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Soil to the Oil
Kristen has spent the past 12 years managing successful cannabis businesses in every sector of the industry (from the Soil to the Oil), including, but not limited to:
• 5 years managing the first dispensary in the City of Los Angeles
• 2 years apprenticing under a master grower
• 3 years of Supply chain management, product development and R&D, and operations management for one of the largest edible companies in CA
• 1 year of project management and terpene training for a cannabis testing lab and processor with locations in CA and OR
Los Angeles Cannabis Task Force
Ruben Honig, Executive Director of the Los Angeles Cannabis Task Force, is a business owner and advocate working to ensure the City of Los Angeles creates a fair and equitable cannabis licensing system. Ruben is a founder and principal at Ceres Strategies consultancy, and a recognized leader in the Los Angeles cannabis industry. At Ceres Strategies, Ruben specializes in local licensing, and governmental affairs throughout the state of California. A Massachusetts native and medical cannabis patient, Ruben previously operated a successful national copywriting business and spent 3 years in sports and brand management. Ruben holds a Bachelor of Arts in Economics from Emory University.Show Notes
In this episode of Cannalaw Connections, Chris interviews two leading
entrepreneurs, advocates, and advisors of LA cannabusinesses.
Some topics covered include:
- How Kristen and Ruben got started in the industry
- Ruben describes how he was a patient first which led to him creating a medicine
- Kristen brings us back to her time lobbying at city counsel meetings in 2010
- Licensing based on neighborhood approval
- Advocating vs. Lobbying
- Volatile vs. Non volatile solvents (Type 1 vs. Type 2 manufacturing)
- Some common controversial issues in the manufacturing process
- The Los Angeles cannabis market profile and its projected growth
- Surprise changes in regulation
- Common themes in the process and culture of advocacy
- Why it's important to join an association to have your voice heard
- And the importance of advocating in general
- Why "trade secrets" aren't so common anymore in the manufacturing of edibles
- The importance of getting expert help
- Making informed decisions
- Food scientists / security professionals / business advisors, etc.
- Some common time/money pits for licensees
- How only 1/4 of the state is under local permit currently
- How California is aiming to automate the process of applying for business licenses and getting an edge on other states' cannabis markets
Chris: Hello, hello everyone… and thank you for joining me in lovely Las Angeles, California, this very warm winter afternoon for another episode of Cannalaw Connections. I’m your host Chris Hoo. I’m a California lawyer based right here in Las Angeles, specializing in cannabis testing labs and manufacturers. Today we’re lucky to have with us not one, but two entrepreneurs, two leaders, really in the commercial cannabis industry that you definitely, definitely want to know and partner-up with, Kristen Yoder and Ruben Honig. Welcome to the show you two.
Kristen: Hey! Thanks for having us.
Ruben: Hey, Chris! How are you?
Chris: I’m very good. Thanks, Ruben. Ruben, if it’s okay with you, I’m gonna start with Kristen. Kristen, you, like Ruben, have a fascinating, varied history in commercial cannabis and we’re gonna go deeper into it later in the conversation, and Ruben’s history too.
But first, can you please just briefly introduce yourself and tell us about your current role in the industry?
Kristen: Sure, my name is Kristen Yoder. I am currently an advisor for investors, entrepreneurs and ancillary companies interested in entering the California cannabis industry, and I have been in the industry in Las Angeles for twelve years, having done everything, but we’re going into that later, right?
Chris: Yeah, definitely.
Kristen: Okay, cool.
Chris: We’re going to get into that. That’s why you’re here. We want to ask all about that… and you Ruben? How about you?
Can you tell us a little bit about your history and what you’re doing now in the commercial cannabis industry?
Ruben: Oh, I thought we were gonna go for where it started. We are going to go for where… uh… I was going to say, I was a young boy in western Massachusetts, is where I started.
Ruben: My name is Ruben Honig, I’m the executive director of the Las Angeles cannabis task force. I’m very honored to be on this show and with Chris, as a member. He’s been a supporting member of the organization and really getting involved since the beginning. So, thank you for having me and Kristen on here.
Chris: Thank you.
Ruben: So, we represent about four hundred non-retail businesses in the city of Las Angeles, so, labs, labs, I went straight for labs, manufacturers, cultivators, distributors and cultivators. Also, I founded a company called serious strategies, we do licensing in other cities around California, so helping clients and helping businesses and really it comes down to educating municipalities on not just cannabis law, but how to appropriately regulate and educate them so that they can have a thriving cannabis industry in their cities.
Chris: Interesting, thanks Ruben, and how did you personally get involved?
Can you tell us a little bit about your personal story?
Ruben: Three years ago this month, I moved to California as a medical cannabis patient. I had Crohn’s disease for seventeen years. I was living in Florida at the time, pretty not-well, but getting better. I was very fortunate to have a cousin out here that introduced me to a doctor that introduced me to CBD. Actually, the brand Care by Design was my entry level product in and I immediately started seeing results. I created a medicine, actually with my cousin, and put my disease process into remission pretty quickly.
Chris: You created a medicine with your cousin?
Chris: Oh, interesting. Okay, and then did you make that medicine commercially available to people?
Ruben: No, but I gave anybody the playbook that wanted it.
Chris: Oh, great. I like that. I like sharing and caring.
Ruben: Sharing and caring is great. But, yeah, so that’s really why I moved here. I was a small cultivator and manufacturer and, kind of, saw the criminality of the industry and pivoted towards being an advocate and helped found the L.A. cannabis task force and have been doing this for about two years.
Chris: Great, thank you for your work Ruben. Okay, Kristen back to you. Can you tell us a little bit about your story and how you got involved in commercial cannabis? Specifically, you’re here today because we wanted to ask you a little bit about edibles manufacturing and manufacturing in general.
So, can you tell us a little bit about your history and how you got involved in that?
Kristen: Sure. So, back in 2005 I got my doctor’s recommendation for cannabis, and to be honest, it was for anxiety in traffic. That’s was like why I got it, and because I was buying all of my cannabis from my ex-boyfriend and I was trying to find a better connection. So, I don’t have one of those feel-good stories on that, but it was something that I’ve always loved since I was young. So, I went to a dispensary, the only dispensary in the city of L.A. and was like, how did you get a job here? Like, I want to work here so bad. Like, this would be awesome. They’re like, well we happen to need some help, and that was the begging of the end of my hairdressing career.
Chris: So, you just, was interested and just walked up to your favorite dispensary, the only dispensary, and asked for a job.
Kristen: Oh, yeah. Oh my god, yeah. I was like, “Are you like serious? I could just, like, sell weed all day to people and just, like, talk to them? Be the guru person that everyone comes to?” So, I mean, it was…. I love research. I love throwing myself into it and all the sudden it was like my job to like try a bunch of weed and to like smell it and to write down the effects and share it with people. So, I did that for five years. And like, Rueben’s been lobbying for two years and it’s already incredibly stressful. Right? Back in 2006 the city of Las Angeles started the interim control ordinance because they went from like, five dispensaries to five hundred dispensaries to a thousand dispensaries and it was just out of control. After jumping through all the hoops with the city where we had to send a letter out to everyone within a thousand-foot radius, and I had to register with the L.A.P.D. narcotic division as a dispensary manager, and we had to do all of these things and then in the end, they basically did a lotto. So, it was like, I was losing my mind. I couldn’t handle the politics anymore. It was like every time we did something, we got nowhere. So, in 2010, after five years of just me and one other girl running a dispensary, everything was booming, and the politics, I just got burned out. So, I took two years off to learn how to grow indoor and outdoor cannabis and I apprenticed under a master grower and just two years off and just retreated from people. Because, I was just like, sucked dry customer service-wise. And then, the price of cannabis dropped. So, I had to get a job, a real job at an edible company. So that’s how we got into manufacturing. We started out doing supply chain management and then immediately took over handling all of the extract and learning how to de-carb it and working with the labs, and doing the RND product development.
Chris: But you didn’t have any scientific background? Or….
Kristen: No, I never had a job at a computer and all of the sudden I was like, having to use Excel and like learn how to type and stuff. Like, I was a hairdresser. You know? So, I went from like one thing, to completely the other side and it was so fun. It was so fun. I then I followed that, I was there for three years, working at an analytical lab that did all the testing at the edible company. So, I was with them for a year doing project management. And then, I went into management consulting, and now I do advising.
Chris: Wow, so, literally seed-to-sale for you.
Kristen: Soil to the oil baby!
Chris: haha… I like that. Okay, thank you Kristen. Ruben, back to you. I wanted to ask you a little about the political lobbying process that you’re involved in. Not just at the L.A. task force currently, but in your history, you’ve done a lot of political lobbying for regulations.
Can you tell us a little bit about the culture and how it’s different in terms of like, business? ‘Cause there’s lobbing for business and there’s lobbying for politics and there’s lobbying for law, so, can you tell us a little bit about the culture and about the differences between those types of lobbying?
Ruben: Well, there is a great miss-conception when it comes to me; that I never I never did lobby for traditional business before. I’ve only been a cannabis, if you like to call it lobbying, I like to use the word advocate more, because I step in first as a patient. I am grounded in that. I have not done as much as Kristen has done and as Kristen has seen, but I’ve dealt with the criminality. Trying to be a small business and trying to get something off the ground it, and just seeing the opportunities that there were with medical law and finally when laws were passed on a state level wanting to allow people to come up out of the shadows and participate in the industry. But, as Kristen was saying, we’ve talked about this before, it’s really important, and when we started the task force we wanted this industry to be as broad as possible. To be as fairly regulated and inclusive so opportunities for the small cottage businesses that really make L.A. the fabric of the industry. As a leader, as people say, the products are very interesting and always have been in the city of Las Angeles and coming out of California. So, we really wanted to see the small and medium sized businesses. I wouldn’t say there are many large businesses in California or in L.A... Because large businesses are what… like big tobacco, big food, big pharma…
Kristen: Or big targets for the DEA.
Ruben: Or big targets for the DEA. Hence, they’re not in the industry right now. So, I think that, back to your original question, then since I haven’t lobbied serious in business, but I have worked with business lobbyists. I actually, I prefer, I like lobbying for cannabis and advocating and doing government affairs and things like that because I care about it. I’m not really paid to advocate for a position. If I didn’t advocate for this position, I wouldn’t be able to sleep at night. I care about the operators. I care about all the people I represent. I care about all the people that I don’t represent. I want the city to understand. I want the smaller cities to understand and I want to expedite the process. I really believe that it’s not just my responsibility, but it’s every operators responsibility in this moment. Prohibition is technically over, as they say. But how long are prohibitionist attitudes going to continue? Is it going to take ten years? Five years? Fifteen years? Three years? I think it’s our responsibility to be great partners with our communities, to speak. This is not just about lobbying and being inside of city hall, this is about, if there was, like, a beach clean-up, doing something like that. Going to your neighborhood councils if you’re an operator and really seeing what is going to support that community and what is going to move the conversation forward? I think it exponentially has and it’s not just about a cash-cab or a money-grab. It’s, obviously there are great financial benefits, but that’s gonna change with regulation. We are moving into a completely different industry and truly a lot of businesses are going to be lost and you really can’t run your business like you used to be able to run it in the past.
Chris: Definitely, Ruben, and I’m glad that you brought up advocacy and that it’s about education and educating the public, because obviously it’s not just in the halls of city hall and it’s not just in legislature or whatever. It’s relationships, it’s neighbors. Even when it comes down to us applying for the application for a commercial cannabis license, you need to submit a neighborhood relationship plan. You need to develop a relationship with your neighbors because ultimately this is a business and this is a business that is gonna require the approval of your neighbors. They have to like you. It has to be evident in your application as well as when you continue your business for years to come. So, I’m glad that you brought that up Ruben. Thank you very much.
Kristen: That’s actually what we were doing when you hear pre-IDO dispensaries. That’s what they’re requiring us to do, is to send a letter out to everyone in the neighborhood and giving them a phone number. Telling them, if there’s ever a problem or anything, if you see any suspicious activity, here is a number where we’re available twenty-four-seven that you can call with your concerns.
Ruben: In your neighborhood they have a neighborhood liaison, I forget what they call it.
Kristen: Yeah, so… I mean, this is why I’m so cynical. It’s like dude, we’ve already covered this. The city of L.A. has been sued so many times by dispensary owners for not getting their stuff together.
Ruben: We all know Kristen, that back in the day… I’m just a puppy in this game… But, back in the day you were walking around with your big binder going to city council meetings, testifying.
Kristen: I had ten inches of ordinances and changes.
Ruben: Go on the internet and find Kristen testifying.
Kristen: Yeah, google me Kristen Yoder speaks. I think that’s all you have to put in.
Kristen: We only have sixty seconds, each person. But, it was so, hyped up. Everyone would talk and they’d be all cheering and clapping. It was definitely interesting, and now it’s happening all over again.
Ruben: That’s amazing, and just to say this, before you ask another question Chris. It’s amazing for the people. You know, Kristen definitely got burnt out on the process. It’s daunting. I’ve been doing it for two years and I’m not burnt out, but it is exhausting. I see a lot of people that are doing this work right now have started when Kristen started, have started before that, and they are like totally beyond…
Kristen: Super jaded.
Ruben: It’s not that they're jaded, but they’ve seen the cycles of what’s gone on in the city and they’re still working towards it. I guess I have the advantage of being a little bit of fresh blood.
Kristen: You truly are an advocate and not a lobbyist. After I hear you explain it, that’s one of the first things I ask potential clients is; Are you in it for the passion or the profit? Because, if you don’t have the passion, you’re gonna lose your mind because it’s so frustrating. It’s not about profit, it really isn’t because it takes money to make money. So, you have to go into this really driven by something deeper than just money.
Chris: Totally, I totally agree with that. Thank you for bringing that up. Passion is important in any industry that you’re in, but I think especially in cannabis, because, like you said, the profit hasn’t come yet. We’re still waiting for the profit to come. We’re hedging our bets on something that we’re passionate about, something that we like, and we are invested into it. We are waiting for something that we don’t know for sure is going to materialize. So, yeah obviously you need the passion because you’re investing in something.
Kristen: It’s a very volatile, regulatory, environment to just want profit.
Chris: Speaking of volatile… hahaha, yeah that was a good segue huh?
Ruben: Have you done this before?
Chris: I wanted to ask a little bit about the manufacturing processes… One of the things… and Ruben you can also, you definitely have an opinion, I’m sure about this. One of the more controversial regulations that come up over and over again in cities and at the state level is volatile manufacturers vs. non-volatile. Volatile solvents vs. non-volatile solvents. I have the definition here, let me read it here: A volatile solvent is; a solvent that produces a flammable gas or vapor that when present in the air in sufficient quantities will create an explosion or ignite a flame. An example is butane.
Kristen: Yeah, BHO.
Chris: So, do you have an opinion about volatile vs non-volatile solvents and what’s better?
Kristen: Oh, yes. I’m so picky about this. I’m snobby about this, and it’s because there are people that smoke flower, people that vape cartridges only, people that dab, shatter, wax, whatever and for the people that dab, it’s all about the BHO because it preserves the terpene profile. Terpenes are nature’s flavor molecules. So, basically when you smell lavender, that aroma, those are terpenes and it’s basically a plant’s natural defense mechanism from pests or whatever. So, with the shatter, the wax, people want to taste the strain that it came from. When it comes to using vape pens, BHO is not a good viscosity for a vape pen. So, most companies use Co2, which is a non-volatile.
Chris: Or ethanol…
Kristen: But, ethanol is a volatile.
Chris: It depends on the city, some of them define it…
Ruben: Ethanol’s a six at the state.
Chris: At the state level?
Kristen: It’s incredibly flammable. That’s interesting.
Ruben: That’s a fascinating twist on, when the regulations came out, because ethanol and Co2 are non-volatile.
Kristen: But, ethanol can be like, the fumes from ethanol are flammable.
Ruben: So ironically, volatile manufacturers is a bit of a misnomer, right? Because they’re calling something because people happen to blow things up in their garages volatile, when in these open lib systems when truly it’s a normal manufacturing process.
Kristen: They’re closed
Ruben: …closed lib process used in industries across the world.
Kristen: Yeah, in food.
Kristen: If you think of vanilla extract, more than likely, that was a butane extract because it maintains the flavor profile, but when it comes to what’s better, it just depends on how you’re consuming it. When it comes to edibles terpene profile doesn’t really matter, so most people… I mean it does, but most people don’t, most companies don’t focus on using a BHO shatter, plus it doesn’t make any sense financially. It’s just, it’s a different thing for different uses.
Chris: Okay, well it sounds like you were saying, and Ruben, you were also saying that the volatile extractions are normal and safe when done correctly and the industry or the regulators they’re just…
Kristen: They’re scared.
Chris: …abundance of caution right now right?
Ruben: I prefer when they say it like type one or type two manufacturers. There’s something that’s, like, alright. It’s not the greatest name but something come closer to that. Level one, level two is a little strange. I think if it’s type one, type two I think is cool.
Kristen: It’s the fact there have been so many explosions and enough deaths from it, enough buildings damaged and enough people that had nothing to do with it being affected by the explosions that the word volatile is a massive turn off to communities. So, its like, yeah, if we were to call it type one, type two I still think they’d still be afraid of BHO because kids blow themselves up with it.
Chris: Immediately a city hears volatile and they’re like, “What is this?”
Ruben: But, even in the city of Las Angeles regulations that were finalized recently volatile manufacturing or type 2 or type 7 license has to be 200 feet from residential, where the other, type 6 or the non-volatile doesn’t. So, there’s and extra buffer from residential for that.
Chris: Right, right. Okay, Okay.
Kristen: So, like just in case you blow up, well c’mon dude, we have twenty plus regulatory bodies approving this? If we blow up that’s your fault. No, I’m kidding. But, I mean c’mon fire department check the codes, ya know?
Ruben: It’s a process Chris.
Chris: Totally, totally a process. Thanks Ruben for bringing up the city of L.A. because I wanted to extrapolate that, if you will. So, we’ve had regulations come out, emergency ones, then we have common periods, then we have trailer bills come out, and then we have medical and recreational merged and then we have to do everything over again. So, obviously this is an influx process of creating the regulations, creating the laws.
Can you tell us, who are these people making these decisions and how can we get involved in the decision-making process?
Ruben: On the state level or the local levels?
Chris: At the state and the city of L.A..
Ruben: On the state level it’s obviously, I mean not obviously, but it’s the policy makers. It’s the senators, it’s the assembly members, you know, the governor. In terms of input you have the police, you have the league of cities, you have the league of counties, you have fire departments, you have labor unions. There’s many levels of different people that are not just lobbying, they are the regulators. And then, we have Lori Ajax who is our tsar up in Sacramento with the bureau of cannabis control I think it’s called now. I’m not gonna get into all the different departments but there’s a department for cultivation, there’s a department for health in manufacturing and that trickles down to the cities, where the cities have local control. Chris can educate us on that if you want, but it’s a system where you need some form of authorization from a local municipality to be able to ladder up to the state and get a state permit. So, there are 482 cities in California, 58 counties and imagine all the work that needs to be done in every individual area there. There’s a lot of education to do. On the municipal level you have the city council or the boards of supervisors in the counties. So, in the city of Las Angeles it’s daunting because there are 15 council members and on the county level there are 5 supervisors. However, you go to like, I’ve seen you in Culver City Chris, there’s 5 council members. I’m not sure how many there are in long beach, but it varies by how big the city is, but the reason why and I always go back to this, why L.A. is a bit daunting is because the market in Las Angeles, first of all. Would you call it underground or shadow Kristen?
Kristen: Isn’t it the grey market?
Ruben: The thriving medical market is…
Kristen: You mean the thriving California market?
Ruben: I mean, what is it? 49% of the country’s market is in California and 30% of that is Las Angeles, you know many have said, I always say this, but I don’t know the number, so you can fact check it on me, but the market in just the city of L.A. worth three to four million people is bigger than Colorado and Washington state combined, those two markets. I say, in the city of L.A. it’s like you have fifteen districts, which are really like cities, and every one of those cities has a mayor. When you’re dealing with smaller cities, you’re dealing with one mayor and their councils, but in L.A., I feel like you’re dealing with fifteen different mayors, because every district in the city… You know, there’s overlap obviously, but the industrial areas are in certain areas, there are some agricultural, not so much, but in certain districts, there’s more commercial in certain districts, there’s more population in different places. So, there’s no one size fits all, like you could do in a WeHo, or a Culver City, or you know a Santa Monica, I’m just picking cities around here…
Kristen: Not to mention, there are 97 neighborhood councils in the city of L.A. so, how much effect do they have on the mayors and how much effect do the neighborhood councils have on the city council members? Isn’t there like 88 cities in the county of L.A., 97 neighborhood councils in the city of L.A.. That’s a lot of cooks in the kitchen.
Ruben: It’s a lot of cooks in the kitchen and there’s obviously levels of bureaucracy.
Kristen: They all have their own concerns.
Ruben: Everyone has their own concerns and it’s interesting because you’re dealing with a lot of old belief systems. It’s very different between neighborhood councils. Neighborhood council is not necessarily, it’s just who happens to sit on them, who participates in those processes. We’ve seen it in different cities and in different counties as well, you’re dealing not just with the process, you’re dealing with belief systems, you’re dealing with lots of attitudes that were formed based upon something, right? So, I’ve seen this and this is very common in smaller municipalities, I didn’t see it as much in the city of Las Angeles, but what I saw, a great example is; Lancaster, or even Culver City, as they’re getting closer to the vote, they go through these long processes and what I see is that towards the end the community comes out because it’s about to be passed and they’ve become aware of it, even though, the cities have been reaching out and holding meetings and all these different things. There’s a loud uproar and then there’s this push right? There’s a push against the council, not to pass it, or to change it. I’ve seen some councils hold firm and just push it through. I’ve seen some start waffling and changing up the conversation. It’s a fascinating process.
Chris: Definitely, and there’s been some surprises too in terms of regulations that we thought were set in stone, they were not gonna change, and then, out of nowhere they change. For example, at the state level we have the limit of one acre for cultivation sites for the first five years. And then, for whatever reason in the last released regulations it disappeared. They don’t have that.
Kristen: It’s called lobbying. Not like Ruben, who is advocating for the people, no these are people advocating for large companies and corporate… You’ve got to think, we’re the sixth larges economy in the world. Best believe our politics are run by money.
Ruben: Best believe, haha.
Kristen: No, for real because there is so much money to be had or to be lost in California. We have huge agricultural industries, we’ve got huge tech industries, we have so much money here. There’s a lot of sway. I mean after Citizens United, I’m not gonna go off on a rant, but after that…
Ruben: No politics.
Kristen: Yeah, America was kind of screwed as far as having unlimited anonymous donors, you know, lobbyists basically. So, I think that’s what happened with removing that size limit. So, companies could come in and do a bigger grow. A massive grow like these hundred-square-foot grows I hear about all the time.
Ruben: But, we’ve had this conversation before Kris and it was like, you were like, Ruben, why can’t we like, do this for this specific issue in the ordinance, why can’t we treat is this way? I find it interesting, but there’s a lot of minutia in strategy in how to approach different offices and how to have these conversations with different cities. It’s not one size fits all. There are certain things when you can come in with the grass-roots approach. There are other times when lobbying or advocating behind the scenes is gonna work better. There are other times a blend or mix is… Sometimes you have to hold a rally, right Kristen? Or do something like that.
Kristen: You’ve got to do your research. Who’s your audience? You know? Appeal to that audience. Not just, like you said, a one size fits all approach.
Chris: Great, then I know you are pulling from your experience Ruben, working with different municipalities and different states as well. Obviously there’s going to be differences and we can’t go into all the differences now, but can you tell us some of the emerging common themes at least in terms of the different policy making and advocacy work that you do?
Ruben: Emerging themes between…?
Chris: The process and the culture.
What are some common themes or common processes that emerge in your advocacy work in different localities?
Ruben: I’ve found, just through my work with the task force, and again my work has been very specific to, even though I’m very well aware of other states doing what they’re doing, but California and Las Angeles again, it’s a very fascinating process. I’ve found that the development of organizations like, say the California Task Force, there are state organizations right there…
Chris: That’s key, that’s keyed advocacy work.
Ruben: … and there are national organizations. What I see as just a general theme, or what I’ve learned from experience is that, from my experience you’re dealing with the city of Las Angeles. You need to tackle it with an association. If you just go in there with one voice, it’s not going to work. Now we’ve seen that you can go to smaller cities, right and be one voice with a few companies or one company, you don’t necessarily need a coalition.
Chris: Right, but L.A. is not Coachella right? It’s completely different culture.
Ruben: Even at the state level, there are state organizations that are lobbying. There are also individual lobbying interests. There are very large labor unions that are lobbying. There’s a lot of machines. There are a lot of machines and truly I think that the difference again between California, I said it was 49% of the market, you’re dealing with a totally different animal. It’s been twenty -years one years now, right Kristen?
Chris: Going on twenty-two.
Ruben: Going on twenty-two, happy birthday. I empathize, back to the city of L.A., I empathize with the regulators because I don’t think they’ve ever done something like this. It’s not like they’re creating something new and putting it into effect, they’re…
Kristen: It’s gonna be they’re legacy.
Ruben: They see all of this below them or above them. I’m not saying they’re above it, but it’s just like, how do you effectively regulate while taking into consideration…
Kristen: That you need to get reelected.
Ruben: Your seat. It’s true Kristen.
Kristen: Appeal to your constituents.
Ruben: Appeal to your constituency and make sure that your neighborhoods are taken care of. There are 2,000 shops they see in L.A. right now that are largely unregulated so they call them our post ICO or people call them our rogue shops. However, there are great stores and there are bad stores. There are stores in the middle. I thin k there is fear that something’s gonna look different in the future. Things are gonna look different in a regulated industry, but they don’t really understand that that’s what it’s gonna look like yet. It’s gonna be a process. It’s gonna take some time for these views to change. But again, I think over time that it’s gonna change.
Chris: It has to change, it must.
Kristen: I was just gonna say that, it has to.
Ruben: How long did alcohol change? I’m sure that alcohol and tobacco, all these different industries went through the same processes.
Chris: Yeah, thank you Ruben. Kristen, bringing it back to you, I wanted to ask a little bit more about the manufacturing process. Obviously twenty-one going on twenty-two years of medical cannabis in California, and people have been doing extractions or doing manufacturing in their basement for centuries, right? But now, that we’re coming out of the shadows and we’re applying for a commercial cannabis license, you need to submit your procedures. You need to submit your extraction procedures, your manufacturing procedures when you are applying for your license. So, question: Some of these procedures people think are really, really "trademarkable" secrets, really, really million-dollar ideas. When you’re submitting your application with your manufacturing procedures, you can say that it’s "trademarkable", or that it’s a trade secret, or that it’s confidential from the public, but
what do you think about the future of that in terms of trademark-ability and trade secrets for manufacturing processes?
Kristen: I think that the cannabis industry has been so soiled because it’s been federally illegal, it’s not been safe to be open about it. From the time I was at the edible company to now, everything that we had to learn on our own is on the internet. It’s not magic anymore. It’s like, god it took us a while to figure out how to do winterization or whatever, so I think we need to remember that food science. There’s a whole industry. There’s the FDA, they have regulations. This isn’t any different. A commercial food kitchen, is a commercial food kitchen. Preparing food is preparing food. There are food handler’s licenses. There’s all kinds of regulation in the food industry. So, when it comes to processes, if anyone would have a patent or anything on that it’s gonna be the extraction companies. Or the companies that came up with science or some type of technology that would blend something or whatever, then maybe they license that technology out, but I can’t imagine that edible companies are going to come up with something that hasn’t already happened. It’s just that they’ll figure it out on their own. When it comes to batch consistency, when you have your potency consistency bring in a food scientist, because its science, literally food, cooking, it’s science. Science is immutable. It is what it is, so people need to stop thinking that they know everything or that they have a secret and just start reaching out to people who know more than them. It’s not a sign of weakness.
Chris: That’s some really good advice, thank you Kristen. One last question, in terms of what Kristen was saying about manufacturing processes, that’s obviously gonna be affected by regulations like we talked about are in flux all the time. It’s gonna take a while, even on January first, they’re not going to be ready on the state level. Most other states are not going to be ready either. Remembering that these regulations are in flux, how can we save some money or some time?
What are some common time or money-pits that you have seen for licensees?
Ruben: This is and interesting statistic and I’m not sure where it is right now, but recently I was told that only 28% of the state is under legal permit right now and most of the state hasn’t come online.
Chris: That sounds about right.
Ruben: They’re mostly up north, there are some pockets down in southern California, L.A. is coming online obviously, but you have the dessert, you have San Diego, you have Long Beach coming online.
Kristen: And not enough licenses.
Ruben: And not enough licenses, right. So, it’s gonna be a small regulated market that’s gonna build out gradually.
Chris: Over the years.
Ruben: Over the years, absolutely, but I think what you’re gonna see is, now the applications, the application writing, the legal, the consulting, all these different things are cannabis based are kind of a commodity right now, but I think you’re gonna see bigger companies coming in and kind of undercutting that. People are going to be able to do it cheaper and better. From a cost perspective, I think that it’s important to join, this is actually a great example, the work that we do in city of Las Angeles with the L.A. Cannabis Task Force, that kind of lobbying work which normally would be like five to ten-thousand dollars a month for a single company, but as you joined Chris, it’s five thousand dollars for a year for that kind of advocacy or you can tier it down for even as an individual member for two-hundred dollars. So, I think that if you find a good organization out there that can actually advocate on your behalf for the industry as a whole and help you through that process. There also needs to be more education and these application materials and these processes need to be publicly available. I think that you’re gonna see as more are done and as it’s distributed widely that it won’t be as difficult to do and you’ll always need to have like a Terry Blevans doing a security plan, right? Or you’re gonna need someone doing architectural drawings or your SOPs or your business plan or different things like this. But there is gonna be more and more templates of success, I think, out there. Working with people with track records is really important, but I think again as more cities come online, I think these processes are gonna become more regulated. I don’t think you’re gonna see paper applications really for much more. Everything is gonna be online. They’re doing it at the state, they’re doing it in the city of L.A., but again like you do Chris, and like you used to do Kristen, I think that it’s important to show up, right? If you are interested in a municipality, if you are interested in moving the conversation forward, go lobby on your behalf, you’ve done that, you’ve lobbied or testified or whatever you want to call it. Speak out to your city councils and these smaller cities, they’ll actually listen to you.
Kristen: They’re very receptive. I don’t know what they’re gonna do with what you say, but they’ll listen. The state of California is incredibly receptive.
Chris: Right, they did a really good job actually of responding to all the comments. I was surprised by that, they actually responded.
Kristen: Yeah, that’s the thing. California is like a total cluster nightmare type thing, but they take amazing notes. They put out the most amazing reports. They’re continuously cleaning up their website and making more resources available and I think that…
Ruben: They’ve done a great job actually.
Kristen: I think that California, as soon as it gets a hang of things, they don’t want to be doing things manually, they want to automate it. There’s too much going on, that I think that they want to learn from Washington, Oregon, they want to learn from everyone because we actually, on our podcast, me and Simone interviewed the chief of communications from the BCC and he said, “We recognize, we are too large to fail, as a state. We have to get this right as much as we can because it will be a massive problem and financial issue if they don’t get it right.” So, I mean, really, if people don’t go out and get their voices heard, they have no right to complain whatsoever. There is an opportunity.
Ruben: In the city of L.A. if you submit a letter, people actually read it, the people who are drafting things. It goes through the chain and people pay attention. These things are not…
Kristen: They get to know your name, you know? If you go to these meetings and you speak enough they start to know your name and that’s the relationship you want to have with your local regulators is that they know you, so that you can ask them and talk to them as people and not just as a business person only, who’s only after their own benefit.
Chris: Right, and I’m so glad you brought up the advocacy and the task force Ruben and Kristen, I definitely think, we’re talking about money-pits, but not a money-pit is investing in advocacy because it’s gonna effect your business, your clients, the entire industry and it’s important not only to show up, but also to support financially your organizations that are advocating for you.
So, just to summarize Kristen, do you have anything to add in terms of money-pits or time-pits to avoid for potential licensees?
Kristen: Yeah, you can not do it on your own and you can not figure it out off of searching google. All day long I’m getting alerts on the news. I’m continuously looking at the news. I’m like a sponge and I am overwhelmed by all the information out there and I know where to look. I know how to digest it. Like, I’m trying to learn marketing, I’m so overwhelmed trying to teach myself, it’s like, as an advisor myself I tell people, dude save your time and money and ask an expert. I mean, even if you just paid for an hour, they could save you so much time and give you the direction you need and point you in the right resources, everything. You can not do it by yourself. You save a ton of money on lawyers and compliance when you join these organizations like L.A. Task Force. You actually save a ton of money because now you know what you need to talk to your lawyer about instead of spending a lot more time getting around it or you know what you need as far as compliance so that you can vet your consultants better.
Ruben: Information is a privilege. It really is. You want to know things faster. You want to see what the cake is like as it’s getting baked. What do they call it in city hall? Making the sausage, right? Again, a benefit of joining an organization is that you have access to information, you can make informed decisions based upon that faster than other people.
Kristen: It’s all about informed decisions.
Ruben: It’s all about informed decisions and if you want to start, continue operating your business, however you want to do it, it’s very daunting to do it on quicksand. So, you want to really invest in leveling that out and that’s really what we’re working on and what we do.
Kristen: I like the quicksand.
Chris: Yeah, I like the building the plane while it’s being flown analogy, I like that one too.
Kristen: What is it, like an entrepreneur is like jumping off a cliff and trying to build a parachute on your way down, or something like that.
Chris: Yeah. Okay, wow, thank you so much Kristen Yoder and Ruben Honig for being our special guests on Cannalaw Connections. You both gave us a sexy, exclusive, insiders look into both the regulations making side and the plant-touching manufacturing side, so thank you so much for that. If any of our listeners out there need your specialized knowledge or skills, which they certainly will need, they can reach out to you, right?
Kristen: Yeah, go to soiltotheoil.com, and my email is email@example.com
Chris: Okay, and Ruben how do our listeners contact you?
Ruben: I’ll give you two choices, firstname.lastname@example.org, but make sure you also go to lacannabistaskforce.org and at the very least sign up for our newsletters and sign up for our emails as well.
Chris: And you’ll be contacting them as well if they sign up.
Ruben: Yeah, and RHonig@ceresstrategy.com
Chris: Great, well that’s our program for today! Please make sure to visit our website, EvergreenLaw.co for updates including a new monthly Cannalaw Connections episode. Until next time, I’m your host, Chris Hoo. Thank you everyone, good-bye.
Kristen: Thank you.
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