William Silver, Ph.D., former Dean of the Sonoma State University School of Business and Economics, spoke to members of the Sonoma County Alliance on June 6 about his new position as CEO of CannaCraft, a seed-to-shelf California cannabis producer and distributor of a community oriented, sun-grown and sustainably-farmed product line. 

This new firm is on the front line of a new era of legalized recreational cannabis production, Silver referred to as the “green rush,” with manufacturing and sales made possible by the passage of a state law that became effective January 1, 2018, following a Yes vote on Prop. 64 in November 2017.

“It’s no mystery to anyone that we are all living in a unique time, a time when Sonoma County residents should be proud” Silver said. “But before talking about CannaCraft, I’d like to describe my personal journey and what attracted me to this new business.” 

As author of a book entitled the Way of Zing, Silver said a goal of life should be to ignite your zing.  “Imagine living a life where you do exactly what you are meant to do. My book is all about successfully aligning work and life.  For me zing is a guide for integrating these two aspects together.  Ask yourself, do you have the same level of passion after 10 years in the same job?” – referring to his decade of service as a professor and head of SSU’s business school. “I’d like to return to teaching some day, but I’m enjoying this new opportunity.”

He pointed to his work in support of Light-the-Night as chair of the local fundraising and an awareness building campaign for the Leukemia & Lymphoma Society. His son, Benji, is a leukemia survivor.

“You can change the world today…and cannabis can be effective in helping those with diseases such as cancer cope with the pain,” Silver said while mentioning a film about cultivating health and wellness that featured Jerold, a cancer patient in stage 4 of the disease who found cannabis and is now cancer free. 

He said the spotlight today is on the recreational market for cannabis, but added that it also has medicinal properties.  Silver mentioned Project CBD.org, a California-based nonprofit news service dedicated to promoting and publicizing research by those engaged in medical marijuana and cannabinoid science. It reports on the worldwide scientific endeavors studying the benefits of Cannabinoid, or CBD, a compound reported to have significant medical applications, but does not make people feel “stoned” and is less psychoactive than THC.

“People have known for years that caffeine helps ease the pain of migraine headaches and that wine helps people relax. Centuries ago, Pliny the elder wrote about cannabis as an effective remedy for glaucoma, for use as a treatment for inflammation and as an anesthetic. Others suggest cannabis derivatives may be useful as a way to lessen the effects of opioid withdrawal as well as for the treatment of epilepsy, fibromyalgia, arthritis, etc.”

From 1850 to 1927, the Pharmacopeia listed 100 uses for cannabis. However, in the 1930s, the tide of popular opinion was turned against it when the U.S. Congress separated drug prohibition from alcohol prohibition with the formation of a new federal agency, the Federal Bureau of Narcotics, headed by Harry J. Anslinger.

Silver observed that Anslinger wanted to fund his new agency and establish a reason for its existence.  He started a campaign to fight against the rise of marijuana use that led to the creation of the Schedule 1 (Class 1) Narcotics list (drugs determined to be illegal that have high abuse potential, no medical use and severe safety concerns, such as Heroin, LSD and cocaine).  Marijuana is also includes as a Class 1 drug despite it being legal and used in many states for medicinal purposes. 

A few years later, in a movement Silver said was based on racism, films were made negatively characterizing marijuana with titles such as “Weed the People, Smoke Signals” and “Reefer Madness.”

During the Nixon Administration, John Ehrlichman, counsel and assistant to the President for domestic affairs, was instrumental in fighting the War On Drugs in the wake of increased heroin addiction and the rise marijuana use. Ehrlichman’s campaign focused on getting the public to associate hippies (and veterans during the Vietnam War) with marijuana and African Americans with heroin.

While the National Institutes of Health (NIH) originally found that marijuana was consistent with being a gateway drug (one that leads to hard narcotic use). Other studies showed that the majority of people who use marijuana do not go on to use (illicit) hard drugs, even though many had used marijuana in the past. 

However, Silver said the Gateway theory for cannabis is a myth that will not go away.  This theory was largely debunked in recent years, but the controversy continues despite studies that indicate weed acts more like a filter that keeps people away from stronger drugs, rather than serving as a stepping-stone to them. The weight of evidence seems to be leaning against the Gateway theory toward cannabis use as an Exit Drug for those wanting to kick the opioid habit.

Today 29 states have legalized cannabis for recreational use. At the same time, opioid use is down 30% by those using cannabis according to research at the University of Minnesota. This institution has received NIH and other grants to study marijuana use and effects in relieving pain, sleep disorders and even possible Alzheimer’s disease applications.

Silver said, “Let’s continue to do research and have a dialogue on this topic without prejudice.  Cannabis is now on Main Street and Wall Street.  So, where are we now?  Our region is the gateway to the emerald triangle as well as a focal point for greater Bay Area cannabis tourism – with Santa Rosa at the epicenter of our cannabis industry today.”

He said growing weed is on the supply side of the value chain for businesses entering this field, along with ag-related cannabis technology, similar to the way the region is seen as a leader in wine and grape growing technology.

CannaCraft co-founders Dennis Hunter and Ned Fasalon say this is a fun business to be in.  Hunter is a cannabis cultivator who — like many others — spent time in jail years ago for growing weed. Fasalon is from Massachusetts. He has ADHD and dyslexia, and used cannabis for these conditions, and also sold weed. He went to Costa Rica and met several people from California before moving here. He started working in cannabis by trimming leaves from flowers, but placed the leftovers in bags and took them back to sell in Central America. Together these two are the creative geniuses driving the firm, according to Silver.

 “What we discard is green gold in Costa Rica,” Silver said quoting Fasalon. “Ned is bilingual. He engages with people and inspires them. He built a vineyard management-style business for cannabis and is one of the largest cultivators in California. Dennis is also a mechanical genius.”

Silver said “vap” cartridges use oil of cannabis. Hunter bought a CO2 extractor, a device similar to technology used in making decaf coffee. The founders improved the technology and refined/redesigned the hardware. Today they manufacture and sell these extractors while producing a line of 150 products.

“We’re an authentic, pioneering and community oriented firm specializing in personalized medicine interested in cultivating health and wellness through cannabis.”

The market for cannabis is projected to be a $4B business in 2018 growing to $5B in 2019. The two key product categories include concentrates and edibles followed by cannabis flowers and other derivatives. 

His firm works with 500 retailers. CannaCraft’s 2017 total revenue was $8.6M (with $37,885 as average revenue per account).  In 2018 the firm projects revenue to reach $8.9M (with average revenue per account rising to $56,329). 

“There is a thriving unlicensed dispensary market, and most consumers do not know the difference between a licensed vs. an unlicensed dispensary. CannaCraft cannot sell to unlicensed dispensaries.

He said, “When the recreational cannabis became legal, medical and recreational users were the primary customers.  However, most recreational users go to the street and unlicensed dispensary sources.  While customer uses vary, we’re seeing everyone from Baby Boomers to soccer moms using cannabis to relieve stress, anxiety, joint pain and other conditions.”

CannaCraft’s AbsoluteXtracts (ABX) line of strain-specific, potent 100% cannabis oil, is the number one brand at retail, according to Silver. The firm’s Care By Design high quality CBD medicine available in a variety of ratios, was initially ranked 12th in the market and has jumped to 4th place.  The company also manufactures Satori, an award-winning line of artisanal cannabis chocolates.

Silver said the cannabis market has suddenly become very competitive and cut-throat.  “An Oregon firm came to California and quickly amassed $30,000 in sales, doubling that of CannaCraft in the same period.” 

Despite the entry of new players, and other growing pains, he said CannaCraft is in it for the long term. 

“We’re here to stay, even though other firms are using highly sophisticated, aggressive sales tactics going head to head with us.  This raises major issues for the future, such as how and when to roll out new products or new combinations, raising and reusing capital, national and/or international expansion as well as issues surrounding the fact that cannabis firms are prohibited from using banks. Imagine running a business by writing hundreds of money orders each month, and hauling bags of cash around when paying taxes.”