At our inaugural Meadowlands, representatives from the licensed California cannabis supply chain discussed creating an environment of open, cooperative cannabis, scaling the legal market, and capturing the opportunity to finally a create a cannabis industry in California as it should be.

In this inaugural Meadowlands State of the Supply Chain panel, we hear from representatives from the licensed California cannabis supply chain: Hezekiah Allen (CGA and Emerald Grown), Amber Senter (Leisure Life), Chris Coulombe (Pacific Expeditors), Alec Dixon (SCLabs), and Jerred Kiloh (The Higher Path, UCBA), moderated by Ryan Bush, Head of Partnerships at Meadow.

The panel was moderated by Ryan Bush, Head of Partnerships at Meadow, and covers what these operators see as the biggest hurdles for the supply chain to overcome, how to address predictions of both an oversupply and an undersupply of cannabis, and how their businesses will change on July 1st, 2018.

Panelists (in order of speaking):

Hezekiah Allen, Executive Director of the California Grower's Association and President of Emerald Grown, representing Growers

Amber Senter, CEO & Founder of Leisure Life and California Rolls, representing Manufacturers

Chris Collum, President &CEO of Pacific Expediters Distributors, representing Distributors

Alec Dixon, Cofounder & Director of Client Relations of SC Labs, representing Lab Testers

Jerred Kiloh, Owner of the Higher Path and President of the United Cannabis Business Association, representing Retailers

Meadowlands Cannabis Supply Chain Panel
"I'm most excited about cooperative cannabis… The ability to work together is the most powerful thing that we have." - Hezekiah Allen. Photo Credit: Kandid Kush

Panelists stressed the importance of opening communication throughout the supply chain - no one can operate in a silo. This communication will be key to getting products to market, creating a continuous supply of clean materials, knowing what end users are asking for and making the right products to satisfy that demand, and creating a universal language and universal standards throughout the supply chain.

Meadowlands cannabis supply chain
Meadowlands attendees watch the Licensed Cannabis Supply Chain panel, Saturday, June 16, 2018 Photo Credit: Kandid Kush

FULL TRANSCRIPT OF THE PANEL:

HEZ: What I'm most excited about right now, I'm most excited about cooperative cannabis. I'm most excited about the fact that we're less concerned about conspiracy charges than we used to be so we can talk openly to each other about what we do. And I think the ability to work together is the most powerful thing that we have and the ability to talk openly about those things. To be here like this, I mean this was unthinkable, growing up as a grower in a community, you know one of the more productive, tiny slices of California. California supplies 70% of the nation, the 10 square miles I grew up in probably supplies 20% of it. So, very secretive, not able to talk about big vision, not able to share your dreams, aspirations, your insecurities, your fears, anxieties. Being able to do all of that now, is going to empower us to work together and to cooperate in ways that we haven't been able to before. So Cooperative Cannabis is really what I'm the most excited about.

AMBER: I think for me and really any branded product maker or manufacturer it's, I guess it's two-fold. There's us being forced to scale to large amounts that we weren't really anticipating. We'd had to before but at the same time if we succeed we're capturing this market share that we just didn't really think was attainable before. So it's scary, it's risky but I think that's been the course of cannabis since the beginning, very scary and risky and taking these risks. But now we're just taking a different risk and it's exciting you know, it's scary, but it's very exciting.

CHRIS: I would say that the number one thing that excites our organization, myself as well, is the opportunity. Touching on what the senator said, it's the opportunity that everybody here has to create the industry as they should be created. There's thousands of industries created before this, now we have all of the technology at our disposal. We have the social understanding to create it in the correct way and make sure that the precedent that we set now is one that we can be proud of in 10 years, 50 years, 100 years. So there's not really any excuse for us not to create this industry correctly, this time. We have everything at hand to do it right. And just looking at the capital side of things we have many of the people who've been here for 10, 15, 20 years that allowed us to become what we are today. They still have an opportunity to be a part of the industry in the long-term and it's up to everybody here to make sure that that happens and that it happens correctly. So I would say that's what excites me the most in the big picture, for the cannabis industry.

ALEC: I think it's been really, really difficult, the beginning of the year and first six months for most of us. I think everybody in their license type, you know you come online, 80% of your business that you used to work with is now gone. The market is now flooded because everybody stocked up on millions of dollars of inventory toward the end of the year and you know really kind of put a lot of unexpected hindrances on I think everybody trying to go through the process. I feel like the dust is starting to settle a little bit and you know from the testing angle of it you know kind of looking at the data analytics and the statistics of what we're seeing you know I have more and more hope and optimism by the day, especially around the idea of cooperative cannabis. You know because the resilience that I think a farmer has that's been doing this generationally and knows how to kind of Tai Chi and combat all the preventative kind of needs so if the plant you know being a very integrity based steward of this plant, I mean it's no joke and I think kind of being able to navigate you know not having to use all these DOW and Duponts and pesticides and knowing how to combat all the different things that come your way and being able to grow fire in areas of the state that are pristine microbiome environments that aren't like legacy Ag-lands I think is one of the levels of resilience and it's going to really kind of promote more success for everybody going forward. You know I think from what we've seen in so many ways a lot of the biggest licensed grows in kind of areas of the state where the kind of major grows are happening are in these really legacy, conventional Ag zones. And now that we're doing 66 pesticide tests with the most common kind of California Ag pesticides it's pretty gnarly and horrifying to see how much unavoidable, residual environmental contamination is a reality that people have to deal with in certain regions. So I think although a lot of my mentors and teachers and friends and community up in Northern California has this really existential fear of what's to come and you know corporate cannabis is going to come take over. But honestly I see kind of from just the testing side of it I mean it's not a plant you can just mono-crop and kind of corporatize and kind of monetize. because you know we're an Ag state and it's dirty land. And cannabis is like almost like this magnifying glass that through the regulations are kind of exposing a lot of the dirty legacy history of the green revolution and chemical industry. So I think kind of staying clean, staying motivated, on point, keeping the interconnected web of community and cooperation within the kind of culture I think is going to define and explode the craft industry and the small farm community and the valuation of clean trim and material in a world where there's a realization happening that everything's dirty.

JERRED: Wow, this is a great panel. I love to hear how we're talking about each kind of segment of our supply chain and what the really good aspects are as we build towards complete supply chain. Because each one of us holds a really big piece and without everyone really specializing in what they do well and really bring that to market we can really just get caught up in having one big mono kind of culture of agri-business just take over. So it's good that we are passing along our history. Passing along our culture, making sure that doesn't disappear because sometimes the culture and sometimes agriculture it disappears on how we got here. And I want to make sure that just because people say I'm from Los Angeles I've lived in Northern California my entire life. I'm a 17-year cultivator here in Northern California and I'm trying to connect the dots between Northern California growers and where a lot of the commerce happens in cannabis in Southern California. So don't do anything wrong in thinking this is just a Southern California draw. It's I want to make sure that Humboldt and Mendocino and the Emerald Triangle is a brand for the entire nation as well as internationally. We have a good opportunity to make sure that this culture is the foundation for growth for the rest of the world, so that they can emulate what we have kind of fought for, what we risked for and look at some of the laws that we have now because we're building them. We get an opportunity and the reason why I'm so excited is this is the first time a Senator has called me and said, "What can I do for cannabis." They don't do that! So this is our opportunity now to push this envelope. Advocacy has been a big part of where our foundation was but we really need to work into how are we going to regulate ourselves? Because if we don't regulate ourselves they will regulate us in a way that we may not want or need. They don't understand so you have to call your congressman. I mean this sounds like the constant, write a letter to your congressman, but it truly does make a difference. I mean I've been helping Kevin de León with his campaign because he truly does believe in jobs and that cannabis has no harmful effects. That is the first line that we have to get to with politicians, is there's nothing harmful here. No one's dying from this, we're regulating a plant that doesn't hurt anyone. I think bleach kills more people than this and we don't put any safety labels on that. So this has really come to a point where we have to know that it's not harmful. They're understanding now and having politicians come here and make sure that there's a platform for cannabis from every single politician that tries to run in California needs to be our goal. They need to make a stance and say I'm with cannabis from here on out, there's nothing harmful about this, regulations can be really tough right now because the pendulum has swung way away from no regulations to too much. We'll find an equilibrium if everyone's voice says, this is what's going to harm my business, this is what's going to make my business better. They need to hear from you. So voting is going to be a big part of this but holding your elected officials accountable for what they're stance is and what they're going to do in the future, there will never be a candidate who will come through California again if we do this right, who doesn't make their stance on cannabis be positive. We have to do that as a group and with the leaders here and the leadership we have now who's all focused on this, I mean you're seeing this in Forbes Magazine, AARP, every one is writing about what cannabis is doing for California's economy. We need to make sure that politician's allow us to thrive in this economy and not put us into a place where you have to decide between your permit or surviving as a business. Those are too rock-and-hard place, we can't be in that position too much. We have to tell them what is going to help us grow this economy right now, so that's what I'm excited about, they are listening and if we don't keep telling them what we want, they're going to listen to someone else with more money. So we either have a large voice or we have a lot of money. I realize right now we have a large voice.

RYAN: What do you see as the biggest hurdle right now for our harmonious supply chain to overcome right now? Like for you know there's a lot of fractured activity going on right now in the supply chain. We have a July 1 deadline looming, we're going to get into that a little bit more later, but what do you see as like the one biggest hurdle and challenge that our supply chain needs to overcome to become you know completely harmonious?

JERRED: Communication with everyone else in the supply chain. Don't isolate yourselves, saying I'm only a cultivator. This is a product that has to make it to market and so there are so many people in the supply chain that you need to communicate with. It's going to be important that you understand that because you have a product doesn't mean it gets to make it to market unless you market it well. You communicate well, that we all communicate about what is going to be the best way to get your product to the end-user. So all of these people sitting in this panel have a portion of the supply chain. You should know everyone here. You should communicate about how can I take my group who's a cultivator and make good connections with lab testing, because if we allow all the agri-businesses to buy up 50,000 tests ahead of time, then we're three months behind getting our tests done. So we can't allow them to do it. We need to use our voice and we need to communicate with each level of the supply chain so that they know you're here. That they know that they need to take care of your testing as much as anyone else's and don't let too much big business jump in the middle of every portion of the supply chain so they can tap into it. We can lower each other's cost if we don't get too greedy. That's truly what we need. It's like you don't think that you're the only part of the supply chain that's important, every single one of these is very important. Be humble, and I think being humble in your position and letting everyone else kind of help support each other is really the way that we can make the supply chain work. But we can't just let it fragment by saying, I'm an island, I'm a cultivator, take care of me. It's like I have to communicate to every person in this and I'm here to make sure that Southern California, to make sure that this brand of Humboldt cultivators makes it to the international market.

ALEC: So a hindrance kind of I think in the supply chain, I think this year so far with compliance testing coming online and working with the initial operators essentially that bought into compliance testing, you know groups like Pacific Expediters, Rise, you know early on from doing testing started almost like a canary in a coal mine started through the testing process realized things that worked and what don't work. You know I think there's still a lot of work to go through to make sure like all the in's and out's of what it is for compliance testing. Where compliance testing cannabis can be distributed to, you know I think there's a few things that still need to be worked out to create the harmony in the supply chain. But as far as the biggest issue in my opinion, I mean so many people that are kind of having these projections to make all these cartridges or all these products, you know are kind of relying on a continuous source of clean material and you know the further off in the supply chain you are from the person that grew the cannabis, you know the more of an incredibly variability or exponential risk that that person sprayed and you don't know where it's from. Oh it's like from some Santa Barbara farm that's getting over sprayed by helicopters next door. You know so kind of the integrity of the system I think in so many ways you know the regulations you know as stringent and difficult as they are I think they're going to also be the biggest things that help define and value the quality of true, clean quality cannabis. And I think in so many ways it's just going to really like progress the slow food movement ideals of knowing and having a relationship with where the source of your food. You know and especially with manufacturing. Every license type has you know the minimum, should be doing the minimum, but most effective enough types of like R&D, you know different tests to help ensure that by the time they have a batch that's ready to go to a distributor for compliance testing that there's not going to be surprises or there's not like huge amounts of pesticides. So for most license types you can do a lot to minimize the vulnerability that you're exposed to and potential contamination risks or cross contamination. But with manufacturing I think that's going to be one of the most difficult licenses to maintain and hold 'cause you're concentrating biomass from different parts of the state and environment and working within closed loop systems where you're recycling and recirculating gases and solvents and you know the trichomes with pesticides just stick the inside surface areas of the machines and they get in the gas. And you know just the risk exposed to a person doing manufacturing or making cartridges or distillate and how much, I mean it's kind of one of the most revealing things 'cause through the concentrate it all comes out and it's not uncommon for us to see in distillate, you know 15 to 19 category one and two pesticides, you know in multiple part-per-million concentrations. So I mean I think that's the perfect example of like no supply chain management and understanding of the sources and the risks that they're exposing into their machine. Because you know once it's in it's almost like STDs because it then ends up spreading around and further you know kind of really bring a lot of kind of difficulties into everybody in your chain's reality. So, just slow food movement, knowing your farm, where you're getting your material, like one off. Like not five-off, if you're relying on brokers to bring you pounds for all these different people, that type of things done, especially if you're doing extraction. But anyway.

AMBER: I would like to echo what's been said about communication. As a brander and a person that makes branded products you know we're taking a material and turning it into something that the masses want. Really we encounter a lot of cultivators, I want to put my flower in this jar and I want to sell it. That might not be the best way to go. Maybe we have to turn it into something else that the people are asking for. So I think being humble enough to understand that we need to sell all this shit. We need to move this product. Is more the mindset that we need to go into instead of I want to do this big, grand idea. Really, really get down to brass tacks and understand what we want to do is move product. And we're going to have to figure out innovative ways to get that done. So you know you might go into it thinking, I want to make this vape pen. I want to do this, I want to do cartridges. That might not be the best way to go. So yeah, communication, listening to the people that are on the frontlines, the people that are doing the demos. The people that are interacting with the customers, the people that are in the dispensaries making the sales. Getting that feedback and really pushing it through the whole supply chain. Going to the cultivators, going to the concentrate makers and the manufacturers and saying well, people want this kind of stuff, people want this kind of stuff and really, really processing all that into information so that we can sell, everything.

HEZ: I think undeniably the biggest barrier is at the local level. Most of California is still living under prohibition. 77% of California's growers can't obtain a permit. 75% of the most populated 100 cities aren't issuing retail permits. More sales are taking place in the unregulated market everyday, less sales are taking place in the regulated market and it's because California cities and counties are failing. I have no concerns about us going global, we've run this market for decades, generations and we're going to keep doing that. We got the global market don't stress, it's at the local level that we have problems. And we've got to do a lot more work there. I think that communicating with each other and within the supply chain is key. But communicating with folks outside of the cannabis industry is also very key. Like our ability to just be now, right. We used to be able to just be and drink some wine and it was no big deal. Now we can just be us, like we've always wanted to, be that, and be proud of that and get out there and be that with everybody. Even people who aren't there yet because that's what's going to win at the local level. Making tremendous progress at the local level thankfully, but California will not legalize cannabis for another decade, that's just what it is. We've got 10 years of hard work to do before every Californian can enjoy what we're all so happy about. You know most of the people that started this journey aren't in yet, and that's a problem. We've got a lot more work to do. The second thing that I just want to point to as more of an internal, housekeeping sort of a piece is the infighting. When you know I'm just going to use the recent example, we've got a bill that would let small growers sell cannabis at four events per year. We went to the mat with other industry players talking about nonsense, it wasn't even what was in the bill. We brought support from local government, we brought neutrality from law enforcement, we brought support from labor organizations, we've been working this bill for three years because we know that these types of direct relationships with consumers are not only the norm, they're also a critical lifeline and we're still fighting with each other over it. It's a bit frustrating. I also want to say that our community is diverse, beautiful and brilliant and it's in that multifaceted brilliance that I find what I need to be a healthy, whole human. It's all of us, it's all the differences, differences can be challenging to manage. Differences are a real challenge and we have to very intentionally manage our differences. I would like to encourage that we organize not around our differences, but we organize around our similarities. Let's organize in a way that we come to a table to talk about our differences. Not so that we set different tables for different groups. We really, really need to get to a point of togetherness so that we can take this on. So those are the two biggest barriers, externally it's at the local level. And it's with everybody and internally it's with our ability to come together and talk rather than talking in separate corners.

RYAN: Excellent thank you.

CHRIS: I'll shift gears for a little bit. I as a distributor have a different lens, more on an operational and logistic side. So that's kind of where I end up staring often. But for us it's probably transparency as was mentioned before. And then making sure that there's a universal language for us to communicate in. The biggest thing if you want to have close communication and transparency is you need to speak the same language and what that means is creating universal standards for us to move throughout the supply chain, to help understand how we're moving. Everybody in this auditorium or in this amphitheater knows how many bottles are in a case of wine. But how many eighth's are in a case?

HEZ: Well there's 8 in an ounce, there's 16 in a case and there's 10 pounds in a box and there's 100 boxes in a pallet. All in the same sized jars.

CHRIS: Yeah, so in the regulated market. So the point there is just we need to start standardizing our operation if we're going to get to a place where we're able to compete with the real money which has not shown up yet. We need to have the ability to speak the same language, how to move product the same way every time. That the retailers know exactly what they're going to get, the manufacturers are creating exactly what needs to be created and distributors are moving exactly what needs to be moved. And if we want to have any opportunity to compete with serious money that will come along in the near future then you either need to have a lot of money or a loud voice or a lot of organization and a lot of organization is what we can start with because that just compounds the ability to speak well to the people. So the best way that I can see us overcoming many of the obstacles, particularly for the small farmers or those that have been there for a very long time is to create efficiencies in operation and ensure that we can get to market in a way that can't be outdone or done better than by those who have lots of money and lots of experience in the supply chain. So when Amazon shows up or any of these other big farms show up and they've got their supply chain dialed and we do not, it's very short conversation. That would be the points I'd address.

RYAN: Excellent, thank you. Dropping knowledge up here. This is an all-star panel, thank you all. Oay, I'm just going to kind of throw this out to whoever has some answers, feel free to grab the mic. So you know there's predictions of both an oversupply of cannabis, you know market prices just plummeting like in Oregon, we're seeing up there now. There's also predictions of just a supply chain bottle neck, stoppage, essentially no legal product is going to be able to make it to market. Which is it, is it a combination of both? How do you see it playing out over these coming months, the rest of this year into next year? And you know what can we do to address it and get out ahead of it to try to fix it before it does become an issue, whether it's an oversupply, under supply, combination of both, what do you guys think? What's the answer here?

HEZ: The market needs to acknowledge the added cost of bringing goods to market. There's not a shortage of regulated supply, there's a shortage of cheap, regulated supply. Especially you know the manufacturing segment has relied on low-value bio matter for the out-of-state markets for a long time. That was in effect a market subsidy and so there is going to be some very real price corrections that come into calculation when we actually figure cost of goods to market. Not having products that looks the way you want it to, that is the price that it always was in the unregulated market is not the same as a shortage. Right now we have less than 1,000 retailers, we've got 1,700 licensed cultivators, many of whom are growing many, many licenses. There is plenty of regulated product for the regulated retailers. As we scale the retail segment we're going to need to scale production. We can do that one of two ways, more growers or bigger growers. Obviously we know what my preference is, let's cooperate and make this cooperative cannabis thing the front runner and bring more folks in, but there is no shortage. There are products in the market that folks want to put on shelves as certain price points that aren't going to be feasible anymore, but that's not the same as a shortage and that needs to be acknowledged. The basic truth is that we grow way more product than we will ever be able to consume as a state. Our challenge is getting as many of those hard working humans that have pioneered this marketplace in to the regulated market so they can stop worrying about their parents getting arrested, their children going to foster care, their doors getting kicked down. That's what we need to do as a regulated market and that's, we're perfectly situated to do that.

RYAN: Anyone else want to weigh in?

ALEC: Yeah, I would love to. So you know I see laboratories, last year we opened, we were opening a lab up in Oregon, we've been open since last August. But all last year essentially we were going through the process of becoming, going through the accreditation process, through this group called the Oregon Laboratory Assessment Program, and through that process we basically we're just standing by and witnessing kind of the reality of what happened in Oregon. And it's pretty horrifying 'cause so much overproduction happened. I mean people sitting on thousands of pounds selling quarter-pounds at a time, a couple pounds here and there to dispensaries. It's like no more 100 packs and everybody grew 10 times or 100 times more than they've ever grown. And you know cannabis, you know terpenes are the biggest like spoilage, cannabis can become a spoiled good. And you know quality and the major metric of quality is terpene content, 'cause it shows how something was grown, and cured, and preserved and it's an exponential loss, with terpenes kind of exposure to temperature and all these other things. So I mean sitting on 1,000 pounds of weed that's going bad and all the terpenes are going so it can become hotdog kind of distillate at some point because there can be nothing else done with it, it isn't like the move. I think people kind of you know scaling as you're able to sell and have a market for, you know I think is going to be one of the big succeeding factors. But I also think California's a very different market than Oregon. You know there's four million people in the entire state of Oregon and everybody's growing like 60, 80,000 square feet and you know it's way too much. I think Oregon is partly depending on a national market, you know very well a lot of the family farms will be competing with California family farms on that level. But kind of right now they're just trying to hang on for dear life and just be able to cover their overhead and their kind of labor costs, all this stuff. Just to make it through the next few years while the market's just being decimated. So I think in California you know I mean it's such a huge state, there's such huge consumption. But again it's like how much of the cannabis has gone to the East Coast, you know kind of like over the last 20, 30 years of the percent of what's grown here? And so I think thinking in terms of like you know no more 100 packs, you know I mean just like understanding that you're only going to be able going to be able to grow as much as you sell and you know it can go bad. But you know as far as kind of I think, I'm sorry two things, one I think there's almost going to be a natural like you know the cannabis plant almost through regulations is going to have this natural governing mechanism of like capping off how big people can go. 'cause like I was alluding to before you know some of the biggest farms that even when they're working so hard and they've integrated pest management, like biological control, all the things. You know even if they're able to grow their million square-feet of production without pesticides, they're always coming in just below levels of pesticides and you're going to fail them if you concentrate the material. You know for any of these category one, category two pesticides. So it's like I think you know bigger is better, I mean most of the big major grows that we're seeing are in these certain legacy Ag areas and so it's like it's going to be really difficult for them just on their own, if they even never use pesticides to just be able to get product to the market. And so I think that aspect is going to have a huge effect in kind of capping people's ability to just try to grow way too much and you know cause certain amounts of it is going to have to go into distillate, certain people are then taking the distillate with pesticides in it and working with edible makers or increased product makers to dilute it out across batches so it can then pass. Which is kind of crazy on it's own but you know I think there's different geographical regions of the state are going to have different issues with oversupply and what can be done with that product if it can even be made into like inhalable extract or anything like that. But then lastly, sorry I'm kind of just rambling on, the last thing I want to point out is the bottleneck in so many ways, yeah I mean testing, there's like 28 temporary lab licenses. I don't know how many are even being fulfilled yet, I think 19 maybe, you know it's like the state's put incredible accreditation and regulations on the lab and I think that's one of the most important things to secure the integrity of the supply chain and the regulations. Have all labs be able to be on account, you know ongoing proficiency testing, high levels of regulation or accreditation you know on every test you run. I think it's going to you know basically bring all labs to account but in the process you know I don't know how over these coming months as like all of a sudden now there's a lot more demand for compliance testing. I think over a six month period there very well might be a kind of backlog, essentially you know of testing. So you know back to kind of the point I think that was brought up earlier, it's communication. You know there more communication and effective kind of projecting that you can do with working with the lab to let them know what you're expectations are and how many compliance batches you seek to do in a given week or month, how many R&D tests, 'cause those types of numbers in projecting and discussing with the lab your working with are going to help the lab be able to kind of fit and project you into the flow, the sample flow, the turnaround flow. Because I think for a lot of people you know in Oregon what really smashed a lot of people was the fact that for certain labs they were at like six to eight week turnaround time. So people couldn't get product to the market so it kind of really collapsed a lot of farms internally as a result and so we've been working for this moment for a long time and it's not going to be that kind of an issue for us, but you know for your own ability to get product to market and deal with kind of these things. It's like developing a really close relationship to the lab and being very communicative with what your needs are is going to be really important for it so it's not a bottleneck for your business.

JERRED: I'll try to be quick, this is has been a supply side economy for awhile, you grew it, someone sold it. It's going to move to a demand side sort of economy when what they want is what you need to grow and what you need to produce because if we don't the gap between what people have become accustomed to buying and what is available on the shelves puts price parity into a position where the black market has too large of an advantage over products that people have become accustomed to buying. So even though there is this large amount of supply if every portion of my menu doesn't have something that someone has become accustomed to buying and is available July 2nd, then they are pushed to a black market that not only has a cheaper product but also has the product they've become accustomed to. So this isn't just about how much have we produced, it's have we produced what people are wanting to demand? Because we did go from 5,000 retailers down to 500 and that has totally decimated the ability for the regulated market to get their products to market, to get them to the end consumer. So yes we need more retailers and everyone should go to their municipality and say we need more retailers otherwise my regulated product that I spent hundreds of thousands of dollars to get ready for, I need to have some place sell it for me. But we also need to make sure that the pricing is okay in terms of you have a budget that you can meet your demands, we've been taking on investment capital. If we can't keep our budget's ready so that investment capital sees the return on investment then you see this kind of pull away from investing in cannabis and we need this investment because we don't have money buried in our backyards. We've all just been surviving, this isn't what they think, it's not a mattress full of cash. It's been tough for us families to make this work but we've all been kind of single, small families. So do realize that if we continue to put this upward pressure on pricing and we take all this non-compliant product and send it back to distributors to get relabeled, to get retested, to get redone, it just adds cost just to bring it back to market and then the end consumer is the one taking on this added cost. And as that end consumer sees that added cost get further and further away from the black market's cost that's when we get diversion back into the black market. So I'm trying to say that we need every portion of our menu to be filled, we need our shelves to be filled with products that everyone's become accustomed to. Otherwise we're driving them outside of the regulated industry. So that's where I see some of our shortages, it's not in supply, it's in the diversity of supply so that everyone can have what they've become accustomed to buying. So that's where we're at. CHRIS: I'll just chime in briefly, I think there are not enough inputs yet to factor out and model out this economic concern. I think the original question was where do we see the prices going? In the aggregate, upward, yeah.

CHRIS: There's far too many inputs that are not going to have the ability to be reflected on the X/Y axis to track that. Sorry, long story short in the aggregate it will go up over time provided that there is enforcement and that there is attractive product.

ALEC: One quick thing, we've seen as a result of how much people are buying material that's dirty, a couple of the biggest like manufacturing groups that make cartridges that we work with are starting to pay and try to lock in sustainable long-term relationships with small farms and pay 6-$800 a pound for trim. Because they've done such like incredible vetting and can find it, so if you have it that's a reality.

RYAN: Say it loud, say it proud!

AMBER: Yeah, I just wanted to basically echo what everyone's saying. We've got to bring to market what people want. There's not going to be any shortages or any issues if we're actually making what people want because they will come and buy it so.

HEZ: Real quick though, I just want to say, you know we started on supply and it obviously morphed into price. The two are definitely fundamentally related, I think that our industry needs to stop and realize that pricing is the thing that you do intentionally, what the market can yield is only one strategy for pricing. And that's, what can we get for it? Cool, that's what it costs. Start looking at other methods of pricing with the skyrocketing costs of bringing goods to market a cost of bringing goods to market pricing strategy is a very important thing for you to be familiar with and that's how we can build the cooperative supply chain partnerships that we need is by being open about what the actual real cost of producing good, cleanest-in-the-world, California cannabis.

RYAN: Okay, last question, going to go to each of ya. Rapid-fire, short answer. We've got a big date looming over us here. Which just so happens to coincide with perfect timing for this event I think, to give everybody a quick breather before we really, really start sprinting. How will your business change or the business of your members and cohorts change on July 1st?

AMBER: We have laser focus now, you know pre January 1, everyone was you know you'd look at some people's offerings, some branded product makers and they've got this like buffet of things to choose from, that is gone. You know so laser focus right now. I mean we're doing, so my company we have Leisure Life, which manufactures popcorn as well as California Rolls which is infused pre-rolls, a few different. You know we've had to put the pre-rolls on pause. Just because we've really got to focus on scaling one product. We got to do one thing and we got to do it extremely well. And that's just how it is, you know. Yeah, laser focus on one thing, do one thing and fuckin' kill it.

RYAN: Who wants to go next? How will your business change July 1, from now until day one, July 1, how's the business going to change?

JERRED: Well sometimes when you're part of an organization you understand the rules, the laws, and the things that are coming. So it's the people who've kind of been operating like an island for a long time that they maybe have just been narrowly focused on what their business is, what those regulations are and they may not have heard what some of the rules that are coming to play, how they're going to affect them. So when I look at my group we have about 62 retailers inside of our trade organization just in Los Angeles, but we've informed all of my 62 members. Well there's also another 90 dispensaries in Los Angeles that have no idea what's going on and so now they're coming and saying wait, how are you going to take care of July 1st? And it's like well I've made relationships with distributors, made relationships with vendors. We've done this over the last few years to make sure that the supply chain wasn't going to be interrupted. But we're an anomaly. Most retailers are their own little islands and have been most of their lives so they don't know this is looming. So now that it's real, July 1st is a real problem for them because they don't have relationships. They're used to someone coming to their doorstep and handing them a turkey bag and saying do you want this or not? It's not that way anymore. You have to find the distributor, you have to find the product, you need to know that they're there. And distributors had a really tough time you know January through today because we as retailers were told to back stock so we could displace a lot of the taxes so we could keep our prices low. So a lot of us did that, but now we're at this place now where like okay, all of that's gone and most of the people who aren't a part of an organization who don't communicate well with each other, who only communicate internally are not ready for this. And it's those people who I fear for because that is probably 70% of the retail market who is not ready just because they put their head in the sand and they just waited for things to happen because that's what they've done always, they just waited for stuff to happen to them. And now it's going to be a hardship. And so they're the ones who I think are going to really hamper the supply chain because they don't know where to turn next and they're still going to wait for someone to come to their door with a turkey bag and say, this is what you can sell so we're going to have to as cultivators make sure that they know I have compliant product. You're going to have to go out there and be your salesman again and it's not the same sales pitch. There is a list of all of the retail shops that are licensed in California, they have an address, they have a phone number. It's going to be groups of people, organizations that come and say, I would like to supply my product in your retail location. So they're the ones who are going to have the biggest supply chain problem and I think we need to help them as suppliers.

HEZ: I'm not a business owner, I represent about 1,300 businesses, about 800 of them are growers and for the most part they're stoked. There might actually be a market for clean, tested cannabis in California for the first time in forever. That's pretty cool. Those of you that have been growing, clean, sustainable cannabis for years, bearing those costs before the market was ready to value what you were putting into it, I think are the most excited. That's what our folks are feeling. Certainly as you get through the supply chain it gets a bit dicier but you know, big up to California growers for working so hard over the last few years to get 1,700 licensees and 3,900 licenses in the first six months of the year. You did a good job you guys, let's keep doing it!

RYAN: Chris, ALEC, quickly, how's your business going to change July 1st?

CHRIS: Not very much, we've been planning this for the last six months, so. Been out ahead of it. Actually we're now focused on January 1st.

RYAN: There you go.

ALEC: On both these points, I think forward planning, again communication. You know kind of a group like Pacific Expediters that has kind of been essentially doing compliance testing over the last few months. Stockpiling kind of grams or you know compliant tested product getting ready for this moment I think are not going to have as much of a bottleneck when it comes to testing. You know if the first compliance event that you've ever done is like on or after July when all the labs are pretty like busy already, I mean it's a whole like installation. You know I mean it's like if you haven't become familiarized with the process of regulatory compliance testing and what it takes, all done through licensed distribution in the lab. Lab sends out like sampling band with field technicians, they put on Tyvek suits, you know the batches are pre-laid out. You know we're essentially recording the information of distribution license number, the manufacturer or producer license number, you know we're then verifying the batch, we're doing a random statistically valid sampling of a representative sample of the batch, 0.35% up to essentially 80 grams off a 50 pound batch, we're randomly selecting. Then with kind of with infused products it's like up to 150,000 individual units, so we're essentially taking certain increments, those are what are going back to do compliance testing. And you know I mean compliance testing is such high stakes because you know if you haven't done it before for one there's like, the first time's kind of awkward, you know. You know the place isn't really setup, you don't really know what's too happen and so it like takes some working with your lab. Like we or another lab are going to kind of handhold and help you in a bit of a way to make sure your room's setup right, kind of all the stuff. And then you know it's about 15 to 30 minutes per sample or per sampling of a batch, you know for unpackaged flower. You know 80–90% of all compliance fails that we've had to report to the BBC this year, specifically aren't even around anything other than label claim. If you make a label claim, don't make any label claims getting your product R&D tested, ready for market for when you go to compliance, it has to be in it's final package form with all it's kind of compliant labeling and all that stuff. But do not put anything about THC, CBD, THCA, terpenes, anything like that. You know if that testing is done at the compliance level and then you can put a sticker on and then it's ready to go. But whenever you make claims on active cannabinoid content we have to basically make a label claim verification on each one of those values, that has to be within 10%. And so it's like oftentimes if you're at 24% THC or something you can hit within 10%, which is plus or minus 2 1/2 percent either way. But it's like if you're making a label claim on a low value like 0.1, 0.3% CBD or THCA the difference between 0.3 and 0.4, which is nothing is 100% difference. So it's like don't make any label claims especially on low values 'cause then it's just going to create like an accordion of backup and then you have to go through and relabel all that stuff. But I guess my point is you know I mean testing labs are going to be a little bit flexed, you know but it's really important to kind of reach out you know and to kind of get educated on the process, familiarize yourself with the regulations and just setup for success, 'cause you know it's definitely a high-stakes game that's happening from now on.

RYAN: Thank you, thank you, thank you, each one of you. What an amazing panel to start off with.

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