There’s a clear Craft Business framework for beer, wine and spirits, but why not cannabis? Can we create an industry where the local/ small business can also win in the David vs Goliath battle? Our guest is Micah Sherman, co-owner of Raven Grass. We discuss the small business landscape in cannabis and how the regulations currently lean towards big money.
Resources from episodes Washington Craft Cannabis & The Cannabis Observer.
Link to Join Email List Community for insights we don’t share anywhere else.
Episode Transcription:
Micah Sherman, Guest: Yeah, thanks. Thanks for the opportunity to have a conversation with you, looking forward to it.
Wayne: Let's start with just context for listeners kind of a simple introduction to yourself, Raven Grass, you know what year you started, and maybe how and why you started the business and got involved with it.
Micah: Yeah, so Raven is a - what's called a tier two farm here in Washington. So we're on the smaller end and we produce our own organic cannabis in an indoor facility here in Olympia. And then we also make a variety of products with that in our processing facility. We started here in Washington's i502 system in 2014, kind of right at the beginning of, of that legal recreational system, we did a little bit of medical production out of the same facility while we were getting all of that set up and going through the very long permitting process with state and our local county. So there's three of us that own Raven Grass, myself, Nichole Graf, who's our creative director, and then David Stein, who is our farmer/grower. Nichole and I moved out here in 2013 from New York. We both came out of design professions, she worked in fashion and I worked in the architecture and building industry. So we moved out here specifically with the intention of starting this business with David who was located here in Olympia. You know, it was right around the time when Washington and Colorado passed their legalization initiatives. Nichole and I were living in New York and were ready for a change in our lives. We had both gotten to places in our careers that, you know, caused us to have - to come up against some broader considerations of kind of what we wanted to do with our lives and how we wanted to spend what limited time we had on this world, and decided it wasn't going to be progressing the profit interests of the already extremely wealthy and saw the cannabis industry as a space to, to come into something that was, you know, in this moment of dramatic transition from an illicit market to a regulated market. We knew that there was going to be a lot of opportunity in there to, you know, have a role in shaping something that was going to be important and new and were there was going to be a lot of conversations that we thought probably hadn't happened in a really long time in, you know, such a economically significant industry.
Wayne: Yeah, and socially impactful. I mean, it's like, I don't think we've ever really seen an industry like this come to light. You know, Tech, those things were new, but this thing - I mean cannabis has been around forever. Now to rebuild it in a legal landscape is very interesting.
Micah: Yeah, it was, you know, it's kind of just a fascinating once in a lifetime moment, and we decided that it was something that we wanted to be a part of. I don't necessarily think we knew exactly how that was going to go and where it was going to lead us. And, you know, like, I certainly didn't have this exact plan of what we're working on now as far as our legislation, but it was certainly - you know, we knew it was going to be there and we were willing to kind of dive in and try to make sure that the conversation and the direction of things stayed on some of the stuff that we thought was, was really important, which is reminding folks that, you know, a lot of times, especially in the, in the sort of investment and business world of the cannabis industry, where you hear terms like, you know, "new industry", and it's an emerging market, and it's, you know, massive growth for this new market. And really what it is, is it's transition from the illicit market to the legal market. And so anything that comes into the legal market, probably comes out of what was once the illicit market and has a profound, you know, economic and social impact on on those people who maybe didn't, didn't have the capacity to make the transition or didn't want to or, you know, had - had had a lifetime of bad experiences with the state and didn't trust that the process was going to go in a way that was going to be considerate to their needs. And you know, most of those people were, were right, it turns out.
Wayne: Right. How - I'm always interested in this stories, and you have three people as co-owners and partnerships, how to make those work long term. Was David a friend that - you said he was already in Washington, was he, you know, familiar with cultivation, wanted to do the business side, and you and Nichole were those other puzzle pieces that kind of rounded that out? Did you know him previously, like, how did you decide to move to Washington and not have a different state?
Micah: Yeah, well, so. David is of my father's generation and has been growing since he was in high school. So he's, he's in his late 60s now, and has you know, been grown for close to 50 years in a variety of different ways and forms and places and - so yeah, we got connected with him through a friend of my father. He was interested in getting into the legal system he had been growing, you know, in the illicit market and in the medical market and wanted to get into the recreational market but didn't want to deal with any of the business side of things, didn't want to deal with, you know, the permitting and all that.
Wayne: And Admin and logistics and - yeah, that's a whole other landscape.
Micah: Oh, yeah, that's where - that's where our setup came from. So we all have different and complimentary roles in the business. You know, which I think just fundamentally, I think that's an important part of a partnership is understanding what everybody's supposed to be doing and what the expectations are and making sure that you know, you're coming together with a group of people that can also work well together. So there's, you know, there's also just - especially in the, in the early days of this industry, so much of its based on on trust. You know, we didn't have a ton of money when we started all this. And, you know, we at first we took all of the very traditional business advice of, you know, get a lawyer and write up really detailed partnership agreements and, and get everything down on paper. And, you know, then about $10,000 of lawyers later, we, you know, just didn't have - like, that process wasn't really becoming satisfying for us. And it wasn't like allowing us to really get that sort of stuff dealt with. I think so we, you know, we decided at some point in that process to pause that and to just kind of sit down with the three of us and make sure that we all knew what was expected of the others and that we, you know, agreed in principle on kind of where we were going and how we were going to get there and just wrote out some really simple agreements ourselves. And definitely that, for us was, was a better process. But again, you know, the scale of our operations was very small, we didn't have a lot of, you know, complicated investment stuff to deal with. You know, we got a couple of like loans from friends and family and we don't have any equity investors. So it was really just the three of us making sure that, that the expectations and, and roles were clear. And that we had a good way to continue to communicate and, you know, that has been easier at different points than others. But we're all still doing it together. And that part of it is moving along well.
Wayne: That's good.
Micah: Yeah. So we've been doing this for about five years and in that process, and you know, part of why, why you're interested in talking to me was about our, our kind of next steps for, for the industry, and how, you know, our experience thus far has informed that.
Wayne: Yeah. And before we jump into that, I kind of want to lay out the landscape of - I'm not as familiar with the Washington market, even though we're right next door. Sometimes you're so focused in your own market, you hear things here and there. But there's so much to focus on in your own state. For listeners, and leading up to why this legislation, why this approach? It's very fascinating to me, and seems almost something like - almost impossible to do from a small business perspective. What led up to this approach to like trying to get this legislation, this bill passed? You know, what's the landscape of the Washington market, the pricing landscape, you know, small business versus corporate businesses? What was the motivation? And then we'll get into the details of what this legislation is. But what's the landscape of Washington over the past couple few years?
Micah: Yeah, so Washington State started with what their - what they call the three tiered system similar to distribution for alcohol. Where they had a production license, which was the farm, a processing license, which was the ability to make any sort of products from those, and then the retail license. They prohibited anyone from having a wholesale license, which is the producer or the processor license, and a retail license. You have farmers. And then you have farmers that are also processors. And then you have people that are just processors, and then you have all the retailers.
Wayne: And did they cap those licenses as well?
Micah: Everything's capped here. Yeah. And everything's pretty much closed at this point, there was an initial round of licensing. Occasionally a license will, will go for sale or get forfeited or something like that and get reissued. But -
Wayne: And it was a small window, right? It was like a couple months? (Very small) Yeah, you had to be like, on the dot the timing of that, to come in later's almost really hard in Washington. It sounds like.
Micah: Yeah, I mean, you can - at this point, you can, you can buy a license from somebody that already has one. And there is a secondary market for licenses. But it's, you know, it's pretty expensive. So that's the basic structure of the industry where you have wholesalers and retailers, and there's no ability for any sort of vertical integration in those relationships. So what we've seen, you know, we started out with about 2,500 production licenses. And these days, we're, we're right at about 600 active licenses. (Wow, wow) And so what what's happened in that time is there's been a lot of consolidation. So a lot of people have now acquired multiple licenses for on the production side. And then there's a lot of licenses that are inactive or dormant. Maybe they're licenses that are that are moving around, but the real story is a story of consolidation. A story of more and more of the sales in the market going to bigger and bigger companies. One of the things that Washington did, as well is they limited ownership in a license entity to Washington residents, so that meant no money could come from out of state directly into a licensed cannabis business. And the way that folks that wanted to get bigger than than they could get and wanted to bring in some money is they was set up, you know, like a secondary company that might own a facility and then lease that out to a licensed entity. So there's, you know, there's lots of ways for bigger companies to bring in, to bring in money. So, you know, licensing agreements, and -
Wayne: So that rule didn't have its intended - it was, they worked around it, essentially.
Micah: Yeah. And if anything, it made it more difficult for small businesses because we didn't have the complicated legal capacities to set up those sort of arrangements. So it almost limited the out of state money to being used only by the big guy.
Wayne: Yeah, that's crazy.
Micah: Yeah. And now, you know, a big part of what I talk about as as we're moving forward with this legislative process is to remind people to like, turn around and look at some of the unintended consequences of choices we made along the way. Because I think sometimes that gets that gets overlooked. So that's really been the story of the Washington cannabis industry over the last five years has been small farmers just struggling to make ends meet, going out of business, selling their license for you know, pennies on the dollar. And a lot of you know, so many people that I know, that have just given up. (Yeah) But now we're at this place where there's a lot less farmers in the market and We're, we're trying to have a conversation about how do we keep those farmers that are left (right) still here and able to make profit. And actually, you know, have this be a business that we could continue to run into the future. (Yeah.) You know, it's still a very tight situation for small farmers.
Wayne: Yeah. On the regulations and the licensing. You know, I thinking of Oregon, we didn't cap any licenses. They did last year decided to stop taking applications for new grow licenses. But I think we're at like, at almost 1,000 - somewhere between 1,000 grow licenses or 1,200. There's another 12,000 applications in the hopper. Washington's at 600 and your population is almost double of Oregon. So when you look at the saturation in Oregon, we should have done something. Why were the growers - Why was it such a struggle? Was their price cutting extremes, was the cap not set low enough, and there was still too much capacity for the state?
Micah: Yeah, it was kind of multifaceted. So one fact is that when 502, the initiative first passed, there was a study, and they determined that we needed about 2 million square feet of production overall for the state. And there's about 20 million square feet licensed. So we do have an excess production capacity here. And I think that 2 million number was probably a bit low. But even if you double it, it's still five times more canopy that we might need.
Wayne: And did they not listen to the report? They decided to go with 20 or?
Micah: Um, it was - more of a, they just basically gave licenses to everybody that applied in the first window. Yeah. And they were originally - So originally everybody was going to be able to have up to three licenses. So there was a lot of people that planned their businesses around that. Then when they realized they had so many more licenses that got applied for than they needed, they said, okay, you can only have one license. And then at some point, once enough people had, you know, the writing was on the wall, people were closing down, they wanted to be able to sell their licenses, then they changed the rules again, that allowed everybody to have three licenses, but you can only only get them by acquiring a license from somebody else. So that was a moment where there was the ability for some of these bigger companies to triple their production capacity by adding two more licenses and - and you know, just keep getting bigger.
Wayne: Yeah, were they driving price down? Because if they're going to triple but it was already over capacity and saturated. Did that allow them just to drive lower prices? Was that where the farmers were really struggling, the local, craft and small?
Micah: Absolutely, and yeah, absolutely. That was exactly what happened. It was just a you know, there was a real race to the bottom for years. I mean, there was, there was seasons where you could buy pretty decent like useable flower for 40 cents a gram, 30 cents a gram in that range. And you know…
Wayne: Yeah, we saw that in Oregon.
Micah: Yeah, yeah, it was - it was similar. I think we hit some similar prices to you guys. But yeah, definitely there was this moment where it was pretty much impossible to make a living growing weed in Washington and so there was a very large overproduction. You know, there was a lot of it that probably ended up getting in diverted into the black market.
Wayne: Yeah, how'd you guys survive that?
Micah: So we're - we're a pretty small farm, we have a couple of different differentiations to what we're doing here from most folks. We were, very early on in our business we, we made a decision to start working on breeding, type two and type three genetics. So mixed ratios, CBD and THC strains, and high CBD low THC strains. And while in the first couple of years, that was something that you know, the market really struggled to find a place for. One of the - one of the situations that really defines our marketplace here is that there's a set number of stores and they're assigned by geographic area. And so that relationship of a limited number of outlets to be able to sell your product combined with this very large over productive capacity, you know, created a situation where the people that did the best were the people that made the jobs and the profit margins of the retailers, the easiest. And so we're - we've been able to do that with, just because of the fact that we're so small we can seek out stores across the state that have similar values. And so one of the things that allowed us to do that was our work with these with these CBD genetics allows us to provide something different to the market. We've always gone above and beyond on following organic standards since since early on in the market. So there was, there was a moment early on where we were, you know, one of three or four companies that were putting out products that could have been certified organic if there was a program for that. So those differentiations helped us to, you know, keep our price a little higher, as well as just the fact that we were such a small scale, we really could, you know, pick our battles as far as which stores to work with and we didn't have to go this route of trying to be for everybody. So we were a bit of a niche.
Wayne: Be more adaptable, didn't have to drop the price, not competing on that. How many stores do you normally work with?
Micah: We work with about 35 stores right now.
Wayne: Okay, that's kind of what I've heard from most, I mean, craft growers - 30-40 stores seems like the norm.
Micah: You know, it's that number where you can still have meaningful relationships with the people that run the stores. It's not, it's not so big that you can't have those conversations on a regular basis. And, you know, and that's, that's really the idea of, of defining craft production. It's about the scale of a business relative to the overall market. And that's, that's the the type of relationship and the type of business model that we're trying to preserve with this legislation by defining what a craft producer is, we can start to have a conversation, you know, really cogently about what is the proper scale to be able to maintain that type of production? And yeah, so that that number seems to be, you know, sort of a natural size for a lot of people, that seems to work really well.
Wayne: Build that brand stronger inside of those. Yeah.
Micah: Yeah. So that was how we were able to basically stay afloat during this time of, you know, really depressed prices and then people closing, and you know, we were we were definitely on on the edge a lot of times. You know, there was a lot of weeks where payroll was late, you know.
Wayne: I've heard that story a lot, yeah. In Oregon, our partners - we look, we try to work with the same type of growers. It was the same thing. Like we've had partners that were close to that edge when we had that same drop, and now that 2019 was one of their better years, and it's great to see that it turned around but a lot of people didn't make it through. Was processors and retailers in a similar situation, or was it really the growers that had bad market crunch and price pinch?
Micah: The growers definitely had the hardest time. You know, a lot of processors, depending on their business model, struggled as well. But there was definitely a lot of processers that did really well in that time because, you know, their input prices were so low that they can you know, if time - especially, you know, folks that were looking for good inputs for edibles and stuff like that, that those prices came down so that I feel like they really got to compete on you know, who had the product that people like to consume the most and it was less about just the price, although, of course, there's still huge price component and all that but yeah. So and then - so retailers are, are essentially the most important people in our industry right now in Washington, because of their very you know, special place in the supply chain.
Wayne: Yeah, there's one gateway to the consumer.
Micah: Exactly. So they're, you know, they're the ones that have really over the years, gotten to have the most impact on how value is defined in the industry. You know, they really got to have all of these conversations with, with the customers, they got to decide what to emphasized in their stores, as far as you know, are we going to talk, you know, how are we going to physically set up our store? How are we going to label the sections, you know, all these you know, what may seem kind of incidental decisions, you know, they really frame how people think about cannabis, right? It's a brand new thing for them. They're coming into a store for the first time. They see you know, the whole store divided up between indicas hybrids and sativas, and that reinforces those conceptions for them. And they see, you know, the THC percentage prominently displayed on every single product -
Wayne: The most important thing! (Laughter)
Micah: Yeah, because it was legally required, so it becomes this really important thing. It's the only thing that's the same on every single product. And so of course, it's important, right? Like that, you know, that's just common sense if you're, if you're somebody who doesn't know that much about cannabis, and so they -you know whether intentionally or not, they got to set the stage for what people thought mattered. And I think a lot of stores, you know, did a really good job in that role. And a lot of stores took that role and decided to use it in a way that allowed them to make the most money the most easily. And those tended to be the stores that found the most success in the market, because they were willing and able to play the game of price. And so, you know, more and more our industry as its consolidated and as different retailers have, you know, figured out there, they're place in the thing, in the situation relative to each other, we've seen these stores that have tended towards high volume, low price. You know, a lot of a lot of foot traffic, you know, quick transactions. These have been the people that have that have found the most profit and the most success. And then I think we've seen more and more of our production capacity, sort of pivot towards supplying that part of the market. Because that's what we tend to do when there's a you know, opportunity to make a profit. Somebody's gonna kind of fill in that space. I think we've seen as a whole, our productive capacity has really shifted towards meeting the needs of a particular kind of retailer. And I think that we're seeing, you know, a pretty substantial shift in the way that the industry is, is oriented towards that.
Wayne: Right. Right.
Micah: And, and that's a big problem in my mind, for a couple of different reasons. One, it, it puts folks, the, you know, the retailers who are, you know, a really important component of any industry, but it puts them in this position to have conversations about what's valuable without understanding the production process. And they, you know, just as a result of that, are not always going to make the decision that makes the most sense for the things that we're making because they don't know about the things that we're making. And so part of, part of our bill is, is really about thinking about the ramifications of those sorts of moments. And how can we, you know, without completely disrupting our whole supply chain, like how can we start to make important, targeted changes to re-evaluate how those power structures are distributed? Yeah, who gets to make the choices about what matters and what's valuable, and have those conversations with consumers and the public to start to come up with a collective idea about, you know, what matters the most for the cannabis industry? Because that's the conversation I think that we're not really having in a transparent way right now.
Wayne: Yeah, well, especially in the Northwest, I mean craft industries. I mean, the Northwest cares about that so much, and we're seeing other areas keeping the money in the state. And to have a craft industry, you know, small businesses, if you look at how much just in general that makes up employment and revenue, I mean, it's a huge number. But it's not one unify - it's hard to unify that. But to have that craft industry, small scale aren't going to - they're producing on quality and differentiation. It's not going to be volume in price. And if you have retailers that come in early, you know, the first few years, that's the model, that's how you're attracting customers, because if the flower isn't getting differentiated, other than the THC percentage, consumers aren't educated, you know, they're not going to start figuring that stuff out. So this is leading you up to this legislation approach, the bill. I want to first talk about what it is, then I think we can circle back to the process of it how you did it. Cuz that seems very elusive to me. Okay, so let's set up the bill. What is the bill? When did you start working on it? And I guess we just kind of give listeners a definition and then where we're at in the progress of it.
Micah: Yeah, so our bill is a bill to do three things. It establishes a new license on the production side. That is called a craft cannabis production license. And that is limited in, in size in a similar way to our existing licenses. Except for it does something slightly different where it looks to talk about productive capacity rather than just square footage. So right now, all of the licenses whether it's indoor or outdoor, are the same square footage. So the craft production license would limit people to 10,000 feet of indoor canopy or 30,000 square feet of outdoor canopy. And then you can also have a blend. So if you had 5000 feet indoor, you could have 15,000 square foot outdoor. So it adds up to the, you know, kind of the total number. So that's new, in and of itself. And we're saying that, you know, it's just acknowledging the difference between the productive capacity of an indoor operation and an outdoor operation to get to a business size that is approximately the same size as a craft brewery or craft distillery here in Washington. We looked at, you know, how big those businesses are and worked our way back from there. The second thing it does is it allows for those craft producers to set up on-site direct sales for the products that are grown exclusively within their operation. And so we're talking about something similar to a you know, craft brewery where you can go in and, and, you know, fill a growler, all those. And then the third thing it does is it, it creates an advisory board of craft producers, craft farmers to work with the liquor and cannabis board on future rulemaking projects. All future rule making projects, but specifically rulemaking projects around the implementation of this new craft license, and then the expansion of the craft economy into the rest of the license types in our industry. So it's, you know, creates this ongoing working relationship between regulators and craft farmers. And - because that's really the idea of this build, it's to establish - what is craft? It's to create a differentiation in the rules for that business model that allows them to succeed in the face of you know, all of the issues that we just talked about. And then it sets up a framework to continue that differentiation in really meaningful ways and move our industry forward.
Wayne: Yeah. Is home delivery allowed at all in Washington?
Micah: Not right now.
Wayne: Okay. Okay. Yeah we see - I actually see a similar approached by some edible companies and other companies in Oregon. They're actually starting hemp CBD lines and then setting up a little retail store - you know, they can't sell their THC products but at least they're making that consumer connection, which we struggle with, you know, we don't see that end consumer because we don't have that direct relationship. And you get so much value and feedback and market research from actually talking to the consumer and the budtenders are great, the dispensaries are great, but there's still that telephone game you know of information being passed down. What, what -
Micah: I don't know about in Oregon but in - one of the things we run up against in Washington is there's an incredibly high turnover for budtenders and for buyers. Apparently it's not a job that people enjoy very much.
Wayne: Yeah, absolutely. But those top ones are succeeding. The ones that are differentiating, it seems like they have really low turnover. But that volume-price player, I see more turnover in those dispensaries.
Micah: Yeah, it's - it's a mix here, I think, you know, small stores in Washington, I think sometimes still struggle to, you know, financially some of the small stores and more rural areas. And, and I think some of that might just be, you know, people get people get burnout on working a low wage job in a stressful situation where there's not money getting made. So.
Wayne: Yeah. What did you learn from - I think in our pre-call, we talked a little bit about the craft beer industry, micro distilleries. What approach to those is there in Washington to help them succeed where Budweiser is don't just run the entire industry? Is there parts of those that should, we should see in cannabis and craft cannabis?
Micah: Yeah, absolutely. So our legislation is really modeled off of those, those two things is craft brewing and craft spirits. So I think a lot of people know the story of craft brewing on the west coast, you know, in the 80s and 90s. The reason why that industry came into existence was because the rules were changed that allowed small brewers to sell their beer directly. And they didn't have to go through the distribution system, which wasn't going to work with small brewers because it just didn't make any financial sense.
Wayne: Yeah. Too much of a leap.
Micah: Yeah, yeah. So and then in 2005, Washington State passed a similar law for micro distillery. And so they define this micro distillery license. And they said, If you make less than a certain number of gallons of alcohol per year, that you could sell a portion of that directly to the consumer and that created a really thriving craft spirits industry here in Washington. And they've had their, you know, their their ups and downs and it's not a perfect industry and you know, model by any means, but it, it created a business type that didn't exist previously in the state of Washington. There were no small distilleries in Washington State. Prior to this, it just wasn't. It wasn't a viable business. So yeah, we're definitely looking at those two industries and seeing - and you know, the real big difference for both of those craft brewers and craft and micro distilleries is the direct sales component. That's the fundamental difference between them and the bigger producers. And, you know, it both allows them to sell a certain amount of their products at a retail margin, you know, which gives them comfortable profit for that. And it allows them to have a greater role in helping to educate the consumer and create, you know, good reality-focused expectations of value. And that is, you know, those that's like kind of the twofold component is going to allow us to sell a small amount of what we produce. Maybe the average brewery from my understanding sells about 25% of what they produce directly. And they make about 45% of their profits from that. So anybody can do the math on that and and realize that that's a good thing for small producers. And one of the things that does for us at that point is it really gives us the stable base of, of income to do more interesting things for our retail partners, and that is something that I've been working on and over the years with, with my retailers that I work with, is helping them understand what are some of the things that we're going to be able to do with this new privilege of selling direct, that's going to make us more valuable as a partner for them. Yeah, and there's a lot of opportunities for us to do things with this direct sales that we wouldn't really be able to do with retail partners effectively, that is going to help us A, make more money so we can continue to exist and other things. But and then Two, like start to broaden some of the stuff that's available for consumers, so they can really start to understand what are some of the different things that could be available that aren't now? Because, you know, we all know that the, the, you know, capitalist mode of production is inherently limiting to the only things that are produced are the things that are profitable, right? We don't see things made that aren't profitable to be made.
Wayne: Or scalable, or a commodity more like, you know.
Micah: Yeah. And there, you know, there tends to be an effect in that and that the things that are less profitable also don't get made, because why would you, you know, if you just own a business and you're kind of disconnected from it from what it's doing on a daily basis, why would you choose to do something that only made you half as much money as doing something else that made you more? You know, there may not be a reason to do that, in that in that system, especially in a system where the ability to get information from the people that are making it to the people that are using it isn't, isn't clear.
Wayne: Where - this seems inevitable. People love small businesses, they know their money staying local, they can actually meet or know who the owner is behind it. It seems inevitable, question is I think, when is this going to happen? Where - I think you said you've been working on this for about three years. Where are you at as far as progress, and is this something you think could happen, maybe 2021? As soon as 2020 as a timeline?
Micah: Yeah, that's - that's a good question because it you know, gives us a chance to talk a little bit about the legislative process. So I'm sure a lot of folks don't know about that. So the average time for a bill to make its way through a state house is like a three to five year process. So we're, you know, technically this is the third year that I've been working on it, but really, it's the second year that it's been on the radar of the legislature. The first year was me just trying to get the attention of my legislators that represent me, getting them up to speed on, on what's going on, help them to understand the cannabis industry, which, you know, hardly any of our state representatives really know, in any sort of detail what's going on. It's, you know, three years ago, I feel like the most common reaction to walking into legislators office was like a little bit of a giggle and a joke about something about cannabis because oftentimes that kind of made them uncomfortable. So they would try to, you know, laugh a little and that was, that was a frustrating dynamic because oftentimes you only get about 10 or 15 minutes to meet with a legislator during the legislative session and to spend, you know, a couple minutes trying to work through their uncomfortableness of talking to a "drug dealer." (Laughter)
So, year one was that, it was - it was education. It was, you know, establishing a relationship with these folks. So they knew that when they were talking to you, they were getting, you know, good information, that they could trust what was being told to them. You know, all those things are important in that process. So last year, we had a we had a bill that was, you know, officially proposed and, you know, we had a lot of meetings about it, but we didn't get a legislative hearing in the committee, so I wasn't able to move through that process. This year, we - we revised the bill. We clarified the language around that a little bit because that was something that, some of the feedback we got last year was that it wasn't clear exactly what we were trying to do, again, especially to people that don't understand the real details of the cannabis industry. And to be frank don't have the time to dive deep into any particular issue. In Washington and Oregon, we both have part time legislators and it creates this environment where, there's just not a lot of time for them to, to do their jobs, and to really understand a lot of nuance. So, learning how to how to interact with that without you know, it can be it can come across as dismissive sometimes. And I think a lot of people get upset about that. But I think if you really think about it, you know, these people have thousands of bills that are getting introduced every year and they have to figure out a way to know enough about all of them to represent their constituents. It's you know, it's a challenge for sure. So, you know, this some relationship building and making sure that people understood what we were trying to do, and that we were clear about its intent. And so this year, we got, we had a hearing for our bill. And it went really well. We had a lot of farmers show up and, and speak really eloquently about their experience and what this opportunity would mean for their businesses. It was, you know, there's some pretty powerful testimonies in that hearing about the idea. And I think that we made a lot of progress and we have a really good chance of the bill passing next year.
Wayne: Next year. It seems like you might be able to get support of the craft brewers or micro distillers because they're small. I mean, they're successful because of their system and what was set up for it. Are they engaged at all or interested on the cannabis craft side trying to create that same part of the industry? Or are they kind of separated from that?
Micah: That's definitely something that I'm working on now. I started reaching out to those that community, you know, over the last couple of months as well as it looked more and more likely that we were going to be able to get a hearing. And yeah, we're making some inroads and I think next year, we're really going to be able to have, you know, a coalition of craft producers from different industries come out and speak to, you know, both their, their struggles, things that have worked, and things that haven't worked. You know, there's a, there's decades of lived experience in those industries about the sorts of things that were helpful and the sorts of things that weren't and I and I definitely, you know, we're working really hard to try to get some of those folks engaged in this. You know, it's hard they're, you know, often busy business owners themselves and, and are, you know. But yeah, there's definitely opportunities to work together there. The other group that we've been talking to and I hope to have as a part of the conversation next year, are organic vegetable farmers that are that are working in CSA's or at the farmers market, because that's really the same sort of idea where it's about, how do we create different market access for different types of production that work, you know, better or worse for that type of production? And you know, CSA's and farmers markets are a big part of a lot of small, organic farmers business models and being able to explain how just the different form of access to the consumer is a really important component in and of itself.
Wayne: Is there any correlation on the hemp CBD side that might also you know get involved in this or because that's so unregulated, they're selling online maybe already directly to consumers or opening up stores, are they not as engaged in this on the CBD side?
Micah: Yeah I'm not, I don't have any hemp farmers that are federally interested in - you know that I find that the hemp farms tend to be, you know it's a larger scale of farming just because of the, you know, the nature of it.
Wayne: We're seeing craft hemp become a category here in Oregon and these craft growers around hemp and products. Yeah, it's really interesting
Micah: Yeah, you guys are definitely a few years ahead of us on on the hemp farming we, we only really last year was the first year that it was easy to get a hemp farming license and I think we're still seeing folks figure out what to do, kind of how to how to do that and the different ways to do it. There was this year was pretty, pretty ugly for Washington hemp farmers, a ton of stuff got planted and you know, we had an early frost and bad weather. And then, I think there was also not the processing facilities in place. So a lot of, a lot of usable material rotted in the field this year.
Wayne: Yeah. And I see a lot of that being industrial hemp right now, which is a whole you know, high volume extraction and processing these, this craft hemp we're seeing in Oregon now is - I mean, it's indistinguishable from craft flower that you would see. It's really interesting. It's as a category.
Micah: Yeah, we grow strains in our facility that would legally meet the definition of hemp. So yeah, we're, that's something we're looking at as you know, maybe doing a small crop locally here and just doing it for to get those type three flowers. So yeah, I wasn't. That's nice to hear about craft hemp flower in Oregon.
Wayne: Yeah people are smoking, I mean buying just the flower and actually smoking it like normal flower or it's you know going into edibles, vapes, different things like that. But the industrial hemp one is scary because I think that's more aligned for fiber, you know, different - paper, textiles. When you take that industrial hemp you've gotta process it so far down. It just doesn't seem like the right fit for an actual consumable product market. But it seems like a filler that's in place right now because it's just brand new. And that's what how hemp was grown before, those strains and cultivars. I mean, that's just been done now. It's so new.
Micah: Yeah, I know we're definitely going to see a whole lot of different stuff happening in that space. And yeah, just not - not something that I've spent a ton of time delving into. I think it's a much smaller activity here in Washington thus far because the state was, you know, pretty far behind Oregon on doing the licensing.
Wayne: Right? Back to the bill, two questions and they might kind of tie together. One, how do you write a bill? Do you have to hire a lawyer? Like what's that process? And then two, I saw your bill is sponsored by Rep. Lori Dolan. How do you get - does a bill have to be sponsored by someone to have to get a hearing to even be seen? How did you get her to sponsor, and is she involved in writing the actual bill on the language?
Micah: Okay. It can go a couple of different ways. I would say probably the most common way that a bill gets written is - Yeah, lawyer that the, the interest that is pushing the bill forward, you know, would hire a lawyer to write the bill in exactly the way that they want it done. Washington has an interesting option available to citizens and to legislators. So if a legislator has a constituent that has a bill that they support, that that legislators supports, what, and this is what happened for us, is so Lori Dolan represents me. She's, you know, I'm her constituent here in Olympia. She represents the 22nd Legislative District, which I live in and have the business in. So once we got to a point where she understood the bill that I was asking for, what, what we have here is each committee in the House or the Senate, has nonpartisan staff members that, their job is to is to write and understand bills. So sometimes they'll get a bill that's already written. But other times they'll just get a proposal for a bill and they actually draft it. So I was actually able to kind of be the contact with the person who wrote the bill that works for the house commerce and gaming committee, who's you know, he's a lawyer and a legal writer. And so over the course of a couple meetings and conversations, he was able to take the proposal that I had put together and put it into legal language that could be, you know, enacted into law. Yeah. So - not every state has that nonpartisan staff available. But it's -
Wayne: It's probably costly, to have a lawyer, if you had to have a lawyer and pay for that writing that up.
Micah: Yeah, I mean, that eliminates a lot of people from participating and in the process right there. So it's definitely a great system and something that I was really, I didn't know about and I was really happy to find out existed because the first year that we had the bill we actually did, we found some some, you know, kind of activist pot lawyers that were willing to help us draft the bill for free. And one of the downsides of doing that is oftentimes, you know, if something gets written in a way that the staff of the committee doesn't think is really executable, a bill can get kind of inherently slowed down just because, you know, the legislators, like I said, they're really busy. They have thousands of bills, only about 10% of the bills, that that get introduced progress, and only a small percentage of those actually get passed. So they have to, they have to really spend their time focusing on bills that they think have a chance of moving forward. So there's - if there's a technical or a structural problem in the bill, that can derail it, regardless of how good of an idea it is. So having something that the kind of bureaucracy that that assists the legislators in their jobs, making sure that they are supportive of it and it's implementable is a really important component. And so that involved for me, over the last couple of years, a lot of conversations with our regulatory authorities about, you know, if this idea were to go into place, what are some of the concerns and considerations that you would have as the people that would be writing these rules and enforcing it? You know, what are the things that you would want to see in it? What are the things you wouldn't want to see in it? And, well, they're not gonna, you know, come out and say, Oh, you know, we love this bill so much, and we, you know, we want it to pass. But having them on board and understanding what we're proposing and being willing to work with us on it is also, I think, a really important component of this process. Because if you don't have the support of the people that are going to put your ideas in and implement them, you know, it's going to be a struggle for the rest of the time. So I do, I would encourage anybody that's that's considering, you know, trying to interact with, with the legislature with a bill, to really spend some time talking to the folks that work for the state that that bill is going to affect and make sure that that you're not doing something that you don't understand the unintended consequences of also.
Wayne: Yeah, it's your own - managing your own time, energy and effort to go so far down a road just to hit up a definite roadblock that you could have caught a year or two earlier, by just asking questions is really important.
Micah: Yeah, and one of the ways that that uh, that a agency like that can derail a bill is by assigning a - So one of the things that has to happen for most bills is they have to get evaluated for their fiscal impacts. So one way that an agency can kill a bill without really very much work is to just put a real high fiscal impact on it, and to say, Oh, this is going to cost, you know, $20 million to implement because we're gonna have to hire 30 people and buy all this technology. And a lot of times, you know, that's a deal breaker.
Wayne: You almost have to address that. I imagine most of the infrastructure's in place for this type of craft license bill, shouldn't be too much of a cost. Yeah.
Micah: Yeah, yep. They but they can, you know, they can get creative and how they interpret things if they feel like it.
Wayne: There's one other part to this. So this is House Bill 2279. And I think you said there may - there's sometimes a way to do this where this license could be added to a, an amendment of a different bill or like an add-on and then if that bill got passed, it could go through? Is that, is there another strategy piece that this could happen?
Micah: Yeah, so that's definitely one of the things that we're now working on. It's it's - in all likelihood the bill, while it did get a hearing, it didn't progress past that point. So it's, it's pretty much impossible for the bill to go through as-is this year, because it's not, it hasn't progress out of committee by the time that it, what they call the cut off. So one of the things that we can do is we can look at some other bills that are in the cannabis space. And we can approach the people that are, that are advocating for those bills. So the, you know, the legislators or the people that those legislators are, you know, advancing that bill on behalf of, and we can try to see if there's areas of compromise where a component or all potentially of our bill could get added to theirs as an amendment. So one of the things that we're looking at are opportunities to introduce the definition of the craft producer, without the other components necessarily. Because you know our strategy there might be to, to establish this license type, give everybody the opportunities to switch over to it. And then that gives us a better place to organize all those small farmers for a push for direct sales, and for our advisory board and, you know, whatever other differentiations might be, might be amenable to folks. You know, there's definitely there's a longer term strategy for for some of the sorts of things that we want to see come out of the craft economy that this would produce, you know, or some of the ideas that people are really excited about are farmers markets. You know, we used to have farmers markets here in the medical days of Washington cannabis and those are really great places to acquire really fantastic cannabis, but also to, you know, just be in community and meet people that are, that are also doing the same thing you are in learn about plants and learn about different, you know, varietals that are available and smell and experience all of the, all the different things in one place. So bringing back that opportunity, I think is really appealing for a lot of folks. Another component of it is the ability to do like a special event license similar to what is allowed for alcohol. So if you're having a special event, you can get a permit from the Liquor Authority that allows you to serve alcohol at your event. I don't think there's any reason why we can't do something similar in the cannabis space and have had these sorts of events that are, that are about normalizing cannabis and allowing for community to build up out of it. Because you know, that's another big component of why we're working on this bill is to take a look at - what are the, what are the social relationships that come out of, you know, these economic interactions in the cannabis industry? And how can we change the structure of things to produce, you know, social and economic relationships that are, that are scaled more to community than they are now. And since certainly having a small farm that people work at and people can come into and tour and really see what's going on and understand the people that are growing for them, can have that direct economic transaction. It also facilitates the social relationship that isn't currently available. And it is opportunity for community to build out of that.
Wayne: Yeah, absolutely. That's, that's so interesting. I really hope this gets some progress and keeps going. Before we kind of end up you know, I want to ask listener - say what listeners can do to help support but I do have one last topic on kind of growing craft cannabis, strain names, how it's merchandised. And I'm so interested in this state by state, as the Sativa/Indica myth we'll call it, is really carried over from the legacy of the black market, Sativa thought to be uplifting, Indica relaxing, and we know now that it's really the cannabinoids and the terpene profiles that're responsible for effects. We're seeing that really get traction in Oregon. Most of the budtenders know, a lot of the consumers - some are coming in saying, what do you have dominant in Limonene, a certain terpene they like. Is that happening in Washington yet? Or does it feel like a lot of stores aren't merchandising based on actual effects? They're still that sativa-indica-hybrid, kind of binary setup?
Micah: I would say there's, there's opportunities for folks that are interested in moving beyond that, that sort of shorthand of sativas and indicas to describe experience. But I would say, predominantly, the stores are still using that vocabulary. We made an intentional decision pretty much from the, from the get-go of our brand to not use those shorthands, because that's ultimately what it is. Right? It's just, it's a sort of an easy way to say, relaxing or energizing. (Yeah, yeah.) And so I mean, I kind of understand why, why people do it.
Wayne: It's just simple, as a system. If it was true, it'd be great, it'd be nice to have these simple categories. Right?
Micah: Right. But we what we've done is, so we talked about cannabis as first, you know, in categories of type, so type one are high THC strains, type twos are mixed ratio, and type three is our high CBD low THC strains. And then within each of those categories, we've created what we've called the hues of experience. So our, all of our different strains are, are categorized by experience. And then there's, you know, three or four different categories under each of the typology, and we use a color to communicate effect. So, you know, our, some of our, what people would would traditionally call a sativa experience are, you know, yellow, or red, kind of depending on where in that spectrum they fall. And then we we have, you know, just descriptive words that talk about experience to describe each category. And so that's allowed us to create a more nuanced conversation tied into experience, rather than, you know, this, you know, plant grows...
Wayne: Yeah, tall, skinny, bushy.
Micah: Yeah. And so we've always tested all of our individual lots for terpenes. And we put that information on the, on the labels. And so we have a lot, you know, a lot of history and data from a lot of different years and strains about what the terpene breakdowns of each of those strains are and, and we've spent a lot of time trying to correlate experience with that data. It's, it is, you know, fully a part of our brand and I think it's really appreciated by a lot of people that consume our products. And it is a work in progress to, you know, to bring that to as many people as we can, and there's definitely lots of other people in the industry here that are that are having some of the same conversations. I think you guys are probably a little bit more, you know, you all down there a little ahead of us on on having those really important nuanced conversations about it, but it's definitely happening here.
Wayne: Yeah. I always wonder and you know, we do it on the edible side, we do strain specific, we look for dominant terpenes. And I've always kind of felt like, Are we too far ahead of the ball? I mean, we want to be accurate. And I mean, sativa and indicas, to me is kind of - that's what the consumer's looking for. So do you want to tell them that, although it's kind of - it's not a lie, but it's misinformation based on effects. But I wonder how far ahead we are, if we're too far ahead, or when the consumer - or will it only be connoisseurs that end up really being, having an interest in that? I would be curious to how it'll evolve.
Micah: Yeah, I mean, I think a lot of that is going to be dependent on who's making those choices. And what is their position in the supply chain? And what is their motivation? I think, you know, you just described as somebody who really understands that, the sativa/indica isn't an accurate way to describe experience, you know, as it's tempting to use that shorthand, because that's what's easy to communicate. But you know, for somebody that like doesn't even really understand the nuance of the sativa/indica inaccuracy; they're obviously just going to use that shorthand. So if you start to, if you start to allocate more of the decision making power about value to people that are more and more disconnected from production and disconnected from the plants and disconnected from the products that come out of them, I think we're going to see more generalizations and more kind of whitewashing of this nuance, because it's gonna, it's going to make it easier to commodify cannabis. So I think that's a, you know, that's an integral part of this conversation about craft cannabis. Because, because it again, it talks about scale. And it talks about ownership. And it talks about who has control over what gets produced, why it gets produced and how it gets talked about. And I don't think we, I don't think we have a very good chance of, of bringing all of the complicated, you know, nuance that we know exists in cannabis, to a broader audience if, you know, we go in a conglomerate direction for who owns the industry. I just don't think that we'll end up in a place where we get a satisfying end result in that arrangement. I think we're going to have mass produced. We're going to start to see strains that are, that are bred and produced for profit, rather than for the qualities that they express, so we're going to let you know, we're going to start seeing strains that are grown entirely based on structure, and how easily they can get, you know, processed by machines. You know, these are the sorts of things that factor into decision making. And it narrows the choices that we all are left with. (Yeah) And that's the, you know, that's the key of how does, how did the economics of a thing affect the way that it that it allows us to live our lives? And yeah, that's the, that's the core of it for me.
Wayne: Yeah, I think ultimately, both parts - all the parts should exist. If you're looking for the cheapest price, mass produced volume, you know, big scale up, Big Ag comes in that market. I think is going to exist without a doubt. The question is, will the other part of the market be able to exist? The craft, maybe that medium volume value producer. And if those things aren't set up, it's kind of skewed towards that mass volume approach. And we see in beer and distilleries, like each market exists, it's not that craft is going to be 100%. But we don't want to see mass volume become 100% or 95% of the market. (Right.) And if it doesn't happen soon, you're gonna see all of these craft businesses go out of business, and then five or 10 years, if they enact it, it kind of like, Well, you know, tons of people lost their life savings, there's so much chaos and turmoil because of it. But, you know, how does that market exist and thrive? Yeah, it's so fascinating right now.
Micah: Yeah, absolutely. And there's, you know, I mean, I, the thing I'll say about that is there, I believe that there are ways to produce efficiently at scale that don't force us to turn all the power and decision making over to, you know, large, disconnected ownership groups. I think there's ways to look at, how do we scale in, in worker cooperative forms of ownership? You know, there's examples, especially in the agricultural world and in the history of agriculture, that that producer co-ops and worker co-ops have allowed industries to scale to really very large entities that do things at a larger scale, but that are that are created through a more democratic and a more bottom-up organization then we see in our in our kind of top -down modes of ownership here, and so that's definitely something that we're talking about with, you know, in the - I think we're getting into a whole different podcast episode. But yeah, you know, we're starting this important thing, that we're having a conversation in Washington right now about social justice and equity for black Americans in the legal cannabis industry, who have largely been left out of our regulated marketplace. And one of the ways to start to fix that inequity, in my opinion, is to set up the ability for, for people to come together and work around cooperatives, which is not functionally possible in the regulated industry here in Washington right now, because it's a real direct way to have equity for the largest amount of people in real ownership equity. And I think having conversations again about scale and about ownership is really important and in looking at how did those relationships effect what comes out of an industry? And I do think we need as an industry to look towards cooperative forms of ownership to help us come out of this process with the best results for the most people.
Wayne: Yeah, absolutely. Micah, I really appreciate the time, and I really like - I really like this and what you're doing, this craft license legislation and bill. You know, I haven't heard any talk of something like this in Oregon. There was you know, this focus on the craft producer and how can we save that part of our industry? And it's kind of all been focused on export, trying to get export allowed as soon as possible. And to me this seems like a much more immediate solution, export just feels too far away. Also, as it seems like export big volume producers are going to do better when they can export. But yeah, I hope we see something like this in Oregon.
Micah: Yeah. I was surprised by that strategic choice in Oregon as well. And I, if - if you have folks that are, that are interested in pursuing an idea like this in Oregon, I'd be more than happy to, to be put in touch with them to be a helpful component of, of that.
Wayne: Yeah. I appreciate it.
Micah: Another thing I want to put in a plug for, which has been a terrific benefit for us, is there's an organization here in Washington called the Cannabis Observer. And so they're a group of people that that go to every single legislative meeting related to cannabis, every single regulators meeting at the Liquor Control Board, and they observe the meeting, they take notes, and then they put up a summary on their website. It's cannabis.observer, and, and that allows us in the industry to have a really regular, detailed, comprehensive look at what's going on from our regulators and from our lawmakers that are going to affect our industry, and has been a really valuable tool for me and for a lot of other people that are trying to stay on top of what's going on. And they're a, you know, the nonprofit, volunteer-funded and you know, people in the industry give them 10 bucks a month on Patreon to, to keep doing that work. And that has been something that has been really tremendously helpful for us. And I imagine would something like that would be a real benefit in Oregon too, because staying up to date on the on the changes can be a ton of work.
Wayne: It's difficult. Yeah, yeah. Yeah, we'll link to them in the show notes. That's a great resource. Great, and appreciate that work they're doing. So as we wrap up, you know, where can people find you? And what do you want to tell listeners - How can they help support? What are your kind of next steps? Anything listeners can do right now to help this bill and this craft license in Washington?
Micah: Yeah, absolutely. So we set up a website for this campaign called washingtoncraftcannabis.org. And you can sign up for our email us there, which is you know, we're putting out action information about what's happening with the bill as it happens. We send out instructions for how people can get in touch with legislators. Certainly, you know, people in Washington that are constituents of these legislators are the are the main people that they like to hear from, but it's certainly never hurts to you know, send some emails from elsewhere as well. And then you can find out more about Raven Grass at ravengrass.com. That's our website. And then as far as the bill this year, you know, the thing that could be the most help for folks would be to, you know, reach out to people that you know, that that live in Washington and that this would affect and let them know about the website and signing up for that. And, and as we move forward in our process, through this year and next year, we're definitely going to have moments where there's calls to action for folks to show up in Olympia and testify, or sign in on behalf of the bill, or, you know, send, send emails to legislators when we need action at particular moments. And I would say that, you know, the biggest thing that folks can do is to stay engaged, keep kind of abreast of what's going on, and, and be talking to your friends and neighbors about some of these ideas and some of these, you know, things that could potentially be available to all of us that would improve just the way we get to go through our lives and how we how we buy our cannabis and the quality of that experience and, and the downstream effects of, of how we choose to buy and sell things because it's a you know, it's a huge component of what we're doing here on this earth. And we don't always think about how the structure of it affects the results. And that I think is, you know, the big - the big message of our bill is start thinking about that and moving forward in a more intentional way.
Wayne: Yeah, absolutely. You know, I think even if you're outside of Washington, we're going to follow this. I really hope this you know, goes through and you guys are able to set this blueprint, which ultimately I think needs to be in it feels like every other state as well. And you know, the details, logistics need to be figured out, but the overall goal of it. I hundred percent, you know, believe in and stand by. So I really hope this gain some more traction, and we're able to see something like this happen. I think this is awesome work. I appreciate it.
Micah: Yeah. Thanks so much for the opportunity to come and chat with you about it. I really appreciate it.