Guest Post: Deal for Regulations Passes California Legislature
by Nate Bradley, Executive Director of California Cannabis Industry Association
We did it! After almost 20 years without statewide regulations, the California State Legislature has taken an important first step in creating a legal framework for medical cannabis. On September 11th at 11:47 pm, CCIA staff watched as the legislature sent a package of bills to the Governor’s office. Those bills – AB 266, AB 243, and SB 643 – combined to make the Medical Marijuana Regulation & Safety Act (MMRSA).
The MMRSA establishes the Bureau of Medical Marijuana Regulation under the Department of Consumer Affairs. The Department of Food and Agriculture has responsibility for regulating cultivation and processing, the Department of Public Health is tasked with developing standards for the manufacture, testing, and production and labeling of all cannabis products, and the Department of Pesticide Regulation oversees developing pesticide standards. For more information on what this legislation does, please check out CCIA’s “MMSRA Cheat Sheet” here.
We think it’s fair to say most CCIA members understand the need for regulation and are glad California has started the process. That said, we believe parts of the bills need fixing. We are eager to hear what you think. We will continue relying on feedback from our allies in the industry to help us develop follow-up legislation — and to take part in the rule-making process — to address these issues. That said, the clear message from our members has been: even strict regulation is better than no regulation at all.
Nate Bradley, cofounder of the California Cannabis Industry Association, an independent state affiliate of NCIA
We also hope this legislation will put California in compliance with the U.S. Department of Justice guidelines, which ought to end federal prosecution of lawful cannabis operators in California. The citizens of California spoke clearly when they voted for medical cannabis in 1996; their elected representatives have just spoken again. We hope the federal government will respect California’s clear desire to have a well-regulated medical cannabis industry.
Our expectation is that California will now be able to take its rightful place as the center of investment and innovation in the cannabis economy. Governor Brown and his colleagues in the legislature have just given the green light to let California’s cannabis industry become the thriving, tax-paying, job-creating industry it was always destined to become.
Nate Bradley, based in Sacramento, is the executive director and cofounder of the California Cannabis Industry Association (CCIA). He is responsible for CCIA’s public policy advocacy and political strategy in California’s State Capitol. Nate also has ten years of education and experience in law enforcement and is a speaker for Law Enforcement Against Prohibition (LEAP).
Member Spotlight: Triple C Cannabis Club
Returning from a very busy summer season, NCIA continues the tradition of featuring one of our members in a monthly member spotlight. For October, we chat with Brian Caldwell of Triple C Cannabis Club, based in Tacoma, Washington. Triple C is proud of their home state of Washington for being one of the first in the nation to recognize and respect the right of every adult to decide what is best for his or her health and happiness. As one of the first and most successful medicinal dispensaries in the state, Triple C continues to lead the way in the transition to adult-use by elevating the retail experience with award-winning selection, service and staff.
Cannabis Industry Sector:
Medical Cannabis Providers
NCIA Member Since:
2014
How do you uniquely serve the cannabis community?
Triple C Cannabis Club is completely dedicated to procuring safe, tested, and properly labeled medical-grade cannabis products for our patients. We take meeting the needs of our patients very seriously and refuse to compromise our standards. We are committed to only providing the very best to our patients. Additionally, we feel we must help be the voice for the patients we serve that otherwise could or would get lost in a bureaucratic system. Change, especially the legalizing of cannabis that has occurred in Washington State, has been quite intimidating. We are here to help and support our patients through this process while ensuring our state’s regulators have trusted professionals from our industry to work with.
Why should customers looking for medical cannabis go to Triple C Cannabis Club?
Patients who want to #ExperienceChronicWellness ® will find a wide selections of oils, edibles, salves, topicals and more at Triple C Cannabis Club. We pride ourselves on consistent medicinal product availability that has been rigorously tested and is produced by the state’s elite manufacturers. Triple C Cannabis Club staff is award-winning and very knowledgeable on a wide array of products and medicines. They ensure product safety and patient confidentiality and consistently perform to the highest standards of care. As the first union shop in Washington, I am proud to work with UFCW to advance the safety and wellbeing of all who come through our doors, regardless if they are a patient or staff.
Our business has evolved rapidly along with the changing legal landscape. As a result, people come to us for very different reasons. Many want to relieve pain and promote healing naturally. Others seek to ease stress, enhance experiences, or nurture creativity. The many wonders and benefits of cannabis are why it has been so beloved for most of recorded history.
Brian Caldwell, Triple C Cannabis Club
Can you give us some insight into the cannabis community in Washington, the challenges, upsides, and where you’d like to see it go?
As we have seen in other states, and in Washington’s past, the road to regulation of cannabis is a difficult one, but one that is desperately needed. The state has to balance federal jurisdictional issues, patients have fears due to years of persecution, and business owners are trying hard to be law-abiding, good corporate citizens. When Washington started the medical cannabis journey in 1998, we all shared the vision of a legal and safe environment for patients. However, with the veto offered by then-Governor Christine Gregoire, that was not the case. The laws have been interpreted in many different ways, hence the success of the black and grey markets. So here we are some twenty years later, trying to fix the regulations to create that safe marketplace we all had envisioned. I believe that if we work with state legislators on practical regulations and our congressional delegation on fixing taxation and banking, it will go a long way in bringing our industry into mainstream acceptance and small business success.
Why did you join NCIA?
I joined NCIA for numerous reasons, but first and foremost is their clear mission to advance the cannabis industry with a thoughtful and targeted approach. The leadership they are providing to our congressional delegation on matters such as banking and taxation is unmatched by any other groups. The cannabis industry needs a strong and professional voice to help solve these critical industry problems, which is exactly what NCIA has stepped up to do. The commitment that NCIA has to membership development, education, and networking is another reason why I chose to become a member. Triple C Cannabis Club supports the efforts of those that want to advance our industry in a positive and educated manner, and NCIA is a good reflection of those principles.
Brand loyalty is a major topic in any industry today and particularly in the cannabis industry. However, brand loyalty can be a tricky concept. What exactly does it mean? How is it achieved or measured? And what are the tangible effects of strong brand loyalty? I’d like to offer some insight into this last question because of how large the potential revenue is for brands with loyal followings.
My firm, Brightfield Group, researches the top brands in the cannabis industry and why consumers select them. What we found in our recent survey of medical cardholders was that brand loyalty is a significant driver in purchasing decisions.
Using the edibles market as an example, we found that 73% of consumers have a favorite brand. Once they find it, they’re extremely loyal, with 60% of these consumers choosing that brand at least 75% of the time.
“Brand loyalty is as important to the cannabis industry as any other and perhaps more because there are no long-established, dominant brands.”
That’s tremendously powerful when you break down the numbers. Take California’s edibles market for example. It is worth about $250 million right now and is projected to grow to $1.2 billion by 2019. If 60% of consumers buy their favorite brand 75% of the time, that’s $112 million that’s won by the power of brand loyalty in 2015. It would be $530 million in 2019, assuming the percentages remain the same. Now this is a very simplified example, but using it one can see the magnitude of the revenue involved when brands build a loyal following.
Then consider how fragmented this market currently is. Going back to our example, the top 10 edibles brands in California combined make up less than 25% of the total market. While this is typical of an industry at this stage in its lifecycle, what it means is that there is a lot of market share still to be captured. That’s about $187 million available for capture this year and almost $1 billion in 2019, again using the numbers above. And that’s just in California. This same story is being played out across other states and other categories such as concentrates or topicals, which are even more fragmented.
The implication for existing brands is that they should exploit their first mover advantage, expand their footprint and increase market share as fast as possible, because the next stage in the industry lifecycle is consolidation, where scale becomes essential. However, in this industry, expanding that footprint isn’t so easy with the current regulatory challenges. That said, some brands are starting to do it, such as Cheeba Chews and Bhang, which are both top 10 edibles brands in multiple states. But there’s a long way to go.
Brand loyalty is as important to the cannabis industry as any other and perhaps more because there are no long-established, dominant brands. The field is wide open, and although there are challenges to building that loyalty, the revenue potential is huge.
Patrick Hayden is the President of Brightfield Group, LLC. Patrick has worked in both market research and investment management for 15 years, most recently as Director of Investment Analysis for a large, private pharmacy benefits manager. Previously he was a consultant with a global research firm helping hedge funds leverage emerging markets data to boost investment returns. Prior to that, Patrick worked in an alternative investment firm where he was involved in numerous private placements raising over $100 million.
He has a Bachelor of Arts in Economics from the University of Iowa and his MBA from City University of New York.
Monthly Video Newsletter: September 2015 National Progress Report
Thank you for joining us for this September edition of NCIA’s monthly video newsletter.
Executive Director Aaron Smith shares the national progress report for the cannabis industry.
Not sure you’ll be making it to Vegas just yet? You can still support NCIA’s fifth anniversary by making a generous contribution to our annual fundraising drive today! All proceeds support our work defending the cannabis industry in Washington, D.C.
Guest Post: Growing Pains in Michigan
(As with all Guest Posts on NCIA’s website, this post solely represents the views and opinions of its author and does not represent an NCIA endorsement or official position. ~ eds.)
by Matthew Abel, Cannabis Counsel P.L.C.
Michigan is poised for change, as it has been for years. Almost seven years of the Michigan Medical Marihuana Act (sponsored by MPP in 2008) has brought plenty of litigation, but no legal dispensaries. That seems likely to change in 2016, one way or another.
Matthew Abel speaks to the crowd at Hash Bash in Ann Arbor, MI
It is possible that the Michigan legislature, which has done nothing to improve the stalemate on dispensaries and the questionable legality of anything other than “dried leaves and flowers,” may finally move forward. The dispensary and extracts bills now are joined by a seed-to-sale tracking system. That finally may overcome the objections of those coddling law enforcement, who see enforcement having to move on to other things (like violations of the new regulations).
Multiple legalization petitions are afoot. One would set up a three-tiered system like the clumsy, expensive, and oligopolistic Michigan liquor control framework. It has taken years to allow brewpubs in this state. Even now, a small local brewery is prohibited from selling directly to retail outlets; everything must go through one of the few beer and wine wholesalers, who take a cut (of course). Even that, however, is not the worst part of the ballot initiative being circulated by the Michigan Cannabis Coalition. The worst part is that any violation of the law still would be a crime. Growing more plants than allowed (two flowering plants, or potentially four if the municipality allows it) would be a felony. Selling to anyone without a license would still be a felony.
The proposal I favor (and which I helped draft) is sponsored by MILegalize. Aside from allowing distribution directly from cultivator to retailer, the main benefit of this legalization proposal is that it no longer criminalizes marijuana except for providing to minors or for driving under the influence. As we move from prohibition to legalization, we need to remember that much of the benefit of legalization is the concept of generally removing marijuana from the illegal market, with the huge savings of lives and money which accompany the move to put cannabis distribution into the legal market.
MILegalize is the right form of legalization. It removes most criminal penalties for cannabis. Eliminating crime by design of our drug laws and treating it as a public health issue, rather than a criminal justice issue, is a healthy change. That is the best reason to support the model put forward by MILegalize, as opposed to the three-tiered system proposed by the Michigan Cannabis Coalition.
For those who need to see a direct economic benefit before considering financially supporting this initiative, don’t be shortsighted. Michigan has a population twice the size of Colorado. MILegalize has no residency requirement, no financial bars to entry, and no caps on size or number or growers, processors or retailers (that is left up to each municipality, who stand to recover 20% of the excise tax imposed at the retail level).
Marijuana legalization in the face of continued criminal punishment in not nearly as sweet. I cut my teeth as a criminal defense attorney, and have had the unfortunate opportunity to see, up close, the negative unintended consequences of a medical marijuana law which is far too restrictive and fails both in providing necessary products and access, while also failing to protect those who are intended to benefit from the law. We need to not continue to make the same mistakes in the progression toward full legalization.
As a person who wants to see government work for the people, we need to recognize that the law itself is most of the problem, and leaving criminal penalties in place only perpetuates the problem.
For more information on MILegalize or to make a contribution, visit www.milegalize.com.
Matthew Abel, Cannabis Counsel, PLC, based in Detroit, MI
Matthew Abel is Executive Director of Michigan NORML and Senior Partner of the Detroit law firm Cannabis Counsel, P.L.C. He has been a member of NCIA since July 2013. Mr. Abel has been a criminal defense lawyer with a special focus on marijuana cases for more than 20 years. Mr. Abel’s Detroit-based law office capably handles marijuana possession, trafficking and distribution cases throughout the state of Michigan. His marijuana-specific practice areas include smuggling issues on the U.S.-Canadian border, asset forfeiture that victimizes clients, and questionable drug testing procedures.
He is a lifetime member of the NORML Legal Committee and the National Association of Criminal Defense Lawyers, and a member of Criminal Defense Attorneys of Michigan, the National Lawyers Guild, Americans for Safe Access, and the legal committee of the ACLU of Michigan. He has lectured on Michigan Medical Marihuana Law for Oaksterdam University in Michigan, the Michigan Cannabis College, MedGrow Cannabis College, the Michigan Institute for Continuing Legal Education, the Cannabis Career Institute, and to bar associations throughout Michigan. Mr. Abel was Director of the Committee for a Safer Michigan, sponsor of an unsuccessful 2012 Michigan Constitutional Amendment Ballot Question Committee, to repeal marijuana prohibition in Michigan for adults 21 and over. www.repealtoday.org
Submit Your Speaker Proposal for the 2016 Cannabis Business Summit!
By Brooke Gilbert, Director of Events and Education
As the director of events and education for the National Cannabis Industry Association, there are many joys that come along with managing our speaker bureau.
Putting together the agenda for our annual national conference, the Cannabis Business Summit, is without a doubt one of the most enjoyable and important responsibilities I manage. Time and time again we hear from attendees how valuable the information presented at our events was to them. We are always striving for the highest quality of speakers and most relevant session topics to help your cannabis business be successful in the long run.
This is where you, as a valued member of NCIA, come in.
“The organization and overall experience at [NCIA] events is always extremely professional. The Cannabis Business Summit was no exception. As someone who attends over 30 industry events a year, I believe this makes for an environment which is conducive to teach and learn.”
-Nick Tanem, Owner, Essential Extracts
Becoming a speaker at our Cannabis Business Summit establishes you as a thought leader in the cannabis industry. It presents you with the opportunity to address and educate a national audience of business owners and operators. It also gives you the direct opportunity to continue creating and contributing to the advancement of a responsible industry. By working together and sharing knowledge, we will continue to raise the bar collectively and propel us into a new era.
So what are you waiting for? Submit your proposal today! Have questions or suggestions about how you can contribute to NCIA’s educational programs? Connect with me at brooke@thecannabisindustry.org to discuss potential opportunities.
The link above will take you to our speaker proposal form, hosted by MemberClicks.
Cannabis State Applications: Don’t Forget Your Security Plans
A United States marijuana production license from 1945
There are three things in business you should never do:
Be your own doctor
Be your own lawyer
Write your own State Cannabis Application
Having been involved in the cannabis industry the last few years, I have seen many businesses and entrepreneurs who have a strong desire to get into this industry. Some want to own cultivation centers and grow marijuana, others want to run a dispensary and sell the marijuana, and then there is another more ambitious group who wants to do both. I think this is great and I encourage all to get involved in this growing and ever-changing industry.
But before you buy your cannabis equipment and hire a staff, you will first need for your state to give you a license. In order to get this license, you will need to apply to the state for review and approval. Your application can range from 300 to 2,000 pages and will cover a wide range of operational programs, including a well-defined security plan.
The primary purpose of a cannabis security plan is to provide a safe and secure environment for your employees, patients and visitors. Your security plan will cover facility security, security surveillance, product security, and policies & procedures.
Just like a doctor who specializes in a disease or a lawyer who only deals in certain types of the law, you want to make sure the person or company
who writes your application has written previous cannabis state applications. This is not the time to give a lawyer or accountant friend, ex-DEA agent, or a retired police chief the chance to learn how to write a cannabis application. Remember, you may only get one chance at a cannabis license and the state regulatory agencies are not very forgiving when it comes to incomplete or poorly written cannabis applications.
So make sure your cannabis application is the best it can be and look for a professional who specializes in this type of application writing.
I wish you the best of luck in this new and exciting industry.
Watch this YouTube video of Tony Gallo from Sapphire Protection speaking about security at CannaStock on September 26, 2014.
Tony Gallo is the Senior Director of Sapphire Protection (www.sapphireprotection.com) with over 30 years in the Loss Prevention, Audit, Safety, and Risk/Emergency Management fields. Tony has a Bachelor of Science degree in Criminal Justice from New Jersey City University and is a member of Americans for Safe Access and National Cannabis Industry Association. Tony is considered one of the leading authorities in cannabis and financial loan service, retail loss prevention, and security. Contact Tony at tony@sapphireprotection.com and follow him on Twitter at @SapphireProtect.
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CCIA members, board, and staff were central to the process — advocating for the cannabis industry and pushing back against the most harmful proposals. The resulting legislation isn’t perfect, but it’s an important first step towards a safer, more professional industry. Click here for more information on CCIA’s legislative victories in the 2015 legislative year.
But before you buy your cannabis equipment and hire a staff, you will first need for your state to give you a license. In order to get this license, you will need to apply to the state for review and approval. Your application can range from 300 to 2,000 pages and will cover a wide range of operational programs, including a well-defined security plan.