For December’s member spotlight, we zoom in on Arizona-based Hypur, an NCIA member business who is committed to “innovation with purpose” by providing solutions for one of our industry’s major hurdles: financial compliance. Navigating the various layers of regulations with mastery is an important aspect of being transparent, legitimate, and compliant, and is an essential cornerstone of NCIA’s mission and values.
Our solution is a technology platform that provides unprecedented transparency and accountability for banks and regulators, and legitimacy, safety, and convenience for businesses and their customers. With many banks and credit unions wanting to bank these booming industries, and government bodies wanting banking services available to them, we knew the demand for our platform would be robust. Hypur represents the future of commerce for cash-intensive businesses and high-risk challenging industries. Hypur’s technology provides financial institutions with a state-of-the-art compliance platform that enables them to profitably bank these businesses – revolutionizing the businesses and the communities they operate in.
What kind of banking and payment solutions does Hypur provide?
The Hypur payment network is available to clients of our financial institutions. It gives retail locations the ability to accept cashless payments from their consumers via their mobile devices. Additionally, businesses that have accounts at Hypur partner financial institutions have the ability to conduct business-to-business transfers electronically without cash.
Can you give us some insight into the unique regulations that affect cannabis business owners in your sector?
Hypur serves financial institutions, which must comply with FinCEN guidance and all BSA/AML laws that govern their institutions. They must also comply with regulatory expectations from the FDIC (Federal Deposit Insurance Corporation), OCC (Office of the Comptroller of the Currency), or NCUA (National Credit Union Association).
Why did you join NCIA?
Hypur always seeks to support leading organizations that intersect with industries of interest. We have taken note of the many important ways that NCIA is advocating for fairness, education, and awareness for the legal cannabis market, and are delighted to be a part of the NCIA community.
Happy Thanksgiving! Bountiful Benefits for NCIA Members
by Laurence Gration, Director of Development
As we head into this weekend of giving thanks, we here at NCIA are grateful for five years of advocacy, education, and community with our members. With a diverse set of services and an increasing influence on industry, legislators, and regulators across the nation, the cornerstone of our success together is firmly in place.
As the cannabis industry’s only non-profit trade association with full-time professional lobbyists working for your interests in Washington, D.C., NCIA is focused on advocacy for your business. With the strength in numbers that our nearly 1,000 member-businesses provide, we have become an influential force on Capitol Hill, with direct access to legislators and regulators.
No other business organization has done (and is doing) more for 280E reform or to fix the dangerous banking crisis than NCIA.
As a unifying voice in the industry, we are also focused on educational programming and community-building, bringing together advocates, business leaders, and policy makers to shape the industry in positive ways. NCIA also leads a Diversity and Inclusion committee, representing the interests of all under-represented groups within the industry.
But in addition to our core mission, NCIA is doing so much more for its members and the industry:
Keeping you informed: sign up for our newsletter, get video updates, and read the NCIA blog
On top of all that, NCIA members have access to a large and growing list of Member-to-Member Discounts, covering virtually every aspect of your business needs, including:
Accounting
Advertising & Marketing
Analytical Lab Testing
Infused Products
Cultivation Supply
HR & Recruiting
Software Technology
Insurance
Legal Services
Packaging
Photography
Real Estate Advising
Security
Training and Education
Travel
Wellness Products
With these discounts alone, many of our members find their NCIA membership pays for itself.
Finally, one more way we say “thanks” to our members is with gifts that let you show your pride in being part of our fast-growing community. Member pins, decals for your business window, and member certificates tell the world that you’ve invested in the long-term future of our industry.
At this time when we count our blessings, we’re grateful to you, and we hope you’ll enjoy the bounty of benefits your NCIA membership brings. With our influence in D.C. on the rise, and new programs and benefits being added all the time, it’s never been a better time to be a part of the NCIA community.
Not yet an NCIA member? Invest in your business and the future of your industry – join today!
Video Newsletter: 5 Years of Advocacy, Education, and Community
Even if you couldn’t attend NCIA’s 5th Anniversary Banquet held in Las Vegas on November 11th, you can still reflect on five years of industry advocacy, education, and community with a few of our founding members in this video presentation.
We are proud of the nearly 1,000 member-businesses that have come together as the unified voice of the cannabis industry.
Not yet a member of NCIA? It’s never too late to get involved in paving a prosperous future for the cannabis industry — join today!
Special Thanks to: Christie Lunsford, Jay and Diane Czarkowski, Brian Vicente, Ean Seeb, Erich Pearson, Étienne Fontán, Julianna Carella, Jill Lamoureux, Rob Kampia, and Steve DeAngelo.
Looking Back, Moving Forward: NCIA Honors Legislative Leader Rep. Barbara Lee
by Michelle Rutter, Government Relations Coordinator
As the year draws to a close, many of us in the cannabis industry are heading to Las Vegas for our annual trip to talk all things cannabis.
On November 11th, NCIA will be celebrating our fifth anniversary as the national voice for responsible cannabis businesses at a luxe banquet at the LiNQ Hotel + Casino, aptly themed “Looking Back, Moving Forward.” We’ll be taking a look back at how far we’ve come together in preparation for the hard work still ahead, while honoring some of the industry’s greatest champions on Capitol Hill. Las Vegas representative Dina Titus (D-NV) will give welcoming remarks to our guests.
To celebrate the progress that the cannabis industry has made, NCIA annually names a member of Congress as the recipient of our 2015 Cannabis Industry Legislative Leadership Award. Winners in prior years include true visionaries and cannabis champions Earl Blumenauer (D-OR) and Dana Rohrabacher (R-CA). Runners-up and “Honorary Legislative Leaders” of 2015 for the award this year included Sen. Ron Wyden (D-OR), Sen. Jeff Merkley (D-OR), Rep. Jared Polis (D-CO), and Rep. Tom McClintock (R-CA). This year, NCIA has chosen to name Rep. Barbara Lee of California as the recipient of the 2015 Legislator of the Year Award.
Congresswoman Barbara Lee
Representative Barbara Lee is currently serving her ninth term in Congress as the representative for California’s 13th district. The district consists of the east San Francisco Bay Area, including Alameda, Albany, Berkeley, Oakland, Piedmont, and San Leandro. The Congresswoman is a member of the Democratic Party and is the first woman to represent her district. She currently serves on the Appropriations Committee and on the Budget Committee in the House of Representatives, in addition to being the former chair of the Congressional Black Caucus.
As a leader on issues that span both the social and economic spectrum, Representative Lee has long been a vocal supporter of the cannabis movement. In the 113th Congress, Rep. Lee sponsored the States’ Medical Marijuana Property Rights Protection Act, which would have exempted real property from civil forfeiture under the Controlled Substances Act due to medical marijuana-related conduct that is authorized by state law.
Currently, during the 114th Congress, Representative Lee has continued to be a champion for the cannabis industry on Capitol Hill. She is a co-sponsor of the Marijuana Businesses Access to Banking Act of 2015 — NCIA’s priority legislation that would end our industry’s banking crisis and provide financial services for the state-legal cannabis businesses. In addition to reintroducing her property rights protection legislation, H.R. 262, Rep. Lee is a co-sponsor of the Regulate Marijuana Like Alcohol Act and the Respect State Marijuana Laws Act.
Representative Lee is very familiar with the cannabis industry in her own backyard: her district is home to many NCIA members, including the nation’s longest continuously operating medical cannabis collective, Berkeley Patients Group, the internationally-recognized Oaksterdam University, and the country’s largest medical cannabis collective, Harborside Health Center.
We hope you’ll be able to join us at this historic event in Las Vegas on Wednesday, November 11th. Much has changed since NCIA formed back in 2010, and there can be no denying the monumental strides achieved since then by the cannabis industry.
Guest Post: NCIA Board Chair Reflects on the Past Five Years
by Jaime Lewis, Mountain Medicine
Dear cannabis colleagues,
I don’t know about you, but I cannot believe that it has been five years since Aaron Smith approached me with the idea of building a national trade association for the cannabis industry. Now, five years later, the National Cannabis Industry Association has become just that for us, and then some.
I’ve been witness to some incredible growth within the cannabis industry since NCIA was established in 2010. With the passage of full adult-use measures in four states and the continual growth of support within the halls of Congress, we have effectively been noticed as a legitimate industry that is gaining respect and recognition across the country.
It’s an amazing honor to have been involved from the very beginning – from attending the very first NCIA Lobby Day in Washington, D.C., to now serving as the chair of NCIA’s Board of Directors. All of us cannabis business leaders should be so proud to have effectively changed the conversation around our work, proving that we are a responsible and politically engaged industry. And we certainly have NCIA to thank for building a community of respected business owners and for fighting for this industry on the federal level for these past five years.
I invite you to come celebrate with me, share some laughs, and reflect on the last half-decade at Looking Back, Moving Forward – NCIA’s 5th Anniversary Celebration. Taking place on November 11 at the LiNQ Hotel & Casino in Las Vegas, the night will be be an unforgettable celebration of where we’ve been and what we have to look forward to in the years ahead. I am excited to celebrate with you! Sincerely, Jaime Lewis Owner, Mountain Medicine Chair, National Cannabis Industry Association Board of Directors
Jaime Lewis, Owner of Mountain Medicine & Chair of NCIA’s Board of Directors
Jaime Lewis is the founder and owner of Mountain Medicine, a leading marijuana provider in Colorado renowned for its quality products, patient services, community engagement, and philanthropic efforts.
Since 2010, she has applied industry best practices to advance the company’s mission to provide safe and legal access to marijuana infused products and improves patient quality of life through the therapeutic benefits of marijuana. Jaime’s business management and entrepreneurial skills have contributed to Mountain Medicine success. In addition she has experience in retail and Medical marijuana dispensary in Denver, with a background in culinary arts, Jaime’s career trajectory into the medical marijuana industry began by creating compassion edibles for HIV/AIDs patients in San Francisco. In 2009, she moved to Colorado and founded Mountain Medicine, a marijuana-infused product manufacturer. She continues to oversee product development, quality control, and product consistency – the main tenants of the philosophy behind the company she founded.
Jaime is founder and Chair of the Cannabis Business Alliance (CBA), which serves as the policy voice for the cannabis industry in Colorado. CBA reflects her priority to develop sound policies and respect for the industry as it grows. She is a current board member of the National Cannabis Industry Association and has been active in campaigns to advance the interest of the industry. As a business woman and industry advocate, her participation in these organizations reflects her passion and commitment to support responsible industry policies, promote patient access, and enhance the emerging industry’s role in the economy.
Member Spotlight: Tahoe Wellness Cooperative
For this November member spotlight, we catch up with Cody Bass of Tahoe Wellness Cooperative, a patient-run medical cannabis cooperative in South Lake Tahoe, California. Cody talks with us here about his cooperative’s mission and values, his experience being raided earlier this year, and the new legislation in California. Cody currently serves on NCIA’s board of directors.
Cannabis Industry Sector:
Medical Cannabis Providers
NCIA Member Since:
2012
How do you uniquely serve the cannabis industry?
My life’s work is to free the cannabis plant. The perspective from working directly with the plant for nearly two decades has allowed me the vision to create a model that is unique. One thing that is unique about us is we use glass packaging at TWC for almost everything, which has created close to zero waste through our jar reusing program. We take a one dollar deposit on the jar when you purchase medicine and when you bring your jar back, you get your dollar deposit back. We installed a commercial dishwashing station and have virtually eliminated waste from our sales. This is one of many conscious standards and ethics you will find throughout Tahoe Wellness Cooperative.
Tahoe Wellness Cooperative
Why should patients seeking medical cannabis go to Tahoe Wellness Cooperative?
To get the highest quality, pure cannabis in California, in a safe space from a knowledgeable and compassionate crew. Our staff is very knowledgeable about cannabis and will ensure a patient has the understanding to choose the medicine they need. Your contribution is supporting a cooperative that is providing a variety of services to our entire community free-of-charge at our Community Center, which is open to all. TWC’s compassion program provides cannabis for terminally-ill patients at no cost. There is also a safe space for our patients to medicate, as well as a hash bar where we teach our patients how to make solvent-free hash.
Earlier this year in the summer, your cooperative in California was raided by local authorities. Can you tell us more about that experience, and how you’ve moved forward?
On June 1st, we experienced a SWAT-style raid on TWC from the El Dorado County Sheriff’s office. This came as a major surprise to all of our members and broader community. Even our local police department was shocked and unaware. We are licensed by the City of South Lake Tahoe and had gone through the renewal process with the city, with which we have worked cooperatively, hand-in-hand over the past seven years. We work and communicate well together. We operate under a local ordinance which has been effectively removing licensed operators that were operating illegally. When our local police department produced evidence that showed two operators were doing illegal things, both of their licenses were revoked and they were closed. So why would the Sheriff’s office raid a city-licensed dispensary that was current with all tax filings and the local ordinance’s current requirements? At this point we still don’t have all the details, and we are pursuing the District Attorney and Sheriff’s office to get our property and damages for their clearly unlawful action. However, I don’t have any other info at this time because I would only be speculating – better to wait for the facts.
As many know, I have been very opposed to the legislation signed by Governor Jerry Brown two weeks ago. I am not against regulations; in fact, Tahoe Wellness Cooperative has been operating under a local ordinance for over four years and paid all the required taxes. What I am so opposed to is what I see as a licensing scheme because of the distribution license. Having a license is great for producing and dispensing cannabis, but not for the distribution. Here in California, we produce half of the cannabis that America currently consumes. If we don’t create markets that are approachable by the buyer and the farmer, we are only further driving cannabis underground. In California, we must re-create the open market with an initiative in 2016 that allows for farmers’ markets, auction houses, or cooperatives, where distributors could exist, but not be the only choice. The distributor-only legislation is what would destroy the open market of cannabis, the biggest cottage industry that could ever hit America.
Why did you join NCIA?
NCIA was the first organized effort to step outside of the pure advocacy related to cannabis and form a membership of responsible cannabis pioneers that could see the need to change issues on a national level that are crucial to the evolution of cannabis. So really I joined NCIA for a unified effort. Since that time it has been remarkable to witness how many people NCIA has educated on pure cannabis knowledge, best practices, and compliance.
In this month’s edition of NCIA’s video newsletter, meet the entire NCIA team working on your behalf.
(Bonus: canine mascots!)
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.
Welcome to the NEW NCIA Website!
If you’re reading this post, you’ve probably noticed that the NCIA website has gotten quite a face lift!
We hope you like our bright new look. We think it’s cleaner, fresher, and more modern – a positive reflection of the professional, forward-looking businesses we represent.
First of all, the NCIA blog can now be read by anyone, not just members. That means a bigger audience for the guest posts our members submit, and it means you can share those posts with anyone you want. Over the last several months, the blog has been full of valuable information – much of it contributed by you – and we want to give that information its fullest chance to shine.
The other exciting change is that NCIA members can now update your business and contact information right through the website. Did your mailing address change? Want to add your website to your record? Maybe you want to update the email address or phone number we use to contact you about your membership.
Just click the white “Member Login” button at the top right of the NCIA home page and log in with your new Username and Password. (We sent an email to your primary contact email address this week with that information. If you didn’t get it, check your spam folder and then contact us at info@thecannabisindustry.org.)
From there, hold your mouse over the “My Profile” tab at the left, and you’ll see all the options for adjusting your information, including changing your password. With this new function, we can keep your member records more current, improve our online member directory, and give you the convenience of updating your contact information any time you want.
We hope you enjoy the new look and features of our updated website! Please let us know if you run into any problems or have any suggestions for future improvements. And, as always, thank you for supporting your industry’s voice for advocacy, education, and community!
The 5 Critical Pieces of Cannabis Legislation You Need to Know About
by Michelle Rutter, Government Relations Coordinator
As the cannabis industry has continued to thrive and expand, the number of bills in Congress dealing with the issue has done the same. Between the House of Representatives and the Senate, there are well over a dozen bills that address the conflicts between state and federal cannabis policy. NCIA’s lobbying efforts focus primarily on banking access and the unfair taxation caused by Section 280E, but we also advocate for other bills that are crucial for the industry. Below are my choices for “The 5 Critical Pieces of Cannabis Legislation You Need to Know About”:
BANKING H.R.2076: Marijuana Businesses Access to Banking Act of 2015 Introduced by: Rep. Ed Perlmutter (D-CO, 7th District) Last Action: Referred to House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on June 1, 2015. Summary: This bill would provide a safe harbor for depository institutions providing financial services to a cannabis-related business insofar as it prohibits a federal banking regulator from: (1) terminating or limiting the deposit or share insurance of a depository institution solely because it provides financial services to a marijuana-related legitimate business; or (2) prohibiting, penalizing, or otherwise discouraging a depository institution from offering such services.
S.1726: Marijuana Businesses Access to Banking Act of 2015 Introduced by: Sen. Jeff Merkley (D-OR) Last Action: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on July 9, 2015. Summary: Although the House and Senate cannabis banking bills are companions, the bill introduced by Sen. Merkley is slightly more detailed in its language.
The Senate bill would prevent federal banking regulators from: prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated marijuana business; terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned marijuana business; recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or taking any action on a loan to an owner or operator of a marijuana-related business.
The bill also creates a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned marijuana businesses, while maintaining banks’ right to choose not to offer those services. It would also require banks to comply with current Financial Crimes Enforcement Network (FinCEN) guidance, while at the same time allowing FinCEN guidance to be streamlined over time as states and the federal government adapt to legalized medicinal and recreational marijuana policies.
280E H.R.1855: Small Business Tax Equity Act of 2015 Introduced by: Rep. Earl Blumenauer (D-OR, 3rd District) Last Action: Referred to House Committee on Ways and Means on April 16, 2015. Summary: Amends the Internal Revenue Code by adding language at the end of Section 280E that would exempt a trade or business that conducts marijuana sales in compliance with state law from the prohibition against allowing business-related tax credits or deductions for expenditures in connection with trafficking in controlled substances.
S.987: Small Business Tax Equity Act of 2015 Introduced by: Sen. Ron Wyden (D-OR) Last Action: Referred to Senate Committee on Finance on April 16, 2015. Summary: This Senate bill is the companion to the H.R. 1855 described above. As such, the summary is the same.
STATES’ RIGHTS AND RESPONSIBILITIES H.R.1940: Respect State Marijuana Laws Act of 2015 Introduced by: Rep. Dana Rohrabacher (R-CA, 48th District) Last Action: Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on May 15, 2015. Summary: Amends the Controlled Substances Act to provide that the provisions of the Act related to cannabis shall not apply to any person acting in compliance with state laws relating to the production, possession, distribution, dispensation, administration, or delivery of marijuana
CIVIL ASSET FORFEITURE H.R.3518: Stop Civil Asset Forfeiture Funding for Marijuana Suppression Act of 2015 Introduced by: Rep. Ted Lieu (D-CA, 33rd District) Last Action: Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on October 5, 2015. Summary: This bill would prevent the Drug Enforcement Administration (DEA) from using federal forfeiture funds to pay for its Domestic Cannabis Eradication/Suppression Program. Additionally, the bill would ban transferring property to federal, state or local agencies if that property “is used for any purpose pertaining to” the DEA’s marijuana eradication program.
MEDICAL CANNABIS S.683: Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2015 Introduced by: Sen. Cory Booker (D-NJ) Last Action: Referred to Senate Committee on the Judiciary on March 10, 2015. Summary: Amends the Controlled Substances Act (CSA) to provide that control and enforcement provisions of such Act relating to marijuana shall not apply to any person acting in compliance with state law relating to the production, possession, distribution, dispensation, administration, laboratory testing, or delivery of medical marijuana.
Transfers marijuana from schedule I to schedule II of the CSA.
Excludes “cannabidiol” from the definition of “marijuana” and defines it separately as the substance cannabidiol, as derived from marijuana or the synthetic formulation, that contains not greater than 0.3% delta-9-tetrahydrocannabinol on a dry weight basis.
Prohibits a federal banking regulator from: (1) terminating or limiting the deposit insurance of a depository institution solely because it provides or has provided financial services to a marijuana-related legitimate business; or (2) prohibiting, penalizing, or otherwise discouraging a depository institution from providing financial services to a marijuana-related legitimate business.
Provides depository institutions that provide financial services to a marijuana-related legitimate business protection under federal law from federal criminal prosecution or investigation, criminal penalties, and forfeiture of legal interest in collateral solely for providing financial services to such a business.
Directs The Department of Health and Human Services to terminate the Public Health Service interdisciplinary review process described in the guidance entitled “Guidance on Procedures for the Provision of marijuana for Medical Research” (issued on May 21, 1999), and also demands the Drug Enforcement Administration to issue at least three licenses under CSA registration requirements to manufacture marijuana and marijuana-derivatives for research approved by the Food and Drug Administration. Also directs the Department of Veterans Affairs (VA) to authorize VA health care providers to provide veterans with recommendations and opinions regarding participation in state marijuana programs.
H.R.1538: Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2015 Introduced by: Rep. Steve Cohen (D, TN-9) Last Action: Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on April 21, 2015. Summary: This House bill is the companion to S. 683 described above. As such, the summary is the same.
In addition to these crucial pieces of legislation, there are other bills relating to cannabis that have been introduced to Congress on issues like CBD, a federal excise tax on cannabis, veterans’ access, and hemp. Cannabis advocates and NCIA members should continue to participate in NCIA’s events and lobbying efforts in addition to contacting their elected officials in order to see cannabis continue to progress in Washington, D.C. and on Capitol Hill.
Guest Post: Raising Money 101 – What’s an Offer and Why Does it Matter?
This is article is the first in a series, which will provide a general overview of the laws that impact raising money in the cannabis industry.
Any business owner planning to raise capital should consider the federal Securities Act of 1933, commonly referred to as the “Securities Act.” In addition to federal law, each state has its own set of laws that regulate securities sales, commonly referred to as the “Blue Sky Laws.” Both the Securities Act and any applicable Blue Sky Laws must be complied with in connection with the sale of securities – a security being proof of ownership or debt that has been assigned a value and may be sold (stocks and bonds are examples). Both the Securities Act and the Blue Sky Laws regulate the sale of securities by prohibiting the offer and sale of unregistered securities (other than pursuant to specified exceptions) and requiring companies to provide investors disclosure of all material facts concerning the securities for sale.
Crucially for business owners, it’s not only the actual documents to raise money that are governed by the Securities Act: so are those initial business plans and executive summaries that might be circulated to gauge interest. Ensuring that your business plans are not violating any securities laws is the focus of this article.
In analyzing whether a transaction or communication is in compliance with the Securities Act and Blue Sky Laws, it’s helpful to think through the following questions:
Does the transaction or communication constitute an offer or sale?
Is the offer or sale of a security (as defined in the Securities Act and the Blue Sky Laws)?
If there is an offer or sale of a security, is the security properly registered with federal and state authorities?
If there is an offer or sale of a security and the security is not registered, does the transaction fall within one or more of the specified exemptions to registration?
As you assess your materials for compliance, begin by asking whether an offer has been made. If a transaction or communication does not constitute an offer, then compliance with state and federal securities law is not a concern. However, if an offer is unintentionally made – a common mistake – it may trigger a violation of securities law since it is unlikely that the unintentional issuer will have taken into account the necessary disclosure items and determined the relevant exemption to registration. Note that in the context of securities law, “issuer” means any company that issues or proposes to issue a security.
What, then, is an offer, from the federal standpoint and from that of the state of Colorado? Section 2(a)(3) of the federal Securities Act defines “offer” as “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” Under the Colorado Securities Act, “offer to sell” includes any attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value and “offer” means an offer to sell or an offer to purchase. What constitutes an offer, furthermore, may be a matter of perceived intent rather than explicit proposal: the SEC has noted that “[t]he publication of information and statements, and publicity efforts, generally, made in advance of a proposed financing, although not couched in terms of an express offer, may in fact contribute to conditioning the public mind or arousing public interest in the issuer or in the securities of an issuer in a manner which raises a serious question whether the publicity is not in fact part of the selling effort.” As a practical matter, these definitions, as well as the SEC’s guidance, mean that many communications that would not be considered offers under contract law may well be considered offers for purposes of state and federal securities law.
From a practical point of view, then, how should an entrepreneur approach an action that might be considered an offer – distributing information about a new company, for example? To mitigate risk of a securities violation, consider the following factors before circulating information about your business:
Include Appropriate Disclaimers: If you do proceed with distribution, any documentation provided to potential investors should contain disclaimers that clearly indicate that the provided information is not an offer or a solicitation of an offer to buy securities. Note that such disclaimers do not necessarily mean the document will not be considered an offer.
Require Further Information: Any documentation should also state explicitly that further information about a purchaser will be required before an offer can be made.
Minimize Details: Generally speaking, the fewer details provided about a potential security, the better. Even high-level details can result in a document being considered an offer.
Ensure Accuracy: Make absolutely sure that any information provided is correct and not misleading (i.e., do not claim that cannabis is legal in the United States, note that it remains illegal at the federal level). Avoid selective disclosure and be prepared to stand behind any claims made.
Follow Best Practices: Every communication should adhere to best practices regarding offerings in general (e.g., avoiding general solicitations, keeping track of distributed documents, etc.)
Seek Legal Counsel: When in doubt, speak to a qualified securities attorney. It’s always easier to do things right the first time, whereas it may not be possible to fix certain mistakes.
This information is educational only and shall not be construed as legal advice. Please consult your attorney prior to relying on any information in this article.
Charlie Alovisetti, Vicente Sederberg LLC
Charlie Alovisetti is a senior associate at Vicente Sederberg LLC. Prior to joining Vicente Sederberg, Charlie worked as an associate in the New York offices of Latham & Watkins and Goodwin Procter where his practice focused on representing private equity sponsors and their portfolio companies, as well as public companies, in a range of corporate transactions, including mergers, stock and asset acquisitions and divestitures, growth equity investments, venture capital investments, and debt financings. In addition, Charlie has experience counseling portfolio and emerging growth companies with respect to general corporate and commercial matters and all aspects of compensation arrangements, including executive employment and consulting agreements, stock option plans, restricted stock plans, bonus plans, and other management incentive arrangements. Charlie has experience in both U.S. and cross-border transactions, and has advised clients across a range of industries including technology, manufacturing, software, digital media, energy and clean tech, healthcare, and biotech. He holds a Bachelor of Arts, with honors, from McGill University and a law degree from Columbia Law School, where he was a Harlan Fiske Stone Scholar.
*Currently only admitted in New York
Guest Post: Legislation, Rule-Making, and the Necessity to Be a Unified Industry
In the 2015 legislative session, much changed in Washington State cannabis law. As with any change in cannabis law in any state, there is much drama that happens after such a change. Usually there is much bickering, finger-pointing, rumors, and misinformation in general. People seem to come out of the woodwork with often nonsensical interpretations of the new law. This often makes me wonder where they were during the legislative session when they may have been able to change the details that seem to trouble them now.
The fact is that all laws passed are imperfect. They are going to need to be fixed and those fixes are going to need to be fixed. There is not just one person that writes what is passed as law. There is a plethora of authors that include industry, interest groups, law enforcement, localities, citizen groups, and many others. Omnibus laws are going to advance some things and create problems elsewhere. This is to be expected.
The thing about law is, once it has passed and been signed by the Governor, it is what it is until the next session. This is not the time for bickering for those that are serious about making positive change. This becomes a time to work together. Once a bill becomes law, the legislative verbiage is put through a process called “rule-making.” In this rule-making, things can be steered within the framework of the law. In addition, the time before the next legislative session is a perfect time to solicit consensus and to author and shop legislative verbiage to potential bill sponsors.
After passage, no matter whether you like the law or not, it needs to be studied. It should be done dispassionately. It should be done section by section. You should ask yourself:
What does this section say?
What is the legislative intent of the section?
What is the synopsis of the section?
What rule-making does this section call for and by which agency?
Are there things in this section that need to be changed in subsequent legislative sessions?
You should write your answers to these questions down so that you can refer to them later. This is the way that you can be most effective at influencing rule-making and achieving success in subsequent legislative sessions. Really, how are you to influence rule-making when you don’t know what rule-making is going to happen with which agency? How are you going to achieve consensus enough to get changes in a legislative session when you don’t know specifically what needs to change?
We in the cannabis industry need to stop the self-destructive habit of thinking of legislative changes as “good” or “bad.” During session we need to do our best to be influential to produce the best results possible. After a law is passed we must come together to produce the best possible results in rule-making and plan for the next legislative session. To do this we need to stop finger-pointing and work together. Divisiveness and name-calling poisons the well for consensus-building.
Approaching a rule-making body or legislature as one person or organization is not going to be very influential.
Approaching the same as an industry with a common voice is powerful and will be extremely helpful in creating positive change.
We must put aside the pettiness and ego and work together for the betterment of the industry and the movement. Those that are willing to work together need to be finding the others that are willing to work together. We need to be focused on listening to others in the industry to understand what their ideas and concerns are. We need to include the end users and to consider their points of view. We need to have patience with each other. We need to put in the work to build consensus on the changes that need to be made. We need to be willing to compromise for the greater good. We need to accept that what happens in the end will not be perfect. We need to, in short, be an industry.
Prohibition is the enemy, not each other. To that end, we have been working to bring together the various industry groups in Washington State to form a super organization that is allied in its purpose. The Coalition for Cannabis Standards and Ethics, CAUSE-M, WAMJA, WMA and Northwest Producers, Processors, and Retailers have formed a Steering Committee to bring these organizations under a common banner. These groups represent the full spectrum of the industry, consisting of producers, processors, retailers, and ancillary businesses. It is my belief that there needs to be industry consensus even when there may be differences in perspective. Retailers and producers working against each other in a lobby effort really just has the effect of negating both. We are looking forward to merging together and ultimately forming a commission that is state-recognized.
Together we will move into the future.
John Davis, Northwest Patient Resource Center
John Davis, an entrepreneur and drug policy activist in Seattle, is founder of Northwest Patient Resource Center. After managing the oldest and longest running medical cannabis dispensary in the state, Compassion In Action, John founded Northwest Patient Resource Center, where he currently serves as the organization’s Chief Executive Officer. John is a founder of the Coalition for Cannabis Standards and Ethics (CCSE) and currently serves as the Executive Director of the industry group. He also chairs the CCSE Access Point Subcommittee. John is on the Board of Directors of the National Cannabis Industry Association (NCIA) and the Cannabis Defense Coalition (CDC), and is on the Advisory Board for Blue Sage Microbes and Life Sense Technologies.
You’re Invited: Celebrating NCIA’s 5th Year Anniversary
By Brooke Gilbert, Director of Events & Education
As the close of 2015 approaches, and along with it NCIA’s 5th year of successful operation, we are very excited to be gearing up to celebrate this momentous occasion with all our members and supporters! Much has changed since NCIA formed back in 2010, and there can be no denying the monumental strides achieved since then by the cannabis industry.
To celebrate these successes, we will be holding a refined retrospective-themed banquet the evening of November 11 at a breathtaking location, The Vortex, in Las Vegas. At the entrance of The LINQ promenade, The Vortex feels like a work of art, with a name inspired by its 7,000-square-foot, color-changing canopy vortex of lights. The Vortex is one of Vegas’ premier outdoor event venues and features a second-story observation deck beneath its LED canopy, situated in a prime location overlooking The Strip.
As in years past, we will be honoring elected officials throughout the evening who have been champions of our issues. We have nominated Senator Ron Wyden (D-OR), Senator Jeff Merkley (D-OR), Representative Barbara Lee (D-CA 13th District), Representative Jared Polis (D-CO 2nd District), and Representative Barbara McClintock (R-CA 4th District) as the “Honorary Legislative Leaders” of 2015. During the banquet, we will be awarding one of these elected officials our coveted “Cannabis Industry Legislative Leadership” award distinguishing them as our industry’s champion this past year.
In addition to the awards ceremony, included in each $250 admission is a three-course meal, an open bar, musical entertainment by Erothyme, and a special gift bag filled with mementos to commemorate the occasion. You will also have the chance to explore our photo gallery offering an industry retrospective of the past five years of growth while making your own memories along our red carpet. In addition, you can take part in our silent auction where we’ll be offering up lots of unique cannabis and cultural memorabilia along with a few once-in-a-lifetime travel packages.
A huge thank you to our generous sponsors for making this event possible!
Premier Sponsor:
Silver Sponsors: Bronze Sponsor:
P.S. – Looking for more ways to support our 5th anniversary celebration? There are still a few high-level sponsorship opportunities available, as well as the opportunity to become a “Friend of the Industry” through a $500 donation.
If you would like to showcase your brand while publicly supporting NCIA’s work during one of the most important evenings of the year, contact us at events@thecannabisindustry.org or (888) 683-5650 today.
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.
by Aaron Smith, NCIA Co-founder and Executive Director
When a handful of top cannabis business leaders came together to form a national industry association in 2010, the world was a different place. Medical cannabis providers were routinely raided by federal law enforcement, the media often characterized cannabis businesses as illegitimate, and there was little political will in Congress to take on the marijuana issue whatsoever. Some of my colleagues in the reform movement even expressed skepticism over whether it was entirely a good idea to bring the industry together as a vocal stakeholder in the fight to change outdated marijuana laws.
Aaron Smith at NCIA’s 1st Annual Cannabis Business Summit, June 2014
As we come close to concluding our 5th year of operation, I’m incredibly proud of what our members have made possible. Cannabis businesses are now largely taken seriously by the mainstream media, a majority of voters, and we are experiencing greater momentum in Congress than ever before.
Too much has happened over the last half-decade to list it all but here are just a few key developments:
Four states and the District of Columbia have legalized adult cannabis use and robust industries have already taken root in Colorado and Washington,
Protections for medical marijuana businesses have been included in the federal government’s annual budget,
Presidential candidates are taking our industry seriously and at least one held a fundraiser with the industry during NCIA’s national Cannabis Business Summit, and
This progress didn’t happen by coincidence. The cannabis industry is finally being taken seriously because our members have come together to assert their collective economic and political strength just as every other business sector does.
The coordinated political and communications strategy executed by NCIA has changed the narrative around marijuana. The debate is now more about how legal cannabis sales will be regulated than about whether people should be put in jail for its use. We have also reframed the conversation so that responsible cannabis businesses and the economic and social benefits they offer communities are at the forefront.
2016 is going to be an even bigger year for the industry and as we look back at our accomplishments, we also must acknowledge there is so much more work that needs to be done before our industry is treated fairly under federal law.
In celebration of NCIA’s 5th Anniversary, we are challenging each of our nearly 1,000 members to contribute at least $500 in our annual fund drive so that we can start next year off as strong as possible.
As a token of my gratitude, all members who contribute to this cause will be acknowledged at our 5th Anniversary Banquet in Las Vegas on November 11. All contributors will also be entered into a drawing to win an iPad Air 2, which will be selected at the Anniversary Banquet.
Please consider investing in the future of the industry by giving a $500 gift to NCIA* today. All proceeds will support our direct advocacy and lobbying efforts on behalf of the cannabis industry.
*This link to will take you to our new donation website, hosted by MemberClicks.
Guest Post: Favorable IRS Ruling – State Excise Tax May Escape 280E Treatment
by Luigi Zamarra, CPA
On July 31, 2015, the IRS released ILM 201531016, concluding that the old Washington State cannabis excise tax may be properly treated as a reduction of gross revenues received. This is a very favorable ruling for our industry as it means that this tax can escape the harsh non-deductibility treatment of IRC Section 280E.
Although this ruling is applicable directly only to old Washington law, it may have far-reaching consequences for cannabis businesses operating in other jurisdictions that also impose special taxes on cannabis business activities.
As originally enacted, the Washington excise tax is imposed upon all sales of cannabis, at either the producer level, the processor level, or the retail level. As written, the tax is imposed upon each sale. (This law has now been amended so that the tax is imposed only at the retail level.)
The IRS has concluded that businesses may treat this tax as a reduction of Gross Revenues. This treatment is similar to “Returns & Allowances” in that it is a “Revenue Contra Account.” As such, it is not an expense, either above-the-line (Cost of Goods Sold) or below-the-line. Since it may be treated as a reduction of Gross Revenues rather than as an expense, it should escape treatment as non-deductible under IRC Section 280E.
Colorado also imposes a variety of special taxes upon cannabis sales. In California, local cities and counties impose special taxes on cannabis sales too. Although it is not yet clear, it seems there may be opportunities for businesses in these jurisdictions to take advantage of this ruling. This would involve these businesses changing their accounting treatment for these taxes: away from an expense or Cost of Goods Sold treatment and toward a Revenue Contra Account treatment.
Businesses are advised to consult with their CPA for a more in-depth analysis of the application of this ruling to their particular situation.
Luigi Zamarra, CPA
Luigi Zamarra, CPA, has been a member of NCIA since 2013. Luigi CPA is an accounting firm located in Oakland, CA, that helps all types of businesses and individuals with tax planning, tax compliance, and tax dispute services. Luigi specializes in the medical marijuana industry. He helps these businesses comply with IRC Section 280E so as to balance tax cost against audit examination risk.
*Disclaimer: NCIA does not provide legal or financial services or advice. Any views or opinions presented in this guest blog post are solely those of the author and do not necessarily represent those of the organization. You must not rely on the legal information on our website as an alternative to legal or financial advice from your lawyer or other professional services provider.
VIDEO: What do members have to say about NCIA?
NCIA co-founder Aaron Smith invites you to hear from a few of our members about why NCIA’s work is important to their businesses. Watch testimonials provided by Khadijah Adams of Marijuana Investments & Private Retreats, AC Braddock of Eden Labs, Ralph Morgan of O.penVAPE, and Tae Darnell of SURNA.
We appreciate the nearly 1,000 members that make up our network of responsible cannabis businesses.
Cannabis sits on display in SPARC, a boutique cannabis shop in San Francisco, CA.
Across all industry verticals, customers are seeking more authentic and personal transactions. Company leaders are being forced to choose between scale and service, and the consumer market is starting to view this dichotomy as “good and evil.” There is a better way… and the cannabis industry must define it!
Most people understand the cannabis industry is positioned at one of the most integral crossroads in business history. Unlike any previous industry, the cannabis “vertical” was already a well-established culture, having existed for thousands of years in various forms. Cannabis as food, medicine, enlightenment, and recreation were cornerstones in social contexts across the world. As a regulated industry has emerged and grown, a battlefield is taking shape, and it is my belief that the victor in this confrontation will set the tone for the entire business environment – not just cannabis – for the next century. The first waves of the clash have washed over Colorado and Washington, but it is early yet and no edge has been gained on either side. Will the influence of the culture developed over millennia be strong enough to defeat the dogmas and principles developed in big business over the past couple of centuries? Will selfish pillaging be the business modality of the future?
It is arguable that momentum is generally on the side of the culture. This can be seen in the bestseller list when both Ask and David and Goliath were in the top three of the list at the same time. The proliferation of farm-to-table eateries across America is also indicative, and finally, even Chiquita Bananas has entered the market of ‘authentic personality’ by attaching the real life stories of their farmers in other countries to their individual banana stickers. Many big industry players across the globe are realizing consumers want more than a transaction when they make purchases. Clearly, the expansive cannabis culture can’t be pigeonholed, but if we take a few core elements, we can define that zeitgeist as close, personal interactions, conscientious consumption (think wise use of resources) and unique experiences designed for purposeful feeling.
If momentum is on our side, why is a war going to be fought? Dollars. Billions of dollars are up for grabs; all kinds will show up, and those for the old regime will fight to defend their fortunes, their power, and their belief structure. Ruthless capitalism has been successful in the past, congregating vast resources into small fractional groups in every major industry on earth.
With past success comes future repetition,
and that is where the nascent cannabis economy has an enormous responsibility.
It is our collective duty to ensure this industry is built correctly from the ground up. Having a smattering of B-Corps speckled about the vertical is not acceptable. Showcasing a signature brand doing things correctly is more indicative of our failure than it is our success. This is the opportunity to merge culture and business, to define not only how this industry will operate and cater, but deliver a blueprint for industries not yet imagined.
It is our challenge to redefine boutique and small,
where they are not describing size and scale,
but rather perspective and action.
It is our opportunity to redefine scale, not as consumption of resources, but by the growth and breadth of a culture. We can build a model where operating boutique can not only provide opportunity for vast financial wealth, but can also be a better, easier means of doing so. We must demonstrate that this model is so much more successful, even in traditional business terms, that future industries no longer see the old system as a viable option. Thousands of years of human culture has passed us this torch, and people centuries ahead count on us.
We must perform.
Travis Howard, General Manager & Founder at Shift Cannabis Co.
Travis Howard is General Manager and Co-Founder of Shift Cannabis Co., a boutique consulting firm focusing on boutique cannabis cultivation and retailing. Shift Cannabis Co. has been a member of NCIA since April 2014. Travis splits his time between corporate management practices and the legal areas of dynamic entrepreneurial industries. He holds a Juris Doctorate from the University of Colorado School of Law and a Bachelor of Science in Business Administration from Colorado State University.
His cannabis industry experience started in 2009 with KindReviews.com and progressed with owning and operating a Boulder dispensary and multiple cultivation centers. He has been consulting to the national industry since 2010, having lectured in multiple states for CannaBusiness Media and the National Cannabis Industry Association. He is currently mentoring the first class of students at Canopy Boulder and thoroughly enjoys sharing his experiences in cannabis.
While he enjoys the cannabis industry, Mr. Howard has a broad business background encompassing specialties in computer information systems, project operations control, and public speaking platforms. In addition, Mr. Howard’s diverse portfolio of professional experiences includes System Administrator roles, Office Director positions, CEO titles, and Board of Directors membership.
Guest Post: Regulating Marijuana – What Direction for FDA?
The Food and Drug Administration (FDA) has learned the hard way, over decades, that there is a moving ‘thin blue line’ for it to take legal action. On one side, the last thing FDA wants is to see thousands of seriously ill people demonstrating at the gates, as happened during the AIDS crisis when FDA stood between horrendously ill and dying patients and potentially life-saving drugs. FDA has become a much more savvy political organization since then and knows that any action it takes is always subject to second guessing by the courts, by Congress, and by political pundits on all sides. On the other side, FDA must act when there is clear evidence of people being harmed by products that fall within its jurisdiction.
There is no question that marijuana, whether in smokable, edible, or any other form, creates drug-like effects in people and animals. This medical fact is acknowledged by everyone and everyone admits that FDA could have jurisdiction to act, if it chooses to act. So why hasn’t FDA acted, and can we read the tea-leaves to foresee when it will act, and how it will act?
The key issue for FDA is always safety to people and especially ‘at risk’ patients such as children, people who might mistakenly take cannabis, or people who are medically compromised. Since no one can smoke cannabis by mistake, and FDA physicians can assure themselves that smoking cannabis has remarkably few toxicity issues, the only remaining safety concern is ingestion. Since it is possible to keep ingesting cannabis-containing food materials until a person reaches levels of medical concern, the question moves to: let’s take a look at the data.
Steve Goldner, Regulatory Affairs Associates
While there may be some overdosed patients who have not been reported into the hospital reporting networks, we do have a couple of years with consumers and consumables in Colorado and Washington State. While there have been some reports of regrettable overdoses that created harm, in general, epidemiologists are surprised by the remarkable absence of medical problems. Frankly, we were expecting significant reports of mortality and morbidity, and the reports are nowhere near the level of concern that FDA sees in field reports when action is necessary to save lives. Certainly there have been isolated problems, but far less than were expected and the trend seems to be towards better labeling, better quality control, and better information at point-of-sale.
So if past action was not necessary by FDA, and current action doesn’t appear necessary, what about future action? Does it look like the marijuana movement is working towards higher standards, more scientific analysis, and greater transparency with medical and scientific collaboration? Or is this movement trying to hide problems and deny that critical self-examination issues need to be addressed?
Clearly the industry is making itself safer on a weekly basis through self-regulation and multiple state regulations. Can we do better? Absolutely! So what are the primary opportunities to make huge leaps forward toward better service and better products for our patients and customers?
We suggest these are the top 5 for you to consider. See if you can answer YES to each of these:
Do I use a test lab regularly, with suitable sampling, and have they performed ‘FDA validation’ for their analysis procedures so I know they are giving true values?
Is the cannabis product produced regularly in the same way so that the product is predictable and do I follow Good Agricultural Practices (GAP)?
Am I always honest about having safe and clean product for my customers?
Do I know all the state rules and regulations and am I and my workers following them in all parts of my operations?
Have I protected myself and my workers from adverse working conditions?
If you can say YES to all 5, then give yourself a hand, and keep looking ahead, so you can stay ahead.
Steve Goldner was Supervisor Forensic Toxicologist at Office of the Chief Medical Examiner, New York City while working on the team that developed the first commercial laboratory chromatography tests for drugs, which helped launch the drug screening industry in the 1970s. He then formulated the drug methadone with his mentor John Broich from Brookhaven Labs., got FDA approval and managed the drug company for several years. After earning his law degree at Quinnipiac University Law School and practicing law in Connecticut, he specialized in gaining FDA approval for new medical technologies, foods, drugs and medical devices. His consulting firm, Regulatory Affairs Associates, became members of NCIA in June 2015, and has helped get over 240 products approved by FDA which launched many new companies. He also has served as FDA Expert Consultant to the National Institutes of Health and advises testing labs, food and drug companies on FDA, State and International compliance.
Recapping the Cannabis Business Summit & Expo 2015
by Brooke Gilbert, Director of Events & Education
The National Cannabis Industry Association’s second annual Cannabis Business Summit took place June 29-July 1 in Denver at the Colorado Convention Center. With attendance surging to nearly 2,000 this year, an expo hall filled with 100+ exhibitors, three full days of educational programming with over 135 speakers, and the bi-partisan involvement of four members of Congress and one Colorado state representative, the symposium represented the rapidly growing, maturing, and increasingly normalized cannabis industry developing here in the United States. Here we take a look, day-by-day, at what took place over the course of three days:
Day 1:
The Cannabis Business Summit & Expo kicked off with workshops, tours, and Canopy Boulder’s demo day. The eight workshops featured a wide range of topics, including:
Growing a National Brand
Complete Cultivation System Design Process
Crime Prevention Through Environmental Design and Security System Compliance, and
Marijuana Risk Management: Navigating Your Client or Cannabis Company Through the Weeds.
Those who signed up for tours got a special treat visiting the Dixie Brands, CannLabs, or EvoLab facilities.
Canopy Boulder rounded out the afternoon by conducting an investor demo day, featuring ten companies that have been participating in Canopy Boulder’s Spring Class of their incubator program. Immediately following, a networking reception officially opened the greatly expanded exhibition hall. Check out this piece from Reason magazine which highlights some of the many sponsors NCIA had on the expo floor.
Day 2:
Day Two’s primary focus was on the mainstream political support we are increasingly seeing behind cannabis policy reform. The day began with a moving video Welcome Address by Senator Kirsten Gillibrand (D-NY), co-sponsor of the CARERS act. NCIA executive director’s opening keynote was preceded by welcoming remarks from Denver Congresswoman Diana Degette, who thanked the industry for being responsible business people and spoke for the need for continued bipartisan support from legislators.
After the morning sessions, attendees broke for lunch, where they had the chance to attend a speech by Rep. Dana Rohrabacher (R-CA), one of the industry’s most consistent and vocal champions in Congress. If you missed the luncheon, check out this great Bloomberg interview with Rep. Rohrabacher.
After lunch, in what has been called a historical first, U.S. Senator and Republican presidential candidate Rand Paul (R-KY) joined in the activities by holding a private fundraiser at the Summit. Sen. Paul met with NCIA members to learn more about the problems they face due to outdated federal law, offering an unprecedented opportunity for industry leaders to directly address these issues with a presidential candidate vying for our nation’s highest elected office.
The afternoon featured five different educational tracks including “Running Your CannaBusiness,” “Cultivation and Processing,” “Money Matters: Finance, Accounting, and Insurance,” “The Law, Policy, and Reform,” and “Emerging Topics.” Educational sessions throughout the afternoon ranged from “Analysis of Different Lighting Technology: HPS, Plasma, & LED” to “Defining the Limits of the IRS Authority over COGS: CCA 201504011 Explained”, “Boutique Cannabis: The Case for Small Business” and “Trademark Enforcement”.
The panel “National Outlook on Evolving State-Wide Regulations” finished up the programming for the day. The session featured an in-depth look at what types of policies and regulations are evolving nationwide, to give attendees a broad view of what’s happening across the United States, and what we can expect as more states come on line in the coming years.
The renowned Cannabis Carnival took place at the Fillmore Auditorium later in the evening, where 1600+ cannabis industry leaders & enthusiasts converged for one unforgettable night to celebrate progress and to support continued reform. Read the full recap here.
Day 3:
Day Three focused heavily on emerging topics in the cannabis industry and started out with the opening panel “Increasing Diversity within the Cannabis Industry.” It’s not a secret that minorities are not advancing as quickly in the cannabis industry as their white, male counterparts. This discussion took an in-depth look at the causes for this, what responsible business owners can do to create more diversity within their workplace, and why it is important to do so.
Breakout sessions for the day featured yet another diverse list of topics. This included “Preventing & Surviving an Armed Robbery,” “Managing the Operations of an Edibles Kitchen,” “To Spray or Not to Spray, That is the Question,” and “Sungrown Cannabis Cultivation – The Movement Towards Outdoor.”
Closing out the conference were two fireside chats, both focusing on different avenues of sustainability in the cannabis industry: “Building Customer Loyalty” and “The Greener Way – Innovative Steps Towards a Sustainable Industry.”
We cannot thank all of our speakers and sponsors enough for participating, and contributing to another successful annual summit. Let’s keep the energy, growth, and education going – register for our upcoming Fall Regional Cannabis Business Summit taking place in New York City, September 21-23.
Cannabis Carnival II: The Fusion of Art & Activism
Written by Brooke Gilbert, Director of Events & Education
For the second year in a row, the National Cannabis Industry Association set the stage for a night of fun, music, mischief, and the celebration of cannabis with our acclaimed benefit concert, Cannabis Carnival II. Held at Denver’s historic Fillmore Auditorium, the Carnival featured a wide-ranging group of world-class musicians and performers, including headliners Medeski Martin & Wood, Everyone Orchestra featuring an all-star ensemble of accomplished musicians, performance troupe Quixotic, and Rob Garza of Thievery Corporation.
Funhouse Facilitator Bhang Corporation gave the interior of the already impressive Fillmore Auditorium a new life through the creation of an inviting, Bhang-branded Funhouse Lounge space complete with seating, psychedelic fine art by Don Callarman and Android Jones, plus even a chance to get your fortune told by the mighty Zoltar!
Filling out the raised viewing area along the east side of the Fillmore were our Cannabis Cavalcade of supporting sponsors and our Non-Profit Village. Attendees had the chance to stop by Mountain Medicine, O.PenVAPE, Mahatma Concentrates, and Terrapin Care Station booth setups to pick up goodies, play carnival-themed games for a variety of prizes, and meet those who make these wonderful products. On top of all this, attendees could also visit the booths of harm reduction heroes Dancesafe and Harm Reduction Action Center to learn more about practical measures to stay safe at live music events and give back by entering into Share Your Cloud’s art raffle to raise money HRAC’s lifesaving local efforts.
The party continued outside with even more carnival fun. Whether taking a chance at soaking someone in the 300-gallon Dunk Tank or showing off your strength by taking a swing at the High Striker, there was plenty of excitement to go around. O.PenVAPE topped it all off by providing a stilt-walker to entertain guests throughout the night in hosting their tricked-out Volkswagen bus where attendees could take a break to play everyone’s party favorite, Mario Kart™.
Opening up the musical portion of the evening was Rob Garza, multi-instrumentalist and founding member of Thievery Corporation. His engaging mix of deep house and nu-disco during his set got everyone warmed up while exploring the venue. Intensely mesmerizing, highly skilled, and visually stunning, Quixotic took the stage next and stole the show for many who were unaware of what they were about to witness. Based out of Kansas City, this group of performers masters the fusion of dance, high fashion, aerial acrobatics, projection mapping, and original live music, producing a multi-dimensional experience unlike any other. You can view highlights from their performance in our official photo album found on our Facebook page here.
The constantly revolving improvisational supergroup Everyone Orchestra took the stage following Quixotic. Matt Butler, a masterful entertainer who also served as our jovial ringleader for the evening, conducted the highly anticipated lineup of musicians, including members of The String Cheese Incident, Big Gigantic, Papadosio, The Motet, Tea Leaf Green, Elephant Revival, The Bridge, and The Congress, through an hour-long improvisational journey which did not disappoint. Combining an eclectic mixture of funk, rock, bluegrass, soul, jazz, and audience participation all guided by the meticulous mind of Matt Butler, Everyone Orchestra got everyone dancing and letting loose to the collaboratively created soundtrack.
A surprise guest for the evening came out during the setbreak before Medeski Martin & Wood closed out the show. Few people knew beforehand that Representative Dana Rohrabacher (R-CA), a longtime champion of cannabis policy reform, also plays guitar and is no stranger to songwriting. In what might have been a first for a member of Congress, Rep. Rohrabacher jumped on stage and shared a personally penned song about freedom at a cannabis-centric concert. This rare moment was definitely a highlight of the evening as it reflected the merging of a political movement, art, and activism that Cannabis Carnival means to encompass.
World-renowned jazz funk trio Medeski Martin & Wood took the stage last, joined by a late night rush of local cannabis enthusiasts who weren’t going to miss their last stateside appearance in 2015. This increasingly rare performance by the jazz fusion pioneers was a real treat for all and the diverse audience once again demonstrated the role cannabis can play in crossing cultural boundaries. With never a dull moment, MMW’s set showcased their wide range with Billy Martin providing an ever-changing canvas of beats and percussive sounds for Chris Woods to build upon, while John Medeski took things deep through his expansive selection of vintage pianos, organs and synthesizers.
As attendees left with smiles on their faces, we couldn’t have been happier with another successful year of throwing Cannabis Carnival. In case you didn’t hear, NCIA will be taking the Cannabis Business Summit and Cannabis Carnival to the Bay Area in 2016. Stay on the lookout for date and location announcements for next year’s edition in the coming months!
Or perhaps more appropriate for today, “Don’t judge all cannabis products by THC percentage.”
As the cannabis industry continues to develop, we will see more medical and recreational marijuana states require testing on cannabis and cannabis products. This means that potency, and THC percentages, are readily available for patients and consumers. As many know, the trend is to obtain cannabis products with the highest THC potency. But is this really the best product? Is this really the best choice for the consumer? Is a single THC percentage even accurate? In answering these questions we shall look specifically to the regulated industries of alcohol and analytical testing.
The alcohol industry requires that all alcohol products be tested for potency, which is called alcohol content. While alcohol content is required to be posted on labels, how often does alcohol percentage affect your drink selection? When a friend offers you a beer they may ask you if you want an IPA, Kolsch, Ale or Stout. Or, when you are shopping for wine you may think about whether you want a Merlot, Chardonnay, Zinfandel, Rose, or Pinot Noir. Rarely is alcohol percentage the deciding factor. No one asks whether the beverage has 4%, 13% or even 95% alcohol content. If that was the case malt liquor and Ever Clear would be the alcohol of choice. Instead, what we see is that enthusiasts look for a wide variety of qualities other than just potency. The same should be said for cannabis.
Traditionally, the choosing of cannabis depended on its appearance, scents, and flavors. Selection was a holistic process. Potency still played an important role, but it was only qualifiable, not quantifiable. No one knew what THC percentage was. They just knew how they felt after consuming their favorite cannabis product. With the new industry of laboratory-tested cannabis, many cannabis consumers are no longer relying upon scents, flavors, and appearances. They are choosing their cannabis based on a very specific number, and sadly, an extremely unreliable number.
There are multiple factors that affect a THC value.
First, a specific THC value is only a representation of the exact sample that was provided, not of every bud produced in the batch. This occurs because marijuana potency naturally has variation. This variance occurs in buds on the same plant, as well as in different plants of the same strain throughout the garden.
Another variable that affects the final THC value is the margin of error, also known as standard deviation, of the testing method. A margin of error is the window in which data falls within a range and is still considered valid. In the analytical testing industry this is represented in a plus or minus value. In analytics, a margin of error may have up to +30% and still be representative. This means that one laboratory can test THC around 18% and another one could test it around 24% and both could be considered valid numbers.
A third factor that may affect the final THC value is the sample matrix. A sample matrix is a type of cannabis product as well as any ingredients that may have been added to it. The sample matrix can make the cannabinoids, such as THC, harder to extract and analyze accurately.
This compounding of errors contributes to the inaccuracy of placing such value on a single number. Focusing on a specific THC value alone is not only scientifically inconsistent, but it also diminishes the total value of the cannabis plant.
The regulation of cannabis testing labs may not resolve all these issues. While regulating cannabis testing laboratories is necessary and important in controlling testing methods, the other, and more important issue, is acknowledging that the THC percentage has been overvalued and oversimplified. The attention on THC and not the appearance, flavor or scent of cannabis or its effects can hardly describe the true cannabis connoisseur’s experience.
What happened to the marijuana that everyone used to love and brag about? It would have tested around 8% or even 12% THC. Why is everyone racing for higher numbers instead of better quality? I would much rather have a quality, locally produced home brew that is brimming with flavors and subtle undertones than a shot of Everclear.
For further analysis on ways in which we can start having an in-depth conversation about the value of cannabis and not THC potency alone, please read our upcoming article in DOPE Magazine’s August edition.
Rowshawn Reordan, Green Leaf Labs
Rowshan Reordan is the founder of Green Leaf Lab, Oregon’s largest cannabis analytical laboratory, one of the first cannabis analytical laboratories to open in the nation, and members of NCIA since February 2014. Ms. Reordan received her law license in the State of Oregon in 2006 and practiced law in Southern Oregon. After opening Green Leaf Lab’s flagship location in Portland, she became more involved with legislative efforts to ensure legitimacy in cannabis safety testing. Ms. Reordan was on the subcommittee for testing for Oregon’s Medical Marijuana Law and was recently invited to be on the subcommittee for testing for Oregon’s recreational marijuana program. Ms. Reordan has presented at a variety of educational seminars and conferences. She recently worked in conjunction with the Oregonian and the University of Oregon in educating and discussing the proper direction of legislative efforts concerning Oregon’s cannabis industry.
VIDEO: Aaron Smith invites you to become a member of NCIA
NCIA co-founder and executive director Aaron Smith invites you to become a member and enjoy the many benefits of standing in unity with nearly 1,000 other responsible member businesses in the cannabis industry.
As we learn more about the cannabis plant and its potential uses and benefits, Cannabidiol, or “CBD,” continues to emerge as one of the most beneficial, and non-intoxicating, parts of the plant. Although there is significant research on the safety and efficacy of CBD, and some forms of CBD derived from hemp are arguably not regulated under the federal Controlled Substances Act (CSA), the Drug Enforcement Administration still considers CBD a marijuana derivative and Schedule I drug that is being illegally marketed in violation of the CSA and the Federal Food, Drug, and Cosmetic Act (FDCA).
In addition to food and drugs, nutrients and other supplements are regulated by the Food and Drug Administration (FDA) under the FDCA. The purpose of the FDCA is to forbid “the movement in interstate commerce of adulterated and misbranded food, drugs, devices, and cosmetics.” Disregarding the legality of CBD product sales under the CSA, any company contemplating the sale of such products should consider whether the products can be lawfully sold under the FDCA. Any product intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease is classified by the FDA as a drug, regardless of the product’s form or how it is marketed or labeled. Drug approval requires an extensive process involving collecting and submitting for review clinical and non-clinical data about the proposed use of the drug. While FDA has not yet attempted to regulate marijuana products sold in licensed marijuana establishments, the proliferation of states legalizing CBD for medical purposes and legalizing the cultivation and sale of hemp products has complicated the legal landscape. As CBD products move out of marijuana establishments and into retail and internet stores, they are catching the FDA’s eye.
In February 2015, the FDA sent letters to companies marketing CBD products stating that the companies were violating the FDCA by making therapeutic claims about the products, which are not approved as “drugs” under the FDCA. The FDA also recently confirmed that CBD cannot be marketed as a dietary supplement, stating that “Based on available evidence, FDA has concluded that cannabidiol products are excluded from the dietary supplement definition under section 201(ff)(3)(B)(ii) of the FD&C Act. Under that provision, if a substance has been authorized for investigation as a new drug for which substantial clinical investigations have been instituted and the existence of such investigations has been made public, then products containing that substance are outside the definition of a dietary supplement. There is an exception if the substance was ‘marketed as’ a dietary supplement or as a conventional food before the new drug investigations were authorized; however, based on available evidence, FDA has concluded that this is not the case for cannabidiol.”
In marketing products, the FDA classifies products based on intended use. Any website selling the product or providing references to sites where the product is sold will likely be examined for content by the FDA in determining the product’s intended use. Evidence of intended use includes claims on labels and literature, the citation of publications related to the product, and claims made on any forum where a consumer may see the product. Products may be considered “drugs” if claims are made related to the product’s use for the cure, mitigation, treatment, or prevention of diseases. Evidence of such claims may include therapeutic claims, claims that the product possesses certain medical properties, or the commercial use of scientific publications to promote the product’s sale. Even simple references to scientific studies or general research, such as “cannabinoids are emerging as an effective treatment for infections,” may be considered evidence that the product is a drug.
Shawn Hauser, Esq. of Vicente Sederberg
To further complicate matters, CBD has been granted orphan drug status by the FDA for treatment of Dravet’s Syndrome and Lennox-Gastaut Syndrome. However, the FDA has acknowledged the mixed signals sent by the present controlled substance classification of cannabis, and of CBD specifically, and has publicly supported research regarding CBD’s potential medical uses in testimony before the House Subcommittee on Government Operations.
Prior to marketing CBD products, companies should consult with an attorney who specializes in FDA compliance. This due diligence can not only ensure compliance and prevent action by the FDA, but may also promote the business’s reputation as one that is professional, thorough, and trustworthy. The FDA is less likely to target medical marijuana companies that a) avoid engaging in interstate commerce and only sell products within states that have legalized medical marijuana, and b) do not make claims about the proven efficacy of CBD products. As cannabis and CBD products proliferate, recent FDA activity indicates that the FDA is monitoring retailers and manufacturers of these products and will continue to do so going forward.
Nothing herein is intended to create an attorney client relationship. This article is for educational purposes only and shall not be considered legal advice. Please consult the appropriate legal professional prior to relying on anything mentioned herein.
Shawn Hauser, Esq., is the senior associate at Vicente Sederberg, Sustaining Members of NCIA. Shawn has been working in marijuana and law in policy for almost 7 years, starting with internships in marijuana law while she was studying at the University of Denver Sturm College of Law, where she chaired the school’s chapter of NORML. Prior to joining Vicente Sederberg LLC, Shawn worked at a small law firm specializing in marijuana law, criminal defense and family law. Shawn is the director of the “Local Implementation Project” for the non-profit Sensible Colorado Action, where she works with local governments across the state to pass marijuana laws that foster responsible businesses. Shawn also serves on the board of National Hemp Association, a Denver-based organization dedicated to the re-birth of industrial hemp in America. Shawn came to Denver in 2008 from Austin, Texas, where she fostered her love for live music, while studying psychology at the University of Texas at Austin.
Guest Post: Marijuana Millions – The Road Map to Your Success, Part 2
How writing effective mission & vision statements can strengthen your cannabis brand
In order to ensure that your cannabusiness is successful both now and into the future, you will want to organize your business goals and objectives with a mission and vision statement. Essentially these two different statements form the foundation for your brand and business and will ensure that you stay aligned with your values and goals moving forward.
Each of these statements accomplishes a different objective but they are easily confused with each other. A mission statement describes what a company wants to do now while a vision statement outlines the company’s future goals.
What is a mission statement?
A mission statement focuses on the present and helps you define exactly what your customers expect from you while giving you clarity about the level of performance you need to be successful. It is the statement that brings your brand’s promise to life.
Your mission statement should clarify the purpose and values of your business as well as the responsibility your business has to your customers. Additionally, it should help you continue to define your Unique Selling Proposition by asking, “What do we do as a company and what makes us unique?”
Your mission statement is an important cornerstone of your brand for your employees as well. It helps you create a strategic plan that provides your employees with a clear guide on what they should do and how they should do it.
A mission statement should answer the following questions:
What do we do today?
For whom do we do it?
What is the benefit our product or service can provide to our customers?
What is a vision statement?
While the mission statement focuses on the present, the vision statement focuses on the future and should become a source of inspiration and motivation for you and your employees.
Your vision statement should be big and lofty and paint a clear picture of your organization and why it exists. In addition to describing the future of your business, your vision statement should also describe the industry that your company hopes to influence.
As you can imagine, a vision statement is incredibly important for the new and rapidly evolving cannabis industry.
A vision statement should answer the following questions:
What do we want to do going forward?
When do we want to do it?
How do we want to do it?
Where to start:
For startups such as new cannabusinesses, it is common for a vision statement to be created first as it may help guide the mission statement and the rest of your strategic road map.
For businesses that have been around for a while where the mission is clear, the mission statement may come first as it can help define the vision and the goals for the future.
Taking time to create a solid foundation for your business such as your Unique Selling Proposition as well as your mission and vision statements will help you create success in your cannabusiness and put you on the path to marijuana millions.
Alexa Divett is the Co-Founder and Marketing Director of Maya Media Collective (http://www.mayamc.com), a Portland, Oregon-based marketing and design firm that provides brand identity packages, marketing strategies and business coaching to marijuana business owners and entrepreneurs. Maya Media Collective has been a member of NCIA since January 2014. With over 14 years of experience in marketing, public relations and coaching, Alexa helps cannabusiness owners earn marijuana millions while uplifting the cannabis industry.
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No other business organization has done (
By John Davis, 
At the entrance of The LINQ promenade, The Vortex feels like a work of art, with a name inspired by its 7,000-square-foot, color-changing canopy vortex of lights. The Vortex is one of Vegas’ premier outdoor event venues and features a second-story observation deck beneath its LED canopy, situated in a prime location overlooking The Strip.
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.
consumption (think wise use of resources) and unique experiences designed for purposeful feeling.
The alcohol industry requires that all alcohol products be tested for potency, which is called alcohol content. While alcohol content is required to be posted on labels, how often does alcohol percentage affect your drink selection? When a friend offers you a beer they may ask you if you want an IPA, Kolsch, Ale or Stout. Or, when you are shopping for wine you may think about whether you want a Merlot, Chardonnay, Zinfandel, Rose, or Pinot Noir. Rarely is alcohol percentage the deciding factor. No one asks whether the beverage has 4%, 13% or even 95% alcohol content. If that was the case malt liquor and Ever Clear would be the alcohol of choice. Instead, what we see is that enthusiasts look for a wide variety of qualities other than just potency. The same should be said for cannabis.
