Denver Direct: All Things MJ with Jessica LeRoux - April 7, 2013

Hello,

I am taking the pre-emptive step of sending this email to every member of the legislature as the issue of vertical integration will impact marijuana issues for every voter in the state. I hope that you will read these bullet points and if you identify any issues that resonate with the voters in your district and the vote they cast last november regarding A-64 please direct your concerns to the Joint Select Committee on implementation of A-64 on Monday before the issue is enshrined in any bill. We have too few days left in the session to make a protectionist mistake now.

Vertical Integration is a proverbial vestigal tail from Medical Marijuana because under 1284 all plants grown had to be tracked and attached to the specific patients they were being grown for. (This is why it is not legal to transfer the plants in an MMC's inventory to recreational sales, they are legally the property of a patient, and are merely in the custody of the OPC attached to their primary care MMC.) Many rural areas suffered under this model as there was not enough commercial warehouse space available in rural areas to meet the needs of the numerous patients spread over a relatively vast area of the state. To this day the MMED is struggling with completion of the shifting sands of paperwork from 70/30 marriages of the small rural retailers and the Big Denver warehouse gang to get compliant with this unworkable rule. To continue to force the combined medical and recreational industry to be subject to VI will be a form of protectionism for those already in the industry who hold leases on huge Denver warehouses, these are the same MMC's who fund the alphabet soup of lobbyists making outrageous claims of federal intervention on behalf of Vertical Integration. The proposed model for vertical integration will ensure that only the most well funded current medical entities from the big city will be able to expand into new locations, rather than a more organic expansion coming from new owners who live in the immediate community.

Vertical Integration was not the 1st choice of the Governor's task force working group on regulation. In fact it was an agenda which received only two yes votes to ten no votes in the original discussions. Please reflect on the audio tapes of the regulatory working group or have a frank discussion with Dan Pabon about the work group he Co-chaired with Ron Kammerzell of the DOR where the open seed to sale tracking model was favored by the large majority of the working group and the only NO votes on doing away with forced vertical integration came from lobbyists Meg & Norton... conversely the only panel members who actually voted to preserve vertical integration were the lobby gang and their attorney, * see page 6 paragraph 4 of the attached document... they lost in the vote and their model (VI) was put forth to the larger task force as a minority opinion which was lobbied for relentlessly just prior to the 1st full task Force voting meeting while the "Open but restricted integration" model most members favored did not have a strong sponsor in the political sense and floundered in the presentation phase. Please ask for a presentation from Mr Kammerzell on his RF1 from January of 2013, I urge you to adopt his model, developed by a new leader from DOR who has input from the best regulators across a variety of industries in the state as well as input from his colleagues at MMED on what impeded the licensing/inspection process.

Vertical Integration is an unenforceable burden, and a drag on the MMED. This is a direct quote of MMED director Laura Harris regarding vertical Integration. Please read the rest of the article in the link to Reason Magazine... You may find that the names implicated are the familiar and well funded lobbyists... and that some of my oft chorused concerns about protectionism from the Task Force & Legislative Work groups are reflected by Ms Harris. It could look awfully fishy in the next election cycle if it became apparent that a vertical integration monopoly was rushed through with behind the scenes wrangling while the truth about Its failure was swept under the rug but for this rather timely audit of the MMED.

"There are folks in this industry [who] are interested in maintaining that status quo," says Harris, who as head of the MMED should know a thing or two about the reality of marijuana regulation in Colorado. "What you will hear from many in industry is that this works. Well, I'm not as optimistic about it working. If it worked, we would be able to present evidence of how the model works toward good enforcement....I'm not as optimistic that the theoretical model works as well as I think they hoped it would."

http://reason.com/blog/2013/03/29/the-illusion-of-effective-marijuana-regu

Vertical Integration is not required for infused products manufacturers under the medical model. MIPs represent roughly 100 licensed and in process businesses in Colorado with existing brands and hundreds of tax paying employees. We are not a source of concern for the MMED regarding diversion nor has my own company ever been investigated for any rules violation period. Every single gram of medicine we use to make our infusions is documented into our system on camera, as well as recorded throughout the process and every single gram of edibles that we export is tracked until the point where the MMC we've wholesaled it to takes possession of the delivery and counts it into their inventory on camera. Vertical integration is not necessary to successfully track every gram from seed to sale, and MIPs are living proof of that fact.

While Vertical Integration has been a big contributor to the drag on the MMED in regards to licensing it also is does not prevent Diversion. Many MMCs have been unable to find a retail location and OPC grow location in the same municipality, with all three licensing entities (state & both towns) requiring proof of approval from the other two entities in an endless catch 22 that leaves no enforcement. Additionally this situation leaves all parties subject to increased risk of diversion. If one link in the chain is denied approval for any reason, the municipality who denies that license will likely have no jurisdiction over the other links in the company chain. As we have seen the state is so overburdened doing paperwork they do not have the resources to communicate the need for relevant closure of associated business locations in a timely manner. With no legal retail option and a huge financial investment to pay off, some businesses who've made the wrong choice in "partners" under 1284 have been tempted to find rogue ways to pay themselves and their investors.

Vertical Integration has not be attainable for a majority of rural MMCs. To this very day there are still MMC's who are "partnering up" (and providing the MMED the associated "boxes" of paperwork to accompany these marriages) to meet their 70/30 obligations because their sales have outpaced their harvest capacity. As more and more rural areas enacted retail MMC bans, the patients congregate to the few remaining retail outlets, this problem has only compounded this congestion in rural areas. When the small rural mom and pop owner operators partner up with large warehouses in Denver they are exposed to the liability for every employee in the new overgrown operation's actions, but they may be 4-8 hours away from any ability to participate in any compliance oversight much less quality control regarding the product grown.

Vertical Integration embraces mediocrity in a way that ensures the success of the black market in many areas. If the same huge warehouse leasees were truly growing an amazing crop of beautiful cannabis that all conneseurs desired to purchase you can bet they would be screaming bloody murder to be allowed to brand that product and sell it statewide. As a majority of rural patients already know now that their MMCs have partnered with the city slickers the quality of the medicine grown in these big buggy monocultured indoor farms is not even close to the quality of the product grown in the hills by their friends and neighbors. As we have seen the governors task force has not one single recommendation regarding large scale adult to adult unlicensed sales of marijuana. Quality will always speak most loudly to true lovers of cannabis, regardless of laws, I believe that is why the USA had lost the drug war on cannabis years ago.

Vertical Integration drives the unhealthy Dabs fad. When a crop is substandard (due to bugs, mold, mildew, immaturity, or lack of flushing out chemicals it was grown with) they dont throw it away, they "spin it down" with harsh chemical solvents like Butane, Hexane, Sirlene and others... into "wax" "budder" "shatter" "dabs" or "BHO" and jack the price up to triple what is charged for cannabis flowers. This product can be profitably sold in large quantities to other MMCs without fear of a 30% compromise as the weight is lower since the THC is deeply concentrated. Unfortunately the solvents used to create these trendy fun products form a covalent bond with the THC molecule so what the users end up smoking is not good old fashioned THC, but some new untested molecule, capable of increased lung expansion, and monumentally greater highs, with properties closer to chemically treated cigarettes. This fad is widespread among the younger cannabis enthusiasts, older folks seem to know that this is not a great idea...

Thank you for reading, please let all your colleagues know that you support the closely monitored open seed to sale system as proposed by Ron kazzermell under RF1...

Thank You.

Jessica LeRoux

concerned rural patient, attendee of a majority of A-64 meetings.