The growth of the Northern California cannabis industry spans various segments, from grower to producer to retailer, as it has emerged from the shadows to become a growing multi-million dollar legal business in the Golden State.
Maturity has prompted other support structures, such as attorneys, accountants, and increasingly financial institutions, to provide critical services for these businesses, which in turn has made Sonoma County a key hub that is growing in economic importance as local level.
That’s what happened in the wine industry decades ago and some of those wine support professionals have also ventured into the weeds.
It also includes cutting-edge research companies.
LeafWorks in Sebastopol is a perfect example. It was made up of two Ph.D. Research scientists using genetic testing on cannabis to improve product quality control, from farm to store, similar to other agricultural crops.
“Genetics may play an important role. It does on all other crops. It’s just that they haven’t been able to do it on cannabis because they haven’t been able to do the research,” said Bill Silver, who serves as an advisor to LeafWorks. “This company came on board early and has access to the largest source material to do the research.”
Silver described LeafWorks as a world leader in the research space.
Silver speaks of his vast experience as a former Dean of the School of Business and Economics at Sonoma State University. He made a dramatic leap into the cannabis industry in 2018 by becoming CEO of CannaCraft in Santa Rosa, a major producer of cannabis products, from oils to beverages, sold in licensed dispensaries.
Silver now serves as the CEO of Doobie, a leading cannabis delivery service that operates in four states. He knows cannabis as well as economic development.
LeafWorks was founded by Eleanor Kuntz and Kerin Law about six years ago when the two were studying at the University of Georgia, a top-tier plant research university. Because cannabis remains illegal under federal law, research on the plant is very limited.
In academia, Kuntz studied rice and Law worked on medicinal plants while earning their doctorates.
“Cannabis is very important. It felt like a really important intersection to bring the kind of classic botany and foundational agricultural science that Kerin and I really had in a space that’s really neglected,” said Kuntz, who serves as CEO of LeafWorks.
Kuntz had family who had been in the cannabis industry in Humboldt County, but she and Law also realized their business needed to be centrally located in the nation’s largest state market, she said, and Sonoma County. fit that fate.
There were also local businesses that work within the natural products category to help provide mentoring, he added.
“We knew at the time and continue to know that cannabis is going to be a huge industry,” Law said. “But it has absolutely no genetic tools that use any of the other agricultural crops.”
LeafWorks also has another advantage of being able to work with businesses and farmers in other states. That’s because the company works strictly on plant DNA issues unlike other cannabis companies, which must obtain licenses from other states to set up additional operations outside of California.
“We do not have those territorial problems. But being in California was really important, especially in North Bay and Northern California because this is the heart of the community,” Law said.
A key service the company offers to farmers and seed producers is a test to determine if a cannabis plant is male with a Y chromosome, which is less valuable to growers than female plants that are more productive.
“Genetics is a tool, and it’s a tool that can be used every step of the way because there are inherent questions of identity in every segment,” said Law, who also serves as scientific director.
Manufacturers also want consistency in the product they are purchasing, such as ensuring that 100% of certain marijuana strains are actually contained in your cannabis purchase, Law added.
“If you’re bringing in a material from multiple sources, how do you know you’re getting the same thing unless you check? It’s really hard to create a consistent product if you don’t know you’re getting the same type of material every time,” he said.
“That’s where we can verify that things are what you expect them to be when they walk through the door.”
There has already been litigation in Oregon and Kentucky over whether cannabis seeds were correctly identified when used by farmers, Law said. Genetic testing can support such claims.
“This is something that we allow in the market for people to have these normal business practices,” Law said.
The goal is to get a consistent product that can grow to the same height and can be harvested at the same time for more uniform and consistent farming practices like other crops, such as corn or potatoes.
Some may actually want to improve a seed variety to try to qualify for a patent. That’s done by understanding the plant’s DNA, which underpins the product’s traits and characteristics, Kuntz said.
“Cannabis is really where those agricultural plants were in the 1930s and 1940s,” Kuntz said. “There are huge improvements that can be made to the efficiency of farming, whether it’s indoors or outdoors (growing)… you need to have tools for that in cannabis.”
The company closed a $1 million investment fund in 2020 and is still raising additional funds, Law said. “It’s really for people who understand the need for science and want to be a part of that in our industry,” he said.
Silver said that trust in science can make a difference for those in the cannabis industry, as federal barriers will eventually disappear and competition will accelerate.
On Thursday, Senate Majority Leader Chuck Schumer unveiled legislation that would remove federal bans on cannabis after the House passed his own package. And the market is already consolidating, as CannaCraft announced this spring that it would be merging with San Diego-based March and Ash.
Companies using LeafWorks will benefit from knowing they have a quality control process in place that will ensure their customers get a consistent product, Silver said.
“You can know for sure that when you buy this, you get what you paid for and it will have the impact you want. That really hasn’t been the case and that’s why I was so fascinated by why I think there’s so much value there,” he said.