Cannabulletin: Your source for Aggregated Cannabis News View this email in your browser (http://us12.campaign-archive1.com/?u=6f95bb3d20482a8e9e013f802&id=b7c4d99748&e=d756ab8267) 10/24/2016
** Welcome to Cannabulletin
Cannabis News that Informs, Intrigues & Captivates.
** A Tale Of A Government Owned Dispensary (http://www.dopemagazine.com/cannabis-corner-a-tale-of-a-government-owned-dispensary/)
This story starts out just 45 minutes outside of Portland, Oregon (http://www.dopemagazine.com/news/oregon/) , alongside the breathtakingly scenic Columbia River. Head right up Highway 84 East and it is just a few minutes from the Bridge of the Gods. This dispensary, located in North Bonneville, has set the standard for a small town to utilize the power of the cannabis plant. North Bonneville’s population hovers around 1,000 citizens and has, in the past, struggled to keep its lights on. Mayor Donald Stevens, often referred to by locals as the The Marijuana Mayor, of North Bonneville stated that the city proposed to bring cannabis into their town to help out with funding. “We are all about putting money back into the employee’s hands and into the community to improve life here in North Bonneville,” Stevens shared. After forming a government body which included a Board of Directors, the city’s vision began to take root.
The Cannabis Corner opened its doors on March 7, 2015. Mayor Stevens was their first customer and had great hopes of bringing some money back into the North Bonneville community. Here we are over a year later, and DOPE Magazine had the chance to catch up with Stevens. He shared that he believes the city is, “Probably about a year and a half or so away from getting its debts paid down,” and once they do they, “Are looking to funnel The Cannabis Corner profits, hundreds of thousands of dollars each year, back into a public fund that will help finance grants and get the community up and running on full again.” One of the first things the city wants to do is rebuild one of its local playgrounds.
A very unique part of this story is that The Cannabis Corner is being run by a non–profit group so the city is not liable for the sale of cannabis. Still being a government owned non–profit group, they have a much more forgiving budget that allows them to retain a well–trained staff who consider themselves educators. They are there to help the consumer from the instant they walk through the door with any and all of their cannabis needs.
With Skamania County having a moratorium that restricts the locals from growing cannabis (http://www.dopemagazine.com/business-of-regulating-cannabis/) in their community, The Cannabis Corner has had to focus on stocking its shelves with the best products from all around Washington State. You will never see their shelves empty. I was able to sit down with the Executive Director of the North Bonneville Public Development Authority, Robyn Legun. Legun looks over the everyday operations of The Cannabis Corner, touring a lot of the grow facilities so she is able to handpick products and ensure that they are of the highest quality. It is her top priority. Having a great budget set aside for products, The Cannabis Corner is able to generate a great revenue for cannabis growers and producers throughout the state. “Because The Cannabis Corner doesn’t have a single owner reaching into the pot asking for his or her dividends as fast as possible, we can seek out the smaller growers so we don’t have that same mandate that some shops have of buying low and selling high.” Legun explained. They are here for the people.
Robyn had fantastic stories to share about the shop’s customers: “So there was a specific group of three native fishermen that would come in and a couple of them were big drinkers. After coming in regularly they got turned onto cannabis concentrates. So after a couple of months we noticed only two of them started showing up, so we asked ‘hey where is your buddy?’ Their reply was that he had quit drinking and got a good job” I immediately asked if he had quit smoking as well, “No no, he was able to keep smoking. And in this case, cannabis helped him pull his life together, and this is just one of many stories that are out there.”
With The Cannabis Corner carrying glass from all over Oregon (http://www.dopemagazine.com/cannabis-at-the-oregon-state-fair/) and Washington, they are trying to support every aspect of the cannabis industry while giving back to their community. This is the first and only municipality-owned dispensary in the world. “We have been the only municipality-owned pot store for a year–and–a–half, and my goal is to be the first not the last,” Mayor Stevens concluded.
** Before Amendment 2, legal cannabis industry already budding in Florida (http://www.mypalmbeachpost.com/news/news/state-regional-govt-politics/before-amendment-2-legal-cannabis-industry-already/nst9W/)
With his raspy voice, long ponytail and friendly demeanor, George Douthitt is the guy you might get if you called central casting and ordered up a vintage pothead.
True to form, the 63-year-old eagerly accepted a delivery from his weed guy one recent morning, forking over $50 for a small package of marijuana.
This drug deal, however, quickly veered off script. The buy was completely aboveboard — as evidenced by the $3.50 in sales taxes tacked onto his tab.
Florida voters on Nov. 8 decide the fate of Amendment 2 (http://www.mypalmbeachpost.com/news/news/state-regional-govt-politics/second-try-for-florida-medical-pot-amendment-pits-/nshtH/) , which would widen the availability of state-regulated marijuana. But a legal cannabis industry already is budding in the state.
Douthitt is one of nearly 400 Floridians permitted to use a breed of cannabis known as Charlotte’s Web or Haleigh’s Hope — and once labeled Hippie’s Disappointment, because it has too little THC to get you high. The marijuana can be purchased only by patients whose doctors vouch that they struggle with seizure disorders or severe muscle spasms.
The low-THC cannabis can be grown and sold by only a handful of state-approved companies. These ganjapreneurs have invested millions in climate-controlled cultivation facilities, carefully calibrated toxicology testing and retail networks.
After taking delivery, Douthitt didn’t light up — smoking marijuana flowers remains illegal in Florida. Instead, he lifted his vial of cannabis oil and carefully measured 5 milliliters, then squirted a few drops of the amber liquid under his tongue.
Douthitt, who lives in Pembroke Pines, suffers daily back spasms and cluster headaches, which he says are more severe than migraines.
“It is a mule kick when it hits me,” Douthitt said. “They call them suicide headaches. You want to kill yourself.”
The legal cannabis oil is low in THC but high in cannabidiol, or CBD, which is thought to ease convulsions, inflammation, anxiety and nausea. Douthitt says the CBD oil turns down the intensity of his spasms and headaches and eases his nausea.
“Nobody knows why it does what it does, but it works,” he said.
Douthitt buys his CBD oil from Trulieve, the marijuana business that was the first in the state to supply product to patients.
Trulieve operates an 80,000-square-foot growhouse in the Florida Panhandle town of Quincy and this summer opened dispensaries in Tallahassee and Clearwater. The company also delivers throughout the state. Douthitt received his order at his doctor’s office in Lauderhill.
In addition to CBD, Trulieve makes high-THC cannabis, which is available to Floridians who are terminally ill. State lawmakers this year passed a measure legalizing full-strength pot for patients who are likely to die within a year.
Trulieve Chief Executive Kim Rivers said tens of thousands — and perhaps hundreds of thousands — of patients might sign up for Florida’s legalized weed in the coming years, even if Amendment 2 fails.
“While we don’t think there’s going to be an overnight boom, we do see it as growing steadily over time,” Rivers said.
Amendment 2 would broaden the number of patients who could use high-THC cannabis legally. The measure would make pot available not just to people who are on their death beds but to patients coping with cancer, AIDS and other diseases.
Rivers is cagey about how much Trulieve has invested in start-up costs. The company was required to post a $5 million bond to win its state license, and setting up a statewide operation with 30 employees required a “significant” investment, she said.
For now, Rivers acknowledged, Trulieve is losing money. There simply aren’t enough customers in Florida’s new cannabis programs to offset the hefty entry fee.
“I don’t think it takes an advanced degree in accounting to do that math,” Rivers said.
Among the state-approved marijuana businesses is Modern Health Concepts of Miami-Dade County. Like Trulieve, it doesn’t disclose how much it has invested to ramp up its business.
And like Trulieve, Modern Health Concepts touts the purity of its product and the cleanliness of its facilities.
Because Florida requires a physician’s approval for medical pot, the state’s cannabis producers say they must persuade doctors that CBD is legit medicine.
“Physician engagement is critical,” said Richard Young, CEO of Modern Health Concepts.
For that reason, Florida’s cannabis growers have taken pains to distance themselves from the industry’s Cheech and Chong roots. In Colorado, where weed is legal to anyone who wants to buy it, strains are marketed with provocative brand names such as Outer Space, Bio Jesus and Dopium.
In Florida, on the other hand, cannabis companies say they’ll be far more subdued in their marketing.
** Supplier Negotiations in a Non-Vertically Integrated and Emerging Cannabis Market (https://smallbiztrends.com/2016/10/medical-marijuana-supply-chain.html)
With just 44 operational medical cannabis dispensaries (retailers) and 19 cultivation centers (suppliers), the Illinois medical cannabis industry is indeed small. All legal medical cannabis in Illinois must be grown, harvested and sold within the state. In other words, no cannabis can be bought or sold over state lines.
Most cannabis business licensees (https://smallbiztrends.com/2016/10/marijuana-business-opportunities.html) have a stake in either the retail or supply side, but few are vertically integrated. The gap between dispensaries, who engage in frequent patient interactions, and cultivators, who grow and process medical cannabis, creates a non-vertically integrated supply chain. This market is further complicated by the number of retailers and suppliers, similar product offerings (for example, five cultivators currently stock the strain of flower Blue Dream), and dynamic nature of product availability (largely contingent on harvest and shelf life.) Accordingly, dispensaries must work in close cooperation with cultivators by developing long-term, stable relationships to offer products that best meet patients’ needs.
As the owner of a medical cannabis dispensary in the Chicago suburbs, we view our negotiations with suppliers as a channel to understand each other — what’s important to each party, how do we prioritize our own needs and the needs of our counter-parts, and what are the deal terms to maximize overall value.
** Insights Into the Medical Marijuana Supply Chain
** The Value of Negotiations
In order to build these strategic cooperative relationships, we recognize that our negotiations with suppliers provide a means for both parties to obtain their own profits. From the viewpoint of income distribution, we seek to obtain a Pareto optimal solution within the whole supply chain. When this is achieved neither one of us can be made “better off” without making the other party “worse off.” A Pareto optimal solution serves to maximize the number of high-quality products, promotes supply chain throughput, and creates a win-win with regard to price volume negotiations. Downstream the result this provides to the patient is assurance of in-stock inventory, greater product variety and affordable product pricing.
** Assessing Our Own Needs and Objectives
Our first step in the negotiation process is to evaluate our own needs and objectives. We routinely assess our inventory levels. We make use of reporting tools in our point-of-sale system to determine what products need to be reordered and the reorder quantity. Metrics like inventory turnover, inventory to sales ratio and out-of-stock items are evaluated. We also take into account patient product requests and new products to hit the market. For example, we may choose to reduce our inventory count of cannabis oil topical bars now that topically applied cannabis patches have come to market.
Secondly, when determining the reorder quantity, we consider how much we are willing to pay (cost of goods) compared to the price the product will sell for (revenue per a unit.) We make estimates on the effect that future supply of cannabis will have on prices, i.e. more cultivators and an expanded product line may drive prices down, a trend we’ve seen in Colorado as prices have dropped by more than 40 percent since the beginning of 2016. We consider whether it’s in our best interest to make smaller, more frequent purchases or if we should take advantage of volume discounts and order larger quantities.
** Understanding Your Supplier and Their Priorities
Understanding suppliers’ objectives can illuminate proposed and negotiated deal terms. We talk with suppliers on a weekly basis, go out with them socially and visit their cultivation facilities. We ask questions and open dialogue: * What other dispensaries carry their products? Do they have a relationship with our closest competitor? Is the dispensary 20 minutes from us carrying their products? And if so, must we carry these same products, as a point of parity, to meet consumer inventory expectations? * Are they looking to offload a particularly large amount of inventory? If so, for what reason? * Which of their products are in greatest demand? Why are these products so sought after? What are their stock levels on these products? * Is their company looking to innovate? Where are their R&D efforts focused? What’s in their product pipeline? * How ambitious are their efforts to gain shelf space? * Are there opportunities for us to co-brand or co-market? Are they open to white-labeling their products? * Will they negotiate on payment terms?
** Embracing Transparency and Ongoing Communication
We believe transparency and communication are the bedrock of our supplier relationships. We openly share product sales data. We drill down in to this data and look under the hood by soliciting feedback from patients and dispensary agents. We incentivize participation by patients in product surveys and focus groups or to leave reviews on our Facebook page. We evaluate a patient’s loyalty to a particular cultivator or category of products, how the product met a patient’s expectations and likelihood of product repurchase.
This feedback loop guides our product roadmap. It ensures our products are exceeding customer expectations. The more information we provide to our suppliers, the more likely it is that they can create even better products and we can deliver a more amazing customer experience.
** Collaborating Outside of the Supply Chain
Discussing the single issue of price can be contentious and, even, counterproductive when trying to strike a negotiated agreement. To this end, we present multiple, extraneous opportunities to our suppliers as a means to strengthen our relationship. These opportunities include: * Engagement with “condition-affiliated” groups, i.e. joining forces for an educational presentation to epileptic patients on the medicinal benefits of cannabis for those suffering from seizures, * Product specials geared towards specific groups of patients, such as deeply discounted products for Veterans on Memorial Day, * Outreach to the medical community and * Assistance with prospective patient enrollment in the Illinois medical cannabis program
In conclusion, supplier relationship management should not be viewed as a “once and done” exercise. In a non-static environment, particularly one like the Illinois medical cannabis market which is characterized by high product innovation and accelerated demand growth, an iterative assessment of the supply chain must be continuously undertaken.
** Cannabis Tax Revenue Is Overwhelming Oregon’s Tax Office (https://www.leafly.com/news/industry/cannabis-tax-revenue-overwhelming-oregons-tax-office)
Oregon’s adult-use cannabis program is taking in so much tax money that it’s affecting day-to-day operations at the Oregon Liquor Control Commission’s Portland office. On Thursday, the OLCC announced adjustments to the payment process because they’ve been running into some issues with cannabis business owners paying their taxes in person.
Oregon officials estimate that they’ll take in around $43 million in tax revenue from recreational cannabis this year. The tax adult-use sales at dispensaries went into effect on January 4, 2016. More than $10.5 million in tax revenue came in during the first quarter of 2016.
Because many cannabis businesses have limited or no access to traditional banking services, they end up making their tax payments in cash. Doing that requires booking an appointment with the OLCC. And those are becoming harder to come by.
For example, appointment slots late in the month are usually all full, which leaves the commission little to no time between appointments. So, if one of the appointments runs over the scheduled time—like if someone shows up late for their appointment, or brings in a larger payment than originally planned for, it can put the commission behind schedule for the rest of the day.
The state accepts cannabis tax in several different forms: check, money order, or cash. Business representatives paying in cash must call for an appointment at least 48 hours in advance. (That number is 503-945-8050.)
To help the OLCC make payment processing more efficient, keep these tips to keep in mind: 1. If possible, schedule your appointment for earlier in the month. This is particularly important if you’re paying on behalf of multiple locations, because it will take longer for the OLCC to process multiple payments. 2. Schedule your appointment at least 48 hours in advance. Consider setting up the next monthly appointment at the end of the current month’s appointment. 3. Arrive at the scheduled time with your payment voucher filled out fully and correctly. 4. Bring the money sorted by denomination, facing the same way, and ready to be counted.
The OLCC reserves the right to reject any payment from businesses that don’t abide by the commission’s requirements, listed here (http://arcweb.sos.state.or.us/pages/rules/oars100/oar150/150_305.html) .
Oregon’s tax rate for adult-use cannabis ranges from 17 to 20 percent. Legislation set the base tax rate at 17 percent. Under certain circumstances, cities and counties may add up to an additional 3 percent local tax.
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