In this guest interview, Livas and Morrotta discuss running a small facility, being female growers among the male-dominated cultivation space and more.
This article originally appeared in the September 2018 print issue of Cannabis Business Times. To subscribe, click here.
Maine’s cannabis industry is caught amid an adult-use and medical expansion purgatory, so it seems. Recreational legalization squeezed past Gov. Paul LePage’s veto with a Statehouse override in May. But while limited home cultivation is currently permissible under the new law, the state’s adult-use regulatory framework likely won’t be established until the next governor takes office in 2019.
In addition, Maine’s medical program improvements made their way to fruition after state lawmakers again overrode Gov. LePage’s veto in July. The amendments allow retail storefronts, expansions for current businesses (including increased quantities of medical cannabis a patient can purchase within a 15-day period, as well as the number of employees a facility may hire—which is currently limited to one employee per caregiver), and the elimination of a qualifying conditions list, among other victories.
The flurry of recent changes has caused confusion among caregivers and patients in the current marketplace. Looking ahead, however, the state’s five-year market projection is $222 million, according to a June 2018 forecast by Brightfield Group. Therein lies great opportunity for Maine’s market, whose robust program already serves approximately 42,000 current registered medical patients.
Two state-registered caregivers—Noelle Livas, the co-owner and lead cultivator for Meowy Jane, and Erika Morrotta, co-lead cultivator and director of sales and marketing of Jar Cannabis Co.—realize that potential and intend to capitalize on it. Despite technically being “competitors” in a currently saturated market, with their facilities just a 20-minute drive apart, they don’t see each other as rivals. In fact, they even share their cultivation experiences and methods with one another. “I feel way it’s more of a collaborative process, like having a friend in an industry,” Morrotta says.
In this behind-the-scenes guest interview, Livas and Morrotta share what it’s like running a small facility and being female growers among the male-dominated cultivation space, and talk about their daily cultivation challenges, their social media efforts, expansion plans for the adult-use rollout, and more.
To read the full article in Cannabis Business Times' September 2018 issue, click here.
Top photo by Kaitlynn TierinnI
Foley Hoag’s Jesse Alderman provides insight into municipalities’ Host Community Agreements and offers tips on scoring an adult-use license.
Adult-use cannabis business licensing began on April 2 in Massachusetts, and municipalities hold a substantial amount of power in deciding who will ultimately become licensed, according to Jesse Alderman, co-chair of Foley Hoag’s cannabis practice.
“Where these licenses are trench warfare in terms of competition is at the municipal level in terms of winning local zoning approvals because many municipalities have banned recreational cannabis, as they’re allowed to do,” Alderman says. “Many more are still contemplating where and how they will zone for recreational cannabis facilities, and there’s a precious few communities … [such as] Boston, Worcester, Salem and many smaller communities [that] have put forward zoning and have begun their process, but it’s incredibly competitive. It’s a process that the municipalities are taking very slowly and carefully at the zoning level.”
Massachusetts’ adult-use statute mandates that any medical or adult-use cannabis operator sign a “Host Community Agreement” with the municipality in which it operates. These agreements can include annual payments by the cannabis businesses of up to three percent of gross revenue, as well as additional incentives like contributions to charity or payment for police details, Alderman says.
RELATED: Massachusetts Regulators Will Not Review Local Municipalities’ Agreements with Cannabis Businesses
“The cities and towns hold so much power in deciding when and to whom to give these Host Community Agreements,” he says. “The whole ballgame is at the municipal level in Massachusetts as I see it.”
To receive one of these coveted Host Community Agreements, Alderman says, a cannabis business needs zoning approval and a discretionary permit from the municipality. This often requires the operator to go before a deliberative body, such as a city council or zoning board. Some municipalities have additional requirements, such as board of health inspections, which would occur either right before or right after a business opens.
RELATED: Cannabis Businesses Face East Coast Zoning Headaches
“And then the end-all and be-all of this entire process would be the Host Community Agreement, and that’s typically negotiated with the mayor or city council or board of selectmen, depending on the form of government,” Alderman says.
The state, on the other hand, does not have a competitive licensing scheme or cap on the number of adult-use licenses that will be issued, and simply requires applicants to complete a uniform application. Applicants must disclose all individuals with equity, operational or management interest in the license and satisfy the requirements of financial and background investigations. They must also offer a preliminary explanation of operations and security plans, Alderman says.
“Essentially, [this is] a preliminary showing of a well-thought out ability to comply with the various operational regulations of the Cannabis Control Commission,” he says.
The commission’s licensing scheme also has a social justice component, so applicants must demonstrate diversity in hiring and operations, as well as plans to positively impact communities that have been disproportionately impacted by cannabis-related arrests.
“For instance, an applicant we work with has a really successful program where they recruit from an inner-city community college, and things like that are asked and have to be demonstrated in state licensing,” Alderman says.
When an application is completed to the satisfaction of the Cannabis Control Commission, the applicant is awarded a provisional license, which is then subject to an architectural-, health- and security-related inspection by compliance staffers. After a successful inspection, the business is granted a final license, and so far, no final adult-use licenses have been issued in the state, Alderman says.
Recreational sales were originally expected to launch July 1, but businesses continue to slog through the licensing process with no clear start date in sight. The first adult-use license for an independent testing lab was granted just last month.
“There is no indication of [a launch date] from the Cannabis Control Commission as I understand it, … either formally or informally,” Alderman says, but with the commission’s recent hiring of inspectors, he is hopeful that some final inspections will take place and final licenses will start to be issued soon.
Overall, businesses embarking on the licensing journey in Massachusetts should first and foremost find a location, Alderman says.
“Find great sites that work with the character of the community,” he says. “Reach out early and often to the municipality, and make sure they are comfortable with you, you are comfortable with them and there’s an ongoing dialogue. … [Ensure] that where and how you propose to operate your business is something palatable to them, and work through that local zoning and that Host Community Agreement. It all happens at the municipal level.”
Eventually, Alderman hopes that some level of transparency will be brought to the Host Community Agreement process. While some municipalities—such as Salem and Worcester—have created a uniform application process and established specialized committees to determine who should receive Host Community Agreements based on a variety of factors like location, compatibility of the neighborhood, diversity programs and the ability to succeed, others have not yet taken this leap.
“I would say that transparency with the Host Community Agreement process is one area where we could see some improvement, and I believe we will as municipalities wrap their head around this issue,” Alderman says.
And as more municipalities zone for cannabis businesses, competition may abate, he adds. “This will probably never be the same as opening a coffee shop, but it will start to resemble opening a normal commercial business, … but still heavily scrutinized.”
Top Image: © iuliia_n | Adobe Stock
There's a "logical product evolution" in these market partnerships.
The green rush is in full force. Beginning in less than six weeks, recreational marijuana will be completely legal in Canada. Aside from Canada becoming the first developed country in the world, and second overall, to wave the proverbial green flag on adult-use weed, this move could also generate upwards of $5 billion in added annual revenue once the industry is running on all cylinders.
Dealmaking ramps up as legalization inches closer
Legalizing weed in our neighbor to the north has also spurred a lot of dealmaking activity both outside and within the cannabis industry. Within the industry, leading producer Aurora Cannabis, which is expected to yield 570,000 kilograms a year once fully operational, acquired CanniMed Therapeutics and Ontario-based MedReleaf for $852 million and approximately $2.5 billion, respectively.
Top photo courtesy of Adobe Stock
PharmaCann and Cresco Labs share how they helped advocate for the state’s opioid replacement law.
Illinois Gov. Bruce Rauner signed legislation that makes medical marijuana available as an opioid painkiller substitute for qualified patients, dramatically expanding the state’s medical cannabis program, but not without the help and advocacy efforts of Illinois’ cannabis businesses.
While Illinois was ahead of the curve in implementing a modern medical cannabis program when it originally developed its regulations, it has since fallen behind, according to Jeremy Unruh, director of regulatory affairs for PharmaCann, a medical cannabis license holder in Illinois, New York, Ohio, Pennsylvania, Maryland and Massachusetts. “This Opioid Alternative Pilot Program is Illinois catching up to the pack,” he said.
Illinois was one of the only states with legalized medical cannabis that did not grant patients access to the program for general pain indications.
“Sen. Don Harmon, who was the architect of … the Opioid Alternative Pilot Program, really was forward-thinking in developing this,” Unruh said. “He set up this mechanism … [where] any condition for which a physician might prescribe an opioid, that doctor can now make a recommendation for medical cannabis.”
RELATED: PharmaCann Launches Verilife Dispensary Brand, Looks Ahead to New Markets
Studies have shown that states with regulated medical marijuana programs see a reduction in opioid prescriptions and abuse, and Illinois has one of the largest populations in the country, meaning this policy is likely to impact a large number of patients, Unruh added.
The opioid replacement bill also removed the requirement that Illinois’ patients be background checked and fingerprinted before registering in the program. “That law, by getting rid of fingerprinting and background checking, puts Illinois on par with every other state in the country with not fingerprinting and background checking patients,” said Charlie Bachtell, CEO of Cresco Labs, another Illinois-based medical cannabis company with additional licenses in Pennsylvania, Ohio, California, Arizona and Nevada. “We were the only state that required that.”
The legislation also creates a process for patients to get a temporary medical marijuana card while waiting for the state to issue permanent cards, Unruh added. It currently takes up to 100 days for a patient to receive the card once all the paperwork is submitted, he said, but under the new law, patients can take their confirmation or receipt of applying for the card to a dispensary and be immediately inputted to the state’s patient management system and issued a temporary card.
Finally, the bill implements a cannabis tracking system in Illinois to track patients’ dispensing of cannabis, which will allow the state to measure data for public health research, Unruh said.
PharmaCann has lobbyists in each state in which it operates, as well as in Washington, D.C., and the company worked closely with lawmakers on the opioid bill, Unruh said. “We put together an opioid resource guide, where we aggregated as many of the published, peer-reviewed studies on opioid replacement as we could find, and we made sure that the policymakers, particularly Leader Harmon, were aware of that and had that information to help develop his anti-opioid bill.”
And this collaboration with policymakers was not new for PharmaCann, Unruh said. “We work very, very closely with those lobbyists to help ensure that lawmakers—not just supportive lawmakers, but lawmakers from both sides of the aisle and all over the state—understand what it is we’re doing and what it is we’re not doing and what it is that we’re trying to do as we move the cannabis policy ball forward.”
PharmaCann has been very active in Springfield and within its industry association, collaborating with other industry stakeholders to develop a policy position and charging the executive director of the association to execute those positions, he said.
Cresco has a similar mindset. “It’s a very political topic and therefore, as operators, as stewards to the industry, you need to be engaged in that conversation on a political level because if you’re not, somebody else is,” Bachtell said. “Most people who are not active participants in the industry don’t really have a good line of sight on what it means to be a part of this industry. It’s imperative that operators that are in this space collaborate with decision makers and make themselves available and … do whatever it takes to be part of the conversation.”
To kick off International Overdose Awareness week on Aug. 29, Cresco launched its Cresco Labs Opioid Prescription Exchange (COPE) campaign to promote medical marijuana as an alternative to opiates for the treatment of pain. The campaign highlights stories of the positive impact cannabis has had in combating the national opioid epidemic, and launched just after Rauner signed the opioid replacement bill.
“We’ve never had a general pain indication here, and so the idea for us to launch COPE in Illinois was entertaining this Alternative to Opiates Act,” he said. “It was a big opportunity for us to make sure that the people of Illinois first understood that cannabis can be used as an alternative or a supplement to opiates for pain management, and it’s a non-lethal option.”
As part of its COPE campaign, Cresco placed vending machines in high-traffic areas that dispense replica pill bottles with enclosed messages about medical cannabis replacing opioids for pain relief. Photo courtesy of Cresco Labs.
Cresco placed functioning vending machines in high-traffic locations that are filled with replica narcotic pill bottles and labeled with the message, “Got Pain? Get Relief.” Passersby can make a selection on the machine, and a dram labeled “Medical Cannabis” is dispensed with the enclosed message:
WHO SAYS THE EPIDEMIC IS OUR ONLY CHOICE?
When you’re in pain, opioid prescriptions are the norm. Addiction is the norm. Overdose is the norm. That’s just the way it’s been, but we don’t need to accept it. Opioid patients deserve an alternative: medical cannabis.
Ask your doctor about replacing opioids with medical cannabis products and get relief that doesn’t cost you peace of mind. Pain isn’t a choice. How you treat it could be.
The vending machines are accompanied by a wall of “NObituaries,” which are vignettes from people whose lives were changed when they transitioned from prescription opioids to medical marijuana to treat their medical conditions.
“It's an example of Cresco trying to normalize and professionalize the space and maybe try to offer a new perspective for people who aren’t as familiar with cannabis to see how this industry is developing and … normalizing and professionalizing it,” Bachtell said.
Cresco's NObituaries share the stories of people whose lives were changed when they transitioned from prescription opioids to medical cannabis to treat their medical conditions. Photo courtesy of Cresco Labs.
And Cresco has always tried to reach out to industry stakeholders through education- and awareness-based campaigns, he added. “We’re all stakeholders in this industry,” he said. “We’ve always tried to create messaging that was based on awareness and education as opposed to more traditional ‘advertising’-type communications. We prefer to communicate in this awareness and education space because it’s a very valuable message to convey—the type of message that makes the intended audience feel like they know more about the subject matter after they’ve seen our piece, whatever it is.”
Education-based communications can also help dissolve the stigma and stereotypes surrounding cannabis, Bachtell added. “I would say the majority of people when they see our awareness and education campaigns that we’ve launched before, their initial reaction is, ‘Oh, that’s interesting, I didn’t think that was from a cannabis company or that that was related to cannabis,’” he said. “And I think that is probably step one in breaking down preconceived notions or stereotypes when it comes to this subject matter.”
“Our job is in large part to change the way people think about medical cannabis and about cannabis in general,” Unruh agreed. “Public policy is a very, very, very important piece of that function.”
The public policy conversation should demonstrate the industry’s sophistication, compliance and responsibility, Unruh added. “In the statehouse, it’s important for we as an industry to show policymakers what our industry really looks like and what values our industry really has because otherwise, in the absence of that interaction from the industry, they’re left imagining what our dispensaries look like and imagining what our employees do in cultivation centers, and a lot of times, that imagery comes from old legacy markets and old notions of people forking cannabis out of mason jars with chop sticks into little baggies and calling it medicine.”
Looking ahead, Cresco will launch its COPE campaign later this month in Pennsylvania and Ohio. “Both of those states, similar to Illinois, are sort of entrenched in an opiate abuse epidemic, and it’s a great opportunity for this industry to shed a light on the fact that there are alternatives,” Bachtell said. “There’s medical cannabis, and it can be an option for people who are currently using or thinking about using opiates for pain management.”
And as for PharmaCann, Unruh said the company will focus its efforts on Illinois and New York as the states discuss adult-use legalization, as well as on banking issues at the federal level. Unruh recently spent time on Capitol Hill, meeting with staffers of the Illinois and New York Congressional delegation who have responsibility in the banking and financial services sectors.
“Banking is the No. 1 impediment to our industry operating as a normally functioning sector,” he said. “So, it’s very important that we make it clear to particularly conservative policymakers who may not be comfortable with cannabis that we’re not trying to expand cannabis necessarily, … but we’re asking them to fix what’s wrong, to fix the things that are broken, so that our transactions can be auditable and are transparent and can be taxed appropriately.”
Top Image: © G | Adobe Stock
As of Aug. 30, short interest in Canopy was down about 8.1 million shares from the day the deal was announced.
Short-sellers appear to have covered their positions in Canopy Growth Corp. in droves last month after news that the Canadian pot producer had lined up a multi-billion-dollar investment from U.S.-based alcohol giant Constellation Brands Inc.
Data from global information provider IHS Markit shows that the number of Canopy shares sold short plummeted following word of the transaction, which could eventually see Constellation increase its stake in the cannabis producer to more than 50 percent.
The deal was announced on Aug. 15, when the short interest in Canopy was approximately 19.3 million shares, the IHS Market numbers show.
That figure began to decline noticeably in the days that followed, reaching as low as 10.4 million shares, the lowest level since February.
As of Aug. 30, short interest in Canopy stood at approximately 11.2 million shares, down about 8.1 million shares from the day the deal was announced.
Top photo courtesy of Adobe Stock
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