Proposition 64 passed in November, legalizing recreational marijuana use in California. Starting Jan. 1, 2018, commercial cultivation and retail sales of cannabis will also begin, legalizing a potentially multibillion dollar industry.
The Daily Bruin traveled to Northern California and Oregon to investigate what changes are ahead for California’s cannabis industry, which has long produced a majority of the nation’s cannabis, and see how a pair of college students built a successful business with the plant.
The snowy cap of Mount Shasta pokes through dairy farms in the northernmost tip of California. Not far away, a lone trailer stands off the highway next to a square of wooden fencing on a grassy hill.
The trailer, filled with fans, wires and hangers, looks abandoned. But in the winter, it is used to hang and trim thousands of dollars of high-quality marijuana.
The owner of the trailer, Connor Kramme, a recent UC Berkeley graduate, finished trimming the year’s crop a few months ago. While he tended to his 198-plant farm, his younger brother Christian Kramme, a third-year microbiology, immunology and molecular genetics student at UCLA, brainstormed innovative cannabis product ideas.
The brothers began a cannabis delivery company, Green Box, in 2014 with significant success. But they know big changes are coming.
Cannabis cultivation, both medical and recreational, went from being an illicit underground endeavor to a protected industry in November 2016. Proposition 64 legalized and began regulating recreational use and personal cultivation of marijuana in California, and will allow commercial sale of cannabis starting in 2018.
The proposition will allow the Kramme brothers to expand their outdoor medical grow to a larger commercial endeavor.
“Cannabis grows best outdoors,” Connor said. “(But) because people were afraid to grow outside, terrified that cops are going to come over and raid your house, they started going indoors.”
Connor previously sold cannabis illegally. In high school, he discovered that cannabis helped alleviate his chronic migraines and aches from playing varsity football. Seeing how beneficial cannabis could be, Connor took his first steps into the industry at Berkeley by dealing marijuana to fellow students.
In college, Christian suffered from a condition known as cannabinoid hyperemesis syndrome, apparently caused by excessive cannabis use, which made him vomit incessantly if he wasn’t in a hot shower. Because of his experience, the brothers focus on providing therapeutic, not recreational, cannabis.
“People don’t want to just get stoned,” Connor said. “There are side effects of using and overusing cannabis.”
Christian said cannabidiol, or CBD, recently gained popularity in the marijuana market because it balances the psychoactive effects of tetrahydrocannabinol, or THC, which is the most prominent cannabinoid, while retaining the therapeutic effects of marijuana. His clientele, he said, prefers one-to-ones, which contain equal ratios of CBD and THC.
Growing one-to-ones is not easy, however. For decades, growers have bred cannabis to contain more THC for stronger psychoactive effects, which in turn lowered the CBD content of plants, Connor said. Because it takes years to breed CBD-high plants, they instead started with clones, which are small plants genetically identical to an original mother plant, with high CBD levels.
Starting a farm proved difficult in itself. Funding for the 64-acre property came from a private investor since banks were not willing to loan money for federally illegal endeavors. The brothers also spent time learning techniques from veteran growers in the area, and before growing the marijuana themselves, they received advice on when to plant and how to water efficiently.
“Family members who wanted to see what we were doing came and helped out every now and then,” Connor said. “We learned how to build a farm from the ground up.”
Meanwhile, Christian tried different processing and extraction techniques to develop new products focused on dosage control and accessibility. Instead of the conventional plant product or premade joints, he developed an oral spray with controlled dosage, akin to a breath spray, and concentrate capsules, which work like pharmaceutical pills.
The brothers said they foresee smaller growers struggling against larger farms in the neighboring Emerald Triangle, a collection of three counties in California known for cannabis cultivation. To prepare for the competition, they are working to band together small growers in the Siskiyou region as an association and influence local regulations in a way that will support commercialization.
They want the region to focus on local grows and specialty products to stand out from mass-produced cannabis.
“Like a microbrewery,” Connor said, “We would like to be able to take everyone’s product and show what Northern California cannabis is, because it is an artisanal product.”
A few dozen miles north of the Krammes’ farm, a different landscape unfolds across the California-Oregon border.
Oregon is two years ahead of California in developing the marijuana industry. The state passed Measure 91 in 2014, which legalized recreational marijuana and allowed the Oregon Liquor Control Commission to regulate and tax cannabis. In those two years, some Oregon residents have come to see the cannabis industry as legitimate as the alcohol and tobacco industries.
Cedar Grey, a veteran grower, owns and operates Siskiyou Sungrown, an outdoor cannabis farm and processor in Williams, Oregon. Unlike the Krammes’ farm, Grey’s company grows 40,000 square feet of mainly recreational marijuana. The area, which only includes the space occupied by the plants, is the upper limit set by the OLCC for canopy size. Proposition 64 in California currently allows similar-size farms up to one acre of canopy, and will also begin issuing licenses for canopies larger than one acre starting in 2023.
Managing such a large-scale operation requires more than two brothers. Siskiyou Sungrown employs 20 people to breed, cultivate, trim and process cannabis. Their schedule is not the dawn-to-dusk workday of a farmer, but rather a daily 8-to-5 shift of a corporation.
A specialized facility on the farm cultivates mother and clone plants before moving them into the soil in June.
Each plant in the facility is individually monitored and tracked. After employees harvest the crop at the end of the growing season in October, they process the harvest for sale as flowers, or as oil extracts.
The farm and facility together cost almost $1 million to build, which Grey acquired through family and private loans. A significant portion of the costs went to meeting state requirements, which entails hiring full-time employees for tracking the products on their way to retailers.
The medical and recreational marijuana programs in Oregon are controlled by two different entities and have very different rules. For example, farmers can cultivate up to 48 medical plants, but the limit of a recreational grow is determined by the canopy size, which encourages growing multiple smaller plants.
“(The Oregon Health Authority) has tended to focus on protecting the public from cannabis,” Grey said. “The OLCC running the recreational program, they’re supporting cannabis production. They’re trying to support a healthy, abundant, productive industry.”
The support has proved effective, according to New Frontier Data, a cannabis industry analytics company. Oregon’s industry was worth $571 million in 2016 and that number is expected to grow to more than $1 billion by 2025. Since its founding in 2015, Siskiyou Sungrown has doubled in physical size and quadrupled in its number of employees. Grey has also started to pay down loans using the farm’s substantial revenue.
Because of the state’s support, larger growers have had little incentive to dive into unregulated markets such as interstate cannabis trade. Instead, Grey and others in the industry work with legislators to improve policies surrounding cannabis, which has been a rough endeavor itself.
“Some of these (lawmakers) are completely unfamiliar with cannabis, so there’s been a real dynamic process these last three or four years as we’re sharing with them our information and our knowledge,” he said.
Grey advises state legislators and OLCC committees on building rules to help consumers get better cannabis more safely. He hopes that by making cannabis cultivation more responsible, the federal government will reconsider its stance on the plant.
But for now, Grey will prepare for the 2017 season, sticking to any changes in state guidelines.
Siskiyou Sungrown and the commercial cannabis scene in Oregon may predict how Proposition 64 will ultimately change cannabis cultivation in California, which produces more cannabis than any other state.
But because of the large amount of discretion the proposition gives to local authorities in setting cannabis policies, it may be years before people feel the full force of the proposition.
“Local, state and federal public officials are all over the place, doing different tax rates, approaching licensing differently,” Connor said.
Proposition 64 allows cities and counties to set tighter guidelines than provisioned in the state law. For example, Siskiyou County has had harsh restrictions on outdoor cultivation and banned nonmedical cultivation entirely since 2015, but neighboring Humboldt County and Oregon allow for commercial grows exceeding tens of thousands of square feet.
Christian also said that laboratory testing, though good for consumer safety and product quality, could become a bottleneck for cannabis production.
Oregon’s venture into legalization initially funneled cannabis into a single lab, he said, which caused massive delays in testing marijuana.
“It would take eight weeks to get it tested, eight weeks to get it back, and then it’s 16 weeks in and your product’s dead,” Christian said.
He also expressed doubt in the reliability of some laboratories in California, stemming from his experiences with Steep Hill Labs.
“They essentially claimed that something we had a hundred pounds of was non-psychoactive,” Christian said. “As it turns out, it was only THC.”
However, as the industry matures, the Kramme brothers expect Proposition 64 to bring bigger changes over Proposition 215, which legalized medical marijuana in California in 1996.
“The best way to (transport cannabis) under Prop 215 is your in your car, doing it yourself,” Christian said. “There’s actually going to be marijuana transport companies, basically armored cars.”
Veteran growers also welcomed the new interest in the industry brought by Proposition 64.
“We learned (how to grow) from working at smaller medical farms,” said Christopher Malandrini, head grower at Siskiyou Sungrown who started growing under a medical license. “These young guys that are learning, they’ll learn from working at the (recreational) farms.”
Although the starting points on growing may differ between the old and new, Malandrini said he welcomes the change.
“It’s an amazing time to watch California come correct,” Malandrini said. “It’s going to be amazing to see how the rest of the world reacts.”