The New Year brought a new wave of retail cannabis for adult use, but industry veterans dread the sound of helicopters. Those fears intensified on Jan. 4 when Attorney General Jeff Sessions rescinded guidance of U.S. attorneys on cannabis, including a 2013 memo from Deputy Attorney General James Cole that suggested deferring to state law on cannabis prosecution except for large-scale criminal enterprise.
Federal agencies have “not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for personal use on private property,” the Cole memo said. Now that guidance is gone.
Fear of arrest plagues cultivators, distributors, transporters, processors and retail sellers at the dispensary level of the fast-growing legalized industry.
Renewed dread rippled through the cannabis trade after Tyler Ogden, a California Highway Patrol officer, on Dec. 22 pulled over a truck from Ukiah-based Old Kai Distribution that was transporting about 1,875 pounds of product. Two workers from the company were detained on suspicion of illegal transportation of cannabis, according to Lucas Seymour, co-founder of Old Kai. The company has permits needed to transport cannabis, he said.
The truck and large quantity of product were seized by police and are still being held, Seymour said in an interview with North Bay Business Journal. Old Kai employs 33 people.
“We have no idea where it’s being held,” Seymour said of the truck and product. “We don’t know if the product still exists or has been destroyed.”
He has worked in the cannabis industry for 15 years. Old Kai started in idea form about two years ago.
“We saw a lack of professionalism between cultivators, manufacturers and retail partners,” Seymour said. The company transports pot to more than 150 dispensaries statewide, including 11 in Sonoma and Marin counties, 10 in Solano County, nine in Mendocino and Lake counties, and 21 in San Francisco.
Old Kai sends cannabis for testing, “quality assurance and quality control,” he said, “making sure we bring clean, safe material to manufacturers or retail establishments. We take many samples,” Seymour said. The company sends about 250 samples a week to laboratories such as CW Analytical in Oakland.
“We take all different grades of material,” Seymour said. “Until we grade it and lab-test it, we don’t actually know the value. A majority of what was in that vehicle was trim.”
Trim prices vary widely. Leaves trimmed from cannabis plants can bring $250 to $400 a pound. Trim is used to extract THC to make concentrates such as shatter and wax for vape cartridges, as well as cannabidiols for medicine.
Flower buds grown indoors sell for $800 to $5,800 a pound, depending on quality, with average wholesale prices at about $1,600 in 2018, according to New Leaf Data Services, based in Connecticut. Outdoor cannabis buds sell for $400 to $2,200 a pound, averaging $1,000. The average deal size is about 12 pounds. Nearly half is grown indoors.
At $250 a pound, a truck with 1,875 pounds of trim could carry roughly $500,000 worth of product. “We want it back,” Seymour said. Liability for confiscation of product will likely be shared with the grower, he said, if police do not return it to the company.
The drivers were detained on misdemeanor charges of transporting cannabis, Seymour said. “They were cited and released without being arrested,” he said. “They have a court date.”
Read more business coverage of North Coast: nbbj.news/cannabis