As the middle of May approaches, cannabis advocates, lobbyists, associations, and many more continue to educate congressional offices on the importance of cannabis policy reform.
So far, 37 states have legalized medical marijuana, and 18 states – including the District of Columbia – permit adult recreational cannabis use. With more businesses operating within the industry, one major issue remains: enacting cannabis banking legislation.
The Secure and Fair Enforcement (SAFE) Banking Act addresses the ongoing hurdles between financial institutions transacting with cannabis-related businesses. Congressional lawmakers have been working to include the SAFE Banking Act as a provision to the House’s U.S. Innovation and Competition (COMPETES) Act.
Let’s take a look at where Congress currently stands with the SAFE Banking Act.
This week, 24 U.S. Senators focused their attention on pressuring congressional leaders in ensuring that cannabis banking provisions are enacted into law as part of the broader-scale, House-passed America COMPETES Act.
Led by U.S. Senators Jeff Merkley (D-OR) and Jacky Rosen (D-NV), the 19 Democrats and five Republicans wrote a letter to the leaders, outlining the significance of the SAFE Banking Act, along with its potential impacts on the emerging industry.
The rapidly developing field has led to remarkable job growth, generating significant tax revenue as a result. Thus, if implemented, the SAFE Banking Act would authorize banks, credit unions, and other financial institutions to provide banking services to legally-operating cannabis businesses without facing punishment by federal regulators. Additionally, the banking provision attached to the America COMPETES Act “fosters innovation, supports small businesses, and raises revenue in states that have chosen to legalize cannabis, while reducing safety risks to industry employees and the public alike.”
As of now, financial institutions remain unwilling to transact with cannabis businesses. Due to the indistinct federal and state laws, banks and credit unions fear the regulatory risks associated with the inconsistent policies. Allowing legal cannabis businesses to operate in compliance with state law in obtaining financial services without federal penalties would confront public safety matters, ultimately assisting communities to lessen cash-motivated crimes.
According to the 24 senators, law enforcement administrations have previously addressed the risks accompanying an unbanked cannabis system, many of which include theft, robbery, and violence perpetrated against employees. They emphasize the need to transfer the substantial amount of cash within the industry into the banking system to ensure safe monitoring of accounts pursuant to present federal anti-money laundering regulations and the Bank Secrecy Act.
The National Cannabis Industry Association’s (NCIA) Government Relations team in Washington, D.C. continues to educate Senate offices this week through our Virtual VIP Lobby Days. As we continue to speak with Senate offices on the inclusion of cannabis banking provisions in the America COMPETES Act, our VIP participants are relaying their day-to-day struggles of operating in the cannabis industry. Additionally, participants are pressing for federal de-scheduling, and making sure our nation’s leaders understand the challenges that small and medium-sized cannabis businesses face every day.
Stay tuned for more details about our next Lobby Days coming this September. For more information on NCIA’s Government Relations works or how to get involved please reach out to madeline@thecannabisindustry.org.
Member Blog: 2022 Cannabis Compensation Survey Reports Released
We are pleased to announce the release of the 2022 Cannabis Compensation Survey Report. The 3rd annual report seeks to further understand and illuminate pay trends and practices in the legal cannabis industry by aggregating and presenting benchmark data in accordance with federal guidelines.
FutureSense and NCIA laid the foundation for the project in 2019 and released results for the inaugural survey at the end of that year. At the onset of the pandemic in early 2020, both parties took a step back to adjust their trajectories looking to enhance the scope and depth of the project. Marijuana Business Daily came on as a primary partner to assist with publication and distribution. Green Leaf Payroll & Business Solutions came on as a supporting partner, providing the project with anonymized payroll data. NCIA has stayed on as an endorsing partner to promote the shared mutual interest of supporting cannabis businesses and the industry at large. In 2022, the project added Western Management Group to support data management, calculations, and analysis.
This year, the survey focused on the cannabis vertical – gathering data specifically for the cultivation, manufacturing, distribution, and sales sides of the business. It established benchmarks with reportable data for 87 unique positions in 41 jobs families/function. With its continued growth and expansion of participation from the industry, it has also begun to analyze demographic breakouts by state, headcount, and revenue.
The final report is available in two tiers:
The Summary Report – available free to the public; contains high-level trends & analysis along with three data cuts indicating central tendency.
The Detailed Report – available to current participants, other cannabis companies, and consultants & ancillary/professional service providers; contains more data cuts, percentiles, and demographic breakouts by state, headcount, and revenue (where appropriate).
The cannabis industry’s job market continues to evolve. The free Summary Report presents an analysis of the current state of the market, including trends relating to the “Great Migration,” the “Great Resignation,” the pivot to hybrid/remote work, and the challenges faced by major MSOs and small, independent, craft, and legacy operators. The Detailed Report presents in-depth data cuts by job and can be used across every facet of business.
Understanding not just how to pay your employees, but also how to attract, motivate, engage, and retain your employees through compensation can be make-or-break in this rapidly evolving industry. 60-70% of companies’ expenses are typically due to payroll. Being 5% on- or off-the-mark could mean thousands or hundreds of thousands of dollars either lost or gained.
The survey’s success is contingent on participation. More and more companies are realizing the value of this information and the importance of transparency through 3rd party surveys. All submissions and their respective data are held in strict confidentiality. Abiding by the Department of Justice regulations, this survey produces anonymous and unbiased results.
The survey accepts organization-wide submissions for cannabis companies with ten or more employees at this time. Individual submissions are appreciated as anecdotal insights but are typically not included in data calculation.
Previously, in part 1 and part 2 of this series, the DEIC examined the problems inherent in existing social equity programs and the merit for federal social equity in regulating interstate commerce. The DEIC also examined the key components of a proposed framework to address these challenges, how to define social equity federally, and the merit of determining the types and numbers of permits to be issued.
Sadly, as written currently, all proposed federal bills fail to meet the critical objective of creating as much NEW generational wealth for the most number of those disparaged from participating in the legal cannabis industry because of the socioeconomic impacts of more than 80 years of federal marijuana prohibition and due to the barriers to entry created amid state regulatory regimes.
To conclude this policy framework proposal, the DEIC will look at the key considerations for a federal program to ensure it functions as designed and how this framework can create social equity technical assistance, qualification, and a phased approach of implementation to ensure that social equity operators have ample time to qualify, have adequate funded, and are set up for success with an equal starting line in the new interstate commerce industry.
Qualifying Social Equity Operators – Federal Technical Assistance Program
It is imperative that any federal social equity framework helps the industry and their new partners, by ensuring permit holders are qualified in both cannabis and business backgrounds, and by helping them bring financing to the table to start a permitted interstate commerce cannabis business that can be as ready, as quickly as possible, to help import, export, and transport cannabis between the States.
To carry out these provisions in the policy, we recommend that amendments to any federal act include:
Requiring that qualified social equity interstate commerce permit holders:
Have a path to educational qualification (training and development)
Can qualify with equivalent experience
Can pre-qualify for the SBA’s funding once they obtain education or equivalent experience (funds issued upon state licensing approval)
Obtain the majority of initial permits offered for interstate commerce (95%)
In alignment with how long and at what percentage the current industry has been dominating the ownership of licenses
Entities should have 51% or more verifiable ownership and control by a social equity qualified applicant.
Advisory Committee to determine how to verify the 51% social equity ownership
Providing social equity qualified permit holders exclusivity for at least 5 years to ensure the qualifying process takes place equitable to the average time in which the industry developed for adult use without considering social equity.
Mandating laboratory testing as national permitting for interstate commerce to work.
Ensure parity amongst states and tribal nations such that tribe-to-tribe trading and interstate trade routes can be protected.
Avoiding overly limiting interstate commerce permits, but also giving them value by not making them unlimited either.
DEIC suggests 1,500 permits as a starting point divided among the three primary types as a fair balance initially.
These pillars of federal act amendments will proactively resolve interstate commerce concerns that are inherent in descheduling cannabis. Further, pre-qualifying permit holders based on their experience, education, as well as federal financing for their business (contingent on state licensing), will accomplish two primary concerns:
Incentivizes state governments to create social equity licensing regimes that emulate federal efforts
Reduces “predatory” operating agreements that use “token” social equity applicants who do not participate in the business license, contribute little to no financing, and are thereby diluted by existing operators and investors
We believe the U.S. Small Business Administration (SBA) is best to handle collaboration efforts to define this new “Minority Cannabis Business” (MCB) certification program for both program providers on the educational side and for pre-qualifying federal funding for qualified applicants.
Through this qualification, the Alcohol and Tobacco Tax and Trade Bureau (TTB) and (SBA) would issue an interstate commerce permit to be tied to state licenses, and only then would funding be issued to the applicant by the SBA. All funding issued is contingent on obtaining a state licensed facility or partnership with an existing operator in any given state.
Phased Approach:
We believe it is also important that the amendments clearly lay out a multi-phased approach to the rollout of interstate commerce permitting to ensure those most qualified operators proceed first, and to then qualify others with enough time to do so. Encapsulating the proposed amendments, we envision the following steps to ensure a smooth transition that maximizes the opportunity for social equity applicants to succeed:
Initially, establishing the advisory board for the regulatory agencies and mandates to allow for education providers to apply and be approved to provide the educational qualification to social equity applicants. These education providers may also be prioritized based on social equity and curriculum requirements designed in collaboration with cannabis business experts and diversity, equity, and inclusion advocates in cannabis.
For those who lack the experience in operating an interstate commerce permitted business, but who are impacted by the war on cannabis, approved educational programs are invaluable to overcoming the barriers in not knowing how to operate a regulated cannabis business.
Those with experience may qualify, without the need of an educational provider, and each are evaluated for priority licensing according to the following priority:
Applicants with cannabis and business experience (most qualified)
Applicants with legacy experience but limited regulated business experience
Applicants with business experience but limited cannabis experience
Applicants with little cannabis or business experience (least qualified)
If qualified in both, the applicant goes first and can qualify for SBA funding fastest.
If they have limited experience in cannabis or business, then the applicant can take the coursework to qualify and apply for SBA funding.
During this time, it is also crucial to increase community education efforts so that communities impacted most by the war on cannabis can be made aware of the opportunity to qualify, be trained/educated, and approved, and get access to the information necessary to pursue the opportunity along the above pathways.
Provide an education fund for state and municipal governments to promote the benefits of cannabis social equity, responsibilities, and risks of cannabis.
Access to financing is critical for social equity applicants and must be made available through the qualification process for social equity qualified businesses. Once qualified on education or equivalent experience, the SBA may pre-approve funding for qualified applicants. By achieving these qualifications, applicants have access to *reserved* funding appropriated by the federal act. Pre-approved financing in the form of grants and low-interest business debt instruments that are contingent on successful completion of course requirements and other “qualifying” factors for a Minority Cannabis Business is critical to ensuring success for operators and the federal government.
These government loans say how one qualifies and is “pre-approved” so that applicants can negotiate with existing industry license holders as valuable partners and receive federal funding contingent on state licensing approval. The idea is to promote partnership and participation between the existing industry and newly established social equity entrepreneurs while ensuring equal opportunity for social equity operators who do not choose to partner with the industry.
Follow Through
To ensure the program functions as designed and that the advisory committee is provided with as much data as possible to improve upon these suggested amendments, the Diversity Equity and Inclusion Committee (DEIC) recommends a final amendment in the form of a best practices study, along with collected data from participating states, to be instituted and reviewed annually for the first five years and subsequently every three years.
The intention of this study and report is to ensure the enforcement of laws, standards, and programs and to monitor that the activities of social equity operators are in alignment with the intention of the program in benefitting the social equity entrepreneurs permitted, that policies against predatory operating agreements are being enforced, and that policies are truly beneficial to creating social equity in the cannabis industry. The study will provide evidence of the benefits and challenges of the program, as well as possible improvements at federal and state levels.
Conclusion
It seems obvious that unless any social equity partner can “bring more to the table” to balance a “mega player’s” contribution, be educated in all aspects of their chosen field in the industry, recognize predatory agreements, and otherwise be positioned more equally to meaningfully participate in the cannabis industry, social equity programs will continue to fall short of meeting the goal of creating new generational wealth.
History has shown that as long as there’s an opportunity for inequality to be wielded as a weapon for those in power, it will be. No amount of good intention can change that fact.
Social equity requires empowerment opportunities for social equity candidates to bring more to the table as equals with “mega players.” We recognize partnerships can be an ideal path forward when the power dynamics within them are balanced and fair. The DEIC proposes these amendments to any federal act to serve as solutions to the traditional problems of inequality, exclusion, and gatekeeping that once spurred prohibition in the first place and that continue to prevail in the inequity the cannabis industry is still experiencing and to solve the shortcomings of social equity programs thus far.
We recognize that the role for the federal government in these federal act amendments is to even the odds in interstate commerce permitting. Their role is to oversee the fairness in qualifying candidates, to ensure a meaningful value for the permits issued, to give permittees the chance to catch up to the privileged few already in the industry with lockout periods for non-social equity applicants, limited licensing, and to provide access to financing for those traditionally locked out of access to financing or wealth as aa result of systemic oppression caused under prohibition.
Interstate commerce permitting seems like the last true chance for America to atone for 80+ years of marijuana madness and its detriment on our society. It is also the last chance for the industry to search for its soul to balance the impacts prohibition has had on these operators in excluding their participation in legal cannabis initially – born as a result of systemic discrimination overall and colonized on by those with clean records.
In doing so, a more equitable federal act can create the bold ideas and incentive to bring traditional wealth and experience into partnership with underprivileged social equity operators and their expertise/culture to form partnerships that truly represent the intent behind the policies intended for social equity and to create a more diverse, equitable, and inclusive industry for all.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 3 – Extraction
by members of NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Three, Food: 10 Things to Consider When Planning Your Manufacturing of Infused Products (MIPs) Operations
Food safety and handling practices are an issue for any industry working with or processing products for human consumption and often come with strict guidelines that need to be followed. In the cannabis industry, edibles and other processed or infused products Manufactured Infused Products (MIPs) are ready-to-eat foods, so many states are regulating them as foods under the cGMP requirements of 21CFR117. We feel this is likely the approach that will be appropriate when cannabis becomes federally legal. These 10 things should be considered as you begin to plan your facility. Always remember to be compliant with all local rules and regulations.
Sanitary Design and Operation
A production room is straightforward, conceptually: design the space so walls, floors, and ceilings can be washed and sanitized, then verified (ATP swabs) to confirm the cleaning process is effective. To facilitate cleaning, everything needs to be pulled away from the walls, the ceiling needs to be solid and the walls need to be sealed. Insulated metal panels (IMP) are a cavity-free construction that is seeing wide acceptance in the industry. To keep the space clean during operation, slope the floors to spot drains, install coves along with the floor/wall interface and avoid ledges and traps for water or dust.
Employee Hand Washing
A stringent internal process for sanitation and washing of hands is crucial. Make sure that lavatories are available throughout your facility for proper sanitation. Confer with the municipal board of health for locations and quantity. Generally locate any place where employees are handling consumable products or encounter the potential for microbiological.
Boot Washing
Sanitation includes making sure all boots/shoes are free of contaminants. Employee captive corporate footwear programs prevent contamination potential from non-business-related employee activities.
Cart Washing
For carts that transport ingredients and materials, it is important to prevent floor debris getting transferred from one area to another. Two areas of concern; are wheels and cart shelves. Either wheel or shelf area can be addressed from multiple washing devices specific to each type of cart used.
Product Storage
Food safety temperature and humidity separation of products are an important factor. The purpose is to store food products at such a temperature and humidity level to prevent the growth of undesirable bacteria.
Allergen cross-contamination
Make sure to arrange products to avoid cross-contamination of open and unopened products. Keep the first pallet off the floor at a height of 6” AFF to avoid picking up contaminants. OHSA SHARP may apply how to organize products.
You can design barriers to keep contamination from entering a room.
Limit contamination by having and always renewing Personal Protective Equipment (PPE), since the adjacent hallways may transport raw biomass. Test all ingredients, including THC, to ensure that everything is microbiologically safe. Wipe down, or unpackage ingredients, materials, and supplies before bringing them into the ‘clean environment’ room. Wear specific scrub, clean boots, and wash off any carts entering the room.
Employees entering the food production space
Contaminants can enter via the employees. It is essential to have all employees and agents clean up before entering the food production space. You must provide facilities to wash and sanitize hands as well as boots. Continuous training of employees and monitoring adherence to the procedures is important. Your procedure will include how sanitation is necessary, where are smocks hung, how are shoes cleaned, etc. Typical controls are in the FDA Food Code for jewelry, open sores, illness, etc.
Food Safety Inherent in the Recipes
Complete a Food Safety Hazard Analysis to know if you need to implement an upstream preventative control, such as for chocolate, or if you need to manage a thermal kill-step such as cooking the gummies mass. Low water activity, high acid, or a natural biocide additive, can all be considered.
Control for Allergens
MIPS often contain soy, flour, eggs, dairy, peanuts, tree nuts, coconut, and perhaps others. Each has special considerations for allergen separations and allergen cleaning.
Ware Washing and Clean Parts Storage Room
Don’t Underestimate the Ware Washing and Clean Parts Storage Room. Adjacent to your MIPs production room, consider building a washroom with a commercial dishwasher for utensils, kettles, wetted parts, trays, molds, etc. You might install a three-compartment sink. And make sure to safely store clean items, so they dry and do not get recontaminated prior to use. This room is maintained at negative pressure to the MIPs production room.
Plan for the Pantry
Store ingredients, materials, and supplies in a pantry off the MIPs room can be considered. It is much easier to clean the MIPs room if such items are stored outside production. If you pre-weight, or decant in the pantry, cardboard and plastic are kept out of production. It is a great idea to provide a door also to the adjacent hallway to drop off ingredients, then your staff can enter from the MIPs room. Special care is taken when storing opened products.
Keeping Final Products Food-Safe
The best practice might be to put products such as chocolate bars into primary film envelopes or fin-seal gummies while still in the MIPs room. Often, subsequent packaging is done where there are other possible contaminants such as open bud, pre-rolls, chipboard or corrugated, etc. If the food products are already protected by primary packaging, you will greatly reduce the risk of recontamination.
HVAC, Humidity Control, and Filtration
HVAC, Humidity Control, and Filtration are critical. The MIP production room should be air-conditioned and filtered to at least MERV 14. Cook kettles may be a source of humidity that could be placed under a commercial hood. Cooling and tempering of chocolates and cooling and drying of gummies/jellies have their own special considerations. And consider provide enough HVAC capacity to dry out the production room after a heavy cleaning.
Airlocks and Room Pressurization
Airlocks and room pressurization should be planned properly based on your goals, budget and facility. The MIPs room pressure should be positive to all other adjacent rooms: washroom, pantry, extraction, corridors, lab. There are a wide variety of approaches to airlocks, from a pharma approach with air showers down, to just a door with sufficient air supply to the production room to ensure that it is always positive to the adjacent hallway.
State-Level Insights: Momentum Builds Across Our Nation
By Sadaf Naushad, NCIA Intern
Although the action-packed April must come to an end, the fight for cannabis reform never stops! With U.S. Senators delaying the much-anticipated introduction of the Cannabis Administration and Opportunity Act (CAOA) last month, Congress has a lot of work to do.
In the meantime, a congressional bicameral bipartisan committee is considering the Secure and Fair Enforcement (SAFE) Banking Act as an amendment to the House’s U.S. Innovation and Competition (COMPETES) Act.
Now let’s focus on action occurring within the states. State-level updates help provide us with insights on cannabis reform progress at the federal level. As more state constituents vote in favor of cannabis initiatives, reformation support overall increases within the United States. Efforts to reform cannabis policies at the state level encourage members of Congress at the federal level to enact legislation.
Let’s take a look at this week’s state-level insights:
New York
As the legal cannabis market is set to launch later this year, New York lawmakers intend to ensure that a sufficient supply of marijauna exists. Last month, state regulators voted to allow conditional marijuana cultivation licenses to several hemp businesses. Regulators also established that adults with prior cannabis convictions, along with family members who have previously faced criminalization, would receive the first round of adult-use cannabis retailer licenses – ahead of present medical marijuana businesses. This week, lawmakers recently approved a second round of applications for recreational cannabis cultivators. Additionally, the Cannabis Control Board (CCB) passed amended regulations granting medical marijuana patients to grow their own plants for personal use.
Delaware
A Delaware House Committee approved a bill that would terminate 50 years of cannabis prohibition and criminalization. For the second time in history, Delaware’s District 24 Representative Ed Osienski (D) introduced House Bill 371, legislation legalizing cannabis possession and gifting. The legislation is attached to a companion measure that would build a regulatory framework for the market. Its two-piece model comes after the House defeated a prior measure in March that incorporated both components.
South Carolina
An eight-year attempt to legalize medical marijuana in a largely conservative state abruptly came to an end on the House floor Wednesday. South Carolina’s District 13 Representative and House Leader John McCravy (R) ruled that the Session 124 measure comprises an unconstitutional tax increase, thereby ceasing further consideration of the bill. According to Representative McCravy, since the bill contains a tax on medical cannabis, lawmakers should have introduced the bill in the House under the state constitution’s article for legislation that raises revenue. The bill’s sponsor, U.S. Senator Tom Davis (R), is rapidly seeking other ways to keep the issue active as the session concludes.
Missouri
In preparation for the 2022 midterm elections, a Missouri House Committee approved a GOP-led joint resolution seeking to place cannabis legalization on the November ballot. Missouri’s District 98 Representative Shamed Dogan (R) sponsored an amended version of the legislation, in which The Special Committee on Criminal Justice passed in a 7-2 vote. The amended bill eliminated provisions that would remove the state’s current separate medical marijuana program and set regulations regarding taxation in the legal market. Under the amended resolution, marijuana offenses would be removed from the Missouri criminal statute, permitting adults to possess, use and sell cannabis without facing penalties.
Washington
State officials Lieutenant Governor Denny Heck (D), Attorney General Bob Ferguson (D), Treasurer Mike Pellicciotti (D) and Governor Jay Inslee (D) sent a letter to congressional leaders, outlining the urgency of passing the Secure and Fair Enforcement (SAFE) Banking Act. With Washington being one of the first states to legalize cannabis, lawmakers remain frustrated at the industry’s lack of access to essential financial services stemming from federal prohibition.
New Jersey
Last month the state attorney general’s office released a controversial document detailing how New Jersey’s marijuana laws currently authorize police to use cannabis when not working. This week, New Jersey lawmakers introduced a string of bills designed to encourage employers to penalize workers from consuming cannabis off duty in compliance with state law. Punishable workers specifically include law enforcement officers and first responders. Now, three new bills exist that intend to enforce restrictions on such activity for particular employees. New Jersey’s 6th Legislative District Representative Louis Greenwald (D) aims to amend state statute to contain the following provisions: penalizing police for using cannabis, conducting random drug tests and the right to refuse job applicants due to lawful cannabis use. Although Representative Greenwald’s bill targets police officers, two other measures presently remain that would also impose employment-based restrictions on lawful marijuana use.
Ohio
The Coalition to Regulate Marijuana Like Alcohol (CTRMLA) filed a lawsuit to keep cannabis legalization on Ohio’s November 2022 ballot. In December 2021, CTRMLA turned in petition signatures to Ohio’s secretary of state’s office, but the office deemed the signatures insufficient. To advance the legislative review of their measure, CTRMLA turned in additional petitions on January 13, 2022. According to the state statute, however, a ballot petition must be submitted “no less than ten days prior to the commencement of any session of the general assembly.” The session commenced on January 19, falling outside of that ten-day certification window. As a result, CTRMLA contacted Franklin County Court of Common Pleas, requesting a ruling on a prospective challenge concerning the timing of the group’s initial signature submission to Ohio for the reform proposal.
Stay tuned for more updates on cannabis policy reform. If you are interested in learning more about NCIA’s government relations work and how to get involved please reach out to Madeline@thecannabisindustry.org.
Video: NCIA Today – Thursday, May 5, 2022
¡Happy Cinco De Mayo! NCIA 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 other Thursday on Facebook for NCIA Today Live.
CAOA Delays, House Negotiations, and a Cannabis Festival
Photo By CannabisCamera.com
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Hopefully you’ve had a chance to recover after 4/20, but here in Washington, D.C. the work never ends!
Over the last few weeks, there have been developments on the timeline for the Cannabis Administration and Opportunity Act (CAOA), updates on the path forward for SAFE Banking, and a slew of pro-legalization events took place in the D.C. Keep reading for the latest:
More Delays for the Cannabis Administration and Opportunity Act (CAOA)
In February 2021, Senate Majority Leader Chuck Schumer (D-NY) along with Sen. Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) announced that they would be introducing a comprehensive cannabis bill to deschedule cannabis, enact a regulatory framework for this new industry, and seek to repair some of the harms that the war on drugs has created. In July of that year, the trio released the long-awaited, detailed discussion draft of the Cannabis Administration and Opportunity Act (CAOA) and asked for comments and feedback from stakeholders (you can read NCIA’s here) to be submitted by September 1, 2021. Since then, the Senators have been diligently reviewing and working on the legislation.
The sponsoring offices had hoped to introduce the CAOA in the beginning part of the year, and more specifically April 2022, however, they recently announced that they are continuing their diligent work and will introduce the bill before August recess.
While this announcement can be frustrating at face value, I’m happy that the Senators are being thoughtful, careful, and considerate about crafting this legislation. Precedent matters a lot on Capitol Hill, so getting it right on the first try (or attempting to!) matters.
SAFE Banking & the America COMPETES Act
The House of Representatives has passed the SAFE Banking Act three times this Congress; first in April 2021 as a standalone bill by vote of 321-101 and most recently as an amendment to the House’s version of the America COMPETES Act, which is now being negotiated by a bicameral, bipartisan conference committee.
While many in D.C. had hoped that negotiations would conclude by Memorial Day, lead sponsor Sen. Todd Young (R-IN) recently said that a more realistic timeline for the bill would be the end of summer. This week, the Senate will vote on 28 motions to instruct- these are procedural, non-binding resolutions that guide the conference committee through the negotiation process. After that, the conference committee can begin meeting
National Cannabis Festival and more!
Founded in 2016, the National Cannabis Festival is an annual event held in Washington, D.C. with a focus on cannabis and music, advocacy, education, and activism. Now boasting well over 20,000 attendees, NCIA is proud to have been involved with the event since its inaugural year, and I even sit as an advocacy committee chair!
This year, the festival was back and better than ever with an entire week of events celebrating cannabis advocacy in the nation’s capital, including an incredible Policy Summit featuring members of Congress, advocates, journalists, and more.
Like I said – the work never ends in D.C., and the NCIA team is gearing up for another busy month filled with Evergreen virtual lobby days, Hill meetings, coalition building, and more! Want to get involved? Consider becoming a member today!
Member Blog: Hard to Get – Why Disposable Gloves are Scarce and Pricey
Disposable gloves are standard issue for the medical, food, and yes – cannabis industry. But thanks to COVID and subsequent disruptions in the supply chain, the market for procuring disposable gloves has gone from routine to challenging. In fact, the demand for quality disposable gloves has skyrocketed, more than doubling since the global pandemic’s arrival, thereby creating an unpredictable cycle of availability. Demand for single-use gloves is expected to continue increasing in the coming years, as the health and safety of workforces across multiple industries – including medical, food, and cannabis-related operations – are required and dependent upon their usage.
Let’s examine the factors that have made disposable gloves both scarce… and pricey, as of late.
Global Glove Origination
Approximately 99% of all disposable gloves are manufactured in southeast Asia, most notably Malaysia and Thailand. But for these regions, compared to the U.S., lockdown to prevent the spread of COVID infections has a much more literal meaning. The restricted movement, as well as outbreaks, led to output at 60% of its normal capacity. In addition, most experts agree that there’s clearly a shortage of workers – many of whom were immigrants affected by travel restrictions. It’s estimated that an additional 25,000 workers are needed to restore full production capacity.
Supply and Demand
As the demand for disposable gloves increased globally, it put added stress on manufacturers and the supply of raw materials, driving up prices tenfold compared to pre-COVID levels. Though glove costs have recently dropped, prices have not reached pre-COVID levels.
Cost of Gas
The raw materials of nitrile gloves are primarily petrochemical based, subject to the volatile price swings in the oil and gas industry. Combined with the tenfold increase in shipping costs, disposable glove prices are not likely to continue dropping.
Labor Violations
In the midst of this price spike, one of the top importers, Malaysia’s Top Glove, the world’s largest glove producer, was banned from importing gloves to the U.S. from July 2020 to September 2021, due to conclusive evidence of forced labor. However, this ban did not extend to other countries.
Knockoffs
When the pandemic nearly doubled the demand for disposable gloves and other PPE components, several new manufacturers with little to no industry experience, assisted by dealers with nothing more than a financial incentive, flooded the market with cheap, counterfeit, and reject-quality gloves. Spotting these unscrupulous suppliers can be done by looking for a few common signs, as they’re often given away by their offering of discount or wholesale pricing, especially in bulk. It’s estimated that the market has already absorbed an influx of gloves of a defective and dangerous quality.
Safeguarding Your Operation
Currently, poor quality gloves continue to flood the disposable-use market. In business, it’s human nature to seek the lowest price for inventory, but saving a little now may cost you dearly on the backend. Cost is obviously important, but consistent quality will keep you from having to replace gloves that rip and tear too easily. When sourcing disposable gloves, seek reputable suppliers – those who have a clear ownership origin, quality web presence and active social media accounts. Taking it a step further, you can inquire about factory audits and HACCP compliance certifications. The cannabis industry has already dealt with at least one recall due to glove contamination. And recalls can have negative financial and brand ramifications. Lastly, always remember when dealing with a new vendor – you can conduct your own product trial before ordering.
Steve Ardagh, “The Glove Guy,” is the founder and CEO of Eagle Protect, a disposable glove supplier dedicated to the responsible sourcing of quality products that ensure customer safety and impact reduction, ultimately mitigating customers’ risk. Eagle Protect is the only global PPE supplier that is a Certified B Corporation, a designation that a business has met the highest standards of verified performance, accountability, and transparency. He can be reached at steve@eagleprotect.com.
Equity Member Spotlight: Puff Couture LLC – LaVonne Turner
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
I am LaVonne Turner, President of PUFF COUTURE LLC. Before my interest in cannabis, my career was focused on marketing, communications, public relations, event management, and community advocacy. After working for non-profit and for-profit organizations, I became increasingly interested in public policy and community advocacy to help the underprivileged and unrepresented. I hold a bachelor’s degree in executive leadership/marketing, a master’s in public administration, and currently working on a master’s degree in clinical mental health counseling. I am a block club president and serve on a couple of boards and committees. I have spent many years mentoring children and youth.
My journey into the cannabis industry as an entrepreneur started when my mother began experiencing debilitating pain, and her only relief was prescribed medication. While I still haven’t found the right product to deal with her pain, I have taken great interest in the industry and the incredible products born from seeds. I plan to open a microbusiness and consumption lounge in Detroit, MI, that serves aromatic, exotic strains and infused products.
What unique value does your company offer to the cannabis industry?
PUFF COUTURE LLC is a minority-woman-owned cannabis company slated to open a microbusiness and consumption lounge in Detroit. We want to bring a sophisticated community-driven cannabis business that offers a contemporary atmosphere for clients. It will convey the importance of the cannabis flower by providing a chilled environment for clients to consume unique, flavorful, and aromatic cannabis. PUFF COUTURE will support mental health counseling, volunteerism, public policy, and minority representation in the cannabis industry, especially among women. According to a recent special report by MJBbizDaily Women and Minority Report, only 3.8% of Blacks or African Americans are cannabis business owners, the percentage of minority women in Michigan is even smaller; our responsibility is to open doors for future female entrepreneurs and people of color.
What is your goal for the greater good of cannabis?
PUFF COUTURE LLC would like to change the face of cannabis through participation and contributions to critical public issues that affect the community values of our clients and neighbors, as well as giving back through donations and mentoring. The organization will support issues affecting women who suffer from traumatic situations through our community advocacy campaign. Still, there will be plenty of time for spoken word, intimate art shows, parties, etc. PUFF COUTURE will take care of our people, support the cannabis industry, and create an atmosphere of excitement.
What challenges do you face in the industry, and what solutions would you like to see?
A few years ago, I couldn’t get anyone to advise me or take the time to mentor me. However, after many no’s, I have been blessed to partake in the City of Detroit’s Homegrown cannabis program and training by the Detroit Cannabis Project. LUME’s Vice President of Retail Operations, Michael Dowdell, has taken the time to speak with me and allowed me to observe the business sales and operations of one of the company’s recreational and medical stores. That first opportunity let me know I could continue to grow in the cannabis industry given a chance.
I have continued to expand my knowledge about cannabis, staffing, and cultivation through a mentorship provided by one of the award-winning co-owners of Oak Canna, LLC/CannaBoys, Jason Tueni. Mr. Tueni has devoted a great deal of time to educating me about caring for the flowers at every growth stage. I am currently interning at the cultivation center, which allows me to see everything first-hand, e.g., flowers, business, human resources, all aspects of creating and running a successful microbusiness and consumption lounge. These types of opportunities should be more readily available. I often hear people complain about not having access to mentors, which I completely understand. I joined the CRA DEI workgroup and from there was able to make a connection to LUME and Mr. Dowdell, who by the way is African American, and I asked for the opportunity. I did the same thing with Mr. Tueni. I was at a Weedmaps event and started talking to people and let them know I was looking for a mentor and from there, introductions were made. We met a few times for two to three hours, a couple of months after, and I asked if I could intern at the cultivation center and he said yes. We continue to meet, although not as often, and I see him on a regular basis. Hopefully, when the time is right, we will partner on a project.
Both of these events have provided a great deal of information for me in preparation for my future cannabis venture and I won’t stop reaching out for more knowledge and advice. Knowing how mentorship has helped me, I will continue to look for opportunities to build my business and while doing so pay it forward by mentoring future Detroiters interested in the cannabis industry. As important is my need to stay involved in public policy and community advocacy.
Why did you join NCIA? What’s the best or most important part about being a member of the Social Equity Scholarship Program?
I joined the NCIA to learn and network. Through the social equity scholarship, I serve on the DEI Committee and am also serving on the Cannabis Regulatory Agency-DEI Workgroup for the state of Michigan. The weekly social equity meetings held by the DEI Director are informative and build camaraderie among social equity entrepreneurs. The added weekly conversations help push to get to the finish line. I believe many social equity members will have an opportunity to work together in the future.
I look forward to growing with the National Cannabis Industry Association.
Committee Blog: Mississippi to Implement Medical Cannabis Law
On February 2, 2022, Mississippi Governor Tate Reeves signed the Mississippi Medical Cannabis Act (SB 2095) into law, making Mississippi the 37th state to authorize the medical use of cannabis. Passage came after the voter-approved ballot measure allowing a medical cannabis program was struck down by the Mississippi State Court. The Mississippi Department of Revenue (MDOR) has 150 days from enactment to begin the process of licensing dispensaries and is working with the Mississippi Department of Health (MDOH) to design the application process. The Alcoholic Beverage Control Enforcement Division of MDOR will be the division accepting the license application and will begin accepting applications no later than July 1, 2022. Thirty days after receiving a completed application, it will have to issue dispensary licenses to qualifying applicants.
Patient Qualification and Limitations
To qualify for the program, patients must have at least one qualifying medical condition and a certification issued by a healthcare practitioner with whom they have a bona fide relationship. A “bona fide practitioner-patient relationship” means the practitioner has a treatment relationship with the patient during which the practitioner has completed an in-person assessment of the patient’s medical history and current mental health and medical condition; has consulted in person with the patient about the patient’s debilitating medical condition; and the practitioner is available to or offers follow-up care and treatment to the patient. The practitioner must be a Mississippi-licensed physician, nurse practitioner, physician assistant, or optometrist. They must believe the patient “would likely have medical or palliative benefit” from medical cannabis to treat their qualifying condition. They also must have completed 8 hours of continuing medical education on medical cannabis and complete five hours every year thereafter.
The qualifying conditions are cancer, Parkinson’s, Huntington’s, muscular dystrophy, glaucoma, spastic quadriplegia, HIV, AIDS, hepatitis, amyotrophic lateral sclerosis (ALS), Crohn’s, ulcerative colitis, sickle cell anemia, Alzheimer’s, agitation of dementia, PTSD, autism, pain refractory to opioid management, diabetic/peripheral neuropathy, spinal cord disease, or severe injury. Patients can also qualify with a chronic medical condition (or its treatment) that produces either cachexia or wasting, severe nausea, seizures, severe and persistent muscle spasms, or chronic pain, narrowly defined as “a pain state in which the cause of the pain cannot be removed or otherwise treated, and which in the generally accepted course of medical practice, no relief or cure of the cause of the pain is possible, or none has been found after reasonable efforts by a practitioner.” There also will be a petition process for patients to seek coverage for other unspecified conditions.
The program limits possession and purchases to “Medical Cannabis Equivalency Units” (MCEUs) of 3.5 grams of flower, up to 100 mg of THC in infused products, or 1 gram of concentrate. Patients’ purchases are limited to 6 MCEUs in a week and 24 MCEUs in a month. They may not possess more than 28 MCEUs at one time. Flower is limited to 30% THC, with tinctures, oils, and concentrates not allowed to exceed 60% THC.
Regulation and Business Operations
The MDOH will be the primary regulator and coordinate with the MDOR for licensing and operations. MDOH will create the applicable regulations relating to seed-to-sale tracking, recordkeeping requirements, safe processing stands, transportation, health and safety, and security. It also will be responsible for monitoring and restricting advertising, signage, and displays. All products will contain a “notice of harm” regarding the use of medical cannabis products.
Licensing will be required for dispensaries, cultivation facilities, processing facilities, transportation entities, disposal entities, testing facilities, and research facilities. Cultivators will be tiered based on size, and the law does not include a numerical cap on business licenses. No individual or business may have more than 10% ownership interest in more than one cultivation license, one processing license, and up to four dispensaries. Application fees for cultivators will range from $1,500 to $60,000 depending on the size/tier of the particular cultivator, with annual fees similarly ranging from $2,000 to $100,000. Cannabis will be taxed at wholesale at 5% of the price, in addition to standard sales taxes.
Initially, dispensaries will not be able to provide delivery or curbside pickup for patients. Still, the law does provide that MDOH and MDOR are to implement rules that include “Protocol development for the safe delivery of medical cannabis from dispensaries to cardholders.” Dispensary staff will be required to complete an initial 8 hours of education on medical cannabis and 5 additional hours of continuing education every year. They also must be over 21 and obtain a work permit for $25. They also generally have been previously convicted of a violation crime or been convicted of a felony violation of a state or federal controlled substance law within five years. A disqualifying felony offense does not include a conviction for conduct that would not have been a felony but for the conduct occurring before the effective date of the Mississippi Medical Cannabis Act.
Medical cannabis businesses are not allowed to be located within 1,000 feet of the boundary of a school, church, or childcare facility, and dispensaries must be at least 1,500 feet from another dispensary. While localities can regulate the time, place, and manner of medical cannabis businesses, they can not ban them or “make their operation impracticable” unless they opt-out of the medical marijuana program by a vote of the localities governing body within 90 days of the law’s passage. If a locality opts out, 20% or 1,500 voters (whichever is fewer) can petition to put the question on the ballot, and an election must be held within 60 days.
Video: NCIA Today – Friday, April 22, 2022
Happy Earth Day! NCIA 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 other week on Facebook for NCIA Today Live.
This episode of NCIA Today is brought to you by Senseon.
4/20 and Policy: A Week to Remember
by Madeline Grant, Government Relations Manager
There is excitement in the air as we approach April 20; what we recognize as a national holiday for cannabis culture. The 2022 National Cannabis Festival will take place this Saturday, April 23 in Washington, D.C. Prior to a full day of music, vendors, and many more fun surprises, the National Cannabis Policy Summit will be held Friday, April 22 at the Ronald Reagan Building, also in D.C.
NCIA’s very own Deputy Director of Government Relations, Michelle Rutter Friberg, will give opening remarks to introduce the “Banking on Incrementalism: How and Should Congress Pass the SAFE Banking Act?” panel. Our long-time cannabis champion on Capitol Hill, Congressman Ed Perlmutter (D-CO), will present a special message to all attendees. If you want to tune in, please stay tuned for a link on one of NCIA’s social media platforms.
The panel will discuss the Secure and Fair Enforcement (SAFE) Banking Act and how it made history when it became the first stand-alone “pro-cannabis” bill to pass in a chamber of Congress in September 2019. Since that day, the House has passed the bill an additional five times, but the Senate, under both Republican and Democratic leadership, has refused to consider the legislation for various reasons. Support for SAFE Banking is evident through numerous allies, including dozens of Governors, states Attorneys General, Auditors, and Treasurers from both parties as well as bankers, unions, and advocates. Despite widespread bipartisan support, pro-reform critics of the SAFE Banking Act worry that its passage opens the floodgates for existing licensees to expand operations while not going far enough to ensure equity and meaningful criminal justice reform.
Additionally, with the recent news of the long-anticipated Senate bill to federally legalize marijuana, the Cannabis Administration & Opportunity Act (CAOA) not being introduced this month, frustration continues to grow among advocates. A discussion draft of CAOA was first unveiled last year; however, Senator Schumer said last week that he and colleagues were in the process of reaching out to Republican senators to “see what they want” included in the legislation. The extended time frame is intended to finalize the measure, helping the senators overcome what are currently significant odds stacked against them to reach a high vote threshold in the Senate chamber. The “official introduction” will take place sometime “before the August recess,” according to a press release from Senator Schumer’s office. Stay tuned for more updates from the NCIA Government Relations team.
As NCIA continues to work to get legislation to the finish line, it’s important to build support on incremental and comprehensive bills with the House and Senate offices. From our VIP Virtual Lobby Days with NCIA’s Evergreen members to providing congressional offices industry reports and data, we work as a resource to support and educate Capitol Hill. Furthermore, events centered around cannabis policy, such as the National Cannabis Policy Summit, help to illustrate the crucial importance of cannabis policy reform. Thanks to members of the National Cannabis Industry Association, we can continue to lobby on behalf of small cannabis businesses and move positive cannabis policy reforms in Congress. Although we can’t all be together this year for NCIA’s Annual Cannabis Business Lobby Days, stay tuned for updates for NCIA members to participate virtually. If you’re interested in learning how to get more involved in NCIA’s policy work please reach out to madeline@thecannabisindustry.org.
Committee Blog: The Road Ahead for Cannabis Payments in 2022
by Daniel Muller, Founder & CEO of AeroPay Member of NCIA’s Banking and Finance Committee
In many legal dispensaries around the U.S., customers have been given the option to pay with debit cards via “Cashless ATM” transactions, but the regulatory walls around these methods might be closing in. Last December, Visa explicitly called out the misuse of ATM cash disbursements by merchant dispensaries that are unable to obtain payment services due to Visa Rules or regulatory constraints. This compliance memo from the United States’ largest payment network put legal dispensaries on high alert, considering how roughly half of the country’s cannabis retailers handle payments through point-of-banking, or cashless ATM transactions.
While Visa did not clarify specific disciplinary measures, any perceptive retailer should view this as a courtesy warning before official crackdowns begin. Fortunately, eschewing cashless ATM transactions will not relegate dispensaries back to cash-only operations. In fact, there are now a number of compliant payment alternatives available to legal dispensaries that will enable them to operate like full-fledged mainstream retail businesses.
As cannabis business owners eye their next phase of growth, many should examine the long-term advantages of adopting modern and compliant payment solutions that ultimately benefit consumers, retailers, and the industry at large.
What should retailers look for in digital payment partners?
Although both credit cards and debit cards are currently off-limits for cannabis transactions, retailers can still offer digital payment options through bank-to-bank transfers, commonly referred to as ACH. In recent years, more mainstream FinTech platforms specializing in this field, like AeroPay, have started offering ACH bank-to-bank account solutions to regulated cannabis businesses. not only to mitigate the operational risks that come with cash-only and cashless ATM transactions but also enable dispensaries to provide seamless retail experiences. Nevertheless, it’s important to remember that not all ACH platforms are made equal. Retailers in search of a compliant and effective digital payment partner should be mindful of the following operating standards before signing on.
First and foremost, payment providers must require transparent and accurate reporting. Dispensaries that use an alternate store name or address on their transaction receipts are likely “masking” their identities in order to conceal cannabis sales from banks or regulators. Platforms that either facilitate or overlook this misconduct are not operating in accordance with state and federal laws.
Compliant platforms should be forthcoming about securing regulatory approvals in each operational state. A responsible payment platform will have rigorous due diligence processes and obtain the necessary local regulatory approvals and permits before working with clients. It is also equally important to work with providers that have an established relationship with trusted, cannabis-compliant financial institutions, such as Safe Harbor Financial, that follow all reporting guidelines outlined by the Financial Crimes Enforcement Network (FinCEN).
In this highly regulated space, it is especially valuable to partner with platforms that offer extensive fraud and anti-money laundering transaction monitoring. These are still prevalent issues within the regulated industry and compliant providers are serious about keeping both their internal operations and clients accountable. Platforms that thoroughly vet clients and routinely look into potential misconduct are mitigating payment risks for dispensaries and consumers while reinforcing the legitimacy of the regulated market.
Finally, dispensaries should seek out solutions that complement their overall tech stack. The industry’s open architecture leaders see the value in integration. Integrations of payment solutions with POS systems and e-commerce solutions can introduce sophisticated services such as cashless payments for deliveries or allowing prepayments online – features that are not feasible through point-of-banking. These seamless, integrated solutions also reduce the risk of human error.
What’s the upside to going cashless?
Running a profitable and streamlined cannabis operation requires business owners to mitigate potential risks. Unfortunately, relying on cash transactions may exacerbate safety concerns, especially in light of increasing dispensary burglary rates across the country. Transitioning to digital payments not only enhances dispensary security but also reduces the possibility of employee theft –which can range from cash skimming to giving away free products under the table.
From an operational and consumer experience standpoint, allowing cashless ATM transactions or cash payments can maximize internal redundancies and friction points at checkout. In fact, mainstream e-commerce studies have already identified extra costs, lengthy checkout processes and untrustworthy payment platforms as the leading drivers of cart abandonment. This is a serious issue that negatively impacts inventory management and new customer acquisitions.
Offering contactless, digital payments can increase basket sizes for both e-commerce and brick-and-mortar settings. While it is widely known that online cannabis orders often outperform in-store transactions, it is also worth noting that contactless payment options can boost total purchase value by 19 percent among mainstream retailers. Although this is an emerging technology within cannabis retail, dispensaries must proactively cater to customer preferences in this competitive environment, especially considering how roughly 60 percent of consumers are currently using digital wallets for mobile payments.
How are digital payment services creating a solid foundation for the regulated industry?
Over the past decade, the industry has adopted a number of makeshift solutions to overcome both expected and unexpected regulatory and consumer challenges. However, as cannabis evolves into a more established sector, it will be imperative for businesses to leverage battle-tested platforms and services to ensure compliant and reliable operations.
By integrating digital payments into a business’ best practices early on, cannabis retailers are positioned to operate seamlessly, thus bolstering their credibility among regulators, investors and future business partners. Additionally, working with a platform that diligently vets clients will ensure timely customer and vendor payments –thus eliminating a pervasive and frustrating retail bottleneck. Embracing digital solutions not only reduces opportunity costs associated with manually tracking cash flow but also optimizes tax collection, compliance monitoring and enforcement as well as consumer-facing cashback and loyalty programs. More importantly, optimizing these internal operations could allow the cannabis industry to establish new and efficient flow of funds standards that do not exist in mainstream sectors.
As the chasm between legal cannabis and established sectors narrows, industry stakeholders must make a concerted effort to adopt standard operating procedures that align with global business practices. It is time for cannabis retailers to finally utilize modern payment solutions for their increasingly mainstream businesses. Gaining access to legitimate payment and banking partners has been a perennial issue within the industry, but dispensaries now have the chance to use this inflection point as an opportunity to demonstrate the sector’s commitment to operating compliantly and fostering trust within the wider business community.
Equity Member Spotlight: LaTosque Adams – Speaking Into Existence, LLC
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell me a bit about your background and why you launched your company?
Hello, I am La’Tosque Adams, an artist, and entrepreneur from East Saint Louis, Illinois, currently residing in Phoenix, Arizona. East Saint Louis is a place that taught me a lot about life and did so early on. It was a place that was full of potential but not a lot of opportunities. Life showed me how leaving your destiny in the hands of another could be dangerous. Growing up in the area helped teach me how to hustle and think outside the box. I was making music and selling candy bags with poems in them for Valentine’s Day in the sixth grade.
I have always had an entrepreneurial mindset and knew that I would have my own company one day. After consulting with a close friend from college I took the leap and moved to Phoenix at the beginning of 2016, and launched Speaking Into Existence summer of 2017. I am a creative artist through Speaking Into Existence, I have the freedom to distribute and publish art, books, merchandise, music, podcasts, and more. Forming my company was integral for my career as it allowed me to take ownership and start building blocks for something that could create generational wealth for my family. Through building a foundation that would help not only my company and family but other families and brands that I worked with along the way.
What unique value does your company offer to the cannabis industry?
I started podcasting a few months prior to the 2020 shutdowns. I was a performing artist and spent almost every week on a stage or performing at an event for two years straight. I started the journey as a way that I would bring on artists that I had performed with or booked for events in Phoenix and we would smoke, talk about the shows, performances, music projects, etc., as ManifestedThis Podcast. It wasn’t until the lockdowns that I started to pivot and rebrand to use my voice to help change the perception of this beautiful plant.
After being forced off of the stages on which I was performing almost every week since the conception of the company, I shifted focus to providing a different form of entertainment. That’s when I launched Cannabis and Coffee with LaTosque under Speaking Into Existence. I knew I wanted to offer a platform for artists, brands, entrepreneurs, and others alike to speak openly and freely about cannabis and their experience with it whether it be negative or positive. I realized how many people resonated with the message and how much misinformation about cannabis had been out there and needed to be debunked. The intention is to get the conversation started and to break down the stigmas surrounding this plant. Now, almost every Monday at 6 PM MST. I broadcast a new episode LIVE on Facebook, Twitch, Twitter, and Youtube. The Cannabis and Coffee with La’Tosque podcast is now streamed in over 15 countries with half of the demographics between the ages of 28 and 34, so it’s a mature audience and it really picked up over the past year and a half with the 60-year plus club.
Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does your company help work toward that goal for the greater good of the cannabis industry?
Going back to what I said earlier, I want to help combat that image that cannabis has received due to the ignorance of some of our ancestors. I love bringing guests on to Cannabis and Coffee with LaTosque and having an amazing conversation about cannabis and/or teaching people how to infuse dishes. In order to change the world’s perception of cannabis and the people who choose to medicate with cannabis, we must first start with educating people about the plant and its properties. Secondly, we must show the history of cannabis use for medicinal purposes dating back thousands of years. Lastly, we must show how we got to where we are with the current laws. I know that through this platform we are able to reach the masses and provide an insight that will enlighten some folks on the matter and my hope is that they will then reach another and teach them.
What kind of challenges do you face in the industry and what solutions would you like to see?
Although the majority of the states have legalized cannabis for either medical or recreational use, there are still a ton of restrictions on advertising and those same restrictions apply to ancillary cannabis businesses. It’s virtually impossible to advertise on social media without getting your accounts shadowbanned or worse having your accounts taken away altogether because of how strict community guidelines are on platforms like Instagram, Facebook, and TikTok.
Why did you join NCIA through the DEI Scholarship Program? What’s the best part about being a member?
I joined the NCIA DEI Scholarship program after learning about a social equity bill that was set to pass in my state. I was attending a Marijuana Industry Trade Association (MITA-AZ) meeting in Arizona when I met Mike Lomuto, where he explained to me this amazing Social Equity program he was putting together that would connect business owners like myself with others around the country who were also impacted by the war on drugs and were pushing the envelope to force a change. I learned about all the support I could get from joining the NCIA specifically, the connections that would be made on the weekly social equity calls. I set out to support the end of the prohibition of cannabis on a federal level. This was my chance to have a bigger impact.
I am glad to be a part of the movement to end the current laws. This plant has helped me and it’s sickening to see that there are still laws surrounding such a wonderful healing component that is leading to incarcerating so many people for years and unfortunately in some cases, for life. I personally was affected by the war on drugs and being a part of history to help enlighten people on what true decriminalization looks like is an honor and has always been a goal of mine because I believe that cannabis should be treated like any other product that naturally grows on the planet.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 1 – Cultivation
by members of NCIA’s Facilities Design Committee
Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Introducing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part 1, Cultivation: The Top Things to Consider When Planning Your Cannabis Cultivation Facilities
As you are planning to start your own indoor cultivation facility, there are some often ignored basic parameters that should be taken into account in the design and decision-making process. We have listed the key parameters that will ease the process of going live and may save time and money while you design your facility and the building process. Always remember to be compliant with all local rules and regulations.
Lighting Recommendations
Depending on your goals, building setting, and local requirements, you have many options for lighting, from HPS light to LED lights. Lighting standards are measured in watts per square foot. Recommendations may vary per state or other criteria. For example, Massachusetts recommends an intensity of 36w/sft for energy consumption.
Water Recovery: Minimum Percentage
Cannabis is a water-intensive crop, and consideration of effluent capacity can be inefficient, expensive, and an issue for municipalities. Depending on your cultivation practices, you should consider a water recovery system and what percentage you are able to capture. There are two types of water recovery – leachate, and condensate. An effective system will recover at least 70% of the water for utilization, significantly reducing your water and sewer expenses. Your irrigation and fertigation selection will have an impact on your water consumption.
Generator Capacity: Minimum Recommendations
Your area or your business model may dictate for a generator – which is a critical Business Continuity consideration as a power outage, even if for a brief period of time can destroy a crop. Make sure to calculate the minimum capacity requirements of your facility. Do you plan to have it for emergency or stand-by usage? Typically, 50% of your short lighting load capacity of cultivation, 100% for AHU (air handling), and some back-office and security system, including cameras, access, and server needs.
Carbon Dioxide Enrichment: New Versus Recaptured
You can consider 75% new tanked- or generated- natural gas and 25% recaptured sources, for cultivation rooms, gas-fired chillers, and gas-fired boilers.
Carbon Dioxide Alarms Levels: Cultivation and Common Areas
Carbon Dioxide monitoring is critical for worker safety. You should be monitoring common areas to ensure that you are below 3,500 ppm. Monitoring should be tied to the fire alarm system for building evacuation, with 2,000 ppm alarm levels for the cultivation area. 5000 ppm limits are required by NFPA/OHSA. Alarms should contain visual strobes, red/green room access indicator lights and/or possibly an exhaust system that is triggered by an alarm
Renewable Energy: Minimum Energy Production Percentage
To demonstrate a commitment to sustainability, a minimum target of 10% of your facility’s energy consumption should be from renewable energy production: i.e. solar power, wind energy, geothermal, biomass, and/or battery energy.
Refuse Disposal: Recycling and Composting
Consider certified disposal of horticulture byproducts with a minimum of 25% recycling or composting by volume; rendered unusable. You will want to establish and verify that your shredder or equivalent system is capable of breaking up debris to a specified size.
Airlock Doors for In-Between Uses
You should install an airlock barrier, or at a minimum an air curtain, between the business and the production side, for outside and inside egresses, to keep a controlled environment. Keep in mind considerations for ventilation systems and cascading airflow.
Wall Material
For best performance to mitigate biological hazards and contamination, depending on your region, recommend installing insulated metal panels, that are non-porous, solid core wall, insulated metal panels (IMP), with surface mounted devices.
Security Entrance: Facility Safety
Consider creating a separate mantrap style entrance to allow for better safety at the entrance point, monitor visitors, keep a controlled environment as well as avoid weather-related issues, i.e. wet areas due to rain or snow, or temperature variance due to extreme heat or cold.
Limiting doors access and key sets for employees needs to be part of your overall security plan, with proper door labeling and authorization levels. The idea is to prevent unauthorized personnel from accessing specific spaces, for proper environment control and to be compliant with the local regulatory body. Remember to be compliant with local rules and regulations.
Security Camera: Minimum Area of Coverage
In most states, you will need security coverage for 100% percent of your faculty where cannabis products will be stored or displayed, with proper recording and monitoring. Keep in mind that your security room will likely need its own dedicated HVAC systems
Security Camera: Minimum Data Storage and Resolution
You will need to store all security camera footage on-site for a minimum of 90-days, or more depending on regulations. You may need to store the data offsite for five years for future legal needs. Footage quality may need to be shot in 1080p minimum. An ASTM International Standard Guide for Video Surveillance System provides additional parameters to utilize.
Security Alarm: Monitoring
Security alarm needs to be monitored by a reputable company. A service level agreement (SLA) or similar to ensure there are redundancies in the event of a failure should be considered, and redundancy or a backup system might be necessary.
Odor Control: Exhaust Air Management
Odor mitigation is a crucial part of all operations. All exhaust airflow must be oxidized or ionized. You also need a fogger system and carbon filtration. Refer to local municipal bylaws and regulations for more information.
For interior odor control and non-cultivation areas, consider cascading air flows from non-cultivation areas to provide a common method of control for pressurization control. Plan to control air flow and exhaust.
Fire Sprinkler: Maximum Bench Sizing
Sprinklers are designed to cover a limited surface area. When installed on cultivation tabletops wider than 48”, additional sprinkler coverage may be required.
Flooring Type: Continuous
Cultivation floors shall have continuous resin or epoxy coating with at least a four-inch lip onto the adjacent wall.
Energy Incentives: Minimum HVAC/D Efficiency Rating
Air Conditioning (AC) units should be no less than 16 SEER, High Point (HP) units no less than 9 HSPF. Incentives for this vary by state. Please check with your local utility company and regulatory commission for all available rebates.
HVAC Validation Requirements:
Bi-Annual Third Party Controlled Environment Validation using required Trend Data Metrics is the validation and calibration of control sensors, including temperature, humidity, CO2, and other devices such as scales, flow meters, integral valves, PPM sensors, EC meters, TDS meters, HVAC dampers and other applicable devices that may drift from factory or initial installation specifications.
Good Agricultural and Collection or Manufacturing Practices (GACP/GMP): Ready Versus Complaint
Your operation should be designed with documentation to prepare for GACP or GMP requirements. Depending on final product types, specific food-based GMPs with appropriate risk assessment programs (such as HACCP, and others referenced within the Food Safety Modernization Act) will prepare you for any federal or international trade opportunities in a federally legalized framework.
Employee Locker Access
Plan for gender-specific, male and female locker rooms, with six square feet per employee per shift expected to arrive at the facility at any given time. Employee supplied flock for locker or lock provided by the employer is a business decision. Keep in mind how you will keep the environment of your production facility under control. You might consider having locker access adjacent to the growing area with a proper gowning area.
Locker Room Type
Make sure your locker room is correctly set up for employees to be able to change in a safe way. Specifications for Locker Room and Gowning/PPE Areas should allow access to faucets for washing hands as well as bathrooms. Note gowning areas should be separate from the bathrooms directly off the locker room area.
Employee Shower Access
Per International Building Code (IBC) and State Plumbing Codes, calculate the number of employees and determine the number of showers based on code requirements as well as business policies. Having gender-specific showers is a recommendation as well as a business decision.
Emergency Eye Wash- Shower
For safety and based on OSHA standards, Integrated Pest Management (IPM), fertigation, and extraction operations must-have emergency eye wash showers. Eyewash stations need to be placed throughout the facility so that they are within 10-15 seconds walking distance from employees. Check local requirements for additional needs.
Note: in a facility where corrosives and skin irritants could pose harm to employees and require immediate remediations, you should consider emergency showers.
First Aid Kit Distribution
First aid kits should be available in all rooms where sharp tools and other hazardous materials are intended to be used. These kits need to be within 10-15 seconds of employee walking distances. Per OSHA requirements, first aid kits should be located in all trim, extraction, flower hallway, and shredding areas. This is overall a must-have in your facility.
Safety and Injury Handling
We recommend that you ensure that you have enough first aid and burn kits available throughout your faculty, based on your activity and the number of employees.
As the debate heats up on “how” rather than “if” cannabis legalization will happen, social equity and comprehensive reform are at the forefront of the minds of national legislators and advocates. Previously, in part 1 of this series, the DEIC examined the problems inherent in existing social equity programs and the merit of federal social equity in regulating interstate commerce. Sadly, as written currently, all proposed federal bills fail to meet the critical objective of creating as much NEW generational wealth as possible for those harmed by the war on drugs.Now, we examine the key components of a proposed framework to address these challenges, how to define social equity federally, and the merit of determining the types and numbers of permits to be issued.
Key Considerations for a Federal Cannabis Social Equity Program:
Fundamentally, any federal act for cannabis legalization should be a social justice bill that deschedules cannabis federally and that creates the most amount of new generational wealth for those most impacted by prohibition. Expungement for all persons with a past criminal record involving cannabis is the bare minimum these bills should do. However, proposed bills so far fall short of the latest innovative solutions to known problems in social equity programs and should be amended to include these key considerations.
Any proposed act must be amended to include provisions on regulating interstate commerce immediately after descheduling. The NCIA’s Diversity Equity and Inclusion Committee (DEIC) believes any federal act must prioritize social equity ownership of interstate commerce permits issued by the federal government. Learning from the municipal and state social equity programs, this policy paper seeks to propose amendments that meet these objectives, by instituting the following amendments to federal legalization bills:
Defining the regulatory agency for federal interstate commerce regulation and taxation
Alcohol and Tobacco Tax and Trade Bureau (TTB) and U.S. Small Business Administration (SBA) roles and responsibilities
Defining number and types of seats for a Federal Cannabis Social Equity advisory board
Ensure a diverse and representative Federal Cannabis Social Equity advisory board members, e.g., federal, state, tribal nations, diverse city representation, NCIA, and social equity cannabis owners, and operators.
Defining who qualifies as a social equity interstate commerce permit holder:
Outlining what states must meet as a minimum standard set by the federal government to participate with equivalent/reciprocal qualification.
May be determined by advisory board to define social equity qualifications
With minimum areas defined such as: income, arrest history, disproportionately impacted area(s), residency or heritage to avoid gentrification issues at large.
Defining permit types (similar to wine wholesale model) such as:
Importing
Privileges to buy from exporters directly and sell to distributors or transporters and licensees into a state system from another state
Exporting
Privileges to buy from operators and sell from a state system to an importer in another state
Transporting
Privileges to sell to or buy from qualified cannabis licensed businesses within a state system and to move product from or to licensees in a state or between importers and exporters interstate
Testing
State labs that meet national standards to ensure consistency with results for other permit types
May not be strictly social equity since existing labs are more specialized in converting to federal standards and adding this permit
Defining these basic requirements offers a framework for interstate commerce permitting and establishes the essential agencies required to enact a robust social equity program federally. More importantly, it stalls illegal and gray area activity from taking root under the guise of federal legalization by ensuring interstate commerce activity falls under a specific regulatory agency already well versed in interstate commerce permitting and regulation.
Suggested Social Equity Definition:
To define social equity applicant qualifications, DEIC suggests the TTB and SBA move away from diversity supplier program definitions which are too restrictive for a new industry to qualify. In order to accommodate the cannabis industry, DEIC recommends looking at other state definitions of social equity qualification that have proven to be effective.
Factors like living in a disproportionately impacted area for 5 out of 10 years, being arrested for cannabis or having a family member who was arrested, as well as income below the poverty line, should become qualifying factors.
Additionally, minorities, women, and veterans should be given additional consideration in the definition of who qualifies as a minority cannabis business.
High poverty rate, unemployment rate and participation in federal or state income-based programs, a history of arrests, convictions and other law enforcement practices in a certain geographic area, such as, but not limited to, precincts, zip codes, neighborhoods, census tracts and political subdivisions, reflecting a disparate enforcement of cannabis prohibition during a certain time period (war on drugs started in 1971), when compared to the rest of the state.
Utilize the advisory committee and collaborate with cannabis social equity groups to make sure gentrification and displacement are taken into account. Many areas have drastically changed over the last 5-10 years. Where a person spent their formative, childhood years should also be factored in. Guarding against ‘gerrymandering’ types of map cutouts, where folks who grew up literally surrounded by DIA’s, and who dealt with many of the same issues growing up, are somehow not considered to be disproportionately impacted.
We believe the federal government should leave regulations within each state alone during this multi-year implementation and defer to the TTB and SBA to work in conjunction with any Federal Drug Administration (FDA) regulations with their primary focus pertaining to interstate commerce and taxation as it relates to social equity permit issuance.
Defining How Many Permits to Issue to Social Equity Operators
To address the common shortfalls of state programs, the DEIC realizes that social equity applicants are already a minority stakeholder in existing cannabis licensing. In most states, sadly, constituting less than 5% ownership. This is a huge difference compared to the proportion of individuals in prison for the same activities a licensed business is allowed to conduct.
Accordingly, the DEIC recommends a direct balance in ensuring a lock-out period on issuing new permits and ensuring, during that time, that 95% of the permits go to social equity owners/operators.
While some may consider such a counter-balance to be extreme, more and more states are increasing the committed amount of licenses for social equity to ensure a fair counter-balance. If anything, mega-players should be competing with each other for a select number of limited licenses – not the other way around.
We also realize that, in order to generate investment or value behind interstate commerce permits, there could not be an unlimited number of them initially issued. While the advisory board may issue more in the future, we feel a bold stand to increase the number of valuable permits for initial social equity applicants nationwide is necessary to ensure a balance that reflects the oversight to include social equity business into the industry thus far.
DEIC suggests 1,500 permits as a starting point divided among the three primary types (import, export, transport) as a fair balance initially.
The above policies may seem bold, but they are designed to seek to balance the industry and state’s failure to allow social equity participation. Most cannabis states left out social equity operators by mandating residency and felony-free requirements.
The reality is that interstate commerce means selling the products already owned and produced by non-social equity folks. Further, if it was not for these legacy operators, there would not be a cannabis culture. A culture that has been co-opted from legacy social equity operators by mega operators who kept “undesirables” from the industry at its inception.
These policies seek to balance the needs of traditional cannabis businesses that would most benefit from interstate commerce, with the needs of social equity businesses to create equal opportunity. By limiting the number and availability of interstate commerce permits for at least a 5 lock-out year period, the policy ensures traditional operators partner with social equity permit holders to export, import, and transport their goods between various markets.
The policy helps ensure partnerships that are more equitable for both parties and, in doing so, seeks to avoid “predatory operating agreements” or “social equity colonialism” that dilute social equity operators who are not given the opportunity or resources to bring anything to the table. Therefore, the DEIC stands by lock-out periods and a dedicated high percentage of limited licenses for social equity interstate commerce permitting as a policy to balance existing inequity.
In the next part of this policy paper series, the DEIC will examine how this framework sets up social equity technical assistance, qualification, and a phased approach of implementation to ensure the widest net is cast and that social equity operators have ample time to qualify, are appropriately funded, and set up for success with an equal starting line for interstate commerce.
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 other Thursday on Facebook for NCIA Today Live.
This episode of NCIA Today is brought to you by Senseon Secure Access, offering concealed protection, monitoring, and workflow management for dispensaries. Senseon is ready to provide you with an exceptional customer experience, plus improved efficiency and compliance, not to mention slim and modular aesthetics. Learn more about their security solutions and cost benefits at Senseon.com.
NCIA Partners with Green Enterprise’s HBCU College to Career Initiative
This week on Thursday, April 7, 2022 kicks off the first event in a partnership between NCIA and Green Enterprise’s HBCU College to Career Initiative to bring career empowerment to HBCU students and alumni (Historically Black Colleges and Universities) starting at Chicago State University.
This significant initiative expands opportunities for underrepresented Black and Brown people in the cannabis industry. In a series of on-campus events at HBCUs around the country, the College to Career Initiative will assemble prominent Black entrepreneurs, state officials, and thought leaders to discuss solutions to create a point of entry in the growing cannabis industry, as well as substantial pathways to success.
Join us on April 7, 2022 at Chicago State University for a dynamic day where you can get up close and personal with prominent Black advocates and entrepreneurs for career advancement in the industry!
You can expect to network throughout the day and join intimate conversations in the afternoon with experts on how to use YOUR unique skills to break into the industry. NCIA leaders will be speaking, as well as hosting “office hours” with students and alumni interested in discussing the best pathways to break into the industry. This event is a continuation of NCIA’s Equity Workshop Series, the live, in-person component of our equity scholarship and mentorship program.
Creating a Pipeline to Generational Wealth
“The goal here is to create a direct pipeline of opportunity from black and brown students and alumni to our member companies and resources,” says NCIA DEI Manager, Mike Lomuto. By now most of us are aware of the vast underrepresentation of Black and Brown communities in the upper levels of the cannabis industry. This initiative is a way to build a foundation, starting at the ground level with students coming out of educational institutions gaining direct access to opportunities that might otherwise be out of reach by bringing these prominent Black entrepreneurs and cannabis leaders in person to meet with these students.
When Mike and Andrew Farrior, co-founder of Green Enterprise Magazine, began conversations in the Fall, they aligned on the deep commitment to expanding real opportunities for folks to have access to building generational wealth. Green Enterprise, operated and produced by Digital Venture Partners and Black Enterprise, then announced the Green Enterprise College to Career Initiative. This series of on-campus events will tour HBCUs across the country in 2022, creating a point of entry in the growing cannabis industry, as well as substantial pathways to success. The timing of this couldn’t be more relevant, as many of the HBCUs are in the Northeast and Southeastern states that are coming online with cannabis programs, and as the tour gets established we will be there right on the ground providing access to the industry.
The Unique Opportunity for NCIA Members
NCIA will provide adapted versions of our Equity Workshop Tour at these HBCU events. The in-person component of our equity scholarship and mentorship program allows us to engage with social equity applicants and operators, as well as the community at large on the ground, in different regions in the country with the goal of addressing specific needs of the community while connecting them to resources. “So this is why it was such a good fit for us to make this partnership. We hope to connect with Black leaders in the industry who may be interested in joining NCIA and strengthening our mission together,” says Mike.
NCIA is composed of thousands of cannabis industry companies that are searching for interns, employees, and partners. NCIA has the unique ability to represent small businesses in all different sectors all over the country. There are many opportunities throughout the NCIA network for people to enter and advance in the industry from a variety of entry points. Being involved in this historic initiative allows us to bring people to the table that may not have otherwise had the ability to partner with Andrew and Green Enterprise’s initiatives. When Andrew brought this opportunity to Mike, and Mike subsequently brought it to NCIA’s member base, the response was immediate and exciting. “People are ready to just give and do whatever they can to help with this initiative, and bring the cannabis industry to these campuses in whatever way Andrew thought we should do.”
The HBCU College to Career Initiative Tour Dates
These historic events at HBCUs will be taking place throughout the remainder of 2022, and underline a variety of conversations and lectures covering a wide range of topics, from entrepreneurship to cannabis marketing, to building an inclusive industry that began at Southern University in Baton Rouge, LA in February and will continue on to Chicago State University this April 7th, presented by Cresco Labs. The CSU event will be held in conjunction with the predominantly black two-year college, Olive-Harvey. The tour will then make additional stops at Florida A&M University on April 20th, and Medgar-Evers College on April 30th, both being powered by Massachusetts-based operator, Curaleaf.
Cresco Labs, the presenting sponsor for Chicago State University and Olive-Harvey College, will promote significant conversations and initiatives and hand out materials to initiate in-earnest partnerships between cannabis operators and HBCUs and develop a direct, effective talent pipeline into the industry.
Spotlighted topics such as social impact and entrepreneurship, as well as, economics and investing, will be covered. The full schedule is available at GreenEnterpriseHBCU.live:
Chicago State University & Olive-Harvey College – Chicago, IL
Thursday, April 7, 2022
Florida A&M University – Tallahassee, FL
Wednesday, April 20, 2022
Medgar-Evers College – New York, NY
Saturday, April 30, 2022
Sponsorship and partnership opportunities are available for this specific initiative and NCIA’s programs. Also for our members interested in becoming involved, please reach out to Mike Lomuto, DEI Manager.
We’re excited to get our members engaged with this initiative to create solid pipelines at this historic point in the industry.
(Another) Historic Week In Congress for Cannabis Reform
Photo By CannabisCamera.com
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Usually, progress is slow in Washington, D.C. However, that has not been the case lately! Within the last week, the U.S. House of Representatives has passed both the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act and the Marijuana Research Act! They passed by a vote of 220-204 and 343-75, respectively. Let’s take a look at the bills and what’s next for them:
The MORE Act
Last week, the MORE Act came to the House floor for the second time in history. It was first voted on in December 2020, when it passed by a margin of 228-164.
Revisions from the last session include the removal of a provision that would have allowed federal regulators to deny cannabis business licenses to applicants who have prior felony convictions. Other changes from the introduced text this session include revisions to property requirements, allowing operators to secure those locations after receiving a federal license.
A number of amendments were offered at a Rules Committee hearing to advance the bill, however, only three were ruled in order. The first passed on a roll call vote and was introduced by Rep. Josh Gottheimer (D-NJ), authorizing $10M for the National Highway Traffic Safety Administration to conduct a study on technologies and methods that law enforcement may use to determine whether a driver is impaired by marijuana.
Another amendment, introduced by Rep. Conor Lamb (D-PA) directs the National Institute for Occupational Safety and Health (NIOSH) to conduct a study on the impact of legalization to the workplace, using states that have legalized recreational use of cannabis as a guide, and requires NIOSH to develop best practices for employers as companies transition their policies related to cannabis, prioritizing employers engaged in federal infrastructure projects, transportation, public safety, and national security. Additionally, it directs the Department of Education to conduct a study on the impact of legalization on schools and school-aged children, using states that have legalized recreational use of cannabis as a guide, and requires the Department of Education to develop best practices for educators and administrators to protect children from any negative impacts.” It passed on a roll call vote.
Another amendment, which failed on a roll call vote was offered by Rep. Jamie Raskin (D-MD) would have required federal agencies to review security clearance denials going back to 1971 and retroactively make it so cannabis could not be used “as a reason to deny or rescind a security clearance.”
While there is currently no companion bill in the Senate, Majority Leader Schumer (D-NY) along with Senators Booker (D-NJ) and Wyden (D-OR) is expected to introduce a comprehensive cannabis reform bill over the next month.
Marijuana Research Act
More recently, the House also passed the Marijuana Research Act sponsored by Reps. Earl Blumenauer (D-OR) and Andy Harris (R-MD). This bill would remove barriers for researchers seeking to apply and get approved to study cannabis, set clear deadlines for federal agencies to act on their applications, and also make it easier for scientists to modify their research protocols without having to seek federal approval.
Last month, the Senate also unanimously passed a research bill: the Cannabidiol Marihuana Research Expansion Act, sponsored by Sens. Feinstein (D-CA), Grassley (R-IA), and Schatz (D-HI). It remains to be seen whether the two chambers will be able to negotiate a deal on these research provisions to send to President Joe Biden.
Whether it’s cannabis research or descheduling, the NCIA D.C. team continues to increase momentum for reform. Interested in learning more about our efforts in D.C.? Consider becoming an Evergreen member today!
As we approach the end of Q1 2022 and prepare to enter Q2, it’s become clear that this is going to be an important year for the cannabis industry. Cannabis business professionals and investors looking for signs of growth or stagnation in the industry will certainly be interested to see how things unfold. With that in mind,CannaBusiness ERP has put together a list of the top cannabis trends for 2022, and those trends appear to be pointing to more growth. However, it’s clear that difficulties for the cannabis sector are still imminent.
Cannabis Trends for 2022
It almost goes without saying that the cannabis industry is complex and not without its fair share of challenges as the most highly regulated industry on the market. For businesses looking to grow, keeping up with complicated and evolving regulations can be stressful enough on a business in and of itself. Cannabis cultivators, processors, and consultants can look to cannabis industry trends to inform their operational decisions.
Increased legalization in the United States
Support for legalization in the USA continues to rise. In fact, a2021 Gallup poll found that 68% of Americans are in favor of legalizing cannabis. Not only is this a record number of supporters, but this percentage also reflects a growing sentiment among Americans regarding the use of legal cannabis.
The changing tide towards legalization is clear – more states passed legislation to legalize cannabis either medicinally or recreationally in 2021, with several more introducing legalization bills in2022. Because states operate independently of each other, every state will have its own policies as well as regulatory and compliance requirements, which can make things very confusing for cannabis businesses, especially multi-state operators (MSOs).
Leading cannabis business experts are predicting strong sales growth this year due to the growth in legalized markets for cannabis. In fact, legal cannabis sales reached $19.5 billion in 2020, and expertsare projecting sales to reach $30 billion in 2022. Washington State alone, which legalized cannabis ten years ago in 2012, is expected to generate $1.5 billion in sales, up from $1.2 billion sales in 2020. But Washington’s projected sales are small when you compare them to California’s projected sales of $7.6 billion. And as more states legalize cannabis, more sales will surely follow.
Another contributing factor to increased cannabis sales is related to increased demand and a growing number of product types. More consumers are learning why cannabis can be beneficial to them, including more restful sleep, lowering stress, lessening pain symptoms, and recreational use. Additionally, with so many products on the market, cannabis consumers have many options to choose from, ranging from edibles to tinctures to topical ointments and more.
Cannabis experts are predicting a growth in cannabis consumption lounges – the cannabis equivalent of a bar or restaurant that allows consumers to use cannabis on-site. According to theCannabis Industry Journal, the popularity of these lounges is growing because they provide consumers with a legal and safe space to consume cannabis. Just as with alcohol, the lounges are regulated according to laws set by each state.
Increasing sales means cannabis businesses are at a critical junction and need to scale operations to meet the growing demand. One way cannabis growers and processors can capitalize on the demand is by streamlining the business end-to-end withcloud-based cannabis business management software. Otherwise known as Cannabis Cloud ERP, it manages production, cultivation, compliance, inventory, financials and traceability, sales, purchasing, and more, all in one system that lives in the Cloud.
Increased legislative bills and pressure for federalization
Under U.S. Federal Law in the Controlled Substances Act, cannabis is still considered a Schedule I substance. However, as the number of states legalizing cannabis either recreationally, medicinally or both has increased, so too has broader support for federalization in the U.S. government. In fact, there are several bills in the U.S. congressional houses that may positively impact the cannabis industry, especially with banking challenges.
Due to the Schedule I federal classification of cannabis, many banks will not work with cannabis companies, creating tedious banking hurdles that are difficult to solve. TheNational Law Review writes, “Yet, in comparison to other industries, legitimate licensed cannabis-related businesses remain hobbled by the difficulties they face in accessing traditional banking and financial services – largely due to the fact that ‘marijuana’ is still considered illegal on the federal level under the Controlled Substances Act (“CSA”). Currently, financial institutions (including federally insured banks) are hesitant, and oftentimes unwilling, to work with cannabis-related businesses due to fear of reprisal from federal banking regulators.”
Congressional representatives have introduced a decent amount of bills geared towards making much-needed changes to banking processes for cannabis, such as the SAFE Banking Act of 2021, passed by the U.S. House of Representatives in April 2021. It is currently awaiting action in theU.S. Senatewith broad support from both sides of the aisle. If it passes both chambers of Congress, the act will allow cannabis companies to have business-critical access to banking and financial services and would reduce their need to operate as cash-only businesses and remove yearly challenges with tax accounting and reconciliation.
In addition to the SAFE Banking Act, there are other bills like U.S. Senate Majority Leader Chuck Schumer’s Cannabis Administration and Opportunity Act (CAOA), which is a push for federal cannabis legalization as well as an equity play. If passed, it is a measure towards ensuring small businesses and minority-owned businesses have access to financial services.
However, even with the tide of public opinion and legal momentum shifting in the industry’s favor, there remains a challenge with the U.S. tax code. Due to IRS Code Section 280E, if a business is trafficking certain controlled substances, like cannabis, that business is unable to deduct business expenses on their taxes. California has taken steps to address this by signing bills that help cannabis businesses overcome this code, but this is still a prohibitive factor for cannabis companies across the U.S.
Fortunately, cannabis companies that invest in a comprehensive Cannabis Cloud ERP solution with a reputable and experienced industry partner are better able to handle any hurdles that come their way.
Increased Merger and Acquisition (M&A) activity
Merger and Acquisition (M&A) activity has been steady in the industry and 2022 will see even more M&A activity. According toMJBizDaily’s article, “Marijuana M&A sizzled in 2021 and is poised for a hot 2022. Marijuana merger and acquisition activity proceeded at a torrid pace in 2021 – and could accelerate in 2022 – thanks to lower interest costs and pressure on larger companies to expand their footprints and boost revenue.”
Citing prominent cannabis acquisitions in 2021, such as Jazz Pharmaceuticals’ acquisition of GW Pharma (for $7.2 billion) and Trulieve’s acquisition of Harvest Health (for $2.1 billion), it is apparent that M&A is not going to slow down. According toBusiness of Cannabis, several deals are already taking place in 2022. Massachusetts-based Curaleaf acquired Arizona-based Bloom Dispensaries for $211 million, adding a total of 13 Arizona dispensaries and 121 dispensaries nationwide to Curaleaf’s portfolio.
For cannabis companies dealing in M&As and becoming Multi-state Operators (MSOs), it is essential to have a comprehensive, full-suite Cannabis Cloud ERP system that can run all the companies in one system. It is a crucial ingredient to manage their M&A transactions and handle their financial statements, compliance, business transactions, and more.
Most important of all, cannabis companies need to choose the right cannabis ERP.
Jennifer Spanos is the VP of Product and Vertical Strategy at CannaBusiness ERP. She has 14+ years of experience in cannabis and food manufacturing software and operations, working to maximize the efficiency and profitability of customers’ businesses.
CannaBusiness ERP: The Right Cannabis Business Management Software. Cannabis companies can grow their business with an ERP solution designed for the cannabis industry and for MSOs expanding into new markets. Learn how CannaBusiness ERP can set businesses on the right path. Manage financials, operations, quality, compliance, traceability, customers and more.
CannaBusiness ERP iscannabis business management software that is built-inSage X3 and configured byNexTec industry experts to deliver a complete cannabis business solution. Our specialization in developing solutions for the cannabis cultivation and processing industry has resulted in some of the most respected companies around the world managing their day-to-day operation using CannaBusiness ERP.
To learn more about the fast-paced movement in cannabis legalization and how Cannabis Cloud ERP software can help your company keep pace,reach out to us. We’d love to show you what CannaBusiness ERP can do for your business.
Equity Member Spotlight: Modesto Cannabis Collective
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
My name is Deanna Garcia with Modesto Cannabis Collective. I was born and raised in the city of Sacramento. I am a mother of five amazing humans and a loving wife. I started growing cannabis in my garage for my personal use as a patient. In 1996, I found cannabis to help me with the arthritis symptoms and pains I was experiencing. During this time I joined as many cannabis groups as possible such as NORML, Americans For Safe Access, and different collectives around Sacramento and Oakland to educate myself.
20 years later, in 2016, the city of Sacramento allowed me to register as a cannabis cultivator. I purchased a warehouse in the city of Sacramento where I would give tours to government officials and staff to help form the legislation and regulations currently being used today. I later sold my indoor grow to help fund and start Riverbank Cannabis Collective, Dixon Wellness, Modesto Cannabis Collective, Napa Cannabis Collective, Chuck’s Wellness, Tracy Cannabis Collective, Khemia Cannabis Dispensary, Khemia Manufacturing, Yolo Family Farms, and Woodland Roots Farm, along with my best friend and business partner Kimberly Cargile (NCIA Board Member). We have been tremendously blessed by God to win so many cannabis licenses across the Central Valley of California.
What unique value does your company offer to the cannabis industry?
Our companies are unique in that our board’s ownership all comes from an incubator program at A Therapeutic Alternative, a retail store in the city of Sacramento. All of the CEOs started as staff members of A Therapeutic Alternative, some working in the very first dispensaries in California prior to that. As trailblazers, we believe in locking arms and rising together making staff into owners sharing and creating generational wealth. So far we have been successful and able to help over 25 people become owners of cannabis companies and we are not finished.
What is your goal for the greater good of cannabis?
My goal is to help as many people as I can, that have been in the legacy cannabis industry become licensed cannabis business owners before it is out of reach forever. I want to keep spreading education on cannabis and its healing powers. I also seek to help bring safe access to every part of California, by attending one Board of Supervisors and or City Council meeting at a time to educate the officials and citizens.
What kind of challenges do you face in the industry and what solutions would you like to see?
For owners and operators that have been in the legacy cannabis industry and are now becoming owners of newly regulated cannabis businesses, the challenge they face is the cost. The capital is just not there to start up, or for upgrading to the new regulations. The banks will not work with the industry and we can not go to the small business administration. The cost is so much more money to become a licensed regulated cannabis business and the obstacles are extreme. We are now going up against billion-dollar companies for licenses in cities and counties across California. Before you know it, all of the California cannabis industry will be taken over by huge corporations and billionaires. We are just trying to help the ones still hanging on. I am working on the Diversity Inclusion Social Equity team with the California Cannabis Industry Association and with the city of Modesto to help form more social equity in the state. I would love to see a state equity program to include the people of every city and county. The same guideline, the same application. One state-funded and run equity program.
Why did you join NCIA? What’s the best or most important part about being a member through the Social Equity Scholarship Program?
I joined the National Cannabis Industry Association to help build reasonable responsible regulations across the United States. I enjoy the supportive community through the weekly calls with other Diversity Equity Inclusion members and appreciate the opportunity to access NCIA’s full member benefits. The best part is the overall support of NCIA’s DEI program in order to help begin to alleviate the injustices from the war on drugs by those most impacted. And of course to free a loving, caring, and healing plant from over-burdensome regulations and corporate greed.
Committee Blog: Protect Against Corporate Identity Theft with Trademark Rights
A company’s brand is its identity. Branding elements – names, logos, colors, graphics, slogans – are how customers recognize a product or service as coming from a particular source. Done properly, brands can be as recognizable to consumers as a person’s face, name, and voice. In some cases, brands may be some of the most valuable assets a company may own. Protecting physical assets is common in the cannabis industry, but how do companies protect intangible assets, like their identity? Fortunately, there are bodies of intellectual property law designed to provide legal protections against others from using brand elements that are too close to your own. To take advantage of these protections, however, cannabis companies must understand how each one works and develop a branding strategy that leverages intellectual property laws.
This is the second article in a 3-part series about cannabis IP. The first article focused on patent law and can be found here. The series will culminate with a Q&A-based webinar on April 19th at 1:00 Eastern. Advance questions can be sent to paul@thalo.io.
Mechanisms of Brand Protection
Brands are protected most prominently by legal domains known as trademark and trade dress. Trademarks include a company’s name, logos, and slogans, as well as those of any individual products. In some instances, trademarks may also include recognizable elements like colors (UPS’s brown) and sounds (NBC’s chimes). Trade dress is a similar concept to trademarks, but applies to the distinct appearance of a product or its packaging. Trade dress can even be used to protect the unique look and feel of a retail establishment, such as a restaurant or dispensary.
Both trademark and trade dress is intended to reduce confusion in the marketplace as to the origin of a product or service. The idea is that the public is best served when they can reliably determine which company to associate with each product. Reliable product-company association increases quality accountability, facilitates safety controls, allows consumers to form powerful brand loyalty.
Companies that avail themselves of trademark and trade dress laws gain access to a set of tools to legally fence off others from using branding that is likely to confuse customers about the source of a product. And, unlike other forms of intellectual property, trademark rights can last indefinitely and even strengthen over time. Some of these rights arise automatically just by using a mark, others must be sought out through registration.
Principles to Consider When Selecting a Brand
Every company should consider trademark principles from day zero, when first selecting a name. U.S. trademark rights only apply to marks that are “distinctive,” meaning they are capable of distinguishing things bearing the mark from goods and services offered by others. The more distinctive a mark is, the stronger protections provided by trademark law. Names that merely describe the goods or services are non-distinctive and are typically not eligible for trademark protection.
There are five general categories along the spectrum of distinctiveness – fanciful, arbitrary, suggestive, descriptive, and generic – arranged from strongest to weakest.
Fanciful marks words that were invented specifically to serve as a trademark, such as Xerox or Nvidia. Because these words have no other meaning than to identify the source of goods or services, they are the most distinctive category of trademark and receive the greatest protections.
Arbitrary marks are the second most distinctive category of mark and include words that have alternative meanings, but only meanings in contexts unrelated to the goods or services being sold. These include Apple computers, Lotus cars, and Bicycle playing cards.
Suggestive marks are less distinctive than Fanciful and Arbitrary marks, but still considered sufficiently distinctive to receive trademark protection, though registration may be more difficult. Suggestive marks imply a quality or characteristic of the good or service the mark is used in connection with. Some examples of suggestive marks would include: Microsoft, a portmanteau of microprocessors and software; ChapStick, for a stick-shaped balm used on chapped lips; and Netflix, which is suggestive of an internet-based video service.
Descriptive marks simply describe the goods or services being offered and are, therefore, not distinctive. In some cases, however, descriptive marks can acquire distinctiveness and achieve a “secondary meaning” as a source-identifier through long-term use (usually +5 years), heavy advertising, or pervasive adoption. Examples of Descriptive Marks would include: International Business Machines (IBM Computers); Best Buy retail stores; and Sports Illustrated magazine.
Generic marks are terms that broadly identify the product or service being offered. Generic marks are so non-distinctive that they are not eligible for trademark registration, even if secondary meaning can be shown. The idea is that these marks are so fundamental to the product that it would be detrimental to consumers and the marketplace to allow a brand to have exclusive use of the term in connection with the goods. “Escalator” and “Dumpster” were once brand names but, because they were used widely to refer to all mechanized stairways and trash receptacles regardless of manufacturer, they lost all trademark distinctiveness.
Parody Does Not Apply – Avoid Famous Brands
A surprising number of cannabis companies have used trademarks that reference or parody famous brands. Gorilla Glue, Girl Scout Cookies, and many others have been used as names for cannabis products. Companies have used packaging that resembles well-known products such as Life Savers and Sour Patch Kids. This is a bad idea. While this practice seems to be increasingly limited to unregulated markets, a recently published (and ill-advised) application for the mark and logo MCWEED for apparel shows that not everyone has received the message:
Registration and Scope of Protection
Some trademark rights are established as soon as a trademark is used in commerce. But to obtain the full scope of legal protections available, trademark owners must register their marks, preferably federally. Federal registration stakes a claim to a nationwide priority date, increases protections available, increases potential damages, and embodies a definities property that can accrue value.
All trademark registrations begin as applications. Trademark applications must, among other things, identify the mark, the applicable dates of use. Applicants must also describe the goods and/or services the mark is (or will be) used with and select one or more classes from an international menu of product classifications. The classes selected and the description of the products can greatly affect the scope and validity of a registration, so it is important to consult with an experienced trademark attorney.
These applications are examined by the U.S. Patent & Trademark Office to ensure they meet the statutory requirements. Typically, the USPTO completes examination within about 6 months, but currently the office is experiencing some delays and it is commonly taking 7-10 months for an application to be evaluated. If the examining attorney identifies any problems, they may issue rejections, to which the applicant will have an opportunity to respond.
If the USPTO approves the application, it will be published for 30 days (expandable to 180 days) to allow other trademark owners to oppose registration of the mark. Sophisticated trademark owners can set up alerts to be notified when any similar applications are published that may be concerning. At the close of that period the mark is recorded in the federal register and the trademark registration is complete.
A qualified trademark attorney can help guide you through the process and provide counseling concerning how to maximize your chances of registering your trademark without prejudicing your rights. Trademark application fees run $250-$350 per class of goods or services and a trademark attorney will typically charge a few hundred to a few thousand dollars, depending on their experience and the level of pre-application clearance. While trademark mills and self-guided applications are available, there are many pitfalls to avoid while preparing and prosecuting a trademark application, and applicants should be wary of attempting to navigate the process without legal guidance.
Applicants should also be aware that many companies mine the USPTO database to send unsolicited offers to trademark applicants. While these offers can look official and typically include some deadline to respond, they are usually scams. Nevertheless, it can be helpful to have an attorney review any correspondence relating to the trademark application to ensure that no important correspondence from the USPTO is missed.
Embrace the Zone of Expansion
There are a lot of benefits to registering trademarks, but registration is not available in all instances. Under federal law, registrations cannot be issued that cover goods or services that are federally illegal. But the same mark can be registered for other, legal products, and the trademark rights will extend to a reasonable “zone of expansion,” covering products that the trademark owner could reasonably branch out to in the future. This allows a brand owner to obtain the benefits of federal trademark registration and use it to provide some umbrella protection for their cannabis brands.
One option is to sell branded accessory products, such as apparel or smoking accessories, for which a trademark registration will pass muster. It is debatable, however, whether cannabis products are within the zone of expansion of t-shirts.
Another option is to develop one or more low-THC hemp products under the same brand as high-THC cannabis products. At least one case is already working its way through the courts where a trademark owner is claiming that cannabis edibles are within the zone of expansion of a line of hemp-infused, low-THC edibles. Edible IP, LLC and Edible Arrangements, LLC v. MC Brands, LLC and Green Thumb Industries, Inc., (Case No. 20-cv-05840). Though that approach is also not without its pitfalls, as discussed below.
A final option that every cannabis company should consider is state trademark registration. State registration requirements are typically governed by state law and, therefore, state trademark registrations can often be obtained for cannabis products. State registrations are more limited than federal registrations, but can be a powerful tool in the current landscape of cannabis IP.
Products with CBD Can Be Trademarked, But You Can’t Trademark “CBD” Products
Companies that produce hemp products do not have the same problem with federal illegality as companies with high-THC products. Federal registration is available for trademarks that are used on hemp and hemp products. However, as most hemp companies should know, the advertising of cannabidiol or “CBD” is regulated by the Federal Drug and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 321(g)(1), 331(d) and 355(a). Because CBD is the active ingredient in an FDA-approved drug (Epidiolex®), the FDCA prohibits marketing CBD products (absent a New Drug Application or Abbreviated New Drug Application). Though that may change. As of now, however, the USPTO will refuse to register marks that identify the goods as “CBD.” In re AgrotecHemp Corp., Serial No. 88979905 (issued Feb. 10, 2022) (finding that PUREXXXCBD for plant extracts should be refused registration).
Notably, the AgrotechHemp decision went further than previous USPTO decisions in that it also criticized the issuance of registrations for marks used on products “derived from hemp.” This may signal a crackdown on all hemp-related registrations, or it may be limited to registrations that explicitly identify the goods as containing “CBD.”
Where’s the Value in Trademarks?
It may come as no surprise that brands can be incredibly valuable assets. In some cases, a company’s brand can make up a significant portion of its balance sheet and brand-centric companies can fetch a premium when they are acquired, known as “goodwill.” Increasingly, specialized lenders are even willing to use secured IP as financing collateral. Nonetheless, the real value for many trademark owners is non-monetary.
When many people think about intellectual property, they recall headlines of jury verdicts with huge damages that can reach into the billions of dollars. The reality is that, absent intentional copying, trademark cases rarely result in large-dollar awards. More often, successful trademark suits result in an injunction preventing further infringement and some relatively minimal damages. The primary value of trademark rights is the ability to control your brand and how consumers perceive your brand in the marketplace. Trademark rights give you the tools to define your brand as a unique identity and preserve that identity in an increasingly crowded industry.
Video: NCIA Today – Thursday, March 24, 2022
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 other Thursday on Facebook for NCIA Today Live.
Continuing Conversations on Capitol Hill
by Madeline Grant, NCIA’s Government Relations Manager
The National Cannabis Industry Association (NCIA) held its very first Virtual Mini Lobby Days with NCIA’s Evergreen Roundtable members. Before the pandemic and closure of our Nation’s Capital, the Government Relations team planned an in-person annual fly-in every spring, the Annual Cannabis Industry Lobby Days, for all NCIA members. For our first Virtual Mini Lobby Days, it was important to facilitate conversations between our Roundtable and Capitol Hill offices. The Evergreen membership tier is for leading businesses looking to make a meaningful investment in shaping policy for the cannabis industry. Evergreen members receive exclusive access to private briefings from members of Congress, inside information from NCIA’s government relations team, and many more opportunities to participate in the national conversation around cannabis policy.
Now more than ever we’ve seen more comprehensive legislation being introduced at the federal level, on both sides of the aisle, so we wanted to focus on meetings with our cannabis champions but also educate all congressional offices on Capitol Hill. We were able to meet with representatives, senators, committee staff, office staff, and much more. Evergreen members were able to share information, stories, and data to Hill offices.
The NCIA team, Monica Gray with Nice Guys Delivery, Khurshid Khoja with Greenbridge Corporate Counsel, and Christina Hollenback with The People’s Ecosystem meeting with Congressman Dave Joyce (OH-14), a co-chair of the Congressional Cannabis Caucus.
As we hopped on our zoom calls, our main focus was education. The Evergreen Roundtable was able to share stories from their personal experiences in the cannabis industry and directly relate these experiences to the importance of cannabis policy reform. The dichotomy around incremental versus comprehensive cannabis policy reform was a central focus in discussion. As around thirty meetings took place throughout the week, the Government Relations team and Evergreen Roundtable caught up with friends, gained valuable insight, and continued to educate Congress. We took this opportunity to show our support and gratitude for all the representatives and senators who constantly support cannabis policy reform. Furthermore, we educated congressional offices with data, testimonials, and research to highlight the necessity for cannabis policy reform at the federal level. There is no doubt that reform is needed for the cannabis community and NCIA will continue to be a resource to all congressional offices.
NCIA’s 9th Annual Cannabis Industry Lobby Days in 2019 May 21-23 2019.
As we monitor the full opening of Capitol Hill, stay tuned for updates regarding NCIA Lobby Days. The Government Relations team is looking forward to our next Mini Lobby Days later this year for all Evergreen members. If you’re interested in learning more or getting involved in our policy work please feel free to reach out to Madeline@TheCannabisIndustry.org.
Member Blog: Trends in Cannabis Technology – Data Mining And Compliance
Cannabis businesses are looking for the best practices to enhance operations, with a primary focus on optimization and growth. So whether you are in the cultivation, production, manufacturing, or selling and marketing section of the cannabis industry, you need technology to steer your business into the future.
The cannabis industry is still growing, albeit faster than anticipated, with an increasing demand for products that continue propelling innovation. Data is driving this innovation because it’s the differentiating factor for long-term success and sustainability.
Today, cannabis is a $25 billion business in the U.S. In fact, the 2022 Leafly Jobs Report found the legal cannabis industry supports 428,059 right now, a 33% increase over the 280 new jobs created per day, on average, last year.
We know all of this because of data, and it’s a critical decision-making factor in this industry. Without access to real-time information, cannabis companies can’t know where to invest or improve to remain competitive and compliant.
Here are the top 4 data and technology trends transforming the cannabis industry to keep in mind.
Laws and Regulations Software
Cannabis compliance is one of the most challenging yet vital factors to consider in the cannabis industry. Government mandates demand that cannabis companies provide cultivation, production, shipping, and sales information to help monitor the entire distribution process.
This makes sense because lack of transparency in other industries has caused several crises, likethe vaping crisis or theromaine lettuce E.coli outbreak of 2019. But collecting, tracking, and monitoring data is challenging for businesses, so is understanding the government regulations and ramifications.
With the emergence of cloud-based cannabis software, cannabis companies remain updated with these tight data restrictions. This software collects the appropriate data and analyzes business operations by checking the right boxes to ensure compliance.
With these industry-specific software solutions, cannabis businesses can establish and implement a standard of operations that comply with cannabis regulations. As an added benefit, these solutions offer convenient avenues for cannabis employees and business owners alike to understand the rules and regulations of the industry. Some also provide security against potential threats like cybersecurity threats.
Artificial Intelligence (AI) and Machine Learning (ML)
Cannabis plants usually require significant attention and fixed schedules because of their temperamental nature. As such, AI and ML are taking effect in the cannabis industry. Machine learning gathers data and provides suggestions on what farmers can change in the growing process.
The detail in machine learning makes it possible to collect, monitor, and track the growing cycle every hour, meaning cannabis farms use machine learning to improve these plants’ growing environment significantly.
For instance, farmers are using agricultural sensors to manipulate the growing environment to suit the needs of the cannabis plants. This is achieved by connecting the environment to growing systems with humidity sensors and controls, thermostats, and temperature controls.
These sensors ensure that cannabis is continually growing in optimal conditions. As such, the products cultivated continue to be of high quality.
Also, the machine learning sensors and tracking IDs make it easier to track cannabis products from seed to sale.
Artificial intelligence then automates these processes to make the entire growing experience easy for cannabis farmers. For instance, AI helps to automatically control the humidity levels as per the settings given by the farm moderator.
AI also automatically changes the light in the growing room since it affects the temperature needed for the plants to grow optimally. This continued innovation and adoption of AI and machine learning in the cannabis industry will lead to increased crop production and reduced manual labor.
Hybrid Cloud-Based Storage
Video data is a significant investment in the cannabis industry right now. Some government regulations outline the need for cannabis companies to have immediate access to video surveillance footage and on-demand. This need is driving the demand for storage spaces for the video footage.
While many cannabis businesses store data on-site, it is unpredictable and expensive. This is where hybrid cloud-based storage technology comes in. The technology is enough to hold video data until it is needed, like in the case of a cyberattack and the subsequent investigation.
It also gives cannabis businesses the choice to store data on-site and in the cloud. This enhances the flexibility, accessibility, and security of business files. Cloud platforms also make it easier to access business information from any location.
Blockchain Technology
Traditionally, the cannabis industry is a cash transaction industry, especially in dispensaries where the majority of the cannabis sales take place. Additionally, many cannabis businesses find it challenging to work with banks since most aren’t legally allowed to work with companies in the industry.
There is also the matter of making secure payments and tracking transactions successfully. In a word, the cannabis industry is adopting blockchain technology for cryptocurrency payments and transaction tracking.
Blockchain is secure, and it has processes that make it easy to track and monitor transactions. But because using blockchain as an alternative to traditional payments methods is a relatively new trend, there is still the challenge of getting cannabis companies to agree on solutions that can standardize the trend.
In conclusion
Every business industry is now leveraging data by defining connections between the different data points and gathering actionable insights on processes. As such, you can optimize, strategize, plan, report, and identify problems using business data.
You can also better understand the consumer using data insights like your consumer consumption preferences. As such, data is crucial for determining where to invest, improve, and remain competitive and compliant in the cannabis industry.
FAQs
What is the future of the cannabis industry?
The future of the cannabis industry is very bright… The cannabis industry is expected to grow by about 20 to 30 percent every year to a value of $50 billion by 2026.
How is technology influencing the cannabis industry?
Technology is propelling the growth of the cannabis industry quickly. Cannabis businesses use innovation and technology to identify downtime in workflows, streamline processes, and identify opportunities for success and growth.
What is the role of data in cannabis manufacturing?
Data is critical for improving all the cannabis processes from seed to sale. Decisions driven by data significantly improve the quality of the cannabis operations from cultivation through to marketing, sales, and customer satisfaction. As such, data is now an integral part of cannabis manufacturing.
Joshua Gilstrap is the Marketing Manager for e2b teknologies, in addition to his marketing responsibilities Joshua leads business development for e2b teknologies emerging Canna Suite product line. A business graduate with a focus in marketing from Miami University in Oxford, Ohio, he joined the e2b team in the Fall of 2019. Josh brought with him a wide array of business and practical experience in planning and execution. Since coming aboard he has led multiple project’s including website hosting and theme standardization company wide, marketing automation streamlining the efficiency of the customer journey, and sales automation where he is changing the conversation from promotion to education, from pitching to catching, and from push to pull in order to keep up with the shifting tides of a digital transformation.
Committee Blog: Social Equity Perspectives on Interstate Commerce – Part 1
As the debate heats up on “how” rather than “if” cannabis legalization will happen, social equity and comprehensive reform are at the forefront of the minds of national legislators and advocates. Historically, people chose to legalize cannabis as a method of legitimizing the illicit cannabis market. Beyond the message that “Black Lives Matter,” the issue of the federal legalization of marijuana means, fundamentally, that the federal government must spearhead meaningful policies in diversity, equity, inclusion, and social justice, to balance the scales of injustice during prohibition and early legalization efforts by the States.
Further, the Biden Administration’s priority of respecting the sovereignty and self-governance of tribal nations means federal trust and treaty responsibilities may finally be met by regularly having meaningful consultations with tribal nations to create federal policy. Thus, the inclusion of tribal nation’s representatives is imperative when creating federal policy to ensure their rights are secure and there is parity amongst states and tribes.
Any descheduling or legalization framework must hold a social equity objective that is clear at the core of its function: To create as much NEW generational wealth for the most number of those disparaged from participating in the legal cannabis industry because of the socioeconomic impacts of more than 80 years of federal marijuana prohibition and due to the barriers to entry created amid state regulatory regimes.
Sadly, as written currently, all proposed federal bills fail to meet this critical objective.
As soon as the federal government deschedules marijuana, it falls under Congress’ constitutional purview to regulate interstate commerce. Marijuana included. This is likely the ONLY opportunity available for those impacted by the war on marijuana to balance the scales of historic injustice, by providing an opportunity to participate in cannabis business ownership in a meaningful and valuable way.
If social equity is not adequately addressed in a federal act, it would require a secondary bill to tax and regulate interstate commerce activities. This would waste precious time and open a door to unregulated and taxed activities until congressional consensus and control are established. We have seen mistakes like this lead to disaster already amid state markets who leapt before ensuring a safety net. It also would NOT guarantee that social equity would be addressed in a second bill under new congressional, senate, or executive purview.
More importantly, the projected market cap of the U.S. cannabis industry is projected to be $85B by 2027 and was $18B in 2020. To put that number in perspective today, the largest tobacco company’s market cap is $95.6B – that’s over 5x the market cap of the whole cannabis industry. Similarly, the largest beverage distribution company has a $45.5B market cap – or over $2.5x of the current cannabis industry cap.
Both of these “big businesses” are in the cannabis industry already and they are preparing for federal legalization. The moment cannabis is de-scheduled, it quickly becomes an “extinction event” for social equity unless guardrails are put in place in the first Federal Act to offer social equity a fighting chance.
To avoid needless delay, to leverage effective taxation and regulation, to protect social equity from rapid market consolidation and control, and to spearhead well-thought-out and innovative ideas to address the inequities of the cannabis industry, the National Cannabis Industry Association’s Diversity Equity and Inclusion Committee (DEIC) presents these considerations to amend any proposed federal act – in order to preserve key concepts central to addressing interstate commerce and the short-falls of previously enacted social equity programs.
The Problems with Current Social Equity Programs
In analyzing the social equity programs undertaken at municipal and state levels so far, the NCIA’s DEIC has found multiple shortcomings in achieving the goal of generating new generational wealth for as many people who have been systematically discriminated against during the prohibition era of cannabis.
Namely, the following major issues continue to prevail:
Social equity applicants who are unqualified or do not participate meaningfully in the ownership or operation of the cannabis business. This can be because of the following reasons:
A lack of experience or expertise in business skills necessary to operate
A lack of experience or expertise in regulated cannabis operations
Fear of continued persecution and distrust related to trauma from being victimized by the war on drugs.
Based on the fact cannabis arrests have and still disproportionately affected BIPOC community members.
This causes many traditional, large, and privileged Multi-State Cannabis Operators (MSOs), in addition to established market entrants (Tobacco and Alcohol) as well as Special Purpose Acquisition Funds (SPAC’s) – collectively referred to as “mega players” – to decide to “take the wheel and drive” the cannabis licensing process and to put the social equity operator in the proverbial “back seat.” Another issue that remains unaddressed and underlies challenges in successful social equity programs is that:
Social equity operators do not have access to financing to meaningfully contribute to capital or operating expenditures to partnerships with cannabis companies who have capital and expertise.
This is certainly in large part due to generational prohibition and lack of access in being underprivileged.
Prohibition also impacts financing which systematically discriminates against the disprivileged; regardless of their interest to participate in the cannabis industry.
These individuals were prohibited from entering the legal market (when barriers were lower) and were initially labeled as “undesirables” because of past criminal history. This gave the cannabis industry and culture away to people who never suffered a day in the war on drugs.
The lack of access to education, experience, and wealth often drives the existing “mega players” who “hold the keys” to expertise and wealth, to justify operating agreements that contain provisions that make the social equity licensee’s position dilutable in the event they cannot meet their operating or fiduciary duties. Which brings up the third underlying problem in social equity programs which is connected to the above factors:
2. Attracting and grooming social equity candidates to qualify for licenses only to then leverage the applicant out of the licenses, is often how “mega players” skirt around social equity provisions. The justification in doing so is due to the above two factors and is justified as “what is best for business” by traditional operators expanding their footprint through social equity licensing.
In the social equity conversation, these partnership agreements are often referred to as “predatory operating agreements” which refer to the manner in which many “mega player” operators, knowing social equity applicants cannot bring education, experience, or money to the table, systemically target and groom qualified social equity applicants into delusions of wealth participation in cannabis only to obtain a license and then proceed into diluting the social equity partner – rather than educating them, providing them experience, or helping them obtain the wealth to contribute as equals.
Mega players, multi-licensed cannabis businesses, and vertical cannabis businesses may also engage in “social equity colonialism” in which they create “incubator programs” to educate, train, possibly fund, or partner with social equity entrepreneurs only to have them compete against one another in “pitch competitions” in which the mega player can cherry-pick the most controllable or affordable operator or otherwise leverage them to benefit including using taxpayer funds granted by the state or through discounts on licensing and/or taxes. Too often, the intent is to “tokenize” social equity operators, rather than empower them as equals.
Whether intentional or not, the impact of reducing social equity applicant participation after using them to obtain social equity licensing is a commonplace practice and shortfall of the programs analyzed by the DEIC.
To solve these problems, the DEIC acknowledges that the motivation for those in power to remain in power does not incentivize them to provide a truly equitable partnership simply because a program exists to do so. To address these diluting agreements, we recognize that the Government must play a role in addressing the underlying factors which justify the behavior driving “predatory operating agreements” and “social equity colonialism”.
Indeed, federal legalization and the regulation of interstate commerce with social equity at the forefront may be the last opportunity to address the harms caused by prohibition nationwide and the inequity of governments refusing to address social equity in cannabis. Similar to the Civil Rights Act of 1964, the victims in the war on cannabis cannot depend solely on state and local governments to address social equity.
Over the next two parts of this series, we will outline a framework of components that may be amended or included in a federal legalization bill to resolve the problems in social equity identified and to provide a comprehensive reform for permitting interstate commerce and addressing the inequity prevalent in the cannabis industry.
Read more in Part 2 and Part 3 of this blog series.
Equity Member Spotlight: Euphorium Oakland
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
Euphorium Oakland is a Black-woman owned, Black family-operated delivery-only concierge service founded by mother and son duo & HBCU graduates, Tee Tee Brown and Bryce Savoy in 2016. Having over 20 years of experience in pharmaceutical sales, my mother wanted to use the skills she acquired over a couple of decades to help heal people.
As a single mother and primary caretaker for her mother, she saw an opportunity to further her purpose of service. For me, being an independent rapper and Founding Member of Bay-Area-based non-profit organization, The Black Neighborhood I saw an opportunity to create a pathway to generational wealth, as well as be able to empower and uplift others, which is at the heart of everything I do.
What unique value does your company offer to the cannabis industry?
Euphorium offers superior customer service and an unparalleled family touch. With her prior background in sales, my mother offers a wealth of knowledge to anyone looking for advice and direction about which products to purchase for their specific needs.
Our primary offerings are that we have high-quality products at affordable prices, which cover all cannabis categories, serve the local community through our philanthropic endeavors, and ensure anyone who does business with us feels like family. We also strive to go above and beyond to make sure our clients’ needs are met. Anyone who shops with us can feel reassured knowing that they are spending money with a fully Black-owned company, that epitomizes what it means to be Oakland natives.
What is your goal for the greater good of cannabis?
Our goal for the greater good of cannabis is to create a blueprint for other Black people looking to enter the industry, at any level. With so few of us being business owners, it is not enough for us alone to thrive; we want others who look like us to also have a seat at the table.
What kind of challenges do you face in the industry and what solutions would you like to see?
Like many of us who are small business owners understand, access to consistent capital is everything. With customer spending habits fluctuating now more than ever, consistent revenue is for and far between. However, maybe even more important than that is being able to market and promote our business/services in effective ways to gain new clients. Being that this is the first business that my mother and I have operated, there are a lot of things we had to learn by trial and error. Having proper incubation/business consultation would help us tremendously. All in all, a solution we would like to see is city and county agencies truly being intentional about providing equity businesses and entrepreneurs with the tools and resources to become successful in an ever-changing industry.
Why did you join NCIA? What’s the best or most important part about being a member through the Social Equity Scholarship Program?
“Equity is not a competition, it’s a community.” – A quote from a gentleman I heard at the March 10 Power Hour session. This is the exact reason why we joined NCIA. We have found more often than not, equity business owners tend to operate in silos: for one reason or another, we do not communicate with each other, although we are almost always experiencing the same challenges.
The best part about being a member of the Social Equity Scholarship Program thus far is the opportunity to build relationships with people from all walks of life and sectors of the industry. Also, from the information we gathered in the short time we have been a part of the program, our success is not predicated upon our popularity. We are looking forward to what is next!
Omnibus Leaves Industry Hanging
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Photo By CannabisCamera.com
Since 2014, federal funding bills, or appropriations bills, have included provisions restricting the Department of Justice from using tax dollars to prosecute or penalize state-legal medical cannabis businesses and patients. Since then, NCIA and others have worked diligently to expand those protections and enact cannabis reform through the budget, with some efforts being more successful than others. Another issue making matters more complicated: the federal appropriations process requires this provision to be approved by congressional process annually, so introducing, lobbying on, and enacting these provisions has to reoccur every year.
Last week, Congress passed the most recent omnibus appropriations bill, which is increasingly used to group together the budgets of all departments in one year. Keep reading to find out what provisions related to cannabis were included (or weren’t!) and why it matters:
PROTECTIONS
If you’ve been in cannabis for a while, you might remember when medical cannabis protections were first enacted in 2014. Back then, the provision was known as the “Rohrabacher-Farr Amendment,” named for then-Reps. Dana Rohrabacher (R-CA) and Sam Farr (D-CA). This amendment forbids the Department of Justice (DOJ) from spending money to prevent the implementation of state-level medical cannabis programs, in addition to removing funding for federal medical cannabis raids, arrests, and prosecutions in states where medical cannabis is legal. To put it simply: the DoJ can’t use any of its money against state-legal, compliant medical cannabis businesses.
So, the omnibus had some good news and some bad news regarding protections for cannabis businesses from the Department of Justice. Good news? Those protections for medical cannabis businesses, patients, and programs remain in place. Bad news? Congressional leaders declined to expand those protections to include all cannabis businesses, despite the fact that the House has voted twice in the past to do so.
WASHINGTON, D.C.
For decades, Congress has used its power and jurisdiction over Washington, D.C. as a bargaining chip and test subject for various policies, and cannabis is no exception.
Washington, D.C. voted to legalize adult-use cannabis via Initiative 71 in 2014. However, because the Constitution gives Congress jurisdiction over the District of Columbia, Washingtonians have been, and continue to be, unable to implement the taxed and regulated sales of cannabis for adults. (That hasn’t stopped a flourishing gray market, but that’s a topic for another blog!)
One Congressman, in particular, has obstructed D.C’s cannabis market: Andy Harris, the lone Republican in the House from the state of Maryland. The “Harris Amendment,” which prevents legal sales from occurring in D.C., has been included in every appropriations bill since – again, despite the fact that House Democrats have voted to strip the language multiple times.
The inclusion and maintenance of this provision – especially while Democrats control both chambers of Congress – is simply unacceptable and inexcusable. To that end, NCIA recently signed on to a letter urging leadership to remove the language. It’s also critical to point out that Washington, D.C. is one of the places where disparate cannabis arrests occur at an alarming rate, making the need for reform even more dire.
EXPUNGEMENTS
A new appropriations amendment that NCIA supported was also included in the most recent omnibus. The language, championed by Cannabis Caucus Co-Chair Dave Joyce (R-OH), would allow JAG funding to be used for the cost of state and local cannabis expungements and record clearing. This is a small but incredible reform that we hope will be the first step in providing justice to individuals impacted by the War on Drugs.
VAPING
The omnibus also included report language related to cannabis. Report language is non-binding and essentially encourages an agency to do something. In this case, Congress is urging NIDA (the National Institute on Drug Abuse) to conduct interdisciplinary research on the relationship between the vaping of tobacco and marijuana, with an emphasis on risk perceptions, decision-making, and neuroscience.
Interestingly, the appropriations process for FY2023 is beginning to get underway already. NCIA will be working with appropriators and other allies in Washington, D.C. to maintain provisions that protect cannabis businesses and consumers while stripping those that deny opportunity and justice to others. Interested in learning more about appropriations, or working with our team on an amendment? Learn more about our Evergreen Roundtable and committees by visiting our website!
Video: NCIA Evergreen Members Lobby Congress Virtually
Due to ongoing COVID-19 and Capitol security restrictions, efforts to lobby Congress on cannabis policy issues have been challenging. Though logistics prevent us from hosting our traditional annual fly-in event in D.C., with hundreds of cannabis industry professionals navigating the halls of Congress, members of Congress themselves are still able to hear from their constituents through virtual means. Recently, NCIA’s Government Relations team worked with our Evergreen Members to guide them through the process of meeting with members of Congress to continue to tell our stories and share our concerns for our industry.
Hear more about their experiences in this video with insights into how those meetings went.
NCIA’s Evergreen membership is for leading businesses looking to make a meaningful investment in shaping policy for the cannabis industry. This premium membership plan provides your company with a seat on NCIA’s Evergreen Member Roundtable, with exclusive access to private briefings from members of Congress, access to NCIA’s lobbying team, invitations to political events, special membership concierge service, and more.
As customers become more sophisticated and discerning about the fast-growing cannabis extract market, from vapes to dabs to infused pre-rolls, the need to routinely produce consistent, quality extracts at scale is becoming doubly important for processors. Compounding the issue, the potential for federal legalization will bring significant growth opportunities but also increased federal oversight, including the need for Good Manufacturing Practices (GMP) and other onerous standards that will challenge unprepared operators.
Future-Proof Extraction Operations Through Data
To overcome these twin challenges, processors should start developing (if they have not already) a framework to capture, review, and analyze data at every stage of production to produce consistent, quality, and compliant products.
That framework should examine every aspect of the extraction process, starting with the type of material harvested from farms, including how it is stored and handled, through to the final, packaged retail-ready product.
It should also be tied to specific goals and clear objectives. Capturing data simply to capture data within a given framework but without a clear idea of how that data will be used can lead to analysis paralysis, or worse, endless trial-and-error that wastes time and material, eating into expected profits.
Leverage Design of Experiments Methodology
Design of Experiments, or DoE, is a scientific methodology that can help guide processors in determining the key parameters they want to track and how those parameters interact. This starts with assertions that map to specific goals or objectives, such as investigating the yield of a specific terpene with the goal of blending it with a distillate-based vape cartridge. From here, processors can design and set up experiments with varying inputs from temperature to pressure, to biomass composition, all to understand how the yield of a specific terpene is influenced throughout a given process.
When these learnings are applied at production scale, the framework developed through DoE methodology provides a guide for creating consistent products, but also to better manage and rectify issues that may arise. With specific goals in mind, processors can then determine what data they need to capture and analyze.
The Four Steps of Data Capture
Step 1: Chemical Makeup – When selecting or determining what plant material to use for extraction, processors first must examine the chemical makeup of the cannabis biomass. This can include the profiles of cannabinoids, terpenes, and the fat/wax/water content.
The exact chemical makeup of cannabis biomass can be difficult to determine because of its nonhomogeneous nature. Imagine closing your eyes and selecting a random sample from a container of bulk biomass. Maybe you grab a sugar leaf or flower, high in THC-laden trichomes, or maybe you grab a fanleaf with little to nothing to contribute to a high-quality extract. The chemical composition will look significantly different depending on how one selects the sample. So it’s important to be cognizant of what and how biomass testing is conducted, and often a single sample isn’t the answer. Knowing the approximate chemical makeup of the feedstock material will guide the processor to determine what type of recipe they will use for extraction and post processing and, ultimately, what end products are most valuable for a given input.
Once the chemical makeup has been determined, the processor will know the inputs of the material, such as the associated THC, CBD, terpenes, etc. They can then use that data to determine what will (or should) come out of the extraction process at its conclusion. This is the mass balance of the production process. It is difficult or impossible to optimize any process if one doesn’t know exactly what goes in and what comes out. Of course, this is much easier said than done given the nonhomogeneous nature of biomass.
Step 3: Identify and Maintain Key Process Parameters – Depending on the recipe and desired end product as determined through the above steps, the extraction process will need to maintain specific temperatures, pressures, times, and flow rates, among other key variables, to ensure a consistent, quality product. This is where a DoE or other similar process can add significant value. Analytical tools, such as the DoE, can help determine what process parameters need to be precisely controlled, and what parameters can have looser controls or can be ignored altogether. Compliance comes into play here as well. The ability to track and record these key data points is crucial to achieving GMP compliance as well as creating a consistent product that customers expect.
Step 4: Post Process Review – In order to understand how recipe parameters affect the end product, the processor needs to know its chemical composition as well as the composition of any waste materials (e.g., biomass, fats, waxes), or impurities that have been filtered out. Capturing this data is vital as it offers the critical clues to why a particular batch did not turn out as planned, for example, so the processor can investigate potential causes and corresponding solutions.
Step 5: Recording Data Between Each Process – What happens between each process is nearly as important as what happens during the process. Storage conditions can have an impact on quality and consistency, issues that may not be readily evident within the data capturing during processing. Those data points to know, among others, may include monitoring the freezer temperature where biomass is stored, measuring the humidity of the environment, documenting when and how equipment is cleaned, or even tracking how long material sits between extraction and placement in a vacuum oven.
Decision Making Via Data Analysis
After the data is captured and analyzed, managers may need to enact decisions if the data shows deviations from the expected outcomes. For example, as part of post-production lab tests (step 4), are acetone traces appearing in the finished product? If so, the organization may need to change its equipment cleaning practices (step 5) to ensure unwanted trace chemicals are not seeping into finished products.
Although enacting a program to better capture, review, and analyze data can appear to be a daunting task, doing so will provide the processor a significant competitive advantage. Not only will it help ensure consistent production while future-proofing the organization against coming regulations, it may also enable processors to experiment with and develop novel or proprietary extracts derived from a repeatable, scientific method that can’t easily be replicated by competitors.
Jack Naito is President of Luna Technologies, where he oversees operations, strategic growth, and R&D for the company he co-founded in 2016. Jack entered the cannabis industry after time spent as a Materials, Process, and Physics Engineer for aerospace giant Boeing. Jack obtained an Economics and Business degree from Colorado College and a Master’s degree in Mechanical Engineering from the University of Washington.
Luna Technologies engineers state-of-the-art extraction equipment for cannabis processors. The meticulously designed, automated equipment empowers operators to process fresh-frozen or cured plant biomass with stress-tested hardware and built-in failsafes to foster a superior level of workplace safety while also lowering labor costs. Luna’s Earth-conscious engineering approach helps decrease energy consumption while setting the industry standard for safety, quality, consistency, and customization in support of creating clean, consistent cannabis concentrates with medical and social benefits. Learn more atwww.lunatechequipment.com.
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