Got Questions? Here's some that we are often asked!
What’s up with this new collective?
Topline concept is:
MCFM Group and BioTrackTHC have developed a wholly transparent solution set for Humboldt County medical cannabis growers. This solution set is fully compliant with California law and published federal guidelines. Humboldt County also earns much needed tax dollars from the implementation of this plan.
The past couple of years have dramatically changed the landscape for medical cannabis. The concerns of the Federal government (See Cole Memo issued last year.) have also changed with legalization in CO and WA and medical status in over 23 states. We created an investment fund (MCFM Group) to provide financing and management services to a new form of collective which will be located in Humboldt County. The Collective’s legal name is: First MC Processing, LLC.
First MC Processing, LLC is a grower-owned medical cannabis collective which was created to move medical cannabis from grower to patient.
The Collective will market and distribute product under three brand names:
- Tea House Collective
- H.O.M.E. ( Humboldt Outdoor Marijuana Exchange)
- Super Critical THC
What makes this Collective different?
The Collective is a true closed loop system (as the state law requires). The central processing location and BioTrackTHC’s comprehensive tracking software gives the Collective the ability to provide any type of report required by State or County regulation. With the BioTrackTHC software we are able to track every gram of medical cannabis in and out of the system. The Collective will also generate sales tax dollars for Humboldt County!
First MC Processing LLC will purchase agricultural product from its grower-members. First MC Processing LLC will clean, test, process, package, market and distribute medical cannabis products. First MC Processing LLC will distribute medical cannabis products through dispensaries operating in compliance with California law and local ordinances.
Run that by me again!
We have a closed loop, grower-owned Collective - First MC Processing, LLC.
- Grower Members.
- Employee Members.
- Patient Members.
- Growers join as Grower-Members. Growers must make an application and certify to compliance with our environmental standards. (Here’s the link for that)
- Growers also must provide tax reporting information in order to be paid.
- We have a central processing location. (Yes, in Garberville Business Park!)
- When medical cannabis is delivered to the central processing, tracking through BioTrackTHC software begins. A grower will be issued a receipt for each delivery.
- The product is then Laboratory tested. Testing is likely to take two weeks.
- If all the tests are satisfactory and the quality is acceptable, a grower will be notified the product has been accepted.
- A grower can then come into the processing center and pick-up a check for the product.
- The product then moves through the supply chain within a single collective organization and is delivered to a patient member. Initially all deliveries will be in the Bay Area.The net proceeds of “sales” will flow back to the grower members as they are supposed to in a closed loop system.
- The sales tax on the product goes back to Humboldt County.
- The key to the operation of the Collective is the BioTrackTHC software tracking system.
Will I be paid immediately?
Yes, almost immediately. When a grower delivers medical cannabis product, the product will be bar coded. A receipt will be issued to the grower. The product will be tested for mold, pesticides and contaminants. Testing may take as long as 2 weeks.
A grower will be notified by e-mail when product is accepted or rejected and you may then come by and pick up a check or we will mail the check to you.
If you do not have e-mail, please let us know and we will call you.
Why the BiotrackTHC tracking system?
BioTrackTHC software is based on software created for the pharmaceutical industry. The BioTrackTHC software was created to track grains of restricted products like narcotics. The creators re-tooled the software for medical cannabis (tracking grams instead of grains). This software gives the Collective the ability to track medical cannabis throughout a closed loop system. The Collective will have the ability at all times to account to state or county authorities for every gram of medical cannabis delivered to the Collective..
Bio-Track THC is the mandated tracking software for the state of WA.
Why is “tracking” through a closed loop system important to Humboldt County?
We believe our solution set provides a number of benefits to County. The County’s concerns regarding outlaw medical cannabis growers can be reduced by:
- Having growers register with a legal collective. (We don’t have to be the only collective.)
- Registration will include the location of a grow and adherence to environmental guidelines, and of course a valid 215 recommendation.
- Requiring growers to “sell” through legal closed loop collectives (as per state laws).
- Legal Collectives will pay the grower members by check which creates more tax paying residents for the County
- Central Processing allows grower owned collectives utilizing state of the art software to keep track of product and dollar flow.
Our solution set is a transparent system.
We hope the County will formally adopt some our proposal. We want to “do it right” so the County and California can see a model that works and complies with all existing ordinances, laws and federal guidelines. We believe the sales tax dollars our model can generate for the County will be of particular interest.
What If everyone does not want to register or “sell” via legal closed loop system?
We are providing the County with information regarding the growers who are growing and “selling” through a transparent legal system in compliance with state law and federal guidelines.
We are identifying the “good growers” (those following the rules and environmental restrictions) for the County. There will be “outlaw growers” (those selling in the underground market and not entirely in tune with environmental concerns) We do not know what the County will do with “outlaw” growers. We also believe this model that can be adapted to the new laws and regulations that are likely to be adopted in the future.
I am a 215 small grower and I cultivate for my own medical needs.
That’s awesome! If you have excess product and you want to help other medical cannabis patients, you might consider belonging to the collective and selling the product legally so that other medical cannabis patients can benefit.
What do you consider a small family farmer?
We are currently working with the recent county ordinances that are in place and arbitrarily using the upward limit of 99 plants as a nod to Mendocino’s guidelines.
Why do I need to be paid by check?
The Collective is a transparent legal collective. Cash creates unacceptable difficulties for the Collective.
When will I see these so called “returns”?
At the end of each year the “net returns” of the Collective flow back to the Collective’s grower-members. The grower-members will finally be rewarded for their superior cultivation and unique strains as well as for taking control of the middleman functions of marketing and distribution.
Will I be issued a 1099 at the end of the year?
Yes and no. A grower will be issued a 1099 for the product purchased by the Collective. A grower-member will also receive a K-1 which will reflect the grower-member’s share of the net returns of the Collective. A K-1 is very similar to a 1099.
Will a grower-member need to file tax returns?
We can’t tell you what to do on that score, but it is generally a good idea to file tax returns. We will hold some tax seminars in the Spring. If a grower files a Schedule F as a small farmer, the grower will pay much less income tax. Filing income tax returns can be a good thing. Showing legal income allows you to build for retirement, obtain credit and more!
Will the IRS know that I am growing cannabis?
No. The IRS will know you were paid money as a farmer by a growers marketing collective - First MC Processing LLC. ( hence the simple name)
Why is this an LLC? I thought an LLC was not a good business format for a collective.
A collective or cooperative structure is required for the operation of a medical cannabis business in California. This requirement is a consequence of some unique aspects of California law relating to medical cannabis. California law currently requires a medical cannabis business to be conducted as a not-for-profit activity in a cooperative or collective organization. First MC Processing LLC has been organized as a collective because the business structure allows for the pass-through of the net returns to the member-growers as required by the closed loop system. First MC Processing LLC is the first wholly transparent grower-owned medical cannabis collective in California.
Where will I deliver my product?
For our first processing center we will be operating in the Meadows Business Park in Redway/Garberville. We have already been approached by one of Humboldt Counties incorporated municipalities that is interested in economic development to establish a second processing collective in the Municipality.
WOW- you are going to need SOME security system!
Yes. We will invest over $75,000 in a state of the art security system.
What about transportation to the Bay?
The Grower-members will not be responsible for transporting your product except for the transportation to the Processing Center in Redway/Garberville. Employee Members of the Collective will transport medical cannabis in sealed boxes with manifests that identify the contents of the box and the holder of the 215 certificate that will accept delivery of the box.
Who is doing all the marketing and distribution?
The marketing and distribution is handled by MCFM Group. The growers will not be responsible for marketing. We have found Humboldt County growers are really good at growing, but do not have the skill set to work with urban based marketing or employee management.
In addition to marketing the actual medical cannabis to patients, MCFM Group will be working hard to brand the already well establish Humboldt County reputation for quality and land stewardship.
Well how much are you charging the collective for that service?
We are a wholly transparent organization. MCFM will receive a management fee equal to 10% of the gross receipts of First MC Processing LLC.
Does that mean I don’t have to attend a lot of long meetings?
Yes. MCFM Group will operate and manage the First MC Processing, LLC collective pursuant to a management contract. The initial contract with MCFM Group will have a 2-year term. Thereafter the contract will be renewable annually. First MC Processing LLC will have the right to “fire” MCFM Group if the Collective chooses to do so. We plan to offer a quarterly meeting to review our collective progress.
Attendance will be optional.
Will growers have an opportunity to participate in decisions?
MCFM Group anticipates creating a Board of Advisors to solicit opinions from the growers regarding matters of policy and practice. The Board of Advisors cannot dictate decisions on such matters, but it will have substantial influence as it is in the best interests of MCFM Group to accommodate the best interests of the growers in order to continue to profit from managing the Collective.
Tell me what kind of product you want again?
Procurement details are available to all members. Sign up on the How to Join page!
How will the prices paid for product be determined?
First MC Processing LLC plans to pay its grower-members current market for product. We have worked extensively to determine a method of grading and pricing that will be fair to all growers. This is one of the reasons for creating a Board of Advisors. It is important both to the grower-members and to First MC Processing LLC that a fair price be paid because the Collective is owned by the growers.
What days will the processing facility be open?
At this time we will plan to receive product 2 days per week. Deliveries will require an appointment. Please check this website for days and hours and make an on-line appointment. This will enable us to serve everyone better. ( calendar and link coming soon)
Is there anything else I need to know?
We will be pleased to answer any questions. Please fill out the box below and we will answer your concern promptly.
Yes! I have a question!