Immaculate Conception: How Do Cannabis Genetics Enter New and Existing Markets

When a state legalizes medical or recreational cannabis, the race for licenses begins. Operators lease grow facilities and retail storefronts. Plants veg out under grow lights and soon customers eagerly line up to buy flower, concentrates and edibles. Behind that flurry of activity, however, is one of the great mysteries of the industry. Where do all the plants powering that green rush come from?

In cannabis, the “immaculate conception” refers not to a religious miracle, but instead to a supply chain secret. Where do growers source plants that were fully illegal just weeks or months prior? And how do state regulators negotiate the reality that cannabis cultivators need to source seeds and clones from somewhere when none were permitted to exist before?

Sourcing Cannabis Genetics in Newly Legal Markets

In states like California that had a robust legacy market prior to legalization, the answer to those questions can often be found in the underground. Similarly, newly minted recreational growers can turn to existing genetics sources to get up and running in states that have a long-established medical market. But in island states surrounded by prohibitive neighbors and where there were few legacy growers, the “immaculate conception” becomes a thornier logistical and legal puzzle. 

There is a brief window in most new cannabis markets in the United States when operators have something of a grace period to secure the cuttings, clones and plants they need to stock a grow. 

In Missouri, for example, the official line from Mo. Code Regulations title 19 § 30-95.040 (D) is that “after December 31, 2020, marijuana for medical use shall be grown from seeds or plants obtained from a Missouri licensed cultivation or dispensary facility.” Prior to that date, however, Missouri regulators declined to stipulate where growers should find their initial seeds, clones and cuttings. 

The Interstate Transportation Problem

Of course, just because the state in which your company is operating has granted permission to bring in the inventory you need doesn’t mean that the state’s neighbors feel the same way. Transporting cannabis of any sort across state lines is illegal, even between adjacent legal markets like California and Oregon or Arizona and New Mexico. 

This short-lived opportunity is the only legitimate time provided to operators to do what they need to do to get their grows up and running. Whether those operators turn to legacy growers for cuttings, order from online cannabis nurseries or zipping down the highway with a cooler of clones in the backseat depends on local and regional availability and that grower’s risk tolerance. 

Regulators turn a blind eye during the immaculate conception period out of necessity. But legislation is also carefully worded to avoid directly advising operators to do anything that’s against state or federal law. 

Of course, no regulator, lawyer or—ahem—cultivation expert worth their salt would provide direct advice to growers about how to navigate this liminal stage of establishing a cultivation business. That’s one reason the immaculate conception remains so mysterious. Like Cosa Nostra, it’s something that is rarely discussed directly.

Sourcing Cannabis Genetics in Established and Mature Markets

After the immaculate conception window closes in emerging cannabis markets, cannabis operators still have supply chain issues to contend with. Even in mature markets where legitimate cannabis genetics sourcing is more widely available, cultivators can find themselves forced to shop for seeds and clones from the same few banks and nurseries as their competitors. 

These sourcing limitations can make it challenging to build a brand based on prime cannabis genetics, hyped strain drops and go-viral trend-setting. Even if your grow goals aren’t so lofty, one thing we have found to remain consistent across every cannabis retail market is that variety is just as important as price. 

Customers are as concerned with novelty as they are with cost—if not more so— and will often ask their budtender “what’s new?” before they ask “how much?” If your dispensary and/or cultivation operation can nail the right recipe of variety and price, your brand will stand out amongst the competition.

That can be a challenge in new markets, however, where legitimate, licensed genetics operators are scarce at best or not yet up and running at worst. That’s a hard problem to manage in an environment where all inventory is tagged, tracked and carefully monitored by regulators. 

Tracking, Inventory and Cannabis Sourcing

All states with legal medical or recreational cannabis have strict rules for how those plants and products are sold, particularly if the transaction crosses state lines. In Colorado, for example, operators are required to use the state-mandated Metrc inventory system, in which each plant and set of clones is given an identification number and tracked digitally using RFID unique identifiers. Colorado cultivators must source their genetics from other Metrc-compliant operators within Colorado to remain within the law.

Michigan has special licenses and rules for “marijuana microbusinesses” that grow, process and sell small-batch cannabis at inventory levels of under 150 plants. According to Marihuana Licensees Rule R 420.102 (3), “a licensed microbusiness is authorized to purchase or accept the transfer of seeds, seedlings, tissue cultures, clones, or immature plants from a licensed marihuana grower without using a marihuana secure transporter.”

The Ol’ Switcheroo

Even in the best-regulated and most established markets, however, tracking is an imperfect process. It’s nearly impossible for regulators to know where a seed or clone originated before it’s entered into tracking software. And most of the business management tools cannabis brands use to track their inventory allows for the renaming of strains or products. 

This unfortunate consequence of our current regulatory paradigm is why “the ol’ switcheroo” is not unheard of. Operators have been known to purchase Metrc-compliant clones, add them to inventory, rename them and then throw them directly into the trash before replacing them with the operator’s clone or cutting of choice. 

We certainly can’t and don’t recommend the practice. We only mention methods like this—as well as how growers in emerging markets sometimes source their plants—to illustrate the murky environment created by cannabis compliance regulations and by ongoing federal prohibition.

Sourcing Cannabis Genetics in International Markets

The issue of immaculate conception exists in international cannabis markets, too. After all, the challenges of initiating a legal supply chain are a universal language. Some countries with legal cannabis markets rely on international partnerships to source seeds and clones—particularly if they have their eye on eventual exports for the pharmaceutical market.

The Colombian Agricultural Institute, for example, gave Canadian enterprise Flora Growth Corp access to hundreds of strains included in the official seed bank in Denmark and strains registered by the US-based Humboldt Seed Company through its national cannabis channels.

Some growers both in the United States and other countries source their immaculate conception from seed banks in the Netherlands, Spain, Canada and the UK. But U.S. companies have also stepped up on the international strain market. Genetics giant Cookies, for example, now offers wholesale seeds in the EU, UK and Thailand with plans to expand into the South American and Canadian markets. 

How to Make the Most of the Immaculate Conception Window

That immaculate conception window is the time for cultivators to bring in as many tested and proven strains as possible. So how does a cultivator make the most of this fleeting window? 

First off, establish just how much you can budget for clones and seeds. Seeds don’t go bad when stored properly, so it makes sense to invest in your future (and a small dorm-room fridge) and get as much variety into inventory as possible on day one of that window. It’s also worth noting that seeds and tissue cultures often fit the legal definition of hemp stipulated by the 2018 Farm Bill and subsequent DEA communiques, which distinguish hemp from cannabis so long as it contains less than .03% Delta-9 THC. 

Whether you stock up on cuttings, seeds or clones, be sure you have enough to get you through the first two to three months’ worth of harvest. In any industry, time is money—and particularly when it comes to commercial agriculture. There’s an art to building a good strain library, and you don’t have to spend months popping seeds and phenohunting to get good ROI. In fact, most cultivators find they get the most bang for their buck by initially sourcing large quantities of quality cuttings or clones, even if the up-front cost is greater.

FYI: Next Big Crop is not a nursery. We are part of a nationwide cannabis collective that helps cultivators get started the right way. Learn more about our commercial services, including cannabis genetics sourcing.