America is a federation. As such, individual states have innumerable sovereign rights that supersede federal law. This may seem obvious, but in most countries, that’s not how it works. Whether they are democracies or not, often all rights emanate from the central government. When the central government says marijuana is illegal in such a place, specific regions or territories aren’t permitted to go their own way.
However, as a federation, the 50 states in the U.S. get to make up their own rules on a lot of material issues.
That’s why cannabis products containing more than .3% THC by volume can be legal in your state, but illegal, federally. And it is also why cannabis products containing .3% THC by volume or less can be legal, federally, but illegal in your state.
All this ambiguity gives the banks and card associations the vapors. And it goes a long way toward explaining why, nearly four years after the landmark Farm Bill, so few banks are willing to provide CBD businesses with merchant accounts.
Parenthetically, it’s also why, if you walk into your local Chase branch to open a simple checking account for your CBD or cannabis business, they will give you a lollipop and show you the door.
A Colorado Resident Walks into a Colorado Dispensary with a Credit Card…
Here’s a fair question: “If cannabis is legal in my state, and I operate a cannabis business in my state, why can’t I accept a credit card from a customer who is not only a resident of my state, but also somebody who got a credit card from a bank in my state?”
On those terms, it defies logic how any intrastate cannabis purchase would be a federal issue. Unfortunately, the movement of money from a Visa or Mastercard, or any U.S. credit card, occurs on a card association’s network, or rail. These rails are nationally interconnected, not siloed to a specific state or territory. So, even if a cannabis consumer lives in the apartment above a dispensary, heading downstairs to make a purchase with a credit card is a national transaction, and not a local one. And on those terms, it violates federal law.
Regional rails do exist outside of the card association networks. They connect banks to one another, and these are the rails that are leveraged for the non-cash transactions taking place at dispensaries around the country. Whether or not these rails are truly siloed, and not part of a national network, is, to say the least, the source of much legal, financial, and philosophical debate.
But Do I Even Need a Merchant Account?
It would be disingenuous to say that you need a merchant account to accept credit card payments. You don’t. There are several FinTech companies out there with names we all know and, generally speaking, trust to process payments on our behalf.
In the payments space, we refer to these third-party organizations as PSPs, or Payment Service Providers, or Payment Aggregators. With a PSP, a commercial enterprise doesn’t need its own merchant account. The PSP is allowing you, and thousands of other merchants, to share in the processing power of its merchant accounts and accept credit card payments on your behalf. In this case, you are what is called a ‘sub-merchant.’
However, the big PSPs, by and large, have been reticent about hopping aboard the CBD express. And there is little surprise there. These FinTech giants we associate with banking are, at their core, just software companies. To offer credit card processing, they need merchant accounts from Acquiring Banks, just like the rest of us. So the dearth of Acquiring Banks willing to work in the cannabis space affects them the same way it affects everyone else.
To date, only Square has thrown its hat in the ring, and an overwhelming number of CBD and hemp retailers have opted to go the Square route. Square is the most popular processing solution for CBD merchants for a couple of reasons. First, it’s easy to find. Searching “How do I begin accepting credit cards CBD” on Google nets mostly ads and review sites, but Square appears prominently. Parenthetically, I just entered that very search term, and Square appeared twice on page one.
Square, we always tell CBD merchants, is low-hanging fruit. Low-hanging fruit, by definition, should always be, and usually is, eaten first.
The near-universal recognition of Square also makes integration easier. The technologists that entrepreneurs hire to code their digital storefronts and websites have plenty of experience integrating the Square plugin for all manner of eCommerce businesses.
However, for the CBD retailer, there are important reasons to approach Square with caution, or, at a minimum, not to use Square without a backup processing option. Backup processing, or redundancy, is a must for everybody in a high-risk business, especially for CBD merchants using Square. It’s a bell we, at MobiusPay, sound often, as Square’s Set It and Forget It value proposition has proven a fiction for numerous CBD retailers.
The horror stories, reductively:
“Square shut me down.”
“Square is holding my money.”
“Square shut me down and is holding my money.”
When Square’s underwriters identify a compliance issue in a CBD retailer’s digital storefront, their processing is halted, and their funds are frozen — sometimes, indefinitely. Most problematic is that, owing to their size and dogged commitment to automation, Square does not excel at communicating with clients — even when it’s of vital importance.
Often, Square doesn’t disclose the cause of the account shutdown. This omission of details turns a precarious situation for the merchant into an existential crisis, and the larger the digital storefront, the bigger the problem it is. This is because, frequently, the compliance issue is a small one, like a broken link or an expired Certificate of Analysis. Depending upon the number of products in your shop, identifying the one problematic COA may be like finding a needle in a haystack. That’s doubly damning. Not only has processing stopped, but work has stopped, too — because now, it’s all-hands-on-deck. Everyone in the office is on a frantic scavenger hunt, trying to track down the one compliance issue (and for all you know, maybe there are two) that has caused all sales to halt.
That doesn’t happen when you have a merchant account.
Even without the threat of a halt in processing, though, merchant accounts will always be the smarter choice for CBD retailers. They simply offer greater flexibility, better rates, more stability, better throughput, and, perhaps most important of all, the marketing and strategy flexibility that a business needs to grow successfully.
This is not an indictment of Square. They deserve points for throwing their hat in the ring. They are good at what they do, and what they do good is provide a turnkey processing solution for low-risk brick & mortar and eCommerce merchants. The pet store, down the street from me, here in Philly, uses Square. When I’m picking up cat litter at the shop, I never think to suggest that she consider a merchant account. She doesn’t need it. Square was made for businesses like hers. It is ideal for low volume businesses operating in a routine business environment.
However, if you’re reading this, your business is facing challenges somewhat different from those faced by the pet store down the street — unless you specialize in CBD for pets, of course.
CBD businesses, as with all individuals and organizations in the cannabis space, stand at the vanguard. They are the tip of the spear in an inevitable plant medicine revolution.
Like square pegs — pun intended — in round holes, they don’t fit easily into Square’s steady-as-she-goes ecosystem.
On the other hand, establishing a merchant account is no picnic. Merchant accounts do not open like elevator doors. At their most reductive, merchant accounts are lines of credit, and lines of credit are established with a paper trail. There is an application to fill out. There are KYC protocols to follow. There are document requests and compliance checks. There is waiting for activation.
However, as someone who has spent many more years acquiring merchant accounts as a high-risk merchant than offering them to high-risk merchants, I can promise you that they are worth the wait and the effort, and that depending upon a PSP like Square for something as important as processing makes growth and success more difficult than it needs to be.
MobiusPay, Inc. is a U.S.-based global financial services organization that is committed to empowering individuals and businesses. For more than a dozen years, MobiusPay has leveraged state-of-the-art secure billing technology, long-standing relationships with financial institutions and award-winning customer support to provide merchant processing and payment solutions to brick and mortar and digital businesses around the world.
Todd Glider has been an e-Commerce leader since the start of the Internet age. He has an MFA in Creative Writing from the University of Miami, and has served as CEO for small and medium-sized technology companies in Spain, Austria and the United States. As our Chief Business Development Officer, Todd introduces MobiusPay’s suite of award-winning financial services to new industries, and implements the development strategies and key partnerships needed to bring value to new customers.
Service Solutions | 10.26.22 | Show Me the Money – The Current State of Cannabis Lending
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, October 26, 2022 we were joined by the experts from cannabis-focused financial institutions FundCanna, Safe Harbor Financial, and AVANA Companies to dive deep into the current state of cannabis lending with leading industry journalist John Schroyer of Green Market Report.
A decade after California and Colorado became the first adult use states, the regulated U.S. cannabis market encompasses over 70,000 cannabis-related businesses. Shockingly, most of those businesses still lack easy access to debt and other forms of growth and operating capital. From federal prohibitions and the impact of IRS regulation 280e, to state and local taxation issues, the costs of operating a regulated cannabis company continue to remain nearly unendurable.
Learn what may change in the coming six to 12 months so you’ll know how to access debt capital most cost-effectively in this ever evolving environment. No matter your place in the industry or the supply chain from cultivators, manufacturers, vendors, suppliers, distributors and retailers this conversation will provide the insights to meet your financial needs.
At the conclusion of the discussion our panel hosted a moderated Q&A session to provide NCIA members an opportunity to interact with leading minds from the financial services space, join today to contribute to future conversations!
Panelists:
Adam Stettner
Founder & CEO
FundCanna
Sundie Seefried
Founder and CEO
Safe Harbor Financial
02:13 – Equity vs. Debt: With equity dried up, should cannabis companies be looking at debt financing to grow now?
07:28 – Equity vs. Debt: What do borrowers need to do before approaching a debt provider (vs. an equity provider)?
13:25 – Equity vs. Debt: What can cannabis companies or entrepreneurs do to improve their overall credit worthiness prior to seeking capital?
17:16 – How has the interest rate increases by the Federal Reserve impacted capital markets (and the industry at large) in 2022?
26:07 – Audience Q&A: “If there’s “no reason not to have banking” for your cannabis business how can I easily (and inexpensively) establish and maintain a compliant bank account?”
28:56 – Lending: What significant lending challenges are your clients currently facing within the industry?
33:56 – Lending: What advice can you provide business owners for evaluating lenders that you should (or shouldn’t) work with and tips for avoiding predatory lending practices?
39:05 – Cannabis Reform: What impact do you expect President Biden’s recent announcement will have on the industry?
49:32 – Audience Q&A: “Are your financial institutions planning to offer lending and banking services in New York, New Jersey and other new markets?”
51:42 – Audience Q&A: “With the mindset of “Investors are betting on the Jockey not the Horse.” What type of CEO or founding team would be a red flag or not a viable investment?”
55:19 – Audience Q&A: “How can I start to shift my retail company from being primarily a cash-only business?”
1:05:03 – NCIA Member Appreciation Credit Sequence
Sponsored By:
Video: NCIA Today – Thursday, October 22, 2022
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.
Member Blog: Payment Processing In The Cannabis Space
There is a lot of confusion about payment processing in the cannabis space because payment processing is somewhat confusing to begin with, and because, in the cannabis space, ambiguity is a way of life.
The title of this very blog post could, realistically, seem misleading to some.
So, to be clear, when I say, “Cannabis Space,” I mean the entire industry — from plant-touchers (CBD included) to the ancillary businesses built up around it.
The passage of the 2018 Farm Bill marked an exciting new chapter for the industry. Suddenly, CBD, or, more specifically, any ingestible cannabis product containing .3% THC or less by volume, was classified as hemp. And since it is marijuana, and not hemp, that is defined as a Schedule I substance under the United States Controlled Substance Act, the Farm Bill, technically, made products like CBD as legal as cow milk — federally, anyway.
The upshot of this new classification is that now, at least some players in the cannabis space can market their products to a national base of consumers and clients, and they can do so by accepting credit cards as payment.
However, the myriad Acquiring Banks across the United States have not exactly jumped for joy at the prospect of providing credit card processing in the form of merchant accounts to CBD retailers. Reticence rules. CBD is considered high risk, and four years on, only a handful of them have thrown their hat in the ring.
Jargon Alert I: Acquiring Banks and Issuing Banks
In merchant processing parlance, banks fall into two categories: Acquiring Banks and Issuing Banks. Acquiring Banks, or, Acquirers, provide merchant processing accounts to businesses wishing to accept credit card transactions. Issuing Banks, short for Card Issuing Banks, are banks that offer branded payment cards directly to consumers. For example, if your bank has ever offered you a Visa card, it is an Issuing Bank (not that it couldn’t also be an Acquiring Bank, too).
Jargon Alert II: CBD is ‘High Risk’
CBD is deemed high risk by the card associations (i.e., Visa, MasterCard, American Express), and when the card associations deem a product or industry high risk, most Acquiring Banks tap out. This is because financial institutions are, by nature, risk averse (subprime mortgage crisis notwithstanding).
So let’s talk for a minute about risk. High risk, that compound term, is a truncation of a longer phrase: ‘Higher risk of fraud or chargebacks.’
Why are CBD products at higher risk of fraud? It’s impossible to say for sure since the Visas and MasterCards of the world are publicly traded companies with their own trade secrets and IP, but there are several characteristics unique to CBD, or any cannabis product now federally legal, that likely figured into that decision.
Those FDA disclaimers that CBD retailers must print or paste on all product packaging and webpages are as good a place as any to start. They are mandatory because none of the benefits assigned to CBD have been clinically proven. There just isn’t enough data or testing at this point, and no big story there. That’s what happens when you demonize a plant for 100 years.
Consequently, from the perspective of the FDA, and the card associations, by extension, consumers are making CBD purchases with baked-in expectations based, exclusively, on word-of-mouth advice and anecdotal data. That’s a recipe for dissatisfied customers. And dissatisfied customers tend to charge back transactions.
The card associations, and the banks who provide merchant accounts, worry incessantly about fraud and chargebacks.
Too Close for Comfort
Dissatisfied customers aside, there are onerous legal nuances that make the prospect of boarding cannabis merchants, even those selling products that are federally legal, daunting for banks.
Selling a product with .31% THC across state lines is felonious. It is a federal offense. Violating a law like that could get a bank’s charter revoked, or, at a minimum, result in massive fines.
On the other hand, selling a product with .30% THC across state lines is 100% federally legal. As stated above, safe as milk, federally.
That is a heck of a distinction. If any product contains more than .3% THC by volume, it is ‘marijuana’ in the eyes of the federal government. From the perspective of the banks, that’s a little close for comfort. Furthermore, banks don’t operate laboratories. They must rely on testing data presented to them in the form of third-party lab reports — Certificates of Analysis or COAs for short — to verify that the products being sold are federally legal.
The last thing an Acquiring Bank wants to do is violate a federal law EVER. It could result in a loss of their charter, lawsuits, and massive fines. And it’s important to keep in mind that the Acquiring Banks out there offering merchant accounts to CBD retailers are not giant, publicly traded institutions like Bank of America or Wells Fargo. They tend to be much smaller, and therefore, have infinitely smaller war chests for court cases.
Still, separating the federally legal Tier I cannabis product from the federally illegal Tier I cannabis product should be pretty cut-and-dry. If the product you’re selling is .3% THC by volume or less, it is exempt from the Controlled Substance Act (CSA). If that threshold is documented in the product’s Certificates of Analysis (COA), you ought to be able to sell it.
Unfortunately, it’s not that simple. When bank underwriters look at percentages of Delta 8, Delta 9, and Delta 10 on the COAs that cross their desks, they’re frequently at sixes and sevens trying to figure the whole thing out.
From the perspective of the 2018 Farm Bill, a cannabis product is hemp if it contains .3% Delta-9 THC or less by volume, but what everybody says is “.3% THC or less by volume.” Consequently, when the compliance officer at the bank is performing her due diligence by inspecting the COAs corresponding to each product, she may encounter a lot of crooked numbers, and she may blanch at the results.
Those results, often, look something like the following:
00.195% D9-THC
52.475% d8-THC.
Federally, the Delta-9 threshold is the only threshold that matters. The 2018 Farm Bill says as much, and the 9th Circuit Court of Appeals in California affirmed it in a ruling this past May. Therefore, in the example above, the Delta-9 threshold has not been crossed. It’s not even close. It is textbook HEMP, even if the Delta-8 threshold is off the charts.
However, if the compliance officer was provided the remit, “.3% or lower,” he’s likely to look at this and say, “Fail,” without realizing that the Delta-8 THC information is irrelevant as far as federal law goes.
Complicating the underwriting further is the fact that there is, to date, no standard template for COA reports. Every lab presents them differently. Bank compliance officers rarely moonlight as scientists. Like most of us, these CBD COAs are probably the first lab reports they’ve looked at since high school chemistry.
Furthermore, the banks can set their own rules. They don’t have to board CBD merchants. Few do, and those few that do have their own standards and practices.
Todd Glider has been an e-Commerce leader since the start of the Internet age. He has an MFA in Creative Writing from the University of Miami, and has served as CEO for small and medium-sized technology companies in Spain, Austria and the United States. As our Chief Business Development Officer, Todd introduces MobiusPay’s suite of award-winning financial services to new industries, and implements the development strategies and key partnerships needed to bring value to new customers.
MobiusPay, Inc. is a U.S.-based global financial services organization that is committed to empowering individuals and businesses. For more than a dozen years, MobiusPay has leveraged state-of-the-art secure billing technology, long-standing relationships with financial institutions and award-winning customer support to provide merchant processing and payment solutions to brick and mortar and digital businesses around the world.
Biden’s Announcement, SAFE Banking, and the CAOA
Photo By CannabisCamera.com
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
October has been a mixed bag in Washington, D.C. in terms of cannabis policy: there hasn’t been much news from Capitol Hill, but the Biden Administration shocked everyone when they made a big announcement earlier this month. As we draw nearer to the midterm elections in November (don’t forget to register!), let’s take a look at where things stand currently:
On Capitol Hill:
SAFE Banking Act
The SAFE Banking Act (S. 910) has been held up in the Senate for more than a year now. Many Senate Democrats (including Leader Schumer) have been pushing for changes to the bill to create a “SAFE +” bill that includes justice-focused provisions. As with all things in politics, a delicate balance must be kept in order to reach 60 votes in the hyper-partisan Senate.
The good news: Leader Schumer and other Democrats have been in negotiations with lead-Republican co-sponsor Sen. Steve Daines (R-MT) and others to determine what “SAFE +” could look like. Those discussions have been occurring for a few weeks now and will continue.
The bad news: those negotiations are taking time. As a result, you shouldn’t expect any legislative movement to occur until after the midterm elections.
There’s also the National Defense Authorization Act (NDAA) to consider. The House passed and sent the FY2023 NDAA to the Senate months ago and the large package did include the language of the SAFE Banking Act (as currently written). It’s unclear how the SAFE+ negotiations may impact cannabis banking’s chances in the NDAA: Leader Schumer could make sure the language is not in the NDAA if he feels confident about SAFE+’s chances.
CAOA
Unfortunately, there’s no substantive news regarding the Cannabis Administration and Opportunity Act (CAOA), or comprehensive reform broadly on Capitol Hill right now. While NCIA and others continue to push for descheduling and responsible regulations from Congress, the upcoming election and Senate timeline have taken precedent. It’s unlikely that CAOA will move this legislative session given the number of legislative days left in the year.
From the Administration:
Earlier this month, President Biden made an unprecedented announcement that his administration would begin the process for the pardoning of thousands of people with nonviolent marijuana use or possession convictions, and would begin the process of working with the Department of Health and Human Services to reclassify marijuana from a Schedule I drug in the Controlled Substances Act.
This announcement comes on the heels of NCIA’s successful 10th Annual Cannabis Industry Lobby Days held in mid-September, where 100 cannabis industry professionals, representing small and medium-sized businesses including social equity operators, met with more than 100 Congressional offices to discuss barriers faced by the industry stemming from marijuana prohibition.
It’s no coincidence that when NCIA members show up to D.C., big things happen! Make sure to stay informed as we head towards the lame duck session via our newsletter and social media platforms and don’t forget to register for NCIA’s upcoming 11th Annual Cannabis Industry Lobby Days in May 2023!
Member Blog: Understanding D&O Coverage for the Cannabis Industry
Cannabis industry companies face more and sometimes greater threats than non-cannabis companies because of the emerging nature of the market, a complex regulatory landscape, and investor relations.
Because of the challenging landscape, cannabis organizations have some unique risks they may face while running their businesses including:
High investor expectations and limited access to capital
The federal status of cannabis
Varying trade practices from state to state
Lack of bankruptcy protections
Increased merger & acquisition activity
State-by-state licensing requirements
Cannabis-specific local, state, and federal tax laws
Private companies in the cannabis market face threats from many directions, business leaders need to protect their assets and be able to attract top potential directors and officers to their company. The increased exposure to litigation includes disputes such as shareholder disagreement, allegations of mismanagement, and actions by regulatory agencies. Lawsuits can be levied against a cannabis company’s directors and officers and create risk for these individuals and the cannabis company. One way to help mitigate the risk of future losses is by getting Directors & Officers (D&O) insurance.
Directors & Officers Liability Insurance, or D&O, is a coverage designed to protect an organization and its directors and officers from being held financially responsible for legal action taken by an organization’s employees, vendors, customers, or shareholders. D&O insurance primarily covers the costs associated with an allegation and wrongful lawsuits including defense costs, legal fees, and settlements. D&O insurance does not cover illegal acts.
What is generally covered with D&O Insurance?
Coverage varies, but typically D&O policies encompass three main insuring agreements: Side A, Side B, and Side C. The structure of a policy depends on which of these three insuring agreements are included. Each insurance agreement can specify a distinct insured party.
Side A
When indemnification is either barred by law or an organization is insolvent and unable to indemnify, the individual director and/or officer can be at risk and responsible for losses. Side A offers protection for an individual’s personal assets in case of a non-indemnifiable loss.
This offers an extra layer of protection if a company is unable to pay for losses in cases like bankruptcy or regulatory investigations.
Side B
Side B provides reimbursement for the defense of a corporation for expenses incurred while defending its organization’s directors and officers. This protects a company’s corporate assets.
Side C
Side C, also known as entity coverage, protects a corporation’s interests if a corporation is named in a suit alongside directors and officers. This coverage provides entity asset protection for legal fees, settlements, or other related costs for covered claims, subject to a policy’s terms and conditions. Side C has a broader implication for private and non-profit companies, as Side C typically only protects public companies from securities claims.
When should you have conversations with your broker?
Buying the correct insurance coverage can be a confusing undertaking for Cannabis business owners. Insurance Agents/Brokers are critical in helping their clients navigate this process and serve as trusted advisors to find the best fit for their client’s businesses. This article aims to demonstrate the differences between admitted and non-admitted policies and their implication for your Cannabis clients.
Running a cannabis company can be challenging and often requires leveraging an insurance broker that understands the cannabis industry. Some questions to help decide when to have conversations about Directors’ & Officer’s coverage include:
Are you planning on taking on new investors during the next 12 months? As you take on investors, it increases your risk profile as shareholders can sue on their own behalf or in the name of the corporation. These suits may allege a breach of a director’s or officer’s fiduciary duties of care and loyalty to the company. This type of litigation can result in issues of conflict between the shareholders, the company, and the individual director and officer defendants.
Are you hoping to hire an executive or team of executives within the next 6-12 months? As the cannabis market begins to expand, cannabis companies are looking to attract top talent and at the executive level, D&O coverage is an advantage to many candidates.
What is an example of a recent lawsuit within the cannabis industry?
Private companies in the cannabis market face threats from many directions. Business leaders need to help protect their assets and be able to attract top potential directors and officers to their company. Below is a recent example of a lawsuit from the Cannabis industry:
PH Invesco LLC v. Pure Harvest Corporate Group Inc et al., case number 1:22-cv-00094, in the U.S. District Court for the District of Wyoming. Colorado-based cannabis farm Pure Harvest Corporate Group Inc. was hit with a suit by a lender that claims the farm and its CEO breached the terms of a $4,000,000 line of credit it took out. (2022)
This information is provided for general informational purposes only and is not intended to provide individualized business, insurance, or legal advice. All descriptions, summaries, or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.
Jon Spratt leads Greensite Insurance, a specialty MGU providing boutique insurance coverage to the rapidly expanding Cannabis industry. Greensite launched in 2021 and is partnering with agents/brokers to help better protect their clients. Jon also runs a business accelerator that develops and launches new programs on behalf of Aon programs.
Greensite Insurance Services is the brand name for the brokerage and program administration operations of Affinity Insurance Services, Inc. a licensed producer in all states (TX 13695); (AR 100106022); in CA & MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services Inc.; in CA, Aon Affinity Insurance Services, Inc., (CA 0G94493), Aon Direct Insurance Administrators and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency
Video: Insights From NCIA’s 10th Annual Lobby Days
“I think it was really successful on all fronts.
Whether it be the networking aspect, VIP access to key decision makers, or just the ability to get to know people both fellow cannabis business owners and congressional leaders.
Lobby Days was a perfect example of really putting the membership into work and seeing what it is that you pay for.” – Chris Jackson, NCIA Board Member
Committee Blog: Four Tips for Cannabis Businesses to Maintain Cannabis Friendly Financial Services
by Kameron Richards and Steven Schain Members of NCIA’s Banking & Financial Services Committee
Obtaining legitimate, cannabis-friendly financial services is among the cannabis industry’s biggest hurdles. Obtaining financial services is challenging for dispensaries, marijuana grows, and testing labs but it could also be an obstacle for non-plant touching businesses or individuals engaged in the cannabis industry. Without cannabis-friendly financial services, individuals and businesses related to the cannabis industry are deprived of simple financial solutions, like checking accounts, resulting in large amounts of cash being held at company facilities or the operator’s residence, posing significant risks.
Because only a small amount of insured banks and credit unions offer cannabis businesses financial services, finding cannabis-friendly financial services offered by FDIC or NCUA/CUNA institutions is challenging, and following a certain approach may fortify the longevity of a relationship with a financial institution.
Know Your Company Information and Banking Needs
Thorough onboarding initiates the account opening process for cannabis companies seeking financial services. Cannabis-friendly financial institutions exercise enhanced due diligence at account opening for compliance purposes, which will be further discussed in this article.
Financial institutions may require information on state licensing, corporate structure, and governance documents. Institutions generally collect information regarding the company’s underlying products and whether those products or services violate The Controlled Substances Act (“CSA”). Information collected during the onboarding process often determines the institution’s fee, risk-based categorization, and willingness to provide financial services to a particular cannabis company.
During the onboarding process, cannabis companies should determine if the financial institution provides all services necessary for its specific operation. The services offered by cannabis-friendly financial institutions may vary based on its risk tolerance.
Know Compliance Requirements and Cannabis-Specific Programs
Financial institutions serving the cannabis industry must comply with The Bank Secrecy Act’s (“BSA”) requirements set forth in the Treasury Department’s Financial Crimes Enforcement Network’s (“FinCEN”) BSA Expectations Regarding Marijuana Banking (FIN-2014-G001) (“FinCEN Guidance”). To mitigate the possibility of money laundering, institutions assemble extensive risk-based BSA programs centered around assessing the risk of each cannabis account and detecting and reporting “Red Flags” set forth by FinCEN Guidance.
To understand the constraints under which financial institutions are forced to operate, cannabis companies should familiarize themselves with relevant cannabis industry regulatory guidance and, if possible, structure its operations to ease its financial institution’s compliance efforts. Further, cannabis companies should understand any contractual terms and operation of any specific cannabis programs required by its financial institution (e.g., participation in cannabis-specific programs to support loan approvals, liquidity management or the coordination of cash courier services).
Know the Risk-Based Approach
FinCEN Guidance requires institutions to perform enhanced due diligence on cannabis companies, because the risk category of each cannabis account is determined during the onboarding process, institutions are required to obtain corporate and state licensing documentation and detect any negative news on the potential account signers and the business.
Because there is no mandated risk-based structure for institutions to follow, it is critical that cannabis companies know its institution’s specific risk-based structure. Further, if a cannabis company is utilizing more than one institution, it should understand that each institution’s risk-based categorization may have specific factors or considerations. Some institutions use a tiering structure (which can vary by institution) or make this determination based on the direct or indirect relationship that the account’s source of funds has with cannabis prohibited by the CSA. An institution’s risk-based categorization could determine an account holder’s compliance obligations or eligibility for financial services such as lending, treasury services, payment processing, and 401(k)/retirement solutions.
Know What Could Cause Account Termination
After completing the onboarding process and placing cannabis accounts in the requisite risk profile (which may vary among institutions), institutions are obligated to conduct ongoing enhanced due diligence on cannabis accounts in accordance with the risk each account poses.
This enhanced due diligence encompasses staying abreast of corporate changes, confirming that all licenses are up to date and conducting periodic negative news checks that indicate FinCEN Guidance “Red Flags.” It can also include a litany of happenings that cannabis account holders may not be aware of. While cannabis account signers may be compliant, without any negative news on them or their business, their institution could also close an account due to adverse information from tax and state licensing authorities or wrongdoing by employees or vendors. Cannabis account holders should also be aware of transactions prohibited by its institution’s policies and procedures like commingling funds between non-plant touching and plant touching accounts or transferring funds to and from vague accounts at unaware institutions unwilling to serve the cannabis industry.
Cannabis account holders with multiple relationships should be aware that each institution’s closure protocol may vary in response to adverse information or conducting transactions prohibited by internal policies and procedures (account termination terms are often contained in the depository agreement between the institution and cannabis account holder).
Conclusion
Beyond assisting a business’ core functioning, maintaining relationships with legitimate financial institutions leads to strategic advantages for a cannabis company and its owners and operators, like financing or payment processing.
Further, because FinCEN requires institutions to monitor and report cannabis account transactions and file a Suspicious Activity Report (SAR) when a cannabis account is opened or closed or if “Red Flags” are detected; cannabis companies can protect their accounts and businesses by knowing applicable laws and regulations and their institution’s cannabis-specific programs’ policies and procedures.
Social Equity Members Head to D.C. to Lobby for A More Inclusive Industry
by Mike Lomuto, NCIA’s DEI Manager
NCIA is proud to announce that for the first time, thanks to the support of our members, we have awarded nine Lobby Days Equity Scholarships to support our Social Equity members with travel expenses to attend NCIA’s Lobby Days in Washington, D.C., on September 13-14. These Social Equity applicants and operators from around the country are leaders and active contributors to NCIA’s Sector Committees, our DEI Initiatives (particularly policy-related ones), and to advocacy efforts in their local and/or state municipalities.
Lobby Days provides the opportunity for NCIA members to come together to advocate for the issues most important to small cannabis businesses — from SAFE Banking to federal de-scheduling — and to share their personal stories with national lawmakers.
Our delegation includes:
Dr. Adrian Adams, Ontogen Botanicals CBD Ambrose Gardner, Elev8 LaVonne Turner, Puff Couture Michael Diaz-Rivera, Better Days Delivery Osbert Orduña, The Cannabis Place Raina Jackson, Purple Raina Toni MSN, RN, CYT, Toni
We asked our DEI delegation why attending Lobby Days was important to them. Here are some of their responses:
“I want our elected officials to hear my story which gives a voice to so many others, who like me, grew up in areas that have disproportionately borne the brunt and weight of cannabis enforcement. Children and young adults, whose only crime was being poor and of color, faced the indignity of being stopped and frisked hundreds of times. Now after paying the ultimate entry price, we can not get in the door of the cannabis industry because of a lack of banking and lending opportunities that continue to shut us out of the cannabis market.
The de-scheduling of cannabis, the passing of SAFE Banking, or the repeal of IRC 280E all would immediately increase the opportunities for small cannabis businesses like mine to have a true opportunity for success, growth, and economic empowerment of our communities.”
– Osbert Orduña, The Cannabis Place
“As the industry grows and moves towards federal legalization, our elected officials must hear constituents’ voices. It’s important that my energy, face, and voice are present, representing the need for safe banking, health equity, and policies that support federal legalization. As states continue to legalize adult recreational cannabis usage, there will be an increased need for cannabis health equity to address the social, political, and economic conditions in underserved communities.
I’m committed to increasing awareness of the importance of education, employee retention, and community wellness in these communities.”
– Toni MSN, RN, CYT, Founder of Toni NCIA’s Education Committee & Health Equity Working Group
“I have begun to work on lobbying at a local level. Federal legalization, descheduling, decarceration, social equity, health equity, and safe banking are some of the areas that I would like to learn how to lobby for at the national level.”
– Michael Diaz-Rivera, Owner/Operator, Better Days Delivery
“We should not stop at using the SAFE Banking Act merely to provide legal and regulatory protection for financial institutions. That will enable, but not ensure, increased banking services for minority-owned cannabis and hemp companies.
As the regulatory gaps between state and federal governments are addressed, there must be mechanisms to prevent predatory practices while opening access to capital.”
– Dr. Adrian Adams, Ontogen Botanicals CBD
It is important to the NCIA, and its membership for Main Street Cannabis to continue to develop in as diverse, equitable, and inclusive a manner as we can achieve. As the industry has thus far failed at creating tangible Social Equity, it’s important to ensure our efforts this September to include these voices and the communities they represent.
This is where the DEI delegation comes in.
As the official DEI delegation, the Lobby Days Equity Scholarship recipients will provide a foundational understanding of matters related to DEI in the industry for all NCIA members present at Lobby Days. The DEI delegation will ensure that there are members present speaking up on matters of DEI from within an important national trade association and within the context of Main Street Cannabis.
NCIA’s Government Relations team has organized a full day of meetings with Lawmakers and their Offices. New citizen lobbyists will receive online training before the event and are grouped together with experienced industry leaders who can help them find their voice. There will be an opening networking reception for all attendees, and a closing event featuring some of NCIA’s most important allies in Congress.
We are still accepting sponsorships to fully fund Lobby Days Equity Scholarships to ensure our recipients have their travel and lodging expenses covered while in Washington, D.C. Contact MikeLomuto@TheCannabisIndustry.org for more information.
Let’s keep building a better industry together, as we bring our voices to Washington, D.C.
Video: Defending Main Street Cannabis Businesses
As the only national advocate for small and mid-sized cannabis businesses, NCIA works every day to advance policy reforms favorable to the whole industry — not just the wealthiest few. Hear from NCIA Board Members why our mission and advocacy work is crucial to defending the interests of everyday businesses in the cannabis industry.
We are Main Street Cannabis, not Wall Street Cannabis.
Become a member of NCIA today so that everyone can benefit from cannabis legalization — not just the wealthiest few.JOIN NCIA TODAY
Joining NCIA ensures that your interests are heard in our nation’s halls of power as the rules for national legalization are written. We’re also the only full service trade association in the industry, which means that our members enjoy unparalleled ROI and benefits to help them thrive in an increasingly challenging environment.
Video: NCIA Today – Thursday, August 25, 2022
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. This week Bethany is joined by NCIA CEO Aaron Smith to talk about the importance of having your voice heard on Capitol Hill at our upcoming 10th Annual Cannabis Industry Lobby Days on September 13-14. Join us every other Thursday on Facebook for NCIA Today Live.
This is your chance to unite with other NCIA members to advocate for the issues most important to small cannabis businesses – from SAFE Banking to federal de-scheduling – and to share your personal stories with national lawmakers who need to hear from Main Street Cannabis businesses.
Watch this video to hear from NCIA’s CEO and Co-founder, Aaron Smith, about why you should attend this most impactful and crucial event next month. Not yet a member? Join today and then make your plans to join us in D.C.
Behind Closed Doors: NCIA at CANNRA’s June Conference
The discussion about the future of cannabis legalization is ongoing, to say the least. Recently, Cannabis Regulators Association (CANNRA) held a two-day conference in early June to gather Marijuana government regulators, trade associations, and businesses. The Cannabis Regulators Association (CANNRA) is a national nonpartisan organization of government cannabis regulators that provides policymakers and regulatory agencies with the resources to make informed decisions when considering whether and how to legalize and regulate cannabis.
Representatives from NCIA participated in the conference – NCIA Board Members Khurshid Khoja (Chair Emeritus) and Michael Cooper (Board Secretary), and we caught up with them in this blog interview to better understand the goals and outcomes of the event.
From a bird’s eye view, what was the overall goal of this conference?
MC: The conference was an opportunity for regulators from around the nation to hear directly from stakeholders on the current and future challenges that face these markets and different models of regulation to tackle them.
KK: I’ll add that our own goals, as the current Policy Co-chairs for NCIA, were to better understand the priorities of state and local cannabis regulators across the country, and anticipate future developments in cannabis policy early on, so we could take that back to the NCIA membership and the staff – especially Michelle Rutter Friberg, Mike Correia, and Maddy Grant from our amazing government relations team.
Let’s talk about who was invited to participate in these panel discussions. From cannabis industry associations to those who regulate cannabis, who else was there?
KK: Michael and I each spoke on a panel. The other speakers included reps from federal trade associations, lobbyists, vendors, and ancillary companies who were helping to underwrite the event (along with NCIA). Given that CANNRA is a non-profit that doesn’t receive any funding from their member jurisdictions, and has a single paid full-time staff member, I thought they were still able to obtain a fairly diverse and interesting set of speakers at the end of the day – including NCIA Board and Committee alums Ean Seeb, Steve DeAngelo, Amber Senter and David Vaillencourt (representing the Colorado Governor’s Office, LPP, Supernova Women and ASTM, respectively), as well as folks from Code for America, Americans for Safe Access, and the Minority Cannabis Business Association, U.S. Pharmacopeia, NIDA, the CDC, and the Alcohol and Tobacco Tax and Trade Bureau, representatives of the pharmaceutical, hemp, tobacco and logistics industries, and public health officials.
Were there any organizations or sectors of the industry that were not in attendance, whether they weren’t invited or just didn’t participate, and why is it important to note the gaps of who was not represented?
MC: No licensed businesses were invited. Instead, organizations that represent industry members were invited. As a result, we felt it was crucial to inform these discussions with the perspective of the multitude of small and medium-sized businesses otherwise known as Main Street Cannabis that have built this industry and continue to serve as its engine.
KK: Sadly, we did not have an opportunity to hear from members of the Coalition of Cannabis Regulators of Color. I can’t speak to why that was, but it was unfortunate for us nonetheless. And while we had some public health officials there, I know that CANNRA Executive Director Dr. Schauer would have preferred to see more of them in attendance.
Across the spectrum of policy and regulations and legislative goals, what topics were covered in the panel discussions across the two-day conference?
KK: We covered a ton, given the time we had, including the federal political and policy landscape; interstate commerce; the impact of taxes on the success of the regulated market; social equity and social justice; preventing youth access; regulation of novel, intoxicating and hemp-based cannabinoids; the prospects for uniform state regulations; technological solutions to improve compliance and regulatory oversight; and delivery models.
What information or perspectives did NCIA bring to the panel discussions that were unique from other participants? What does NCIA represent that is different from the other voices at the event?
MC: There really are a wide variety of perspectives on how best to regulate this industry. We felt it was essential that NCIA give a voice to Main Street Cannabis, the small businesses that so many adult-use consumers and medical patients rely upon. We emphasized, for example, that these are often businesses that cannot simply operate in the red indefinitely, but provide essential diversity (in the background and life experience of operators as well as in product selection and choice). NCIA wants to make sure that the future of cannabis isn’t simply the McDonalds and Burger Kings of cannabis. There are times when consumers want that, but there are also times when they want something unique and different. And it’s crucial that policy not destroy the small and medium-sized, frequently social equity-owned, businesses that provide those choices.
What else was interesting to you about this gathering of minds? Were you surprised by anything, or was there anything you heard that you disagreed with?
MC: There are a ton of different perspectives and approaches to cannabis, and that’s no surprise to anyone who has followed these issues closely because the tensions are very clear in the policy debates that are ongoing.
As the voice for the industry, we sought to urge an approach grounded in reality. Americans want these products. That’s clear from the ballot box and public polling. The question should be about how to encourage Americans to purchase regulated, tested versions of these products.
KK: There was definitely stuff we didn’t agree with – some of it from folks that we otherwise largely agree with. For example, our good friend Steve Hawkins of the USCC shocked a few of us in the audience when he seemed to indicate some receptivity to re-scheduling cannabis on an interim basis, rather than moving to de-scheduling immediately. I think that while rescheduling may benefit scientific research and pharmaceutical development, it could ring the death knell for Main Street Cannabis businesses. NCIA has consistently advocated for de-scheduling rather than re-scheduling.
After two days of panels, did anything new come through these discussions, or were any accomplishments achieved?
KK: I think there’s a growing recognition that addressing social equity solely through preferential licensing and business ownership for the few isn’t enough and that the licensing agencies and regulators that execute social equity policies have a very limited (and often underfunded) arsenal to comprehensively redress the harm caused by federal, state and local governments prosecuting the war on drugs. In my remarks, I said it was time for us to start discussing additional forms of targeted reparation and had a number of regulators approach me afterward to continue the discussion. Candidly, I expected my remarks to fall on deaf ears. They didn’t. That was very encouraging.
MC: There was definite progress. At the end of the day, these cannabis regulators are working hard to try to get this right. But in such a new area, and with so many competing perspectives and voices, their job isn’t easy. We were heartened to see the level of engagement from regulators on these points, including follow-ups to get more information on some of the pain points we identified for small and equity businesses in the industry.
It was definitely rewarding to provide NCIA and our members’ perspectives in a forum like this, and we’re looking forward to continuing to further strengthen NCIA’s relationship with CANNRA and regulators around the country.
Member Blog: Trials and Tribulations – Compliance for Banking
There are not a lot of financial institutions out there that support cannabis, so finding the right one is important. What is also important is to understand the ‘why’ behind what they are asking. Opening a cannabis bank account is not as easy as opening a traditional business bank account. With cannabis being federally illegal, banks, and credit unions must adhere to the rules and regulations set forth by our regulators, also tying in the respective state that the cannabis business is operating in.
An initial phone call is often set up for the financial institution to learn more about the cannabis business, its owners, and signers. Knowing when the business will be operational and what their big picture looks like is fundamentally important. Questions could be asked about ownership, location, growth, licenses, and compliance. Some products and services are not fully available to the cannabis industry, because other players have not fully opted in (i.e., merchant processing and debit/credit cards). This makes the financial institution banking cannabis able to create a product suite that they feel comfortable with from a risk and compliance standpoint. Pricing out cannabis bank accounts is also something that differs from the traditional businesses being banked.
Again, not every financial institution will support cannabis, and that is because it is expensive. It is expensive because those that support the industry have had to seek guidance from consultants, their respective regulator, their state, their local cannabis groups and associations and their board of directors. The initial onboarding of a cannabis customer, after pricing is accepted, takes longer as well. Background and credit checks, as well as risk reviews need to be completed at most financial institutions, along with an initial onsite audit visit.
It is widely understood that cannabis businesses must go through an inspection with their operating state before they are licensed, however, financial institutions are still required to make sure they know what they are working with. Most financial institutions work closely with their compliance/BSA teams to develop risk profiles so that if questions are asked of them during an audit, they can answer to the best of their knowledge the transactions that are occurring and then prove that we understand what the cannabis businesses are using their accounts for. Many financial institutions have implemented the use of compliance software that allows their cannabis departments to review transactions, seed-to-sale monitoring, monitor licensing, insurance, onsite visits, and financial changes. METRC and Bio Track are the two main seed-to-sale tracking systems used throughout the United States. Most states have adopted using one or the other and few have implemented their own manual tracking.
The seed-to-sale system your financial institution chooses to work with can integrate with your respective state’s seed-to-sale tracking system for financial institutions to monitor account transactions and seed-to-sale flow. It is common to have your financial institution reach out to you once you have been onboarded to integrate your API key (QR code that houses your cannabis licenses) into their respective compliance software to initialize the tracking component. Directly after this, the designated person at the cannabis business or CPA (to be determined by the cannabis business) will be asked to upload your financials into the compliance software monthly for tracking purposes. These systems correlate with most POS systems as well as QuickBooks for a seamless flow. Financial Institutions are often asked by cannabis businesses if this is something they can do in-house or if they can utilize an outside CPA firm to help. The answer is yes to both. It takes minimal time each month to upload your financials so doing it yourself is certainly feasible, however, there are many CPA firms out there who will do it for you, along with making sure your numbers make sense and your taxes are accounted for. Not to mention, the annual CPA attestation as well.
Financial institutions are not asking you to do this to make your life difficult. It is simply because this is a new industry, one that is federally illegal at that, and verifying information to better understand how the industry works only helps to normalize it. It is also common for your financial institution to ask for invoices to accompany transactions such as wires, ACH, bill pay, checks, cash deposits, etc. We do this because auditors also ask us if we can, in fact, verify we know what this transaction was for and to whom the funds went. It also helps with fraud surveillance. Most financial institutions have experts in fraud or compliance who can help deter this from happening to you and your business.
We have come a long way since inception and have learned a lot over the years. What is important to know is we are all a team. The cannabis business and the financial institution are working together to understand how they both complement each other. Together we are building the cannabis industry, so that one day, when it is stabilized and normalized, we can take that with us for the next big thing. Every industry out there was new at one point and had to go through the same trials and tribulations, and while most of us cannot remember or have never been a part of the ‘build out,’ it did happen at some point. When your financial institution asks you for something related to transactions or business, please understand that it is for the better of the industry.
We can work together to normalize and strengthen this industry. All the steps we are taking are learning opportunities. I believe everyone can say at one point they did not know how to do something, but through training, education, and a road map, we were able to develop a routine so that as we grew at understanding something we had not understood before, it became normal.
Nicole Perry has been with Dart Bank since 2016 as the Office Manager and most recently VP/Senior Treasury Management Officer. She brings with her 20 years of financial services experience. Prior to joining Dart Bank, she worked for various financial institutions holding many different roles, specializing in business banking.
Nicole is an alumna of the Lansing Chamber of Commerce’s Lansing Leadership 2018 class and is part of the Perry School of Banking class of 2020. She received her Bachelor of Arts in Business Management with an emphasis in Human Resources from Davenport University and attended Central Michigan University for her Master of Science degree. In her spare time, Nicole enjoys attending Michigan State University football and basketball games and spending time with her family and friends at the lake.
Video: NCIA Today – Thursday, July 28, 2022
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. This week Bethany is joined by NCIA CEO Aaron Smith and Deputy Director of Government Relations Michelle Rutter Friberg. Join us every other Thursday on Facebook for NCIA Today Live.
Equity Member Spotlights: Where Are They Now?
Where are they now? This month, NCIA’s editorial department continues the monthly Member Spotlight series by following up with three of 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.
First off, we have rebranded. We are now Cannvas Events. The name change was part of our evolution and maturation as a startup. As we scaled, more resources became available for things like branding. We brought in Greg Hill of Brand Birth to deploy the science of branding and the end result was a new name, new logo, and new understanding of where we were situated in the regulated cannabis ecosystem. The transformation led to the planning and production of our signature Cannabis Event 2.0 offering, the inaugural Saturnalia Canna Carnival, taking place at the Trinity Health Arena in Muskegon, MI on August 2oth. We are powering a traditional indoor/outdoor carnival – rides and attractions included – with a hassle-free, normalizing consumption solution. If you’re in the Midwest, come join us as we celebrate the first year of an iconic, perennial cannabis festival. Tickets and info at cannvasevents.com and follow us @saturnaliacannacarnival
Would you like to share anything that came out of being in the Spotlight previously?
The Spotlight feature presented tremendous value. The first year of the cannabis startup journey is devoid of financial revenue. Unless you’re needle-in-the-haystack lucky, it’s not even a consideration. The money is flowing in the opposite direction. So, the only available revenue, or currency, are the relationships. If you’re fortunate, these become renewable resources upon which you can draw repeatedly, and managed properly, they have no expiration date. You can bank them like any currency and you have much more influence on their stability, than on fiat currency. For me, that one relationship was with Michael Schwamm, who leads the Duane Morris cannabis practice out of New York. Michael opened doors for me and got me into rooms that I was previously unaware existed. That access has made all of the difference for me, personally, and for Cannvas Events. And had it not been for the Spotlight, I would have never been in position to enjoy that access.
Endo Industries
Since the last spotlight, you’ve joined the DEI Committee and its Regulatory Subcommittee. Anything you’d like to share about that experience thus far?
I’m impressed by the brilliant folks on the committee, and their dedication to making cannabis equitable. It takes time out of our grueling work days to contribute time on these committees but the contribution to making the industry better is crucial during these developmental years of cannabis. Perhaps our current misguided, harmful CA cannabis policies could have been prevented with more early participation from stakeholders who are stewards of the plant. However, there were many factors involved with the way CA policies were created, including special interest money from those who don’t care or want to see the industry fail.
It’s been a painful journey living through the consequences of these challenging policies as a cannabis operator. It takes a long time to change once it’s been passed. However, companies who are willing to work together in these important processes will survive and write a new path to move forward. Most of us can’t wait anymore for things to change so we need everyone’s active participation now, whether it’s writing an email to your constituents or being a part of NCIA!
California cannabis seems to be going through terrible challenges. Is there anything you’d like to share about what you’re seeing, or about some of the solutions our members can support with?
Overburdensome taxes and high barriers to entry for licensing throughout the state are most obvious right now. The lack of diversity and equity, consumer education, state and federal funding for further research and development also play a huge role in CA’s struggles. I’m frustrated that the State doesn’t understand that those who have been dedicated to the industry, collaboration and this plant are the only ones who can truly guide this industry forward.
NCIA members can lend support by truly including legacy, equity, and other diverse teams into your conversations and partnerships, and opening our eyes to value brought to the table by different communities. I would also encourage members to think about ways we can create awareness to our consumers to make better buying decisions. We have left all the medical properties of cannabis while legalizing, and that’s also why the industry is failing. Lastly, we need to keep pushing for more consumption lounges and events!
At Endo Industries, we built our company on principles of collaboration, science, equity and inclusion. Most notably, we offer critical supply chain support through our tissue culture services, and certified virus-free clean clones for growers, breeders and brands. If you know good operators who could benefit from our support, please send them our way. I cannot stress enough that the work Endo is doing is crucial for the success of the supply chain right now.
Would you like to share anything that came out of being in the Spotlight previously?
We’ve gotten great exposure for being featured in Spotlight. Endo and myself are more internet searchable, which in this day in age means we are real people!
People started sharing the link to the Spotlight to use as an introduction to Endo and myself as a founder. We’ve been told by clients who decided to work with us because they came across the feature when researching Endo. It solidified their desire to pick us because we are bullish about our values because our business model is strategic and collaborative.
It’s great to be co-signed by a credible organization like NCIA, and it goes a long way for a small business that doesn’t have an abundance of marketing and PR resources. I’ve hid in the shadows for far too long. My journey and passion for cannabis needs to be told and celebrated. Endo as a company needs exposure so we can reach a larger audience. I’m grateful for NCIA and look forward to our continued relationship.
Next Level Edibles
What’s new in the world of Next Level Edibles?
There is a lot new in the world of Next Level since our Equity Spotlight in September of 2021. In December, we had a booth, sponsored by the awesome team at The People’s Ecosystem, in Moscone Center at NCIA San Francisco. It was our first time attending an expo, let alone having a booth, and it was a great opportunity to grow our brand while creating relationships for future business opportunities. In the second week of the new year we launched our 1000 mg full spectrum coconut oil in Ivy Hill Oakland. And, later that month, we were welcomed into the Third Cohort of Momentum, Eaze’s Cannabis Business Accelerator. Two weeks before classes began, in early April, we launched our infused fast-acting brown sugar in 7 Star Holistic Healing Center. And in May, we attended MJ Unpacked NYC with other graduates of Our Academy.
California cannabis seems to be going through terrible challenges. Is there anything you’d like to share about what you’re seeing, or about some of the solutions our members can support with?
California Cannabis is facing challenges on many fronts. Countless unnecessary hurdles to legal entry, political red tape, and excess packaging waste to name a few. But the biggest challenges are around security. Every week there is news of a new dispensary, farm, distributor, and friend being burglarized. High tech security systems, gates, and cameras are no match for organized thieves and slow police responses. Until we can get a portion of our excessive taxes dedicated to funding police divisions that specifically targets cannabis thieves, the best solution to combat this is to support your favorite brands by purchasing their products through legal cannabis retail sources.
Would you like to share anything that came out of being in the Spotlight previously?
Being in the Spotlight helped our company tremendously. It allowed us to grow our cannabis network as plant-touching and ancillary companies reached out from all over the country. In addition, the visibility it provided us helped connect with the team at The People’s Ecosystem which led to our booth at NCIA’s Cannabis Business Summit and our new supply chain partners. It provided the traction we needed to help us get to the next level.
Midsummer Movement: The Pre-August Recess Rush in D.C.
Photo By CannabisCamera.com
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
As Congress gets ready to beat the D.C. heat and leave Washington for their annual August recess, there’s at least one thing on their minds: cannabis.
Last week, Senate Majority Leader Chuck Schumer (D-NY) along with Finance Committee Chair Ron Wyden (D-OR), and Sen. Cory Booker (D-NJ) introduced their much anticipated Cannabis Administration and Opportunity Act (CAOA), which is now the Senate’s only pending legislation that would provide comprehensive cannabis policy reforms across the nation.
The landmark bill would remove cannabis from the federal Controlled Substances Act and move regulatory responsibility from the Drug Enforcement Administration (DEA) to the Alcohol and Tobacco Tax and Trade Bureau (TTB), the Food and Drug Administration (FDA), and other agencies to protect public health and safety. The bill would also institute a federal excise tax of 5-25% on cannabis on top of the already-hefty state taxes imposed on the industry, concerning advocates for small cannabis businesses and equity operators.
The long-awaited CAOA was introduced after sponsors circulated a discussion draft last year. NCIA and other advocacy organizations provided comprehensive feedback to the bill’s authors last year. Notable changes to the legislation include:
Increases the permissible THC by dry weight from the current 0.3 percent to 0.7 percent and refines the definition of “hemp,” and consequently “cannabis” by taking into account the total THC in a cannabis product, rather than just delta-9 THC.
Changes to the weight quantity to qualify a person for felony cannabis distribution or possession charge under the section from 10 pounds to 20 pounds.
Provides that a court shall automatically, after a sentencing review, expunge each federal cannabis conviction, vacate any remaining sentence, and resentence the defendant as if this law had been in place prior to the original sentencing.
Enables a noncitizen who has received a deportation order based on a cannabis-related offense to file a motion to reconsider that decision. If the motion to reconsider is filed within 30 days of the removal order, the motion may allow for the cancellation of the deportation order.
Establishes a new 10-year intermediary lending pilot program in which SBA would make direct loans to eligible intermediaries that in turn make small business loans to startups, businesses owned by individuals adversely impacted by the war on drugs, and socially and economically disadvantaged small businesses.
Removes the requirement to maintain a bond for any cannabis business that had less than $100,000 in excise tax liability in the prior year and reasonably expects excise tax liability in the current year to be below such amount.
Incorporates rules similar to rules currently applicable to permitted malt beverage producers and wholesalers.
While the historic nature of the CAOA cannot be understated, the bill has a multitude of challenges ahead of it. Not all Senate Democrats support the legislation, making the 60-vote filibuster threshold nearly impossible. Plus, with only a couple dozen legislative days between now and the end of the session, time is also working against advocates.
Dovetailing with the introduction of the CAOA, the Senate Judiciary Committee’s Subcommittee on Criminal Justice and Counterterrorism will hold a hearing titled “Decriminalizing Cannabis at the Federal Level: Necessary Steps to Address Past Harms” this Tuesday. While the witness list has not been made public as of publication, expect the hearing to focus on the newly introduced legislation and how it would affect communities most impacted by the war on drugs.
In other news, the House and Senate will vote on a revised research bill, the Cannabidiol and Marihuana Research Expansion Act, this week. The bill is expected to pass both chambers and be sent to President Biden’s desk for his signature. The Senate bill is sponsored by Sens. Dianne Feinstein (D-CA), Chuck Grassley (R-IA), and Brian Schatz (D-HI) and passed by unanimous consent in March. The House bill is sponsored by Reps. Earl Blumenauer (D-OR) and Andy Harris (R-MD), and passed 343-75 in April. One of the notable areas of compromise? The House bill would have allowed researchers to do their studies on cannabis that’s actually being sold to consumers in dispensaries. That was removed during negotiations, meaning that researchers will still have to obtain their cannabis from the University of Mississippi’s cultivation facility.
There’s still time before recess begins, so make sure you stay tuned to NCIA’s podcast, social media, and newsletter to stay up-to-date on all the latest from Washington, D.C.! Interested in making more of an impact? Don’t forget to register for our upcoming 10th Annual Cannabis Industry Lobby Days on September 13-14, 2022!
Making History In Congress, Thanks To NCIA Members!
by Aaron Smith, NCIA’s CEO and Co-founder
History was made today as Senate Majority Leader Chuck Schumer (D-NY) along with Senators Ron Wyden (D-OR) and Cory Booker (D-NJ) introduced the Cannabis Administration and Opportunity Act which would finally remove cannabis from the federal Controlled Substances Act and begin the process of federal regulation.
For the last year, NCIA has been working behind the scenes to ensure this landmark legislation not only ends prohibition but also creates an environment where small and medium-sized businesses can thrive under national legalization. These businesses – who we now call “Main Street Cannabis” – are the heart of our industry and we’re proud to have been giving them a seat at the table in our nation’s halls of power for over 12 years.
We will continue working with our allies in the Senate to advance this bill and advocate for some necessary amendments to better ensure that small, equity, and women-owned businesses (in particular) are well-positioned to thrive after the end of federal prohibition.
We would not be where we are today if not for your support which has allowed us to effectively represent the interests of small businesses like yours in the halls of Congress and in the court of national public opinion.
I hope you’ll join us in making national legalization a reality by making your voice heard at our upcoming 10th Annual Cannabis Industry Lobby Days in Washington, D.C. September 13 & 14!
Thanks to your membership, NCIA’s government relations staff represents Main Street Cannabis in D.C. every day but Lobby Days is your chance to show up and tell your unique story to our nation’s lawmakers, firsthand.
Lobby Days is also the best opportunity to connect with your fellow industry leaders who are truly invested in the future of cannabis and sensible national policy. Please register today so you don’t miss out on making history with us! Reach out to my colleague Madeline Grant to learn more about how you can be as impactful as possible at this year’s Lobby Days.
Thanks, as always, to all NCIA members for their support of the cannabis industry. If your company is not yet a member of NCIA, now’s the time to join and have your voice heard in the halls of Congress.
Watch this video update with Aaron Smith and Michelle Rutter Friberg:
Service Solutions | 7.13.22 | Scarcity Shouldn’t be Scary – How to Fund Your Growth
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, July 13, 2022 we were joined by e2b Teknologies whose team of leading integration & technology experts discussed some easy steps to prepare your business for funding and accelerated growth. As you all know, competition was stiff for funding prior to 2022 but with the current economy and rising interest rates, capital is much harder to acquire today. You should be taking steps get noticed and get the MONEY you need to grow your business now.
After viewing you’ll walk away with a better understanding of:
• How to leverage a team properly
• What’s most important – It may not be what you think.
• What’s necessary in terms of reporting, compliance, and record-keeping
• Evaluating potential technology partners
Sit back and settle in for an informative and timely program outlining the challenges facing operators and how you can position yourself for success with the right tools to help succeed at scale.
Founded in 2010, NCIA is the oldest, largest, and most effective trade association serving the cannabis industry. Our membership consists of hundreds of small businesses and tens of thousands of cannabis professionals who know that we are stronger and more prosperous when we work together to lift up our entire industry.
As the only national advocate for small cannabis businesses, NCIA works every day to advance policy reforms favorable to the whole industry — not just the wealthiest few.
Equity Member Spotlight: Banyan Tree Dispensary – Adolfo “Ace” Castillo
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 Adolfo Castillo. People who know me call me Ace. Before I started my first cannabis business, I had a 10-year career in the banking industry. I started in a call center as a customer service associate. I then moved into a traditional banking center where I learned sales and eventually became the assistant manager. It was at the end of my tenure in 2008 that my Tia Eloise was diagnosed with terminal cancer. At the request of my mother, she asked me to get some cannabis in hopes that it would help her sister eat. Although it did not cure cancer, it really helped her appetite and gave her a bit of relief. Unfortunately, my Tia Eloise lost that battle, but it was the relief that I was able to provide that helped bring me peace when she passed away. This all happened around the same time that bill SB 420 was signed into California law, establishing statewide guidelines for Prop. 215. This law paved the way for cooperatives and collectives to begin operating legally in my city. It was at that moment that my love for cannabis became a passion. I felt a need to help more people gain access to cannabis, so I partnered with a friend of mine who sold weed and I took what I had learned about business and applied it to opening my first medical cannabis dispensary.
What unique value does your company offer to the cannabis industry?
I named the dispensary Banyan Tree after an experience I had in Maui about 13 years ago. It was my first visit to Maui so I decided not to bring any cannabis products to avoid any problems at the airport. When I arrived, I asked a few locals where I could find some good smoke and they all pointed me to the Banyan Tree. It was true. As soon as I found the Banyan Tree, I could tell this was the place to be. The smell was in the air and I met some really nice Hawaiians who were happy to hook me up. I want our guests to have the same experience when they visit our dispensary. Banyan Tree is a destination. A place where friends can meet to find quality cannabis.
As a local native, I understand the cannabis culture in my town. The legacy market has thrived for so long in Fresno. One of our biggest challenges will be convincing medicinal users and cannabis connoisseurs to buy their cannabis from a licensed facility and not from the streets. In order to create the best experience possible, it starts with a well-trained, knowledgeable staff. I am lucky to have two educators on my team who have helped me put together a robust employee development program that will ensure that the Banyan Tree staff will be primed for success.
My goal for Banyan Tree is to be the #1 dispensary to work for. I truly believe that the success of your business relies heavily on its employees. I want our employees to have purpose and feel proud of the work they do. Banyan Tree was built upon the idea of helping our surrounding community achieve wellness and enjoyment through cannabis. When you come to Banyan Tree, you will not be rushed, you will feel safe, your questions will be answered, and the price you pay will not shock you.
What is your goal for the greater good of cannabis?
I am hopeful that I will see full legalization in my lifetime. As a cannabis business operator, I would like cannabis to be recognized as a normal commodity and not this taboo substance that has so much negativity around it and red tape. As a business owner, I would like cannabis commerce to transact and be accepted without any special rules in regards to banking and filing federal income tax. As outdated stereotypes are finally fading away, more and more consumers view cannabis as an integral part of their health and wellness routine. I’m confident that in 20 years we will look back at the history of cannabis and just laugh at all the nonsensical rules surrounding cannabis in the early 2000s.
What kind of challenges do you face in the industry and what solutions would you like to see?
Most cannabis operations are running all-cash businesses because mainstream, national banking institutions are not willing to support a federally illegal industry. A small number of state-chartered banks and credit unions have offered financial services to compliant operations, but establishing these relationships continues to be a significant challenge for operators.
An equally frustrating financial challenge is IRS Tax Code 280E, which states that “no deduction or credit shall be allowed in running a business that consists of trafficking a controlled substance.” This archaic code impacts cannabis businesses across the nation, causing unnecessary fiscal and operational stress.
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 NCIA through the Social Equity Scholarship program to extend my network of cannapreneurs and to help develop best practices and guidelines that will shape the future of our industry. I would say for me, the best part of being a member of NCIA is the synergy. One of my favorite parts of the program is the “Power Hour.” Each week, Mike Lomuto hosts a zoom meeting dedicated to Social Equity members. It is where we have an opportunity to share ideas and find solutions to the issues we all face in our industry. I am very capable, but I recognize that by fostering relationships and collaborating with others in my industry, I can achieve far more than I could ever achieve on my own.
Committee Blog: Best Practices During Planning and Design to Prepare for a (Relatively) Painless Permitting Process
The cannabis industry is an emerging and dynamic industry, but just how leading edge is it in your community? If you are considering constructing a new facility it is important to understand the experience level and “hot buttons” of the Authority Having Jurisdiction (AHJ). Navigating the waters of a new market is different from that of an established market, but both can be treacherous.
In a new market, you may be part of the first round of projects that the AHJ has reviewed for this industry. Codes are meant to be interpreted and every AHJ has a different interpretation. Although this may seem like agriculture, it most likely is not seen that way in the eyes of the AHJ. The facility’s classification (commercial, industrial, agricultural, etc.) is key in driving the balance of the facility design, and it will have a significant impact on schedule and costs.
Many new markets will utilize established markets as a model and plan reviewers may be trained to emulate the existing model markets for code interpretation. It is well worth the research to understand if there is a model market being utilized, as it will create footsteps to follow even if you are the first one on the path.
Whether it is a new market or an existing market, each AHJ has its “hot buttons.” Do your homework to not only determine what these hot button issues are, but understand why, and how it is based in code. Many jurisdictions provide for a “round table” or a pre-submittal review. Take advantage of these processes to ferret out key issues. Do this early in the design stage to avoid surprises later in the process.
When the AHJ takes issue, or has a unique or overly conservative interpretation of the code, take a breath. Choose your battles wisely. If you have a strong case and it is a hill to die on then there are opportunities to work with the AHJ to find a more reasonable interpretation. However, this must be done with a positive and collaborative approach. Don’t win the battle and lose the war. If you have been in the cannabis industry but have not experienced a traditional entitlement process before, there will be many requirements that seem unreasonable. Common sense and past practices are always trumped by current code interpretation unique to each AHJ.
Pick your design and construction team wisely, spend smart money to assemble a seasoned group that has specific specialty knowledge in this industry. When assembled, listen to your team, know your strengths, and recognize theirs. Being part of an emerging industry creates many opportunities and challenges. Your ability to navigate these uncharted waters determines your success.
Construction: Making the best of properly zoned leftovers
In a perfect world, we would purchase existing facilities that are of the proper construction type or a green field site to construct a purpose-built facility. Given the nature of our industry this rarely, if ever, happens. Typically we must make do with the properly zoned leftovers. Understanding how your operations will interact with your existing building’s envelope is key to creating a successful facility.
Creating and maintaining the ideal environment is the ultimate focus, but how your plants function in this environment is only part of the equation. Understanding how your building will function in this unique environment is key to having a successful operation. A major component of this is water vapor – you may not be able to see it but it is all-powerful.
If you are contemplating constructing an indoor cultivation facility in a region that experiences cool temperatures, then you and your team need to understand the concepts and principles involved in a Hygrothermal Analysis. This analysis examines the movement of heat, air, and moisture flow through building enclosure assemblies (walls, roof, floors etc.). Without an understanding of these principles, you risk having significant condensation issues which can result in mold growth, deterioration of building components, and ultimately significant facility costs to properly address.
Since most existing building envelopes were not designed and are not suited to maintain this environment, in most cases the best solution is a “room within a room.” Constructing grow rooms out of insulated metal panels (IMP, think walk-in cooler panels) solves most of the issues. These panels not only provide a complete vapor barrier, but they reduce the volume that must be conditioned and provide ideal wash-down conditions. Thermal bridging is eliminated, and you are provided with an extremely well insulted, controlled, sanitized space.
You may not be able to select the ideal existing building for your facility, but knowing its limitations and appreciating the uniqueness of the environment that is being created is fundamental to your facility’s success. Utilizing products such as IMPs is just one of the methods to address the various pitfalls when working with existing buildings and making the most of the leftovers.
Financing – Show me the Money!
The structure of project funding is extremely important to not only manage a large number of funds properly but to foster an environment that encourages contractor interest while providing security for your investor partners. The continued federal prohibition has eliminated most of the financial mechanisms that other industries utilize when constructing facilities. This coupled with a less-than-stellar initial track record of timely payments to contractors has created a serious issue in our industry, however, there are solutions.
Show me the money… it is literally that simple and the mechanism for this is an escrow account. An escrow account is an account that is set up specifically for the project costs and funds can only be accessed with authorization from both parties (owner and contractor). This ensures that the funds are available and will remain available for the purpose intended. However, parking all the funds required for a project that will take many months or possibly a year to construct has a significant cost of money aspect, but there is a solution.
Contractors generally get reimbursed for work in place 30 days in the rears, if there is an issue with financing, it can take another month to two months to close down a project. Therefore, a contractor’s financial exposure is three months of project cash flow. In lieu of placing the entire project’s funds into the escrow account, three months of cash flow is deposited and then replenished with each monthly draw until the balance in the account equals the cost to complete of the project. This approach minimizes the amount of funds that must be parked in the account while ensuring the funds are available for the contractor.
This topic must be addressed at the onset of the project to ensure that you receive the full benefit of this approach. While you are in the process of selecting your general contractor partner this should be a topic of discussion. Knowing this mechanism is in place will increase contractor and subcontractor interest and may result in lower fees as the approach reduces contractor risk. The structure of project funding and utilization of financial mechanisms outside of mainstream financing is a key component of a successful project.
Video: NCIA Today – Thursday, June 30, 2022
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.
Positioned for Success – Highlights from the Insights & Influencers: NY Opportunity Tour
Any cannabis insider knows that New York is poised to become the next cannabis epicenter since legalizing last year. As such there is naturally incredible interest in learning about the business opportunities, how to best position yourself for success, as well as networking with potential future partners and clients. To meet these needs for our members and supporters, NCIA hosted the “Insights & Influencers: NY Opportunity Tour”, a weeklong series of events across New York featuring stops in Rochester, Albany and Brooklyn in partnership with founding members Canna Advisors, a trusted advisor to cannabis entrepreneurs who are starting or expanding a cannabis business.
(C) Sam C. Long / Honeysuckle Media, Inc.
Returning with our first in person events of the year, we couldn’t have been more thrilled to meet face-to-face with nearly 150 attendees who were either current or prospective business owners operating in New York and interested in expanding their operations or trying to break into the industry. With stops in Rochester, Albany, and New York City, the events brought together attendees from across the Empire State to not only learn about the developing regulatory landscape and opportunities to get involved with the burgeoning cannabis industry, but also the latest developments with NCIA’s work on federal cannabis policy.
(C) Sam C. Long / Honeysuckle Media, Inc.
Speakers were NCIA CEO and co-founder Aaron Smith and representatives from Canna Advisors including Bob Wagener, Vice President of Real Estate Development; Sumer Thomas, Director of Regulatory Operations; and Vincent DiMichele, Regulatory Content Manager. During the hour long presentation, numerous topics were covered that were relevant to business owners in the cannabis industry such as:
• The possibility of federal legalization and the work NCIA is doing to ensure small — or “main street” — cannabis businesses have a seat at the table as legislation is written
(C) Sam C. Long / Honeysuckle Media, Inc.
• Benefits of starting the license application process early and the importance of community engagement efforts
(C) Sam C. Long / Honeysuckle Media, Inc.
• Understanding zoning requirements and ensuring your business can operate in the best location possible
(C) Sam C. Long / Honeysuckle Media, Inc.
• Developing staffing needs and protocols so the team behind your operations is positioned for success and growth
• Engaging in public comment periods including the New York Office of Cannabis Management’s (OCM) current 60 day comment period open now through August 15 surrounding regulations for packaging, labeling, marketing, advertising, and laboratory testing of adult-use cannabis
Throughout the tour, representatives from the OCM were on-site to chat with participants, answer questions that attendees had, and generally get to know those interested in owning or operating a cannabis related business in the state. We are proud to facilitate those connections at our events time and time again, so that regulators and business owners alike can meet in person to build relationships which in turn helps break down the barriers to communication down the line.
Nevillene White, Manager of Community Relations and External Affairs for OCM, joined our Albany gathering right next door to The Egg performing arts venue located inside of Empire State Plaza. Throughout she was able to supplement the presentation by providing comments directly to crowd feedback during updates on the licensing process in the Capitol.
(C) Sam C. Long / Honeysuckle Media, Inc.
Trivette Knowles, Press Officer and Manager of Community Outreach for the OCM, was present in Brooklyn and commented ”We need more events like this to show people that cannabis touches all walks of life,” he said. “It’s part of the culture.”
(C) Sam C. Long / Honeysuckle Media, Inc.
NCIA’s Aaron Smith closed out each of the events with a final call to action for everyone in the room: Contact New York’s U.S. Senators Chuck Schumer and Kirsten Gillibrand to urge them to support the SAFE Banking Act and bring it to the floor for a vote. As the Majority Leader in the Senate, Sen. Schumer has the power to allow the legislation to be voted on but has not done so, stating a preference for more comprehensive legislation. Smith also discussed the Cannabis Administration and Opportunity Act (CAOA), which addresses federal legalization on a broader scale. A final version of that bill is still yet to be introduced however, and passage of the SAFE Banking Act would provide protections to financial institutions working with cannabis business and would have a positive impact on the cannabis industry while support for CAOA and comprehensive reform builds in Congress.
Of course we encourage anyone reading to take this call to action even further, and plan to join NCIA at our upcoming 10th Annual Cannabis Industry Lobby Days from September 13-14 in Washington, D.C. Find out more details and register online here.
We can’t thank all our members and supporters who attended the events on our “Insights & Influencers: NY Opportunity Tour” enough, as well as our co-hosts, Canna Advisors, for making these events possible!
(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.
Interested in attending our next in-person event this Summer? Register now for the Colorado Industry Social taking place on Thursday, July 28 in Denver, CO.
Want to know how you can sponsor events like these? Please contact our Events Team at events@thecannabisindustry.org to explore possibilities.
Mixed Bag in D.C. – SAFE Banking and New Bills
Photo By CannabisCamera.com
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
There’s no getting around it: last week was a mixed bag for cannabis policy in Washington, D.C. While there was excitement around the introduction of two bills in the House of Representatives, it was tempered by the fact that congressional leaders removed the SAFE Banking Act language from the America COMPETES/USICA trade bill.
SAFE Banking: what happened and what’s next?
The cannabis industry (and many others) were disheartened to learn that the SAFE Banking Act language that had been attached to the House’s America COMPETES Act was stripped out during negotiations last week. Over the last couple of months, both parties have been scrambling to negotiate the legislation into something that could pass both chambers and get across the President’s desk. Unfortunately, Majority Leader Schumer (D-NY), Minority Leader McConnell (R-KY), Speaker Pelosi (D-CA), and Minority Leader McCarthy (R-CA) decided to put the SAFE Banking Act on the chopping block again despite pleas from businesses, financial institutions, and numerous state officials.
While SAFE will not be included in this legislative package, lead sponsor Rep. Ed Perlmutter went to Twitter to talk about what’s next:
“By excluding the#SAFEBankingAct from the#USICA/#COMPETES bill, the Senate continues to ignore the public safety risk of forcing cannabis businesses to deal in all cash. In the wake of the Senate’s inaction, people continue to be killed and businesses continue to be robbed. I will continue to push for#SAFEBanking to be included in COMPETES, other legislative vehicles, or for the Senate to finally take up the standalone version of the bill which has been sitting in the Senate for three and a half years.”
But don’t give up just yet: there’s been much talk on Capitol Hill about a “SAFE+” package of some type. Read more about that here.
New bills: the CLIMB Act and the Veterans Equal Access Act
Last week, we saw the introduction of two cannabis bills in the House: one was a new bill that’s never been introduced, while the other has been introduced in many Congress’ past. The former: the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act; the latter: the Veterans Equal Access Act.
Led by Reps. Troy A Carter, Sr. (D-LA) and Guy Reschenthaler (R-PA), the CLIMB Act looks to:
Provide safe harbor for private financial institutions to offer lending services state-legal American businesses. Due to federal prohibition, a majority of American banks will not offer loans or lending options to small, minority and veteran-owned cannabis businesses.
Protect government agencies such as Community Development Financial Institutions (CDFI) and the Small Business Administration (SBA) and Minority Business Development Association (MBDA) from issuing grants and other sources of government funding. The CLIMB Act will allow entrepreneurs and small businesses to apply for funding to start and grow their business in the cannabis industry, particularly in areas most adversely impacted by the War on Drugs.
The Veterans Equal Access Act has been introduced in the past; this session, the bill is again led by champion Rep. Earl Blumenauer (D-OR) and newcomer to the legislation and Cannabis Caucus co-chair Brian Mast (R-FL).
The bill states that the secretary of the VA must “authorize physicians and other health care providers employed” by the department to 1) “provide recommendations and opinions to veterans who are residents of states with state marijuana programs regarding the participation of veterans in such state marijuana programs” and 2) “complete forms reflecting such recommendations and opinions.”
The bill has previously cleared the House Veterans’ Affairs Committee and was then turned into an appropriations rider; however, it has never been passed into law.
One thing is clear: we have our work cut out for us as we look to the last six months of this Congress. Want to get more involved with our government relations efforts? Consider becoming an Evergreen Roundtable member today, and mark your calendar for September 13-14, as we return in-person for lobby days in Washington, D.C.!
Member Blog: The 6 Technology Tools Every Multi-Location Dispensary Needs
As amulti-location dispensary owner, you know that the industry is expanding quickly. With more people choosing to buy and enjoy cannabis and there’s no sign of this trend slowing down. And as the demand increases, so does the opportunity to scale single-store dispensaries, into multi-location establishments.
Dispensaries like Tokyo Smoke and Cookies now have multiple locations in different countries and states, and lesser-known Mom and Pop cannabis retail stores are here for the expansion and boom as well, but if you own or operate a multi-location dispensary, you will need specialized tools to stay compliant, lean and effective.
What is a multi-location dispensary?
A multi-location dispensary is a marijuana dispensary with at least two locations. In other words, it’s a chain of dispensaries.
Multiple dispensaries serve more people by increasing convenience and accessibility. These dispensaries have branches in other cities, states or countries, or even different locations in the same city.
The benefits of having multiple locations over traditional single-location dispensaries are numerous. You can:
Offer your services to more people
Increase your brand awareness by being present in more places
Streamline processes like billing and payroll across multiple locations
Reduce overhead costs by not having to maintain as much human capital in each place
What are dispensary technology tools?
Dispensary technology tools, or dispensary software, are the software and hardware that help dispensaries manage their business.
This could include inventory management, an e-commerce website, POS systems, and finally, people management tools like dispensary payroll, HR, scheduling, and time tracking to manage their employees and staff.
Why do you need unique tools when running a multi-location dispensary?
When you’re running a multi-location dispensary, it’s more important than ever to stay organized. You need tools that can help you manage people and systems, inventory, and finances in a cohesive way.
It’s also helpful to benchmark things across your locations and gain insights into each market’s uniqueness.
For example, let’s say you have two locations – one in California and one in Colorado. You can use your analytics tool to see which products are more prevalent in each state or even which days of the week are busier for each location.
You could also compare how much inventory you have at each location and see if there are any patterns between them. Maybe one place sells out of product more quickly than another? The information will help you make better business decisions about where to open new dispensaries or how to improve existing ones. Here are the top 6 tools we recommend for any multi-dispensary operator.
1 – A POS system that works across multiple dispensary locations.
A POS system that works across numerous dispensary locations allows you to manage your business from a centralized location rather than log into each place individually. With the system, you can track inventory across your sites and make sure everything stays in sync.
And while most POS systems have some level of integration with other applications, here are three key integrations to look for:
Track and trace: The ability to track a product from origin through distribution, so you know exactly where it is at any given time.
Dispensary workforce management: The ability to view employee hours and schedules across multiple locations. The feature will ensure that everyone is working as efficiently as possible.
Dispensary payroll software: A payroll application that integrates with your existing POS system so that employees can clock in from anywhere with just a few clicks!
What is a dispensary POS system?
Dispensary POS systems are the backbone of any multi-location dispensary. They help you track inventory, manage employee hours and shifts, and keep track of customer purchases.
They’re also the first step in creating a successful business by enabling you to do things like:
Track product inventory across multiple locations
Manage employee pay, hours, and shifts
Keep track of customer purchases in real-time (to see what products people buy)
Many dispensaries use POS systems to track medical and recreational marijuana products and their sales metrics. A good dispensary POS system will keep track of inventory levels across all your locations. It will also monitor customer traffic at each location.
What to look for in a POS for multi-dispensary locations.
When you run a multi-location dispensary, it’s crucial to have a POS that can handle the unique needs of your business. Here are some of the most important things to keep in mind when shopping for a POS.
Easy to learn
When running a multi-dispensary location, you need software that’s easy to learn. It should be intuitive, with clearly labeled buttons and a simple interface. There are many options out there that meet this requirement. Some even come with a training program or video tutorials.
Compatible with the current system
You will want to make sure the new POS software is compatible with your current system. It saves you the additional work of switching over. The POS software should integrate with your existing POS hardware and provide real-time data transfer between devices.
Integrates with a payment processor
A good POS will be able to integrate seamlessly with your payment processor. It should have features that process transactions quickly and easily without any hassle from either the seller or buyer.
Customer support
When you have multiple locations, it’s vital that your customers can quickly call or email customer support if they have an issue—and that the support team is responsive and helpful.
Support for multiple currencies
If you’re operating in multiple countries, you’ll want to find a merchant solution that supports multiple currencies so you can accept payments from overseas customers with ease.
2 – Consistent payment systems.
Consistent payment systems are one of the most important things to have in place for a multi-location dispensary. The first thing you need to do is decide the types of payments you will accept.
The payment system can be as simple as cash or debit card, or it could include ACH transfers and cryptocurrencies. The key is to choose available options in all of your locations, so customers can pay no matter where they are.
It also helps to ensure that all locations have the same system for accepting payments. If one accepts cash-only, but another accepts debit cards and credit cards, this can create confusion and frustration for customers who travel between locations.
Finally, it’s essential to ensure that each location has access to its accounts to process its sales and deposits without having to go through a central office or owner each time there’s an issue.
Here are some examples of options for consistent payment systems:
Cash: some dispensaries only accept cash as a payment method. If you only accept cash at one of your dispensaries, then make sure there is an ATM nearby because it may not be convenient for customers to drive elsewhere to use an ATM.
Debit/Credit Card: Debit and credit card transactions are fast and easy for customers because they don’t have to wait for their bank account balance to transfer into their checking account before purchasing.
Cryptocurrencies: Cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) are often used by dispensaries because they offer high levels of privacy, security, and anonymity for users worldwide. Because these ‘coins’ don’t require any middlemen to oversee their transactions, they are ideal for businesses that want their payments kept secret from third parties.
ACH transfer: This electronic system allows you to transfer funds from one account to another without physically moving money or checks through the mail. It’s usually an automated process, so you don’t need any specialized training or experience with the system to use it effectively.
Point of banking: A Point of Banking system allows you to accept credit cards through a single point of sale (POS) terminal located at each location. This means that your customers can pay with their credit card wherever they go — no matter which place they visit.
It is essential for multi-location dispensaries as they often hire across multiple locations. It’s necessary to have an HR for multi-location dispensaries that helps you manage your hires to make sense and keep everyone on the same page.
To keep track of employees, you might want to find out who has worked at which locations during a particular period. This information will help you keep track of your company’s workforce and ensure that former employees are not applying for jobs at new locations.
Another benefit of this type of software is that it will help you share information more efficiently among managers by storing essential documents like applications or resumes in one place.
Finally, with dispensary HR tools, you can utilize systems like applicant tracking tools to hire for one dispensary, and not the other. You can also set up alerts when someone applies for your dispensary who has previously worked at a different location, and was let go.
4 – Workforce management to save time and money.
Workforce management software can save you a lot of time and money by allowing you to manage your staff at each location better. It allows you to track your employees’ performance, schedule shifts and vacations, view employee information, send messages, and more.
Here are other reasons you need a workforce management software for your multi-location dispensaries:
Dispensary scheduling software will integrate with your point-of-sale system to forecast your schedules via machine learning. It helps you better plan for staffing needs in the future.
Scheduling software can integrate with facial recognition time tracking technology, providing alerts to business owners when employees clock in outside of assigned work hours.
Scheduling for multi-location dispensaries with a lot of employees is complex. However, scheduling software can easily sort out staff on multi-location shifts, so that they show up at the right place at the right time.
Easy toggling between locations to manage staff: if you use integrated multi-location dispensary technology, it’s easy to manage many locations, and time clocks, from the same laptop by toggling between locations. Providing you with a birds eye view and helping you automate your operations.
5 – Inventory management that is consistent yet flexible.
Inventory management is a crucial component of the success of any multi-location dispensary. It’s vital to track what’s happening at each dispensary location.
However, you should be able to review items that sell better at specific locations and see how they’re performing overall. This way, you can ensure you’re not stocking too many (or too few) of each item. With this feature, your customers will have the best possible experience no matter where they go.
Inventory tracking software is one of the essential tools that any dispensary needs. It’s a great way to ensure that all locations use the same naming conventions for their products. It helps you offer your customers the best possible experience no matter where they go.
For example, suppose you have an edible called “Banana Bread” in one place and “Cinnamon Roll” at another location. It may be difficult for employees or customers to know what they’re getting when they order the product by name alone.
The best inventory management systems take into account the needs of your business and your customers. They can be used on a small scale or scaled up to manage massive amounts of products across multiple dispensaries.
6- Payroll software for multi-location dispensaries.
Managing payroll for multi-location dispensaries is a tough nut to crack. You need to keep track of all the employees at each location, their hours worked and paid, benefits and compensation, and their taxes.
The good news is that there is specific payroll software built for cannabis dispensaries that can help you manage all those details without too much trouble.
One recommendation would be to choose a payroll provider with service in all the geographic locations you have your dispensaries. This way, you can pay staff across the board instead of manually. The automation will help ensure your payroll tax and overtime calculations are accurate.
Many companies are turning to dispensary payroll software that integrates with HR, time tracking, and scheduling software, to help streamline processes and save time.
What do the experts say?
The most important thing to consider when choosing a dispensary solution is how you want to run your business. However, many multi-location dispensary experts advise keeping it simple. A simple system lets you track sales and inventory. As time goes on, you can add more features. The best way to simplify your dispensary operations is to use a dispensary POS system that integrates with your dispensary payroll, HR, and workforce management for streamlined operations.
In addition, choose a technology that works for everyone in your organization. Make sure everyone is comfortable with whatever product or service you choose before moving forward with implementation plans.
Author Tommy Truong is the CEO at KayaPush; the cannabis software helping dispensary owners manage their employee HR, scheduling, and payroll. KayaPush also integrates with leading dispensary POS systems. Tommy loves hot sauce, fried chicken, and running with his Boston terriers.
Optimize your operations with KayaPush. We hope this article has helped you learn about different dispensary software tools and tech for managing multiple locations and the different ways you can overcome the challenges with multi-location dispensary management systems. If you are looking for a compliant and integrated solution to manage your multi-location dispensary chain, check out KayaPush.
KayaPush delivers a more innovative, unified compliance solution that meets payroll and HR needs without compromising speed and accuracy. Implementing KayaPush will save you time and money and help eliminate the financial risks associated with non-compliance.
Member Blog: Reflections On Banking Reform For Cannabis Operators
Isn’t it crazy to think that the legal cannabis industry could be worth $57 billion by 2030? Or that nearly half of the country’s adult population (49%) has tried marijuana, the largest number ever recorded.*
At the time of this article, nineteen states, two territories, and Washington D.C. have legalized cannabis for adult recreational use. With more than two-thirds of U.S. states that have legalized the sale of both adult-use and medical cannabis and nearly half the population of potential cannabis consumers – it’s safe to say the cannabis industry is thriving.
But can it continue to grow without banking reform?
Cannabis businesses have a hard time accessing traditional banking options because the plant is still federally illegal. This means that banks are hesitant to work with cannabis companies for fear of retribution from the federal government.
This lack of banking options creates a difficult environment for cannabis businesses to operate in. Since they can’t deposit money or write checks, they have to operate on a cash-only basis, which can lead to security problems.
Cannabis operators also have a hard time securing financing because most traditional lenders are unwilling to work with them. This leaves them struggling to get the capital they need to grow and scale their business.
When cannabis businesses lack financing options for basic business growth, a banking system more ideal for cannabis operators is needed.
The Federal Law Guides Everything
Despite the growing opportunities in the cannabis industry at the state level, many prospecting business owners are stalled by a lack of capital. Businesses in the cannabis industry might celebrate legalization in their respective states but still deal with the challenge of accessing banking services.
Cannabis dispensaries that run cash-only operations are forced to confront security challenges in a new way. Online ordering, credit and debit card processing, taking business loans, and accessing other revenue-driving financial services are denied to cannabis businesses due to their federal status.
This shows an immediate need for financial reprieve in the cannabis industry.
Getting Financial Reprieve
The House of Representatives has passed several bills supporting the cannabis industry. Some of these bills include:
Bill to decriminalize marijuana
The Marijuana Opportunity Reinvestment and Expungement (MORE) Act
Legalization of adult-use cannabis
Legislation for medical marijuana programs
Legislation to reduce barriers to cannabis research
Approval of measures for adult cannabis use
One such bill that focuses on banking reform is the Secure and Fair Enforcement (SAFE) Banking Act, which aims to reduce the banking services challenges in the cannabis industry. If the SAFE Banking bill passes in Congress, financial institutions can open their services to cannabis businesses without the fear of violating anti-money laundering (AML) laws.
In return, cannabis businesses reduce the risk of theft and employee welfare by transitioning from cash-only services to banking services. However, this financial reprieve doesn’t address the cannabis tax code that prevents cannabis businesses from deducting business expenses from the gross income as per the Controlled Substances Act
Nonetheless, the SAFE Banking bill is a step in the right direction. The remaining concern is whether these financial reprieves will pass in the Senate and legalize cannabis businesses at the federal level.
Another financial option expected to reform the cannabis industry is crypto. The authenticity and security of blockchain currencies like Bitcoin are becoming a lucrative consideration for financial reprieve in the cannabis industry.
Currently, there are cryptocurrencies like PotCoin and CannabisCoin mined to cater to various needs within the cannabis industry. However, the uncertainty in the crypto world makes it challenging for the cannabis industry to settle on using crypto as a financial banking solution.
Granted, some crypto technology like blockchain technology is used to transact sales in the cannabis industry, where buyers make cashless payments, and the dispensaries convert this into crypto. But these transactions are not fully transparent.
But Is The Banking Industry Prepared For This Reprieve?
Financial institutions are gathering more courage when working with the cannabis industry. In 2021, 755 banks showed working relationships with cannabis clients. However, this comfort is more prevalent at the state level than at the federal level, where cannabis is yet to be legalized.
But since support from the federal government is anticipated, banking institutions must equally prepare for the capability to host cannabis businesses legally. Banks must stay compliant with the anti-money laundering (AML) laws.
Banks should conduct due diligence on cannabis businesses that want to use their services. Since federal legalization of cannabis is still pending, some cannabis operations might be illegal. Therefore, it is prudent for banks to start preparation by ensuring any new partners are not lawbreakers.
This means checking for legalization and registration licenses and conducting due diligence on employees and angel investors. Business transactions are also an excellent indicator of whether a cannabis business is involved in illegal activities.
For instance, a cannabis business in a state that frowns upon international shipments shouldn’t have any international transactions. Avid AML monitoring controls should quickly identify legitimate cannabis businesses.
In a nutshell, every business that partners with a cannabis business should be prepared to support its decisions with factual claims. In case of any suspicious activity, the bank should be ready to give an account of their due diligence procedure and the findings.
Creating relationships with federal regulations is also prudent since they help make the regulation process easier. Regulators also help ensure that banks remain compliant with the Federal cannabis laws, which protect their banking operations.
Cannabis business owners must also prepare for the possibility of using open and traditional banking services for their operations. If, or when, cannabis is Federally legalized, the cannabis industry will streamline its operations throughout the U.S.
This means added investments in research, cultivation, marketing, production, and sales of cannabis and cannabis products, whether medicinal or recreational. And the added boost of a legal banking system would further increase employment and boost the economy.
Cards On The Table
Does the cannabis industry need a banking reform? Absolutely. The challenge, however, is that, despite the willingness of the House of Representatives to support the SAFE Act bill, among other proposed banking reforms for the industry, approval in the Senate is still in question. Cards on the table, bank financing in the cannabis industry will propel businesses into more growth, which, in turn, should pragmatically influence the overall U.S. economy. But this starts with active congressional action.
FAQs
What is the current cannabis banking system?
The current cannabis banking system is not ideal for cannabis businesses because the lack of Federal legalization keeps banks from offering traditional banking services to cannabis businesses for fear of violating anti-money laundering (AML) laws.
What are the challenges of using non-FDIC banking options?
Non-FDIC banking options are not secured by the FDIC, meaning businesses that operate under these banking services are not protected by the Federal laws against theft or failure.
What can a banking reform do for the cannabis industry?
A banking reform allows banking institutions to offer cannabis businesses the same banking services they offer other businesses, like capital loans, online bill payments, and debit and credit cards.
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.
Video: NCIA Today – Thursday, June 16, 2022
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.
An Optimistic Congress Aims to Legislate a Bipartisan Cannabis Omnibus Package
By Sadaf Naushad, NCIA Intern
As the cannabis industry progresses nationwide, the public demands Congress to pass major cannabis reforms. After months of opposition met among Congress members, a breath of fresh air awaits cannabis advocates, lobbyists, and consumers.
Last Thursday, two crucial congressmen revealed objectives to establish an extensive package of incremental cannabis proposals.
While Senate Majority Leader Chuck Schumer (D-NY) expects to file the final version of the Cannabis Administration and Opportunity Act (CAOA) sometime this summer, lawmakers are using the draft language as a guide to propose an alternative backup bill in creating a cannabis “omnibus” package.
With the wide-ranging package garnering support across Democratic and Republican lawmakers, industry insiders have high hopes that both chambers could come together to endorse an effective, bipartisan bill by the end of this year.
Let’s discuss the potential inclusions within the bipartisan cannabis package.
Recently, a number of Congress members have discussed the possibility of creating a new cannabis bill that would comprise several incremental measures, including provisions focusing on banking, access to medical cannabis for veterans, research expansion, access to SBA programs, drug sentencing reformations, and more.
Lead sponsor of the Secure and Fair Enforcement (SAFE) Banking Act, Rep. Ed Perlmutter (D-CO) is hoping to incorporate protection for financial institutions operating with state-legal cannabis businesses in a potential package. According to Rep. Perlmutter, members also have interest in including Rep. Dave Joyce’s (R-OH) Harnessing Opportunities by Pursuing Expungement (HOPE) Act, a bill designed to expunge prior marijuana convictions. Additionally, lawmakers are deliberating over granting cannabis businesses access to SBA loans and services that are obtainable to every other industry, a reform initially advocated by Sen. Jacky Rosen (D-NV).
These four concerns –- veterans, research, expungements, and banking – constitute a small portion of the package’s considerations.
Congress will also potentially consider including a non-cannabis item as part of the wider deal, known as the EQUAL Act, which looks to alleviate racial disparities within the criminal justice system by eliminating the federal sentencing disparity between crack and powder cocaine.
Leader Schumer, however, faces the requirement of having a 60-vote threshold to pass legislation. Although the chamber comprises a slim majority of Democrats with the vast majority of GOP members opposing numerous past bills, the 60-vote requirement may be attainable. In contrast to Schumer’s CAOA, indications are that the incremental package has more broad bipartisan support.
Though members have not reached an official deal as these major reforms remain under deliberation, Congress members are not abandoning their efforts to push for a broader-based CAOA bill.
Currently in the bicameral conference committee remains the large-scale manufacturing bill, known as the America COMPETES Act. Leader Schumer has rejected attempts to integrate the SAFE Banking Act as currently written into the COMPETES Act, alleging that it may weaken the ability to approve a slightly larger cannabis reform package. Having passed the House six times, industry insiders feel certain that the Senate will authorize the SAFE Banking Act later this year.
Altogether, the above-mentioned legislation would come up short in federally descheduling cannabis; however, these provisions may acquire the support necessary to reach U.S. President Biden’s desk.
Video: NCIA Today – Thursday, May 19, 2022
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.
MobiusPay, Inc. is a U.S.-based global financial services organization that is committed to empowering individuals and businesses. For more than a dozen years, MobiusPay has leveraged state-of-the-art secure billing technology, long-standing relationships with financial institutions and award-winning customer support to provide merchant processing and payment solutions to brick and mortar and digital businesses around the world.
Jon Spratt leads Greensite Insurance, a specialty MGU providing boutique insurance coverage to the rapidly expanding Cannabis industry. Greensite launched in 2021 and is partnering with agents/brokers to help better protect their clients. Jon also runs a business accelerator that develops and launches new programs on behalf of Aon programs.
by Kameron Richards and Steven Schain
“I want our elected officials to hear my story which gives a voice to so many others, who like me, grew up in areas that have disproportionately borne the brunt and weight of cannabis enforcement. Children and young adults, whose only crime was being poor and of color, faced the indignity of being stopped and frisked hundreds of times. Now after paying the ultimate entry price, we can not get in the door of the cannabis industry because of a lack of banking and lending opportunities that continue to shut us out of the cannabis market. 
“As the industry grows and moves towards federal legalization, our elected officials must hear constituents’ voices. It’s important that my energy, face, and voice are present, representing the need for safe banking, health equity, and policies that support federal legalization. As states continue to legalize adult recreational cannabis usage, there will be an increased need for cannabis health equity to address the social, political, and economic conditions in underserved communities. 
“I have begun to work on lobbying at a local level. Federal legalization, descheduling, decarceration, social equity, health equity, and safe banking are some of the areas that I would like to learn how to lobby for at the national level.”
“We should not stop at using the SAFE Banking Act merely to provide legal and regulatory protection for financial institutions. That will enable, but not ensure, increased banking services for minority-owned cannabis and hemp companies. 
MC
Nicole Perry has been with 
Where are they now? This month, NCIA’s editorial department continues the monthly Member Spotlight series by following up with three of 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.
First off, we have rebranded. We are now Cannvas Events. The name change was part of our evolution and maturation as a startup. As we scaled, more resources became available for things like branding. We brought in Greg Hill of Brand Birth to deploy the science of branding and the end result was a new name, new logo, and new understanding of where we were situated in the regulated cannabis ecosystem. The transformation led to the planning and production of our signature Cannabis Event 2.0 offering, the inaugural Saturnalia Canna Carnival, taking place at the Trinity Health Arena in Muskegon, MI on August 2oth. We are powering a traditional indoor/outdoor carnival – rides and attractions included – with a hassle-free, normalizing consumption solution. If you’re in the Midwest, come join us as we celebrate the first year of an iconic, perennial cannabis festival. Tickets and info at cannvasevents.com and follow us @saturnaliacannacarnival
The 
I’m impressed by the brilliant folks on the committee, and their dedication to making cannabis equitable. It takes time out of our grueling work days to contribute time on these committees but the contribution to making the industry better is crucial during these developmental years of cannabis. Perhaps our current misguided, harmful CA cannabis policies could have been prevented with more early participation from stakeholders who are stewards of the plant. However, there were many factors involved with the way CA policies were created, including special interest money from those who don’t care or want to see the industry fail. 
Overburdensome taxes and high barriers to entry for licensing throughout the state are most obvious right now. The lack of diversity and equity, consumer education, state and federal funding for further research and development also play a huge role in CA’s struggles. I’m frustrated that the State doesn’t understand that those who have been dedicated to the industry, collaboration and this plant are the only ones who can truly guide this industry forward.
There is a lot new in the world of Next Level since 
California Cannabis is facing challenges on many fronts. Countless unnecessary hurdles to legal entry, political red tape, and excess packaging waste to name a few. But the biggest challenges are around security. Every week there is news of a new dispensary, farm, distributor, and friend being burglarized. High tech security systems, gates, and cameras are no match for organized thieves and slow police responses. Until we can get a portion of our excessive taxes dedicated to funding police divisions that specifically targets cannabis thieves, the best solution to combat this is to support your favorite brands by purchasing their products through legal cannabis retail sources.
by Aaron Smith, NCIA’s CEO and Co-founder
NCIA’s editorial department continues the Member Spotlight series by highlighting our 
My name is Adolfo Castillo. People who know me call me Ace. Before I started my first cannabis business, I had a 10-year career in the banking industry. I started in a call center as a customer service associate. I then moved into a traditional banking center where I learned sales and eventually became the assistant manager. It was at the end of my tenure in 2008 that my Tia Eloise was diagnosed with terminal cancer. At the request of my mother, she asked me to get some cannabis in hopes that it would help her sister eat. Although it did not cure cancer, it really helped her appetite and gave her a bit of relief. Unfortunately, my Tia Eloise lost that battle, but it was the relief that I was able to provide that helped bring me peace when she passed away. This all happened around the same time that bill SB 420 was signed into California law, establishing statewide guidelines for Prop. 215. This law paved the way for cooperatives and collectives to begin operating legally in my city. It was at that moment that my love for cannabis became a passion. I felt a need to help more people gain access to cannabis, so I partnered with a friend of mine who sold weed and I took what I had learned about business and applied it to opening my first medical cannabis dispensary.
Author Tommy Truong is the CEO at 
Joshua Gilstrap is the Marketing Manager for 
By Sadaf Naushad