At press time, these questions remained unanswered, leaving business lawyers to start brainstorming strategies for working around any residency require-ments that come to pass.

One problem with residency require-ments is that they may be unconstitution-

al. Under a relatively unknown provision of the U.S. Constitution, the Privileges and Immunities Clause, which applies to the states through the 14th Amendment, it is unconstitutional for one state to dis-criminate against residents of another state when it comes to certain fundamental rights, including the right to earn a living.

In the 1948 case Toomer v. Witsell, the U.S. Supreme Court held that South Car-olina’s license fees for out-of-state shrimp boats, which were 100 times higher than the fees for in-state boats, were an uncon-stitutional violation of the Privileges and Immunities Clause.

The state argued that the discriminatory licensing scheme was necessary to pro-tect the state’s natural resources. Uncon-vinced, the court found that the state’s real goal was to create a monopoly for in-state residents. Sound familiar?

It is by no means certain that a Privi-leges and Immunities Clause challenge would overturn state marijuana residen-cy laws. For one, the clause applies only to individual citizens, not corporations or other business entities. Second, one would expect a state on the receiving end of a lawsuit would argue that the restric-tions on out-of-state participation were necessary to thwart leakage into the black market. Whether a court would find that reason more compelling than South Car-olina’s argument to exclude non-resident fishermen is hard to know. What is clear, though, is that a trial court would need to take evidence on whether it could be demonstrated that limiting ownership of — or investment in — cannabis business-es to in-state residents actually does thwart leakage to the black market.

The kerfuffle over marijuana residen-cy laws, like with IRC 280E of the tax code or the unavailability federal cannabis trademarks, likely will blow over once in-terstate cannabis commerce becomes a re-ality. At that point, states will lose any po-tentially compelling argument that would justify keeping one state’s residents from participating in another state’s cannabis economy.

Matt Goldberg advises cannabis busi-nesses throughout the Pacific Northwest at Cannabis Lawyers NW, LLC (www.can-nabislawyersnw.com). He can be found on Twitter at @Cannabis_Lawyer.

LEGAL PAGES

Oregon ponders question of keeping medical intactBy Matt GoldbergResidency restrictions could also be added to Measure 91

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As strain-specific products (flow-

ers, infused products, oils, etc.) become more popular, the impor-tance of understanding legal warranties and disclaimers becomes

vital. Where strain-specific products are being made available to medical marijuana patients, as opposed to recreational users, accurate labeling and warranties become an even higher priority.

Honest, non-misleading labeling, war-ranties and disclaimers still apply even in states that do not have formal cannabis-in-fused food regulations. And they must be properly affixed or otherwise communicat-ed as required by state law.

ACCURATE LABELINGUnder California law, honesty in label-

ing is required to be in compliance with federal law, as well as state food and food retail laws. This means all consumables (including infused foods, waxes, oils, etc.), even if made in a home kitchen, must be properly labeled. This requires producers and distributors to take a close look at the fine print. What does it say and what does it mean? Honest labeling means if you print something on the package, it should be true and not misleading. About a year ago, I met a business owner who was sell-ing cannabis-infused pastries with a pop-ular strain name on the package. When I asked him about the strain in his product, he informed me that they were not really using the strain on the label — the strain was just a sales tactic. This is misleading labeling.

Up until now, not much attention has been paid to labeling. However, as the in-dustry grows, and, for example, the devel-opment of high-CBD products increase in market share, labeling will become even more critical and more scrutinized.

Many are becoming aware of the trend

toward medical marijuana patients seek-ing marijuana strains that claim to be high CBD. These seeds, plants, tinctures and oils are becoming increasingly popular, and people will pay extra for them. For example, AC/DC, Catatonic, Charlotte’s Web and Harlequin strain-specific prod-ucts may command more than a product containing Juicy Fruit. This could open the door for unscrupulous people, seeking top dollar, to mislead regarding strains they are supplying to manufacturers or dispen-saries. This is serious. And it is advisable that suppliers and producers ensure their plants are genetically tested if a strain-spe-cific product is the goal. Likewise, man-ufacturers should ensure THC/CBD or genetic testing has been completed by a reputable lab.

Dispensaries should seek written war-ranties from their suppliers or producers, to ensure the end product has an accurate label affixed, and that the label describes the genuine product to the patient — who may be relying on the accuracy and consis-tency of this product as medicine.

EXPRESS WARRANTIES

Under California law, and likely under the law of your state, the legal doctrines of express and implied warranty are import-ant — and the fodder of more lawsuits than you might imagine. So, when it comes to the manufacturing or distribution of any product, these legal doctrines need to be on your radar. Express warranties mean an affirmative statement of fact about a prod-uct by the seller. That statement of fact in-cludes or conveys some sort of warranty. For example, a warranty that a product was produced without pesticides, that it is not misleading about being a particular “fa-mous strain,” that it was a “two-time Can-nabis Cup winner” (when it wasn’t), or that it will have a particular effect (and there is no data to support that claim); these are un-true statements and warranties for which a supplier can be held legally liable.

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

IMPLIED WARRANTIESProducts may have an implied warranty

of merchantability and/or an implied war-ranty of fitness for a particular purpose. If there is no warranty implied or intended, a well-worded disclaimer may be appropri-ate.

An implied warranty of merchantability may arise from the transfer of a product by someone who deals in that product as part of their regular business, or if they hold themselves out as having particular knowl-edge in regards to a product. So, if a pro-ducer or cultivator supplies medical mari-juana to a dispensary, claiming to know all about the flowers, the strain, etc., they are creating a warranty of merchantability.

An implied warranty of fitness for a par-ticular purpose may exist when the dispen-sary owners tells the supplier they are try-ing to provide strains for patients who are suffering the effects of chemotherapy, and the supplier says, “XYZ Kush is perfect!”

Based on expressed expertise, the dis-pensary owner then purchases several pounds, based on the implied warranty that XYZ Kush will help patients.

DISCLAIMERSDisclaimers in general are used to avoid

or limit liability. Sometimes a disclaimer is appropriate, but sometimes they are reject-ed by courts as a matter of law or public policy. Disclaimers are specialized — one size does not fit all. Discuss disclaimers for your products with your lawyer.

Labeling, warranties and disclaimers are as important in the marijuana industry as they are for any other product or service. Our focus here is primarily on the integrity of the plant and infused products, but they may apply to any product, ranging from that amazing electronic bud trimmer to the infused protein shake. The bottom line is to value integrity and honest communication, and to give our patients, and ourselves, the safest, most effective products possible.

Michele Brooke is an attorney in California who practices civil litigation and civil cannabis law (www.brookelawgroup). She is a member of Americans For Safe Access, NORML and the American Herbal Products Association.

LEGAL PAGES

Accurate labeling is more crucial than many realizeBy Michele BrookeMisrepresentation of products could open door for lawsuits


In a small Washing-ton town, a histori-

cal moment has taken place toward ending the federal prohibition on cannabis. The city of North Bonneville was granted a license

to open a marijuana retail store through a government-run corporation. This marks the nation’s first recreational marijuana license issued to a government-run entity.

This is historical because it is a robust step toward resolving the tension between federal and state marijuana laws.

On the one hand, the state is asserting its rights under the 10th Amendment to an even more substantial degree by actively participating in the sale of cannabis. On the other hand, litigation concerning the federal and state law conflict is likely to occur in the near future because local gov-ernment is not protected by sovereign im-munity and may be sued by private parties, regardless of the Department of Justice’s non-prosecution policy.

Though the exact outcome of any future litigation is largely unpredictable and dis-cretionary, the political attitudes toward the 10th Amendment implicated by legal-ization statutes are swaying toward the end of prohibition at the discretion of the states.

10TH AMENDMENTThe 10th Amendment provides that the

powers not specifically delegated to or prohibited by the federal government are reserved for the states or its people. It’s the source of power states rely on to unilater-ally enact cannabis legislation.

Historically, the 10th Amendment has endured years of diminishment by the in-creased federal breadth of power through domestic affairs legislation.

Recent legalization laws gave new life to the 10th Amendment. This is reflected

by the Obama Administration’s respect for state legalization efforts through a non-en-forcement policy. Although this policy was initially criticized by many 2016 presidential hopefuls, the general attitude among these likely candidates is greater respect for the 10th Amendment.

As clarity between the federal and state laws is lacking, the future of prohibition lies primarily in the interpretation of the 10th Amendment by the courts and the ex-ecutives that follow the current adminis-tration which seem to favor a more broad interpretation of the 10th Amendment.

THE POTENTIAL COMPETITORWhen the prohibition of alcohol was

lifted, state entities used the sale and dis-tribution of alcohol as a means of increas-ing their source of revenue. North Bon-neville is following this post-prohibition model by seeking to generate revenue through cannabis sales to support its budget and improve public services.

However, unlike the end of alcohol pro-hibition, the end of cannabis prohibition at this juncture will still require that states comply with federal requirements for ap-proval.

This means an increased likelihood of denial, as the members to government-run applications will be greater, increasing the likelihood of conflicts.

As long as government-run corpora-tions are subject to the same requirements as private ventures, it is not likely that the market will become flooded with govern-ment-run entities even if prohibition is lift-ed at the federal level.

SOVEREIGN IMMUNITY Since the federal government follows a

non-prosecution policy, it is unlikely that North Bonneville will face federal pros-ecution. However, private citizens may choose to challenge the North Bonneville endeavor.

Derived from the 11th Amendment, the principle of sovereign immunity bars law-suits against state governments in state and federal courts brought by private individu-als. This immunity is subject to certain ex-ceptions, including the non-application of the principle to local government, though states may modify this exception.

The first articles breaking the news of the North Bonneville endeavor mentioned the possibility of private citizens contem-plating a lawsuit. The desire to defeat the legalization efforts in the name of feder-al supremacy is a real factor. Recently in Colorado, several sheriffs have joined in a suit to challenge the legalization of mar-ijuana by Colorado, arguing that the Su-premacy Clause prevents them from up-holding state laws.

Though litigation in this area is unpre-dictable, clarification should be welcomed by the cannabis community. Clarity of law offers many benefits including increased

investment opportu-nities, as investors may more readily assess the risks in-volved with their in-vestments.

Litigation on these matters is inevita-ble. The only issue is when, not if. The

advent of a government-run corporation engaging in the sale of cannabis will likely speed up process, as the federal govern-ment is forced to define the outer limits of its non-prosecution tolerance and private citizens may take on the matter on their own, regardless of the federal non-prose-cution policy.

The political and legal atmospheres favor a broad interpretation of the 10th Amendment, which bodes well for the fu-ture of the cannabis industry.

Sean Badgley is a Washington State attorney who’s been working in the cannabis industry for more than two years. He has a degree in business economics, and currently works with Ashby Law Group

LEGAL PAGES

Cannabis legislation shows power of 10th AmendmentBy Sean BadgleyLawsuits still expected from those that oppose legalization

RECENT LEGALIZATION

LAWS GAVE NEW LIFE TO THE 10TH

AMENDMENT.

GROWTHE

ULTIMATE


Like any construction project, building the ultimate grow operation begins long before the first walls are erected or the first wires

are installed. It begins with proper planning and an excellent design, so when it comes time to set up a facility, don’t make the all-too-common mistake of rushing the early stages.

A version of this story was originally published as a three-part series in the May, June and July

2014 issues of Marijuana Venture. Since then, each of the three parts have been among the most-read stories ever published on Marijuana Venture’s website.

Due to the popularity of the original series and requests from readers, Marijuana Venture pres-ents a revamped version of story in its entirety, along with the original blueprint sketches.

The following pages outline the steps of build-

By Craig Allen

Planning out a commercial grow facility in advance can prevent problems in the long run


ing a top-notch, 30,000-square-foot growing fa-cility, including technical aspects of the build-out and environments of each major room of a pro-duction operation.

Among the limiting factors for marijuana producers, some of the most common include growing expertise, physical space and financing. When designing a growing space, all producers should keep these aspects in mind. By taking a

holistic approach to the system design, you can set yourself up for a much easier path to suc-cess. That being said, the mock system outlined here was laid out under the assumption that a group has a master gardener, a large and ideal-ly-shaped building and strong finances.

Not all groups will have everything, but prop-er planning can make a big difference in closing some of the gaps.


SITE LAYOUTIf saving money and increasing produc-

tion are important factors, then system design should be a top priority. This is true whether the goal of the venture is a large-volume commercial enterprise or a boutique, small-batch brand.

When designing a system, there are two important questions to address with the fa-cility: How big is the space and how much of the space is usable for growing canopy? Indoor gardens need area for more than just plant canopy; it’ll need aisle ways, places for key activities like transplanting or equipment maintenance and spill-over room for those times when plants get too big.

Some growers will also decide to work with vertical gardens to increase canopy size on a smaller footprint. The key here is not to squeeze yourself out of a place to work. A smaller, healthy crop will produce higher-quality product than a larger, out-of-control-system. That means a stronger business might have fewer lights in the air.

The design layout for this grow oper-ation needs to take into account factors like electrical constraints, drain locations, building insulation, bay door locations, ceiling heights and even the slope of the floor. But perhaps the most important part of the build-out has to do with labor.

The site layout can reduce the bottom line with lower staffing expenses. With cities like Seattle considering a $15 an hour minimum wage, marijuana business-es need to keep an eye on labor rates that could become the largest expense of a growing operation. One good way to do this is searching for processes that can be improved in order to save time. An assem-bly line — a well-organized flow of oper-ations where raw materials go in and fin-ished product goes out — can save many labor hours. Higher efficiency may be the key to a quicker expansion.

KEY COMPONENTSOnce the system layout is drawn up, do

a fair amount of research about sourcing the proper equipment to outfit the build-ing. Remember, living things are being grown. If a balanced environment is cre-ated for the plants, they will be healthier and have a higher yield. The major com-ponents needed to create this balanced en-vironment are electrical, lighting, HVAC and plumbing.

Many growers may not be used to the

large-scale gardening that recent legal-ization allows, and with that scale comes heavy-duty equipment. For example, in-stead of mounting flip boxes to use one ballast in two bloom rooms, commercial relays can be installed for half the cost.

The same tactic can be employed with commercial air-conditioning systems by installing automated louvers to manage the temperature in multiple rooms.

For the purpose of this mock system, the goal was to illustrate a proven busi-ness model that has demonstrated results and reliability. The system outlined here implements the style found in almost all high-output, professional growing appli-cations. Based on years of trial and error in the medicinal market, this model has been shown to create the optimal return on investment. There is something to be said

for innovation — but it’s probably best to reinvent the wheel in your spare time, and not with your entire budget.

SCALABILITY AND USE OF SPACEThis size grow operation will be out

of reach for boutique producers, and that means some folks will need to figure out good methods of scaling down and trying to increase efficiency.

When designing the growing space, plan to build out veg rooms to around 30% of the canopy. The goal of the veg room should be to keep a healthy supply of veg plants on hand, so the bloom room can be filled up and flipped the same day it is har-vested. One of the best ways to compete is to have no down time for blooming. If the bloom room is down for two weeks every

Veg 24400 sq. ft.144 1000w

Transplant (Veg 1)

2200 sq. ft.50 T-5

Bloom 11800 sq. ft.72 1000w

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Bloom 3

Bloom 5

Bloom 7

Bloom 2

Bloom 4

Bloom 6

Bloom 8

Pack

agin

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Trimming room Drying room Utilities

Mothers16 1000wM

aterial

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For the sake of this story, a grow facility between 20,000 and 30,000 square feet was mocked up.

cycle, one full cycle is lost each year — 25% of the profit, gone.

Another tip is finding ways to maximize the footprint of the building. Leased space is pricey and often under-utilized by grow-ers. One easy way to maximize the space is to combine the drying room with the trimming room. If the plan is for bloom cycles to finish once every two weeks, that can give enough time to finish trim-ming the previous harvest before the new harvest needs to start drying in the same space.

If the building has tall ceilings, a 3,000-square-foot canopy might be able to be grown in a 2,000-square-foot building. Stacking rooms is a great option for some growers, allowing easy sharing of equip-ment and power. Some buildings may not have enough height for two bloom rooms stacked on top of each other, but they may have enough space for a drying and trim-ming room, finished product storage or even cloning and small veg plants.

The best practice for designing the lay-out is to plan. And once planning has been completed, it should be scrutinized with critical eyes. Often small mistakes can

mean big problems down the line. It may be a good idea to hire an expert to over-look the finished layout before construc-tion begins. Hiring a consultant for a sec-ond opinion will be cheaper changing the floor plans halfway through construction.

Ultimately, if you shine lights on plants, they’re going to grow. But now the goal should be process improvement, making the facility more efficient, saving on labor and increasing output.

The conventional knowledge about pro-duction has hinged on one question: How much bud can be grown under one 1,000-watt high-pressure sodium grow light? It’s been a pertinent question in the medical realm for years, and it has helped advance many techniques for increasing yield. But, these days, the big constraint isn’t so much power availability or number of plants. It will be space. So, the real question now is: How much bud can be grown per square foot?

POWER The subject of electricity has mystified

growers for decades. Every grower must negotiate the available power, its loca-tion compared to the growing space, how

to run electrical lines and how to install outlets properly. The scale of commercial-ly-licensed growing operations means the end of “dryer plug” bloom rooms and the beginning of backup generators, thermal overload cutoffs and commercial relays. Pricey professional electrical installations are now the norm, but the benefits are safety and greater capability.

Some producers will have growing fa-cilities with power installed and some will have the opportunity to build out from scratch. If you plan to purchase or lease an existing structure, keep in mind that power is expensive to install; try to get a building with as much installed power as possible to save time and money. A project that requires new construction will cost more up front. However, in the long run, it may increase ease and efficiency. Not every-one has the resources necessary to build everything at once, so try to build while keeping future expansion plans in mind. Do not waste future profits removing and replacing systems have already been built.

ELECTRICAL NEEDS PER ROOMIt is important to plan out the electrical


Bloom A

Light 1

Bloom B

Light 2

Relay

Timer

For switching power between lights

For telling the relay when to flip between lights

Ballast

Ignites HPS or metal halide

lamp

240-volt power cord



Photo by Garrett Rudolph; Blueprint sketches by Craig Allen and Garrett

Rudolph

A commercial relay setup can be used to power two lights with one ballast.

needs for each room in detail. If you plan properly, you can avoid things like an ex-tension cord jungle. In this plan’s design, each room will need different amounts of power and power for different purposes. Some rooms will need a good deal of 120-volt, and others will need dedicated 240-volt sub-panels.

Cuttings will first be grown in the clon-ing/transplants room, or “Veg 1.” This room is designed to bathe the young plants in gentle light, allowing them to set their roots. This stage is probably the most im-portant for the future growth of the can-opy. Since young plants are very fragile, their growth can be stunted by many fac-tors, including too much light, heat, cold, nutrients, imbalanced pH, etc.

Providing the proper atmosphere for growth during this 10- to 18-day period will ensure that the adult plants are strong enough to produce dense flowers. T5 fix-tures are suggested for this room to give the plants that gentle and steady light they will need. As a general rule, T5s run on 120/240-volt power. Install a sub-panel with enough power to handle both the T5s for cuttings and some high-intensity dis-charge (HID) lights for the mother plants.

After transplants are rooted, they will make the transition to “Veg 2.” This room will generally have dimmable 1000-watt HID lights — either metal halides or

high-pressure sodium (HPS) bulbs. Metal halide bulbs are a good choice at this stage because their light output is about 25% less than HPS. This eases the transition for the still-fragile plants as they are moved from T5 lights in Veg 1 to HPS lights in the bloom stage. To encourage this transi-tion even further, it’s also recommend be-ginning the Veg 2 stage with dimmed met-al halide lights (around 600 watts), then increasing the output to 750 watts or 1000 watts after the first few days. The design shown in this article series calls for 144 1000-watt ballasts in Veg 2, so a hearty sub-panel will be needed to direct power.

Once the canopy in Veg 2 is lush, it is time to bloom the crop. In the design shown on Page 80, there are eight bloom rooms, and each bloom has 72 digital 1000-watt ballasts running high-output HPS bulbs. Double-ended HPS bulbs can also be used; they have a higher light out-put, but also have a higher initial cost and produce more heat.

Blooming plants with HPS bulbs is drastically more productive than any other lighting type, per watt. Some people will choose to use LED fixtures and plasma lighting options to bloom, but the initial cost is far more expensive than other fix-tures, although the long-term cost is miti-gated to a degree by lower energy costs.

Independent tests have demonstrated that most fixtures sold today cannot match

the production output of traditional HPS lighting. That said, HPS bulbs consume a good deal of energy, so each bloom room will need dedicated power.

One way to manage this is to bring pow-er in from the main panel to a sub-panel. This sub-panel will control all equipment — 120-volt and 240-volt — in the bloom room (this includes fans, controllers, de-humidifiers, air conditioners, meters and more). Off of this sub-panel, power will be drawn to a second sub-panel dedicated to ballasts so that they can be ground sep-arately. Digital ballasts are best installed with a separate ground from the rest of the electrical equipment because the electro-magnetic feedback from their operation can render other equipment inaccurate. For example, a nutrient meter can show incorrect readings if the power source it is plugged into has feedback from nearby ballasts. The last thing a grower wants is a false reading on a nutrient meter.

Outside of growing space, work light-ing and climate control systems will need to be installed, as well as some generic power outlets for tools and other gear. These needs should be fairly minimal and an electrician can help determine the best way to install those systems.

TRICKS OF THE TRADECommercial growers have discovered



Bloom ballast sub-panel

To control ballasts on independent ground for

less interferenceThermal

cut-off

Thermometer

Power from main

panel for each bloom

room

Main power panel controls all power to

the facility

Cuts power to ballasts if room gets too hot


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


some effective ways to save money and protect crops from equipment failure. For example, one of the most important and overlooked safety items in an electrical setup is a thermal power disconnect.

This is installed between the main panel and a sub-panel, and it’s controlled by a small thermostat in the grow room. In the event of a climate control failure — for example, if the air conditioner malfunc-tions but the ballasts are still on — the unit will automatically cut power to the entire system when the room temperature rises above a set amount. This will protect the crop from certain heat damage until the air-conditioning can be fixed and the room can be cooled down.

A backup generator system is another highly recommended piece of equipment. When the power goes out — and it will — essential systems must be protected to en-sure yield is not affected. Ideally, the gen-erator could power the entire facility so that there is minimal downtime. But more practically, generator only needs to handle 10-20% of overall power needs. The most important systems are cloning machines, minimal lighting in Veg 1 and Veg 2, min-imal lighting in the bloom rooms and min-imal HVAC.

Electrical components can be pricey, and one of the most expensive is wire. This is one reason why sub-panels are so prevalent in this design. Running one large wire to a sub-panel 100 feet away from the main panel prevents running 20 smaller lines that same distance. These savings will add up and leave more mon-ey for other aspects of the build-out. Once again, if the plan is to expand the grow facility over the course of a few months or a year, the space should be wired for what it will look like when it is completed; this will make expansion much easier and more cost effective.

Another item which can save strapped-for-cash producers in their initial build-out is a commercial relay that powers two HPS lights with one ballast. This works by switching the output of the bal-last from one lamp cord to another lamp cord. So let’s say there are five HPS lights in Bloom Room A, and five HPS lights in Bloom Room B; normally 10 ballasts would be needed to power all 10 lights, but that number can be cut in half by in-stalling commercial relays.



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Veg 24400 sq. ft.144 1000w

Transplant (Veg 1)

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Bloom 11800 sq. ft.72 1000w

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This image shows the setup of a bloom room with 72 1000-watt HPS lights

Now Bloom A can run five lights for 12 hours, then the power switches rooms and Bloom B has five lights on for 12 hours. There are some prepackaged products on the market called “flip boxes” that allow up to 10 or 20 ballasts to flip between rooms, but they are costly, ranging be-tween $50 and $100 per ballast replaced.

In large commercial installations, it is far less expensive to buy the components and hardwire ballasts and lamp cords to separate commercial relays which may only cost $12-15 per ballast replaced. But they do have to be wired, which takes more time than a plug-and-play unit.

This commercial production design needs a lot of power, and it will require roughly a 3,000-amp service from the electrical provider. The nuances are not the same as a 200-amp home panel, so it will be important to find a good electrician who is willing to help discover the best way to apply these methods to the space.

Getting the major systems like electrical correctly managed in the beginning will help build a strong business with good operational flow and product output. You now have just enough information in your hands to be dangerous, so bear in mind that you should still discuss your final plans with an experienced growing con-sultant. Through preparation, organization and processes, you can create balance.

INTERIOR SPACESIt has been said in the growing commu-

nity that you can tell the state of a person’s life by looking in their grow room. When attempting to create a business that pro-duces a large quantity of marijuana, the foundation begins with a well-built grow-ing facility. Each business needs to have a strong understanding of what it is trying to accomplish, and what helps it thrive.

Many things will impact the ability to plan and execute, including security, staff-ing, sales, branding, material sourcing and monitoring competition. All of these can be important for success; but once the facility is built and licensing is com-plete, generating revenue hinges on one key point: producing marijuana. The best way to do that is to create and maintain thoughtful spaces in which to cultivate it.

HVAC SYSTEMEach room of a grow operation will

have a different purpose and should be built keeping that purpose in mind. The conditions inside the grow and bloom rooms are the Achilles heel of an opera-tion; the best way to protect production is to build HVAC systems that maintain ideal conditions. Production rooms will need to have the proper balance of temperature, humidity and airflow.

Historically, the majority of medical

Veg 24400 sq. ft.144 1000w

Transplant (Veg 1)

2200 sq. ft.50 T-5

Bloom 11800 sq. ft.72 1000w

Adm

in, secu

rity,

bathroom

, brea

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room

, etc.

Bloom 3

Bloom 5

Bloom 7

Bloom 2

Bloom 4

Bloom 6

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Pack

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Mothers16 1000wM

aterial

prepara

tion

and

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20 ft.

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30 ft.

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This image shows the setup of a bloom room with 72 1000-watt HPS lights

growers have not relied upon complex HVAC systems to keep their rooms in appropriate conditions, but instead have used fans to vent in cooler air from out-side their grow rooms, while pushing the warm air out. This method has several drawbacks, from possible contamination by bugs and molds to the temperature and humidity fluctuations of the season. By using HVAC tools like air conditioning, a grower can keep the temperature within a 5 degree range all year and utilize grow-ing methods like CO2 enrichment, which can increase yield dramatically. Now, with larger-scale production facilities coming online, and the challenges of operating in a highly-regulated, highly taxed market, it is more important than ever to increase yield and maintain quality.

The main purpose of an HVAC system is to combat the heat generated by a light source — most commonly high-pressure sodium bulbs. This heat output is mea-sured in BTUs (British thermal units). Air conditioning systems are rated by either BTUs or tons of cooling, where one ton of cooling is equivalent to 12,000 BTUs.

As a general rule for air conditioning, a grow facility should feature 1.2 times the total BTUs that need to be cooled; a slight-ly oversized system will slow the wear on the system’s components and increase re-liability.

Traditionally an open-hood 1000-watt HPS lamp emits upwards of 3,800 BTUs of heat, but a vented hood should reduce that number by about 40-50%. Keep in mind, vented hoods will reduce heat, but there will be a 6-8% loss in light energy reaching the canopy (that light is absorbed by the glass on the vented hood). On the upside, decreasing air-conditioning needs by roughly half can reduce installation costs by tens of thousands of dollars. LED grow lights produce significantly less heat, opening the door to reduce cooling needs even further.

Air-conditioning systems this size are costly to install and operate, with an up-front cost between $1,000 and $2,000 per ton of cooling, depending on the equip-ment and installer. Many budgets will not be able to afford dedicated systems for all of the lights planned for an operation. A good way to reduce these costs is to split the 100 lights into two separate rooms of 50 lights, setting the lights to operate on 12-hour periods — 50 lights in Room A





turn on for 12 hours, then turn off, while the other 50 in Room B turn on. This way half of the cooling can be used by setting up dual-zone climate controls and ventila-tion. It’s also cost effective to insulate and drywall the rooms; R-19 insulation can save equipment a lot of working hours per year by maintaining the internal tempera-tures.

Along with temperature, controlling the humidity of a room can help acceler-ate the plants’ growth in all stages of life. Marijuana plants respond well to higher humidity during the cloning process and the early veg period, which means that veg and cloning rooms may require humidifi-ers depending on the climate and season. If left unchecked, humidity can also ruin a crop; for example, high humidity in late bloom can allow the growth of molds that will render the product unsalable. Through the growing process, plants will absorb and release hundreds of gallons of water, so the battle in most grow rooms will be keeping the humidity low.

Air conditioners are great dehumidifiers — in their cooling process the copper coils in the air handlers will condense water vapor into droplets. Along with the dehu-midification achieved by air conditioners, most rooms will need additional dedicated dehumidifiers.

Each room’s air conditioners and de-humidifiers will collect many gallons of water per day. For example, a five-ton air conditioner will condense an average of 15-20 gallons in 24 hours. If that conden-sation is captured and piped into watering bins, all that pure water can be recycled back to the plants.

Keep in mind that if equipment is kept clean, the water that is recycled will most likely be cleaner than the water from the tap. A well-run grow room might need only an additional 10-20% of outside wa-ter per day, which means a lower water bill and a lower impact on the local environ-ment.

Finally, the HVAC system will need to do something it was created to do — move air. Airflow is vital to a healthy plant can-opy; it will help prevent hot or cold spots and keep molds and mildews from seed-ing. It will also keep plants moving and vi-brating, creating stronger stalks and heart-ier vegetation, which will help the plants produce and support larger buds.

The ventilation system will cycle the

air many times daily, which offers an-other opportunity to impact the environ-ment by filtering and cleaning the air as it passes through the chambers. Applying a high-quality filter to the return air supply will help capture large particles like dust and sediment, keeping them off of the can-opy, which is good for photosynthesis.

A good filter can also snag mold spores, and the fewer mold spores in the air, the lower probability they will take hold in buds. Along with a filter, another way to clean the room’s air is to add ultraviolet light into the ventilation system. UV light can destroy mold spores if given adequate contact time. But be careful because it will also damage human eyes; make sure the

UV light is deep in the ventilation system.

GARDEN ENVIRONMENTEach room will require different inputs

for healthy plant growth. The clone room will need to have higher humidity and less light, while the bloom room will thrive with lower humidity and more intense light. Bear in mind that some strains may prefer different conditions.

The clone and transplant room needs warm temperature and high humidity. Young cuttings and transplants can’t effec-tively feed through their roots, so they feed through their epidermis (the plant equiva-lent of skin cells). The clone room should



The cooling needs of a grow facility will partially be determined by what type of lighting is used. LEDs, such as the ones used by Trail Blazin’ Productions in Bellingham, Washington (top), are cooler and more energy-efficient than HIDs (pictured below), but the initial cost is also higher.


also have good airflow to prevent mold from growing; but since young plants are still fragile, be careful not to agitate small plants too much. Clone and transplant pro-duction is a vital aspect of a production fa-cility as it can keep production on point or it can lose a lot of money through delays. The goal here is to produce your quota of healthy, rooted plants as quickly as possi-ble; a delay of even one week for a batch of clones can mean lost revenue of tens of thousands of dollars or more.

The veg rooms will not need to be as humid as the clone and transplant room, but the plants still benefit from higher hu-midity in this stage. Humidity levels of 50-65% are ideal. Along with the humid-ity, veg plants will benefit from warmer temperatures, so somewhere in the high 70s is great for a balanced environment. The plants will be seeing HID lights for the first time here so whether the room uses HPS or metal halides, keep the lights three feet or so above the canopy at first to prevent light and heat stress.

Once the plants are in the bloom phase, with the humidity should start around 50-55% and drop over the course of the bloom

to around 35%. This will allow the plants a good transition from growth into bloom-ing, and prevents mold from taking over in late bloom. Airflow is another means for controlling molds. Bloom rooms should have powerful HVAC systems in addition to fans blowing air over the canopy.

The bloom room’s HVAC system should be able to keep the room be-tween the high-70s and mid-80s. This temperature range, along with CO2 enrichment, will allow for in-creased photosynthesis. CO2 enrichment is a method of growing that supplements the environment’s natural CO2 level of 350 parts per million up to 1,200-1,500 parts per million. Providing the plants with more CO2 to use for photosynthesis can allow them to grow up to twice as fast.

GARDEN LAYOUTSIn a large-scale production facility, like

the 30,000-square-foot facility outlined here, it is important to keep labor — and therefore plant maintenance — to a min-imum. Producing many smaller plants,

rather than a fewer large plants has sev-eral benefits, including quicker veg time, which means an earlier harvest.

The faster you can bloom, the faster you can harvest and also cycle through plant

genetics. If it takes three weeks to veg and eight weeks to bloom, that means a new strain can be brought to market in about three months, and it also means the market can be supplied with

in-demand strains in healthy quantity. A good rule of thumb is to bloom as soon as the canopy is full. The more healthy, root-ed plants that are in veg, the more cano-py gets covered, so the quicker plants can bloom.

Many growers believe in “lolly-pop-ping” the stalks, which essentially means cutting off all growth except for the top 8-10 inches. Under-pruning like this pre-vents the lower leaves — those that don’t produce quality marijuana buds — from taking energy away from the more dense and marketable top colas.

Unfortunately, every time a leaf is cut,



BUILD THE FACILITY WELL AND BUILD IT WITH INTENT.

days of growth are being cut too. And days of growth means days of expenses. So if removing leaves can be avoided, while still getting full-quality production, the system has been maximized. With the price and demand for oils and extracts in-creasing rapidly, any plant material con-taining THC, including the sugar leaf and undeveloped buds, can challenge the value of high-quality trimmed buds.

A wise grower may choose to stop un-der-pruning altogether, decreasing labor and gaining in gross product. Growing smaller plants with a final harvest foot-print of one or two square feet will allow waste and delays to be minimized.

The layout of a large veg room should take into account the vast number of plants in it. A veg room might have enough plants in transition to supply three to four bloom rooms, which could be 2,000-2,500 plants. Organization will be vital, so calculate how many plants of different ages need to be in rooms at any time to divide the room into equally-spaced sections.

Painting lines on the ground between groupings is an easy way to save time. Dividing the room into 10-foot wide rows

will make it easier to install trellis netting.A benefit to growing lots of smaller

plants in the veg room is that their branch-es don’t need support to hold them up, so workers won’t be spending countless hours of labor connecting bamboo stakes to the branches. A narrow aisle every five feet or so will be sufficient space to allow for plant maintenance.

When plants are moved into the bloom room, they will grow quickly, possibly doubling in height within about three weeks. All of that growth will need some structure, and one of the best ways to pro-vide that structure is a trellis net.

When the veg plants are first moved into the bloom room, cover each 10-foot row with trellis nets that run the length of the room. Allow the plants to grow into the trellis netting so that it can support their flowers when they start to get heavy. Be-cause individual plants won’t need to be managed, the plants will naturally grow into every spare inch of light, minimizing labor and maximizing the canopy’s foot-print.

CONCLUSIONSDeveloping a large business in unchart-

ed territory is a daunting and complicat-ed proposition. At this junction in history, with many people and groups investing their life savings into this new industry, it is important for investors, business own-ers and growers to be conscious of their decisions.

All too often, people forget that the de-cisions made today will guide the next 10 years or more. For indoor producers, re-member that the core of the business is in-side the walls of the building, and more to the point, they are inside the boundaries of your decisions. Build the facility well and build it with intent.

The Ultimate Grow series was written to describe how to design and build a 30,000-square-foot facility, but the major-ity of producers are working with smaller grow operations. All of the ideas in this series can be used for any size grow. Re-member that a smaller facility that is run well can profit more than a larger, ineffi-cient facility.

Craig Allen is an experienced grower and consultant. He is the co-owner of Groco Sup-ply in Bellevue, Washington (grocosupply.com; 425-998-7212).



SEEDSCLONESvs.


Every marijuana cultivation operation is faced with the question of how to

get starter plants for each flowering cycle. On one hand, growers want to harvest and sell each crop as quickly as possible. The flip side is aspiring to have the cleanest, highest-quality plants possible.

That’s where the dilemma of whether to start from seeds or clones comes into play. Which is the better and why?

It turns out that both strategies have their strengths and weaknesses, and the choice between them depends on the par-ticular priorities of the managing organi-zation.

The industry stan-dard for cultivation operations is to in-clude a partitioned room for mother plants of the de-sired strains and an area where they are cloned and rooted on a regular basis, to resupply the flow-ering operation as needed. Clone pro-duction is typical-ly done with either aeroponic cloning machines or with more traditional slabs or plugs that are incubated on shelves with heat mats. Regardless of the root-ing method, cloning provides a quick and consistent way to keep flower harvests coming in.

Cloning from your own mother plant stock has several advantages over starting from seed. For one, it guarantees genet-ic consistency. All your flowering plants will be the same, whereas sprouting seeds often comes with unwanted variation from plant to plant. And second, the to-

tal amount of time spent from planting to harvesting is four to six weeks short-er with clones than with seeds. You don’t have to take the time to sprout and sex the plants before you can go into a 12/12 light cycle.

Clones are all females, ready to flower as soon as they are big enough.

Cloning has some shortcomings as well, and these are more significant for some growers than for others. For one, mother plants can acquire viruses and other infections over time that weaken the strain in some way. This is often at-

tributed to “genetic drift” in the culti-vation community, but there’s no sci-entific evidence for genetic changes in clones through the course of multiple generations. Many clone-only strains have been around for decades and are still going strong. If a strain is losing strength from one generation to the next, it’s almost cer-

tainly because it has begun to accumulate plant diseases.

These diseases are where the downside of cloning most commonly shows itself, particularly when clones are acquired from outside sources. Aside from workers bringing bugs in on their clothing, infesta-tions from dirty clones are the most com-mon way that gardens run into trouble.

A quarantine space is an absolute must for the clone acquisition process. Newly introduced clones should have a sepa-

Positives and negatives exist for both starting methods By Jennifer Martin

IF A STRAIN IS LOSING STRENGTH

FROM ONE GENERATION TO THE NEXT, IT’S ALMOST

CERTAINLY BECAUSE IT HAS BEGUN TO

ACCUMULATE PLANT DISEASES.

Photo by Oregrow

n Photography




rate room where they live for one or two weeks, under domes, with an eagle-eyed worker examining them daily for any in-sect activity, before they are allowed into the larger facility.

Anyone who has been growing can-nabis for more than a year or two has most likely encountered a wide range of pest problems. It’s worth doing anything possible to avoid infestations in the first place. Prevention is much cheaper and more enjoyable than ongoing abatement, especially in an operation that’s designed for continuous harvests, which most legal operations are.

This is where seeds become an attrac-tive alternative to clones. They are free of all infections, including all insects and systemic diseases, which can be a major relief to the growers. Starting from seeds rules out one of the two major ways bugs get into marijuana gardens. If you start from seeds and you can keep your site workers from bringing bugs from other gardens, then you’ve got a good thing going.

Seeds have another major advan-tage over clones — they produce larger,

healthier plants. Many growers don’t believe it until they’ve seen it with their own eyes, but the value of the taproot should not be underestimated. The first root to come out of a seed and penetrate into the medium has strength that no oth-er roots can match. It will help produce a flowering plant that’s 10-15% larger and more productive than a cloned plant of the same size. This improvement in yield helps offset the time loss that comes along with seed use.

Seeds also fit better into certain styles of growing. Many outdoor growers prefer seeds, because they favor natural tech-niques and are accustomed to a single growth cycle (with very large plants) each year. Seeds are also easier to transport and more affordable than clones. They have more genetic diversity, which can be a drawback, but it’s precisely that genetic diversity that is so important to the future of cannabis.

Not everybody needs to grow from seed, but hopefully some people will keep doing it, so that new and interesting phe-notypes continue to appear.

Biotechnology is also doing its share to make seed-based cultivation a better op-

tion for growers. Traditionally, seeds take four to six weeks to show gender, now in-expensive genetic tests can help weed out males as early as 10 days after planting. This is especially helpful in state-regulat-ed grow operations that have space and plant-number limits. The sooner you can get unwanted males out of a garden, the faster you can use that space for more valuable plants. If you have a genetically stable source of seeds, then starting from seeds and using a sexing test offers the best of all worlds — a bug-free, fast and consistent approach to ongoing flower production.

In the end, growers should try each and every approach to plant stock regenera-tion until they find what suits their setup the best. Any method that can save time without quality loss will win out over the long term.

Jennifer Martin is the winner of the 1998 San Francisco Bay Area Cannabis Cup, and is a pioneer in the US marijuana clone industry. She currently speaks at national conferences and consults for the legal cannabis industry. She can be reached through her website Mar-ijuanaPropagation.com.



Powdery mildew is a typical disease that can befall ornamental plants, and

it’s also one of the most devastating and common diseases that cannabis growers have to contend with.

Caused by a range of microscopic fun-gi, it’s easy for people to believe that the mildew is the same from plant to plant; in reality, there is a wide variation among the many different diseases associated with powdery mildew.

Based on the published research of Jan-na Beckerman, from Purdue University’s Department of Botany and Plant Pathol-ogy, the following is an account of the symptoms and disease cycles found to be typical of powdery mildew in urban grow operations.

SYMPTOMSTypically, powdery mildew has not been

known to be fatal toward its host, however

it is the disfiguration and mildew itself that will destroy a hard-earned harvest. For landscape plants, this might mean the loss of some of its beauty. However, for canna-bis that is meant for human consumption, a serious outbreak of powdery mildew could mean the loss of an entire crop.

In most cases, with the exception of some perennials, powdery mildews are plant specific. Therefore, the risk of cross-contamination between different species is low.

Powdery mildew can first be spotted by discolored leaves that defoliate and then die, or by disfigured shoots or deformed flower buds. The plant will usually turn yellow and will darken from the infection. On younger plants, common indicators of infection can include longer, malnourished stems, a shortage of leaves and leaf discol-oration.The powdery mildew that is easily recognized is just one of several forms of

the disease and just because a plant hap-pens to be free of lightly colored powders does not mean that the plant is free of in-fection. DISEASE CYCLE

For outdoor plants, the spring breeze helps the disease spread to the newer, tender plant tissues, usually the broad photosynthe-sizing leafs that are beginning to sprout up from the soil surface. The spores are asexu-al, meaning that every contact with the plant spores could result in another possible infec-tion on new crops the following year.

As the spores begin to reproduce over time, the leaves (in most cases) will begin to give off a white-to-light gray residue. This mildew can be common in cooler and more humid climates, like greenhouses or in ex-tremely dry climates like several styles of indoor grow operations.

The most common solutions to powdery mildew in landscaping plants has been to in-crease air circulation and light penetration for the infected plants. For cannabis, there are a wide range of chemicals that can be used, but growers are well-advised to take preventative measures before the disease strikes.

The Powdery PlagueOrnamentals, cannabis alike are prone to mildew diseasesBy Patrick Wagner

Powdery mildew infects several oak leaves.

Photo by Roger Griffith/W

ikimedia Com

mons

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The paradox of America’s history and its cannabis prohibition policy are

multitudinous, glaring and saturated in irony. Perhaps none is more protrusive than the rejection of cannabis-related currency by the Federal Reserve, because not only was America’s independence from England reliant on industrial hemp, but also because the raw material itself was used as U.S. currency for more than 200 years.

For thousands of years, including into the early 1800s, hemp was the foremost global business and industry, with its fi-ber moving virtually all of the world’s shipping. The world’s economy utilized and relied upon the countless necessities produced and derived from hemp.

Several books, including “The Emper-or Wears No Clothes,” by Jack Herer, chronicle the United States’ historic rela-tionship with hemp.

HISTORYAt Jamestown Colony, Virginia in

1619, America’s first cannabis law was enacted. However, instead of making the plant illegal, all farmers were mandated to grow “Indian hempseed.”

Similar compulsory hemp cultivation laws were enacted across the colonies into the 1700s. Hemp was considered legal tender in most of the nation from 1631 through the early 1800s. During pe-riods of scarcity, farmers could actually be incarcerated for not producing hemp. For more than 200 years, U.S. citizens

could pay their taxes with industrial hemp throughout the country.

Paper money was regularly of little use and value to the colonists, whose econ-omy often revolved around a barter sys-tem. The steadfast and universal demand for hemp, along with its uniformity and resistance to deterioration and value con-mpared to other raw produce made it a standard commodity in the developing country.

In 1776, governing officials described hemp as “a valuable economic commod-ity to colony and mother country alike,” as part of a concerted public awareness campaign.

Even then, neither England nor Amer-ica were able to cultivate enough hemp to meet their respective needs, and each had to import great quantities from Rus-sia, Hungary, Czechoslovakia and Po-land. In 1809, while John Quincy Adams was serving as the American Consul at St. Petersburg, Russia, he noted seeing “as many as 600 clipper ships flying the American flag, in a two week period … loading principally cannabis hemp for England … and America, where quality hemp is also in great demand.”

According to the 1850 U.S. Census, America was then home to no less than 8,327 hemp plantations — with a planta-tion meaning a minimum of a 2,000-acre farm. This equates to at least 16 million recorded acres of hemp cultivated in the U.S. — a number that doesn’t even ac-



By Joy Beckerman

HISTORY INTERTWINED

The U.S. has a long, complicated and hypocritical relationship with cannabis and industrial hemp

count for the tens of thousands of smaller farms growing hemp, nor the potentially hundreds of thousands of family hemp patches that were being grown across the nation.

All one needs to do is ponder the mu-nicipality names “Hempstead Coun-ty, Arkansas,” “Hempstead, Texas,” “Hemphill, North Carolina,” or “Hemp-field, Pennsylvania” to arrive at the con-clusion that industrial hemp was obvi-ously an exceedingly significant part of American life.

About 90% of all sails for ships were made from hemp (the word canvas is ac-tually derived from cannabis). Hemp has also been used for basically all rigging, anchor ropes, nets, shrouds and uniforms; 80% of all textiles were primarily made with hemp fiber through the 1820s; 75-90% of the world’s paper was made with hemp fiber until 1883, and leftover hemp scraps and clothing were recycled into hemp paper until that time (thus the term “rag” paper); 70-90% of all rope, twine and cordage was made from hemp until 1937, and nearly every city and town in the world had some type of hemp rope-making industry.

The most obvious ropewalk building that comes to mind is Faneuil Hall, also known as Quincy Market, in Boston, which was heavily populated with similar ropewalk buildings.

Until approximately 1800, hemp seed oil was the most used oil for lighting in America and the rest of the planet. It was second only to whale oil between 1800 and the 1870s.

All fine paints and varnishes were made from hemp seed oil and/or linseed oil for thousands of years. Ac-cording to the National Institute of Oilseed Products’ congressio-nal testimony against the 1937 Marijuana Transfer Tax Law, 58,000 tons of hemp seed were used in American paints and varnishes in 1935 alone. After the Mar-ihuana Tax Act passed, the hemp drying oil business was swallowed up by Du-Pont’s petrochemicals.

Surely this story of engineered inequal-ity cannot be told in full without sharing the nefarious role of multi-millionaire Andrew Mellon in cannabis prohibition. Mellon, who served as U.S. secretary

of the treasury from 1921 to 1932, was one of America’s richest men, paying the third-highest income tax in the country, behind only John D. Rockefeller and Henry Ford.

He was born into tremendous wealth and became an extraordinarily success-ful lumber and coal businessman. He

later joined, then took ownership of, his fa-ther’s banking firm, T. Mellon & Sons. Mellon assisted with the forma-tion of the Union Trust Company and Union Savings Bank of Pitts-burgh, which loaned

DuPont nearly 80% of the funds needed to grow its petrochemical enterprises. Mellon then expanded his own industri-al activities to oil, steel, shipbuilding and construction.

His financial backing also birthed enormous conglomerates involved with aluminum, industrial abrasives and coke. Mellon financed the refinery that grew into the giant Aluminum Company of America (Alcoa).

He partnered with Edward Goodrich




MARIJUANA WAS CLEARLY

THE SCAPEGOAT FOR HEMP.

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

Acheson in manufacturing the inorganic compound silicon carbide, a revolution-ary abrasive, and formed the Carborun-dum Company. And he created an entire industry by way of financing Heinrich Koppers, inventor of coke ovens that converted industrial sludge into coal-gas, coal-tar and sulfur.

Coke is a fuel with a very high carbon content. The more commonly used form of coke is manmade, derived from oil re-finery coker units or other cracking pro-cesses, and is known as petroleum coke or pet coke.

Mellon’s caustic petrochemical and banking wealth peaked to approximately $300-400 million in 1929 and 1930. And in 1930 — just seven years prior to the abrupt passage of the Marihuana Tax Act, and two years prior to the end of Mellon’s service as secretary — the Department of the Treasury created the Federal Bureau of Narcotics, now known as the Drug En-forcement Administration.

Also in 1930, Secretary Mellon’s then-nephew-in-law-to-be, Henry Anslinger, was appointed as the first commissioner to this new Federal Bureau of Narcotics. It was Anslinger who presided over the

late-night proceedings that culminated in the 1937 Marihuana Tax Act.

COMMENTARYMarijuana was clearly the scapegoat

for hemp, while the U.S. developed and glorified (with the help of social engineer-ing) new-fangled, inorganic inventions that were detrimental to the environment. There’s no soothing shade of lipstick to put on this industrialist pig of charade.

While the Federal Reserve allows for hemp commerce — a beacon of light in the darkness — it is sheer greed and the

superlative worst that capitalism bears which has created cannabis prohibition and the banking laws facing legitimate medical and adult-use marijuana com-merce today.

We must use our voices, our phones, our pens, our computers and our dollars to send the bellowing message to Con-gress that we will no longer tolerate this absurd theater.

Joy Beckerman is the president of Hemp Ace International and president of the Washington chapter of the Hemp Industries Association.



A tax stamp that allowed for the production of hemp during World War II.

Oregon is the future of

CANNABISThe Hughes Companies – Industry Knowledge and Legal Expertise

CALL TODAY

(888) 878-9108Contact us to obtain your FREE assessment

from an Oregon lawyer

[email protected]

In Washington State, we are making

progress toward a sin-gle regulated system where consumers can safely purchase can-nabis products from fully-licensed and

state-inspected businesses. While we Washingtonians think of ourselves as pro-gressive — giving new meaning to the Evergreen State — the truth is that nearly half of the country permits the medical use of marijuana. There are now 23 states plus the District of Columbia that have approved the use of cannabis for medical purposes. The range of regulations varies considerably from state to state, but the momentum toward legalization nation-wide is undeniable.

It is now, in these early days of a legal cannabis industry, that we must build a strong foundation for its growth. Its mat-uration out of the shadows and into the light demands it. Part of that effort in Washington has been devoted to the in-spection and testing of cannabis products to ensure safety, quality and potency with the goal of determining fitness for sale to the public.

These safeguards are critical to building public trust and ensuring accountability. Such safeguards also empower advocates of legalization and medical cannabis alike to make a stronger case for consumer safety.

One member of the Washington Can-naBusiness Association, Brad Douglass, is a Ph.D. organic and medicinal chemist with expertise in the regulation of health products.

In his role as scientific director at The Werc Shop, a botanical quality control and research laboratory in Bellevue, Washington, Douglass has been strongly encouraged by the positive benefits that cannabis has for a range of patients. Like many, he is also a firm believer in the

doctor-patient relationship and the value of not restricting the practice of medicine unnecessarily.

But as a scientist, and in his conversa-tions with regulators in Olympia, he has testified at public hearings and submitted letters to policymakers expressing serious reservations about labeling cannabis as a “medical” product while also treating it as somehow different from all other med-ical products. With-out minimal quality control and labeling requirements, it is impossible for ei-ther health providers or patients to make informed decisions about safety, consis-tency and efficacy. A regulated system committed to safety and understanding, for patients and all others, must account for the composition of the product. We already do this for the food found in our grocery stores. The same should be true for cannabis found in our medical access points.

The Werc Shop began testing medical cannabis five years ago with the purpose of helping to make safe, consistent and reliable medical cannabis available to pa-tients. Five years of cannabis testing data in The Werc Shop archives has revealed a few things. First, medical cannabis strains are often misidentified and mislabeled. For example, products offered as being “high in CBD,” a cannabis component frequently touted for its medical benefits, are commonly found to have low levels of CBD.

Sometimes these same products contain high levels of THC, which is regarded as the primary psychoactive component of cannabis. Such a situation makes it im-possible for health providers to reliably

recommend, and for patients to access consistent therapeutics.

Furthermore, The Werc Shop analyses have found that roughly 20% of the medi-cal products tested by its lab over the past five years do not meet the microbiological standards established for Washington’s recreational market.

This is not meant to suggest that the microbiological standards currently man-dated by the Washington State Liquor Control Board are perfect, because they are not. However, it does seem inane to accept that medical products should not at least meet those microbiological stan-dards established for products that are meant for infrequent use by healthy indi-viduals. For any perishable product, mi-

crobiological stan-dards are a means to ensure basic sanita-tion and safety prior to human consump-tion. Even the food we buy in grocery stores is tested for m i c r o b i o l o g i c a l insults, such as E. coli and Salmonella. Cannabis should be no different.

There is no place for a casual “why fix what ain’t broke”

approach to cannabis simply because of old ideas about marijuana use. As the le-gal framework surrounding cannabis be-comes firmly established in Washington and other states, many more individuals will begin to explore the benefits of can-nabis. Increasing the probability of pa-tient safety requires transparency and a willingness to identify and address issues with cannabis — right now.

It is only by shining light upon the bur-geoning cannabis industry that we can position ourselves as responsible citizens and leaders. We should strive to enact standards that will help protect patients and adult-use consumers alike while also supporting those conscientious produc-ers and providers that seek to make safe, consistent and reliable cannabis products available.

Vicki Christophersen is the executive director of the Washington CannaBusiness Association.

GUEST COLUMN

Test results emphasize importance of regulations By Vicki ChristophersenQuality control becomes even more vital for medical patients


IT IS NOW, IN THESE EARLY DAYS OF A LEGAL CANNABIS

INDUSTRY, THAT WE MUST

BUILD A STRONG FOUNDATION FOR

ITS GROWTH.

For the past two decades, email

marketing has been an important promotional channel for all kinds of business, big and small. Despite the wor-ry that the arrival of

social media marketing and mobile smart devices would make email obsolete, we are seeing that email marketing remains alive and well.

Companies are still receiving a substan-tial return on their investment with email and cannabusiness owners would be wise to consider implementing or increasing their email-marketing budget in 2015 and beyond.

So what is email marketing and why does it work?

Email marketing refers to sending mes-sages with the purpose of enhancing the relationship of a business or business owner with its current or previous cus-tomers, encouraging customer loyalty and repeat business, acquiring new customers or convincing current customers to pur-chase something immediately, and adding advertisements, special promotions and sales to email messages.

As the original online marketing vehi-cle, email still leads the pack because it works. Here’s why. First, email gives you complete control over the content of your message, including who receives it and when they receive it.

This control allows you to personalize messages and foster long-lasting custom-er relationships, which leads to repeat sales and referrals. Also, when you com-pare the time, effort and results of all the marketing vehicles, email is still the best bang for your buck.

Additionally, email marketing works because it is no longer just about email; it is about delivering value to your cus-tomers through informative content and helping them to engage with you through

your other marketing channels.Email marketing works especially well

for the cannabis industry because it is a mostly unregulated channel for business owners to get their messages across.

Unlike Facebook and Google, which restrict cannabis-related ads, permis-sion-based email marketing is wide open regarding pictures of cannabis, descrip-tions of different marijuana products and your overall message.

Of course, there’s more to email mar-keting than simply hitting the send button.

The most successful email marketing campaigns have the following three things in common.

• Permission-based: While it may be tempting to lift an email address from an online order or from your seed-to-sale software, if you are sending sales messag-es via email without the customer’s per-mission you not only put your reputation at risk with your customer but you risk being slapped by the Federal Trade Com-mission.

Because the cannabis industry is new and still slightly controversial, it is under a microscope and the last thing you want to do is violate the Federal Trade Com-mission’s CAN-SPAM Act of 2003.

The CAN-SPAM Act — a shortened way of referring to the Controlling the As-sault of Non-Solicited Pornography and Marketing Act — was a direct response to the rapidly-increasing number of com-plaints about email spam.

Instead of assuming your prospects and customers want to hear from you, simply ask permission. You’ll get the green light when you engage customers, provide a “wow” experience, and let them know the benefits of subscribing to your newsletter such as insider deals and expert tips.

• Loaded with great content: The best email campaigns aren’t built around deep discounts. Instead, they engage custom-ers through balanced content that features valuable insight and offers.

For example, a garden supply store could provide a monthly gardening news-letter with indoor and hydroponic garden-ing tips and a dispensary owner would do well sharing informative content about the ways in which marijuana works in the body and how the different products can help different ailments.

By providing valuable information, you will demonstrate your expertise and create a trusting relationship with your prospects and customers. As I’m sure you’ve heard before, people like to do business with people they know, like and trust.

Additionally, over-delivering value in the form of fresh, relevant and informa-tive content will help you avoid the one-way shouting dynamic that is a sure-fire way to turn off your customers.

• Easily read on a smart phone: Today more than half of all emails are read on a mobile device. Knowing this, consider the following five recommendations be-fore sending your next email marketing campaign.

1. Use a clean and simple design that is responsive and mobile friendly.

2. Write concise text that immediately gets to the point.

3. Use bold headings to break up your sections.

4. Choose a font that’s easy to read on a mobile device.

5. Avoid images that take a long time to download.

6. Be sure response buttons can accom-modate index fingers and thumbs.

As email continues to evolve it will still be the number one marketing tool for the foreseeable future. Because of its ability to engage customers on a one-on-one ba-sis, its less-restrictive nature than social media, its ease of use and its inexpensive cost, email marketing will give people in the cannabis industry more bang for their buck and provide a higher return on in-vestment than other marketing channels.

Alexa Divett is the co-founder and mar-keting director of Maya Media Collective (http://www.mayamc.com), an Oregon-based marketing and design firm that specializes in the cannabis industry. She and her team help brands achieve their goals through education, thoughtful design concepts and inventive mar-keting solutions.

GUEST COLUMN

Emails remain a strong technique for marketingBy Alexa DivettRise of mobile devices has changed the way people interact


There are a couple things we know

for certain about op-erating a company on the front lines of legal cannabis: It isn’t easy, and it isn’t cheap.

As an entrepreneur or executive in this industry, the demands on your finite resources seem endless. When you consider the risks of being un-der-capitalized in such a volatile market, it seems wise to trim costs wherever you can.

For many companies that means turn-ing to one of the countless job boards to search for talent. Why engage the ser-vices of a recruiter when a single job posting on Craigslist can yield hundreds of resumes?

It’s been said that time is money and nowhere is that more apparent than in a fast-paced emerging market like the can-nabis industry.

So the first thing to consider is how valuable your time is. Have you really considered how much time and energy it takes to find the right person to fill a key position within your company using an online job board?

If not, here’s what’s generally in-volved: First, you’ll need to go to the trouble of creating a detailed ad and job description, spelling out all your wants and needs without inadvertently violat-ing fair employment laws (which isn’t as easy as it sounds); second, you’ll need to decide which of the hundreds of job boards to choose from.

Do you use one of the highly-adver-tised knock-off services claiming to be the “CareerBuilder of Cannabis” or use the actual CareerBuilder?

Or would it be better to use one of those cannabis news websites or social networks that recently added a classi-fieds section that includes job postings? Or perhaps your local paper? No matter

which service you choose, you’re still only reaching a tiny fraction of the avail-able talent pool and hardly the cream of the crop.

Why is this? It’s because all the job/resume boards on the Internet combined only make up approximately 10% of the available talent pool at any given time, the so-called “active” job-seekers.

Most of these people are currently un-employed because they are the ones most likely to advertise the fact that they’re actively looking for work or motivated enough to frequent the job boards to see your ad.

The other 90% of the available talent pool is made up of the gainfully em-ployed and casual job seekers. These are the individuals that experienced recruit-ers have spent years of their lives learn-ing how to identify, qualify and attract to businesses looking to maintain a com-petitive edge. Whether they are casually keeping their options open or minding their own business, the most competitive

companies in the world have come to re-alize that this tends to be a far more desir-able pool of candidates than the 10% who are actively searching the job boards.

It’s also why the vast majority of desir-able positions are never advertised pub-licly.

Those positions are typically sourced by either an experienced in-house recruit-er or an agency the company contracts with to find talent. As you can imagine, the results of these two approaches are radically different — the latter is much easier for a hiring manager than attempt-ing to handle the entire process on their own.

When you add up the opportunity cost of everything that might have been done while you were digging through resumes, double-checking references, conduct-ing background checks and putting each candidate through all the stages of the interview and vetting process, it’s usual-ly cheaper from both a time and money standpoint to leave this chore to a profes-sional.

You still maintain the final decision, but are likely to attract superior talent with a lot less fuss and considerably low-er turnover.

According to the U.S. Bureau of Labor Statistics, employee turnover costs em-ployers anywhere from 30% to 200% of an individual’s annual salary.

When you look at it that way, engaging the services of a qualified recruiter is typ-ically less tedious, more rewarding and less costly than trying your luck on the job boards.

Don’t assume that this sort of profes-sional support is out of reach for your early-stage small business. You’ll most likely be surprised to learn just how af-fordable it is.

Given the value of your time at this critical stage in your company’s develop-ment, you’ll likely find that it’s far more costly to do it yourself.

David Murét is the co-founder and COO of Viridian Staffing. He has a diverse back-ground that includes everything from public policy and law to information technology, finance and business development and, as a veteran of multiple start-ups, appreciates the challenge of assembling the right team.

GUEST COLUMN

Don’t post and pray: Reach the rest of the talent poolBy David MurétMost of the best job candidates aren’t actively seeking work

HAVE YOU REALLY CONSIDERED HOW MUCH TIME AND ENERGY IT TAKES

TO FIND THE RIGHT PERSON TO FILL A KEY POSITION

WITHIN YOUR COMPANY USING AN ONLINE JOB

BOARD?


If you’re not using a website to attract

customers through search engines, you’re missing a huge mar-keting and sales op-portunity. Adding your business to locater

sites such as Leafly and Weedmaps or local listings like Google My Business is one step, but it’s only a start.

Relying solely on local search is like hanging an open sign in your digital win-dow and calling it a marketing campaign. That’s not enough in this competitive en-vironment.

You need to actively seek out and at-tract customers, and a website is the best way to do that.

But not all websites are created equal. Your site needs to be responsive and mo-bile-friendly. A responsive website adapts to whatever device it’s viewed on — smart phone, tablet, laptop or desktop — so that it looks good and works well on all screen sizes.

This point is critical for two main rea-sons. First, mobile search is growing ex-ponentially as more people access search engines using their smart phones. Second, Google recently changed its ranking al-gorithm to give preference to responsive sites. That means that if your site isn’t mobile friendly, you are losing valuable search traffic from the fastest growing traffic source on the Web. As mobile continues to grow in importance for both search and e-commerce, so will the op-portunities to connect with potential cus-tomers.

You can get the most from your respon-sive site by applying the principles of search engine optimization (SEO). SEO refers to a broad set of techniques for in-creasing site traffic and improving search engine rankings. This is the behind-the-scenes work that includes adding key-words to your page titles, headings, meta

descriptions, meta tags, content and URL structure. It also includes improving your authority online, which comes from in-bound links to your site, social signals, ci-tations and other references from trusted places on the Web.

A solid SEO strategy also involves reg-ularly adding useful content to your site to attract relevant visitors — those most likely to turn into customers. You do this by writing blog posts or articles that answer questions and provide infor-mation people are seeking with search engines.

The content you post also lets you share your expertise and perspective as a brand, so quality counts. For best re-sults, your posts should be at least 300 words and include keywords and phrases in the title and body of the text that people would use as search queries.

When you do publish content, include relevant images and videos to make it en-gaging and worth sharing. If you use so-cial media for your business, and we think you should, be sure to share your content through your channels while linking back to your website.

Gaining visitors is great, but turning them into customers is even better. A great way to do that is to capture emails and build your marketing lists. Remember that every address you gather is a poten-tial customer.

Use these lists to keep people informed about product releases, new services and other relevant news about your business. This helps you form connections with customers and separate yourself from competitors.

There are many good, inexpensive

tools to help you store addresses and send emails. Some, such as Mailchimp, are even free if you have a website and fewer than 2,000 subscribers.

All you do is add an email sign-up box in a prominent place on your site using a plug-in or other simple tool. You may want to offer free business information or other valuable content to entice people to share their addresses.

Finally, no solid SEO strategy is com-plete without analytics, and Google An-alytics is the recommended platform of choice.

It’s free, simple to set up and integrates with Google Webmaster Tools and other applications. The information it gathers allows you to track click-through rates,

responses to specif-ic offers, conver-sion rate of landing pages and the total number of sales and sales leads generat-ed by your site.

Be sure to take advantage of goal tracking (or conver-sion tracking). By setting up simple site goals in Google Analytics, you will be able to identify

information about your customers such as their location, demographic data, the type of device they used for their purchase, what pages they reviewed before convert-ing and much more. This invaluable in-formation will inform your decisions and help you create more targeted marketing plans.

Creating a website is not something you set and forget. It requires regular updates to coding and content as well as a plan for capturing business information. But the returns can be enormous. You’ll be able to adjust and adapt to market chang-es and customer demands quickly while also learning about your customers. All of which makes it easier to stay connected to them so you can be profitable in the long run.

Joel Caudill is the owner of Yabaseo, which provides Internet marketing strategies and services exclusively to the cannabis industry (www.yabaseo.com).

GUEST COLUMN

Turn your website into an online sales machineBy Joel CaudillIf customers don’t show, your business cannot grow


RELYING SOLELY ON LOCAL SEARCH IS LIKE HANGING AN

OPEN SIGN IN YOUR DIGITAL WINDOW AND CALLING IT A MARKETING

CAMPAIGN.

NOT JUST POT46 years experience

solving a wide variety of legal problems in

administrative, state and federal courts, including appeals.

LAW OFFICE OFJEFFREY STEINBORN

206-622-5117 [email protected]

A LETTER FROM THE EDITOR

The fight over resi-dency restrictions

is, to me, one of the more interesting de-bates taking place in the cannabis industry right now, both for the two most recent states

to legalize recreational marijuana and for those that are likely to end cannabis prohi-bition in the near future.

Two stories in this issue specifically address that question as it pertains to Or-egon and the implementation of Measure 91. Dispensary owner Meghan Walstat-ter talks about in her Living the Dream piece on Page 22. She supports residen-cy restrictions; her husband and business partner, however, does not. Meanwhile, at-torney Matt Goldberg addresses that same subject in his column on Page 72, noting that some business lawyers have already started “brainstorming strategies for work-ing around any residency requirements that come to pass.”

Like any good, objective journalist and ardent fence-sitter, I see both sides of the argument. I fully understand why Oregon and Alaska residents would fight to put up an iron curtain around their state’s borders. Keep big business out. Keep local dollars local.

But the flip side of stout in-state re-quirements is also true. Preventing outside investments mean more significant chal-lenges in raising venture capital needed to launch marijuana businesses, and un-der-capitalization dooms more start-up businesses than any other factor. This po-tential pitfall is even more critical when considering the exorbitant federal, state and local tax obligations the cannabis in-dustry faces. Remember, opening a can-nabis retail store isn’t like starting a bak-ery. You can’t walk into your local bank branch, show the manager your business plan and excellent credit history and re-ceive a small business loan.

Big business will join the cannabis in-dustry whenever it wants to. It has deeper pockets, more lawyers and bigger lobby-ing budgets than almost any individual. I know that idea terrifies a lot of people in the industry, and with good reason.

The “Green Rush” mentality has already driven countless business people — both from inside and outside the existing can-nabis industry — to concentrate efforts on Washington and Colorado’s regulated recreational markets, despite residency re-strictions being in place. The Washington State Liquor Control Board opened a one-month window for marijuana business ap-plications back in 2013. Based on numbers out of Colorado, about 2,200 applicants were expected for producer, processor and retail licenses, agency director Rick Gar-za told Marijuana Venture in a May 2014 interview. In the end, more than 7,000 ap-plications were submitted — triple the ex-pected number, despite an extremely small application window.

Imagine the rush Oregon or Alaska would experience if they opened the li-censing process to all U.S. citizens. Be-cause of its remote location, Alaska would probably remain somewhat isolated with only a medium-sized bump in outside investment. Oregon, on the other hand, would be flooded with investors, entre-preneurs and cannabis enthusiasts from around the nation.

Sleepy Southern Oregon could poten-tially become the Silicon Valley of the cannabis industry.

Naturally, most existing businesses are fiercely committed to holding onto what makes them special and unique, and there-fore profitable — much the same way an inventor covets a patent.

For Washington, Colorado, Oregon and Alaska, residency restrictions are a signif-icant topic of conversation. Mostly, I think that’s because they are the pioneer states that were willing to venture into the un-known territory of legalized cannabis.

In the long run (which could only be a couple years down the road, with the pace that marijuana is becoming mainstream), residency restrictions will be a moot point. Following the 2016 election, there will likely be at least six states that have legal-ized marijuana for recreational purpose — and maybe, depending on how things play out in the near future, that number could be as many as a dozen. By the time more than a small, isolated handful of states have ended the prohibi-tion of cannabis, nobody is going to care whether business owners or investors are in-state residents, the same way nobody cares if a restaurateur has been a local res-ident for more than a year before opening a steakhouse.

I’m not convinced that Budweiser, Phil-lip Morris and other wildly successful, billion-dollar empires are champing at the bit to get into the cannabis game. If they were, legalization may have occurred much sooner.

Yes, eventually some Fortune 500-type company will enter the marijuana arena. But by the time that happens, we’ll al-ready be living in a very different world than the one that exists right now. It would mean the end of marijuana prohibition at the federal level — and that’s a day many of us in this industry never believed would happen, even just a few short years ago. Now, it feels anything could be possible.

GARRETT RUDOLPHEDITOR

To close off the borders or not? An interesting debateEventually, residency restrictions will be a thing of the past

CorrectionsThe following are corrections from

the April 2015 edition of Marijuana Venture.

Rather than selling its products directly, Vaportek depends on its distributors and dealers. Those dis-tributors can be found at www.va-portek.com.

The Vaportek system doesn’t use filters. Its essential oil, dry va-por technology eliminates odors through molecular pairing.

Also, the correct spelling of the Vaportek media coordinator’s name is Sunny Schneider-Christensen.


Buildings/land availableMcDaniel Properties............................63Ninja Gardens.....................................73Okanogan County land for sale..........117

ConsultingU.S. Cannabis......................................40Hortistructure....................................119Clean Green Certified........................123

ContractorsHamer Electric.....................................25

Distributors/retailersGroco Supply.......................................15Indoor Tropics.....................................27502 Enterprises....................................49Hydrobuilder.......................................51Alternative Gardening.........................62North Coast Electric.............................73Growers Supply....................................91NW Garden Supply...............................93

EmploymentViridian Staffing.................................113

EventsCannaCon..............................................9Seattle Hempfest...............................100Northwest Cannabis Classic...............116

GreenhousesOBC Northwest....................................71Forever Flowering Greenhouses..........77Horticulture Services...........................81

Growing equipment/servicesTriQ Systems........................................61KesAir..................................................69Current Culture H20.............................93Phylos Bioscience...............................101B-Wave Technologies.........................111Vaportek............................................112

Heating/coolingIntelli-Choice Energy............................69

InsuranceGunning and Associates.......................65Premier Dispensary Insurance..............66

LegalTHC Law Firm......................................57Gleam Law...........................................59

KB Law.................................................85Gordon Thomas Honeywell Law........111The Hughes Companies.....................113Garvey Schubert Barer Law Firm........115DK Law...............................................117Hornecker Cowling.............................119Jeffrey Steinborn................................123

Lighting/electrical suppliesPowerbox..............................................1Bios.......................................................3Nanolux Technology.............................17Urban-Gro...........................................29Forever Green Indoors.........................53Illumitex..............................................91G8 LED.................................................92Eco Grow Lighting...............................104

Machinery Terpp...................................................12Eden Labs............................................63SRI Instruments...................................96Grasshopper Extractors......................111GreenBroz.........................................115Across International..........................130

MarketingBrandsy................................................95CannaBranders..................................119

Merchant servicesGreen-Bits...........................................39Jane Four20.........................................59U.S. Debit............................................86PayQwick...........................................103

Misc.Political Action Water...........................28Ross Andrew Winery...........................107‘Weed the People’..............................121Float Seattle......................................125

Marijuana retailClear Choice Cannabis..........................55

Packaging VC999....................................................7WS Packaging......................................39Maverick Labels...................................41DCG One..............................................71CoolJarz...............................................75VacuPack.............................................94First in Packaging...............................125Cannaline..........................................128

ParaphernaliaE-Blunt.................................................86

Producer/processorsCannaSol Farms...................................33Buddy Boy Farm.................................121Fairwinds Manufacturing...................123Sun Goddess Farms...........................126

Retail equipmentBud Bar Displays..................................77

SecurityCCTV Dynamics....................................31Building Security & Solutions...............45Armored Group...................................68Angler Fence........................................81

Soil/nutrientsDirt M.D................................................4Flying Skull..........................................11Miller Soils..........................................21Good Earth Organics............................23RX Green Solutions..............................83West Coast Horticulture.......................87Dutch Method...................................115

Testing labsConfidence Analytics...........................19The Werc Shop....................................45CannaSafe Analytics............................66

TrackingTraceWeed..........................................67

Trade/business associationsWACA.................................................97NORML..............................................105THC Plexus.........................................125

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