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Is HHC Legal? What is HHC

Is HHC Legal? What is HHC

What is HHC hexahydrocannabinol

Another day, another THC analog cannabinoid product!

Every few months there seems to be a new THC analog product that gains popularity. It started with Delta 8 and Delta 10. Then we saw THC-O and THCV.

The latest analog to hit the market is HHC. Also known as Hexahydrocannabinol, HHC is a hydrogenated form of THC.

What is HHC?

Like other THC analog products like Delta 8, HHC does not occur naturally in concentrations large enough to be consumed directly. Instead it is made through an extraction process similar to how a margarine manufacturer hardens vegetable oils.

Through hydrogenation, hydrogen atoms are added to the chemical structure of THC using some type of catalyst like nickel or palladium. With the addition of high pressure, the double bond chemical structure of THC breaks down, replacing one half with hydrogen. This preserves the cannabinoid’s potency and effects.

In other words, HHC is made through a chemical process that converts THC, which is also how Delta 8 and other cannabinoids are made.

HHC vs THC

Like Delta 8 and THC-O, HHC is very comparable, though slightly less potent. However users report the same effects as when consuming THC, like euphoria, increased appetite and increased heart rate.

Some HHC users place HHC somewhere in the middle of Delta 8 and Delta 9 THC, claiming HHC is more relaxing than stimulating. Due to its molecular structure, HHC also still holds many of the beneficial aspects of the cannabinoid.

However because HHC is not regulated, there are no reliable studies to confirm any of the effects or potential health benefits.

Is HHC Legal?

Just like other THC analogs like Delta 8 and THC-O, HHC is technically legal due to a loophole in the 2018 Farm Bill which legalized hemp on the federal level. Under federal law, as long as a cannabis plant has a THC content of .3% or less it is considered hemp.

However through extraction and chemical processes like those mentioned above, THC analogs are created from federally legal hemp. And because they aren’t technically Delta 9 THC, they aren’t regulated under the Farm Bill.

So while HHC is legal to buy and consume, it is completely unregulated. With products such as this, it is not uncommon for bad actors to get into the market to make a quick buck without taking into the account the safety of their products and consumers.

Where to find HHC

Because HHC is not a licensed THC product, you won’t see it a legal medical or recreational cannabis dispensary. You are most likely to find HHC products at gas stations and smoke shops where you see Delta 8 and other analog products.

When shopping for HHC or any other analog THC product, do a little research on the product before purchase. Confirm that the brand actually has a website. See if they offer lab test analyses of their products which can confirm the potency that they claim.

If you see any product that is branded as a name-brand knockoff like Skittles, Sour Patch Kids, Oreos, Chips Ahoy, etc., avoid it. Aside from the obvious legal implications of stealing a company’s trademark, these products are in most cases not legitimate. They count on consumers seeing a brand they recognize and thinking it looks cool to sell plain gummies with nothing in them, or vastly misrepresented potencies.

Next time you hear someone asking “what is HHC?”, now you’ll have the answer! Always be careful when buying any sort of “cannabis products” from a non-licensed retailer.

In several state where cannabis is already legal medically, recreationally or both, THC analogs like Delta 8 THC have already been banned. Other states have chose to regulate them like Delta 9 THC and make them available only through licensed retailers.

Is the Oklahoma cannabis market to blame for the crashing industry? Ft. Jessica Baker

Is the Oklahoma cannabis market to blame for the crashing industry? Ft. Jessica Baker

Oklahoma cannabis market

Anybody who is operating in the legal cannabis industry is likely feeling the strain of a seemingly shrinking market. Despite the massive growth of the national cannabis industry thanks to legalization in multiple states, the increased production of cannabis is tanking prices.

Cultivators and business owners are beginning to wonder if the industry is still profitable for small operators.

Jessica Baker owns and operates Clone City in Oklahoma City. She provides high quality clones to cultivations across the state, and has definitely noticed the industry beginning to shrink there.

Oklahoma has been the red-headed step child of the cannabis industry since it legalized medical cannabis in 2018. What started as a highly unrestricted industry that exploded into the largest cannabis market in the country in just two years, has turned into an industry that is rapidly shrinking.

Oklahoma has been, you know, an interesting market to say the least when we first got there, you know, three plus years ago, it was a very immature market in terms of the knowledge surrounding cannabis was pretty limited to you know, the little bit of, of knowledge that people have gained over the years from, you know, the private market, which is always amazing, but the strain names and things like that really weren’t, hadn’t quite hit Oklahoma yet. But now, you know, it is pretty much you’re hearing the same things as you’re here in Colorado and California in terms of growth techniques, terminology, and cultivars that are now popular in Oklahoma. So I feel like I’ve really seen that change and people get really enthusiastic about cannabis.

According to Jessica, the Oklahoma cannabis market has evolved to more or less replicate the Colorado and California cannabis industries, despite only being available to medical patients. However with easy access to a patient card and no cap on cannabis business licenses until very recently, the Oklahoma cannabis market quickly saw the consequences.

An oversupply of cannabis has led to the price per pound tanking across the country. While Oklahoma has been getting a lot of attention recently for the state’s efforts to restrict future licensing and regulate the industry more strictly, it is by no means the only state with the issue.

Many blamed Oklahoma when the industry began tanking following the COVID pandemic. However the criticism typically fails to account for the pandemic and the impacts that had on the industry as a whole.

With restricted trade and major impacts to the supply chain, inputs needed to cultivate cannabis at a commercial scale went up in price, if they were available at all. Without raising their prices to match their costs, many cannabis businesses began operating at a loss just to stay competitive with larger commercial competitors.

I think it has dropped nationally, because there’s just so much cannabis being grown and a lot of states that never were legally allowed to grow before. And I think with metric or not, I think there are still ways that people are probably putting that on the private market, even though they’re meant for the public market. But I think there’s just a glut and cannabis.

Overproduction is not an issue exclusive to Oklahoma. Oregon’s legal cannabis industry faced serious issues early on due to similar regulation. A lack of restrictions on who could grow cannabis led to a massive oversupply of cannabis, which dropped the price per pound drastically.

The state eventually passed a law that would allow the export of Oregon cannabis to neighbor states. However no neighbor states have passed a similar law yet, making it irrelevant. Eventually the market consolidated as grow operations could no longer afford the overhead costs with such a low profit.

It isn’t just overproduction impacting the current cannabis market either. Inflation, high gas prices and multiple other factors that impact individuals has resulted in less people purchasing cannabis recreationally.

 If gas is $5 a gallon, and you have to make a choice between buying your eighth or ounce for the week, or continue to put gas in your car to get to work and everywhere else you’re going, then you may have to sacrifice by spending less on cannabis.

For example, Colorado has seen a 30%+ decrease in cannabis sales since July 2020, the peak of the pandemic. While at the time many people had more disposable income thanks to stimulus checks and saving from staying inside, that has changed drastically.

When looking at the industry as a whole, it is hard to conclude that Oklahoma is solely to blame. Just about every legal cannabis market in the country has seen a drastic drop in price per pound.

As consumer purchases decrease, so does distributor purchases. With growers sitting on a massive stock of cannabis product from 2021 thinking the pandemic boost would last, there is an oversupply of product sitting in storage.

The longer it sits, the less it is worth.

I mean, people have already gone out of business, and it’s just the nature of business. 100% of all businesses don’t survive in any industry. So especially in a boom and bust scenario, and with the banking issues we have and the tax issues. You know, it’s not simple.

Listen to the latest episode of The Real Dirt with Chip Baker to hear more about how the Oklahoma cannabis market has been impacted along with analyses of other state markets, and what it all means for the future of the industry!

Transcript:

Chip  

This is Chip Baker with The Real Dirt podcast. We’re back again. Wow. It’s been a long time since we put out an episode. But we got a lot of important things going on in the cannabis industry and we felt like this was the perfect time to get back into it. 

You know, today it is July 10 2022. I’m in Denver, Colorado. We’ve been spending time all over the country, but primarily in Oklahoma this past year. And it seems that the state of the cannabis union is really in flux right now. You know, with the economy with inflation. With post COVID You know, structure of business and in life, the cannabis industry is really taking a turn. Today I have Jessica Baker as my guest. Jessica owns and operates a series of cannabis businesses in Oklahoma. Welcome, Jessica. 

Jessica  

Thank you for having me on the show, Chip. Always a pleasure to talk to you by cannabis and cannabis business. 

Chip  

Just to introduce yourself a little bit. I know you’ve been on the show before. And many people know you as my wife, but you are a incredible entrepreneur and educator. And let’s just talk about Jessica for one song moment. Okay, great. 

Jessica  

Thank you for the introduction. I am your wife gladly. But I’m also an acupuncturist for the last 15 years and a Western herbalist for the last, you know, two decades plus, so I have well versed in, you know, Chinese medicine and Western herbalism. And also I own several cannabis businesses. I’ve been growing medical cannabis since 1997. Back in the good old days, and so probably grown a lot of different ways. Not every way. But I’ve definitely dabbled in growing in multiple different modalities. And I own a clone nursery in Oklahoma City, as well as cultivation and processing facility. And so we’re kind of do a little bit of everything. And yeah, I love cannabis. And I love your show. Well, thanks, Jessica. And you know, I really appreciate all the women weed warriors out there, you know, this industry is is filled with dudes and dudes often try to dominate, uh, you know, whatever we’re involved with. That’s just the dude power. But, you know, we know so many women, cultivators, women, extractors, women, business owners, and the you know, I get to see it throughout the industry. I see. Maybe you call it discrimination against women business owners, just as we see it in the rest of society. But man, you know, if if the women that you know, in the cannabis industry, I guarantee you, they’re working twice as hard as the dude right next to them. And if you have a problem, you should go like maybe chat with the women that you know, in the cannabis industry and see how they feel about what’s going on. Because often they do have a different perspective than our dude oriented industry.

Bro science. 

Chip  

It is bro science. But yeah, we’re here today to talk about the cannabis industry. Boy, it is in a tailspin. Every aspect of the cannabis industry from the manufacturers and the suppliers of all the equipment, transportation, all the cultivators, the distributors, the the grocery stores, the dispensaries, like everybody is really filling this economic depression right now. Jessica, how has it been an Oklahoma what’s going on there? 

Jessica  

Oklahoma has been, you know, an interesting market to say the least when we first got there, you know, three plus years ago, it was a very immature market in terms of the knowledge surrounding cannabis was pretty limited to you know, the little bit of, of knowledge that people have gained over the years from, you know, the private market, which is always amazing, but the strain names and things like that really weren’t, hadn’t quite hit Oklahoma yet. But now, you know, it is pretty much you’re hearing the same things as you’re here in Colorado and California in terms of growth techniques, terminology, and cultivars that are now popular in Oklahoma. So I feel like I’ve really seen that change and people get really enthusiastic about cannabis. And so you know, the last year we’ve definitely seen especially at the clone nursery, a lot of the big cultivators aren’t buying clones, like they have been the two years previously. A lot of people that were maybe larger Cole debaters came in and bought less clones, because their facilities that were 1020 30,000 square feet, they, maybe they didn’t have the knowledge to pull off that large of a grow at the very beginning. So they were like, Hey, I’m going to scale back, learn a little bit more about it. And then I can always scale up again in the future. And then I know people who, unfortunately, you know, maybe they had a 401k They took out or some early retirement or some other personal investment to invest in cannabis, and it didn’t work out for them. And now they are cultivating anymore, either their want to sell their licence, or they are just kind of letting it stay dormant for a little bit.

Chip  

Tell us about like, what you feel about the number of cultivators that in Oklahoma that are cultivating this year, or number of businesses that maybe have like gone out of business or just aren’t operating? 

Jessica  

Well, I only know a handful of those, but I can say it’s all across the board, from dispensaries to processors to cultivators, I’ve heard a little bit from all of those sectors, saying that they’re they’re taking a break, or that they just downright are going back to their job at the, you know, do an oil rigging or we know whatever it is, I don’t think that’s the proper terminology. But you know, they’ve just decided they’re gonna go back to what they were doing before, right, or what they never stopped doing, you know, and they were doing cannabis on the side. And so, yeah, it has been significant. I know that, you know, where we’ve heard stories about when metric came into, into law at the end of May, that a lot of people never signed up for metric that actually had a licence. And so maybe they were going to do that later. Or maybe they just decided, well, I’m out now that there’s more regulation and work to be done to you know, how to leave or business

Chip  

To catch up on in Oklahoma. They’ve had a series, one, if you don’t know really was a free for all until recently on getting licenced and started cultivation in Oklahoma. But in the past couple of months, we’ve had a series of things going on between changes in the law, moratoriums and the licences requirements for metric tiered licencing. And it has reduced the number of people in the industry, right? Some people just didn’t want to deal with it, or they were barely making any enough revenue to support their hobby, so to speak.

Jessica  

Yeah. And like, oh, MMA, the Oklahoma Medical Marijuana marijuana advisory or stands for something like that. We’ve had a couple of inspections. Now it took it took a couple years or more, but we finally have been starting to get inspected. And our inspectors are telling us that, you know, they’re going to places that are not operational. So a lot of places still have a licence, but they’re not operating. 

Chip  

And we haven’t touched on to the elephant in the room, but it is about the decrease in price.

Jessica  

Oh, 100%. It has to do with also the decrease in profit margins for people. Right.

Chip  

Right. Right. Yeah. You know, it’s not just Oklahoma, across the country, people are having these, you know, this, this decrease in cost per pound cost per gramme from the wholesaler to the distributors to the manufacturers. Everybody has their theory on why you think this is. And some people say it’s just simply supply and demand. I believe it goes a little bit deeper than that. But why do you think the national price of cannabis has gone? So it has dropped so much? And why do you think it’s dropped so much in Oklahoma?

Jessica  

I think it has dropped nationally, because there’s just so much cannabis being grown and a lot of states that never were legally allowed to grow before. And I think with metric or not, I think there are still ways that people are probably putting that on the private market, even though they’re meant for the public market. But I think there’s just a glut and cannabis. I know people regulated market, the regulated market, right. So I know that there’s a glut of you know, cannabis in Oklahoma, and Colorado and California. And in Oregon production, overproduction. People still are sitting on hundreds or 1000s of pounds from last year. And now they’re like, growing again this year. So there’s going to be even more on the market.

Chip  

Do you think this is overproduction in the regulated market or the illicit market?

Jessica  

Probably both both. But yeah, I would say both.

Chip  

Yeah, farmers mostly have one. You know, one business plan and we talked about this many times on The Real Dirt is prices down, grow more, prices up, grow more. And that’s really what’s going on and you know, there was just such this huge decrease increase in demand for cannabis products, you know, 2020 2021 And it’s a fact unemployed people consume more wheat, right? They unemployed people smoke more weed. Right? So, you know, all those people have gone back to work right now we’re at the lowest unemployment rate, you know, the country’s one of the lowest the country’s ever seen like everybody’s back at work, but the economy is not so great.

Jessica  

And if gas is $5 a gallon, and you have to make a choice between buying your Eight for the week or your ounce for the week, or continue to put gas in your car to get, you know, to work and everywhere else you’re going, then you may have to sacrifice by spending less on cannabis

Chip  

Or many people walk. Many people don’t have that option. Yeah, how many people unfortunately, transportation options, but you know, that recreation is one of the first things to go. And you know, they say that, like the vice industries are recession proof, but it’s just not true. As as we see it now, if people just don’t have the money to spend on it, you know, and cannabis isn’t like coffee, or alcohol, right? People really need that coffee and alcohol. And most people can just like do without we, they might want it. But they can do it out do without it. And it’s similar to the cleaning business we were talking about this earlier, is, you know, one of the first ways that farmers can cut their costs is by not buying clones. And you know, one of the one of the things that I see, you know, farmers use clone nurseries for is when they can’t fill up their fields, they can’t fill up their rooms, and they come to clone nurseries often in an emergency situation. Absolutely. I see that. And they say, you know, oh, my clones died or

Jessica  

Yeah exactly my clones died, or I bought clones apartment out or

Chip  

and it’s often because they need to fill up that room. Yeah, but many people are shutting down lights, they’re shutting down greenhouses.

Jessica  

Their rooms are getting smaller. They had, you know, eight rooms and a 20,000 square foot facility and they’re gonna run two of them. Right? That’s where they started their own moms. Right and took clones, right, you know, but most of them still come back saying my clones didn’t work out. I need more. You know, we can all we always need more, you know? Not always but

Chip  

Yeah, totally. But no, we we know several people who have shut down parts of their business, you know, and aren’t cultivating any longer because they can buy cannabis cheaper or as cheap as they can produce it. And so now in their dispensaries instead of buying a built making in house, they’re buying it on the market.

Jessica  

Yes. Yep. I see all of that. 

Chip  

What about this overproduction that’s been going on in Oklahoma.

Jessica  

So you know, the overproduction in Oklahoma is twofold. One, and just to be frank, it’s okay. To be frank, a little bit about the overproduction of Oklahoma, is that a lot of the cannabis just isn’t really that great. So you have inexperienced growers growing outdoor in a really harsh environment. Yeah, or a greenhouse or greenhouses, you know, in harsh environments. And so it’s kind of sub quality weed. And so that’s one reason why the price is so low,

Chip  

because when the market is flooded with whatever it is, the price does drop, but it drops that lowest common denominator with the quality of the weed being

Jessica  

exactly and I think a lot of people, outdoor growers and greenhouse and even indoor, they know that they’re just growing for extraction, and that their quality is only going to be extraction material anyway. And so there’s this large volume of only things that they know will only go to the extractor, so the quality doesn’t have to be there,

Chip  

right but then somehow that extractable quality weed still ends up in the flower market. Oh, absolutely. Right, because there’s just 1000s and 1000s of pounds. Do you have an estimate of how much nobody even knows how much wheat was grown in Oklahoma?

Jessica  

I can’t even try to guess but I mean hundreds of 1000s of pounds million. I don’t even know what 2 million so I think that’s part of it. And then I also think that

Chip  

Hey right now, if people are listening to this, we’re definitely getting some responses about how Oklahoma was fucking up the market for everybody else. But that’s

Jessica  

just not true because California and Oregon have waived for cannabis and Oklahoma even has because there’s more people and it’s better quality and it’s still going for super cheap. And that has nothing to do with Oklahoma’s outdoor and non regulating the amount of plants you can grow.

Chip  

Yeah, so you know talking to people around the country we still see the most cannabis both regulated and you know A private market cannabis is coming from California and Oregon.

Jessica  

I mean, California, of course. 

Chip  

Right. It’s just pot the seed over there. Yes. You just put it in the ground and it grows great. It’s not like that anyplace else in the country. Absolutely. So we got in Oklahoma, we’ve got an overproduction issue, we’ve got inflation issue. And we kind of have a regulatory issue that’s occurred here, too.

Jessica  

But you know, the other thing we have is the fact that a lot of people with no knowledge or history of being in cannabis, or business, or business thought that it would be easy money to get into cannabis. And then three years later, they’re realising that’s not actually true. And so I think that’s a large part of it too.

Chip  

Getting rich quick since 86.

Jessica  

Yeah, I mean, I love you know, it is what it is. But I think

Chip  

that also because, at least at Oklahoma, it’s not get rich quick, is it? No,

Jessica  

it’s absolutely not, you may have some couple of great harvests and think you made some money. But, you know, you never know.

Chip  

You know, few people can do this number, where they like, enter the market, get a bunch of weed, make a bunch of profit, and leave and exit the in and out hot potato business strategy, right people that just doesn’t work for No, absolutely. There’s this just dream. And what happens for most people is they put all of their retirement. All right, exactly. 101 K, you know, their friends, money, their grandparents, whatever, whatever investment, they use it, right, because they’re inexperienced, they may love weed, they may have grown wheat all of their life, they may grow great weed, but none of that matters in commercial sales, commercial production. You know, when the price drops so low, you have to know how to grow that cannabis as inexpensive as possible, but still remain the highest quality,

Jessica  

Absolutely absolute, but most people, especially with how low the prices are right now, even for indoor and a lot of places. It’s really, you have to know how much it actually cost you to grow per pound, to make sure you’re not actually losing money on every pound that you sell. 

Chip  

Yeah, absolutely. In many people, you know, there’s this struggle because people so many people think that like you’re reducing quality and blah, blah, blah, but but so much of it is just organising the space, time and materials, right and people, right, and if you can organise space time materials and people like you will, like have the most efficient operation that you have that you can get a no matter what technique you’re growing under. But when you’re able to do that, then you will reduce your you know, your cost of good your overhaul cost. In hey, let’s talk about that. Jessica, what do you think the breakeven cost of production for farmers should be your needs to be for, for people to continue to stay in the industry or cultivators?

Jessica  

I mean, that’s hard to say if you are just talking about you’re growing for extraction, and Oklahoma pounds for extraction go for about 50 bucks a piece. So if you’re growing cannabis for under $50, and then you know and that’s your entire cost of labour and you know,

Chip  

You’re gonna grow it for extraction in Oklahoma,

Jessica  

then you better be growing it for $25 or $5 of have me just hard to

Chip  

do right because of the manual labour associated with harvest mostly manual labour associated with planning till the irrigation can be put together what but what about indoor?

Jessica  

I mean, indoor again, I’ve seen the indoor for as low as $500 in Oklahoma, and these you know, I don’t know if they’re truly selling indoor if they’re just calling it indoor, it’s hard to say. But I’ve seen what they call indoor that does not look that great.

Chip  

We see this throughout Oklahoma, and we’re unsure if it’s just, you know, nice greenhouse operations, poor operators indoors. Yeah, I don’t know. Yeah, we don’t quite know.

Jessica  

But I know I’ve seen it. You know, I’ve even seen $350 pounds of indoor with somebody that claims they have a 50,000 square foot facility.

Chip  

We have seen those prices in Colorado to hurt them. I don’t think that’s the average price. But those are the lows. What do you think people in Oklahoma or? I’ve heard you sing for the like, how much does it cost to produce it? That’s what I’m asking. 

Jessica  

I mean, I honestly don’t know for people because I don’t know. So you have to Yeah, okay, you know, because I don’t know what they owe on the building they’re growing in are they paying back investors every month for part of this grow? Or if it’s, you know, they own the building

Chip  

for $500. Then like, you know, like you got to indoor specifically, they’re either liquid needing to get rid of round is how much it’s gonna cost, right? Yeah. Like if you’re the one of the best operators in the country, you got all your shit together, you might be at 250 pound indoors, and some people can do it even cheaper. And that’s trimmed all your cost of production in the bag. Yeah, most people it’s not that much money. It’s 450. It’s 750. It’s, it could be $1,000 For some people, and it doesn’t matter how great the weed is.

Jessica  

I mean, I’m still hearing some rumour. There’s a couple growers in Oklahoma claiming they’re still getting 2000 and door lb, I have yet to see that. I’m sure that exists. I get but the emails I get, they’re not selling for that much. 50.

Chip  

So there’s the other thing we talked about, about pricing throughout the country, too. And now what’s even worse, is these emails and texts, often I feel like you’re just driving the price down. And so much of it’s fictional, right? There’s nobody that has the operation that needs 1000 pounds a day or you know, it’s just fictional in order to drive the price down or to manipulate the market or just people fucking around.

Jessica  

Well, and these brokers don’t even get me started on like, how they lowball and then still try to get the same price because at one they in Oklahoma, none of them had a licence to be doing that anyway.

Chip  

Yeah, they you know, they shouldn’t be called brokers. They should be Hey, pardon me, all brokers out there. They’re really nice and honest, dudes. They shouldn’t be called brokers. They should be called hustlers.

Jessica  

Yeah. Well, we always tell the middleman and we really never liked unless they were helpful and actually, like, not just trying to rip off the growers.

Chip  

Well, you know, what I’ve seen between old days in these days, and distributors and brokers is old days, it was like a set like, Hey, I’m gonna get $50 or $100 a pound.

Jessica  

Now they want as much as the grower made. 

Chip  

Yeah, exactly and they’re just trying to lowball the grower to get that price down so much. And then the bad part is, it’s usually not even their money. So it’s often this like, you know, fucked up deal where they’re truly middleman, someone else has the money. Right? And, you know, they’re like, 

Jessica  

they’re acting like they have some inside knowledge into the weed space. 

Chip  

They should be connection and they should be paid for that connection. Don’t get me wrong, but like, I don’t know, if you want a sustainable business and you really wanted to clean up like, you know, having a reasonable brokerage fee. You know, I mean, hell, what a, you know, like,

Jessica  

but you can’t be trying to make $200-300 a pound you’re buying for $500 or $400. Well, not only that, 

Chip  

but like your seeds right now. I know. But hey, man, you’re gonna go they’re gonna go out of business right now. Or your your profit definitely is gonna change.

Jessica  

Yeah, absolutely. As it should. Because I mean, once again, the farmers are always the ones who take the hit.

Chip  

Yeah, let’s talk price structure. That’s a great way to do it. Alright, so we’ve been taught cost to production, but like farmer sells the pound for 500 bucks. Let’s just say $500. He sells it to a dispensary direct. Right? dispensary sells $100 ounces. They make $1,600. dispensary sells $75 ounces. Right. They’re making 12 hundred bucks.

Jessica  

But then 40% of that goes to the tax man because of you know, the

Chip  

well 40% of the profit. So not 40% of the sale. Right. Right

Jessica  

or 40% ofthat profit goes to the taxpayer. Well, that goes to the feds. And then if you’re in Oklahoma City, 15.5% of that immediately goes to

Chip  

passed on though it’s usually not out the door pricing on what I’m talking about. Sometimes it

Jessica  

In Oklahoma they really like out the door pricing

Chip  

Yeah, but this just is just not the standard, you know. And so basically what I’m saying you’re buying it for 500 bucks, you’re selling it for 1600 bucks, you’re making $1,100 profit and then 40% of that should go to the man which is about 400 and something dollars. So like, now you just made the six $700 on a $500 lb there’s still quite a bit of money going on with dispensaries.

Jessica  

Absolutely. But I mean, especially in Oklahoma, man, you’re seeing three ounces for 150 bucks and unit Yeah, but that’s greenhouse or outdoor we No, I’m just saying that like, I’m not seeing the high priced in Oklahoma. I don’t see as much of the high price than you used to. So I do think in some respect, those profit margins may not be as high but I’m sure they’re still high for a lot of places.

Chip  

Sure, sure. And then a lot of those places are produced a lot of you know, if you’re producing the cannabis and you’re selling it, that’s the best deal you got going if you can grow it cheap enough? Yeah. Right? If you can grow it for 500 bucks or $700 a pound inside, and then resell it for that that’s decent money. That’s really good, good money. But I guess my point is this is that restaurants, farmers, entrepreneurs throughout the world operate on 10 and 12%. Net profit. And it just takes a skilled business person to operate in that manner. And you’re still making money, as the dispensaries right at these at these low prices, you have to get the customers come in to buy it.

Jessica  

And you have to have the staff, of course. 

Chip  

You have to have the staff and in all of that, but there’s still money to be made out there. And if you’re in the cannabis industry, and you’re like, oh, man, I can produce $170 $190 pounds in a greenhouse. And I can sell them for 350 or $500. But you’re making good money.  

Jessica  

Yeah, there’s still no doubt about that. It may not be the profit margin you think you should be getting? Or do you use to begin entitled to be or you feel entitled to be getting. 

Chip  

Right. But it is the sky is not falling? There? Will many people go out of business in Oklahoma? 

Jessica  

Well, of course. I mean, people have already gone out of business, and it’s just the nature of business, not 100% of all businesses don’t survive in any industry. So especially in a boom and bust scenario, especially in a boom and bust. Yep. Especially with the banking issues we have and the tax issues. You know, it’s not simple.

Chip  

Well, you know, one interesting thing from my perspective is, you know, we operate hydroponic stores and, you know, potting soil manufacturing is, you know, how bad the manufacturers are and how much the prices have risen on our side. Inflation is truly shit. You know, in all of your cannabis, grow equipment, at Cultivate Colorado, Cultivate OKC you know, we operate an online shop there, cultivateokc.com cultivatecolorado.com. People from all over the country in the world buy products from us. And you know, we have seen, they’re still we still understand there’s the demand there. And even though we have a decrease in business in our retail shops in Colorado, and in Oklahoma, we’re still on an up three year average last year was a banner year for us. But we’ve been able to like still do pretty good and you know, we we made may operate a little bit differently than other people, but many of the stores that are you know, because we’ve been around for such a long time and many of the other stores including like, grow generation and you know, some of the other like smaller stores that either are just oversized or underdeveloped they’re they’re having a struggle hanging on to this industry. But you know, we have a really well established business Kobe, Colorado you know, we expect to weather this storm, you know, you know, well you know, we’re definitely talking to our customers you know, we’re offering the best prices we can we know everyone’s struggling you know, we see new products come out all the time. This past couple of years. We haven’t seen any new products come out

Jessica  

There’s a couple new products that have come out.

Chip  

I guess you’re right, I do have some products coming out. Yeah, growers our potting soil company if you’re not familiar with us, we make potting soil in and outside Denver, Colorado, some of the highest quality potting soil in the world made from cocoa fibre. We’re coming out with two new products right now that we’re actually using, you’ve been using you’ve been a prototyping our organic cocoa for a moment.

Jessica  

Absolutely great cocoa

Chip  

…so we’re coming out with a organic cocoa and a 7030. And we’ve actually put these off for a moment that are coming out with them right now at really great great prices because everybody’s having a hard time right now.

Jessica  

Well it’s also you know, just thinking post COVID and everything going on with not only inflation, but it is a supply chain issues. So really noticing that there are things and all of our grocery stores and markets that we noticed just isn’t there anymore because of supply chain.

Chip  

Oh yeah, it’s it has been hard we have we have bought more cocoa fibre than we thought we were going to use. We’ve really tried to get the biggest deals from our competitors coming from our suppliers, the best deals so we could, you know, be able to like me Eat this market because…

Jessica  

Well I don’t even have it in stock when you need it struggling

Chip  

to manufacture is you’re struggling to get materials. But yeah, so we got a 7030 Cocoa fibre coming out. We’ve got a organic cocoa fibre coming out right now. Call us at cultivate Colorado, look us up at growers grown on Instagram, cultivate Colorado on Instagram, and Facebook. And, you know, follow your progress there. If you’re in the Colorado area, we’re offering incredible prices to you right now on this product. So give us a call if you’re in Oklahoma or Michigan or anywhere in the country, if you’re a grower, or if you’re a grocery store, you know, drop us a line at growers cocoa or it goes big Colorado. We’d love to help it out. How do people getting get in touch with you and your organisation?

Jessica  

In my organisation if you’re a commercial grower in Oklahoma, and you want clones, you know you can reach us at You can go to our website, which is clone dash city.com on Instagram, we’re at the clone city and also clone nursery. You know, because you gotta have more than one and then you can always just Google clone City, Oklahoma, and we come up oh my gosh, probably around 50 These days we really expanded our our mom rooms and got some great Oh, there are Yeah, we plant a bunch of seeds we select for specific finos and then we grow them at least two different ways in Oklahoma and then we put them out on the market so so we know they’re actually going to survive in greenhouses and outdoor yields 

Chip  

Great speaking to you today, Jessica. You know, I fortunately I get to get your wisdom on Cannabis industry all the time. Is there anything you’d like to say to fellow business?

Jessica  

I always have things I want to say.

Chip  

Women Business Owners or just cannabis business owners in general.

Jessica  

I’m gonna say cannabis owners and business owners in general even if you’re not in the cannabis space yet and you’re just thinking of any business endeavour. It is a long game it there is no shortcuts. Like I said you may do well successfully at first and then that’s when your hurdles start. But don’t think this is an easy like I’m in and out and I’m gonna just it is a long game and enjoy it Have fun, please honour and respect the plants and your employees and your business contacts, the earth, all of it. But definitely it is not it is not a short game. It’s a long game. So be patient. Take deep breaths, connect with the other people in your industry community and don’t feel entitled to anything because we’re not

Chip  

Hey, and I just want to say to you listeners. We love you all, keep the plant in your heart and just keep going you know times may be tough but just roll the biggest joint you can and fire it up.

Jessica  

We’re about to!

Chip  

This has been The Real Dirt!

Is Colorado cannabis industry dying or just returning to normal?

Is Colorado cannabis industry dying or just returning to normal?

Colorado cannabis

The Colorado cannabis market that thrived during the peak of the COVID pandemic has been slowly coming back down, decreasing 32% since the state broke records in July of 2020.

Colorado cannabis sales broke $226 million in July 2020 alone, setting a new record for the state. Latest state records show that total cannabis sales in the state for May 2022 were just $147 million.

At first glance this could be interpreted as the market correcting itself following the massive boost it received during the COVID pandemic. It could also be seen as the Colorado cannabis market losing marketshare following the legalization of cannabis in neighboring states like New Mexico and Oklahoma.

This answer is likely a combination of both.

During the peak of the pandemic, cannabis sales rose to record levels across the country. While many restaurants and stores shut down for months, in most states with recreational and medical cannabis, dispensaries remained open.

Cannabis was treated similarly to alcohol in this instance; liquor stores were allowed to remain open in most states during the pandemic as well.

The picture of Colorado’s cannabis industry profits becomes less pessimistic when taken in context and compared to pre-COVID numbers. However the numbers still show an industry that is struggling to grow as the national industry also grows and consolidates.

For comparison, let’s take the same month that we can consistently track according to state released data; May.

In May 2019, total Colorado cannabis sales were $143 million. One year later in May 2020, the state sold over $192 million in cannabis, which would gradually increase month by month until the record breaking month of July 2020 ($226 million).

It is easy to see the boost that COVID gave to cannabis sales in Colorado, as in May of 2021 sales were back down to $194 million. This number is just $2 million more than the same month in 2019.

Comparing to 2019 and removing 2020 from the equation, May 2019 to May 2022 show almost no growth.

Coincidentally, July 2021 was also one of the most successful months of the year, selling $202 million in cannabis products. The industry has not broken $200 million in sales since then.

As an additional comparison, we can look at the same 5 month timeframe from this year (2022) and last year (2021), from January to May.

The mean cannabis revenue in Colorado in 2021 from January to May was $192 million.

The mean cannabis revenue for 2022 is $151 in the same time period.

For a pre-COVID reference, sales for the same period in 2019 were only $133 million.

In other words, while Colorado cannabis sales are down compared to previous quarters, the industry has overall seen growth. The boost the industry gained from COVID has had residual impacts, with more people still purchasing cannabis than before the pandemic.

However the state has not seen a booming month like July 2020 for some time. Current trends in the industry hint that it is unlikely the state will see sales numbers surpassing $200 million until the next holiday season, if ever again.

What is the Cannabis Administration and Opportunity Act?

What is the Cannabis Administration and Opportunity Act?

Cannabis Administration and Opportunity Act introduced

Senators Cory Booker, Chuck Schumer and Ron Wyden have introduced a bill that would legalize and regulate cannabis at the federal level.

The Cannabis Administration and Opportunity Act (CAOA) is a comprehensive legislation that would end federal cannabis prohibition by removing cannabis from the Controlled Substances Act. The CAOA  would also empower states to create their own cannabis laws; ensure federal regulation protects public health and safety; and prioritize restorative and economic justice.

The bill was initially introduced as a discussion draft in 2021, and after receiving over 1,800 comments, the senators made adjustments and additions to the bill before introducing it this to the chamber this week.

The restorative justice aspect of the bill would help undo the decades of harm caused by the failed War on Drugs, ends discrimination in the provision of federal benefits on the basis of cannabis use, provides major investments for cannabis research, and strengthens worker protections. By decriminalizing cannabis at the federal level, the CAOA also ensures that state-legal cannabis businesses or those in adjacent industries will no longer be denied access to bank accounts or financial services simply because of their ties to cannabis.

“As more states legalize cannabis and work towards reversing the many injustices the failed War on Drugs levied against Black, Brown, and low-income people, the federal government continues to lag woefully behind,” said Sen. Booker. “With strong restorative justice provisions for communities impacted by the drug war, support for small cannabis businesses, and expungement of federal cannabis offenses, this bill reflects long overdue, common sense drug policy. I am proud to have partnered with Senators Schumer and Wyden to introduce this critical legislation. The support that we have received from committee chairs and outside groups underscores the historic nature of this bill and the urgent need for Congress to pass it.”

The Cannabis Administration and Opportunity Act has several goals, including protecting public health and safety, and prioritizing restorative and economic justice. This would be done by implementing safeguards like track-and-trace and purchase limits on retail cannabis for the former. Expunging federal cannabis convictions and encouraging states to do the same would be an initial step for the latter objectives.

It would be made easier for more individuals to get involved in the legal cannabis industry by expanding access to loans and capital for entrepreneurs, especially those impacted by the war on drugs.

The regulation and taxation of cannabis would be implemented by transferring jurisdiction over cannabis from the Drug Enforcement Agency (DEA) to the Alcohol and Tobacco Tax and Trade Bureau (TTB). The regulatory framework would be similar to alcohol and tobacco while supposedly recognizing the unique nature of cannabis products.

By default, federal banks would now be permitted to freely do business with legal cannabis businesses without fear of prosecution from the government. Further, cannabis businesses would actually be allowed to claim tax deductions for business expenses, which currently isn’t an option in most states.

One of the last main objectives of the Cannabis Administration and Opportunity Act is to encourage cannabis research which has been severely lacking for decades. The CAOA would require more federal research into the impacts of cannabis on health and public safety.

The bill would also establish clinical trials through the VA to study the effects of medical cannabis on the health outcomes of veterans, compile industry-related data and trends, and establish grants for cannabis research.

For employees, federal drug testing for cannabis would be removed as well as random testing for cannabis. However certain “sensitive categories” of federal employees could still be drug tested. This includes those working in national security, law enforcement and commercial transportation.

Regular industry employees would also get worker protections.

There is no current timeline on when the bill we be held to a vote in the Senate. The SAFE Banking Act which aimed to only allow legal cannabis businesses in states access to federal banking, has been shot down in the Senate several times.

Nevada cannabis lounges approved by state oversight board

Nevada cannabis lounges approved by state oversight board

Nevada cannabis consumption lounge licenses

Regulations for the licensing and operation of cannabis consumption lounges in Nevada received approval from the state’s oversight board Tuesday.

State lawmakers approved a bill authorizing cannabis consumption lounges in Nevada last year. The last several months have included 15 meetings among Nevada Cannabis Compliance Board members to determine the licensing process.

Two consumption lounge license-types will be issued. The first is for lounges that will be directly attached to a retail cannabis dispensary. The second is for independent, stand alone consumption lounges.

Anybody can apply for a Nevada cannabis consumption lounge license. However one person cannot hold a retail dispensary license and an independent consumption lounge license at the same time.

Only the owner of a licensed operational retail cannabis dispensary may be eligible to apply for a retail cannabis consumption lounge license. In other words, a consumption lounge attached to a dispensary will be owned by the owner of the dispensary.

The Nevada Cannabis Compliance Board will hand out 20 licenses for independent consumption lounges, with 10 reserved for social equity applicants. To qualify as a social equity applicant, the applicant must be someone “who has been adversely affected by provisions of previous laws which criminalized activity relating to cannabis, as determined by the Board [. . .] Such adverse effects may include, without limitation, adverse effects on an owner or officer of the applicant.”

An independent cannabis consumption lounge would contract with a retail cannabis dispensary to supply cannabis for customers to consume on site.

If all 20 licenses are handed out by June 30, more will be issued as long as the amount of independent consumption licenses does not outnumber the amount of retail consumption lounges.

However a retail cannabis consumption lounge will not come cheap. The application alone requires a non-refundable application fee of $100,000.

An independent cannabis consumption license on the other hand will carry a $10,000 fee to apply. This fee can be reduced further for social equity applicants.

Currently there is no word on when or how the licenses will be scored and issued. Additionally there will still be several months ahead of developing and promulgating regulations for cannabis consumption lounges.

Local jurisdictions will also have the option to restrict cannabis consumption lounges from opening in their area.

The Nevada Cannabis Compliance Board will be keeping those interested in Nevada cannabis consumption lounges up to date through a newsletter, which can be subscribed to on the government website.

Cannabis industry could be worth over $90 billion by 2026

Cannabis industry could be worth over $90 billion by 2026

cannabis industry market projects

When states began legalizing cannabis for recreational use following Colorado in 2012, the trend looked promising. Multiple states followed suit in the years to come, and as of 2022, 19 states and the District of Columbia have legalized cannabis for recreational use.

In addition to adult-use cannabis, the majority of the country now has some form of medical cannabis laws on the books. The rapid growth of the industry has turned initial predictions for the industry’s revenue on their heads.

In 2017, those with insights into the industry and a pulse on the growth of the legal cannabis market predicted that the industry could bring in as much as $25 billion in revenue by 2025. A recent analysis by MarketsandMarkets found that cannabis industry revenue surpassed $20 billion in 2020. It also predicts that legal cannabis markets could be worth over $90 billion by 2026.

In other words, the industry has triple the growth potential as originally thought. This is a positive sign for those wanting to see the industry grow. It also shows the increasing acceptance of cannabis as a recreational product, and the changing perceptions surrounding cannabis consumers.

Concentrates are the main product sector that is seeing the most growth since 2020, and has the most projected growth through 2026. This includes edibles, tinctures, vape pens, cannabis extracts and other concentrated products.

What may come as a surprise is the finding that medical cannabis dominated the majority of cannabis revenue since 2020. However it does appear that the conductors of the analysis included CBD as a medical cannabis product.

CBD has exploded in popularity as a legal “health supplement” after the 2018 Farm Bill legalized hemp, i.e. cannabis with a THC percentage below .3%. Opposed to medical cannabis which requires a patient’s license and purchasing from a licensed dispensary, CBD can be obtained from a smoke shop or gas station in some cases.

Not to take away from the success of medical cannabis states, Oklahoma was the highest grossing cannabis market in the country in 2021, despite only having a medical cannabis program.

Overall, future growth of cannabis markets will be mostly seen in North America as Canadian and US markets continue to grow. Other factors such as an increase in recognition of medical benefits of cannabis and growing consumer demand for cannabis in disease management and treatment due to high health care costs are expected to drive the growth in the North American region.

As for hemp markets, the industry is projected to hit roughly $25 billion by 2025. The hemp industry was worth over $4.5 billion in 2019, just one year after hemp was federally legalized.