CBD OIL

MM: You have engaged in a diversity of business. What was so special about the cannabis sector?

CB: Not only did I think cannabis was an incredible opportunity to monetize and do well financially, I thought it was an opportunity to do good at the same time. For me, it was a situation where I could now put the tools that I had spent time developing over my career to work for me and benefit the broader community too.

California’s regulatory framework for cannabis and hemp-derived products, including CBD, continues to evolve, most recently via updated Proposition 65 warning requirements that came into full effect Jan. 3, 2021. As of that date, anyone offering for sale cannabis and hemp-derived products in California must provide an appropriate warning in accordance with the current regulations, with limited exceptions.

Noncompliance with the new regulations may result in government or private prosecution, with potential penalties of up to $2,500 per day for an alleged violation.

Proposition 65 Warning Requirement

California’s Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Prop. 65, requires the state of California to maintain an updated list of chemicals known to the state to cause cancer or reproductive toxicity.

Persons or companies who offer products for sale in California containing Proposition 65-listed chemicals must provide a “clear and reasonable” warning to the consumer (with limited exceptions) or face the prospect of penalties. Businesses usually choose to apply either the standard or “short form” default warnings provided in the Proposition 65 regulations, as these are deemed presumptively “clear and reasonable,” whereas any other warning language runs the risk of being challenged as noncompliant.

Prior Proposition 65 Requirement Limited to Smokable Cannabis

“Marijuana smoke” was added to the Proposition 65 list in 2009 solely as a cancer-causing agent. After that date, a cancer-specific warning was required for all smokable cannabis. In addition, if a cannabis product contained other Proposition 65 listed chemicals—such as certain heavy metals or pesticides—warnings for those chemicals were also applicable.

However, THC was not a listed Proposition 65 chemical. As such, no warning was required for non-smokable cannabis products, including edibles or hemp-derived CBD products, unless those products contained other listed chemicals.

Until recently.

READ MORE: What Should California Dispensaries Know About Prop. 65? 

New Chemical Listings Expand Warning Requirement, Including to Hemp-Derived CBD

On Jan. 3, 2020, the state of California agency that oversees Proposition 65 (the Office of Environmental Health Hazard Assessment, known as OEHHA) updated the Proposition 65 list to add “cannabis (marijuana) smoke” as a reproductive toxin causing developmental harm (in addition to the prior listing as a cancer-causing agent) and add Δ9-tetrahydrocannabinol (Δ9-THC) as a reproductive toxin causing developmental harm.

The one-year grace period to provide adequate warnings based on these new listings expired on Jan. 3, 2021.

As such, to avoid a potential claim of a Proposition 65 violation:

• persons offering for sale smokable marijuana should now be providing appropriate warnings that address both cancer and reproductive/developmental harm, and
• persons offering for sale any THC-containing products—including, but not limited to, edibles/concentrates/vapes and hemp-derived CBD products—should now be providing an appropriate reproductive harm warning.

It is important to note that the warning requirement applies to any products offered for sale as of Jan. 3, 2021, not just products manufactured or distributed to retailers after that date. Any items “on the shelf” (either physically or online) after Jan. 3, 2021 are subject to the newly applicable Proposition 65 warning requirements, regardless of packaging dates. Products sold online generally require online warnings at the website point-of-sale, in addition to warnings on the product itself.

The “Safe Harbor” Exemption for Low Levels of Exposure: Not So Safe

Proposition 65 does provide an exemption from the warning requirement if a business can demonstrate that the exposures caused by its product create “no significant risk” (if the chemical is listed as a carcinogen) or cause “no observable effect” (if the chemical is listed as a reproductive toxicant). However, it is very difficult for businesses to take advantage of this exemption in a cost-effective manner.

Even where OEHHA has set numeric “safe harbor” thresholds for listed chemicals, those thresholds only identify the volume of chemical per day that is considered safe for a person to be exposed to. Determining how that safe harbor number applies to use of a product containing the chemical requires a product-specific exposure analysis by a toxicologist or other qualified expert. 

An exposure analysis involves a number of complex factors, including the route of exposure (e.g., inhalation, skin contact, eating/drinking) and the amount of product to which the range of potential customers is exposed on a daily basis. 

For products subject to Proposition 65 because of the marijuana smoke or THC listings, this analysis is even more difficult, as neither chemical has an OEHHA-approved safe harbor threshold. As such, the toxicologist or other expert would need to propose such a threshold themselves, based on a review of the totality of available scientific evidence, as the starting point in their analysis.

Not surprisingly, exposure assessments are expensive and time-consuming. In addition, they often result in a determination that a warning is, in fact, required. Finally, even where the assessment would support use of the safe harbor exemption, the cost of defending use of the exemption in potential litigation with a governmental or private enforcer often outweighs the cost and burden of providing a warning.

Impact of New Requirements: Potential Legal Enforcement and Penalties

Persons violating the new Proposition 65 requirements could face enforcement actions by the California Attorney General, district attorneys or (in cities with populations of over 750,000) city attorneys. Importantly, even if government enforcement does not occur, penalties may also be sought by private “citizen” enforcers of Proposition 65, who are very active across California. In addition to seeking recovery of up to $2,500 per day of an alleged violation, enforcers may also seek recovery of their attorneys’ fees in prosecuting the action.

Citizen enforcers must serve a notice of the alleged violation at least 60 days prior to initiating an enforcement action in court. Anyone receiving such a notice should promptly seek advice from an attorney experienced with Proposition 65, with the goals of promptly:

• identifying and enforcing any potential right to defense and indemnification from another party in the chain of distribution for the product at issue;
• determining whether a viable defense to the Proposition 65 claim may exist: for example, businesses employing under ten persons are exempt from providing warnings (although such a business may have indemnified a party in the chain of distribution that is not exempt);
• if appropriate, negotiating a prompt settlement with the citizen enforcer, before the enforcer incurs attorneys’ fees to initiate a court proceeding at the expiration of the 60-day notice period.

For these reasons, anyone offering for sale cannabis and hemp-derived products in California should ensure they are implementing Proposition 65 warnings in accordance with the current listings and regulations, absent a strong technical and legal basis for asserting that an exemption applies.

Donald E. Sobelman is an environmental law partner in Farella Braun + Martel’s San Francisco office. He can be reached at dsobelman@fbm.com.

Wendy M. Hernández earned her law degree from UC Hastings and passed the California bar in 2020 (pending admission). Hernández currently works with Farella Braun + Martel LLP.

District Growers established itself in Washington, D.C., in 2012, part of a medical cannabis market that has grown steadily ever since. 

Founder and President Corey Barnette says that his extensive business background gave him a solid foundation for his entrance into the cannabis space. And now that he’s spent years here, navigating the cultivation side of the industry and monitoring broader trends in the U.S., he says that there are ways for business owners to challenge the working assumptions about social equity and market development.

While he may be in D.C., a smaller market than many of the larger states coming online, he points to the fragmentation of the U.S. cannabis space as a major problem.

“We have to build long-term relationships to build a stronger cannabis community among ourselves to be competitive and profitable for years to come,” he says.

Here, our recent conversation with Barnette helps illuminate that need.

Mila Marshall: You are one of the licensed industry’s few African American growers. How did you find yourself one of the few history makers in the cannabis industry?

 

Corey Barnette: I have a background in business and graduated from Duke School of Business. I had been strategically buying and selling businesses—like an automotive parts manufacturer, a clinical research company and other small businesses. In 2008, I was invited by a colleague to sit on the Board of the San Diego Medical Marijuana Collective, and subsequently ended up purchasing the company. After owning and operating that company I opened a second dispensary, Chi Holistic Collective.

My companies were two of the top 10 largest businesses in San Diego at the time, and, while that success was phenomenal, my family was based in Washington, D.C. The industry was just beginning and I was able to engage and help influence the market using my previous experience. When the Capital market began to move toward medical marijuana, I took advantage of the opportunity to help shape the market and opened District Growers.

California’s regulatory framework for cannabis and hemp-derived products, including CBD, continues to evolve, most recently via updated Proposition 65 warning requirements that came into full effect Jan. 3, 2021. As of that date, anyone offering for sale cannabis and hemp-derived products in California must provide an appropriate warning in accordance with the current regulations, with limited exceptions.

Noncompliance with the new regulations may result in government or private prosecution, with potential penalties of up to $2,500 per day for an alleged violation.

Proposition 65 Warning Requirement

California’s Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Prop. 65, requires the state of California to maintain an updated list of chemicals known to the state to cause cancer or reproductive toxicity.

Persons or companies who offer products for sale in California containing Proposition 65-listed chemicals must provide a “clear and reasonable” warning to the consumer (with limited exceptions) or face the prospect of penalties. Businesses usually choose to apply either the standard or “short form” default warnings provided in the Proposition 65 regulations, as these are deemed presumptively “clear and reasonable,” whereas any other warning language runs the risk of being challenged as noncompliant.

Prior Proposition 65 Requirement Limited to Smokable Cannabis

“Marijuana smoke” was added to the Proposition 65 list in 2009 solely as a cancer-causing agent. After that date, a cancer-specific warning was required for all smokable cannabis. In addition, if a cannabis product contained other Proposition 65 listed chemicals—such as certain heavy metals or pesticides—warnings for those chemicals were also applicable.

However, THC was not a listed Proposition 65 chemical. As such, no warning was required for non-smokable cannabis products, including edibles or hemp-derived CBD products, unless those products contained other listed chemicals.

Until recently.

READ MORE: What Should California Dispensaries Know About Prop. 65? 

New Chemical Listings Expand Warning Requirement, Including to Hemp-Derived CBD

On Jan. 3, 2020, the state of California agency that oversees Proposition 65 (the Office of Environmental Health Hazard Assessment, known as OEHHA) updated the Proposition 65 list to add “cannabis (marijuana) smoke” as a reproductive toxin causing developmental harm (in addition to the prior listing as a cancer-causing agent) and add Δ9-tetrahydrocannabinol (Δ9-THC) as a reproductive toxin causing developmental harm.

The one-year grace period to provide adequate warnings based on these new listings expired on Jan. 3, 2021.

As such, to avoid a potential claim of a Proposition 65 violation:

• persons offering for sale smokable marijuana should now be providing appropriate warnings that address both cancer and reproductive/developmental harm, and
• persons offering for sale any THC-containing products—including, but not limited to, edibles/concentrates/vapes and hemp-derived CBD products—should now be providing an appropriate reproductive harm warning.

It is important to note that the warning requirement applies to any products offered for sale as of Jan. 3, 2021, not just products manufactured or distributed to retailers after that date. Any items “on the shelf” (either physically or online) after Jan. 3, 2021 are subject to the newly applicable Proposition 65 warning requirements, regardless of packaging dates. Products sold online generally require online warnings at the website point-of-sale, in addition to warnings on the product itself.

The “Safe Harbor” Exemption for Low Levels of Exposure: Not So Safe

Proposition 65 does provide an exemption from the warning requirement if a business can demonstrate that the exposures caused by its product create “no significant risk” (if the chemical is listed as a carcinogen) or cause “no observable effect” (if the chemical is listed as a reproductive toxicant). However, it is very difficult for businesses to take advantage of this exemption in a cost-effective manner.

Even where OEHHA has set numeric “safe harbor” thresholds for listed chemicals, those thresholds only identify the volume of chemical per day that is considered safe for a person to be exposed to. Determining how that safe harbor number applies to use of a product containing the chemical requires a product-specific exposure analysis by a toxicologist or other qualified expert. 

An exposure analysis involves a number of complex factors, including the route of exposure (e.g., inhalation, skin contact, eating/drinking) and the amount of product to which the range of potential customers is exposed on a daily basis. 

For products subject to Proposition 65 because of the marijuana smoke or THC listings, this analysis is even more difficult, as neither chemical has an OEHHA-approved safe harbor threshold. As such, the toxicologist or other expert would need to propose such a threshold themselves, based on a review of the totality of available scientific evidence, as the starting point in their analysis.

Not surprisingly, exposure assessments are expensive and time-consuming. In addition, they often result in a determination that a warning is, in fact, required. Finally, even where the assessment would support use of the safe harbor exemption, the cost of defending use of the exemption in potential litigation with a governmental or private enforcer often outweighs the cost and burden of providing a warning.

Impact of New Requirements: Potential Legal Enforcement and Penalties

Persons violating the new Proposition 65 requirements could face enforcement actions by the California Attorney General, district attorneys or (in cities with populations of over 750,000) city attorneys. Importantly, even if government enforcement does not occur, penalties may also be sought by private “citizen” enforcers of Proposition 65, who are very active across California. In addition to seeking recovery of up to $2,500 per day of an alleged violation, enforcers may also seek recovery of their attorneys’ fees in prosecuting the action.

Citizen enforcers must serve a notice of the alleged violation at least 60 days prior to initiating an enforcement action in court. Anyone receiving such a notice should promptly seek advice from an attorney experienced with Proposition 65, with the goals of promptly:

• identifying and enforcing any potential right to defense and indemnification from another party in the chain of distribution for the product at issue;
• determining whether a viable defense to the Proposition 65 claim may exist: for example, businesses employing under ten persons are exempt from providing warnings (although such a business may have indemnified a party in the chain of distribution that is not exempt);
• if appropriate, negotiating a prompt settlement with the citizen enforcer, before the enforcer incurs attorneys’ fees to initiate a court proceeding at the expiration of the 60-day notice period.

For these reasons, anyone offering for sale cannabis and hemp-derived products in California should ensure they are implementing Proposition 65 warnings in accordance with the current listings and regulations, absent a strong technical and legal basis for asserting that an exemption applies.

Donald E. Sobelman is an environmental law partner in Farella Braun + Martel’s San Francisco office. He can be reached at dsobelman@fbm.com.

Wendy M. Hernández earned her law degree from UC Hastings and passed the California bar in 2020 (pending admission). Hernández currently works with Farella Braun + Martel LLP.

Editor’s Note: While CIJ typically omits the word “marijuana” where possible due to antiquated nomenclature and prejudicial connotations, we understand the legal distinction between cannabis containing THC and hemp requires the use of the word when referencing federal government policies and legislative language.

Despite the rapid evolution of the cannabis industry, the assurance of safe manufacturing practices remains unclear.Both the Food and Drug Administration (FDA) and the Drug Enforcement Agency (DEA) have imposed significant hurdles for cannabis operators to remain on the “right side of the law.” Therefore, manufacturers of both hemp and marijuana products have been left to figure things out on their own, or choose to ignore existing guidance because the lack of federal oversight allows them to do so. Inconsistent regulation on manufacturing, packaging, labeling and testing of cannabis products offers the potential for unsubstantiated, non-scientific and often times blatantly false claims on product safety and efficacy.

Science vs. Law

Hemp and marijuana are both species of the Cannabis family, Cannabaceae. Genetically they are identical but are arbitrarily defined by the presence of delta-9 tetrahydrocannabinol (THC). While science does not differentiate between hemp and marijuana, the law does.

The hemp industry declared a small victory with the passing of the Agricultural Act of 2014 (2014 Farm Bill). Under this bill universities and state agriculture departments were allowed to grow hemp under state law. Additionally, “industrial hemp” was officially defined by establishing the legal limit of THC at 0.3% on a dry weight basis. The Agricultural Improvement Act of 2018 (2018 Farm Bill), under the guidance of the United States Department of Agriculture (USDA), took things a few steps further by authorizing the cultivation of hemp and removed hemp and hemp seeds from the CSA. The bill however provides no language that mandates the safe manufacture of hemp-derived consumer goods. The 2018 version also preserved the FDA’s authority to regulate products containing cannabis and cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FFDAC). To the surprise of most, listing cannabidiol (CBD), even hemp-derived, as an ingredient on consumer product labels remains illegal under the bill. Furthermore, CBD product manufacturers are not protected under the current regulations. Since 2015 the FDA has issued warning letters to firms marketing CBD products as dietary supplements and/or foods, and in December 2018, FDA declared it illegal to introduce food containing CBD (or THC) into interstate commerce, regardless if it derived from hemp. To date, the only FDA approved CBD product is GW Pharmaceutical’s Epidiolex.

Marijuana remains classified as a Schedule I controlled substance under the CSA. 36 states have approved comprehensive, publicly available medical marijuana programs, and now 14 states have approved adult use programs, with New Jersey passing legislation on February 22, 2021. However, the industry has seen minimal movement toward mandating GMP requirements in the marijuana market. Only a handful of medical programs require manufacturers to follow GMP. Furthermore, the requirements are inconsistent between states and the language in the regulations on how to approach GMP implementation is vague and disjointed. This fragmented guidance supports the complexity and difficulty of enforcing a coherent, standardized and reliable approach to safe manufacturing practices.

What is GMP and Why Should You Care?

Good Manufacturing Practices (GMPs) are a system for ensuring that products are consistently manufactured and controlled according to quality standards and regulatory guidelines. The implementation of a GMP compliant program ensures consumer health and safety, allows manufacturers to understand the intended use of their products, allows manufacturers to defend product specifications as being appropriate, considers the risks to vulnerable populations and minimizes overall business risk. In a nutshell, GMP equals product safety and quality, and defines the responsibilities of the manufacturer to ensure consumers are protected from the distribution of unsafe and ineffective products. Currently, the GMP “landscape” in the cannabis space is complicated. The various “flavors” (food, dietary supplements, cosmetics and drugs/devices) of GMP leave many confused and frustrated when making the decision to implement GMP. Confusion is a result of unclear regulatory requirements as well as operators not fully understanding how to classify or designate the end use of their product(s). Implementing an effective GMP program requires proper planning (both short and long term), financial commitment and qualified resources.

Where Should You Start?

As the regulatory landscape continues to evolve and mature in the cannabis space, your business model must consider GMP implementation if you wish to remain successful and sustainable.

Intended Use

Before you can implement GMP you must first understand what GMP regulations apply to the intended use of your product(s). Are you manufacturing food, beverages or dietary supplements? Get acquainted with the FDA Code of Federal Regulations (CFRs) on GMP. 

Conduct a Gap Assessment

A gap assessment allows you to determine your deficiencies in relation to GMP compliance. The assessment should include, but is not limited to facility design, equipment design, supply chain, risk management and employee training.

Develop an Action Plan

Once the gap assessment is complete a comprehensive action plan will be developed to map out the steps required to achieve GMP compliance. The action plan should follow the SMART Goal principles:

• Specific (simple, well-defined)
• Measurable (meaningful)
• Attainable (achievable, agreed upon)
• Relevant (resource-based, reasonable and realistic)
• Timely (time-based, defined due dates)

The plan will include prioritized deliverables, due dates and allocated resources in order to strategically plan and execute and complete the required tasks.

Schedule a Mock GMP Inspection

A mock inspection verifies that the action plan was adequately executed. Hire an experienced resource familiar with related GMPs and QMS to conduct the inspection. A successful mock inspection is a perfect litmus test if the end goal is to achieve GMP certification.

Cannabis manufacturers that ignore the obvious progression toward an FDA-like industry will not survive the long game. Those that embrace the momentum and properly plan to mitigate product and business risk – those who demonstrate integrity and are truly in this space to ensure safe, effective and quality products to consumers will come out on top, gain credibility and secure brand recognition.

References:

• 21 CFR Part 111, Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements.
• 21 CFR Part 117, Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food and the Food Safety Modernization Act (FSMA).
• 21 CFR Part 210, Current Good Manufacturing Practice in Manufacturing, Processing, Packing, or Holding of Drugs; General.
• 21 CFR Part 211, Current Good Manufacturing Practice for Finished Pharmaceuticals.
• 21 CFR Part 700, Subchapter G-Cosmetics.
• 21 CFR Part 820, Subchapter H-Medical Devices; Quality System Regulation
• Congressional Research Service, FDA Regulation of Cannabidiol (CBD) Products, June 12, 2019.
• United States Food and Drug Administration-Warning Letters, Current Content as of 02/19/2021.

Links:

Despite operational hiccups stemming from the COVID-19 pandemic and supply chain shortages, Missouri Health & Wellness is working quickly to open five dispensary locations in the state’s medical cannabis market, which officially launched its first sales in October.

The company holds five retail licenses, which is the maximum number of licenses that any one company can have in Missouri’s market. Missouri Health & Wellness opened its first location in Washington at the end of November, and its second location in Sedalia just before Christmas. The company then opened a third dispensary in the state’s capital, Jefferson City, on Jan. 25. Now, Missouri Health & Wellness has its sights set on its final two stores in Kirksville and Belton, which will open by the end of the winter.

Photos courtesy of Missouri Health & Wellness

The company is standing up its locations quickly, despite Missouri’s medical program experiencing delays due to the COVID-19 pandemic. Missouri Health & Wellness HR Director and Regional Manager Kathleen Beebe says it took a year and a half for the state’s first dispensaries to open after the state began issuing patient ID cards, but there has been a steady increase in the number of patients enrolling in the program.

“What’s most exciting is when you have patients walking in the door for the first time and you hear about … what they’ve been dealing with, and they’re so excited to have another option,” Beebe tells Cannabis Business Times and Cannabis Dispensary.

Most of Missouri Health & Wellness’ patients are 60 years old and older, she says, and many are first-time cannabis consumers who are frustrated with the results of traditional medicine.

“I think that’s the No. 1 thing that excites me most about this industry, is that we are bringing some relief to people,” Beebe says.

The company also strives to create a diverse and inclusive culture, she adds, where employees feel valued and can make meaningful contributions to the company and the patients they serve.

Missouri Health & Wellness’ budtenders (called “wellness specialists”) go through a robust training program to ensure they can have educated conversations with patients about cannabis, Beebe says.

As with many new markets, Missouri’s medical cannabis industry is currently experiencing supply chain shortages, especially in the wake of the ongoing pandemic, which Beebe says has delayed the launch of many cultivators and manufacturers.

“They’re still under construction,” she says. “We’re starting to now see more and more of them entering the market, but we just had our first manufacturer pass their final inspection maybe a few weeks ago now. Obviously, it takes a little while for them to ramp up their production.”

The COVID-19 pandemic has also further restricted Missouri Health & Wellness’ ability to promote itself within the communities it serves, as in-person, patient-facing events have been on hold. Traditional marketing channels, such as social media, are also challenging for the industry due to the various platforms’ restrictions on cannabis.

“Social media doesn’t really like us to talk too much about cannabis, so it limits what we’re able to do,” Beebe says. “We’re really trying to get creative, using our website more and texting. We do have a text service, but … the carriers will block certain messages. … We’ve hired a new marketing agency to help us start thinking outside the box to look at those ways that we can get out there, despite COVID and the marketing challenges that the industry has probably always had to face.”

To keep its staff and patients safe during the ongoing pandemic, Missouri Health & Wellness checks the temperatures of everyone upon entering the store, and provides hand sanitizer to its employees and customers.

Patients are asked to complete paperwork upon entering the store for the first time, and the staff sanitizes the clipboards and pens after each use. The dispensary’s registers are also sanitized in between each customer, and staff and patients are asked to wear masks while inside the store.

Photos courtesy of Missouri Health & Wellness

Missouri Health & Wellness’ dispensaries sell flower packaged in eighths, as well as pre-rolls and edibles. The company started selling gummies and cannabis-infused beverages on New Year’s Eve, and Beebe says the dispensaries have seen an increase in business just by offering these two new product lines.

“We’re hearing that there are going to be some vape cartridges coming, and of course, there have been a lot of questions about concentrates,” she says. “I expect where we are today and where we’re going to be in two or three months is going to be dramatically different.”

Missouri issued 192 total dispensary licenses, and Beebe estimates that there are roughly 30 dispensaries currently open in the state.

“I expect that is also dramatically going to change in the next couple of months,” she says. “We’ll probably see the majority of them coming online, so what you see in this market today is going to look dramatically different in the next few months, between an increase in supply and an increase in the number of dispensaries that are open.”

Missouri Health & Wellness will continue to differentiate itself in the rapidly growing market through its friendly and supportive wellness specialists, Beebe says.

“I really stress to the team that it’s important to be respectful to each other,” she says. “Obviously, when that patient walks through the door, be mindful that they are dealing with something. They may be cranky because they’re not feeling well, and they need some help. That’s where we come in to support them, whether that’s sitting down and helping them figure out how to find their patient card online because it can be a little tricky to do that, or just having a conversation with them that you can relate [to]. … Customer service, to me, is going to be what really helps us stand out.”

Patient education is also a key differentiator for the company, Beebe adds. Many of Missouri Health & Wellness’ team members come from working in other states’ cannabis programs, which provides them with diverse cannabis knowledge to help support the company’s patients.

“We’re hearing a lot that we have a little bit of an uphill battle with breaking the stigma,” Beebe says. “It’s not like it’s unique to Missouri, but the fact that we’re a little bit more conservative state, we do know there are people who don’t support cannabis, so we’re helping to bring a professional tone to the industry. … You’re going to walk in and be treated like a patient, and your privacy is important. Having that professional customer service and taking care of the patient is ultimately where I see us focusing our attentions and breaking that stigma.”

Flower continues to be the dominant product category in US cannabis sales. In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

Maggie’s Farm is an integrated cannabis company based in Southern Colorado. Maggie’s Farm has seven adult-use and medical dispensaries and cultivates the vast majority of their flower on outdoor farms. All Maggie’s Farm products are sun-grown from seed in soil that is 100% custom-mixed onsite as well as spring-watered, slow-cured and hand-trimmed. Maggie’s Farm does not use any synthetic pesticides or growth hormones in its cultivation. In addition, for the past eight years, Maggie’s Farm has recently obtained Clean Green Certified®, a designation certifying organic standards and testing that mirrors the USDA organic certification. Maggie’s Farm was the first cultivator in Colorado to earn the Clean Green certification.

We spoke with Bill Conkling, Founder and CEO of Maggie’s Farm to learn more about the benefits of outdoor growing, localism and their Clean Green certification. Bill started Maggie’s Farm in 2010 after growing up on cattle ranches and farms in Colorado.

Aaron Green: Bill, thanks for taking the time today. Tell me a bit about how you got involved in the cannabis industry.

Bill Conkling: I am a native of southern Colorado. I was a medical caregiver back in the early days of legalization, and I saw an opportunity to vertically align after my first legal crop in 2010. I opened up the store in 2011. I’ve been a lifelong proponent of medical, recreational and adult use of marijuana.

I come from a background of farmers and I had worked on cattle ranches and farms throughout childhood. As soon as I graduated from college, I went back to work on a large cattle ranch in the four corners area [of southern Colorado]. That’s where I started to incorporate my indoor cultivation experience and skills with outdoor.

Aaron: What trends are you following in the cannabis industry?

Bill: I was one of the first medical operators to support legalization, so I have certainly followed legalization trends. I’ve looked at some other states in our region in terms of growth and legalization.

We’re trying to stay a regional supplier and producer so that we are locally grown. We believe the southwest of Colorado is optimal for outdoor cannabis cultivation.

At Maggie’s Farm, we have followed an organic trend from the beginning and I think that’s becoming more of a trend now. We recently received Clean Green certification to that effect. Our goal is to try to provide the healthiest product at a good value to the market.

I believe that all of the products that are made in the cannabis world come from the flower. Downstream products are only as good as their ingredients. It all starts with the flower. So, we focus on producing a clean, top-shelf quality flower that is produced outdoors.

Aaron: How do you define local?

Bill: Local is staying in the climate that is optimal with the least amount of carbon footprint to the earth. That also means trying to operate so that we’re not moving a lot of product across long distances.

We’re trying to set up farms that are in optimal climates. There is a two or three-state region that I believe is the optimal climate for outdoor marijuana cultivation in our country.

Aaron: What states are those specifically?

Bill: I think Colorado and New Mexico, primarily.

Aaron: What geographies is Maggie’s farm currently in?

Bill: We’re in southern Colorado. We don’t go into the plains of Colorado.

Aaron: So Colorado state only right now?

Bill: Yes. The wet mountain range is one of the mountain ranges that we are in. I’ve also cultivated in the La Plata mountain range.

Aaron: What specifically is it about that region that makes it conducive to cannabis growing?

Bill: I think if you get the right elevation and the right microclimates within those elevations, and you have the number of sunny days that Colorado offers in those areas – the intensity of the sunlight, and the cool nights – all those things are factors that coincide in these areas that we like to cultivate in.

Aaron: We’ve been talking about outdoor growth. Does Maggie’s do any indoor?

Bill: No. We’re essentially an outdoor farm. We do a little bit of breeding and we’ve got starter houses, greenhouses and hoop houses for that purpose. We’ve got one greenhouse that we use for some wholesale, but we are primarily outdoors.

Aaron: How do you go about selecting the genetics or evolving the genetics to meet your local environment, given that you’re growing outdoors?

Bill: A lot of it is honestly through testing and experimentation, historically. You just cultivate and harvest and see how the genetics performed, you know? You test, you take test inputs, you take customer reviews, and blind test results from the team and from the customers and you consider all those facts.

Aaron: Do you produce and use your own seeds or are you purchasing those?

Bill: We have done both. I think I’ve probably created somewhere north of 800 different strains at this point. So, we’ve got a huge seed bank. We do also buy from vendors and experiment with some of those genetics as well.

Aaron: Do you market your seeds in Colorado?“I don’t think that you can get anywhere near the terpene value indoors that you can outdoors.”

Bill: We do not.

Aaron: How did you settle on outdoor-only as the strategy for Maggie’s?

Bill: I believe outdoor is a premium flower. I think it has less impact on the earth. I think that there is a lot less pest mitigation than there is indoors, which makes it a healthier, cleaner product. You don’t have to mitigate the concentration of pests that you get in temperate climates of stagnant corners of greenhouses and buildings that you cultivate indoors. Therefore, you never get into the situations as often or as intensely, where you might have to really work hard at mitigating your pests. You can use the natural predator insects you can introduce and oftentimes they survive and they create their own climates and it’s a more natural, healthier product.

I don’t think that you can get anywhere near the terpene value indoors that you can outdoors. You just don’t have the value of the sun, which nothing compares to. You can hold up as many high wattage bulbs as you want and you don’t even pale to the sun and the effect that the sun has on the flower.

Aaron: What are some of the challenges of growing outdoors that you see frequently?

Bill: You have to be nimble. You can’t rely completely on a schedule. You’ve got to be able to shift around in your planting days and your harvest dates.

You’ve obviously got to be on your toes all the time for weather changes. Higher humidity years can tend to bring more insects or pests. Some years you’ve got higher winds than other years. This year, we had a snowstorm on September 9, which left nine inches of heavy wet snow on one of our farms. So, you’ve got to be nimble, very proactive and ready for those kinds of weather events that happen in very short notice.

Aaron: We mentioned Clean Green Certified® briefly. Can you explain more about the Clean Green certification and why that’s an important thing for you at Maggie’s?

Bill: The choice to become Clean Green Certified® was really an effort to validate the organic process that we have. We vetted out what we believe was and still is the premier, organic criteria certification endorsement in the market for cannabis. To this day, they really do an ethical, vetting-out process whereby if you fail the parts of any of the soils that are sent to federal-licensed labs, you do not get your endorsement. The owner of Clean Green also had a mother company that was an endorser of other agricultural products such as coffee, wheat and dairy.

Aaron: How would you compare Clean Green Certified® to USDA Organic?

Bill: Identical. When the federal government legalizes, we are poised to automatically convert to a USDA Organic certification and endorsement. The processes the founder and owner of Clean Green uses to test cannabis is the same process used to test other agricultural industries. For plants, he takes random samples of soils throughout a cultivation field and sends them to a federal-licensed lab where they test for impurities.

Aaron: Did you decide to get your Clean Green certification due to pulling from the market, or is this more something you decided to do internally as Maggie’s Farm?

Bill: I decided to do this internally. I wanted to be recognized for all of our organic efforts and I wanted to let people know that we have a safe product that doesn’t have synthetics in it. Even to this day, a lot of people in Colorado unlike the coastal states like maybe California are still pretty unaware of a Clean Green certification or even the fact that there is an organic process for cannabis or marijuana. So, it’s really just to let our customers know that there is value in a safe, healthy choice for them.

Aaron: What kind of products do you create at Maggie’s farm?

Bill: We grow flower. We are also a big producer of a very high-quality pre-roll. We are developing promoted products as well.

Aaron: Do you do fresh frozen?

Bill: We do some, yes.

Aaron: Are you selling direct to the dispensary or to manufacturers?

Bill: We finally had produced some excess. So, we started wholesaling flower this year and lots of high-quality shake for concentrates to concentrate makers. Our customer is typically a little more of a mature customer. I don’t want to say necessarily older, but I think we probably do hit a little bit of a higher, more experienced, health-conscious, connoisseur customer.

Aaron: Can you give me an idea of some of the regulatory challenges in Colorado that you’ve faced in the past or are facing today?

Bill: The perpetual change of regulation has been a challenge. Being a competent operator in cannabis means getting used to the change and having the resources to be nimble with compliance. We haven’t had common problems such as metals, mold or mildew issues. However, we have had some hardware issues, which required us to change cameras along with other technical intricacies.

Aaron: How many acres do you have?

Bill: We have about 30 acres of secured premise cultivation.

Aaron: Is that all managed in-house or sublet?

Bill: It’s all managed and operated exclusively by Maggie’s Farm.

Aaron: What’s next for Maggie’s Farm? What are you excited about?

Bill:  We want to continue to put a higher scale of a very healthy, quality, value flower out there and to be able to offer that to more states initially states that are within our region and eventually states across the US. Also, we will continue to do our best to meet the growing demand for healthier choices in general.

Aaron: Lastly, what are you personally interested in learning more about?

Bill: How we can continue to be as earth-conscious as we can be? How we can continue to look for ways to give back to our communities? How we can continue to operate as a view of made in the USA and to try to just support local regional and national products and vendors? Just how to be more aware and always look for opportunities for self-improvement.

Aaron: That concludes the interview, thank you Bill!