Witnessing existing cannabis markets as they shift into compliance with the bureaucratic changes that come with recreational legalization can be painful. Being cannabis business owners whose businesses are being greatly affected and burdened by these changes is even more daunting. Luckily, there are organizations around the nation who work feverishly to improve state and local regulations that disrupt practical business operations.
The California Cannabis Industry Association (CCIA) is one of the most recognized and acclaimed cannabis industry associations in the nation, and its mission “to promote growth of a responsible and legitimate cannabis industry and work for a favorable, social, economic and legal environment for our industry in the state of California” has not gone unnoticed.
Made up of various committees representing all facets of the industry, the CCIA’s Manufacturing Committee in particular represents cannabis manufacturing businesses in the state, which have been heavily affected by the Bureau of Cannabis Control’s new regulations that were set into motion as of January 2018. CULTURE B2B sat down with Chairperson of the Manufacturing Committee, Christopher Coggan, to discuss his role in the committee, as well as the biggest priorities that the committee is currently working toward.
Tell us a little bit about your involvement in the cannabis industry.
My name is Christopher Coggan, and I am the founder and CEO of Therapy Tonics & Provisions, a San Diego-based cannabis company specializing in a number of infused drinks, tinctures and other edibles. I am committed to putting the power of dosing in the hands of the consumer and providing them a consistent experience every time they indulge in our healthy products!
I am also the chairperson of the California Cannabis Industry Association (CCIA) Manufacturing Committee.
What is the CCIA Manufacturing Committee?
In California, there are two main business-oriented cannabis-centric associations that have been working hard to normalize our industry by promoting practical regulation. The CCIA is one of those organizations. The CCIA Manufacturing Committee, with over 60 participants, is one of the most active committees within the CCIA.
What does the committee do?
The committee identifies shared priorities as manufacturers with specificity, as they relate to proposed regulation or legislation. Once these issues are identified, we then take a collaborative approach to providing potential ways to address the issues, promoting both practical change to regulation and direction for new legislative action.
Last year alone, under the guidance of Kristi Knoblich, one of the co-founders of Kiva Confections, we generated a number of white papers that were submitted and shared with many of the state agencies. These efforts, along with many face-to-face meetings with regulators and legislators, have had a significant impact on the evolution of these regulations.
How has the impact been significant?
It has been significant in two ways. Firstly, as it relates to the actual regulations, there is zero doubt in my mind that we have been an instrument of change. Many of the most over-reaching regulatory proposals made last spring were absent from the emergency regulations released in the fall. The combined efforts of the cannabis community were the reason for that.
Secondly, after decades of demonizing marijuana, there was some initial discomfort and skepticism amongst lawmakers and cannabis operators alike. That skepticism has been replaced by mutual respect and great rapport which, in the long run, might be the most significant part of our continuing efforts.
“Currently, there are 55 bills that are cannabis-related, and they may present an opportunity to add additional language that may alleviate some of our issues. Bottom line, this is politics and this is a process.”
What are currently the biggest priorities for the committee?
Well, as you are probably aware, there are still a number of major issues that need to be addressed. In no particular order, I can say with confidence these are serious issues that could have a major impact on safe access to all cannabis products statewide.
For one, we have the taxes. Since January, the size of the illicit market has grown considerably, and a lot of this has to do with the heavy tax burden on those operators working towards compliance. For example, the proposed trim tax on cultivators amounts to upwards of 50 percent tax on trim, which is typically what manufacturers rely on for their infused products.
Then of course there is the “medical” or “adult-use” designation at the seed level. In this scenario, the minute a seed is planted, it needs to be designated as either “medical” or “adult-use.” This not only requires the cultivator to predict demand in four to six months, but creates two parallel supply chains, nearly doubling expenses for anyone serving both markets (as all A and M products must be made, tested and stored separately). As the “adult-use” market is expected to amount to 80 percent of future sales and the cost of all this is so expensive, cultivators and manufacturers will most likely choose the more lucrative market, and the medical market will swiftly meet its demise.
In addition to those big issues, manufacturers are also saddled with extremely high packaging costs. These costs threaten to push our products out of the competitive marketplace, products that represent the most accessible, most innovative efforts to normalize the cannabis industry. In addition, the excess packaging will result in many times more waste.
Another potentially destructive regulatory stance revolves around testing. Much more burdensome than any other food or combustible market in the world today, the standard deviations as related to potency (i.e. +/-10 percent), for example, are not consistent with the reality manufacturers have experienced for the last 10 years.
The list goes on from there, but those represent the biggest problems in my book.
That sounds pretty serious. So what is your committee doing to address these issues?
Once we’ve identified a problem and agreed on an appropriate solution, we then try to determine how to change policy. If it is regulatory, we have a lot more leverage, and the regulators are propelled to work with us and others to implement a solution. If it is statutory, meaning it will either require a two-thirds majority vote at the state capital or possibly a ballot initiative that will go before the voters, which represents a much more prolonged and challenging effort.
In both cases, we look at up and coming bills that may prove a good platform to promote our position. Currently, there are 55 bills that are cannabis-related, and they may present an opportunity to add additional language that may alleviate some of our issues.
Bottom line, this is politics and this is a process. There is a fair amount of administrative B.S. involved, but the relationships we have forged and the professionalism we represent have gone a long way in cutting through the red tape.
How do you propose we could fix all these issues?
That, is a much longer conversation! Moving through 2018, I would love to address the issues one-by-one, as they are involved and complex. The good news is, the various state agencies overseeing our industry finally have come to understand that a seemingly insignificant or small issue in one place can resonate throughout the supply chain resulting in unintended and catastrophic consequences for our industry and consumers alike.
That understanding has set the stage for meaningful change. Now it is on us as an industry to prove our positions practical and solutions ideal.