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inside this

10.

issue.

contents: Q1 2018

Editor-In-Chief Jamie Solis associate Editor Ashley Bennett Editorial Benjamin Adams coordinator

Eager Expansion California is attracting the attention of outof-state cannabis business owners who are looking to cash in.

photographers Jon Gilhooley, Tonya Perme, Eric Stoner, Steve Terrebonne

From Beer to Cannabis CEO of beer company Lagunitas is mixing terpene-infused with cannabis and taking things to a whole new level.

Editorial David Branfman, Esq., Contributors Devon Brown, Hilary Bricken, Jasen T. Davis, Julie Hamill, Emily Manke, Meital Manzuri, Michelle Mabugat, Nicole Potter, Addison HerronWheeler

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Art Director Steven Myrdahl Production Michelle Aguirre Manager

On Hold

18.

sales director Joe Larson

With California’s testing requirements on recreational cannabis still a work in progress, it’s the responsibility of consumers to ensure they purchase safe product.

High Risk, High Reward Cryptocurrency is sweeping the nation—is it too risky to be the banking solution for the cannabis industry?

20.

Account Alex Brizicky, Eric Bulls, Executives Kim Cook, Molly Clark, Lee Moran, Casey Roel, Garry Stalling, Annie Weber Shayne Williams, Vic Zaragoza

general Manager Iris Norsworthy office Manager Mikayla Aguilar digital content Hannah Lemley manager

24.

The perfect solution

Distribution Cruz Bobadilla Manager

From business to entertainment, many cannabis events are being removed without refund by one of the largest event platforms.

LEGAL 26. Attorney General Jeff Sessions rescinded cannabis protections across the country—will the industry change as a result?

TRENDS 28. Here is everything convention vendors need

to know about elevating the presentation of a trade show booth. 4

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in EVERY issue. 06. news bytes 08. by the numbers

Publisher David Comden

Culture B2B Magazine® is published quarterly and distributes 20,000 copies at over 6,000 locations throughout the United States and Europe. No articles, illustrations, photographs, or other matter within may be reproduced without written permission. Culture B2B Magazine® is a registered trademark. All rights reserved.

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n e w s

bytes

First Batch of Medical Cannabis Cultivators Approved in Pennsylvania On Dec. 27, 2017, Pennsylvania Gov. Tom Wolf announced that eight medical cannabis grower/processors have been approved

to begin cultivation of the state’s first batch of medical cannabis. He also announced that about 10,000 patients have already registered with

the program. “We have four grower/processors in the final stages of their inspection process,” said Dr. Rachel Levine, Pennsylvania’s acting secretary of health. “We have been working with them to make sure they are meeting all of the standards set out by the regulations and their facilities are safe and secure.” Medical cannabis is expected to become available in the first part of 2018. Patients suffering from 17 illnesses are eligible to register with the program. The approved businesses are Cresco Yeltrah, Franklin Labs, GTI Pennsylvania, Ilera Healthcare, Pennsylvania Medical Solutions, PurePenn LLC, Standard Farms and Terrapin Investment Fund.

Banks Continue to Warm Up to Cannabis Businesses Since January 2017, the number of depository institutions in America that are willing to provide services for cannabis businesses has increased 18 percent. In January 2017, 340 banks were allowing cannabis businesses to access their banking services, and as of the end of September 2017, there were 400 banks willing to embrace cannabis businesses, according to the Financial Crimes Enforcement Network (FinCEN). Thanks to the Freedom of 6

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Information Act, FinCEN must periodically report on information that is frequently requested. A 2014 amendment to the Financial Services Appropriations Bill blocks the Treasury Department

from using funds to punish financial institutions that provide services to statelegal cannabis businesses, but unfortunately, it wasn’t enough to encourage banks to accept those types of businesses.

Medical Marijuana Inc. Continues to Expand Overseas Medical Marijuana Inc. announced on Dec. 8 2017, that its subsidiary Kannaway® has expanded business into the untapped European market. The company’s network will be capable of distributing organic hemp-based products to all citizens of the European Union. In addition, the products will be sourced out of Europe. “We are extremely excited to take this next step in our international expansion by becoming the first direct selling company to feature phytocannabinoid based products in Europe and to share our products, culture, and mission throughout Europe,” stated Blake Shroeder, COO Medical Marijuana Inc. “We have always planned to bring our revolutionary products to a worldwide audience, and Europe is the perfect next step for our company.” Kannaway® specializes in hemp-based botanical products. This is a significant opportunity for the brand to expand into Europe, as it is already operating in both North and South American countries.


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The amount of money, in millions of dollars, that the Nevada recreational cannabis market collected in cannabis products in October 2017: (Source: Forbes)

37.9

The increase in percentage of depository institutions that are currently providing banking services to cannabis-related businesses, since the beginning of 2017: (Source: Forbes)

18

The estimated amount of money, in billions of Canadian dollars, that Canadians purchased in cannabis products in 2015: (Source: BBC)

6

The number of medical professionals throughout the United States who are partnering with Skipta, a medical practitioner social networking site, to promote education about medical cannabis: (Source: The Fresh Toast)

800,000

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The percentage of adults in the United States who believe that cannabis should be made legal, as of Jan. 5: (Source: TIME)

61

The number of countries that will allow for the export of medical cannabis products, after the addition of Australia, which is expected to happen in February 2018: (Source: VOA News)

4

The number of permits that the Saskatchewan Liquor and Gaming Authority will issue to cannabis business applicants once cannabis sales begin in Canada: (Source: CBC)

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C a l i f o r n i a G r ee n R u s h O u t- o f - s tat e c a n n a b i s b r a n d s l o o k t o c a s h i n o n C a l i f o r n i a’ s r e c r e at i o n a l m a r k e t By Meital Manzuri, Esq. of Manzuri Law

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ith California’s legalization of recreational cannabis on Jan. 1, 2018, businesses have begun the exciting race to cash in on the expected $7 billion cannabis marketplace. However, since a grey market has been flourishing for over 20 years, it takes time and in-depth knowledge to set up shop in California. Getting your business established, compliant and operating in California will take time, and licenses may be limited depending on the local laws and regulations. There are three major operational considerations if you want to expand into this market with your existing out-ofstate cannabis business. Here are the steps you can take to start blazing a trail.

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Photos coutesy of Airfield Supply Co., San Jose CA

1

Keep it on Your Turf

Federal law prohibits people from transporting any federally restricted substance, like cannabis, across state lines. However, what happens when you are transporting cannabis across state lines between two states, like California and Nevada where cannabis is legal? Well, even if cannabis is legal in both states, crossing a border puts you at risk under the individual state jurisdictions along with federal jurisdiction, and you could be liable to all government entities at the same time without the protections of the Double Jeopardy Clause of the Fifth Amendment. For example, the Drug Enforcement Administration could be waiting at the border to prosecute you and transporting cannabis across a border can be considered an aggravating factor if you end up facing charges in that state for other offenses.


Consider Section 812 of Title 21 of the U.S. Code, the Schedule of Controlled Substances, which makes no distinction between a legal state, a medical state or an illegal state. Violating this section is a federal crime and could earn you a criminal record, even for the lowest tier of cannabis. Thereunder, possession of: 1 kilogram or less of hash oil 10 kilograms or less of hashish 1 to 49 cannabis plants Less than 50 kilograms of cannabis flower Carries penalties of: First Offense: Up to five years in federal prison and a fine of $250,000 to $1 million Second Offense: Up to 10 years in federal prison and a fine of $500,000 to $2 million Moreover, some legalized states have laws on the books carrying penalties for transporting cannabis across state lines.  For example, in Nevada, NRS 453.321 states that it is unlawful for a person to “import, transport, sell, exchange, barter, supply, prescribe, dispense, give away or administer a controlled or counterfeit substance”: If the substance is considered Schedule I, you could face a Category B felony, punishable by $10,000 fine and 2 to 10 years in prison. Also in Oregon, House Bill 4014 expressly forbids the import of cannabis from another state, as well as exporting cannabis across state

lines. Violating this law happens by importing or exporting: Up to an ounce of cannabis is punishable by a Class B violation: $260 fine Over an ounce of cannabis is punishable by a Class A misdemeanor: $6,250 fine Over 16 ounces of cannabis is punishable by a Class C felony: $125,000 fine and up to 5 years imprisonment Finally in California Proposition 64, Section 6.1 states: 26080. (a) This division shall not be construed to authorize or permit a licensee to transport or distribute, or cause to be transported or distributed, cannabis or cannabis products outside the state, unless authorized by federal law. Further, if it is more than an ounce of flower or four grams of concentrates, it can be charged as a felony under Health & Safety Code Section 11360, if you imported or attempted or offered to import into California, or transported or attempted/ offered to transport out of California for sale.

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Need to be a Licensed Entity in California

Due to the fact that federal law limits transporting cannabis between state lines, out-of-state cannabis businesses must register as a California entity and must be licensed from the local municipality and the state in order to cultivate, manufacture or conduct any medical or nonmedical commercial cannabis activity in CULTUREB2B.com

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California. To get a license in California you will need to have a compliant location and decide whether you need medical/adult-use licenses, or both.

3

Can I License My Current State Operations to a California Entity?

If creating and running a licensed cannabis business in California is not feasible for your circumstances, you can consider partnering with a California cannabis entity. In this case, you can license your intellectual property and partner with a cannabis business. NOTE— some are speculating that mergers and acquisitions will have to be disclosed to the licensing agencies. Once you license your operations to a California cannabis entity, or partner up (or both), you can obtain a California state trademark registration. To obtain this registration, you must be making lawful use of the mark in California state commerce at the time of your application. This could mean that you must be licensed by the state

to provide the goods and services for which you are seeking protection, and you have made your first sale of those goods or services as well. Unlike the United States Patent and Trademark Office and some states that allow for trademark “reservations,” California does not have an intent-to-use trademark application, so you must make use of your mark prior to obtaining protection.

Even though getting your business established, compliant, and operating in California might be time consuming, seeking legal advice from a California licensed cannabis firm can ease the process. Once your cannabis business is on board, you can start taking advantage of all the opportunities the cannabis industry has to offer. “The Green Rush” in California has begun! c

U.S. NA T IONAL CANNAB IS US E RAT ES AMONG 1 8 + ADULT S 2009-2016 CHANGE IN CANNABIS CONSUMPTION

2.5%

3%

PAST YEAR USE

16% 14.1%

14% 12%

+7.5 MILLION CONSUMERS WITH PAST MONTH USE

PAST MONTH USE

11.1%

10% 8%

9.1% 6.6%

6% 4% 2%

+9.4 MILLION CONSUMERS WITH PAST YEAR USE 12

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0%

2009

2010

2011

2012

2013

2014

2015

2016

Source: Substance Abuse & Mental Health Administration


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CannaCon

Taking place in one of the country’s centralmost hubs for the Pacific Northwest coast, CannaCon is an important annual event. Labeled as the place “where the cannabis industry does business,” CannaCon is a three-day event that allows business owners of every type to network, learn and grow. Attendees get hands-on experience with new products from countless vendors and exhibitors. Plus, everyone can benefit from the many seminars, which vary from topics about cultivation, compliance, extraction, marketing and so much more—the amount knowledge to be gained from an event like this is unprecedented. Best of all, if you’re unable to make it to The Evergreen State in February, you can always plan to visit the CannaCon events taking place in Michigan in June and Massachusetts in July. WHEN: Thurs, Feb. 15-Sat, Feb. 17 WHERE: Washington State Convention Center, 705 Pike St., Seattle, Washington WEBSITE:  cannacon.org

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A p p r o p r i a te Partnership Tony Magee uses his experience in craft BEER to inspire cannabis industry leaders By Pamela Jayne

“K

now your customers, tell people who you are and walk the talk.” These are the three simple rules for success in the cannabis industry (or any industry, really), according to Tony Magee, founder of Lagunitas Brewing Company, which is based in Petaluma, California. With a mix of downto-earth whimsy and sharp business acumen, Magee’s everyman nature and love of cannabis is matched only by his passion for branding products and creating a truly unique customer experience. Magee will share his 25 years of experience in the highly-regulated craft brewing industry when he delivers the keynote speech at the National Cannabis Industry Association’s Seed to Sale Show in Denver, Colorado on Feb. 7. The show, which will focus on innovation within the cannabis industry, is so important to Magee that he has made arrangements to take a helicopter from the cruise ship he and his wife are vacationing on, in order to make

it to the event he describes with great earnest as, “The most enormous honor imaginable. No matter what it costs, I wouldn’t miss talking to these guys for anything.” The rapidly expanding legal cannabis industry has more in common with the early days of the craft brewing industry than many realize, and Magee insists that they are complementary products that pair well together, despite the hesitation among some in the cannabis world to associate with alcohol. Always a standout in the craft brew industry, Magee also successfully branded Lagunitas in the cannabis world by creating brews like the Kronik, Undercover Investigation ShutDown Ale (now that’s a story!), and culminated with the creation


“ F o r u s , I d o n ’ t th i n k w e ’ r e i n the bee r b u s i n e s s a s m u c h a s w e ’ r e i n the t r i be b u i l d i n g b u s i n e s s , a n d o u r b r a n d r i d e s w i th th a t t r i be . F o r m a r i j u a n a producers, distributors, sellers, w h a te v e r . . . c r e a t i n g a b r a n d w i l l m a tte r . T hey a r e g o i n g t o h av e t o f i n d wa y s t o m a k e i t p e r s o n a l . ”

of SuperCritical Ale, a cannabis terpene-infused craft beer that was released in limited quantities in August of 2017 in partnership with AbsoluteXtracts. The similarities between the early craft brew industry and the newly legal cannabis industry are hard to ignore. Both operate under heavy regulation, an ever-changing business landscape, and both industries are largely misunderstood by outsiders. Magee stresses how fast he believes the legal cannabis industry is going to change, based on his knowledge of the early days of the craft brewing industry, and he also knows that early success has nothing to do with long-term success. “You have to pursue early success so that you can survive, but you also have to be thinking about the future,” Magee told CULTURE B2B. “The trend of today is just that, a trend, so businesses have to buckle down and get ready for the long haul if they expect to be anything other than a flash in the pan, as many once successful craft breweries became due to being careless about maintaining the relationship they hold with their customers.” Talking the talk does not equate to walking the walk. “People have to get to know you, and those relationships have to be personal.” Magee continued to explain how branding is of utmost importance to the overall statement and the success of a

business; it’s what customers will remember long after they have used a product. “Ultimately, if you have a brand, the brand is different from the product. The product has to be beautiful and has to serve a need, but the brand is about personal relationships,” Magee said. “For us, I don’t think we’re in the beer business as much as we’re in the tribe building business, and our brand rides with that tribe. For marijuana producers, distributors, sellers, whatever . . . creating a brand will matter. They are going to have to find ways to make it personal. Just having a cute label isn’t enough, just having a clever name or a strong variety or a flavorful variety isn’t enough.” Magee further explained that cannabis companies need to create a lifestyle that overall encompasses a brand. “The brand is a three-dimensional thing that acts and lives in the world with the people that partake of it,” Magee said. “That will be a big challenge, because the black market marijuana industry would never allow for space to create a brand because you were trying to keep your head down, not put your head up. It’s a big change for people born of the black market.” On the subject of changes, Magee gives warning of the inevitability of huge corporations like Unilever and Nestle entering into the cannabis marketplace with the monstrous benefit of already having a household brand established, saying, “It’s what they do.” As for a possible future for Lagunitas in the cannabis industry, Magee chuckles and says, “No, we’re a beer business. We’ll be good customers to the cannabis industry, but that will be it.” c

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T he T e s t of Time Consumers in California must be diligent about finding safe cannabis in lieu of testing requirements By Benjamin M. Adams

C

annabis legalization is a process, and in California, testing the safety of recreational cannabis is still an element of legal regulations that is in progress. Increasingly stringent lab testing requirements on cannabis products in California will be phased in over the next year. The phases, however, will start off slow and will eventually usher in a new era of safe quality cannabis. In the meantime, experts have warned California cannabis consumers by declaring “buyer beware.” This is because some untested cannabis products will continue to be available for sale at cannabis dispensaries and stores until the complete testing requirements take effect on Dec. 31. Steep Hill Labs, Inc. is widely considered to be a global leader in cannabis lab science. “Starting Jan. 1 in California, safety testing will be phasing in,” Dr. Donald Land, chief scientific consultant of Steep Hill Labs, Inc. told CULTURE B2B. “Early on, things will be similar to last year—only a very small fraction of the cannabis [that is] sold legally will have been tested for safety. Just because a product has a label with the THC or CBD levels, doesn’t mean it’s been safety tested. However, products sold that are not safetytested are now supposed to have a ‘Not Tested for Safety’ label, but even that might not be required or enforced right away.” Land is also a Professor of Chemistry at University of California, Davis. 18

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To truly identify if a cannabis product has been properly tested for safety, Land explained, consumers will have to ask retailers three questions:

1. Has this been safety tested? 2. By WHICH lab? 3. CAN I SEE the results? For the time being, asking these questions is one of the only ways that consumers can attempt to determine if the cannabis products they are purchasing are safe for consumption. “People who pay for safety testing will be more than happy to answer ‘yes’ to all of the above,” Land said. “If it’s not a reputable lab belonging to the Association of Commercial Cannabis Labs (ACCL), you might want to call, ask them about their testing practices and if they provide testing reports. By Dec. 31, 2018, everything on the shelves should all be safety tested. Until then, it’s still caveat emptor, but at least


there will be more information for the patient and consumer to make an informed decision.” Many other companies are members of the ACCL including The Werc Shop, CW Analytical and Pharm Labs. Lab testing of cannabis products in California falls under the oversight of the California Bureau of Cannabis Control (BCC). After July 1, testing becomes more stringent. At that time, “moderate relative health risk” contaminants will be tested, and by the end of 2018, the state will include “minor relative health risk” testing. In addition, cannabis products will be tested for foreign material. According to the BCC, laboratories will test for cannabinoids, foreign

materials, heavy metals, microbial impurities, mycotoxins, moisture content and water activity, residual pesticides, residual solvents and processing chemicals and finally, terpenoids. Harvest batches will not exceed 50 pounds, and samples collected from batches weighing more than 50 pounds will be deemed invalid. After testing, the bureau will generate a certificate of analysis that will reveal the results and determine if a business passes or fails. Lab testing gives both consumers and business owners the peace of mind that they desperately need. With the implementation of cannabis lab testing requirements, the cannabis industry elevates itself to the level of other regulated industries. c

California is taking the spotlight in the cannabis world, but it’s important not to forget the many states on the east coast that are ramping up their medical and/ or recreational cannabis statuses as well. Returning for its fourth year, the New England Cannabis Convention is creating a hub for over 6,000 attendees to visit and experience. Presented by The New England Cannabis Network, this massive event is one of the largest of its kind on the coast, bringing in over 150 exhibitors and 100 speakers. This means that there are many opportunities to network with other like-minded business professionals. Of course, there will be many other opportunities to experience this unique convention as it visits Vermont, Maine, Rhode Island, and the not-soeast-coast state of Nevada later in 2018.

The 4th Annual New England Cannabis Convention

“ E a r ly o n , th i n g s w i l l be s i m i l a r t o l a s t ye a r : o n ly a v e ry s m a l l f r a c t i o n o f the c a n n a b i s s o l d l e g a l ly w i l l h av e bee n te s te d f o r s a f ety. J u s t be c a u s e a p r o d u c t h a s a l a be l w i th the THC or CBD levels, doesn’t mean it’s bee n s a f ety te s te d . ”

WHEN: Sat, March 24-Sun, March 25 WHERE: Hynes Convention Center, 900 Boylston St., Boston, Massachusetts WEBSITE: www. necann.com

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Cryptic Coinage T h e l o w v i a b i l i t y, h i g h r i s k o f c r y p t o c u r r e n c i e s m ay n o t b e t h e best banking solution By Julie Hamill, Attorney

T

he cannabis industry needs a banking solution and cryptocurrencies—blockchain-based digital tokens or coins that enable transactions without government or other intermediary—are gaining popularity. Though a decentralized currency untethered to a bank or government seems like an attractive alternative to using cash, cryptocurrencies are unlikely to be the knight in shining armor to rescue the cannabis industry due to their high risk and low viability. There has been no widespread adoption of any particular cannabis coin in the industry, and even if there were, cryptocurrencies in the cannabis space are too unstable to be used to replace dollars in everyday transactions. The problems and risks inherent in cryptocurrencies increase when cannabis is added to the mix. The federal government treats transactions involving cryptocurrency and controlled substances harshly, as demonstrated by the prosecution of Silk Road’s alleged creator Ross Ulbricht, who is currently serving a life sentence without the possibility of parole. 20

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Th e Da n ge rs of C ryp toc u rre n cy Cryptocurrencies can be purchased on the secondary market via exchanges and initial coin offerings (ICOs), which companies are increasingly using to raise capital. Many ICOs follow the same pattern: (1) create a media blitz using a social media “influencer” to hype the crypto, (2) release a whitepaper touting a yet-to-be-built ecosystem where the token will be utilized and emphasizing secondary market trading potential for the token, (3) at the peak of the hype, open the token sale to raise money, and (4) enable trade on secondary markets. Cryptocurrency markets provide substantially less investor protection “For a than traditional securities markets, c ry p t o c u r r e n cy t o with correspondingly be v i a b l e , i t m u s t greater opportunities for be w i d e ly a c c e p te d fraud and manipulation. Cryptocurrencies a n d u s e d by n e a r ly are highly volatile a l l p l a ye r s i n i t s and risky—a $1,000 b u s i n e s s n et w o r k . investment can become $100,000 overnight, but I n the c a n n a b i s the reverse is also true. s pa c e th a t i n c l u d e s The Internal Revenue Service (IRS) and the U.S. c u s t o m e r s , r eta i l e r s , Securities and Exchange c u lt i va t o r s , Commission (SEC) are m a n u fa c t u r e r s , zeroing in on ICOs and investors. In December, l a n d l o r d s , a tt o r n ey s , the SEC halted an ICO d o c t o r s a n d ta x i n g by Munchee Inc. for agencies.” securities law violations.


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Companies issuing ICOs typically claim that their tokens do not implicate securities laws violations because they are utilities rather than securities under a Howey Test. However, the economic realities, not the label, determine whether an offering is a security and according to the SEC, most ICOs carry the key hallmarks of securities offerings. Because no ICO has registered with the SEC as of December 2017, many ICOs have run afoul of securities laws. The IRS treats cryptocurrencies as property, not currency, and it is monitoring cryptocurrency exchanges to ensure investors are reporting and paying taxes on cryptocurrency gains. In November 2017, a federal court ordered popular cryptocurrency exchange Coinbase to provide the IRS identifying information for investors with more than $20,000 in annual transactions on its platform.

industry’s preferred token, because it provides a unique advertising solution that can only be accessed using DopeCoin. Paragon Coin contends its coin will be the coin of choice because of its ParagonCoin-only niche real-estate solution. We have identified only one retailer that accepts payment via a cannabis cryptocurrency—an internet seller of vaping products that accepts payment via DopeCoin, Litecoin and Bitcoin. If other cannabis companies are using and accepting cannabis cryptocurrency, they’re not sharing it publicly. Some retailers

C an nab is C ryp to cu rrenc i es a re no t a Vi able Ban k ing Soluti on f or t h e Cannabis I ndu s try Cryptocurrencies in the cannabis space include PotCoin, CannabisCoin, DopeCoin and Paragon Coin, among others. Some are actively traded on the secondary market while others are in their infancy. Nearly all cannabis cryptocurrency companies claim to be developing an ecosystem where their coin will be the preferred or only method of payment. PotCoin explains to retailers that its networks will grow as the coin becomes more widely adopted, with the goal of using only PotCoin for transactions with customers and vendors. DopeCoin claims its own version will be the 22

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with whom we’ve spoken state that they will not touch cryptocurrencies for fear of scrutiny from state and federal regulators. For a cryptocurrency to be viable, it must be widely accepted and used by nearly all players in its business network. In the cannabis space that includes customers, retailers, cultivators, manufacturers, landlords, attorneys, doctors and taxing agencies. If it is not widely accepted, its users are limited to exchanging it among themselves. That could work if the value of

the cryptocurrency is stable enough to reliably convert to dollars for parties who don’t use the cryptocurrency. But given the dramatic fluctuations in the cryptocurrency market over the past several months, it seems unlikely cryptocurrencies will soon stabilize in value.

Investment Risks The value of a cryptocurrency is speculative and ultimately depends on the viability of its ecosystem. On the secondary market, a coin’s value is mostly tied to hype and to speculation that a certain ecosystem will succeed. If an ecosystem never comes to fruition or the coin cannot gain sufficient market share, the coin will have little actual value. Before purchasing cryptocurrency or an ICO interest, the SEC recommends you ask (1) whether those promoting the project have been paid to do so, (2) what legal recourse an investor has if something goes wrong, and (3) whether new investment proceeds are used to cash out other investors—which would indicate a Ponzi scheme. Cryptocurrency traders make and lose a lot of money on cryptocurrency exchanges. Pump and dump schemes and hacks are commonplace, leading to big losses for some investors. Take for example the recent hacks of South Korean exchange Youbit, which resulted in the loss of one-fifth of its clients’ holdings and the exchange filing for bankruptcy. Investors should proceed with caution, and be sure to track and report any gains in compliance with IRS guidelines. Given cryptocurrency’s high risk and low viability, the cannabis industry needs to look elsewhere to solve its banking crisis. c


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Eventful Opportunities E v e n t H i w a r m ly e m b r a c e s a l l t y p e s o f c a n n a b i s - r e l at e d e v e n t s By Benjamin M. Adams

O

ver the last year, mounting frustration festered over dropped events, lost time and wasted resources that afflicted members of the cannabis industry after some cannabis-related events were allegedly dropped from the popular platform Eventbrite. Event organizers reported their accounts were frozen, events were dropped—even some ticket sale purchases were not immediately refunded. Eventbrite defended its intentions, but confirmed that it will continue to drop events that it deems as inappropriate. “We ticket millions of events each year, including some related to cannabis,” Eventbrite Corporate Communications Lead Amanda Livingood told CULTURE B2B. “To host any event on our platform, our terms require organizers and their events comply with all applicable laws. While various activities related to cannabis are permitted under certain states’ laws, they remain illegal under federal law. This means when we become aware of events where cannabis is included with a paid 24

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ticket or registration, or consumption is promoted in the event listing as the primary purpose of the event, we look to remove the event regardless of where it is taking place.” For President and CEO of EventHi, Ali Fahkri, the ensuing fallout was a blessing in disguise—especially for companies that openly embrace cannabisrelated events. He saw a need for a cannabisfriendly event website after he experienced a similar occurrence with another event hosting platform. “We started developing the concept and the idea of EventHi in late 2014, when we had our event terminated from the software company that we were using to manage our event and sell our tickets,” Fakri told CULTURE B2B. “We quickly realized that all event platforms that help event organizers manage and sell their tickets prohibit cannabis events from using their platform.” Fakhri’s frustration grew as he went to other platforms to post event listings but kept running into the same issue—all because they don’t want to promote cannabisrelated events. The company considered Fakhri’s business a prohibited merchant and considered the tickets he was selling as prohibited transactions. The unfolding events led to an exodus from conventional event sites to cannabis-friendly platforms like EventHi.

“These unfortunate incidents sparked the idea of having a centralized platform built specifically as a marketplace for cannabis events,” Fakhri explained. “EventHi’s marketplace would help cannabis event organizers who were having the same issues that we were having, to have a safe hosting platform, while also providing one location to find any kind of event for people who like to attend cannabis-related events.” Before Fahkri started building the software, he wanted to make sure that a stable market did indeed exist for cannabis events and that there were enough events to build a business around. To his surprise, he found out that in 2016, attendees spent over $100 million on tickets to go to these cannabis-related events. In 2017, that number tripled. Fakhri also found that companies in the cannabis industry were using events as a marketing channel to reach out to their clients and educate them on their products. “When looking at EventHi, we [were] built on two main ingredients—the first one was to offer users a safe hosting event management platform for them to publish their events so they wouldn’t worry about issues because of the type of event they were having. The second ingredient was to help connect people together off-line by using technology.”


Cannabis may be a thriving industry now, but it was originally born from the passion of cannabis cultivation. With decades of experience, many business owners and employees have worked to perfect the art of growing cannabis, even before the plant was approved for medical use in various states. Now, we look to the industry’s most practiced professional cultivators, the best of whom will be at the Cannabis 2018 Cultivation Conference. Aside from the large number of attendees and vendor participants, the conference will feature a varied selection of panels on topics such as outdoor cultivation, plant nutrition, greenhouses and compliance preparedness. Of course, no event like this one would be complete without noteworthy speakers such as Hezekiah Allen, Dr. Raymond Cloyd and Todd Hill, among others.

Cannabis 2018 Cultivation Conference

“ T he s e u n f o r t u n a te incidents s pa r k e d the i d e a o f h av i n g a centralized p l a t f o r m b u i lt s p e c i f i c a l ly a s a m a r k et p l a c e for cannabis events.”

Event organizers must provide a reason for dropping events from platforms. Unfortunately, Fakhri added, those reasons are very vague and unspecific to the underlying reason the event has been shut down. Not even ancillary cannabis business events are off the hook. “Even if you get permission from the salesperson or whoever in the company that gives you the okay, you still can have issues as these companies are continuously applying a machine learning algorithm (AI), using millions of data points to automatically flag and take down activities that violate the platform’s Terms of Use.” Another major selling point is the growing amount of financial resources that are willing to back up companies like EventHi. “I have been going around for 11 months speaking with different banks and credit unions, about working with EventHi, and as you all my probably imagine, I got the door shut in my face quite a few times,” warned Fakhri. “But with all this trouble I had to go through I finally found a credit union bank that was willing to work with me in 2017 called Safe Harbor Private Bank, which is a separate branch from the actual bank called Partner Colorado Credit Union. We announced the partnership between my company and the bank publicly on July 7, 2017 to the State Treasurer of California John Chiang at the Cannabis Banking Working Group in San Diego as a California company.” Being able to work with a bank like Safe Harbor allowed Fakhri’s business to operate at the highest level of compliance. The bank monitors every transaction that goes into his account while also filing an Suspicious Activity Report quarterly with FinCEN for EventHi. Event organizers can find resources and licenses through the appropriate governing body that handles permitting and licensing. For example, in California, the Bureau of Cannabis Control issues cannabis event organizer licenses to host a cannabis event. Fakhri believes that California is going to be the last piece in a “domino effect” in the “War on Drugs” where we are going to see more states legalizing cannabis recreationally. “Now this journey won’t be immediate, especially with the latest announcement by Jeff Sessions, but it will definitely lead up to it especially if we as an industry can keep reaching out to our political and government officials in all of our states and using the voice that we have been building year after year to state our opinion on cannabis.” c

WHEN: Mon, March 12-Wed, March 14 WHERE: Oakland Marriott City Center, 1001 Broadway, Oakland, California WEBSITE: www.can nabiscultivationcon ference.com

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LEGAL

A War on Progress How the rescinded Cole Memo will affect the cannabis industry By Kimberly Simms

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n Jan. 4, just three days after California opened its newly regulated cannabis market, United States Attorney General Jeff Sessions announced his decision to rescind the 2013 Cole memo. The repealment of the Obama-era protections for states that have legalized cannabis is outrageous, economically unsound and a move criticized by many. The Cole Memo was a Department of Justice cannabis-specific guidance memoranda that instructed Untied States attorneys to focus their limited resources on eight enforcement priorities including preventing distribution to minors, preventing revenue from the sale of cannabis from getting into the hands of drug cartels and preventing violence and the use of firearms in the cultivation and distribution of cannabis. Although the Cole Memo did not affect cannabis’ status as a Schedule I substance under the Controlled Substances Act, it has provided some level of assurance for the 29 states that have adopted some form of legalized cannabis. While the news of Sessions’ decision to rescind the Cole Memo is unsettling, the reality is the new memo does little to change how the Department of Justice will pursue lawful cannabis businesses. It does not specifically encourage U.S. prosecutors to open enforcement actions against cannabis business. 26

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Instead, the Jan. 4 memo restates the Department of Justice’s current position, that U.S. attorneys have the discretion to determine whether their limited resources are best used to enforce federal law against cannabis crimes in states that have legalized cannabis. Unfortunately, this discretion may create varying results across the country and may even provide different enforcement standards within a given state. U.S. Attorney Adam Braverman, of the Southern District of California, has expressed his commitment to enforce the laws enacted by Congress and stressed that the cultivation, distribution and possession of cannabis remains a violation of federal law. Sessions has a history of pursuing a crusade to bring back the failed “War on Drugs.” Unfortunately, Sessions is vastly out of touch with the will of voters. According to Politico Magazine, nearly 70 percent of Americans believe in allowing some form of legalized cannabis. Sessions’ decision has not gone unnoticed. There has been tremendous bipartisan pushback against this action. Politicians in states that have legalized cannabis have been outspoken about the benefits that the regulated cannabis industry has brought to their states. Benefits have included the creation of more than 100,000 well-paying jobs and diverting hundreds of millions of dollars in sales of cannabis from drug cartels to new tax revenue for infrastructure, education and law enforcement. Notably, California representatives have drawn a hard line against Sessions’ decision. Congresswoman Nancy Pelosi has stated, “Attorney General Sessions, your unjust war against Americans who legally use marijuana is shameful and insults the democratic processes that

played out in states across the country.” Likewise, Lt. Gov. Gavin Newsom responded saying, “Jeff Sessions has destructively doubled down on the failed, costly, and racially discriminatory ‘War on Drugs,’ ignoring facts and logic, and trampling on the will of California voters. Have no doubt—California will pursue all options to protect our reforms and rights.” We expect that Sessions’ decision will have a limited impact in California in the immediate future. In response to Sessions’ decision, the Bureau of Cannabis Control Chief Lori Ajax, has stated, “We expect the federal government to respect the rights of states and the votes of millions of people across America, and if they won’t, Congress should act. Regardless, we’ll continue to move forward with the state’s regulatory processes covering medicinal and adult-use cannabis.” That said, there certainly may be some real impacts that may form due to Sessions’ recession of the Cole Memo. Most likely Sessions’ decision could discourage more traditional investors who were just getting more comfortable with the cannabis industry. Additionally, the memo could have a chilling effect on other professionals offering their much-needed services to the cannabis industry. It is unclear whether Sessions truly hopes U.S. attorneys will crackdown on the state licensed cannabis businesses or simply hopes to disrupt the cannabis industry with uncertainty. Nevertheless, Sessions has a lot to learn about our industry and the courageous people who make it up. The cannabis industry has become accustomed to wavering politicians and has blossomed in a state of ambiguity. We have come too far and will not back down without a fight! c


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TRENDS

Brilliant Display Step up your trade show game courtesy tips from industry leaders By Addison Herron-Wheeler

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ow that you’ve compiled a list of the cannabis trade shows you have to hit this year, it’s time to consider how you’re going to setup your booth. After all, competition in the cannabis industry continues to grow with each passing day, and it can be tough to make your booth stand out from the crowd. No one wants to walk by a booth full of bored volunteers looking at their phones, or pass an unmanned stall that looks generic and uninviting. With your revamped marketing materials for the new year in hand, here are a few techniques that will help you up your trade show game and get even more traction at your booth.

T he k ey i s t o c r e a te a n i n v i t i n g e n v i r o n m e n t th a t a l l o w s p e o p l e t o be a b l e to relax and chill. 28

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S ta n d O u t from th e C row d “It’s about doing something that’s different and something that will draw attention to you in a sea of booths,” explained Chris Walsh, vice president of editorial and strategic development at Marijuana Business Daily, the company that sets up the well-known trade show MJBizCon. “You have some of the companies that make kind of selfcontained growing pods or facilities. Something like that makes a major footprint on the show floor, and you can see it across the hall. Those have been successful at attracting people, and mock dispensaries have been particularly effective, when you’re trying to create something that resembles a dispensary or a recreational store.” In other words, have more material to your booth than just some literature to take, one or two cheap freebies, and don’t hire just anyone to watch over it all. The more creative

your booth is, the more likely strangers (who could become potential clients) are to stop by. “We always strive to have captivating, interactive booths,” said Chris Whitener, executive director at MagicalButter, a company that excels when it comes to its trade show presentation. “Often times, we offer live cooking demonstrations, showcasing our unique products and the exciting process of cooking with cannabis. In order to draw in a crowd, you must appeal to a person’s five senses. MagicalButter does this with ease through engaging cooking experiences you can see, smell, hear and often times taste. The key is to create an inviting environment that allows people to be able to relax and chill.”

B rin g K n ow l e dge a b l e B ooth S ta ff Other rookie mistakes, according to the experts, include staffing booths with volunteers who don’t care, folks who lose interest in manning the booth or leaving the booth completely unattended. It’s also not a good idea to try and hire people who don’t know much about your product, to try and sexualize your product or services. While there’s something to be said for the appeal of an attractive person, experienced industry professionals will see right through the marketing strategy. “Be sure that your staff and [yourself] know your key messaging inside out,” advised Mike Weiss, president and founder of Nature’s Dream


cannabis company. “Having informed staff that can answer questions intelligently is more effective than hiring ‘booth babes’ who are experts at attracting attention—because you want your product or service to be the main attraction and not those pretty hostesses. Lastly, if you are going to exhibit, be sure that you bring enough people to work your booth so attendees won’t have to wait to make inquiries, because most times they’ll just walk on by if there is no one to speak to.”

Pa rtn er Up

Often, two heads are better than one—especially when it comes to trade shows. If you want to make your own booth stand out and do something cool and unique, finding someone to share the booth with could be just the ticket. Often, with the combined efforts of two booths, some really creative designs and concepts can be achieved. “We have found that collaborating with other ancillary or support businesses can help drive traffic,” said Erik Knutson, CEO of CanCore Concepts Inc. and owner of the Keef Cola product line. “The trick is to bring synergy to your product or service offering. For example, in the past we partnered with Thompson Duke Industrial, a vape cartridge filling company that is used in conjunction with our OilStix Technology line of vape devices. This past year in Vegas we partnered with a subsidiary of TerraTech and wrapped a Keef Cola automated dispensing kiosk for display at the booth.”

C o ns u lt a Prof essi onal

While all these suggestions will give you a major leg up, sometimes you need some professional help to bring things to the next level. If so, you can try companies that provide professional consulting and design for trade show booths and presentation. RND Exhibits International, based in Illinois, prides itself on renting display materials to cannabis companies, providing design and custom booths and helping with trade show displays. “Ensure your dominance on the show floor over a sea

of generic stands with a custom constructed trade show exhibit,” RND Exhibits International boasts. “Reflect your unique attributes from the main structure to product displays and graphics down to the smallest details. Our full wood and metal shop can make any concept a reality from large to small. Inlines and islands of all sizes can benefit from a bespoke display tailored to how you’d like to communicate with show attendees.” Listen to the experts, and take their advice. These tips and practices will help you make your business and your products become more noticeable and help make a bigger impact at the next cannabis trade show you attend. c

MEDIUM AND NUTRIENTS LEAD CULTIVATION SUPPLIES SALES 22.3%

MEDIUM

21.8%

NUTRIENTS

12.8% 4.8% 4.7% 33.7%

GROWERS SPENT

$5.3M on nutrients and medium

GROW LIGHTS

at grow generation stores in colorado between jan. 2016 and jan. 2017

PEST CONTROL ORGANICS

OTHER

Source: New Frontier Data

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Culture B2B Q1 2018  
Culture B2B Q1 2018