ENERGY-SAVING TECHNOLOGY / OUT-OF-STATE INVESTING / IMPACT OF BIG AGRICULTURE
M A R I J U A N A
THE JOURNAL OF PROFESSIONAL CANNABIS GROWERS AND RETAILERS
THE SECRETS OF
Make 99% pure
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High-tech commercial bud
production with a purpose
Wild medical cannabis
laws stifle industry
JULY 2016 $6.99
PLUS: ACCREDITED COLLEGE STARTS MEDICAL MARIJUANA TRAINING
West Coast Horticulture
A look at the science and
technology behind the industry’s
most sought-after concentrates
TREE OF KNOWLEDGE
Tech innovators bring a
variety of new products to the
grower emphasizes more
than just profits
Q&A with the director of hemp
documentary Bringing it Home
ABOUT THE COVER: Soulshine Cannabis has established
a mission to not only produce top-shelf flower,
as shown on this month’s cover, but also to give
back to community nonprofits like Emerald City Pet
Rescue. Photo by Garrett Rudolph.
6 | Marijuana Venture // July 2016
24 | Calendar
30 | Market Watch
153 | P.O.V.
159 | Ad Directory
34 | Have a Heart
36 | SPARC
38 | Etain Health
40 | ROAR
40 | Simplifya
40 | Thinner
42 | HighMax
42 | Procidic2
44 | Icarus Vi
44 | OG Chillum
46 | AgHeat
48 | Harvestdate
Medical marijuana program
struggles with low patient count,
Dope Media boss talks about
building a cannabis empire from
the ground up.
114 | The High Cost of Energy
124 | Traditional Agriculture
130 | Boutique Businesses
138 | Medical Marijuana Training
• Partnerships present a challenging
legal issue for business owners.
• A variety of financing options are
available for cannabusinesses.
• Does your business follow HIPAA
regulations? Should it?
18 | Message from the Publisher
22 | Letter to the Editor
160 | Bud Scores
Marijuana Venture’s goal is to provide the best information
possible to the legal, licensed, commercial marijuana business. Our
belief is that a great business publication will help professionals in
the industry create more efficient and profitable businesses.
8 | Marijuana Venture // July 2016
Greg founded Topics Entertainment
in 1990 and grew it to be the largest
privately held consumer software
company. After graduating from
Bellevue High School in 1975, he
enlisted in the Navy. He was honorably
discharged after serving from
1975 to 1979. He has four kids and
enjoys skiing, hiking, scuba diving,
sailing, biking and foreign travel.
After eight years as a newspaper
reporter, photographer and editor,
Garrett helped launch Marijuana
Venture in March 2014. He’s an
avid golfer, IPA drinker, sports fan,
workaholic with a deep love-hate
relationship with technology.
Lisa is a longtime advocate for
legal marijuana and feels fortunate
to be a part of the industry. She
especially enjoys working with and
getting to know our advertisers. If
you’re interested in getting your
message out and in front of this
new & evolving category, drop her
a line, we’re certain she can help
and would love to hear from you.
Aaron joined Marijuana Venture after
years of sales account management
in the construction industry
and management in the music business.
He enjoys all things outdoors,
playing music and causing trouble
with his young sons.
Resident avocado enthusiast and
Street Fighter II champion, Patrick
graduated from the University
of Washington with a degree in
communications in 2014. When he
isn’t making snarky quips around
the office, he works on editing, researching,
writing and the concept
of compound modifiers.
Chloé was born and raised in Wisconsin,
where she graduated from St.
Norbert College in Media Communications
and Graphic Design. In her
free time, Chloé enjoys photography,
woodworking, exploring the Pacific
Northwest and making incredible
grilled cheese sandwiches.
Adam has a passion for all things
outdoors, and has dedicated himself
to the cannabis industry since
2010, having worked in medical
dispensaries and retail shops. He
keeps his hands green by working
for a state-licensed cannabis farm.
His favorite color is green, and 2 is
his lucky number.
Lael is an award-winning journalist,
a licensed private investigator
and a University of Washington
graduate. As a journalist she
has written about crime, social
justice, culture and, most recently,
12 | Marijuana Venture // July 2016
Marijuana Venture seeks out well-respected experts in their fields to contribute
content and guidance for cannabis industry business owners and managers.
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.
HANAN B. KOLKO is a member of Meyer, Suozzi, English & Klein, P.C. He is co-chair
of the firm’s Cannabis Practice Group. He is also a member of the National Cannabis Bar
Association and its Amicus Committee, and has presented continuing legal education
programs on cannabis-related topics, including the ethics of representing cannabis clients,
employment issues in the cannabis industry, cannabis businesses and access to bankruptcy
courts, and how the interplay between federal and state laws impacts the cannabis industry.
LAUREN RUDICK represents investors and startup organizations in all aspects of
business and intellectual property law, specializing in cannabis, media and technology. Her
law firm, Hiller, PC, is a white-shoe boutique firm with a track record for success, handling
sophisticated legal matters that include business and corporate law.
WALTER STARK is the president of MSP Technology and a widely-recognized thought
leader in dehumidification solutions. He has more than 50 years of experience in the heating,
ventilating and air conditioning industry. During his career, he has won numerous awards,
including the ASHRAE Regional Award for An Energy Efficient Project and the New York
Governor’s Award of Energy Excellence. He was also featured in Popular Science magazine’s
“Best of What’s New.”
14 | Marijuana Venture // July 2016
Denver Consulting Group
A MESSAGE FROM THE PUBLISHER
Opening up new markets
Milder cannabis is key to broad appeal
All the doom-andgloom
by the naysayers
when marijuana was
legalized turned out to
be about as accurate
as the now-infamous
Iraq WMD predictions
made by the Bush administration. In fact,
from what I’ve read lately, the rate of use
by teens has actually declined in Washington
and Colorado since both states legalized
marijuana. Maybe this is a simple
case of street-level psychology at work:
Make something taboo and teenagers will
want it. Make the product readily available
at local, well-lit pot shops where
dads shop, and
teens will start to see
it as about as cool as
shopping at Kmart.
That’s the funny
thing about legal
weed: It seems to be
stuck in a place that’s
still trying to be edgy
but also accessible
and friendly. Welcome
to 2016: Pot
culture meets American
on. While we’re probably still many years
away from Frito Lay-style end-caps and
promotions in retail stores, the inevitable
slide into widespread acceptance and
consumerism will undoubtedly result in
some big changes to the cannabis scene.
In a recent issue of The Atlantic, Mowgli
Holmes of Phylos Bioscience compared
the current varieties of cannabis
to moonshine, saying that “breeding has
been inward-looking, making products
for stoners. Normal people want to try it,
but can’t because they get too high. Legalization
should lead to options more
like wine or beer.”
I couldn’t agree more.
Last summer, after being told that
shade leaf couldn’t get you high, I decided
to see if it was true. To my surprise, a
couple of hits gave me the same kind of
light buzz I remember from the crummy
Mexican pot we got in the 1970s. Drawing
a parallel to booze, I’d say the effect
was comparable to a couple of Miller 64s.
That suited me fine since I had work to
do, and didn’t want to settle into a couch
for five hours of deep thought while listening
to Mike Oldfield’s Tubular Bells.
I would love to see a “lighter” section in
a retail store that caters to novices and
those who don’t want to get completely
baked on Green Crack. My guess is that a
light — or low-THC section of cannabis
— would be successful for all the same
reasons light beer or wine works now.
Most drinkers don’t want to get smashed
on 151 rum! To make
this happen, store
owners — who, from
my experience, are
typically regular users
themselves — would
have to hire non-users
or only occasional
users to interact with
the potentially huge
number of people
who don’t want the
pot culture version of
Taking this line of
thinking further, you
have to wonder if it
would even make sense to start a magazine
called High Times today. Sure, it’s
been around forever and has published
a lot of great culture articles, but if you
drew another parallel to booze, High
Times would be called “Drunk Times.”
And the alcohol-based version of Cannabis
Cups would be contests to see who
could make the most potent bathtub gin
and get wasted the fastest.
I think we need to move beyond the
pot culture emphasis on potency, and
start thinking about marijuana in a more
consumer-friendly way. What we need
is a message that conveys “buzzed, not
baked,” and “simmered, not fried.”
Hanan B. Kolko
MARIJUANA VENTURE VOL. 3, ISSUE 7
Marijuana Venture (ISSN #2376-0710) is published monthly
by MJ Directions LLC. PO Box 1419, Renton, WA, 98057.
Phone: (425)656-3621. Website: www.marijuanaventure.
com. Copyright 2016 by Marijuana Venture. All rights reserved.
Reprinting, in whole or in part, is expressly forbidden
without written permission from the publisher.
For advertising rates, call (425)656-3621 or email Greg@
For subscription services, please call (425)656-3621, visit www.
marijuanaventure.com or email Editor@MarijuanaVenture.
com. 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 updated 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 educational 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.
18 | Marijuana Venture // July 2016
to the EDITOR
As fire chief of Red
Creek Volunteer Fire &
Rescue, I was disappointed
by the way your authors portrayed our
department. I would like to offer another
perspective on how cultivation businesses
are affecting our community and how
Colorado Leaf has subjectively misrepresented
our fire department’s actions.
When these commercial cultivation
businesses first began construction a
year and a half ago, they did not inquire
about the capabilities of our small volunteer
department or research the local insurance
regulations (just as they did not
perform due diligence in regards to water
and power restrictions). The letter I circulated
to Colorado Leaf and the other
licensed grows in our area was prompted
by questions posed by their respective insurance
companies. From the questions I
was fielding, I knew our department was
being misrepresented in regards to our
structure fire capabilities. We have no
structure engines capable of consistently
accessing these rural properties, limited
structure training, no breathing apparatus
and aging structure gear. Our department
is a wildland fire department and we fight
We have, on several occasions, attempted
to discuss our limitations with the local
cultivators, to no avail.
Members of my department, myself
included, have personally reached out
to these new residents to invite them to
meetings, fundraisers and trainings, including
Mr. Sprau of Colorado Leaf. We
were assured of their attendance and support
at these meetings. We did not receive
the courtesy of an appearance. Several
months later, we hand-delivered a letter
to each cultivator announcing a special
22 | Marijuana Venture // July 2016
meeting for the growers to explain what
we can and cannot do as a fire department.
We had agendas prepared, introductions
planned and our volunteer members present
for a meet and greet, and none of the
cultivators showed up.
Our department has made many efforts
to communicate with all of the new
grows, but we have been ignored by all
but a handful of these farms. A few of the
smaller businesses have helped us with
training areas, volunteers and events, but
only one individual representing the cannabis
industry has made a significant donation
to our department. The bulk of that
donation was put toward a fund to replace
one of our fire trucks for the community's
In response to the charge of being “held
for ransom,” Mr. Sprau should reread the
letter I sent to all of the cultivators. In
November, there were 16 licensed grows
in our area (now 22). I had proposed the
growers come together and divide the
total cost of upgrading our department
($172,000), for a contribution of $10,750
each. That is a big difference, and hardly
an unfair price for moving a commercial
enterprise into a fire district that was designed
In the 20-plus years that I have been a
student of firefighting, I am always surprised
how people become experts on
how structures burn, when they are the
one that built it. If any of the cultivators
had bothered to attend the meetings we
hosted, we would have explained how
real firefighting works, and not the fantasy
they see on TV. There are no “arbitrary
targets” here. The cannabis industry is the
only one sporting 100,000-square-foot
facilities in this area, and it doesn’t matter
what they grow. Soybeans, Christmas
trees or cannabis, they all present serious
challenges to our department when the
buildings are of large size.
In regards to their impact on the community,
when a multimillion-dollar business
moves into a pre-existing fire department's
coverage area and their only
contribution to the community is a water
hookup, yes, that can cause tension. This
area has always been sparsely populated
with only 217 homes stretched over
a 107-square-mile coverage area. Our
community has supported us for 20 years
on donations alone with no tax income
of any kind. They support us not only to
lower their own insurance rates, but for
the service we provide. The neighbors
surrounding your businesses donate money,
time, baked goods for fundraisers,
labor to wash fire trucks, skills to repair
our aging equipment, and all manner of
support … what has the cannabis industry
It seems the cannabis industry is far
more interested in “bottom lines” than
good relations with their neighbors. The
bottom line from the fire chief’s chair
is very simple: I will not risk the lives
of my volunteers by sending them into
a building for which they do not have
the proper equipment and training. We
asked for their help to obtain those
things, and they ignored us. What would
you have us do?
If this is the level of community responsibility
and generosity that your industry
represents, I feel sorry for you. People
move out to these rural locations to have
neighbors they can rely on, but what have
you offered to any of these residents besides
broken promises and bright lights?
RED CREEK VOLUNTEER FIRE & RESCUE
The Tacoma Dome hosts numerous
business events, like the Imperious
Expo, due to its convenient location
and accommodating amenities.
July 9-10: The National College of
Natural Medicine (NCNM) will be hosting
the Medical Marijuana Conference
on July 9-10 at the NCNM campus in
Portland, Oregon. The event will focus
primarily on educating health care professionals
about the medical uses and
properties of cannabis. The two-day
conference will feature several leading
clinicians and experts on topics like the
history, components and botanical agents
of cannabis. The conference is open to
the public with discounts for medical
students, NCNM alumni, physicians and
health care providers.
More information: career-alumni.
July 9-12: AmericanHort presents
Cultivate‘16 at the Greater Columbus
Convention Center in Columbus, Ohio on
July 9-12. The all-industry horticultural
trade show will host more than 120 educational
sessions throughout the four-day
event. The eight-acre show floor will be
home to various networking opportunities,
product announcements and vendors
from across the country.
More information: cultivate16.org.
'Braised and Confused'
launches at trade show
TACOMA, Wash. — Bringing together
30 cannabis industry speakers and more
than 100 exhibitors, the Imperious Cannabis
Business Expo will kick off its
inaugural two-day, business-to-business
trade event at the Tacoma Dome in Tacoma,
Washington on July 20-21.
Tickets start at $99 for single-day access
to all speakers and exhibits.
VIP passes include full access for both
days and a special dinner by “The Herbal
Chef” Christopher Sayegh, who will be
filming the pilot for his Apple TV reality
show, Braised and Confused.
Attendees can expect a broad range of
speakers and vendors at the show.
“From licensing and celebrity branding,
all the way to legal advice from lawyers
like Aaron Pelley,” show organizer
Eric Norton said. “It’s not just going to
be about lighting or outdoor grows — it’s
going to be about everything.”
Norton is no stranger to hosting B2B
events; he produces five shows a year for
the oil industry, and now he’s taken his
experience into the cannabis space.
“I had a big paradigm shift, personally,
because being from Texas there were all
the negative stereotypes against cannabis,”
Norton plans to turn the show into an
annual event with a focus on recreational
states, and hopes to expand into Arizona
More information: www.imperiousexpo.com.
July 16: Alaska Genetics and the
Alaska Small Cultivators Association
are holding Canna Fair 2016 on July
15, at the Land’s End Resort in Homer,
Alaska. The show features a variety of
guest speakers and employment services,
panel discussions, educational opportunities,
raffles and free gifts. Although public
consumption is illegal, attendees can
bring up to one ounce of cannabis to gift
or display to other show-goers.
Admission is $10. Attendees must be
21 or older. Sponsorships and vendor opportunities
More Information: www.aksmallcultivators.org/canna-fair-2016.html.
July 23-24: Maximum Yield will host the
2016 San Francisco Indoor Gardening
Expo at Pier 48 in San Francisco on July
23-24. The first day of the show is reserved
for industry professionals only, and the following
day is open to the public. The twoday
event will kick off Saturday with a VIP
seminar and expert panel discussion. Both
days feature an open vendor floor where exhibitors
and attendees can network.
More information: www.indoorgardenexpo.com/san-francisco.
24 | Marijuana Venture // July 2016
July 27-29: The Latin American
Medical Cannabis Conference, part of
the PROMED series, takes place July 27-
29 at the Crowne Plaza Hotel in San Jose,
Costa Rica. The educational event will
cover the fast-growing medical cannabis
industry in Latin America. With Costa
Rico, Mexico, Peru, and Argentina all
having medical cannabis legislation in the
works and recent legislation in Colombia
and Uruguay, the conference’s goal is to
promote understanding of the new medical
markets and ensure that quality legislation
is passed in Latin America and the
U.S. this fall.
More information: latinamericanmedicalcannabis.com.
July 30: The team at MJ Conferences
is launching the National Cannabis
Tour with its first stop on July 30, in Hollywood,
California. Bucking the cannabis
conference trends of high costs, stiff
competition and minimal ROI, the tour
is focused on providing education and
networking opportunities for licensees,
applicants, investors and policy makers
without the significant financial barriers
to entry. Tickets are available now.
More information: nationalcannabis.
August 6-7: The Indo Expo Trade
Show is opening on Aug. 6-7 at the Portland
Expo Center in Portland, Oregon.
The two-day expo opens exclusively to
industry professionals on Saturday, Aug.
6 and opens to the public the following
day. The show will host 250 exhibitors,
25 of which cater to international markets,
and more than 20 speakers providing
seminars and educational forums. A
career fair is being held on the second
day. Complimentary passes are being provided
to trade and industry professionals.
Tickets are available now.
More information: indoexpo.com.
August 6-7: Leaf Brand and Weedmaps
present the San Diego Cannabis
Conference and Expo on Aug. 6-7 at
the San Diego Convention Center. The
show features seminars from the Gridiron
Cannabis Coalition, panels on current
state and federal laws, and a panel
featuring female industry leaders.
The show will be home to 150 exhibitors,
educational workshops and business-to-business
Tickets are available now.
More information: socalccexpo.com.
August 19-21: Seattle Hempfest celebrates
its 25th anniversary Aug. 19-21.
The event spans three of Seattle’s waterfront
parks: Centennial Park, Myrtle
Edwards Park and the Olympic Sculpture
Park. The show continues to focus on
cannabis culture, politics and activism.
Attendance for the show has averaged
around 100,000 visitors in the past few
years. The 2016 speaker and performer
lineup will be announced soon. Admission
is free, and sponsorships and vendor
opportunities are available.
More information: www.hempfest.org.
September 7-9: The Cannabis World
Congress & Business Exposition will be
at the Los Angeles Convention Center on
26 | Marijuana Venture // July 2016
The fall event features a similar lineup
as its East Coast counterpart with a focus
on industry professionals, lawmakers
and entrepreneurs. While the show floor
opens Sept. 8-9, the educational track begins
Sept. 7. A variety of guest speakers
have yet to be announced.
More information: www.cwcbexpo.com.
October 5-6: Canncon, a scientific
organization dedicated exclusively to
cannabis testing and research, hosts a
conference in Portland, Oregon on Oct.
5-6. Not to be confused with the trade
show of a similar name in Seattle, this
two-day conference will bring testing
experts together with attendees who are
looking to learn more about testing processes,
cannabis science and research.
Topics will include sample preparation,
chromatography, mass spectrometry, terpene
profiling, contamination analysis
(pesticides, residual solvents, microorganisms
and heavy metals), genetics/
genomics, regulations, legalization, scientific
methods/standards and medicinal
cannabis. A venue for the event has yet
to be announced. Registration is available
More information: www.canncon.org.
October 13-14: The International
Cannabis Business Conference continues
its global event tour in Vancouver,
British Columbia, on Oct. 13-14 at the
Hyatt Regency. The event brings attendees
the latest information in business,
culture, advocacy and politics. The show
is different than other expos, because organizers
limit the number and types of
vendors allowed on the show floor. This
ensures a greater variety of vendors and
gives attendees plenty of time to see the
seminars. Tickets are available now.
More information: internationalcbc.com.
November 16-18: The Marijuana
Business Conference and Expo will hit
Las Vegas for a three-day, business-only
event that is expected to have thousands
of attendees, several hundred vendors and
some of the most well-renowned speakers
in the cannabis industry, including
dispensary owners, private equity leaders
and top lawyers. The show will be hosted
at the Rio Hotel & Casino in Las Vegas.
The general public is not invited to
Marijuana Business Conferences.
More information: mjbizconference.com.
January 28-29, 2017: The Hawaii
Cannabis Expo will hold its second
event on Jan. 28-29, 2017 at the Neal
S. Blaisdell Exhibition Hall in Honolulu,
Hawaii. This event is expected to be
similar to the 2016 show, which offered
attendees free education seminars, panel
discussions and keynote presentations
by industry leaders. Classes covering
growing, budtending, strain selection
and advanced cultivation tips were available
for a fee. Although the 2017 show
has yet to announce its official schedule,
tickets and sponsorship opportunities are
More information: hawaiicannabisexpo.com.
To submit an event for inclusion in the
Marijuana Venture calendar, email Editor@MarijuanaVenture.com.
28 | Marijuana Venture // July 2016
A look at business metrics from the legal cannabis market, with information
provided by FrontRunnerData.com and CannabisBenchmarks.com
National spot pricing by grow type
Indoor U.S. Spot Price
$0 - $1,500
$1,501 - $2,000
$2,001 - $2,500
$2,501 - $3,000
$3,001 - $5,500
Source: Cannabis Benchmarks
Outdoor U.S. Spot Price
Greenhouse U.S. Spot Price
30 | Marijuana Venture // July 2016
Sales percentage by day of the week
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Sales percentage by product category
Percentages based on sales
figures from Washington's
licensed marijuana retail
stores for the month of May.
0.3% Source: Front Runner
32 | Marijuana Venture // July 2016
Green lights and
glass displays fill
the Have a Heart
one of the chain’s
five retail stores
Have a Heart
Newest store should be a tourist hotspot
By Lael Henterly
SEATTLE — Ryan Kunkel was working
as a blackjack dealer in a shady card
room, before making the life-changing
decision to open the first Have a Heart
medical dispensary in 2011. By the time
Washington voters legalized recreational
marijuana in 2012, Kunkel was operating
As Washington moved toward legalization,
Kunkel began collecting taxes
on the medical marijuana he sold, having
heard that Colorado favored tax-paying
businesses when it began issuing recreational
marijuana licenses under Amendment
In the medical market, Kunkel made
enough money to dive seamlessly into
Washington’s retail market without any
funding from outside investors, but
missed out on the initial license lottery.
After scouring the state for a license,
he finally managed to open a marijuana
retail store in Ocean Shores. Now, he’s
about to open a store in Seattle’s Belltown
neighborhood. It will be the fifth
34 | Marijuana Venture // July 2016
rec shop in the Have a Heart family, in
addition to Seattle stores in Greenwood,
Skyway and Fremont.
Have a Heart Belltown is possibly the
most centrally-located shop in Seattle.
Situated in the cavernous space that once
housed the nightclub See Sound Lounge,
the retail store has an enviable amount
of floor space. Seattle’s downtown area
doesn’t have any cannabis shops, so the
proximity to tourist destinations bodes
well for Kunkel’s new location.
Have a Heart Belltown
is less like a
retail store and more
like an immersive
cannabis culture experience.
has a candy-colored
mural, and various
props include a seven-foot-long
glows red on one end.
The latest Have a
Heart location almost
Company: Have a Heart
Locations: Ocean Shores
and Seattle (Belltown,
Fremont, Greenwood and
Owner: Ryan Kunkel
Washington retail stores
didn’t open due to changes to Seattle’s
zoning laws. When Kunkel bought out
the nightclub that occupied the space, it
was far enough away from any restricted
entities, such as schools and parks,
which require a 1,000-foot buffer according
to state law.
However, the City Council reduced
buffer zones to 250 feet in Belltown,
making Kunkel’s shop too close to a
neighboring dog park. He petitioned the
council and the rule was ultimately adjusted,
allowing him to open.
“We had to do some crafty work,” Kunkel
said. “The City Council wanted to allow
it, but the dog park was prohibiting it.”
Although Kunkel has successfully
opened several rec
shops, it hasn’t been
without hurdles, including
letting go of
80% of his work force
from medical to recreational.
All Have a
Heart locations will
continue to serve both
and medical patients.
out as a highwater
High concept design comes to life in San Francisco
By Patrick Wagner
SAN FRANCISCO — Located at the
corner of Laskie and Mission streets in San
Francisco, SPARC represents an important
milestone for both the cannabis industry
and the roughly 800 patients who visit the
medical dispensary on a daily basis.
Erich Pearson opened the above-board
dispensary in 2010 with permission from
San Francisco city officials. Being the
first to cultivate and sell medical cannabis
with permits from the city inadvertently
made Pearson an ambassador for the entire
industry. It was a role the entrepreneur
and activist took into account while
designing the facility.
“I wanted it to be professional,” he said.
“I wanted it to be a place where I could
bring regulators and government officials,
and also a place where a person of any
economic class or social status could come
through and be comfortable.”
Pearson, like many dispensary owners,
36 | Marijuana Venture // July 2016
aimed to normalize the cannabis industry
in the eyes of lawmakers. But describing
SPARC merely as “comfortable” might
be a little understated. From the outside,
the dispensary looks perfectly at home in
one of the most tech-driven cities in the
world. Its neon sign hangs above the De
Stijl-inspired blue and off-white windows
running along the sidewalk, which leads to
SPARC’s front door.
Inside, the design
morphs into something
with stylish elements
such as a multi-tiered
ceiling and hidden
blue lights that stretch
the length of the dispensary
with the wood and
concrete walls. A neon-lit
bench lines one
Location: San Francisco,
Owner: Erich Pearson
and three indoor cultivation
wall of the dispensary. Vaporizers sit on
each table, and at the opposite end of the
sales floor, glass cases display flowers, edibles
“Professionalizing it was really the
driving force,” Pearson said. “We’ve certainly
seen a lot of folks motivated by
what we did five years ago. We’ve seen a
lot of amazing dispensaries come online
since. We’ve put together a great space,
but I’ve never considered myself to be a
Role model or not, Pearson definitely
helped usher in the modern era of dispensary
design. But what
will the company do
for an encore?
Pearson is planning
to open another
in the Lower Haight
neighborhood of San
Francisco, which, if
history is an indicator,
will be another milestone
in the cannabis
The design of all four
Etain locations match
the color palette of the
company logo and the
of a physician’s office.
Family-run business stakes an altruistic claim in New York
By Patrick Wagner
ALBANY, N.Y. — Etain Health is
ready to run, but New York wants it to
crawl. One of the five companies licensed
to produce and sell medical marijuana in
the Empire State, Etain has dispensaries
in Albany, Kingston, Syracuse and Yonkers,
as well as a 22,000-square-foot cultivation
and manufacturing facility capable
of serving 20,000 patients.
Inside the four dispensaries, patients
meet with licensed pharmacists behind
the red and black counter. The dispensaries
look and operate like doctor’s offices.
“There is a lot more skepticism in the
Northeast of whether or not this is a credible
medicine,” chief operating officer Hillary
Peckham said. “It’s not just a group
of friends that are trying to grow weed.
It’s people who’re trying to produce a
medicine for good reasons.”
Peckham said the company has taken a
different approach than most of the other
state-licensed organizations in New York. Although
the company operates as a for-profit
38 | Marijuana Venture // July 2016
business, many of Etain’s goals seem to
mirror those of a traditional non-profit.
“We’re very community-focused,” she
said. “We’re just trying to do the right
Etain Health makes numerous efforts to
enhance the communities where it operates,
including hiring local part-time employees
for its harvest
program. The company
also has a program
specifically for helping
women who had
previously retired or
left jobs to be stay-athome
moms return to
“It’s part of our
whole vision with
Etain to promote
Company: Etain Health
Syracuse, Kingston and
Yonkers, New York
Owner: Peckham family
said. “Any sort of direction
we can take to
support that and remain
good community partners is essential
for this industry.”
Promoting women in the industry
makes sense, considering women play
such a significant role within Etain. Hillary
Peckham’s sister, Keeley Peckham,
is the chief horticulture officer, while
their mother, Amy Peckham, is the company’s
“This is a huge victory for us, for women-owned
and family-owned businesses,
and for New York State!” the company
posted on social media after receiving its
Etain’s patient count
continues to climb
slowly, as New York’s
program has expanded
from just 51 patients
in January to nearly
4,000 in May.
Although the company’s
reach is limited
at the moment,
Peckham said she is
optimistic about the
steps the Department
of Health has taken to
expand the program.
Guardian Data Systems has developed
an enterprise resource planning (ERP)
platform specifically for the fast-growing
The ROAR software is designed to help
growers, processors and retailers track all
aspects of their operation. (ROAR stands
for Resource Optimization, Accounting
and Reporting.) Among other capabilities,
the software helps growers manage traceability
requirements, test results, nutrient
usage and energy consumption, while
retailers can manage inventory, review
business information through interactive
dashboards and forecast product demand.
“We’ve taken a mature, established ERP
platform and tailored it to the cannabis industry,”
Guardian CEO Lance Ott said. “We
have created a solution that alleviates
business management pain for cultivators,
processors and retailers in one of the nation’s
ROAR’s mobile platform is compatible
with computers, tablets and smart
phones, giving stakeholders the flexibility
needed to keep pace with business.
“This is a global ERP system tailored to
all parts of the industry,” Ott said. “It enables
cannabis-based suppliers, producers
and service providers
to focus on
than running a
Two of the nation’s
leading cannabis law
firms — Denver-based
Vicente Sederberg LLC
and California-based Greenbridge Corporate Counsel — are pairing up with
tech entrepreneur Marion Mariathasan to develop compliance software
Simplifya is software as a service (SaaS) that will assist cannabis businesses,
law firms, consultants, financial institutions and regulatory agencies
with monitoring licensee operations for compliance with state and local
regulations. The software is backed by the knowledge and expertise of
attorneys, such as Kelly Rosenberg, who served as counsel to the Colorado
Marijuana Enforcement Division for many years.
With a unique combination of legal expertise and software development
experience, Simplifya is producing an easy-to-use app for web, mobile and
“Simplifya aligns with Vicente Sederberg’s philosophy of advancing the
cannabis movement as we provide value to our cannabis industry clients,”
said Brian Vicente, Vicente Sederberg partner and Simplifya co-founder.
“By simplifying legal and regulatory compliance, we will enable clients to
achieve excellence in the market.”
Simplifya will launch for the Colorado market in July and will continue the
rollout to other markets soon thereafter.
More information: www.simplifya.com.
Farm to Vape now offers
one-gallon bottles of Thinner,
a mixing agent used to break
down concentrates and essential
oils into a stable liquid for
The Virginia-based company
does not manufacture Thinner
specifically for cannabis, but
says on its website that Washington
and Colorado customers
“swear that this is the best
possible solution to thin their
extracts and waxes for their
vape pens/wicking vaporizers.”
The one-gallon bottles of
Thinner have been designed
with commercial enterprises
in mind, allowing concentrate
makers to focus on manufacturing
the best products
for their consumers. Farm to
Vape’s manufacturing facility is
Wholesale, distribution and
licensing opportunities are
More information: www.
40 | Marijuana Venture // July 2016
Urban-gro is the sole U.S. distributor of Procidic2,
a fungicide and bactericide that is labeled
specifically for use on cannabis crops.
“Growers are grappling with the issue of protecting
their plants while still remaining compliant
with the industry’s fluctuating regulatory
landscape,” said John Chandler, Urban-gro’s
vice president of cultivation technologies.
“Procidic2 is the first cannabis-labeled and
legally approved pesticide product to protect
growers’ harvests and fight against common
fungi, specifically powdery mildew.”
According to Urban-gro, Procidic2 is labeled
and cleared for use on cannabis in Alaska, California,
Colorado, Connecticut, Delaware, Hawaii,
Illinois, Maine, Massachusetts, Michigan, Minnesota,
Montana, Nevada, New Jersey, New York,
Rhode Island, Vermont and Washington, with
Maryland, New Hampshire, Oregon and Washington,
D.C. nearing approval. The manufacturer
has begun the approval process with the Arizona
and New Mexico departments of agriculture.
The organic acids in Procidic2 fall under the classification
of GRAS (generally recognized as safe).
Urban-gro has formed an exclusive partnership
with Biobest, a Belgian-based global
leader in biological control of pests. Biobest’s
organic bio-control solutions help cultivators
grow a successful organic crop.
More information: urban-gro.com.
MaxLite has introduced its HighMax line of horticultural lamps
as energy-efficient replacements for 400-watt metal halide and
high-pressure sodium fixtures.
HighMax lights are designed to help plants germinate, develop
and flower by concentrating radiation in order to stimulate photosynthesis.
The 200-watt compact fluorescent lamps are offered
in two color temperatures (6500K and 2200K). The grow lights
are built to efficiently manage heat over a lifetime of 10,000
hours. The lamp body is vented with patented air gaps that increase
“MaxLite continues to be on the forefront of energy-efficient
technologies, including with traditional light sources,” product
manager Alex Truong said. “Our new HighMax lamps are specifically
designed to provide growers with the ideal lighting conditions
to improve the yield, quality and speed-to-market of their
MaxLite bulbs fit common mogul (E39) base fixtures and are
less than 14 inches long.
More information: www.maxlite.com.
42 | Marijuana Venture // July 2016
BIOS Lighting has introduced the new
Icarus Vi low-profile LED grow lights designed
specifically for vertical farming
According to the company, BIOS LED
fixtures deliver up to 70% greater PAR
photon efficacy and 50% more system
efficiency than 1.000-watt high-intensity
discharge lights. Icarus Vi LEDs are
just 1.5 inches tall and can be mounted
in smaller spaces than many similar fixtures
for more uniform PAR levels over
wide areas and multiple layers of production.
Icarus Vi fixtures include an optional
remote powering system based on
VoltServer’s Digital Electricity, meaning
they can be powered from a nearby climate-controlled
server room using optical
fiber cables. This approach can significantly
reduce equipment and labor
costs, and slash energy costs associated
with expansive air conditioning by lowering
grow facility temperatures.
“It is time to bring commercial crop
production out of the ‘purple haze’ and
into the white light, as BIOS broad white
spectrum delivers the highest PAR photon
efficiency along with clear cost benefits,”
said Sean Tegart, president and CEO
of BIOS. “Two-thirds of LED grow light
fixtures on the market use purple light,
which have no benefit above broad spectrum
light for plant growth and are far
less effective for visual crop assessment.”
More information: bioslighting.com.
OG Chillum Starter Kit
While many consumers take a certain
amount of pride in owning custom-made
glass pieces, there are just
as many who prefer simpler smoking
The OG Chillum display case is an innovative
new way for cannabis retail
stores and head shops to sell simple
The starter kit includes 100 four-inch
OG Chillum pipes, as well as a heavy-duty
acrylic display case, making it easy
for retailers to sell and replenish these
The display case is five inches wide
and 11.5 inches deep, while standing
less than seven inches tall. Each display
case features a simple dispensing
mechanism for customers to remove
one pipe at a time. Retailers generally
price the pipes between $5-7. The OG
Chillum is manufactured in the United
Custom printing is available.
More information: www.ogchillum.
44 | Marijuana Venture // July 2016
Outdoor cannabis growers in Washington, Oregon and Colorado
haven’t had to cope with an early autumn freeze — yet.
When one does hit, the losses could be catastrophic.
Fruit growers know the drill; they’ve experienced significant
crop losses due to frost. Growers protect large apple orchards
from frost and freeze using elaborate — and expensive — systems
featuring huge fans and diesel heaters that produce black
smoke. Unfortunately, the cost to install one of these wind machine
system is prohibitive for many smaller operations.
Luckily, there’s a more affordable and less fuel-intensive
system that is perfectly suited to marijuana farms. AgHeat
heaters offer growers an affordable alternative to the standard
diesel smudge pots.
The small heaters are plumbed together and fueled by propane
that circulates through underground piping or surface
hoses. Warm air rises from the pyramid-shaped heaters on cold
nights, protecting the plants from frost damage. The AgHeat
system works well as a defense against both frost and freezing
temperatures. When Oregon State University researchers tested
the propane heaters in 2006, the units outperformed both
shell casing heaters and diesel smudge pot heaters, lifting the
temperature 6-7 degrees up to 16 feet off the ground.
The AgHeat units work well by themselves, but they can also
be used in conjunction with a fan system to circulate the rising
warm air. Without fans, 30 to 40 heaters are needed to protect
a one-acre grow.
AgHeat heaters are easier on the environment than similar
products, too. The OSU study found that diesel smudge pots released
as much as four times more smoke than propane heaters.
The system isn’t cheap to install, but it’s more affordable than
its competitors and will pay for itself the first time it saves a crop.
More information: www.agheat.com.
46 | Marijuana Venture // July 2016
When Saagar Varu was approached about building a website
for a state-licensed cannabis producer, he began looking deeper
into the inner workings of Washington’s recreational marijuana
He realized the challenges of a system with more than 700
licensed producers and less than 300 currently licensed retail
When growers send an email to a retail buyer, it’s likely that
dozens of competitors have already done the same thing. Dropping
off samples might yield a better response rate, but retailers
are inundated with growers who stop by without appointments.
All too often, those samples are forgotten or ignored, meaning
wasted time and money for both parties.
Varu launched Harvestdate as a simple web-based solution to
connecting buyers and sellers through one easy-to-use site.
“A lot of growers know how to grow really well, but they
don’t know how or where to sell their products,” said Varu, the
company’s co-founder and lead developer.
The site allows licensed producers and processors to list their
available products. Each post can include logos, contact information,
product photos, strain information, quantity available
and, perhaps most importantly, laboratory test results.
“It’s the next best thing to a sample,” Varu said.
Varu focused on making the site user friendly. It had to be
something people could figure out how to use in a matter of
minutes, he said. Businesses can post products and manage their
listings quickly and easily. Potential buyers can sort products by
brand, strain, potency or distance, allowing them to find exactly
what they need.
Harvestdate is currently free to all state-licensed cannabis
businesses. Varu said he wanted to build a platform that could
help cannabis companies operate more efficiently, rather than
burdening them with a subscription fee or another monthly bill.
The site can be particularly valuable for processors, who are
constantly looking for enough raw materials to keep their machines
running and a steady supply of edibles and concentrates
on retail shelves.
More information: www.harvestdate.com.
48 | Marijuana Venture // July 2016
Growth by Design
–––––––– is ––––––––
Front Runner is Washington’s premier i502 business
intelligence website for recreational marijuana data
“You can’t afford NOT to have this information”
52 | Marijuana Venture // July 2016
Equipment used to make THC distillate is now available
for commercial cannabis processors
― ― ―
By GREG JAMES
Those paying attention to the rapidly evolving legal
marijuana industry are familiar with the “me
too” culture that follows the latest innovations.
New products are often hyped to death until
something else comes along to distract the predictable
hordes and repeat the pattern.
Often, the cause of the clamor is little
more than a new name or small evolution
in the industry. Rarely does anything
amount to a sea change.
However, the emergence of commercially
available equipment to make “The
Clear” — also known as golden distillate
or clear distillate — represents a poten-
www.marijuanaventure.com | 53
tial game-changer in the business, and a
big leap forward in both technology and
possible applications. For the purpose of
this article, we will refer to the product
created as THC distillate.
THC distillate is an odorless, tasteless
liquid created by refining hash oil — the
thick, viscous product that is extracted
from cannabis through CO2 or hydrocarbon
extraction or alcohol reduction.
In its most common forms, hash oil contains
THC concentrations in the 50-70%
Different methods and skill levels of
hash oil producers result in a finished
product that can vary greatly from one
batch to the next.
THC distillate, on the other hand, is
made through a process called molecular
distillation. Molecular distillation
has been around for decades, and is most
commonly used to separate various products
from crude oil. Gasoline, diesel fuel,
acetone, liquefied petroleum gas (LPG)
and many other products made from petroleum
are created using molecular distillation.
The process involves vacuum
distillation below the pressure of 0.01
torr. It is the separation, purification and
concentration of natural products’ complex
and thermally sensitive molecules.
Molecular distillation is characterized
by short-term exposure of the base liquid
to high temperatures by high-volume
pressure (around 1,024 millimeters of
mercury) in the distillation column and
a small distance between the evaporator
and the condenser, where fluids are in the
free molecular flow regime (the mean
free path of molecules is comparable to
the size of the equipment). In short, molecular
distillation creates pure extracts
that are stripped of any contaminants. In
the food industry, for example, fish oil is
purified to eliminate heavy metals using
It’s essentially the same process used
in the creation of spirits, says Hamilton
Foro, chief scientist at Root Sciences, the
exclusive North American distributor of
VTA molecular distillation equipment.
“With heat and pressure, you target
the molecules that are desired,” Foro
says. “In the same fashion that you
would distill vodka from mash, you can
distill pure cannabinoids from its crude
oil, leaving the undesirables behind.”
54 | Marijuana Venture // July 2016
Nenad Yashruti (left)
and Cory Balma
stand in front of Root
www.marijuanaventure.com | 55
to refine extracts
into THC distillate.
The same process that has worked in the
petroleum and food industries for decades is
now being utilized in the cannabis industry
to create THC distillate. Molecular distillation
is a further refinement of hash oil that
strips the raw product of impurities and terpenes,
resulting in a pure, potent, highly refined
and much more versatile end product.
THC distillate can be up to 99% THC.
Up until now, THC distillate has been
something of a mystery. Created only by a
few companies that had the equipment and
know-how to make it, most producers and
growers have had to outsource production of
THC distillate. With the equipment to make
the finished product now available, the ability
to create a pure cannabis extract is within
reach of most licensed cannabis growers and
Although the science behind the machinery
is complicated, Cory Balma, principal at
Root Sciences, says the learning curve is not
56 | Marijuana Venture // July 2016
“It’s actually fairly simple, and there’s not
a lot of hand-holding,” Balma says. “The
equipment works well, and someone can
learn how to operate it in a relatively short
period of time.”
The equipment used to create THC distillate
looks like something out of a college
chemistry lab (and many college chemistry
labs do have advanced distillation equipment).
The basic principles behind the creation
of the pure distillate are straightforward.
“The process includes a heating, vapor
and condensing phase, and ultimately can be
achieved in a number of ways,” says Derek
Houston of Helderpad, another company that
sells equipment used to make THC distillate.
“The differences in equipment and specific
processes change the production capacity
and overall quality of the oil.”
From a practical standpoint, the reason a
pure extract is a potential game changer is
easy to comprehend: Its odorless, tasteless,
highly refined, super-potent qualities mean
that it can be used in a vast number of products
and applications. For example, edibles
can be manufactured without the cannabis
flavor some consumers find unpleasant; vape
products can be made with or without added
flavors, depending on preference; medical
marijuana products can be created with more
accurate dosing and guaranteed pure ingredients.d
Above: The jar on the left contains 200 grams of pure THC
distillate; the middle jar is filled with terpenes that have
been removed from cannabis extract through molecular
distillation and the jar on the right is winterized hash oil.
Below: Root Sciences utilizes German engineered VTA
processing equipment to handle molecular distillation.
At a glance
For more information on “The
Clear” and the equipment used
to create it:
Suspended Brands/Root Sciences
58 | Marijuana Venture // July 2016
Tree of Knowledge products are on the cutting-edge of cannabis
― ― ―
By JOY BECKERMAN
There is nothing more inspiring than purpose-driven
One shining example is Tree of Knowledge,
which combines the motivation to heal
with applied science and business acumen.
Co-founders Brian Main and Michael Caridi
break into smiles when describing their EVR line
of hemp-derived CBD products and the cutting-edge
technology they’re developing (see sidebar).
TOK’s product line includes premium
hemp-derived CBD oil, tinctures,
capsules and vape pens, all of which are
produced under the highest manufacturing
standards. Verified lab results can be
accessed by a QR code, allowing consumers
to view details about the precise
lot and batch of the product they want to
The EVR products are derived from
60 | Marijuana Venture // July 2016
IF A COMPANY
WANTS TO BE
YEARS FROM NOW,
THEN THERE MUST
BE A STRONG
PRESENCE IN THE
European industrial hemp cultivated
through time-tested methods and
processed under stringent regulations.
All products are inspected and
lab-tested prior to shipment. Cannabinoids
are organic compounds that
can break down or degrade if not
stored properly, so all products are
analyzed again when they arrive in
the United States. TOK has U.S. and
international distribution agreements
in place, and its products can be purchased
TOK is far more than just a
business venture. Main, a Northwest-born
veteran and entrepreneur,
met Caridi, a Northeast business development
virtuoso, in 2010. They
worked together on several real estate
and investment projects, including
the modernization of a hydropower
plant in Montana where they
installed new generators in existing
In late 2010, Main was approached
by a group looking to explore cannabis
industry endeavors in New York.
Main had already begun to focus on
the non-euphoric aspects of cannabis
after experiencing a horrific car accident
that left him with pins in his
shoulder and legs. He refused to rely
on opioids, and years of living with
the pain and severe headaches from
The Tree of Knowledge vending kiosk
acts as a self-service cashier that
reduces wait times and clerical errors.
62 | Marijuana Venture // July 2016
Tree of Knowledge
testing (genetic enzyme
This is a cheek swab test kit (sometimes known as a
gene SNP kit) for health care practitioners that analyzes
the genetic disposition of the patient for metabolic
data. This information provides an indication of
how the patient will metabolize various cannabinoids,
including how various cannabinoids react with other
medicines being taken by the patient. Interactions
between certain medicines and cannabinoids can be
problematic. Monitoring the rise or fall of enzyme levels
can aid in the diagnosis of a variety of conditions.
Knowing the metabolizer status of a patient helps
practitioners in dosing and choosing a pharmaceutical
strategy more effectively than the trial-and-error
dosing models that are common practice.
TOK is the exclusive licensee of this patented technology
for CBD from cannabis. Nasal sprays are an effective
delivery method, especially when rapid absorption
is necessary, such as during an epileptic seizure. Nasal
delivery may also assist with challenges related to poor
bioavailability and gastrointestinal tract distress, while
also avoiding the first-pass metabolism in the liver.
TOK has a licensing agreement for a state-of-the-art
identification verification system created by a team of
software developers in both the financial compliance
and casino gaming arenas. The kiosk technology was
created for the rapidly emerging sector of self-service,
where terminals are capable of conducting transactions,
but unable to verify government-issued identification.
TOK’s kiosks also use biometric markers to enable
a repeat use account to meet regulations.
those injuries left him feeling rusty and aged before his time. He
found relief in cannabis, but as he grew older, he could no longer
tolerate the euphoric effects of THC.
As Main explored CBD and non-euphoric cannabinoids to treat his
own pain, he also began to study the effect of CBD on veterans suffering
from PTSD, another condition that hits close to home for him.
As Main and Caridi became increasingly encouraged by the peer-reviewed
research and anecdotal evidence, they developed a joint mission
to provide high-quality CBD products and to develop systems
that will benefit the cannabis industry through technology.
“Because we believe in what we’re doing, we insist on delivering
the highest standards in everything we do, and we have the ex-
64 | Marijuana Venture // July 2016
RX Green Solutions
This system, which can incorporate identification
verification, enables the payment of purchases
at the kiosk by bridging the gap between live
tellers and advanced cash handling machines.
The system is uniquely focused on point-of-sale
for hospitality and retail operations, where it can
reduce lines, increase speed of self-service and
reduce clerical errors. It also caters to consumers
who do not wish to interact with a salesperson
EVR BrainBit EEG:
The BrainBit is a small, wearable electroencephalography
(EEG) device that monitors and
records electrical activity of the brain. This data
may be used to measure and compare brain
activity before, during and after cannabinoid
therapy. For example, brain activity can be measured
during a seizure or PTSD event, and then
measured again after treatment with cannabis to
help determine the drug’s efficacy. Initial models
will be designed for health care practitioners,
but a personal use device is planned for release
perience and team to navigate the
churning waters of cannabinoids
quality of life,” Main says.
In addition to its EVR product
line, TOK has heavily invested
in the technology sector of the
cannabis industry. The company
formed an advisory board consisting
of leaders from virtually every
sector, ranging from medicine to
professional sports to the military.
The company’s strategic partners
include nationally renowned scientists
and researchers, as well as
some of the top software developers
in international financial compliance
and casino gaming.
“Markets are controlled by systems
that are in place,” Main says.
“If a company wants to be relevant
five years from now, then there
must be a strong presence in the
Given the outrageous barriers to
formal research of cannabinoids,
TOK sought out the leading experts
in the field in order to ascertain the
most reliable data available and create
the first models of its diagnostic
tools. Some of these tools have been
created for health care practitioners
in states that either allow or require
providers to prescribe dosing instructions
or other specific directions
for cannabis patients.
Joy Beckerman is the president
of Hemp Ace International and
president of the Washington chapter
of the Hemp Industries Association.
She is a member of Tree of
Knowledge’s advisory board.
The company featured in this story, Tree of Knowledge, is incorporated as
Tree of Knowledge, Inc. in Nevada and Tree of Kindness, Inc. in Washington.
Its only public website is www.evrcbd.com.
It is a completely separate organization from Tree of Knowledge, Inc. in
Washington, which is a state-licensed cannabis producer (tokinc.com).
66 | Marijuana Venture // July 2016
Commercial grow operation goes
beyond bud to create a company that
also gives back to the community
Story by GREG JAMES
Photos by GARRETT RUDOLPH
and PATRICK WAGNER
68 | Marijuana Venture // July 2016
Seline McCormick fine-tunes
crops inside one Soulshine’s
13 grow rooms.
www.marijuanaventure.com | 69
70 | Marijuana Venture // July 2016
For many people in business,
the ultimate challenge is balancing
the drive for financial
success with company values
that emphasize workplace harmony, charitable
giving and being environmentally
The inherent conflict between behaving
like a good corporate citizen and the
realities of a profit-driven enterprise is
at the forefront of many executives’ and
business owners’ minds. There are, after
all, many complex issues that may need
to be addressed when formulating company
policies, if social good is part of the
enterprise’s DNA. For example, how do
companies make a good profit while also
compensating employees fairly? How
much waste generation is acceptable if
it costs more to recycle? Can you reward
shareholders and investors while also doing
the right thing for the environment
and future generations?
These are questions faced by companies
as big as ExxonMobil, Costco and
Amazon and as small as mom-and-pop
grocers and various sole proprietorships.
In the end, business can be a delicate balancing
ExxonMobil, under former CEO Lee
Raymond, was vilified for its role in the
Exxon Valdez disaster, but has also been
widely praised by shareholders for its
spectacular returns over several decades.
Costco, often criticized by Wall Street
for paying employees too much and not
focusing enough on the bottom line, has
happier employees and a far lower turnover
rate than Walmart. Amazon, regularly
accused of worker abuse, has become
one of the world’s most valuable corporations
in a little more than two decades.
All companies face this delicate balancing
act, and the legal cannabis industry is
Far left: Soulshine coowners
(left) and Mike Mercer
take a photo-op with
recent rescues Rootie
Above: A dense forest
of colas populate the
grow rooms just days
prior to harvest.
www.marijuanaventure.com | 71
Soulshine Cannabis, a Washington-based
cultivator of high-quality marijuana,
has established a mission of doing
the right thing for the environment and
important social causes, while simultaneously
growing in a manner that some
would say is inconsistent with the ethos
of traditional conservation practices. This
raises an interesting question: Can an indoor
farm produce superior flower and be
socially responsible at the same time?
WELL, CAN IT?
Soulshine co-owners Mike Mercer and
Patrick Wlaznak were both involved in
CAN AN INDOOR
AND BE SOCIALLY
THE SAME TIME?
the finance industry when they met more
than a decade ago. Wlaznak eventually
quit the business, and decided to look at
other opportunities. As luck would have it,
the two men reconnected at a charity event
in 2014. It was there that they discussed
the emerging legal marijuana business,
and what it might mean if they teamed up.
Mercer knew investors who were interested
in getting involved, and Wlaznak had
some strong connections on the grow side.
They both mused … maybe this could lead
In addition to their similar backgrounds
From top to bottom: Robbie Louque
and Frank Lane midway through
harvesting Soulshine’s first crop; a
farmhand stops to display harvested
colas on their way to being
trimmed; Patrick Wlaznak and Mike
Mercer amid the foliage.
www.marijuanaventure.com | 73
pulls the nets
the top of the
74 | Marijuana Venture // July 2016
in finance, both entrepreneurs live in the Seattle
area, and wanted to keep their base close
to home in Seattle’s rapidly-expanding recreational
“An interesting discussion came up when
we considered the type of grow we wanted
to create, and the resulting carbon footprint,”
Wlaznak says. “If you’re growing inside under
artificial lights, the assumption is that you’re
creating a bigger carbon footprint than someone
using the sun. However, in this business,
where the retailers are concentrated mostly on
the more populous west side of the state near
Seattle, and the prime sun-growing areas are
150-200 miles away on the rural east side,
the added fuel used to make sales calls and to
transport the product is fairly significant.
“In other words, if you’re a wheat farmer
growing one big crop on 2,000 acres that you
sell to a single buyer once a year, the way to
operate is obvious. On the other hand, if you’re
in the marijuana business, and you’re only allowed
half an acre of canopy, and you’re selling
to 100 different stores spread over a wide
geographic area, the question of efficiency and
carbon footprint becomes a bit more murky
and harder to pin down, and therefore, proximity
becomes a much bigger factor.”
Mercer and Wlaznak spent many months
looking for the right space. Their original
intent was to lease about 15,000 square feet
of space and apply for a Tier 2 license. This
proved problematic because many landlords
didn’t want a marijuana business located on
their property, or the space just didn’t seem
right. One landlord even promised them a
lease, and then promptly backed out and applied
for his own grow license.
Eventually, their real estate broker found
them a large, 50,000-square-foot location in
A portion of Soulshine’s sales will go to
Emerald City Pet Rescue as part of the
company’s charitable mission.
Soulshine’s warehouse was formerly
Skate Barn West, a giant indoor skate
park. The size of the facility will allow
Soulshine to continue to expand.
Photo courtesy Dan Hughes.
WE KNEW THAT
TRYING TO FIT A
SQUARE PEG IN
A ROUND HOLE
WASN’T THE WAY
TO APPROACH THIS
Renton and showed it to the entrepreneurs.
They both loved it and a deal was done. In
Mercer’s words, it was a “home run,” but
it also presented another challenge: Originally
they had discussed the idea of a medium-sized
grow with about 7,500 square
feet of canopy. With the new space, it was
obvious they would be expanding to a fullblown
30,000 square feet of canopy, the
largest operation allowed under state law.
As the two discussed the future of Soulshine,
they realized they saw eye-to-eye
on several key points: (1) Their product
would always be “top shelf,” and no compromise
would ever be made on quality;
(2) In order to create top-shelf product, a
state-of-the-art grow facility would be required,
and built from the ground up, with
an emphasis on numerous individual clean
rooms that could produce as self-contained
units; (3) The company would operate as
efficiently as possible, and utilize sustainable,
low-impact packaging whenever applicable;
(4) Soulshine would operate in
76 | Marijuana Venture // July 2016
a manner that reflected the importance of
teamwork, employee satisfaction and customer
relationships; (5) Finally, Soulshine
really would have “soul,” by donating a
portion of its sales to Emerald City Pet
Rescue, a non-profit that focuses on homeless
and neglected animals.
PUTTING PLANS INTO ACTION
Once the core values were established,
construction began. The warehouse they
settled on was ideal in many respects, and
had ample power. However, it was rough,
and had been used for many years as an
indoor skate park. Permits and inspections
were also hurdles as their cannabis farm
would be the first allowed in the city of
Renton. While the city had many questions
as it approached uncharted territory, Mercer
and Wlaznak were able to reassure city
officials and permits ultimately took only
a few months. The entrepreneurs decided
on a traditional business split when it came
to assigning duties: Mercer would oversee
sales, and Wlaznak would focus on growing
the product. As mentioned earlier, the
Soulshine goal is to create only top-quality
marijuana, and Wlaznak has his own take
on how that will be achieved.
“Our mainstay strains will be unique in
the industry, and we look forward to introducing
both newbies and cannabis connoisseurs
to their new favorites,” he says.
“We’ve also developed our own pH-correct
soil mixture that utilizes environmentally-friendly
fertilizers, mycorrhizae and
other natural additives. In addition, because
we’re utilizing a series of individual
sealed grow rooms, we have more control,
and can therefore catch any pests before
they can spread and do damage. We feel
confident that our system will allow us to
use only natural, organic pest mitigation
products. We’re also big believers in beneficials
and predatory insects that we will
use when — and if — they’re needed. All
of these factors, while adding upfront cost,
will allow us to dedicate more time to cre-
team takes a
break to pose
for the camera.
ating ultra-high quality product.”
Soulshine’s goal of sustainability extends
to its packaging. All of Soulshine’s
boxes are compostable, recyclable and
non-wasteful. Mercer spent months researching
the printing/packaging business
and quizzed many store
owners and employees.
“Some of the best feedback
came from budtenders,
who had a lot of good suggestions
about sizing, layout
and copy,” he says.
The two men spent six
months touring more than
40 recreational marijuana
stores, and realized from
the many budtenders and
managers they interviewed that a highly
customer-centric approach would be
“We knew that trying to fit a square
peg in a round hole wasn’t the way to approach
this new industry,” Mercer says,
“so we decided to really focus our efforts
on creating products with a reverse engineering
method. In other words, what the
78 | Marijuana Venture // July 2016
customer wants, we will make.”
While a traditional market model is
driven by demand and consumer preferences,
outliers can, if they have the right
market savvy and products, create their
own niche and loyal following. Think
WE LOOK FORWARD
TO INTRODUCING BOTH
NEWBIES AND CANNABIS
CONNOISSEURS TO THEIR
Subaru in the auto industry or Costco in
retail. Both are considered experts at their
niche and both enjoy an almost fanatical
level of loyalty from customers. Mercer
and Wlaznak believe they can achieve the
same in the crowded cannabis space.
“Our aim is to position Soulshine products
in the upper middle tier pricing-wise,
and to win customers slowly and steadily
with consistency, and unique products
that they know will never disappoint,”
Mercer says. “We think that THC levels
in the 20-27% range are probably ideal
for most consumers, and we believe that
actively involving our retail partners with
facility tours, education,
sales support and continuous
improvement will ultimately
lead to the kind of
loyalty that comes from a
lot of work and a genuine
effort to cultivate friends,
as well as partners.”
In the end, the cannabis
industry will evolve like
all others: The poorly prepared
will fall by the wayside,
and those with focus, a strong work
ethic, and a core set of values that clearly
define their purpose will survive. Soulshine
Cannabis, with its commitment to
employees, the environment, social causes
and high-quality products, is surely
positioned to be a long-time innovator in
the rapidly morphing and evolving retail
marijuana industry. MV
From Construction to Completion:
Because the Soulshine indoor farm is located less than half a mile from the Marijuana Venture offices,
we were lucky enough to be able to photograph the grow from its inception. The photos on
this page show some of the work as it was actually bring done, and the progress made over an
18-month period. Soulshine’s warehouse previously housed Skate Barn West for many years (photos
courtesy Dan Hughes).
80 | Marijuana Venture // July 2016
84 | Marijuana Venture // July 2016
A drone captured
shot of Revolution
in Barry, Illinois.
Recent legislative changes are expected
to boost the state’s slow-moving medical
cannabis program, which has been hampered
by low patient enrollment, political infighting
and strict regulations
By SUE VORENBERG
www.marijuanaventure.com | 85
ME WITH EVERYTHING
I COULD ASK FOR.
IT’S GOT RISK.
IT’S GOT CONTROVERSY.
I FEEL LIKE WE’RE
IN A WAGON TRAIN
Strict regulations, low patient enrollment
and political infighting
all contributed to a slow start for
medical marijuana in Illinois.
However, while the fledgling program still faces a wide
range of challenges, business owners and investors have a
renewed sense of optimism with the expectation of several
legislative changes that provide an economic boost and, more
importantly, options for patients.
In May, lawmakers approved Senate Bill 10, which would extend
the Illinois Medical Cannabis Pilot Program until July 2020.
Licensed growers and dispensary owners now hold their breath as they
wait for Governor Bruce Rauner to sign the bill into law. At the time of
publication, the governor had not done so.
“We expect the governor to sign this legislation quickly,” said Tim McGraw,
CEO of Revolution Enterprises, one of the largest state-licensed cultivators in
The extension provides some assurance for the state’s slow-moving program,
which had been set to expire at the end of 2017 and had received little in the way
of help from a deadlocked state Legislature.
Despite the challenges ahead, the industry is far too young to write off just yet,
said Larry O’Hern, CEO of Nature’s Grace and Wellness.
IT’S THE NEW
86 | Marijuana Venture // July 2016
PASS THE LAW,
BUT IT NEEDS
Tim McGraw, CEO
two of the most
88 | Marijuana Venture // July 2016
For O’Hern, it’s been fun to run his
state-licensed cultivation business, even
with all the problems, he said.
“This industry has provided me with
everything I could ask for,” he said. “It’s
got risk. It’s got controversy. I feel like
we’re in a wagon train heading west. It’s
the new frontier.”
FLAWS IN THE SYSTEM
The state’s first medical marijuana
dispensaries opened in November 2015,
but as of June, there were only 7,000 patients
enrolled in the system. A total of
9,200 people had submitted applications.
Businesses say the program needs about
20,000 to 30,000 patients on the books in
the next six months to keep their doors
The Illinois pilot program includes
about 40 qualifying ailments, but chronic
pain isn’t among them, which has contributed
to the slow start.
By comparison, one-third of all patients
in Arizona indicate “severe and chronic
pain” as their only debilitating medical
condition. Chronic pain, either by itself
or in conjunction with another ailment,
affects about 90% of Arizona’s nearly
80,000 medical marijuana patients.
However, assuming Rauner signs SB
10, patients suffering from post-traumatic
stress disorder and those with terminal
illness will now qualify for medical cannabis
— rectifying two glaring omissions
from the original legislation.
The addition of PTSD means thousands
of Illinois veterans and other residents
who have suffered traumatic experiences,
such as rape or abuse, will have access to
medical marijuana, McGraw said.
“Quite frankly, this will save lives,” he
Recent legislation has also accelerated
the authorization process for patients with
terminal illnesses whom doctors give less
than six months to live. Their approval
time will be shortened to 14 days, compared
to time frames of up to seven weeks
Many in the industry have seen Rauner
as an opponent of the marijuana industry;
the first-term governor has rejected the
addition of several other qualifying conditions.
PEOPLE ARE SICK, AND
THEY DON’T KNOW HOW TO
“HANDLE THE SYSTEM
“That’s cut down on the size of the patient
population,” said John Kagia, director
of industry analytics for New Frontier,
an informatics company focused on cannabis.
Another issue is that most of the larger
HMOs and physician groups have banned
their doctors from recommending cannabis
to patients. A handful of doctors
who have made recommendations face
lawsuits from the Illinois Department of
Financial and Professional Regulation for
recommending treatments without legitimate
“Politics clearly plays a role,” Kagia
said. “One of the reasons why a market
like Colorado has been so successful is
that there has been very broad consensus
and collaboration, so the program was
implemented successfully. Collaboration
makes any system stronger. Illinois had
enough consensus to pass the law, but it
needs more buy-in from state leaders.”
TACKLING THE ISSUES
Some dispensaries are taking matters
into their own hands to increase the
number of patients, said Brad Zerman,
director of the Illinois Cannabis Industry
Association and CEO of the Seven Point
Dispensary in Oak Park.
“As soon as I was awarded a license
last year, I hired a licensed social worker
to do outreach to new patients,” he said.
“And that’s just grown, so now we’re doing
seven or eight patient workshops a
month in different towns. There’s clearly
a lot of negatives in Illinois that have
been reported over and over, but I’m actually
The workshops help patients fill out
paperwork, navigate the state system,
have an FBI background check and get
fingerprinted — all requirements for the
program. Attendance has been full to
bursting so far, Zerman said.
“We’re trying to make it a one-stop-
From top to bottom: Larry, Claire and Tim
O’Hern pose with Ryan McCraken (from
left to right) outside their Vermont, Illinois
production facility; Unusual state rules
regarding advertising limit journalists’ ability
to cover the cannabis industry in Illinois.
90 | Marijuana Venture // July 2016
Nature’s Grace and
Wellness on display at
a nearby dispensary.
shop for patients,” Zerman said. “People
are sick, and they don’t know how to
handle the system. So we have a team
of people on these workshops, and so far
SB 10 should help alleviate this pain
point as well, by streamlining the doctor
“Essentially, doctors will no longer be
required to recommend medical cannabis
treatment for patients, but will just need
to certify that a patient has a qualifying
condition,” McGraw explained. “This
should help accelerate patient population
growth as well.”
Zerman’s team is also contacting physicians
and offering them free training on
cannabis — how it works medically, and
also how to make patient recommendations
under the constraints of the system.
“We also work with patients to help
them educate their doctors. We have materials
we give them,” he said. “And we
can follow up with those doctors and educate
The outreach is a way for the dispensary
to grow its own client base, he added.
“There are a lot of critics, but to me
it’s about finding all the positive parts
92 | Marijuana Venture // July 2016
Revolution Enterprises’ Delavan,
Illinois grow facility, which brings
the company’s total to 150,000
square feet of production.
Several key provisions of
Senate Bill 10 breathe new
life into the Illinois Medical
Cannabis Pilot Program,
Extending the pilot program
to July 1, 2020 (the
program had initially been set
to expire in 2017).
stress disorder and
terminal illness as qualifying
Making patient and caregiver
cards valid for three
years instead of one.
Eliminating the fingerprint
requirement upon renewal
of patient and caregiver cards.
Changing details about
relationships; doctors will
only have to certify that there
is a bona fide doctor-patient
relationship and that the
patient has a qualifying condition,
rather than specifically
recommending the use of
Allowing minors who
are patients to have two
94 | Marijuana Venture // July 2016
of the program and working to expand
them,” Zerman said. “We’re spending a
lot of money, but I think it will be worth
He estimates the company spent between
$40,000 and $50,000 on outreach
in the past year.
Meanwhile, Larry O’Hern said his
cultivation facility is actually running
well and supplying medical marijuana
to a handful of the 37 dispensaries that
have opened thus far.
The farm is one of 21 licensed cultivation
centers, but several have yet to
begin producing crops. “We’re one of
the few cultivators that is locally owned
and self-funded, which has helped us,”
O’Hern said. “We saw it as an agricultural
enterprise, and we think it’s been
well-received so far.”
Some cultivators have scaled back
production or held off on construction
because they’re waiting for more patients
to be registered. Patient enrollment
and dispensary revenue have both
shown steady growth, ranging between
10-20% per month. During the month
of May, Illinois dispensaries sold nearly
$2.3 million worth of cannabis, bringing
the program’s total up to $10.8 million
over its first seven months.
“Our hope is it’s going to get better,”
said Tim O’Hern, chief operations officer
of Nature’s Grace and Wellness and Larry
O’Hern’s son. “The patient count has improved
slowly, but steadily. They’re approving
about 400 new patients a month
right now. But it’ll be interesting to see
what total patient number is needed to
support the industry.”
Tim O’Hern said he thinks at least
100,000 patients will ultimately be needed
to sustain the program.
“Illinois has a population of 13 million
Security requirements in Illinois
mandate bio-metric keycard access
and 24-hour video surveillance.
TO SEE WHAT
people, and as things move forward, we
think we’ll have a viable industry with
what we’ve got here,” he said. “We’re
still working things out, but I don’t think
it’s as much gloom and doom as people
foresee. It’s really just about increasing
patient access and helping them find
doctors who are willing to work with the
For now, one of the biggest goals for
the young industry has been achieved
with the extension of the Illinois Medical
Cannabis Pilot Program.
Scott Miller, the owner of Salveo
Health & Wellness in Canton, said the
political climate has been a mess. Politics
being what they are, marijuana is
largely an afterthought for state lawmakers,
There’s still a lot of skepticism about
medical marijuana, particularly among
Republicans, Miller said.
“From a party standpoint, they’re going
to go slower rather than faster,” he
said. “But there’s been so much money
spent here by sophisticated people that
know their state reps, that have fundraised
for state reps, that we don’t think
they’ll leave us high and dry.”
But SB 10 is a game-changer for Illinois,
“Although we had a slow start because
of some early vetoes by the administration,
we are confident about the longterm
success of the program,” he said.
“I think, initially, the biggest issue was
that the pilot program wasn’t really on
the current administration’s radar; there
may have also been a lack of support
as the pilot program was inherited from
former Governor Pat Quinn’s administration.
With the signing of this bill, that
all changes,” he added, applauding lawmakers
on both sides of the aisle for negotiating
a fair, but ultimately beneficial
compromise for the industry.
Zerman said adding more patients to
the program is still critical.
“I think it will be harder for the Legislature
to reject the program extension if
there are 20,000 or 30,000 patients in the
program,” he said. “And I think we have
to do that as an industry.”
Marijuana Venture editor Garrett Rudolph
contributed to this story.
Vital Garden Supply
96 | Marijuana Venture // July 2016
98 | Marijuana Venture // July 2016
A Teaching Tool
Bringing it Home remains a relevant, impactful film as the industrial hemp industry
continues to fight a battle of misinformation and illogical prohibition
― ― ―
By GARRETT RUDOLPH
In the fall of 2010, Linda Booker picked up a copy of USA
Today that featured the first permanent home in the United
States made from hemp-based building materials.
The Asheville, North Carolina, home was celebrated for
its eco-friendly, nontoxic design, but also highlighted the
fact that the U.S. largely recognized as the only industrialized
country in the world that prohibits hemp cultivation.
Booker, who describes herself as a
natural cynic, had already begun researching
the uses of hemp at the urging
of fellow filmmaker, Blaire Johnson.
The multitude of uses for the forbidden
plant — ranging from biofuels to
building materials to high-protein food
supplements — led Booker to think the
claims were too good to be true.
But as she and Johnson began work on
a short film about the Asheville home,
Booker was quickly became a believer.
Before she knew it, she was flying to the
International Hemp Building Symposium
in Spain and meeting with some of
the global leaders in the hemp industry.
The end result was Bringing it Home,
a documentary co-directed by Booker
and Johnson, which immediately became
a teaching tool for hemp advocates
across the U.S. Even three years after
the film’s initial release, it continues to
influence legislative changes.
www.marijuanaventure.com | 99
Glynis Murry and Henry
Braham, the founders of
Good Hemp Oil, walk around
their industrial hemp farm in
North Devon, England.
What captured your attention for the
potential of using hempcrete and other
hemp-based building materials in
I think the thing that struck the biggest
chord was the health and environmental
benefits from hempcrete.
If you look at it from plant to finished
product, it’s a major carbon-saving
material, and as we show in the film,
at the U.K. facility, it ended up being
a carbon-negative building material.
On top of that, this material regulates
temperature and humidity, and could
almost eliminate the need of a heating
and cooling system for everything from
a townhouse to a warehouse, which is
amazing. We learned about the incredible
properties of the material, it being
a natural lightweight fiber, a concrete
product that could resist mold and mildew.
I live in the South and that’s a major
problem in so many buildings.
Everything always resonates more
when you have a personal connection.
100 | Marijuana Venture // July 2016
The lightbulb started going off for me
when I thought back about how I felt
the first week I was in my new house.
Our builder had used all the conventional
building materials and never introduced
the topic of nontoxic, healthy
or sustainable materials. The first time
I had asthma was in our new home,
and it was the flood of chemicals and
the off-gassing of all the materials from
the paint to the floor sealant to the new
It was quite a learning journey for me
in making Bringing it Home, and also
doing the research and educating myself
about chemical products in general.
The healthy homes were a powerful
part of the film, to think about using
hempcrete in everything from schools
to hospitals and office buildings. We
had a segment that eventually didn’t
make the cut about Sanjay Gupta talking
about how more than 30% of our public
school buildings have mold and mildew
in them. From the get-go we’re exposing
children to unhealthy environments.
And then there’s the environmental
side, to see the lumber, framing, insulation,
sheetrock — all of this stuff that
can be replaced with hemp-based products.
Until we get this plant grown on
the same level as corn and soybeans and
everything else, we’re not going to have
it readily available in the United States.
But in places like France and the U.K.,
they do have companies that are supplying
hemp. There’s so much potential for
construction, and right now, probably the
biggest consumer markets are food, nutrition
and body care products.
How has the film been received
by hemp advocates, politicians
and policy makers?
We couldn’t be more grateful for
industrial hemp advocacy groups
that have taken Bringing it Home and
used it as an educational tool. They were
thankful to us that they have a comprehensive
film they can do community
screenings with, as well as show policy
makers how hemp and marijuana are different.
I think that’s been helpful, because a
big obstacle has been for the advocates
to get the public policy makers to understand
the difference between the two.
Once people get it, they get it, but unfortunately,
the U.S. government still wants
to lump it all together.
It’s been interesting since the film came
out to watch this tremendous movement
happen as far as introducing legislative
policies in so many states. Now 27 states
have industrial hemp farming bills, and
we now have ten states that are growing
it on a research basis thanks to the
hemp amendment in the 2014 Farm Bill.
The biggest hurdle is still the DEA and
Department of Justice’s stubbornness to
change the definition, but I really think
we’re closer than ever. I don’t think it’s
going to be too much longer before it’s
It’s interesting that marijuana,
the intoxicating substance,
is rapidly gaining acceptance, while
industrial hemp seems to be caught in
somewhat of a standstill.
It’s frustrating. It’s frustrating for
the industrial hemp organizations,
and on a personal level, it’s frustrating.
Here we have something that can be a
solution for some very important issues,
even on a global scale. Believe me, I
For Sale: T-1
102 | Marijuana Venture // July 2016
started as a cynic about all the benefits
and I had to be convinced. But having
looked at this topic from all angles over
the last several years, it’s just such a
head-scratcher as to why hemp is not
being used more. A lot of it is money.
That’s where the focus is always going
California looks like it’s next in line
to open up a billion-dollar marijuana
business. That gets a lot of attention.
What I wish is that some of the marijuana
advocates would become sustainable
industry leaders in other ways, and
invest in supporting the plant’s cousin
as a viable crop.
Like it or not, they’re tied together.
They’re part of the Cannabis sativa
plant family. It would be encouraging to
see some of the people making millions
of dollars now that laws have opened up
around marijuana say, ‘Here’s this other
part of the plant family that has so many
104 | Marijuana Venture // July 2016
SUCH A HEAD-
TO WHY HEMP
IS NOT BEING
uses beyond medicinal. Let’s help them
build a processing facility. Let’s help
farmers. Let’s help ag departments get
going on their policy.’ It’s just not happening
I know your readership is probably
more marijuana industry leaders, but
if I could get their ear, I would say,
‘Please, now that things are going so
well on that end, can you lend some
focus and attention and investment to
industrial hemp?’ It would be great to
see that happen.
How have you seen the film
used as an educational tool to
I’m always thrilled when people
show it to legislators, because
this film has been able to cross a line
with them when they see the business
possibilities for it. Hemp is not a joke,
and it’s not just rope and that 20-yearold
T-shirt that’s still held up. It has real
and potential applications for uses ranging
from food, textiles, bio-composites,
building products and nanotechnology.
It’s been great to see the support in
Hawaii; I was invited to the state capitol
in Oahu and present Bringing it Home
at an agricultural meeting with several
senators there, and that definitely influenced
them to support introducing legislation.
I hope to get back to Hawaii and
do more filming, because they introduced
seven hemp laws recently and are building
beautiful houses using hempcrete.
They’re looking to hemp as a replacement
crop for sugarcane. This is a state
that imports almost all of their building
materials. It has huge potential in there
to lessen their imports by replacing them
with hemp products. It’s very cool to see
And Kentucky and Colorado has been
on the forefront when it comes to getting
hemp going on a state level. Having
supportive agricultural commissioners
makes a huge difference.
What moments or locations
stand out to you about Bringing
it Home as being particularly
I’d say the England trip, definitely.
It was the first time we were
standing in a hemp field. Here I had been
living with this topic for 18 months, and
then to finally be standing there with the
plant, touching it, smelling it and seeing
it, that was great.
And there are no fences, no signage,
no barbed wires. It’s just growing like
any other crop, and the neighbors and
law enforcement aren’t freaked out by it.
A lot of American companies have
sustainability as part of their business
model or vision, but it would be great to
see more companies embrace industrial
hemp and incorporate it into their sustainable
practices and products.
Certainly the auto industry could be
using hemp fiber for panels and dashboards,
like the European automakers.
Think about the impact the auto industry
could have in the U.S. alone. It’s just a
matter of time and policy change. The
Left: Kentucky has
become the national
leader in industrial
Photo by Gene
Above: Linda Booker
(left) and Bringing
it Home co-director
www.marijuanaventure.com | 105
Rosin Press Kings
Hemp Technologies consultant
Mike Giffin gives Blaire Johnson
a guided tour of hemp farm just
west of London.
federal policy is the biggest hurdle and
until the Industrial Hemp Farming Act
or a similar bill passes, we won’t be
able to compete at the same level as
Canada, Europe, Australia and China.
It’s just that simple.
What are the next projects
you’re working on, and how
involved do you stay in the industrial
IT’S EASY FOR BUSINESSES TO CHANGE,
AND CAN LEAD TO SOLVING THE BIGGER
PROBLEM OF PLASTIC POLLUTION AND
“PLASTIC MARINE DEBRIS
Bringing it Home got me more
passionate about environmental
issues. However, the enormity of those
issues can be overwhelming. My next
project is a short film and I want to focus
on something very small that can
lend itself to a much bigger issue, and
that is plastic litter pollution.
You can go to strawsfilm.com and
see the beginning of it. I found an advocate
in the Monterey Bay area that has
been on an anti-plastic-straw crusade
for a few years now. Her organization
is called The Last Plastic Straw, and focuses
on that one thing that is an easy
thing for people to change. It’s easy for
businesses to change, and can lead to
solving the bigger problem of plastic
pollution and plastic marine debris.
I know we all get a little weary about
so much happening around environmental
issues. You can only be engaged
at a certain level for so long. It’s kind
of depressing. It’s not happy news from
day to day.
For me, hemp has so much possibility
and so much hope. I have to be
convinced of something to say words
like ‘hope’ and ‘possibility.’ But I truly
believe this is grounded. There’s so
much that can be done, and all it will
take is some policy change. If there’s
one thing I can leave people with, it
is, please go to VoteHemp.com, please
go to Hemp History Week’s website,
please take the one or two minutes to
write a letter to your senator, make the
I used to be very skeptical that phone
calls to lawmakers did anything, but
they do take notice if enough people
start to rally around a certain topic.
The momentum is there. Let’s keep
it going. Let’s make that policy change
www.marijuanaventure.com | 107
Respect, Love &
With marketing savvy
and a business plan
that extends far into
the future, David Tran
is pushing Dope to
By PATRICK WAGNER
108 | Marijuana Venture // July 2016
David Tran’s growing cannabis
culture empire began with
www.marijuanaventure.com | 109
In addition to publishing a
culture magazine, Tran hosts
the annual Dope Industry
Awards and the Dope Cup,
where he’s been able to
meet celebrities such as
hip-hop icon and Public
Enemy hype-man Flavor Flav
For David Tran, Dope isn’t just the name of his company.
It’s a standard.
In the span of five years, Dope Media has become more
than a publishing company, with events and licensed products
found all around the country, and Tran has helped
launch a new identity for cannabis consumers.
“We always say, ‘Everything we do
has to be dope,’” Tran says. “The magazine?
Has to be dope. Our events? Have
to be dope. Our products? Have to be
dope. Or we don’t put it out.”
Dope Magazine started as a local publication
for Seattle’s medical marijuana
market, but has expanded rapidly with
progressive cannabis legislation sweeping
the nation. Dope now publishes a
national edition with distribution in 24
states, as well as local versions in Arizona,
Colorado, Northern and Southern
110 | Marijuana Venture // July 2016
California, Nevada, Oregon and Washington.
After working his way up the ranks of
the nightclub industry, from bar-back to
successful promoter and bar owner, Tran
first joined the cannabis industry in 2011
as Washington’s medical market began
“I was running bars on the marketing
and entertainment side and a friend came
up to me and said, ‘Hey, are you interested
in cannabis?’” Tran says. “I thought I
knew everything about it.”
He co-founded the Ballard branch of
the Conscious Care dispensary chain.
Many business owners would have
followed the route of opening multiple
dispensaries, possibly branching into
cultivation, manufacturing and advocating
legislative changes. In Tran’s case,
he immediately began looking for avenues
to promote Conscious Care. He
looked at his coffee table and realized
his advertising options were extremely
limited in print media.
At that time, there were just a couple
magazines covering the medical marijuana
“One was a small pamphlet and their
prices were $2,000 a page because they
were the only people doing it back in the
day,” Tran says. “The other was a newspaper
So Tran created his own marketing vehicle
with Dope Magazine, an acronym
for Defending Our Patients Everywhere
(which eventually evolved into Defending
Our Plant Everywhere).
With $30,000 and a shared booth at
Seattle Hempfest, Tran found enough interest
from consumers and advertisers to
WE ALWAYS SAY, ‘EVERYTHING WE DO HAS TO BE
DOPE.’ THE MAGAZINE? HAS TO BE DOPE. OUR
EVENTS? HAVE TO BE DOPE. OUR PRODUCTS?
HAVE TO BE DOPE. OR WE DON’T PUT IT OUT.
launch Dope Magazine.
The first issue featured Seattle Mayor
Mike McGinn on the cover, bringing
national attention to the startup publication.
“CNN picked it up,” Tran says. “MSN-
BC picked it up. They said, ‘Look at the
mayor of Seattle … what a dope.’”
The media coverage worked as a promotional
tool for Tran’s magazine, and
it quickly gained momentum across the
western medical states. Following the
magazine’s roll-out, the company began
hosting the Dope Cup, a celebration of
cannabis culture, which has continued
to grow each year. The 2016 party drew
more than 2,000 attendees.
The Dope Awards came next, and both
events have grown into cultural centerpieces
in their own rights.
More recently, Tran began to notice
the lack of marketing and business experience
among cannabis producers, which
led him to license out the Dope brand.
“We wanted to make sure the magazine
was a staple,” Tran says. “As we
started solidifying that, we knew events
were really the second stage of our evolution.
Because I was in the bar industry
and I promoted events, it was still in our
With interests in nearly every angle of
cannabis culture, business continues to
accelerate for Dope Media.
“We’re growing really fast,” Tran
says. “We just got done with a $1.5 million
capital raise. What that’s telling me
is that people who are inside and outside
the industry are looking at cannabis and
are seeing us as a lifestyle brand that’s
different from all the other companies
who touch cannabis.” MV
112 | Marijuana Venture // July 2016
Cannabis growers will have to become more energy-efficient as the
developing industry moves forward
― ― ―
By WALTER STARK
A2015 Gallup poll found that 58% of Americans believe
marijuana should be legal in the United States.
Considering that in 1969, just 12% of Americans
held this view, it’s fair to say the tide is turning for
the marijuana legalization movement.
That’s good news for cannabis growers;
however, the industry’s high energy
consumption is already of great
concern to utilities, municipalities and
Research indicates marijuana grow-
114 | Marijuana Venture // July 2016
MARIJUANA GROWERS ARE RESPONSIBLE FOR 1%
OF THE COUNTRY’S TOTAL ELECTRICITY USAGE
ers are responsible for 1% of the country’s
total electricity usage. With more
commercial grow facilities starting, this
percentage is expected to rise accordingly,
leading utilities and municipalities to
caution growers that continuing this trend
could have serious repercussions.
For growers, there are several incentives
for transitioning to more sustainable
energy practices. Energy-efficient operations
will not only cultivate a more positive
image with the American public, but
they will also reduce their operating costs
and avoid future conflicts when government
agencies and utilities clamp down
on energy consumption.
Understanding the full scope of this
problem is imperative for proactive cannabis
growers who want success for their own
businesses and for the broader industry.
A CLOSER LOOK
Although 1% of the nation’s total consumed
energy might not sound like a lot,
it’s the amount of energy needed to power
1.7 million American homes, based on
data reported in The Carbon Footprint
of Indoor Cannabis Production, by Evan
Mills, Ph.D., a staff scientist at Lawrence
Berkeley National Laboratory.
At the regional level, the Northwest
Power and Conservation Council projects
that if the current rate of energy
consumption by cannabis growers in the
Northwestern states continues, it will
double from 130 megawatts in 2015 to
237 megawatts in 2035. This calculation
was based on the projected increase of
Americans’ use of marijuana.
To gain some perspective for how
things look on a state level, consider
Colorado, which legalized marijuana in
2012. By 2014, data from Xcel Energy
officials indicated that grow facilities
in the state had consumed 200 million
kilowatt-hours (kwh) of electricity. In
Denver, where the majority of the state’s
grow facilities are located, the 354 grow
facilities in operation at that time were
tracked at using 121 million kwh — a
significant increase from the 2012 figure
of 86 million kwh for the 351 facilities
operating that year. By 2014, Denver
grow facilities were responsible for 2%
of the city’s electricity consumption. As
of 2015, Colorado had more than 1,200
licensed grow facilities, which were responsible
for more than 50% of the increased
energy demand across the state,
according to a Bloomberg News story by
Here are some other statistics projecting
the marijuana grow industry’s high
• Its consumption of 1% of the nation’s
electrical output represents a cost of $6
billion annually and produces the equivalent
of 15 million tons of greenhouse gas
emissions, which is equal to that produced
The grown-up grow operation
Checks and balances for labor, electricity and more play a bigger role as cannabis
grow operations begin to mimic traditional ag manufacturers
― ― ―
By DAVID HODES
Building and operating an efficient grow facility begins
with the design process.
Rather than looking at the current market, growers
need to look three or four years down the road.
“If you design a facility based on what you are thinking
now, you are dead in the water,” says Jan Carlos Byl,
founder and managing member of MedCanna Consulting
“There is a lot of intricacy to all of this growing,” he says.
“You have to track growth, collect data and dial in the
light level, temperature and humidity to get the plants to
be the best that they can be.”
USE OF RESOURCES
According to Byl, one of the biggest mistakes indoor
growers make is having a large open space where all
the plants are growing. The result is a lot less individual
attention and more of a broad-strokes approach to cultivating
large quantities of plants, he says. It also reduces
116 | Marijuana Venture // July 2016
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M A R I J U A N A
Dehumidification advancements, such as
MSP Technology’s wrap-around plate
systems, represent a new wave of options
for growers looking to implement more
The MSP system boasts 39-58% energy savings
compared to traditional dehumidifiers.
Utilities are excited about this technology
because of the potential energy savings and
reduced greenhouse gas emissions. It also
promotes sustainability by enabling growers
to use recycled water for irrigation through
the regenerative thermal exchange.
Grow facilities are seeing additional benefits,
including prevention of mold and airborne
pathogens and lower maintenance costs.
Groundbreaking technologies such as
wrap-around plate dehumidification will likely
be developed specifically with cannabis cultivation
in mind, especially considering the
continued growth of the industry.
1. Warm, humid incoming air flows through
the first pass of the plate type air-to-air heat
exchangers for pre-cooling, initial condensing
and water production. This is achieved
by regenerative thermal exchange with the
cooler air leaving the heat exchanger.
Benefit: Pre-cooling, condensing and water
production by regenerative thermal exchange
are “free” and involve no additional
2. Pre-cooled air then passes twice over
conventional cooling coils for final condensing
and water production.
Benefit: Pre-conditioned air can be treated
much more efficiently, using smaller compressors
that require as little as half the power.
3. The cool, dry air is then drawn back
through the opposite side of the heat exchanger
where it absorbs heat from incoming
air and continues to control humidity in
the conditioned environment.
Benefit: There is no heating coil — and no
energy penalty — needed to reheat the
dehumidified air before it enters the conditioned
by 3 million average cars in a year
(The Carbon Footprint of Indoor
Cannabis Production, Evan Mills);
• The U.S. marijuana grow industry’s
energy consumption is six
times that of the U.S. pharmaceutical
industry and eight times more
than the amount of energy required
per square foot in the average U.S.
commercial building (Columbia
Environmental Law Journal, “Regulating
Pot to save the Polar Bear:
Energy and Climate Impacts of the
Marijuana Industry,” Gina S. Warren,
• In Denver, the monthly electric
bill for Colorado Harvest Company’s
10,000-square-foot grow facility
was reported by the company
to be $12,000. Other facilities in
Colorado have reported bills almost
double that amount (Colorado Public
Radio, “How Much Electricity
Does It Take To Grow Marijuana?”
Grace Hood, 2015).
THE CANNABIS INDUSTRY
PRODUCES THE EQUIVALENT OF
15 MILLION TONS
OF GREENHOUSE GAS EMMISSIONS
For cannabis cultivation facilities,
lighting accounts for the
greatest consumption of energy
— typically about 40% of its total
electricity usage. Not only does it
represent the highest energy usage
in an indoor growing facility, but
it’s also the biggest contributor to
the facility’s cooling requirements.
Currently, a variety of lighting
manufacturers are developing engrowers’
ability to effectively map out a harvest schedule.
A more efficient method is to have individual subdivided rooms. Byl favors
a dense canopy and shorter veg times, with the goal of producing
about 30 grams per square meter. That way, a room can be completely
harvested on the first day, cleaned the second day and back up and
running on day three.
Damian Solomon, director of cultivation for MedMen, says one key
variable for an efficient grow operation is to limit labor to about 30% of
total expenses. This can be easier said than done.
Grow operations often hire trimmers and other workers who are paid
minimum wage and have little or no background working in a production
“You have to have properly trained employees to perform the task,”
Solomon says. “That means consistent supervision for quality control.
You want to ensure that they are doing the right job as efficiently as
possible, and that they are not taking a lot of bathroom breaks or cell
He says supervisors in the cannabis industry are not collecting enough
data from their employees about what they are doing and when. Increasing
productivity, even if it’s only by a couple percent, means a
more profitable organization.
118 | Marijuana Venture // July 2016
Many savvy growers, such as
Washington’s Trail Blazin’ Productions,
are switching to LEDs to reduce energy
consumption, both for the environmental
benefits and their bottom lines.
“You need to know what your fertilizer targets are and
then what your plants get,” he says. “You have to adergy-efficient
lighting solutions for the
cannabis industry, including ceramic metal
halide, double-ended high-pressure sodium,
LED and plasma fixtures.
Also being studied are fiber-optic energy
systems capable of streaming and
channeling sunlight into grow
checklists is one way to
track workers as they complete
tasks. It also helps
managers keep the process
on schedule and maintain
Byl says labor efficiency is one of the biggest hurdles in
running a profitable grow operation.
“Labor is a killer,” he says. “I go into these grows and
there are 150 employees. This is mind-boggling. You
should have 25 for any sized grow.”
The electricity bill for an indoor facility can be enough
to sink an entire operation. The cost of lighting alone,
particularly at grows that use high-intensity discharge
bulbs, can be a major drag on profits. Add in all the electricity
needed to run water pumps, heating and cooling,
extraction equipment and trimming machines, and it’s
easy to see why growers are looking for any advantage
they can get.
120 | Marijuana Venture // July 2016
CALL TO ACTION
To encourage the industry’s proactive
pursuit of energy-saving methods,
both the utilities and municipalities
have responded with their own forms
of motivation. Municipalities are offering
both incentives and penalties to
promote energy conservation. In 2015,
Boulder County, Colorado, started requiring
marijuana grow facilities to use
renewable energy sources for half of
YOU NEED TO
KNOW WHAT YOUR
ARE AND THEN WHAT
YOUR PLANTS GET
their production in 2015 and all of their
output starting in 2016. The county is
levying a surcharge of 2.16 cents per
kwh and applying the fees to the Energy
Impact Offset Fund for programs focusing
on more efficient ways to grow
In Oregon, the Energy Trust of Oregon
is providing cash incentives to marijuana
grow facilities that are actively reducing
their energy consumption, while many
utility districts in Washington state have
done the same. Other municipalities encourage
the development of new building
codes and/or LEED or Energy Star standards
to be applied in the design of new
grow facilities or retrofitting of existing
The utilities are encouraging grow
facilities to modify their operations,
where possible, by rescheduling their
power draws to avoid peak demand
periods. Utilities are also asking grow
facilities to consider upgrading to
more energy-efficient lighting, as well
as offering incentives for energy-efficient
upgrades. Seattle City Light established
an incentive program
for this purpose, and it’s also
Solomon says the adoption
of new technology, like LED
lights, is gaining a lot of interest
in cannabis cultivation.
“They are used now in a lot of
vertical grow farms for food
production systems and are a
great way to lower energy consumption,” he says.
Not only are the lights themselves more efficient, but the
lower heat output allows facilities to use less cooling.
While there are ways to improve energy efficiency in an
indoor facility, part of the problem is the business model
itself. More and more, cannabis growers are following the
path of traditional agriculture by growing outdoors or in
Solomon says a regular analysis of drain water can improve
the fertilizer content.
ewarding growers for the use of other
energy-saving devices. One example is
variable-frequency drives that manage
a facility’s total HVAC energy consumption
by slowing the supply-air fan
and/or compressor to decrease energy
consumption when cooling demand is
lower than the HVAC equipment’s capacity.
Other technologies being recommended
for their energy-saving role
are economizers, which are integrated
with remote terminal units (microprocessor-controlled
electronic devices) to
draw in cool outside air to reduce cooling
To help grow facilities reduce their energy
consumption, some utilities, such
as Xcel, consult with grow facilities regarding
these various technologies and
lighting and their related levels of energy
usage. Xcel also offers significant rebates
for the application of energy-saving
products and technologies, such as wraparound
plate dehumidification technology
with atmospheric water generation for irrigation
Moving forward, it’s safe to expect increased
regulations as demands for energy
conservation and sustainable practices become
amplified. Agencies like Oregon’s
Task Force on Cannabis Environmental
Best Practices are cropping up in states
across the country, ushered in by legislators
who are intent on gaining control of the
cannabis cultivation industry’s high energy
In the meantime, responsible grow facilities
are doing their part to learn more
about measures they can take to contain
their energy usage and, at the same time,
gain valuable operational and competitive
advantages by doing so.
Walter Stark is the president of MSP Technology
and a widely-recognized thought
leader in dehumidification solutions. He has
more than 50 years of experience in the heating,
ventilating and air conditioning industry.
During his career, he has won numerous
awards, including the ASHRAE Regional
Award for An Energy Efficient Project and
the New York Governor’s Award of Energy
Excellence. He was also featured in Popular
Science magazine’s “Best of What’s New.”
LED lighting is steadily becoming a
greener alternative to high-pressure
sodium grow lights.
compared to liquid can be significant.
Byl says automation and specialization
are becoming more prevalent in
the cannabis industry. He points to
cultivators who outsource trimming
duties during peak productivity periods
as an example of how some facilities
just your fertilizer program to meet the needs of the crop
quickly, and give it what it needs for each phase of its life
Knowing the nutritional requirements of each stage of the
crop cycle helps determine what and how much fertilizer
to use, Solomon says.
One way of using fertilizer efficiently is to buy dry fertilizer
in bulk and mix it at the facility, instead of paying
to ship liquid fertilizer. The cost savings of dry fertilizer
Solomon says cannabis growers can
should take tips from other agricultural business operations,
like tomato and cucumber growers, that have to be
profitable at a much lower price per pound than marijuana
In the future, operations could utilize robots that designed
to harvest vegetables based on color and firmness.
“It’s very easy to be able to transition that type of technology
and tweak it a little for the cannabis space,” Byl
says. “It’s really about just a transfer of knowledge.”
122 | Marijuana Venture // July 2016
agriculture industry could
have a major impact on
By R.W. NAVIS
124 | Marijuana Venture // July 2016
Sixth-generation California farmer
Cannon Michael believes there are
many non-cannabis farmers that
will consider shifting to marijuana
operations in the near future.
www.marijuanaventure.com | 125
For thousands of relatively conservative towns
across the United States, agriculture is the
backbone of the local economy.
But many of these traditional ag hubs, particularly
in California’s Central Valley, face a bleak
financial future if dwindling revenue streams
and tax bases can’t be replaced.
The town of Coalinga, California, was
built on agriculture and oil, the latter of
which is in a protracted bear market. At
one point, city planners thought prisons
might be an answer, but that too has fallen
short of expected revenue.
At the current pace, Coalinga will run
out of money in three years, according to
City Council member Nathan Vosburg.
126 | Marijuana Venture // July 2016
Flower greenhouses could easily
convert to cannabis cultivation if laws
shift in favor of legalization.
55 local jobs and boost local tax revenue
once operations started. The City Council
voted 4-1 in favor of the sale, but there’s
still a sense of urgency regarding the subject
of cannabis. This fall, state residents
will vote on an initiative that would legalize
recreational marijuana for all adults.
“I don’t want us to wait until November
on this,” Coalinga Mayor Ron Ramsey
said. “There are a lot of towns hurting,
and they too will be looking into this.”
The push for cannabis cultivation in
Coalinga is sure to make waves in the
Central Valley — and not just among the
active cannabis community.
Multi-generational farm operators,
especially those with forward-thinking
enterprises, are beginning to ask themselves:
“Why aren’t we going in this direction?”
Many neighboring cities face a similar
In January, the Coalinga City Council
shocked locals by approving commercial
cannabis operations. The move initially
prompted backlash from local clergy and
other longtime residents.
The mood seems to have calmed down
as residents have heard from proposed
operators such as Ocean Grown Extracts,
which addressed the council at its meeting
in March. The company has proposed
to buy the vacant Claremont Custody
Center from the city, and turn it into a
77,000-square-foot grow facility. The
professional team from Ocean Grown
Extracts gave a detailed presentation addressing
how the company would add
TRADITIONAL FARM PLANS ENTRY
Bowles Farming Company is a
sixth-generation family farming outfit
based in Merced County, California. It
grows annual crops like tomatoes, melons
and carrots on 11,000 acres. Company
president Cannon Michael keeps a
close eye on cannabis developments and
could begin his own operation by spring
To Michael, “It’s just another crop, and
the customer is always right.”
He sees many advantages for large
farmers in cannabis cultivation. Small
growers may struggle with new state regulations
that have long been enforced for
traditional farmers. Pesticide usage is one
In order to “get a seat at the table,” as
Michael put it, he has been talking to local
dispensaries and county supervisors. If it
is legal and profitable, his company will
do it. He thinks many of his fellow farmers
will follow his lead, depending upon
the age of those running the operations. If
the younger generation is in control, they
will move more quickly.
www.marijuanaventure.com | 127
A view from the hills of Carpinteria, California
gives an indication of the scope commercial ag
could bring to the cannabis industry.
Below: About 20,000 illegal cannabis plants
were thriving California’s ideal growing climate
while being hidden by other agricultural crops in
this photo by the Fresno County Sheriffs Office.
BE TOO MUCH
At a recent Central Coast Greenhouse
Growers Association mixer, some attendees
said they were either already
growing cannabis or planning to. The
potential revenue is just too good to ignore,
they said. Plus, with vast experience
running commercial greenhouses,
they already have many of the necessary
Adrian Sedlin, CEO of Canndescent,
a Santa Barbara-based craft cultivator,
confirmed this rising interest.
“I got a call last month from an oldline,
large Carpinteria flower grower
who wanted us to partner with him on
growing (cannabis),” Sedlin said. “Unfortunately,
I had to tell him that it was
currently illegal to grow in his town.”
However, the flower industry has a lot
of influence in the city of Carpinteria.
Time will tell whether laws will shift in
favor of allowing marijuana cultivation.
Likewise, many facets of the cannabis
industry seem to be a perfect fit with the
wine business. The various strains are
reviewed similarly to fine wines, and
there are marketing parallels between
the two products.
The skills needed to grow grapes
could be honed for cannabis cultivation,
and the regions where grapes thrive also
fit nicely with cannabis.
So when will the wine industry enter
128 | Marijuana Venture // July 2016
the market? Not anytime soon, says one
“The O2 license granted to winemakers
is approved by the Department of
Alcoholic Beverage Control,” said Mary
Hitchcock, who has more than 20 years
of experience in the wine business. This
license requires both state and federal
approval, so until federal approval, wineries
in California will not be directly
involved in the cannabis industry, Hitchcock
But grape growers, separate from the
wine industry, could potentially be looking
to convert some of their acreage into
cannabis operations. The impact of traditional
agriculture on the cannabis industry
is likely to be far greater in California
than any other state that has legalized
This leads Michael to ponder: “Will
there be too much cannabis produced in
the years ahead?” MV
Can the small
As big businesses steadily take over the cannabis industry,
opportunities arise for boutique growers and retailers
― ― ―
By DAVID HODES
At one time, the cannabis industry was one of dedicated
mom-and-pop businesses that would buy
cannabis wholesale and sell it to patients at a dispensary
storefront. It wasn’t that much different
from other retail operations.
But the quaint origins of the industry
have largely disappeared, at least for
now. With retail chains becoming more
prevalent, multi-million-dollar licensing
requirements in some states, and
commercial grow operations churning
out incredible yields, what does the future
look like for boutique cannabusiness
The pros and cons of cannabis commercialization
have always been an argument
of quality versus quantity. Some
say businesses that specialize and take
advantage of economies of scale can be
more profitable. Others argue that smallbatch,
connoisseur-level producers will
always have a place in the market; the
boutique businesses are prime to come
roaring back, they say.
“There is an absolute gaping hole, in
my opinion, for high-quality cannabis,”
says Jan Carlos Byl, founder and managing
member of MedCanna Consulting
Group. “We are moving toward commercialization
and moving toward an ag
“That leaves the door open for the
boutique producer, because quality will
always trump volume — in anything,”
he says (although shareholders of companies
like McDonald’s might disagree).
130 | Marijuana Venture // July 2016
HAVE TO PROVIDE
WANTS, AND THEN
GET BETTER AT
Bob Morgan, a cannabis industry
consultant and attorney at the Chicago-based
law firm Much Shelist, spearheaded
the Illinois medical cannabis
pilot program. He tracks mergers and
acquisitions activity in the cannabis industry.
Morgan says many of the early
cannabis growers and dispensary owners
are now in the early stages of planning
“Ultimately, we are likely to see a mix
of mom-and-pop boutiques that evolve
and mature, and others that entirely cash
out of the labor of love that they have
built,” he says. “State cannabis industries
as old as California and as new
as Illinois will continue to mature and
force boutique shops to further carve out
a niche in the market or form strategic
At this stage of the industry’s evolution,
there are mergers and acquisitions
happening among licensed cultivation
and retail businesses, and ancillary companies.
“There have already been substantial
acquisitions on the ancillary side, such
as vaporizers, cannabis consulting and
management companies, and edible
brands,” Morgan says. “But the mergers
and acquisitions on the grow and retail
side have just begun.”
He believes many of the investments
taking place now come at a critical time
for the pioneer companies where the
infusion of outside cash — or outright
acquisition — makes sense for both the
buyer and seller.
“Smaller shops looking to survive
consolidations and increasing competition
should give serious thought and
planning to their next steps,” Morgan
Mom-and-pop businesses are not
dead, but they are going to have to adapt
in the long run, says Travis Howard,
general manager and founder of Shift
Cannabis Company, which provides
consulting services to boutique cannabis
Howard says the industry, as a whole,
needs the $100 million player in order
to build the business infrastructure to
allow more diversified companies to
Financial considerations are the main
reason small businesses have largely
watched from the sidelines or have gotten
into and then back out of the cannabis
industry, he says. It’s expensive to
get into the game, and managing a profitable
grow operation is complicated.
“In Hawaii, you have to have $1.2
million just to submit an application,”
he says. The Aloha State recently selected
eight winning applicants from a
pool of about 60 contenders. (Among
the non-winning applicants were actor
Woody Harrelson and video game pioneer
Operating a small business still means
a more defined niche that customers can
understand; companies that are small
and don’t provide unique or specialized
products will eventually go out of business,
“For every market, you have to provide
something that a customer wants,
and then get better at doing that,” he
The broader point Howard makes
about doing business today, and for the
future of a boutique business, is about
listening to the customer, providing specific
products they want, and educating
the customer about both the product and
the company. Modern consumers want
132 | Marijuana Venture // July 2016
YOU HAVE A
HIRE AND TO
to know why a company is in business,
and how their business affects society
and the environment. The potential for
the boutique model to succeed is, in part,
driven by millennials’ big-picture thinking
about the world, Howard says. They
tend to have a deep sense of distrust, but
believe they can make a difference in the
world, he says.
“They expect their retailer to be authentic,
and give them a sense of community,”
he says. “And that works for
the cannabis boutique employer. You
have a chance to hire and to scale your
culture with a workforce that feels compelled
to change the world. If you don’t
leverage that, you are missing a great opportunity.”
That’s been the methodology used by
artisan beer and food makers, clothing
manufacturers and other companies that
started as small businesses and have
grown quickly. It’s why Kellogg’s bought
Kashi, originally a small health food
maker, and General Mills bought momand-pop
organic snack maker Annie’s
Homegrowns, Howard says.
“They see what is happening in the
overall economy and where the consumer
is moving to,” he says.
There are similarities between the cannabis
and beer industries, where craft
brewers produce more exclusive and
more expensive products. Craft brewers,
such as New Belgium Brewing Company
from Fort Collins, Colorado, began telling
customers their story. They highlighted
sustainable methods and created an “us
versus them” rivalry with the mass-produced
brands like Budweiser and Coors.
Quality was just one of the factors used to
differentiate craft brewers from the multinational
Smaller businesses — whether they’re
brewing lagers, growing cannabis or
making specialty cupcakes — need to
learn how to promote themselves. Howard
believes people will pay more because
they know and appreciate what
they are paying for.
In cannabis, the multinational giant
simply doesn’t exist — yet. The market
is too new, and federal regulations against
transporting marijuana across state lines
prevent companies from becoming truly
national. But it’s coming, and boutique
business operators are wondering how
much room will be left for them. MV
134 | Marijuana Venture // July 2016
Eliminating workplace hazards is the responsibility of every employee
― ― ―
By ROSALVA CLEVELAND
When it comes to owning or operating a business,
safety should never be compromised.
In the cannabis industry, because of federal
regulations and the largely cash-only
nature of business, it’s even more important
to follow proper safety protocols.
Safety is a wide-ranging subject that
includes well-trained employees who use
appropriate personal protective equipment,
follow company injury and illness
prevention programs, learn how to
prevent workplace violence, understand
indoor air quality levels and take proper
respiratory protection measures.
Safety often begins at the top; if supervisors
work in an unsafe manner, then so
will the employees.
Each state is regulated differently when
it comes to occupational safety. In California,
for example, the Division of Occupational
Safety and Health oversees health
and safety hazards in the workplace.
How can your employees learn to be
safer? The first step is knowing the specific
regulations of your industry. The needs
of an auto repair shop will be different
than a restaurant’s needs. For cannabis
businesses, retail stores have significantly
different safety hazards than a grow operation,
so learning those specific elements
is key. The OSHA-mandated training varies
from industry to industry, so be sure to
follow your industry’s standards.
Another subject of great importance,
particularly for retail stores that are open
to the public, is workplace violence prevention.
Be sure you and your employees
are properly trained. Be aware if someone
at your workplace has a conflict with
another person, particularly if a restraining
order may be issued. Sometimes,
the workplace is a prime location for
violence, simply because the perpetrator
knows when and where the victim can be
found at work.
Business owners should ask their
workers’ compensation insurance carrier
about their experience modification rate
and how that score was determined. This
gives businesses insight into ways they
can lower their insurance rates with a
safer work environment. Many insurance
companies will give discounts to companies
that implement safety training programs
and facility audits.
Rosalva Cleveland is the co-owner and
vice president of Force Field Safety LLC.
She can be reached at firstname.lastname@example.org.
136 | Marijuana Venture // July 2016
138 | Marijuana Venture // July 2016
Trey Reckling teaches a state-certified
training program that prepares students
to work in the medical marijuana sector.
Under Washington’s new medical
marijuana regulations, retail stores with a
medical endorsement must always have at
least one budtender on staff who is licensed
as a “medical marijuana consultant.”
Led by Trey Reckling, Seattle Central College offers one of two state-approved
medical marijuana training programs in the state
― ― ―
By PATRICK WAGNER
hen Trey Reckling moved to Seattle, he thought he
was leaving behind a career in education to join
the cannabis industry. In the back of his mind, he
wondered what future employers might think about
hiring somebody with marijuana on their resume.
Reckling had spent 15 years at the
Savannah College of Art and Design in
Georgia, where he worked in student
development and conflict resolution,
before moving with his husband to the
Pacific Northwest in 2014.
To his surprise, his career in education
was far from over. He initially
began teaching a course at the University
of Washington on the essentials of
cannabis handling. Not long after, the
state began a highly controversial overhaul
of medical marijuana regulations
that would require dispensaries to be
licensed by the state.
Among the many changes implemented
for dispensaries and patients,
medical marijuana budtenders are now
required to complete a state-certified
training program. According to rules
set forth by the state Department of
Health, marijuana retail stores with
www.marijuanaventure.com | 139
College, which has
a history of bucking
was recognized for
being one of the top
in the nation in 2000.
140 | Marijuana Venture // July 2016
medical endorsements must have at least
one certified “medical marijuana consultant”
on staff at all times.
Reckling, who runs the Academy of
Cannabis Science, began preparing a
proposal for an online certification program
that would meet the state requirements
for medical marijuana training
courses. He reached out to Lisa Babinec,
who is now the director of Seattle Central
College’s continuing education program,
about establishing a partnership
with the school.
Reckling praises Babinec for her willingness
to host the program at an accredited
“Her bravery in all of this can’t be understated,”
Reckling says. “She’s been a
tiger for us.”
Reckling says he was lucky to connect
with Seattle Central for the program because
the school has the willingness and
infrastructure to handle such a program.
“Nothing falls through the cracks, and
to me there’s the joy of studying at an
accredited institution,” Reckling says.
“You’re not off studying in the dark
Reckling also teaches a class in cannabis
foundations through Seattle Central,
for people who want to learn about the
chemistry, history and medical applications
of marijuana. The four-hour class is
designed as an introduction for medical
marijuana patients, prospective investors
and employees of various cannabis businesses.
Seattle Central had already been running
a distillation program where students
learn about producing spirits.
Reckling says Seattle Central recognizes
the need to train students for careers,
rather than just providing a novelty education.
Reckling designed the medical marijuana
consultant certification program
with an emphasis on student dialogue
and interactions with himself and other
professional lecturers. The 20-hour online
course allows students to complete
required lessons and examinations at
their own pace within the allotted twoweek
Reckling also lines up lectures from
local experts, including Nicole Li, a
health care and cannabis lawyer, Dr. Jake
Felice, a naturopath, and Miles Jonard,
head grower of Solstice.
The coursework isn’t just designed
to prepare students for a test, Reckling
“We try to get real, practical applications.”
The program launches at a tumultuous
time for medical marijuana in Washington.
For years, Washington’s medical dispensaries
operated without licenses and
little in the way of regulations. In an effort
to merge the medical and recreational
sectors, lawmakers approved the Cannabis
Patient Protection Act, outlawing
SOME PATIENTS ARE SCARED
BECAUSE THEY ARE LOSING THE
PLACE WHERE THEY’VE ALWAYS GONE.
THEY’RE LOSING THEIR HOME BASE
unlicensed dispensaries as of July 1. The
legislation sparked outcry from medical
cannabis activists throughout the state,
but it’s unclear if existing unlicensed dispensaries
will be given extensions. As of
mid-June, there were about 260 marijuana
retail stores that had received medical
To account for the additional needs of
medical patients, the state expanded the
cap on marijuana retail stores by 222,
bringing the new total to 556. As of mid-
June, there were less than 320 retail stores
listed as active, according to Liquor and
Cannabis Board records.
Reckling hopes training budtenders for
medical consultations will help quell the
fears of patients who have watched collective
gardens and unlicensed medical
dispensaries be deemed illegal.
“Some patients are scared because
they are losing the place where they’ve
always gone,” he says. “They’re losing
their home base and all the people who
used to work with them. Some places are
lucky and they will get licensed, but others
have to make a new contact and find
new people to trust.”
The medical marijuana training program
syllabus has four peer-reviewed
articles as required reading, and the six
modules covered during the course pull
from more than 80 journals, periodicals
and documentaries, as well as statements
and requirements from the Department
of Health. Students begin the course
with simple lessons in CBD, chronic
pain and the history of marijuana in the
United States, before moving on to more
complex subjects like pharmacology, addiction
and identifying qualifying conditions.
The Seattle Central course is one of
two state-approved training programs for
medical marijuana consultants. The other
is through NGR Enterprises, which offers
an on-site certification program, as opposed
to Reckling’s online course. MV
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142 | Marijuana Venture // July 2016
Business partners must
abide by fiduciary principles
What constitutes a breach of contract in a partnership?
By Michele Brooke
Joint ventures and
day in the cannabis
world, whether by
a handshake, phone
call, email, deal scribbled
on a napkin or a
formal agreement drafted by an attorney.
Partnerships are the combination of
two or more people to jointly conduct
business. Partners are obligated to share
risks and benefits, and to carry out the
enterprise with the loyalty and care of a
fiduciary. The same fiduciary duty principles
apply to any business venture, including
those in the cannabis space.
It’s not uncommon to see partnerships
begin with great enthusiasm, only to decay
as friction, personality conflicts and
other complications emerge. This sometimes
results in litigation.
Here, we will discuss fiduciary principles
found in two California cases: Leff
v. Gunter (1983) and Agam v. Gavra
LESSONS FROM LEFF V. GUNTER
Ted Leff initiated a lawsuit against
his former partners, William Gunter and
others, after they won a government construction
project where Leff was an unsuccessful
One of Leff’s causes of action was
unfair competition due to a breach of
fiduciary duty. At the trial, the judge
properly instructed the jury that a business
partner has a duty not to pursue a
business opportunity that competes with
the partnership. This duty not to compete
survives a partner’s withdrawal from the
company. Therefore, the defendant partners
were properly found liable.
From the evidence presented, the jury
may have concluded that the defendants
secretly began an independent bid during
their association with the plaintiff, utilizing,
at least in part, information acquired
by virtue of that participation. After the
defendants withdrew from the joint venture,
they continued to prepare their independent
bid. While their formal bid
apparently did not occur until after their
withdrawal, their conduct was not immunized.
Careful orchestration of their plans
didn’t safeguard the defendants.
This scenario is similar to any number
of transactions that occur within the
emerging commercial cannabis business.
There are three main lessons to take from
the Leff case.
First, partnerships are not just created
by way of a formal partnership agreement.
In the Leff case, the partnership
was recognized despite the parties having
only a written agreement.
Second, partners are trustees for each
other and in all business dealings connected
with the conduct of the partnership
business. Notice the word “trustee”
has “trust” in it, meaning a business
partner has to act in a trustworthy manner
and in the highest good faith to their
co-partners. Therefore, business partners
may not obtain any advantage over their
partners in any kind of partnership business
affair. In other words, they cannot
make even the slightest misrepresentation
about a business affair, conceal important
data or details, threaten the other
partners or engage in any kind of unfair
Third, if a member of a partnership
obtains important information while conducting
partnership business, and this information
is within the scope of the firm’s
business, that partner cannot engage in
self-serving behavior. Any information
obtained by a partner that would be helpful
to the business must be disclosed to
the other partners.
LESSONS FROM AGAM V. GAVRA
In Agam v. Gavra, the parties agreed
to purchase and develop two parcels of
property by constructing houses thereon.
In the end, they ran into multiple financial
and personality conflicts that eroded
their initial plans. Agam eventually filed
a lawsuit against Gavra for breach of
the partnership agreement, and the court
found that Gavra knew or should have
known that the success of the partnership
depended on the construction of houses
for sale. This was the sole goal of the
partnership, as set forth in the partnership
agreement. The court concluded that
Agam had made significant expenditures,
and found that Gavra’s refusal to participate
in construction prevented the partnership
from attaining its goal, leading
to the breach of his fiduciary duties. The
facts also showed that Gavra inflicted adverse
pressure by threatening to default a
key loan if Agam and another partner did
not sign a subsequent contract that essentially
constituted an unfair advantage in
favor of Gavra.
There are three lessons to be learned
from this case. First, substantial evidence
is required to prove a breach of fiduciary
duty. As a marijuana business attorney, it
is not uncommon for disgruntled clients
to complain about their business partners.
It is important to distinguish whether
the other partner has actually breached
Second, a partner cannot attempt to
“strong arm” another partner into agreement
on a particular issue for their own
Third, a partner does not violate his or
her fiduciary duties merely because their
conduct furthers their own interest. The
purpose of this code section is to distinguish
breaches of fiduciary duty, and
provides an excuse to partners from accounting
for incidental benefits obtained
in the course of the partnership activities
without detriment to the partnership.
All cannabis entrepreneurs should
heed the lessons of the Leff and Agam
decisions. Remember, it’s better to avoid
a fiduciary relationship than to be found
in breach thereof.
Michele Brooke is an attorney in California
who practices civil litigation and
civil cannabis law (www.brookelawgroup.
com). She is a member of Americans for
Safe Access, NORML and the American
Herbal Products Association.
144 | Marijuana Venture // July 2016
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North County Distributors
Using creative financing to
avoid residency requirements
Convertible notes and SAFEs are two options for businesses
By Lauren Rudick
Last year, Colorado
passed House Bill
15-1379, formally allowing
to fund marijuana
warrants and options. Cash-strapped
startups in the industry were relieved.
Residency requirements protect against
“Big Marijuana” and helps prevent cannabis
dollars from moving across state
lines, but they constitute a significant
impediment to fundraising that is unparalleled
in other industries.
Colorado’s law did not receive extensive
press attention, perhaps because it legitimized
a practice that savvy startups and
investors had already been using in Colorado
and Oregon (before restrictions on
out-of-state investment were lifted).
However, those entrepreneurs who
were late to the party (or perhaps lack
access to creative and sophisticated legal
counsel) still view residency requirements
as entirely prohibitive to out-of-state investment.
To clarify, in carefully crafted
situations, convertible notes and SAFEs
(simple agreements for future equity) can
be used to raise out-of-state capital without
violating residency requirements or
the Cole Memorandum.
Convertible notes are akin to promissory
notes (loans with interest, payable on or
before a maturity date), but also provide
the investor/lender with options to convert
the debt into equity (typically preferred
stock) of the company/borrower. Common
“conversion events” include:
• The loan remains outstanding upon
the maturity date;
• The company raises a certain amount
of capital in a priced equity round (a
• A sale of the company;
• A “change in control” of the company
(such as changes in effective control,
ownership or a sale of all or a majority of
the company’s assets).
Cannabis investors may cash in on their
equity in compliance with residency requirements
only upon the earlier of: establishing
residency for the requisite period of
time within the state in which the company
is located; a regulatory shift eliminating any
applicable residency requirements; and/or
sale of the note to a buyer who meets the
Conversion frequently includes a discount
(averaging 15-25%) on the price
of stock to the future round of financing.
Suppose the company were to raise
$500,000 in convertible debt with a 20%
discount to the next round. Upon a subsequent
qualified financing of $1 million at
$1 per share, convertible noteholders will
get 625,000 shares for their $500,000.
This rewards early-stage investors for
their foresight and risk.
Startups can further sweeten convertible
notes for investors by using, among
• Valuation caps (thus protecting
against shareholder dilution upon a future
• A premium upon a sale of the company
(frequently double the amount of the loan);
• Most-favored-nation clauses, allowing
investors to benefit from future investors’
terms that are more favorable than
their own terms;
• Limitations on pre-payment, such as
requiring the majority vote approval of
In some circumstances, startups that
have a variety of assets, such as intellectual
property, equipment or land, may secure or
collateralize the note, giving the investor
protection against default on the underlying
loan. Notes appear as long-term liabilities
on the company’s balance sheet.
SAFEs are similar to convertible notes,
as they allow investors to convert their investment
into equity at some future point
(when residency requirements are moot).
Unlike convertible notes, SAFEs are not
classified as debt, SAFE holders are not
creditors and there is no maturity date or
interest rate. Instead, SAFE holders get a
warrant that can be exercised if the company
is acquired, raises investment capital
or goes public.
SAFE agreements are short — roughly
five pages — and terms are standardized,
leaving little to negotiate aside from the
valuation cap. Thus, startups can save significant
transaction costs. Tom Quigley,
cannabis investor, advocate and CEO of
the Gluu, a wholesale distribution platform
for cannabis culture and wellness
products, encourages cannabis startups
and investors to utilize SAFEs, noting
that “time is money … and debating valuations
can limit growth.”
Because investors may wait indefinitely
for an exit, SAFEs cannot be flipped, thereby
assuring investors’ long-term loyalty
and commitment to the company’s growth
(as appropriate for early-stage investors).
Upon qualified financing, SAFE holders
automatically receive a number of
preferred shares based upon the valuation
cap, as opposed to a number of preferred
shares based upon a higher pre-money
valuation. While it may seem that SAFEs
are predominately founder-friendly, investors
are entitled to pro-rata rights of
participation in future financing rounds.
Startups should consider including a
threshold, because these rights are automatic
for every SAFE investor.
Clearly, states are trending against residency
requirements. For instance, Colorado
and Oregon have paved a clear path for
out-of-state lenders and investors, respectively.
Washington officials are considering
allowing out-of-state lending and whether
to allow out-of-state minority ownership of
marijuana licenses. And for those startups
and investors who cannot wait, there are
creative deals to be made in the meantime.
Lauren Rudick represents investors and
startup organizations in all aspects of business
and intellectual property law, specializing
in cannabis, media and technology.
Her law firm, Hiller, PC, is a white-shoe
boutique firm with a track record for success,
handling sophisticated legal matters
that include business and corporate law.
146 | Marijuana Venture // July 2016
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Is your medical dispensary
covered by HIPAA?
It might be smart to bring your business into compliance
By Hanan B. Kolko
The Health Insurance
Act of 1996 (HIPAA)
is a federal law that
forbids disclosure of
protected health information
requires entities to take specific steps to
ensure security of PHI. Since HIPAA was
enacted, the U.S. Department of Health
and Human Services has issued regulations
describing in detail what a “covered
entity” must do to protect PHI.
There are several important definitions
to understand in order to determine
whether your dispensary is subject to
HIPAA regulations define a covered
entity to include a “health care provider
who transmits any health information
in electronic form in connection with a
A “health care provider” is any person
or organization that furnishes or is paid
for “care, services, or supplies related to
the health of an individual.” Since dispensaries
provide medical marijuana in order
to treat illnesses, they are almost certainly
“health care providers” as that term is defined
according to HIPAA.
As health care providers, dispensaries
may be subject to HIPAA if they transmit
any health information in electronic form
in connection with a covered transaction.
HIPAA regulations define “health information”
as any information that “relates
to the past, present, or future physical or
mental health or condition of an individual;
the provision of health care to an individual;
or the past, present, or future payment
for the provision of health care to
an individual.” Based on that definition,
most dispensaries have HIPAA health information.
In fact, depending on the medical
marijuana regulations in each state,
dispensaries may be required to maintain
health information data and provide that
information to state regulators.
Even if they meet the previous definitions,
medical marijuana dispensaries
are typically not subject to HIPAA unless
they electronically transmit health
information in connection with “covered
transactions” specified in the HIPAA
Under those regulations, “covered
transactions” include: requests to obtain
payment from a health insurance plan
and the exchange of information in connection
with such a request; inquiries to
health insurance plan to determine whether
an individual is eligible for coverage
under that plan and to determine benefits
associated with that plan, as well as the
health plan’s response to such inquiries;
requests to obtain authorization to refer
a person to another health care provider;
the electronic transmission of payment
for health care services from a health
insurance plan to a health care provider
or the provider’s financial institution, as
well as the transmission of information
concerning that payment.
At this time, most insurers do not cover
medical marijuana, so dispensaries
are not likely to be electronically transmitting
health information in connection
with transactions that would subject them
to HIPAA. However, if a dispensary does
send or receive information electronically
in connection to receiving payment from
a health insurer, or to determine the eligibility
of a patient for health insurance, it
is likely to be covered by HIPAA.
Dispensaries covered by HIPAA may
not disclose PHI unless that disclosure
is either authorized by the patient or authorized
by HIPAA regulations. The regulations
authorize limited use of such
information in connection with providing
treatment and obtaining payment for services.
In addition, HIPAA Security Standards
require businesses covered by HI-
PAA to develop and implement stringent
safeguards for PHI.
HIPAA’s privacy requirements are enforced
by the Department of Health and
Human Services Office of Civil Rights,
which has the power to impose penalties
for violations of HIPAA’s privacy protections.
Those penalties can range from
$100 to $50,000 per violation.
Even if your dispensary is not currently
covered by HIPAA, you may want to
consider gradually bringing it into compliance
for several reasons. First, as the
industry matures and insurers begin covering
medical marijuana, you’ll have to
engage in HIPAA-covered transactions
with your patients’ insurers, so it makes
sense to prepare for that now. Second,
your patients care about the privacy of
their records and expect your dispensary
to maintain the privacy of those records.
Finally, the cannabis industry benefits
when businesses demonstrate that they
“play by the rules,” and complying with
HIPAA is one way to do that.
Hanan B. Kolko, a member of Meyer,
Suozzi, English & Klein, P.C., is cochair
of the firm’s Cannabis Practice
Group. He is also a member of the National
Cannabis Bar Association and its
Amicus Committee, and has presented
continuing legal education programs on
cannabis-related topics, including the
ethics of representing cannabis clients,
employment issues in the cannabis industry,
cannabis businesses and access to
bankruptcy courts, and how the interplay
between federal and state laws impacts
the cannabis industry.
148 | Marijuana Venture // July 2016
SWCC San Diego
M A R I J U A N A
is proud to present
Meet with 20+ licensed marijuana retailers at the
Renton Pavilion, Renton, Washington • June 22-23, 2016
This is not another
typical ‘trade show’
• This event is a buy/sell meeting for
vendors to meet with qualified buyers.
• Industry only. No public. Interchange is
for professionals in Washington’s legal,
recreational marijuana industry.
• Each vendor will have 15-20 one-on-one
meetings over a two day period with retail
buyers from around the state.
• Vendors and buyers will be provided
breakfast and lunch.
TaraBabette@gmail.com | GJames@Topics-Ent.com | 425.656.3621
is a monthly section in Marijuana
Venture showing images of operational cannabis
businesses throughout the U.S. and Canada.
To submit photos for consideration in future
issues email: Editor@marijuanaventure.com.
left) shakes hands
Governor Jay Inslee,
while sales manager
Lisa Smith poses
for a photo with
U.S. Senator Patty
Murray (far left).
James and Smith
recently had lunches
with the governor
and senator to
issues in the state of
www.marijuanaventure.com | 153
One little leg injury isn’t enough to keep Emily Walter, national sales manager for Nanolux, off the sales
floor at the Marijuana Business Conference in Orlando. Photo by Patrick Wagner.
Extraction masters at Apeks Supercritical answer attendee questions in
Orlando (above), while Pope Scientific displays its molecular distillation
technology. Photos by Patrick Wagner.
154 | Marijuana Venture // July 2016
Jason Cramer (right) and
Kassandra Nienaber display
a few copies of Marijuana
Venture at Buddy’s, the newest
marijuana retail store in Renton,
Washington. Photo by Adam Wik.
Will Smith of Bud Bar Displays took his next-level dispensary
solutions to the Southeast for the Marijuana Business Conference
in Orlando. Photo by Patrick Wagner.
Showcasing its expertise in lighting, pest management, irrigation and water treatment, Urban-gro had a prime
location at the Marijuana Business Conference in Orlando. Photo by Patrick Wagner.
www.marijuanaventure.com | 155
Promotional photos of Eugreen Organics’ Blackberry Kush. Photo by Michael Caley.
The team at San Diego Healing Center (from left to right)
Michelle, Tom, Matt and Dr. Bee. Photo courtesy San
Diego Healing Center.
Master journalist Patrick Wagner manages
to put the Playstation controller down
long enough to snap a selfie inside one of
156 | Marijuana Venture // July 2016
www.marijuanaventure.com | 157
WWW.MARIJUANAVENTURE.COM VOLUME 3 / I SUE 2
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the mind, body and soul
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Inside the nation’s most
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JANUARY 2016 $6. 9
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Preparation, attention to details
are key for a successful harvest
Licensed retail store goes up
for sale in Washington
MARIJUANA VENTURE ADVERTISER DIRECTORY
Front Runner .....................................51
Business Operations Guide ..............101
Clean Green Certified ......................147
Denver Consulting Group ...................15
The Grow Expert ................................50
Dear Electric ......................................49
Young Electric ..................................137
Green Thumb Industries ....................16
Groco Supply .....................................95
Vital Garden Supply ...........................96
Viridian Staffing ...............................123
CWCB Expo ........................................82
Imperious Cannabis Business Expo ....29
Interchange 2016 ..................... 152, 154
MJ Business Conference ..................150
SWCC San Diego ..............................151
ZMS Financial ....................................26
Hort Services ...................................134
Next G3N .........................................161
OBC Northwest ................................157
Rough Brothers, Inc. ..........................11
BOLD Light Deprivation .....................25
Green Thumb Industries ....................16
Harvest Excel ...................................147
HydroLogic ......................................... 4
KES Science .......................................19
O2 Grow ..........................................158
Zwart Systems .................................133
AT Foam ..........................................147
CannaBiz Insure ...............................158
Crimson Insurance .............................33
Pension Builders ..............................129
Shirreff Insurance ............................149
For Sale: Elma Airport ........................66
For Sale: T-1 Producer/Processor .....102
Regency Group, Inc ..........................158
Titan Clearinghouse .........................143
Crew Consulting ................................39
Gordon Thomas Honeywell Law ......137
GSB Law ..........................................123
Bios Lighting ......................................10
Forever Green Indoors .......................91
Groco Supply .....................................95
Kind LED ............................................57
Nanolux Technology ........................... 1
Solar Buddy .....................................149
Across International ........................162
Centurion Pro ....................................27
Eden Labs ..........................................55
Friendly Farms ......................................
Grasshopper Extractor .....................141
Root Sciences ....................................37
Rosin Press Kings .............................106
Terpp Extractions .............................121
Twister Trimmer ................................75
VC999 ................................................. 7
Zoom Technologies ............................43
Clear Choice Cannabis .......................35
Alpha Books ....................................141
Dash Hemp ........................................83
Peterson Cheese ..............................133
DCG One ..........................................135
Kush Bottles ......................................77
Maverick Label ..................................92
VC999 ................................................. 7
Vessel Verde ....................................... 3
WS Packaging ..................................137
Vaporous Technologies ......................89
Blue Roots .......................................145
CannaSol Farms ...............................113
Clarity Farms .....................................41
Interra Oils ........................................45
Northwest Cannabis Solutions ...........61
Northwest Harvesting Co .................119
Walden Cannabis ................................ 9
Bud Bar Displays ..............................131
Portland Store Fixtures ....................112
Campbell Nelson ...............................28
CCTV Dynamics ..................................31
High Quality Security Walls ..............145
Salient Systems .................................13
Statewide Security ...........................142
Flying Skull ......................................157
Growth Products ...............................79
North County Distributors ...............145
Plant Success .....................................23
Rx Green Solutions ............................65
West Coast Horticulture ..................... 5
Confidence Analytics .........................81
Medicine Creek .................................. 2
Weed TraQR ....................................157
M A R I J U A N A
Black Dog Acres thrives
WWW.MARIJUANAVENTURE.COM VOLUME 2 / ISSUE 9
WWW.MARIJUANAVENTURE.COM VOLUME 3 / I SUE 1
M A R I J U A N A M A R I J U A N A
IN NAME ONLY
Giant investment opportunity:
Back issues of Marijuana Venture are
available. Send an email to Editor@
MarijuanaVenture.com or check out
www.marijuanaventure.com for details.
www.marijuanaventure.com | 159
Three experienced bud tasters sample two different products each month. The test is done completely blind. There
are no visual cues; no information is relayed regarding the origin of the product or any other factors that might
influence the testers. At Marijuana Venture, we believe blind testing is the only way to get a truly honest score.
Each of our testers has been asked to rate a bud sample on five factors: smell, taste, texture (or cure), how it
smokes and overall appeal. Each category is rated on a scale of 1-100, with 100 being a perfect score. The results
of the five categories for each tester are averaged to determine the Bud Score. We deliberately did not include
the effect or the “high” in the rating, because we chose to mirror blind tastings in the wine, cigar and spirits
businesses. Each Bud Score is determined according to personal appeal and taste, rather than potency. Each
sample was purchased at a Washington state-licensed cannabis retail store.
Brand: U.S. Cannabis
Strain: Grand Daddy Purple
Total THC: 26.0%
Grow type: Indoor indica
Brand: Tiller/NCW Grow
Total THC: 20.6%
Grow type: Outdoor sativa
The June 2016 issue
of Marijuana Venture
incorrectly labeled one
of the strains sampled
in the Bud Scores
section. The Pioneer
Nuggets Afgoo is an
ARCHIVES BUD SCORE TOTAL THC GROW/TYPE ISSUE
Green Barn Farms Super Skunk 81.4 28.6% Outdoor indica hybrid April 2016
Phat Panda OG Chem 83.7 15.3% Indoor sativa hybrid April 2016
Pioneer Nuggets Afgoo 82.5 21.0% Indoor indica May 2016
Pingston Creek Durban Poison 87.6 17.8% Indoor sativa hybrid May 2016
Secret Gardens of Washington Gas Mask 87.4 21.6% Indoor indica June 2016
Tiller/Flying Farma Dirty Girl 84.2 21.4% Outdoor sativa June 2016
Joy Beckerman is a renowned industrial
hemp and marijuana consultant and
policy maven who has been involved in
both movements for more than a quarter
of a century. She judged her first High
Times Cannabis Cup in Amsterdam in
1995, and enjoyed her most recent High
Times Cannabis Cup judging in SoCal
in 2015 before a wide variety of duties
overwhelmed her cannacalendar.
Adam Wik is a Pacific Northwest native,
who has a love for all things cannabis.
He’s worked for several different
companies in the cannabis industry,
including sales for Marijuana Venture. A
mad scientist of sorts, Adam really enjoys
learning about and understanding strain
genetics, terpene profiles and the effects
they have on the mind and body. He also
enjoys long walks to the refrigerator.
Tera Martin is the founder of the Pink
Gene Foundation and general manager
of Green-Theory, a marijuana retail store
in Bellevue, Washington. She studied
hospitality management at Washington
State University, and was introduced
to the cannabis industry after being
diagnosed with breast cancer. Cannabis
was a part of her treatment program,
which led her to become an activist.
160 | Marijuana Venture // July 2016