Tag: industry
Pot Legalization Spreads Through The West And Into D.C.

Pot Legalization Spreads Through The West And Into D.C.

By Evan Halper, Tribune Washington Bureau

Joints, pot brownies, cannabis–dosed sodas, and other marijuana products will soon be sold in retail shops to any adult who wants them throughout a large chunk of the West, after voters in Oregon and Alaska approved legalization measures Tuesday.

And an initiative approved overwhelmingly by Washington, D.C., voters legalizes the use and cultivation of marijuana there, but stops short of allowing retail sales.

The states join Colorado and Washington, which legalized recreational pot sales only two years ago, in a remarkable change of fortune for legalization advocates who had been toiling for decades to lift the prohibition on the drug. Proponents this week overcame voter concerns surrounding the bumpy roll out of the taxing and regulatory plans for cannabis in the states where it was legalized in 2012 – as well as many unwelcome headlines – in a sign that voter unease with the drug is rapidly fading.

The outcome also was a clear sign that opinions on marijuana no longer fall neatly along partisan lines. The narrow passage of legalization in GOP-dominated Alaska, where 52 percent of voters cast ballots in favor, was considered a symbolic victory among cannabis advocates.

The vote in the capital also had political significance, playing out in the backyard of federal government as advocates try to persuade Congress to soften drug laws. The Washington, D.C., measure was driven in large part by racial justice concerns, in a city where African-Americans accounted for 91 percent of those arrested for drug possession, even though statistics show they are no more likely to use the drug than whites.

Organizers are now setting their sights on California for 2016, where they are confident the state’s liberal-leaning electorate will opt to legalize sales for recreational use. Such an outcome would create a bulwark for marijuana permissiveness in the West, which proponents hope to buffet by targeting other large states to the east for legalization measures in 2016 and shortly thereafter.

“This Election Day was an extraordinary one for the marijuana and criminal justice reform movements,” Ethan Nadelmann, executive director of the Drug Policy Alliance, said in a statement. The alliance, a nonprofit bankrolled by billionaire George Soros, invested heavily in the Oregon measure through its political action affiliate, and it also provided advice and financial support to the Alaska initiative.

“These victories are even more notable for having happened in a year when Democrats were trounced at the polls,” Nadelmann wrote. “Reform of marijuana and criminal justice policies is no longer just a liberal cause but a conservative and bipartisan one as well. On these issues at least, the nation is at last coming to its senses.”

This election season was also notable for the opposition the marijuana movement attracted. Billionaire casino magnate Sheldon Adelson stepped up with $5 million to help defeat a fairly routine measure in Florida to legalize marijuana for medical use only. It was done in by a Florida state law that requires 60 percent approval for constitutional measures to pass. It fell just a few percentage points short.

Still, Adelson’s involvement in the campaign marked the first time a mega-donor has gotten so deeply involved in fighting such a measure. Opponents of pot said they had never before been able to afford television time, and in Florida they had the resources to mount a sophisticated multimedia effort. Adelson’s political adviser said the billionaire will be looking for other opportunities to fight legalization.

Smart Approaches to Marijuana, a national anti-pot group, is vowing to step up its efforts.

“This was not the complete slam-dunk the legalization groups expected,” said a statement from Kevin Sabet, president of the group. “Alaska barely voted to legalize, and several cities rejected marijuana retail stores outright. We are confident the more people know the truth about marijuana and the Big Tobacco-like marijuana industry, the more opposition to marijuana legalization will continue to grow.”

AFP Photo/Frederic J. Brown

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Edible Marijuana Products Slow To Arrive, As Regulators Exercise Caution

Edible Marijuana Products Slow To Arrive, As Regulators Exercise Caution

By Evan Bush, The Seattle Times

SEATTLE — Marijuana-infused edibles began trickling to store shelves in Washington state last month, and the sweets, snacks, and drinks offer a glimpse of a diverse and maturing marketplace on the horizon — one rife with concerns for consumers and regulators.

Statewide pot-supply shortages slowed the edibles’ arrival, but manufacturers also were stifled, and frustrated, by emergency regulations from the state Liquor Control Board (LCB), which has taken a cautious approach to opening the marketplace.

So far, the LCB has given its blessing to products — including chocolate bars, sodas, and energy shots — from three new businesses.

Nine more kitchens have been approved by the Washington Department of Agriculture, but the LCB hasn’t yet signed off on their products.

Although eager entrepreneurs have bemoaned the LCB’s pace, Washington has benefited from watching Colorado deal with unexpected concerns and high demand for edibles. It also avoided national scrutiny after media seized on cautionary tales about edibles. New York Times columnist Maureen Dowd visited Colorado, ate marijuana candy, and wrote that it left her in an eight-hour “hallucinatory state” in which she was “panting and paranoid.”

The stories pushed regulators in both Colorado and Washington to tighten the market, put an emphasis on education and, in many ways, protect consumers from themselves.

Making edibles a commercial scale requires a touch of science and a dash of culinary skill.

With the state’s pot supply limited, edibles processors do have one advantage: They can use other pot growers’ trim, or waste clippings, as the base to make THC-laden oil or cooking fat.

“You can get a high-quality perceived product from essentially scraps,” said Jim Chaney, who has been making edibles for medical patients since 2011.

From there, processors can be creative. Take, for example, the first three to have edibles approved:

— After furtive discussions around their family’s Thanksgiving table in 2012, Patrick, Dan, and Michael Devlin started Db3. The brothers’ company became the state’s first licensed edibles processor. In January, they started setting up shop in a 25,000-square-foot warehouse in the SoDo neighborhood.

The brothers will soon launch Zoots, their line of marijuana-infused drops and candies.

Industrial food-processing machines will churn out three products initially: drink additives that combine THC with substances like green coffee-bean extract or camomile; energy shots that have a similar appearance to 5-Hour Energy drinks; and “chili cinnamon fire” candies packaged in what looks like an Altoids tin.

The Devlins converted their warehouse, which had been processing chicken salad, into an edibles assembly line and spent months developing their products, then testing them with focus groups. By the end of the month, they expect to have 24 employees.

They see Zoots as a future “signature Seattle brand.”

“From a business perspective, this is a very large market without a brand,” Dan Devlin said.

— An hour north near Granite Falls, Green Chiefs has a former horse barn with a kitchen, a $125,000 carbon-dioxide processor named “Leviathan,” and about 2,700 pot plants inside.

With walls constructed of corrugated metal lining the barn’s frame, Green Chiefs built a commercial kitchen to produce such snacks as Parmesan garlic pita chips and peanut brittle.

Instead of convening focus groups, Green Chiefs pushed out small batches of confectionery items like truffles and brownie brittle and is tracking sales and price margins, said Demetri Huffman, a consultant with the company.

Although state-licensed retail stores priced their high-potency chocolate bars with about 55 milligrams of THC between $70 to $100, Huffman said Green Chiefs did not profit from its first batch, which also included other kinds of edibles, because trim was expensive and their kitchen processes were not yet streamlined.

— In Longview, in Southwest Washington, Mirth Provisions hopes its cannabis-infused sodas can compete with “a nice 22-ounce beer or a glass of pinot noir.” Founder Adam Stites said the company “can push about 8,000 bottles a day.” Soon, Stites hopes to bring cold-brew cannabis coffee to shelves.

For now, though, Mirth Provisions offers three soda flavors. Rainier Cherry, infused with a sativa strain, contains about 20 milligrams of THC.

Stites said he decided to pursue pot-infused beverages because he believes they’ll have a bigger consumer base than traditional bud.

“Regardless of what socioeconomic group you’re in, drinking is a socially acceptable way to recreate,” said Stites. “We said, why not make it a single serving for when you’re out barbecuing?”

All three companies project a wide base for their market, something an initial study of Colorado’s market seems to support.

“(Edibles have) been a lot more popular than we thought this year,” said Adam Orens of BBC Research, who helped research the market for the state. “It has that appeal for casual users — an easy way to consume marijuana.”

In Colorado, the researchers estimated, tourists account for about 44 percent of recreational marijuana sales in metro areas, and about 90 percent in heavily visited mountain communities.
Novice pot users having bad experiences with Colorado edibles piqued Washington regulators’ attention in the process.

In June, Dowd wrote about her experience with edibles, and the story went viral. Three months earlier, a 19-year-old Wyoming student had jumped from a balcony and died after eating more than six times the recommended serving of marijuana cookies.

In response, regulators and industry leaders in both states imposed restrictions on the edibles marketplace and put new emphasis on education.

Most concerns stem from the newly pot-curious eating too much too fast because they don’t know better, said Meg Collins, executive director of Colorado’s Cannabis Business Alliance.

“Edibles seem like an easy, friendly way to get into marijuana,” Collins said. “It may taste like a yummy chocolate, but it’s still a drug and you need to be careful.”

Unlike smoking or vaping marijuana, eating pot can affect people quite differently and can produce a delayed high that kicks in hours later.

Although Washington’s law was more restrictive than Colorado’s, that state’s struggles brought new attention. In June, the Washington LCB released emergency rules to tighten its control over the edibles market.

“There were reports coming out of Colorado that edibles were more tricky,” said Brian Smith, an LCB spokesman. “We had already established serving sizes and limits. We wanted to take it a step further.”

The rules require products be scored and labeled to indicate serving sizes, and homogenized so psychoactive chemicals are dispersed evenly throughout the products.

The LCB also restricted how manufacturers could preserve products. The rules don’t allow dairy products or anything that requires heating or cooling, among other constraints.

“We’re trying to keep this relatively young industry more on the side of safety with inherently low-risk products,” said Steve Fuller, a policy analyst for the state agriculture department. Some of those regulations might loosen in the future.

The LCB’s rules also allow it to reject any product or packaging it thinks would appeal to children. That means no gummy bears or cartoon animals.

AFP Photo/Desiree Martin

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Manufacturing Leads U.S. Industrial Output Higher

Manufacturing Leads U.S. Industrial Output Higher

Washington (AFP) — Manufacturing pushed U.S. industrial production higher in July in the sixth straight months of gains, the Federal Reserve said Friday.

Total output of the nation’s manufacturing, mining, and utilities rose 0.4 percent in July, after an upwardly revised 0.4 percent gain in June.

The July output increase was slightly stronger than analysts expected.

Manufacturing output surged 1.0 percent, its largest gain since February, and up from a 0.3 percent rise in each of the prior three months.

Leading the increase was production of motor vehicles and parts, revving up 10.1 percent, while other production rose 0.4 percent.

Mining output gains slowed sharply to 0.3 percent from 1.3 percent in June.

Utilities output fell for the second month in a row, by 3.4 percent, as weather that was unusually mild for July reduced demand for air conditioning, the central bank said.

Year on year industrial output in July was up 5.0 percent.

“So far, with the exception of consumer spending… it looks like Q3 is getting off to a good start,” said Jennifer Lee of BMO Capital Markets.

Capacity utilization crept higher by a tenth point for the second straight month, reaching 79.2 percent in July, the highest since June 2008.

Lee said capacity utilization was “still below inflation-threatening” levels of more than 82 percent.

AFP Photo/Stephen Brashear

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Tobacco Industry Once Had High Hopes For Marijuana Business

Tobacco Industry Once Had High Hopes For Marijuana Business

By Evan Halper, Tribune Washington Bureau

WASHINGTON — Richard Nixon was in the White House, his “war on drugs” was in full swing, yet Big Tobacco was secretly exploring the possibility of becoming Big Pot.

Newly discovered documents from tobacco company archives at the University of California, San Francisco, show that major companies in the cigarette industry investigated joining the marijuana business in the late 1960s and early 1970s.

The companies were driven then by the same shift in public attitudes that is now pushing legalization around the country.

One company even asked a federal counternarcotics official to secretly secure marijuana from the government for research.

“We request that there be no publicity whatsoever,” a Philip Morris vice president wrote in late 1969 to Milton Joffee, drug sciences chief at the Justice Department’s narcotics bureau. “We will provide the results to you on a confidential basis, and request that you not identify in the form of any public announcement where the work has been done.”

Joffee responded that Philip Morris could skip Food and Drug Administration review of its application for government pot. “I do not feel there is any bar to maintaining the confidentiality you request,” he wrote.

The documents, discovered by public health researchers, were disclosed Tuesday in the Milbank Quarterly, a health policy journal. They not only shed new light on the Nixon era, but appear when some Wall Street analysts and health advocates say tobacco companies may again be considering the expanding market for legalized weed.

“The issues the tobacco companies were exploring are all still there today,” said Stanton Glantz, director of the UC San Francisco Center for Tobacco Control Research and Education. “The only thing they were wrong on is they thought legalization would happen a lot sooner.”

Legalization seemed in the air in the 1970s, though Nixon staunchly opposed it. He ignored a presidential commission’s recommendation in 1972 to decriminalize possession for personal use.

But 11 states would do just that between 1973 and 1977. Jimmy Carter was elected to the White House in 1976 on a platform that included marijuana decriminalization. Views shifted dramatically in the 1980s, however, and President Ronald Reagan oversaw a harsh crackdown that included imprisonment for thousands of nonviolent offenders.

The tobacco companies say the newly unearthed documents are no longer relevant.

“Our companies have no plans to sell marijuana-based products,” said David Sylvia, a spokesman for Altria Group Inc., the parent company of Philip Morris. “We don’t do anything related to marijuana at all.”

Company denials were also emphatic in 1971 when Joseph Cullman, chairman of the board at Philip Morris, declared that marijuana was nowhere on its corporate radar. A handwritten note from the company president at the time, George Weissman, suggests otherwise.

The Philip Morris marijuana collaboration with the Justice Department, he wrote, was meant to explore “potential competition” and “a potential product.”

Another Philip Morris memo, this one unsigned, laid out to executives the rationale for the marijuana research.

“We are in the business of relaxing people who are tense and providing a pickup for people who are bored or depressed,” it said. “The only real threat to our business is that society will find other means of satisfying those needs.”

Company officials say they do not know what ultimately came of the project. Nor do staff at the Justice Department or National Institute for Drug Abuse. No files could be found at the National Archives.

But the project clearly rattled other tobacco firms.

An internal memo from an executive at the American Tobacco Co. reported that his team had learned from a “reliable source” that Philip Morris “was granted a special permit to grow, cultivate and make marijuana extracts … and that Philip Morris urged the State agency people to secrecy.”

Over at British American Tobacco, the world’s second-largest tobacco firm, documents show that a confidential research effort labeled the “Pot Project” was launched in Britain.

The firm’s head science adviser, Charles Ellis, also drafted a detailed research plan to position British American Tobacco to produce “cannabis-loaded cigarettes.”

Cigarettes mixed with marijuana, Ellis wrote in the 1970 document, were a “natural expansion of current smoking habits” and if pot became legal, such cigarettes would be “a change in habit much like moving to cigars.”

He suggested that the firm “learn how to produce in quantity cigarettes loaded uniformly with a known amount of either ground cannabis or dried and cut cannabis rag.”

It is unclear if any of the research was ever carried out.

“The 1970s were a long time ago,” British American Tobacco said in statement. “Today, we have no interest whatsoever in participating in the marijuana market.”

Big Tobacco’s attraction to pot appeared to drop off in the 1980s. But the companies were intrigued again by the early 1990s, documents show, when R.J. Reynolds launched into research on the chemistry of marijuana.

The project was triggered by reports — later proved false — that a French competitor was manufacturing marijuana-laden smokes. An R.J. Reynolds executive also explained in an internal memo that the company needed to better acquaint itself with marijuana “in view of the possibility of its future more frequent use in certain European countries.”

“I cannot begin to speculate on the thinking of management more than 20 years ago,” said David Howard, a spokesman for R.J. Reynolds Tobacco Co. “Regarding the current cannabis market, we are not pondering any expansion or involvement in that market, nor do we conduct any research into marijuana.”

Anti-smoking activists are skeptical. And some investors are betting that their suspicions are well-founded.

“The tobacco companies may deny even thinking about it, but they have to think about it,” said Gerry Sullivan, portfolio manager of the Vice Fund, a $300 million mutual fund made up of alcohol, tobacco, gambling and defense company stocks.

“It is an opportunity to diversify their business and help benefit shareholders,” Sullivan said. “That is what management is most likely pursuing in the dark corners of some research lab in Virginia.”

AFP Photo/Desiree Martin