Distribution Woes Are a Major Buzzkill for the California Pot Industry
By Alex Halperin // July 19, 2017
Recreational weed’s debut in Nevada this month was marred by a legal fight over how product reaches consumers. Despite lines stretching out pot shop doors, stores reportedly couldn’t restock their shelves for the first two weeks of sales because the state hadn’t issued any distribution licenses. There was no legal way to deliver product to stores.
Nevada resolved the matter, at least temporarily, by awarding two distribution licenses, but a bigger, messier fight over distributing pot in California is just beginning.
California legalized medical marijuana in 1996, but it took 20 years for the state to create rules for the industry. While some cities have regulated the industry, the movement of product around the state has functioned as a gray market. Cities and counties can license growers and dispensaries, but how product moves from, say, a grower in Humboldt County to a Bay Area infused-chocolate maker to an L.A. dispensary has left drivers vulnerable to criminal prosecution.
There are written histories of marijuana prohibition, but much of the plant’s past will never be recorded. Much of its illicit past survives only as oral history, a kind of mythology. The most tangible evidence of this folklore is in the endless number of cannabis strain names, which can refer to famous activists, unlikely crossings and, probably more often, meaningless, silly shit that must have seemed funny at the time.
Shop at any dispensary and the provenance of its strains is highly dubious. But every grower can make the case for the veracity of his crop. Similarly, the widely held belief that strains can be sorted into uplifting sativas, restful indicas and balanced hybrids has no scientific basis. But people use the terms anyway. Strain names also hint at how companies want to position their brands for a legal future.
The mood is tense in L.A.’s cannabis scene as many businesses are fretting about L.A. Police Department raids (three of the proprietors asked that their last names not be published). But a few Southern California producers shared with L.A. Weekly the stories behind their strains.
City Council's Proposed Weed Rules Worry the Industry
By Alex Halperin // July 5th, 2017
In March, L.A. voters overwhelmingly approved Measure M, giving the City Council permission to regulate the marijuana industry in the world’s biggest market. But industry leaders worry that the council’s proposed rules, released earlier this month, could force cannabis companies to relocate to more amenable cities, taking their jobs and tax dollars with them.
The proposed rules are up for a 60-day public comment period.
Marijuana industry insiders' main complaint is that while Measure M empowered the City Council to regulate the industry, the proposed rules would not give cannabis businesses full legal standing. Instead of licenses or permits, the draft regulations offer “certificates of compliance.”
The certificates, according to a spokesman for L.A. City Attorney Mike Feuer, would affirm that a business has met certain requirements, such as being far enough from schools, but do not signify “the city’s ‘approval’ of the business’ cannabis activity.”
Police Raids of Marijuana Businesses Continue to Worry the Pot Industry
By Alex Halperin // June 13th, 2017
One morning this spring, about two dozen L.A. cops arrived at a large marijuana grow facility with a battering ram. Without knocking, and armed with what the business owner called “full-on assault rifles, like something from a movie,” the owner said police proceeded to bash on the entrance.
The facility's owner recounted the event to L.A. Weekly on condition of anonymity, for fear of attracting more law enforcement activity. The incident also was referenced at a May 19 City Council meeting by Seth Hilsabeck, a board member of the Southern California Coalition, a cannabis industry group.
The police arrived at 7:30 a.m., and only 15 of the 35 workers were on-site, according to the owner. Those who were present, including an apparently very pregnant woman and a man with cancer, were handcuffed and “literally paraded up and down the street” for at least 20 minutes before they were released with a court date and misdemeanor charges that could carry fines or jail time, the owner said. One employee, a security guard, was arrested because he had a gun, according to the owner, and then released without charge.
Budtending Offers an Entry-Level Job Opportunity in the Marijuana Industry
By Alex Halperin // May 22nd, 2017
When she was 14, Sandra Andrade first learned about marijuana from her brother who had an outdoor garden. Today, the 36-year-old works at downtown L.A. dispensary Kushmart, where she helms the point-of-sale contact for those who want to purchase cannabis products. In weed industry terms, she's a budtender.
Sitting in a cramped space behind the showroom of downtown dispensary Kushmart, Andrade shares her experience of working in the relatively new industry. She said it’s essential to her job to “relate to what a patient needs.” Andrade has a great deal of influence over the patients’ purchase, whether a patient asks for something that will help with sleep or deal with pain. Or maybe they're looking to simply have more fun at parties..
The incipient industry offers opportunities to enter the legit marijuana economy, but like many budtenders, Andrade and her colleagues began work while dispensaries were in a legal "gray area." “The way we’ve learned has been a hustle,” Kushmart budtender Michelle de la Cruz said. “The next generation will have to go to school."
“There is a career in this,” Cruz, who has “Ambition” tattooed in script down her right forearm said. “We’re going to take over alcohol and cigarettes. We’re already doing it.”
Rogue Marijuana Dispensaries Cause Conflict With Legit Pot Shops
By Alex Halperin // May 19th, 2017
Donnie Anderson says it took weeks of driving to count the pot dispensaries in City Council District 8, which covers much of South Central Los Angeles. The team found two shops granted “limited immunity” by the city, but they were vastly outnumbered by 133 of what Anderson calls “rogue shops.”
As partial owner of Med X, one of the two dispensaries in the district that are trying to follow the rules, it bothers Anderson that scores of other less conscientious stores operate openly, selling similar inventory, while not necessarily paying taxes or fulfilling other obligations of legitimate businesses. A former music and entertainment executive, he’s a founder of the Southern California Coalition, an advocacy group that created Measure M, as well as chairman of the NAACP’s cannabis task force for California and Hawaii.
District 8 is overwhelmingly Black and Latino. But Anderson says many of the rogue shops are owned by non-residents who are, in effect, siphoning money out of the area. “They don’t live in the community, they don’t invest in the community, they just know that our people are going to purchase cannabis,” he said.
Proposed Marijuana Regulations Offer a Business-Friendly Overhaul of the Industry
By Alex Halperin // May 1st, 2017
California became the first state to legalize medical marijuana in 1996. For the first 20 years of the legalization era, the state declined to create a normalized industry.
Instead, local governments have been forced to figure out for themselves how to regulate a federally illegal industry. The consequences of this delay have frustrated cannabis activists eager to see California set the tone for legalization. In some cases, entrepreneurs have been convicted and incarcerated for growing or selling a plant that’s ostensibly legal in California.
Sherman Oaks–based cannabis business lawyer Ariel Clark notes that the cannabis industry is a "challenging" field. “It’s a huge thing to put your arms around, and [it’s] well outside local government’s general experience,” Clark said.
The situation has been especially confusing in Los Angeles, which is considered the world’s largest cannabis market. While San Francisco, Oakland and other progressive cities have licensed some cannabis businesses, L.A. has not. The closest it has come is Proposition D, which took effect in early 2013. Proposition D offers “limited immunity” to more than 130 dispensaries.
Will the Marijuana Industry Save the Struggling Town of Adelanto?
By Alex Halperin // April 11, 2017
In the dusty, Joshua tree–speckled desert of southwestern San Bernardino County, the town of Adelanto almost blends into the landscape with its unlovely grid of colorless, low-slung buildings. The remote town was founded in 1915 by Earl Richardson, who is best known for inventing the toaster and an electric iron. Much like the nearby colony of Llano Del Rio — the failed Antelope Valley utopian commune that existed from 1914 to 1918 — Adelanto was intended to be one of Southern California’s prototypical planned communities. It was home to orchards and farms. But after the George Air Force Base — a large area employer since it opened in the 1940s — shuttered in 1992, the city never recovered.
Today, Adelanto’s population is around 33,000. It is 50 percent Latino and 30 percent African-American, and roughly 40 percent of the population lives below the poverty line. Adelanto’s first prison opened in 1991, and since then it’s been known — to the extent that it’s known at all — as a prison city. The for-profit prison company GEO Group has opened facilities there, housing more than 3,000 inmates. Last year, Adelanto reportedly collected only $160,000 annually from these businesses.
On a desolate inbound road, a welcoming sign calls Adelanto “the city with unlimited possibilities.” Beneath the slogan are badges for Rotary International, the city’s Chamber of Commerce (founded in 1956), and the American Legion. There’s also a new logo on the sign, for the Adelanto Growers Association, a marijuana industry group striving to revive the city’s fortunes.
Southern California Coalition Has Big Plans for L.A.'s Pot Industry
By Alex Halperin // March 20, 2017
On the evening of this month’s local elections, members of the Southern California Coalition gathered on a restaurant patio downtown. It was a clean-cut, mostly male crowd and they had come to celebrate a milestone more than 20 years in the making: a regulated marijuana industry in Los Angeles.
Virgil Grant, the organization’s president, held a tablet showing the results. It wasn’t even close. Only 20 percent of Angelenos voted, but Measure M had better than 70 percent support.
Grant, a Compton native who had his first dispensary more than a decade ago and later served six years in prison, is now president of the industry trade group Southern California Coalition (SCC) and a powerful figure in L.A. weed.
While California legalized medical marijuana in 1996, it entrusted local governments to regulate their own industries. While some cities have banned pot businesses, others including San Francisco created frameworks allowing some cannabis businesses to get licenses from the city.
Pot Pickups Just Got Easier With This Marijuana Ordering App
By Alex Halperin // March 13, 2017
One aspect of legal marijuana that is not often acknowledged is the difficulty of making money in the industry. Despite seemingly bottomless demand for cannabis, companies face problems that stem from its unique semi-legal status. Many pot companies, for example, have to deal with 280e, a few lines of the tax code left over from the early Reagan years. It's the measure that prohibits companies that deal in federally illegal substances from deducting business expenses on their taxes. It’s a crushing burden, especially for small businesses.
Within the market itself, companies struggle to differentiate themselves, leading to brutal competition. Every weed grower, vape designer and edibles maker can explain at excruciating length why his product is incomparably superior. But only the most fanatic connoisseurs appreciate the difference, or care.
Cannabis Businesses Stay Chill in Face of Federal Threat
By Alex Halperin // March 6, 2017
In late February, White House press secretary Sean Spicer implied that President Donald Trump’s administration may crack down on recreational marijuana businesses. The news worried legal marijuana entrepreneurs accustomed to the Obama administration’s willingness to allow state legal businesses to operate.
Conversations with a few Southern California businesses suggest that, while they are conscious of a threat from Washington, panic has not set in.
Neither Spicer nor U.S. Attorney General Jeff Sessions has specifically said that state-legal businesses will be targeted. Coming from Sessions, this could be seen as a positive sign for the industry. Unlike many Republicans, Sessions remains a committed prohibitionist. Last year, the Alabama senator even said that “good people" don’t smoke marijuana.
Here's What It's Like to Eat a Hemp-Oil Power Lunch
By Alex Halperin // March 4, 2017
At a recent afternoon at Spring restaurant, Will Kleidon, a big, affable Bay Area native with messy blond hair, passes me a bottle of "super CBD." He's the founder of hemp oil company Ojai Energetics, and we're about to dine on a “CBD Power Lunch,” featuring three courses for $35, each augmented with his company's non-psychoactive product. I had a few droppers’ full from the bottle, which sells for $75 an ounce. It's the hemp oil used in a few other restaurants around L.A., including Cafe Gratitude and Gracias Madre. It tasted sweet like cough syrup, with a bitter aftertaste that Kleidon said would dissipate depending on how much more cannabidiol, or CBD, my body needed. It sounded like something out of Willy Wonka, but once he mentioned it, I didn't notice the bitter taste anymore.
Marijuana companies have a marketing problem. Whether they sell bespoke edibles, laboriously refined concentrates or weed with a celebrity’s name on the box, they are all selling products that deliver THC. When most customers can’t tell the difference between one product and the next, it’s difficult for companies to develop brand loyalty.
In most consumer industries, this is a solvable problem: Brands can spend lots of money promoting their product. Yet this approach isn’t an option for cannabis companies, which don’t have marketing budgets anywhere near that of a giant multinational company. In addition, most legal states restrict where and how marijuana companies can advertise.
Yet there is an unconventional solution to marijuana's marketing woes: emojis.
According to AdWeek, 92 percent of online users employ emojis, and new company KushMoji is capitalizing on the trend. The company’s app, which it says will be available in March, allows users to communicate using pot-themed icons, including ones that promote 50 different cannabis brands. Instead of sending a joint image, or a generic blissed-out smiley face, users can send images such as the incredibles logo.
Long before the so-called Green Rush today, where businesses are flocking to invest in marijuana, five years ago, corporate America and other mainstream organizations stayed away from legal weed. But one organization was willing to get involved: the United Food and Commercial Workers International Union.
Rigo Valdez Jr., director of organizing at Local 770, which represents grocery and pharmacy workers, says the union saw an opportunity. “If your job is dispensing medical cannabis, your job is not that different from a pharmacy tech,” he says.
From the beginning, the alliance of the cannabis industry and organized labor has reflected the parties’ complementary interests: Cannabis gained legitimacy and unions could start a tradition of organizing workers in a quickly growing industry. Valdez compares it to the repeal of Prohibition, which led to an alcohol industry that he says is still highly unionized.
Cannabis Company Cyberattack Reveals Industry's Vulnerability to Hacking
By Alex Halperin // February 6, 2017
On Sunday, Jan. 8, Waylon Broussard arrived at Cannabal City Collective, the medical marijuana dispensary he manages in downtown Los Angeles, to find that the software system was down. He thought it might be a brief outage for maintenance, but the cloud-based software hadn’t been restored by the time the store opened. As customers arrived, the budtenders started scribbling down orders.
“It was the exact same way for us,” said Corey Schwartz, who manages Coast to Coast Collective in Canoga Park.
Similar scenes played out across legal marijuana states. MJ Freeway, the Colorado company that is the largest provider of software to cannabis businesses — including grows, factories and shops — had suffered a major crash, crippling all of its customers, about 600 businesses, many with more than one location.
Government regulators in Nevada, who use MJ Freeway software, also saw their systems go dark. For MJ Freeway, the outage set off a feverish few days, says Jeannette Ward, executive director of data and marketing. She says that as the company tried to get customers back online, it also was boosting its own security. Restoring customers' systems often required individual, one-on-one conversations. (The Nevada system was back up in 24 hours.)
Medical Marijuana Offers Hope for Hospice Patients
By Alex Halperin // January 30, 2017
In 2013, after her mother, Myriam, was diagnosed with brain cancer, Diana Peña, a makeup artist and hairstylist in Rancho Cucamonga, began researching whether cannabis could help. Doctors had given Myriam a prognosis of three months to live, Peña said, and there was “not a whole lot they could do” except extend her life a bit. But with cannabis treatments, Peña said her mom outlived expectations by more than a year, with a better quality of life than she could have expected without it.
The experience changed the course of Peña’s life. In December 2013 she co-founded Myriam’s Hope, a medical marijuana collective with an emphasis on serving very ill people. The organization offers a menu of cannabis oils and edibles that Peña says are of a higher quality than those available elsewhere. Myriam’s Hope has grown to serve approximately 3,000 patients, Peña said.
Stories of medical successes like Peña’s are common among people who work with cannabis. But the question of which serious illnesses medical marijuana actually treats remains largely unanswered.
Trump Is Just Another Businessman, According to Marijuana Companies
By Alex Halperin // January 23, 2017
On the day before Donald Trump took the oath of office, David Bienenstock, a senior editor at High Times, asked a question of an audience of marijuana entrepreneurs and consumers at the Convention Center: "How many people feel a creeping oppression?”
Trump’s election has inspired fear among millions of Americans, but Bienenstock said the notion that the U.S. government, or other powerful institutions, can be irrational, menacing and cruel is “no secret to anyone who’s lived through the drug war.” The cannabis world has its reasons to fear Trump and his nominee for U.S. attorney general but the predominant moods at last week’s High TimesBusiness Summit was optimism. In November, eight of nine states voted for legal medical or recreational pot, including California, which has finally rolled out the green carpet. And this month, High Times announced that after decades in New York, it's moving to friendlier climes in L.A.
Bienenstock, while openly distressed about Trump, was triumphant about pot’s march toward legalization and mainstream acceptance. “Any reasonable sentient being” agrees on legalization, he said.
Cannabis Software Companies Seek to Legitimize the Marijuana Industry and Cash In
By Alex Halperin // January 16, 2017
Even though California was the first state to legalize medical marijuana and is the largest legal marijuana market in the country, it has not yet adapted a system for the government to track product. These kinds of protocols, similar to those that exist for pharmaceuticals, have become standard in other legal states.
In Colorado, Radio-Frequency Identification (RFID) chips track plants from grow rooms to the dispensary, even if a plant is ultimately processed into an edible or vaping oil. By having a record of every legal plant in the state, regulators can ensure, among other things, that legally grown product is sold according to code.
Next month, California will begin accepting proposals from the companies that want to sell California a platform for tracking pot throughout the state. It’s a way to ensure that “businesses will be run like a regular business as opposed to operating like drug dealers," says David Dinenberg, CEO of L.A.-based Kind Financial, one of the companies planning to bid on the state contract.