Tag Archives: California

Wildfires Devastating Californian Cannabis Farms

By Aaron G. Biros
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Earlier this week, a series of wildfires began ripping through Napa, Sonoma and Mendocino Counties, causing mandatory evacuations, rampant property damage and taking the lives of at least 17 people. Extraordinarily high wind gusts up to 50 mph have swept through communities in Northern California, leaving complete destruction in its wake.

According to The Washington Post, flames have reached more than 170,000 acres since Sunday when the fires began. The cause is still unknown. The President declared a state of emergency, allowing emergency funds to go to clearing debris and supplies for shelters. Nearly 25,000 have fled their homes to shelters in seven counties.

NASA’s Aqua satellite took this picture of the smoke over California on Tuesday
Photo: NASA, Flickr

The area is well known for its wine production, an industry that is taking a very hard hit from the wildfires. It is also known as a productive cannabis growing area as part of the Emerald Triangle, synonymous with high quality, outdoor cannabis farms. A number of cannabis farms have been severely impacted by the flames.

We’ve received numerous reports of growers fleeing their homes and farms to get to safety. The LA Times reported that at least seven cannabis farms have been engulfed in flames. According to Amanda Reiman, vice president of community relations at Flow Kana, a distribution company working with cannabis farmers in the Emerald Triangle, they are in active evacuations and the fire is only about 5% contained. “It will be a while before we know the extent of the damage to our farmers and our community,” says Reiman. “The Emerald Triangle is a large region and central Mendocino county contributes a lot. Our farmers are resilient, but right now we are all focused on safety and vigilance.”

Kristin Nevedal, founder and chair of International Cannabis Farmers Association (ICFA), says she’s received information about cannabis farms being destroyed. “The true extent of damage to farms, lives and communities won’t unfortunately be known for sometime,” says Nevedal. “There is no rain in the immediate forecast, conditions are dry and we have had high winds.” Nevedal says the damage goes way beyond just a business setback. “Traditional sun grown cannabis farmers often live on the property they farm, so for many, a forest fire can mean not only loosing the crop but also their homes,” says Nevedal. “While there are fire insurance policies available for houses and outbuildings, the operational infrastructure components and the crop itself can be challenging or impossible to insure.” She says things like water storage tanks, water supply systems, irrigation systems, fences, water pumps and solar systems might not be insured at all. “Law enforcement in Mendocino is coordinating, to the best of their ability, with evacuees who have fire damage or have been evacuated, to insure public safety while assisting folks with repopulating their property and/or assessing the status of fire damage,” says Nevedal.

Because California is expected to implement their full adult use legalization in early 2018, the wildfires are particularly devastating to businesses that have been gearing up for the new market. To make matters worse, the fires came during peak harvest time, while growers are cutting plants and preparing their entire crops for distribution and sale.

Over 5,000 residents have evacuated in Sonoma County

Devika Maskey, founder of TSO Sonoma, a cannabis farm in Sonoma County, could only speak briefly because her farm is under evacuation orders. “We are getting all personnel off the hill to safety,” says Maskey. “The wind will be picking up to 40-50mph again later today.” Those high winds have the potential to spread the flames quicker, destroying more property and putting more lives at risk.

Maskey says the wildfires are having an enormous impact on their crops this year. “We do not have enough time to harvest the outdoor crop,” says Maskey. “So far there has been clear skies, but if the fire gets closer it can taint the buds with a smoky smell and flavor.”

Maskey says she has a number of friends in the cannabis space that have been severely affected already. “We do have a few friends that have lost their farms already,” says Maskey. “About a dozen other friends and family members who have lost their homes.” In Sonoma County alone, 5,000 people have been evacuated to shelters as of Wednesday morning, reports The Washington Post. “This has been a devastating week for many people and businesses,” says Maskey. “Our priority is getting everyone off the hill and to safety.” If you want to help the cannabis growers impacted by the fires, Maskey recommends donating to this growers relief fund or donate to the North Bay Fire Relief fund here. 

This list of charities, including GoFundMe pages, food banks and shelters in need of supplies and donations, is also a helpful resource to figure out how you can help those impacted by the fires.

Digipath Expands To California

By Aaron G. Biros
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In July, we sat down with the folks at Digipath, Inc. when they received their testing license in Nevada for the adult use market. In that conversation, they mentioned they were looking to expand into California.

According to a press release published September 25th, DigiPath, Inc. has entered a joint venture to establish their first cannabis-testing lab in California. They will be working with Don Ashley, an experienced real estate developer and cannabis entrepreneur, to launch Humboldt Botanical, LLC, conducting business under the name “Digipath Botanical Testing”.

Ashley says they expect to be fully operational by Q1 of 2018. “We expect to break ground on this project in the next few weeks and hope to be operational in early Q1 2018 just after the state-wide adult-use market is expected to launch, as we have already obtained approval from the local planning authorities for the entire complex,” says Ashley.

Todd Denkin, founder and president of Digipath

Todd Denkin, president of Digipath, is optimistic for California’s market and the coming regulations. “The state of California is estimated to be the single largest cannabis market in the U.S. Adult-use cannabis legislation was approved by California residents last November, and we expect these new regulations to be implemented in 2018,” says Denkin. “The good news for the industry is that the requirements for cannabis testing will be significant, and we are excited to partner with Don and his team to pursue this opportunity in Humboldt County.”

Ashley is contributing roughly $2 million to build and equip the lab with instrumentation, while Digipath Labs will manage and supervise operations at the lab. According to the press release, Digipath will provide a non-exclusive license to use its intellectual property for the operation of the lab. Digipath Labs will retain rights over all the scientific data generated in the lab.

Cindy Orser, PhD., chief science officer at Digipath

According to Cindy Orser, PhD., chief science officer at Digipath, that data will be put to good use. “Digipath Labs has developed an algorithm for use in strain authentication based largely on terpene profiling from our testing lab in Nevada and we are eager to further test our hypothesis with an expanded dataset from cannabis grown in Northern California,” says Orser.

While testing labs are primarily seen as safeguards for public health and safety, using data to correctly identify strains is a relatively new concept. “Digipath Labs is all about public health and safety through testing for adulterants,” says Orser. “Another component to quality is having confidence in product authenticity at the dispensary level. Not only is the consumer buying quality assured products but truth in advertising when it comes to strain nomenclature.”

Denkin says they were proactive in working toward getting the license early on. “Our partners have been dealing with the local regulators while we have been providing the proper SOP’s for the local government in order to receive the proper licensure in the area,” says Denkin. Taking their experience from Nevada to California, Orser says they have been asked to present to the California Toxicology Association on their experience with cannabis testing in the highly regulated marketplace of Nevada.

The laboratory in Humboldt is going to be part of a “cannabis industrial park,” alongside an R&D facility, oils/concentrate manufacturing center, health and wellness center, distribution and processing facility, tissue culture nursery, hemp clothing outlet, and coffee bistro, according to the press release.

Looking forward to growing their business, Denkin says they hope to launch a lab in Southern California. “We do expect to have a larger footprint in California because of the size of the market and are looking for locations in Southern California as well,” says Denkin. When asked about any new plans to expand elsewhere, Denkin says they’ll let us know. “We are continuing with our business plan and actively seeking the right mergers and acquisitions. Stay tuned.”

The Future of California’s Regulations: Q&A with Josh Drayton

By Aaron G. Biros
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Josh Drayton, deputy director of the California Cannabis Industry Association, has an extensive career in local and state-level politics, with his origins in Humboldt County as a political organizer. As a coffee shop owner about ten years ago in Humboldt, he let city council candidates use his space for community engagement, which eventually steered him towards a career in politics. As a heavily involved resident of Northern California and an advocate in local and state matters, he came to understand cannabis as a strong economic driver for the region and beyond.

Drayton saw firsthand how local economies benefit from cannabis as a source of income, economic activity, and providing occupational opportunities for many families in Humboldt County. After running a handful of local campaigns in the Humboldt region, Drayton served as deputy director for a state senate campaign in Riverside.

Josh Drayton, deputy director of the CCIA

Towards the end of his tenure with the Democratic Party in California, the state legislature began working on medical cannabis regulations. “As we saw those regulations moving through, cities and counties began to ban cannabis throughout the state, which was a very unintended consequence,” says Drayton. “The goal was to put regulations forward that would create a framework for the industry to survive and function under, but they were not very fond of cannabis at the time. It was clear that we had a lot of work to do.” Politicians shying away from cannabis issues and a lack of real representation in the legislature for those stakeholders drove him to leave the state’s senate for the California Cannabis Industry Association (CCIA).

In January of 2016, he jumped on board with the CCIA as their deputy director. Ahead of the California Cannabis Business Conference, September 21-22 in Anaheim, we sit down with Drayton to hear his take on the future of California’s cannabis regulations.

CannabisIndustryJournal: Give us a quick update on the regulatory framework in California and the changes we should expect.

Josh Drayton: One of the biggest challenges that California has faced has been the reconciliation of medical regulations with adult use regulations. Although California had medical cannabis legalized in 1996, we did not get those regulations put forward until 2015. That was called the Medical Cannabis Regulation and Safety Act. That was approved by the state legislature and signed by the governor into law. It was created in the legislature. When Prop 64 passed, the Adult Use of Marijuana Act, in November of 2016, it was passed through by a voter initiative. Any time that a piece of legislation goes to the voters, it trumps any legislation or regulations written by the state legislature. The real work has been to reconcile these two pieces of legislation into one regulatory structure. With that being said, we saw the initial trailer bill, attempting to reconcile these regulatory structures. That trailer bill is meant to address the new framework. Currently, we are waiting for the second viewing of the updated trailer bill SB 94 with all current amendments. Then we are anticipating those in the next couple weeks and we will see the regulations that will affect all these changes by November.

CIJ: How strong will local and municipal control be in the future?

Josh: It is incredibly strong and it is meant to be. I will say that California is like its own country. In Northern California, what they are willing to accept is very different in comparison to Southern California. Every city and county still has the ability to fully ban adult use and they can create and draft their own ordinances and regulations as long as it doesn’t go above state requirements. They can craft an ordinance to fit the needs of their city or county. Lets say you are in a rural area, delivery services might be important for patient access. Some areas might not allow brick and mortar dispensaries, and all that control lies in the cities and counties.

CIJ: Will there be a dosing limit for patients buying infused products? What about for adult use?

Josh: For adult use, there is going to be a limitation. Every edible has a maximum potency of 10mg of THC. For example, a chocolate bar can have a maximum of 100mg [of THC] but must be perforated in to 10mg pieces.

We have been advocating for, and what has been a priority for CCIA, is a lift of any sort of limits on medical infused products. Many patients have a higher threshold or tolerance and they may need 100mg and we don’t want them eating an entire chocolate bar to get that. We are anxiously awaiting the new trailer bill to see if we have been able to lift that concentration limit.

CIJ: Some have said the first draft of lab testing rules is extreme and overreaching. Can you speculate how those have been modified?

Josh: The lab testing is a huge educational issue for the industry and regulators. No state right now has been able to fully analyze the effects of different pesticide levels for a product that is smoked. We are basing all of our standards currently on food consumption. A lot of testing labs are concerned they are unable to test at the state’s threshold for some of these contaminants and pesticides; the detection limits seem very low. The testing portion will take years to work out, I am sure we will remove and add different pesticides and contaminants to the list. But again, the data and research isn’t fully there. There is a big push across the board that we will be able to do more research and testing so that the future of regulations can reflect reality, and ensure that consumer safety is priority.

CIJ: What do you think of the lack of residency requirement? When Oregon lifted it, outside investors flocked to the market. How might that impact local, California ownership and smaller businesses?

Josh: Well I do think that is a concern across the board. That is something that cities and counties have been adding to their requirements for the matrix of items needed to get a license. I think there is a very gray area when looking at investors opposed to operators. At what threshold does an investor become an owner? And if that person is from outside the state, how will that reflect on the evolution of the industry? It is a concern. Keeping limitations on the size of outdoor cultivation might help limit folks from outside the state coming into that arena. After living in Humboldt County for years, and living next to Mom and Pop growers for a long time, I don’t want to see them displaced by businesses coming from another area. We have been doing this a long time and I believe we have the best operators in the world.

CIJ: How is the CCIA helping businesses gear up for changing regulations?

Josh: Well one of our biggest areas of focus is education. Educating our own industry is one of the biggest parts in making sure the industry will be successful in this regulated market. Our legislative committee will take a position of support or opposition, which goes to our board, and those recommendations go to the state. The manufacturing committee has worked very closely with Lori Ajax [director of the Bureau of Cannabis Regulation] and her office, to educate on a variety of areas, guiding the way for state departments on how to properly regulate the industry. We have a Diversity and Inclusion Committee, Retail/Delivery, Testing, Distribution and Agricultural committees; across the board our committees create white papers that we submit to the regulatory departments of the state. We take regulatory officials on tours of facilities to get a hands-on view of what they are regulating. They have been speaking with scientists and growers, who often have a better understanding of current industry standards. We see these tours as very helpful. We have brought groups of regulators from LA County, Long Beach, Napa, Alameda and many others on tours of Bay Area commercial manufacturing facilities, dispensaries and nurseries. They have a lot of questions and we want to make sure we are a resource for them. Putting folks in touch with the right people and, in moving forward with this process, in an educated manner. Cannabis is a foreign language to many people and I get that.

CIJ: If you have one recommendation for regulators, what would that be?

Josh: My recommendation to regulators: do not over-tax this industry. Do not make taxation the priority for regulation. Over-taxation will strengthen the illicit market and that is not the goal. We need to make sure the taxes are reasonable to encourage businesses to operate in this market, not in the illegal one. If cities decide to ban, they need to know they can be hubs for illicit activity. Cities with bans might draw the illicit market because illegal operators won’t have to pay taxes or license fees. It is a long play, but responsible taxation is the best path to draw people out of this illicit market. We want to help protect public safety and health, safe medicine, safe products and keep cannabis out of the hands of children.

Harborside, CanPay Announce Partnership, Launching Debit Payment System

By Aaron G. Biros
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CanPay, a debit payment solution for the cannabis space, announced today their partnership with Harborside, the largest medical dispensary brand in the United States. The partnership will allow Harborside’s more than 200,000 patients to use a mobile debit app when purchasing cannabis through their delivery service, instead of bringing cash.

For deliveries, patients would use the CanPay app on their device “to generate a secure, single-use payment token that includes no personal identifiable information,” according to the press release. A Harborside delivery employee scans the token and the money is transferred from the patient’s checking account to Harborside. This allows for delivery employees to make less cash transactions and affords patients the luxury of not having to take out cash to get their medicine.

Harborside, founded in 2006, is recognized as the largest nonprofit cannabis dispensary in California, and the United States. They were reportedly the first dispensary to lab test their products. Being an advocate for patients and their safety, they offer a variety of free health and wellness services. “It’s important to us that we stay on the forefront of patient care and access to the products our community needs to improve their quality of life,” says dress wedding, co-founder of Harborside. “CanPay enables us to continue delivering on those goals by normalizing the payment process for our patients and staff.”

CanPay launched last year in November and has since expanded to over 50 dispensaries and six different states. The premise of their system is a secure and safe transaction for customers or patients of dispensaries. “To ensure privacy and security, all purchases are made using non-identifiable, single-use, and random payment tokens generated in the CanPay App,” reads the press release. CanPay is currently serving businesses in Washington, California, Colorado, Maine, Florida, and Oregon.

Dustin Eide, CEO of CanPay

“Patients who rely on cannabis for preexisting medical conditions should not have to be inconvenienced or have their safety put at risk by a cash-only model,” says Dustin Eide, chief executive officer of CanPay. “Delivery is a mainstream solution and payments should be able to keep up with the industry. By partnering with Harborside, we are providing their patients the benefits of more secure, transparent transactions.” According to Eide, their service is compliant with federal medical cannabis policy and guidance. “CanPay’s service operates under compliance programs built around the Cole Memo and FinCEN Guidance issued by the Department of Justice and the Treasury, respectively, and updated on Feb. 14, 2014 which provided guidance to financial institutions on the conditions with which they can provide banking services to the state regulated cannabis industry without incurring federal action,” says Eide. “Also, CanPay utilizes the Automated Clearing House (ACH) network to affect our services in full transparency. While Visa and MasterCard have established clear rules prohibiting cannabis transactions on their networks, the ACH network relies on the individual financial institutions to determine what type of transactions may occur.” Because of that, Eide says, there’s no need to hide transactions, unlike services that use Visa or MasterCard that require using an obscure legal entity name or a financial intermediary’s name.

According to Dustin Eide, CanPay is designed to be a long-term solution for the cannabis industry’s cash transaction woes. “At approximately 2% fees to the dispensary (and no cost to the consumer), CanPay will be a low cost payment service compared to Visa and MasterCard when they do enter the market, which we’ve been told by our contacts at the companies that this won’t be until federal law changes,” says Eide. He thinks that when MasterCard and Visa begin working with cannabis businesses, they will charge higher transaction fees in the 3-4% range, given the high-risk nature of the market. “CanPay’s challenge is to gain sufficient breadth of coverage with dispensaries and adoption among cannabis consumers to be able to offer that value on a wide scale prior to Visa and MasterCard’s entry into the market.”

Looking to the future, Eide hopes the partnership with Harborside will lead to more business. “CanPay couldn’t ask for a better partner to enter into the California cannabis market, which is expected to top $20 billion by 2020, than Harborside, one of the world’s most respected and well-known cannabis organizations,” says Eide. “It is an honor to be chosen by Harborside, who has their pick of services for the cannabis industry, to facilitate their cashless delivery payments and enhance the safety and convenience of purchasing medicine from Harborside for both their patients and their employees.”

Regulatory Overreach: Are California’s Lab Rules Too Strict?

By Aaron G. Biros
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With California moving into a more regulated market, some are concerned the state may be overregulating the market with strict, unnecessary rules. The Bureau of Marijuana Control, California’s agency in charge of regulatory oversight for the cannabis industry, released a set of proposed draft regulations for lab testing recently.

Jeffrey Raber, Ph.D, Chief Executive Officer of The Werc Shop

Those rules cover everything from sampling standard operating procedures to detection limits for pesticide analytes, which some say are absurdly strict as is. According to Jeffrey Raber, Ph.D, chief executive officer of The Werc Shop, a cannabis consulting firm located in Monrovia, CA, these rules will immediately raise prices. “The regulations are quite extensive and will undoubtedly drive the costs of patient medicine upward,” says Raber. “Regulations are not intended to be so detailed in these fashions, but are supposed to provide the floor and specific framework upon which operators can build best practices and differentiate themselves from others in a competitive market that drives prices downward.”

“Comparable guidance from other states operating today, and even federal regulations, are not nearly as specific in certain aspects,” says Raber. “While there are some very good parts to the current draft, and the bureau has certainly aimed to provide strong consumer protections, as they should, the idea of benzene even being mentioned or possibly permitted, or a completely cold transportation chain being required, and pesticide levels so low it pushes the limits of the most sophisticated and modern analytical equipment while going far past sensible EPA limits, strongly suggests there is work to be done to dial back the current position and make for far more workable and fully balanced regulations before they are fully finalized.”

Dave Egerton, vice president of technical operations at CW Analytical

It is important to note that nothing is set in stone yet. The bureau will hold four public hearings throughout the month of June for the lab testing rules. In addition to that, concerned stakeholders can send written comments through June 20th.

Dave Egerton, vice president of technical operations at CW Analytical, a cannabis-testing lab based in Oakland, is pleased they are finally regulating the market, but definitely plans on providing some feedback to change the rules a bit. “CW Analytical applauds the state’s efforts to regulate laboratories and the cannabis industry in general,” says Egerton. “…Many aspects of the proposed regulations for labs will make for a marked shift in the way our businesses operate, but the motivation behind them is well-intended.” His sentiment is consistent with many who operate cannabis laboratories and other stakeholders who see these proposed rules as overreach.

“Unfortunately, some of the regulations as written will create undo burden upon the industry and carry a strong probability of limiting supply to medical patients,” says Egerton. “During the current review period, CA laboratories will be providing feedback on some of the details within the law in order to streamline their quality assurance goals into a more tenable document that still protects patients.” That public comment period is a crucial part of the rulemaking process, as the rules will most likely change after cannabis laboratories’ voices are heard.

California Releases Draft Lab Testing Regulations

By Aaron G. Biros
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Last Friday, the Bureau of Marijuana Control, the regulatory body overseeing California’s cannabis industry, released a set of proposed regulations for the lab testing market. The regulations are somewhat comprehensive, covering sampling, licensing, pesticide testing, microbiological contaminants, residual solvents, water activity and much more.

Formerly named the Bureau of Medical Cannabis Regulation under the state’s Department of Consumer Affairs, the Bureau of Marijuana Control is tasked with overseeing the development, implementation and enforcement of the regulations for the state’s cannabis industry. In their statement of reasons for the lab testing regulations, the bureau says they are designed with public health and safety at top of mind. At first glance, much of these laboratory rules seem loosely modeled off of Colorado and Oregon’s already implemented testing regulations.

The regulations lay out requirements for testing cannabis products prior to bringing them to market. That includes testing for residual solvents and processing chemicals, microbiological contaminants, mycotoxins, foreign materials, heavy metals, pesticides, homogeneity as well as potency in quantifying cannabinoids.

The microbiological impurities section lays out some testing requirements designed to prevent food-borne illness. Labs are required to test for E. coli, Salmonella and multiple species of the pathogenic Aspergillus. If a lab detects any of those contaminants, that batch of cannabis or cannabis products would then fail the test and could not be sold to consumers. A lab must report all of that information on a certificate of analysis, according to the text of the regulations.

The proposed regulations stipulate requirements for sampling, including requiring labs to develop sampling plans with standard operating procedures (SOPs) and requiring a lab-approved sampler to follow chain-of-custody protocols. The rules also propose requiring SOPs for analytical methodology. That includes some method development parameters like the list of analytes and applicable matrices. It also says all testing methods need to be validated and labs need to incorporate guidelines from the FDA’s Bacterial Analytical Manual, the U.S. Pharmacopeia and AOAC’s Official Methods of Analysis for Contaminant Testing, or other scientifically valid testing methodology.

Labs will be required to be ISO 17025-accredited in order to perform routine cannabis testing. Laboratories also need to participate in proficiency testing (PT) program “provided by an ISO 17043 accredited proficiency-test provider.” If a laboratory fails to participate in the PT program or fails to pass to receive a passing grade, that lab may be subject to disciplinary action against the lab’s license. Labs need to have corrective action plans in place if they fail to get a passing grade for any portion of the PT program.

California Releases Draft Medical Cannabis Regulations

By Aaron G. Biros
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Last week, Governor Brown’s Administration released a set of proposed rules for the medical cannabis, attempting to provide some oversight to the once unregulated market. In 2015, the governor signed three bills into law that established a regulatory framework via the Medical Cannabis Regulation and Safety Act. That legislation set up the Bureau of Medical Cannabis Regulation inside the Department of Consumer Affairs as the overseeing regulatory agency.

According to the press release, the proposed regulations for manufacturing and cultivation have also been published. “The proposed licensing regulations for medical cannabis are the result of countless hours of research, stakeholder outreach, informational sessions and pre-regulatory meetings all across the state,” says Lori Ajax, chief of the Bureau of Medical Cannabis Regulation. “And while we have done quite a bit of work and heard from thousands of people, there is still so much more to do. In order to make our program successful we still need your feedback.”

According to their website, the legislation divides responsibility for licensing businesses between three regulatory bodies: The CA Department of Food and Agriculture the CA Department of Public Health and the Bureau of Medical Cannabis Regulation, which will be the leading body in charge of licensing. The proposed regulations are not set in stone, but give us an important glimpse into how the state hopes to regulate the market.

Among the proposed rules are a number of regulatory compliance nuances expected to raise prices, but provide extra measures to protect consumer safety. According to the SF Gate, regulators expect prices could climb $524 per pound. But with that price jump comes a lot of regulations that other states have so far successfully implemented. The laboratory testing and traceability stipulations are presumably designed to safeguard public health, preventing things like black market diversion and off-label pesticide use.

The proposed ‘cannabis product symbol’

In addition to the medical regulations, the proposed manufacturing regulations set some notable requirements. Those rules are set by the Office of Manufactured Cannabis Safety, established in the Center for Environmental Health of the California Department of Public Health (CDPH) after the 2015 legislation was signed into law. Good Manufacturing Practices, food product standards, operational and labeling requirements are included in the provisions, along with a list of licensing tiers, application requirements and fees. They have a handy summary of the proposed regulations for those looking for the key highlights.

Omar Figueroa, an attorney with a cannabis law practice in California, says his clients in the industry are preparing to suggest changes to the proposed regulations and possibly legal challenges. “They are looking at this as overregulation by people that are not in the cannabis industry,” says Figueroa. “These are outsiders with a limited knowledge base creating somewhat uninformed regulations.” He says a good example of this is the potency limit on infused products. “They make perfect sense for [the recreational market] but for the medical market it is simply unacceptable. Patients develop a tolerance to THC and would have to increase their caloric intake and buy more infused products if this proposed regulation becomes final.” He says there are a number of regulations that seem kind of arbitrary. “Like prohibiting cannabis-infused caffeine products; there doesn’t seem to be a necessity in the rulemaking for this,” says Figueroa. “A lot of these regulations are going to be susceptible to challenges because California requires regulations to be necessary and alternatives to be considered.”

Although the lab testing regulations won’t be published for another few days, Figueroa expects them to be a huge disruptor for the market. “Most labs in the state are not ISO 17025-accredited, which means many labs might not be able to issue certificates of analysis when the regulations get enforced,” says Figueroa. He says it is safe to say California regulators are looking at other jurisdictions, like Colorado and Oregon for example, in crafting these rules, but we can expect a sea change in these regulations before they get enforced.

Manufacturers will be required to use a cannabis product symbol with a ‘THC!’ marking on their labels. There is also a 100-milligrams-per-package limit for THC in infused products, which is similar to rules we saw Colorado and Oregon roll out during a preliminary period of legal recreational cannabis.

For those looking to get involved in the regulatory process, there is a 45-day comment period on the proposed rules.

Implementing Real Science in Cultivation and Extraction

By Aaron G. Biros
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Formed in 2015, Outco is a vertically integrated, licensed producer of medical cannabis in Southern California. Outco manages Outliers Collective, the first licensed dispensary continually operating in San Diego County. They operate the first licensed cultivation on Native American land in Southern California, the first cultivation building permit in Southern California and the first licensed extraction facility in San Diego County. Outco is on track to be the largest licensed producer of medical cannabis in Southern California.

Lincoln Fish, co-founder and chief executive officer of Outco
Lincoln Fish, co-founder and chief executive officer of Outco

The company prides themselves on attention to detail; the well versed team implements real science in their cultivation and extraction processes. Lincoln Fish, co-founder and chief executive officer of Outco, has more than 30 years of experience as an entrepreneur. Before entering the cannabis industry, Linc started and sold companies in the healthcare technology and nutraceutical spaces.

With construction underway at new facilities, Outco is anticipating an expanding market and higher demand.
With construction underway at new facilities, Outco is anticipating an expanding market and higher demand.

Fish’s experience with FDA regulations in nutraceuticals prepared him for running a business in such a tumultuous, highly regulated environment like cannabis. “One thing I took from the nutraceutical industry is how to present products to consumers and letting them know it is safe, effective and consistent,” says Fish. He says he noticed a serious lack of consistency in products. They tested 25 different vape cartridges, with their own oil, to find a consistent product they can use and know that consumers will safely and consistently get the same results. “There is a lot of room for more professionals and a lot of room for more science,” says Fish. “We try to position ourselves in a way that is consistent with where we think policy will go so we are very careful with recommendations from a scientific standpoint, patient information and product safety.”

Starting at a seed or cutting, plants are grown with the protection of biological control agents
Starting at a seed or cutting, plants are grown with the protection of biological control agents

According to Fish, they currently distribute cannabis products to about 75 licensed dispensaries in Orange County, San Diego and Los Angeles. With construction underway at their cultivation facility on Native American land, Fish says they plan to generate roughly 2600 pounds of cannabis each month. Gearing up for that in addition to the expanding recreational market requires some planning in advance, says Fish. Part of that plan is making sure quality controls are in place to keep consistency in the product quality and dosage. They are also actively seeking to open their distribution channels further.

One of the cultivation facilities at Outco
One of the cultivation facilities at Outco

“We are building out a full lab of our own in addition to third party testing to perform internal quality controls,” says Fish. Equipped with their own laboratory instrumentation like HPLC and GC, they hope to establish proper in-house quality controls as well as provide that resource to younger startup companies. As one of the founding partners of Canopy San Diego, an ancillary startup accelerator, Fish sees great potential in working with younger companies to get them off the ground. Fish met Outco’s vice president of extraction, Dr. Markus Roggen, at a Canopy San Diego event. It was there that they had the idea to build a startup accelerator for companies that actually touch the plant- extractors, cultivators and infused-product manufacturers, as opposed to a startup accelerator that would only help ancillary businesses.

Dr. Markus Roggen, vice president of extraction
Dr. Markus Roggen, vice president of extraction

Dr. Roggen, who is an organic chemist by training, heads up Outco’s supercritical CO2 extraction operation. “I came to the ‘art’ of cannabis extraction with an open, yet scientifically focused mind,” says Dr. Roggen. “My approach was to look past the myths and stories about extraction methods and focus on finding data, as there really wasn’t much available. I therefore, from the beginning, started to study the capabilities of our extraction equipment by chemometric methods.” Chemometrics is the science of relating measurements made on a chemical system or process to the state of the system via applications of mathematical methods. “Already the first sets of experiments showed that long-held beliefs in the cannabis community were inaccurate,” says Dr. Roggen. “For example the particle size of extracted material matters. Or that it is possible to preserve and even isolate terpenes by CO2 extraction methods.” With plans to have a full plant and analytical chemistry laboratory on site, they hope to perform more research that focuses on optimizing extraction processes.

Plant irrigation and fertigation procedures are determined via experimentation
Plant irrigation and fertigation procedures are determined via experimentation

Dr. Allison Justice leads their cultivation team with a background in greenhouse management and commercial horticulture. Dr. Justice says plants are grown, starting at a young age (seed or vegetative cutting), with the protection of biological control agents. “Biological control is a management strategy that entails the release of beneficial insects or fungi, such as parasitoids and predators, in order to suppress or regulate insect populations in greenhouses and grow rooms,” says Dr. Justice.

Dr. Allison Justice, vice president of cultivation
Dr. Allison Justice, vice president of cultivation

When implemented properly, this eliminates the need to use synthetic pesticides. “Biological control agents are not put in place to eradicate pest populations yet are applied as preventives to minimize plant damage and maintain their own populations.” They are constantly evaluating light types, spectrum and intensity to determine optimal ranges, according to Dr. Justice. They don’t use any pre-mixed “cannabis” nutrient supplements for their plants, instead they design an experiment to determine the desired levels and ratios of essential plant nutrients. “We have found it crucial to determine what ratios of nutrients the plant actually needs and by knowing this, we know how to manipulate the recipe determined by the plant’s given nutritional symptoms,” says Dr. Justice. Every type of adjustment in cultivation and extraction is based on results from experimentation rooted in legitimate science. Instead of guessing when it might be time to harvest, they use a water activity meter, logging and recording all the data to determine the appropriate time to trim and cure plants. Performing analytical testing at every step is key, says Fish.

Looking toward the recreational market, Fish sees an obvious opportunity to expand their wholesale operations substantially, with several larger new cultivation projects planned. “The key though is to produce flower and concentrate offerings with the same standards we employ for medical cannabis,” says Fish.

Biros' Blog

2016 Year in Review: Why the Cannabis Industry Needs Resiliency

By Aaron G. Biros
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2016 was a tumultuous, but productive year for the cannabis industry. Larger companies began to take interest in the fledgling market, like Microsoft and Scotts Miracle-Gro. This year brought major innovations in technology like market data tools, advances in LED tech, efficient cultivation tech and patient education tools. The Supreme Court set an important precedent by shutting down a challenge to Colorado’s cannabis market.

Voters legalized cannabis in 8 states last month Photo: Nicole Klauss, Flickr
Voters legalized cannabis in 8 states on Election Day.
Photo: Nicole Klauss, Flickr

Election Day brought a renewed sense of vigor to the market with voters in eight states legalizing forms of cannabis. California, Nevada, Maine and Massachusetts passed recreational cannabis measures, making legalization’s momentum seem exponential.

But November 8th also gave Donald Trump the presidency, and his cabinet appointments, namely Sen. Jeff Sessions as Attorney General, gave many a feeling of uncertainty for the future of federal legalization. Adding insult to injury, the DEA repeatedly stood by their antiquated and ludicrous judgment for cannabis to remain a Schedule 1 narcotic.

Gage Skidmore, Flickr
Trump nominated Sen. Jeff Sessions (R) for Attorney General Photo: Gage Skidmore, Flickr

A lot of the fervor surrounding public safety could be described as overdramatic or somewhat unwarranted. 2016 was the year of misinformation. Fake news spread like wildfire with people sharing stories like this or this that turned out to be very misleading or just downright false.

States with legal cannabis came under heavy public scrutiny and addressed problems like consumer education, public safety and lab testing. Pesticides became a highly publicized and persistent issue in a number of areas, with some states regulating it heavily and addressing public health concerns. Plenty of new rules were formed surrounding labeling and testing, with Oregon, Colorado and Washington experiencing some regulatory growing pains.

Those growing pains shed light on the need for regulators to craft rules that allow for changes, adding rules where necessary and getting rid of cumbersome rules that might thwart market growth. Rules need to be able to adapt as the industry grows, much like businesses need to adapt to a changing market climate to stay afloat. This is all the more reason why cannabis businesses need to make their voices heard and work with regulators to move things forward.

Pesticide Use was a major issue of 2016 Photo: Michelle Tribe, Flickr
Pesticide use was a major issue in 2016
Photo: Michelle Tribe, Flickr

With so much uncertainty surrounding the future of legal cannabis in America, the word of the year for 2017 should be resiliency. In a social-ecological context, resiliency is “the capacity of a system to absorb or withstand perturbations and other stressors such that the system remains within the same regime, essentially maintaining its structure and functions. It describes the degree to which the system is capable of self-organization, learning and adaptation.”

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A warning label for cannabis in Oregon after the October 1st compliance deadline

Self-organization, learning and adaptation are three very important attributes of a resilient system. Without knowing what will happen when Trump’s cabinet takes the reigns of federal agencies, it is important to prepare for the unexpected. Adhering to standards like FOCUS allows cannabis businesses to prepare for unexpected events like recalls or product safety failures.

Those standards could also become the law down the road, as government officials often look to an industry’s voluntary consensus-based standards when deciding how to regulate it. In 2017, a number of state governments will embark on the heavy undertaking of writing the regulatory framework for legal cannabis.

2017 will bring opportunities and challenges to the cannabis industry. The industry’s rapid growth juxtaposed with political, economic and regulatory uncertainties create a climate that requires resilience to be built into the system at all levels. It is critical, now more than ever, that cannabis businesses build strong relationships with industry groups, advocacy groups and regulators to craft the institutional capacity and mutual trust needed to weather the uncertainty ahead.