Aja Allen, owner-operator of Sixty Four & Hope's Mid-City location in Los Angeles
Editor’s Note: Los Angeles-based Sixty Four & Hope represents one of the earliest operating social equity cannabis businesses. What follows is a reflective discussion between Aja Allen, owner-operator of Sixty Four & Hope’s Mid-City location, and Rhavin L, owner-operator of Sixty Four & Hope’s Melrose District location.
Aja Allen: We started our social equity journey three years ago. When I first heard about social equity, I thought it was just about money—righting the wrongs of the war on drugs, pseudo reparations. But when I dug deeper, I realized it was about more than money.
Along with roughly 700 other people from South LA, Rhavin and I attended an information session hosted by our now parent company, 4thMVMT. The company's CEO, Karim Webb, explained the program to us and laid out the opportunity social equity provided and what it could mean for our community.
Not only was this an opportunity for us to become entrepreneurs, but it was fair. It was moral. It was integrity. The potential income of owning our own business could change the trajectory of our lives and the lives of our family and community. But it's so much more than just money. I had heard of Karim through his work with the California Community Foundation and his Buffalo Wild Wings. It was the first sports bar we've ever had at Crenshaw and MLK Blvd., which was a big deal for our community. So instantly, I was comfortable; it felt right. Social equity, for me, is fairness. It's equality; it's all of it. And I knew this was something I wanted to be involved in.
Rhavin L, owner-operator of Sixty Four & Hope's Melrose District location in Los Angeles
Rhavin L: Yeah, I felt the same way. I didn't know Aja at the time, but I knew a few other people who attended the information session. I have always been a smoker, but it was about starting a business for me. It was about being able to support my family, and to help my community and relatives locked up for something as small as an eighth. It's ridiculous, especially when you have large multi-state operators making millions while people remain in jail. I've always wanted to live that saying, “be the change you want to see in the world,” and this is one way I can do that. It's important that I am contributing to the hope this industry provides.
AA: But it certainly has not been an easy three years. The waiting was the most challenging part of this process for me. We were kept in the dark by the city. They'd set deadlines but never meet them. I essentially put my life on hold for this chance, so it was tough not knowing when it would happen. The application process was also complicated. And we had to have real estate attached to our applications, which means we were paying on commercial property for over a year without opening or generating revenue. It's a miracle we even made it to opening day.
RL: It felt like we received no help from the city. There was no communication, no resources that would assure success in this process. I can't help but feel bad for people trying to do this without support—those who don't have a parent company providing financial backing and resources. People took out second mortgages on their homes to keep their licenses, and they still aren't generating revenue.
AA: The city has since attempted to streamline the application process to ensure the program is successful, but we still contend with many things now that Rhavin and I have opened our stores. 280E taxes are rough. I'm not sure if the general public is aware, but as a cannabis business, you cannot write off expenses, we can't bank like a regular business, and the regulations are a moving target. The social equity program was challenging, and being open is even tougher, but we're determined to be successful. And luckily, we have a supportive community in 4thMVMT and among the other 19 owners of Sixty Four & Hope locations.
RL: Yeah, our fellow owner-operators have been incredibly supportive throughout this process. It has been hard to open the first two Sixty Four & Hope locations, but it's worth it. And I agree with Aja about how much of an impact our community and 4thMVMT have had. Without their financial backing, we likely wouldn't be open. We're in a unique position with our parent company; not all large, multi-state corporations are in this industry for the social equity aspect. They're here to make money, capitalizing off the backs of those who built this industry.
AA: That's why we have to make sure that we're reinvesting when we are successful. It's not just about getting the capital; it's about what we do with the money once we've got it.
Aja Allen is owner-operator of Sixty Four & Hope’s Mid-City location in Los Angeles.
Rhavin L is owner-operator of Sixty Four & Hope’s Melrose District location in Los Angeles.
Endeavor Moore Media | Adobe Stock
Will the Biden Administration’s Increased Antitrust Scrutiny Impact Cannabis M&A?
Matt Karnes, founder of cannabis-focused advisory firm GreenWave Advisors, says the risk is low under Attorney General Merrick Garland.
In 2019, the U.S. Department of Justice (DOJ), led by former Attorney General William Barr, launched 10 Antitrust Division probes that involved cannabis companies, accounting for 29% of the total merger investigations that year.
In 2020, a DOJ whistleblower testified before the U.S. House Committee on the Judiciary that these investigations were not bona fide antitrust investigations, as they did not meet the standard internal requirements for proceeding with a Second Request subpoena, which the DOJ must file to formally object to a merger.
Instead, John Elias, a career employee at the DOJ, alleged that Barr was motivated by his personal dislike of the cannabis industry when he launched the antitrust investigations.
Now, as reports surface that President Joe Biden’s administration will pay more attention to antitrust concerns, particularly in the tech and media spaces, some cannabis industry stakeholders may be wondering whether the increased scrutiny will again land on their operations.
While Matt Karnes, founder of cannabis-focused advisory firm GreenWave Advisors, says it would not surprise him if the Biden administration’s increased attention to antitrust issues impacts the cannabis space in some way, he said it is unlikely that Attorney General Merrick Garland would target the industry in any antitrust investigations.
“It’s something that also was raised in the past, under the Trump administration, and I think that was really more of a result of Attorney General Barr taking a passive-aggressive approach to try to weaken the cannabis industry through these antitrust reviews,” Karnes tells Cannabis Business Times. “It was just really nonsensical to conduct these reviews on an industry that’s in its infancy stage and it's federally illegal. … If the Department of Justice were to get involved and it’s federally illegal, then shut it down.”
Since shutting down state-legal cannabis programs was not an option, Karnes speculates that Barr’s only tactic to interfere with the industry was to exercise his authority over the DOJ to slow down M&A activity—and therefore growth—in the space.
“I think the whole intent behind what Barr did was he wanted the cannabis companies to incur added cost and time, and cannabis companies are particularly vulnerable to added cost,” Karnes says. “No company wants to spend money that’s not necessary, but for a cannabis company, it’s really very difficult because you’re not able to take the tax deductions [for] the legal costs and all that. And also, capital is very scarce, generally speaking, in the cannabis industry.”
Karnes says Biden’s increased attention to antitrust concerns in the tech and media spaces could stem from his general opposition to big business, but he does not believe cannabis companies have anything to worry about, especially given that Garland has been a more cannabis-friendly attorney general.
“Attorney General Barr had come out and said he was against cannabis legalization and there was no way that he could shut it down,” Karnes says. “If he could, he would have. So, the only power he could have exercised was to direct these investigations or reviews. The attorney general today is more cannabis-friendly, so I don’t think he’s going to direct any effort toward any of these cannabis mergers. It just doesn’t seem like he would because it’s federally illegal and the industry is still in its infancy stage. He doesn’t have any ulterior motive. It seems he wants the cannabis industry to flourish because he would’ve said something different by now or acted in a different way.”
As long as the tension exists between federal and state cannabis policies, Karnes says companies should continue to perform their due diligence when considering a merger or acquisition, but for the most part, cannabis businesses should be safe from antitrust reviews under Garland.
“I think it’s actually more favorable now than it was under Trump because of Barr,” he says.
Nevada Cannabis Association Appoints New President, Brandon Wiegand
Wiegand, chief commercial officer for the Nevada-based cannabis operator The Source+, has been a member of the NCA since 2015 and has served as a board member since 2019.
LAS VEGAS – Feb. 9, 2022 – PRESS RELEASE – Nevada’s oldest and largest cannabis trade association, the Nevada Cannabis Association (NCA), previously the Nevada Dispensary Association, has named Brandon Wiegand as its new president.
Wiegand, chief commercial officer for the Nevada-based cannabis operator The Source+, has been a member of the NCA since 2015 and has served as a board member since 2019. Established in 2015, The Source+ is a vertically integrated business with four dispensaries across Nevada, in addition to manufacturing, cultivation and production operations. Born and raised in Las Vegas, Wiegand has extensive leadership experience in the state’s cannabis industry. Wiegand assumes the role of president after the NCA’s previous president, Tisha Black, stepped down to run for Nevada attorney general.
“We are grateful for Tisha’s service to the NCA and her leadership in the cannabis industry,” said Wiegand. “I am looking forward to building on the NCA’s current momentum. We are adding new members and voices to the association, increasing educational and compliance resources for the industry, and advancing policies at the federal, state, and local level to help cannabis businesses stabilize and grow."
Created in 2014, the NCA recently expanded its membership beyond dispensaries to include cultivation, production and distribution licensees, independent testing laboratories, and affiliated cannabis businesses across Nevada. The NCA supports cannabis companies through four channels: government affairs and lobbying, education and compliance resources, networking events, and exclusive business partnerships.
ACS Laboratory tests potency of derivatives.
ACS Laboratory
What Is HHC?
A breakdown of hexahydrocannabinol, how it’s made, its effects, and more.
Editors Note: This article was originally published on Wednesday, Feb. 9, and was updated at 11:00 a.m. ET on Friday, Feb. 11, to reflect that while HHC has been claimed by many to be naturally occurring in trace amounts in cannabis, that has not been proven by peer-reviewed research.
The cannabinoid craze continues as HHC, chemically known as hexahydrocannabinol, has hit the scene as one of the latest hemp-derived newcomers.
Like delta-8 THC, delta-10 THC, and other related cannabinoids, many questions revolve around what HHC is, its legal status, where it comes from, and more.
While HHC seems to be emerging into the spotlight recently, it’s not exactly new.
The semi-synthetic compound was first discovered in the 1940s by a chemist named Roger Adams through a process called hydrogenation. Adams added two hydrogen molecules to delta-9 THC, the primary psychoactive compound found in cannabis, to convert THC to HHC, Way of Leaf reports.
While Adams synthesized HHC from cannabis-derived THC, today, it can also be converted from hemp-derived cannabinoids such as delta-8, according to Roger Brown, the president and founder of ACS Laboratory, a cannabis, hemp, and CBD testing laboratory in Florida.
How is HHC Made? Hydrogenation Explained.
HHC has been claimed by many to be naturally occurring in trace amounts in cannabis; however that has not been proven by peer-reviewed research. Therefore, all HHC on the market is currently derived through THC conversion or some other synthetic process.
HHC is most commonly converted in a laboratory using a hydrogenation process, which typically requires the addition of hydrogen and using a metal catalyst, like palladium, says Greg Gerdeman, Ph.D., cannabis scientist and educator and the co-founder of NASHCX (Nashville Commodities Exchange).
Allison Justice, Ph.D., CEO of The Hemp Mine, a vertically integrated hemp CBD business in South Carolina, says the same hydrogenation process is used to make margarine, a common substitute for butter.
“Vegetable oil, when it’s hydrogenated, it becomes [margarine],” she says. “So, this process is used in products we consume on the daily. [However,] the process can be dangerous to those who aren’t qualified, [or] don’t have the right procedures or the right equipment.”
Gerdeman agrees, as he said in an email that “working with these reactions is serious chemistry.”
“The catalysts are considered ‘pyrophoric,’ which means they readily ignite in certain conditions,” he said, adding that processing HHC is an explosion hazard.
When making HHC, you typically start with a clean, purified cannabinoid like THC and put it into a reducing environment, Gerdeman says. “That leads to that hydrogenation in the presence of an appropriate solvent and a metal catalyst to improve the efficiency of the reaction,” he adds.
To better understand hydrogenation, let’s break down the meaning of “delta” in delta-8, “tetra” in tetrahydrocannabinol, and “hexa” in hexahydrocannabinol.
As previously reported by Hemp Grower, the chemical difference between delta-8 and delta-9 is where the double bond is located on the chain of carbon atoms. So, the “delta” in delta-8 simply refers to the position of where that double bond is located, Gerdeman says.
“‘Tetra’ [is the] prefix within THC [that] actually refers to four hydrogens that are partially saturating [a] ring [in the molecule],” Gerdeman said in an email. “Adding two more [hydrogens] makes the ring ‘hexa’ hydrogenated. In other words, all six carbons in the ring are fully saturated with hydrogens. This increases stability, but also changes how well the molecule can interact with the cannabinoid receptors.”
Is HHC Legal?
The legal status of HHC is currently ambiguous. Some say it’s legal if manufactured from a hemp-derived compound like delta-8, while others disagree.
“It should be illegal depending on what the starting material is,” says Dr. Ethan Russo, M.D., a board-certified neurologist and the CEO and founder of CReDO Science. “My position is that even the synthetically derived delta-8 that’s out there is illegal. [In the] original Controlled Substances Act of 1970, hemp fiber, for example, isn’t illegal, but once you start doing chemical extractions on it, it is. Delta-8 is an isomer of delta-9 THC. There is a 1986 congressional act called the [Federal] Analogue Act that says if you make a molecule related to something that’s a Schedule I [controlled substance], what you made also can be considered Schedule I and illegal.”
Russo says he’s the “last person interested in creating another prohibited drug.” However, he believes the sale of these unregulated products, which could expose consumers to potential toxicities, should not be allowed.
“The way to deal with this is to legalize cannabis and regulate the market,” Russo says.
Unlike Russo, others argue that it’s federally legal because it’s a hemp derivative and therefore covered under the 2018 Farm Bill.
Nolan Jackson, an attorney at Frost Brown Todd who advises clients nationwide regarding hemp laws and regulations at the state and federal levels, and regulatory counsel to the U.S. Hemp Roundtable, sees both sides of the legal argument.
“The argument is that the 2018 Farm Bill defines ‘hemp’ to include all parts of the plant with a delta-9 THC concentration of 0.3% [THC] or less on a dry-weight basis, removes hemp from scheduling under the federal Controlled Substances Act, and protects hemp and hemp products in interstate commerce,” Jackson said in an email. “Because HHC is naturally occurring in the hemp plant, it constitutes ‘hemp’ under the 2018 Farm Bill, [and it is] is not a federal controlled substance and is protected in interstate commerce.”
Jackson also understands the counterargument, which is that since the 2018 Farm Bill was made to regulate and protect non-intoxicating hemp products, and HHC is considered intoxicating, it may not be deemed “hemp” under the bill.
“Many who worked on the 2018 Farm Bill will tell you that Congress did not—and could not—foresee the issue of intoxicating [hemp-derived] cannabinoids because the science and data at the time did not suggest that delta-9 THC and other non-intoxicating cannabinoids could be converted into intoxicating cannabinoids like delta-8 THC and HHC,” Jackson said in an email.
“There are other reasons why HHC might be illegal under federal law, including that it is or can be a synthetic cannabinoid or an analogue of another controlled substance,” he added. “Those arguments have been secondary to the argument about the spirit and intent of the 2018 Farm Bill, which has been the prevailing argument that I’ve seen.”
What Are the Effects of HHC?
Brown describes the effects of HHCas“a feeling of happiness, increased energy, [and] low level of euphoria.” However, he says he doesn’t think it is competitive with cannabis (with predominantly delta-9 THC) in terms of effects or medicinal benefits.
"We are in the process of conducting a survey of the reported effects based on the type of product people are using: 25mg gummy of HHC," Brown said in an email. "It's just anecdotal that the effects are of a mild psychedelic cannabinoid, however there have been no known published studies on humans."
As far as potency, Gerdeman said in an email that HHC is less potent than delta-9, and potentially less potent than delta-8; however, that varies “because the chemistry that creates HHC is inconsistent across all methods,” he said.
"The way HHC binds to the endocannabinoid receptors is different from THC and similar to delta-8," Brown said in an email. "It's not about more or less potent, it's different–both the effects and different potency measures."
Because HHC is synthetic, Russo says individuals may even experience additional undesired side effects.
“The endocannabinoid system is very finely tuned,” Russo says. “THC on its own is actually too strong, … so it's called a weak agonist at the CB1 receptor. That means that its affinity for the receptor is low to middling."
“When you have something like the synthetic agonist or like HHC, it’s stronger than that, and it means that you’re very likely to get side effects, maybe even before you get the benefits,” Russo adds.
HHC does have one leg up on THC: it’s stability, says Gerdeman.
“By adding those two extra hydrogens, HHC has a full saturated ring structure, which is more stable for shelf live preservation,” Gerdeman said in an email. “To me, this is the most interesting and useful feature of HHC as a potential therapeutic.”
The Testing Process
Brown says ACS Laboratory is currently testing products for HHC every day, most commonly in the form of edibles or vaporizers.
“It’s really starting to move in the marketplace,” he says. “We test for it every single day from a potency level and also from other minor cannabinoids that are along with it, and also for the metals from the safety perspective,” he says.
Brown says he started receiving an "incredible" number of inquiries about HHC testing around October of last year, prompting the lab to start researching and developing a proper testing method for the cannabinoid.
He says the tests for HHC products are entirely different from the tests for delta-9 or delta-8. However, the goal for testing these products is the same: to ensure it is safe for consumption and doesn’t contain any residual metals, solvents, pesticides, etc.
The Future of Intoxicating Cannabinoids
Brown says he doesn’t necessarily think HHC presents a new market opportunity for businesses, but rather a market extension.
“It’s a little bit different than delta-8. I mean, delta-8 has been outlawed in [numerous] states. So, it just creates a market extension for those that have a distribution channel for delta-8 or for CBD hemp products, so it’s just another extension of the product line,” Brown says. However, he believes the market for cannabinoids like HHC, THC-O acetate, and delta-9 THC is “here to stay.”
“The opportunity that might exist now probably is not representative of future opportunity in 18, 12, or even 6 months,” Jackson said in an email. “I think it’s safe to predict that markets where intoxicating cannabinoid products can be sold freely and without restriction will be less by this time next year. There’s also the possibility of federal regulation on intoxicating cannabinoids.”
Jackson also suggests that a business engaging or looking to engage in intoxicating products should be cautious and “think about the claims it is making about the products and the truthfulness of its labeling and packaging.”
“Some companies have masqueraded intoxicating products as legitimate hemp products, which raises an ethics and fair competition issue that organizations like the U.S. Hemp Roundtable are fighting to address,” he added.
As this industry sector continues to emerge, Gerdeman says the legality of these cannabinoids will undoubtedly depend on the 2018 Farm Bill, which will undergo updates next year.
“Unless the farm bill in 2023 explicitly makes these things legal or confirms their legality or sort of renews their legality, then [these issues won’t] go away,” he says. “And I think that’ll be very interesting as different groups jockey to have a voice in the writing of that 2023 Farm Bill.”
Brown agrees, as he thinks several hemp derivatives that will have to be tackled on a one-on-one basis.
“Where they outlaw delta-8, then there’s delta-10, then there’s THCO- [acetate], then there’s HHC,” Brown says. “This is just a different derivative. … [And] this is something that the regulators will have to deal with on an ongoing basis. I don’t think it’s going to end.”
kennytong | Adobe Stock
New Legislation in Colorado Would Bar Employers From Firing Employees for Cannabis Use
House Bill 1152 would also require employers to let their workers consume medical cannabis on the job, although there are exceptions for certain fields.
Colorado legalized medical cannabis in 2000 and adult-use in 2012, but employers can still deny employment to or fire workers due to their off-the-clock cannabis use.
New legislation in the statehouse aims to remedy this, according to The Colorado Sun.
House Bill 1152, sponsored by Reps. Edie Hooton and Brianna Titone, would bar employers from firing employees for cannabis use, as well as require employers to let their workers consume medical cannabis on the job.
Workers whose jobs are in dangerous fields or require the use of heavy machinery would be exempted from the law, The Colorado Sun reported.
“Marijuana is legal in Colorado,” Titone told the news outlet. “And what people do in their spare time that doesn’t impact their work shouldn’t really be a problem for them. They should be able to enjoy the legal things that we have here in Colorado and not be penalized for it.”
“The whole idea is to signal to the business community and to employers that because we have legalized cannabis, we should be following the same laws and rules that apply to alcohol and prescription drugs,” Hooton added.
Similar legislation stalled in 2020, and House Minority Leader Chris Holbert has expressed opposition to H.B. 1152, according to The Colorado Sun. Holbert’s stance hinges on a provision in Amendment 64, Colorado’s voter-approved adult-use cannabis measure, that says: “Nothing in this [ballot measure] is intended to require an employer to permit or accommodate the use, consumption, possession, transfer, delay, transportation, sale or growing of marijuana in the workplace.”
“That really did clarify that employers can have a 100% drug-free policy in their workplace, and that, in my opinion, should not be infringed upon,” Holbert told The Colorado Sun.
Similarly, Amendment 20, Colorado’s voter-approved medical cannabis initiative, included a provision stating that the measure does not “require any employer to accommodate the medical use of marijuana in any workplace,” according to the news outlet.
H.B. 1152 was introduced Feb. 4 and has not yet been scheduled for its first committee hearing.
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