KPBS SCRIPT - GROWING POT

LOWER THIRD IDS:

Lincoln Fish
OutCo Labs, CEO
@:55

Matt Hoffman
KPBS News
@ 2:37

Mike Mellano
Green Venture Farms, Owner
@ 3:12

INTRO: Recreational Marijuana is now legal in California and cannabis growers in San Diego are trying to meet the demands of the new market. KPBS Reporter Matt Hoffman shows us the growing business of cannabis.
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PACKAGE:

00;45;07;20 Fish
What makes a good bud I mean obviously there is a lot of questions, what strain is it, what’s the flavor going to be and so forth

Lincoln Fish is taking us on a tour inside the building where he grows cannabis in east San Diego county.

ID: Lincoln Fish
OutCo Labs, CEO
00;45;21;06 Fish
This would be called a very frosty nug with all those little white things they’re trichomes it looks kind of like snow, this one is going to have a lot of flavor and a lot of oil out of it

Fish is CEO of OutCo Labs which grows hundreds of cannabis plants at a time. The buds in this room are almost ready to harvest.

00;49;34;13 Fish
We’re going to cut them down by the base here, and we’re going to take this and hang it upside down, the drying process is very important

Outco isn’t your typical cannabis business. It grows, manufacturers, and sells cannabis products at its own dispensaries. Outco also wholesales cannabis to retailers across southern california.

00;08;15;06 Fish
We sell to 60 dispensaries plus, we’ll be in over 200 by the end of the year

Outco has its own line of products including concentrates and vapes - items that Fish says are growing in demand.

00;18;11;10 Lincoln Fish, CEO OutCo Labs
You aren’t getting a lot of new smokers. As you get new entrances to the market you get they typically go to concentrates, they go to vapes or other other concentrated products that’s where they’re going to go. People who didn’t smoke before aren’t suddenly going to take up smoking because cannabis became legal and we’re seeing that - we’re seeing the flower a percentage of total sales we’re seeing that drop. So what you’re going to see is a lot of plants that are grown to maximize how they might come out in an extraction for example

Growing cannabis indoors allows for a higher quality product - but it’s expensive. You’re basically creating a natural environment in a highly controlled way. There’s lighting, air circulation, filtering, water, pest, and labor considerations. Fish believes as more growers come in, the cannabis growing process will change.

00;17;19;27 Fish
I really believe that the days of the indoor grow except for very specific niche kind of stuff they’re kind of numbered. I think we’re going to see a lot of price compression. To grow indoors and you’ll hear different numbers from different people but let's call it between 5-600 dollars per pound is your cost to grow. To grow in a sophisticated light deprivation, light supplementation greenhouse where you’re using the power of the sun is more like $250 per pound. I think that’s the future of the industry

Greenhouses are how Mike Mellano plans to grow cannabis.

16;13;09;02 Mellano
We will have hard walls, clear roof, light deprivation we’ll be able to blackout the light completely

15;11;48;04
Big tractor driving by

Mellano's family owns and operates a farm in Oceanside.
14;31;12;10Truck driving by Mellano logo

STANDUP:
Matt Hoffman, KPBS News
Mellano enterprises grows things like flowers, and filler plants. Just like this Israeli ruscus here. Two years ago the company’s CEO left his position to pursue growing cannabis



ID: Mike Mellano
Green Venture Farms, Owner
15;24;56;28 Mike MellanoI just saw it as an opportunity that I don’t think we’ll see again. It’s just a brand new industry and it intrigued me, it interested me

14;28;54;21
Flowers loading up

15;23;45;22 Mellano
There’s way more gross margin in cannabis than there is in cut flowers

Mellano has been in the agriculture business for most of his life 14:36:38:51
Setting in the boxes and says cannabis is just another crop.

15;26;30;25 Mellano
I have a background of running large scale ag operations. The cultivation of cannabis is just an ag operation. That fact that we’re going the ‘taboo plant of cannabis’ is irrelevant. It’s environmental controls, pest control, pest management, process management, labor management all the same things that make you successful in a business like this make you successful in cannabis.

It’s taken two years, but Mellano just received a permit from the city of Oceanside to start growing cannabis.

15;28;06;13 Mellano
It’s been a challenge to work through the political process of all this

Now he faces a state licensing process. Mellano says it’s a huge investment to start a cannabis growing operation.

15;39;34;16 Mellano
I think it’s really difficult for a smaller group that just wants to jump in now or an individual that’s like hey I want to grow cannabis. Okay well do you have 7 or 8 million laying around to get it done, or do you have a year or two to do the political process when you start asking the questions about what it actually takes, good luck.

00;48;08;01 Fish
Gotta keep the air circulating. The air circulating really helps keep the plants healthy.

OutCo’s Fish agrees. He says the cannabis industry isn’t the cash-cow it’s made out to be.

00;22;24;04 Fish
It’s far more difficult to make money in cannabis than most people realize and ultimately it’s going to be just like any other business - in terms of you have to do things efficiently. You have to watch your margins, you have to create to a real business infrastructure

Then there’s the whole issue of competing with the black market.

00;11;48;05 Fish
Every legal operator will tell you they aren’t doing nearly as well as they could because of the blackmarket

Illegal grows aren’t under any regulation and are avoiding the tax burden that legal operators face.

00;12;03;11 Fish
I’m happy to pay those taxes - I’m all for it. But it’s got to be - gotta coincide with making it more difficult for the other guys
00;16;16;26 Fish
The problem with that whole black market piece is they’re using stuff all over place.
00;16;36;12 Fish
They’re making products that they don’t care about how much lead is in a vape cartridge or what pesticides, they just don’t care

Fish says he hasn’t seen a lot of enforcement from the state on cannabis. Just recently California found it received lower tax revenue than originally projected. Fish says to see that revenue grow illegal operators need to be shut down. In San Diego, Matt Hoffman, KPBS News.