POLITICO: Lucid Green’s Marco Rullo on Building Consumer Confidence
We want to provide consumers with the knowledge that they need at the moment of truth.– Lucid Green’s Marco Rullo
LOS ANGELES — Scroll through Yelp or Weedmaps in the Los Angeles area and you will find dozens of dispensaries with names like Cookies Melrose, HP Pharmacy, Firehouse 365 and the national, West Hollywood-based chain MedMen.Ensuring that a dispensary is licensed, however, can be a confusing process few consumers are likely to undertake before buying.HP Pharmacy,a dispensary in Huntington Park, Calif., for example, lists a state-issued license number on Weedmaps, a cannabis consumer website. Search that number in the Bureau of Cannabis Control’s online database and you’ll find the license belongs to PureLife Alternative Wellness Center an hour away in Chatsworth, Calif.The inconsistencies are a concern in a region where most dispensaries are estimated to be unlicensed. The problem has been amplified in recent months by the vaping health crisis, with cases of lung disease tied largely to illicit THC vape products. A store employee who answered the number listed for HP Pharmacy declined to explain the license discrepancy, and an inquiry to management was not returned.With a spate of vaping-related illnesses and deaths and a persistent illicit market, California is changing its outreach to urge consumers to protect themselves. Until now, state-funded consumer cannabis education in legal recreational marijuana states has been broad and focused on defining lawful consumption and keeping others safe while consuming. Colorado’s folksy campaign, for example, warns against smoking marijuana in national parks — it’s still against federal law — and advises “locking up your stash.”The most the federal government has done is urge consumers not to use marijuana e-cigs, especially those from the black market. California has reported at least four deaths and 166 cases of vaping-related illnesses, but only in one case did one of those who became ill say they bought THC products from a licensed dispensary.“We’re really pinpointing consumer education and consumer awareness,” said Alex Traverso of the California Bureau of Cannabis Control. “There is that consumer out there that is walking down the street in SoCal somewhere; and you may see [a] retail location with the green cross. You walk in and buy your stuff and don’t think twice about [if it’s licensed].”Consumer education is tough in a state where many have been smoking marijuana for decades, but where the legal industry — with its licensing, testing and new products like vapes and edibles — provides an entirely new set of issues to navigate.“I wouldn’t sit here and pull a piece of gum from beneath here and eat this,” said Cat Packer, who oversees cannabis regulation for LA, pointing to the underside of a metal railing beside the outdoor cafe in Long Beach where she was sitting. “And that … could be similar to the health risk that you choose when you’re buying an unlicensed vape cartridge.”The vaping crisis hit just as California, Los Angeles County and the city of Los Angeles were preparing to launch public awareness campaigns targeting the illicit market. California’s underground market is expected to reach $9 billion in sales this year, according to BDS Analytics, dwarfing the legal industry’s estimated $3 billion value.Business owners say high taxes and licensing fees allow the illicit market to undercut the legal market, reducing revenues. Unlicensed dispensaries don’t pay California taxes and fees and therefore can charge less.Businesses and California officials including state Treasurer Fiona Ma propose reducing taxes, though tax revenue has fallen short of expectation. But the state — which said it will raise taxes next year as planned — is instead dedicating more than$20 million for educating consumers about illicit dispensaries and both THC and nicotine vape products. Amajor goal is to steer consumers to licensed shops selling regulated products.One of the major problems in California — and new recreational markets nationwide — is that while most children are told not to eat the gum stuck on the railing, cannabis consumers aren’t being educated onhow to interact with the legal cannabis market.“Sadly, there needs to be a campaign that’s called, ‘That’s gross, don’t do that,'” Packer said.Education now is largelyup to “budtenders” in dispensaries around the country, who explain to consumers everything from the impact of edibles on liver health to how to store a cannabis muscle balm.“We needed to have a public information campaign before Jan. 1, 2018,” Packer said. “You need to have a campaign that is being implemented as the first set of consumers are going into facilities.”Now, nearly two years after legalization, the LA city and county governments are working together on consumer awareness efforts, which include a public awareness campaign andinstituting an emblem that dispensaries can display — much like a liquor license or health code letter — to ensure consumers they are licensed.The emblem is critical because it’s difficult to tell which dispensaries are legally licensed. Culver City Associates , for example, was listed on Weedmaps and, when asked in person, claimed to be licensed. The peppy, knowledgeable budtender at the counter had recommendations about which edibles lasted longest, assured a POLITICO reporter who visited the shop that the vape products didn’t include any additives that may cause lung disease, and even offered unsubstantiated advice on marijuana use for autism.There were gallon-sized zip-top bags of flower stored at one end of the glass counter, and the dispensary’s Weedmaps profile did not even list a license number, butthe man checking IDs at the door insisted the dispensary was licensed. A search through the BCC’s database does not turn up any record of Culver City Associates or a license issued for that address. One clue that might raise a concern for the observant: its operating hours. California requires dispensaries to close by 10 p.m, and Culver City Associates advertises that it is open until midnight.Many unlicensed dispensaries listed online appear legitimate from the outside. Some list a license ID that does not match the state’s online system if checked. In a city with a limited supply of licenses — 800 applications were submitted for only 100 licenses in the last round — Packer said this is one of her biggest problems.“That’s what amazes me,” said Packer. “[Is] you took the time to invest in an architect and like, an interior designer, but you’re like, ‘F— that license’?”The concerns are opening up a new line of cannabis business.“People will not stop vaping just because their elected officials told them so,” said Vered Elkouby Nisim, an executive board member at Global Green, which plans to offer third-party verification technology for vaping products. “So we really need to give them the tools and the access to product that’s regulated and product that’s not going to harm them.”The technology is intended to help consumers ensure what they buy is tested and verified.Global Green’s tech — a variation of the hologram sticker on the underside of an NFL or MLB baseball cap bill — is secured through blockchain technology and can be scanned by consumers with their smartphone. A scan provides tracking information for the product and verification that it was tested, Nisim said.“Let’s say you bought a product and you’re in MedMen,” she said. “But it shows you that this product is sitting on the shelf at Aeon — at another store. You should now question it because something’s wrong.”Global Green said it is working with West Hollywood to phase in its technology to all producers and dispensaries in the city, and it is discussing its system with Massachusetts as well.Another company, Lucid Green, has partnered with companies including Papa & Barkley, Cresco Labs and Wana to provide third-party authentication. Lucid Green’s technology is similar to Global Green’s: It is scannable on a smartphone, protected through blockchain and provides consumers with information about the product.“The public right now is being bombarded … by accounts of legitimate health concerns,” said Marco Rullo, chief marketing officer of Lucid Green. “We want to provide consumers with the knowledge that they need at the ‘moment of truth’ — which is either inside a dispensary or when they’re home consuming the product — so that they’re able to have confidence when purchasing, peace of mind when consuming, and have a safe, predictable and enjoyable experience.”This article was originally featured on POLITICO Pro December 2, 2019