NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
by Claudia Della Mora, Black Legend Capital
While marijuana has been around in Mexico since the 1600s, the real story begins in the 20th century during the Prohibitionist Era. After Mexico news outlets widely reported stories of cannabis users committing violent crimes, a cannabis stigma was created, resulting in Mexico banning the production, sale, and use of cannabis in 1920, followed by a ban of exports in 1927. The movement of cannabis was first regulated by the three U.N. conventions on narcotic drugs, beginning with the Single Convention on Drugs in 1961. The prohibition gave rise to the cartel’s involvement in the illegal cannabis industry in the ’80s, and these cartels have consistently supplied the U.S. market since. After the war on drugs significantly increased violence in Mexico and gave the cartels more power than before, Mexico began to alter its stance. In 2015, the country decriminalized cannabis use, and in 2017, legalized medical cannabis containing less than 1% THC. In 2018, the Mexican Supreme Court deemed the prohibition unconstitutional, and in December 2020, the U.N. Commission on Narcotic Drugs transferred cannabis from a Schedule 4 to a Schedule 1 drug under the Single Convention. As of now, Mexico is on the edge of legalizing recreational cannabis use. This bill, “The New Federal Law on the Regulation of Cannabis,” is awaiting approval by the Senate and then only needs to be signed by the President to be passed into law.
With a population of 130 million and over 10 million regular cannabis users, Mexico will generate $1.2 billion in annual tax revenues while saving $200 million annually in law enforcement and creating thousands of new jobs. One estimate has cannabis legalization bringing up to $5 billion to the economy annually. One issue Mexico will face will be keeping the cartels from transitioning to the legal cannabis market. While those with criminal records can’t obtain any cannabis license, cartels have a deep network, and Mexican officials can’t always determine whether someone is connected to a cartel. Mexico’s legislators believe the cartel will be forced to operate legally over time as they won’t be able to compete in the illegal market and keep as much power as they currently have.
There are also many questions regarding how Mexico’s cannabis legalization will affect the U.S. market. The USMCA, formerly known as NAFTA, currently does not include cannabis, raising the question of whether Mexican producers will be able to import cannabis into the U.S. for a much lower price than the U.S. can produce domestically. However, the U.S. will likely implement trade barriers to protect domestic companies. Currently, the U.S. places trade barriers on tomatoes in Mexico, and many see similar actions being placed on cannabis.
There’s no doubt that cannabis legalization in Mexico will create investment opportunities in the U.S. It mostly comes down to whether the U.S. creates trade barriers with Mexico regarding cannabis. If they don’t, the U.S. cultivation and manufacturing sectors will be hurt badly as Mexico can produce much cheaper. The absence of trade barriers will also hurt testing labs as cultivation moves out of the country and uses testing labs in that same country. However, U.S. companies with distribution networks, retail operations, or strong brands will benefit from Mexican legalization through lower costs of goods sold. One solution that would benefit U.S. companies would be legalizing interstate commerce in the U.S. without federally legalizing cannabis. This means other countries wouldn’t export finished products or raw material with THC above 0.3% into the U.S., and the U.S. industry would develop and consolidate. Once the U.S. federally legalizes cannabis, they must create tariffs or some trade barriers against all the developing countries legalizing cannabis, or the U.S. companies will suffer.
Companies are also greatly affected by banking laws. Currently, companies touching the flower in countries where it is not federally legal cannot access regular banking and can’t list publicly on the NASDAQ or NYSE. However, Canadian companies touching the flower can list in the U.S. since it is federally legal in Canada. These laws mean companies operating in Mexico will also be able to list in the U.S publicly. However, the SAFE Banking Act recently passed the House of Representatives in April 2021 and is up for debate in the Senate. Passage of this act would grant banking access to cannabis companies touching the flower and open the door for these companies to list in the U.S publicly. This would create a large flow of money into U.S. cannabis companies and allow them to scale at a much quicker pace than previously available. One important thing to note is that the large U.S. stock exchanges are technically able to accept cannabis companies’ listings if they meet the exchange requirements. However, they don’t accept them to avoid punishment from the federal government. Therefore, as the government moves towards allowing these companies federal banking access, the main question regarding U.S. companies is raised. In absence of government pressure, will these exchanges allow U.S. companies to list and access their own public markets?
Overall, companies and investors looking to take advantage of the booming cannabis market need to stay up to date on the fast-changing cannabis legalization process in many countries. Those that truly understand it will position themselves to benefit from what is projected to be one of the fastest-growing industries over the next decade.
Ms. Della Mora is the Co-founder of BLC, a financial advisory and investment firm based in Los Angeles with satellite offices in Houston, New York, London, Hong Kong, and Melbourne. During her tenure at BLC, she successfully invested, assisted in the capitalization, and helped business develop small cap oil companies in Kentucky, Texas, Louisiana, Illinois, Colorado, California, Wyoming, North Dakota, and Alaska. She has also structured oil & gas partnerships in several U.S. states, and in Ecuador, Central America. Ms. Della Mora has been involved in many LNG (Liquid to Natural Gas) projects in the U.S., as well as many commodity trades worldwide. She has personally advised also Chinese conglomerates in their U.S. oil & gas investments.
Black Legend Capital is a leading Merger & Acquisition boutique advisory firm based in California with offices worldwide. Black Legend Capital was founded in 2011 by former senior investment bankers from Merrill Lynch and Duff & Phelps. We provide M&A advisory services, structured financing, and valuation services primarily in the cannabis, technology, healthcare, and consumer products industries. Black Legend Capital’s partners have extensive advisory experience in structuring deals across Asia-Pacific, Europe, and North America.
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week was undoubtedly one of the most exciting weeks in federal cannabis policy ever! On July 14, Senate Majority Leader Chuck Schumer (D-NY), along with Sen. Cory Booker (D-NJ) and Senate Finance Committee Chair Ron Wyden (D-OR), unveiled long-awaited draft legislation that would remove cannabis from the schedule of controlled substances while allowing states to determine their own cannabis policies. Let’s take a look at what we know:
You’ll recall that back in February, the trio of Senators announced that they were working on a comprehensive cannabis bill. Since then, NCIA and other advocates have (im)patiently been waiting to see what shape that would take – I was calling it the best-kept secret in Washington! However, at long last, the discussion draft of the Cannabis Administration and Opportunity Act (CAOA) was released.
A discussion draft is exactly what it sounds like – prior to introducing this language as formal legislation, the Senators have shared it in this form, allowing stakeholders, the public, and others the opportunity to weigh in and provide their expertise and feedback.
As I mentioned above, the CAOA removes cannabis from the list of controlled substances, effectively legalizing it at the federal level while still allowing states to set their own policies. According to the bill’s detailed summary, it has a few goals:
“… [it will] Ensure that Americans – especially Black and Brown Americans – no longer have to fear arrest or be barred from public housing or federal financial aid for higher education for using cannabis in states where it’s legal. State-compliant cannabis businesses will finally be treated like other businesses and allowed access to essential financial services, like bank accounts and loans. Medical research will no longer be stifled.”
The bill also includes:
The discussion draft comment and feedback process will be ongoing until September 1. Until then, NCIA will be working with our board, Policy Council, committees, and our members (particularly our Evergreen members!) to solicit their expert input on some of the areas the Senators have expressed interest in. After that deadline, the Senators will take their time to review submissions and subsequently formally introduce the revised language later this year. Stay tuned via our newsletter, blog, and upcoming events to learn the latest on this and how you can actually submit your thoughts to us!
By Dan Shapiro, Greenlane Holdings
Sitting here on July 14, 2021, the Senate Majority Leader of the United States Chuck Schumer just introduced legislation to (among other things) federally legalize cannabis. Yet, despite the Senate’s official entrance into the path to legalization, many states, businesses, and importantly here, athletes and celebrities, or “talent,” continue to behave as if legalization has already occurred. Side note – it has in many states!
Talent throughout the country have engaged in a variety of licensing and endorsement deals within the cannabis industry, ranging from Martha Stewart, Keith Haring, Bob Marley, Seth Rogan, Berner, Travis Scott, Rick Ross, “Sugar” Sean O’Malley, Jonathan Adler, to Gary Payton. A common theme among talent newly entering the space seems to be a default to the plant itself, i.e., partnering with cannabis producers to either endorse or license intellectual property (“IP”) to create cannabis strains and products. Here, I would like to first describe what licensing and endorsement deals are and then discuss a hidden gem of the cannabis licensing and endorsement space. That is, talent partnering with cannabis ancillary businesses, meaning, businesses that sell cannabis accessories and products but do NOT ‘touch the plant.’
Before I dive into a discussion of cannabis accessories, it is important to quickly outline “licensing and endorsement deals.” At a high level, a licensing deal is the process of an individual granting another party the right to use his or her name, image, and likeness, for a particular purpose, in exchange for certain consideration (payment). For example, publicly-traded cannabis accessory distributor Greenlane (NASDAQ: GNLN), where I serve as the Associate General Counsel, has remitted consideration to the owner of the artist Keith Haring’s IP, to use images of his artwork on a line of smoking accessories. A licensing deal allows an owner of IP to capitalize on its value by finding the right partner who can harness the IP in a way to create a profitable outcome. It allows an IP owner to find a partner with the production and distribution capacity and operational know-how that an IP owner likely does not possess. In a licensing deal, the end consumer is often under the impression that the end product is coming directly from the IP owner, which can add huge value to the talent’s brand; whether the talent is alive or deceased. This perception for the end consumer can be different with endorsement deals where there is usually a clear delineation between the talent and brand.
An endorsement deal is where talent is used to create awareness for a particular product or service; this can be seen in commercials, Instagram or Twitter posts, and public appearances. Unlike a pure licensing deal, an endorsement deal will commonly make it clear that the product being endorsed is not coming from the talent directly, but that he or she is merely promoting the underlying product in exchange for consideration. Nevertheless, despite the distinction, licensing deals and endorsement deals often merge into one and the same. For instance, Greenlane’s cannabis accessory house brand and retail arm Higher Standards did a licensing and endorsement deal with UFC MMA fighter “Sugar” Sean O’Malley. In this deal, Higher Standards secured a license to use Sugar Sean’s IP to create a limited-edition water pipe and promote this water pipe using his IP on all of its promotional mediums. As part of the deal, Greenlane also caused Sugar Sean to promote the Higher Standards brand on his social media platforms through a select number of posts and mentions. This is a prime example where talent and brands will often dip their toes into a deal that incorporates both a licensing and endorsement component.
So, now that I have established what a licensing and endorsement deal looks like, I want to shift to a discussion of the benefits of working with cannabis accessories. For clarity, cannabis accessories can include rolling trays, roach clips, rolling papers, vaporizers, water pipes, jars, grinders, lighters, packaging, and in certain cases, clothing. So, why should talent focus on licensing and endorsement deals with cannabis accessories?
Cannabis accessories can allow for a unique form of creative control for talent. Talent can create a product from scratch, like an ashtray, jar, or water pipe, and have a direct impact on the structural design. Additionally, accessories can be sold in a plethora of different locations. Unlike cannabis products, accessories can be found in department stores, headshops, smoke shops, convenience stores, clothing stores, and upscale interior design boutiques. In addition to the broad array of available doors, accessories can also allow certain talent to enter the cannabis space in a way that more closely aligns with their primary non-cannabis-focused brand. A great example of this is Greenlane’s licensing deal with iconic designer Jonathan Adler. It would be impossible for Jonathan Adler to partner with a plant-touching product and still be able to sell those products in his stores throughout the world. By partnering with Greenlane, Jonathan Adler is able to enter the cannabis space while maintaining his traditional brand and his ability to sell these products in his interior design boutiques.
An additional appeal of the cannabis accessory space is timing, flexibility, and speed. While talent could quickly endorse an already developed and cultivated cannabis strain or other plant-touching product, the process could be timely. In contrast, to go back to the Sugar Sean example, Greenlane and Sugar Sean were able to move swiftly and nimbly to promote a line of water pipes for a launch in direct correlation to an upcoming fight. The deal moved quickly and highlighted the maneuverability and flexibility of working with accessories. Often, a template or mold for a product is already developed, with the talent’s unique branding and direction the last piece of the puzzle. For plant-touching products, talent may want to be a part of the cultivation process; focused on taste and effect on consumers. This process will usually take a bit more time and can present far more variables and regulatory concerns and limitations.
Ultimately, there are fascinating and innovative deals to be made for both plant-touching and non-plant-touching products, but moving forward, I believe the hidden gem of cannabis endorsement and licensing deals is with the non-plant-touching cannabis accessories.
Dan Shapiro is the Associate General Counsel at Greenlane Holdings, Inc. (NASDAQ: GNLN), one of the largest global sellers of premium cannabis accessories and CBD products. Prior to joining Greenlane, Dan worked at CAA in the Sports Business & Legal Affairs division. Dan is the Founder and Inaugural Chair of the Cannabis Division of the American Bar Association Forum on Entertainment and Sports Industries and a member of the National Cannabis Industry Association’s States Regulations Committee. Dan is a member of the New York Bar and Authorized House Counsel in Florida, and holds a JD from Cardozo Law School where he served as the President of the Cardozo Sports Law Society, and a BA from The George Washington University.
By Aaron Rosenbluth, Hybrid Marketing Co
Social media is a powerful tool for all businesses today. Even in the cannabis industry, where most paid advertising opportunities – including paid social – are off the table.
It’s an effective way to communicate with customers directly. Social media lets your cannabis brand or dispensary start meaningful conversations – it’s a place to develop and nurture a community. But should you look at social media as a primary business driver? Probably not; hear me out.
Five years ago, when I started managing social media accounts for cannabis brands, organic engagement wasn’t easy, but it was easier than it is today. Marketers (like me) remember the era of chronological Instagram feeds and simplified Facebook algorithms fondly. Five years ago, getting organic attention from your followers was more straightforward. It was also easier to build an audience quickly.
Strict regulations are a constant battle for cannabis businesses marketing on social media. We’re violating every platform’s terms of service and community guidelines just by being there. Every cannabis brand wants social dominance. I’m here to deliver unfortunate news; social media dominance is off the table for most of you.
Today, you can only expect to reach about 3% of your audience on most social media platforms. And that’s if your content is excellent. But even with amazing content, algorithms are your enemy, and hashtags only get you so far.
It can feel like an impossible challenge. We’re tasked with bolstering brands but walk a tightrope of rules to keep posts and accounts from getting the boot.
You can access a limitless direct-to-consumer digital platform if you can manage to grow and maintain a social media following. But, of course, it’ll take time to build an engaged community (for many of you, it’ll take years of hard and consistent work), and you need to be realistic – don’t put all of your cannabis marketing eggs in the social media basket; there are other ways (email and programmatic advertising for example).
Still, social media is a business necessity today, just like printer cartridges or desk chairs. You must be there – even if the task is seemingly impossible.
Every marketing “expert” on the internet will tell you the key to social media success is excellent content. And that’s true. But, what makes for awesome content is relatively subjective – it’s not for you or me to decide. So, who gets to decide what makes terrific content? Your customers, that’s who.
How do you determine if your customers think your content is excellent? They’ll reward you with engagement. And engagement is virtually the only thing almighty social media algorithms care about.
Maybe your customers love ridiculous memes; perhaps they prefer higher-brow lifestyle content. If you run a dispensary, your customers might love seeing their favorite budtenders highlighted on your feeds. If you’re a cultivator, your customers probably think drool-worthy strain content is excellent (be careful, Instagram is advanced enough to find flower images, and that violates TOS and community guidelines).
You need to deeply understand your customers (that’s why we’re persona development sticklers) and craft a content strategy explicitly designed for engagement. Of course, I’m vastly oversimplifying this process – it takes time and a lot of testing to determine what will work best for your cannabis brand. But the results are often worth the work. Let your customers tell you what they want.
I’m going to break some hard news to you – even with genuinely excellent content, you can still really only expect to reach around 3% (as I mentioned earlier) of your total audience. So whoever told you that organic engagement on social media is easy lied to you.
Most people think there’s one overarching algorithm controlling what we see on our social media feeds. But, in the case of Instagram, for example, several algorithms work together, making tiny decisions in real-time to determine the posts you see.
Adam Mosseri (head of Instagram) talks about how their algorithms work in a recent blog:
“One of the main misconceptions we want to clear up is the existence of “The Algorithm.” Instagram doesn’t have one algorithm that oversees what people do and don’t see on the app. We use a variety of algorithms, classifiers, and processes, each with its own purpose. We want to make the most of your time, and we believe that using technology to personalize your experience is the best way to do that.
When we first launched in 2010, Instagram was a single stream of photos in chronological order. But as more people joined and more was shared, it became impossible for most people to see everything, let alone all the posts they cared about. By 2016, people were missing 70% of all their posts in Feed, including almost half of posts from their close connections. So we developed and introduced a Feed that ranked posts based on what you care about most.
Each part of the app — Feed, Explore, Reels — uses its own algorithm tailored to how people use it. People tend to look for their closest friends in Stories, but they want to discover something entirely new in Explore. We rank things differently in different parts of the app, based on how people use them.”
Instagram wants to personalize content for users, so it’s constantly making small decisions to reach its goal. Your job (and ours, as marketers) is to understand our customers deeply enough to create unique personalized experiences (I prefer to use the word experience over content in this scenario). Still, the algorithms pose a challenge which is why you need to understand that it’s going to take a lot of time, a lot of trial and error, and more content than you think you can possibly create in a lifetime to build and manage a loyal – and engaged – community.
It’s not impossible, but it’s not easy – many of you will fail. But still, you must be there because your customers expect you to show up for them in the places they hang out digitally. Of course, it doesn’t hurt to have the support of an experienced social media marketing team.
Aaron is Hybrid Marketing Co‘s Content Director, and he loves to write blogs. He’s written so many blogs that he’s lost count. And beyond his skills as a copywriter and storyteller, he’s an obsessive reader and researcher. Aaron writes on subjects ranging from cannabis to collaboration, social equity to HR software, interior design to cybersecurity. His words attract, engage, educate, and convert. Btw, Aaron hates the phrase “content is king” (even though content is king – and queen).
Hybrid Marketing Co is a Denver-based branding and marketing agency that specializes in building custom strategies that supercharge growth and drive revenue. Working with brands and businesses across the U.S. and Canada, Hybrid’s partners run the full-spectrum of the cannabis world including dispensaries, manufacturers, cultivators, and ancillary businesses. Visit hybridmarketingco.com to learn more about the Hybrid approach.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. This week Bethany is joined by NCIA’s GR team in Washington D.C. to discuss the Cannabis Administration and Opportunity Act discussion draft introduced by Senate Majority Leader Chuck Schumer. Join us every Friday on Facebook for NCIA Today Live. Registration to our Midwest Cannabis Business Conference in Detroit is now open with special limited-time super early bird pricing on tickets available, head to www.MidwestCannabisBusinessConference.com today.
By Rachel Kurtz-McAlaine, NCIA’s Deputy Director of Public Policy
What a time to be in the cannabis industry! Federal legalization feels like it is finally on the horizon, especially with the big news that tomorrow will be a press conference to introduce a draft discussion bill that has been promised by Senate Majority Leader Chuck Schumer Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ).
When I first started cannabis reform advocacy 25 years ago, cannabis legalization seemed unattainable in my lifetime, given the stigma we were, and still are, up against. But medical cannabis was just starting to pass and more of us were coming around to believing in the potential of the plant and being horrified at the war on drugs to the point that we devoted our lives to ending it. That includes the founders of this organization and many who went on to start businesses that are now members of NCIA.
Running a business in the cannabis industry can be a daily challenge, from banking to text messaging to supply chain issues, so it may be hard to notice the sea change happening with cannabis bills around the country. Four state legislatures legalized cannabis just within the first six months of this year, for a total of 18 states and Washington, D.C., that have legalized cannabis for adult use over 21 years of age. (You can check out our state policy map to learn more about the status of different states.)
Believe it or not, that sea change is happening in Congress, too, and we want to make sure we’re doing everything we can to inform you about what is happening and to hear you.
As Michelle wrote about previously in the Government Relations blog, Give Us MORE, the MORE Act of 2021 was reintroduced at the end of this Spring in the House of Representatives. Read Michelle’s excellent summary, but more importantly, read the bill! An almost identical version of the MORE Act passed the House last Fall, only to be held up by a GOP-led Senate, but showed the real momentum happening in Congress.
Despite the hold up in the Senate, there is some bipartisan support. A Republican bill was even introduced in the House, the “Common Sense Cannabis Reform For Veterans, Small Businesses, and Medical Professionals Act,” that would have similar legalization efforts to the MORE Act, such as descheduling cannabis from the Controlled Substances Act and punting on regulations to federal agencies, but would not have any of the provisions that address industry equity and retribution from the years of harm caused by cannabis prohibition.
Support for legalization is now so mainstream that even Amazon is now backing cannabis legalization, expressing support for the MORE Act, although it remains to be seen if they will continue supporting MORE or get behind Sen. Schumer’s bill.
The SAFE Banking Act of 2021 is still in play and remains a crucial bill given that it could have the highest likelihood of passing the soonest. It can be overlooked given the trajectory of descheduling bills, but NCIA’s Government Relations team remains committed to SAFE and continues lobbying for it because, even though we’re planning what descheduling looks like now, it could take a few years to get there. In the meantime, banking is in emergency status.
As federal descheduling appears on the horizon, I encourage you to read the bills, including the Schumer bill, and consider how they will affect you and your business. I’m not saying legislation will necessarily pass this year, but right now is when ideas are being discussed, amendments are being drawn up, decisions are being made.
Consider how much we need to do federally versus getting the states to standardize their regulations versus having a set of voluntary self-regulatory measures that shows we are a self-aware industry and want to be safe for our customers. Keep in mind that much of the alcohol industry is self-regulated, and why would we purposely advocate to regulate ourselves more than the alcohol industry when cannabis is demonstrably safer? I appreciate the thriving alcohol market, the innovation and craft, but I know we can do even better while minimizing harm and acknowledging the past harm, but we have to be diligent.
NCIA is proud and honored to be representing the broad spectrum of the industry, from multi-state operators, to small legacy farmers, to those that have been hurt by past prohibition and want to be part of this thriving industry – all of the industry. That means hearing from you, your concerns, your ideas, your insights. Please feel free to contact me at Rachel@TheCannabisIndustry.org.
I encourage you to read the bills, including Sen. Schumer’s draft discussion bill being released tomorrow, keep reading blog posts, watching webinars, checking out NCIA’s industry buzz, and stay informed because a new day is dawning, but it’s going to be a long day, so we better be prepared for it.
The International Cannabis Business Conference is coming back to Berlin, Germany on August 25-27, 2021. Offering world-class industry networking opportunities, the Berlin International Cannabis Business Conference is the largest B2B cannabis trade event in Europe and is also the longest-running cannabis B2B conference on the continent. The conference will once again feature a unique blend of cannabis policy, advocacy, industry, and networking.
“We are particularly excited about this year’s conference in Berlin. It is going to be extra special for our team to be able to get back to offering world-class cannabis industry and policy education, networking, and entertainment to attendees,” says Alex Rogers, founder of the International Cannabis Business Conference.
The National Cannabis Industry Association’s (NCIA) Director of Government Relations, Michael Correia, will be speaking at the conference in Berlin. Correia’s presentation is titled, ‘Being a Voice for the Cannabis Industry.’ In addition to the Berlin B2B event the International Cannabis Business Conference will also offer a one-day Global Investment Forum (GIF). Germany is home to the largest economy in the European Union and is poised to serve as the cannabis industry capital of Europe going forward. The cannabis industry is evolving rapidly in Germany, with the country’s medical cannabis program increasing in size with every passing day.
Cannabis industry opportunities that are popping up in Germany and on the European continent have tremendous profit potential, and the Global Investment Forum is the perfect place for entrepreneurs to try to secure capital to take their pursuits to the next level. It is also an unparalleled opportunity for investors to learn more about pre-vetted investment opportunities.
“We know how hard it is for quality investors to link up with vetted cannabis industry companies offering valuable investment opportunities,” Rogers stated. “That is why we are bringing the Global Investment Forum to Berlin. It’s a prime networking opportunity for both cannabis industry investors and entrepreneurs.”
The International Cannabis Business Conference is the leading B2B cannabis event series on earth. Events have been held in the United States, Canada, Spain, Germany, and Switzerland. Additional locations in other countries are being identified and will be announced in the future.
Event festivities begin on August 25 with the start of the Global Investment Forum at the amazing Vienna House Andel’s Berlin. Speakers and the official GIF schedule will be announced soon. Attendance at the International Cannabis Business Conference Global Investment Forum in Berlin will be limited to 200 attendees.
The following morning the 2-day curriculum portion of the conference will begin with a conference overview from Alex Rogers, founder and Executive Producer of the International Cannabis Business Conference. Rogers will welcome conference attendees and provide an overview of the schedule, including the panels and speakers that will be providing presentations and interviews. Attendees at the conference portion of the event will be limited to 1,000 people.
In addition to the previously mentioned panel featuring NCIA’s Michael Correia, other topics that will be covered at the conference include:
The topics covered at the conference via panels and presentations will be led by the top cannabis experts in the global cannabis space. The International Cannabis Business Conference in Berlin, Germany will include (but is not limited to) the following speakers:
International Cannabis Business Conference events are attended by leading policymakers, executives, and entrepreneurs from all over the world, with over 60 countries being represented at previous events. The event series is the best way for innovators and inventors to get their products or services in front of the top influencers and decision-makers in the cannabis space, as well as for investors to network with aspiring entrepreneurs.
The conference series consistently features world-class speakers that cannabis entrepreneurs, advocates, and consumers from all backgrounds can learn from and be entertained by. International Cannabis Business Conference events include after-party festivities that feature some of the most entertaining musical acts and celebrities from across the globe.
A cannabis industry revolution is sweeping Europe, and Germany is at the center of it. If you’re serious about succeeding in the cannabis industry, check out the International Cannabis Business Conference’s flagship program in Berlin in July. Leading cannabis entrepreneurs and policymakers from around the world will be in attendance and the networking and educational opportunities will be unparalleled.
You can secure tickets now and take advantage of the early bird pricing discount.
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About the International Cannabis Business Conference
International Cannabis Business Conference events are the premier cannabis events for entrepreneurs across the planet. With events in Canada, the United States, Switzerland, Spain, and Germany the International Cannabis Business Conference is where the world meets cannabis. Find out more at InternationalCBC.com and on LinkedIn, Twitter, Facebook, YouTube, and Instagram.
For more information or media inquiries, please email noelle@internationalcbc.com or call 541.864.0090.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
Registration to our Midwest Cannabis Business Conference in Detroit is now open with special limited-time super early bird pricing on tickets available, head to www.MidwestCannabisBusinessConference.com today!
Dan Broudy, CEO of rushIMPRINT
Cannabis, CBD, and hemp companies are giving out cannabis-themed promotional gifts – but they’re not the only companies to follow this trend.
The stigma against cannabis is slowly disintegrating. And the more mainstream cannabis gets, the more companies are establishing themselves as open-minded and unique by using cannabis as a part of their marketing and business strategy.
A decade ago, cannabis and hemp were still niche topics. Few people outside the industry could’ve predicted that we’d now be living in a world where cannabis was so widely accepted. CBD can now be found in most health stores, there’s bipartisan support for cannabis legalization, and the world’s biggest celebrities have their own CBD and cannabis lines.
While we still have a long way to go in terms of breaking down stigma and advocating for reasonable cannabis laws, it’s clear that we’re getting somewhere. One thing that demonstrates this is the fact that many companies are aligning their brands with cannabis – even those that aren’t in the industry.
CBD, in particular, is gaining more mainstream interest. This popularity is partly because CBD is non-intoxicating and doesn’t carry the same level of stigma. As a result, health stores and pharmacies -– including chains like Walgreens and CVS – are selling CBD. Even Sephora, one of the U.S.’s most popular beauty stores, now stocks CBD-infused skincare products.
It’s not just huge corporate businesses that are embracing cannabis: smaller businesses are, too. At-home beauty spas use CBD-enriched serums. Local health stores stock CBD oil. Little bakeries are offering edibles. Small clothing companies are creating sustainable garments using hemp. While this proximity to cannabis might’ve been shunned years ago, these businesses are now simply keeping up with demands, staying on-trend, and experimenting with the now well-known benefits of cannabinoids.
It’s clear that, as our society moves away from cannabis stigma, cannabis is becoming a signifier for open-mindedness. Brands that embrace cannabis, CBD, and hemp products show that they’re in touch with the latest trends and informed about the science-backed benefits of these products. This establishes those companies as modern, progressive, and youthful.
As a branded merchandise company, we know that corporate gifts, promotional items, and branded apparel say a lot about a company. When someone orders branded goods for their business, they choose items that align with their business’s values, brand, and target market.
Just as with regular gifting, corporate gifting says a great deal about the giver. When you give someone a gift, they’ll think of you whenever they see or use it. The same goes with corporate gifting and branded items: companies give out items that they want us to associate with their brand. If you want to know how a company sees itself, take a look at what they’re willing to put their name on.
As such, branding merchandise companies, like our own, have access to interesting insights. We can tell what’s trending based on what the most innovative and exciting brands are gifting their clients, staff, and partners. Gift-giving is something of a litmus test when it comes to industry trends.
And what’s trending now is cannabis. More and more companies – including those outside of the industry – are excited to put their names on cannabis-related items, such as grinders, storage products, and rolling papers.
When we decided to establish a category for our cannabis-specific merchandise, we expected cannabis companies to be our main clients. We didn’t expect companies outside the industry to be interested in those same items, but we were wrong.
It seems to be that more and more brands want to align themselves with the cannabis industry, even when they don’t directly offer cannabis-related goods or services. Edgy new clothing companies and innovative start-ups alike might use cannabis-specific promotional items to show that they’re forward-thinking companies that rebel against outdated, traditional concepts.
The other side of gifting is that you expect the recipient to actually use their gift. This is why time-tested promotional items, such as branded pens and tote bags, continue to be brand favorites. The more often someone uses your gift, the more likely they are to think positively of you, so it makes sense to choose functional items instead of white elephants.
In the same way, the popularity of branded cannabis accessories is a reflection of how widespread and accepted cannabis use is. Nowadays, cannabis use is tolerated more than ever before, and CBD is a household name. Companies that use cannabis-related promotional items are saying something about their target market: their intended audience is cool with cannabis.
Two decades ago, young starlets who were “caught” using cannabis were the subject of scandal. This year, Academy Awards nominees were given a compensatory gift bag that included luxury cannabis vaporizers. Part of the assumption of giving gifts here is that people will be excited to use what they receive, and the exact same principle applies to promotional items.
Up until recently, you’d never have seen CBD-infused items on a Mother’s Day gift guide. But in 2021, the world’s approach to cannabis and hemp is far more permissive, especially since more people are now informed about the potential health benefits of cannabinoids. We’re at the point where cannabis and CBD items aren’t just something you’d buy yourself: you can gift it to others because you think they’ll like it, too.
In many ways, corporate gifting and promotional merchandise can tell us a lot about branding trends. The growing popularity of cannabis-specific branded items is a reflection of how society is becoming more and more tolerant of – and excited about – using cannabis, hemp, and CBD.
The fact that this once-disparaged plant is slowly being embraced by individuals and businesses alike is encouraging. It shows us that the stigma is slowly fading away – a sign that the industry is slowly gaining more and more support.
Dan Broudy is the CEO of rushIMPRINT, a marketing supply chain firm providing products and programs that stimulate sales, motivate employees, and strengthen corporate identity. rushIMPRINT serves companies and organizations throughout the USA and Canada.
As a finance and marketing expert with over 20 years of experience in the industry, Dan realizes the importance of having a recognizable brand. That is why he takes great pride in providing cost-efficient branded solutions using state-of-the-art technology. rushIMPRINT creates branded merchandise for the cannabis industry, such as grinders, storage solutions, rolling papers, personalized lighters and more – a unique offering for a growing industry. In addition, rushIMPRINT offers apparel, promotional products, signage, business cards and brochures to help you grow your business.
His current goal is to partner with dispensaries, distributors, labs, growers, cultivators, and vape shops to help them scale their businesses. Dan is excited to get involved in this revolutionary industry by assisting innovative cannabis and hemp brands.
Dan has an undergraduate degree in Psychology from Washington University in St, Louis. He also holds an MBA in Finance and Marketing obtained from the University of Miami Herbert Business School and is a Certified Franchise Executive (CFE).
Dan’s visionary perspective, enthusiasm, and exceptional organizational skills have earned him opportunities to work with brands such as European Wax Center, Blaze Pizza, TCBY, and Amazing Lash.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
If you want to take your industry involvement to the next level, now is the time to get involved with one of NCIA’s 14 member-driven committees! NCIA is excited to announce that from now until August 15, we are accepting applications for the 2021-2022 term!
All NCIA annual members in good standing are invited to apply for an NCIA committee seat for the 2021-2022 committee term.
NCIA Committees enable current NCIA members to engage their vast and varied areas of expertise and passion to:
By Madeline Grant, NCIA’s Government Relations Manager
Over the past couple of weeks, we’ve talked a lot about what is happening at the federal level – with the passage of the SAFE Banking in the House of Representative, the reintroduction of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, and the introduction of many bills, we’ve seen the momentum continue to rise in the 117th Congress. So this week, I’m going to go over numerous updates happening at the state level. When we see movement at the state level, this directly correlates to success at the federal level, although not immediate. Think about it… more constituents voting in support of cannabis initiatives and more state legislators speaking in favor of moving cannabis measures means more overall support in the United States. That support at the local and state levels streamlines up to members of Congress at the federal level. So let’s take a look at a few updates in the states.
In Wyoming, lawmakers failed to pass a bill to legalize marijuana this session. However, last week two measures were submitted to the state to place medical cannabis legalization and adult-use decriminalization measures before voters on the 2022 ballot.
Last week, Governor Ned Lamont (D) said he’ll be upset if the legislature fails to deliver him a bill to legalize marijuana in a special session that is set to take place this week. The Senate approved a legalization proposal in the final days of the regular session last week, but an expected House vote was called off as time ran short in the face of Republican opposition and threats to a filibuster.
The Sensible Movement Coalition (SMC), an Ohio-based marijuana group, is helping campaigns in West Virginia and South Carolina get cannabis decriminalization on their local ballots this year. SMC has traditionally pushed for reforms within Ohio – and has seen multiple successes in getting decriminalization enacted there – they’re now lending expertise to activist-led campaigns in other traditionally conservative states.
Marijuana activists are gearing up for a “mass scale” campaign to put medical cannabis legalization on the state’s 2022 ballot after the state legislature failed to pass a bill to enact the reform this session.
For the first time in Rhode Island, a bill to legalize cannabis for recreational use has advanced in the state. The Judiciary Committee approved a marijuana legalization bill that’s being championed by leadership in the chamber.
The governors of Texas and Louisiana on Thursday separately indicated that they will sign marijuana reform bills that have recently been delivered to their desks.
A vote on a marijuana legalization bill that was scheduled in the House of Representatives was canceled, despite attempts to propose amendments to reach the three-fifths supermajority support. Rep. Edward Osienski (D), who filed the measure, said lawmakers need more time to consider a series of proposed changes before reaching a consensus and moving forward.
A newly formed progressive coalition that’s being led by two former Democratic congressional candidates, Julie Oliver and Mike Siegel, is aiming to take cannabis and other issues directly to voters by putting reform measures on local ballots across the state. Although Texas legislators made progress this session on some marijuana policy changes, activists were hoping for more. The new coalition, Ground Game Texas, works to engage voters on issues like marijuana reform that are popular among young people and Democrats.
These are just a few of the many updates that are happening state by state. It’s extraordinary to see the momentum building throughout the country with the help of advocates and public support. I implore you to get involved with state initiatives to propel cannabis policy reform forward, as every person has a voice to be heard. To keep updated on what’s happening at the state level please be sure to check out our state policy map that can be found HERE. Additionally, I would love the opportunity to hear from you about the difficulties you face in the cannabis space. If you have the time please feel free to email me at Madeline@TheCannabisIndustry.org.
By Dr. Dominick Monaco, CLS Holdings
The state of Nevada has always been a unique place to do business. Not only is its economy fueled almost entirely by tourism, but its population is located almost exclusively within a few key urban centers. These factors influence nearly every type of business opportunity in Nevada – including cannabis.
While Nevada’s economic and geographic constraints are unique in themselves, the type of tourist industry found here is one of a kind. Las Vegas is famously known as “Sin City.” It is a place where people flock from around the globe to indulge their vices, such as gambling and clubbing.
As a microcosm of Nevada itself, the Nevada cannabis industry has its own set of challenges and opportunities.
Nevada boasts both medical and adult-use cannabis markets. The state voted to legalize medical cannabis back in 2000, although their first medical dispensary did not open until 2015. While the medical cannabis space in Nevada began with a crawl, the adult-use industry has been quite different.
Nevada voted to legalize adult-use cannabis in late 2016, with the first adult-use dispensary opening mid-2017. Nevada has both medical and recreational dispensaries, although certain stores service both customer bases.
One of the more exciting facets of the Nevada cannabis market has to do with home cultivation. Its unique program allows people 21+ years old to grow at home if they live more than 25 miles from a dispensary. Nevada put these rules in place to accommodate citizens living in rural areas who cannot access dispensaries.
Since Nevada’s legalization, cannabis has become a big business. Here are some statistics for the 2019-2020 fiscal year in the Nevada cannabis industry:
Nevada sales are ahead of other new adult-use recreational markets such as Illinois and Massachusetts to put these numbers in perspective. Nevada falls short compared to more established industries such as Colorado and Washington, but it holds promise for massive growth.
The tourism industry in Las Vegas makes for a unique market. Adult-use market regulations coupled with the global renown of the city lead to an environment where out-of-state visitors greatly influence cannabis sales.
The structure of a cannabis market directly influences business opportunities. In medical cannabis, qualifying conditions and patient counts dictate potential market growth. Conversely, adult-use markets are only limited by people’s age.
The interesting thing about the Las Vegas market is that anyone over 21-years can legally purchase cannabis – this includes out-of-state visitors. According to the Las Vegas Conventions and Visitors Authority website, the city saw 42,523,700 visitors in 2019 alone. These people spent over $10 billion in Las Vegas that year. Within these billions of dollars in tourist money lies an excellent opportunity for adult-use operators in Nevada.
Another fact worth noting is that people flock to “Sin City” to partake in activities inaccessible in other U.S. states. Cannabis fits nicely into this package of taboo activities that can only be done in Las Vegas, NV.
While the tourist money in Las Vegas makes for a very intriguing adult-use market, it is not easy to acquire a cannabis business license. Unfortunately, Nevada has put a cap on the number of licenses available in the state, making it much more difficult to enter than other adult-use states like Colorado.
There are five types of business licenses in the Nevada cannabis industry:
It’s worth noting that both the medical and adult-use markets offer these same business licenses. Similarly, the licensing cap in the state includes both verticals.
As of early 2021, the state of Nevada awarded 132 dispensary licenses. However, these licenses did not go to 132 different operators. Certain businesses acquired multiple licenses, with some able to open as many as seven retail stores. While Nevada has issued 132 retail licenses, there are only 80 dispensaries operational at this point.
The licensing situation in Nevada is frustrating for local investors and outside interests alike. Namely, because studies show that the Nevada economy could support as many as 1,283 more dispensaries than it has issued licenses for. Aggravation mounts with a lack of expansion opportunities in the area.
The state of Nevada only accepts additional cannabis business license requests during “application periods.” These short windows are scheduled by the Nevada Cannabis Compliance Board and stay open for just ten days. However, there has not been an application opportunity since 2018, and it doesn’t appear there will be one anytime soon. As such, it appears that plant-touching opportunities in Nevada are limited to current license holders.
While many believe there is ample room for new players in the Nevada cannabis market, the state does not agree at this point. As a result, if you are looking to get involved in the Nevada industry, you are well-advised to look into ancillary business models instead of plant-touching businesses.
With such promise in the Nevada market, you can rest assured that those cannabis companies that have won licenses will be extremely busy. Ancillary operators can take advantage of this climate by developing models that operate in the business-to-business (B2B) vertical. To help plant-touching companies in Nevada, both product-based and service-based ancillary businesses could prove profitable. Examples of product-based companies include business management software and cultivation technology, while service-based businesses work in marketing, staffing, and consulting.
Opening an ancillary cannabis company in Nevada gives you the ability to enter the market by circumventing the licensing process. Even more, you don’t have to worry about application fees, compliance mandates, and other stressors faced by plant-touching companies. You also have the option to operate across state and national borders if you so desire.
There is no doubt that the Nevada cannabis industry is one-of-a-kind. While there is a good deal of excitement surrounding the market, many feel it hasn’t even come close to reaching its potential. To this end, the adult-use market in Nevada was only 1.5 years old when the COVID-19 pandemic struck. The financial blow of the pandemic was cataclysmic in Las Vegas, as the tourism industry dropped to 50% below average in 2020.
With the pandemic on the downswing in 2021, there is an unmistakable air of excitement across the globe. Some economists feel that we are about to enter a new “roaring 20’s” period, where people celebrate by spending travel money that was unusable during COVID-19. With this celebratory outlook on the near feature, there is no doubt Sin City will see its share of visitors. With the casinos and hotels full again, maybe we will finally see what the Nevada cannabis market can really do.
Dr. Monaco is the Director of Laboratory Operations for CLS Holdings’ newly opened approximately $4 million laboratory, and is responsible for all day-to-day operations inside the North Las Vegas facility. Dr. Monaco brings over 8 years of licensed & regulated cannabis experience, starting back in 2012 when medical marijuana first opened in Arizona, he has held numerous positions, with escalating responsibilities year over year. He graduated from the University of Arizona College of Pharmacy, in Tucson, Arizona, with a Doctor of Pharmacy in 2010.
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week, a long-awaited and much-anticipated piece of cannabis legislation was finally unveiled. On Friday, H.R. 3617, known as the Marijuana Opportunity, Reinvestment, and Expungement Act, or the MORE Act, was reintroduced by House Judiciary Committee Chairman Jerry Nadler (D-NY). You’ll remember that back in December 2020, the House of Representatives made history when they passed the MORE Act by a vote of 228-164. Let’s take a look at the bill and break it down:
H.R. 3617, the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act
House Judiciary Committee Chairman Jerry Nadler (D-NY) is the lead sponsor, along with Reps. Lee (D-CA), Blumenauer (D-OR), Jackson Lee (D-TX), Jeffries (D-NY), and Velazquez (D-NY).
Just like the last session, the bill has been referred to a number of committees: In addition to Judiciary, it was also passed on to the Committees on Energy and Commerce, Agriculture, Education and Labor, Ways and Means, Small Business, Natural Resources, Oversight and Reform, and Transportation and Infrastructure.
The MORE Act would remove cannabis from the federal Controlled Substances Act and attempt to undo the damage caused by racially and economically disproportionate enforcement of prohibition. It would also eliminate the conflict between federal law and states with regulated cannabis systems, and would require the expungement of past federal cannabis convictions. The bill would establish a Cannabis Justice Office to administer a program to reinvest resources in the communities that have been most heavily impacted by prohibition, funded by a graduated tax on state-legal cannabis commerce. It would also prevent discrimination based on cannabis consumption during immigration proceedings, and permit doctors within the Veterans Affairs system to recommend medical cannabis to patients in accordance with applicable state laws.
As I mentioned previously, during the 116th Congress, the MORE Act passed the House but was not taken up by the Senate. Now, during the 117th Congress, the calculus has changed a bit – on both the House and Senate sides. On the House side, the chamber is more Republican than the last time the bill was passed – meaning that advocates will have to work hard to ensure no more votes are lost and that support increases. On the Senate side, Democrats now maintain the majority by the skin of their teeth, but all legislation effectively needs 60 votes to pass – a difficult threshold. It’s also important to note that the MORE Act has not been introduced in the upper chamber as all eyes focus on Leader Schumer (D-NY) and Sens. Booker (D-NJ) and Wyden’s (D-OR) upcoming comprehensive bill.
When the MORE Act passed out of the House back in December 2020, it contained a small but impactful section that was included at the last minute. This contentious provision related to discrimination against victims of cannabis prohibition in the permitting process. A section that pertained to applications for a federal cannabis permit stated that an application may be rejected and a permit denied if the Secretary of Treasury finds that the legal person (including in the case of a corporation, any officer, director, or principal shareholder) is “by reason of previous or current legal proceedings involving a felony violation of any other provision of Federal or State criminal law relating to cannabis or cannabis products, not likely to maintain operations in compliance with this chapter,” which would be a major blow to the intent of the legislation to undo the harms caused by prohibition. NCIA brought this provision and our concerns to the bill sponsors’ attention, resulting in them publicly committing on the House Floor to revisit and improve this section. That language was not included in the 117th Congress’ recently reintroduced version.
Also of note, the MORE Act includes tax language. When the bill was first introduced in 2019, it contained a tax section that set up a flat 5% sales tax on cannabis products at the federal level. That was later amended to be a graduated tax, beginning at 5% and increasing up to 8% in subsequent years post-legalization. The soon-to-be-reintroduced MORE Act has the same graduated tax levels.
The bill has a long path ahead: as I pointed out, there are multiple committees of jurisdiction that will want to weigh in on this important legislation – I’d venture to say that both the Ways and Means (tax writing) and the Energy and Commerce Committees will have substantive edits. Another consideration is one I’ve mentioned in passing, and that’s the impending introduction of new, comprehensive cannabis reform legislation that will (hopefully) soon be unveiled in the Senate. It’s also important to note that the MORE Act is missing one critical thing: regulations, and we at NCIA believe that those can make all the difference when looking at what’s next for this legislation.
We applaud Chairman Nadler and the other cosponsors of this legislation for tackling this topic, and congratulate them on the bill’s reintroduction! We look forward to continuing to work with their offices to improve and build support for this critical piece of legislation. Stay tuned on our blog, our NCIA weekly newsletter, and NCIA Connect to find out the latest on MORE!
NCIA Chief Executive Officer Aaron Smith checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
By Morgan Fox, NCIA’s Director of Media Relations
The cannabis world is still eagerly awaiting the introduction of Senate Majority Leader Chuck Schumer’s comprehensive descheduling legislation, but that doesn’t mean things haven’t been moving on the policy front in recent weeks!
First up, the DEA announced that it was finally moving forward with approving applications to cultivate cannabis for research purposes, which would effectively end the federal government’s stranglehold on research production. The agency spent years fending off lawsuits from applicants, who correctly asserted that not only was the monopoly limiting research, but the cannabis being grown at the single licensed facility at the University of Mississippi was basically unusable for research purposes anyway. This announcement comes several years after the DEA publicly stated that it would begin the licensing process. Better late than never.
Of course, we don’t think the DEA should be involved in cannabis research whatsoever, seeing as how they are a law enforcement organization and not, you know, scientists.
Next, Sen. Ron Wyden, who is also working closely with Majority Leader Schumer on descheduling along with Sen. Cory Booker, introduced S. 1698 last week. While text of this bill is currently not publicly available, the name suggests that this legislation would direct the FDA to allow hemp-derived CBD, made legal under the 2018 Farm Bill, to be used as a dietary supplement or in food. Some perceive this bill as necessary to get some regulatory clarity from the FDA, which has been dragging its feet and missed several deadlines for CBD regulations. Many in the industry blame this lack of regulation for larger retailers staying out of the CBD market, which has led to massive supply gluts of the substance and has been hypothesized to be a leading cause for the recent boom in Delta 8 THC production.
And earlier this month, Rep. David Joyce, an Ohio Republican who co-chairs the Congressional Cannabis Caucus, introduced a narrowly tailored bill to remove cannabis from the schedule of controlled substances. The bill assigns regulatory responsibilities to the FDA and the Alcohol and Tobacco Tax and Trade Bureau and gives them a one-year deadline to come up with a regulatory structure similar to alcohol. It also contains provisions similar to the protections that exist in the House-approved SAFE Banking Act, calls for studies on how cannabis impacts pain and driving, and improves access for veterans. Notably, this bill does not contain any social equity or restorative justice language.
While the chances of such legislation passing in the Democrat-controlled House are slim, it could serve as a doorway to get fence-sitting Republicans into the debate. It could also be a tool to identify those members of the GOP who are steadfastly opposed to any legalization bill and out of touch with their constituents, many of whom would directly benefit from cannabis policy reforms and who are increasingly in support of ending federal prohibition.
We’re also getting word that the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act is getting reintroduced in the House this week (and may have already been at the time of this publication). This legislation made history last December when it became the first descheduling bill to receive a floor vote – and pass – in either chamber of Congress. We are hopeful that there will be some revisions from the previous bill, including the removal of a provision that would allow federal licensors to deny applications for cannabis business licenses based on prior state or federal felony convictions, and the inclusion of a more sensible and robust regulatory framework.
We are less than halfway through the calendar year, and it is shaping up to be a momentous one for cannabis advocacy! Stay tuned for more updates from Capitol Hill.
P.S. On the state side, Alabama became the latest state to approve an effective medical cannabis law. Yes, Alabama. That brings the count of medical states to 36, after unfortunately losing Mississippi to a shameful court decision. So far in 2021, four states have approved adult-use or medical cannabis legislation, and more are expected to do so in the coming weeks and months.
by NCIA’s State Regulations Committee
Contributing authors Jennifer Gallerani, Tim Gunther, Elise Serbaroli, and Erin Fay
The COVID-19 pandemic and subsequent recession powerfully demonstrated that the cannabis industry is providing essential medicine and products to countless Americans, as well as creating jobs and tax revenue. Retail sales of medical and adult-use cannabis in the United States were on pace to eclipse $15 billion by the end of 2020, and if you include ancillary products and services, the industry is estimated to reach $68.4 billion in 2021. The U.S. cannabis industry is experiencing rapid job growth, boasting an estimated 300,000 full-time jobs in 2020. Those numbers are expected to almost double by 2024. Over the next four years, the industry is expected to add nearly 250,000 full-time equivalent positions. By comparison, roughly 271,000 people currently hold beverage manufacturing jobs. These numbers demonstrate with sureness that the U.S. cannabis industry is on a high-growth trajectory, which makes it imperative that the market operate under a practical regulatory framework that benefits both regulators and operators.
Most states that have approved some form of legal cannabis sales (medical and/or adult-use) have also selected a single, mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and end products. Some iterations of the current track and trace model — which is primarily centralized approach — sets businesses, employees, and regulators up to fail. Of course, it also further limits the competitiveness of the regulated market with the unregulated market, and the ability for policymakers to be confident that cannabis consumers in their states are obtaining taxed, tested, and regulated products.
Local governments are missing out on tax revenue, and businesses (both large and small) are forced to spend unnecessary resources on a system that is fundamentally flawed. The centralized model, contracting with one specific software provider, and mandating operators to use that software provider in order to stay compliant, is wreaking havoc on the entire U.S. cannabis industry and is not sustainable for a federally-legal and global supply chain.
As a team, the National Cannabis Industry Association’s State Regulations Committee’s Technology and Compliance Subcommittee has spoken to regulators, operators, and international technology providers in the interest of presenting a practical track and trace solution to benefit the industry as a whole. This is the first blog in a series that will highlight the issues that cannabis operators and regulators are facing because of the current centralized state-mandated track and trace model. We propose that the U.S. cannabis industry operate under a more practical framework that has a higher probability of success for regulators and cannabis businesses through slight changes and improvements based on proven best practices.
Track and trace systems serialize assets to identify where assets are (track) and to identify where assets have been (trace). Track and trace is not something new. It is the globally acknowledged standard for product movement and reconciliation in both the Pharmaceuticals and Consumer Packaged Goods (CPG) industries. A secure track and trace system combines material security and information security elements to confirm assets are legitimately produced and sourced, following a pre-defined and auditable path.
As the regulated cannabis markets started to take shape and mature in 2012, one of the driving factors that shaped the need for a track and trace system was the 2013 U.S. Department of Justice Cole Memorandum (Cole Memo). The Cole Memo indicated for the first time that the federal government would only intervene in states that failed to prevent criminal involvement in the market, sales to youths, and illegal diversion to other states.
The first four states to legalize adult-use cannabis were Colorado, Oregon, Washington, and Alaska. All four of these states instituted a market-based licensing system to regulate the commercial activity of cannabis sales. The intentions of the newly instituted policies were two-fold: protect consumer health and minimize diversion, both of which align with the core principles of the Cole Memo. To meet these intentions, the states instituted procedures for inventory control and tracking documentation using a state-mandated centralized model, in an effort to create a transparent and controlled system of oversight within the cannabis industry.
As the industry has developed over the years, most states that have approved some form of legal cannabis sales have selected a single mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and cannabis products. As shown in Figure 1, the majority of legalized states have chosen METRC as their exclusive contractor of track and trace services.
Figure 1: https://mjbizdaily.com/metrc-sees-sale-tracking-opportunities-in-new-cannabis-markets/
The legal cannabis market has changed significantly since 1996 and it is important for the industry to re-evaluate the intention and implementation of track and trace. Regulatory bodies contracting with one track and trace technology provider and mandating operators to use that specific provider in order to stay compliant is problematic for many reasons. Time has shown that the current centralized model is fiscally irresponsible and ultimately counterproductive, with significant negative externalities, including ethical concerns such as anti-trust issues. Most recently, an Oklahoma cannabis operator (seeking class-action status) initiated litigation against the state’s Medical Marijuana Authority (OMMA), alleging that the state exceeded its authority by requiring licensees to pay for a state-mandated track and trace program, and that the state’s contract with METRC creates an unlawful monopoly, among other claims.
To provide an analogy, let’s think about how businesses are required to report taxes. The IRS sets out certain rules and every business must report their income and assets according to that framework. Technology providers (such as TurboTax, Tax Slayer, H&R Block, etc.) have built scalable products to support businesses in reporting their taxes. The IRS does not mandate that businesses use one single specified software in order to report their taxes. Doing so would kill competition, introduce a monopoly, and eliminate any incentive for the technology providers to improve their product. By the IRS allowing free competition over the realm of tax preparation and processing software, the public benefits from the technology companies being incentivized to update and improve their software features and benefits.
The centralized model is crippling the entire industry as system failures are occurring on a more frequent basis, and its after-effects are causing a more detrimental and wide-ranging impact as the industry grows at an exponential rate. Most recently, METRC’s integration functionality (how third-party business operations software communicates to the state’s system) was down for more than fourteen days in California, causing significant problems in the nation’s largest cannabis market. One software provider and its tag-producing partners are benefitting, while setting industry regulators and operators up to fail. One software provider cannot meet the current or future needs of regulators and operators, especially not on a national level. Meanwhile, there are many excellent software providers that specialize in track and trace. The free market should determine the most efficient and user-friendly approach to allow businesses to stay compliant and accurately report to the appropriate regulatory authorities.
By leveraging the knowledge and experience the industry has gained over the last 20 years, we can incorporate best practices from other industries’ and other markets’ track and trace systems, and set regulators and operators up for success.
Join us as we dive deeper into the issues surrounding compliance and track and trace in the cannabis industry. Our multi-part blog series provides an in-depth look into the technical shortcomings of the current centralized approach and provides a roadmap for implementing a distributed model approach. Some of the disadvantages we will cover in the subsequent posts include:
Impact of System Failure: The current centralized model provides a single point of failure: if the system goes down, all licensee operations must stop operating entirely. In some cases, operators may manually record activity during a system failure, and then manually enter the activity when the system resumes. This introduces a high risk of human error. No backup system or alternative means of recording through the use of technology exists since the state relies on only one system.
Challenges with Scalability: The history of performance with centralized track and trace systems demonstrates that there are significant challenges in scalability because of multiple system failures and shutdowns. The system would benefit from a more advanced track and trace capability, specifically with its API (Application Programming Interface). Many times it is not the technology of the licensee system, but the technology design of the state-mandated systems.
Fiscal and Environmental Impacts: Licensees are required to purchase plant and product tags from the single state-mandated vendor, which creates a fixed price system that is typically not in favor of a licensee. It is also creating a sustainability issue in the industry, as the plant and product tags are single-use. More operators are speaking up about the waste it is generating in our cannabis industry.
Interested in joining us in establishing an effective and scalable track and trace framework for regulators and operators in the legal cannabis space? Click here to stay updated on the State Regulations Committee, and the efforts that it’s Technology and Compliance Subcommittee are taking to improve and advance track and trace nationally. Let’s close the informational gap between operators and regulators, and help the entire industry move forward together.
Stay tuned for the next two blog posts in our multi-part series!
#cannabisindustry #legalcannabis #trackandtrace #wearethecannabisindustry #cannabiscompliance
by NCIA’s Cannabis Manufacturing CommitteeDespite prohibition, the cannabis industry is not behind the curve of sustainability progress. While other industries were inventing modern Cloud-based quality control/distribution systems and making stuff out of plastic, cannabis producers were maximizing yields per watt and creating stronger concentrates in attempts to get the most out of their value streams while staying under the radar. Now all industries are racing towards a more sustainable future and the cannabis industry has the opportunity to show that it can be a good example, even a leader in sustainability. Regardless if it is in preparation for competition or regulation, now is the time to start building more sustainable, energy-efficient, and overall lower footprint businesses.
As the manufacturing branch of the cannabis industry paves its way into the future, the processes involved need to be made environmentally sustainable and best practices need to be shared and standardized to ensure product safety and industry longevity. Collecting and sharing data from manufacturing facilities is the ideal way to achieve these sector goals.
Environmental sustainability is a multi-discipline effort. Experts in engineering, emissions, air quality, worker health and legal matters should be relied on for educating and guiding businesses into a more sustainable future.
While cultivation is one of the main focuses of the cannabis sustainability effort, manufacturing procedures are also prime targets for sustainable advancements. Due to the nature of the organic chemical processes used to produce consumables, some of the materials and practices could have a negative impact on both worker and environmental health if not addressed and handled properly. As a best management practice, regulated cannabis manufacturers typically operate closed-loop systems, which greatly reduce certain dangers, but this can require other more energy-intensive systems. As these relatively new processing techniques are being pioneered, we need more data to understand how they can be made more efficient and sustainable. For various reasons — such as intellectual property concerns — advancements in sustainable practices are often not shared and therefore not visible to potentially become a standard process that ensures product and consumer safety.
The scientific improvements for manufacturing cannabis into consumer products in high demand have outpaced regulations. From process design and equipment to processing material sourcing, the manufacturing branch of the cannabis industry has much to offer the future of sustainable cannabis products. In many jurisdictions today, regulators have hastily opted for vertical, prescriptive regulations which have left many manufacturing operations without the leeway required to innovate more sustainable process strategies. Even more businesses with the legal leeway simply do not want to push the envelope in today’s regulatory climate. More forward-thinking, regulation-savvy equipment manufacturers have begun focusing on lower energy-use in their newer products as a selling point. The industry as a whole could be making progress much faster if regulators focused on performance standards for manufacturing facilities.
Strategies inspired by building and process heat recovery offer dozens of basic possibilities when it comes to implementation in a cannabis manufacturing facility. Using the energy released during solvent condensation for solvent evaporation is a prime example. Connecting liquid-cooled equipment with the building’s central plant system is another. These are big ideas that could be implemented in different ways with different efficiencies. Intelligent use of insulation, exhaust recirculation, odor mitigation, ventilation minimization, demand-control ventilation for providing makeup air, etc. could also make significant differences. Data collected from actual operating facilities experimenting with different strategies will be the best guide going forward in determining what the best energy saving strategies are.
In an effort to prevent unnecessary Volatile Organic Compounds (VOC) emissions it is important to maintain proper solvent transfer and storage, perform extraction equipment inspections, and ensure a maintained inventory and handling of solvents on site are a part of a facility’s standard operating procedures. Best practice for extraction and post-processing dictates the use of butane, propane, CO2, ethanol, isopropanol, acetone, heptane, and pentane as solvents to encourage safe consumer products.
Carbon filtration is also the best management practice for controlling cannabis terpenes (VOCs) and odor emissions. It is important to install properly engineered molecular filtration systems (aka carbon scrubbers) that are sized appropriately for a facility’s ‘emission load’ and don’t exceed the maximum cfm rating for air circulation through the filter. To prevent VOC and odor breakthrough, it is imperative to inspect and conduct regular maintenance of HVAC systems and carbon filters. A standardized method for measuring the lifespan of carbon is by using a Butane Life Test, which equips manufacturers with the data to know how to manage their carbon replacement schedule effectively, minimizing unnecessary carbon waste. Additionally, processors can conduct air sampling to detect and measure VOC and odor levels in their facilities and the data can be used to validate the impact of control technologies further protecting worker and environmental health.
Proper VOC and cannabis odor control from manufacturing processes helps reduce community odor complaints and improve neighborhood relations. It also improves public and environmental health by reducing local ozone concentrations. Proper emissions control when running cannabis manufacturing processes and handling chemicals helps to shift the industry at large toward sustainable and environmentally conscious business practices.
Cannabis manufacturers are seeing big changes on the horizon. Increased legalization brings increased competition and inevitable M&A activity. Whether a business aspires to compete on the world stage or to be acquired in one of the coming green waves, there are actions that can be taken today to help cannabis manufacturers maximize their value to both customers and potential acquirers.
One of the most important assets a company can have — both to compete effectively and to attract purchasers — is intellectual property. Intellectual property, or IP for short, is the term for an intangible asset that has been afforded certain legal protections to solidify the asset into a commodity that can be bought, sold, and licensed. IP can have a negative connotation in some circles, mostly resulting from misconceptions in the law but also rooted in IP abuses by unscrupulous “trolls.” In reality, IP is an important tool to help companies protect their hard work and, when properly deployed, intellectual property can increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement.
Intellectual property broadly covers a number of different types of rights. Patents protect new inventions like processes, machines, compositions of matter, ornamental designs, and plant genetics. Patents can grant relatively broad rights to these ideas, but with substantial additional costs and scrutiny.
Similarly, copyright can protect creative works, like writings, drawings, and sculptures. But many do not recognize that copyright can also protect compilations of data that have been creatively selected or arranged. Data and algorithm copyrights are relatively nascent, but they promise to play a large role in the intellectual property landscape of the future cannabis industry.
Another sect of intellectual property, trademarks, is all about protecting a brand: the names, logos, slogans, and overall look that tells customers that a good or service is from a particular company. Federal trademark registration is unavailable for federally illegal goods and services, but that does not mean that federal trademark protection is unavailable to cannabis brands. Many companies are using the zone-of-expansion doctrine baked into federal trademark law to set up registrations on related legal products (smoking/vaping devices, clothing, and even CBD edibles) that can be expanded to cover THC products when federally legal.
The nuances and requirements of these property rights — along with other IP rights like trade secrets and trade dress — are highly fact-specific, so involve a good IP attorney to guide your strategy from the start.
Now is the time to start building more sustainable, energy-efficient, and overall lower carbon footprint businesses and the emerging legal cannabis industry is well-positioned to be the leader. If manufacturers are incentivized to safely share processing data directly or through emerging data collection and tracking platforms, the industry will make major advancements towards more environmentally sustainable practices. Environmental impact areas, such as air quality, energy, water, soil waste, and community all need to be considered by the manufacturing arm of the cannabis industry. Regulators can help push the industry forward by reducing negative impacts in these areas though focusing on performance standards for manufacturing facilities and their processes. Lastly, understanding that IP, including trademarks, can in fact increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement will help position operators for M&A activity coupled with proper legal representation. These factors work together to protect the environment and communities, as well as future-proof manufacturing operations setting up the rest of the cannabis industry for longevity and federal legalization.
By Mell Green, CBD Oracle
Medical cannabis hasn’t always had a smooth go in the United States. Thankfully, as time has slowly started to change and viewpoints have shifted, cannabis legalization is finally gaining traction state-wide. While this is an incredible feat for so many different reasons, many states see long-term benefits of cannabis legalization much further reaching than anyone could have imagined.
Today, we’re talking about how cannabis legalization in Minnesota may actually help further equality and break down barriers that have long been deeply rooted. Let’s get started.
Quickly, it’s essential to understand the tumultuous history behind marijuana and just how far we’ve come as a society. However, seeing this rocky past also helps illuminate how much further we still have to go.
The cannabis plant has existed for millennia on planet Earth. Its therapeutic benefits have supported civilizations in spiritual, religious, and medicinal ceremonies across the globe. As this idea spread to Western societies, the plant was, at first, welcomed with open arms. At the start of the 20th century, all of this changed entirely in the United States.
During the Mexican Revolution from 1910-1920, many Mexican citizens fled their war-torn home country in search of a safer, more promising future. With this, the U.S. saw an influx of Mexican immigrants.
Throughout Mexico, enjoying cannabis for its recreational effects wasn’t a new idea. So, when citizens began migrating North, they also brought more normalized recreational cannabis use. At first, for those in the U.S. who already adored cannabis, this was incredibly exciting. But, for many in positions of power, class, and wealth, this type of cannabis use wasn’t going to fly. Thus came the Reefer Madness film and decades-long racially charged cannabis persecutions.
It took way too long, but the United States finally started getting on board with cannabis decriminalization and legalization back in the 80s and 90s. With this, the exposure to cannabis science became more extensive, and it was easier to see that the plant did (and still does) have some serious medicinal benefit. Seeing these facts caused a lot of opinions to change, resulting in an almost domino-like effect of cannabis legalization across the country.
Now, 36 states have legalized medical cannabis, allowing more people than ever access to the precious plant they love. But has this legalization impacted the people most disproportionately punished? Not really.
Still today, we see Black men arrested for cannabis crimes at disproportionately high rates, even though cannabis is legal in most states across the U.S. If anything, these legal changes have made the divide all the more evident, allowing the country to see just how horrific the cannabis industry can be for people of color. At the same time, it simultaneously celebrates white American consumers. This may help boost PR for big business, but it doesn’t help local (black-owned or otherwise) businesses on the ground. Legally or economically.
So, what can we do to change this? How can cannabis legalization help to further the progress we’ve made?
I know, it sounds like we’re a bit cynical, but it’s crucial to bring up these divides before discussing how we can move further. The country often loves to praise all the beauty that the cannabis industry brings, forgetting the intense harm it has caused so many communities.
Let’s talk about Minnesota, for example. In May, it looks as though the state is going to vote to pass adult-use cannabis use. If this happens, here’s what could potentially occur in terms of furthering equality — but, at the end of the day, this change is up to you.
Realistically, the legalization of cannabis should help reduce the number of victimless crimes in the area, helping the community feel more at ease. With this, you would also expect a lowered number of consistent police presence in areas where cannabis use was a previous “problem.” Often, when communities of color experience increased and frequent police presence, this does not provide a sense of safety. Typically, it provides the opposite. Thus, legalizing cannabis in places like Minnesota may be able to create an environment that not only feels safer but feels more accepting of all residents. Feeling safe is great for business, big and small – but especially small. Reduction of victimless crimes and less police presence could really boost the state economy, and additionally enhance everyone’s sense of community and unity.
Furthering equality through the legalization of cannabis can be done, but the work goes much deeper than just on a legal level. As we’ve seen, just because the law says one thing, that doesn’t mean it applies to all groups of people. So, once legalization happens in Minnesota — or your state — the next steps are in your hands.
With this, you’ll also understand how legalization is not an end-all-be-all solution. If we want to erase cannabis’s racially charged stigma, the answer is holistic: it starts with a community.
Mell Green is a content creator who believes that cannabis can help anyone achieve a life-enhancing experience. Her participation in the advocacy of the plant for the last several years has not only allowed her to create solid relationships with the world’s leading cannabis companies, but it has also helped her to educate and spread awareness on the power of alternative medicine.
CBD Oracle is a California-based online magazine dedicated to cannabis and CBD education. The company has made it its mission to provide specialized, expert advice to those who need it, publishing detailed, informative, and entertaining articles, guides, and reviews, all backed by the latest scientific studies and research.
by Anne Davis, Bennabis Health
The use of medical cannabis in chronic conditions is well-known, and some estimates are that medical cannabis can be an adjunct to more than 100 medical conditions. Frequently mentioned conditions include neuropathic disorders such as multiple sclerosis, neuropathy, PTSD, anxiety and depression and certain epilepsies among young children.
Although cannabis is still federally illegal, multiple studies of patients with multiple sclerosis and their providers have acknowledged that cannabis may have a role in improving symptom control, particularly pain, muscle spasticity, and more.
Anne Davis is a successful attorney, mother and community leader in New Jersey. In 2007, she focused her practice on the legal, regulatory, and advocacy issues surrounding use of medical cannabis. In this role, she became a national figure, presenting at conferences, and a sought-after contributor to health care law and advocacy initiatives.
Fast forward to 2013: Anne was thriving in her career and caring for her 2 daughters, ages 8 and 19-a critical time for her young family, whose needs were typical of busy and actively involved children and parents. In 2013, Anne was diagnosed with relapsing-remitting MS.
Devastated by the diagnosis, Anne began to research the impact of the medical regimen, prescribed medications and ongoing testing and lab work that would be required. Anne would need frequent lab tests to ensure treatment was not harming her vital organs, a potential side effect of many medications used in treating MS.
After careful consideration, Anne decided to use her professional knowledge about medical cannabis for herself, a decision not supported by her neurologist and care team.
Much like Anne, studies indicate that most patients conduct their own research when considering medical cannabis. The advice from friends and family are the most frequently cited resources when considering cannabis. A 2014 study indicated that only 18% of patients discussed use of cannabis with their healthcare provider, and less than 1% received assistance from their healthcare team on the kinds of formulations available. This leaves patients in a precarious and potentially harmful situation. Patients rely on and trust their healthcare team.
Surprisingly, despite lack of support and collaboration with their healthcare team, a survey of MS patients conducted in 2019 showed that more than 40% of patients said they used medical cannabis in the past 3 months. This is a striking number, indicating that patients are seeking non-traditional resources in managing their care. These data beg the question: Why are MS patients trying medical cannabis? Are their current prescriptive medicines not working? Do they have ongoing and unresolved symptoms that interfere with their quality of life? What is motivating patients to pay out of pocket costs for medical cannabis on top of their co-pays and health insurance premiums?
For Anne, the answer was “to avoid potential side effects” of her prescription medicines.
“I knew from my years in the industry cannabis was effective and had zero side effects. I was well aware of the research that indicates that cannabis has neuroprotective qualities, in addition to symptom relief. For that reason, I decided to use it every day as part of my treatment plan.
As an MS patient, cannabis is an integral part of my daily life. I use it every night before bed to help with fatigue, muscle cramping and spasticity. It also significantly helps elevate my mood, especially on days when I feel a sense of overwhelm. For me, I struggle with cognitive issues the most from MS. It depends on where the lesions occur in your body, or specific regions of the brain that determines what is impacted the most. It is important to live a healthy lifestyle. For me, that consists of exercise, nutrition, avoiding saturated fats, sugars, beef and dairy. I have reduced stress in my life, get enough sleep, meditate and stay positive. Add cannabis, and I feel like I am doing everything in my power to live my best life.”
Anne is often asked what strains work best? The fact is, there is not one in particular. “I prefer to change strains often. It seems that you build up a tolerance when you use the same strain every day. The therapeutic benefits are best from a blend of strains. I prefer high THC as my use is primarily in the evenings. The level of relaxation that I can experience helps me to fall asleep, stay asleep and get a good night’s rest. I have heard of pharmaceutical companies getting in the cannabis industry and making the argument that cannabis should be mass-produced and you should have the same consistent THC and CBD levels with every plant. Nothing can be further from accurate. Patients need and want variations.”
“First, celebrate and recognize your work, no matter if it is behind the counter, in the boardroom, growing, cultivating, and supporting advocacy that directly benefits patients like me. No matter your role in this industry, behind at the end of the supply chain is a patient seeking resolve from one or more symptoms. It could be the nausea associated with cancer, the pain from glaucoma, the night terrors from PTSD.”
“Continue to grow and produce quality products. What is a quality product in the opinion of a patient? In my experience, it consists of large green or purple buds with aromatic terpenes. I strongly believe in the “entourage effect “so I like both high THC and CBD combined, another reason that I prefer to mix cultivars and create blends.”
The industry can also advance healthcare and consumer knowledge about cannabis in all its forms. Although peer reviewed articles and scientific evidence are less available than we would like, helping patients and their providers understand what and how to use medical cannabis is essential to its acceptance as an alternative treatment option.
Anne continues to successfully use medical cannabis today. Anne’s neurologist, who was originally against her decision, has since advised her that she made the right choice.
Anne M. Davis, Esq. has been practicing law for 20 years. For the past 12 years, she has been recognized as one of the state’s leading experts in marijuana law and policy. In that role, Davis has presented workshops and seminars nationally about marijuana law reform. Since her diagnosis with MS, she has dedicated her skills and experience to create programs and expand access for medical marijuana patients. As part of that mission, she is a Patient Advocate for Bennabis Health, the first health care plan in the nation covering medical marijuana.
As a community leader, Anne serves as a CASA (Court Appointed Special Advocate) working with foster children; she teaches CCD at her local Church, and has served as a Girl Scout leader for 11 years. Anne was recognized as a “Woman of Distinction” by the Girl Scouts at their annual Gala in 2020. Working with children, keeping them safe and giving them the best opportunities possible are some of her top priorities.
by Madeline Grant, NCIA’s Government Relations Manager
The Secure and Fair Enforcement (SAFE) Act, or H.R. 1996, passed the U.S House of Representatives with a final recorded vote of 321-101. This is the first floor action on a cannabis reform bill this Congress. This is not the first time we’ve seen movement on this bipartisan piece of legislation that would protect banks that service state-legal marijuana businesses from being penalized by federal regulators. The bill was reintroduced in March by Reps. Ed Perlmutter (D-CO), Steve Stivers (R-OH), Nydia Velazquez (D-NY), and Warren Davidson (R-OH), and had 177 total cosponsors by the time of the vote. The bill was taken up under a process known as suspension of the rules, which requires a 2/3rd supermajority to pass and does not allow for amendments. This is the fourth time that the House has approved the language of the SAFE Banking Act, initially as the first standalone cannabis policy reform bill ever passed by either chamber of Congress in 2019 and two more times last year as part of pandemic relief packages that were not approved in the Senate.
The SAFE Banking Act would protect financial institutions from federal prosecution for providing banking and other services to cannabis businesses that are in compliance with state law, as well as help address serious public health and safety concerns caused by operating in predominantly cash-only environments. The legislation would improve the operational viability of small businesses by helping them reduce costs associated with lack of access to banking and increasing options for traditional lending that many small businesses in other fields rely upon. It would also mandate a study on diversity in the cannabis industry.The SAFE Banking Act seeks to harmonize federal and state law by prohibiting federal banking regulators from: threatening or limited a depository institutions access to the Deposit Insurance Fund, discouraging, prohibiting, or penalizing depository institutions from dealing with the cannabis industry, taking any action against a loan made to a covered business and forcing a depository institution to halt providing any kind of banking services.
Legislation to provide safe harbor for financial institutions that choose to service the cannabis industry was first introduced in 2013 and was called the “Marijuana Businesses Access to Banking Act.” When the bill died in Congress, it had 32 cosponsors and no Senate companion legislation. The bill was reintroduced in 2015 with the same name and 39 cosponsors and a Senate companion with 11 cosponsors.
In 2017, the bill was reintroduced and renamed the Secure and Fair Enforcement (SAFE) Banking Act. By the end of that session, the bill had 95 cosponsors and the Senate companion bill had 20 cosponsors.
On March 7, SAFE Banking was introduced in the House by Rep. Ed Perlmutter (D-CO) and was referred to the Judiciary and Financial Services Committees. On March 28, 2019, the Financial Services Committee voted 45 to 15 to advance the bill to the full House. The bill had broad bipartisan support with 153 cosponsors, over a third of the entire House, at the time of the committee vote (a major jump from 2017). On April 1, Senator Jeff Merkley (D-OR) introduced a companion bill to the Senate and the bill was referred to the Senate Banking, Housing, and Urban Affairs Committee. On June 6, the House bill moved out of committee and was placed on the Union calendar for a vote. The bill then passed the House by 321-103.
Congress spent 2020 legislating relief legislation for Americans as the coronavirus took a toll across our nation. SAFE Banking language was also included in two coronavirus relief packages that the House approved, but unfortunately, did not make it through the Senate.
One thing is abundantly clear, states are continuing to legalize cannabis and the federal government must mitigate the state and federal conflict that legal cannabis businesses are facing. Access to banking is not only essential for any business to function, but a necessary measure for public safety. Laws making cannabis legal for adults have been passed in 18 states as well as the District of Columbia and the territories of CNMI and Guam, and 36 states, as well as several territories, have comprehensive medical cannabis laws. As the House of Representatives, again, has passed SAFE Banking, we will turn our focus to the Senate and keep up the momentum. Make sure when you have a few minutes call your senators and urge them to support the SAFE Banking Act, S. 910. You can look up your senators’ information HERE.
by Deborah Johnson, MCA Accounting Solutions & James Whatmore, MAB Investments
NCIA’s Banking & Financial Services Committee
Part 2 of a 3-part series
In our first part of this blog, we discussed the very beginnings of a company; an idea, gathering a team around you, self-funding, opening a bank account and forming an LLC or incorporating. Now you are ready to take a big step, bring on some more people, purchase more equipment and explore partnerships. You have a path with real milestones. This is the time to plan a funding strategy.
If you are not plant-touching, or you are directly ancillary, you might be able to secure a bank loan or an SBA loan. As the SAFE Banking Act is being considered in Congress (at time of writing) the reality of greater access to cannabis banking services may be getting brighter. However, traditional banking sources may still be an issue. These challenges have blended into some ancillary activities. There are a few other debt instruments including venture debt, an accounts receivable (AR) line, or an asset loan. Some of these instruments can be originated with specialty firms or other investment sources.
“While debt has traditionally been scarce in our industry, the relatively recent arrival of lenders has fortunately changed the construct of cannabis company balance sheets. Industry normalization, low rates, relatively high equity capital costs and supply-demand imbalances have attracted capital pools into credit and provided companies with the ability to further normalize their blended cost of capital,” said Sumit Mehta, founder and CEO of Mazakali and chairperson of NCIA’s Banking & Financial Services Committee.
Recently Harborside Inc. (CSE:HBOR) (OTCQX:HBORF) in California landed a historic $12 million revolving line of credit with a bank, marking the first time a cannabis touching company has secured this kind of access. Granted it is secured, but it is a commercial loan from a traditional lender. If you have real estate involved many investors will do a sale leaseback on the property to provide some liquidity. Equipment may also secure a loan; this is often a choice to outfit a capital-intensive production. When evaluating your debt options consider what is happening at this point in your life cycle. For an early-stage company, a revolver may not be the right fit; however, having the right equipment getting you to revenues might be worth investigating.
There are also grants available. Especially with COVID-19, many local jurisdictions are providing small business grants, or you might find one aligned with your demographic or target market niche. Many startups find an accelerator or incubator to help both fund and scale the company. In cannabis, the accelerators have historically been targeted to the ancillary market. Several exist, including Canopy Boulder, Momentum, Gateway, Hood Incubator, The Initiative, Cannabiziac, and even traditional market accelerators such as Y Combinator are addressing the needs of the cannabis market. Accelerators will invest in the companies they are providing guidance to and are generally hosted over a short period of time like 3-4 months, whereas an incubator provides resources, networks, and services over an 18+ month time and might charge a fee to participate. This early mentoring is a great resource for social and personal capital as well. If you have participated in an accelerator or incubator environment you should be exposed to early-stage investors; if you haven’t been exposed to them, this is the time for a solid PowerPoint deck and to polish your presentation.
Next on the list are angel investors. Angels are those individual investors that provide early-stage funding for a startup usually in exchange for convertible debt or ownership equity but are not locked into a funding structure. Banks make loans, angels can do as they please. They can be sophisticated or unsophisticated as they technically just need to qualify as an accredited investor. Most are drawn to investing in something familiar, so either they have a direct professional background in your industry or have felt the pain point you are addressing personally. Some want to roll up their sleeves and be engaged in helping your company grow, others just want to diversify their investment portfolio and take a more passive role. They can invest in the idea and direction of the company and a good angel will understand the timing of the investment. This means that early-stage investors like angels and funds should understand that this is a long-term investment that might take 5-8 years to see liquidity.
The greatest challenge to an entrepreneur is where to find them. Sometimes it’s as easy as looking around your network. With some work you can attract attention to your business idea by either presenting/speaking or pitching at a conference. Over the years, many opportunities to do so have developed. NCIA hosts CannaVest and Cannabis Business Summit, one of the longest running is The Arcview Group, Benzinga, IC3 by IMN, CWCBExpo and many cut their teeth at MJ Biz. Angels are individuals, but often belong to a group of angels to assist with deal sourcing and due diligence. With the normalization of cannabis, you can find many groups via the Angel Capital Association. We’d suggest reviewing market transactions and see who is announcing that they secured funds and with whom. You can find this information through keywords and press releases, consolidating sites such as New Cannabis Ventures or Viridian Capital Advisors, or even Pitchbook. This is the hard part of fundraising: connecting with the right investors.
You can also gain exposure to investors by sharing your expertise. Whether it’s articles on LinkedIn or podcasts and panels, exposing your knowledge of your niche is critical to gaining their confidence in your ability to execute. The conferences above may host your presentation as well furthering your investor engagement. One word of caution, there is a new platform being used by millions – even though it’s still in beta – called Clubhouse. There have been many people that are running pitch rooms on that platform and they are running up against the SEC and rules for fundraising. We encourage an extra dose of caution when pitching where you don’t understand who your audience is and if they adhere to qualifying factors. Many times, the later investors (Series B or C rounds) have to do a lot of work to clean up the cap table from earlier investment rounds. That can be a hurdle that an investor might walk away from. So, the more you can do to assure you are running a clean and efficient fundraising round, the better.
Given that we are in the cannabis industry, it is of particular importance to be an advocate. Access to this plant is still restricted for many, people are still going to jail or are still in jail, and businesses have a disadvantage to all other industries given the repercussions of federal illegality. So being an advocate, aligning and engaging with advocates like the National Cannabis Industry Association (NCIA), Marijuana Policy Project (MPP), Students for Sensible Drug Policy (SSDP) and others, can also expose you to investors who recognize your understanding that there is much work to be done to assure fair access. Expertise, Advocacy, and Engagement will build your social capital. The early rounds can hinge on these factors. While you will need a proforma, other financials and a solid plan, an angel is investing in you as much as in your current project. With enough social capital, your relationship with the early angel investor will survive major setbacks.
Once past these early rounds, your focus will turn to more formal investment groups and businesses in private equity, venture capital and then the public market. Currently those companies touching the plant are able to be hosted on the OTC (over-the-counter) market or the CSE (Canadian Stock Exchange) with a growing number of ancillary companies listing on the traditional exchanges. Here there will be a deep dive into the numbers and execution, pre/post revenues with a clear runway to real revenue. This requires an adaptive corporate culture with some loss of control expected.
In our final piece of the series, we will review crowdfunding, tips on angel and fund investors, and types of funding.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
by Aaron Smith, NCIA’s CEO and Co-founder
Today, 70% of Americans support the end of cannabis prohibition and almost four in every ten adults have access to regulated, legal cannabis for their own use — no questions asked.
We are on the precipice of the end of federal prohibition, with even the Senate Majority Leader calling regularly for his chamber to advance legislation that would legalize cannabis. In 2012, when Colorado voted overwhelmingly to amend their constitution to create the adult-use cannabis industry, it seemed incredibly unlikely – even in that moment of success – that we’d see the explosion in progressive policy and normalization coast-to-coast in marijuana that we have.
For those that were fortunate to know Steve Fox, though, our present felt more like an inevitability than anything else. Remembered as an energetically empathic and enthusiastic advocate, anyone who has enjoyed any part of the legal cannabis boom owes a moment of peace to Steve’s memory.
Steve was one of the first political power players to turn their attention to cannabis, long before it was polling at a place where prominent politicians were tripping over themselves to attach themselves to 420-friendly policy. Building on momentum from the medical cannabis movement and championing the personal liberties being accosted by the overcriminalization of cannabis, he had an immediate and lasting impact when he arrived on Capitol Hill.
In 2002, only five years after the first state decriminalized cannabis for medical use, Steve was the lone full-time cannabis lobbyist in Washington, D.C., pushing for federal reform in our nation’s capital on behalf of Marijuana Policy Project. He answered the call for justice long before most others heard it, championing cannabis as a proxy for his own views on societal justice and individual freedom.
Dedicated to a clear set of righteous ethics, armed with his passionate voice for sensible reform, Steve worked incredibly hard and with every tool at his disposal to do the right thing, in the correct way. While drafting and campaigning for Colorado’s Amendment 64, which would be the nation’s first to legalize cannabis for adult use, Steve never took his eyes off the need for succinct and coordinated efforts for the community that would grow in a patchwork across a country opening their markets state by state.
It was in 2010 that he and I, fellow Marijuana Policy Project alums, set out to answer that call for a single voice to speak on behalf of the emerging industry and founded the National Cannabis Industry Association. Recognizing that his incredible energy, rarely slowed, would serve best in his lobbying efforts, Steve opted to become the first Secretary of the NCIA Board of Directors and worked with and around — though never in — his own organization for the next decade.
At the time, after the release of the Ogden Memo by the U.S. Justice Department directing prosecutors not to prioritize the use of federal resources to prosecute patients with serious illnesses or their caregivers who are complying with state laws on medical marijuana, cannabis policy was wide open.
An industry association, uniting all voices and allowing for progressive policy to be pushed in a single stroke, remains only one of Steve’s legacies. Though his work is unfinished, we are all fortunate that he inspired dozens of passionate activists, lobbyists, and policy writers who are dedicated to seeing it done in his memory and with his spirit.
If you’ve enjoyed any of the benefits of legal, regulated, adult-use cannabis — whether it is your own personal consumption, better schools from taxes, a safer neighborhood — please consider contributing to the GoFundMe set up by VS Strategies to support his wife and daughters in this difficult time.
by Rachel Kurtz-McAlaine, NCIA’s Deputy Director of Public Policy
Like many of you, NCIA needed to pare down during the pandemic. This has been hard on everyone and we understand first hand the sacrifices. Thankfully cannabis was deemed essential throughout much of the country, which isn’t a surprise to any of us in the industry. But we know that our members still needed to adjust their operations and spend a lot of money trying to stay safe and in operation. Like you, we also needed to adjust.
During this time we weren’t able to oversee our Allied Associations Program, although we maintained our relationships and were able to include many of our Allied Associations and their valuable insight in our webinars. As the number of vaccinations continues to rise and things start opening up, we can’t help but feel hopeful in the future — not to mention a Senate Majority Leader committed to legalization. We want to thank everyone for their patience and announce that we are picking up where we left off on the Allied Associations Program.
What is the Allied Associations Program?
The Allied Associations Program is a network of cannabis trade associations from the local, state, national, and international level designed to harness our collective knowledge and work together to advance the cannabis industry. As the leading national cannabis industry trade association, we felt an obligation to the community to make sure cannabis businesses have strong trade associations to educate and represent them in every way, so we started this complimentary program for other cannabis trade associations.
While the focus of our lobbying efforts is at the federal level, we know what a huge impact state and local policies have on the day-to-day operations of our members. The Allied Associations Program allows us to keep updated about these important issues so we remain a valued resource. It also allows us to keep other associations informed on federal issues and utilize this extensive national network for important federal policy action items.
We encourage our members to learn more about the Allied Associations Program and check out the directory of participating associations. Being part of the Allied Associations Program means the association is providing educational opportunities for their staff and leadership, and networking with other cannabis trade associations from around the country, ensuring they are adding value for their members.
What does this mean for cannabis trade associations?
Current Allied Associations need to check their email for information on the next Allied Associations Program monthly call, and updating any information that has changed via the NCIA member portal. In addition to the return of monthly calls, Allied Associations should be aware of NCIA’s upcoming conferences: our Midwest Cannabis Business Conference in Detroit in September, and the Cannabis Business Summit in San Francisco in December. Allied Associations are visible at our events and important to the planning process.
Cannabis trade associations who would like to learn more about joining should check out our Allied Associations Program page and click on “learn more about the AAP” to get in touch with Rachel Kurtz-McAlaine, our Deputy Director of Public Policy who also manages the program.
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