CBD OIL

For the cannabis industry, Q3 2020 marked somewhat of a return to normalcy. Most multi-state operators (MSOs) saw an increase in both net and gross revenue, while also reigning in costs. And while a Democratic victory in November’s election is bringing some optimism to the field, experts and industry execs agree there is still a long road ahead to market maturity.

Cannabis Business Times and Cannabis Dispensary spoke with leadership at the industry’s largest companies for a snapshot of this quarter’s results and the industry’s position as a whole moving into the final quarter of 2020.

Green Thumb Industries (GTI)

Chicago, Ill.

Q3 Revenue: $157.1 million (131.1% year-over-year increase) 

Net Income: $9.6 million adjusted net income

Highlights:

Green Thumb continued strong business in its home state of Illinois as well as New Jersey, Pennsylvania and Ohio. After a slight decline in Massachusetts and Nevada following the initial COVID-19 outbreak, GTI’s revenues in those states have rebounded. 

For the first time in its history, the MSO that owns 50 retail locations in ten different states also posted a positive net income.

“The third quarter was an excellent quarter for Green Thumb,” said Ben Kovler, CEO of GTI. “We are poised to further benefit from the strong tailwinds driving a robust, multi-billion-dollar marketplace.” Kovler also pointed to the company’s strong position in New Jersey—where voters overwhelmingly approved legalization in the election—as a corporate asset in the coming years. 

“New Jersey is great news for us as we think that legal market has the potential to mirror Illinois—a single state, multi-billion dollar legal cannabis market about to be born,” Kovler said.

Other notable quarterly activities included the expansion of the company’s popular incredibles brand in Illinois, Nevada and Maryland, progress on construction of a new plant in Oglesby, Illinois, and the opening of GTI’s 13th store in Pennsylvania and eighth store in Illinois.

To help advance equity in cannabis, Green Thumb continued to promote and develop its License Education Assistance Program (LEAP) New Business Accelerator, a social equity program designed to improve access to the industry for people in Illinois disproportionately impacted by prohibition.

Acreage Holdings

New York, N.Y.

Q3 Revenue: $31.7 million (42% year-over-year increase)

Net Income: $14.3 million adjusted net loss

Highlights:

Acreage is an MSO concentrated heavily across the Northeast, with retail locations in New York, New Jersey, Rhode Island, Massachusetts and Connecticut. Now that Americans have grown somewhat accustomed to the impact of COVID-19, the company saw rebounding numbers—partner revenue increased 79% year-over-year in Q3, while same-store sales growth for managed entities came in at 22%.

“Operational excellence led to improved financials and a stronger balance sheet,” said Bill Van Faasen, Acreage’s interim CEO. “Our core profitability is in sight in the first half of 2021. Much work remains, but we are absolutely on the right path both short and long-term.”

Acreage also has a strong position in New Jersey—it closed on the purchase of the Compassionate Care Foundation, a major vertically-integrated cannabis company that operates multiple medical cannabis dispensaries in the Garden State and one of the state’s largest grows. 

But arguably the largest event on the horizon for Acreage—an already-agreed-to merger with Canopy Growth to occur as soon as the U.S. federally legalizes cannabis—is still shrouded in an uncertain timeline. President-elect Joe Biden is expected to loosen legal restrictions on cannabis but stop short of full legalization, raising the possibility that the Acreage-Canopy merger may be four more years away, at minimum. 

Additionally, Seeking Alpha reported Acreage’s “lack of scale in any individual state” could be a hindrance to its performance going forward, pointing out that the company had just one or two locations in major markets like Florida, Massachusetts and Illinois. 

Canopy Growth

Smiths Falls, ON

Q3 Revenue (Q2 2021 in Canada): $124 million (CAD, 39% year-over-year increase)

Net Income: $96.6 million net loss

Highlights:

In Q3, Canopy Growth continued its dominance of the Canadian cannabis industry. Its well-publicized 2020 strategic adjustment following some corporate downsizing earlier in the year seems to have paid off—according to internal numbers, the Ontario giant increased its market share in the Canadian recreational market by 200 basis points.

“In Canopy Growth’s second quarter, we saw our renewed strategy come to life as momentum built across key businesses,” said David Klein, CEO of Canopy Growth, in an email. “We established the leadership position in the cannabis-infused beverage segment with over 2 million units shipped since March, grew our market share in the flower category, and opened nine new retail stores in Alberta.”

Canopy’s dominance in the beverages sector is not much of a surprise when you consider its backers. In 2017, beverage conglomerate Constellation Brands purchased a 10% stake in Canopy. Earlier this year, Constellation—which also owns major alcohol brands like Corona, Modelo, and Svedka—upped its equity in Canopy to 38.6%, with the option to increase it to over 55%.

But while Canopy continues to dominate up north, questions about its access to the U.S. cannabis market remain. Though it has a new online store to sell CBD to Americans—including a popular line sponsored by Martha Stewart—Canopy doesn’t have the same iron-clad grip on the market in the states. 

In an effort to further penetrate the U.S. industry, Canopy announced in October that Acreage Holdings would be marketing its THC beverages at recreational shops in Illinois and California. Canopy also owns the sports nutrition brand BioSteel, which recently finalized distribution agreements allowing it to offer electrolyte-filled sports drinks to 100% of the American market by 2021.

Small cannabis dispensaries face different challenges than those seen with large, multi-state operators. To this end, massive companies like MedMen and Grassroots Cannabis need to accommodate multi-state operations’ compliance challenges. Conversely, small dispensaries must learn to compete with the big box retailers of the cannabis industry.

Small cannabis dispensaries must figure out how to make their size an advantage against larger business entities to stay competitive. To this end, they must critically assess the corporate structure of large cannabis companies like Green Thumb Industries to look for operations and m​arketing opportunities​ still “left on the table” for smaller operators.

Luckily, owning and operating a small cannabis dispensary affords creativity and innovation in the workplace. Namely, because small businesses can quickly implement change and pivot to the demands of the ever-changing cannabis landscape. Conversely, due to corporate structures’ difficult navigation, their larger counterparts must go through far more effort to implement operational changes. To better understand how small dispensaries can stay competitive in today’s market, we put together some criteria to examine.

Cross-Training Employee Teams

The fact that small cannabis dispensaries do not have many employees significantly reduces operating costs. However, to capitalize on the savings of a small employee team, you must cross-train your staff. Because if a small team can handle all the required tasks of a shift, you will never waste money on over-staffing your dispensary operation.

Looking at the specific jobs of a small cannabis dispensary, business owners should ensure that budtenders are trained to handle nearly every business task. To illustrate, you should train budtenders to open and close the store, conduct inventory work, recommend products and operate seed-to-sale software. Not only does this cross-training keep you from overstaffing your dispensary when it is slow, but it also insulates your business during busy market fluctuations.

Please note, once you train budtenders to handle a variety of tasks, you should also pay them more than the industry average. In doing so, you insulate yourself from the high turnover rate that plagues the cannabis space.

Lean Operating Principles

Lean operating is a practice that has exploded in popularity across the business world. To help teach lean operating principles, specialty training companies offer Six Sigma certifications. These certifications help business owners and executives save money on operational efficiencies. Methods taken from Six Sigma can be incredibly impactful for small cannabis dispensary businesses.

According to the ASQ professional training w​ebsite​, “Lean Six Sigma … drives customer satisfaction and bottom-line results by reducing variation, waste, and cycle time, while promoting the use of standardization and flow, thereby creating a competitive advantage.”

Lean Six Sigma principles can be beneficial with inventory control in small cannabis dispensaries. To this end, these businesses should apply analytics to track consumer behavior within their stores. After that, they can use data to create precise sales forecasts and conduct highly accurate product procurement. The end goal being to increase liquidity by reducing money tied up in a bloated inventory of unsold cannabis products.

Personalized Experience

Due to their small size, single dispensaries have the luxury of customizing the retail shopping experience. As such, without the added pressures of corporate oversight, small operators have the creative freedom to make for highly memorable shopping experiences within their stores. In going the extra mile on things like interior design, small dispensaries can help ensure customer retention and benefit from word-of-mouth marketing.

For example, ​Barbary Coast Dispensary​ in San Francisco, CA, has the look and feel of a high-end speakeasy, making it the perfect match for the Bay Area’s aesthetic sensibilities. The dispensary interior is decorated with a 19th-century touch and features a dab bar, where clients can enjoy the surreal atmosphere while consuming some of California’s best cannabis. A visit to a small dispensary like this will likely leave a lasting impression.

Memorable retail shopping experiences often translate directly to customer loyalty. In turn, this dynamic directly impacts your bottom-line concerning marketing expenses. Notably, a steady base of loyal customers will sustain your business, significantly reducing your marketing costs. In the end, marketing can be directed at retaining clients through loyalty programs and customer engagement – both can be mainly handled “in house” and relatively inexpensively.

Product Differentiation

Small dispensaries can utilize ​product differentiation​ to stay competitive in today’s market. To this end, small operators are blessed with the ability to pivot quickly with new product offerings. Conversely, large dispensary chains with corporate structures must go through rigorous steps before launching new products at their stores.

Small cannabis dispensaries can immediately “get out ahead” on new product trends as they arise. For example, you can offer rare cannabis strains or boutique extracts that none of the larger dispensaries carry.

By the time the larger dispensaries in your area catch up on the current trends, you can move on to the next one. We recommend making alliances with some of the top craft growers in your area to make this possible.

Every year, the cannabis industry grows more competitive. As this business evolves from an underground affair to a multi-billion-dollar enterprise, the scope and sophistication of cannabis dispensary operations grows exponentially. Within this ever-changing dynamic, many small dispensaries fear the wayside will leave them.

Yet, if you approach the market with creativity and zeal, you can make the additional market pressure work to your benefit. By focusing on critical facets like cross-training employees, lean operating principles and product differentiation, you can build a profitable and sustainable cannabis dispensary by making small size a competitive advantage.

In late November, Detroit City Council formally approved a plan to allow adult-use cannabis sales within the city. Until then, the largest city in Michigan had joined the 1,400 or so municipalities that had opted out of an adult-use cannabis market approved by voters in 2018.

The new ordinance will give licensing priority to longtime residents who have lived in Detroit for 15,13 or 10 of the past 30 years (with other qualifying factors, such as living in a low-income household or holding a past cannabis conviction), according to the Detroit Free Press. Those residents will have the first crack at half of the 75 retail licenses.

Councilman James Tate has been out in front of this cause for the past year, insisting that a legal cannabis market represents an opportunity to broaden the scope of social equity in the city’s commercial landscape.

“This is an industry that is in its infancy in Detroit, and we have to make sure that we nurture it properly and make sure that it grows strong, not reckless, and is a bridge to generational wealth that has been out of reach for so many families in our city,” he said in October.

Since the first day of adult-use sales, on Dec. 1, 2019, one year ago today, Michigan has recorded $439 million in cannabis sales (and $73 million in tax revenue). 

CanBreed, an Israeli cannabis genetics seed company, announced this week its acquisition of a 3.5-acre hemp farm in San Diego. The company is part of the Smart-Agro R&D Partnership, a publicly traded firm on the Tel Aviv Stock Exchange.

Construction of new facilities and greenhouses on the San Diego site is expected to begin early in the new year, with CanBreed selling stable genetics into the market by the end of 2021. Initial output, according to the company, is estimated at 12.5 million seeds annually. CanBreed’s goal runs up to 50 million seeds annually.

In September, CanBreed secured a licensing agreement for foundational CRISPR-Cas9 patents held by Corteva Biosciences (MIT) and Broad Institute (Harvard) allowing the company to selectively edit its cannabis plants’ genetic material. In November, the company announced that its genome editing research had led it to a powdery mildew-resistant chemotype.

“We want to be world leaders in using CRISPR technology for cannabis,” CERO Ido Margalit told the Times of Israel after signing the CRISPR-Cas9 agreement. “The idea is to sell stable enhanced cannabis seeds to the entire global market.”

Two years ago, the European Union declared that CRISPR-edited crops are deemed genetically modified organisms (GMOs), making them illegal to sell. In the U.S., however, shortly after the EU decision, the federal government stepped aside to allow for more product innovation in the agricultural space.  

“While these crops do not require regulatory oversight, we do have an important role to play in protecting plant health by evaluating products developed using modern biotechnology,” U.S. Agriculture Secretary Sonny Perdue said at the time.  

Virginia Gov. Ralph Northam has unveiled plans to introduce an adult-use cannabis legalization bill when the General Assembly reconvenes in January, following the release of a study on the potential impacts of legalization in the state, and the Virginia Medical Cannabis Coalition (VMCC) hopes that the state builds on its existing medical program when planning the launch of an adult-use market.

VMCC is a coalition of vertically integrated cannabis operators that had won conditional approval from the Virginia Board of Pharmacy with the goal of advancing the medical market through patient education and connecting the state’s industry stakeholders with legislators, according to Jack Page, VMCC member and the founder and CEO of medical cannabis operator Dharma Pharmaceuticals.

Dharma opened for business Oct. 17, marking the first day of medical cannabis sales in Virginia. From his experience in the medical market, Page says the state has a lot to consider when it comes to legalizing and regulating adult-use cannabis, as well as fine-tuning the medical program.

Photos courtesy of Dharma Pharmaceuticals

Virginia law requires medical cannabis operators to be vertically integrated, and Dharma currently operates one location that houses its cultivation, processing and retail operations. Page says patient response has been positive in the month or so since the market launched, and in January, Dharma will be able to open up to five additional retail locations within its health service area.

Page and the VMCC support adult-use legalization, but want to ensure that the medical program remains part of the overall cannabis industry in Virginia, and that changes are made to the medical program to make it more accessible to patients.

For example, although Dharma can deliver to its patients, the current medical regulations mandate that a patient’s first visit to the dispensary be on-site.

“We’ve been contacted by numerous hospice organizations and nursing homes across the state that have patients that could benefit from the medicine but are not physically able to travel,” Page says. “So, that’s one of the things that we need to look at fixing in the medical program.”

Another change the VMCC has been lobbying for is access to flower in Virginia’s medical market. Right now, it is an extract-only market, which increases costs for both patients and operators.

“That is a dose form that a lot of patients are asking for, and there are certain conditions that botanicals just treat better and the cost is lower to patients because there’s not all the processing with the expensive lab equipment that we have in the back to extract the oil, refine the oil and make the product,” Page says. “Right now, we’re vertically integrated, and that’s a barrier of entry to most people because the cost associated with a vertical organization is pretty high. We’d like to see some way for small business to be included in the adult-use market, as well.”

Virginia has an extract-only medical cannabis market, but Page says allowing patients to access flower would decrease costs for both operators and patients.

Although the medical program still has its pain points, Page would like the opportunity for Virginia’s medical cannabis operators to roll out the adult-use program to ensure a speedy market launch.

“Allowing the medical producers to jumpstart the adult-use market, you’re providing tax revenue pretty much immediately for the commonwealth, and that can pay for some social equity programs and pay for the infrastructure that will be required, and of course provide those jobs faster if we’re able to join the market as early as possible,” he says.

However, Page is still keeping his main focus on the state’s patient base.

“We definitely want to make sure that we also continue to serve our medical patients first and foremost,” Page says. “We want to make sure, too, that any kind of adult-use market has the same testing requirements so that we ensure that the product that’s being delivered is safe for Virginians to use.”

Virginia’s medical cannabis operators are required to submit their products for third-party testing for pesticides, heavy metals and mycotoxins.

“The thing, too, is with the medical cannabis market, there are more specialized dose forms that are used to treat specialized conditions, so that’s why it’s important to keep the medical market also viable in Virginia,” Page says. “For example, Dharma is producing a nasal spray and a suppository. You’re not probably going to find those kinds of products in an adult-use market, but we are seeing there’s a high demand for those products in the medical market.”

VMCC is advocating for one regulator that would oversee the medical and adult-use cannabis programs in Virginia, he adds, as well as the ability for medical operators to co-locate adult-use dispensaries with their medical storefronts.

“I just think in the discussions of bringing adult-use to Virginia, we need to realize that the medical program and the adult-use program are both necessary to serve patients across the commonwealth,” Page says. “We have to carefully think about how the adult-use market needs to be rolled out so that we don’t make all of the time and effort that’s been put into establishing the medical program be wasted.”

Virginia Gov. Ralph Northam has unveiled plans to introduce an adult-use cannabis legalization bill when the General Assembly reconvenes in January, following the release of a study on the potential impacts of legalization in the state, and the Virginia Medical Cannabis Coalition (VMCC) hopes that the state builds on its existing medical program when planning the launch of an adult-use market.

VMCC is a coalition of vertically integrated cannabis operators that had won conditional approval from the Virginia Board of Pharmacy with the goal of advancing the medical market through patient education and connecting the state’s industry stakeholders with legislators, according to Jack Page, VMCC member and the founder and CEO of medical cannabis operator Dharma Pharmaceuticals.

Dharma opened for business Oct. 17, marking the first day of medical cannabis sales in Virginia. From his experience in the medical market, Page says the state has a lot to consider when it comes to legalizing and regulating adult-use cannabis, as well as fine-tuning the medical program.

Photos courtesy of Dharma Pharmaceuticals

Virginia law requires medical cannabis operators to be vertically integrated, and Dharma currently operates one location that houses its cultivation, processing and retail operations. Page says patient response has been positive in the month or so since the market launched, and in January, Dharma will be able to open up to five additional retail locations within its health service area.

Page and the VMCC support adult-use legalization, but want to ensure that the medical program remains part of the overall cannabis industry in Virginia, and that changes are made to the medical program to make it more accessible to patients.

For example, although Dharma can deliver to its patients, the current medical regulations mandate that a patient’s first visit to the dispensary be on-site.

“We’ve been contacted by numerous hospice organizations and nursing homes across the state that have patients that could benefit from the medicine but are not physically able to travel,” Page says. “So, that’s one of the things that we need to look at fixing in the medical program.”

Another change the VMCC has been lobbying for is access to flower in Virginia’s medical market. Right now, it is an extract-only market, which increases costs for both patients and operators.

“That is a dose form that a lot of patients are asking for, and there are certain conditions that botanicals just treat better and the cost is lower to patients because there’s not all the processing with the expensive lab equipment that we have in the back to extract the oil, refine the oil and make the product,” Page says. “Right now, we’re vertically integrated, and that’s a barrier of entry to most people because the cost associated with a vertical organization is pretty high. We’d like to see some way for small business to be included in the adult-use market, as well.”

Virginia has an extract-only medical cannabis market, but Page says allowing patients to access flower would decrease costs for both operators and patients.

Although the medical program still has its pain points, Page would like the opportunity for Virginia’s medical cannabis operators to roll out the adult-use program to ensure a speedy market launch.

“Allowing the medical producers to jumpstart the adult-use market, you’re providing tax revenue pretty much immediately for the commonwealth, and that can pay for some social equity programs and pay for the infrastructure that will be required, and of course provide those jobs faster if we’re able to join the market as early as possible,” he says.

However, Page is still keeping his main focus on the state’s patient base.

“We definitely want to make sure that we also continue to serve our medical patients first and foremost,” Page says. “We want to make sure, too, that any kind of adult-use market has the same testing requirements so that we ensure that the product that’s being delivered is safe for Virginians to use.”

Virginia’s medical cannabis operators are required to submit their products for third-party testing for pesticides, heavy metals and mycotoxins.

“The thing, too, is with the medical cannabis market, there are more specialized dose forms that are used to treat specialized conditions, so that’s why it’s important to keep the medical market also viable in Virginia,” Page says. “For example, Dharma is producing a nasal spray and a suppository. You’re not probably going to find those kinds of products in an adult-use market, but we are seeing there’s a high demand for those products in the medical market.”

VMCC is advocating for one regulator that would oversee the medical and adult-use cannabis programs in Virginia, he adds, as well as the ability for medical operators to co-locate adult-use dispensaries with their medical storefronts.

“I just think in the discussions of bringing adult-use to Virginia, we need to realize that the medical program and the adult-use program are both necessary to serve patients across the commonwealth,” Page says. “We have to carefully think about how the adult-use market needs to be rolled out so that we don’t make all of the time and effort that’s been put into establishing the medical program be wasted.”

There is an ineffable logic to the pace of reform these days. Nowhere is that clearer in both the success of voter reform measures in the United States (along with timelines for implementation baked into the language of the same) and developments internationally. No matter that New Zealand decided to take a recent punt on the issue, there are other forces moving elsewhere that have the potential to be far more consequential – and in the short term.

Israel Announced Its Intent To Create A Recreational Market in 2021

There is little news anywhere as consequential as that of the oldest medical market finally succumbing to the inevitable. Namely, Israel has announced that it will allow an adult use market to begin operations probably by the third quarter of 2021. That said, don’t hold anyone to a deadline in the days of COVID-19, which will just as surely have not passed by then.

However, this development means that the entire conversation has moved up a notch – because the Israelis have so much research on the plant at this point.

For this reason, the tiny country is likely to have an outsized impact on the entire discussion – along with conveniently timed medical exports to the world.

Luxembourg Will Initiate Its Recreational Market Shortly Thereafter

It is likely not insignificant that the Israelis announced their intent to begin an adult use market just ahead of the long-announced Luxembourg flip – now on the agenda of the Green Party domestically for several years.

The strategic location of Luxembourg in both the European market as well as the much larger financial one now interested in the vertical cannot be understated. Indeed, the country has already played an outsized role in the development of the medical market here due to the contretemps over the clearing of stock trades in the German market as of 2018.

The double whammy of good news from both markets will also create a buzz internationally that is sure to drive other conversations forward – even if it is to study how both countries approach the issue. And, more to a point, how they differ from Canada, including regulation of their equity markets.

Combined with a more regulated market in Holland and presumably continued “experimentation” in Denmark, and by the end of next year, adult use reform will have hit the continent and in no small way.

Does This Mean The Sudden Potential of Adult Use Everywhere?

As 2020 has shown, in spades, just about anything can and frequently does happen. However, do not expect many more countries to move into the recreational column for the next several years.

Whatever the UN does or does not do about cannabis at the next meeting of the WHO, cannabis the plant remains a Schedule I drug internationally. This means that, for example, import and export of the same across borders, even in Europe, is likely to be problematic and for some time to come – let alone its international travel across say, the Atlantic.

Further from the law enforcement and financial security (namely money laundering) perspective, there are big issues that have to be dealt with finally, internationally, that so far have not – and under the guise of “medical reform.”

For that reason, in other words, do not expect Germany, much less France or even the UK to suddenly switch gears. And remember that both Luxembourg and Israel are small countries.

Bottom line? Adult use reform is here to stay, and will increasingly show up on the map. But the more “blanket” reform, still driving the entire discussion, is broadly, and globally, medical.

Earlier this month, the California Bureau of Cannabis Control (BCC) announced the recipients of public university grant funding that will allow universities across the state to research the legal cannabis system and its impacts, and researchers are eager to launch their wide-ranging studies.

More than 100 universities applied for grants of up to $2 million to fund research proposals that had to fall within one of several specified categories, including public health, criminal justice and public safety, and economic and environmental impacts of the legal cannabis industry.

The BCC ultimately awarded nearly $30 million in funding to UC San Francisco, UC Santa Barbara, CSU Dominguez Hills, UC Berkeley, UC Los Angeles, UC Irvine, UC San Diego, UC Davis and CSU Humboldt for their specified research proposals.

UCLA received seven grants totaling $6.4 million to fund studies that will be conducted through the Semel Institute/Department of Psychiatry, Integrative Substance Abuse Programs (ISAP), Center for Health Services and Society, Department of Family Medicine, Division of Pulmonary and Critical Care, Division of Infectious Disease, Luskin School of Public Policy and the UCLA Labor Center.

Funded studies will focus on the impact of Prop. 64 on maladaptive cannabis use and treatment for cannabis use disorder, as well as the toxicity of inhaled and second-hand cannabis smoke, the neurobiological and behavioral impact of cannabis marketing, employment conditions in California’s cannabis industry, a demographic analysis of the licensed cannabis industry and cannabis consumers, and an assessment of the feasibility and consequences of implementing a cannabis potency tax.

“The funded grants exemplify the breadth of cannabis research at UCLA,” Ziva Cooper, Ph.D and director of the UCLA Cannabis Research Initiative, told Cannabis Business Times and Cannabis Dispensary in an emailed statement.

UC Davis received five grants totaling $3.1 million to fund studies on the impact of cannabis use in early psychosis, an assessment of the demographics of the licensed cannabis industry, the economic impacts of the industry on the private and public sectors in California, the environmental impacts of licensed and unlicensed cannabis cultivation in the state, and a study on California’s cannabis workers.

“We have a Cannabis and Hemp Research Center at UC Davis that fosters scientific research, as well as a dissemination of knowledge related to the many scientific disciplines associated with cannabis and hemp, and that includes agricultural science, environmental science, pharmacology and clinical medicine,” Cam Carter, co-director of the research center, told CBT and CD, adding that the grant funding will support research across all of these areas. “The area that our research is focused on is the effects of cannabis use on the brain, brain function and brain health in young people with serious mental illness. We want to understand the complexities, particularly adverse effects and clinical outcomes, as well as potential therapeutic effects associated with cannabis use in high-risk, young populations.”

One group of researchers will focus specifically on economic issues, Carter said, particularly economic development and equity in California’s legal cannabis industry. Much of that research will rely on information from public records, as well as interviews with various participants in the industry and an analysis of policy related to economic development and equity.

Other studies will focus on the occupational health for workers who participate in California’s legal cannabis industry, as well as health-related research involving cannabis consumers who are receiving mental care, Carter added.

“That research will involve clinical interviews and evaluations, metabolic and inflammatory markers, and brain imaging studies, looking at the function and structure of the brain in those young people,” he said.

The goal of the research funding program, which is supported by state tax dollars, is to provide a better understanding of the impact of cannabis legalization on California’s economy, environment and public health, Carter said. He expects the results of UC Davis’ research to be published in scientific journals and white papers, and hopes that the research will have many positive outcomes.

“We would like to see an industry that is contributing positively to the economy, doing that in a way that’s equitable, that’s not in any way harmful to the health of people who are actually participating in the industry,” Carter said. “And we’d definitely like to have a better understanding on the impact of the industry and cannabis use in general on high-risk populations, such as those who are young, whose brains are still developing, or who have mental health problems.”