America's marijuana growers are the best in the world

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, and releases three types of insects to clear unwanted pests without the use of toxic pesticides.

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

<section>After 20 years of experience, legal marijuana growers in the U.S. have a reputation for 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.

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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 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 marijuana trade, which ArcView Market Research and BDS Analytics estimated at $14.9 billion in sales for 2019. Companies are raising capital and building international trade ties despite Canada's unlikely climate to be an agricultural pot haven.

"Canada has a huge advantage because they can fill a gap," said Rezwan Khan, vice president of global corporate development for cannabis seed supplier DNA Genetics.

Best in the World

California's growers have been developing legal marijuana products since 1996, longer than everywhere but Amsterdam. Khan describes the state as "the epicenter of cannabis culture."

California's cannabis seeds have been distributed all over the world, and many foreign firms are trying to reproduce the quality of West Coast marijuana.

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

"The world wants that technology," said Michael Sassano, chief executive 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

But 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 has not been cost effective to invest in automation for its production line. Most processing and packaging is done by hand.

The patchwork of legalization means cannabis is not always grown where it thrives, 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, a potential exit strategy. Many U.S. marijuana growers are positioning themselves as attractive acquisition targets for Canadian firms eyeing the 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 United States 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 the District approving recreational use and 33 states legalizing medical marijuana, industry insiders believe marijuana may be legalized nationally in the near future, greatly expanding its market.

In November, the House Judiciary Committee passed a bill with more than 50 co-sponsors that would effectively make marijuana legal in the United States. 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 (KHN) is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.

Source: Washington Post
Photo by Markian Hawryluk/Kaiser Health News

Source: Washington Post