Rusty Wilenkin Weighs In on Pot Myths, Trends & Buying Tips
Mar 19, 2021 | Save On Cannabis
The landscape of legal marijuana is evolving at breakneck speed. It can be a challenge for even seasoned tokers to make sense of the new product technologies, the regulations, and why the price of a quality herb is still so darned high.
To make sense of it all, we spoke to someone who’s been in the game since 2014. His name is Rusty Wilenkin, and he’s one of California’s most successful cannapreneurs. He’s the founder of Old Pal, 2019’s largest cannabis brand in California by volume. Wilenkin and his business partner established Old Pal with the goal of bringing people back to the dispensary: affordable, accessible
cannabis that isn’t inhibited by buzzwords or complicated extractions.
During our conversation, Wilenkin provided a number of intriguing insights into the trends and regulations affecting cannabis consumers. For instance:
- Why are cannabis prices so high?
- Could the recreational market actually be bad for medical marijuana patients?
- Has regulation ultimately been a good or bad thing for consumers?
- Are dispensaries degrading their own products with improper packaging?
- What new exciting cannabis technologies are on the horizon?
- Is legal cannabis actually that much better than illicit cannabis?
- How can consumers actually get the best value for cannabis (hint: the answer has nothing to do with price)?
Many of his insights were surprising even to us.
Cannabis Regulations Have Been a Good Thing…Mostly
Wilenkin notes that the good outweighs the bad when it comes to cannabis regulations, especially when it comes to testing.
Wilenkin has worked in California cannabis since 2014, first with Kiva Confections. He watched as the company spent over a million dollars a year in testing before the state even required it. Most companies weren’t doing this, and beacuse of that it was hard to say what was actually on the shelf and how safe the product was.
“In terms of providing a safe, tested and consistent product to the consumer, the regulations are doing a good job,” notes Wilenkin. “Are they efficient? Are there things that could be better? Totally. But I really believe the consumer should at least be armed with the information to know what they’re buying. And
today the regulations do that.”
The system is far from perfect, though. Different states have vastly different regulations, and as a result, it can cost significantly more to produce cannabis in one state than in a neighboring state. Wilenkin noted that his business operates in California, Nevada, and Oklahoma, all three of which have different testing requirements.
- In California, 50 pounds of dried flower cannabis can be tested at one time.
- In Nevada, you can only test up to 5 pounds at a time. That’s a tenfold higher testing cost.
- According to some estimates, testing costs about $136 per pound of dried cannabis flower in California, accounting for about 10% of the average wholesale price in the state. So based on the regulations noted above, it could potentially cost more than $1,000 to test a pound of cannabis in Nevada. This is partly to blame for Nevada’s sky-high weed prices.
Not all regulations may be in the best interest of the consumer, though. For example, Wilenkin notes that–in California and in other places—it used to be possible to gift cannabis to someone in need. “In the Prop 215 days, there were a lot of groups that
distributed free cannabis to vets or people with cancer, and when 2018 came around, that became impossible to do legally. It was a bit disappointing.”
Prop 64 created this roadblock in California. It allowed legal residents over 21 to gift up to an ounce of cannabis to one another but prohibited state-licensed medical and adult-use stores from giving away cannabis even to medical patients and veterans in need. The Brownie Mary and Dennis Peron Act—signed into law by Gov. Gavin Newsom in October 2019—re-enabled charitable giving.
The Reason for High Cannabis Prices Can Be Summed Up in One Word
There are numerous factors that play into the high cost of cannabis: licensing costs, testing, packaging, markups at every level of production and distribution. But the biggest reason, as you might expect, is taxes. But the issue is a bit more complicated than just a high tax rate.
Consider that Prop 64 alone imposes a 15% state excise tax on all retail sales and a cultivation tax of $9.65 per ounce in addition to the state’s standard 7.25% sales tax. Add in the local sales taxes, and the cost can be significant. And while some of these taxes are imposed at the cultivation and distribution level, the costs almost always get passed down to the consumer.
According to Wilenkin, the local taxes in California are really where you feel the pain. “Just being in one city vs a neighboring city, you might have a 3% gross receipts tax vs zero. And a 3% gross receipts tax on wholesale ends up getting passed on to the consumer as basically 6% at retail.”
The taxes compound at the supply chain. So if a tax is imposed on the original cultivator and then gets marked up by the distributor and then the retailer, the consumer ends up paying the full sum of those markups.
Wilenkin further notes that “in California, by the time cannabis hits consumers, there’s probably an effective 40-50% tax on it. And that’s pretty incredible relative to almost any other CPG item sold in America.”
In 2019 alone, California is estimated to have collected about $635 million in cannabis tax revenue.
The Most Exciting New Cannabis Technology Isn’t Really a Technology
When we asked Wilenkin about the most exciting new cannabis technologies, he didn’t talk about fancy extraction tools, nanoemulsions, or state-of-the-art dab rigs. Once again, he brought it back to the basics and highlighted a potentially world-changing advance in breeding: autoflowering.
Wilenkin’s company has been partnering with autoflower breeders for about 2 years now, and they’ve been amazed by how rapidly the genetics have improved. “Just the idea of a quicker flowering plant that’s mold-resistant and does well in various humidities and that isn’t as finicky as the typical cannabis plant. It really changes the dynamic of how cannabis cultivation can work in a wide range markets.”
Autoflower seeds require a shorter planting window and have less risk of crop failure. Whereas the traditional photosensitive cannabis plant will only start flowering when it receives 12 hours of daylight and 12 hours of darkness, autoflowering plants don’t have such stringent requirements and can be grown year-round.
Of course, autoflower seeds haven’t always enjoyed the best reputation. The original Dutch autoflowering strains from Sensi Seeds were largely ignored because they were highly unstable and had only about a 50% success rate. Even as other breeders produced better strains, autoflowers remained controversial due to their smaller yields and lower potency.
Wilenkin notes that this is all changing for the better. “I’ve been walking our partner’s R&D field for about 2 years, and just seeing the improvement in bud density and terpene potency, autoflower are becoming increasingly exciting.”
This could have enormous implications for the cannabis industry as far as prices and product availability. Because of the prohibition on interstate commerce, cannabis must be sold in the same state where it’s grown. Many states, though, have inhospitable growing conditions, resulting in more complex (i.e. expensive) cultivation demands and lower-quality products.
But as autoflowering strains continue to improve as a result of selective breeding, it’s possible that every state will be able to produce cannabis that rivals Humboldt County bud. And they’ll be able to produce more of it at a better price.
Big Tobacco Isn’t Likely to Disrupt Cannabis in a Big Way
Tobacco and alcohol companies are spending billions of dollars to break into the cannabis industry. Consider that:
- Altria, the owner of Philip Morris and Marlboro cigarettes, has invested nearly $2 billion in the Canadian cannabis producer Cronos and now owns a 45% stake in the company.
- Constellation Brands, which owns Corona beer, purchased a 38% stake in the Canadian cannabis company Canopy Growth. The deal contains stipulations that allow Constellation to ultimately purchase a majority stake. Altogether, Constellation has invested about $5 billion in the cannabis industry.
- Novartis, one of the world’s biggest pharmaceutical companies, has partnered with medicinal cannabis company Tilray to develop products for medical marijuana patients.
Does this mean that the cannabis market could soon be overtaken by a small group of mega-corporations that already monopolize alcohol and tobacco? Rusty Wilenkin believes this is unlikely.
“I think authenticity is really important in cannabis,” Wilenkin notes. “Big Tobacco and Big Alcohol are definitely looking at the industry, and they definitely will be here one day. I just think they’re going to need to make sure they’re working with the right existing folks to provide what the consumer is looking for.”
It’s not just the product that matters, from Wilenkin’s perspective. It’s who’s behind it, how it came to market, and how it has come to be. “Did they operate in the early days? Are they a newer brand? It’s all the different pieces.” Wilenkin cites Patagonia as an example of a pioneering brand that he supports. Their community care about and where they put their money in terms of conservation and other important causes.
And Wilenkin isn’t alone. With the growth of craft cannabis, there does appear to be a sizable sector of the weed market that cares deeply about the origins and the authenticity of the products they buy.
Cannabis May Be Legal in Your State Sooner Than You Think
For those consumers who are still unable to access legal cannabis, there’s some good news. Cultural attitudes about cannabis are changing in a big way, and that’s why we’re seeing legalization embraced in a growing number of states—even traditionally conservative states. Wilenkin notes that we’re seeing more acceptance and curiosity across the board.
For example, Old Pal recently launched in Oklahoma’s medicinal market. As Wilenkin notes, “Five years ago, if somebody had told me that Oklahoma had legal cannabis, my mind would have been blown. I think we’re simply seeing that there are more and more communities within the country accepting cannabis for a number of reasons, whether it be a much better alternative to opioids or whether it be tax benefits.”
The data also reflects this trend. Pew Research found that two-thirds of Americans support the legalization of cannabis. Only 32% oppose legalization compared to 52% in 2010. In addition, only 8% of those surveyed believed that all cannabis (medicinal and recreational) should be illegal.
Of course, federal legalization is more of an uphill battle. Wilenkin notes that the recent U.S. presidential election “seemed to indicate that lawmakers are feeling better about cannabis.” Still, whether we’ll have federally legal cannabis in 2 years, 5 years, or 10 years is much harder to say.
It’s worth noting, however, that Senate Majority Leader Chuck Schumer and two other Democratic senators recently released a joint statement calling for sweeping legislation to end the federal cannabis prohibition. They’re pushing reforms that would not only legalize pot but would also provide restorative justice for those convicted of marijuana-related crimes. It’s yet to be seen what will come of this push.
Recreational Pot May Be Hurting Some Medical Marijuana Patients
One of the unintended consequences of recreational marijuana legalization may be the adverse impact that it has on the medicinal market. For example, prior to Prop 64’s passage in California, the industry was primarily focused on supporting medicinal patients. But with adult use legalization, the priority has shifted to the recreational market.
Wilenkin relates a personal example involving Rick Simpson Oil, a cannabis concentrate that’s designed to help relieve cancer symptoms. Prior to 2018, it was easy for someone to get their hands on the oil if they or a loved one was suffering from cancer or a related affliction. Almost every dispensary sold it, and many cultivators would give it away for free just to help someone in their time of need.
But that all changed as the recreational market took over.
“I remember looking in mid-2018,” Wilenkin recalls. “One of my friends was like, ‘Hey, my uncle has cancer. Do you know where I can get Rick Simpson Oil?’ And I said, ‘I’m sure I have a friend,’ and I started calling all my friends with dispensaries. None of them carried the product because there wasn’t a legal supplier of it at that time. And it was
so disappointing that a market that had been carrying the product a year earlier had now virtually turned their back on it.”
Wilenkin notes that it’s getting better, but recent trends may provide some insight into why the industry is focusing less energy on the medicinal market. It largely comes down to supply and demand. In Oregon, for example, nearly two-thirds of patients ditched their medical cards when recreational use was legalized. As a result, the state fell from 400 medicinal-only dispensaries to just two. Hundreds of medicinal growers walked away.
Only two other states—Nevada and Colorado—maintain public records related to medicinal and recreational consumer trends. Both of these states have experienced similar declines since legalizing recreational use.
There’s Still Good Weed in the Illicit Market—But You Should Probably Avoid It
It should come as no surprise that illicit cannabis is still a hot commodity. It’s cheaper to buy since it has no taxes or regulations associated with it, and it’s easier than ever for amateur growers to break into the market. Law enforcement raids have become increasingly common in Northern California’s Emerald Triangle, and one such raid uncovered a Mendocino County facility that was processing 500 pounds of illegal cannabis a day.
In addition, legal cannabis can sometimes be frustrating to access even in weed-friendly states. In California, for example, cities are free to set their own regulations, and most cities won’t allow cannabis businesses within their borders. Of California’s nearly 500 municipalities, 80% refuse to allow cannabis businesses. This means that consumers sometimes have to drive long distances to visit dispensaries in cities like L.A., San Francisco, and San Diego.
Or they can just buy illicit weed.
Wilenkin notes that “there’s amazing cannabis on the illicit market” that looks, smells, and tastes every bit as good as top-shelf dispensary weed. He notes, however, that the legal product is still worth the added cost and inconvenience. One of the biggest problems with buying illicit marijuana is that you just don’t know what’s in it. Harsh pesticides are an especially prevalent issue.
For Wilenkin, “the appeal of buying legal, licensed cannabis is the ability to know that it wasn’t sprayed with Eagle 20 or Avid.”Both incredibly toxic pesticides.
When it comes to cannabis, California imposes some of the strictest pesticide regulations in the country, even stricter than the EPA in some areas. But without the benefit of testing and regulation, a sample of cannabis could easily contain any of more than 350 common pesticides in very high concentrations.
Your Favorite Dispensary Is Probably Storing Cannabis Incorrectly
Wilenkin is a big advocate for products with functional packaging, like airtight Mylar bags that block out light. Most consumers are used to walking into a dispensary and seeing various strains neatly arranged in glass jars, which makes for an exciting presentation but poor product preservation.
The problem is that those pretty glass jars are transparent and terrible at holding air. As any good connoisseur knows, light and air are the worst things for cannabis. Marijuana typically has a shelf life of 6 to 12 months, but if it isn’t stored properly, that shelf life can shrink significantly. The moisture content, terpenes, and potency all start to degrade under those bright lights, and there’s a point at which the weed changes color.
“So when you start thinking about maximizing your product,” Wilenkin explains, “it’s not always about getting the most actual weed for your money. It’s sometimes getting the freshest weed for your money.”
And then there are the environmental concerns. The plastic, child-resistant lids on those jars require a ton of plastic, comparable to a hundred Mylar bags. When shopping for cannabis, it’s best to just avoid the jar products altogether.
Finding Quality Weed Is About Choosing the Right Brands
So what qualities should you look for when shopping for cannabis in a dispensary? According to Wilenkin, “I think it’s really identifying brands that look like a brand you would support. How are the products grown or manufactured? Look at what the brand is doing. Check out their website. Try to stay away from the super buzzwordy kind of trendy nonsense.”
Wilenkin urges consumers to look for products that look like the kinds of things they would normally buy. Don’t get caught up in convoluted product descriptions that are filled with industry jargon and obscure tech lingo.
Wilenkin’s own company, Old Pal, refers to its flower product as simply sativa (for daytime), indica (for nighttime), and hybrid (for all the time). They intentionally didn’t go overboard in describing their strains and cultivation methods because cannabis should be simple, accessible, and enjoyable for everyone.
Wilenkin additionally notes that there’s no single best way to learn about a brand or product. In today’s market, you have numerous research options at your disposal. “I think a consumer should have the luxury of being educated where they want to consume, whether that’s on the couch looking at a brand’s Instagram or in the dispensary talking to their budtender.”
Cannabis Is Only Getting Better
With all of the new strains, extraction methods, and technologies, one important question remains: Is cannabis actually getting better? The answer, as Wilenkin sees it, is a resounding yes.
“I think we’re seeing improvement across the board with cannabis,” he explains. “We’re seeing genetics getting better, hardware getting substantially better and really enabling new types of products. I think innovations the industry is seeing are awesome.
Still, Wilenkin notes that “with the constant hardware evolution and the constant genetic evolution, there’s a lot of exciting stuff going on in real time.” And considering the speed at which the industry is advancing, it’s hard to disagree with him.
Whether you prefer old-fashioned joints or the latest temperature-controlled vape technologies, there has never been a more exciting time to be a cannabis connoisseur.
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