High Finance Podcast

Another picturesque farm in Oregon, this one tucked in between mountains and a river, hidden and peaceful, with 20 llamas to greet you. It’s where Nathan Howard, his brother and their crew grow their medicinal cannabis with the intent to go completely off the grid. If their success continues, they will branch into rec as well, not so much for the financial opportunity, but for the opportunity to invest back into the beautiful rural community they live in. But Nathan leads two lives: One as the farmer/partner, the other as a political advocate as he moved into the Portland Mayor’s office as part of the crew. There, he can educate and advise as the new Mayor helps shape policy for the legal industry. How did cannabis find you? Nathan’s oldest brother born with a NF, a rare disease causing abnormal cell growth, giving him a large number of tumors. CBD proved to help relieve both his pain and epilepsy. It also cut down the pharmaceuticals he needed. This was the impetus for the CBD farm in southern Oregon. The science is catching up. Farm is tucked away in a small town. Pack of llamas, part of the lease on the land. Right now, they are bringing the farm into compliance and things look like a war zone. Would you move into the rec side of cannabis? Would have to talk to partners, but probably. The more medicine they produce the more successful they will be. They would like to give about 7% back to their county to help support the county and rec would help accomplish that. Have been preparing books and information for interested investors. How has he been finding investors? Outside of friends and family, they started making a list. The list if people who are outside of their known community. The opportunity is new wealth in the rural counties. What makes your company attractive to investors? Lower operating costs than many other growers. Long term projections of being completely off the grid. Right now they are indoor and outdoor, they may move to all greenhouses. 74% of angel investments are made on gut decisions. What about your company made the investors believe in you? They saw the confidence that the team had the will to push on through the tough times and that confidence transferred to the investors. How did you end up in the small town? Family had always loved farming. Brother helped out in Portland neighbor farmers’ markets. About 7 years ago, he visited the small town and the cannabis gardens and he decided to make a life there. Visiting his brother made Nathan fall in love with the area. The farm is a long drive from Nathan’s Portland-based job, but it’s part of the reason there is peaceful beauty when people get there. Climate change has made for hotter summers and more forest fires. The heat and smoke has made everyone think that maybe they will need to move everything indoors. And they may need to be breeding plants that can stand the heat better. As part of a campaign team for Ted Wheeler, former State Secretary of the Treasury and apparent next Mayor of Portland, what will Portland’s policy be? He will be an advocate for the cannabis entrepreneurs.

It’s not all about yield and pounds, it’s about a sustainable, quality product. Robert Elam knows because he and his partners are constantly experimenting to deliver rich, popular strains of cannabis from a grow farm that emphasizes organic growth and a small production footprint. Robert and company of friends have taken patient years to construct their own grow facility and to do it on their own capital rather than take on partners who might not share their values. And they are their own distributors, so Robert is in constant contact with the dispensaries who report what the consumer wants and demands. How did cannabis find you? Young. Found early in school, started to grow as a young adult. Has an organic landscaping company, so plants are a natural outgrowth. But also has a business degree, so when he got his first job, it really catapulted him into the industry. Came to Oregon because of a woman - to whom he is now married - who lived in Oregon and with whom he reconnected. Was tough at first, took six months to get a job and now is in a gorgeous facility. Was approached by person now his business partner who found a great space on Craigslist. They put in their life savings, did as much of the work by themselves as they could and built it out slowly and got rooms on line one at a time. As money came in, they expanded so they have done it all on their own. Partner had a structural engineering degree, which was a great asset. Keep up on lighting and atmospheric controls. Also try to keep footprint at a minimum for electricity and water usage. The Team: Most have been friends for years. Has known his business partner for eight years, have known gardeners for years as well. Small team with lots of knowledge and work collaboratively. Use a trellis system. Stake plants out when they are ready for their potting, then spread out to get the middle of the plant exposed. Three plants per cart and have large plants with big canopy. Only flower the number of plants for whom they have cards. Working with state regulatory bodies has been pretty smooth so far. Application has been accepted and waiting for site inspection. Going to change grow routine to smaller plants but more plants. Why? Because vegetative time to get large plants is months, so want to reduce the time and improve yields. Also, more manageable and less time for disease to set in before harvest. And large plants more apt for branches to break and lost yield. Had opportunity to test two identical grow rooms, one synthetic and one organic. Synthetic yield was superior but organic quality was superior. So decided to go all organic. Fit with their personal lives and professional goals. Quality first, then yield. Other way around much more difficult. If you’re not doing the breeding yourself, you must be incredibly careful of taking another company’s cuttings. Cherry Pie, Cotton Candy Cush have been really popular strains. Try to grow only the “incredible” strains. Currently in 8-10 shops. Started out with 33 but had to limit quantities. Also added difficulty with dealing with so many shops. So current number is more manageable. They do their own distribution. What’s it like being a grower working with the shops? At the end of the day, it’s obvious what strains the consumers want, which allows the grower to make selections. Don’t get that feedback unless you deal with the dispensary directly as Robert does. If you are only in the garden, you just don’t hear from the consumer. Leafly good publication for a consumer who is a novice. Not anything very useful for dispensaries and growers. Won DOPE award for best producer. Have won others.

Tax expert and a leader in shaping the financing and structures of legal cannabis companies, John Magliana talks about the practical aspects of dealing with the 280E tax code section, which has huge impact on the operation and success of those involved in the legal industry. In particular, John emphasizes setting up your company - whether grower, processor or dispenser - properly. Doing it correctly in the beginning can save an owner tons of money in the long run. Also, great record keeping not only helps any business run better, it is especially important to a cannabis company for credibility when challenged by the IRS. Section 280E, Internal Revenue Code, if you “traffic” in illegal substances, normal business expenses are not allowed. It is a gateway issue: If you get audited by IRS, they get an in-depth look at your business. Then info can spread to state level and if inventory or other issues appear, there is potential liability. Stems from a drug dealer case where the dealer was able to write off certain business expenses after being caught. So congress passed 280E to blunt the trend. Key is cost of goods sold, because that is a write-off. Very difficult for a dispensary because direct cost of goods sold not necessarily written off, such as labor. But for a grower it’s different, because labor is involved in growing the plant. Very sticky. SAD, John’s acronym. S: Segregate what is trafficking and what is not. A: Allocation of cost of goods sold. D: Diversify your stream of income to show you are not solely a trafficker. Get set up correctly to begin: You could be paying an 85% tax rate while your competitor is paying 35%, just because they have set up the accounting correctly. One technique: Set up an employee leasing company, make it a profit center and when you can allocate their labor to direct cost of goods sold, you can get the write-off. Murky: When employee is selling T-shirts, pipes and so forth, they are not trafficking. However, when they sell product, they are involved in trafficking. Set up the store so there is a separate location between product and non-product items. So allocate the employee’s time between the two. Practical Key: Have clean, good records because when there is a dispute, the auditors will view good records as credibility and more likely to believe the write-off assertions. There is a good side to 280E: The industry is only going to grow and be respected if the bar to operations is kept high. It screens out the unprofessionals that are the root of the bad stigma. The best thing to happen to the industry is rec. Why? Because anyone who wants to do business legitimately, they need to get a license, they must pay taxes and there will be pressure on the mavericks to pay their fair share. Also, with investors looking to get into the industry, 280E disclosures need to be up to date and accurate or investors will have recourse. This helps keep the industry clean. Be careful of pass-through company structures (LLCs, Sub Ss), as IRS can go after personal income taxes. Being a C corp makes it easier because the company is potentially liable, not the individuals. Always file a non-fraudulent return, then the clock starts on statutes. Keep returns for six years. Keep all transactions transparent to your bank. Allow them to check on daily sales if they want. Use a company credit card for everything you do. Receipt and description. Nevada good state to register IP for larger companies. No state income tax. Will there be a follow up to 280E? If marijuana is taken off schedule 1 AND 2, 280E will not apply. Other “fixes” would be to say 280E does not apply if company is in compliance with STATE laws.

Music festival promoters come from all angles, but Levi’s perspective is very clear: To promote positive changes in the laws to recognize the huge responsible use of cannabis products. Levi heads up the Seattle Hemp Festival and talks to us from the road in Medford, Oregon as the troupe takes the show on the road. The Seattle show has enjoyed amazing success becoming a respectable gathering that has been incident-free and serves to be a focus for serious cannabis users to enjoy themselves, list to a variety of music, and discuss successful legalization. How did cannabis find you? Volunteered for Seattle Hemp Fest. Had an opportunity to book the bands and fell in love with the culture. First Hemp Fest (2004/5) brought in some heavy rock music. Music and marijuana go hand in hand! Fest has grown to five live musical stages. Everything from blues, to punk to reggae. Getting city leaders to come in and talk. 400 - 500 vendors. Will be adding an app so can view the broadcast for those who don’t want to be in a crowd or can’t get there. Since legalization, lots more serious people attending, talking more about the laws. Being on the road and crossing state lines on the tour has caused everyone to be hyper-aware of each state’s laws. The medical card can be honored or not. Early festivals really pushed the buttons, including bringing cannabis bushes on stage. Have had lots of celebrities show up but couldn’t publicize them because crowds already so packed. So just surprise the audience with them. In 24 years, no violent incidents, even with 100,000 plus people going through the Festival. Proof there can be a peaceful festival. And when they leave, all the trash is cleaned up leaving the venue pristine. Set up a licensing with a Las Vegas group, trying to set up with people in other states that legalize. Levi hasn’t seen the “grocery store” setup in Oregon that they have in Washington. However, that is because of different regulations. Is there a difference between product offerings in Oregon and Washington? Levi thinks both states are offering high quality product and doing a great job in production. Glass blowers are creating fabulous pipes that are works of art. Don’t allow lighters or torches at festival. Most parks are smoke-free, but exceptions are made. Everyone is a volunteer, so last thing they want is to be taking care of people who “dab out”. Keeping the festival mellow and for networking and enjoying music is the mission. Purpose is to make a positive change in the laws. Lyon Pride Music - app to get cannabis related music.

There’s more to being in the cannabis business than passion for the industry, much more. You have to be a successful business person and you have to market your business professionally to demonstrate how your product is different. Whether you’re a dispensary, processor or producer, you have to develop and keep your tribe. This is the sermon from Alexa Divett, cannabis advocate who coaches cannabis entrepreneurs into the business world. As those entrepreneurs are creating an industry, Alexa is their sherpa, guiding their brand development and helping them through the stress and trauma while traversing this wild journey called legalization How did cannabis find you? Alexa has been in the industry longer than she would like her parents to know! However, she did find cannabis for medical ailments superior to pharmaceuticals and that’s when she became an advocate. Her parents were entrepreneurs, so with her background in PR, it was a natural to go out on her own. What was fascinating to her was the opportunity to create an industry versus sitting in a cubicle executing someone else’s vision. At Southern Oregon University, she thought she was going to be an environmental scientist, but she wasn’t good at math. so she transitioned into journalism with a PR emphasis. Got some great breaks right after college with Trillium Services in Portland in fundraising. But the money wasn’t quite enough, so she bartended while learning about digital media when the discipline was being born. She cut her teeth on webinars learning about it. Started a creative/PR company but realized business coaching was her true calling. More than handling marketing, she saw that cannabis entrepreneurs needed an advocate. She is essentially a one-woman company with plenty of backup people and branded products to help her clientele. The spirit of “uplift”: Seeing the professionalism more and more in the cannabis industry. Better behavior in the industry and how all are treating each other. The education piece is SO huge in this business. She now has an Ebook and lots of coaching modules available. Her vision is more clear now than ever before; she sees the need for what she offers. Because of the history of cannabis, there has been this odd blend of friendship and secretive business. No last names, contracts of business structure. Worked with friends before legalization, now there are others involved. Lots of the people in Oregon are not “coachable” right now; they think they are on top of their game. But there are so many others around the globe who need her digital products. Getting to lifting the veil of how hard it is to be a good business person is the big challenge. Staying coachable and humble are necessary ingredients. There’s no way anyone can know it all. The people who speak up to Alexa and want her coaching are baby boomer men. Her business is growing. Most of the one-on-one are with Oregon people. Can get to more people and faster when she can do group sessions. The big vision: Scalability; Digital entrepreneurship for the cannabis industry. How do we get the real ROI? How does weed sell itself as opposed to couponing? Email marketing still the most effective marketing for a small business, along with your own website. Those things cannot be taken away from you as other advertising - such as FaceBook - can do. It’s not important that Alexa be the best, it’s important she does the best for her clients. There’s not a lot of time before the big companies come in and small businesses won’t want to work with them. Don’t worry about “missing the boat” - it hasn’t even docked yet! Oregon is going to have the opportunity to champion the boutique cannabis approach, much like craft beer has been embraced.

The Pioneer Spirit is alive and well in Bend, Oregon. After being high school friends and finding cannabis together, Aviv and Hunter reconnected years later in beautiful Bend, Oregon to grow cannabis their way. It wasn’t easy. Besides the general resistance of the population, there was a wealthy group that wanted to keep the area a “gentleman’s farm” atmosphere and mounted stiff opposition to their big campus. However, the citizenry of the area backed Oregrown and farm was approved. Good thing, as the two and their wives had already ditched their former homes and put all their eggs in this basket. But the pair has bigger ambitions. With and intense reverence for the land, Aviv and Hunter are researching better crop performance for more than just cannabis, but for all crops and produce. Their pioneering efforts will hopefully lead to more abundant farming for the planet. Who found who first? You or cannabis? It found them when they were 12/13 as cannabis “cured” A.D.D. and as a curiosity too. They’re doing the same thing now they did in high school but now it’s legal! They went to high school together at a mega-school in Chicago. Lots of partying in the Midwest high school scene, contrasted with Oregon kids who seem to have an incredible head on their shoulders They love Bend, Oregon for life and business. Great outdoor activities but still small town feel 10 years in the orthopedic industry; got a great understanding of medical industry. Sold trauma equipment, life-saving situations. Affordable Care Act took away the innovation of the industry. Hooked back up when Aviv was working for a grower and they decided to go together where innovation could still happen. 84-acre farm is their dream place Bend considered recreation center of Oregon. They have downtown location for dispensary, dream farm campus 10 miles away. Was first a pumice mine, then a goat cheese factory. Factory dug a well so they have mineral-rich water Problem was wealthy people coming to Tumalo/Bend, buying exclusive farm land, building a mansion but not farming. Banded together to keep the area “rural” – Preserve Rural Deschutes, but essentially creating a gated community. Threatened the business. Took a gratifying grassroots effort to get the business approved, but was a contested vote and got nasty: Got compared to Auschwitz concentration camp The approach is far past cannabis; agriculture research in many other crops and designed to be sustainable and productive Retail competitive environment is fierce: 21 dispensaries for a 90,000 population town. However, surrounded by dry counties and not too far from California border. By serving on political action committees and by virtue of the downtown dispensary, wind up being a visible model for the community Have 25-30% market share in Bend Seeing lots of “normalization” in Bend; lots of seniors Research is the future of the industry, proving cures and medical benefits This is a global industry and Oregon is behind

If the cannabis industry has a “Mr. Science”, it has to be Jeremy Sackett. A Doctor in Pharmacy, courtesy of the University of Buffalo, New York, Jeremy is in love with all the molecules involved in cannabis and what good things they can do for the body. It took awhile for him to overcome his first exposure to “weed”, however. It was a visit from the local police department to the school, educating the students that marijuana was on par with crystal meth, heroin and the like. However, the lab scientist – even in grade school! – soon came to understand the medicinal value of the plant family. Today, Jeremy’s company, Cascade Labs is aiding processors in delivering precision products and assurance to their users of quality control. The two biggest challenges right now? Regulation changes which play havoc on Cascade’s procedures and methodology is one. The other is processors who do not understand the problems inherent in scaling their manufacturing to increase volume; it’s not a linear process. Cascade Labs, http://www.cascadia-labs.com/ First recollection of cannabis? The police coming to school and “explaining” it was equivalent to crystal meth, heroin and so forth Early grade school, Jeremy wanted to have a lab. Parents indulged by buying animal cadavers to dissect, chemicals and everything to encourage his vocation Looked at cannabis from the point of looking into the constituents of the plant and all the active ingredients that can change how the body works Most of those ingredients don’t get you high, they work as anti-inflammatories and other physiological benefits that have not been explored before because of the illegality of the plant Background: Dr of pharmacy U. of Buffalo, New York. Knew he wanted to help people. Molecules interacting with the body, how the body changes and responds to the things put into it Then got into pharmaceutical sciences and discovery after a couple of years in the Idaho woods working for the Forestry Service Formulation science: How to put a chemical into a pill or capsule and regulate dosage to the body Analytical work on the delivery – then the scale-up for commercialized production amounts There are great indoor growing techniques But the processing after are the hard part. Need SOPs because now you are into real manufacturing and need to understand this is a regulatory-driven part of the business in order to have quality control Paperwork is the key. Electronic records are an absolute necessity. Apply technology even if it is expensive up front because it will pay off in the long run. But because of the illegal background, people involved for a long time are hesitant to keep records Jeremy’s company doesn’t participate in growing or processing, only testing, so they can keep their head above the water. They have seen a significant shift in acceptance from cannabis companies coming to them Was thinking about starting a lab but a presentation about cannabis kicked him off the dime and started lab in 2013 as Cascade Labs His true interest is understanding the effects and building a multi-profile of cannaboids and the different ways they affect the body. Also making the information available to the public so they can use the drugs responsibly Buckets: Industrial, medical/FDA, over-the-counter and social/recreational Need to go to a cannabis store and have it be equal to going to a drug store or a liquor store in the sense that you know what you are getting Tobacco and alcohol are poisons, but cannabis is NOT! Medicine is being re-defined. Wellness is medicine; relaxing, being with your children and so forth also is medicine Lab environment is a very, very hard thing to do. Some methods to analyze take 12 months to develop. Now, with regulations changing so fast, have to scramble to build systems and change them in order to give analyses. Reg changes are the biggest challenge right now

Another great story of “How did you wind up in this business?” Erin Kennedy leapt from Aerospace to cannabis, another example of taking skills from an established industry and applying them to the newly-legalized, constantly evolving world of cannabis. Erin and family had been hoping to move to Oregon some day, and when an opening at Oregon Health Sciences University medical marijuana dispensary became available, they jumped at it. This adventure turned into becoming a state inspector, where she became only too familiar with the rules and regulations, because she basically had a hand in creating many of them with her feedback from visiting all the sites and stores. Then the private sector called and Erin could not resist. Not only is it quite common for people to get knowledge of how the public sector works and then become “Sherpas” to the private sector as consultants, Erin’s performance as an inspector was what separated her from the pack. She gained so much respect as an inspector for her fairness and knowledge that is was the people whose operations she inspected that begged her to work for them. Oregon’s big challenge right now? Stay united. Some infighting has begun and that will only lead to extinction for current operators as they will be easy prey when the rules are set and the big players come in. Cannabis found Erin, not the other way around Working in Aerospace before for five years. Friend told her of Oregon having a medical program. She had family in Oregon and she and husband wanted to move anyway, so they took the leap. Started at OHSU dispensary. She didn’t try cannabis as a kid, was a “rule-follower” – most inspectors are! Not good with bureaucracy because of her “Vulcan” mind for asking if something is logical First inspection was difficult because they were writing the rules as they went along. But they got through is and all was well The stigma of low lighting, people in tie-dyed t-shirts, rather dingy needs to go away to keep the industry credible. Otherwise people from the outside see weed as dark and dirty What’s your vision of the evolution? There is that “Apple” influence with lots of light to show off the beauty of the plants. And then there’s another group that wants you to feel you’re coming into a comfortable home and you’re safe. A place you could bring your Grandmother and feel safe Some go overboard with cannabis themes Hygiene was only recently added to the regulations with regard to inspections. Now with edibles, is very important to watch Watch a company to see if operations actually match written policy. Especially when it comes to inventory control Average inspection is about four hours Always audit inventory. Looking for accuracy first. Record keeping issues and tracking are key indicators of what inspectors will be checking. Weigh inventory and margin of error is 5% actual weight vs. records from receiving inventory to sale. For flower only That 5% means at each stage, not from original inventory purchase Has been to at least 100 inspections so far. Only one time when she thought being an inspector was not such a great idea. Went out to a dispensary where there had been complaints. Was told the place was not safe, but went up to the store anyway. Owner of store didn’t have a retail license, but had a grow site. Rather scary story on her trip through the site, but all ended well 76 pages of rules, and packaging and labeling are coming later Transitioning to OLCC also conflicts with OHA rules. So very, very hard for retailers to stay on top of being compliant Now in the private sector. Very flattering about becoming a consultant to the people that had been inspected by her before, now they wanted her to work for them! Work with growers, processors and retailers.

Whitney’s career as a wholesaler of cannabis products has given her a unique perspective into the industry, because she serves the retailers on the front line. What are the big milestones to reach for the industry right now? De-scheduling – NOT re-scheduling – is one of the key factors, as all business fundamentals for success are currently thwarted by tax code 208-E. However, one of Whitney’s goals is to break the stigma of women in the industry, and that is why she has put so much time to server Women Grow, the national organization of which Portland’s chapter is the largest. Breaking the barrier women feel about participating in the business will be a big boon to business. And she sees improved growing conditions, higher quality of product and continued education of the people serving the customers as the future of successful business and normalization for the industry. A “Jill of all trades” in Oregon cannabis Moved to Oregon to start a CO2 company couple of years ago, Pop Naturals HB 3460 had just started to regulate shops. Was repping a product all over the state at the time Then Measure 91 passed and started to get lots of demand from retailers; “I was showing up on time”, which made her stand out from much of the rep crowd In Portland, lots of small businesses in the retail business. tremendous amount of stress for an operation with not much depth. Add to that the tremendous competitive atmosphere and no wonder why the failure rate is high Navigating the rules changes along with general business climate is “terrifying” Was working with craft beer before cannabis Changing legislation creates a lot of unemployment when shops have to cut back suddenly Even applying for licensing is difficult and expensive Extracts have a higher profit margin than flower, but extracting equipment is expensive Live resins remind Whitney of fresh hops, a reminder of her time in the craft beer industry Is there a certain energy to a shop that predicts its success? Yes, the shops that listen to their customers are the ones that focus on the customer service are the most successful. Also, the shops that educate the people behind the counter so they can serve the customer better are most successful There is continuing education and can be done on a local level There is a huge array of products and numbers of skews. Best shops keep their bud tenders educated What is biggest challenge? Unfair tax burdens and tax code 280-E and not being able to write off normal business expenses. Makes probability of success that much smaller when this burden is added to the business’ list of challenges Banking is the other big challenge. Wholesale is a high-transaction business and there are huge amounts of cash every day. it is a public safety issue. We can’t have people driving around the state with thousands of dollars in their car. Oregon is a friendly state but there are gangs and there is the potential for trouble De-scheduling will solve these problems NOT re-scheduling We work with our legislators to create laws that make our community safer Has been putting big effort into Women Grow organization. Will be joining the governing body this year and leading public relations Why has cannabis industry dominated by men? With history of industry operating in the illicit drugs originally, was dominated by men Also, women have traditionally been primary caregivers and women could lose their children if caught with cannabis Women Grow creates a neutral atmosphere on a monthly basis for women to learn about the industry, network and share stories Loves cannabis but equally excited about the potential of hemp

From the singing slot machines of Las Vegas to Portland’s “Green Mile” has been Julie Dubocq’s saga the last couple of years. After a long career in administration of law offices, Julie’s legal background had a strong appeal for the owners of Shango, a vertically integrated (Shango grows, processes and retails cannabis products) company in Las Vegas. Julie was moved to Portland to roll out Shango’s retail chain and keep control of the quality of the operation in the roller coaster regulatory environment. The eagle eye she developed from all her legal experience has paid off as she constantly watches operations and employees carefully to protect the Shango name by staying in compliance and avoiding any embarrassing setbacks for the company. Her toughest job during all the see-saw between state regulatory bodies? Besides keeping up with the changes and implementing them into the company’s operations, it’s employees. Everybody at Shango is expected to bring their “A” game every day, no exceptions. Even a “no smoking” policy has been enforced, keeping Shango medical patients from smoking on the job. Employees need to be able to talk knowledgeably about cannabis and to keep the cash register balanced at the same time! “We don’t want our customers to think we’re run by a bunch of stoners here”, she says. Shango is as vertically integrated company, grow to retail Julie was in Las Vegas in legal area when contacted by Shango owners Hardest part of keeping up with compliance is retail, but moving forward it will be on producer and processor part OHA changes in March shut down extract operations until time to reapply for licensing in April but were able to keep all employees working. However, smaller processors were hurt and some disappeared. Shango has expanded throughout the Portland metro area. Hillsboro in particular had been a great store because it uncovered a huge population of underserved patients and customers “Everybody’s buying pot, so why not give some of it back to the cities?” (in the form of taxes) We (Shango) try to stay out of price wars because that’s not what we’re about The “Green Mile” is the row of retail shops along Portland’s Sandy Boulevard The medical clients are super-loyal Our best seller in Portland is the flower. In west suburbs, medical clients prefer more extracts. There are so many ways to use extracts in other cannabis products OLCC is staffing up for level of inspection they anticipate. That will determine staffing level of retailers “Sometimes people in management don’t like me but I keep them in line (regarding compliance)” Shango also has licenses in Nevada and applications in other states including Hawaii. Multiple licenses in multiple states Lots of people depending on Shango so they must do things right Nevada only state so far with reciprocity for medical. A card from another state will be honored in Nevada. Hawaii appears to be headed same place What’s hardest for you Julie as Controller? “Keeping up with the changes and hiring good employees.” Have lost more people on the retail side than other areas. Shango people have to be on their A game. We require our managers and bud tenders to have an extensive knowledge of cannabis Looking for people with cannabis knowledge and retail experience Good employees are Dutch Bros. because they have to do math in their head. Also grocery store employees because of their customer service

For 32 years, John Magliana was the quintessential corporate legal eagle, a tax attorney engaged in international mergers and acquisitions. So how did a big business type like him end up in the Wild West cannabis industry? His son. A problem marijuana smoker and finally a runaway, John and son had been estranged for three years – no contact. Then, John got a call his son had been shot in the heart in a shopping mall off the freeway. Turns out, the son had been a medical marijuana grower, his crop went back and he went to the outside to find a supply. The “suppliers” were robbers and wound up being thugs as well. Miraculously, son lived and continues to be in the industry. But it was John who jumped in to help try to sort out the regulations and make the industry professional and safe. That’s when he was contacted by some other individuals and Golden Leaf Holdings, a Canadian public company, was born. Golden is currently the largest extractor in the world. Comes from a tax attorney background Now with Golden Leaf Holdings Co., one of the first publicly traded cannabis companies and the largest extractor in the world How did cannabis find you? Was M&A international attorney for 32 years and now in cannabis – how unlikely However, also a father of a son who could not stay away from pot caused family problems He ran away from home, didn’t hear from him for three years. Then got a call he had just been shot. Turns out he had been a medical grower and lost a crop, so had to find another source and made a bad choice. They were there to rob him and when he resisted, he was shot in the heart. The bullet went into his heart, the ONLY part of the heart that could take a bullet and not fail In the hospital, son asked John to help him make the business more legitimate and regulated so things like what he went through to take care of his customers didn’t happen again. John got with Andy Hartong (sp?) and Jack Schwebbel (sp?) and they started Golden Leaf Holdings It’s amazing watching the family come around to understanding the cannabis industry and seeing the changes and legitimacy The thing that made Golden Leaf work was everybody brought a different skill to the company “Andy is the Steve Jobs of pot” I don’t smoke now but I smoked enough in college for three lifetimes Golden Leaf challenge: Cannabis company must have residency. That kills a public company because stockholders can reside anywhere. Put together a structure that reallocated corporate attributes Also, Golden is a Canadian company and investors are from all over the world There is a misconception that if you want to get into the business, all you need is a jar, dirt and seeds DEA is now looking at taking cannabis off the scheduled narcotics It’s time for people to come out of the shadows, pay taxes and be mainstream Banks CAN have cannabis accounts; John has had an FDIC banking relationship for Golden for over a year. The problem for banks is they are in trouble if they take black market money. If you lie to a bank about WHAT you do, you can go to jail. Don’t do it Obama legacy is a phrase we hear – will he give clarity and certainty? We are a link between cannabis and food; canna butter, infused products The people in their 50s and 60s are the logical shoppers. They’re the ones who smoked the “evil weed” and are now the professionals in society It is clear that the oils and extracts are where the market is going; smoking is on the way out along with smoking in general “I see cannabis in the home as a parent issue. Do you keep your alcohol out for your kids to consume? We shouldn’t stigmatize cannabis any more than we do alcohol.” “I have no problem with the ‘poison skull’ picture on cannabis. It will let the kids know to leave it alone and the parents understand.” We need to look to other countries to see what they have done to legalize and control previously illegal drugs

Anthony Johnson is a war veteran. Maybe not in Afghanistan or Iraq, but in the long, protracted war to legalize cannabis. He’s fought many wars and lost quite a few of them, but he is confident the big war is winnable. As a law student in Missouri, Anthony saw unequal treatment of his African-American friends in the issue of possession of Marijuana. Not only in the arrest procedures, but also in the incarceration. He decided that reform was necessary and it became a vocation. Putting an issue on the ballot in 2003, he tasted his first defeat, but he learned. He and his group revised the initiative and put a split bill on the ballot in 2004 which passed solidly. Bringing his war medals to Oregon in 2004, Anthony became not only the prime drafter, but also the spokesperson for Oregon’s landmark 2004 Measure 91, which brought major reform to the state’s marijuana laws. However, there’s still much to do for Oregon’s dust to settle and for the nation’s policy makers to get things settle. He feels about ten years for the Federal level to get squared away. Anthony was chief petitioner for Measure 91, Oregon’s ballot measure to legalize recreational use of cannabis He became the official spokesperson for the campaign Has continued lobbying in the Capitol, Salem Oregon, for New Approach Oregon Grew up in Missouri. In college, became interested in rewriting marijuana laws after seeing the unequal treatment of his African-American friends not only when apprehended but when tried In law school at the University of Missouri, where he met his future wife, he became a member of NORML Remembers a candlelight vigil to commemorate the moment when two million people were incarcerated in the US for drug offenses Got reforms on Missouri ballot in 2003, got 43% of vote and considered it a good start Went back on ballot in 2004. Split issue between decimalization and medical. Medical got 59%, decriminalization got 61% Moved to Oregon in 2004. While studying for the bar exam, saw a job listing from a Lee Burger, long time advocate. Got working for Voter Power, an NPO. Advocates wanted to move forward in 2014, Anthony thought they should wait until 2016. However, 2014 was the year! Advocates tried legalization initially in Oregon in 1989. Takes some losses to learn how to get initiatives passed. There are very thorny issues such as measuring DUII. Plenty of evidence THC can stay in body for 48 hours. Campaigns are fragile. Even rumors of infused candy give to children at Halloween can hurt a campaign. What was the magic that made it “happen” in 2014? The Oregon community in GENERAL, not just any one thing. The medical community had give prescriptions to more and more patients and that community grows. It permeated over time. then Colorado and Washington passed so momentum grew. Definitely did not see the legislature would jump on medical right after 91. Now he sees further regulations were inevitable. Would have been better if legislatures had waited to get better informed. Because there are many medical patients who cannot afford to walk into a dispensary. They should have a grower who can provide a limited supply. People on social security and can’t afford a lobbyist. Hopefully, can use money from medical and recreational to support low-income medical patients. There will be more and more legalization. Federal law will change to resolve banking and insurance issues. In ten years, Federal prohibition will end in states that have passed medical and rec laws. Don’t see a blanket reform, but step-by-step. This is a cultural battle. What’s next for Anthony? Continuing to lobby, advise on committees and write.

Jesse Peters of Eco Firma may not be a user of cannabis products, but he was born into it. Officials found five kilos (about 11 pounds) under his crib. Dad took the big felony (which, through a family connection somehow mysteriously disappeared) and Mom got a misdemeanor. It was so ubiquitous Jesse was in middle school before he knew not everybody had a pot plant in their backyard! With that incredible background, plus careers in firefighting and being a Marine gunnery sergeant, Jesse has seen a lot and he’s quite confident in seeing around the corner. He knew the cannabis industry would be legalized and began to prepare for the eventuality. And he’s an organizer, convincing people in the industry and the government agencies to work together to create a climate of professionalism and education which respects the legitimate use of the plant. That’s why he believes the Oregon model is going to be adopted by more and more states. So what’s around the next corner? Among other things, recognizing that cannabis is a safe plant and treat it as such, including labeling. Getting the banking industry comfortable with handling cannabis business. And getting cannabis de-scheduled completely to keep it from being owned by Big Pharma. Eco Firma: http://www.ecofirmafarms.com/ Was a firefighter and gunnery sergeant in the Marines prior to the growing business I was BORN into the cannabis business. There were five keys (kilos) under my crib when the law came. My Dad got a felony and my Mom a misdemeanor. I didn’t know until middle school that not EVERYONE had a pot plant in their backyard. We started as a collective farm with nine locations Politics is huge and getting huger. If you’re not involved, you’re on the backend of the slope I’m not a user! Being a cash business is a tremendous drain on time. You can’t borrow money if your crop goes bad; your ability to grow and breath is gone The industry is growing so fast, you can’t take any money off the table We should all help each other in this business because we are not the REAL competition. When the real competition shows up, we’re going to look at each other and say, “Let’s merge” Big Pharma, Big Alcohol and Big Tobacco are all just watching right now California and Florida are the two big swing states right now Cannabis needs to be DE-scheduled, not Schedule 2. That will only make it owned by Big Pharma The learning curve and high fees are going to make larger facilities very expensive Packaging is a nightmare; rules keep changing daily You can’t let vendors know what you do Oregon has the BEST program right now, creating the model for all to follow Oregon and Washington should be THE big growers and should be a huge export crop because of water rights issues in Northern California

Sara Batterby (that’s pronounced SAHR’ UH), CEO of Hifi Farms didn’t even know about Oregon’s newly legalized cannabis industry when she moved north from Silicon Valley, where she had been involved raising money for fast-paced high tech startups. Glamorous as it looks from the outside, the inside of all that hectic Valley activity can drain the soul. So Sara rented a house in Oregon – sight unseen – and simply made a lifestyle leap, not know where she would land. She met a community of cannabis people who were committed to super-organic growing methods and creating high-quality products. “We treat cannabis like we treat food”, is Sara’s mantra. Sara’s friends needed much help with business aspect of the industry and soon she found herself as CEO, raising money again. But this time it was different. “As a woman it was liberating”, she beams, because the cannabis industry was wide open compared to the Valley where you had “a lot of white guys” just naturally working with people like them, other “white guys”. The business aspect of the emerging cannabis industry is a barrier to entry and Sara is working hard to help those who have never had to interact with things such as accountants or lawyers. She wants to create a pathway for people coming from the illegal to the legal side. And she predicts a shakeout, “90% of the startups in the Valley don’t make it, but our odds are better than that”. To help educate and prepare those who want a credible and legitimate industry, Sara works closely with the state regulators and the OLCC, whom she credits with begin very engaged and helping create a model that all states can follow. Hifi Farms: http://www.hififarms.com/ Committed to super-organic methods and quality product We treat cannabis like we treat food Getting into the wide open cannabis field was liberating In the Silicon Valley, it’s a bunch of white guys investing in other white guys, because people naturally work with people who are like them Portland’s Women Grow organization is the largest chapter in the US. Sara was an organizer/founder. At first, we thought it would be just 20 girls and some bottles of wine With our investors, we created a conversation. They wanted to invest in cannabis and wanted to give their money to someone with experience. As a woman, I created a warm, welcoming environment. I told the investors when I didn’t know about some area of the business and they appreciated my transparency. Venture capital is basically 93% in men-owned startups. But the statistics show that women-owned startups have a higher success rate. It will be fun to come back in a year and discuss this again!