American Pot Is The Gold Standard. But Canada Leads The Export Game — For Now.

Lambert here: There’s opportunity here for Presidential candidates with a little courage, particularly if amnesty is coupled with legalization.

By Markian Hawryluk, the senior Colorado correspondent for KHN, based in Denver. He has reported on health care for more than 25 years. Originally published at Kaiser Health News.

DENVER — In a large warehouse, LivWell Enlightened Health feeds its cloned cannabis plants a custom blend of nutrients, sprays them with filtered water and pumps extra carbon dioxide into the air. LivWell releases three types of insects to clear the plants of unwanted pests without the use of toxic pesticides.

Every part of the growing process is meticulously documented and evaluated to constantly refine the process.

After 20 years of experience, legal marijuana growers in the U.S. have the reputation of creating the best product in the world, scientifically grown and tightly regulated for quality and safety.

The crop would be in high demand internationally — perhaps the centerpiece of a new U.S. industry — if not for the regulatory conundrum in which growers operate.

Because marijuana is legal in many states but still illegal federally, marijuana growers are unable to ship their products to other countries or even other American states that have legalized the drug. So while U.S. cannabis firms have driven product innovation and mastered the science of large-scale grow operations, they restlessly wait for the export curtain to lift.

Instead Canada has emerged as the dominant exporter in the burgeoning global trade of marijuana, which ArcView Market Research and BDS Analytics estimated at $14.9 billion in sales for 2019. Companies there are raising capital and building international trade ties despite having an unlikely climate to be an agricultural pot haven.

Rezwan Khan, vice president of global corporate development for cannabis seed supplier DNA Genetics, believes that U.S. cannabis is the world’s best but said: “Canada has a huge advantage, because they can fill a gap.”

Best In The World

Khan said California cannabis especially is superior because its growers have been developing legal marijuana products since 1996, longer than everywhere but Amsterdam.

“California has been the epicenter of cannabis culture for many years,” he said.

Its cannabis seeds have been distributed all over the world, and many foreign firms are trying to reproduce the quality of West Coast marijuana. But Khan said it takes more than seeds and water to grow good weed.

The genetics and sophistication underlying the U.S. cannabis industry lead to better-quality and higher-potency flowers for those who smoke marijuana and innovations in oils, tinctures and edibles.

“The world wants that technology,” said Michael Sassano, CEO of Solaris Farms, the largest cannabis hybrid greenhouse in Nevada. “The Netherlands had a big jump; they could have done anything. But the U.S. is the one that turned the industry into what it is today, with all the products we make, not Canada.”

The other draw of American-grown cannabis, according to Denver-based cannabis law expert Bob Hoban, is that foreign customers value the regulatory oversight that ensures the product is safe and unadulterated.

“It’s being regulated by a government agency, which is not necessarily what’s happening around the rest of the world,” Hoban said.

Hampered Growth

Because federal law prohibits the sale and use of marijuana, growers have not had easy access to the banking system. LivWell had to pay cash for its HVAC system. And with sales limited to in-state retailers, it hasn’t been cost-effective to invest in much automation for its production line. Most of its processing and packaging is done by hand.

The patchwork of legalization means cannabis isn’t always grown where it’s easiest to grow, in warm climates with limited rainfall. It’s grown where it’s legal. California, Oregon and Colorado grow most of the country’s authorized marijuana as legally isolated islands.

That leaves cold Canada as a somewhat odd choice to be the world’s leader in marijuana exports.

When Canada legalized marijuana in 2018, its firms could be listed on the New York Stock Exchange and NASDAQ. So Canadian companies represent a back door for U.S. firms to access capital and export markets, and, for smaller firms, provide a potential exit strategy. Many U.S. marijuana growers are positioning themselves as attractive acquisition targets for Canadian firms eyeing the lucrative U.S. market.

Canadian firms are using their head start to sign trade deals and secure licenses to sell marijuana internationally. While the market remains limited, at least 30 countries — including Mexico, Germany and Italy — have legalized medical marijuana. And the numbers are growing as scientific studies have demonstrated its utility for pain control, nausea and glaucoma.

“There’s more than enough time for American companies to catch up,” said Kris Krane, president of 4Front Ventures, which grows and sells marijuana in nine states. “But the longer that we wait, the longer we continue to maintain this unsustainable prohibition, the more difficult it’s going to be for American companies to catch up.”

Ready To Export

Changing public sentiments about marijuana in the U.S. have many American cannabis firms readying for the day they can legally sell their products elsewhere.

“If the state borders do break open, we’re preparing for that,” said Sassano, who also is board chairman at Somai Pharmaceutical, a holding company based in Dublin that distributes medical cannabis products to pharmacies across Europe.

That means an industry that began mainly as small mom-and-pop growers and retailers must now consider its corporate hygiene and whether it’s meeting legal requirements to sell in these new markets.

LivWell is building large-scale indoor cannabis growing rooms in Colorado and Oregon designed to scale up production for interstate or international commerce. The new rooms have 30- to 40-foot-high ceilings and state-of-the-art LED lighting cool enough to sit close to the plants.

“Then you farm vertically,” said Dean Heizer, LivWell’s chief legal strategist. “We learned that from the microgreens that people are farming in old cities and in old skyscrapers. If you can cultivate in cubic meters, you can scale. If you’re cultivating in square feet, you can’t.”

With 11 states plus Washington, D.C., approving recreational use and 33 states legalizing medical marijuana, industry insiders believe marijuana may be legalized nationally in the near future, greatly expanding their market.

In November, the House Judiciary Committee passed a bill with more than 50 co-sponsors that would effectively make marijuana legal in the U.S. Though unlikely to pass Congress immediately, it is seen as a sign of hope for the future.

“It’s just a matter of time,” Krane said. “How much time is very much a question of debate.”

Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

35 comments

  1. jcmcdonal

    Two quibbles – it seems implied that Canada would have a less well regarded regulatory framework than the US? That seems unlikely…

    Also, for climate, it used to grow in the wild in many places in Canada. Just because it’s a shorter growing season doesn’t mean it’s not viable to grow here. And considering the positive view in the article of vertical farming, I’m not sure they’re grasping the economics of it.

    Reply
  2. upstater

    High THC potency cannabis is linked to increased incidence of psychosis. While there is more research required, some suspect that breeders ever-increasing THC and reduced CBD content is a major factor (pot 40 years ago had plenty of CBD). Indeed, CBD is currently in stage 3 trials for use as an antipsychotic.

    Needless to say, complete legalization of high-THC cannabis surely will provide a rich epidemiological data source.

    Obviously this comment will unleash a flurry of nay-sayers. The fact of the matter is the vast majority of potheads do not suffer psychosis — they need only worry about lethargy and munchies. But for the 5% or so of people that have risk factors for psychotic illness, this is a hugely significant matter. The cost of major psychotic disorders is enormous — most people diagnosed with schizophrenia become fully disabled at a young age and unable to work. The streets, prisons and jails are full of people with psychotic illnesses — they are considered expendable trash by society.

    Having said all that two last points:

    1. Cannabis should be SAFE and legal. I personally do not feel 20-25% THC pot has be shown to be safe.

    2. A drugged population is unlikely to demand the changes that are so obviously necessary.

    Discloser: I used low-potency pot in the 70s with no ill effects other than laziness and snacking. My son used high potency cannabis daily during his first year of university and is permanently disabled with schizophrenia.

    Reply
    1. sd

      Are you certain the damage your son has experienced is solely from pot and not from mdma or any of the other of the newer substances out there which are doing some very real damage?

      I’m a big fan of medical marijuana having seen its efficacy first hand.

      Anecdotally, my mother recently passed from complications due to cancer. We got cbd and thc products from a local dispensary that really helped appetite, sleeping, aches and pains. At one point she was rapidly losing weight. The only thing that stopped the slide and brought back her appetite was the pot products.

      The clientele at the dispensary seemed to skew older and what I can only describe as “more serious.” They didn’t strike me as solely recreational users. But then, this particular dispensary was known for specializing in medical.

      Reply
      1. Arizona Slim

        My mother had dementia-related appetite loss. I would have LOVED to have gotten her on CBD and THC products.

        Reply
    2. Travis Bickle

      It’s worth considering how the evolution of pot “quality” may actually play out.

      Sure, evolution has first focused on increasing potency, as a reflection of how users have for generations judged and bought the stuff, simply to get the biggest bang for the buck when every purchase transaction carried a risk. Now, growing older in safer legal settings, we are assumming the more wholistic pretensions of our times, related to purity.

      However, people eventually begin to wake-up to the limitations of product evolution along these lines. I cannot see a downside to purity, but have seen it with potency: getting high is one thing, plastered is quite another. With modern stuff a single hit can be quite enough and two can be counterproductive. We must all have friends with kids with stunted developed from the inevitable over-indulgence. It as as though the only alcohol available were Everclear, served by the glass.

      What might happen with pot development is a move toward flavors, for lack of a better word, sort of like with wines. There are different potency wine products, but getting drunk isn’t the point. I can see pot developers and marketers, at some point looking for other ways to refine and differentiate, and it’s the social dimension that I sense missing with this modern pot. Even now, modern pot hits can be dramatically as well as subtly different, but you have to be extremely careful to use it this way. It’s a dimension that stands to be developed when considering the prospect of more widespread social acceptance.

      Reply
      1. Rob Dunford

        There was a recent doc on UK TV, where the documentary maker went through differing ratios of CBD/THC. It was quite an insight for me to see how he reacted to the different ratios. His ultimate preference was for a ratio that leaned towards CBD, he said it felt mellow and less scary than the ratios with high THC.

        Reply
        1. Travis Bickle

          Actually, there are two strains of the herb, the Indica (Southern Asian), and the Sativa (New World) varieties. There would be countless terroirs of each if we weren’t talking about hydroponics in many cases, which can be and are blended to offer a particular high. In Colorado, pot in any form comes with something like an FDA Food Label, which tells you the balance it contains, as well as the concentration of THC/CBD. I think this is the Quality Control dimension the authors are referring to, which can be a serious marketing tool. At some point these labels are going to read like the back of a wine bottle (if they aren’t already). The Indica strains purportedly provide more of a body high that’d be superior for a concert or relaxing with friends, while the Sativa strains are more of an “up”, partying sort of high.

          Reply
          1. Henry Moon Pie

            The strain is important, but so is the harvest time. Cannabis plants contain trichomes which excrete a resin that coats the buds and leaves around the buds. It’s this resin that contains the THC, CBD and terpenes.

            The resin changes over time with exposure to light and oxygen by converting THC to CBD. After a certain peak point, the later the cannabis is harvested, the higher the CBD and lower the THC.

            This site provides very good background with some good photographs.

            Reply
    3. Jeremy Grimm

      My son has also been diagnosed as a schizophrenic. I have no reason to believe he used cannabis or any other drugs. Most cases of schizophrenia and other mental illnesses show up during the late teen years.

      I am not a fan of the high potency cannabis for the same reason I drink wine instead of vodka. [I notice this component of my comment has already been commented upon by Travis Bickle above. I agee!]

      Reply
      1. samuel janovici

        I’m sorry your son suffers. My cousin suffers from schizophrenia too. He would not stay on his meds and he was in and out of jail for years. Then he was introduced to high THC medical cannabis by a caregiver. He seems more stable and at easy now, and he has not been arrested in 3 years.

        I do not know if it will work for your son. My cousin had no contact with marijuana until the caregiver gave it to him. That may have made a difference but who knows. We need clinical testing . . . my heart goes out to you.

        Reply
    4. Craig H.

      There are basically no clinical studies on cannabis because medical researchers are paid by the government/corporations and need to abide by all of the laws and regulations.

      If you want reliable information on illegal drugs the only recourse is to do your own research. One source is Dale Pendell’s Pharmako trilogy. On top of the useful information you get the bonus that these are stunningly beautiful books.

      Here is one snip of what Pendell reports on the topic of cannabis:

      “Smoking it occasionally makes you wise; smoking it a lot turns you into a donkey.”
      –Pharmako/Poeia p. 199

      Reply
    5. CarlH

      Although anecdotal, this has not been the experience of myself or any of the other long time growers and smokers of high THC cannabis I I grew up with and know. I am not trying to fully detract from your point as I do not have any scientific evidence to back me up, only 40 years or so of being immersed in “pot culture” in Northern California. Having my own mental health problems due to an absolutely verified correlation between mental health problems and military service in war, I have had the opposite experience. Pot is the only thing I have found that is safe (the pharmies they wanted to give me made me a zombie) in dealing with my symptoms. Many other vets I know have given similar accounts. I hope nothing but the best and brightest of futures for your son and your family regardless of cause and feel for the pain his condition must have brought him and all who love him. Hopefully he can find a treatment regimen that helps him live as normal a life as is possible.
      As an aside, the real hype in the industry right now is definitely NOT in creating higher potency plants. I think everyone has realized that it is not just the THC in cannabis which delivers all it’s therapeutical benefits, but in the combinations of all the other cannabinoids and terpenes inherent in the plant. Taste, smell, and bag appeal are the big drivers these days.

      Reply
  3. John

    After dealing with chronic pinched nerve back pain for 7 years, spending thousands on acupuncture and massage (which worked up to a point), I decided to visit the really strange gray market in DC. For $200 immediate and profound relief.
    Yes, it’s really strong. So I dose accordingly. Duh.
    And I generally dose immediately before bedtime for the perfect night’s sleep as I am not particularly interested in going around stoned at this point (73 yo).
    It works for many things but not the severe mental illnesses. Many young afflicted with such illnesses will self medicate early on in the expression of their illness. Don’t confuse correlation with causation.
    The current big pharma/medical cartels will never study this.

    Reply
  4. eg

    I’m no agri-scientist, but where can’t marijuana be grown? I’m struggling to envision the need for much in the way of an export market if the stuff can be grown locally just about everywhere?

    Reply
    1. lordkoos

      It can be grown almost anywhere, but countries like Canada and the USA have a big head start in breeding and general expertise. It takes some time to set up a legal framework for growing and people want it now rather than later.

      Certain varieties require a long flowering period which means you either need to be nearer the equator or grow indoors, the latter uses a lot of energy for lighting and air flow. In a region with cheap hydro power it’s not a problem but in other places it would be expensive. Cannabis uses a lot of water, as well.

      I don’t think there is any definitive study that shows a strong link between psychosis and cannabis use. On the whole, pot is much less damaging that alcohol, both to the individual and to society.

      As far as the potency, there has been strong weed around for millennia, for example plants in Afghanistan, Morroco, India etc which have long been grown to make hashish. As with any drug, care and careful experimentation is needed to find the proper dose for each individual. If booze is legal, then cannabis certainly should be, both alcohol and legal prescription drugs are much more dangerous and kill far more people every year than pot.

      Reply
      1. twonine

        “The power consumption for grow rooms and grow operations is staggering. I am guessing that a typical grow operation uses 10 to 20 times more energy per square foot as the typical office building. In Denver, the “grow capital of Colorado,” almost 5% of Denver’s electricity is devoted to marijuana according to Denver’s Department of Public Health and Environment. Even more unbelievable, commercial marijuana grow operations consume more electricity than all of Denver’s commercial and industrial electrical use combined, according to the Department.” — Dr. Joe Lstiburek in June 2018 ASHRAE Journal.

        Reply
        1. John Zelnicker

          @twonine
          January 6, 2020 at 12:35 pm
          ——-

          I don’t doubt the veracity of your quote, but the article mentions the use of LED lights in new grow operations. If the use of LED’s becomes widespread it will make a substantial difference in energy consumption. Traditional grow lights have been very high wattage and so hot that some kind of a/c is needed. With LED’s growers might be able to do without the a/c as well.

          Reply
      2. John Zelnicker

        @lordkoos
        January 6, 2020 at 11:58 am
        ——-

        “both alcohol and legal prescription drugs are much more dangerous and kill far more people every year than pot.”

        True, but that sentence implies that there have been deaths from cannabis use. No one has ever died from the use of cannabis alone.

        Reply
    2. lyman alpha blob

      Thank you.

      Australia is on fire and yet we still can’t start thinking outside these old economic paradigms. There is absolutely zero need to export marijuana anywhere, and I say this as a strong advocate for legalization.

      And I have a bone (pun intended!) to pick with this from the article –

      But Khan said it takes more than seeds and water to grow good weed.

      Sounds like Khan is talking his book. It does take more – light is very helpful – but not much. I remember someone who took the seeds out of some nasty ditchweed, but them in a flower pot under a gro-light in a small closet and did just fine.

      Smoke locally.

      Reply
      1. CarlH

        He said “good” weed. There is a huge difference in product between someone who knows close to nothing about growing cannabis and is using bad genetics, and the product produced by professionals who have a love for and deep knowledge of the plant and a background in growing medical grade cannabis. If you want to fill your lungs with acrid ditch weed with near zero therapeutical benefits, go with the first option. California is famous for its weed far a damn good reason. All things being equal, however, I take your point. In the best of all possible worlds everyone would have access to quality genetics and medical grade cannabis grown locally.

        Reply
  5. doug

    Minimally, for gosh sakes, get it off the federal schedule 4, so more research can be done in the USofA.
    This would seem to be a no brainer for the last few decades, so I am missing something…

    There does seem to be a possible link to bad outcomes for young people and it has some documentation from outside the USofA. We need to research this, and can’t really.
    And yes, a weed. grows anywhere.

    Reply
    1. TimH

      You’re missing that cannabis competes with established recreational substances, hence concerted resistance to allowing sch.4.

      Reply
      1. sj

        I think the greater pushback is from the pharmaceutical companies rather than the recreational. Until they can monetize and most especially monopolize the marijuana industry they are going to continue to lobby to keep it on the federal Schedule I list.

        Reply
      2. John Zelnicker

        @TimH
        January 6, 2020 at 12:20 pm
        and @doug
        January 6, 2020 at 11:17 am
        ——-

        Just for the record, in the US cannabis is a Schedule I drug, which means the gov’t believes it has no therapeutic value and is subject to high levels of abuse. Other drugs on Schedule I include heroin and LSD.

        Also, doug, and other commentators above, there is no good research showing causation between mental illness and cannabis use. All of the research so far has only shown correlation, which kinda makes sense as many folks who suffer from mental issues will try whatever substances they can in order to get relief from their symptoms.

        Reply
  6. mistah charley, ph.d.

    a couple facts about cannabis in canada – derived from reading news from nova scotia, where the provincial liquor authority sells it

    1)there’s a big inventory of legal cannabis piling up in the warehouses

    2)this is related to people sticking with their usual pot dealers, whom they have a relationship with, and who offer lower prices

    Reply
  7. notabanktoadie

    No comment on pot (except personally, “Don’t it make my brain cells brown?” (apologies to Crystal Gayle )) but I do object to “gold standard this, gold standard that” as if a shiny metal is the ultimate in anything outside its proper realm.

    And also this warning: if people won’t embrace ethics wrt fiat and credit creation then don’t be surprised if gold buggery returns since the present system is so evidently flawed that a return to that corrupt system might seem an improvement!

    Reply
  8. phichibe

    This article inadvertently touched on another topic of interest to NC readers (and Yves and her contributors), namely the appropriate levels of technology and automation as we approach 8 billion people, many of whom need work. To wit:

    “Because federal law prohibits the sale and use of marijuana, growers have not had easy access to the banking system. LivWell had to pay cash for its HVAC system. And with sales limited to in-state retailers, it hasn’t been cost-effective to invest in much automation for its production line. Most of its processing and packaging is done by hand.”

    Henry Ford realized over a century ago that if there was not a large sector of gainfully employed workers who earned enough then he would not sell very many cars, particularly cars that were targeted not at the luxury market but rather to the mass consumption segment.

    We are rapidly approaching, indeed have likely passed the point, where there is already not enough work, particularly for manual/low-skill workers. So the manijuana companies currently employ human beings but when they get access to bank loans and capital markets, they’ll mechanize the work and fire the workers (btw, I hate the euphemism ‘lay off’: ‘lay off’ implies a gentle motion or transition: these workers will never be re-hired once the machines are bought, and they will be fired). Then who’ll buy their pot apart from the high-end boutique brands sold to high-income ‘knowledge economy’ workers and trust-fund kids. BTW2, several decades ago I heard from a friend who sold pot that the highest grade of pot on the market was called “Wall Street” and retailed for 10x the price of the conventional street ‘schwag’ he primarily sold.

    Just kind of funny that an article on the exploding pot industry stepped in this without even being aware of it.

    Cheers,

    P

    Reply
    1. notabanktoadie

      You’re not talking about a shortage of work (there’s no such thing) but a shortage of wage slavery as if that should concern anyone but elitists and snobs.

      No, what there’s a shortage of is economic justice which Henry Ford himself acknowledged:

      It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford from https://www.brainyquote.com/quotes/henry_ford_136294

      Reply
  9. Genuine Hippie

    We should all grow it. Everywhere. And takeindustrial capitalism out of it.

    Right now in CA we have 37 varieties of green super-pot targeted at addicts (who spend the most and want the highest THC levels).

    It’s like having no fine wines, no artisanal beers. Just flavors of vodka.

    Reply
    1. CarlH

      I don’t know where you get your cannabis from in California, but this has definitely not been my experience.

      Reply
    2. Henry Moon Pie

      And I look forward to a day when it’s so widespread that we can dispense with the grow lights and security concerns and just grow it outside like tomatoes and peppers.

      Reply
      1. rob

        That is the rightful achille’s heel to the “growth” the wall street side of the legalization NEEDS ….to pretend it will “create money”… everywhere… from here on out…
        When people can go to a local nursery for good seeds, supplies and even clones…. The world over will have all it needs. State fairs will have another competition to check out.

        Reply

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