California Cannabis Business Conference

Last week I flew to Orange County’s John Wayne Airport to attend the CCIA/NCIA Conference in Anaheim. The atmosphere was already buzzing in the lobby on Wednesday night before the event. It was great to see familiar faces and share hugs in the midst of the crowd, many coming to their first Cannabis event. Contingents from Steep Hill, Harborside and Flowkana helped me feel at home, as did a big hug from Nate Bradley, Founder of CCIA.

The Thursday morning session began with a “Fireside Chat” with Lindsay Robinson, Executive Director of CCIA and Aaron Smith, Executive Director of NCIA, apprising the audience of their activities in Sacramento and Washington, D.C. on behalf of the cannabis industry. At one point, Aaron asked the audience how many had been in the cannabis business prior to 2010 (I think that was the cut off date). I looked around the audience and was surprised to see fewer than 10% raised their hands.

Clearly all the newbies were excited at the possibilities and potential. The exhibition hall was packed with people and over 90 booths featuring the latest in packaging, extraction equipment, insurance, security, climate control, legal advice, media and all the other ancillary businesses that will be necessary for a fully legalized mass market industry. 

Lori Ajax, the Chief of the newly created and oft renamed Bureau of Cannabis Control, gave the first keynote address. (At one point it was called Bureau of Medical Marijuana Regulation or BMMR!) She was a very entertaining and dynamic speaker, explaining how complex the process has been with three separate government departments (Department of Food and Agriculture, Department of Consumer Affairs and Department of Public Health) all creating regulations. After Prop. 64 was passed there was a need to revise the just proposed regulations when the Governor signed the Trailer Bill. Chief Ajax promised that a brochure outlining all the steps the state will require for obtaining a permit will be available soon.  

The second keynote address was by the State Insurance Commissioner David Jones, who reminded us that he was elected by The People. Apparently, we are all going to need insurance. Already the night before in the lobby, I met four or five insurance brokers. Product liability, workmen’s comp, crop insurance, fire insurance, property insurance…who knows what else? But the job of the commissioner is to make sure that fair rates for insurance are offered to all prospective buyers, and that different types are available.

The rest of the Business Conference was organized around six Tracks: Distribution, Manufacturing & Processing, Cultivation, Retail and Delivery, Industry & Political Forecasting  and Emerging Topics, such as Investing and Advertising. There were three different panels under each rubric, the first three Tracks on Thursday, the rest on Friday. A busy schedule. 

The panel in which I participated, “Track 3: Cultivation: Market Order, discussed “Cannabis as an Agricultural Commodity,” investigated ideas like will legal cannabis futures or options be traded like soy beans or coffee on the commodities market in Chicago? Yes. That will be the base price for mass market cannabis, sort of like the coffee one might buy at a gas station convenience store, while enjoying a pour-over of Jamaican Blue Mountain at an upscale caffé will be a premium priced experience. The way to break free of commodity pricing is to create added value by making it a unique product and its consumption a special experience. 

In the old days of the Black Market, I pointed out, Panama Red and Acapulco Gold commanded a higher price. Michuoacan was a bit less, then came the regular Mexican one kilo bricks, wrapped in weird plastic and yellow greenish paper, for $200 to $300. In other words, about a month’s rent on a four bedroom flat in the Haight-Ashbury in the late sixties/early seventies. 

Nowadays, to make one’s cannabis stand out, the marketing campaign must highlight the strain, organic growing methods, whether it is hand trimmed, sun grown in the mountains or the valleys. One must share the story about the farm and the farmer. How far we have come from the days when the identity and location of the farmer was the best kept secret of all.

The panel agreed that in the future, once the fallout from this difficult transition has settled, the market for cannabis will look much like the tobacco or wine markets. There will be the very high end products (such as Swami Select), comparable to fine Cuban Cigars and Dom Perignon Champagne, and there will also be mass market vape pens and edibles, similar to e-cigarettes and jug wine. The consequence of this is that each smaller grower needs to find a niche market, either selling premium quality flowers (Estate Bottled), or supplying a medical market with discount flowers, or becoming pure source for a manufacturer or extractor.

The only other panel I had the time for was a great panel on Pesticides and Testing: Setting the Standard, moderated by Kristin Nevedal, of the IFCA. The discussion started with a presentation by Rachel Kubiak, Program Supervisor for Cannabis for the State Department of Pesticide Control. This is all new and hence no scientific testing on cannabis has really been done. The plan of action was to identify the sixty or so pesticides in common use which would most likely be used on cannabis and then ban them until tests on toxicity can be performed. The difficulty comes in determining what levels are indeed toxic when eaten, used topically, smoked, or are toxic for workers handling plants and breathing the air in the grow room or in the field during application. This will take awhile.

Issues like “Ag-land soil contamination” and “pesticide blow over” came up, as well as a lengthy discussion of numerous sources of Myclobutinil contamination, now so common. Estimates of 80% of clones have it; even the coir start cubes can be a source of contamination, as well as tainted soil, compost and even tainted worm castings. Sourcing pure amendments is imperative. Perhaps the mountains of the Emerald Triangle are the best place to grow clean herb after all.

The final question concerned microbial testing for pathogens. Was it possible to distinguish beneficial from malevolent microbes? I raised my hand and asked if, when smoking a joint, might the heat kill any pathogens, similar to pasteurization? Dr. Don Land, from Steep Hill Labs, replied: “No.”  Though the “cherry” might kill the germs, the temperature of the rest of the joint would vary through the length as a factor of the distance from the cherry. That is, the end puffed on would be just above room temperature, the rest getting hotter and hotter until combustion at the cherry. All the material at less than 160 degrees would still have pathogens.

All in all, a great conference with a lot of important information shared. Next, Nikki and I are both going to Long Beach for the State of Cannabis Conference on Thursday and Friday. It is clearly Cannabis Conference Season!