Donnell Alexander

Cannabis Security: The Hardest Easy Job You'll Ever Have

In California, security work can look like a shortcut into the cannabis industry. Despite popular belief, one doesn’t even need to have a bouncer’s tough aura to work the door at dispensary. It can pay $25-an-hour in a modest-wage municipality like Fresno. Or, it can pay twice as much -- though it won’t feel like it – in San Francisco. 

Since the state requires all open dispensaries to employ security, these public-facing positions  will have openings for as long as brick-and-mortar dispensaries remain viable . But the opportunities don’t end there. Workers who are dependable, trustworthy, and willing to hang around a spell may find themselves escorting cash or product in an armored vehicle, or watching over a manufacturing site, either in person or on video far from the scene.  

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“When you say security, you’re talking about a range of personnel,” said Elvis McGovern, founder of EL Rey Engineering - which specializes in custom security work for the Cannabis Industry. 

State and local laws and industry standards are new enough that job seekers who don’t have drug dealing offenses can get to work quickly. Too quickly, in too many instances.

“As a private patrol officer I can bring someone off the street and give them eight hours of training” before putting them to work, Sacramento-area consultant Matt Carroll said. Carroll, who comes from a law enforcement background, said state rules call for 40 training hours, but private security companies sometimes throw their newbies into the mixture after only one workday of preparation. 

Are cannabis dispensaries, cultivation sites, manufacturers, distributors and lab testers actually getting that government-mandated training? 

Carroll divides candidates for this kind of cannabis work into three types: The wanna-bes, gonna-bes, and has-beens. The first two tend to be young and enthusiastic but have holes in their resumes wide enough to drive through. 

In the quickly evolving and cash-intensive cannabis industry, security personnel can see action quickly. And that makes the experienced has-beens the most desirable applicants.

You may have heard about Oregon Senator Jeff Merkley (D) accompanying an Oregon operator as he carried a $70,000 tax payment, in a duffle bag. Carroll shared the story of having to escort much more money. “I carried $1.4M into City Hall. I wasn’t feeling really good about it, but one of my clients was representing a number of companies.”

That kind of guard work, a mix of vigilance and chill, is right in the wheelhouse of a specific swath of aspirational and unemployed American. “The silver lining of 20 years of war is we have a plethora of veterans coming out of war zones with immense experience in convoy operations,” Carroll said. He said veteran applicants of this sort should emphasize “Intermodal Security” experience on their linked LinkedIn pages and cover letters.

Distribution companies, which work with large amounts of cash and product, are especially in need of these veterans. However, Carroll said the industry has a problem with distribution and cultivation operations  “allowing unscreened employees learning vault locations and “untold volumes of information” before quitting.

In the year and a half since REC went legal, the security job has changed. The out-of-the-shadows-and-into-the-public-record transition has put increased pressure on security guards. Dispensaries are the cannabis enterprises most often cased by burglars. In addition, to that vigilance, the work often requires constant interaction with the public.

Wannabe security guards who don’t have transport experience can find their niche by coming across as someone who’ll stick around. Dispensaries are plagued by high turnover.  

“The hardest thing is to find someone who wants to do it,” McGovern, of El Rey said. “A lot of people use cannabis as a stepping stone ,” quickly flipping low-level gigs into better ones.

Manufacturers, on the other hand, offer up prepped product. 

“You could steal a thousand vape cartridges under your arm,” according to Carroll. Even lab tests sites are targeted for theft, despite their relative lack of goods and money on site. Some poorly-informed heisters simply track cannabis vehicles. 

As with all things cannabis, the rules get a little funky as one moves between legal states and Canada: Local municipalities differ in gun requirements. (For example, in California  In-house guards can’t carry guns.) The unifying element of regulation is that businesses all over California are subject to losing their licenses if they fail public safety testing, of which security is part.

And yet Carroll, who still teaches new security guards twice a month at his school in Sacramento, still sees companies operating with toothless, “scarecrow” security teams and simply not showing sufficient vigilance. He shared a story of one company which nearly got an official ding when an anti-pot activist spotted a child on the property of a dispensary and reported it.

“As an emerging industry, there’s still a lot of skeptics and critics that are going to be monitoring,” Carroll says.

Turned out that the kid in question belonged to an Amazon deliverer. Regardless, the dispensary security guard overlooking the child’s presence nearly cost the operator mightily.  

While IT companies still handle the vast majority of high-end security work -- robot camera installation and operation and such -- that focused person with an associate’s degree and a record unblemished by drug and theft convictions can play a significant role in the life of an industry unlike any other.   

It's the hardest easy job you'll ever have

Cannabis Security

Jesse Staniforth

Canadian Pot Companies Face Talent Shortage

Canada’s coming legalization of extracts and edibles is putting a new strain on a cannabis jobs market where it’s already difficult to find skilled workers.

Extracted cannabis oil is necessary to produce vape pens and edibles. But with products set to become available as soon as December, cannabis companies are struggling to find skilled extractors. In turn, the extractors want to hire experienced expert technicians, analysts, and testers. But companies are struggling to fill those positions.

"The challenge that I'm seeing in the industry right now is there's a very small pool of candidates who would have already worked in cannabis extraction roles," said Cannabis at Work CEO Alison McMahon. "Especially if we're talking about highly educated, masters degree or PhD level people."

Though McMahon noted there's a whole pool of people who've done unlicensed extraction work, most companies want to hire workers with professional-level training.

"The challenge there is finding people who have the right transferable skill sets from these other industries and fit with the overall culture of the cannabis industry."

The shortage of expert skills across the sector is widely acknowledged—and the issue isn't just in extraction. Every technical corner of the Canadian cannabis industry is desperate to draw experienced talent from a talent pool that's barely begun to fill.

The root of the problem is simple enough. Before 2014, virtually no one in Canada or the U. S. was licensed to commercially cultivate medical cannabis. But even after a few dozen licensed producers emerged on the scene, the legal medical cannabis industry employed a tiny fraction of the Canadian workforce. Producers often had to learn as they went, with no one who could legally teach them. There were few cultivators who knew how to grow quality MED at commercial scale. If you needed an expert, you needed to become one.

Of course, North America had plenty of cannabis experts. Unlicensed growers, working in concert with MED users, activists, and compassion clubs helped developed all kinds of products and experimented with production and extraction approaches to best meet the needs of the medical-cannabis market. 

By the time grey-market dispensaries had proven they could operate openly in cities from St. John's to Victoria, plenty of Canadians were becoming experts on cannabis cultivation, production, and genetics. They were learning the best ways to produce extracts, and the best approaches to produce edibles to meet a variety of medical needs. Some of these experts might even be able to get hired by a licensed company—as long as they don't have a record for cannabis cultivation, which would prevent them from getting mandatory security clearance. But that's not where challenges end.

"The challenge for individuals who have worked in the black market and gained their experience there is it can be a challenge in cultural fit into the highly regulated environment,” of the legal industry, McMahon said.

Though many unlicensed producers proudly grow organically and eschew substances they believe harmful to cannabis consumers, they do so without the burden of regulation. In the strictly controlled environment of a licensed producer, workers spend their days filling out paperwork and making sure there are no documentation gaps, while updating enterprise-resource planning (ERP) and seed-to-sale systems.

"While it's obviously growing cannabis at its core," McMahon said, "the operational requirements and the regulatory requirements around that are not always the best fit for individuals whose true passion is really to grow plants, and who in the past haven't necessarily had to deal with the burden of all the regulatory and compliance side."

Regulatory compliance is not optional for new hires, said Lifford Cannabis CEO Lisa Campbell. 

"Most new hires need to start from scratch, including [learning] a huge list of cannabis acronyms," she said. "I'm not looking to babysit my employees. They need to be already knowledgeable—not just about cannabis, but also the regulations, both federally and province-by-province. It’s really sink or swim in the cannabis industry, so it requires the highest caliber of employee."

But Campbell believes there are many legacy-market experts who could thrive in the legal production side. 

"Nothing beats actually knowing about cannabis," she said. "That being said, there are very few professional certifications to show someone is a qualified cannabis worker. There are many myths about cannabis, so it’s important to find someone who has expert knowledge with the skills to match. Some people are very knowledgeable about cannabis, but the industry is in start up mode which requires a work ethic well beyond most nine-to-five jobs."

Cannabis Management Resources partner Sarah Seale agreed, noting what she called "the extreme demands" of the cannabis industry. "Sometimes the right person is in place but the stress levels are so high it leads to a six-to-eight month burnout period," Seale said.

For Seale, the question of hiring gets complicated by the perspectives different workplaces bring to the task.

"Each company has their own definition of what 'top-tier talent' means, and unfortunately the viewpoint can be quite narrow," she said. The average company hopes to find an experienced executive who'll need only a short time to get up to speed and begin working magic right out of the gate. Many companies have learned quickly, Seale said, that "considering the nature and duration of the cannabis industry specifically, it's hard to find experience and in-depth knowledge of cannabis itself."

Passion matters enormously. Dan Sutton, CEO of BC-based LP Tantalus Labs, has heard complaints of staffing shortages for some time, but says he has experienced little of it first hand. Companies that frame their brand around enthusiasm for cannabis, Sutton said, don't have to look far to find employees as passionate as they are.

"I think it's feasible to find humans who nerd out on process and systems and security and the different functions of the cannabis business without being quite as committed to the plant," Sutton said. "However, it certainly makes for a more interesting working environment when you can all get together on your lunch break and talk about interesting new genetics or talk about some funny phenomenon that you noticed in one of the production runs."

For bigger companies that aren't focused on deep cannabis nerdery, Sutton said—suggesting infrastructure and tech-oriented firms, and those chiefly producing bulk cannabinoids—hiring is a different challenge. 

"You're trying to get people to self-select for a different personality type, maybe just a growth of business or their own personal financial gain," Sutton said, adding the risk is without passion, drive alone can carry a worker very quickly to burnout.

McMahon says similar talent shortages first emerged following Canada’s legalization of MED at the turn of the millennium and became rampant only a few years ago, as the need for experienced growers outweighed the available licensed-producer workforce. 

"All of a sudden people needed cultivation talent," McMahon recalled, "and there's only a limited number of people who worked in the 30 some licensed producers at that time doing that. I think this is just the new version of that challenge as the regulations are evolving. Time will help solve that and create a bigger talent pool."

"As the financial market starts to desire more cost-efficiency and perhaps management consultants come in and create efficiencies on those larger teams," Sutton said, "then perhaps we'll see new entrants into the labor market from those firms, and I think we'll see a lot broader access to the expertise [of those currently employed]."

But until then, Lifford’s Campbell thinks the next shift needs to be one that helps bring the talent of legacy experience into the licensed market.

"There are enough people in the cannabis industry who know nothing about cannabis. It’s time for the existing industry to cross over. or else legal cannabis will never beat out the illicit market."

Skilled individuals are out there, but the 9 to 5 life isn't for all of them

Alex Halperin

Last year former Speaker of the House John Boehner joined the board of Acreage Holdings, one of the country’s largest multi-state cannabis companies (MSOs), and became the most prominent face of the legal marijuana industry in Washington D.C. Boehner "helped legitimize our industry more than perhaps anything had before it,” Acreage CEO Kevin Murphy recently told WeedWeek. 

Boehner, who served as speaker from 2011 to 2015, is an unlikely pot lobbyist. While in office, he declared himself “unalterably opposed” to legalization. His “evolution” on the subject coincided with his receipt of an Acreage stock package currently worth about $12M (based on information in Canadian regulatory filings) and potentially worth $20M if a planned acquisition of Acreage closes.

It’s worth asking what Boehner’s influence might mean for the industry’s future. Many cannabis companies claim to care about the plant’s medicinal properties or rectifying injustices of the war on drugs. Boehner’s career, however, suggests he will advance the interests of the industry’s largest shareholders, which now include him.

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Boehner grew up near Cincinnati, the son of a bar owner, and he started working at the family establishment before he was 10. The second of 12 siblings, he was the first person in his family to graduate from college. Before Congress, he worked as a salesman and then executive at a plastics distribution company. Opposition to organized labor, environmental regulations and anything else that might depress profits were the animating issues of his political career. 

Boehner was first elected to Congress in 1990, and he rose quickly. He became a key lieutenant on Newt Gingrich’s Contract with America and when Republicans took the House in 1994 Boehner became the fourth ranking member of the caucus. 

Boehner is a lifelong cigarette smoker and the next year he attracted attention for distributing checks from tobacco lobbyists to lawmakers on the House floor. Boehner later said he regretted the incident, but I couldn’t find any indication the money was returned. (Acreage didn’t respond to the question.)

Since joining the industry, Boehner has said conversations with veterans have changed his mind about the benefits, real and potential, of medical marijuana. While he may be right, he lacks the credibility to deliver the message. 

During his 26 years in Congress Boehner accepted more money from the tobacco industry than any other lawmaker according to data from the Center for Responsive Politics. In 2016, Boehner joined the board of Reynolds American, maker of his beloved Camels. (He left when the company was acquired.)

Another reason to doubt Boehner’s commitment to public health: As speaker his caucus repeatedly voted to repeal the Affordable Care Act (Obamacare) without proposing an alternative. Today, 20 million Americans have health insurance because of the law.   

For an industry obsessed with the stigma around its product, it doesn’t help that Boehner says he has never tried cannabis. Despite his eight figure stock package, he won’t take a puff. It would be difficult to personify the stigma more fully.  

On policy the Speaker's views and voting record were in line with his very conservative caucus. But Boehner cultivated an affable dealmaker persona, which can matter more than a voting record when retired lawmakers peddle their influence.

On several occasions, Boehner leveraged his perceived centrism to dignify right wing conspiracies and misinformation.

Probably the most consequential of these came in early 2011 when Donald Trump was riding the racist “birther” theory to political prominence. On ‘Meet the Press,’ Boehner said he believed President Obama was an American citizen, but added, "It's not my job to tell the American people what to think."

As the senior most Republican in the country, Boehner had the opportunity to reject the pernicious libel. Instead he welcomed it into the GOP tent.

Boehner similarly declined to lead on climate change, Like many prominent Republicans, he embraced the cop-out that as a non-scientist he wasn’t qualified to discuss the issue.  

Boehner is still not a scientist. But now that it is his job to tell the American people what to think, he’s decided to weigh in on the health benefits of cannabis, a subject he knows nothing about.

More than a year after Boehner joined Acreage, his effectiveness as a cannabis industry advocate remains an open question. In June the Democrat-controlled House voted to support the States Act, which would protect state-legal cannabis businesses, a major step towards reform, which reportedly has support from President Trump. As far as is known, however, Boehner has not won the essential support from his friend Senate Majority Leader Mitch McConnell.

Boehner has been more successful in making Acreage look like the most attractive American partner for Ontario-based cannabis giant Canopy Growth. In April, Canopy announced plans to acquire Acreage for US$3.4 Billion once American law allows. (Depending on how it’s worded, enacting the STATES Act could enable the deal, according to Acreage.)

Then-Canopy CEO Bruce Linton said the presence of Boehner, former Massachusetts Governor Bill Weld (R), and former conservative Canadian Prime Minister Brian Mulroney on its board boosted Acreage’s credibility. “They have reputations they can’t risk — and we need that,” Linton said. 

(Acreage’s tactics for growing its market share are reportedly under investigation in Massachusetts and Ohio. An Acreage spokesman says the company operates in “strict compliance with any and all state regulations.”)

Since joining the industry, Boehner has said ordinary marijuana users don’t pose a threat and should not be imprisoned. But he has expressed no regrets about his failure to change the law when he was in a position to do so. Though possessed of the smarts, charm and tenacity to retire second in line to the presidency, he appears not to understand the unique circumstances which enable a federally illegal industry to pay him so handsomely. 

Here’s the transcript of a TV interview Boehner recently gave to Axios:

Axios:	So when you were a politician, you said you were unalterably opposed to legalization. One thing I want to ask is what harm has been done by the fact that we didn't legalize it back then?

Boehner: Well I don't know if there's any harm that's been done, but the American people's views on this began to change. Frankly, my views on this began to change.

Axios:  So you say you don't think that there was much harm done, I mean there was people getting arrested, there were people getting thrown in jail, and that counts doesn't it?

Boehner: Well yeah, but that was under a different set of rules, at a different time.

Axios:  Do you think there's something unfair about the idea that African Americans were disproportionately incarcerated as the result of these laws, and yet, the minute that the laws get loosened, it seems to be white Americans who benefit.

Boehner: Well yeah, the states are the ones issuing the licenses. Although the industry, by enlarge believes, that these people are being treated fairly.

Axios:  And they should not have any obstacles in terms of entering this industry.

Boehner:  No. I mean they've been released. They've done their time or they've changed the rules and they were released. They should have access to it like anybody else. But again, we're in the early stages. Once there's legalization of some sort, on the side of the federal government, tens of billions of dollars roll into this industry overnight.

Axios: Where does that leave a formerly incarcerated African American trying to make their own way into this business? How can they compete?

Boehner:  It's tough competing in any business. I would say the biggest challenge on the minority side, would be access to capital. If you don't have the capital it's hard to get into the business. And if you don't have enough capital, it's hard to stay in the business. I do think that may be a challenge.

During Mitt Romney’s 2012 Presidential campaign, the Republican party fixated on a similar idea. In a speech President Obama said “If you’ve got a business-- you didn’t build that.” He meant successful businesses depended on things they didn’t pay for, like roads and telecommunications infrastructure. Republicans, including Boehner, distorted the meaning into an attack on entrepreneurs, and made it the theme of their convention. 

Today a company Boehner didn’t build has made him rich. Within cannabis, that company is an outlier. It has built value by raising capital and acquiring licenses, not producing great products and delighting customers. The other people and companies who built this industry, the ones who have suffered and sacrificed for it, might want to ask themselves if Boehner speaks for them.   

Seeing Green: Is John Boehner Good for Weed?

Kevin Murphy, CEO of Acreage Holdings is on top of the cannabis world.

For several years, Acreage accumulated dozens of cannabis business licenses across 20 legal U.S. states, one of the industry’s most expansive footprints. Then in April Canadian giant Canopy Growth agreed to acquire Acreage for $3.4 billion once U.S. legal conditions permit. The world’s largest weed company had endorsed Murphy’s blueprint for conquering the U.S. market. 

Even before it closes, the deal anointed Acreage the unofficial leader among the increasingly powerful group of multi-state operators (MSO). And if the acquisition closes as anticipated, Murphy’s personal holdings in Canopy will be worth roughly $500M, according to my analysis of regulatory filings. 

Before the Canopy deal became public, Acreage was best known for putting former Republican Speaker of the House John Boehner to its board of directors. Today the company appears poised to have enormous influence over the industry. 

Murphy sat down with WeedWeek on June 27 in San Francisco to discuss the Canopy deal, how the market will shake out, and whether former prohibitionist Boehner owes anyone an apology.

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Murphy, 57, is soft-spoken and very fit. After playing linebacker at Holy Cross and one season in the United States Football League, he began a career in finance, working at several large firms before moving into hedge funds. 

In 2011, Murphy made his first cannabis investment in a Maine medical dispensary. Three years later he started the investment vehicle High Street Capital Partners, which invested in and leant money to license holders, largely in the northeast, an industry backwater. 

The company changed its name to Acreage Holdings in 2018 and began to “roll-up” its existing investments. It raised $119M in venture capital, then believed to be the largest private cannabis investment to date. The cash infusion fueled Acreage’s acquisition strategy and prepared it to go public in Canada, which it did in November 2018. 

A striking aspect of Acreage’s strategy -- and that of several rival MSOs -- is its relative lack of sales to date. The larger legal states have forced companies to adapt to complex and costly regulations, taxes and a stubbornly persistent illegal market which can often match legal operators on quality and undersell them on price.

Rather than swimming upstream with hundreds of other brands, Acreage prioritized building a broad portfolio of licenses. Canopy evidently found the geographic diversity more valuable than sales volume or a prominent brand. In 2018, Acreage generated C$21.1M in revenue, less than 1% of Canopy’s $3.4 Billion offer.

Now that Acreage has a foothold in most major U.S. markets, Murphy anticipates the differentiator between the larger players will be in the choices they offer consumers.

Late last year, Acreage acquired Form Factory, a California manufacturer and distributor that it believes will enable it to bring produce popular products to a much larger public. "If we discover for instance a brand in California," Murphy said, "We might approach that brand and say, 'Would you like to sell your goods in 19 other states?" And it will sell those products alongside in-house brands.

It doesn’t sit well with everyone that success in cannabis today can come at such a far remove from the plant and the movement to legalize it. 

“I have no objection to mainstream investors and businesspeople making profit in the legal cannabis industry,” Steve DeAngelo founder of Oakland-based mega-dispensary Harborside wrote in an email. “What I have a problem with is these companies using their financial and political power to game the system to their advantage.”

Today, Harborside trades alongside Acreage on Canadian Securities Exchange, but they took very different routes to the public markets. DeAngelo was a legalization activist for decades when it was a risky, unprofitable life, before he opened Harborside in 2006. Then between 2012 and 2016 Harborside fought and won a four year lawsuit against the federal government.  

Few if any cannabis activists have become capitalists as successfully as DeAngelo. And there’s some resentment at relative newcomers like Acreage which have prospered.

“I'm sorry they feel that way,” Murphy said. But “I'm not going to apologize for some of the success that we've had."    

(DeAngelo is especially opposed to large companies who oppose legal home growing, presumably because they fear it cuts into earnings. Despite reports to the contrary, Murphy says he’s comfortable with home growing for personal use.)

The rise of Acreage and other MSOs shows the industry shedding some of the pieties that have propelled legalization so far. Nothing showed the trend as succinctly as Acreage’s appointment last year of former Republican Speaker of the House John Boehner to its board of directors.

As the industry’s figurehead in Washington D.C., Boehner presents some difficulties. He has never tried marijuana, and while in office he declared himself “unalterably opposed” to legalization. Since leaving office, Boehner says his position has “evolved.” 

Acreage gave Boehner a stock package currently worth about $12M, which will jump to $20M when the Canopy acquisition closes according to media reports.  

Boehner is also one of the very few industry advocates who doesn’t pay lip service to equity, the idea that the minority communities who were disproportionately punished during the war on drugs should benefit from the proceeds of legalization. 

And Boehner was in a position to do something about it. "I don't have any regrets at all," Boehner told NPR this March. "I was opposed to the use of it. The whole criminal justice part of this, frankly, it never crossed my mind."

"Does John [Boehner]owe anyone anything? I can't speak for John," Murphy said when I asked if the Speaker owed an apology to people who have suffered because of the war on drugs. 

Murphy called Boehner’s arrival on the scene a “turning point” that “helped legitimize our industry more than perhaps anything had before it.”

By contrast, Murphy said “It sickens me,” that people have been imprisoned for what Acreage does. The company is hiring a director of corporate social responsibility, an area where Murphy acknowledged it has fallen short thus far.

Boehner’s presence  on the board did apparently help Acreage land the Canopy deal. Having someone of his stature “Means they’re going to be strict on governance, because they have reputations they can’t risk — and we need that,” Canopy CEO Bruce Linton told MarketWatch in May.

Several weeks earlier the Boston Globe had reported Acreage is "using complex corporate structures to acquire or manage store licenses" in excess of the three recreational retail licenses which the state permits a company to own or control. 

Acreage’s plans, and that of another company “are not just pushing the limits built into the state law, but may be busting them entirely,” according to the Globe story. “Their early moves also threaten the state’s promise to not just legalize recreational marijuana but to make the marketplace for the drug a fair one in which diversity of ownership is prized and small players have a chance.” 

Massachusetts regulators have reportedly opened an investigation into the matter. 

Murphy declined to comment on the Globe story or state investigation. But he said Acreage is compliant in every state where it operates, and that it has been transparent with Massachusetts regulators. Similar practices by other MSOs have been reported on in other states. (Canopy did not respond to requests for comment.)

While people have used cannabis as medicine since antiquity, the drug’s recent history has delayed cannabis research and drug development behind where it might be. The absence of credible science enables both legalization supporters and opponents to interpret the ambiguities to maximum advantage. 

During our 50 minutes, Murphy repeatedly steered the conversation to his passion for medical marijuana’s potential benefits for veterans with PTSD, opioid users, children with severe epilepsy and insomniacs among others.

Assertions like these, as Murphy acknowledges, are based largely on anecdotal evidence. But the future of Acreage’s business and that of its chief competitors primarily involves selling marijuana to adults who don’t have a pressing medical need for it.

On the other side of the health spectrum, Murphy expressed skepticism about a recent N.Y. Times op-ed headlined “Marijuana Damages Young Brains.” The piece, by two prominent doctors, states, “Numerous studies show that marijuana can have a deleterious impact on cognitive development in adolescents, impairing executive function, processing speed, memory, attention span and concentration.“ It calls on legal states to implement a legal buying age to 25. 

"There would need to be more research done," Murphy said, for him to believe cannabis is especially dangerous for under 25s. (Of course it’s up to individual states, not Murphy, to determine the legal buying age.) 

Canopy recently became a founding member of the Global Cannabis Partnership, which aims to develop industry standards for responsible use, corporate governance and environmental practices.  Doing so, supporters argue will help the industry attract institutional investors, and be helpful preparation for any future scandals. 

Like alcohol and tobacco, cannabis fits the profile of a “vice industry,” dependent on a relatively small number of heavy users for its revenue. 

Murphy didn’t directly answer a question about what responsible use looks like. "Working out's a problem for me. I overtrain and I get colds like I have now. Eating pastas a problem for me too,” he said. “So I think we all have different vices.”

"How many people die every year from alcohol poisoning or alcoholism? How much domestic violence do we experience by alcohol related attacks?” He said he was more likely to get a cardiac arrest from “18 Starbucks” than from smoking joints.

The Canopy acquisition, Murphy said, would enable the combined company to pursue medical marijuana research. Outside the U.S. Canopy was pursuing 20 clinical trials for medical marijuana, he said. 

In a June profile, Canopy CEO Bruce Linton told Bloomberg about his expansive view of the legalization opportunity. “We’re disrupting everything from veterinarian care, vet medicines, vegan proteins, OxyContin, opioids, sleep aids, geriatric care, alcohol, sports drinks.” 

Fueled by a  $4 Billion investment from U.S. liquor company Constellation brands, Canopy has acquired a dozen companies in the last year, including a German bio-pharma shop, and a U.K. skin care company. 

Then last week Canopy fired Linton. It came days after Constellation CEO Bill Newlands said he was “not pleased” with Canopy’s fiscal year loss of C$670.1M (US$511.8) on revenue of C$226.3. (🍁WeedWeek Canada has all the details on Linton’s exit.)

A spokesperson for Constellation said the company was “excited” about the acquisition but didn’t respond to a question about Canopy’s clinical trials program. 

Never before has cannabis looked so much like a mainstream industry. 

Acreage CEO Kevin Murphy: The WeedWeek Interview

Let’s agree that cannabis regulations should both support companies which try to play by the rules and protect consumers. With North America’s industry so fractured, rulemakers should also try to build on the best practices of other markets. 

Canada’s new rules are sure to be a hassle for companies while adding minimal value for consumers. Additionally they force the industry across North America to reassess a status quo that was working pretty well.

Inevitably when edibles arrive in a new market lawmakers and regulators make a show of concern. They have no choice. Edibles include brands consumers will recognize, and taking them in excess can result in a very unpleasant experience. 

The turning point year was 2014. In April, Denver man Richard Kirk consumed an edible and it  apparently led to him having a psychotic episode. Kirk got into his gun safe and fatally shot his wife while she was on the phone with 911. 

Then in In June, the New York Times’ Maureen Dowd wrote her infamous column about a miserable episode in a Denver hotel room, after she ate a THC infused chocolate bar. 

Since then large markets like Colorado and California have required REC edibles packages to be limited to 100 mg of THC total, with the contents easily divisible into 10 mg portions. Companies and jurisdictions have adopted PSA slogans like “Start low, Go slow.” 

Canada’s new rules could force new markets to go back to the drawing board. As Jesse Staniforth explains in WeedWeek Canada, Canada’s new rules will limit edibles to 10 mg of THC (the rough equivalent of one alcoholic drink) per package. The result is likely to be a hassle for companies, and perhaps also an opportunity for price gouging. 

The industry’s stock response to regulation it doesn’t like is to say it will energize the illegal market. In this case, the criticism is likely valid. And unregulated edibles are probably a more significant threat than other products, since it’s impossible to tell if they are uniformly dosed.   

Another inane rule Canada is implementing is the ban on cannabis drinks which evoke alcoholic beverages. Other than forcing a handful of companies to rename their variations on beer and wine things like “sparkling beverage with THC,” it’s unclear what this will achieve. (I’m not aware of any market which allows products containing alcohol and THC.)

There are so many aspects of the cannabis industry which require close attention from regulators. Canada’s rules all but ensure edibles will take up more time across the continent, without yielding an improvement for anyone involved. 

Canada's new edibles regulations don't help anyone

Seeing Green: Canada Misfires on Edibles 

Business Insider’s Jeremy Berke recently asked investors for their predictions on the hottest cannabis start-ups. He came back with 11 consumer brands and 11 technology companies which investors say are poised for a big year. 

Even though most of the investors are touting companies in their portfolio, the consumer-brand recommendations seem reasonable enough. They include low-dose beverage company Cann, discount player Old Pal and Canndescent, the high end company known for ditching strain names. 

One of the reasons cannabis branding is so difficult, is that the products are so similar. Whether it’s in a vape pen, a joint or a canned beverage, all the companies are selling THC and CBD. Packaging and other brand ephemera is all the companies have to distinguish themselves. 

It also remains unclear (to me at least) whether customers can tell the difference between luxury and economy products. With so little to go on, investors seem to be assessing cannabis companies by looking under the hood at their numbers and management teams. 

But even that can seem a little 2017. At the moment, multi-state operators are emerging as dominant forces in the industry. While they all have in-house brands they are developing, these companies aren’t ascendent because of their brands, or even because they’ve sold a lot of product. The deep-pocketed MSOs are building up their presence in key markets. Once they're ubiquitous, customers will be happy to buy whatever they're selling. Do people go to Starbucks because they love the coffee or because Starbucks is everywhere? 

So far, there has been relatively little overlap between these two theories of the cannabis marketplace. The most carefully tended brands come from California, where the MSOs still have a relatively limited presence. 

But sooner or later, and probably sooner, high profile brands are going to catch the eye of the largest operators. The big unanswered question is whether customers will pay more, or drive farther, to acquire a preferred product. Or will they be satisfied with whatever is close by and on sale? 

In short, will cannabis brands matter? Or will the ultimate winners be determined by access, location and other factors largely unrelated to their products? 

What will be key to winning the cannabis market?

Seeing Green: Can Brands Win?

Manchester, U.K.--A few days ago I had a very pleasant conversation -- over pints of lager -- with some of the folks at the London cannabis consultancy Hanway Associates. They've got a lot going on, including the late June Cannabis Europa conference in London, which lists a solid contingent of speakers and sponsors from North America. They project attendance of about 1,300.

That said, don't expect there to be much of a U.K. Green Rush anytime soon, for reasons I'll go into in a forthcoming column for the Guardian. On a much smaller scale, however, there are hints of legalization reaching British and European shores.

The European company which sounded most intriguing is Holland-based Bedrocan which claims to be the only company in the world growing flower so consistent it qualifies as pharmaceutical grade.

Hanway CEO George McBride said the U.K.'s National Health Service is "very ill-informed" on MED and reluctant to learn more. But access is expanding somewhat through private clinics which serve the very wealthy, as well as some of the workforces of major multinationals. The first such clinic opened in March in Manchester. More are anticipated soon on Harley Street, London's hub of private medical care. 

While most of the British public favors REC legalization, according to a 2018 poll commissioned by the drug policy think tank Volteface, there's more wariness about the risks. (The consultancy Hanway has close ties to Volteface.) 

When legalization arrives, it's likely to be more organized and more closely tied to the medical profession. "I don't think the American model of taking medical advice from shop assistants is something we want to follow," McBride said.

In Spain, and perhaps much of southern Europe, cannabis is "ubiquitous," which makes it harder to create a for-profit industry.

Don't hold your breath for legalization in the U.K.

Seeing Green: The View from London

Five years into the state experiments with legal recreational marijuana, it’s becoming harder to believe states can capably enforce their own marijuana laws. Two recent examples help to illustrate why:

As part of an effort to support smaller, homegrown cannabis businesses, Massachusetts doesn’t allow any company to control more than three recreational dispensary licenses. However, in March, the Boston Globe’s Spotlight team reported that two large multi-state cannabis companies, “have offered investor pitches that seem to look right past Massachusetts license limits.”

The article describes how the companies, Acreage Holdings and Sea Hunter Therapeutics (part of the conglomerate Tilt Holdings), “are trying to multiply the ‘rule of three’ out over a much larger network. They have been buying or backing a series of businesses that each, in turn, is seeking to control up to three licenses.” (New York-based Acreage claims to be the largest U.S. cannabis company; Former Republican Speaker of the House John Boehner sits on the Acreage board.) 

“You can’t control more than three licenses, whether it’s direct or indirect, through subsidiaries or holding companies or shadow companies,” Massachusetts’ top regulator Steven Hoffman, a former partner at consultancy Bain & Co., told the Globe. 

Both Acreage and Sea Hunter denied they were breaking or bending the law. While they both anticipate earning revenue from about a dozen Massachusetts stores, each said they did not control more than three. 

In an April 2019 securities filing, Acreage provides more detail (P# 42) on how its “management services agreements” can work in Massachusetts and other states with similar ownership limits, such as Florida, Maryland and New Jersey:

“The company believes that, where such restrictions apply, it may still capture significant share of revenue in the market through wholesale sales, exclusive marketing relations, provision of management or support services, franchising and similar arrangement [sic] with other operators.” 

After the Boston Globe story came out, Massachusetts regulators said they were investigating whether either company violated state license limits. “Tilt is in compliance with all Massachusetts statutes and regulations,” a company spokesperson told me. Acreage declined to comment for this story.

The second example comes from Colorado, which is reputedly among the best-regulated state marijuana markets. 

For years, Colorado pot companies have felt stymied by the state’s relatively strict rules surrounding how they can raise money. Colorado marijuana licenses can’t be owned by publicly-traded companies. Last year, the industry criticized Gov. John Hickenlooper for vetoing a bill to loosen Colorado’s investment rules. (Today, a similar bill awaits Gov. Jared Polis’ likely signature.)  

In April, the Denver Post reported publicly-traded firm MJardin had claimed to manage seven Colorado dispensaries, under the brand Buddy Boy, in a presentation to investors. (MJardin went public in November 2018 on the Canadian Securities Exchange, where Acreage and Tilt also trade.)

While not speaking about MJardin specifically, Colorado cannabis lawyer Daniel Garfield told the Post, “There’s not really a black and white line there, but if a publicly traded company is managing a store in the usual sense of the word, then it probably has some sort of control over the licensed entity and that would not be permitted.” 

MJardin executive Jeannette Harkin told the Post, the company “consults, advises and assists” Colorado-licensed businesses, but does not own or operate them.    

Further complicating the picture -- and not mentioned in the Post story -- in January 2018, MJardin paid C$49.7M (US$40M) to acquire “debt, consulting contracts, real estate and intellectual property of Buddy Boy Brands” according to Canadian securities filings.

In an email to me, Harkin wrote, “MJardin did acquire some assets from Buddy Boy and also was assigned certain contracts of Buddy Boy, but the licensed marijuana business of the company operating as Buddy Boy is still owned by that company which is independent of MJardin.  MJardin provides services to that company through its contractual relationship with it.” She said MJardin is fully compliant with Colorado marijuana laws. 

"Currently, the ownership structure for all marijuana businesses is subject to evaluation, during renewals and at any other time as warranted by our regulatory analysis."   A spokesperson for Colorado’s Marijuana Enforcement Division told me and that, "There is an 'open and ongoing' investigation into MJardin." Harkin declined to comment on the investigation.

In every legal state, there are laws pot companies are going to consider inconvenient, especially since it’s so hard to run a profitable weed business. The Post and Globe stories both suggest that to succeed, companies are exploring strategies which aren’t in the “spirit” of state laws. No doubt, numerous other companies are trying to find an edge via similar methods. 

The Colorado and Massachusetts investigations may eventually clear Acreage, Tilt and MJardin. However, it’s impossible to know how well regulators are attuned to similar practices at other companies, some of which could cross the line into impropriety. 

Unlike Acreage, Tilt and MJardin, the vast majority of marijuana companies, including all 1,400 or so in Colorado, are privately held, and reveal much less information to the public. (Colorado regulators have repeatedly refused to discuss my reporting on Ebbu, a private company whose assets were acquired by Canadian giant Canopy Growth last year.) 

Voters forced states to create and police freestanding industries for a controlled substance. It’s a gargantuan task. Now the states have to keep up with how sophisticated companies work within those laws. The results of the Colorado and Massachusetts investigations won’t conclusively answer whether the states can effectively regulate weed. But they could clarify what regulators think is the spirit of their laws. 

Can States Police Their Own Pot Markets?

On the heels of the delivery brand's landmark leap into 40+ states, Delivery app Eaze is wrapping up a round of fundraising that will place its total valuation above $300 million. 

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