From Compassionate Use To A Corporate Buyout: 24 Years In California Cannabis, A First-Hand Experience

By Mara Gordon, founder of Aunt Zelda’s.

I entered the medical cannabis space as a collective under the 1996 Compassionate Use Act (often referred to as 215). This allowed me to provide medicine to collective members, and take in taxable donations to pay for the cost of the medicine. This model also allowed me to do research and development (R&D) on the medicinal benefits of cannabinoid-based medicines, and chart the doses required to achieve maximum therapeutic results. The patients we cared for (under medical doctor supervision) had serious illnesses that often were not adequately addressed by allopathic protocols. This information was used to establish both the profile and dose for pre-clinical and clinical trials that have been conducted in Spain and Australia. 

Once Prop 64 was the law in California, we were no longer able to operate under the collective model. In its place was a series of license types for each step in the supply chain - testing labs, cultivators, manufacturers, distributors, transporters, retail - both storefront and delivery. The micro-business and shared licenses appeared initially to be promising for cannabis artisans. However, there are not many that can afford to operate with these limited license-types. 

Also licenses were further divided into ‘recreational’ and ‘medical’ without any requirements that patients have their medical needs met. Pushed to the side were the tinctures, extracts, and salves, and in their place were mass produced, white-labeled products with large marketing budgets to pay for shelf space. These newcomers to the space were often out of state investors looking to cash in on the cannabis economy with ROI (return on investment) and stock share prices the sole focus. Creation and protection of intellectual property, and producing fancy pitch decks was now the heart of the cannabis industry. 

See also: The Evolution Of Capitalism: A Cannabis And Psychedelics Investor's Proposal

The new model required me to go from an R&D model to full-scale manufacture if I wished to continue to supply our patients with the medicine they depended upon for their health. This necessitated finding a building in a properly zoned area at a reasonable cost. A building that leased for $.75 per sq ft became $2.75 (or more) per sq ft as soon as they knew it was for a cannabis business. I was required to get the landlord’s approval to have a cannabis business, making this over-inflated pricing a form of extortion. The landlord is free to change his mind at any time during the lease without reason. So, not only was I taking on the high cost of a leased facility, I had to make very expensive upgrades and capital investment in the hundreds of thousands of dollars without any guarantee that I wouldn’t have to cease doing business at the whim of the landlord. Zero tenant rights. 

The cannabis medicine that we manufactured had to be sold to a distributor, who then sold to a retailer. The retailer sold to the patients. Instead of highly knowledgeable researchers working directly with patients, the system now required patients to depend upon ‘budtenders’ that are too frequently minimum wage, uneducated young men and women without sufficient incentive to direct the patient correctly. The sales cycle is about how much THC for how little money a consumer can buy, and less about what profile and dose is best suited to treat, for example, epilepsy and chronic pain. It should not be the budtenders responsibility anymore than it would be that of the pharmacy cashier to advise the patient as to which pharmaceutical is right for them. 

We did not place our products in dispensaries prior to Prop 64 because it was important that we controlled the process with the patient. Now, there is no way to know who is using what profiles and doses  - or if they have stopped because of the obstacles to getting it now. The prices for patients has doubled, and in some cases, tripled, forcing patients to either lower their dose to the detriment of their health, or turn to the illegal market, which is estimated at 80% of the California cannabis market. 

I didn’t have a sales or marketing team because we were not interested in sales as much as knowing how to best treat patients. Once I was burdened with overhead that comes along with a license, I watched my financial reserves dwindle while struggling to fit into this new paradigm. If we didn’t have enough revenue through sales, I was left to cover rent, payroll, etc. It didn’t take long to learn that this was not a sustainable model.

It is important to add my medicines had been made in small batch and independently lab tested since 2011. I am not a cultivator, so I came to agreement with a number of small farmers who were dedicated to growing for us knowing their flowers would be used to make medicine for the sick. They grew to our specifications, and we agreed to purchase their crop based upon the lab results. It still had to meet our standards, but they were autonomous. These farmers were able to provide for their families, do meaningful work, and contribute to their communities. Most of these farmers are no longer able to grow the medicine they have been producing for generations as their land is not eligible for licensing because their land is too small, the zoning is incorrect, or the costs of entering the legal market is prohibitive. This means I am now expected to compete with large-scale manufacturers buying in bulk, and dispensaries catering to the 21-34 year old male that wants pretty flowers to smoke. The pressure on large-scale farmers to grow hardy cultivars instead of the varietals that may be best suited to treating a particular disease is obvious when I look for the proper profiles. 

See also: Black Veteran Sent To Prison For Medical Marijuana: What's Wrong With Our Cannabis Laws?

Fortunately, I was able to sell my manufacturing facility to a corporation that is willing to keep my people to continue to produce my medicines as orders come in. The model isn’t ideal, but it is the only viable option in a broken system that has seen the majority of medicinal brands disappear in the first year of legalization. 

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted In: Mara GordonCannabisMarkets

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