Everything You Need To Know About The Cannabis Industry
With the legal status of medical and recreational marijuana in constant flux, and varying wildly from state to state, the opportunities and risks of this market are mind-alteringly complex. Here are the basics.
Although it remains illegal at a federal level, marijuana is one of the most exciting growth industries in the US as it becomes legal in some states, attracts investment, and becomes a vertical that can utilize multiple technologies ranging from the internet of things to cloud to analytics.
In a majority of US states, medical marijuana programs serve as a natural alternative to traditional pharmaceuticals for treating numerous conditions, like neurological and psychiatric disorders, pain control, and cancer. And marijuana has the potential to be the next big legal recreational substance after tobacco, alcohol, and caffeine. Canada has been among the countries leading the way to develop the marijuana industry.
The byproducts of marijuana being grown and processed in industries that have real economic potential include hemp fibers for clothing, upholstery, and other fabric use, as well as sources for biofuel, cooking oils, and green plastics.
New research shows that there are potentially hundreds of uses of cannabis and hemp beyond pharmacology, natural medicine, and recreational drug use. Many complementary industries in the agricultural, industrial, technology, and services sectors will support the overall marijuana growth industry.
According to Arcview Market Research and its research partner BDS Analytics, over the next 10 years, the legal cannabis industry is poised for explosive growth. Total spend on on legal marijuana worldwide is expected to hit $57 billion by 2027. The recreational market is expected to cover 67 percent of this overall number, whereas medical marijuana is expected to comprise the remaining 33 percent.
The largest group of legal consumers of marijuana will be in North America, going from $9.2 billion market in 2017 to an estimated $47.3 billion in 2027. Here’s what you need to know as this industry grows.
SCHEDULE 1 RESTRICTED SUBSTANCE
While there is draft legislation in congress to legalize or decriminalize marijuana, the cultivation, distribution, and processing of Cannabis Sativa (marijuana) currently remains illegal at a federal level. As such, it is currently classified as a Schedule 1 restricted substance, with the Justice Department’s Drug Enforcement Agency (DEA), assigning it in the same legal status as narcotic drugs like heroin and LSD — and in a more restrictive category than cocaine, which is Schedule 2.
Marijuana cannot be transported across state lines, even if the states in question have medical or recreational marijuana programs.
However, there are certain legal protections afforded by states that have medical and recreational marijuana programs. There are no national marijuana firms per se in North America — with the exception of those based in Canada that have US based subsidiaries operating on a state-by-state basis. However, individual companies in specific states — those that have legalized the use of cannabis for medical and/or recreational use — are protected by specific federal legislation.
The main legal instrument that protects state medical and recreational marijuana programs is the Rohrabacher-Blumenauer Amendment. This legislation, included in congressional omnibus spending bills since 2014, prohibits the DEA from spending funds to interfere with state medical cannabis laws. Consequently, cannabis companies, employees of those companies, and medical marijuana patients in those states are immune from federal prosecution. As Rohrabacher-Blumenauer is part of a congressional spending bill, it must be renewed for every congressional year.
The amendment was renewed for FY 2018 under the $1.3 trillion omnibus spending bill on March 22, 2018. Newer legislation that would make the essential verbiage of Rohrabacher-Blumenauer permanent is currently in draft and is expected to be voted on during the next major session of Congress.
WHEN WILL IT BECOME LEGAL?
There’s more room for optimism.
The STATES Act (S.3032), a draft bill sponsored by Sen. Elizabeth Warren (D, NJ), would amend the Controlled Substances Act of 1970 and add permanent protection to businesses and individuals in compliance with state marijuana laws. President Trump has indicated that if such a bill were introduced, it would have his probable support. Additional draft legislation, such as the McClintock-Polis Amendment, would remove the word “medical” from the Rohrabacher-Blumenauer protections so as to include recreational use.
As of November 2018, 33 states have passed marijuana legislation which legalizes it in some form. Since every state with a medical or a recreational program has different laws, consult your jurisdiction for specific guidance as to who qualifies for its use and how the specific industry in that state or territory is organized.
What are the products?
There are precious few standards in the type and potency of marijuana products available for sale. The number of possible variants is dizzying.
Because each state has it own policies and programs, and because plants must be grown and processed in the state in which the program originates, there is wide variation from one dispensary to another in the nature of their products.
Also, there are potency variations among growers that produce different yields of the same product during different harvests. Unlike pharmaceuticals that are manufactured to yield a consistent product, marijuana is an organic material cultivated under varying conditions.
For example, a 300mg vape cartridge at one dispensary using one particular strain might contain 96 percent THC, whereas another 300mg cartridge at another dispensary using the identical strain but from a different grower might be 80 percent THC. But because of competition, the price per milligram between dispensaries is largely consistent in vertically integrated markets.
In Florida, THC is priced at about 12 cents per milligram for a typical vape cartridge. When purchased as raw distillate or concentrate, that price can drop down to about 7 cents per milligram.
In horizontally integrated markets, anything goes as far as pricing, because of much wider availability of product and differences in processing methods and technology.
In addition to the selling of marijuana flower in states that permit it, the products sold at a marijuana dispensary are manufactured and packaged as a result of processing the marijuana flower into extracts or powders.
How are extracts created?
There are multiple ways of creating extracts, but the two most common methods are BHO (Butane Hash Oil) or SCE (Supercritical CO2 Extract). BHO is much more common in states with highly established programs such as California and involves the use of butane solvents. SCE is an all-natural process involving the use of high pressures and carbon dioxide gas.
SCE is becoming more popular and is the exclusive process in many states, such as Florida, that have recently introduced marijuana programs. In the SCE process, the whole plant flower is first carboxylated (heated), pulverized, placed into canisters filled with extremely cold (supercritical) carbon dioxide, and agitated. All the oils, resin, and terpenes (natural organic compounds also present in other plants such as citrus, dill, and hops) are extracted, producing a sticky, gooey substance that resembles a thick tree sap.
This extract — which is often referred to as a “full spectrum” extract, because it contains all the essential phytocannabinoids, not just THC — can be sold in its pure form, placed into capsules, or blended with cutting agents to produce vape cartridges for use in vape pens.
Using the BHO method, the extract can also be hardened into a substance called “shatter,” which provides for an extremely potent and high-quality inhalation using a specialized vaporizer. It can also be used to make thick pastes and other derivative products.
Some dispensaries sell medical marijuana products in proprietary cups or “pods,” which contain ground marijuana flower that can be used with specialized vaporizers. (This is the only way the whole flower can currently be used legally, for example, in Florida.) The ground flowers can also be made into pills for oral use.
Alcohol can also be added as a solvent to carboxylated flower in order to create tinctures that can be taken orally, and heat-activated marijuana can be added to cocoa butter for topical use.
In addition to different packaging types and delivery systems for routes of use (oral, sublingual, topical, vaporized, or rectal), the THC and CBD percentage potency for each product, and the cutting agents used in products, there are differences between strains of marijuana used in the products between dispensaries.
The types of marijuana plants
Just as there are many different varieties of grapes used in making wine or different countries of origin where coffee comes from that contributes to differences in flavor, there are many varieties of marijuana used in the production of medical marijuana medications.
SATIVA VS INDICA
Generally speaking, marijuana plants can be classified into two genetic types: Cannabis Sativa or Cannabis Sativa forma Indica. Sativa plants, which mostly originate from South America, are taller and have longer leaves, and typically have a more energetic high. Indica plants, which originate in various parts of Asia, are shorter and have wider leaves, and have a more calming, sedative effect. It’s not uncommon to see Indica recommended as a sleep aid.
Most marijuana products sold in states with medical or recreational programs are hybrids of different varieties of sativa and indica genetics that were created by breeders to produce different therapeutic effects. These plants all have different levels of THC, CBD, other cannabinoids and mixes of terpenes (which also have their therapeutic effects, and are far less understood at this time).
When the names of these hybrids are used in the product marketing, they will have funny names like “Tillamook Strawberry” or “Glass Slipper.” The names will often reflect the source of the seeds and even their country of origin. There are hundreds of marijuana strains, and depending on the state, any dispensary may have several dozen on offer at any time.
To Read The Rest Of This Article By Jason Perlow, Tech Broiler on ZDNet
Published: November 16, 2018
Founder & Interim Editor of L.A. Cannabis News