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LA County Introduces Ordinance to Charge Illegal Cannabis Operations $30,000 Per Day

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Los Angeles County has long been home to illegal cannabis endeavors, and now the Board of Supervisors has approved the introduction of an ordinance that could charge illegal cannabis operations tens of thousands of dollars per day.

The Los Angeles County Board of Supervisors voted unanimously on Tuesday to introduce an ordinance to start fining illegal cannabis businesses. Any cultivation or dispensaries operating without a permit in unincorporated areas of the county could soon be charged $30,000 every day. Although the introduction was approved, the ordinance still needs to be voted on by the Board for formal adoption.

The official motion text describes the “nuisance abatement ordinance” that could be approved in a future meeting. “The unpermitted commercial cannabis activities including illegal cannabis cultivation are incredibly profitable and in particular, cannabis cultivation has continued to proliferate due to the ease of establishment in more remote and rural locations,” the motion reads. “Therefore, the penalties contained within the draft ordinance should, consistent with State law, be adjusted and increased to ensure that they act as a deterrent to the continued operation of illegal commercial cannabis operations.”

The motion was written by Supervisors Kathryn Barger and Sheila Kuehl. “The County Code currently prohibits all commercial cannabis activity within the County’s unincorporated areas, including the establishment, maintenance, and operation of any commercial cannabis business activity, and the renting or leasing of, or allowing property to be used for that purpose in all zones,” the motion states. “However, the County continues to be inundated with unpermitted cannabis dispensaries in the unincorporated areas. Despite the efforts of numerous County departments, the growth of unpermitted cannabis dispensaries continues to outpace enforcement.”

Barger presented the motion with the hope that it could help cull illegal cannabis operations, noting that water supplies that contain chemicals pose both a threat to public safety, among other concerns. She states that even though the county’s work against illegal cannabis is steadfast, a lack of “legally enforceable options” puts the efforts at a disadvantage.

In a press release, Barger summarized how these illegal cannabis businesses are harming the county. “Unpermitted commercial cannabis cultivation is profitable and has thrived in the rural Antelope Valley because of how easy it is to stand up operations. Communities in the desert continue to report illegal large scale cannabis grows that have been accompanied by water theft, trespassing, trash and the use of dangerous pesticides and fertilizers, putting residents’ health and safety at risk.”

Supervisor Sheila Kuehl also agreed that something needs to be done. “California voters legalized recreational cannabis in order to create a system that assured consumers of product safety while prohibiting cannabis access to minors,” said Kuehl, “but illegal cannabis operations continue to  undermine the will of the people. This motion puts teeth in enforcement and ensures that unpermitted dispensaries face stiff penalties in the future.”

Supervisor Janice Hahn confirmed that strengthening and protecting the region’s legal cannabis businesses is also a way to tackle the illegal businesses head-on.

“I do know that providing a legal pathway for people to grow, produce, sell cannabis can help in some way to tackle the illegal market,” Hahn shared. “Hopefully, we’re going to be voting soon on the idea of legally providing options for cannabis businesses in unincorporated county [areas].” A news release on Barger’s website confirms that a study is being conducted to determine recommendations for legal cannabis businesses, such as retail, manufacturing, distribution and more.

In October 2021, Los Angeles County set aside $5 million to fund the effort to combat illegal cannabis in Antelope Valley. A press release states that $2.4 million will go to the Los Angeles County Sheriff’s Department and $1.2 million toward the department’s Marijuana Eradication Team, while $503,000 will go toward Lancaster Sheriff Station overtime patrols and $707,000 will be used to buy trucks that can traverse tough terrain in these investigations.

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EU Cannabis Consumption Increased and Ecstasy Use Decreased in 2021

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A new survey studying the consumption habits of participants in the European Union (EU) reveal that cannabis use has increased, and the use of ecstasy has decreased considerably.

The European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) recently found that cannabis and ecstasy saw the strongest changes in consumption habits. The European Web Survey on Drugs was conducted online between March and April 2021 with the intention of illuminating patterns of drug use to consider in future regulation. Throughout 21 EU countries and nine non-EU countries, the survey recorded answers from those who were 18 or older and had used drugs.

The survey results, published on January 20, recorded the drug use breakdown of the 48,469 participants. “Cannabis was the drug used most, with 93 percent of survey respondents reporting to have used it in the previous 12 months and with little variation between countries,” the survey results state. “MDMA/ecstasy (35 percent), cocaine (35 percent) and amphetamine (28 percent) were the next most reported illicit substances, with the order of the three drugs varying by country. Around a third of respondents (32 percent) reported using more (herbal) cannabis and 42 percent using less MDMA/ecstasy.” The results also show that a group of participants had used LSD (20 percent), a new psychoactive substance (16 percent), ketamine (13 percent) and heroin (three percent).

Furthermore, participants from the Western Balkans (which is made up of a Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia and Kosovo) also echoed the high consumption of cannabis, and decreased use in other substances—especially ecstasy. “Most respondents (91 percent) reported using cannabis in the previous 12 months, followed by cocaine (38 percent), MDMA/ecstasy (22 percent) and amphetamine (20 percent). Again, around a third of respondents (32 percent) reported using more (herbal) cannabis and 34 percent using less MDMA/ecstasy.”

In terms of where these substances were consumed, 85 percent of participants in the EU and 72 percent of the Western Balkans used these substances at home, rather than at public venues. It also takes into account that the motivation for cannabis use at home was because of a multitude of reasons. Participants wanted to relax, get high in order to improve sleep, but their use of MDMA or ecstasy was used to attain “euphoric and socialising [sic] effects.”

The study result breakdown states that the information shared by the 50,000 people included in the survey is just a small portion of the EU, but still offers a useful glimpse into the changing habits of residents. “While web surveys are not representative of the general population, when carefully conducted and combined with traditional data-collection methods, they can help paint a more detailed, realistic and timely picture of drug use and drug markets in Europe. Over 100 organisations [sic] took part in the initiative, including the Reitox national focal points, universities and NGOs.”

EMCDDA Director Alexis Goosdeel shared a statement regarding the goal of this survey, and the amount of participation needed from organizations to sort and analyze the data. “Web surveys are a key ingredient in our monitoring of Europe’s shifting drugs problem,” Goosdeel said. “They help us reach an important target population through innovative online methods. Today’s results reveal the wide variety of drugs available across Europe and provide valuable information on emerging trends and changing patterns of use during the COVID-19 pandemic. An impressive 100 organisations [sic] joined us this time in building, translating and disseminating the survey, ensuring that this is now an invaluable tool to help tailor our responses and shape future drug policies.”

Other studies in the U.S. have shed light on other topics related to cannabis, such as targeting teens with ads on social media or an updated Gallup survey that shows that a majority of Americans support legalization.

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3 tips for making a cannabis grow operation sustainable without breaking the bank 

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Image for a Sustainability in Cannabis Cultivation series(This is the second installment in a series examining sustainability in cannabis cultivation. Read Part 1 here.)

Environmental sustainability in cannabis cultivation operations sounds nice in marketing material, but in practice, marijuana growers need to turn a profit to keep their companies alive.

So how can a cannabis grower do both?

“Balancing the health of the pocketbook with the health of the planet is a step that all cannabis facilities should consider regardless of their own worldviews, because it just makes sense,” said Av Singh, cultivation expert at Nova Scotia-based Flemming & Singh Cannabis.

Three key areas to consider when thinking about improving a cannabis operation’s impact on the environment are:

  1. How to add financially viable sustainability.
  2. How to work sustainability into a business plan.
  3. How to ensure a return on a sustainability investment.

To gain some advice and insights, MJBizDaily spoke with three cultivation experts.

Here are their thoughts.

  1. How to add financially viable sustainability.

Singh recommends growers start with a “trash inventory” to take stock of what is lost to the landfill.

“When you find that the majority of your waste is in rockwool or coco blocks or it’s in foot covers and pesticides, or that most of your money is being spent on electricity or water – you now have real information which you can act on for some more cost-effective and sustainable solutions,” he said.

For example, foot covers are not costly, but they add trash.

Instead of assuming that foot covers are the only way to minimize pathogens, do an environmental scan and test where pathogens are truly a problem, Singh added.

“Sustainable business practices and profitable businesses are not necessarily mutually exclusive,” said David Kessler, chief science officer of Billerica, Massachusetts-based Agrify Corp., which makes hardware and software for indoor cannabis cultivators.

“Making choices based on sustainability can often lead to a more successful enterprise.”

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Kessler recommended growers looking to improve sustainability focus on the following areas:

Cultivation room environmental management: Sizing HVAC systems for a cultivation room is more like the requirements for an indoor pool than a factory, Kessler said.

“Managing the temperature in a grow room is easier than controlling the humidity, a problem that compounds with increased plant density,” he added.

“Also, consider more than the price and the size of your HVAC equipment. Consider the operational efficiency.”

Lighting selection: Electricity is one of the primary cultivation cost drivers, according to Kessler.

Choosing energy-efficient LED lighting over high-intensity discharge (HID) bulbs can reduce energy consumption by more than a third, he added.

Fertigation automation: This can reduce the amount of water used by a cultivation operation. It also eliminates human error and reduces the amount of spent water and fertilizer, according to Kessler.

Media selection: Choosing a sustainable growing media such as coco coir over peat-based substrates reduces the depletion of peat bogs, Kessler said.

“Peat fields house roughly one-third of the world’s soil-sequestered carbon, the harvesting of which releases tremendous amounts of the greenhouse gas carbon dioxide, contributing to climate change,” he added.

Switching from hydroponics to organic or living soil is another way cultivators can make their operations more sustainable, according to Ryan Douglas, a Florida-based cannabis consultant.

“Soil-based substrates are teeming with microorganisms that constantly break down organic matter and slowly release nutrition to the crop,” he said.

“This minimizes the amount of additional fertilizer required, and the soil can be used more than once.”

Use appropriate caution, however.

Soil-borne pests, difficulties sourcing raw ingredients and problems ensuring sufficient volume for commercial-scale production can result in a steep learning curve for cultivators new to soil growing, Douglas added.

  1. How to work sustainability into a business plan.

Singh doesn’t recommend setting a specific budget for sustainability.

Instead, the operation should maintain a healthy work environment. It also should maintain optimal quality and continue to reduce production costs, he added.

“Hopefully, you can, over time and with proper management, increase your efficiency,” he said.

“The savings from these efficiencies should go toward meeting your sustainability goals.”

A good business plan will weave sustainable practices and initiatives throughout, mindful of the costs and contemplating the benefits, according to Kessler.

For example, buying grow media in bulk can offset cost differences and allow for more sustainable options.

Douglas said cultivators should focus on staying profitable when wholesale marijuana flower prices are about $500 a pound, much lower for hemp flower.

They can do so through a combination of process improvements, automation and sustainable cultivation practices.

“Focusing only on sustainability at the cost of profitability makes no business sense,” he added. “A cultivation business that’s (environmentally) sustainable but not profitable is not a sustainable business.”

  1. How to ensure a return on the investment.

Climate-smart cultivation practices can help lower a crop’s overall cost of production and decrease a company’s exposure to variations in the supply chain, according to Douglas.

For example, living soils provide their own nutrients and can be used repeatedly, whereas hydroponic facilities rely on single-use substrates that require the constant addition of mineral fertilizers, he added.

“Sustainable operations are also less reliant on global supply chains,” Douglas said.

“If your 100,000-square-foot facility grows in coconut shell fiber sourced from Sri Lanka and there’s a disruption to the worldwide supply chain, now what?”

Choosing to adopt environmentally sustainable practices doesn’t necessarily equate to less profit, according to Kessler.

The ongoing savings of energy-efficient cultivation systems pay for themselves in short order.

“Now, more than ever, consumers vote with their wallets. If you make sustainability a core value, tie it to your brand identity,” he added.

“Let sustainability and environmental conscientiousness drive consumers to you.”

Bart Schaneman can be reached at bart.schaneman@mjbizdaily.com.

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Cannabis company BC Craft Supply seeks creditor protection

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Vancouver, British Columbia-based BC Craft Supply Co. filed for temporary protection from creditors under Canada’s Bankruptcy and Insolvency Act while the craft cannabis firm pursues restructuring.

The filing imposes an automatic 30-day stay of proceedings, protecting the company from any claims of creditors while it pursues restructuring, with Vancouver-based Crowe MacKay & Co. acting as trustee.

BC Craft Supply warned investors in August of “significant doubts as to the ability of the company to meet its obligations as they fall due.”

The company said day-to-day operations will continue throughout the process as it looks to restructure and put forward a proposal to creditors.

The objective of the filing, per the notice, “is to regain the company’s financial footing although there can be no guarantee that the company will be successful in securing further financing or achieving its restructuring objectives.”

Failure to achieve the financing and restructuring goals will likely result in bankruptcy, the company warned.

According to the most recent financials, BC Craft Supply lost 2.4 million Canadian dollars ($1.9 million) for the nine months ended June 30, 2021.

That left the company with only CA$105,801 in cash at the time. Revenue in the same period was CA$801,276.

In 2019 and 2020, BC Craft Supply lost CA$54.2 million and CA$35.6 million, respectively.

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BC Craft Supply is the first Canadian cannabis company to seek creditor protection this year.

A number of companies have sought creditor protection as competition in the cannabis industry intensifies.

In December, British Columbia-based Ascent Industries was granted creditor protection by the Supreme Court of British Columbia.

In 2020, Kitchener, Ontario-based cannabis cultivator James E. Wagner Cultivation (JWC) entered creditor protection as part of a debtor-in-possession loan deal with cannabis sector lender Trichome Financial.

The Toronto-based lender ended up acquiring JWC’s assets, possibly providing a blueprint for reviving struggling, deeply indebted marijuana producers.

Shares of BC Craft Supply are traded on the Canadian Stock Exchange under the ticker symbol CRFT.

Matt Lamers can be reached at mattl@mjbizdaily.com.

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