Monday, September 23

Budding Los Angeles: Punch Edibles looking to operate but stuck in limbo as it awaits license


Punch Edibles manufactures cannabis-infused chocolates and fruit snacks from their 7,000-square-foot factory. Like many edibles companies, Punch's Canoga Park facility has yet to receive its manufacturing permit. (Joe Akira/Daily Bruin staff)

Punch Edibles manufactures cannabis-infused chocolates and fruit snacks from their 7,000-square-foot factory. Like many edibles companies, Punch's Canoga Park facility has yet to receive its manufacturing permit. (Joe Akira/Daily Bruin staff)


Thirty years ago, buying cannabis was difficult, expensive and illegal. Buying cannabis in 2019 is somewhere between picking up a prescription from a pharmacy and buying beer from a liquor store. Join columnist John Tudhope each week as he visits cannabis companies in Los Angeles and discusses the budding industry.

The first time I purchased cannabis was in my high school parking lot from an older guy in my Boy Scouts troop. It was a chocolate cannabis edible, wrapped in green foil, and it immediately stunk up any room I brought it into.

More important than the ethics behind my 15-year-old self buying drugs at school is the fact that an edible was my segue into the cannabis world. Cannabis-infused edibles are a category of cannabis products that have expanded rapidly in California’s new legal market, in part because of their accessibility for those trying cannabis for the first time and the ease with which foods can be infused with cannabis.

I have seen the standard brownie and gummy edible options cascade into products ranging from granola to gourmet truffles to canned beverages. Edibles are less harmful and more discreet than traditional cannabis because you don’t have to smoke to feel the effects.

Almost any food can be infused with tetrahydrocannabinol and cannabidiol, more commonly known as THC and CBD. These two active ingredients in cannabis are responsible for a variety of effects which can range from a simple “buzz” to anti-inflammatory effects, and are becoming more quantifiable as scientific research on cannabis progresses.

I visited Punch Edibles’ industrial kitchen and extraction facility to see how these products are manufactured and how the market has changed since legalization. Their cannabis-infused chocolates and fruit snacks contain nine servings and include 90 milligrams total of THC or CBD. This is a standard-dose edible and is just under the legal limit of 100 milligrams per product. Their edible is straightforward, well-made and sold in small colored boxes the size of floss containers.

When I visited their facility in Canoga Park I saw a business that creates a solid edible, but is hamstrung by strict regulations and bureaucracy moving at a snail’s pace – a trend I have observed in cannabis businesses throughout LA.

The City of Los Angeles Department of Cannabis Regulation is LA’s permitting body for cannabis businesses. Though California voters approved cannabis legalization in 2016, three years later, many cannabis manufacturing businesses have yet to receive the required local permits in LA. This means that currently, only a small number of businesses are even eligible to be manufacturing legally, and Punch is not one of them.

Punch has been selling cannabis-infused chocolate bars since 2014, but has been forbidden from producing their products since Dec. 31, 2017. If you’re confused, as was I, this means that since legalization, businesses have come to face much harsher and more prohibitive regulations. Despite Punch’s home in a state-of-the-art extraction facility, they would be breaking the law if they continued making their edible chocolates and gummies, so they don’t. Instead they have a stockpile of products made before the ban and are focusing on improving the capacity of their industrial kitchen so they can compete when they are fully licensed.

Their 7,000-square-foot factory in the San Fernando Valley is at a standstill while they await permits. When I visited them, the preparation space was completely empty save for the seemingly untouched machines – it was a sight of unfulfilled potential.

Because LA has yet to issue manufacturing permits to businesses like Punch, the companies are in a state of limbo where they must spend hundreds of thousands of dollars to comply with strict regulations, but are not permitted to engage in any manufacturing activity. Andrew O’Donnell, the owner and founder of Punch, says the situation is costly and frustrating.

“What were they thinking? We have payroll, we have mortgages, we have all of these things. Were we just supposed to sit on our hands for nine months?” he said. “You need at least a million dollars.”

Though Punch seems to be surviving this less-than-ideal bureaucratic shutdown, my fear is that not all of LA’s cannabis edible manufacturers will be able to as well. O’Donnell said this situation is in fact hurting small businesses that are trying to be legally compliant.

“(The city) literally choked out all the small guys,” he said. “Not only the small guys, but the small guys that are trying to do it legally.”

Of course I would have liked to focus on the tastiness of a product, the kindness of the business owner or the enjoyable time I had walking through the factory, but unfortunately, above all, I felt a type of frustration. I felt the frustration of business owners who want to sell their product, comply with regulations and compete in the free market, but are currently stuck twiddling their thumbs and burning through cash while they wait for the city to give them a piece of paper.

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