The changing California landscape: Q&A with Korova founder Joe Gerlach

By John Schroyer

Oakland-based Korova is one of the most well-known edibles brands in California, and its product lines appear in roughly 700 dispensaries statewide.

Founded in 2011, the company has enjoyed solid growth over the past five years, and owner Joe Gerlach has upgraded to a new manufacturing facility to meet demand.

Marijuana Business Daily caught up with Gerlach last month to get his take on how the California cannabis industry may evolve over the coming years under the state’s new MMJ regulations and emerging recreational market.

He predicted the black market will come under pressure. And he suggested the California market initially will undergo a boom-and-bust cycle, like other states, early on.

What do you think the biggest changes are going to be over the next year or two for the industry in California?

I think things are going to get a lot tighter. The gray area is going to go away a little bit, or completely, and people are going to start to be held accountable. There’s going to be someone paying attention to what you’re doing, which I think is good.

I have had some thoughts about the fears of big corporations coming in, too, but I’m pretty confident that whatever hoops there are to jump through, it’s not going to be insurmountable. Anybody who’s been in the cannabis industry for a number of years, that’s what we get used to doing: jumping through hoops.

The positive to really take away from it is that you’re going to know what goes into your medicine, you’re going to have someone that’s actually licensed and regulated knowing what your dosage is.

The money part of it is going to be tightened up, where there’s less opportunity for black-market activities. People are going to know where the plant goes, from seed to sale, and I think that’s a very good thing.

I’m really excited to know people are going to tighten up on things like pesticide use, because there are going to be standards set for what’s safe and what’s not.

From a 10,000-foot view, would you say that the passages of Proposition 64 and the state medical cannabis industry regulations are positive developments for the industry?

Absolutely. I think it’s far from perfect, but it’s a start, and the average person just wants access to cannabis. Lots of people like to grow their own and produce their own things, but I think the vast majority of people are just going to be happy that they can stop by the store and get something. And they’ll also know what’s in it. They’ll feel like it’s a safe product.

Are there any specific regulatory hurdles that Korova is going to have to deal with in the next year or so?

As the state licensing stuff becomes available, obviously we’ll have to jump through those hoops.

Do you already have a license in Oakland? I ask because of the dual licensing requirement in the Medical Cannabis Regulation and Safety Act (MCRSA).

We’re working on it. We’re paying the tax. People accept you being here, and they take the tax money that goes to the community. So we’ll have to jump through that hurdle and then apply for the state license.

It seems like a lot of places are just flat-out not allowing it in their areas. They’re rushing to not let people grow outside and stuff like that.

I really don’t think it’s going to be easy, for sure, but it’s not going to be insurmountable, and it’s for the greater good. I think that we’ll probably see some regulations on the recreational market on packaging, dosing, all of that stuff.

So we may have to change our business model a little bit, but I’m confident with all the hurdles we’ve gotten over in the last five years that we’ll be just fine. You just have to be able to roll with the punches and accept the good with the bad.

At some point, when you’re in the cannabis industry, you’re either in or you’re out. And I long ago made that decision.

In two years, toward the end of 2018, do you think the cannabis industry in California will have grown, shrunk or stayed pretty much the same?

I think we’ll probably see exactly what happened in other states: a boom-and-bust cycle. Everyone will rush in with stars in their eyes, and like anything in life, the cream will rise and the rest of the people will fall away.

There’s definitely some parts of Prop 64, they put some things in there to keep giant monopolies from happening, at least for a few years. So I don’t think it’s going to totally squash the mom-and-pops, but I think that the people that really want to do business and do it correctly will be fine.

So we’ll see this big influx, and then we’ll see a bust, and then we’ll see the fallout, and the people who are doing good business will remain.

This interview has been edited for length and clarity.

John Schroyer can be reached at [email protected]

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