Week in Review: Massachusetts’ MMJ upgrades, WA tracking issues & possible Rhode Island expansion

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Massachusetts aims to improve its medical marijuana program, Washington state cannabis companies could find themselves without a traceability system, and Rhode Island may try to expand its MMJ footprint.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Benefits of clones

The Massachusetts health department resumed efforts to make changes to the state’s medical cannabis program that are mostly regarded as improvements.

Perhaps the most important change of the four proposals would eliminate a restriction that vertically integrated MMJ businesses can grow their inaugural crops only from seeds.

MMJ businesses are currently allowed to grow from clones, but they must come from cultivators’ own crops – essentially forcing all growers to start with seeds.

Under the new rule, businesses would be permitted to grow their first crops from clones.

“That’s a really big deal, particularly at this point in the program,” said Kris Krane, managing partner of 4Front Ventures, a Boston-based cannabis consulting firm.

The change wouldn’t affect the 15 MMJ businesses currently operating in Massachusetts.

But it could benefit the roughly 50 provisionally licensed businesses that are pursuing their final licenses and could begin growing cannabis in the next three to nine months, Krane said.

“Had they made this change, say, two years from now,” he added, “I don’t think it would have had that much of an impact.

“But the impact now is really important.”

Here’s why:

  • Allowing operators who come online in the next few months to start growing with clones rather than seeds would reduce the time needed to grow their first plants by about four to eight weeks. And that would speed those companies’ entry into the market.
  • Marijuana derived from clones is more consistent than cannabis originated from seeds because seeds have greater genetic variability. For example, if a grower has 10 seeds and 10 clones of a certain strain, the plants derived from the clones will be more consistent in terms of cannabinoid content, yield and other characteristics.

“These new players are going to have harvests a lot faster than if they had started from seed,” Krane said, “and they’re also going to have much better first harvests.”

Washington state troubles

Marijuana entrepreneurs in Washington state are bracing for added costs, supply bottlenecks and paperwork headaches if the state goes at least two months without a working seed-to-sale tracking system starting Nov. 1.

BioTrackTHC’s traceability system contract with the state ends Oct. 31, and the replacement program – MJ Freeway’s Leaf Data System – won’t be ready until Jan. 1, at the earliest.

“This is a dumpster fire,” said Aaron Varney, co-founder of Dockside Cannabis, a retailer in Seattle and Shoreline. “All the business owners are going to bear the burden of this.”

Washington’s Liquor and Cannabis Board has released a contingency plan for the time there’s no traceability system, and it requires all licensees to keep their own records during the transition.

Businesses will mostly be working from spreadsheets to track and trace cannabis, adding significant man hours and costs to their operations.

Varney estimates his labor costs for receiving products will double. He also expects a supply shortage at his shop because “the system just got way less efficient.”

Other potential issues facing Washington state MJ businesses:

  • Retailers are stocking up now, so producers may see a drop in purchases in November.
  • Without a working seed-to-sale system to generate lot numbers, producer/processors must create their own ID numbers for plants. But businesses could end up with duplicate numbers, causing confusion come January.
  • Without a traceability system to help producers/processors label products, retailers will be responsible for ensuring that packaging contains correct information, adding time and cost to their operations.
  • When Leaf Data System goes online, businesses must upload the data they’ve collected, and that could also create some heartburn.

Meanwhile, BioTrackTHC CEO Patrick Vo confirmed to Marijuana Business Daily that discussions are continuing with the state about a traceability contract extension.

Neighbor may incentivize Rhode Island

Rhode Island Gov. Gina Raimondo recently reiterated her hesitation regarding recreational legalization and instead hinted that an expansion of the state’s medical cannabis program is more likely.

For years, Rhode Island has been at the top of the list for cannabis reform advocates seeking their first recreational marijuana legalization win through a state legislature, since all adult-use victories so far have come through the ballot box.

Given Raimondo’s comments, that victory still seems elusive.

However, activists aren’t giving up hope that 2018 could be the year that Rhode Island – or perhaps another New England state – becomes the first to legalize rec through a legislature.

The key may be Massachusetts, said Marijuana Policy Project’s director of state campaigns, Matt Schweich.

If Massachusetts starts adult-use sales in July 2018 as scheduled, he said, it may draw enough of Rhode Island’s MMJ patients to be a serious hit to the Ocean State’s cannabis sales. The same could prove true for Vermont and Connecticut, Schweich added.

“It’s our belief that a lot of current patients are going to choose to go to Massachusetts, where they won’t be required to get a (doctor’s recommendation), where they won’t be required to have a card and where there’s going to be more cultivators, more product, probably a greater variety of marijuana,” Schweich said.

“So we think it’s safe to assume that there’s going to be a decrease in the number of patients, so you really have to look at reforms to the medical program in the context of Massachusetts.”

Omar Sacirbey can be reached at omars@mjbizdaily.com

Bart Schaneman can be reached at barts@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com